Radecki and Radecki
[2011] FMCAfam 1220
•22 November 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RADECKI & RADECKI | [2011] FMCAfam 1220 |
| CHILD SUPPORT – Property Adjustment – s124 Order for Non Periodic payments. |
| Family Law Act 1975, ss.75, 79 Child Support (Assessment) Act 1989, ss.117, 124, 125 |
| Gollings and Scott [2007] FamCA Full Court 397 Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143, (2003) 30 FamLR 355 In the marriage of Lee Steere (1985) FLC91-626 In the marriage of Ferrarro (1993) FLC92-335 In the marriage of Clauson (1995) FLC 92-595 Russell and Russell (1999) FLC 92-877 Teal & Teal [2010] FamCAFC 120 B and B (No.2) [2000] Fam CA Full Court 734 Kowaliw (1981) FLC 91-092 |
| Applicant: | MS RADECKI |
| Respondent: | MR RADECKI |
| File Number: | SYC 6071 of 2008 |
| Judgment of: | Foster FM |
| Hearing dates: | 24, 25 and 26 October 2011 |
| Date of Last Submission: | 26 October 2011 |
| Delivered at: | Newcastle |
| Delivered on: | 22 November 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr Kearney |
| Solicitors for the Applicant: | Broun Abrahams Burreket |
| Solicitors for the Respondent: | Self Represented |
ORDERS
That within one month from this date the husband pay to the wife the sum of $5,197 with such payment to be made to such bank account as is nominated by the wife in writing to the husband within 7 days from the date this order.
That the wife do all things necessary within one month from this date to transfer to the husband all her interest in the C Investment and the husband shall hereinafter indemnify and save harmless the wife from all or any liability arising from Westpac Banking Corporation loans … and ….
That pursuant to s124 of the Child Support (Assessment) Act the husband shall pay child support to the wife for the benefit of the children (in addition to any periodic amounts assessed by the Child Support Agency from time to time) until each child attains the age of 18 years or completes secondary school whichever is the later by payment of:
(a)All school costs for the children including but not limited to all invoiced tuition and other fees, school uniforms, school footwear, school sports uniforms and sports footwear, text books , sporting activities, camps and excursions, and
(b)As and when they fall due all medical, hospital, dental, optical and orthodontic fees for the children that are not covered by medical insurance or otherwise claimable pursuant to private health cover insurance for the children, and .
(c)All premiums necessary to maintain cover for the children at the highest level of private health insurance
That within 28 days from this date the party’s file a Minute of Proposed Orders so as to give effect to courts findings as to the asset pool for division and the appropriate percentage division together with short submissions as to what, if any, spousal maintenance order should be made.
That in the event that there be no agreement as to orders within 28 days from this date the parties shall file and serve within a further 14 days a draft Minute of Order sought by each of them and short written submissions in support of their contention together with short submissions as to what if any spousal maintenance order should be made.
That the mother by no later than 5pm each Thursday advise the father as to the time and place of any weekend sporting or extra curricular activities in which the children are to participate in on the following weekend and that such communication by email or SMS communication.
IT IS NOTED that publication of this judgment under the pseudonym Radecki & Radecki is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 6071 of 2008
| MS RADECKI |
Applicant
And
| MR RADECKI |
Respondent
REASONS FOR JUDGMENT
Applications
This matter concerns competing applications for property settlement between the applicant wife and the respondent husband.
Prior to the commencement of the property proceedings the husband and wife reached agreement as to parenting and orders were made by consent that in summary provide for the children X born on the … 1997 and Y born on the … 2000 to live with the wife and for the children to spend limited defined time with the father or otherwise as agreed.
During the course of proceedings, it was agreed between the parties that the court would make findings as to the relevant asset pool for division, of the contribution based entitlements of the parties and the extent of any section 75(2) adjustment that was appropriate.
Both parties were in agreement that contributions should be regarded as equal as at the date of separation. The wife contended that there should be a further adjustment in her favour for post separation contributions. The husband conceded that there should be a 15% section 75(2) adjustment in favour of the wife. The wife contended for a much more significant adjustment as a consequent of the husband's nondisclosure and other matters referred to below.
The parties further agreed that following the court's determination of the issues referred to above, that the parties would themselves reach agreement as to the distribution and apportionment of the assets in specie in accordance with the court's findings as to overall percentages.
Background
The wife was born on the … 1966 and at trial was 45 years of age. The husband was born on the … 1965 and at trial was 46 years of age.
Neither party asserts any relevant health issues.
The party’s cohabitation commenced with marriage on the … 1990. The wife was then aged 24 and the husband aged 25. The wife asserts that separation was on the 16 of January 2008 and the husband asserts that separation was on the 30 of December 2007. Nothing turns on this issue.
The Wife’s Circumstances Post Separation
Following separation the wife remained the primary carer for the children with the children spending little time with the husband.
The wife has undertaken some retraining to update her skills (Exh I) At present she does voluntary work at "D" and the "D" three days per week. She rejects the husband assertion that she should be in paid employment as the youngest child needs to be transported to and from school each day.
The wife has not applied for any paid jobs.
The eldest child Mr NN resides with her but although in employment makes no contribution to the household.
The wife asserted some $428 per week on the younger children’s activities. On closer examination she conceded that such figure was an error and should be about $110 per week.
The husband has recently been assessed to pay child support increased to the sum of $2,678 per month from the 24 March 2011. The husband concedes that he thereafter unilaterally reduced his spousal maintenance payments by $692 per month, thus accruing arrears.
The husband accepted that the parties had agreed that it was expected that the wife would not seek further employment until the youngest child was in secondary school.
The Husbands Circumstances Post Separation
The husband continued with Employer E. At the time of separation he was a Band 8 partner under the terms of the Employer E Partnership Agreement effective from the 1 January 2009. The husband can clearly earn a more significant income should he go into the market (Exh M) but he asserts that as a career employee of Employer E he has no intention of doing so.
The husband’s asserts his gross Employer E income including profit share in the 2011 financial year was $639,000 or $12,300 per week. He asserts that his overall household income comprised his Employer E remuneration, rent and his defacto partner’s income.
His assertion as to Employer E income is that such income includes any income diverted through the F Street Trust. He has distributed income through the Trust historically to his defacto partner Ms G and his father to significant taxation advantage.
The husband asserts that from 1st July 2011 he is now on a Band 6 income from the partnership (Exh. Z) of about $8,769 per week ($455,988 per annum) with a tax liability of about $3430 per week. He concedes that in previous years income splitting through the Trust to his defacto and his father has generated personal income tax savings for him. In the 2010 tax year the husband conceded in cross examination that he had diverted some $165,000 of his income through the Trust to his defacto in what he called a notional distribution (Exh. Q). The effect of this was a significant tax saving to the husband.
In the current financial year no Trust distributions have been made to his defacto but same would be considered towards the end of the year to achieve the best taxation outcome overall.
The husband’s income circumstances are by no means certain. In November 2009 he represented to Westpac an income of $750,000 per annum (Exh. P) He provided a letter from Employer E to his bank in February 2010 which asserted his income at $791,000 for the tax year 2009 (see Exh. O). In March 2010 he represented to Westpac that his income had fallen slightly but that his income would gradually improve to $800,000 per annum (Exh. O). In October 2010 he represented to his bank an income of $45,000 per month net ($540,000 per annum). In cross examination he conceded that his income goes up and down and his future income can only be an estimate.
The 2010 tax return of Ms G revealed the acquisition of an investment property in … 2009 at H Street, Town J. In cross examination the husband conceded he had advanced to her $25,000 as part of the purchase price and guaranteed the Westpac loan secured against the property. The property commenced earning rent from … 2009. This loan is a disputed issue in the balance sheet referred to below.
The husband asserts on the one hand that the loan to Ms G had been “notionally” repaid by the tax savings to the husband by having Ms G as an object of distributions from the Trust. No evidence was offered by the husband as to the quantum of any such savings or any such agreement between the husband and his defacto.
On the other hand the husband asserted in cross examination that the funds were a gift.
However as the Full Court observed in Gollings and Scott [2007] FamCA Full Court 397:
“68. As a general rule once the parties have separated, subject to obligations of maintenance and support, and subject to the type of considerations described in Kowaliw (1981) FLC 91-092 relating to waste, each party is entitled to get on with his or her life independent of the other. The husband would be free to go about spending the money he earned post-separation in the furtherance of his relationship with Ms Y if he chose to do so providing that at the same time he properly met his obligations towards his wife and children for their due support. It would not normally be appropriate some years after separation to require each of the parties to account for any monies they had spent post-separation so as to determine whether or not that expenditure was reasonably necessary for their own self-support, and to the extent that it was not, to determine whether it would be proper to add it back into the pool of assets available for division between the parties.”
After separation the husband has paid mortgages, rates and insurances in relation to the party’s properties, together with the children’s school fees and spousal maintenance In all the circumstances the court considers that the sum of $25,000 should not be included in the matrimonial asset pool.
Prior to separation the husband advanced by way of loan to his father $70,000 with this sum being topped up by a later loan post separation of a further $25,000. The husband asserts in cross-examination that the funds advanced have been notionally repaid as a result of tax savings to the husband achieved through “notional” Trust distributions totalling $313,500 to his father over the years. In the tax years 2003 to 2007 such distributions totalled $100,000 with the balance being distributed in the 2008. (Exhs. S and X). The distributions to his father were entered up in the Trust balance sheet as beneficiary loan accounts which the father promptly forgave. Indeed none of the “distributions” to the father or Ms G were ever in fact paid but were represented by book entry only. These advances also are a disputed issue in the balance sheet referred to below.
Having regard to the observations made above in all the circumstances the court considers that only the sum of $70,000 advanced prior to separation should be included in the matrimonial asset pool.
The husband conceded that his expectation of gross income from the Employer E including profit share would be in the range of $450,000 ($8,653 per week) to $500,000 ($9,615 per week) for the current financial year.
The husband’s current child support assessment commencing March 2011 is in the sum of $2,697 per month. Upon receiving the increased assessment the husband unilaterally reduced his spousal maintenance payments with such reduction giving rise to the current arrears.
Marital History
In 1989, prior to marriage, the parties purchased a property at M Street, Suburb N for the sum of $171,000. The purchase price comprised a mortgage advance of $122,000, funds provided by the husband and monies gifted by his mother and funds provided by the wife of a bit less than $20,000. The property was tenanted after purchase.
At the time of cohabitation apart from the M Street, Suburb N property neither party had any assets of any significance. The husband had an AMP Policy started by his parents to which he alone continued to contribute $1,000 per annum after marriage. The husband at this time was employed by Employer E as a professional and the wife as a professional.
There are three children of the marriage, Mr NN aged 19, X now aged 14 and Y now aged 11.
Immediately after of the parties marriage the parties relocated to the United Kingdom where the husband had been transferred in the course of his employment. The wife obtained employment in the United Kingdom, but ceased that employment shortly before the birth of the first child Mr NN in … 1991.
The parties returned to Australia in 1993 and the wife commenced part time employment in 1993 and in 1994 full-time employment.
In about 1996 the parties sold to the M Street, Suburb N property and purchased the present matrimonial home at F Street, Suburb O for $320,000.
At this time the parties relocated to City P in the United States for the purposes of the husband's employment. At this time, the youngest child was aged 4. The child X was born in the United States in … 1997.
The parties returned to Sydney in … 1997. The tenants in the F Street, Suburb O property vacated and the parties moved into the matrimonial home. In 2000 the parties undertook substantial renovations to the matrimonial home. The parties continue to reside in the matrimonial home until separation.
In 1998 the husband was admitted into partnership at Employer E and he is currently a professional.
In … 1999 the parties purchased in the wife's name an investment property at R Street, Suburb S , Queensland. The property continues to be tenanted.
In … 2002 the parties purchased in the wife's name an investment property at K Street, Suburb N for the sum of $530,000.
In 2003 of the husband purchased in his name a property at OO Street, Town PP for the sum of $695,000. These property dealings were by the time of the purchase of the OO Street, Town PP property secured by way of an over arching mortgage security with Westpac Banking Corporation in the sum of $2,026,000.
In … 2006 the husband purchased a property at T Street, Suburb U for the sum of $340,000 part financed by a mortgage advance of $289,000 and a drawdown against other existing Westpac facilities.
During the course of cohabitation of the husband attended to the party’s financial dealings in relation to the purchase of the financing of various properties. The wife acknowledges that she signed documents at his request and trusted him.
In … 2008 the husband provided the wife with $30,000. Of these funds she paid her parents outstanding rent of $25,000 and the remainder was utilised for Christmas period and a laptop for the child X.
Following separation the husband purchased in his name and for his accommodation a property at Q Street, Suburb N, for the sum of $720,000. The whole of the purchase price was financed by way of security over the M Street, Suburb N property and collateral security over the parties other assets. This property was subsequently sold by the husband in … 2009 for $760,000.
In 2009 the husband also sold the property at OO Street, Town PP for $685,000 and the property at T Street, Suburb U.
In late 2009 the husband commenced living with Ms G and her three children aged 17, 15 and 8.
He thereafter in … 2009 purchased a home at V Street, Suburb W for the sum of $1,125,000 to accommodate himself and his defacto partner and her children.
Following separation the husband continued to move the party’s funds around, drawing against certain facilities and depositing funds to others.
The husband purchased in … 2010 the property comprising a factory unit at Z Street, Town AA for $155,000 (excluding GST) using funds drawn against the Westpac loan facilities of $55,000 (Exh K) and the balance by way of secured mortgage. The property is rented for $375 per week plus GST.
Following separation the husband caused the company MM Pty Ltd to purchase a second factory unit at CC Street, Town AA with funding by way of a Westpac facility. The property is currently rented for $500 per week. Several of the company’s liabilities totalling about $480,000 are secured by way of collateral security over the F Street, Suburb O matrimonial home.
On the 20 April 2010 orders were made that in summary, inter alia, provided:
a)For the husband to pay all outgoings in regard to the Suburb S, M Street, Suburb N and F Street, Suburb O properties,
b)For the wife to receive the income from the properties,
c)For the husband to seek a waiver of the wife’s ATO provisional liability and if not pay same,
d)For the husband to pay spousal maintenance in the sum of $500 per week,
e)and by way of non periodic child support the husband pay the children’s private school costs, all medical etc expenses, and health insurance payments.
The husband it appears paid the wife’s provisional ATO liability and on filing her 2010 tax return she received a refund of about $5,000.
The husband post separation sold portion of his share portfolio and paid down the associated BT Margin Lending Loan to nil.
Exhibit D in the proceedings is the parties draft balance sheet. Following the course of evidence and during submissions there was substantial agreement as to the Joint Balance sheet. That agreement is set out in the table below with reference to the relevant items in Exh D with items in dispute as to value or otherwise shown in bold and italicised:
| ExhD | Asset: | W Value | H Value | |
| 1 | Joint | F Street, Suburb O | 1,150,000 | |
| 12 | Joint | Westpac Account (…) | 2,093 | |
| 2 | Wife | K Street, Suburb N | 750,000 | |
| 3 | Wife | R Street, Suburb S | 360,000 | |
| 8 | Wife | Share Portfolio | 187,387 | |
| 13 | Wife | CBA account (…) | 1,690 | |
| 14 | Wife | CBA account (…) | 2,093 | |
| 15 | Wife | CBA account (…) | 16,669 | |
| 16 | Wife | Motor Vehicle DD | 6,600 | |
| 17 | Wife | Contents | 500 | |
| 19 | Wife | Jewellery | 2,500 | |
| 4 | Husband | Z Street, Town AA | 155,000 | |
| 5 | Husband | Suburb EE property | NK | 0 |
| 6 | Husband | V Street, Suburb W | 1,150,000 | |
| 7 | Husband | Share Portfolio | 6,096 | |
| 9 | Husband | C Investment | NK | 0 |
| 10 | Husband | MM P/L | 40,000 | NK |
| 11 | Husband | Employer E Partnership | 192,613 | 76,298 |
| 18 | Husband | Contents | NK | 500 |
| 20 | Husband | 2 boats | NK | 100 |
| 21 | Husband | Loan to Father | 95,000 | 0 |
| 22 | Husband | Loan to Ms G | 25,000 | 0 |
| 23 | Husband | Motor Vehicle FF | 20,000 | 12,000 |
| 24 | Husband | Motor Vehicle QQ (Sold) | 0 | 0 |
| 25 | Husband | Motor Vehicle GG | 32,000 | |
| 26 | Husband | Scooter | NK | 0 |
| 28 | Husband | Loan to M P/L | 3,884 | |
| 29 | Husband | Westpac Chq Account (…) | (47,949) | |
| ADDBACKS | ||||
| 30 | H | Experts Reports | 8,654 | 17,308 |
| 31 | Husband | Arrears spousal maintenance | 4,155 | 0 |
| 32 | Husband | Rental property expense | 6,696 | 0 |
| LIABILITIES: | ||||
| 33 | Wife | R Street, Suburb S Mortgage | 65,313 | |
| 34 | Wife | M Street, Suburb N (…) | 252,957 | |
| 35 | Wife | M Street, Suburb N (…) | 254,847 | |
| 37 | Wife | R Street, Suburb S Westpac loan (…) | (9,634) | |
| 42 | Wife | BT Margin loan | 25,615 | |
| 36 | Husband (Joint) | Westpac F Street, Suburb O Mortgage (…) | 64,256 | |
| 38 | Husband (Joint) | Westpac F Street, Suburb O Mortgage (…) | 86,806 | |
| 39 | Husband (Joint) | Westpac F Street, Suburb O Mortgage (…) | 27,399 | |
| 40 | Husband | Z Street, Town AA Westpac loan (…) | 100,680 | |
| 41 | Husband | F Street, Suburb O/Suburb N Westpac loan (…) | 149,045 | |
| 43 | Husband | BT margin loan | 0 | 0 |
| 44 | Husband | V Street, Suburb W loan (…) | 450,737 | |
| 45 | Husband | V Street, Suburb W loan (…) | 500,000 | |
| 46 | Husband | Car loan Motor Vehicle GG | 28,995 | |
| SUPERANNUATION | ||||
| 51 | Wife | F Street Super Fund | 236,722 | |
| 52 | Husband | F Street Super Fund | 460,088 | |
| 53 | Husband | HH Super Fund | 50,000 | |
| FINANCIAL RESOURCES | ||||
| 54 | Husband | F Street Investment Trust | 0 | 0 |
| 55 | Husband | Estate B Radecki | 717,472 | |
| 56 | Husband | Employer E Leave entitlements | 150,000 | 0 |
| 57 | Husband | Employer E Retirement Benefit | 315,000 | |
| 58 | Husband | Radecki Family Trust | NK | 0 |
The Law
The approach the court is required to adopt in determining an application under section 79 of the Family Law Act for adjustment of property interests is well established by authority (Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143, (2003) 30 FamLR 355. In the marriage of Lee Steere (1985) FLC91-626, In the marriage of Ferrarro (1993) FLC92-335, In the marriage of Clauson (1999) FLC 92-595).
The process ordinarily involves a four-staged process. Firstly the court must identify the property, liabilities and financial resources of the parties at the time of the hearing. The court then considers the contributions made by the parties as defined in section 79 (4) (a) to (c). Thirdly the court must consider the future needs of the parties by having regard to the provisions of section 75(2) in so far as they are relevant. Finally in determining what order the court should make the court must be satisfied in all of the circumstances that it is just and equitable to make the order – S79(2). It is the justice and equity of the actual orders that the court must consider. (Russell and Russell (1999) FLC 92-877, Teal & Teal [2010] FamCAFC 120 (25 June 2010).
The property of the parties
The first step is to determine the appropriate pool of assets for division. The contentious issues as to the balance sheet are highlighted above and discussed below:
The Suburb EE Property:
The wife assets the husband and his sister purchased the subject property in … 1997. Her only evidence of such assertion is the annexing of a transfer and mortgage to her affidavit (Exh AMR 41 and 42.) The husband denies such assertion. The husband denies such assertion. A perusal of the signatures on the mortgage document and the husband’s sworn material in this court reveals no similarity at all. The husband asserts that his sister’s name is A. The wife has no knowledge of same. The wife acknowledges that during the cohabitation the parties never discussed such a property and that she had never been to the property. The wife has not sought to have the property valued. She has not made direct enquiries at the property of the occupants nor any other enquiry to support her contention. The husband sought to adduce evidence from his sister on affidavit but as she was not available for cross examination leave was refused. However it is the wife’s assertion as to ownership by the husband. In all the circumstances the court cannot be satisfied that the property should be included in the balance sheet.
M P/L
The husband’s interest in this entity was valued by the Single Expert at $40,000. The company has a loan debt to the husband of $3,884 which is included in the balance sheet.
The interest was valued as a non trading entity and thus on an asset backing basis. On the basis of the 2011 Financial Statements the husband’s interest was valued at $40,000. In conducting the valuation the Single Expert:
a)had no knowledge of any real estate owned by the company at Town AA,
b)had no knowledge of any underlying interest in any other trading entity,
c)was of the view that the company income comprised dividends from share holdings, rent and interest received on loans.
The Single Expert acknowledged that in the event that the company held an interest in another trading entity then consideration of that entity was necessary.
The husband asserted that the company was a passive investment vehicle with its assets comprising shares, a rented factory unit, a static investment in land in South East Queensland and a loan to his brother.
The husband asserted that the company had no continuing interest in any active trading venture.
The company balance sheet reveals a debt to the husband’s mother’s estate of $173,391. However on closer examination that sum represents portion of the husbands interest in his mother’s estate in fact advanced by the husband to the company and then on lent to his brothers entity BB Pty Ltd that acquired the stock of the business previously run by the husband’s late mother and assumed the conduct of the business. The value of this loan is already included in the value attributed to the husband’s interest in his late mother’s estate at item 55 above and particularised in Exh U.
It was asserted by the wife’s Counsel in cross examination that the husband held an interest in BB Pty Ltd trading as “BB Pty Ltd”. This was in reality the business operated by the husband’s late mother which has been taken over by this company which the husband asserts is owned by his brother. It was this entity to which the husband asserts he advanced funds from his late mother’s estate to facilitate the acquisition of the trading stock from the estate.
The husband conceded in cross examination that he still held two shares in BB Pty Ltd but that such shares were only held to assist the company borrowing capital and that the shares were at all times to be ultimately transferred to his brother.
This contention appears at odds with the assertions in Exhs V and CC where the husbands then solicitors assert that the husband sought to have his 50% interest in the business previously conducted by his late mother transferred to MM Pty Ltd, that the business was profitable and that any dividend received from BB Pty Ltd would be offset against accumulated tax losses. The husband then conceded when confronted by Exh V that his two shares in BB Pty Ltd were indeed owned by his company and that those shares represented an interest in a trading entity.
The court is unable to resolve the issue as to the husband’s interest in BB Pty Ltd nor indeed as a consequence the true value of the husbands interest in MM Pty Ltd.
The Radecki Family Trust
The husband is a beneficiary of this trust. He asserts that he only became aware of his potential interest following the death of his mother in … 2009. He asserts that he believed that the trust was included in his late mother’s estate. This assertion is somewhat remarkable having regard to the husband’s extensive professional background.
However the husband conceded that his interest in the ultimate trust distribution would be about $30,856. (Exh. T)
C Investment
The husband asserts that this investment should have a minimal value in the balance sheet. However two loans are presently secured in favour of Westpac Bank in relation to the acquisition of the investment. Those loans (… and …) presently stand at $151,062 and are presently secured over the F Street, Suburb O matrimonial home.
Yet in … 2009 the husband represented to Westpac that the investment had a value of $100,000 (Exh W). The husband asserts that the value of the investment was it’s up front tax deductibility and that ongoing interest is not deductible. In that event the prudent course would have been to liquidate the debt at an early date. The husband chose not to.
The husband conceded that the investment was a long term prospect and that the returns in due course are uncertain. In the circumstances the husband will retain the debt and indemnify the wife against any liability in regard to the Westpac loans and retain the asset.
This asset and its related liabilities will be subject to a discrete order.
The Husband’s Westpac Overdraft
The husband operates a Westpac day to day account and opened same since separation. He seeks to include the debt in the balance sheet to the effect that the wife would bear some liability in regard to same.
The husband post separation has supported his defacto and her children. He has bought and sold real estate without reference to the wife and incurred stamp duty, purchase and sale costs. He has purchased 3 motor vehicles and sold one at a loss.
He concedes that such expenses are to some extent reflected in the present property pool although the extent is unclear. In addition he has expended some $56,000 in legal (Exh AA) and surveillance costs from various sources.
In all the circumstances the husband’s post separation overdraft account shall be excluded from the balance sheet.
School Enrolment Fee
The wife seeks reimbursement of the fees paid by her to secure the enrolment of the youngest child at private school. The husband concedes that that such enrolment was agreed.
The husband agrees that he should reimburse the wife the sum. This sum will be adjusted between the parties in the context of Order 1.
Employer E Partnership Interest Valuation
The Single Expert valued the husband’s Partner Account interest at $192,613. The valuation was substantially based on information supplied by Employer E to the Single Expert.
The husband sought to challenge this conclusion asserting that the PI reserve sum of $50,000 should be excluded from the valuation figure.
The husband adduced no evidence to support his contention.
The Single Expert valued the husbands present Retirement Benefit at $315,000 on a before tax basis. The valuation was in accordance with the provision of the Employer E Partnership Agreement dated … 2009.
The husband asserted that there should be an allowance for income tax. The Single Expert asserted that it was difficult to assess any tax liability on payment of the benefit. Any assessment was subject to taxation minimisation tools and the husband’s relevant income at retirement.
The present expectancy on retirement is by agreement to be dealt with as a financial resource. The court accepts the Single Experts opinion and will allow for taxation uncertainties in considering an appropriate s75(2) adjustment overall.
Husbands Contents, Boats, Scooter and Motor Vehicle FF
No evidence as to value as to these items was adduced by either party. The court will adopt the assertion as to value in the husbands Financial Statement as an admission against interest.
Experts Fees
The parties agreed that the wife was to be liable for her unpaid one half share of the Single Experts fees in the sum of $8,654. This sum will be adjusted between the parties in the context of Order 1.
Spousal Maintenance Arrears and Rental Property Expense
The husband conceded the spousal maintenance arrears as a consequence of his unilateral in payments following a child support reassessment. This sum will be adjusted between the parties.
The court is satisfied on the evidence that repairs to the air-conditioning at the R Street, Suburb S property were properly incurred and that the husband was not entitled to refuse to pay same. The wife has had her rental income reduced to facilitate payment of the debt in the sum of $6,696 and she is entitled to be reimbursed. This sum will be adjusted between the parties in the context of Order 1.
THE ADJUSTED JOINT BALANCE SHEET
As a consequence of the court’s findings above the appropriate joint balance sheet is as follows:
| ExhD | Asset: | Value | |
| 1 | Joint | F Street, Suburb O | 1,150,000 |
| 12 | Joint | Westpac Account (…) | 2,093 |
| 2 | Wife | K Street, Suburb N | 750,000 |
| 3 | Wife | R Street, Suburb S | 360,000 |
| 8 | Wife | Share Portfolio | 187,387 |
| 13 | Wife | CBA account (…) | 1,690 |
| 14 | Wife | CBA account (…) | 2,093 |
| 15 | Wife | CBA account (…) | 16,669 |
| 16 | Wife | Motor Vehicle DD | 6,600 |
| 17 | Wife | Contents | 500 |
| 19 | Wife | Jewellery | 2,500 |
| 37 | Wife | R Street, Suburb S Westpac loan (…) (In credit) | 9,634 |
| 4 | Husband | Z Street, Town AA | 155,000 |
| 6 | Husband | V Street, Suburb W | 1,150,000 |
| 7 | Husband | Share Portfolio | 6,096 |
| 10 | Husband | MM P/L | 40,000 |
| 11 | Husband | Employer E Partnership | 192,613 |
| 18 | Husband | Contents | 500 |
| 20 | Husband | 2 boats | 100 |
| 21 | Husband | Loan to Father | 70,000 |
| 23 | Husband | Motor Vehicle FF | 12,000 |
| 25 | Husband | Motor Vehicle GG | 32,000 |
| 28 | Husband | Loan to MM P/L | 3,884 |
| 4,106,359 | |||
| LIABILITIES: | |||
| 33 | Wife | R Street, Suburb S Mortgage | 65,313 |
| 34 | Wife | M Street, Suburb N (…) | 252,957 |
| 35 | Wife | M Street, Suburb N (…) | 254,847 |
| 42 | Wife | BT Margin loan | 25,615 |
| 29 | Husband | Westpac Chq Account (…) Overdraft | 0 |
| 39 | Husband (Joint) | Westpac F Street, Suburb O Mortgage (…) | 27,399 |
| 40 | Husband | Z Street, Town AA Westpac loan (…) | 100,680 |
| 41 | Husband | F Street, Suburb O/Suburb N Westpac loan (…) | 149,045 |
| 43 | Husband | BT margin loan | 0 |
| 44 | Husband | V Street, Suburb W loan (…) | 450,737 |
| 45 | Husband | V Street, Suburb W loan (…) | 500,000 |
| 46 | Husband | Car loan Motor Vehicle GG | 28,995 |
| 1,855,558 | |||
| $2,250,801 | |||
| SUPERANNUATION | |||
| 51 | Wife | F Street Super Fund | 236,722 |
| 52 | Husband | F Street Super Fund | 460,088 |
| 53 | Husband | HH Super Fund | 50,000 |
| 746,810 | |||
| $2,997,611 | |||
| FINANCIAL RESOURCES | |||
| 55 | Husband | Estate B Radecki | 717,472 |
| 56 | Husband | Employer E Leave entitlements | 150,000 |
| 57 | Husband | Employer E Retirement Benefit | 315,000 |
| 58 | Husband | Radecki Family Trust | 30,856 |
| 1,213,328 |
Contributions
The court now turns to the second step in the exercise under s.79, namely an assessment of the parties contributions within the context of s.79(4)(a) to (c).
The parties at the outset agreed that to the date of separation contributions should be regarded as equal. The court regards that position as a sensible concession by both parties.
The wife asserts that contributions after separation to hearing should favour her by reason of her overwhelming contribution to the children. However the wife’s position ignores the substantial funds provided by the husband post separation by way of child support, spousal maintenance, outgoings on the rental properties and mortgage payments. This is particularly significant where the wife received the rental income from the properties the husband was servicing.
In all the circumstances the court finds that contributions to trial are equal.
Section 75(2) factors
Having determined the contribution elements the court is required to have regard to the provisions of section 75(2).
The relevant matters to be so taken into account are -
a)The age and state of health of each of the parties;
The wife is aged 45 years and in good health. The husband is aged 46 years and makes no assertion as to health issues.
b) The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
The wife at present devotes her time to the children and some charity work during school hours. She proposes to re-enter the work force when the youngest child commences secondary education in accord with the party’s expectations during cohabitation. She says that at present she is required to transport the youngest child to school each day. She has commenced some retraining to ready herself for resumed employment but she has been out of the workforce for many years. Her expectation as to income in due course is modest.
The husband is a partner at Employer E. His income circumstances vary as the fortunes of his firm fluctuate with global economic circumstances. However his income historically has been in the range of $700,000 to $800,000 per annum. At present asserts that his income will be in the order of $450,000 to $500,000. The court treats that estimate with some circumspection, particularly having regard to his representations to his financial institution. There is no suggestion that the husband will not continue with Employer E. There is some analysis of income expectations on the open market but the husband has been a career employee and partner with Employer E and such comparisons are of little assistance to the court. This is a significant factor weighing in the wife’s favour. As has often been said, one of the most valuable things a husband can take out of a marriage is his income earning capacity. The wife in this case has no such comfort.
c) Whether either party has the care or control of a child of the marriage who has not obtained the age of 18 years;
The wife will under the parenting orders made by consent have the primary and significant care of the younger children now aged 14 and 11. The husband’s role in their lives has since separation been minimal. This is factor that weighs in the wife’s favour.
d) Commitments of each of the parties that are necessary to enable the parties to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain;
The commitments for each party are set out in their financial statements and will be considered in detail in regard to the issues of spousal maintenance and child support.
e) The responsibilities of either party to support any other person;
The wife has the eldest child now aged nearly 20 in her household. He is incoming earning but she provides him with accommodation and food.
The husband is in a defacto relationship with Ms G and her children form part of his household. He has no obligation to support her or her children. There is no evidence before the court as to neither Ms G’s capacity to earn nor her child support circumstances.
This factor has little weight.
f) subject to subsection (3) the eligibility of either party for a pension, allowance or benefit under
(i)any law of the Commonwealth, of a State or Territory or of any other country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established or operates within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party;
The parties are in a self managed superannuation scheme. The extent of their respective entitlements are set out above.
g) Where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
It is clear that the parties enjoyed a comfortable standard of living during cohabitation as such that should be reflected in any order for spousal support made.
h) The extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
The wife seeks spousal maintenance for a closed period so as to settle the youngest child into secondary school and then seek appropriate employment. That period would also facilitate the wife undertaking such retraining as she saw fit.
ha) ……..
j) The extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
The wife has provided the primary homemaker and carer role throughout the relationship. She and the children have lived with the husband in London and the USA to further his career. This factor is deserving of significant recognition. (see B and B (N0 2) [2000] Fam CA Full Court 734)
k) The duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
This factor favours the wife. Her expectations as to income were conceded by the husband to be modest.
l) The need to protect a party who wishes to continue that party’s role as a parent;
The wife wishes to continue as full time carer at least until secondary school commences for the youngest child.
m) If either party is cohabiting with another person – the financial circumstances relating to the cohabitation;
The wife is not cohabiting with any other person. The husband has commenced to reside in a defacto relationship the financial circumstances of which are discussed above. This factor is of no consequence.
(n) the terms of any order made or proposed to be made under section 79 in relation to:
(i)the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party;
This will be considered in the context of spousal maintenance.
na) Any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
The husband presently pays child support for the two youngest children at the rate of $2,697 per month or $311 per week per child. He will continue to have a significant child support liability by reason of his income levels and in due course the wife’s modest income expectations.
o) Any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
Two issues here loom large.
The first is the husband’s incomplete and reluctant disclosure. It was only during a detailed cross examination that the court became appraised as to number of matters touching upon the husbands financial affairs. This was particularly so in relation to the shareholding and interest of MM Pty Ltd. The issue is discussed above at length. The court is not be satisfied that the husband has been frank with the court in this regard. As to his financial dealings with Ms G, particularly as to the purchase of the investment property at Town J his evidence is unconvincing. The loan to her has been excluded from the asset pool but the court is not satisfied that he has no interest in the equity in the property. Ms G was clearly available to give evidence but was not called by the husband. The inference being that her evidence may not have assisted him. In other respects identified above his evidence was unconvincing, illogical and reluctant. In all the circumstances the court is not satisfied that the husband has been full and frank with the court. The consequences of such a finding are well known. This factor will favour the wife.
The second issue is the question of financial resources. Whilst the wife makes no claim as to contribution to the husbands interest in his late mother’s estate or the Radecki Family Trust they represent a significant resource to him. The same can be said as to his present retirement benefit with Employer E and the availability of paid leave entitlements that accrued during cohabitation. This factor also weighs in favour of the wife.
p) ……….
The court finds that s75 (2) factors favour the wife such as to require an adjustment to the contribution based entitlement of equality by 15% in favour of the wife.
Thus the overall the asset pool is to be divided as to 65 % to the wife and 45% to the husband. This in mathematical terms creates a disparity of almost $900,000 in favour of the wife.
Section 79(2) – just and equitable
The fourth stage of the process is for the court to step back and assess whether in all of the circumstances it is just and equitable to make the orders to be proposed.
In this matter the parties have requested that following final findings as to percentage division of the asset pool they wish to consider the appropriate way to divide, apportion, split and transfer assets to meet the courts orders.
The court will order that consent orders be filed within 28 days in default the matter will be listed for submissions.
Spousal Maintenance
The wife seeks an order for periodic spousal maintenance in the sum of $506 per week. The issue is clouded by the uncertain circumstances as to the in specie division of the matrimonial asset pool.
Some of the assets are incoming producing but have significant outgoings attached to them in particular mortgage payments.
The court is thus unable to determine the final issue as to spousal maintenance with any certainty.
The present order is expressed to be pending further order and the court proposes to allow that order to continue until such time as the asset division is agreed or court ordered. At that time the court will invite submissions as to the issue and if necessary deliver short supplementary reasons.
Child Support
The wife seeks orders under s124 of the Child Support (Assessment) Act that the husband pay by way of non periodic child support private school fees and associated expenses for the children, any gap payments relating medical and other expenses for the children and continuing health cover at the highest rate.
The husband is presently meeting those payments pursuant to interim orders made on the 20 April 2010.
S.124 provides that the court must be satisfied that such an order would be just and equitable as regards the children, the payer and the payee and otherwise proper.
The current administrative assessment is referred to above. That assessment has not been departed from. The husband asserts that the court would have regard to his capacity to meet any such order in the context of determining the application.
The wife is not in receipt of any means tested benefit and the effect of the order sought would not render her incapable of supporting herself without such a benefit.
In determining whether it would be just and equitable the court must have regard to the matters in s117(4), (6), (7), (7A) and (8) of the Act.
It is the expectation of both parties that the children be educated at private catholic schools particularly JJ School for secondary school (s117 (6)).
In his Outline of Case the husband asserts that his current payments for fees are in the order of $20,000 per annum ($400 per week) in total (Annex A). No doubt that would increase when the younger child commences secondary school.
The husband’s income as discussed above is uncertain. His own assertion is that he receives after tax $5,332 per week but distributions historically through his income Trust have reduced this tax significantly as demonstrated in Exh X. It is clear that his distribution to Ms G in 2010 would have reduced his tax significantly probably by about $65,000 per annum or $1,250 per week. That provides the husband with an after tax income per week of $6,582. That tax saving alone is more than sufficient to cover the expenses sought in the s124 Application.
The husbands asserted and reasonable expenses as best can be ascertained are found by the court to be:
Mortgage payments 1,276
Rates and Levies 29
Motor vehicle rego (50%) 10
Spousal maintenance 500
Child Support periodic 622
Weekly Expenses (Part N) 725
Total $3,162
Otherwise the party’s incomes, earning capacities, property and financial resources are discussed at length above. (s117 (4) and s117 (7) and (7A)). The court has considered the income forgone by the wife in providing child care. (s117(8))
In all of the circumstances the court is satisfied that it is just and equitable to make the order sought and that it is otherwise proper to make the order sought (s117 (5)) and that such order is not to reduce the annual rate of child support under any relevant assessment.(s125) and that such order is just and equitable and otherwise proper (s125(2)) having regard to the matters set out in s125(5) and (6).
Parenting
The parties resolved the primary issue as to parenting and consent orders were made on the 24 October 2011.
The parties remained in dispute as to how the father was to inform himself or be notified as to the particular sporting and other activities the children were engaged in that pursuant to Order 4 made on the 24 October.
The mother asserted that in the event that such information was not self evident from material to be provided to the father pursuant to Order 3 made on the 24 October 2011 she would notify the father as soon as practicable.
In support of this proposal the mother in Exh F produce a JJ School Newsletter and a KK School newsletter.
A perusal of Exh F reveals that the newsletters provide comprehensive and timely details as to school events and the receipt of such documents will adequately inform the father as to same. However the newsletters are silent as to the time and place of the children’s individual or team sports conducted on weekends for the school or otherwise.
The court was invited to determine the issue without detailed reasons. Indeed on such a discrete issue the matter falls to be determined on best interest principles in terms of S60CC of the Act. Many of the factors have no relevance and are of little assistance. The question is more a facilitative one.
It appears practicable solution that the mother by no later than 5pm each Thursday advise the father as to the time and place of any weekend sporting or extra curricular activities in which the children are to participate in on the following weekend and that such communication by email or SMS communication.
The court will so order.
Conclusion
For the above reasons I will make the orders set out in the beginning of this judgment.
I certify that the preceding one hundred and twenty-eight (128) paragraphs are a true copy of the reasons for judgment of Foster FM
Date: 22 November 2011
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