RIPPLEY & RIPPLEY
[2013] FamCA 322
FAMILY COURT OF AUSTRALIA
| RIPPLEY & RIPPLEY | [2013] FamCA 322 |
| FAMILY LAW – PROPERTY SETTLEMENT – Contributions – Inheritance – Child with severe disability – Just and equitable outcome FAMILY LAW – SPOUSAL MAINTENANCE – Inability of wife to adequately support herself – Question of husband’s ability to contribute – Financial circumstances unclear FAMILY LAW – CHILD SUPPORT – Grounds for departure exist – Quantum |
| Family Law Act 1975 (Cth) |
| Mallet v Mallet (1984) 156 CLR 605 Omacini and Omacini (2005) FLC 93-218 Rosati v Rosati (1998) FLC 92-804 Westmore & Westmore [2007] FamCA 1341 |
| APPLICANT: | Mr Rippley |
| RESPONDENT: | Ms Rippley |
| FILE NUMBER: | SYC | 6798 | of | 2011 |
| DATE DELIVERED: | 9 May 2013 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Crisford J |
| HEARING DATE: | 11 & 12 March 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Bell |
| SOLICITOR FOR THE APPLICANT: | Searle & Associates Lawyers Pty Ltd |
| COUNSEL FOR THE RESPONDENT: | Mr Sansom |
| SOLICITOR FOR THE RESPONDENT: | Barkus Doolan Kelly |
Orders
Property settlement
Within 42 days the husband do all acts and things and sign all documents, deeds and instruments as may be necessary so as to transfer to the wife unencumbered the whole of his right, title and interest in the Suburb B property.
Within six months from the date of these orders the husband pay to the wife the sum of $81,129.
The husband forthwith do all acts and things and sign all documents as may be necessary so as to resign as a trustee of the wife’s portion of the C Trust, but first shall, if called up to do so by the wife, sign all deeds, documents and instruments as the wife may submit to him to appoint an alternate trustee.
As against the husband, the wife be solely entitled to all other assets, property and chattels of whatsoever nature and kind in the name, possession or ownership of the wife as at the date of the making of the orders.
As against the wife, the husband be solely entitled to all other assets, property and chattels of whatsoever nature and kind in the name, possession or ownership of the husband as at the date of the making of the orders.
Spousal maintenance
Until further order, as and by way of spousal maintenance the husband pay or cause to be paid to the wife the sum of $1,000 per week with such payments to be made monthly in advance:
(a)on the first day of each calendar month with the first payment to be no later than 7 days following the date of these orders; and
(b)to the credit of an account of an Australian financial institution nominated in writing by the wife.
Either party have liberty to apply in relation to the issue of spousal maintenance after the expiration of 12 months from the date of these orders.
Child support
As and by way of departure from any administrative assessment for child support for the children D born … January 1999, F born … December 2001 and E born … January 2004 and continuing until each child attains the age of 18 years or 31 December in the year in which each child finishes secondary school (whichever is the latter) the husband shall pay:
(a)by way of periodic child support in respect of the children D and F, pay to the wife the sum of $375 per week per child until the happening of a child support terminating event in respect of each of D and F;
(b)by way of periodic child support in respect of the child E pay to the wife the sum of $500 per week until the happening of a child support terminating event in respect of E;
(c)by way of non-periodic child support and in addition to any other amount of child support the husband is liable to pay pursuant to order 5 hereof:
(i)100 per cent of the school fees, uniforms, text books and school related extracurricular activities and excursions for D to attend G School or such other school as agreed between the parties or orders by the Court;
(ii)100 per cent of the school fees, uniforms, text books and school related extracurricular activities and excursions for F to attend H School or such other school as agreed between the parties or ordered by the Court;
(iii)100 per cent of the school fees, uniforms and school related expenses for E;
(iv)all instalments necessary to maintain private health insurance for the children; and
(v)all gap medical, hospital, optical, physiotherapy, dental and orthodontic expenses in respect of the children not otherwise covered by government rebate or by the health insurance policy which provides cover for the children.
That child support payable by the husband pursuant to order 7:
(a)is to be calculated against the husband's liability under any administrative child support payable by the husband to the wife for the period until the happening of a child support terminating event in respect of each of the children; and
(b)is to count for 100 per cent of the annual rate of child support payable by the husband under the administrative assessment for child support payable by the husband to the wife for the period until the happening of a child support terminating event in respect of each of the children.
That the payments to be made by the husband pursuant to orders 6 and 7 above (by way of spousal maintenance and periodic child support) be varied on 1 October in each year (“the review date”) commencing on 1 October 2013 to such sum as shall be determined by multiplying the child support and spousal maintenance being paid on the review date by the fraction N/B where N is the Consumer Price Index (all groups of Sydney) published by the Australian Bureau of Statistics (“CPI”) in respect of the quarter year ending 12 months prior to the review date.
General
That all previous orders be discharged.
That all applications, save for that relating to spousal maintenance, be dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Rippley & Rippley has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: SYC 6798 of 2011
| Mr Rippley |
Applicant
And
| Ms Rippley |
Respondent
REASONS FOR JUDGMENT
Introduction & Background
I am asked to determine how the assets acquired by Mr Rippley, (“the husband”) and Ms Rippley, (“the wife”) during their 14 year relationship should be divided. They also ask the Court to quantify an appropriate level of spousal maintenance for the wife and an appropriate level of child support for the three children of their relationship, D aged 14, F aged 11 and E aged 9.
Brief relevant chronology
The husband and wife met in 1991. The husband is employed in the financial industry. In 1989 he completed a degree at university in his field. The wife is engaged in full-time home duties. Prior to the marriage she had obtained a degree in the healthcare field.
The parties started living together on 5 September 1995 in New York City where the husband had employment with I Company. Soon after, the wife returned briefly to Australia, but from at least early 2006 the parties settled in New York City together. The wife undertook a design qualification in New York. She was unable to utilise any of her work skills in paid employment due to visa restrictions.
The parties married in 1996 and their first child, D, was born in January 1999. F followed in December 2001.
The parties returned to Australia in late 2002. They lived in a property they bought at J Street, Suburb A. By then the husband had been working for K Company since May 1997. He was promoted to a senior executive position in Sydney in September 2002.
Some time in 2002 the husband received an early inheritance of a portion of his family farm property known as Farm L, which is located at Town M, Victoria.
In about March 2003 the parties purchased another farming property at N Street, Town O.
In January 2004 E was born. She had medical complications during the first few months of her life. An assessment undertaken in 2005 showed she had significant developmental delays. The extent of her disabilities are such that she requires full-time care and will continue to do so for the rest of her life. She continues to live with the wife, but her ongoing care requirements are something the parties acknowledge need to be factored into their future financial arrangements.
In May 2006 the parties purchased the former matrimonial home at P Street, Suburb Q for $4.8 million. They sold the Suburb A property.
In March 2009 the husband ceased employment with K Company and received a redundancy package. He started his own business.
The parties separated in September 2009. The husband remained living in the former matrimonial home until January 2010 when he moved into a property he had purchased at R Street, Suburb S. In June 2010 the Town O farming property was sold.
In February 2011 the husband received an offer of employment with T Company and in April 2011 he started to live with his present wife. They married in October 2012.
The Suburb S property was sold in August 2011.
The law to be applied
I am required to follow a four-step process in dealing with an application for property settlement pursuant to the Family Law Act 1975. Those steps are:
·Identify and value the parties’ legal and equitable interests in their property and determine whether or not any adjustment in those interests should be made;
·Assess the parties’ contributions to the assets;
·Assess a range of other factors set out in s 75(2) and s 79(4) of the Act; and
·Consider whether the order proposed is just and equitable.
Orders sought by the parties
In simple terms the wife would like to retain the unencumbered Suburb Q property in which she and the three children live. Although this is the parties’ major asset she argues that it is ideally suited to E’s needs. She accepts she could rehouse, but given the design features and proximity to each of the children’s schools, it would be very difficult to find another home which is as suitable.
Overall, she is seeking a split of between 65 per cent and 75 per cent of the net assets.
She also seeks spousal support for herself and child support for the children.
The husband seeks the sale of both the Suburb Q property and Farm L. The matrimonial debt is secured over the farm. He seeks to retain about 55 per cent of the net assets.
He accepts there is a need to pay some level of spousal and child support, but disputes the amount sought by the wife.
Pool of Assets
I find the pool of assets to be:
Assets Ownership Value Farm L (Eastern Portion) Husband 4,523,000 NAB Farm Management Account Husband 2,920 St George’s Account Complete Freedom Savings …61 Husband 500 Luxury Car X Husband 40,000 Kit Car (in pieces, not registered) Husband 20,000 Ford (in parts, not registered) Husband 25,000 Holden Ute Husband 10,000 Artist U Painting Husband 400,000 Artist V Painting Husband 20,000 Contents at Suburb W property Husband 33,955 Plant and equipment at Farm L Husband 6,500 Luxury Car Y Husband 10,000 Funds held in Searle & Associates trust account Husband 17,500 P Street, Suburb Q, NSW Wife 4,500,000 Jewellery Wife 15,845 Volvo motor vehicle Wife 20,000 ANZ Account #...08 Wife 6,461 Mutual Trust Account …50 (balance of distribution from Z Trust_ Wife 36,212 Funds held in trust account of Barkus Doolan Kelly Wife 40,000 Contents at Suburb Q Wife 77,750 Total $9,805,643 Add backs Paid legal fees Husband 185,573 Paid legal fees Wife 84,828 Total add backs $270,401 Total assets $10,076,044 Liabilities NAB account (joint matrimonial debt secured over Farm L) Joint 1,500,000 ATO liabilities re sale of K Company January 2011 and 2012, and PAYG Joint 300,000 Total liabilities $1,800,000 Superannuation Asset Plumb Superannuation Fund Husband 180,000 Total net assets (including superannuation) $8,456,044
There were a number of items in contention and I will deal with these now.
Assets
·Value of the Farm L property
At the date the parties commenced cohabitation the husband had an expectation he would inherit a portion of Farm L. This heritage listed farming property has been in the Rippley family since its original settlement in the mid 1800s. The husband’s brother, Mr BB, is the fifth generation to operate Farm L.
In 2002 the husband acquired 2,601 acres known as the Eastern Part of Farm L. This was seen as an early inheritance due to his father, who subsequently passed away in 2008, having the onset of dementia. The husband owns the Eastern Part and his brother owns the Western Part of the farming property.
The understanding was that the husband would lease his holding of the Eastern Part to Mr BB, the farmer of the family. Mr BB would then have the ongoing use of both parts of the property. The brothers entered into such a lease agreement on 1 July 2002. The husband receives approximately $160,000 plus GST each year pursuant to the agreement which runs until 30 June 2014. There is an option to renew the lease for a further six years.
The parties agreed to the joint tender of a valuation of the husband’s interest in Farm L. Although the wife asserts a value of $4,890,000, this fails to take into account any discount which may be applicable, given the property is the subject of an ongoing lease agreement.
The agreed valuation places an unencumbered market value of $4,890,000 on the property. However, the valuation comments that whilst the current lease conditions generally are in accord with market expectations, a potential purchaser would be unable to gain control of the property in their own right for a period of up to eight years. The marketability of the property is therefore reduced. The valuer attributes a 5-10 per cent reduction in the value, and adopting a mid-point of 7.5 per cent, values the property, on an encumbered basis, at $4,523,000.
It is the husband’s position that the interest he holds in the farm will need to be sold. I have no information about a potential market for any sale. I have no evidence of the brother’s intention, either in relation to the lease itself or as a potential purchaser of the Eastern Part of the property. I have no firm evidence of when it is likely to be placed on the market for sale. The fact itself of the lease and its duration was unchallenged.
However, the wife has accepted the valuation and she wants the property to be sold. I will therefore adopt the value as asserted by the husband, which is that any sale needs to take into account a lease.
·Motor vehicles - Kit Car and Ford
An order was made by the Court on 25 July 2012 that unless by 14 August 2012 the value of the motor vehicles, motor parts and equipment were agreed in writing between the parties, an expert valuer was to be appointed to determine the value for the purpose of trial. The values were not agreed, yet no steps were taken for any valuation evidence to be obtained.
In relation to each of the motor vehicles the wife asserts the purchase price is the appropriate price for the Court to adopt. Both of these cars were purchased in 2009, some five years ago.
In relation to the kit car I accept the husband’s evidence that it is now worth approximately $20,000. If the wife asserts a higher value then I find it was incumbent upon her to take steps to obtain the appropriate valuation.
The husband deposes that the Ford is worth approximately $25,000. Again, without appropriate valuation evidence I accept this is the best and most likely present value of the car.
Add backs
The wife asks the Court to include in the asset pool items that no longer exist.
In the decision of Omacini and Omacini[1], the Full Court reviewed the cases dealing with this notation of add backs. Three clear categories of cases were identified as being appropriate to notionally add back to the pool of assets money or the value of items that no longer exist. These categories are:
·where the parties have expended money on legal fees;
·where there has been a premature distribution of matrimonial assets; and
·where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effect or value of assets or has acted recklessly, negligently or wantonly with assets.
[1] (2005) FLC 93-218
These categories obviously have to be considered within the factual context of each case and a trial Judge has a wide discretion in relation to the add back issue.
I will deal with the items sought to be added back, in this case, by the wife:
·Balance of proceeds of sale of K Company shares in 2010 ($105,000) and 2011 ($110,500)
In January 2010 and January 2011 the husband sold a substantial amount of K Company shares which he had acquired through his previous employment. The sale of these shares occurred during the period of time the husband was unemployed. He was required to service substantial debt in relation to the various properties. The wife also had access to their joint flexi mortgage account at the time and used it for her and the children’s living expenses.
The husband says that the funds he realised from share sales went towards joint bank borrowings, including interest payments and other ANZ debt. He said the funds also went to general family living expenses. The wife acknowledges some money went towards the bank debt, but she says the balance is generally unaccounted for and needs to be added back into the asset pool.
The wife maintains that over this post-separation period the husband indulged in ‘extravagant and unnecessary’ expenditure.
The husband said that he applied as much as he could from the sale of the shares to the joint flexi mortgage account. He accepts that he still has about $300,000 owing on unpaid tax resulting from the sale of these shares and also another batch of shares that he sold in 2012, the net proceeds of which it is accepted went towards matrimonial debt. In relation to the unpaid tax the husband accepts he made no provision for it at the time of the share sales, but said he needed the funds to pay immediate debt.
The evidence in relation to how the balance of the money realised from the sale of the shares was used was vague and uncertain. I accept that until the middle of 2011 both parties had access to the joint flexi mortgage facility and to that extent the money from the sale of the shares did fund their living expenses. The money sought to be added back was money not directly placed into the bank accounts. I am not able to say whether all of the husband’s living expenses were reasonable or otherwise. However, I found the husband to be a generally credible and reliable witness. He did make appropriate concessions. I also note that over this period of time the husband was unsuccessfully trying to establish his own business and may well have had some health difficulties. He was also servicing debt on the Suburb S property he acquired after separation.
I do not intend to add back the amount sought by the wife. I do not find it comes within the categories previously set out. I accept the husband generally used the money for reasonable living expenses, some at least of which were joint expenses. However, it is a matter I will again consider in the discussions on contributions.
·Boat insurance payout of $44,000 and $5,000 for the sale of the boat trailer
During the marriage the husband acquired a boat from the United States. He also purchased a boat trailer for its transport. Unfortunately, the boat was accidentally destroyed and the husband received an insurance payout of $44,000. He then sold the boat trailer for $5,000.
He says that the money received from the insurance payout went to repay some of the joint overdraft account in September 2011. I accept the facility was closed about a month earlier, but that there were funds still owing on it. I will not add this amount back into the asset pool. I am satisfied it was used for joint debts.
·Loss incurred on Suburb S
At around the time the parties separated the husband decided to buy a unit in Suburb S. On 2 October 2010 he paid a deposit of $350,000 from the joint overdraft account to secure the purchase of a unit without the wife’s knowledge or consent. The total cost of the unit was $3,450,000. He says he also borrowed approximately $500,000 from his mother. The balance remaining was borrowed from the ANZ Bank. This property was subsequently sold in mid-2011 at a loss. The sale price was $2,450,000.
The husband deposes:
I accept the fact that I am responsible for the loss and decision to buy [Suburb S] at that price and the wife had nothing to do with it.
He accepts that he suffered a ‘lapse of judgment’. The husband made an appropriate concession in this regard.
The wife quantifies the husband’s total loss to be $1,704,510. She says this is made up of a capital loss of $1,228,000 with $291,000 in interest repayments on the loan facility and a further $185,510 representing stamp duty and legal fees. The husband, on the other hand, says the capital loss is $1,050,000 and the total loss, thus, $1,536,510. I accept the husband’s figure in terms of his loss.
In all the circumstances, I do not intend to add this amount back as a notional asset. The purchase and sale took place post-separation. Although the purchase was tied up with matrimonial assets, to now add it back will simply result in an artificial inflation of the asset pool.
Instead, as was proposed by the husband’s counsel, I will allocate the loss on this property solely to the husband. I will not include it in the joint pool of assets, but rather deal with it as a liability of the husband to be taken into account in a general sense pursuant to s 75(2)(o) of the Act.
·Holden motor vehicle
The husband deposes that in about March 2009 he purchased a Holden motor vehicle to be kept in Melbourne for his use when he travelled to that city for work purposes. He purchased it for about $50,000. He sold this vehicle in November 2011 for $30,000. He says he used the sale proceeds to “pay down debt”.
There is no evidence that the acquisition and specifically the sale of this vehicle comes within the general principles relating to add backs and I will treat it accordingly.
·Proceeds from husband’s US 401K Retirement Program account - $11,640 - $12,000
The husband says that the funds he accessed from this account in early October 2011 were used to pay some of his legal fees. Given the husband’s paid legal fees are already accounted for by consent as an add back, I do not intend to include this account as a separate item. To do so would be to double count that item.
Liabilities
Generally, there was a paucity of precise and relevant evidence about the liabilities of the parties and how such amounts sought to be included in the asset schedule were comprised.
·NAB mortgage over Farm L
I have included in the liabilities an amount which relates to the mortgage over the Suburb Q home. I am told this is $1,500,000. It is secured over Farm L along with the loss incurred by the husband on the Suburb S property of $1,300,000. It is agreed the husband should be solely responsible for the latter.
·Loan from T Company
Well after separation and in about April 2011 the husband entered into a loan agreement with his then employer, T Company. As a result he borrowed $250,000. He deposes that he utilised the funds to pay an Australian Taxation Office debt and loan repayments. There is little detail about how he utilised the borrowed funds. The husband is attempting to service the interest payments on this loan, but he says he was unable to do so between 5 April 2011 and 25 May 2012. Despite this, he does detail it as a current weekly outgoing in his financial statement sworn 5 March 2013. The unpaid interest due and owing over that period of time was deducted from a bonus payment he was entitled to. The husband has given evidence that he is likely to receive bonus payments in the future. I find that the husband should be responsible for this debt as I am not satisfied these funds have been used to defray matrimonial costs. It was incumbent upon the husband to provide full detail about how these funds were expended and he has failed to do so with any precision. Some of the expenses he identifies, for example school fees, he accepts he should be solely responsible for in any event.
It was accepted in the cross-examination of the husband that in 2010 he, in fact, had a credit with the Australian Taxation Office. I was not clear about what particular tax debt the husband paid with the T Company funds and how or when it was incurred. The loan was acquired at a time his income was $500,000 with bonuses each year and he had also realised substantial shares.
The joint flexi mortgage facility utilised by the parties was not available after about August 2011. The wife’s evidence is that save and except for some school fees the husband has not provided her with any financial support whatsoever, save for her and the children’s ability to live in the former matrimonial home. She is responsible for all utility expenses and rates and taxes relating to that property.
I will refer to this debt later in my judgment and will not include it here as a joint liability.
·ATO liability (sale of K company shares in January 2010 and 2011)
The husband continues to owe the Australian Taxation Office the Capital Gains Tax payable on the sale of the shares he sold in January 2010, 2011 and 2012. He deposes that the funds were used to repay debt and for general living expenses. I did not add back, as sought by the wife, the money the husband failed to account for in relation to the sale of these shares.
The husband has entered into a payment arrangement with the Australian Taxation Office whereby he pays $1,250 per week to reduce his liability.
I intend to include this particular Australian Taxation Office debt as a joint liability. I am generally satisfied that the money was used for the parties and general living expenses. It was debt that arose shortly after separation and the wife accepts the 2012 proceeds of sale went to pay matrimonial debt. Any inequality in the use of the funds can be dealt with in the discussion on contribution.
·Personal loan
On 29 October 2012 the husband borrowed $200,000 from the National Australian Bank for ‘family living’ and school fees. I am unsure to what this refers. The husband and his present wife have a more comfortable family lifestyle than the wife and the children. I am not satisfied that this money has been utilised for matrimonial expenses or that it should be a joint liability. At trial not all of this amount had been drawn down in any event.
·Husband’s NAB Qantas credit card
In the absence of any evidence in relation to how and when this debt was accumulated, I do not intend to take it into account as a liability of the parties, but will treat it as a debt the husband has.
·Capital Gains Tax on sale of Farm L property
The husband deposed on 5 March 2013:
22I have with regret, decided to sell my share of [Farm L] and put it on the market once orders are made in these proceedings although a sale may take some time because it is only part of the overall property and any sale is subject to the lease which goes to 2014 with an option to [Mr BB’s] company for another 6 years. [sic]
The detail of an exact timing or otherwise of the sale of the property was never explored. It appears a sale may depend on the orders the Court makes, although the husband has sought orders to that effect. The basis for the calculation of any Capital Gains Tax was not the subject of evidence. All I was told was the method of calculation of a certain sum was disputed. In his case outline the husband says the sum is “approximately $250,000”.
The issue of capital gains was considered by the Full Court in Westmore & Westmore[2]. The Full Court identified that a liability for capital gains tax is dependent upon the calculation of:
(a)the capital gain;
(b)the marginal rate of taxation applicable to the capital gain; and
(c)any tax offsets which can minimise the capital gain.
[2] [2007] FamCA 1341
Here there was no evidence, expert or otherwise, about the likely capital gain, the likely marginal rate of taxation applicable to the capital gain or any tax offsets available to minimise capital gain. The calculations of the husband, about which I have no evidence, were said to be challenged. The value of the Farm L property was agreed.
The Court was left with some doubt about when or if any likely sale would take place. The Court is left in doubt about the issue of Capital Gains Tax - if the property will be sold and the actual amount of Capital Gains Tax that the husband would ultimately be responsible for. The Full Court in Westmore (supra) referred to Rosati v Rosati[3]:
6.36…
(1)Whether the incidence of capital gains tax should be taken into account in valuing a particular asset varies according to the circumstances of the case, including the method of valuation applied to the particular asset, the likelihood or otherwise of that asset being realised in the foreseeable future, the circumstances of its acquisition and the evidence of the parties as to their intentions in relation to that asset.
(2)If the Court orders the sale of an asset, or is satisfied that a sale of it is inevitable, or would probably occur in the near future, or if the asset is one which was acquired solely as an investment and with a view to its ultimate sale for profit, then, generally, allowance should be made for any capital gains tax payable upon such a sale in determining the value of that asset for the purpose of the proceedings.
(3) If … the Court is satisfied that there is a significant risk that the asset will have to be sold in the short to mid term, then the Court, whilst not making allowance for the capital gains tax payable on such a sale in determining the value of the asset, may take that risk into account as a relevant s 75(2) factor, the weight to be attributed to that factor varying according to the degree of the risk and the length of the period within which the sale may occur.
(4) There may be special circumstances in a particular case which, despite the absence of any certainty or even likelihood of a sale of an asset in the foreseeable future, make it appropriate to take the incidence of capital gains tax into account in valuing that asset. In such a case, it may be appropriate to take the capital gains tax into account at its full rate, or at some discounted rate, having regard to the degree of risk of a sale occurring and/or the length of time which is likely to elapse before that occurs.
[3] (1998) FLC 92-804 at 85,043
I will take into account pursuant to s 75(2), the fact that the husband may risk a Capital Gains Tax liability.
I consider it just and equitable, given the present position of each party, to adjust their interest in any items of property they jointly own. However, I can see no reason to adjust or make orders regarding solely owned property.
Contributions
At the date of cohabitation
Each party had assets and interests in property prior to the date of their cohabitation.
The wife owned:
·An unencumbered property at AA Street, Suburb CC, which she had purchased in August 1993 for $350,500.
This property was sold for $612,500 in August 2001. The net proceeds were applied for the benefit of the family, including contributing towards the purchase of their home in Suburb A.
The Suburb CC property was rented from the time the parties lived in New York until its sale. The wife received rent of not less than $600 a week for about four and a half years. The income was used for the benefit of the family.
(b) An interest in the C Trust. In about 1991 the wife received a quarter interest in part of the estate of her late Aunt, Ms EE.
At cohabitation the value of part of this interest was $418,895. In addition, there was an investment in Were Global Small Companies Whole Fund of $25,000. Throughout the marriage the wife received an income from her portion of the trust of $1,500 each month. Prior to separation this went to joint living expenses and since separation it has been money upon which the wife has relied for both her own and the children’s expenses. She has also drawn down on capital to support herself.
In around 2006, during the marriage, the husband used around $1 million of the C Trust assets ostensibly to directly or indirectly assist in the payment of the mortgage over of the Suburb Q property.
The husband had an interest in:
·Farm L.
This interest was actually transferred to him in 2002 and has been referred to earlier in the judgment.
The present joint matrimonial debt is registered over the husband’s interest in the Farm L property and, thus, the former matrimonial home is unencumbered.
The lease over the farm has provided income of $160,000 plus GST each year since 2002.
·Paintings
The husband has two paintings by way of an inheritance which are now included in the asset pool.
At the beginning of the relationship the husband was employed in the financial industry. The wife accepts that up until 2009 he was a very high income earner. Although the wife had gained secondary qualifications and had been working full-time in healthcare, she moved to New York City to live with the husband. In doing so, she was unable to work in any form of paid employment due to visa restrictions.
During the marriage
Each party worked very hard during the currency of their relationship. It is acknowledged the husband was a good financial provider up until 2009. He worked very long hours, in what his counsel describes as a “high octane industry”, to achieve his success. This came at a considerable cost and I accept, especially towards the end of the parties’ relationship, he experienced difficulties with his lifestyle. This reduced his capacity for employment and his ability to assist greatly in the care of the children.
He left his employment at K Company in around May 2009 and he was not then again engaged in remunerative employment until April 2011, when he started with T Company in a senior executive position.
Given the husband’s very long work hours, it fell upon the wife to carry out the role as primary homemaker for the parties’ three children. E has always required considerable and constant attention.
The wife supported the husband in his career. She left Australia and her job in healthcare and lived with him initially in New York and then encouraged and assisted him in Australia. She participated in social events as required by his employment. She supported him emotionally when he left K Company.
I accept the husband was interested in his children and especially early in their lives played a supportive and loving role. As his work became more demanding and his health more compromised, his contribution in that regard was less.
The wife received income from the C Trust and the husband received an income from the farm lease after 2002.
Each party did the best they were able to do during the period of time they were together. They had their ups and downs. I consider they acted as a team and worked well together for most of the time they were living together.
Post-separation contributions
It is clear that for the first two years after separation the husband was not earning any income. He had a redundancy payment from K Company of $225,000.
In May 2009 he started a business, DD Company, which he deposes to funding with $50,000 drawn down against equity on the former matrimonial home. The business was not a success and from March 2009 until April 2011 he says the family debt increased as they lived on credit, selling shares and by drawing down against equity in their properties.
During this period of time, until about August 2011, the wife had use of the joint flexi mortgage facility. The husband also had use of it and he had access to other funds of the parties. The wife gave unchallenged evidence in this regard. The husband made some poor financial decisions which included the purchase of the Suburb S property and his unsuccessful business. He had to sell assets to cover escalating debt.
Since mid-2011 the wife has had to support herself and, largely, the children from her own resources. I am not satisfied that the husband’s standard of living has been as compromised as that of the wife. I accept he has made what, in the circumstances, appear to be some extravagant or, at least, unnecessary purchases of personal items. He has had holidays regularly. He has paid some school fees and since mid-2011 has made the mortgage payments over the Suburb Q property from his sole income. However, his lifestyle with his present wife does not reflect what he says is his debt level. I again accept the wife’s mostly unchallenged evidence in this regard.
When the husband was questioned about some of his expenditure on motor vehicles during the time the parties were together, he admitted the wife had not approved of his spending, but said that “a man is allowed to have his toys”. This general attitude appeared to flow into his post-separation lifestyle.
Even by his own account, after separation the husband made some errors of judgement in money matters. I accept that over this period of time he lived beyond his means and he dealt with matrimonial assets in a less than prudent manner.
I have dealt with the purchase of the Suburb S property and its sale. Although the actual loss on that sale is to be borne by the husband, until it was sold he serviced his borrowings to acquire the property from joint funds.
The parties now have a tax debt to pay as a result of the sale of K Company shares. The husband said he used those funds to pay immediate debts and did not take into account future tax liabilities, I consider that to reflect poor overall financial management.
The husband sees his three children each alternate weekend. He sees the two older children on a Tuesday night for dinner every week. He also has some school holiday time. The bulk of the care giving for the children, especially E, has fallen fairly and squarely with the wife. I consider that her contribution, even with paid help, in this regard has been exceptional.
One needs only to peruse the unchallenged affidavit material of the wife to gauge the extent and quality of the time she needs to spend with E on a daily basis in carrying out very difficult care giving duties. Although the parties utilise carers, it is the wife who must always be available in case of an emergency or a difficulty. I found the wife to be credible in her evidence about E and the family circumstances.
Discussion
It is apparent that each party has many different contributions over this 14 year relationship. Each was to the fore during different periods of time in terms of contribution. In particular, I take into account the following contributions of the wife:
·At the very beginning of the marriage she had an unencumbered property at Suburb CC which, when sold, provided the parties with a considerable amount of money to put towards the acquisition of their Suburb A property. This home was sold and the proceeds of sale then went into the present matrimonial home at Suburb Q.
·The wife has consistently received money from the C Trust. The wife attaches a schedule to her trial affidavit of the gross income she received between 30 June 2000 and 30 June 2010 from either rent from the Suburb CC property or various money from the C Trust, some of which was utilised to ameliorate debt on the former matrimonial home in 2006. It is clear that if one only considers the years between 2002 and 2009, this amounts to almost $1 million gross.
·Early in the marriage before the birth of the children, and consistently thereafter, the wife supported the husband in his work endeavours and also made attempts to help him overcome the health difficulties he had prior to separation.
·The wife has always been the primary caregiver of three young children in difficult circumstances, given E’s severe disabilities. There have been times when due to the husband's own health difficulties arising, he says, out of the nature of his employment, the wife has virtually had sole responsibility for the children. She has had a considerable load to bear since separation in that respect and has never deviated from a very dedicated and consistent approach.
Alongside these are the contributions of the husband, in particular:
·From before the marriage until 2009 it is common ground the husband was a consistently very high income earner.
·From 2002 he brought in extra income as a result of his inheritance of part of the family farm. Between 2002 and the present he has received $165,000 plus GST each year. If one considers the years between 2002 and 2009 that is approximately a gross amount of at least $1,155,000.
·In 2002 the husband’s inheritance brought in the very substantial asset of the family farm. Along with the matrimonial home it is the most valuable asset in the pool. It has allowed the parties to consolidate debt such that the former matrimonial home is now encumbrance free. There is no suggestion the wife made any direct contribution to it.
·Even when the husband was unemployed, he had a redundancy payment and the farm rent. He had some lapses in his financial judgement, which I do not consider to be deliberate, wanton or reckless, however, he simply did not maintain the quality of his contribution over that period of time. It was of a lesser magnitude than it had been between 2002 and about late 2008.
When I consider all these issues, and in particular matters already canvassed in my judgment and in the parties’ affidavit material, I consider that the two contributions of most note are the Farm L property and the wife’s contribution to the family, in particular, E.
The Farm L property has meant an enormous direct injection to the asset pool. It was inherited wealth from the husband’s side of the family, however, neither he nor the wife have made any great direct ongoing contribution to it, given the leasing arrangement with the husband's brother.
Appropriately, neither party sought to isolate their various inheritances. This allows for a more complete consideration of what all the contributions are, especially to the family. The contributions in this case come in many forms. It is appropriate to look at them all and not simply assume the financial contributions are of greater moment.
Neither of the parties could foresee the change in direction their lives would take with E’s birth in 2004. Despite extensive investigation, both genetically and neurologically, no diagnosis of any specific condition has been made. She suffers from a plethora of different medical problems. Despite the use of carers, her condition has demanded a constant, unrelenting, but willingly given, contribution. That contribution has been made mostly by the wife. The husband has for periods and for various reasons, been absent from her life, both physically and emotionally. Initially, there were his long working days, followed by his health difficulties and, latterly, the fact of separation.
It is well known that the contribution by a party as homemaker and parent must be assessed “not in a token way, but in a substantial way”.[4]
[4] Mallet v Mallet (1984) 156 CLR 605
The quality of the wife’s contributions as homemaker and parent were exhibited prior to the birth of the children in moving to New York and consistently being supportive of the husband in his career. I have detailed her contribution after E’s birth. The inheritance which came from the husband's side injected significant wealth into the family. Particularly, this has been utilised late in the marriage to secure substantial debt.
Whilst there is no presumption of equality of contribution, I am satisfied that when I evaluate the role of the wife as homemaker and parent and the husband’s role as financial provider, including an inheritance from his family, I consider that the two very different sorts of contributions are equal.
Primarily prospective factors of s 75(2) of the act
The wife is 43 years and the husband 45 years. They each appear to be in good health. The wife has had hernia repair surgery and experiences back pain, likely to be as a result of the physical impost of caring for E.
The husband continues to work in the financial industry with T Company earning a significant income. This is not likely to change in the short term. Given this income, it is inevitable that it will fall to him to service all the current debt.
In cross-examination and in conjunction with the husband’s current 2012 financial information, his present earnings have compromised the following:
| Base Income | 500,000 |
| Farm rent | 160,000 |
| Borrowings | 225,000 |
| Sale of shares | 166,000 |
| Gross income | $1,051,000 |
This does not include any bonus he receives from his employer. The husband accepts he had around $880,000 in disposable income.
The husband explained that in May 2012 he received a bonus from T Company worth the equivalent of $750,000. $500,000 is in the form of shares, which cannot be sold for three to four years. The balance of $250,000 is in cash. He said this amounts to about $112,000 after tax. He says that this year, 2013, he anticipates receiving about $450,000 worth of shares and $200,000 in cash.
The wife has not worked in paid employment of any note since 1995 and it is accepted she will not be in a position to do so for a long time. Her commitments to E are likely to continue past E’s eighteenth birthday. The wife deposes that E is likely to have a normal life expectancy.
There is no criticism of the husband for moving into a new relationship and commencing a new chapter in his life. The wife does not have quite the same opportunities. Her primary focus has clearly been on the children on a daily and ongoing basis and this will continue.
The wife is not in a position to service debt and she will utilise the income from the C Trust to defray the costs of caring for the family, especially E. She does retain some capital, which the parties have agreed is a financial resource. At 31 December 2012 this was worth just over $700,000. I am also satisfied that each of the parties has earmarked that to be used in the future for E as well.
It cannot be overlooked there are two other children of this marriage. As a result, no doubt, of the breakdown of the relationship and the circumstances of the household each of these children requires additional care.
The wife deposes to difficulties that F is experiencing. He visits a psychologist and has speech and occupational therapy. D also has sporting interests which require the wife facilitating her attendance at these. There are additional costs associated with D’s interests.
The husband has additional debt of $1,300,000 to service. This is also secured over the Farm L property. This relates to his loss on the rather impetuous purchase of the Suburb S property. He has other debt such as the NAB personal loan, his credit card and the T Company debt. There are considerable family advances to him, but I am satisfied there is no immediate need for these to be repaid.
The husband also has a number of assets, albeit modest, in the form of motor vehicles that he can sell. He is expecting further funds as a result of the sale of a Luxury Car Y. The unpaid balance on sale is $40,000. He has unvested T Company shares from his 2012 bonus which he estimates are valued at approximately $500,000. He also anticipates, at least this year, receiving a further bonus payment from his employer. I accept that if he continues to default on payment of the T Company debt, then his bonus payment will be reduced accordingly. However, it is presently being utilised to pay interest on that debt and provides the husband with flexibility in how to arrange his finances.
Another issue is the amount of any capital gain over the Farm L property should it be sold. There was simply not enough evidence for me to make a specific calculation of any capital gain likely to be paid. Although it was the position of both parties that the farm should be sold, I found the evidence about any sale was vague. I was simply not provided with the detail I would have liked. However, I intend to take into account that the husband may have to pay Capital Gains Tax resulting from any sale of that property. This was the generally accepted, albeit vague, position of both of the parties.
The husband was able to develop and continue his career due in no small part to the wife’s support of his working life and to her caring for the children during and after the marriage. It may take him some time to recover financially, but the husband has that time, given he is only 45 years old. I find on the evidence before me he has the ability to repay debt and secure his own future, even if it does not happen immediately.
In terms of an adjustment pursuant to s 75(2), I am satisfied the wife should receive a further 7.5 per cent.
Just and Equitable
On the basis of that assessment the wife, by retaining 57.5 per cent of the assets, will be entitled to $4,862,225. She already has $4,781,096 worth of assets. The husband will retain $3,593,818 or 42.5 per cent of the assets. Those figures include the husband’s superannuation asset, the add backs of legal fees and the husband bearing the debt.
It is necessary to consider the practical outcome of the orders I intend to make. The wife will retain the Suburb Q property unencumbered. This is a very substantial asset. I accept her argument that it presently caters for E and the children’s needs. It has good security, internal garages and appropriate fencing. The wife must be able to attend to E on an urgent basis if there is an emergency. The schools of all the children and E are in close proximity to the Suburb Q property such that any emergency allows the wife to return home quickly. There is a supportive neighbourhood in terms of E and her propensity to run away. However, if the wife cannot live within her current financial circumstances, she will have to sell the house despite its present suitability. This will likely allow her some additional income.
The wife will otherwise retain the items I have nominated in the schedule as being in her possession. Additionally, the husband will need to pay her $81,129. I will give him some time to raise that amount.
The husband will retain what he has with all the considerable debt. However, he has a very significant, and what I consider to be a reliable, present income stream. He has a long term income earning capacity. His only period of unemployment revolved around poor judgement as to his lifestyle bringing with it inevitable health consequences. There was nothing to suggest at trial that this was a continuing problem.
There can be no doubt that both parties, especially the husband, will have to scale down their lifestyles.
Overall, I consider this outcome, which will be reflected in the orders to be just and equitable.
Spousal maintenance
Section 72 of the Family Law At 197 reads as follows:
(1)A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b)by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c)for any other adequate reason;
having regard to any relevant matter referred to in sub-s 75(2)
The husband made an appropriate concession that given the wife’s present need to care for the parties’ children, in particular E, she is unable to support herself adequately.
The question then remains as to what support he is in a position to extend to her. The husband proposes he make payments of spousal maintenance to the wife of $1,000 a week. Although the wife was originally seeking $1,600 a week, this was revised by her counsel in his closing submissions to $1,442 a week.
That amount is made up of $260 which relates in the main to house and motor vehicle insurance and allied payments. A further $472 is what the wife says she currently spends on her average weekly expenses. She says if she was to live a reasonable lifestyle commensurate with that pre-separation, an additional $710 would be required.
I accept there is some double up of her expenses in her financial statement. For example, the wife allocates money for pet expenses, despite the fact the family pet appears to have passed away recently. Some of her expenses, although substantially unchallenged, require explanation, for example, $300 a week for fares/parking. I also take into account that although the wife currently wishes to retain the former matrimonial home, if she cannot afford to do so, she may need to reconsider and, at an appropriate time, rehouse to more modest accommodation. Hopefully, then she will have money available to invest. Whilst I do not consider it appropriate for me to force her into that just now, it is something she needs to consider for the future.
In all the circumstances, I consider an appropriate level of support for the wife to currently be $1,000 a week.
It is now necessary to consider the husband’s ability to contribute that amount. He is currently renting accommodation for $2,000 each week. It does not appear his present wife contributes to that cost despite the fact she has an income. She also has a rental property which provides her additional income.
The husband pays the mortgage over the Suburb Q property. This is around $1,500 each week. He is paying, or willing to pay, all the children’s education expenses.
When I consider the husband's available income, and even taking into account the debts, I am satisfied that he can make a contribution towards the wife’s expenses at this stage of $1,250 each week. As stated earlier, although he deposes to paying $690 each week to service the T Company debt, that is not always paid. He has the ability or flexibility to use other sources of income to cover this.
His financial statement in relation to average weekly expenses for himself and the children shows he pays $3,385. He spends time with the children on alternate weekends and sees D and F one evening a week. In turn, the wife pays $3,196 and has them for considerably more time. Whilst I accept the husband's expenses include the children’s education expenses, the wife pays a considerable amount to E’s carers.
I am satisfied the husband can make some reduction in his expenses and pay the wife $1,000 each week.
Conclusion
Given that the financial position of each party is in a state of flux, I consider that the orders in relation to spousal maintenance should be interim orders only. This is on the basis that when the parties have complied with my orders for property settlement and considered their financial situation afresh, the Court will be better placed to make a more accurate assessment of what precisely the husband’s ability to contribute is and what the corresponding needs are.
One of the reasons for the Court’s present inability to provide a more mathematical calculation is, firstly, the failure of the parties to provide the Court with the appropriate financial information and, secondly, and understandably, the position each party finds him and herself in given the way in which they have structured their financial position. The latter will hopefully be overcome once each works out how they wish to proceed in the future.
Child support
Both parties accept that it is appropriate for there to be a departure from the administrative assessment for each of the children. The parties do not agree on the amount of such departure.
They do agree that by way of non-periodic child support the husband is to be liable for 100 per cent of the children’s school fees, to include text books and extracurricular activities. The husband has been providing funds to make most of these payments since separation. The wife pays for text books and some extracurricular activities.
It is likely she will continue to make some contribution towards those activities given that she has the day to day care of the children and it may well be convenient for her to make payments direct to the educational facility. However, the husband has offered to pay all the children’s expenses. I accept him to be genuine in this regard.
In relation to periodic support, the wife’s position in her financial statement is that E’s needs are $1,447 a week and F and D require a total of $1,277 a week. I consider some of those expenses excessive given the current circumstances.
It is agreed that the money received by the wife from the C Trust of $727 each week should be allocated to E’s needs. This alone will not even cover the costs presently required for her carers on a weekly basis.
The husband says that an appropriate amount of support for F and D is $1,000 each month, or approximately $231 each week. He offers the same for E.
I am satisfied that the husband can, at this stage, make a contribution of $375 each week for each of D and F and $500 a week for E. That is a total of $1,250 a week.
The orders that I make are as set out at the forefront of these reasons for Judgment.
I certify that the preceding one hundred and forty eight (148) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Crisford delivered on 9 May 2013.
Associate:
Date: 9 May 2013
Key Legal Topics
Areas of Law
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Family Law
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Property Law
Legal Concepts
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Remedies
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Jurisdiction
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