Pilar & Pilar
[2024] FedCFamC1F 76
•19 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Pilar & Pilar [2024] FedCFamC1F 76
File number(s): ROC 389 of 2022 Judgment of: JARRETT J Date of judgment: 19 February 2024 Catchwords: FAMILY LAW – PARENTING – Where agreed that children should relocate with applicant to the United Kingdom – Dispute as to frequency children return to Australia to spend time with respondent
FAMILY LAW – PROPERTY – Add-back of unexplained expenditure of joint savings – Onus of proof for add-back arguments
Legislation: Family Law Act 1975 (Cth) ss 65D, 75(2), 79(2), 90XT(1)(a)
Family Law (Superannuation) Regulations 2001 (Cth)
Superannuation Industry (Superannuation) Regulations 1994 (Cth)
Cases cited: Barrett & Winnie (2022) 66 Fam LR 523
Trevi & Trevi [2018] FamCAFC 173
Zao & Lee [2023] FedCFamC1A 232
Division: Division 1 First Instance Number of paragraphs: 32 Date of hearing: 5 & 6 February 2024 Place: Brisbane Counsel for the Applicant: Ms Chesterman Solicitor for the Applicant: V.A.J. Byrne & Associates Solicitor for the Respondent: Litigant in person Counsel for the Independent Children’s Lawyer: Ms Pendergast Solicitor for the Independent Children’s Lawyer: Swanwick Murray Roche Lawyers ORDERS
ROC 389 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS PILAR
Applicant
AND: MR PILAR
Respondent
INDEPENDENT CHILDREN'S LAWYER
ORDER MADE BY:
JARRETT J
DATE OF ORDER:
19 JANUARY 2024
BY CONSENT THE COURT ORDERS THAT:
1.The applicant and the respondent have equal shared parental responsibility for decisions concerning the major long-term issues for the children X born 2013, Z born 2019 and Y born 2016.
2.The children shall live with the applicant.
3.The applicant is permitted to relocate to the United Kingdom at the time of her choosing upon the completion of order 4.
4.The children shall spend time with the respondent as agreed, and failing agreement, from 3:00pm on 29 March, 2024 to 9:00am on 19 April, 2024.
5.The children shall communicate with the party they are not otherwise spending time with:
(a)each Wednesday at 7:00am United Kingdom time;
(b)each Sunday at 10:00am United Kingdom time; and
(c)at all times reasonably requested by them;
with the party who does not have care of the children to instigate the call and the party with care of the children to ensure they are available to receive the call.
6.The respondent is restrained and an injunction hereby issues restraining the respondent from taking steps to establish a Passenger Analysis Clearance and Evacuation System Alert (PACE Alert) preventing the children from leaving Australia on their United Kingdom passports, specifically:
(a)passport number … for X born 2013;
(b)passport number … for Z born 2019; and
(c)passport number … for Y born 2016.
7.The applicant and respondent shall keep each other informed at all times of:
(a)their residential address, home telephone number and mobile telephone number and shall notify the other in writing of any change within 72 hours of that change;
(b)any medical emergency or major illness involving the children that occurs during periods when the children are residing with each of them.
8.This order shall act as an authority for schools that the children may attend from time to time to provide each of the parties will all information relating to the children’s progress at school, including school reports, newsletters and photographs.
9.This order shall act as an authority to the children’s medical and dental providers to discuss with either party the care, welfare, treatment and development of the children.
10.Neither party shall denigrate the other or their household either directly to or in the presence of the children nor allow any other person to do so.
PURSUANT TO S 65D OF THE FAMILY LAW ACT 1975 (CTH) THE COURT FURTHER ORDERS THAT:
11.In addition to the time provided for in order 4 hereof, the children shall spend time with the respondent as agreed, and failing agreement, as follows:
(a)commencing in 2026 and every second year thereafter, in Australia for the first two weeks of the children’s United Kingdom summer holidays;
(b)in the event the respondent travels to the United Kingdom, for two weeks on no more than four occasions each year.
12.For the purposes of order 4, the respondent shall provide the applicant with notice that he intends to exercise time with the children in either Australia or the United Kingdom with such notice to also include:
(a)a copy of the travel itineraries;
(b)details of travel arrangements; and
(c)contact details of where the children can be contacted throughout the period of travel;
no less than eight weeks prior to the date of intended travel.
13.The respondent shall be solely responsible for the costs of the children’s travel to and from Australia in 2026, and thereafter the parties share the costs of travel equally.
PURSUANT TO S 79(2) OF THE FAMILY LAW ACT 1975 (CTH), THE COURT FURTHER ORDERS THAT:
14.In accordance with s 90XT(1)(a) of the Family Law Act 1975 (Cth), whenever a splitable payment becomes payable in respect of the interest of the respondent in the Superannuation Fund 1 Trust, Superannuation Fund 1, the applicant is entitled to be paid the amount (if any) calculated in accordance with Part 6 of the Family Law Superannuation) Regulations 2001 (Cth), using a base amount of thirty thousand dollars ($30,000) and there shall be a corresponding reduction in the entitlement of the respondent to whom the splitable payment would have been made, but for these orders.
15.Order 14 hereof has effect from the operative time.
16.The operative time of these orders shall be the beginning of the fourth business day after the day on which a certified sealed copy of these orders is served on the Trustee.
17.Having been afforded procedural fairness in relation to the making of this order, orders 14 to 16 and order 18 bind the Trustee of Superannuation Fund 1.
18.The Trustee of Superannuation Fund 1, the applicant and respondent, in accordance with the obligations set out under the Family Law Act 1975 (Cth), the Family Law (Superannuation) Regulations 2001 (Cth) and the Superannuation Industry (Superannuation) Regulations 1994 (Cth) shall do all acts and things and sign all such documents as may be necessary to calculate the entitlement of, and make payment to, the applicant in accordance with these orders.
19.The proceeds held in the V.A.J. Byrne & Co Lawyers Trust Account be paid in the following manner and priority:
(a)an amount of $120,000 to be held in the V.A.J. Byrne and Co Lawyers Trust Account for the payment of capital gains tax associated with the sale of B Pty Ltd, and once the liability for capital gains tax is settled, the balance, if any, to the respondent;
(b)the amount of $313,958.51 to the applicant;
(c)the amount of $34,585.03 to the applicant and for that purpose such payment shall be deemed by the parties as total satisfaction of the respondent’s outstanding child support debt and the parties shall do all acts necessary to notify the Child Support Agency that such debt has been paid, including providing to the Child Support Agency a copy of these orders;
(d)the balance to the respondent.
20.The parties otherwise retain all assets, liabilities and financial resources in their sole name.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JARRETT J:
This is an application for parenting and property adjustment orders. The parenting orders relate to three children: X, age 10, Y, age 7, and Z, age 5. The applicant is their mother and the respondent is their father.
Insofar as the parenting orders are concerned, though the proceedings were commenced in April, 2022 and the parties have been in furious dispute since then, by the conclusion of the trial the parties were agreed in almost all respects. It was agreed that the children should live with the applicant and that she should be permitted to relocate their residence to the United Kingdom. It was agreed that the children should communicate with the respondent regularly and spend time with him in Australia and the United Kingdom. However, how frequently the children should return to Australia and who should pay for their flights was not agreed. It was agreed that there should be an order for equal shared parental responsibility.
In the property aspect of the proceedings, contributions and adjustments for s 75(2) were agreed. The only matter not agreed was the value of the property pool, in particular, whether money should be notionally “added back” to the property pool.
PARENTING
The applicant and the independent children’s lawyer sought that the children return to Australia every second year for two weeks to spend time with the respondent. They also sought that in the event the respondent travelled to the United Kingdom, the children spend two weeks with him on no more than four occasions per year.
The respondent sought that the children return to Australia once per year in the July and August United Kingdom summer holidays for a period of four weeks.
The independent children’s lawyer filed a family report authored by Ms C, a psychologist and family consultant. At the time the report was written, whether the applicant should be permitted to relocate to the United Kingdom was still a live issue, but by the conclusion of the trial the respondent conceded the applicant should be permitted to relocate. Ms C recommended, should the applicant be permitted to relocate, the court make an order that the children return to Australia once per year for a minimum of two weeks to spend time with the respondent.
The basis for that recommendation by Ms C was not entirely clear from the body of her report. Unfortunately, Ms C was not cross-examined on this issue (nor any issue of relevance to what I have to decide).
The applicant’s evidence was that the cost of flights would be prohibitively expensive if the children were travelling to Australia once per year and that they will soon have to pay adult fares. This was curious in light of the fact that she sought an order that the respondent be solely responsible for the children’s travel costs.
Initially, the respondent sought an order that the children travel to Australia during their Christmas school holidays. He sought an order that they spend two weeks with him and his family here. The evidence showed that the schooling arrangements are different in the United Kingdom to those in Australia and the Christmas school holidays are only 2 weeks long. To spend all of that time in Australia would mean that the children would miss schooling, travelling back and forth. It was suggested that he should travel to the United Kingdom for that period. The respondent accepted under cross-examination that he has extended family in the United Kingdom and that he could visit them if he was travelling there, though could not stay with them for extended periods. His evidence was that Christmas time would not be as special for the children if he was staying in a hotel. However, by the time he made his submissions, the respondent accepted that his orders for the children’s Christmas travel would not be in their best interests. Instead and consistent with the orders suggested by the applicant and the independent children’s lawyer, the respondent accepted that travel to Australia should occur during the children’s long summer school holidays in June and July each year.
Whether an order is made for the children to return to Australia once per year or once every two years and the respondent travels to the United Kingdom to spend time with them, they will have the same benefit of a meaningful relationship with him over that time. Really, what is left for me to decide is which of the two proposals will create the least practical difficulty and expense of the children spending time with the respondent.
The proposal of the applicant and the independent children’s lawyer will create the least practical difficulty and expense. The children will be spending less time, and incurring less cost, on international flights. There was some evidence that given the present age of the children, they may require an accompanying parent on each flight, which will increase the expense.
Additionally, travelling to Australia during the long summer holidays each year has the potential to impact upon the children’s social networks and their ability to develop and maintain friendships and other important relationships outside of school term time. School holiday times are important for children.
Having regard to those matters, I have concluded that it will be in the children’s best interests for them to return to Australia every second year. In that way the impost, both financial and otherwise, on the children will be lessened and they will have the opportunity of enjoying the long summer holidays in the United Kingdom, uninterrupted by travel to Australia, every alternate year. The respondent will be at liberty to travel to the United Kingdom up to four times per year for the children to spend time with him, including that period should he choose to take that up.
In reaching this decision, I have taken into account the children’s relationships with the respondent’s new partner, Ms D and her children, E and F. The respondent re-partnered with Ms D in mid-2021. E and F are in Ms D’s care every other weekend and half school holidays. There was nothing in the evidence of Ms C that suggested that the nature and extent of the children’s relationships with Ms D or her children should inform either where the children should reside (the United Kingdom or Australia) or how much time they should spend with the respondent.
There was also a dispute as to who should pay for the children’s flights. The applicant sought that the respondent pays the costs, whereas the respondent sought that they be split equally between the parties. The main basis for the applicant’s contention was her lesser capacity to pay than the respondent. Given the children will only be travelling to Australia each second year, those costs will be lowered. The respondent will also be responsible for his own flights as well as any accommodation costs for when he stays in the United Kingdom. He gave evidence that if the applicant was unable to continue to afford her half share of the flights, he would pay for the children to fly over if he could afford it. That eliminates the worst risk of an order that the costs be shared, being that the children would be unable to spend time with the respondent if the applicant could not afford to pay half their flights.
The applicant’s alternate position was that the flight costs should be solely borne by the respondent for the first 3 or 5 years, after which they should be shared. That is an attractive proposal given that it gives the applicant some time to obtain paid employment. Three years would only cover the first visit of the children to Australia being in 2026. I consider this order to be the most appropriate in the circumstances. There will be an order in terms that the costs of the children’s travel to Australia be borne solely by the respondent until 2027 and thereafter they shall be shared equally.
By the end of the trial, the independent children’s lawyer proposed making no order about whether the children should be accompanied on their international flights but leaving it up to airline policy. That position was put to the parties to which each agreed. An order in those terms will follow.
Finally, the respondent sought an order that the children not be left unsupervised with the applicant’s mother. That was based on what the respondent said was the applicant’s admission that her mother suffered from alcoholism. But, the evidence did not take it so far. The evidence was that the applicant told Ms C her mother turned into an alcoholic as a way of coping with the distress of some difficult teenage years. There was no evidence that the applicant’s mother was still an alcoholic or posed any risk to these children, or that the applicant would allow them to come into harm’s way if her mother truly was a risk. In fact, the evidence was that the applicant had in the past acted proactively and protectively in removing the children from potentially harmful situations. The order proposed by the respondent is unnecessary.
PROPERTY
The only disagreement left in relation to property was the identification and value of the property of the parties. A balance sheet was handed up to me, marked Exhibit 3 in these proceedings. I took the respondent through the balance sheet to identify where there were disagreements.
The applicant asserted the respondent held sporting equipment worth $3,000 and sporting technology worth the same amount. The respondent agreed he held those items, but asserted their value to be about $800 each. It was incumbent on the respondent to provide valuation evidence for these items if their value was in dispute. He did not do so. I therefore accept the applicant’s value for these items. It seems that their value had been agreed at $3,000 each earlier in the proceedings and the respondent’s disagreement now came as a surprise to the applicant.
The respondent made an admission against interest as to the value of his superannuation during submissions. I accept that admission such that the value of his superannuation (an accumulation interest) is $61,000.
The submissions about the notional add back and the respondent’s credit card debt were along the same lines, so I will deal with them together.
It was accepted that at the time of separation, the parties had a joint bank account with a balance of $140,000.43. There were several dividends from the respondent’s B Pty Ltd business deposited into the account shortly thereafter, for a total of $183,722. The respondent produced a table in his affidavit explaining some $133,000 of these expenses. His broad claim was that they were spent on living expenses. He was questioned about why he spent savings on living expenses in excess of his salary and his evidence was that he had bills he could not afford through his salary.
The applicant submitted that these expenses fell within the second category of notional addbacks as set out in Trevi & Trevi [2018] FamCAFC 173, being a premature distribution of matrimonial assets. Of course, a premature distribution of matrimonial assets does not itself constitute a reason for an amount to be notionally added back to the property pool, it is the reason for the dissipation of assets that is of critical importance: Zao & Lee [2023] FedCFamC1A 232 at [13].
The applicant took me to Barrett & Winnie (2022) 66 Fam LR 523, in which the Full Court of the Federal Circuit and Family Court of Australia (Division 1) accepted that it fell to the party who had benefited from a premature distribution to explain how funds had been applied, and that a failure to provide a satisfactory explanation could result in funds being notionally added back. In that sense an argument that funds have been prematurely distributed under the second limb of Trevi can be understood to have two components: first, a requirement that there has been premature distribution of assets that would be otherwise available for distribution between the parties, for which the legal onus falls on the party seeking to have the funds added back, and second, a requirement that the funds have not been utilised on ordinary living expenses or other reasonable expenditure, for which the legal onus falls on the party resisting the add-back of the funds.
The respondent’s explanation for some of the expenditure was satisfactory. In fact, the applicant accepted that some $87,000 should not be added back, but contended for a figure of $97,000. The problem for the applicant is that the respondent gave a satisfactory explanation of significant amounts of expenditure, which explanation survived cross-examination. The respondent also demonstrated that the applicant had also accessed joint funds in that time. He provided a list of items upon which the applicant had expended money and under cross‑examination he asserted that other of the expenses may have been attributable to the applicant. If that were so, it would be unjust to visit the entirety of the add-back upon the respondent. The onus then shifted back to the applicant to establish which expenditure the respondent was responsible for and why it was unreasonable in light of his explanation. The applicant failed to establish her case in that respect, save for the $20,000 the respondent admitted he gave to his new partner to spend on surgery. I have included the sum of $20,000 as an “add back”.
Similarly for the respondent’s credit card debt, he gave an explanation that it was spent on living expenses which was not successfully challenged in cross-examination. He also admitted in submissions that the amount owing on this credit card was only $9,951 whereas his unchallenged evidence was that at the date of separation the amount owing was $8,289.64, a relatively minor difference.
I therefore find that the assets, liabilities and financial resources as at the date of the trial were as follows:
Item Value Held by ASSETS Funds held on trust $560,891.35 Joint Sporting equipment $3,000.00 Respondent Sporting technology $3,000.00 Respondent Motor Vehicle 1 $48,000.00 Respondent Motor Vehicle 2 $5,000.00 Applicant Total $619,891.35 ADDBACKS Money expended on partner’s surgery $20,000.00 Respondent LIABILITIES Third party loans $1,027.25 Applicant Westpac loan $36,976.17 Respondent Estimated capital gains tax owing on sale of business $120,000.00 Respondent G Finance liability $1,845.43 Applicant Westpac credit card $926.17 Applicant H Finance liability $1,577.71 Applicant Credit card $9,951.00 Respondent TOTAL $172.303.73 FINANCIAL RESOURCES Superannuation Fund 1 $61,000.00 Respondent NET ASSETS: $528,587.62
The parties ultimately agreed on the overall division of property, though initially expressing the breakdown in different ways. The respondent contended I should assess contributions as equal as at the date of the trial. The applicant contended contributions should be assessed at 55-45 in her favour, though when pressed on the matter conceded that an assessment of contributions as equal was appropriate. A finding of equality of contribution accords with my own assessment of the parties’ evidence, or $264,293.81 each.
The respondent contended that I should make an adjustment to the parties’ contribution-based assessment (equality) in favour of the applicant for the matters in s 75(2) of the Family Law Act 1975 (Cth) in the order of 15%. That adjustment took into account the disparity in income earning capacity apparent on the evidence and the applicant’s responsibility to care for the children, largely on her own. The applicant initially contended for a 10% adjustment ($52,857.00), but having conceded that contributions were equal, agreed that a 15% adjustment ($79,288.00) was appropriate. I so find. On that basis the applicant is entitled to $343,581.95 and the respondent is entitled to $185,005.67.
The applicant has nett liabilities of $376.56. It was agreed that there should be a superannuation splitting order in favour of the applicant of $30,000. To give effect to that order and the assessments I have made, the applicant will receive a payment of $313,958.51 from the funds held on trust. The balance will pay out any capital gains tax owing by the respondent, his outstanding child support debt and the remainder will be paid to him.
I am satisfied that orders to that effect will be just and equitable.
I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jarrett. Associate:
Dated: 19 February 2024
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