Radek & Radek
[2023] FedCFamC2F 1153
•1 September 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Radek & Radek [2023] FedCFamC2F 1153
File number(s): NCC 850 of 2022 Judgment of: JUDGE BETTS Date of judgment: 1 September 2023 Catchwords: FAMILY LAW – Property settlement – lengthy relationship – three children, 16, 14 and 12 – where the children have lived with the wife and spent little to no time with the father since separation – where the husband earns a substantial income – where wife seeks 80% of the net property in her favour and where the husband seeks 57.5% in the wife’s favour – where the wife seeks no super splitting order but where the husband does – where the Court must weigh up the parties contributions during the relationship – where the Court must consider future factors – just and equitable outcome. Legislation: Family Law Act 1975 (Cth), Pt VIII Cases cited: Hall & Hall (2016) FLC 93-709
Hickey & Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143
Stanford & Stanford (2012) FLC 93-518
Division: Division 2 Family Law Number of paragraphs: 146 Date of last submission/s: 14 June 2023 Date of hearing: 13 & 14 June 2023 Place: Newcastle Counsel for the Applicant: Mr Tregilgas Solicitors for the Applicant: Mark Evans Solicitor Counsel for the Respondent: Mr Bithrey Solicitors for the Respondent: Dalzell Law ORDERS
NCC 850 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR RADEK
Applicant
AND: MS RADEK
Respondent
ORDER MADE BY:
JUDGE BETTS
DATE OF ORDER:
1 SEPTEMBER 2023
THE COURT ORDERS THAT:
1.Within sixty (60) days of the date of this Order, the Wife shall pay to the Husband the sum of $132,984.00 (the payment):
(a)Contemporaneously with the payment, the Wife shall be declared to be the sole legal and beneficial owner of the property at B Street, Suburb C being Lot … in Deposited Plan … and subject to the mortgage number … to D Company.
(b)Contemporaneously with the above declaration the Wife shall;
(i)Do all such acts, execute all such documents and pay all such moneys as are necessary to discharge the parties’ mortgage to E Bank in respect of the property at B Street, Suburb C, or refinance such mortgage so that the Husband is removed as a borrower therefrom.
2.Within twenty-eight (28) days, the parties are to submit a proposed superannuation splitting order to give effect to these Reasons, NOTING that the superannuation trustee must be afforded procedural fairness.
3.Other than set out in these orders, the parties have the sole right title and interest in any other property which is at the date of these orders in their possession title or name, and they shall be solely liable for and indemnify the other against any personal liability.
4.Unless otherwise specified in these orders and except for the purpose of enforcing the payment of any money under these or any subsequent orders:
(a)Each party be solely entitled to all property including choses-in-action in the possession of such party as the date of these orders;
(b)Any moneys standing to the credit of the parties in a bank account are to be retained by the party in whose name the account appears;
(c)Each party forgoes any claim they may have to any superannuation benefit that is belonging to or owned by the other save for the superannuation splitting orders as provided for in these reasons;
(d)All insurance policies are to become the sole property of the owner as named;
(e)Each party is solely liable for and indemnifies the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(f)Any joint tenancy of the Husband and Wife in any real or personal estate is expressly severed.
5.The Court will hear the parties as to costs.
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
JUDGE BETTS
OVERVIEW
Following the breakdown of their marriage, Mr Radek (“the Husband”) and Ms Radek (“the Wife”) have been unable to agree on a property settlement.
The parties commenced an intimate relationship around 2002/2003 when the Husband was living and working in Sydney and the Wife was living and working in City F. Initially they spent time together on weekends but by early 2004 their relationship had progressed to such an extent that they decided to live together in City F in the Wife’s home at Suburb C. The parties married in 2005, separated under the one roof in mid-2018 and physically separated in mid-2019 when the Husband moved into his own rental accommodation.
In all, the parties’ relationship subsisted for around sixteen (16) or seventeen (17) years, of which they cohabited for around fifteen (15).
There are three (3) children of the marriage:
·X born in 2007 who is 16 years old and presently in Year 10 at G School in City F;
·Y born in 2009 who has recently turned 14. He is presently in Year 8 at City F School; and
·Z born in 2011 who has recently turned 12. He is presently in Year 6 at H School in City F.
All of the children have high needs, though for different reasons. Both X and Z are talented at sports and compete at representative level, meaning that they frequently have to travel away from home to compete (in Sydney for example). X also plays competitive sports. Both children have a gruelling training regimen each week.
Y’s needs are much higher again. Diagnosed with a sensory processing disorder at the age of 4, he has since been diagnosed with Autism Spectrum Disorder (“ASD”), Attention Deficit Hyperactivity Disorder (“ADHD”), a learning disorder and mental health issues. Y’s disabilities are significant and he requires high level of care and support. He is required to attend regular medical and allied health appointments. These are largely funded through the NDIS. He takes four (4) different prescription medications.
Y is developmentally delayed and requires as much stability and routine as possible. His schooling has been a particular challenge as discussed later.
Since separation the children have lived with the Wife and spent little to no time with the Husband. The parties dispute the reasons. The Husband says that the Wife has discouraged the children from staying with him; the Wife says that the children are uncomfortable doing so, particularly Y. Notwithstanding, on 17 February 2022 the parties entered into some final parenting orders by consent [1] whereby:
·the children are to stay living with the Wife and spend time with the Husband as agreed, and failing agreement each alternate Sunday from 11am to 3pm;
·the Husband may spend time with X and Z on two (2) occasions per week while they are playing sport;
·the orders specifically provide for the parties to engage an autism specialist and to attend therapy sessions as recommended by that specialist ‘to build relationships towards the reality of the children being able to attend the father’s home without the presence of the mother (paragraph 7 of the Orders).
The orders have not been complied with.
The Husband earns a healthy income as a professional in a City F company. The Wife is a stay-at-home mother and receives a Centrelink Carer’s Pension for Y.
Most of the background facts are agreed. Although there are some Balance Sheet issues, it is common ground that the parties’ net assets come to around $2.8M including superannuation of $635,270.
Notwithstanding, the parties’ formal stated positions are worlds apart. The Wife seeks 80% of the net property, comprising a 60% contributions-based entitlement and a further 20% adjustment in her favour for future needs. She is not interested in a super split; she would prefer to retain more of the “cash” assets instead. The Husband proposes an overall division of 57.5% to the Wife and 42.5% to him on the basis that contributions would be assessed at 50% each and that the adjustment for future needs in the Wife’s favour would be 7.5%. He proposes that there be a superannuation splitting order.
THE HEARING & MATERIAL RELIED UPON
The final hearing took place on 13 and 14 June 2023. The Husband was represented by Mr Tregilgas of counsel and the Wife by Mr Bithrey of counsel.
The parties relied upon the following documents:
Husband:
(a)Case Outline Document filed 09/06/23;
(b)Amended Initiating Application filed 15/05/23;
(c)Affidavit of the Husband filed 15/05/23;
(d)Financial Statement of the Husband filed 15/05/23.
Wife:
(a)Case Outline Document filed 13/06/23;
(b)Second Amended Response filed 16/05/23. This document was superseded by a corrected version. (The Husband did not object);
(c)Affidavit of the Wife filed 16/05/23;
(d)Financial Statement of the Wife filed 16/05/23.
Various documentary exhibits were tendered which will be referred to as relevant.
THE LAW
These property settlement proceedings are governed by the provisions of Part VIII of the Family Law Act 1975 (Cth) (“the Act”).
Essentially a Court must not make a property settlement order unless it is ‘just and equitable’ to make the order: s 79(2). In arriving at this statutorily-mandated outcome, I propose to:
(a)identify and value the property, liabilities, and financial resources of the parties (the Balance Sheet);
consider whether it is just and equitable to make any property settlement order;
(b)if it is, then identify and assess the respective contributions made by each of the parties towards the net assets as required by s 79(4)(a), (b) and (c) of the Act. For convenience, each party’s respective contributions-based entitlement will be expressed in percentage terms;
(c)identify and assess the relevant “future factors” set out in s 75(2) of the Act, including any relevant matters arising pursuant to section 79(4)(d), (f) and (g) of the Act. I will then determine what (if any) adjustment ought be made to the parties’ respective contributions-based entitlements on account of such matters;
(d)lastly, I will consider the effect of my findings and proposed orders so as to satisfy myself that any overall property settlement order I am contemplating is ‘just and equitable’.
This pathway derives from the Full Court’s decision of Hickey & Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143, adapted to take into account the High Court’s later decision in Stanford & Stanford (2012) FLC 93-518.
THE BALANCE SHEET
I am satisfied that the Balance Sheet is as set out below. Most of the items were agreed; contentious items have been asterisked and my reasoning will follow.
ASSETS
Item
Description
Value (H)
Value (W)
Value adopted
1
B Street, Suburb C (W)
$1,965,000
$1,965,000
$1,965,000
2
Furniture & furnishings incl jewellery (W) *
$25,000
$25,000
$ disregard
3
J Company Shares (W)
$53,568
$53,568
$53,568
4
Motor Vehicle 1 (W)
$5,000
$5,000
$5,000
5
K Bank account (W)
$124
$124
$124
6
L Bank account (W)
$1
$1
$ disregard (de minimis)
7
M Street Suburb O (H)
$1,090,000
$1,090,000
$1,090,000
8
Motor Vehicle 2 (H)
$60,000
$60,000
$60,000
9
Furniture & furnishings (H) *
$10,000
$25,000
$ disregard
10
Westpac Bank account (H)
$8,205
$8,205
$8,205
11
Commonwealth Bank account (Joint)
$1
$1
$ disregard (de minimis)
Sub-total:
$3,181,897
ADD-BACKS
Item
Description
Value (H)
Value (W)
Value adopted
12
E Bank mortgage redraw (W)
$1,825 but abandoned
$0
$0
Sub-total:
$0
LIABILITIES
Item
Description
Value (H)
Value (W)
Value adopted
13
E Bank mortgage Suburb C (Joint)
$298,406
$298,406
$298,406
14
L Bank home mortgage Suburb O (H)
$622,667
$622,667
$622,667
15
Lease on Motor Vehicle 2 (H)
$69,504
$69,504
$69,504
16
P Company personal loan (H)
$10,085
$10,085
$10,085
17
ATO debt for FY 2023 (H) *
$88,378
$0
$Disregard
Sub-total:
$1,000,662
SUPERANNUATION
Item
Description
Value (H)
Value (W)
Value adopted
18
Super Fund 1 (H)
$477,558
$477,558
$477,558
19
Super Fund 2 (W)
$157,682
$157,682
$157,682
Sub-total:
$635,240
FINANCIAL RESOURCES
Item
Description
Value (H)
Value (W)
Value adopted
20
Q Company Shares (on trust for the children)
$95,737
$95,737
$95,737
Sub-total:
$95,737
To summarise the above figures, the parties’ net assets (including superannuation) are $2,816,475. The Wife also has financial resources of $95,737.
I now turn to the contentious items.
Items 2 & 9 – Furniture & furnishings of the parties (including jewellery of the Wife)
The Wife’s Financial Statement valued her items at $25,000 and this figure was unchallenged.
The Husband’s Financial Statement valued his items at $10,000. But, pointing to an online home loan application completed by the Husband in May 2021 in which he had estimated the value of his home contents at $50,000, the Wife suggested that a figure of $25,000 was also appropriate for the Husband’s items.
In the witness box, the Husband could not recall if his $50,000 estimate was based on reasonable second hand values (which would be the appropriate measure of value in this Court) or replacement values (which would produce a disproportionately high figure). Given that loan applications generally paint the most optimistic picture of an applicant’s finances, and that the Husband himself disavowed the accuracy of the loan application when it was shown to him in the witness box, I consider that the Husband’s $50,000 figure was disproportionately high. Moreover, the Husband was only renting a two (2) bedroom unit at the time of the loan application and I accept his evidence that, whatever the basis for his $50,000 figure, it was intended by him to refer to the combined value of the contents of both his unit and the Suburb C home.
In closing submissions I raised the prospect of disregarding both parties’ figures. Though doing so arguably favours the Wife given her higher admitted figure, in my view it is an appropriate way to proceed given the questions about the Husband’s figure and in the absence of any proper valuation evidence. I am also mindful of the modest value of such items in context of the overall value of the matrimonial property being divided in this case and also of the fact that furniture and furnishings are essential day-to-day living items that lose value over time; they would not ordinarily be sold for a profit.
Item 17 – Husband’s anticipated ATO debt for FY 2023
As a professional, the Husband’s income consists of drawings from which expected to meet, amongst other things, his own tax liabilities.
His unchallenged evidence is that during FY 2023 he has not made any payments towards his anticipated tax liabilities. He does not have to lodge his FY 2023 return until May 2024 and is in no hurry to do so as, based on his FY 2022 tax liability, the Husband estimates that he will end up owing approximately $88,378 which is what he seeks to include as a liability.
The Husband had a similar tax problem in FY 2022. According to his FY 2022 return [2] his taxable income was $250,450 and his ultimate tax liability was $87,884 including the Medicare levy. He had paid $33,285 to the ATO that financial year and was left with a debt of $54,599. In the witness box, the Husband said that he did not have the available cash to pay it off as a lump sum, and had instead been paying the ATO a sum of $7,000 each month which his accountant had advised might keep them at bay and forestall any enforcement action.
Interestingly the Husband had not referred to his FY 2022 tax liabilities either in his affidavit or in his Financial Statement – despite the $7,000 per month repayment arrangement being in place. Nor did he seek to include the FY 2022 tax liability in the Balance Sheet.
Returning then to the contentious FY 2023 tax debt, the Wife’s position is that there should be no allowance in the Balance Sheet. Pointing to the absence of any expert evidence as to the exact quantum of the debt, and making the general complaint that the Husband should have properly provided for his tax, she contends that the tax debt simply be dealt with by way of an allowance under s 75(2).
At the hearing I tried to address the absence of expert evidence by inviting the parties to have discussions (through counsel) to see whether some sensible agreement or compromise figure could be reached as to the likely amount of the tax liability. It was to no avail.
Ultimately, the Wife is well within her rights to object to the Husband’s proposed figure in the absence of expert evidence. In the absence of agreement, I will not include the Husband’s anticipated FY 2023 tax liability in the Balance Sheet, but deal with it in my s 75(2) assessment.
IS IT JUST & EQUITABLE TO MAKE A PROPERTY SETTLEMENT ORDER?
This was a lengthy relationship which produced three (3) children. The parties’ incomes and assets have been intertwined but they cannot now continue to mutually enjoy the use and benefit of the various assets that they hold.
Each party seeks a property settlement order, albeit in different terms.
I respectfully agree that it would be just and equitable to make an order and will proceed on that basis.
STEP 3 – ASSESSMENT OF CONTRIBUTIONS:
Initial contributions
In 2002/2003 the Husband was working as a Professional in Sydney. He had accumulated around $65,000 in the bank, most of which was held in term deposits. He also had some managed funds with a balance of <$25,000. He had superannuation of approximately $18,000.
The Wife was working for R Company and living in the Suburb C property which at that stage was owned by she and her ex-partner. The home was quite basic; it consisted of 2 bedrooms and 1 bathroom only and the driveway was unsealed. The Wife and her ex-partner had purchased the property in 2001 for $312,000 with the assistance of a home loan of $300,000 secured by way of mortgage. The Wife also had a Motor Vehicle 3 which she had previously purchased for $20,000. She had superannuation of < $28,400.
In 2003 the Wife and her ex-partner negotiated a property settlement whereby they agreed that, in exchange for a cash payment of $25,000, he would relinquish any claim against the Suburb C Property. The Wife did not have that cash available and so she approached the Husband for assistance. He agreed to make the payment - which was done by way of bank cheque in 2003. Such was the relationship of trust between the Husband and the Wife that he did not even ask to see any written documentation. At around the same time the Husband also began making repayments towards the Suburb C home loan (then with CBA).
Contributions during the relationship
As a general statement, the Husband was the primary income-earner during the relationship while also making some homemaking and parenting contributions. The Wife was the primary homemaker and parent although she also made contributions as an income-earner.
In terms of household tasks, the Husband regularly cleaned the kitchen after meals, sometimes cooked on weekends, assisted with laundry and general cleaning and tidying, did his own ironing, did the yard work, took out the rubbish, organised the garage, helped look after family pets, did minor household repair and maintenance work (including some fence painting) and looked after the family cars. When the children came along, he helped bathe them, helped with their laundry including ironing school uniforms, made their school lunchboxes, helped them with homework and took them to and from their various activities.
In broad terms the Wife was responsible for everything else relating to the home and the children.
In early 2004 the Husband moved into the Suburb C home after obtaining employment as a professional in City F. His salary was $160,000 per annum. The Wife was working as an administrator for R Company. I accept her evidence that her salary at that time was $56,000 per annum.
Each party’s pay was banked to the CBA home loan account (which had a redraw facility) and the parties largely lived out of their credit cards which they then paid off each month. Inferentially, the Husband’s income increased over time. I accept that throughout the relationship each party applied their respective incomes for the benefit of the family. By agreement, the Wife was responsible for managing the household finances.
In 2005/2006, the parties refinanced the home loan to pay for extensive home renovations. They added an upper level to the home, incorporating a staircase, master bedroom, balcony and ensuite, another bedroom and a study. I accept the Wife’s evidence that the parties borrowed around $250,000 for the renovation – thereby increasing the mortgage balance to around $500,000. The Husband’s father, a tradesman, repainted the interior and exterior of the home at no cost.
X was born in 2007. After the birth, the Husband took a few weeks off work. The Wife took 6 months’ maternity leave, before returning to work part-time.
Y was born in 2009. The Wife sustained an injury while pregnant with him; she used up her sick leave until 2009 at which point she went onto maternity leave.
Around that time, the Wife’s parents gifted the parties:
·about $4,000 which was used to pay for some security and fly screens;
·a $8,000 leather lounge;
·a cubby house and some outdoor upgrades (connecting gas to the barbeque) which cost around $5,500.
In early 2010 the Wife again returned to work part-time. Later that year the Husband did some re-landscaping of the backyard including installing the cubby house and a play area. His father assisted by providing some free labour.
In 2011 the parties upgraded the driveway and front gate of the home at a cost of around $10,000 which was paid for by the Wife’s parents.
Z (“Z”) was born in 2011. The Wife again took 6 months’ maternity leave before returning to part-time work.
In 2013 the Husband began working for his current employer. The parties extensively renovated the kitchen at a cost of around $80,000 which was paid for by the Wife’s parents.
By this time it had become obvious that Y had high needs. He was having regular emotional ‘meltdowns’, putting his hands over his ears, yelling, crying, being physically aggressive and struggling to regulate his emotions. This had particularly been noted at his daycare centre. The Wife took Y to see a psychologist, Mr T, who diagnosed him with a sensory processing disorder.
In 2014 the Husband had a promotion at his firm, at which point his income increased to around $240,000 per annum (taken as drawings).
In 2015 the Husband’s father repainted the exterior of the Suburb C home at no cost.
Over the ensuing years, Y was diagnosed with ASD, ADHD, and other mental health issues. I accept the Wife’s affidavit evidence that:
32.[Y] was not diagnosed with all these disorders at one time, and I have spent years following up professionals and advocating for my son. I have also spent hours online searching for recent scientific papers, nutrition and diet regimes that could assist [Y]. To the reduced the impact [sic] of disability on our entire family in particular our other children.
Given the way in which the parties structured their respective roles during the relationship, and the work stresses and responsibilities now thrust upon the Husband as a professional, the practical burden of attending to Y’s needs very largely fell on the Wife.
In 2016, Y began receiving NDIS assistance. Even so, life remained a struggle. He began absconding from school (S School) and as a general statement it was the Wife who had to go there, collect him and bring him home. It all started to become too much.
I accept the Wife’s affidavit evidence that:
38.In or around [mid-]2016 [S School] telephoned me as [Y] had disappeared out the school gate and I needed to come down and collect him. At the time I was at work at [R Company], and I put my head on the keyboard and cried as I had the realisation I just couldn’t work and take care of [Y]. This was his third attempt of absconding from [S School]. I was constantly being disrupted by phone calls from the school, taking [Y] to appointments and being asked to come and collect him early from school.
The Husband accepted that the Wife was the parent who dealt with the school and that she would give him feedback afterwards.
By July 2016 the school were suggesting that Y would be better off at a public school as more support would be available. I accept the Wife’s evidence that:
40.[X] was also in attendance at [S School] and so the decision to leave [S School] could affect her also. After a discussion with [Mr Radek], we decided that [Y]’s needs and early intervention therapy was more important than my employment. [Mr Radek] was a high income-earner of $260,000 at the time and so we thought we would be financially in a position for me not to work and take care of [Y].
41.I took all my long service leave, annual leave and exhausted all benefits and then finally resigned from my position in or about [mid-]2016 at [R Company]. At the time I finished work I was earning $30,000 part-time and as I had been there for 15 years, and [sic] I had been promoted through the ranks.
By that stage the wife had enjoyed her work and the opportunity to interact with others in an office environment.
The Husband was now solely responsible for paying the mortgage.
In August/September 2016, the Wife home-schooled Y. Following the end of term holidays he then commenced at H School for term 4.
That same year, X began displaying remarkable talent in sports.
The parties refinanced the CBA mortgage that year with E Bank. At the same time as refinancing the CBA mortgage (then $350,000), they also took out a loan so that the Wife could purchase some shares in her sole name. This was done; the associated loan repayments were made out of the husband’s income, assisted by the dividend income.
In 2017 X and Z joined Y at H School. The same year, the parties upgraded the downstairs flooring of the home at a cost of around $10,000 which was paid for by the Wife’s parents.
Financially the parties lived a comfortable lifestyle. For instance in 2018 their average credit card bill was around $14,255 per month or $3,290 per week. This expenditure was in addition to their fixed expenses such as mortgage repayments and vehicle expenses.
On a personal level however, family life was a struggle:
·Y would become dysregulated at school and could be doing anything from crying, throwing things, swearing, upturning tables and chairs and ripping things off the classroom walls;
·he would then abscond from the school and they in turn would contact the Wife;
·the Wife would then locate Y and let the school know that he was safe;
·the Wife then had to calm Y down, which involved hugging him tightly, sometimes for hours.
The Wife also home-schooled Y on Wednesday’s to give him a ‘break’. On occasions the Wife was also called to come to the classroom to de-escalate Y when no-one else could. In 2018 he absconded from school about 30 times and was twice suspended for aggressive behaviour. Sometimes the Wife went to the classroom to help with the cleanup and I accept her affidavit evidence that:
“[I]t was heartbreaking, confronting; but most of all it was relentless and exhausting. I still had two other young children to look after, and my husband had a demanding job; so, I felt like I was doing it all alone.”
Getting Y to school each morning was a challenge on its own. The Wife would medicate him at 7am and give him breakfast in bed so that the medication took effect before he got up. She would run through his day with him and lay out his clothes. She would assist him to put on deodorant and, up until 2023 she had to dress him as he could not do it properly himself. She would make sure his correct books were packed for the day, that his hair and face were clean and that his devices were charged. It was essentially a full-time job; she would not leave his side. Fortunately his siblings could organise themselves adequately.
Y has had an individual student support plan and a crisis management plan at every school he has attended. The Wife would meet with the school at the end of each term to discuss and update the plans.
The Wife would also take Y to his regular medical and allied health appointments.
During the relationship the parties purchased shares for each of the children in a listed managed fund, Q Company. Essentially the Husband invested $500 of his income each month beginning when each of the children were born and ending when they started school. Any dividends were re-invested. As at the date of the Husband’s affidavit, X had 3,000 shares, Y 3,000 shares and Z 3,000 shares. These shares are included as a Financial Resource in the Balance Sheet.
At separation the Suburb C mortgage had a balance of $198,849 with available redraw of $151,151.
Post-separation
The parties’ relationship broke down in mid-2018 at which point they started sleeping in separate rooms. The Husband continued banking his pay into the mortgage; financially the parties lived much the same as before.
Given Y’s care needs the Wife did not search for outside employment, which in my view was reasonable.
In late 2018 the Husband’s parents’ investment home at Town U began operations as a ‘short stay’ rental. In return for the parties managing the property and doing the cleaning between stays, the parties received half the income.
Managing the property was somewhat labour-intensive. It involved the Wife driving there and cleaning the interior and exterior to a very high standard. So that they would receive ratings as a ‘Superhost’ which in turn would help drive future bookings. The Wife also re-stocked the pantry and replaced the consumables (like soap and shampoo). As a general statement the whole job took around 18 hours from start to finish and the Wife would stay there overnight.
The Wife estimates that she cleaned the home around 33 times in total, but ultimately it became too difficult as Y and the children did not cope very well with her being away. The Wife stopped around mid-2020 and the Husband’s parents sold the home soon after. The Wife ‘styled’ the home for them so as to present it in as good a state as possible for the sale. In total, the Husband’s parents paid the parties around $40,000 for managing the rental.
In 2018, the Wife received an inheritance of $100,000 from her late uncle. She deposited it into the E Bank loan, increasing the available redraw to $187,000.
In 2019 the parties brought a discrimination claim against the V Authority in respect of Y; they received an award of $10,000.
X began attending G School that year. Despite the Husband’s agreement to be solely liable for the fees, the Wife or her mother have paid them (presently $3,930 per annum).
In July 2019 the Husband moved out of the Suburb C property and into a 1-bedroom unit which he rented for $510 per week. The Wife and children remained living in the home. For the time being the Husband’s income continued to be banked into the E Bank loan. At that stage the E Bank loan mortgage balance was $198,849 with available redraw of $151,151. The Husband used the redraw to pay his rent, tax, living expenses and superannuation. The Wife also used the redraw to meet living expenses.
In August 2019 the Wife opened a bank account in her own name and applied for Government assistance. She began receiving Centrelink Carer benefits as well as Family Tax benefits. But child support was the largest portion of her income.
In 2019 / 2020 the Wife paid $22,470 towards the parties’ joint credit card debts.
In early 2020 the Husband moved into a studio apartment which he rented for $420 per week. In October 2020 he moved into a two (2) bedroom unit which he rented for $550 per week. Throughout this period the children barely visited him, despite his requests.
In 2020 the Wife’s already busy life became even more hectic when Z, like his sister, began playing sports at representative level. I accept the Wife’s affidavit evidence that:
28.As a family, due to [Y]’s need for sameness we travel for sport at least twice per month to carnivals or representative events, trials and I travel to many training sessions during the week which can range from [City W], Sydney, to [Region AA] to [City BB]. There are 14 scheduled training and playing session [sic] between [X] and [Z] per week currently. There are also flights, accommodation registration fees uniforms and insurance costs associated with this level of sport.
29.We must consider [Y] on the choices of accommodation and length of stay as he has to accompany us.
In 2020 the Wife’s mother paid around $4,500 to replace the security doors and screens at the back of the home. At the Wife’s request, her mother also paid around $4,000 towards the Wife’s home and car insurance payments.
In May 2020 the Wife took over the Rates payments for the Suburb C property.
Using Covid-related rules, the Wife also withdrew $20,000 from her superannuation. She used $17,397 to pay for numerous maintenance and improvement works. The Wife also had to spend $5,775 to properly waterproof the wall.
In 2021 the Wife’s father passed away.
In anticipation of buying his own home, in May 2021 the Husband stopped banking his income into the E Bank loan and instead paid it into his Westpac account. I accept the Husband’s evidence that in the period between July 2019 and May 2021 he had deposited total income of $533,150 into the home loan and withdrawn approximately $280,706 to meet his rent, tax, living expenses and superannuation.
By that stage the E Bank loan balance had increased to $240,951 with available redraw of $109,049.
The Husband continued making E Bank loan repayments of $1,025 per month up until March 2022 (a total of $10,617). Thereafter the repayments came out of the redraw.
The Husband also paid:
·child support of $4,431 per month;
·children’s private health costs of $918 per month, more recently dropping to around $750;
·Lease repayments for the Wife’s Motor Vehicle 1 of $700 per month being a total of around $7,000 up to the final balloon payment in April 2022 (discussed later).
The parties divorced in June 2021.
In July 2021 the Husband purchased the Suburb O property for $910,000, with the assistance of a $650,000 mortgage from L Bank and $300,000 provided by his parents. The total purchase cost was $950,000 after allowing for stamp duty and fees. Following the purchase, the Husband began to repay:
·$2,465 per month to the L Bank;
·$1,500 per month to his parents although at the hearing the Husband conceded that there was not an enforceable loan agreement in place between them.
In 2021 the Wife sold her shares and the sale proceeds were used to discharge the relevant loan; the surplus left over was applied towards the E Bank loan. While the sale reduced the debt burden for the parties, it also reduced the Wife’s dividend income.
On 10 August 2021 the Husband unilaterally placed a double authority over the E Bank loan and redraw facility. The Husband did so because he wanted the Wife to either make the final balloon payment for her motor vehicle ($11,125) or give him the car to sell it. There followed a standoff for the next 6 months during which time the Wife turned to her mother for financial support. In late February 2022 the Wife ultimately agreed to make the balloon payment at which time the double authority was removed and the redraw was again available.
While the double authority was in place, in November 2021 the Wife borrowed $23,150 from her mother to attend to some exterior weatherboard repairs and repainting. In January 2022 the Wife arranged for the roof to be repainted at a cost of $4,000, as well as replacing the ducted air conditioning unit which cost $12,470. Again she borrowed this money from her mother.
The Wife also borrowed $2,728 from her mother in February 2022 so she could pay the home insurance.
Once the double authority was lifted, the Wife repaid all those sums to her mother.
The Husband has since gone on to improve the Suburb O home; he wants to retain it and stay living there. I accept his evidence that he has:
(a)installed a solar panel system, with the assistance of a personal loan from ‘P Company’ as set out in the Balance Sheet;
(b)attended to interior and exterior painting;
(c)knocked out an interior wall to open up the living/dining area;
(d)changed lights and installed curtains;
(e)undertaken some tiling and replaced some taps and fittings;
(f)resurfaced the bar area and installed LED lights;
(g)created a gym in the garage and a library;
(h)installed artificial grass and undertaken some landscaping;
(i)installed a picture rail.
The Husband’s purchase was motivated by his desire to create a second home for the children in the hope they would visit him more. Regrettably that has not materialised, despite orders. But while the Husband is critical of the Wife for this, his complaints fell to be considered in the course of the parenting proceedings, which were ultimately settled on a final basis. For the purposes of these proceedings, the real issue is who made the relevant parenting contributions - not why.
To avoid doubt, I do not doubt the Husband’s genuineness in wanting to see the children in accordance with the orders. In practical terms however, he currently only sees X and Z at sport during the week, he sometimes sees Z on the weekends, and he rarely sees Y although does attend some medical and allied health appointments. As at the date of his trial affidavit, the Husband’s best estimate was that the children had only been to his Suburb O home around a dozen times.
In 2022 Y commenced high school. The Wife was called to the school to collect him early on 19 occasions that year.
At the date of the hearing, the E Bank loan balance had increased to $298,406 and there was no redraw capacity left. In my view, this is a consequence of both parties consistently living at or beyond their means. In truth, each party has relied on their own parent/s to subsidise their living costs.
Overall assessment of contributions
In the exercise of my discretion I will assess contributions across the whole of the asset base.
Each party made substantial contributions towards their marital assets and financial resources. Ultimately, the Husband contended that contributions should be assessed as equal, particularly given his substantial financial contributions and particularly his parents’ recent advance in respect of the Suburb O property. The Wife, pointing particularly to her initial contribution of the Suburb C home, her inheritance, her parents’ financial assistance and her arduous parenting contributions (particularly post-separation), contended for an overall assessment of up to 60% in her favour.
Weighing the contributions, I find them to be as follows:
(a)in respect of the non-superannuation property – 53% to the Wife and 47% to the Husband;
(b)in respect of the superannuation property – 50% to the Wife and 50% to the Husband, ie. that their combined superannuation should be divided equally;
(c)in respect of the Q Company Shares (financial resource) – 50% to the Wife and 50% to the Husband.
In dollar terms, the parties’ respective contributions-based entitlements are as follows:
(a)in respect of the non-superannuation property – $1,156,055 to the Wife and $1,025,180 to the Husband;
(b)in respect of the superannuation – $317,620 each.
STEP 4 – ADJUSTMENTS FOR FUTURE FACTORS:
The Husband was born in 1974 and is presently 49 years old and in good health. As a professional, he has long had a healthy income-earning capacity. For instance, between FY 2015 and FY 2022, his taxable income was in the range of $240,000 - $294,555. That said, his employment also has its disadvantages. He is not entitled to long service leave. Moreover, although he is entitled to take six (6) weeks’ leave per calendar year, it is a ‘use it or lose it’ policy and cannot be accumulated unless all employers agree.
On the face of his Financial Statement, the husband’s income is $5,576 per week and his expenses are $5,574. But the weekly expenses set out in the Financial Statement did not in fact add up to that figure; that aspect of the document was rather shoddy and only in the course of cross-examination did a clearer picture emerge. Specifically in relation to the Husband’s fixed weekly expenses:
·his tax (item 19) is just under $1,700;
·his super contributions (item 20) are $528;
·his mortgage (item 21) is $568;
·his rates (item 22) are $42;
·his combined insurances (items 25 & 26) are $270;
·his vehicle registration and lease repayments (items 27 & 28) are $250;
·his child support is $1,023;
being a weekly total of $4,381.
I am disregarding the repayment made by the Husband to his parents of $346 per week as there is no binding loan agreement in place. Putting that payment to one side, the Husband’s weekly net surplus of income over expenses would be in the order of $1,170 or thereabouts – subject to his ‘Part N’ expenses (food and household / consumables etc) which still needed to be deducted.
I accept that the Husband incurs ‘Part N’ expenses, but unhelpfully these were left blank in his Financial Statement. The Wife’s counsel suggested to the Husband that these ‘Part N’ expenses were only around $200 per week – meaning that the Husband have a weekly surplus of around $970. The Husband disagreed.
Given the historical levels of credit card spending by both parties[3], and general costs of living, I would allow for the Husband’s ‘Part N’ expenses be at $750 per week so that his true surplus is in the general range of $200 per week. Of course in saying this I am mindful that the Husband is able to make voluntary super contributions as well, which the Wife cannot. If his superannuation contributions are disregarded, his true surplus is around $748 per week.
But there are some complicating factors.
Firstly, for a number of months there will be no surplus as the Husband will be paying $7,000 per month to the ATO on account of his FY 2022 debt.
Secondly, the Husband’s home loan is presently on a fixed interest rate of 2.19% per annum, but on the three (3) year anniversary of the loan in June/July 2024 the rate will revert to a variable rate. Though it is impossible to state what the interest rate be at that stage, it is practically inevitable that the interests repayments will increase, perhaps substantially so.
Lastly, the Husband has a looming tax liability for FY 2023 in an unknown but significant amount. This may require him to either borrow more money from L Bank (or from his parents if they are willing to assist); alternatively the Husband may have to keep making instalment payments to the ATO.
In short, the Husband’s surplus of income over expenses seems to be questionable over the next few years.
The Wife was born in 1975 and is presently 48 years old. She has a diagnosis of ADHD which is well-managed with medication and 6-monthly psychiatric appointments. She was consistently in employment up until 2016. During that time she acquired significant administrative experience, management experience as well as completing certificates and qualifications. She has qualifications in hospitality. An industrious and hard worker, the Wife enjoys interacting with others in an office setting. If she could, the Wife would still be at work in some capacity. But I accept her evidence that:
“I don’t determine that, it depends on [Y] and his need for support.”
The Wife has been out of the paid workforce for seven (7) years as a result of Y’s high care needs. I do not consider that it is reasonable to expect her to look for any meaningful work in the foreseeable future. Caring for Y is effectively a full-time job, as evidenced by her receipt of a Carer’s pension.
The Wife presently lives beyond her means. Her weekly income is $1,807 per week of which $1,019 (56.5%) is child support; $758 (42%) comprises means-tested Government benefits and the other $29 (1.5%) comes from dividends. Yet her weekly expenses are $3,565 including fixed expenses of $704 (including $490 for the mortgage which has been paid out of the redraw). Her ‘Part N’ expenses come to $2,861 per week - including $595 for the children’s activities alone. Her mother pays for their sport expenses and school fees totalling $339 per week.
In essence, the Wife is solely responsible for the children’s care and associated expenses each week, but without being able to adequately support them financially without assistance from her mother.
Neither parent has re-partnered.
Both parties have enjoyed a reasonable standard of living. Given the assets that they hold, each will continue to enjoy at least a reasonable standard of living going forward. The question is whether or not their current standards of living are sustainable.
The Wife is going to be required to attend to practically all of the day-to-day parenting of the children. The Husband agreed in the witness box that just looking after Y on his own was “pretty full-on”. In addition to assisting Y with all of his school-related needs, Y also attends physiotherapy and exercise physiology appointments twice per week; as well as monthly appointments with a psychologist, a chiropractor, a behavioural paediatrician and an occupational therapist. The Wife also personally manages Y’s NDIS funding budget, at times a difficult and complicated process involving therapists, reviews and applications to the fund administrators. But to the burden of caring for Y must then be added the burden of the other childrens’ intensive sporting commitments.
Put shortly, the Wife has very little respite; her parenting role is and will remain unrelenting for the foreseeable future.
In the witness box the Husband’s counsel suggested to the Wife that, rather than taking all of the children with her on sporting trips, she could instead leave one or more of them with him. She responded that she cannot leave Y with the Husband and that Z (who also suffers from anxiety) is not comfortable staying with him unless his siblings are present. I accept the Wife’s evidence. While I do not doubt that the Husband would like to see more of the children, it does appear to have been somewhat of an acrimonious separation and the circumstances of the siblings are obviously complex – as reflected by the terms of the final parenting order itself, particularly order 7.
The Husband pays child support to the Wife of $1,020 per week and will continue to pay similar levels of child support going forward.
The Wife confirmed in the witness box that she no longer sought a spousal maintenance order. In closing submissions the Husband’s counsel placed emphasis on this. He submitted that in terms of future needs, the Court should take into account the Wife’s expectation that her mother will continue to provide her with financial support as needed. He thereby contended that the Wife’s mother’s continued support was effectively a ‘financial resource’ available to the Wife and thus relevant pursuant to s 75(2)(b) and/or s 75(2)(o).
The Wife conceded that her mother is willing to act as guarantor for her if the Wife is able to retain the Suburb C home. But asked whether her mother could simply pay out the E Bank loan in its entirety, the Wife demurred, observing that her reliance on her mother has an “expiry date” and that the loan is fundamentally the Wife’s own responsibility.
In Hall & Hall (2016) FLC 93-709, the High Court (French CJ, Gageler, Keane & Nettle JJ) observed that a financial resource has been correctly interpreted by the Family Court as ‘a source of financial support which a party can reasonably expect will be available to him or her to supply a need or deficiency’. Their Honours went on to observe that in most cases it involves a factual inquiry. Though a party need not control the source of funds, there must be more than a mere expectation of benevolence from another. Essentially the question to ask is whether or not support from that source could reasonably be expected to be forthcoming were the party to call on it. [4]
In my view, the Wife’s mother’s past and present financial support of the Wife, coupled with her willingness to guarantee the Wife’s home loan in the future, makes her support a relevant ‘financial resource’ for the purposes of s 75(2). But how much weight should I place on that support?
In my view, some weight can be placed on that fact. But the Court needs to be careful not to place too much weight on it because:
·the Wife is a woman of mature years with a family of her own. To the extent she can reasonably do so, she wants to ‘stand on her own two feet’ financially and not to impose on her mother;
·it is not just or equitable for this Court to proceed in the expectation that the Wife’s mother would or should continue to financially subsidise the Wife and children in circumstances to the extent that those financial obligations can be met by the parties themselves out of their marital assets; and
·in any event, the Husband’s parents have demonstrated a similar willingness to financially support the Husband – as most recently evidenced by their $300,000 advance to purchase the Suburb O property. Just as the Wife may have her mother to assist her to meet her mortgage obligations for the E Bank loan, so too the Husband has his parents to assist him to meet his obligations (including potentially his tax debt).
The Wife was asked whether her mother’s City F home was being held on trust for the Wife since the passing of the Wife’s father. The Wife said it was not. While it is possible – indeed likely – that the Wife’s mother will benefit the Wife under her Will at some future point, so too might the Husband’s parents do the same with him. I intend to disregard the prospect of inheritances in each case.
The Husband has exited the relationship with a healthy income-earning capacity and a good career albeit with some relatively short-term financial strain. The Wife has exited it without a career, or even any real prospects of a meaningful job for the foreseeable future. The Wife’s parenting role also needs to be protected if possible given the needs of the children, particularly Y.
Appropriate s 75(2) adjustment
Weighing all of these matters, I am satisfied that a further adjustment to the wife of 20% of the value of the net non-superannuation assets would be just and equitable, as well as a 5% adjustment in respect of the Husband’s superannuation given his superior capacity to contribute to superannuation in future.
In dollar terms, the effect of this adjustment is that:
(a)the Wife is entitled to 73% of the non-superannuation property, being $1,592,302. The Husband is entitled to 27% or $588,933;
(b)the Wife is entitled to 55% of the combined superannuation property, or $349,382. The Husband is entitled to 45% or $285,858.
These figures create a practical problem for the Wife in retaining the Suburb C property as she presently holds net non-superannuation assets of $1,725,286. Rather than receiving a cash payment of $200,000 (or thereabouts) from the Husband, she has to make a payment to him of $132,984.
Lastly, it is logical that the Wife (as the children’s carer) continue to solely manage the Q Company shares for the benefit of the children rather than the Court appointing the Husband as a co-trustee. I have considered this resource as part of my s 75(2) assessment.
STEP 5 – CONSIDERING THE EFFECT OF MY FINDINGS / ENSURING A JUST & EQUITABLE OUTCOME:
The Wife proposes that she forego a superannuation split in her favour in exchange for a cash payment in that amount. On my calculations that figure would be $191,700. The Wife’s case rests on her fervent desire to retain the Suburb C property, which requires her to refinance the existing E Bank loan and reduce its balance as much as she can. I accept her evidence that she will not willingly sell the property as she believes that “Y would never adapt to that.”
Whether this aspect of the dispute is dealt with as a s 75(2) matter, or as part of a consideration of what would be the appropriate ‘mix’ of assets each party should hold in order to give effect to the Court’s orders, the underlying question remains what is ‘just and equitable’.
On that point, where is the Husband to get the cash from? He has no significant cash assets; he would either have to borrow the money from L Bank or go ‘cap in hand’ to his parents. Or his Suburb O home would have to be sold – a home which the Husband purchased in his own name and which, save for parenting contributions, the Wife has made no contribution towards. None of these options would result in a just and equitable outcome insofar as the Husband is concerned. His interests are also relevant; what is just and equitable must be just and equitable to both.
It would be regrettable if the Wife has to sell the Suburb C home but it may be unavoidable. The fundamental problem here is that the parties are ‘cash poor’, most of their money is tied up in real estate and neither of them has shown any particular enthusiasm or aptitude for cutting their expenditure. The Court can only deal with the parties and the assets as it finds them.
CONCLUSION & ORDERS:
For these reasons, I make the property orders set out at the commencement of the judgment.
I certify that the preceding one hundred and forty-six (146) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Betts. Associate:
Dated: 1 September 2023
[1] Exhibit 4
[2] Exhibit 2
[3] See for instance exhibit 3
[4] Paras 54 and 55 of their Honours’ judgment at p 81,456
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