OS and PS
[2007] FamCA 1180
•24 September 2007
FAMILY COURT OF AUSTRALIA
| OS & PS | [2007] FamCA 1180 |
| FAMILY LAW - APPEAL – EQUAL SHARED PARENTAL RESPONSIBILITY – Wife appealed the order that the husband have sole parental responsibility in relation to the child’s education – Held that on the evidence, the Federal Magistrate was in error in removing education as a shared parental responsibility – Appeal allowed – Husband and wife to have equal shared parental responsibility for the child FAMILY LAW - SPOUSAL MAINTENANCE – Wife appealed Federal Magistrate’s failure to order spousal maintenance to be paid to her – Held that the Federal Magistrate was in error in failing to deal with the requirements of a maintenance claim, particularly the wife’s needs to maintain an adequate standard of living and her ability to contribute to it – Appeal allowed – Remitted for rehearing FAMILY LAW - PROPERTY – Wife appealed Federal Magistrate’s dismissal of her property claim on the basis that there was not a pool of assets to be divided – Held that the Federal Magistrate was in error, having not made appropriate add backs and failing to analyse liabilities – There was clearly a modest pool of assets available for division between the parties – Appeal allowed – Due to the state of the evidence, this issue remitted for rehearing |
| Family Law Act 1975 (Cth) |
Chorn and Hopkins (2004) FLC 93-204; (2004) 32 Fam LR 518
M and M [1998] FamCA 42
| APPELLANT: | OS |
| RESPONDENT: | PS |
| INDEPENDENT CHILDREN’S LAWYER: | MS SUE MACGREGOR |
| FILE NUMBER: | MLM | 1611 | of | 2006 |
| APPEAL NUMBER: | SA | 48 | of | 2007 |
| DATE DELIVERED: | 24 September 2007 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Kay J |
| HEARING DATE: | 24 September 2007 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 11 May 2007 |
| LOWER COURT MNC: | [2007] FMCAfam 285 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Crozier-Durham |
| SOLICITOR FOR THE APPELLANT: | Raynal & Associates |
| COUNSEL FOR THE RESPONDENT: | Mr Howe |
| SOLICITOR FOR THE RESPONDENT: | Calleas Le Brun & Burke Solicitors |
ORDERS
The appeal be allowed in part.
Order 2 of the orders made by Federal Magistrate Lucev on 11 May 2007 be varied by deleting all words after “for the child”.
Orders 10, 11, 12 of the above mentioned orders be set aside and the wife’s application for alteration of property interests and spousal maintenance be remitted to the Federal Magistrates Court at Melbourne for rehearing.
The Court grants to the appellant wife a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.
The Court grants to the respondent husband a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by the respondent in relation to the appeal.
The Court grants to each party a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each party in respect of the costs incurred be each party in relation to the new trial.
Otherwise the appeal is dismissed.
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as OS & PS.
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
APPEAL NUMBER: SA 48 of 2007
FILE NUMBER: MLM 1611 of 2006
| OS |
Appellant
And
| PS |
Respondent
REASONS FOR JUDGMENT
This is an appeal against orders that were made by Lucev FM on 11 May 2007 in proceedings which concerned parenting orders, alteration of property interests and spousal maintenance. The proceedings were conducted over four days late in 2006.
In broad terms, the orders that were made in relation to the child of the marriage, T born July 2003, were that the child should live with each of the parents on a week about basis with changeover each Friday. There were specific orders in relation to school holidays and other special days. The arrangements were to be supervised under s 65L by a family consultant for a period of 12 months. Specifically the parties were ordered, in order 2, as follows:
The Husband and Wife have equal shared parental responsibility for the Child, save that the Husband shall have sole parental responsibility for all decisions concerning, and the cost of, the Child’s education, and provided that on any matter:
(a)having more than a minor effect on the Child’s education; and
(b)not being a day-to-day matter concerning the Child’s education,
the Husband must consult and discuss the matter with the Wife before any decision is made, save in a genuine emergency, in which case the Husband must inform the Wife of any decision made as soon as possible.
The orders then went on to deal with the issues relating to alteration of property interests and spousal maintenance, effectively dismissing the wife’s claim for an alteration of property interests and spousal maintenance.
The wife has appealed in relation to the orders, and the appeal has covered most of the aspects of the matters discussed by the federal magistrate.
Background
The background to the matter is that the husband was born in India in June 1971 and the wife in Russia in August 1978. They met in Russia when the husband was on service with the Indian Army. They married in India in March 1997. In 2003 they came to Australia. They have only the one child. They are permanent residents of Australia. They separated in February 2006.
Parenting
In relation to the children’s matters, the Federal Magistrate indicated that the presumption of equal shared parental responsibility (see s61DA of the FamilyLaw Act 1975 (Cth) (“the Act”)) applied and had not been rebutted but indicated that he would deal with the child’s educational needs on a separate basis.
His Honour spoke of the wife’s reluctance to consider the husband’s proposals concerning the child’s education in paragraph 49(b) of the judgment. He spoke, when dealing with the capacity of the parents to provide for the needs of the child, as follows:
56.The Husband clearly has the capacity to provide for the needs of the Child. He is employed, and has accommodation appropriate to the needs of the Child. The Husband demonstrates a clear understanding of what the Child’s needs are. Under the present shared care arrangements those needs have been met by the Husband during time spent with the Child. In relation to the Child’s emotional needs it is clear that the Husband understands the Child’s emotional needs, and is concerned at all levels with her security and well being, and social development. The Husband’s approach in this regard is very engaged, and perhaps controlling. See Family Report, paras 31 and 35.
57.The Wife also has provided for the needs of the Child under the current shared care arrangement. Whilst she is not employed, and whilst her accommodation and social arrangements have a degree of uncertainty about them, there is no evidence that she has not adequately provided for the Child’s needs post separation. As indicated above, the Wife’s parenting approach is different to that of the Husband, but is has not, and on the evidence, probably will not, affect the Wife’s ability to meet the Child’s needs (save for what is said below concerning intellectual needs), and particularly the Child’s emotional needs.
…
59.The one area of concern for the Court about the Wife’s approach to the Child’s needs is in relation to the intellectual needs of the Child.
60.In this regard the Husband’s evidence demonstrated an understanding of the importance of education in the life of a child (having gone so far as to set up an education fund for her), and an ability and eagerness to ensure that the Child’s educational needs were met: Transcript, p 133 – 134; Family Report, paras 31 and 35.
61.The Husband’s English skills are superior to those of the Wife, this being of some assistance in understanding and dealing with the Child’s educational needs.
62.The Wife has not demonstrated a desire to deal with the educational needs of the Child, nor its importance: Transcript, p 135. That has not yet impacted on the Child’s development, but has the potential to do so in the future, and do so to the Child’s longer term detriment (or perhaps limitation of opportunity), such that it is the Court’s view that the Husband is better placed to deal with the Child’s intellectual needs, noting that the Husband is prepared to do so at his cost: Transcript, p 135.
63.In relation to the Child’s future educational needs it is preferable that any arrangement for time spent with the parents be less rather than more complex.
64.The presumption of equal shared responsibility will apply, subject to an exception with respect to the Child’s intellectual (educational) needs.
Based upon the matters therein set out, the Federal Magistrate made the order that has been complained about in relation to the husband having the primary right to make decisions relating to the education of the child.
The key, as far as I can understand it, to the Federal Magistrate’s finding is the passage commencing at paragraph 62, that the wife has not demonstrated a desire to deal with the educational needs of the child nor its importance. It has to be remembered that this child, at the time of the hearing, was barely past three years of age.
The passage at page 135 of the transcript was a passage in the husband’s evidence. When asked about the wife’s attitudes on the issue that he wanted her to sign forms to enrol the child into private schools the husband complained that the wife refused to sign the forms on three occasions.
On what basis did she refuse? --- She says that “Till [sic] the matters are resolved, I’m not going to sign anything”.
She said what? --- Till [sic] the matters are resolved about [T], she’s not going to be signing anything.
It seems hard to understand what the nature of the criticism then is of the wife that could lead the Federal Magistrate to conclude that the wife was showing an inappropriate disinterest in the child’s education.
The matter is touched on again in the family report but not in any sense that one would reach a conclusion that the otherwise joint shared parental responsibility should be handed over from one parent to another. It was the view of the report writer that the wife failed to recognise the importance of the father. The report writer said that the wife expressed a view that she need not communicate with the husband any more as he is out of her life. Nonetheless, the wife needed to recognise the husband also shares the parenting responsibility/rights equally with her.
There seems nothing in that passage that would lead to a conclusion that it was appropriate to make an order for the parties in the equal shared parenting regime. The family report writer recommended:
The parents need to keep a communication book to inform each other in writing about the health and education issues relating to the child to avoid miscommunication and reduce further conflicts between the parents.
It seems to me that this may well have been a case, given the level of inability of the parties to communicate on a civil basis, to lead to a result that moved away from the presumption of equal shared parenting responsibility, but once that presumption was applied it seems to me that, on the evidence available and for the reasons explained by the Federal Magistrate, there was no basis to simply remove one part of the parenting responsibility and hand it from one parent to another. To the extent that the Federal Magistrate has purported to do that, in my view, his Honour has fallen into error.
It seems to me that the appropriate order is simply that order 2 be varied to read: “The husband and wife have equal shared parental responsibility for the child”. The balance of order 2 should be deleted.
There were raised in the notice of appeal, grounds complaining about the order for equal shared parenting. There was not, however, any oral argument advanced in support of those grounds of appeal and indeed the notice of appeal sought orders in lieu of equal shared parenting that would have seen the child with the father over a 21 day period for seven different nights, and the existing order is the equivalent of 10 and a half nights – if you can have half a night with a child. There did not seem to be much by way of difference in principle between what the mother was asserting was appropriate and what the father ultimately achieved.
It may well be that the order for equal shared parenting is likely to be a folly. The circumstances of these parties will change. Their lives will drift significantly apart and their options for making arrangements that would see the child spending a week about with each of them may be stymied by the geographic and economic realities of the family, but that is not an appealable error. As circumstances change the parties will be able to make application for further orders. Speaking for myself I think that that is a likely outcome in these proceedings and the order least likely to lead to further litigation is an order for equal shared parenting. That is not a ground of appeal. As I said the matter has not been pressed before me. Insofar as the grounds of appeal complain about the order made for equal shared parenting, I think the appeal must fail.
Spousal maintenance
I turn to the two remaining issues, and it is probably most convenient to deal with the maintenance issue first. At the time of the hearing, the father was in employment and the mother was not. She was reliant on social welfare and on some child support. She filed a statement of financial circumstances which demonstrated how she budgeted on the meagre amounts of money she had available to her, but the statement of financial circumstances did not deal with the issues that the Federal Magistrate was obliged to deal with as a result of the provisions of ss 72 to 75 of the Act.
The Federal Magistrate dealt with the entire issue of spousal maintenance in two paragraphs. In the first paragraph at 110, he set out s 72 of the Act and then said as follows in paragraph 111:
The Wife’s evidence was that she was confident of obtaining employment, having complete [sic] a Real Estate Agents [sic] Course, having building/design related qualifications and the ability to work in child care: Transcript, p 235 – 240, if she chooses to do so. In those circumstances, the Wife is capable of supporting herself and is therefore not entitled to spousal maintenance: Taguchi & Taguchi (1987) FLC 91-836. There will therefore be no order as to spousal maintenance.
The obligations of the Federal Magistrate under s 72 was to give consideration to whether the wife was able to establish that she was unable to support herself adequately, and then if that was shown, to give consideration to the extent to which the husband was reasonably able to contribute towards the wife’s support.
Unfortunately the Federal Magistrate did not really have ample material upon which to carry out his task. It is understandable that the focus of the parties in this case was really about other issues – issues relating to the residence of the child and issues relating to property. Even so the task that is required under the legislation is clear. Maintenance orders can be made if the necessary hurdles are jumped pursuant to the legislation. That requires making findings about what is an adequate amount necessary to support the wife, and that requires measuring matters according to a moving feast, one of which matters is the standard of living that is reasonable in the circumstances. I refer to s 75(2)(g).
After having decided what standard of living that was reasonable in the circumstances, the Federal Magistrate was then required to determine whether the wife could meet that from her own resources. Her evidence in relation to her earning capacity was fairly equivocal to say the least. The Federal Magistrate refers to pages 235 to 240 of the transcript in which the wife says through an interpreter – not directly answering questions – that she has the capacity to do something, she does not know what it is and she does not know what she will earn from it. The relevant parts of the transcript read as follows – and I am paraphrasing a little bit:
She is asked from page 237 onwards about her working history in Russia and India. She indicated that she was working in a weight management program and working as a plasterer but did not have the qualifications to do so in Australia.
She would like to do some design for some renovations and that she had done a real estate course which she said, “I’m entitled to sell the properties, to buy the properties, to rent the properties, and I’m entitled to work privately with people who would like to buy the property or sell the property”.
She is asked will her income be dependent upon how she does. She says, “Yes it will be interest commission”.
She indicates that she wants to stay home to help look after the child and the work she will get effectively will be part-time work.
“Are you confident that you will be able to find something to work out?” --- “Why not?”
“That means yes?” – “I hope I will be able to find a job which will be interesting for me and which will give me financial satisfaction as well. Maybe initially I will have to work for somebody else, for another company, like, to go to somebody’s place and clean someone else’s house. I don’t know.”
That is all there is about the wife’s earning capacity.
As I have indicated, we know nothing about what she needs, nor do we know the extent to which her earning capacity – she not having had any evidence of any serious work experience in Australia – would be able to go towards meeting those needs.
Now, because I am not satisfied the Federal Magistrate had properly attended to the tasks that he was obliged to attend to under ss 72, 74 and 75, I am proposing to remit this matter but in so doing, will require the parties to give attention to the issues and ultimately it may well be up to a Federal Magistrate to say: “The person who carries the onus, namely the wife, has not satisfied me that she is unable to adequately support herself” or, “has not satisfied me that the husband has a capacity to provide support to the extent she is unable to support herself”.
However in an appellate sense I am satisfied that the Federal Magistrate has erred in failing to deal with the statutory obligations to determine what was an adequate standard of living and the extent to which the wife and the husband would be able to contribute to it.
I do not find that it was open to the Federal Magistrate to reach the conclusion that the wife was confident of obtaining employment and that once she had so done she would be capable of supporting herself adequately within the meaning of s 72.
Property
The Federal Magistrate dismissed the wife’s property claim on the basis that his Honour was not satisfied that there was a pool of available property for division between the parties. He concluded that on the evidence the debts of the parties exceeded their assets and, accordingly, he would make no order altering the parties’ interests in the property. In so doing in my view the Federal Magistrate fell into some readily identifiable errors.
The task in a property case is well known in that it involves four stages:
· the first is ascertain the pool of assets;
· the second is then to make findings under s 79(4)(a), (b) and (c) concerning the contribution aspects of the parties towards the assets that now exist, or have existed, and towards the family;
· the third step is to give consideration to the remaining aspects of s 79, and particularly s 79(4)(e) which incorporates s 75(2);
· the final step is to determine whether the order that is proposed is just and equitable in the circumstances.
The pool of assets was modest by any view. What was established clearly was that there was presently in existence a superannuation entitlement in the husband’s name of $24,000. It is to be remembered the parties are comparatively young and the superannuation would not fall in for a long time.
The husband had chattels of $5,000 according to the Federal Magistrate’s findings, and the husband admitted he had a bank account of about $2,300.
The wife’s position was that she had assets of $250 and liabilities of $2,000.
The case focused significantly upon moneys that were said to have been in the husband’s possession and were not, it was said, adequately accounted for. There was a sum of $50,000 which had been sent by the parties to the husband’s sister in the United States of America in about August 2004, well before the parties separated. The moneys had been retained by the sister and the husband asserted that she retained them to offset a debt that he said he had accumulated over the years of moneys advanced by the sister in the sum of about $75,000. The wife said she knew nothing of the debt.
The circumstances in which the money went to America were not really in dispute. The husband’s sister had emailed the parties saying that she had stumbled across an investment, was short of some money and took the view that the husband might want to become a co-investor. This appears from an email, exhibited to the wife’s affidavit, sent on 8 August 2004 which says, as follows:
We have found another great potential two family house and need to move on this fast. Their foreclosure auction is on August 23 and we need to pay off their loan by August 18. We need about $40K to take over this property. [PS], if you can send it over we can pay you 18 per cent as we discussed (or whatever you are comfortable with). Let me know what you think.
The wife sent the money and confirmed this in an email of 10 August in which she said:
Today I sand [sic] to you $50,000 oz [sic]. It will be 35,470 USD. You shoud gate whithin [sic] 24 to 48 ours [sic]. It is on your name. Let me know whan [sic] you receive. Love, [OS].
There was a reply to that email that came back on the same day:
Hey guys, u [sic] have now started earning $532.05 USD or $750 oz/month cash flow on that money :D. Feel good. It’s like part of ur [sic] rent is covered ;) Lol, [S].
One would have thought on reading those affidavits that there was a clear arrangement that had been made. Moneys had been sent from the parties’ savings in Australia to the husband’s sister on an investment basis. This was acknowledged by the recipient of the moneys, and those moneys were still in existence. However, the deal quickly went sour and the property turned out to be not available. The parties reach a different view as to what then occurred.
All this happens within a day on 11 August – there is an email from his sister to him which said:
Big disappointment! Can you believe the deal with two family … fell through at the closing table. The sellers had a lien of 45K when we pulled title and we couldn’t go forward with it. Will let you know more in details on the phone.
The husband responded by email set out in paragraph 98 of the judgment as follows:
Actually I do need your help regarding the financial issues that I am facing.
I understand that we did borrow money for our wedding, our other wedding … the money you sent so generously to [OS’] parents, money sent for our honeymoon trip to the USA, [OS’] education in India etc.
…
[OS] and I want to pay you back. Please ley [sic] us know whether I can pay back in instalments. I was hoping that if this deal came through we could have sold it later and I could have paid off the 75k debt that I owe to you till [sic] date.
It is your generosity that you are not even asking for it back, but we understand that we owe you that and we stand by that.
Thanks for your understanding. We will try our very best to clear that up as soon as we are able.
The husband was asked how he calculated the $75,000 debt and he said it was accumulated over time and that having paid off the $50,000 he still owed about $21,000. The Federal Magistrate seemingly accepted that evidence. The wife said she knew nothing about it.
I must say for myself that it looks awfully suspicious, but I did not have the advantage of seeing the witnesses. It may well be that there was enough evidence upon which the Federal Magistrate could have accepted the husband’s story, although one would have to be entirely sceptical about it as the sequence of events unfolded. However, the sequence of events also predates the breakdown of the marriage and as such may not be quite as suspicious as one might otherwise have thought.
In a strict appellate sense the finding as to the existence of the debt was probably not a finding that I could interfere with but I do not think that is the end of the story, because the Federal Magistrate had to then deal with another matter, namely the sum of $41,000 that was present in the parties’ bank account at separation which the husband then removed in cash. The issue was whether the husband had properly accounted for it or whether it should be brought back into the pool.
His Honour said at paragraph 106:
There was evidence that there was $41,000.00 in an account in joint names at the time of separation. That money has since been spent by the Husband, it would appear, in payment of legal fees and credit card debits [sic]: Transcript, p51 – 58. The credit card debts included debts incurred by the Wife pre-separation. In any event, the money was not available at the date of trail, and even if it is added back, or the liabilities of the Husband reduced, there is still no surplus of assets over liabilities.
What is clear is that the husband’s evidence was that of the $41,000 that was taken from the parties’ joint account, $30,000 was used to pay his solicitors his legal costs. Clearly, in accordance with well established authority, discussed in Chorn and Hopkins (2004) FLC 93-204; (2004) 32 Fam LR 518, it would be appropriate for those moneys to be notionally added back into the pool of assets. Of the remaining $11,000, the husband gave evidence that $3,400 was applied towards credit card debts that the parties accumulated during the course of the marriage and to that extent that would be a reasonable explanation which presumably would not lead to the moneys being brought back into the pool. However, the balance of some $7,600 was simply not explained at all. In my view, absent any explanation, jointly owned moneys taken by one party and not applied towards the necessary support of that party, in accordance with matters discussed in M and M [1998] FamCA 42 – which is discussed in Chorn and Hopkins (above) – ought to have been brought back into the pool. That would increase the visible pool of assets which basically consisted of the husband’s superannuation by a further $37,600.
The Federal Magistrate said, however, that the husband still had debts which he accepted were matters that should counterbalance whatever it was in the pool. His Honour said in paragraph 90:
The Husband says his liabilities are:
(a)a debt to the Husband’s sister and brother-in-law of $21,333.00;
(b)a credit card debt of $15,000.00;
(c)legal costs of approximately $30,000.00; and
(d)furniture removal and storage expenses following separation, contribution to expenses for mothers [sic] hip-joint replacement and associated therapy and treatment, personal loan taken by Wife from mother, forfeited rental bond monies, and fees for Family Report of $17,910.00.
Of those matters therein discussed, the $21,333 is part of the $75,000 which, theoretically was open to the Federal Magistrate to have found was owing. As I have indicated one would have to be a bit sceptical about that.
The credit card debt included $10,000 that the wife had the use of, and contrary to the husband’s instructions to the bank, the evidence showed that he was disputing the debt with the bank and he was, on his oral evidence, optimistic about that dispute. It could not in my view have been said that the debt was actually one which would have been appropriate to have been brought back into account, given the nature of the dispute. Maybe some discounted figure for risk might have been properly brought in, but in my view there had to be some serious doubts about setting off the credit card debt.
The next item relied upon by the Federal Magistrate was a further sum of $30,000 owing for legal costs. On any view, if the husband did owe legal costs, it was not a matter that should have been dealt with as part of the property proceedings but separately in relation to any s 117 order that the Federal Magistrate might have been asked to make.
The husband also deposed to a number of other debts relating to post-separation expenses which may well have been reasonable: a debt he claimed that he owed to his siblings for their contribution towards their mother’s hip joint replacement; the repayment of a personal loan taken by the wife from the mother; the forfeited rental bond moneys – you would make a damages claim effectively – and fees for the family report.
The Federal Magistrate simply stated the sum of the liabilities without analysing which of the liabilities ought properly have been taken into consideration and which ones should not. When one simply removes from these liabilities the $30,000 that had already been paid to the lawyers and the $30,000 said to be owing to the lawyers, there is no longer an appropriate basis for a finding made by the Federal Magistrate that irrespective of the manner in which the $41,000 was dealt with, there was a surplus of liabilities over assets. There was clearly a pool of assets available for division between the parties.
To the extent that the Federal Magistrate reached a contrary conclusion, in my view his Honour erred. I am unable to determine the size of the pool of the assets based on the state of the evidence and the findings and, unfortunately for the parties, the property matter will have to also be remitted. I have urged the parties during the day to try to reach some agreement about the property and the spousal maintenance orders, as there is very little money available between the parties for division. They have been unable to do so.
It will be necessary, if the superannuation becomes the only visible asset, for appropriate notice to be given to the superannuation trustees before an order can be made affecting the superannuation. The wife has indicated the reality may well be the only thing that she can get her hands on as a result of these proceedings is the superannuation, but even so appropriate notice will have to be given.
I certify that the preceding fifty one (51) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kay
Associate:
Date: 2 October 2007
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