Petrellis & Petrellis
[2022] FedCFamC2F 1375
Federal Circuit and Family Court of Australia
(DIVISION 2)
Petrellis & Petrellis [2022] FedCFamC2F 1375
File number(s): SYC 4713 of 2021 Judgment of: JUDGE JENKINS Date of judgment: 28 October 2022 Catchwords: FAMILY LAW – PROPERTY – final hearing – adjustment of property interests – spousal maintenance – child support departure – non-periodic child support – substantial gifts during the marriage – significant earning capacity differential – sale of real property – treatment of leave entitlements Legislation: Child Support (Assessment) Act 1989 (Cth) ss 116, 117, 124, 125, Div 4 Pt 7, Div 5 Pt 7
Family Law Act 1975 (Cth) ss 72, 74, 75, 79, 106A, 121, Pt VIII
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 10.13 and 10.14(b)
Cases cited: Aleksovski & Aleksovski [1996] FamCA 111
Best & Best (1993) FLC 92-418
Bevan & Bevan [1993] FamCA 95
Clausen & Clausen (1995) FLR 9
D & D [2003] FamCA 473
Dickons & Dickons [2012] FamCAFC 154
Gould & Gould (1995) FamCA 142
Hallinan & Witynski[1999] FamCA 1127
Harrison & Harrison (1996) FamCA 12
Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93‑143
Hides & Hatton (1997) FLC 92-95
In the Marriage of Gyselman [1991] FamCA 93
In the Marriage of Omacini (2005) 33 Fam LR 134
In the Marriage of WILSON, D.J. and WILSON, L.L. (1989) FLC
Jabour & Jabour [2019] FamCAFC 78
Lee Steere & Lee Steere (1985) FLC 91-626
Mallet v Mallet (1984) 156 CLR 605
Pierce & Pierce (1998) 24 FamLR 377
MS & PS (2006) FLC 93-268
Stanford v Stanford [2012] HCA 52
Thomson Australian Holdings Pty Ltd v The Trade Practices Commission (1980) 148 CLR 150
Division: Division 2 Family Law Number of paragraphs: 180 Date of last submission/s: 26 July 2022 Date of hearing: 25-26 July 2022 Place: Sydney Counsel for the Applicant: Mr Kearney SC Solicitor for the Applicant: Blanchfield Nicholls Counsel for the Respondent: Mr Richardson SC Solicitor for the Respondent: Barkus Doolan Winning ORDERS
SYC 4713 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR PETRELLIS
Applicant
AND: MS PETRELLIS
Respondent
order made by:
JUDGE JENKINS
DATE OF ORDER:
28 October 2022
UPON NOTING:
A.The following definitions for the purposes of these orders:
A.1 "B Street, Suburb C mortgage" means mortgage registration number … registered on title to the B Street, Suburb C property securing loans from National Australia Bank, being account number …08 and account number …31.
A.2"B Street, Suburb C property" means the property situated at and known as B Street, Suburb C in the State of New South Wales, being the whole of the land described in Folio Identifier … registered in the names of the husband and the wife as joint tenants.
A.3"Petrellis" means the company known as Petrellis Pty Ltd, ACN … in respect of which the husband and the wife are directors and each hold 1 of the 2 ordinary shares.
A.4"Petrellis" means the company known as Petrellis Pty Ltd, … in respect of which the husband and the wife are directors and each hold 1 of the 2 ordinary shares.
A.5"Petrellis Superannuation Fund" means the self-managed superannuation fund known as Petrellis Superannuation Fund in respect of which the husband and the wife are the members and Petrellis is the trustee.
A.6"D Street, Suburb E mortgage" means mortgage registration numbers … and … registered on title to the D Street, Suburb E property securing a loan from National Australia Bank, being account number …71.
A.7"D Street, Suburb E property" means the property situated at and known as D Street, Suburb E in the State of New South Wales, being the whole of the land described in Folio Identifier … and … registered in the name of Mr & Ms Petrellis.
THE COURT ORDERS:
Property
1.Within 28 days of the date of these orders, the husband do all acts and things and sign all documents to transfer unencumbered to the wife the Motor Vehicle 1 registration number ….
B Street, Suburb C property
2.Within 30 days of the date of the making of these orders, the husband and the wife do all acts and things and sign all documents necessary to cause a sale of the B Street, Suburb C property for the best price reasonably obtainable on the following terms:
2.1list the B Street, Suburb C property for sale by public auction with such agent as is agreed between the parties within 14 days of the date of the making of these orders and failing agreement, the wife shall put forward three proposed names within 21 days thereafter and the husband shall select one within 24 hours of receiving the proposed names; ("the B Street, Suburb C agent");
2.2the reserve price for the purpose of such auction shall be such price as is mutually agreed upon by the parties not later than two days prior to the auction date and in the absence of agreement reached, the parties shall act on the recommendation of the B Street, Suburb C agent in respect of the reserve price;
2.3the parties shall each co-operate in every way with the B Street, Suburb C agent including but not limited to:
2.3.1making all necessary keys available to the B Street, Suburb C agent;
2.3.2allowing inspection of the B Street, Suburb C property at all reasonable times requested by the agent;
2.3.3doing or saying nothing to hinder or prevent a sale being effected;
2.3.4ensuring the B Street, Suburb C property is in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
2.3.5signing all documents requested by the agent in relation to the listing for sale of the B Street, Suburb C property.
2.4in the event the bidding at the auction does not reach the reserve price the parties may negotiate with the highest bidders or any other interested person and effect a sale of the B Street, Suburb C property at a price which is not more than five (5) per cent below the reserve price or at such other price as the parties agree upon in writing;
2.5if the B Street, Suburb C property thereafter remains unsold, the parties shall do all acts and things and sign all documents necessary to list the B Street, Suburb C property for sale by private treaty with the B Street, Suburb C agent at a price agreed upon in writing or in the absence of agreement within 24 hours of the failed auction as recommended by the B Street, Suburb C agent;
2.6the parties shall instruct such solicitor as they agree upon to have the conduct of the sale on behalf of both parties and in the absence of agreement within 14 days of the date of the making of these orders, the wife shall nominate three (3) solicitors within 21 days thereafter and the husband will select one within 24 hours of receiving the proposed names; ("the B Street, Suburb C solicitor");
2.7the parties shall each execute a contract for sale in the form prepared by the B Street, Suburb C solicitor having the conduct of the sale;
2.8neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the B Street, Suburb C property or to any commission.
3.That upon settlement of the sale of the B Street, Suburb C property, the proceeds of sale be applied in the following manner and priority:
3.1in payment of all costs of sale including but not limited to agent's commission, legal costs, auction expenses and advertising expenses;
3.2in payment of any outstanding outgoings or liabilities due and owing with respect to the B Street, Suburb C property including but not limited to strata levies and land tax;
3.3to pay out and discharge the B Street, Suburb C mortgage;
3.4in payment of the balance in such proportions as to effect an overall settlement of 62.5 per cent of the non-superannuation pool in annexure “A” in favour of the wife and 37.5 per cent in favour of the husband.
D Street, Suburb E property
4.That the husband and the wife do all acts and things and sign all documents necessary in their capacity as directors of Petrellis Pty Ltd to cause a sale of the D Street, Suburb E property for the best price reasonably obtainable on the following terms:
4.1list the D Street, Suburb E property for sale by public auction with such agent as is agreed between the parties within 14 days of the date of the making of these orders and failing agreement, the wife shall put forward three (3) proposed names within 21 days thereafter and the husband shall select one within 24 hours of receiving the proposed names; ("the D Street, Suburb E agent");
4.2the reserve price for the purpose of such auction shall be such price as is mutually agreed upon by the parties not later than two (2) days prior to the auction date and in the absence of agreement reached, the parties shall act on the recommendation of the D Street, Suburb E agent in respect of the reserve price;
4.3the parties shall each co-operate in every way with the D Street, Suburb E agent including but not limited to:
4.3.1making all necessary keys available to the D Street, Suburb E agent;
4.3.2allowing inspection of the D Street, Suburb E property at all reasonable times requested by the agent;
4.3.3doing or saying nothing to hinder or prevent a sale being effected;
4.3.4ensuring the D Street, Suburb E property is in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
4.3.5signing all documents requested by the agent in relation to the listing for sale of the D Street, Suburb E property.
4.4in the event the bidding at the auction does not reach the reserve price the parties may negotiate with the highest bidders or any other interested person and effect a sale of the D Street, Suburb E property at a price which is not more than five (5) per cent below the reserve price or at such other price as the parties agree upon in writing;
4.5if the D Street, Suburb E property thereafter remains unsold, the parties shall do all acts and things and sign all documents necessary to list the D Street, Suburb E property for sale by private treaty with the D Street, Suburb E agent at a price agreed upon in writing or in the absence of agreement within 24 hours of the failed auction as recommended by the D Street, Suburb E agent;
4.6the parties shall instruct such solicitor as they agree upon to have the conduct of the sale on behalf of both parties and in the absence of agreement within 14 days of the date of the making of these orders, the wife shall nominate three solicitors within 21 days thereafter and the husband will select one within 24 hours thereafter; ("the D Street, Suburb E solicitor");
4.7the parties shall each execute a contract for sale in the form prepared by the D Street, Suburb E solicitor having the conduct of the sale;
4.8neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the D Street, Suburb E property or to any commission.
5.That upon settlement of the sale of the D Street, Suburb E property, the proceeds of sale be applied in the following manner and priority:
5.1in payment of all costs of sale including but not limited to agent's commission, legal costs, auction expenses and advertising expenses;
5.2in payment of any outstanding outgoings or liabilities due and owing with respect to the D Street, Suburb E property including but not limited to strata levies and land tax;
5.3to pay out and discharge the D Street, Suburb E mortgage;
5.4the balance thereafter to be deposited in an interest-bearing account in the name of Mr & Ms Petrellis as trustee of the Petrellis Superannuation Fund.
6.Within 28 days of settlement of the sale of the D Street, Suburb E property and payment of the net sale proceeds to the Petrellis Superannuation Fund ("the Fund"), the husband and the wife shall instruct the accountant to prepare financial accounts of the Fund to calculate the member entitlement of each of the husband and the wife and that thereafter the wife shall request Petrellis Pty Ltd as trustee of the Fund to rollover her allocated benefit in the Fund calculated as at the date of the rollover to a complying superannuation fund nominated by her.
7.Within 21 days after receiving the request referred to in Order 6 of these orders and contemporaneously:
7.1the husband and the wife in their capacity as directors of Petrellis Pty Ltd, the trustee of the Fund shall at the expense of the Fund do all acts and things and sign all documents as may be necessary to pay to the trustee of the superannuation fund nominated by the wife the superannuation benefit to which she is entitled as a member of the Fund;
7.2the wife shall do all acts and things and sign all documents presented to her by the husband as are necessary to transfer her right, title and interest in Mr & Ms Petrellis to the husband and resign as a director of Petrellis Pty Ltd and the wife, if requested to do so by the husband shall prior to such resignation join with the husband to appoint a new director of Petrellis Pty Ltd;
8.Within seven (7) days of the date of these Orders, the wife assign to the husband her interest in the loan account referred to in the financial statements of Mr Petrellis ABN: …, such documents to be prepared at the husband's expense.
9.That subject to these orders, the husband and the wife are each entitled to retain sole legal and beneficial ownership to the exclusion of the other of:
9.1all other items of property including but not limited to motor vehicles, money, jewellery and personal effects presently in the possession of each of them respectively or to which they may become entitled;
9.2all shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his/her sole name respectively or to which they may become entitled;
9.3all interests in life insurance policies and superannuation funds standing in his/her sole name respectively or to which they may become entitled.
10.That subject to these orders:
10.1the husband hereby indemnifies the wife from and in respect of all actions, claims, suits and demands as may be made against the wife in relation to all liabilities in the name of the husband or in his name jointly with any other person, including the loan account referred to in the financial statements of Mr Petrellis ABN: …;
10.2the wife hereby indemnifies the husband from and in respect of all actions, claims, suits and demands as may be made against the husband in relation to all liabilities in the name of the wife or in her name jointly with any other person.
11.That subject to these orders, each of the husband and the wife release the other from all actions, proceedings, claims, demands, debts, costs, and expenses whatsoever and howsoever arising which either of them had or may have against the other for or by reason of or in respect of any act, cause, matter, or thing.
Spousal maintenance
12.That pending the settlement of the sale of the B Street, Suburb C property, the husband shall pay as and when due:
12.1all municipal and water rates and taxes, electricity, gas and internet and telephone and all other outgoings in respect of the B Street, Suburb C property;
12.2all moneys due and owing pursuant to the B Street, Suburb C mortgage;
12.3home building and contents insurance for the B Street, Suburb C property;
12.4all instalments at the highest scale to Company F, including cover for private hospital, optical, physiotherapy, dental and orthodontic expenses in respect of the wife; and
12.5registration, comprehensive insurance, repairs and maintenance in relation to the Motor Vehicle 1 registration number ….
Child support
13.Pursuant to s 116 of the Child Support Assessment Act 1989 (Cth), the wife be granted leave to seek orders to depart from the administrative assessment of child support.
14.Pursuant to s 117 of the Child Support Assessment Act 1989 (Cth), there be a departure from the administrative assessment of child support payable by the husband for the children, X born in 2006 and Y born in 2008 for the period from the date of settlement of the sale of the B Street, Suburb C property until the occurrence of a child support terminating event as defined by s 12 of the Act in relation to a child, save that in the event a child turns 18 years of age during Year 12 of education then on 31 December of that year, the husband pay to the wife by way of periodic child support for the children in the sum of $550 per week per child (a total of $1,100 per week), the first payment to be made by the first Monday after the making of these orders and monthly thereafter by the 15th day of each calendar month to a bank account nominated by the wife.
15.That the child support payable by the husband to the wife pursuant to Order 14 is to be varied on the review date each year commencing 1 July 2023 to such sum as shall be determined by multiplying the child support payable on the review date by the fraction N/B where "B" is the CPI in respect of the quarter year ended 12 months prior to review dated, namely 30 June and "N" is the CPI in respect of the quarter year ending on the day immediately preceding the review date.
16.Pursuant to s 124 of the Child Support Assessment Act 1989 (Cth) the husband shall as and when due pay: All fees for each of the children as listed on all tax invoices issued to the parties by G School or such other school as the children or any of them may attend, including tuition fees:
16.1school and sports uniforms, extra-curricular activities, domestic school excursions, tutoring, stationery, textbooks, musical instruments, equipment, personal computers;
16.2all instalments at the current scale to Company F, including cover for private hospital, optical, physiotherapy, dental and orthodontic expenses in respect of the children;
16.3any private hospital, optical, physiotherapy, dental and orthodontic and other medical expenses incurred in respect of the children not able to be recovered by Medicare or the private health insurer; until the completion of the secondary education of each child or the attaining of 18 years of age whichever is the later.
17.That the parties shall do all acts and things necessary to cause a copy of these orders to be lodged with the Child Support Register.
General
18.In default of any party doing any act or thing, taking any step and/or executing any such document necessary to give effect to these Orders, the Registrar of the Federal Circuit and Family Court of Australia at Sydney or such other person appointed by the Court be authorised pursuant to s 106A of the Family Law Act to execute all such documents in the name of the defaulting party and to do all acts and things necessary to give validity and operation to such documents and the defaulting party shall pay the costs of the non-defaulting party in relation thereto.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Petrellis & Petrellis has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
ANNEXURE “A”
Assets
1 Joint B Street, Suburb C 16,500,000 2 Husband Motor Vehicle 2 79,450 3 Husband Motor Vehicle 1 27,850 4 Joint NAB account number …26 (offset account) 0 5 Husband NAB account number …27 (business account) 455,427 6 Husband NAB account number …08 (X's account) 5,690 7 Husband NAB account number …39 (Y's account) 5,600 8 Wife NAB account number …66 33,838 9 Wife NAB account number …59 3,727 10 Joint Furniture, furnishings and effects E 25,000 11 Husband Furniture, furnishings and effects E 10,000 12 Husband Rental bond 4,418 13 Husband 3 watches, including Rolex and several pairs of cufflinks E 10,000 14 Wife Jewellery E 65,000 15 Wife Funds held in H Trust Account 0 16 Husband Funds held in J Trust Account 0 Total $ 17,226,000 ADDBACKS
17 Husband Paid legal costs 256,606 18 Wife Paid legal costs 397,772 Total $ 654,378 LIABILITIES
19 Joint NAB loan account number …08 (B Street, Suburb C) 0 20 Husband NAB loan account number …31 (B Street, Suburb C) 3,114,840 21 Husband Finance re: Motor Vehicle 2* 67,813 22 Husband NAB Visa ending #...79 4,056 23 Husband NAB Visa ending #...49 2,818 24 Husband CGT on the sale of the Suburb K property 286,332 25 Wife CGT on the sale of the Suburb K property 157,170 26 Wife CGT loss on the sale of the Suburb L property 0 27 Husband Contingent CGT on the sale of B Street, Suburb C property 30,019 28 Wife Contingent CGT on the sale of B Street, Suburb C property 30,019 29 Husband 2022 income tax E 126,878 Total $ 3,819,945
NETT TOTAL ASSETS (excluding superannuation) $ $14,060,433 REASONS FOR JUDGMENT
JUDGE JENKINS
Introduction
These proceedings concern an adjustment of the parties’ property interests under the provisions of Part VIII of the Family Law Act 1975 (Cth) (“the Act”), as well as applications for spousal maintenance, for a child support departure order and for the payment of non-periodic child support.
In determining these proceedings, I have had regard to all of the evidence presented at Trial. It is not possible to include every aspect of the parties’ evidence in these reasons for judgment. However, if a particular fact or issue is not mentioned in these reasons, it does not mean that I have failed to consider it.
Background
The husband, Mr Petrellis (“the husband”) was born in 1969 and is currently 53 years of age.
The wife, Ms Petrellis (“the wife”) was born in 1974 and is currently 48 years of age.
The parties married and commenced cohabitation in 2002 and separated on 1 October 2020.
The parties have two children, X born in 2006, aged 16 years and Y born in 2008, aged 14 years.
The children live with the wife and spend no time at present with the husband.
At the commencement of the relationship the husband was a medical professional at the M Hospital. The wife was a medical professional.
Both parties worked in their respective fields until the birth of the parties’ first child, at which time the wife ceased employment and commenced full-time home duties.
The husband continued to develop his career in health care, ultimately establishing himself as a pre-eminent medical professional in that area.
It is common ground that the husband worked long hours and the wife was consequently left to primarily care for the children and the home.
It is also not contentious that the wife’s parents gifted the parties’ substantial funds during the relationship, in excess of $2.5 million. This was predominately applied towards assets which in due course formed the pool now available for division.
ORDERS SOUGHT
The husband seeks orders pursuant to a Minute of Order tendered to the Court and marked husband’s Exhibit 1. A Minute of Proposed Orders was also tendered on behalf of the wife and marked wife’s Exhibit 2.
Documents relied upon
The husband relied upon:
(i)his affidavit filed on 24 June 2022; and
(ii)his financial statement filed on 24 June 2022.
The wife relied upon:
(i)her affidavit filed on 27 June 2022; and
(ii)her financial statement filed on 27 June 2022.
Whilst both parties, in their outlines, relied upon the affidavit of Mr N (single expert) filed 19 July 2022 and the report of Mr O (single expert) dated 19 July 2022, no reference was otherwise made to these reports during the trial and nor was either expert called for cross-examination. I note further that the report of Mr O was never produced to the Court.
At the outset of each party’s case, counsel raised objections to evidence contained within their respective affidavits. Numerous amendments were made to those affidavits, either by consent or following the ruling of the Court. The amended affidavits were marked husband’s Exhibit 2 and wife’s Exhibit 1.
A number of amendments were also made to the wife’s financial statement during her evidence in chief.
I also made it clear to both counsel at the commencement of the hearing that I would not be allowing them to rely on documents in a tender bundle en masse. I would only allow into evidence documents tendered through or put to a witness or otherwise referred to in submissions.
THE EVIDENCE
The only witnesses called in this matter were the parties themselves. In my view each party gave evidence in a forthright manner and to the best of their subjective recollection. This is not a case that turns on their credibility.
OUTSTANDING OBJECTIONS TO EVIDENCE
At the end of the trial there were a number of aspects of the evidence which had been objected to and which were reserved until this judgment.
Wife’s Provisional Exhibit 5
The wife’s counsel sought to tender certain documents by way of re-examination. The documents were printouts from websites and concerned various job positions or roles said to be available to the wife. Counsel for the husband objected to the documents being tendered as he submitted they were not in response to questions put in cross-examination. As I did not have the benefit of the transcript to confirm exactly what was put, the objection was reserved to this judgment.
On examining the transcript it is apparent that the husband’s counsel had put to the wife that she could obtain certain specific jobs that did not require health care re-registration and for which she would be remunerated. These included as a health care educator and positions as a medical professional and a health care worker.
The documents in the wife’s provisional Exhibit 5 relate to such positions and to the issue of remuneration and the requirement for professional registration.
Accordingly, I find that the documents are admissible and will now be marked as wife’s Exhibit 5.
Objection to reference to paragraphs in authorities in reply
In final submissions, counsel for the husband referred to the cases of Dickons & Dickons[1] (“Dickons”) and to Jabour & Jabour[2] (“Jabour”), although not to particular paragraphs. Following submissions on behalf of the wife, counsel for the husband endeavoured to provide the Court with the specific paragraph references to those cases, namely to paragraphs 73 and 114 of Jabour and from paragraph 19 onwards in Dickons.
[1] Dickons & Dickons [2012] FamCAFC 154.
[2] Jabour & Jabour [2019] FamCAFC 78.
Counsel for the wife objected on the basis that this was not in reply.
In regard to this objection, I note that each counsel had sought to have read into their submissions their outlines of case. In the husband’s outline of case reference is made to paragraph 73 of Jabour and from paragraph 19 onwards in Dickons, and therefore these paragraphs are already included in the husband’s submissions. To the extent that reference to a case in reply is even objectionable, it is clear I allowed the wife’s counsel to provide the Court with an authority by way of email after the closure of the case. Consequently I will allow reference to paragraph 114 of Jabour to be included in the husband’s submissions.
RELEVANT LEGAL PRINCIPLES
The relevant legal principles governing any application for property settlement are set out in Part VIII of the Act. Section 79(1) authorises the Court to make such orders between the parties as it considers appropriate. Prior to making any order pursuant to s 79(4) of the Act, I must first be satisfied it is just and equitable for me to do so.
Pursuant to the High Court decision of Stanford v Stanford[3](“Stanford”) this process requires me to firstly identify the assets of the parties and then determine whether it is just and equitable to make any order for the adjustment of property.
[3] Stanford v Stanford [2012] HCA 52.
In the event the Court is satisfied that it is just and equitable to make an order for property settlement, the Court should then assess each party's contributions during the relationship in accordance with ss 79(4) (a)-(c).[4]
[4] See Lee Steere & Lee Steere (1985) FLC 91-626; Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93‑143; and In the Marriage of Omacini (2005) 33 Fam LR 134.
Additionally, the Court must consider the range of factors set out in ss 79(4) (d)-(g), including the future needs factors identified in s 75(2). The Court should then consider its findings and, if the Court is satisfied that it is just and equitable to do so, make orders adjusting the parties' property interests.
Existing property interests
The parties prepared a joint balance sheet which was tendered by agreement and marked Court Exhibit A. The asset pool was agreed save for items 15 to 18. The point of difference was the treatment of certain funds (“the disputed funds”), which the wife identifies as being held in two trust accounts, and which the husband instead adds to the parties respective legal costs in items 17 and 18. The Court was advised it need not be troubled by this, as the net allocation of funds to each of the parties remained the same.
The other point of difference was the treatment of the husband’s leave entitlements. The wife sought to include these entitlements as a financial resource of the husband. The husband’s position was the entitlements should be excluded.
Although the husband was cross-examined as to the location of gold and jewellery, no submissions were made with respect to these items so I conclude that this is not being pursued. In any event the husband said the items were kept in a safe at the mother-in-law’s home when the parties were renovating the B Street, Suburb C property. The wife gave no evidence in regard to same and there is no evidence as to the particulars or value of these items. Accordingly these items, if they exist, will not be included in the pool.
I find the pool available for division between the parties (adopting the husband’s approach to the disputed funds for simplicity) is as follows:
Assets
1 Joint B Street, Suburb C 16,500,000 2 Husband Motor Vehicle 2 79,450 3 Husband Motor Vehicle 1 27,850 4 Joint NAB account number …26 (offset account) 0 5 Husband NAB account number …27 (business account) 455,427 6 Husband NAB account number …08 (X's account) 5,690 7 Husband NAB account number …39 (Y's account) 5,600 8 Wife NAB account number …66 33,838 9 Wife NAB account number …59 3,727 10 Joint Furniture, furnishings and effects E 25,000 11 Husband Furniture, furnishings and effects E 10,000 12 Husband Rental bond 4,418 13 Husband 3 watches, including Rolex and several pairs of cufflinks E 10,000 14 Wife Jewellery E 65,000 15 Wife Funds held in H Trust Account 0 16 Husband Funds held in J Trust Account 0 Total $ 17,226,000 ADDBACKS
17 Husband Paid legal costs 256,606 18 Wife Paid legal costs 397,772 Total $ 654,378 LIABILITIES
19 Joint NAB loan account number …08 (B Street, Suburb C) 0 20 Husband NAB loan account number …31 (B Street, Suburb C) 3,114,840 21 Husband Finance re: Motor Vehicle 2* 67,813 22 Husband NAB Visa ending #...79 4,056 23 Husband NAB Visa ending #...49 2,818 24 Husband CGT on the sale of the Suburb K property 286,332 25 Wife CGT on the sale of the Suburb K property 157,170 26 Wife CGT loss on the sale of the Suburb L property 0 27 Husband Contingent CGT on the sale of B Street, Suburb C property 30,019 28 Wife Contingent CGT on the sale of B Street, Suburb C property 30,019 29 Husband 2022 income tax E 126,878 Total $ 3,819,945
NETT TOTAL ASSETS (excluding superannuation) $ $14,060,433 SUPERANNUATION
Member Name of Fund Type of Interest Value 30 Husband Petrellis Superannuation Fund SMSF 653,600 31 Wife Petrellis Superannuation Fund SMSF 370,185 Total $ 1,023,785 Is it Just and Equitable that an Order be made?
In Stanford, their Honours, in the joint judgment of French CJ, Hayne, Kiefel and Bell JJ, considered the expression “just and equitable” at paragraph 36 and noted that it:
… is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.
There is no presumption that the parties’ entitlements in the existing asset pool should be altered, or that one party has the right to have the property of the parties divided between them only on the basis of the considerations in s 79(4) of the Act. The Court must not conflate the determination pursuant to s 79(2) of the Act with its determination pursuant to s 79(4) of the Act. These are separate enquiries.
In these proceedings, though the position of both parties was that it was just and equitable that orders be made to alter their property interests, the existence of such an agreement is not sufficient on its own. The Court must be satisfied that such orders are appropriate.
I find that in the circumstances of this case, it is just and equitable to make an order pursuant to s 79 of the Act for a division of property between the parties. Both parties made contributions, financial and otherwise, which would not be appropriately recognised if the Court does not make an order for the adjustment of property.
Section 79(4)
In determining what orders are to be made pursuant to s 79(4) of the Act, and as set out in Aleksovski & Aleksovski[5] (“Aleksovski”) at paragraph 50 I must:
weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment.
[5] Aleksovski & Aleksovski [1996] FamCA 111.
Pursuant to the High Court case of Mallet v Mallet,[6] there is no presumption of equality of division of property, not even in a long relationship, and in each case the contributions of each party must be assessed on their own facts.
[6] Mallet v Mallet (1984) 156 CLR 605.
In Aleksovski at paragraph 90 his Honour Kay J said:
The Judge must weigh up various areas of contribution. In a short marriage, significant weight might be given to a large capital contribution. In a long marriage, other factors often assume great significance and ought not be left almost unseen by eyes dazzled by the magnitude of recently acquired capital… What is important is to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship.
Those observations were quoted with approval by the Full Court in Dickons. In that case, at paragraph 21, their Honours, Bryant CJ, Faulks and Murphy JJ said that “…the requirements of the section are met by approaching the assessment of contributions holistically…”, by analysing the contributions of all types, and by reference to the particular circumstances of that particular relationship.
The assessment of contributions does not require “over-zealous” attention to the ascertainment of contributions, and the process of the Court as required by s 79 of the Act “…is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise” as set out in Dickons at paragraph 25.
In determining any application for property settlement, the Court is not embarking upon an arithmetical exercise but rather an examination of all the relevant factors set out in s 79(4). As noted by the Full Court in D & D[7]at paragraph 49:
… the task of the Court in proceedings under s 79 is not akin to an accounting exercise. The task is to examine the facts of each case carefully to decide what is appropriate and just and equitable in the circumstances. There cannot be expected to be a universal answer to that question on any given set of facts. It is of the essence of judicial discretion that different minds may comfortably arrive at different conclusions.
CONTRIBUTIONS IN THIS CASE
[7] D & D [2003] FamCA 473.
Initial contributions
The husband’s evidence is that at the commencement of the relationship he owned a property at P Street, Suburb Q (“the P Street, Suburb Q property”), subject to a mortgage of $505,000, a motor vehicle purchased in 2004 for $45,000, cash of approximately $30,000 and superannuation of approximately $40,000.
The wife’s evidence is she owned a property at R Street, Suburb S, with equity of approximately $92,000 in 2001, and a property at T Street, Suburb U, with equity of approximately $100,000 in 2001, as well as a motor vehicle and some superannuation.
Whilst the wife asserted that there was no evidence as to the value of the husband’s P Street, Suburb Q property at the commencement of the relationship, in the end her counsel conceded in final submissions that nothing should turn on the parties’ initial contributions.
Contributions during the relationship
As outlined above, at the commencement of the relationship the wife was a medical professional and the husband a medical professional.
In 2001 the wife commenced accredited training in health care. Between 2003 and 2006 she worked full-time as a medical professional. The wife says she successfully completed the first examination and the written component of the second examination, but was unable to complete the practical examination due to being unwell in the first trimester of her pregnancy. The husband says she failed the final exam. (I find that little turns on this particular dispute).
The wife ceased work in 2006, about four months before the birth of the parties’ first child. The wife says that although she intended to return to work, she became pregnant again towards the end of her maternity leave. It is common ground she has not worked since that time.
The year prior to the marriage the husband commenced his further studies, which he completed in 2006. During the marriage the husband worked in the health care system, ran an extensive private practice and had educator roles at University V and the University W. The husband said in cross-examination that his position was not only a requirement of his employment but would improve his position in the hospital system as well as augmenting his income. The husband ultimately became the head of Department at Z Hospital and was a member of the AB Authority, which included coordinating patient care.
During the marriage and up until the 2020 financial year the wife was allocated a salary from the husband’s practice and the parties benefited from the corresponding tax benefits of this arrangement.
It is common ground the husband worked long hours during the relationship. The wife says that during the week he would often not return home until 11.00 pm. The husband says this was more like 8.00 pm to 8.30 pm although at times it could be as late as 11.00 pm if he was completing a medical procedure. The husband also conceded working regularly on weekends, on one or two days, including hospital rounds. In addition, part of his role was to travel anywhere in New South Wales, at short notice, as part of the retrieval team for patients.
The husband’s own evidence is that he did not spend much time with the children on weekdays and that he saw them briefly before work in the morning and at night when he got home, though they were often already in bed or preparing for bed. He says that in order to spend more time with the children on the weekends, he would fit hospital rounds around the children’s activities. He says he had no hobbies of his own and was either at work or with the family. Despite this, he contends that he often did chores around the home including cooking meals, cleaning the house and ironing.
The wife sets out in her Trial affidavit with great particularity the matters she was responsible for as homemaker and primary carer of the children. The parties did not employ any outside help such as a nanny or a cleaner. The husband asserted in cross-examination that family help was available and it was the wife’s decision not to engage that help. However he conceded that there was no reference in his affidavit to any conversation where he suggested they had family help and that the wife should return to work or go and study.
Although the husband gave evidence that it was always the intention that the wife would return to her health care career and that he had encouraged the wife to seek employment, he conceded in cross-examination that he said the words attributed to him in paragraph 51 of the wife’s affidavit:
You are worth more to me at home. I don’t have to worry about the kids. I know you have it under control. By paying you a wage from my rooms, you can be tax-deductible and not have to pay for babysitting or a cleaner. I can concentrate at work and not have to worry about them.
It was put in submissions for the wife that not only did the husband concede this, but that it was common sense as it would have given him reassurance to be able to do his job without having to worry about what was happening in the home and I accept that.
Moreover, I find that as a consequence of the wife’s role as homemaker and carer of the children, the wife contributed to the substantial income earning capacity of the husband.
The wife also asserts that she made a significant contribution to the purchase of the property for the self-managed super fund in that she searched for properties, contacted agencies for information and inspected properties. Given the husband’s workload this is likely to be true.
Furthermore the wife says she was heavily involved in the renovation of the B Street, Suburb C property. The husband says that they both contributed to that renovation. Despite the husband denying that the wife was the first point of contact for the renovations or that she attended on-site four times a week, it also seems likely given the husband’s work commitments that the wife was primarily responsible for co-ordinating the renovations that took place.
The husband asserts his father physically contributed to the earlier renovation of a property in Suburb U but his father was not called to give evidence and no submissions were made that I ought to place any weight on this contribution.
On the evidence before me it appears that both parties fulfilled their roles to the best of their ability during the relationship and that their day to day contributions during the marriage should be seen as equal.
Additional capital contributions
At or around the time of the marriage the husband says his parents gifted the parties $10,000 and some gold sovereigns, and that the wife’s parents gave them $20,000.
The wife says that in 2006 and 2008 the wife’s parents gifted the parties $10,000 following the birth of each child. She says these funds were subsequently used to pay for renovations to a property the parties’ owned in Suburb K.
It is not in dispute that the wife’s parents gifted the following amounts:
·in late 2007 or early 2008 $940,000;
·in late 2012 or early 2013 $895,000;
·in May 2018 $100,000;
·in May 2018 $540,000; and
·in August 2018 $100,000.
It is also accepted that the $940,000 was placed in a term deposit and that the parties benefited from $40,000 by way of interest (subject to tax).
Moreover, the wife says she received $60,000 in shares from her paternal grandmother which were sold and the funds applied for the benefit of the family.
Whilst it is unclear whether the husband accepts some of the smaller amounts such as the gifts upon the birth of each child and the shares, it is evident that it is not disputed the wife’s family gifted her in excess of $2.5 million and that these funds were largely applied towards the purchase of real property and/or the expenses of the family.
Counsel for the wife made reference to the Full Court case of Pierce & Pierce[8] and urged the Court to consider the value of the wife’s contribution at the time of the gifts and in particular that the wife was able to pay the 20 per cent deposit on the B Street, Suburb C property.
[8] Pierce & Pierce (1998) 24 FamLR 377.
These gifts were clearly a substantial contribution by the wife which should be given significant weight. They must, however, still be assessed in the context of the myriad of other contributions made during the relationship and post-separation.
Post separation
Post-separation the wife has continued to be the primary carer of the children, indeed the sole carer since approximately June 2021. Her role in this respect has been made particularly more arduous due to the Covid-19 lockdowns during which she was responsible for keeping the children occupied as well as providing them with emotional support. Outside of lockdown the wife has been responsible for every aspect of their care, including collecting the children from school (noting they finish at different times) and taking them to all of their various activities. In doing so she has continued to enable the husband to build his career and to work the long hours seemingly required by his profession.
On the other hand the husband has paid all of the outgoings relating to the parties’ investment properties that were not otherwise covered by the rental income (until they were sold) as well as paying a substantial proportion of the wife’s and children’s expenses. These expenses include paying the mortgage as well as the reasonable maintenance and other outgoings on the home in which the wife and children reside. Moreover, the husband has paid for their private health insurance, medical and allied health expenses not covered by Medicare, mobile phone bills and the wife’s car expenses (including lease payments). The husband has also paid for the children’s private school fees and other associated costs (books, computers, musical instruments and the like), as well as the cost of the children’s activities.
It is my assessment that the parties’ post-separation contributions should also be seen as relatively equal.
Overall factoring in the myriad of contributions made by the parties over the course of the relationship, including the wife’s gifts received from her family, I have assessed that the wife should receive an adjustment in her favour of 57.5 per cent of the pool based on contributions.
Section 75 (2) Factors
Section 75(2)(a) Age and health of parties
The wife is 48 years of age and in good health.
The husband is 53 years of age and likewise in good health.
Section 75 (2)(b) Income, property and financial resources of the parties
The husband is paid a salary by the Z Hospital and by the University W. In addition, through his private practice, he receives fees from various sources including Medicare, private health insurance, the Department of Veterans Affairs and from patients directly. Whilst there was some dispute about the precise income of the husband, with there being a discrepancy between his 2021/2022 BAS statements and his 2021/2022 draft tax return, it is clear that the husband’s gross income is currently in excess of $1 million per year.
The husband’s evidence is that he has reached the ceiling of his income earning potential. There is no corroboration for this assertion but regardless his income is significant.
The wife, on the other hand, has not worked since 2006. She has a health care qualifications but is not currently registered as a medical professional. In order to become reregistered, her evidence, which does not appear to be in dispute, is that she would need to retrain and that this would take in the order of three to four years, longer if part-time. She may also have to work outside the metropolitan area for a minimum of six months and will then have to sit the health care examinations, in order to be qualified as a medical professional. The wife would then be commencing her health care career at 52 years of age (or older). The wife’s evidence is that to thereafter become a medical professional she would have to engage in five years of full-time training including rotational placements, possibly in rural New South Wales and that these may not be paid. During those years the husband is likely to continue earning a substantial income.
As the husband said himself under cross-examination:
The creation of a career in [health care] takes a significant amount of time. It’s not about you just qualify with a [health care degree] that all of a sudden you have a full clinic. You have to work for that.[9]
[9] Transcript of Proceedings, [SYC4713/2021 Petrellis & Petrellis] (Federal Circuit and Family Court of Australia, Judge Jenkins, 26 July 2022) p. 42.
Despite this, the husband asserted in evidence that many medical professionals earn more money than he does, although, these appeared to be entrepreneurs who ran their own practices employing other medical professionals.
Moreover, the husband claimed that the wife could find work which did not require health care registration, if she so chose. He pointed out that she is only 48 years of age, clearly intelligent and has a tertiary education. It was put to the wife she could perform roles such as an educator at a university or working as a medical professional or a health care professional. The wife said these positions required professional registration and/or were not remunerated. The wife ultimately produced documentary evidence to support this assertion, which after objection I have allowed into evidence. I am satisfied that these documents corroborate, at least with respect to the limited sample, what the wife says.
Nonetheless, it was submitted to the Court that the wife has simply not explored the option of employment in any meaningful way because she has the overarching attitude that the husband ought to pay all her expenses even if she receives a huge capital sum.
I accept that the flavour of the wife’s evidence was that she ought not to have to work until the children have finished their secondary education and that the husband should support the children without financial contribution from herself. It also appears the wife obtained the documentary evidence in wife’s Exhibit 5 with a view to refuting the husband’s assertions rather than through any desire to actually obtain employment.
Whilst the wife could potentially obtain some form of employment outside of her health care field or possibly even within it, albeit one that does not require registration as a medical professional, there is no evidence she would be capable of earning a comparable income to the husband without years of retraining and work experience. Even if I were to find the wife has the business knowledge and was otherwise capable of running a large health care practice and that this would earn her more money than the husband, it would still take her at least four years to obtain the base qualification.
I find that the husband’s income is likely to continue to far exceed that of the wife. I also accept the submission put on behalf of the wife, with reference to Clausen[10] and Best[11] that earning capacity is often one of the most valuable assets taken from the marriage.
[10] Clausen & Clausen (1995) FLR 9.
[11] Best (1993) FLC 92-418.
Leave entitlements
It was submitted for the wife that the Court should take into consideration the husband’s leave entitlements including sick leave, recreational leave, long service leave and accrued days off, calculated at $476,752, as a financial resource of the husband. It was common ground that the husband cannot cash in this leave until he ceases to work. It is also evident based on the husband’s Exhibit H4 that the human resources department of the Z Hospital began insisting as of May this year that the husband take leave due to the number of hours he has accrued.
It is the husband’s case, with reference to Gould[12] and Harrison,[13] that these leave entitlements are no more than income substitutes and that the Court should only consider them to be a financial resource in circumstances where a party is able to use that time for another purpose, such as a course of study, establishing a business or otherwise working.
[12] Gould (1995) FamCA 142.
[13] Harrison (1996) FamCA 12.
The wife’s case is that the husband is not excluded from private practice during any periods of leave from the hospital. It was submitted for the husband there is no evidence the husband would do anything other than enjoy a period of leave.
The determination of whether the leave should be treated as a financial resource turns on whether the husband is likely to use that time to work or study. I am not satisfied that despite his work history the husband will do anything other than take leave. Further to this, though he may receive a lump sum upon leaving his employment, this is contingent on the husband not using all of the leave during that time. As it is not possible to predict with any certainty how much will remain I cannot find that the leave constitutes a financial resource.
Section 75 (2)(c) Care of children under 18 years
The children aged 16 years and 14 years live with the wife and currently spend no time with the husband. Whilst the husband hopes to have a relationship with the children in the future, on the evidence before me this appears to be at this stage little more than a hope. He has spent limited time with the children since separation and no time since June 2021. The husband’s evidence is that he did not want to force the children to spend time with him against their wishes as this may have caused them disruption. In spite of this, his evidence was he had made extensive attempts to contact the wife in order to communicate with the children but that his calls had gone unanswered. He also evidences numerous text messages to the children which he says show his desire to spend time with the children. I accept that these texts show the husband attempted to reach out to the children, between June 2021 and March 2022. Sadly they also confirm that he has had no contact from them, even on special occasions or in response to gifts.
The wife says in her affidavit that she encouraged the husband to spend time with the children, that she suggested he attend their activities, that he come over to have dinner with them, that he take them to school in the morning and that he spend other days with them during school holidays. Despite this, she says he has not contacted her since June 2021 asking to spend time with them (though she does acknowledge that the husband contacted the children directly on their mobile phones). She says she encouraged both children to respond to the father’s communications but they have been adamant they did not want to see him.
I am unable to make a finding as to whether the husband did everything he could to foster his relationship with the children and/or the part, if any, the wife played in its demise. What is clear is that the husband has been unsuccessful to date and it did not appear to me that there was any concrete plan to improve the situation in the near future. Consequently it appears likely the wife will remain the predominant, if not the sole carer for the children.
Section 75 (2)(g) A standard of living that is reasonable under the circumstances
It is apparent that the parties had a particularly high standard of living during their relationship. For example, the husband says that during the marriage the parties travelled extensively overseas and that he purchased the wife approximately $400,000 worth of jewellery, as well as luxury brand handbags and shoes.
Nevertheless, I accept that the standard of living that is reasonable in all of the circumstances is not necessarily the same standard as that enjoyed during cohabitation. I also note that the standard of living does not have to be the same for both parties. However, the parties’ previous lifestyle is one which I take into consideration in this matter, especially in light of the husband’s ongoing disposable income.
Section 75 (2)(j) Contribution to the income, earning capacity and financial resource of the other
I have already factored in the wife’s contribution to the husband’s income and earning capacity under s .
Section 75 (2)(l) The need to protect the party who wishes to continue that role as a parent
The wife wishes to continue supporting the children, who she says are high achievers, including being able to assist them after school and on weekends. She says this is consistent with the parties’ mutual intention during the marriage. The husband concedes that it suited both parties during the marriage for the wife to remain home with the children and not work.
The wife sets out in her affidavit the extensive activities the children currently undertake during the week, as well as on weekends. She says these require the wife to either physically drive the children or to make other arrangements where not provided by the school.
Given the children currently have no desire to see the husband, the majority of this responsibility will remain with the wife and is likely to impact her ability to work or retrain other than on a part-time basis for the foreseeable future. Furthermore, retraining may not be practicable whilst she has the care of the children if it involves placements outside the metropolitan area.
In all of the circumstances of this case, I do not believe it would be reasonable to expect the wife to have to work, even part-time, whilst she has the full time care of the children. By mutual agreement she sacrificed her own career during the marriage and took on the role of primary carer. In my view, in light of the substantial income of the husband and the limited income the wife would likely earn in the short term, she ought to be able to continue that role, until the children finish school.
Section 75 (2)(o) Any fact or circumstance the justice of the case requires to be taken into account
Post-separation transactions
The wife asserts that in breach of an injunction made pursuant to interim consent orders of this Court dated 21 October 2021 (“the interim orders”), the husband withdrew $25,883.72 on 3 May 2022 and $884 on 9 May 2022. The husband says he transferred these funds between accounts to reduce the interest on the liabilities across their portfolio.
In addition the wife asserts the husband failed to meet loan repayments pursuant to the interim orders which increased the loan on the parties’ investment property at Suburb L Property by $49,562.70 and on the NAB loan account by $18,663.90. The husband appears to concede in his affidavit that he did not pay the shortfall between the rent and the mortgage.
The wife did not seek that these amounts be added back to the pool. However the question remains as to whether it should be taken into account in any other way. In all of the circumstances of this case, and in particular the relatively minor nature of the amounts in question I am not going to make an additional adjustment to the pool based on this factor.
Section 75(2)(na) Support of the children
The husband has always met his obligations to pay child support as well as providing substantial additional financial support for the children.
ANALYSIS
Taking into consideration all of the s 75(2) factors I find the wife should receive an additional property adjustment. However the Court must assess the weight to be given to those factors in light of the adjustment already provided by way of contributions and ultimately must stand back and consider the practical effect of any percentage division, to determine whether such an outcome would be just and equitable.
Having already determined the wife should receive a 7.5 per cent adjustment on contributions, this would result in division of the non-superannuation assets to the wife of $8,084,748.98. These are funds which the wife can invest to generate income and which will to some degree reduce the income earning differential between the parties. Despite this, there will still remain a disparity. Based on this and the other s75 (2) factors to which I have already referred I determine the wife should receive an additional 5 per cent adjustment in her favour.
The wife will therefore receive 62.5 per cent of the non-superannuation pool, which equates to $8,787,770.63. This will leave the husband with $5,272,662.38 of non-superannuation assets, providing a differential of $3,515,108.25. On top of this it is agreed that each party will retain their member entitlements in the parties’ self-managed super fund. The husband’s current entitlement in the fund is $653,600, being 63.8 per cent of the fund. The wife’s entitlement of $370,185 represents 36.2 per cent of the fund. Thus, the husband will have an additional $283,415 by way of superannuation over the wife. For all these reasons, and in all of the circumstances of this case I am satisfied that a division to the wife of the non-superannuation pool of 62.5 per cent and a division of the superannuation pool of 36.2 per cent, being 60.7 per cent of the total pool, would result in a just and equitable division of the assets between the parties.
OTHER ORDERS
The parties both propose the B Street, Suburb C property be sold but disagree on the timeline for the sale. There was no evidence that any significant works need to be carried out on the property to prepare it for sale or that there is any other basis on which to delay. As such I will order that the property be placed on the market within 30 days.
For completion I note the parties have agreed that the wine collection shall be divided equally.
In regards to the superannuation, the parties both agree the wife should receive her membership entitlement however the fund is currently made up of a real property and there are no liquid funds from which to pay the wife her member entitlements.
The husband wishes to retain the property in the superannuation fund and seeks time to obtain the means to pay out the wife. The wife resists this on the basis that the husband has no plan before the Court as to how he will be legally able to do so. The wife says that as a director of the trustee company of the superannuation fund she is liable for any actions the husband takes that may cause the fund to become non-compliant. The wife’s case is that the husband has had ample time to put evidence before the Court of any proposed plan and he has chosen not to do so.
Ordinarily if one party wants to retain a property and there is no prejudice to the other party, it would often be appropriate to give that party an opportunity to do so. However in this case, where the wife may end up being jointly responsible for a non-compliant fund or where the parties may end up in dispute about the course of action required to ensure compliance, I propose to order that the real property within the self-managed superannuation fund be sold forthwith.
SPOUSAL MAINTENANCE
The interim orders provide for the husband to pay on behalf of the wife by way of spousal maintenance:
(i)All outgoings on the B Street, Suburb C property including the mortgage;
(ii)Private health insurance for the wife; and
(iii)The car expenses for the Motor Vehicle 1 driven by the wife.
Pending the sale of the B Street, Suburb C property, the wife seeks by way of spousal maintenance, orders in similar terms to the interim orders (with some slight but inconsequential variations) as well as a periodic payment of $1,775 per week.
RELEVANT LAW
The right of a party to a marriage to spousal maintenance is found in ss 72 and 74(1) of the Act.
Section 72 of the Act states as follows:
72 Right of spouse to maintenance
(1)A party to a marriage is liable to maintain the other party, to the extent that the first‑mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
In Bevan[14] the Full Court outlined the four general principles that an award of spousal maintenance requires:
(1)A threshold finding under s 72;
(2)Consideration of s 74 and 75(2);
(3)No fettering principle that pre-separation standard of living must automatically be awarded where the respondent’s means permit; and
(4)Discretion exercised in accordance with the provisions of s 74, with “reasonableness in the circumstances” as the guiding principle.
[14] Bevan & Bevan [1993] FamCA 95.
I accept, as submitted for the wife, that the test involves a 4 step process as set out in Ms & PS[15] namely:
(i)Can the applicant support themselves adequately?
(ii)If not, what are the applicant’s reasonable needs?
(iii)What capacity does the respondent have to meet those needs?
(iv)What order is reasonable, having regard to s 75(2) of the Act?
[15] MS & PS (2006) FLC 93-268.
I have already made findings about the reasonableness of expecting the wife to immediately obtain employment in all of the circumstances of this case.
This aside, it was put to the wife in the witness box that she has the capacity to meet her own expenses, without any further weekly payment, because she has been able to do so to date without reducing her savings. However it became apparent during the wife’s cross-examination that she had been living off the lump sum payment of $74,000 paid to her pursuant to the interim orders (“the lump sum”).
Consequently, it was argued for the husband that the wife has the remainder of the lump sum still available to her (being approximately $33,000 at the time of trial) and thus has not established a need for additional payments by the husband.
The wife’s counsel submitted that the order sought by the wife was for a limited period and thus akin to an interim order and therefore she ought not to be required to live off capital.
To the extent that an order for spousal maintenance is ever really final in the true sense, given it can always be varied or converted to a lump sum order, my order is being made as a final order. In keeping with this, I will consider whether the lump sum is likely to be sufficient to meet the wife’s needs until the settlement of the B Street, Suburb C property. In order to determine this I must endeavour to quantify those needs.
The husband’s position is that the wife’s application for spousal maintenance be entirely dismissed.
On the wife’s financial statement her total weekly expenses (excluding those of the children) exceed $5,000 per week. If the wife were required to pay all of those expenses from the lump sum it is unlikely to cover the period until the settlement of the B Street, Suburb C property.
It is not in dispute that the husband has the capacity to meet the expenses ordered to be paid pursuant to the interim orders. The wife clearly does not have the capacity to meet those expenses until the settlement of the B Street, Suburb C property. As already noted in this judgment, once that property settles the wife will be able to structure her affairs such that she will not have a mortgage and/or will have investment income.
Accordingly I am going to order the husband continue to make the payments currently ordered pursuant to the interim orders, save that the orders will be in accordance with the orders proposed by the wife.
On this point I observe that there are a number of expenses currently paid pursuant to the interim orders by way of spousal maintenance which are arguably children’s expenses. However given in some cases they are expenses the wife may have had to pay anyway, and as neither party raised this with the Court, I have determined that the final order for spousal maintenance should continue to cover these costs.
I will now consider whether the husband should pay the wife an additional weekly payment.
The wife’s financial statement was amended by the wife in her evidence in chief. The wife’s medical expenses were reduced to $150, her shoe repairs down to about $4 or $5 and the land tax was removed. The effect of this was to reduce the wife’s weekly expenses from $1,990 to approximately $1,576 per week. Removing the expenses from Part N of the wife’s financial statement, that the husband will otherwise be ordered to pay, I find the wife’s weekly expenses to be as follows:
Food $133
Household supplies $66
Petrol $30
Fares $8
Clothing and shoes $259
Medical $150
Entertainment and hobbies $70
Holidays $192
Chemist $15
Cleaning $75
Repairs (furnishings and appliances) $40
Dry cleaning $4
Books and magazines $20
Gifts $15
Hairdressing and toiletries $100
Shoe repairs $4
Family counselling $180
Total $1361Given the wife gave evidence that some of the repairs were one off costs and that she had employed a cleaner because she had been recovering from an operation I assess her reasonable weekly costs to be $1,300.00.
Taking into consideration all of the factors in s 75(2) I do not propose to order the husband pay the wife an additional weekly payment. The wife ought to be able to meet those costs (which I have assessed as $1,300 per week) from the remainder of the lump sum (being approximately $33,000). This should allow her ample funds to cover the period leading up to the settlement of the B Street, Suburb C property.
CHILD SUPPORT DEPARTURE
The wife seeks the Court make an order departing from the child support assessment.
The husband is currently assessed by the Child Support Agency to pay $777.64 per week for both children.
The wife seeks a departure from this assessment in the amount of $2,531 per week, being $1,265.50 per child (increased yearly by CPI).
Division 4 of Part 7 of the Child Support (Assessment) Act 1989 (Cth) (“the CSA Act”) deals with orders for departure from the administrative assessment.
The wife seeks an order pursuant to s 116 of the CSA Act for an order under this division in the special circumstances of the case.
The definition of the special circumstances of the case was considered In the Marriage of Gyselman[16] (“Gyselman”).
Whilst it is not possible to define with precision the meaning of that term, as agenerality, it is intended to emphasize that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases. In Savery’s case (p 77,897), Kay J, adopting the view in Philippe and Philippe (1978) FLC 90–433 at p 77,202 in a different context, said that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”.
[16] In the Marriage of Gyselman [1991] FamCA 93.
The wife’s case was that the special circumstances were three fold:
(i)Due to the husband’s income and his ability to structure his affairs to minimise taxation;
(ii)The parties were engaged in complex property proceedings, requiring the Court to conduct a detailed exploration of their financial affairs; and
(iii)Should the Court not deal with the issue the parties were likely to end up pursuing the issue in a different forum, resulting in further proceedings and costs.
I accept the arguments put forward by the wife and am satisfied that it is in the parties’ interests that this issue be determined as part of these proceedings.
The Full Court in Gyselman at paragraphs 162-163 set out the procedure to be followed when considering an application for departure from an administrative assessment of child support. That procedure requires a three-step process namely:
(i)Whether one or more grounds of departure in s 117(2) of the CSA Act is established;
(ii)Whether it is “just and equitable” within the meaning of s 117(4) of the CSA Act to make a particular order; and
(iii)Whether it is “otherwise proper” within the meaning of s 117(5) of the CSA Act to make a particular order.
Section 117(2) of the CSA Act sets out the grounds for a departure order. The Court must be persuaded the applicant has established the existence of one of those grounds.
The wife seeks to rely upon the ground under s 117(2)(c) of the CSA Act namely:
117 Matters as to which court must be satisfied before making order
(c)that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
(ia)because of the income, property and financial resources of either parent; or
(ib) because of the earning capacity of either parent.
The primary basis for this ground was the high income of the husband and that the wife has no current earning capacity and should not be required to retrain until the children are over 18 years.
I find that the husband’s significant income and his ability to structure his finances for taxation purposes does constitute an exceptional circumstance such as to justify the making of a departure order. The application of the administrative assessment in those circumstances would result in an unjust and inequitable determination of the level of support the husband was to provide for the children.
ORDERS WHICH ARE “JUST AND EQUITABLE” AND “OTHERWISE PROPER”
As I am satisfied a ground for departure exists, I must now consider whether it is just and equitable and whether it is otherwise proper to make a particular order.
In Hallinan & Witynski[17] the Full Court said that the reasons for answering these two questions posed by s 117(1)(b)(ii) need not be elaborate but that a necessary part of the exercise of discretion imposed on the Court, is to consider at least broadly the matters referred to in s 117(4) and 117(5) respectively and then make a finding as to satisfaction or otherwise in relation to the relevant matter.
[17]Hallinan & Witynski[1999] FamCA 1127
In considering whether it is “just and equitable” within the meaning of s 117(4) to make a particular order, the Court is required to undertake the task of considering the matters set out in paragraphs (a) to (g) of that subsection, noting that the Court is not required to “slavishly go through” each of the paragraphs.[18]
[18] In the Marriage of Gyselman [1991] FamCA 93
In considering what order is to be made I have had regard to each of the factors under s 117(4), although I may not refer to each specifically. I note further that a number of the factors have already been canvassed in this judgment. In particular I have factored in the income, earning capacity, expenses, property and financial resources of each party - noting the adjustment of property which is to follow from these orders. I have also factored in the needs and expenses of the children as well as any hardship they would suffer.
It did not appear to be in dispute that the husband had significant excess income after expenses.
It is clear in the husband’s financial statement that he has an excess of approximately $1,826 per week after expenses, including meeting his obligations pursuant to the interim orders. Moreover, under cross examination he conceded that based on his draft 2022 tax return his income had increased by $368 per week.
The husband also conceded that after the sale of the B Street, Suburb C property his expenses will be reduced and he will have excess income above expenses in the vicinity of $5,000 per week.
There is no dispute the husband will continue to meet the children’s school, extracurricular and health expenses, just whether an order should be made in regard to same.
The wife sets out in her financial statement the children’s expenses, after those payments. The husband took issue with those calculations pointing out that some expenses were formulaic, others were estimates and others based on past years. In short, it was argued that they did not represent actual costs of the children, especially given it is unknown where they will be living and the costs associated with their new housing. It was also argued out that the wife had included one off costs such as for a cleaner when she was unwell (though she may need this again if she returns to work) and for one off repairs to the home.
It was submitted on the husband’s behalf that the child support assessment was better able to take into consideration the children’s changing circumstances and actual costs and that there was no danger the children would end up suffering any hardship.
Counsel for the wife argued that uncertainty of actual costs apply in every application of this nature and that the task is not to make an order that reflects actual costs but for what is accepted to be the reasonable needs of the children having regard to the standard of living in which they resided.
I accept the argument put for the wife that the costs do not need to represent the actual costs of the children. I also find that the wife used her best endeavours to provide accurate estimates, based on receipts and costs of previous years and that the figures put by the wife are reasonable given the standard of living of the parties.
In looking at Part N the total of the children’s expenses each week is currently $4,075. Upon removing the education expenses of $1,589, which on either party’s case the husband proposes to pay, the figure is reduced to $2,486. In regard to the remaining expenses the wife conceded that there were a number of one off house repairs and that the cleaner had been hired whilst she was recovering from surgery. If the costs of house repairs and cleaning were entirely removed this would bring the costs of the children down to $2,150 however allowing a small amount for those expenses, I find that the reasonable weekly costs of both children, outside of those already to be paid by the husband, amount to $2,200 per week.
In regard to what orders would be “otherwise proper”, I accept the argument for the husband that it is the primary duty of each of the parents in s 117 (5)(a) of the CSA Act to maintain a child. I find that upon the division of property in this matter the wife will have capacity to structure her financial affairs so that she can contribute to these costs.
In all of the circumstances I find that the order which is just and equitable and otherwise proper is that the parties share equally in the children’s weekly expenses of $2,200. To give effect to this the husband shall be ordered to pay by way of child support the sum of $550 per child per week to be adjusted for CPI.
I also find that in all of the circumstances of this case, including as already discussed that the order for spousal maintenance that I am making may cover some of the children’s expenses pending the sale of the B Street, Suburb C property and given the property will be on the market within 30 days, that it would be just and equitable and otherwise proper to commence the departure order upon the settlement of B Street, Suburb C.
NON-PERIODIC CHILD SUPPORT
X and Y attend G School. Y is in receipt of a full scholarship for his fees. The children appear to be talented and driven children who have a broad interest in a range of extracurricular activities. The husband currently pays the children’s school fees and costs included on school invoice and other expenses in accordance with the interim orders.
The husband says he will continue to pay the school fees and related costs, health insurance and medical costs and the costs of the children’s mobile phones; however he resists an order being made.
The husband is prepared to offer the Court an undertaking to make these payments and in such circumstances says an order is not justified.
Division 5 of Part 7 of the CSA Act provides for jurisdiction to make an order for non-periodic child support. It is a discretionary exercise.
Section 124(1)(b) of the CSA Act sets out that the Court may make an order that the liable parent provide child support for the child otherwise than in the form of periodic amounts; s 124 (1)(b) provides that the Court may make such an order if satisfied it would be:
(i) Just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(ii) Otherwise proper.
In determining the application the Court must have regard to the factors outlined under s 124(2) of the CSA Act. These include the administrative assessment in force, any departure determinations and whether the carer entitled to child support is in receipt of an income tested pension, allowance or benefit or whether the circumstances of the carer are such that taking into account the effect of the order proposed to be made by the Court, the carer would be unable to support himself or herself without an income tested pension, allowance or benefit.
In determining whether it would be just and equitable to make an order, the Court must have regard to the matters mentioned in subsections 117(4), (6), (7), (7A) and (8) of the CSA Act.
Under s 125(1) of the CSA Act, if the Court makes an order under s 124 the Court must state in the order whether the annual rate of child support payable by the liable parent under any relevant administrative assessment is to be reduced.
Conclusion ABOUT NON-PERIODIC CHILD SUPPORT
It was not in dispute that the husband has been meeting all of the children’s educational, extracurricular and health costs as well as paying for their phones and the like, pursuant to the interim orders and his evidence was clear that it was his intention to continue to do so.
The husband was seemingly offended at the notion that there needed to be an order. He was nevertheless prepared to give an undertaking to this effect.
Counsel for the wife argued that in the circumstances where the husband was agreeing to meet the costs there was no prejudice to him to make such an order.
Counsel for the husband submitted that whether or not there was prejudice to the husband was irrelevant. He was prepared to give an undertaking and this could be enforced in the same manner as an order.
Counsel for the wife argued that an undertaking cannot be enforced in the same way as an order and relied upon the authority of Thomson Australian Holdings Pty Ltd v The Trade Practices Commission.[19]
[19] Thomson Australian Holdings Pty Ltd v The Trade Practices Commission (1980) 148 CLR 150.
In my view if there is no difference between an undertaking and an order then the husband should take no issue with an order. In any event, given the level of disputation in this case, I propose to make such an order to ensure absolute certainty.
The husband does not propose to continue to pay for the children’s streaming services. I was not specifically addressed on why the husband should or should not pay for such services but these appear to be discretionary costs that the wife will have the capacity to pay and therefore they shall be excluded.
Finally, each party has presented the Court with a Minute of Proposed Orders. Where the parties seek similar orders but have not addressed the Court on the particular wording I have assumed the parties have no preference for the form of order.
For all of the foregoing reasons, I make the orders as are set out.
I certify that the preceding one hundred and eighty (180) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Jenkins. Associate:
Dated: 28 October 2022
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