S and S
[2001] FMCAfam 92
•25 October 2001
FEDERAL MAGISTRATES COURT OF AUSTRALIA
S & S [2001] FMCA fam 92
FAMILY LAW – Residence – property settlement – relevance of status quo – father’s obsessive attitude to the children – wishes of the children – disparity in income earning capacity – superannuation – application pursuant to s.79(5) for a partial property settlement and a deferral until superannuation vests.
| Applicant: | MS |
| Respondent: | BS |
| File No: | ZC 2251 of 2000 |
| Delivered on: | 25 October 2001 |
| Delivered at: | Canberra |
| Hearing Dates: | 19, 20 & 21 June 2001 |
| Judgment of: | Brewster FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Serisier |
| Solicitors for the Applicant: | McGuinness Eley, Solicitors |
| Counsel for the Respondent: | Mr Millar |
| Solicitors for the Respondent: | Farrar Gesini & Dunn |
ORDERS
That the children of the marriage AS born …….. 1986, BS born …….. 1989 and CS born ……. 1991 reside with the wife.
That the husband have contact with the children as follows:
(a)From 5 pm Friday until the commencement of school on Monday (or Tuesday if a long weekend) each alternate weekend.
(b)One half of each school holiday period being the first half of holidays that commence in an even numbered year and the second half of holidays that commence in an odd numbered year.
The husband may have telephone contact on the following basis:
(a)He may telephone the children no more than twice a week.
(b)The wife is to permit the children to telephone him at any reasonable time.
That the wife transfer to the husband her interest in the Telstra and TAB shares in her name and the jointly owned Telstra and NRMA shares.
That the wife is to elect within 14 days of the date of these orders whether or not she wishes to retain the property situated at 4 W Place (“the property”) and is within that time to notify the husband of that election.
That if the wife elects to retain the property she is to pay to the husband within 30 days of the date of these orders the sum of $25,000 and indemnify the husband in relation to any liability with respect to the mortgage on the property whereupon the husband is to transfer to the wife his interest in the property.
That if this amount is not paid within that time interest is to be paid at the rate prescribed from time to time in the Family Law Rules.
That if this amount is not paid within 90 days of the date of these orders the parties are to take all steps necessary to sell the property and to apply the proceeds of sale as follows:
(a)To discharge the mortgage on the property.
(b)To pay the costs of sale.
(c)To pay to the husband the sum of $25,000 together with interest accrued.
(d)To pay the balance to the wife.
That if the wife does not elect to retain the property then the parties are, immediately after the expiry of the 14 days referred to in Order 2, to take all steps necessary to sell the property and to apply the proceeds of sale as follows:
(a)To discharge the mortgage on the property.
(b)To pay the costs of sale.
(c)To pay to the husband 8% of the balance.
(d)To pay the then balance to the wife.
That each party is entitled as against the other to retain the chattels presently in his or her possession and any bank or other accounts in his or her name.
That if she has not already done so the wife pay to the husband the sum of $1,700 with respect to the parties’ Mastercard and thereafter the husband indemnify the wife with respect to any liability concerning that card.
That each party has liberty to apply to re-list the matter.
FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA
ZC 2251 of 2000
MS
Applicant
And
BS
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns competing applications between the parties concerning where their three children will reside, and property matters.
Background
The husband is aged 46 and the wife 44. They were married on
24 January 1981.
At the time of the marriage, the husband owned a property at Waramanga which he subsequently sold and received from the proceeds of sale the sum of $55,000.
Shortly after the marriage, the wife received an amount of $60,000 from a personal injuries claim. Shortly after receiving that money the parties purchased a property in H for $82,000. The wife applied $40,000 from her damages money to the purchase and the balance was funded by a mortgage.
In 1986 the parties purchased a property at 4 W Place, F. This cost $150,000. It was funded in part by the proceeds of sale of the Waramanga house, an amount of $20,000 being the balance of the wife’s personal injuries monies and a mortgage. The parties moved into the property in F and rented out the H property.
There are three children of the marriage, AS born …….. 1986 and currently aged 15, BS born …….. 1989 and therefore aged 12, and CS born …….. 1991 and is therefore now aged 10.
In May 1998 the parties sold their H property. They received some $90,000 net from this sale. $50,000 of this was applied to reduce the mortgage on the F property, some $8,000 was used to renovate the Farrer property, and a computer and TAB and Telstra shares were purchased. Some $30,000 remained from the proceeds of sale.
There were problems in the marriage which came to a head in about January 1999. The wife instituted proceedings in the Family Court seeking sole occupancy of the matrimonial home. Ultimately this did not proceed to hearing as the husband agreed to leave and he did so on 1 March 1999.
The children remained with the wife in the former matrimonial home. An informal arrangement in relation to contact was instituted whereby the father had the children each alternate weekend and half the school holidays. He also communicated with them by telephone and drove them to school each morning. This arrangement has continued up to the present.
On 12 September 2000, the wife filed a Form 3 application in this Court seeking orders under s.79 of the Family Law Act. The father in his response sought an order that the children reside with him for nine days each fortnight.
Children’s issues
As I have indicated the husband proposes a regimen whereby the children reside with him nine days a fortnight and with the wife the balance of the time. The wife for her part seeks orders that would reflect the status quo.
In deciding what order to make in this case the Family Law Act requires me to regard the best interests of the children as the paramount consideration. Section 68F(2) sets out the matters to which I am to have regard when making a decision as to what are the best interests of the children.
Subsection 62F(2)(a) requires me to have regard to any wishes expressed by the children and any factors (such as their maturity or level of understanding) that I consider relevant to the weight to be given to those wishes.
Ms Wendy Styles, the Order 30A expert in this case, interviewed the children first as a group and then individually.
Ms Styles reports that A in the group interview said that he was content with the existing position and thought that, in effect, a change along the lines proposed by the father or any other shared arrangement would be too complicated.
She reports that B said, “It’d be really nice to have more time with Dad, but it wouldn’t work” and that while he’d like “maybe a little bit more time with Dad but (he) wouldn’t like to swap the situation around.” He also said, “I don’t want to move. I like the situation as it is. If we got more time with Dad that’s fine.”
Ms Styles reports that C in both the joint and individual sessions proposed a shared arrangement involving dividing the week in half. However I am unsure how much weight should be given to these wishes as I am unsure whether or not they represent a genuinely held wish or what Ms Styles termed a “sympathy vote” for the husband.
I formed the view that the husband has still not accepted the breakdown of the marriage. He also struck me as a person who had a very intense relationship with his children. I do not doubt that he is genuine and believes that his proposals as to residence are in the best interests of the children. In my opinion however those proposals are a result more of his need to connect with his children (and possibly through this to the wife) rather than the other way around. I have some concerns as to the effect that his intense need to connect with his children may or could have on the children’s development. For example he drives the children to school each day. I accept the evidence of the wife that in fact they would rather ride their bicycles to school. Ms Styles reports B as saying “Dad still drags it out on us. Sometimes when he drives us to school we sit in silence while he goes on about how much he loves Mum and how he wishes it didn’t happen. I know he does wish that but he doesn’t have to drag it out on us and make our whole day sad.” In addition the husband speaks to the children each night on the telephone. If they have not rung by 9pm he telephones them. I have little doubt that this is a result of his needs rather than those of the children.
The husband reports that the children have told him that they want to live with him. I have little doubt that this is so and that he believes these are genuine wishes. For my part I have little doubt that they reflect what the children perceive as what their father wants to hear.
My conclusion is that the two older boys would not wish me to make orders of the type sought by the husband. I am in doubt as to whether C would want a shared regimen or whether his expressed wish for this arrangement is motivated by a wish to please his father.
Subsection (b) requires me to consider the nature of the relationship between the children and each of their parents.
I have no doubt that all the children love both their parents and that this is reciprocated.
I have no doubt that the relationship between the children and their mother is a healthy one. As indicated previously I have some concerns as to the relationship between the boys and the father.
Subsection (c) requires me to consider the likely effect of any changes in each of the children’s circumstances including the likely effect of any separation from either of their parents or any child or other person with whom he has been living.
There is no suggestion that the boys should be separated and I would not contemplate doing so in any event.
The husband’s application would involve the children being separated from their mother to a significant extent. The present regimen has been in operation since early 1999. It appears to be working well. The husband says that he has never been in favour of this arrangement. I do not have to go into the reasons for his acquiescing in. Irrespective of those reasons I have significant reservations in altering such a longstanding arrangement.
Subsection (d) concerns any practical difficulties in relation to contact. It has no application to this case.
Subsection (e) requires the court to consider the capacity of each parent to provide for the needs of the children, including emotional and intellectual needs.
In my opinion the inability of the father to separate his feelings towards the mother from his interaction with the children constitutes a shortcoming in his capacity to provide for the emotional needs of his children. I also have concerns that what I perceive as his need to interact constantly with the children, as indicated by the nightly telephone calls and the driving to school, may be inimical to their development as independent personalities.
Otherwise I believe that both parents are capable of adequately providing for the children’s needs.
Subsection (f) requires the court to consider the children’s maturity, sex and background and any other characteristics any of them may have that are considered relevant. The subsection also refers to matters of aboriginality. This subsection has no relevance to this case.
Subsection (g) and subsections (I) and (j) deal with matters of violence.
While there have been no incidents involving assaults there was an incident after separation on Christmas Day which involved the father losing his self control and damaging property. I do not need to recite all the circumstances; suffice to say I accept what is contained in the wife’s affidavit concerning this incident. It occurred in front of the children and reflects no credit on the husband but I am satisfied it is not indicative of a violent personality. These subsections are not relevant to this case.
Subsection (h) requires the court to consider the attitude to the children, and to the responsibilities of parenthood demonstrated by each parent. The comments I have made in paragraph 28 are also relevant under this subsection. Otherwise I find no fault in either parent insofar as discharging their responsibilities as parents is concerned.
Subsection (k) requires the court to consider whether it would be preferable to make the order that would be least likely to lead to the institution of further proceedings between the parties. I believe that the retention of the status quo, rather than the embarking upon the untried regimen sought by the father, would best suit this criterion.
Subsection (l) allows the court to consider any other fact or circumstance it considers relevant.
The father’s proposal involves something in the nature of a shared regimen. Usually for such an arrangement to work a good deal of co-operation is required between the parents. I do not believe the relationship between the parties is such as that such a level of co-operation could be achieved.
In all the circumstances I do not believe that there should be any change to the existing arrangements in relation to residence and contact and in general terms the orders I make will reflect this. I summarise my reasons as follows:
(a)I have regard to the wishes of the two older children. While C has indicated a preference for a shared regimen I note that neither of the other boys considers it practical and I have considerable reservations as to whether or not C’s expressed wish is genuinely held.
(b)I am critical of the father in respect of the matters I have already commented on.
(c)In my opinion there is no reason of any substance to justify changing a long established status quo.
(d)I am not confident that the parties would be able to achieve a level of co-operation sufficient to enable the shared regimen proposed by the husband to work in practice.
I have expressed my concerns at the father’s insistence on speaking to the children on a nightly basis by telephone and driving them to school each day. I do not propose to stop the children ringing their father at any time and if this is because they feel obliged to do so this is unfortunate but there is nothing I believe I can do about it. I will restrict the number of times he may telephone them. Insofar as driving them to school is concerned I can see benefits in the father seeing the children at times other than set contact periods and driving them to school on occasions would provide an opportunity for this to occur. It is unfortunate that it occurs all the time. In the circumstances however I do not believe I should make any order about this.
I have considered the suggestion made by Ms Styles that the weekend contact might be increased to include the Thursday night. She suggested that this “might be managed without too much disruption.” I am not convinced this is so. It would still involve a degree of co-operation and I am not convinced that it would not be disruptive to some extent. A opined that the proposal by C to split the week would not suit B and B commented “It’d be really nice to have more time with Dad but it wouldn’t work.” I appreciate that later he expressed an opinion that it would be nice to see more of his father and did not include this caveat but I believe that if this involved adding the Thursday night the reservations he had would be apposite. To some extent adding a day to the weekend contact has the same problems as splitting the week. I do not believe that the modest increase in the time the children would spend with the husband if the Thursday night were added to the weekend contact justifies the possible disruption that might be involved.
Property
I propose to approach this matter using a three-stage process. The first step is to make findings as to the pool of property available for distribution. The second involves a consideration of the matters set out in s.79(4)(a) to (d) and (f) and (g). While these matters extend beyond contributions for convenience I will call them the contribution factors. The final stage involves a consideration of those matters set out in s 75(2) which are relevant to this case.
The property pool
The property of the parties is as follows:
The former matrimonial home: Total value $330,000 Less mortgage $17,000 Equity $313,000 Husband’s vehicle $2,800 Vehicle in the possession of the wife $8,500 Husband’s 2,200 Telstra shares
Wife’s 2,200 Telstra shares
2,400 jointly owned Telstra shares$11,000
$11,000
$12,000Husband’s TAB shares $743 Wife’s TAB shares $743 Jointly-owned NRMA shares $1,115 Wife’s bank accounts $15,000 Husband’s bank accounts $1,600 Total: $377,501
There are other items of personalty which have not been valued. In addition, the husband may be entitled to receive a tax refund. This would relate to the period of the marriage and would arise out of tax deductions referable to H property.
At separation there remained $30,000 from the proceeds of sale of the H property. The wife gave the husband $5,000 of this and retained the balance. She spent $10,000 of that balance and at present the balance stands at $15,000 which is represented in the item wife’s bank accounts.
There are no debts referable to the marriage apart from the mortgage referred to above. The husband has a debt to the HMC Credit Union and each has Mastercard debts arising out of the use of the same Mastercard. It has been agreed in relation to this card that the wife’s liability will be $1,700 and the balance of any debt from the Mastercard will be borne by the husband. The wife also has some small debts to AVCO and Radio Rentals. Given that all of these were incurred post-separation, I do not propose to take them from the property pool for the purpose of dividing it, but will take the fact that each party has debts into account in a general way. It needs to be added, however, that a significant portion of the husband’s debts relates to monies borrowed to pay legal fees.
Contribution factors
It was common ground between the parties that the difference in initial contributions was irrelevant at this stage and that up until separation there was no reason to value one party’s contributions as being greater than the other’s.
The wife has had the care of the children post-separation. The wife has never sought, and husband has never paid, child support. It was argued on behalf of the husband that notwithstanding this that the parties’ post separation contributions as parents should be considered to be equal. The basis for this contention was firstly that the husband had the children with him for each alternate weekend and half the school holidays and that whilst he paid no child support he was voluntarily paying the mortgage on the former matrimonial home and the parties’ health insurance. He also made certain other payments which are in evidence but which are unnecessary to detail.
When the various payments made by him are averaged over the period since separation and added to the mortgage and health insurance payments, it appears that the average contributions the husband has made to the wife’s household is in the order of $210 per week.
I agree that where one party has had the responsibility for caring for children the bulk of the time and the other party makes financial contributions which cover the whole or almost the whole of the costs of maintaining those children, it may be reasonable to regard the respective contributions as equal. In this case, however, the average amount paid by the husband since separation could not be described in these terms. It can be seen that the payments by the husband averaged $70 per week per child. If regard is had to the statistical cost of maintaining children this would represent less than half the cost of maintaining those children. Under these circumstances, I do not consider that the fact that the wife has had the predominant responsibility for the physical care of the children is counter-balanced by the financial contributions made by the husband.
It has now been some two years and seven months since the parties separated. An adjustment should be made in favour of the wife to reflect her contributions as a parent over this time. The matters referred to in paragraphs 40 and 41 need to be kept in mind when making that adjustment. I would make an adjustment of 2½% in favour of the wife. This results in a contribution-based entitlement of 52.5% to the wife and 47.5% to the husband.
Section 75(2) factors
There are three significant matters under s.75(2) that justify further adjustments in favour of the wife. These are:
(a)The wife’s continuing responsibilities in relation to the care of the three children.
(b)The husband’s superior earning capacity.
(c)The husband’s superannuation entitlements.
The husband will have responsibilities for caring for the children for significant periods of time pursuant to the orders I propose to make in relation to children. However, the main responsibility will fall to the wife. This is a matter which requires recognition in any adjustment of the parties’ interests in their property.
The husband is employed in the Commonwealth Public Service. His present salary as disclosed in his financial statement is in the order of $84,000 per annum. His employment would appear to be reasonably secure. The wife on the other hand gave up paid work in 1986 shortly before the birth of the parties’ first child, A. She did not work outside the home again until March 1990 when she commenced some part-time employment. She ceased this employment for a period before C’s birth and then re-commenced part-time work in March 1992. In December of that year the husband was posted to Brisbane in the course of his employment and the wife gave up this employment. She had other intermittent and casual employment up until March 2001 when she commenced her present job. This is as a receptionist at a firm of accountants. Her hours of work are 8.00 am to 1.00 pm. Her salary as disclosed in her financial statement is in the order of $18,500 per annum.
There seems to be no reason why the wife could not work full-time if she chose to do so, and if work were available. Nevertheless, even if she were to obtain full-time employment, there is no prospect of her earning an income in any way comparable to that of the husband.
The wife has a small amount of superannuation, about $4,500. The husband is a member of the Commonwealth Superannuation Scheme. At present he has accumulated in that fund, by way of contributions and interest, about $140,000. If he were to resign now and take this money as a lump sum, he would receive in the order of $117,000 after payment of tax.
The husband’s superannuation entitlements are more valuable, however, than a consideration of his contributions and interest alone would indicate. He is also entitled to receive an indexed pension from age 55. This pension would continue for life. He would be entitled to receive a pension from age 55 years even if he were to leave the Public Service now. In such an event he could leave his contributions and interest in the fund and at age 55 commence receiving a pension. The size of that pension would depend on the size of his lump sum entitlements at that time. It is not possible to accurately estimate how much this would be, as it depends on the earning rates of the superannuation fund. The wife had an investment advisor, Mr Wayne Lear, prepare some calculations. Mr Lear gave evidence that the Commonwealth Superannuation Fund has returned an interest rate on its assets over the last 20 years averaging 10% per annum. If it continued to perform at this rate, Mr Lear has calculated that if the husband resigned now and left his contributions in the scheme, he would be entitled a pension of some $57,000 per annum and a lump sum refund of about $415,000.
Calculations of the type performed by Mr Lear may be useful to gain some indication of the potential benefits the husband could obtain, but cannot, in my opinion, be used to provide any accurate prediction as to these matters. In any event, calculations of this sort are somewhat irrelevant. The husband gave evidence that he does not intend to resign from the Public Service and proposes to work to the age of 65. If he did so, then in addition to receiving a refund of his contributions together with interest, he would be entitled to an indexed pension equivalent to 52.5% of his final salary. On the assumption that he does not receive any increase in his salary, this would be in the order of $44,000 per annum in today’s terms.
The husband joined the Commonwealth Superannuation Scheme in 1975. It is apparent therefore that most of his lump sum entitlements were accumulated during the marriage. In addition, of course, his entitlement to an indexed pension is a very valuable resource. Mr Lear has done some calculations as to the capitalised value of the husband’s pension entitlements. Such calculations may be useful as a reminder of the value of superannuation entitlements but in my opinion should not be used to convert such entitlements into any form of notional property. See Perrett (1990) FLC 92-101. Suffice it to say that the husband’s entitlement to receive a pension is a very valuable financial resource. Together with his earning capacity it constitutes the most valuable asset that either party takes from the marriage.
Plainly, a substantial adjustment would be required to recognise these three s.75 (2) factors. However, there must be a limit to this. If they were given their proper recognition in dollar terms, then the result would be the wife would receive the whole of the parties’ property. This would be unfair to the husband. Normally s.75(2) factors should not be permitted to totally subsume the share of property to which a party is entitled by reason of his or her contributions. See Robb (1995) FLC 92-555.
In the circumstances, I propose to make a further adjustment in favour of the wife of 30%.
The husband’s s.79(5) application
The husband seeks that, in the event that the orders I would make if his superannuation entitlements became a factor under s.75(2) would result in him receiving an amount of less than $124,000, I should adjourn the proceedings pursuant to s.79(5) until his superannuation became payable and make an interim division excluding any consideration of those entitlements. While not explicitly stated, I assume that this would not be pursued if the end result of a division excluding superannuation would also result in the husband receiving less than $124,000. Given the responsibilities the wife will have in relation to the children and the disparity in the parties’ earning capacities, it might be that even if the husband’s superannuation entitlements were excluded from consideration the end result would not leave him such an amount but it is unnecessary to consider this.
The wife opposed any adjournment and wanted to receive her full entitlements now.
It should be noted that no submissions were made to the effect that the court should have regard to the impending changes to the Family Law Act with respect to superannuation.
The basis on which the husband sought the adjournment was that he wishes to obtain enough capital to acquire a house for himself and for the children. It was submitted that any order which would result in the wife being able to retain a house for herself with the children but which would not enable the husband to do likewise would be an injustice.
As indicated above, the husband’s proposal is to work to age 65. He is presently 45 years of age. This would mean that the proceedings would, if the husband is able to effect his plans, mean that the final hearing of property matters would be deferred for twenty years. Having regard to the provisions of s.81 of the Act, this would be a powerful reason to exercise my discretion against granting any adjournment.
However, in my opinion, it is not necessary to consider the exercise of any discretion. In my opinion, the terms of s.79(5) do not provide for an adjournment in these circumstances.
Section 79(5) provides as follows:
“Without limiting the power of any Court to grant an adjournment in proceedings under this Act, where, in proceedings with respect to the property of the parties to a marriage or either of them, a Court is of the opinion —
a)that there is likely to be a significant change in the financial circumstances of the parties to the marriage or either of them and that, in regard to the time when that change is likely to take place, it is reasonable to adjourn the proceedings; and
b)that an order that the Court could make with respect to the property of the parties to the marriage or either of them if that significant change in financial circumstances occurs is more likely to do justice as between the parties to the marriage than an order that the Court could make immediately with respect to the property of the parties to the marriage or either of them,
the Court may, if so requested by either party to the marriage, adjourn the proceedings …… “
The critical words appear in subsection (b). That subsection provides that where a change of financial circumstances will take place in the future, and an order that the Court could make in relation to property if that significant change in financial circumstances occurs is more likely to do justice between the parties than an immediate order, the court may adjourn the proceedings. The critical words are those in italics.”
The husband’s case has nothing to do with any significant change in financial circumstances occurring. His case is that an order that the Court could make with respect to the parties’ property if the proceedings are adjourned is more likely to do justice as between the parties than an immediate order because a partial order would exclude any consideration of his superannuation entitlements and might give him enough money to buy a house.
The only person to whom justice would more readily be done if the proceedings were deferred to take account of the impending change in financial circumstances is the wife. However, she opposes the adjournment and it would be perverse of me to grant an adjournment in order to do greater justice to her. She is a competent adult represented by competent lawyers. There is no basis upon which I should take such a paternalistic attitude. In any event that is not the basis of the husband’s application. The application is based on the alleged injustice to the husband if he is unable to purchase, as opposed to rent, a residence for himself and the children.
I do not propose to make an order under s.97(5).
Conclusion
The end result is that the property of the parties will be divided between them in the proportions 82.5% to the wife and 17.5% to the husband.
The property pool as set out in paragraph 39 is $377,501. 17.5% of this is $66,063 which I round off to $66,000.
The property in the possession of or in the name of the husband amounts to $16,143. If he received the wife’s Telstra and TAB shares together with the jointly owned Telstra and NRMA shares this would involve an additional $24,858 which would make a total of $41,001 which I would round off to $41,000. On this basis if the wife wishes to retain the former matrimonial home she would have to pay him $25,000.
If the wife is unable or unwilling to pay this amount the home will need to be sold. $25,000 represents 7.99% of the equity in the home which I round off to 8%.
The orders I propose to make will involve her transferring her shares and the jointly owned shares to the husband. I will give the wife the option of paying the husband a further $25,000, in which case she can retain the home, or of selling the home. If she opts to sell the home the husband will receive 8% of the net proceeds of sale. If she opts to retain the home she must pay the husband $25,000 even if she later changes her mind and opts for a sale or if her plan to acquire the home turns out to be impossible. I propose to give her 14 days to decide what she wants to do. This should give her enough time to ascertain if she can raise $25,000. However I will not take out the orders for 14 days. This would mean that this time could be extended if sufficient reason were shown why this should occur. I will give liberty to either party to have the matter re-listed either for any mechanical variation to the orders within 14 days or at any time for consequential orders concerning enforcement.
I certify that the preceding seventy-six (76) paragraphs are a true copy of the reasons for judgment of Brewster FM
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