Roda and Roda
[2015] FamCA 353
•14 May 2015
FAMILY COURT OF AUSTRALIA
| RODA & RODA | [2015] FamCA 353 |
| FAMILY LAW – PROPERTY – Final property orders – Where the husband’s initial financial contributions were significantly greater than the wife’s – Where the wife contributed as the main care giver to the three children – Where the wife has not been employed for many years – Where the husband continues to earn a significant income – Section 75(2) adjustments – Where an adjustment is made in favour of the wife due to the likelihood of her gaining employment and as she will be the main care giver to the children – Where the husband’s sisters have made significant payments to the husband’s new wife – Where the husband has not disclosed all of these payments – Where the wife seeks a superannuation splitting order – Where it is just and equitable that final property orders are made. FAMILY LAW – PROPERTY – SPOUSE MAINTENANCE – Where the wife seeks a continuation of spouse maintenance payments due to her current situation – Where the wife is currently studying – Where the wife is currently unemployed – Where the wife hopes to find full time work – Where the husband is ordered to continue paying spouse maintenance. FAMILY LAW – PROPERTY – CHILD SUPPORT – Where the wife seeks a child support departure order – Where the wife claims that there is a special circumstance which requires an adjustment of child support – Where the parties’ child, T, plays ice hockey – Where there is no evidence that establishes the level of support needed for T – Where the application is dismissed. |
| Family Law Act 1975 (Cth) s 75(2), s 79(4), s 81 Family Law (Superannuation) Regulations 2001 (Cth) | |
| NHC & RCH [2004] FamCA 633; (2004) FLC 93-204 | |
| APPLICANT: | Ms Roda |
| RESPONDENT: | Mr Roda |
| FILE NUMBER: | SYC | 2084 | of | 2007 |
| DATE DELIVERED: | 14 May 2015 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Aldridge J |
| HEARING DATE: | 20-23 April 2015 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Batey |
| SOLICITOR FOR THE APPLICANT: | Cameron Gillingham Boyd |
| COUNSEL FOR THE RESPONDENT: | Mr Sansom |
| SOLICITOR FOR THE RESPONDENT: | Taperell Rutledge Lawyers |
Orders
That the husband pay to the wife the sum of $599 512 within twenty eight (28) days of the date of these orders.
That the wife is to retain the following:
(a)The property known as and situate at H Street, Suburb I (“the Suburb I property”),
(b)Funds held on deposit with any bank, credit union or any other financial institution whether in her sole name or held jointly;
(c)The motor vehicle presently in the wife’s possession; and
(d) Any items stored within the Suburb I property.
The wife is to be solely liable for her HECS debt and ASK funding debt and shall indemnify the husband and hold him forever indemnified in respect of those debts.
That the husband is to retain the following:
(a) His interests in the properties known as and situate at:
(i)1 B Street, Suburb G,
(ii)2 B Street, Suburb G; and
(iii)Suburb G Street, Suburb G (“the Suburb G properties”),
(b) His share portfolio; and
(c)Funds held on deposit with any bank, credit union or any other financial institution whether in his sole name or held jointly.
That the husband is to be solely liable for the Westpac Banking loan, any mortgages on the Suburb G properties, his credit card debts, his loan from Mr D and the loan from the estate of his late father and shall indemnify the wife and hold her forever indemnified in respect of those debts
That the court allocates, as required by s 90MT(4) of the Family Law Act 1975 (Cth) a base amount of $160 000.00 out of the husband’s interest in the First State Superannuation Scheme (“the Fund”), member number 2631268.
That in accordance with s 90MT(1)(a) of the Family Law Act 1975 (Cth) the court:
(a) Creates an entitlement on the part of the wife to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth); and
(b)Makes a corresponding reduction in the entitlement of the husband, or such other person to whom a splittable payment may be made, would have had in the fund, but for these orders.
That whenever the Trustee of the fund makes a splittable payment out of the husband’s interest in the fund, the Trustee shall do all acts and things and sign all such documents as may be necessary to pay the entitlement created in the paragraph 6 of these Orders in accordance with the requirements of the Family Law Act 1975 (Cth) and the Family Law (Superannuation) Regulations 2001 (Cth).
That these Orders have the effect from the operative time and the operative time is seven days from the Fund’s receipt of a copy of these Orders.
That this Order binds the Trustee of the First State Super.
That save as aforementioned, each party is to retain the superannuation benefits to which they are presently entitled.
That the Order made on 2 May 2007 that the husband pay to the wife spousal maintenance in the sum of $1 000 per week continue up to and including 31 December 2016 and that from that date until 31 December 2017 the husband pay to the wife spousal maintenance in the sum of $500 per week.
That the wife’s application for an order for departure of the child support assessment is dismissed.
That all other applications and cross applications be and are hereby dismissed.
That all issues be removed from the Active Pending Cases List.
That all material produced on subpoena shall be returned to the persons or institutions from which they emanated and all exhibits are returned to the person or persons who tendered the same not before fifty-six (56) days from the date of these Orders.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Roda & Roda 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 SYDNEY |
FILE NUMBER: SYC 2084 of 2007
| Ms Roda |
Applicant
And
| Mr Roda |
Respondent
REASONS FOR JUDGMENT
Introduction
These are property proceedings between Ms Roda (“the wife”) and Mr Roda (“the husband”).
The orders finally sought by the wife were that she retain the former matrimonial home at H Street, Suburb I (“the Suburb I property”), receive a cash payment of $1 503 327.80 and receive a superannuation splitting order with the base amount to be allocated to her of $210 000. She also sought an indefinite order for the payment of spousal maintenance of $1 400 per week and a child support departure order.
The husband’s position was that the wife should retain the Suburb I property, receive either no or a small cash adjustment and receive the benefit of a superannuation splitting order with a base amount set at $160 000. He accepted that the current order for spousal maintenance of $1 000 per week should be continued for 12 months and opposed any further order for maintenance or for child support.
The parties were generally agreed on what assets and liabilities should be the subject of the property orders but disagreed as to add backs of legal fees and the borrowings for those legal fees, the husband’s Westpac Banking Corporation loan and his credit cards and whether capital gains tax (“CGT”) should be taken into account in respect of one of the husband’s properties.
Background
The husband was born in 1958 and is now 56 years old. The wife was born in 1964 and is now 50 years old. They commenced to cohabit in 1998, married in 1999 and separated (under the one roof) on 16 August 2006. They have three children. T born in 1998 (16), R born in 2001 (14), and A born in 2004 (11).
The husband graduated from F University and undertook training to become a medical specialist. He is now a specialist medical practitioner. He completed those studies in 1991. The wife is a trained health professional. The parties met in 1996 when they were both working in Perth.
Between 1997 and 2000 the husband worked in Country J. In 1998, having discovered that she was pregnant, the wife moved to Country J to live with the husband. She has not engaged in paid employment since that time.
At the time the parties commenced to live together the husband had the following assets and liabilities:
Assets
Value
Interest in the Suburb G property
$0
Car
$0
Personal effects
$3 000
Shares
$1 500
Bank account
$11 700
Loan to his sister Ms S
$71 200
Colonial Superlink
$15 600
Colonial Superwise
$ 1 200
Super SA
$ 8 000
Ultimately, no admissible evidence was adduced as to the value of the Suburb G business property or the car at the time of cohabitation.
The description “Suburb G property” was used by the parties to describe a property at 1 B Street at Suburb G in Victoria which was used as a commercial business. The husband’s father attended the auction of that property in 1995 and entered into a contract to purchase it for $520 000. In order to minimise his exposure to land tax, the husband and his mother were recorded as the purchasers of the property. This was not unusual. The husband had worked overseas in 1991 and his father had managed the husband’s financial affairs in Australia pursuant to a Power of Attorney.
The husband said that the total acquisition costs of the Suburb G business property were $552 000 which was partly funded by a loan arranged by his father taken out in the name of the husband and his mother. The husband said that one half of the balance of the funds required for the property’s purchase came out of the husband’s bank account then under the control of his father. The rent from the property was used to offset the repayments on the loan and to pay other outgoings.
The rental of the property was entirely managed by the husband’s father and when capital contributions were required or there was a shortfall in the rent his father made the contribution or met the shortfall.
The loan to his sister Ms S was a loan made in 1990 in the sum of $115 000. It was made from the husband’s savings.
At the time the parties started living together the wife owned a home unit in Perth holding approximately $35 000 equity. She also owned a car with a net value of $15 000 and a small superannuation entitlement. A loan for the purchase of the car was paid out by the husband.
The financial contribution of the husband at the time of cohabitation was therefore significantly higher than the wife’s.
On their return from the Country J in early 2000 the parties purchased the Suburb I property. To enable the purchase to be undertaken the wife sold her property in Perth. The net proceeds of sale were $37 785.
In April 2000 the Suburb I property was purchased for $478 000. The deposit of $47 800 was paid from their joint bank account. The parties borrowed $383 000 to complete the purchase and the husband contributed some $17 004 from his bank account and the wife $11 088 from her bank account and the proceeds of the sale of her unit.
In 2001 and 2002 major renovations were undertaken at the Suburb I property including the installation of an in ground pool.
The parties separated under the same roof on 16 August 2006. The husband ultimately moved out of the Suburb I property on a permanent basis
later that year.
In January 2007 the husband commenced to live with Ms M. They married in 2012. In March 2013 they commenced to live at N Street, Suburb O. That property is owned by the husband’s sister and he pays rent to her pursuant to a residential tenancy agreement. In 2013 the husband and Ms M had a child, P.
In August 2006 the wife withdrew $40 000 from the joint mortgage account and placed it in her name. Some $30 000 of that was eventually used by the wife to pay her legal expenses.
At the time of separation each of the parties held a half interest in the Suburb I property, subject to the mortgage. The husband had his half interest in the Suburb G business property and some relatively small amounts in his various bank accounts and shares worth $13 800. It appears that the loan to his sister had been repaid. The husband’s superannuation entitlements were:
·First Sate Super $104 000
·Colonial Super Link $ 30 800
·Super SA $ 11 300
·Unisuper $ 10 000
·Colonial Super Wise $ 800
The wife had her half interest in the Suburb I property, a motor vehicle, personal effects, a small amount of money in a bank account and her superannuation.
These proceedings were commenced in March 2007. On 14 September 2009 Cohen J conducted a hearing which dealt with the question of the husband’s ownership of the Suburb G business property. That dispute involved the present parties as well as the Executor of the estate of the husband’s late father and his two sisters. Cohen J delivered judgment on 21 February 2011. His Honour’s decision was the subject of an appeal which was heard on 4 December 2012. The Full Court delivered it’s judgment on 11 March 2013. The effect of those proceedings was that the husband was declared to be the owner of a one half share of the Suburb G business property as a tenant in common with the estate of his late mother.
On 1 July 2010 the husband’s father signed a contract to purchase a property described as the “Suburb G Investment Property” (Suburb G Street, Suburb G). The purchase price was $680 000.
The initial proposal was that the husband and his father were to buy the property together. However, it was subsequently agreed between the two of them that the property would be owned solely by the husband. As both the husband and his father had paid $34 000 as their half share of the deposit, it was agreed that the father’s payment of $34 000 would be treated as a loan by him to the husband.
The total acquisition costs of the Suburb G investment property was $717 016 of which $53 016 came from the husband’s bank account. A sum of $152 000 was obtained by personal loans and $512 000 from investment loans. The property was rented and the rent was used to offset the obligations to pay interest.
Following the delivery of the judgment of the Full Court, the husband and his two sisters agreed on the distribution of their father’s estate. Probate of their father’s will was granted on 21 October 2013. The husband’s father left his estate equally between the three children. The agreement between the siblings divided the real estate between them without it having to be sold. They entered into a Deed agreeing on the distribution of their father’s estate at some stage in 2014. Pursuant to their agreement the husband received his mother’s interest in the Suburb G business property (his mother has predeceased his father and left her assets to the father). He also received a one half interest in the property at
2 B Street, Suburb G (“the Suburb G investment”) as a tenant in common with his sister, Ms S. Those interests transferred to the husband shortly prior to this hearing commencing.
On 5 August 2014, by consent, the court made orders requiring the husband to discharge the mortgage over the Suburb I property and to transfer it to the wife. It appears that those orders had not been put into effect at the time of the hearing.
Applicable Principles
According to guidelines established through a series of leading decisions, the Court is required to determine the following matters:
·having regard to the breakdown of the marriage, if any, is it just and equitable to consider whether the alteration of the parties interests in their property is just and equitable;
·the assets, liabilities and financial resources of the parties to the marriage;
·all relevant contributions of each of the parties, within the meaning of paragraphs (a) - (c) of s 79(4) must be identified and weighed against each other;
·the matters in paragraphs (d) - (g) of s 79(4), particularly paragraph (e) which takes up by reference the provisions of s 75(2) must be considered and a determination made as to what, if any, alteration should be made to the entitlements of the parties earlier assessed on account of contribution; and
·an order under s 79 must not be made unless the Court is satisfied that, in all the circumstances, it is just and equitable to make the order.
It is necessary to deal with the contested items on the list of assets and liabilities.
Add Backs For Legal Fees And Borrowings Associated With Them
The wife seeks to add back her paid legal fees of $369 678 and the husband’s paid legal fees of $473 075. She also seeks to add back $50 000 the wife owes for unpaid barrister’s fees in relation to these proceedings. In addition she seeks to have taken into account her ASK Funding debt of $613 296 and a loan from her mother, Ms Q, for $193 311 she says relate to her legal fees.
The ASK Funding debt is a litigation lending debt. ASK Funding is the trading name of Impact Capital Pty Ltd. On 12 October 2009 the wife entered into a document described as a “Matrimonial Progressive Real Security Contract” with Impact Capital Pty Ltd. Under the agreement ASK Funding was to advance to the wife up to $220 000 for legal fees repayable 14 days after receipt of all or any part of the settlement proceeds or any other settlement or after demand for repayment by the Lender.
Pursuant to that agreement the wife received advances from ASK Funding of $194 036. The interest rate was 17.95 per cent. Taking into account interest, penalties and charges, the amount outstanding as at 13 March 2015 was $613 296.52.
The evidence of Ms Q is that she made the following payments to lawyers acting for the wife.
·23 June 2009 $10 000.00
·20 May 2011 $18 791.38
·29 January 2013 $13 761.00
·15 August 2011 $ 622.95
·29 September 2011 $ 894.95
·21 October 2011 $ 2 776.06
·27 October 2011 $ 932.05
·23 November 2011 $ 1 695.10
·16 February 2012 $ 1 691.50
·20 March 2012 $ 805.25
·15 June 2012 $ 446.95
·13 July 2012 $ 523.15
·31 July 2012 $ 6 000.00
·31 July 2012 $ 5 440.00
·14 August 2012 $ 154.00
·27 November 2012 $ 2 076.17
·8 February 2013 $ 3 934.51
·4 April 2013 $ 1 142.78
·4 July 2013 $ 6 267.95
·23 September 2013 $ 427.80
·27 November 2013 $11 000.00
·27 November 2013 $ 5 452.00
·27 November 2013 $ 5 000.00
·7 January 2014 $ 1 988.41
·6 March 2014 $ 416.66
·28 April 2014 $ 8 875.02
·8 May 2014 $ 5 170.00
·Shortly prior to hearing $35 000.00 (on account of counsel’s fees)
·Partial payment of
Outstanding costs $20 000.00
Thus the total of advances for legal fees from Ms Q to the wife is $171 285.64. The difference between that and the total advance referred to of $193 311 are payments Ms Q made for a motor vehicle for the wife and assistance with school fees.
The husband sought to have included in the list of assets, at $215 890, his borrowing from Westpac. The amount presently outstanding to Westpac is $381 515 of which $60 000 was used for legal fees for his lawyers in these proceedings and the balance was used to repay a Commonwealth Bank of Australia (“CBA”) facility and a payment of land tax. If the wife’s submissions as to the inclusion of her legal fees and her liabilities in respect of borrowings for legal fees are to be accepted, then the Westpac debt would need to be taken into account in full. Those submissions, however, are not accepted. The Westpac borrowing was otherwise primarily used to pay out a pre-separation liability and thus should be taken into account.
The wife did not identify any other basis for reducing the Westpac debt to the figure asserted by her.
The husband has otherwise been paying his legal fees from his income by regular payments of $1 000. Whilst it is true that these payments do not appear in his financial statement, it is clear from his Notification of Cost that this is the case.
In NHC & RCH [2004] FamCA 633; (2004) FLC 93-204 the Full Court said at [55] – [60]:
This decision appears to confirm the principle that where the payment of legal costs can be regarded as a premature distribution of funds (in which both parties have an interest), it is appropriate to add back those costs as a notional asset. It also confirms the principle that where funds have been borrowed to pay legal fees, and such liability is still outstanding, neither the payment of the fees nor the liability should be taken into account. The decision also supports the proposition that where it is determined that a payment of legal fees should be taken into account as a notional asset, any outstanding liability in respect of those fees should also be taken into account.
In summary, we consider that the above mentioned decisions of the Full Court establish that, while the treatment of funds used to pay legal costs remains ultimately a matter for the discretion of the trial Judge, in determining how to exercise that discretion, regard should be had to the source of the funds.
If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
If funds used to pay legal fees have been generated by a party post-separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance), they would generally not be added back as a notional asset; nor would any borrowing undertaken by a party post-separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties. Funds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post-separation income or acquisitions.
Outstanding legal fees themselves are generally not taken into account as a liability.
If in the exercise of the discretion, it is determined that legal fees already paid should be taken into account as a notional asset, then normally any liability associated with the acquisition of the monies used to pay the legal fees should also be taken into account.
The authority of NHC & RCH (supra) remains undiminished by recent authority dealing with add backs, other than in relation to legal fees.
In the present case the wife’s legal fees, other than for $30 000 paid for from the joint funds retained by her shortly after separation, have been funded entirely by borrowings from her mother and from ASK Funding. The husband’s legal fees have been paid by borrowings or by payments from his post separation income. In accordance with the above authority, neither the legal fees nor the borrowings for them should be added back. This is particularly so in this case where to do so would require the husband to bear a significant part of the liability for the extremely large interest debt (of the order of approximately $420 000) incurred by the wife in relation to her ASK Funding borrowings.
Similarly, the unpaid barrister’s fees cannot be taken into account, they not having been paid at all, let alone from pre-separation funds.
Thus, save for the $30 000 mentioned, none of the payments of legal fees can be regarded as a premature disposition of funds in which both parties have an interest.
I will therefore not add back the legal fees or the borrowings in respect of them.
The wife’s use of $30 000 of joint funds to pay her legal fees will be taken into account under s 75(2) of the Family Law Act 1975 (Cth) (“the Act”).
The Husband’s Credit Cards
The husband sought to include in his liabilities his outstanding credit card debts of $46 982, a personal loan from CBA of $4 240 and a loan from his sister of $9 967. There is no evidence that these debts were for the benefit of the parties, the children or led to the acquisition of any assets to be taken into account in the division of property between the parties. In those circumstances, as debts incurred after the separation of the parties, they will not be taken into account.
Capital Gains Tax
The husband does not have available to him the liquid funds to be able to make the payment sought by the wife in these proceedings, given his present financial position. The evidence was that given the mode and time of the acquisition of the husband’s interest in the Suburb G investment property and the Suburb G caryard property, any sale of those properties now undertaken (at a price similar to their acquisition cost) would not incur CGT. However, the sale of the Suburb G business property would incur CGT.
The husband called an expert witness to try to establish what the CGT may be but, as became readily apparent during cross-examination of the expert, he had not been provided with the information that would ordinarily be taken into account in determining the amount of CGT payable on any sale including the costs of owning, the costs of preserving or increasing the value of the property and the costs of defending the parties’ title to the asset. In those circumstances no weight can be given to the figure for CGT calculated by him. At best, the evidence establishes that it could be a significant sum.
The husband asserted that he did not wish to sell his interest in the other two Suburb G properties. If that is so, to comply with the order it would be necessary to sell the Suburb G business property, thus incurring CGT.
Of course, it depends upon the orders that are ultimately made for the sale of the property. However, as correctly pointed out by the wife, any obligation to pay CGT could be avoided by realising one of the other properties and that if he chooses not to do so, for whatever reason, the husband should bear the burden of any CGT himself.
It was pointed out by the husband that CGT will be payable at some time in the future when the property is sold. It is clear enough from what has already been said, and from the husband’s evidence, that he regards the Suburb G business property as a long term investment and it is not likely to be sold by him in the foreseeable future unless he has to do so. Thus, whilst the payment of CGT in the future remains a possibility it is impossible to say when, other than to say it is more likely than not, to be in the long term. There is no evidence whatsoever of what the payment of CGT might be if and when the property is sold at some time in the future.
Although, pursuant to the Deed of Arrangement between the husband and his sisters, each of the parties is to bear any CGT payable on their acquisition of the properties, there is no evidence that suggests any such liability has arisen in relation to the two properties received by the husband.
Consequently, it is not appropriate to take into account any figure for CGT in the parties’ lists of assets and liabilities.
The Parties’ Assets And Liabilities
Other than for these matters the parties were in agreement as to the assets and liabilities to be taken into account for the division of property between them and their values. It was agreed that the husband’s bank accounts at the date of hearing had a total balance of $21 880. Thus at the date of the hearing the parties had the following assets and liabilities:
BALANCE SHEET Assets Joint Wife Husband H Street, Suburb I $850 000 1 B Street, Suburb G (business) $2 700 000 Suburb G Street, Suburb G (investment) $700 000 2 B Street, Suburb G (investment) $1 250 000 Husband’s share portfolio $98 150 Husband’s bank accounts $21 880 Wife’s bank accounts $1 310 Wife’s motor vehicle $9 600 Assets $850 000 $10 910 $4 770 030 Total assets $5 630 940
Liabilities
Joint
Wife
Husband
Westpac Loan
$215 890
Suburb G Mortgage
$476 000
Husband Debt to Mr D
$86 014
Husband Loan from Estate of Mr K Roda
$84 664
HECS Debt
$25 060
Liabilities
$25 060
$862 568
Total Liabilities $887 628
Superannuation
Wife
Husband
First State Super
$417 853
Member Entitlement in SA
$16 572
Colonial Link
$48 009
Colonial First State
$3 481
West State Super
$34 019
Total superannuation $519 934
Total Assets $5 630 940
Less Total Liabilities $887 628
Net Assets $5 263 246
Subsection 79(2) of the Act
I must first determine whether it is just and equitable that there be an alteration of the property rights of the parties. This must be done by consideration of the relationship, its breakdown, the property held by the parties and the basis on which it was held and used by them.
In the present case I am satisfied that it is just and equitable to make orders altering the interests of the parties to the marriage to the property held by them. They are no longer living in a marital relationship. The basis on which the ownership of their property and the use of it by reason of them being in a married relationship and living together has ended and it is appropriate that their property interests are altered so as to meet their new needs and circumstances. The parties join in seeking such an order.
Contributions
The parties approached the issue of their contributions to their assets and liabilities by looking at three periods - the initial contribution of the parties, the contributions during the nearly eight years of marriage and the contributions since separation, nearly ten years ago.
As to the parties’ initial contributions, the wife accepted that the husband had made a greater initial contribution. His interest in the Suburb G business property and the loan he made to his sister significantly exceeded the wife’s interest in her unit in Perth and the interest in her car. It was not possible to quantify the husband’s interest in the Suburb G business property but if it’s purchase cost was $520 000 funded by a mortgage of approximately $300 000 then his half interest in the property may well have been in the order of $110 000.
The Suburb G business property ultimately lost its tenant and has been vacant for many years. Other than for contributions described earlier in these reasons, which were not extensive, the husband made no financial contribution to this property it being paid for by rent applied to the borrowings and by the shortfall provided by his father. Nonetheless it is to be regarded as a financial contribution by the husband.
The parties agreed that each of the parties contributed significantly during the period of the marriage. The wife was the primary homemaker and parent. She was the primary carer for the children. The husband worked very hard over long hours as a medical specialist. I accept the submissions of both parties that their financial and non-financial contributions to their property and to the welfare of their family during the period of the marriage should be regarded as equal.
Since separation the wife has continued to be the primary carer for the children. They have spent much more time with her than with the husband. Against that she has had the use of the former matrimonial home for the last ten years. During that time the husband has made the mortgage repayments on the mortgage on that property. He has paid spousal maintenance and child support as assessed by the Child Support Registrar.
Importantly, the assets of the parties have grown significantly since separation. There has been a substantial increase in the husband’s superannuation. At separation his entitlements totalled $156 100. At the hearing the total was $482 434. The increase is due to payments made from his income after the separation.
Even more importantly, the husband has received interests in the three Suburb G properties from his mother and from his father. This greatly boosted the assets available for distribution and compels a finding that the husband’s financial contributions to their property greatly exceeded the wife’s.
Apart from the husband’s initial investment in the Suburb G investment property, neither party made any significant investments in these properties either by way of the provision of funds or services. Thus the acquisition of those interests must be treated as a contribution by the husband alone.
Having regard to those matters, it is appropriate to find that the contributions of the parties to their assets and to the welfare of their family, up to the date of the hearing, are 80 per cent as to the husband and 20 per cent as to the wife.
Other Section 79(4) Considerations
Although the wife is a trained health professional she has not worked since 1998. Both parties accepted that for her to resume work as such she would need to undertake some form of refresher training. There was no evidence as to what that training might be, how long it would take or the costs involved.
For her own part, the wife does not wish to return to work in the same field. The evidence was that she could earn significantly more as a in her current role. The wife does not wish to work in this role because of the hours involved which would require her to either start early in the morning or during the day so that she would not be available to the children before school or after school, depending on the shift.
In 2011 she commenced a university course to train for a different health profession. Except for one year the wife has undertaken that course on a part-time basis. She hopes to complete that degree later this year. She intends to work part-time during 2016 and 2017 so as to be able to assist her children before and after school for the next two and a half years. Her evidence was that a full time could expect to receive a salary of between $48 000 and $58 000 per annum.
The husband is a highly qualified medical specialist. For the last four years the husband has earned a taxable income well in excess of $500 000 a year.
Whether the wife works in her current role or her new one her capacity to earn income is well below that of the husband.
The wife will receive the Suburb I property in which she lives free of a mortgage although she is saddled with the very large burden of the ASK Funding debt. She also expects to have a HECS debt in excess of $40 000 when she completes her degree.
The husband, on the other hand, will have available to him not only a substantial income but the potential for income or capital gain from the Suburb G properties. He has certain employment whereas the wife’s is uncertain.
The husband pays his sister $850 per week rent for the premises in which he and his new wife and his child resides. His wife has two children from a previous relationship who are effectively supported by the husband. Ms M worked until the birth of their child. She has started working one day per week and hopes to increase that. Almost every month the husband pays Ms M approximately $900 to help with her car payments and other expenses. Generally she would ask him for this assistance.
It is difficult to know what Ms M’s potential capacity for gainful employment is. She is employed through her own company, R Pty Ltd. Its financial statements for the years ended 30 June 2011 to 30 June 2014 were before the court. That company made a loss in each year. In each year it paid a salary to an “associated person”. When asked about the salary for the associated person Ms M said that at that time she had a sub-contractor. If that evidence is correct Ms M received no financial benefit from her employment which was conducted through this company, for four years, yet is apparently able to support herself. Either Ms M was in fact the “associated person” or there is something wrong with the accounts.
It emerged from the cross-examination of the husband and Ms M that between October 2014 and January 2015, the husband’s sisters deposited $81 000 into Ms M’s bank account. The husband’s sister Ms S provided $53 000 and Ms Y, $28 000.
The husband sought to explain the payments from his sisters by pointing to his sister Ms S being his landlord and obliged to carry out repairs on the property pursuant to the lease. He pointed out that there had been significant painting undertaken by her as well as sewerage works and repairs to some poles. He said this work was arranged for and paid by Ms M who then sought reimbursement from his sister Ms S and that she then paid Ms M.
When it emerged that the cost of these repairs was no more than $12 500 the husband could not provide an explanation. Indeed, his evidence was that he was unaware of the extent of the payments. This is despite the husband’s meticulous attention to his financial affairs.
Ms M said that she had only, in the last few weeks, mentioned the payments from the husband’s sisters to the husband and that he did not know their extent. She said the funds had been arranged in this way. She and the husband were facing financial difficulties and the husband’s sister offered financial support which the husband refused. However, Ms M’s mother spoke to the husband’s sisters and arranged for there to be a payment of money to her which she then deposited in Ms M’s bank account. Further support was then provided directly. Again, Ms M was coy about the extent of the assistance saying that she didn’t know how much it was exactly, that it was all in her bank statement and it could have been $10 000, it could have been $20 000, that she didn’t know exactly but it could have been double $20 000. She said it was financial support, Christmas presents for the children and the cost of living, as well as for the repairs.
I do not see how, if one was in difficult financial circumstances, recent support in an amount of $70 000 in a short period of time would have slipped Ms M’s memory. It is also difficult to accept that the husband did not know of it.
Ms M said that there had been no discussions between her and the husband’s sisters as to whether they were gifts or a loan but thought it might have been a loan but nothing had been discussed. She has not asked them if it was a gift.
The payments by the sisters, excluding the payments made in respect of the painting and repairs, were not disclosed in the husband’s financial statement, in his affidavit or in Ms M’s affidavit. The suggestion, made by counsel for the wife, that these payments were simply returns of rent, was denied by both Ms M and the husband.
In those circumstances it is difficult to know what to make of these extensive undisclosed payments. Whether or not the husband knew of these payments, they were not disclosed by him. In the absence of any evidence, I will not take these payments to be loans. Precisely what they are is unknown. They indicate doubt as to the husband’s disclosure and his claims of financial difficulty.
These payments and the support that the husband provides to Ms M’s children are relevant matters to take into account.
All of these matters point to a significant adjustment in the wife’s favour.
The wife will have the greater care of the children.
Pursuant to orders made by me, T spent much of 2014 at a sports academy in Country U. He hopes to return to Country U for another year at the academy later this year. His trips to Country U have been entirely funded by the wife and her relatives, the husband refusing to assist. He says that this is because he did not agree with the trip and that it would be in T’s interests to remain at school in Australia. Since the issues arose about his trip to Country U he has spent little time with the husband.
The wife will remain the primary caregiver for the children and be largely responsible for their support, subject to the payments of child support by the husband.
I take into account that the wife took $40 000 out of the joint account and used two thirds to pay for legal fees.
I also take into account that there will be an order for spousal maintenance which will be in force for a limited time.
Taking all these matters into account I am satisfied that the appropriate adjustment in favour of the wife should be 11.5 per cent. This is a substantial sum. 11.5 per cent of the total asset pool is $605 273. That is a very significant sum indeed. It is justified in this case by the vast disparity between earning capacity of the parties, the assets that would be available to them in the future and the care of the children.
This has the effect that the property referred to above will be divided between the parties so that the wife receives 31.5 per cent of the property and the husband 68.5 per cent.
The husband, as I have said, proposed that a superannuation split with a base amount be attributed to the wife being $160 000. This is $50 000 less than is sought by the wife but it is the appropriate amount. Having regard to the wife’s obligations to ASK Funding, her need for cash at the present is more pressing. I will accordingly make the superannuation order proposed by the husband.
The wife is to receive 31.5 of the net assets and superannuation totalling $5 263 246.
Therefore the wife is to receive from the above matrimonial asset pool, the sum of $1 657 922.
She already has the following property:
· Suburb I Property $850 000
· Bank accounts $ 1 310
· Motor vehicle $ 9 600
· Colonial First State Superannuation $ 3 481
· West State Super $ 34 019
Total: $898 410
Thus the wife needs $1 657 922 minus $898 410, which equals $759 512 to receive the 31.5 per cent of the net total assets.
Given that a superannuation splitting order of the base amount of $160 000 will be made, there needs to be, therefore, a payment by the husband to the wife of $599 512.
The wife’s HECS debt should be borne by her as it is a debt incurred post separation and for her benefit.
I have given some consideration as to whether there should be an order that in the event that sum is not paid that a specified property of the husband’s be sold. The husband’s preferred position was, seemingly, that although he regarded the Suburb G business property as a long term investment he would prefer to sell it, and incur a liability for CGT, rather than sell his interest in one of the other properties. For reasons given above I have not taken any CGT into account. It may well be that the husband can raise the sum required to pay the wife without having to sell the property but if he needs to do so he can determine for himself which property to sell. If he chooses to sell a property that requires payment of CGT then that is a matter for him. If of course he does not pay, the wife has available to her the appropriate enforcement mechanisms.
On 31 March 2015 the wife’s solicitors wrote to the Trustee of the First State Superannuation giving them notice of the superannuation splitting order in relation to the husband’s interest in the First State Superannuation. On 9 April 2015 the Trustee advised that, save for two amendments which it proposed, it did not have any objections to the proposed order.
Taking all of the above matters into account, I am satisfied that the orders I propose to make are appropriate, that is to say, just and equitable taking into account all of the matters I have discussed under the heading ‘Other Section 79(4) considerations’ as set out above. The orders meet, as best they can in the circumstances, the obligation under s 81 finally to determine the financial relationship between the parties and avoid further proceedings between them to the extent possible.
Spousal Maintenance
The wife seeks an order that the husband pay her $1 400 per week spousal maintenance until she remarries or enters into a de facto relationship. There is no evidence to suggest that either of those possibilities is imminent.
The current order for spousal maintenance, made on 2 July 2007, is for the husband to pay to the wife $1 000 per week.
The wife, in her financial statement filed on 10 April 2015, identified her weekly personal expenditure as being $2 520. Of this she identified in ‘Part N’ of her financial statement, $1 466 as being expenditure for the children and $48 for other adults within the household. Removing those payments gives her a weekly expenditure of $1 006. Whilst there was some criticism of the wife in cross-examination as to the figures used by her for her expenditure they were generally accepted by the husband in his cross-examination as being reasonable.
The husband himself proposes that there be an order for spousal maintenance for a short period of $1 000 per week. Accordingly, I find that the wife’s reasonable expenditure is $1 006 per week.
Leaving aside government support and pensions that are income tested, the wife has no means of support other than the sums which she receives from the husband as spousal maintenance and child support. The wife presently has no capacity to earn an income given her skills as a nurse or her skills she is updating as a podiatrist. She is presently studying. She is unable to support herself by reason of those matters.
It is necessary to turn to the ability of the husband to pay. He says in his financial statement filed on 9 April 2015 that he has an average total weekly income of $12 446 but a total personal expenditure of $14 178. There needs to be a degree of scepticism as to his statement however.
First, the husband’s evidence was that he had used for his average weekly income his net income derived from his income tax returns - that is to say his income after deductions for things such as motor vehicle running expenses, home office and Medicare levy. They seem to have been included as deductions in his tax return, and are thus claimed twice.
More importantly, the financial statement does not take into account the payments made by the husband’s sisters referred to earlier.
Further, the husband has been paying $1 000 per week for some eight years and has managed to do so. In any event, the husband has available to him very significant capital assets to which he can have recourse if necessary.
He clearly has the capacity to pay the maintenance.
Having regard to the fact that the wife hopes to be in employment within
18 months, at the most, and full time employment within two and a half years, it is not appropriate to make an order unlimited in time as sought by her. It would be undesirable in any event because purpose of these proceedings is to bring the financial relations between the parties to an end.
The husband’s proposal allows for the wife to receive maintenance while she completes her degree and looks for a job. The appropriate period for that, taking into account the difficulties she may face in finding a job given her age and her inexperience, is 18 months and not 12. Consequently there will be an order that the husband pays spousal maintenance to the wife of $1 000 per week up to and including 31 December 2016 and thereafter $500 per week up to and including 31 December 2017.
Child Support Departure Order
The wife seeks an order that the child support assessment be departed from by requiring the husband to pay to her $750 per week for each child.
On 22 November 2014 the Child Support Registrar assessed the husband’s liability for child support for the period 1 January 2015 to 31 March 2016 as being $2 938.25 per month. This works out to be $244.85 per week per child. According to the husband he is presently paying a total of $678 per month in child support for the three children and according to the wife, $675.
The new assessment seemed to be an increase from that to $734.55 per week.
In her financial statement the wife identified the children’s needs as being $1 466 per week.
Sections 117(1) and (2) of the Child Support (Assessment) Act 1989 (Cth) provide:
Court may make departure order
(1) Where:
(a) application is made to a court having jurisdiction under this Act for an order under this Division in relation to a child in the special circumstances of the case; and
(b)the court is satisfied:
(i) that one or more of the grounds for departure mentioned in subsection (2) exists or exist; and
(ii) that it would be:
(A) just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(B) otherwise proper;
to make a particular order under this Division;
the court may make the order.
Grounds for departure order
(2) For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:
(a) that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of:
(i) the duty of the parent to maintain any other child or another person; or
(ii) special needs of any other child or another person that the parent has a duty to maintain; or
(iii) commitments of the parent necessary to enable the parent to support:
(A) himself or herself; or
(B) any other child or another person that the parent has a duty to maintain; or
(iv) high costs involved in enabling a parent to spend time with, or communicate with, any other child or another person that the parent has a duty to maintain;
(aa) that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of the responsibility of the parent to maintain a resident child of the parent (see subsection (10));
(b) that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
(i) because of high costs involved in enabling a parent to spend time with, or communicate with, the child; or
(ia) because of special needs of the child; or
(ib) because of high child care costs in relation to the child; or
(ii) because the child is being cared for, educated or trained in the manner that was expected by his or her parents;
(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
(i) because of the income, earning capacity, property and financial resources of the child; or
(ia) because of the income, property and financial resources of either parent; or
(ib) because of the earning capacity of either parent; or
(ii) because of any payments, and any transfer or settlement of property, made or to be made (whether under this Act, the Family Law Act 1975 or otherwise) by the liable parent to the child, to the carer entitled to child support or to any other person for the benefit of the child.
The special circumstance relied upon by the wife was T’s special skill and talent as a sportsman which, it was said, required the support of both parties. It is to be recalled that T has attended a sports academy in Country U for which he received a part scholarship and also required support from the wife and her family. The husband, who did not agree with T attending the academy, did not contribute anything towards it.
As it has also been seen, T proposes to return to Country U later this year and to complete his Higher School Certificate by distance education.
In making these submissions counsel for the wife accepted that it would therefore be hard to make out a case for a child support departure order in relation to the other two children.
The special needs of T as described could establish a case for departure within s 117 (2)(B)(ia) of the Child Support (Assessment) Act 1989 (Cth).
The difficulty with the application is, however, that there is no evidence that establishes the level of support needed. There is no evidence as to what are the special costs related to the special needs of T that are not being taken into account in the child assessment.
The wife relied on two matters. First, in her ‘Part N’ the statement of her financial statement she refers to costs of $200 per week for clothing and shoes, $281 for children’s activities and $210 for holidays. It can readily be accepted that these three items could include the travel to Country U and costs of T playing sport in Country U not covered by the scholarship. However, those costs also include the sporting costs (clothes and shoes, payment for games and travel interstate) of R and probably A as well. It is not possible to discern from that material a figure than can be attributed to T.
The other material relied upon was an email exchange between the parties and T in January and February 2014. This was before the first trip to Country U. The only reference to costs in those emails is in an email from the husband to the wife disputing her estimate of the cost of $25 000 to $30 000 and asserting that the cost would be more likely to be $40 000 to $45 000 plus the spending money and air fares. There is no evidence to support either of those assertions by the wife. In any event, they relate to a trip that has already taken place.
There was no evidence as to the cost of the previous trip or, more importantly, the proposed trip.
It is quite impossible to determine what would be an appropriate level of support upon which a child support departure order could be considered. There is therefore no utility in considering whether or not the evidence established that T’s trip to Country U constituted special circumstances.
The application for a child support departure order will be dismissed.
I certify that the preceding one hundred and twenty-eight (128) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 14 May 2015.
Associate:
Date: 14 May 2015
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Family Law
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Equity & Trusts
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