S and G

FEDERAL MAGISTRATES COURT OF AUSTRALIA

S & G

[2001] FMCA fam 263

FAMILY LAW – Property settlement – equal contribution – inclusion of capital gains tax liability – section 75(2) factors – children’s matters – shared care – need for communication.

Applicant:

L S

Respondent:

A F G

File No:

ZH2377 of 2001

Delivered on:

4 December, 2001

Delivered at:

Devonport

Hearing Dates:

21, 22 & 23 August 2001
15 November 2001

Judgment of:

Roberts FM

REPRESENTATION

Counsel for the Applicant:

Mr Brett

Solicitors for the Applicant:

Rae & Partners

Counsel for the Respondent:

Mr Crawford

Solicitors for the Respondent:

Crawford & Crawford

ORDERS

That within sixty days A F G (“the Husband”) do transfer to L S (“the Wife”) all his right, title and interest in the properties situate at and known as 88 U B Street and 57 C S in W L in Tasmania.
That contemporaneously with the transfers referred to in Order No. 1 hereof the Wife do pay to the Husband the sum of $35,000.00.
That within sixty days the Wife return to the Husband the following chattels:
(a)All those chattels listed under the heading “List of chattels to be agreed by parties to be returned to husband” as provided to the Court on 23^rd August, 2001;
(b)Hot water urn;
(c)A set of four books on building;
(d)A set of Time Life books on war or similar subjects;
(e)A set of fourteen to sixteen volumes relating to countries of the world;
(f)One aluminium cooking boiler.
That within sixty days the Husband deliver up to the Wife any personal papers including taxation records belonging to the Wife that may be in his possession or control.
That each party otherwise retain the chattels in his or her control as his or her sole property.
That within sixty days the Wife do transfer to the Husband any interest she may have in 5,500 C & W Optus shares and 2,558 Qantas shares.
That within sixty days the Wife may request the Husband to allow her to have temporary possession of photographic slides of the parties or their family whereupon the Wife may have possession of them for up to twenty eight days for the purpose of arranging copies of same and she shall return them to the Husband in good order and condition
That the preceding orders be in full satisfaction of the parties’ rights and obligations pursuant to Part VIII of the Family Law Act 1975.
That the Husband’s Application in relation to children’s matters contained in his Amended Response filed 7^th February, 2001 be dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
LAUNCESTON

ZH2377 of 2001

L S

Applicant

And

A F G

Respondent

REASONS FOR JUDGMENT

Background

A F G (“the Husband”) and L S (“the Wife”) met in England in 1979 while holidaying there. They were married at Launceston in Tasmania on 9^th October, 1982.
There are two children of the marriage, Z born 6^th December, 1987 and J born 22^nd July, 1990.
The parties separated on 29^th March, 1999 and their divorce became absolute on 4^th August, 2000. However, I shall refer to them as “the Husband” and “the Wife” in these reasons.
The originating application in this matter was filed by the wife in the Family Court of Australia on 26^th May, 1999. That application sought orders in relation to children’s matters and property settlement. That application has been amended on a number of occasions.
On 24^th November, 1999 Orders were made by consent in the Family Court of Australia in relation to children. Essentially, those Orders provided that the children reside with the Wife and the Husband have contact as follows:
a)each alternate weekend from Friday after school until the commencement of school on the following Monday;
b)on special occasions such as the children’s birthdays, Father’s Day, etc;
c)for half the school holidays.
There is also an order that provides that in the event that either child is playing or training in a sport the Wife is to ensure that the Husband is notified of the event as soon as practicable after she becomes aware of it and the Husband is permitted to be present at such an event. This has assumed some significance because the children play basketball.
The Wife’s latest amended application was filed on 23^rd August, 2000. The Husband filed an Amended Response on 7^th February, 2001 in which he sought to re-open the children’s matters. Essentially, he is seeking a shared care arrangement in relation to the children on a week and week about basis.
The Wife had filed a Reply on 22^nd December, 2000 and she still relies on that document. She is seeking a dismissal of any application the Husband is making in relation to children’s matters.

Issues and findings

Because the applications before the Court deal with children’s matters and property matters, it is important to deal with the children’s matters first, because that could have a significant bearing upon any orders in relation to property settlement.

Children’s matters

As stated above, the Husband is seeking to change the Orders that were made by consent on 24^th November, 1999. Because of this, counsel had agreed prior to the hearing that the Husband’s case should go first.
In addition to the evidence of the parties, the Wife’s friend, D M gave evidence. Further, a Family Report was issued on 26^th July, 2001 and the counsellor who prepared that Report, Mrs. Suzanne Nesham, was also cross-examined.
In her Report, Mrs. Nesham indicates that both children are saying that they want to spend more time with their father. However, it became apparent from the evidence that she gave, that J is much stronger in his view about this than Z.
In her Report, Mrs. Nesham says:
“Z said he would be happy to have more time with his father and he thinks that he would like “about half and half”. However, he said he would prefer to have a flexible arrangement so that if he decided that he would want to visit his other parent, he would be free to do so….. Z recognised that his parents do not communicate sufficiently well that they could facilitate this open-ended arrangement, however, he felt that he could communicate sufficiently well with both of them to plan and let his views be known.”
In relation to J, Mrs. Nesham said:
“J enjoys time with his father and wants to have some additional time with him. He seems to be happy when he is with his mother. He also seems to be emotionally close to her. However, as time goes by it is likely that J will continue to want to have more time with his father and it is likely that if his wishes are not taken into account by his mother, that this may create some strains in their relationship.
Part of J’s desire to have more time with his father is due to his view that the present arrangement is not fair for his father. J seems to be concerned to be fair to both of his parents and for him this entails having equal time with both of his parents.
Both children seem to be intelligent and competent young people. They both said that they played basketball and seem confident that they excel at their chosen sport. They both seemed to like living with their mother but they both expressed a desire to have more time with their father. They related well with each other, sharing jokes and engaging in light banter.”
As referred to above, Mrs. Nesham made it clear in her oral evidence that J’s desire to be with his father was stronger than that of Z. In her report she also said:
“As abusive arguments have continued to occur over a significant period of time, and as the parties have a history of litigation about their children’s issues it is not appropriate to support the concept of shared parenting. Shared care would require continuing and ongoing discussion between Mr. G and Ms. S, not only to do with major issues about the children’s welfare, but also many day to day decisions affecting both households.
J is not showing signs of distress, at present, however, it is not clear how he will cope with a continuation of the present arrangement as he clearly wants to have more time with his father. It may be important to let him know that if circumstances become more settled and if his parents develop better strategies for communication with each other, increased time might be possible. J is presenting as a peacemaker and problem solver, suggesting that half time is ‘fair’ to both his parents and that the present arrangement is not ‘fair’ to his father.”
Mrs. Nesham’s recommendations are important. She says the following:
“It is recommended that at present Z and J continue to reside with Ms. S and that contact with their father continues as it is, with minimal contact between the parents at changeover times.
It is recommended that the parent who has the children with them accompanies the children to their basketball game and the parent who does not have the children with them consider not attending the game unless this is necessary to officiate.
It is recommended that Ms. S and Mr. G do not attempt to resolve issues or disputes at the basketball or at any other place where the children or their friends are present.
It is recommended that Mr. G attends a Controlling Abusive Behaviour Course offered by Centrecare in Launceston. It is important that he provides proof that his behaviour has changed by not becoming involved in any further incidents involving Ms. S, her partner, her friends or her family for at least twelve months, before the issue of shared care is considered further.”
The parties gave conflicting evidence about how often there had been disputes between them at the basketball and in relation to an incident in the carpark at a McDonalds Family Restaurant. The Wife’s friend also gave evidence in relation to that particular incident at McDonalds.
Where the parties’ evidence conflicts in relation to these matters, I find that I prefer the evidence of the Wife. I have no doubt that the Husband speaks to the Wife and her friend at the basketball in a sneering and sarcastic manner. I have no doubt that his manner is offensive and it is quite clear that he was quite violent towards her friend at McDonalds. I am also sure that the Husband initiated that violence.
The Husband says that he has attended some counselling sessions “to see if there is a violence issue” with a Launceston counsellor. In this regard, I do not believe that he has done enough and there does not seem to be any great change in attitude. In his evidence, he referred to the Wife as “the woman” and to her friend as “the boy”. He also acknowledged that he regularly calls her friend “sweetheart”. Indeed, that is his pet name for her friend.
It is also clear that the level of communication between the Husband and the Wife in this matter has reached a very low point. The Wife feels intimidated by the Husband so she communicates with him by written notes.
It is obvious to me that a shared care arrangement will not work. That is because a shared care arrangement in relation to children requires regular and sophisticated communication between the parents and they must have similar attitudes in relation to important matters, such as education and discipline. In this particular case it is clear that the Husband has left the important question of education almost entirely to the Wife.
As stated, it is obvious to me that a shared care arrangement will not work. However, I must also give consideration to the possibility of more contact in order to meet the apparent desires of Z and J for more time with their father.
The Husband’s counsel put to me as a secondary submission that, if I was not prepared to accede to the request of shared care, the alternate weekend contact should commence on Wednesday rather than the Friday, thereby giving his client an additional two days contact each fortnight. I have considered that submission very carefully but I cannot agree with that either. That is because those extra two days are school days and that would also involve additional communication at a level that is not happening at the moment. Further, it is unlikely to happen if the Husband does not change his ways.
Having considered all these matters very carefully, I am of the view that there should be no change to the Orders of 24^th November, 1999 in relation to children’s matters.

Property matters

Both parties approached the question of property settlement on the basis that their contributions during the marriage were equal. The Husband’s Outline of Case Document states that the Husband “does not seek to differentiate between the contributions of the parties and submits that the contributions to the assets is equal”.
In his closing address, counsel for the Wife submitted a written outline of his submissions and that document states that a consideration of the contribution factors referred to in Section 79 of the Family Law Act 1975 – “would lead to the conclusion that there was generally equal contribution by the parties to the acquisition of the property in existence at the time of separation”.
However, it is clear that the parties differ as to the treatment of the assets and liabilities and the method by which I should calculate the value of the asset pool. Further, the parties disagree in relation to any adjustment that should be made pursuant to subsection (2) of Section 75 of the Act.
Dealing with the method of calculating the value of the asset pool,

I was invited by counsel for the Husband to include the liabilities incurred by the parties since separation. The Husband’s liabilities even excluding legal costs are substantially greater than those of the Wife. I am therefore not surprised that the Husband’s counsel prefers that I include those liabilities. He sought to persuade me that the Husband had incurred some of these liabilities because his reasonable expenditure was greater than his income. Further, it was put to me that this could be seen from his Financial Statement sworn on 25^th August, 2000 and there was no cross-examination in relation to his expenditure. Frankly, I consider that to be an unfair approach because one would not expect cross-examination in relation to his expenditure more than a year ago in a matter that does not involve an application for payment of spouse maintenance.
I prefer the approach adopted by counsel for the Wife that the debts of each party that have accrued since separation should be excluded from my calculations. This is because the parties were virtually debt free at the time of separation, apart from a small debt over a motor vehicle which was paid off shortly after separation.
On the same basis, current bank balances of the parties should also be excluded from consideration.
Using the same reasoning, I exclude the legal costs of both parties in relation to family law matters. However, there was a refund of legal costs to the Wife which related to proceedings taken in relation to her worker’s compensation claim following a decision of the Administrative Appeals Tribunal. Those costs had been paid to the Wife’s legal representatives from the funds of the parties prior to separation. Upon being successful before the Administrative Appeals Tribunal the sum of $15,232.60 was refunded to her. Clearly, that must be brought back into account as a capital sum that has been made available to the Wife.
The Husband also withdrew $15,000.00 from his superannuation after separation and that sum should be brought back into account.

I have considered the argument by counsel for the Husband that it should be ignored because the Husband stated that he had used the majority “to stay above board and not go bankrupt”. I do not accept that. The Husband has shown that he has the capacity to be properly employed as a fitter and turner. Notwithstanding that he had to pay rent and child support, he only had himself to support and he should have been able to manage his finances well enough to do that.
The Husband’s counsel informed me that he could find little authority on how to deal with debts at the time of the hearing, especially those that had come into existence after separation. It may well be that the paucity of authority is because common sense has been applied. Where debts have been incurred after separation, it cannot often be said that the other party made any contribution to the existence of that debt.
The parties have shareholdings in Qantas and C & W Optus. In relation to the values of those shares I have the affidavit of an accountant, Scott Hawkins. In a letter attached to his affidavit, Mr. Dawkins states that the Qantas shares are worth $8,664.18 and that there is a notional capital gains tax liability of $390.11.
It appeared from the evidence of the Husband that he would accept an offer for the C & W Optus shares from a Singapore based company, Sing Tel. It was Mr. Dawkin’s evidence that if that offer was accepted, the C & W Optus shares were worth $21,571.00 and the notional capital gains tax liability was $1,087.70.
It seems to me from reading Rosati & Rosati (1998) FLC 92-804 that where there is a likelihood of a sale, capital gains tax should be taken into account. In this particular case, there is a possibility that the Husband may need to sell his shares in order to purchase a house. As a consequence, I am of the view that this case falls into the category referred to in Rosati when their Honours said at page 85043, “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”.
I therefore find that, net of capital gains tax, the Qantas shares are worth $8,274.00 and the C & W Optus shares are worth $20,483.00.
In relation to chattels, the parties are agreed about an extensive list of chattels that are to be provided by the Wife to the Husband. However, there is no agreement in relation to a much smaller list of chattels that the Husband seeks and, likewise, there is no agreement about a small list of chattels sought by the Wife from the Husband.
In relation to those chattels sought by the Husband but resisted by the Wife, I make the following determinations:
a)The two blackwood bedside tables or chests should be remain with the Wife because I accept that they are part of a set.
b)The hot water urn is to be returned to the Husband. There was no challenge to his evidence that he purchased this from a fellow employee.
c)The set of four books on building are to be returned to the Husband. It seems very clear to me that they were a present to him from the Wife at the time that they built the former matrimonial home.
d)The set of Time Life books on war or similar subjects are also to be returned to the Husband. The children may well use those books, but they can do so in the Husband’s household.
e)For exactly the same reasons, the set of fourteen to sixteen volumes relating to countries of the world will also be returned to the Husband.
f)One aluminium cooking boiler must also be provided to the Husband. I accept that the Wife has another that she can use.
g)It seems to me that it is not possible for the wife to provide the floodlight for the video camera because I accept her evidence that it had to be given to the insurance company when a claim was made.
In relation to the disputed chattels sought by the Wife, my determinations are as follows:
a)No sensible and logical reason was put to me why the Husband should provide the aluminium concrete screed to the Wife and I am not prepared to make an order simply because the Wife asks for it.
b)The Husband’s evidence was that he does not have the steel building pegs, the round fifty cent pieces, the Wife’s keys and alarm button to her motor vehicle or the slides of her European trip. I accept his evidence in relation to that, so he cannot provide them to her.
c)If the Husband has the Wife’s taxation papers for any year, they should be returned. That applies to any personal papers that he may have.
d)No adequate reason was put to me why the Wife should have the trailer (other than she wants it), so I am not prepared to make an order requiring the trailer to be delivered to her.

In the documents and submissions that were put to me, reference was made to the Wife’s jewellery and the Husband’s tie pin. It is my general view that those are personal assets that should not come into account in property settlement proceedings unless they are of unusual value. In this particular case the Wife’s jewellery is valued at only $2,396.00 and the tie pin is worth $80.00. It is not unusual for a woman’s jewellery to be more valuable than a man’s. Men often prefer to spend their money on other chattels. Because I do not consider the jewellery in this case to be of exceptional value, I will not be taking it into account. I also note that the Wife’s evidence is that she owned some jewellery before cohabitation and she was not cross-examined about that. As a consequence, I have no knowledge of how much jewellery was owned prior to cohabitation by either party and I will therefore not include jewellery in my calculations.
Consequently, the property for division between the parties is as follows:
The former matrimonial home................................................. $140.000.00
Adjoining block of land................................................................. 22,500.00
Wife’s chattels............................................................................... 13,696.00
Wife’s Ford Fairlane....................................................................... 4,500.00
C & W Optus shares (net)............................................................ 20,483.00
Qantas shares (net)........................................................................ 8,274.00
Husband’s Ford............................................................................... 3,400.00
Husband’s chattels.......................................................................... 5,040.00
Wife’s compensation costs refund.............................................. 15,233.00
Husband’s withdrawal from superannuation.............................. 15,000.00
Total: $248,126.00
As state above, the parties generally accepted that on contribution factors, they were equal. It follows, that I must now turn to the factors referred to in subsection (2) of Section 75 of the Family Law Act 1975 to ascertain whether there should be any variation from an equal division.
It was stated in submissions that the Wife is unable to work again. She is currently in receipt of benefits from ComCare and ComSuper. Those give her an income in the vicinity of $28,000.00 per annum. Although the Wife’s evidence was that she will continue to receive these payments until she reaches retirement age (paragraph 37 of her trial affidavit), that is not really the case.
After this matter concluded on 23^rd August, 2001, the Husband’s legal representatives filed an Application to re-open, in order to obtain more information about the Wife’s ComSuper benefits. The legal representatives for the Wife co-operated and on 15^th November, 2001 an Agreed Statement of Facts was presented to the Court.
That Agreed Statement of Facts reads as follows:
“(The Wife) is being paid a benefit under the provisions of the Superannuation Act 1976 following her retirement on medical grounds. The pension whilst generally payable for life, is subject to medical review from time to time which may result in an increase, a reduction or cessation of the pension.
Currently payment is made at the rate of $17,131.53 gross per annum, $685.91 gross per fortnight.
Every January and July the pension will be adjusted, based on the upward movements in the Consumer Price Index.
There is no lump sum component that is payable on (the Wife’s) superannuation. The pension is payable for life.
Medical reviews for invalidity pension recipients from ComSuper cease at the age of 55. After this date, the pension becomes a lifetime payment.
If (the Wife) starts earning, ComSuper will need to be notified as her benefit will be decreased accordingly.
ComCare benefits have no bearing on ComSuper benefits. If ComCare benefits are ceased, the ComSuper benefit will not be increased. ComCare decides if and when their benefit will be ceased, increased or decreased.”
It was clear from the evidence that the Wife gave in the witness box that she must produce her medical report on an annual basis. Presumably, her ComSuper and ComCare benefits would reduce to zero if she were able to work in sufficiently remunerative employment.
It was put to me by the Husband’s counsel that because the ComCare and ComSuper benefits are in the vicinity of $30,000.00 per annum, I should quantify the value of that. I do not accept that as a valid argument. If that were the case, I would also need to quantify the value of the Husband’s future earning potential.
What I can say is that the Wife’s income, inclusive of child support, is in the vicinity of $36,000.00 per annum. The Husband’s income, after deducting child support is in the vicinity of $37,000.00. At first blush, this would appear to make them roughly equal. However, that is clearly not the case. From her income, the Wife needs to support herself and two boys aged thirteen and eleven years. Those two boys are heavily involved in sporting activities and I need hardly look at the relevant tables on the costs of supporting children to know that they are a very significant drain on the Wife’s financial resources.
In addition to the normal costs the Wife has to meet for those two boys, she also has to meet their education costs. The unchallenged evidence of the Wife is that the parties agreed that the children should be educated in the Catholic School system. Although that system is not as expensive as some other private education systems, it is certainly more expensive than the State system. The Wife gives examples in her affidavit of what it costs to send the children to their schools, and she was not challenged in relation to that evidence. I find that, in the main, the Wife is primarily responsible for paying the children’s private school fees and expenses. Although the Husband pays the required Child Support payments pursuant to the relevant legislation, that is only at the approximate rate of $80.00 per week per child. Published research in relation to costs of children shows that children of thirteen and eleven cost significantly more than that to support, even without the costs of Catholic school fees.
The Husband has investments in superannuation which counsel for the Wife indicated is worth approximately 15% of the total value property that is available for division. On the other hand, however, the Wife has her ComSuper benefit that has a reasonable likelihood of continuing for the rest of her life.
The Wife’s counsel sought to persuade me that taking all factors into account would lead to a conclusion that an appropriate division of property is 70% to the Wife and 30% to the Husband. That may be a reasonable conclusion if I could be entirely confident that the children would remain predominantly in the Wife’s care in the very long term. Given the evidence of Mrs. Nesham and the contents of the Family Report, I cannot rule out the possibility that one or both of the children will spend more time with their father at some stage in the future. However, that will require a significant change in attitude from the Husband and I do not see any sign of such a change at this time. In this regard, I regard his attendance upon a counsellor in relation to violence issues as perfunctory.
Weighing up all these factors, I am of the view that a division of property on the basis of 65% to the Wife and 35% to the Husband is appropriate. That is an adjustment of 15% in favour of the Wife because of the Section 75(2) factors.
As referred to above, the total value of the property available for division is $248,126.00. Sixty five per cent of that figure is $161,282.00 and thirty five per cent is $86,844.00.
The Wife wishes to retain the former matrimonial home, adjoining block of land, her chattels and her Ford Fairlane. In addition, she has had the benefit of the legal costs refunded in relation to her compensation action. The total of those is $195,929.00.
The Husband is to retain the C & W Optus shares, the Qantas shares, his Ford motor vehicle and his chattels. He has also had the benefit of $15,000.00 withdrawn from his superannuation. The total of those is $52,197.00. This means that to provide for a division of 35% to the Husband, the Wife must pay him $34,647.00. I shall round that off to the nearest thousand dollars and make orders requiring the Wife to pay the Husband $35,000.00. Family law is not an exact science.
Quite by coincidence, the Wife does not wish to borrow any more than $35,000.00. However, I was not influenced in any way by that desire in arriving at the sum to be paid by her.
I will make orders to provide for my decisions in this matter. However, I am mindful that the Christmas break is about to intervene, so I will allow a little longer than usual for the Orders to take effect.

I certify that the preceding fifty eight (58) paragraphs are a true copy of the reasons for judgment of Roberts FM

Associate:

Date:

[2001] FMCAfam 263

4 December 2001