Sabell and Medhurst (No 2)
[2011] FamCA 596
•30 June 2011
FAMILY COURT OF AUSTRALIA
| SABELL & MEDHURST (NO 2) | [2011] FamCA 596 |
| FAMILY LAW - PROPERTY SETTLEMENT – whether promissory estoppel arises in relation to occupancy of property – valuation of real property interests – assessment of contributions – assessment of s 75(2) matters – just and equitable orders FAMILY LAW - SPOUSE MAINTENANCE – threshold issue – assessment of quantum FAMILY LAW - DEPARTURE CHILD SUPPORT ASSESSMENT – whether ground established to incur liability for private school fees. |
| Family Law Act 1975 (Cth) |
| Chorn v Hopkins (2007) FLC 93-317; Harrington v Harrington (2004) FLC 93-204; |
| APPLICANT: | Mr Sabell |
| RESPONDENT: | Ms Medhurst |
| FILE NUMBER: | SYC | 3944 | of | 2009 |
| DATE DELIVERED: | 30 June 2011 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Rose J |
| HEARING DATES: | 24-25 & 27 May 2011; 9 June 2011; 10 June 2011 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | G Johnston |
| SOLICITOR FOR THE APPLICANT: | Hazan Hollander |
| COUNSEL FOR THE RESPONDENT: | T Kirk SC |
| SOLICITOR FOR THE RESPONDENT: | Barkus Doolan Kelly |
Orders
Property settlement
That on or before the expiration of 90 days from today the wife shall do all acts and things and sign all documents as may be necessary to:
(a)obtain the mortgagor’s consent to the transfer by the husband to the wife of the husband’s right title and interest in the property situate at and known as … W Street, Sydney Suburb 2 in the State of New South Wales being the whole of the land contained in Folio Identifier … (“the home”) and the wife shall indemnify and keep indemnified the husband from and against all liability under the home loan; or
(b)failing the mortgagor’s consent the wife shall effect a discharge of the home loan and provide a copy of the discharge of mortgage to the husband;
(c)pay to the husband the sum of $25,872.00.
That upon the wife complying with Order 1 the husband shall do all things and sign all documents as may be necessary to transfer to the wife all of his right, title and interest in the home subject to the home loan and pending the transfer the husband pay all instalments payable under the home loan as and when the same fall due.
That subject to compliance by the husband of Order 2 the wife shall do all acts and things and sign all documents as may be necessary to transfer to the husband all her right, title and interest in the property situate at and known as Unit …, … B Street, Sydney Suburb 3 in the State of New South Wales being the whole of the land contained in Folio Identifier … (“the Sydney Suburb 3 Unit”) PROVIDED THAT the husband is solely responsible for all expenses arising as a consequence of the wife’s compliance with her obligations under this Order.
That on or before 5.00 pm 14 July 2011 the husband sign all documents and do all acts and things as may be necessary for the purpose of transferring to the wife his interest in the following:
(a) The Subaru motor vehicle currently used by the wife.
(b) The parties’ Westpac joint account.
Declare that subject to the Orders made this day and the delivery to the husband’s lawyer or as he may nominate the husband’s personal effects and other items which may be agreed upon within seven (7) days from today, each of the parties is beneficially entitled to all items of personalty in his or her possession respectively.
Spousal maintenance
That the husband pay to the wife spousal maintenance at the rate of $550.00 per week for a period of 12 months from today and that payment be made by automatic transfer to such bank account as the wife may direct in writing, the first of such payments to be made on or before 5.00 pm 7 July 2011.
Departure child support assessment
That by way of departure from the child support administrative assessments issued by the Child Support Agency from time to time for the two children of the marriage B born … March 2004 and S born … March 2007:
(a)The husband pay periodic child support to the wife in the sum of $400.00 per week and that payment be made by automatic transfer to such bank account as the wife may in writing direct, the first of such payments to be made on or before 5.00 pm 7 July 2011.
(b)The amount of child support payable by the husband pursuant to Order 7(a) shall be varied on 1 July (“the review date”) in each year commencing on 1 July 2012 to such sum as shall be determined by multiplying the child support being paid on the review date by the inflation factor (if any) applicable to each such child support year as prescribed by the Child Support (Assessment) Regulations.
That the husband pay the following costs of the attendance by the two children at School 1 as and when such costs fall due:
(a) Tuition fees and levies.
(b) School required books and stationery.
(c) Sports activities and equipment.
(d) Computers.
(e) Musical instruments.
(f) Uniforms.
(g) Local extra curricular expenses.
That the husband pay as and when they fall due costs of premiums for private health insurance for the children with the … health fund at its current level and any gap medical expenses including but not limited to medical, hospital, dental, orthodontic, physiotherapy, optometry and pharmaceutical costs and expenses not otherwise met by the private health fund.
That the parties forthwith do all acts and things necessary to promptly cause a copy of these Orders to be lodged with the Child Support Agency.
That on or before the end of Year 5 for each child the parties shall actively enquire about and consider all options for secondary education for the child including permitting the child to take part in such procedures available for entrance to a selective high school and they shall also jointly seek advice from an independent education consultant.
Other orders
That in the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these Orders then the Registrar of the Court be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute such deed or instrument in the name of the defaulting party and to do all acts and things necessary to give validity and operation to the deed or instrument.
That each party has liberty to apply on seven (7) days written notice being given in respect of the implementation of any of these Orders.
That all documents produced on subpoena may be returned to the person who produced the same.
That subject to the Orders made this day all outstanding applications are dismissed save and except for any pending application for costs.
IT IS NOTED that publication of this judgment under the pseudonym Sabell & Medhurst (No 2) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC3944 of 2009
| Mr Sabell |
Applicant
And
| Ms Medhurst |
Respondent
REASONS FOR JUDGMENT
Introduction
In these proceedings the applicant Mr Sabell (who for convenience I shall refer to as “the husband”) sought orders for property settlement in accordance with his application filed 6 July 2009. The application was amended unopposed whereby the orders sought are in accordance with the “Minute of Orders” marked Exhibit 1. Exhibit 1 also sought consequential orders and costs.
The respondent Ms Medhurst (who for convenience I shall refer to as “the wife”) sought orders for property settlement, spousal maintenance and child support departure as well as ancillary orders and costs pursuant to her Response filed 11 September 2009. The response was subsequently amended unopposed firstly by the “Minute of Orders” set out in Exhibit 2 and ultimately in lieu thereof by Exhibit 12.
The parties cohabited for a period of approximately 14 years which commenced during December 1994 and continued until they finally separated on 4 October 2008, there having been an earlier period of separation between 16 August 2008 and 15 September 2008.
The marriage was dissolved by Divorce Order made 29 October 2009 with the effect from 30 November 2009.
The husband is 44 years of age and employed in the finance industry.
The wife is 44 years of age and works in marketing engaged part-time four days per week.
There are two children of the marriage, namely:
(a)B, 7 years of age having been born in March 2004;
(b)S, 4 years of age having been born in March 2007.
The two children have lived with the wife in her primary care since the parties finally separated.
The husband is in an intimate relationship with Ms S, who is 27 years of age employed as a consultant. The husband intends shortly to reside in Hong Kong where he will continue his employment. Ms S will cohabit with him there.
The wife has an intimate relationship with Mr N. They do not cohabit.
Historical background
The following are further brief relevant non-controversial historical matters.
In 1992 the husband purchased the property M Street, Sydney Suburb 2 (“the M Street property”) for $229,000.00. There is an absence of evidence of the funding of the purchase price although, implicitly, a mortgage was granted to secure a loan given that there was an outstanding mortgage amount at the time of commencement of cohabitation.
From about the end of 1994 to during 1996 the parties lived in Asian Country 1.
From during 1996 to during 1998 the parties lived in Hong Kong.
In about May 1996 the husband purchased the property Q Street, Sydney Suburb 1 for $506,001.00 (“the Q Street property”). It was funded by combination of loans and savings to which subsequent reference will be made.
In about 1998 the husband lent $580,000.00 to his parents Mr M and Ms L.
In about May 1998 the husband sold the M Street property for $500,000.00 with net proceeds of sale of $464,000.00.
During 1999 the parties commenced to occupy the Q Street property. Subsequently, in that year demolition of the house at the Q Street property took place and construction of a new house commenced and completed. The building costs were substantially funded from the net proceeds of sale of the M Street property.
In about November 2001 the husband transferred to the wife half of his interest in the Q Street property to the effect that they became the jointly registered proprietors as joint tenants.
In 2006 B Street, Sydney Suburb 3 (“the Sydney Suburb 3 Unit”) was purchased for $875,000.00. It was funded by the husband’s parents. The title was and is held as to 53% by the husband’s mother and the parties as to the parties 47%. The registered proprietors holding their interests as tenants in common and as between the husband and wife as joint tenants. The husband’s parents had previously paid to the husband $250,000.00 in part-payment of the previously mentioned loan of $580,000.00. The parties accepted that their interest of 47%, to which I have referred, represented the balance of that indebtedness converted into their 47% interest. The title is unencumbered.
In December 2006 the Q Street property was sold and was settled on 1 February 2007 for $2,410,000.00 with net proceeds of sale of $2,169,409.00.
On 1 February 2007 the parties completed the purchase of the former matrimonial home. The purchase price was $2,150,000.00 funded by the net proceeds of sale of the Q Street property, there having been a short-term loan to enable payment of deposit.
Relevant legal principles
It is now well established that generally speaking the approach to be taken to determination of property settlement proceedings, concluding with an order that is “just and equitable” represents four steps.
The first of which is that the Court should determine the property and financial resources of the parties at the date of the hearing.
Secondly, determine the nature and extent of the respective contributions made by each of the parties whether financial or non financial, including contribution to the welfare of family in the role of home-maker and parent.
Thirdly, determine and assess the relevant matters pursuant to s 75(2).
Fourthly, consideration of orders, if any, that should be made that are just and equitable.[1]
[1] Hickey & Anor and Attorney-General for the Commonwealth (2003) FLC 93-143
I will now proceed to make findings in relation to the property of the parties, their respective financial and non-financial contributions and relevant matters (if any) pursuant to s 75(2) of the Act. In addition, I will make findings in respect of the issue of “waste” raised by the applicant.
Property of the parties
Exhibit 10 is the joint balance sheet reproduced as follows. Findings will be subsequently made in relation to areas of dispute arising out of Exhibit 10:
| ASSETS | Ownership | Husband's Values ($) | Wife's Values ($) | |
| 1 | [Sydney Suburb 2] home | H & W | 2,500,000 | 2,250,000 |
| 2 | Interest [Sydney Suburb 3] unit | H & W (47%) | 289,050 | 470,000 |
| 3 | 2004 Subaru […] | H & W | 18,350 | 18,350 |
| 4 | 2008 VW Golf […] - sold | H | Nil | Nil |
| 5 | Westpac joint account # […] | H & W | 4,281 | 2,700 |
| 6 | ING account #[…] - closed | H | ||
| 7 | NAB account […] | H | 7,655 | 7,655 |
| 8 | ([Sabell] Capital Management P/L) 30% of tax losses $343,356 | 0 | 103,000 | |
| 9 | Westpac eSaver account #[…] (for tax) | W | 39 | 39 |
| 10 | Westpac Choice account #[…] | W | 2,300 | 2,300 |
| 11 | Contents at [Sydney Suburb 2] | H & W | 11,355 | 11,355 |
| 12 | Jewellery | W | 6,250 | 6,250 |
| 13 | Jewellery | H | 2,000 | 2,000 |
| 14 | NAB equity shares (583) | H | 14,423 | 14,423 |
| 15 | Contents at [Sydney Suburb 1] | H | 6,000 | 6,000 |
| 16 | [Sydney Suburb 1] property | H | 1,200,000 | 1,200,000 |
| TOTAL | 4,061,703 | 4,094,072 | ||
| ADDBACKS | ||||
| 1 | 2008 Bonus (estimate) | H | Nil | |
| 2 | 2009 Bonus (estimate) | H | Nil | |
| 3 | 2010 Bonus (estimate) | H | Nil | |
| 4 | Funds Drawn Down from Mortgage (a) to pay school fees (b) legal fees for Wife (included below) (c) Legal fees for Husband (included below) | 42,095 | ||
| 5 | Legals paid otherwise by: Wife; Husband; in husband's solicitor's trust account | 119,444 63,000 69,505 | 119,444 204,149 | |
| TOTAL | 251,949 | 365,688 | ||
| LIABILITIES | Ownership | Husband's Estimate ($) | Wife's Estimate ($) | |
| 1 | Westpac Rocket mortgage [Sydney Suburb 2] | H & W | 238,719 | 238,719 |
| 2 | NAB credit card | H | 2,100 | 0 |
| 3 | NAB credit card | W | 0 | 0 |
| 4 | Westpac credit card | W | Not Known | 13,402 |
| 5 | Income Tax 2010 | W | 0 | 5,147 |
| 6 | NAB home loan ([Sydney Suburb 1]) increase of legals | H | 1,024,155 | 1,024,155 |
| TOTAL | 1,264,974 | 1,281,423 | ||
| NET ASSETS | Ownership | Husband's Estimate ($) | Wife's Estimate ($) | |
| Assets | 4,061,703 | 4,094,072 | ||
| Addbacks | 251,949 | 365,688 | ||
| LESS Liabilities | 1,264,974 | 1,281,423 | ||
| TOTAL | 3,048,678 | 3,178,337 | ||
| SUPERANNUATION | Ownership | Husband's Estimate ($) | Wife's Estimate ($) | |
| 1 | [Super 1] | W | 35,210 | 35,210 |
| 2 | [Super 2] | W | 1,425 | 1,425 |
| 3 | [Super 3] | H | Nil | Nil |
| 4 | [Super 4] | H | 48,742 | 48,742 |
| TOTAL | 82,593 | 82,593 | ||
| NET ASSETS & SUPERANNUATION | Ownership | Husband's Estimate ($) | Wife's Estimate ($) | |
| Net Assets | 3,048,678 | 3,178,337 | ||
| PLUS Superannuation | 82,593 | 82,593 | ||
| TOTAL | 3,131,271 | 3,260,930 |
Disputed items – exhibit 10
I make the following findings in relation to disputed items arising out of Exhibit 10.
Item 2 – Interest in Sydney Suburb 3 Unit
The husband and wife are joint tenants as to 47% interest in the legal estate to this property, the remaining 53% being held by the husband’s mother Ms L who holds that interest as tenant-in-common with the husband and wife. The issue that arises is whether or not the current market value of the interest held by the husband and wife should be found to be $289,050.00, as contended on behalf of the husband, or $470,000.00 as claimed on behalf of the wife.
The single joint expert Mr B provided his report dated 10 May 2011 marked Exhibit 7. As instructed Mr B provided two separate current market valuations depending on whether or not there was found to be a life tenancy in favour of the husband’s parents Ms L and Mr M. Mr B’s conclusions, not the subject of challenge, are as follows:
“1.Unencumbered by Any Life Tenancy or Other Legal or Equitable Interest
One Million Dollars ($1,000,000)
2.Subject to Life Tenancy to [Ms L] & [Mr M]
Six Hundred & Fifteen Thousand Dollars ($615,000)”
In order to conclude which of the two alternative valuations will be accepted, there is required to be a determination of whether or not a life tenancy had been established.
At the commencement of the hearing, the case for the husband was that his parents held a life tenancy in the Sydney Suburb 3 Unit pursuant to an oral agreement between them on the one hand and the parties on the other.
Subsequently, by his written submissions, counsel for the husband no longer pressed the issue of a life interest, but rather made submissions on a category of promissory estoppel namely, “tenancy by estoppel”. The concession and approach are in the following terms:
“2.I concede at the outset that no legal life interest exists in the husband’s parents in the subject property but say that the husband and wife are estopped from denying, inter-partes, that the husband’s parents have the right to occupy the unit for life.”[2]
[2] Husband’s written submissions dated 25 May 2011 paragraph 2.
It was further submitted that the tenancy was created orally.
During the course of considering the evidence and the submissions made, it seemed to me that the doctrine of election, frequently referred to as it not being open to a party to “approbate and reprobate”[3], may have arisen for consideration. However, I will not consider that matter any further as no submissions were made in relation to it.
[3] Australian Legal Dictionary Butterworths 1997.
The principles to be applied in relation to promissory estoppel are set out in the judgment of Brennan J (as he then was) in Waltons Stores (Interstate)Ltd v Maher as follows:
“[I]t is necessary for a plaintiff to prove that (1) the plaintiff assumed or expected that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.”[4]
[4] (1988) 164 CLR 387 at 428.
The critical factual matters that require findings are whether or not there was an agreement between the husband’s parents and the parties regarding the terms upon which the husband’s parents may continue to occupy the whole of the Sydney Suburb 3 Unit. This was recognised in the written submissions lodged by counsel on behalf of the parties.
The parties gave affidavit and oral evidence in relation to relevant factual matters. The husband’s father, Mr M gave affidavit evidence only. Senior counsel for the wife emphasised that the husband’s father had been required to attend for cross-examination however, was unable to do so as it was accepted that he was overseas. No application had been made for an order to enable him to be examined by video-link.
The substance of the husband’s evidence is that he had discussions with the wife in relation to his parents occupying the Sydney Suburb 3 Unit for life on the basis that they would not pay rent and otherwise meet the cost of improvements, maintenance and rates. The husband further contends that the wife, by her words and actions, approved the husband’s parents occupying the Sydney Suburb 3 Unit on that basis. The husband acknowledged that there had not been any discussion between himself and the wife in relation to his parents’ life expectancy.
It was common ground between the parties that the 47% interest in the Sydney Suburb 3 Unit acquired by them on the purchase of it was due to that interest being substituted for the outstanding balance of the husband’s loan to his parents of about $580,000.00 there having been a repayment in part by payment of $250,000.00 of it in about 2001. The husband had carried out various calculations to arrive at a 47% interest for the husband and wife in the property to be then purchased which was accepted by the husband’s parents and the wife.
The affidavit evidence of the husband’s father, Mr M was to the effect that the wife agreed with the proposition that the husband’s parents could occupy the Sydney Suburb 3 Unit for life rent free and would meet all outgoings.
The substance of the wife’s evidence was that she did not agree in conversation with the husband or indeed, during the course of conversation with the husband’s parents or either of them that they could occupy the Sydney Suburb 3 Unit for the rest of their lives.
However, the wife did state during the course of her oral evidence that she did not know how long the husband’s parents would live and she was happy with the way matters were arranged at that time in terms of their occupation including that they would pay the rates and not have to pay rent. The wife stated, in effect, that she considered the Sydney Suburb 3 Unit was to be the home of the husband’s parents and that they were permitted to make improvements at their cost.
I detected some hesitancy in the oral evidence of the husband and the wife in relation to the crucial matter of whether there was an agreement that the husband’s parents could have, in effect, exclusive occupancy of the Sydney Suburb 3 Unit for their lifetime. I accept the evidence of both the husband and his father that as between them, without the presence of the wife, there was an agreement for the husband’s parents to occupy the Sydney Suburb 3 Unit for their lifetime. However, the wife has been, and remains, one of the registered proprietors of the property. Consequently, the wife’s agreement, express or implied, was also required for such occupancy.
I find that on the balance of probabilities the husband and wife did agree either expressly or by implication, from their words and actions, that the husband’s parents could have exclusive occupancy of the Sydney Suburb 3 Unit. With regard to the terms upon which such an agreement was reached, I am also satisfied that the wife’s position was that she did not agree that such occupancy be for life, but rather it is inferred from her evidence that she was in agreement to the husband’s parents having exclusive occupancy for an indefinite period of time on the basis that they paid the rates, levies and the cost of maintenance and improvements which, in fact, has occurred.
Consequently, I have concluded that the wife is not estopped from contending that the husband’s parents do not have exclusive occupancy for their lives. However, I have further determined that the agreement between the parties and the husband’s parents is that they have exclusive occupancy for an indefinite period on the further terms that they continue to meet the rates, levies and cost of maintenance and improvements to the Sydney Suburb 3 Unit.
In written submissions made by senior counsel for the wife, reference was made to the judgment in Morris v Morris[5]. In the course of that judgment, reference is made to the general equitable principle that on the facts in a given case and having regard to an assurance “of an indefinite right of residence in the relevant property, declaration may be made that the expenditure of money in those circumstances by the person concerned gives rise to an equitable charge for the amount of such expenditure”. I find that in application of the principle referred to that judgment[6] to the facts as I have found them in these proceedings, the husband’s parents may have the benefit of an encumbrance to the title represented by an equitable charge for the purpose of which I have referred, apart from the agreement in relation to occupation by them of the property for an indefinite period of time. It must be remembered that the husband’s parents are not parties to these proceedings. Consequently, my determination in relation to their rights is not binding upon them.
[5] (1982) 1 NSWLR 61
[6] Ibid at 64
Accordingly, I find that the husband’s parents, Mr M and Ms L have a right of exclusive occupancy for an indefinite period on terms that require them to meet the expenses of rates, levies, maintenance and improvements to the Sydney Suburb 3 Unit. I am not in a position to make a finding regarding the conditions upon which such exclusive occupancy may be terminated whether by way of notice or otherwise. However, it must not be overlooked that Ms L has rights of occupancy due to her being one of the registered proprietors of the Sydney Suburb 3 Unit.
The alternative valuations are centred upon whether or not there is a life tenancy. I have concluded that a life tenancy has not been established and consequently, the greater amount of the competing valuations will apply namely, $470,000.00. The weight that I ultimately give to the value of the interest of the parties in the Sydney Suburb 3 Unit is, of course, a different matter which will fall for consideration in terms of orders to be made which are just and equitable pursuant to s 79(2) of the Act.
Item 1
Controversy arose in relation to the current market value of the former matrimonial home. The single joint expert Mr B in his first report marked Exhibit 5 gave a valuation of $2,500,000.00. Subsequently, for reasons set out in Mr B’s second report marked Exhibit 9, he amended his valuation to $2,250,000.00.
During the course of cross-examination Mr B stated that a reasonable range for value is $2,250,000.00 to $2,500,000.00.
Subsequently, submissions were made supporting one figure or the other, it also being submitted by counsel for the husband that I should strike a mean figure in the range, namely in effect $2,375,000.00. Whilst senior counsel for the wife submitted that the amount should be $2,250,000.00, he did not submit that as a matter of law that I am unable to reach a conclusion based on the mean figure. I accept the submissions made by counsel for the husband that the approach in determining the mean figure in the range can be distinguished from the authorities which make it clear that it is not open to the trial judge to reach a mean figure based on competing valuation evidence. The difference in this case is that there is not a clash of expert evidence. The only evidence of value was that given by the single joint expert who, for the reasons stated in his oral evidence, opined that the range of valuation was that to which I have referred.
Consequently, I have determined that the value of the former matrimonial home is $2,375,000.00.
Item 8 – tax losses of $103,000.00
It was submitted on behalf of the wife that company losses may be carried forward indefinitely. The material referred to in the submissions makes it clear that the future application and benefit of such tax losses are qualified.
Whilst those submissions were initially opposed by counsel for the husband, subsequently on 27 May 2011, he made oral submissions which included conceding the written submissions by senior counsel on behalf of the wife as being correct.
The issue then arises as to whether or not the amount of $103,000.00 should be included as part of the calculation of the net property of the parties or alternatively be considered and given appropriate weight pursuant to s 75(2)(b).
I have concluded that the proper approach in the circumstances is for the available tax loss of $103,000.00 to remain for the purpose of calculation of the net property of the parties.
The reason for taking that approach is that whilst the husband is no longer trading and is not about to embark upon the resumption of trading, nonetheless he has many years experience and expertise in that area albeit that for some years he recorded losses totalling $343,356.00. Given that out of those considerable losses which would otherwise have been available for the benefit of the parties and their children, there is an asset represented by the tax loss of $103,000.00. Therefore, it is proper that it be included as it remains available for financial benefit to the husband in the future especially having continued in the finance industry and the potential further accumulation of knowledge and experience which may make it worthwhile for him to resume trading.
Add-backs
Item 4
I will include this item as an “add-back” representing a partial property settlement for the wife, albeit that part of it was for the purpose of paying school fees, an issue of contention between the parties.
Item 5
Exhibit 15 is a copy of an email dated 23 June 2011 from the solicitors for the parties to my Associate stating that $192,455.00 is the agreed amount of the husband’s paid legal fees including funds held in trust in substitution for the figures which otherwise appear in Item 5 of Exhibit 10 so far as the husband is concerned. I do not accept the submissions that legal fees paid of $192,455.00 should not be included because it was derived from income post-separation. In that regard counsel for the husband relied upon the guidelines in Chorn v Hopkins[7]. I do not accept that submission for the reasons set out in the following paragraph.
[7] (2004) FLC 93-204
In my view the preferable guidelines are those set out in the full Court’s judgment in Harrington v Harrington[8] which in their essence do not seek to fetter the exercise of discretion which on one interpretation is the result of the guidelines in Chorn v Hopkins. In addition, when the parties separated the two children were aged four and 18 months old respectively. Each of the parties have subsequently made significant contributions to the present time. It is unrealistic to consider that their lives fell into a vacuum simply because they separated. Indeed, that has been part of the rationale for many years for courts to consider post-separation contributions in cases such as this. There is no logic in being able to follow that approach and yet to conclude that the funding of legal costs should be excluded simply because monies applied for that purpose were derived from income.
Liabilities
[8] (2007) FLC 93-317
Items 2, 4 and 5
I have concluded that it is proper to include these credit card and tax liabilities. There is no evidence, nor indeed any submission made, that the credit card liabilities were caused by irresponsible or reckless financial conduct. I accept the submission by senior counsel for the wife that the wife’s bank account included deposits from her income and accordingly tax should also be included in the calculation of the net property of the parties. For reasons previously given in paragraph 63, I do not accept the submission that simply because these liabilities arose post-separation the amount should be discarded from the calculation of the parties’ net property.
Revised property of the parties
Consistent with my findings in relation to disputed items in Exhibit 10, I find that the property of the parties is as follows:
| ASSETS | ||||
| 1 | [Sydney Suburb 2] home | H & W | 2,375,000 | |
| 2 | Interest [Sydney Suburb 3] unit | H & W (47%) | 470,000 | |
| 3 | 2004 Subaru […] | H & W | 18,350 | |
| 4 | 2008 VW Golf […] – sold | H | Nil | |
| 5 | Westpac joint account # […] | H & W | 2,700 | |
| 6 | ING account #[…] - closed | H | ||
| 7 | NAB account […] | H | 7,655 | |
| 8 | Tax losses | 103,000 | ||
| 9 | Westpac eSaver account #[…] (for tax) | W | 39 | |
| 10 | Westpac Choice account #[…] | W | 2,300 | |
| 11 | Contents at [Sydney Suburb 2] | H & W | 11,355 | |
| 12 | Jewellery | W | 6,250 | |
| 13 | Jewellery | H | 2,000 | |
| 14 | NAB equity shares (583) | H | 14,423 | |
| 15 | Contents at [Sydney Suburb 1] | H | 6,000 | |
| 16 | [Sydney Suburb 1] property | H | 1,200,000 | |
| TOTAL | 4,219,072.00 | |||
| ADDBACKS | ||||
| 1 | 2008 Bonus (estimate) | H | Nil | |
| 2 | 2009 Bonus (estimate) | H | Nil | |
| 3 | 2009 Bonus (estimate) | H | Nil | |
| 4 | Funds Drawn Down from Mortgage (a) to pay school fees (b) legal fees for Wife (included below) (c) Legal fees for Husband (included below) | 42,095 | ||
| 5 | Legals paid otherwise by: Wife Husband including in husband’s solicitors trust account | 119,444 192,455 | ||
| TOTAL | 311,899 | |||
| LIABILITIES | Ownership | Husband's Estimate ($) | Wife's Estimate ($) | |
| 1 | Westpac Rocket mortgage [Sydney Suburb 2] | H & W | 238,719 | |
| 2 | NAB credit card | H | 2,100 | |
| 3 | NAB credit card | W | 0 | |
| 4 | Westpac credit card | W | 13,402 | |
| 5 | Income Tax 2010 | W | 5,147 | |
| 6 | NAB home loan ([Sydney Suburb 1]) ? increase of legals | H | 1,024,155 | |
| TOTAL | 1,283,523 | |||
| NET ASSETS | Ownership | Husband's Estimate ($) | Wife's Estimate ($) | |
| Assets | 4,2219,072 | |||
| Addbacks | 311,899 | |||
| LESS Liabilities | 1,283,523 | |||
| TOTAL | 3,247,448 | |||
| SUPERANNUATION | Ownership | Husband's Estimate ($) | Wife's Estimate ($) | |
| 1 | [Super 1] | W | 35,210 | |
| 2 | [Super 2] | W | 1,425 | |
| 3 | [Super 3] | H | Nil | |
| 4 | [Super 4] | H | 48,742 | |
| TOTAL | 82,593 | |||
| NET ASSETS & SUPERANNUATION | Ownership | Husband's Estimate ($) | Wife's Estimate ($) | |
| Net Assets | 3,247,448 | |||
| PLUS Superannuation | 82,593 | |||
| TOTAL | 3,330,041 | |||
Contributions
I make the following findings in relation to the financial and non-financial contributions of each of the parties including contributions to the welfare of the family in the role of homemaker and parent.
The husband
I find that the husband made the following initial financial contributions. In relation to financial matters as well as this particular issue the husband provided detailed documentary corroboration. I accept his evidence including in those respects where there was an absence of documents as I consider the husband’s affidavit evidence to be detailed and plausible, unless otherwise stated.
The husband’s initial financial contributions included:
(a)Equity in the M Street property. There is an absence of agreement as to the then current market value at the time of cohabitation. I do not accept the husband’s estimate. He is not qualified to provide valuation evidence. At about the commencement of cohabitation the property was subject to a mortgage as security for an outstanding amount of $213,107.00.
(b) Funds on deposit with Bank 1 approximately $69,744.00.
(c)Funds on deposit with Westpac Banking Corporation. Approximately two months prior to the commencement of cohabitation the husband had a credit balance of $6,451.00. There is an absence of evidence of the credit balance (if any) at any time during December 1994 when cohabitation commenced. Consequently, I am not in a position to make a finding of the balance in the account at that time.
(d)Funds held derived from Company 1. The husband’s evidence is that at the time of leaving its employ in September 1994 his net entitlement was $30,000.00. Again, there is an absence of evidence of the amount held by him from that source at the commencement of cohabitation.
(e)Household furniture and contents. The husband provides an estimate of $3,000.00. There is no evidence as to the basis of that calculation. For example, there is no evidence to indicate such amount represented an expert’s opinion as to the market value at the time in its condition or whether this is just simply the husband’s own estimate. Consequently, I am not in a position to attribute a value for that personal property.
The husband made financial contributions both direct and indirect. Such contributions included:
(a)Full-time employment in well-remunerated positions within the finance sector and the application of such income to meeting liabilities and living expenses as well as accumulation of savings.
(b)Purchase of the Q Street property in May 1996 for $506,001.00. The purchase price was funded by a combination of savings from each of the parties applied towards payment of the deposit and stamp duty as well as loans.
(c)In 1998 the M Street property was sold by the husband. The husband received net proceeds of sale of $464,000.00 applied towards meeting the major part of the building costs for the new house built on the Q Street property in 1999.
(d)Completion of the sale of the Q Street property on 1 February 2007 in conjunction with the wife producing net sale proceeds of $2,169,409.00.
(e)The purchase with the wife of the former matrimonial home settled on 1 February 2007. The purchase price was $2,150,000.00 almost completely funded by the net sale proceeds of the Q Street property.
(f)The husband purchased the Sydney Suburb 1 property in October 2009 for $1,200,000.00. He funded the purchase price by a combination of a loan from his sister in the sum of $120,000.00; first mortgage advance $1,035,000.00 and the balance of about $46,390.00 from the bonus paid by his employer.
(g)In 2010 the husband caused renovations to be carried out to the Sydney Suburb 1 property at a cost of $35,459.00 funded by monies available to him at that time.
(h)The acquisition with the wife of the 47% interest in the Sydney Suburb 3 Unit, in the circumstances to which earlier reference has been made.
The husband’s primary affidavit provides minimal evidence of a contribution made by him to the welfare of the family in the role of homemaker and parent. However, I infer from the evidence given by him, such as it is, and the wife’s evidence that he did make a contribution in that regard in terms of care of and engagement in activities with the children from time-to-time.
Subsequent to the separation of the parties, the husband has been paying child support and meeting outgoings in relation to the former matrimonial home. In addition, he has made a contribution in the role of homemaker and parent, principally in his care of them, initially for an unstated period each second weekend as well as on Wednesday nights and more recently instead of each second weekend the period spent has been each second Sunday.
The wife
There was little challenge to the wife’s affidavit evidence in relation to her contributions.
In her affidavit, the wife conceded that at the commencement of cohabitation she did not have significant assets. The husband alleges that the wife had a HECS debt of $3,000.00 which he subsequently satisfied. I accept his evidence in the absence of contrary evidence.
During the period of cohabitation and post-separation the wife made various direct and indirect financial contributions.
The wife was an employed professional person in Sydney.
Subsequently, the wife has been employed either in the full-time or part-time position in marketing with some periods of unemployment whilst the parties lived overseas as well as both shortly prior to and subsequent to the birth of each of the two children. The wife took 15 months maternity leave after each birth.
For the period from 1998 until 2004 the wife was employed on a full-time basis. Upon returning to work at the conclusion of each period of maternity leave the wife was engaged in part-time work in marketing. Her pattern of part-time work has been approximately two days per week until early this year when she commenced working four days per week on a six month contract.
The wife made further contributions by joining in the purchase of the former matrimonial home and the acquisition jointly with the husband of their 47% interest in the Sydney Suburb 3 property in the circumstances previously described.
The wife together with the husband managed the renovations in all aspects to the Q Street property.
There is no dispute that the wife has made contributions in the role of homemaker and parent both by being primarily responsible for homemaking as described in her affidavit as well as being the primary carer of each of the two children to the present time which increased to a greater degree following the separation of the parties.
Assessment of contributions
I have assessed the contributions of the parties on a global basis as being equal for the following reasons.
The manner in which the proceedings were conducted and the helpful submissions by counsel, clearly were on the basis that contributions should be assessed in a global fashion rather than an asset-by-asset approach, it being open to the trial judge to adopt either approach depending upon the facts in each case.[9] No distinction was drawn between contributions to superannuation and other contributions.
[9] Norbis v Norbis (1986) FLC 91-712 at 75,168
I find that each of the parties applied himself or herself to the full extent of their ability in making their respective contributions. The husband made the primary financial contributions represented by his initial contributions and then subsequently due to remuneration packages that he earned in the course of his employment in the finance industry. In addition, he made a contribution in the role of homemaker and parent which was ancillary to the contributions made by the wife in that regard.
The wife undoubtedly made the primary contribution in the role of homemaker and parent, both prior and subsequent to the separation of the parties. During the latter period her contributions were in more difficult circumstances than before due to the limited periods of time that the children were in the care of the husband. The wife also made financial contributions due to the income that she earned from time-to-time applied, as with the husband, in meeting the parties living expenses and liabilities was of particular significance for the parties and their children during the years when the husband engaged in trading in his own right resulting ultimately in large losses being incurred. I should add at this point that it was not an issue in these proceedings that the question of waste through irresponsible or reckless financial conduct fell to be considered.
So far as the husband is concerned, it was submitted that he had made substantial initial financial contributions. I accept that his contributions initially exceeded those of the wife. The extent of those contributions were not as great as it may have seemed as in the absence of appropriate evidence, I have been unable to determine the amount or approximate amount of the equity that the husband had in the M Street property. I have not given any weight to his personal assessments of value due to his lack of qualifications to give expert evidence.
So far as submissions on behalf of the wife are concerned, I have recognised her greater homemaker and parent contributions subsequent to separation. The wife also earned income in that period applied for the purposes to which earlier reference has been made. However, the husband for his part continued to provide substantial financial contributions for the benefit of the wife and two children.
Relevant s 75(2) matters
I make the following findings in relation to relevant matters pursuant to the provisions of s 75(2).
The husband and wife are each 44 years of age. The husband is in good health.
The wife has significant health issues. The evidence in that regard is unchallenged. I accept the evidence given by the wife in her primary affidavit and the expert evidence given by Professor A dated 20 May 2011 marked Exhibit 4. The wife suffers from pulmonary sarcoidosis, a chronic autoimmune lung disease. The wife was diagnosed with that disease in July 2010 although had experienced difficulties since about October 2008. The wife has given detailed evidence of the symptoms that affect her which include but are not limited to chronic tiredness, breathlessness, anxiety and other symptoms which affect her from time to time during the day and/or at night. The wife has treatment which includes pain killers, an inhaler, antibiotics and anti-viral medications.
The wife’s income is given in her Financial Statement sworn 11 March 2011. That income is derived from several sources including salary and child support as well as receiving the benefit of the superannuation guarantee. Her principle source of income is her salary amounting to $1,834.00 per week gross. After allowing for tax of $474.00, the wife’s net salary is $1,360.00 per week. The wife has the physical and mental capacity for appropriate gainful employment in her current occupation in marketing, whether employed or on a free-lance basis. The wife is currently employed in that occupation four days per week pursuant to a six month contract which commenced earlier this year. Previously, the wife had worked for different periods of either three days per week or two days per week.
The wife is a qualified professional person but has not been engaged in her professional field for many years. There is no evidence that realistically she would have reasonable prospects of being re-employed in her professional field whether full-time or part-time in the immediate future. Consequently, her current ability to exercise her capacity to earn income is in her current occupation in marketing. There are health limitations on the extent to which the wife can exercise that capacity as set out in her primary affidavit as well as the current cost of childcare on the basis of her continuing employment or in marketing working four days per week. There are also the practical difficulties outlined in her evidence in relation to finding a suitable permanent nanny for days when the wife is engaged in her employment during school term. I accept the wife’s oral evidence as to her preference for a permanent nanny as opposed to an au pair. However, it may be that the ideal cannot be achieved having regard to her future financial circumstances from time to time.
The wife has the primary care of the two children who are still very young. S will be attending school next year. The wife’s degree of care of the two children will increase to full-time once the husband relocates to Hong Kong, save and except the occasional travel by him to Sydney for the purpose of spending time with them.
The wife’s commitments for the support of herself and the two children are set out in her Financial Statement sworn 11 March 2011. There was limited exploration in the oral evidence for the purpose of distinguishing her expenses on a “necessary” basis, as opposed to discretionary. I accept the evidence of her personal expenditure set out in Part G of that document bearing in mind that Item 20, being superannuation guarantee $165.00, is set off by the benefit in the same amount referred to in Item 14. I have previously taken into account her income tax when considering the wife’s net weekly income. With regard to the schedule of expenses attached to her Financial Statement, they all appear to be reasonable with qualifications so far as home maintenance, repairs and furnishings and that her medical, dental, optical and acupuncture expenses may be subject to rebate, particularly having regard to health insurance premiums being met by the husband. I note that he also meets the cost of internet and insurance premiums. As in many cases it was neither practical nor cost effective to in effect conduct an oral audit of many of the expenses for the purpose of distinguishing “necessary” expenditure from other expenditure.
The wife is eligible for superannuation entitlements as described in paragraph 65 and has property as set forth in that paragraph.
The parties enjoyed a good standard of living for a substantial part of the period of cohabitation and since.
The wife seeks to maximise her ability to carry out her parenting role.
I accept the wife’s evidence that she is not cohabiting with her friend Mr N although they spend regular periods of time together. Mr N assists the wife with childcare.
I accept the husband’s evidence in his primary affidavit regarding the income which he is about to receive consequent upon the transfer of his employment from Sydney to Hong Kong. That income will be $307,692.31 per annum gross subject to tax of approximately sixteen per cent being $49,230.00 leaving net annual salary $258,462.00. In addition, he will receive superannuation benefits payable in Australia.
The husband has the property including superannuation entitlements described in paragraph 65. The husband has the indirect financial resource of the financial circumstances of Ms S. Ms S’s anticipated income in Hong Kong will be $100,000.00 per annum which I have inferred is gross. Ms S owns a one bedroom apartment in Sydney Suburb 4 purchased on an unspecified date for approximately $380,000.00 subject to a mortgage as security for ninety per cent of the purchase price. Ms S provides financial support for her parents and an aunt.
The husband has the physical and mental capacity to be engaged in his current employment in the finance industry. He has been employed in that position in Sydney and will shortly continue that employment in Hong Kong. The husband has substantial experience in the finance industry and in particular with prominent financial institutions and has held senior positions with several major corporations engaged in the financial industry. The husband received a high remuneration package comprising salary, housing allowance, bonus and other benefits. In 1997 he received a performance bonus to the equivalent of approximately $2,000,000.00. In the period 1998 to 2007 he incurred trading losses of $343,356.00 in the course of trading on his own account through an appropriate entity. The husband stated in his primary affidavit that for the period 2002 to 2008 he worked from home and earned “minimal income”.
From 2008 until recently the husband’s employer incurred trading losses in the areas in which the husband was engaged. Whilst the husband had previously earned bonuses, I accept his evidence that for 2010 and this year he has not received a bonus and is unlikely to receive one.
Consequently, the husband does have the capacity, by dint of substantial experience, to be engaged in the various trading and other positions in the finance industry to which I have referred. However, realistically for the immediate future his capacity to earn income is in his current occupation in that industry. The husband has the care of the two children on a limited basis to which I have made earlier reference which will become irregular, having regard to travel from Hong Kong to Sydney likely to be approximately four times during the year. I accept that on each occasion the care of the children is likely to be for several days.
The husband has commitments for the support of himself and the two children. The husband’s financial statement sworn 15 March 2011 gives a list of detailed expenditure that he incurs for himself and the children. Apart from obvious living expenses there was little exploration in the evidence to determine such commitments that “are necessary” as opposed to other commitments.
The husband does not have the responsibility to support any other person.
The husband is eligible for superannuation benefits as described in paragraph 65.
The parties have endured a good standard of living.
The husband does not cohabit with Ms S but is about to do so. Whilst, implicitly, certain expenses are likely to be shared however, the evidence does not allow me to make specific findings in that regard.
The husband pays child support amounting to $400.00 per week and other expenses which directly and indirectly benefit the two children.
Assessment of relevant s 75(2) matters
I have determined that it is proper that there be an adjustment in favour of the wife of twenty per cent of the net property of the parties having regard to the weight that I attribute to my findings with respect to relevant matters that arise pursuant to s. 75(2). My reasons are as follows.
The wife suffers from serious health issues with significant ongoing symptoms, the subject of my earlier findings. On the evidence before me, the difficulties that she experiences in that regard are likely to continue into the foreseeable future. In contrast, the husband enjoys good health.
The husband’s financial circumstances represented in particular by his income and capacity to earn income are far greater than the wife’s income and income earning capacity. The husband is about to earn $4,970.00 per week net upon continuing his employment in Hong Kong. His capacity to earn income is not inhibited by lack of appropriate qualifications or experience or the care of children or health issues.
By comparison, the wife is in a much more disadvantaged position.
The wife is currently working part-time in her occupation in marketing. On the basis of being employed four days per week, her net income after tax per week is approximately $900.00 as set out in her Financial Statement sworn 11 March 2011. Due to the need to care for the children as well as allowing for symptoms associated with her health, the wife’s reasonable income earning capacity is in the range of two days to fours days per week. Her income earning capacity is constrained by not only health issues but also care of two young children and her occupation does not have the potential for the range of income that is likely to be earned by the husband.
The husband has also demonstrated his capacity to recently purchase property being the Sydney Suburb 1 property, to a very large extent funded by loans including a bank loan of $1,035,000.00 apart from a personal loan from his sister of $120,000.00 after the parties separated. That purchase occurred in October 2009 being commitments he felt able to assume notwithstanding other significant financial commitments including in relation to, but not limited to, the former matrimonial home.
The husband also has a financial ability to improve his future financial security by continuing superannuation contributions due to the stability and level of his current employment whereas the wife’s ability for herself in that regard is substantially limited.
Conclusion
I have assessed the respective contributions of the parties on a global basis as being equal with an adjustment in favour of the wife of 20% of the net property of the parties having regard to the weight attributed by me to the relevant matters pursuant to the provisions of s 75(2).
As a consequence, the wife would receive property equivalent to 70% of the net property of the parties including their superannuation entitlements. The monetary value is $2,331,028.00.
However, I am also required by s 79(2) and the jurisprudence in relation to it to make orders that are just and equitable.
For that purpose I have considered categories of assessment to which I have referred but that ultimately a value judgment must be given in the course of exercise of my discretion.[10] The consideration of “just and equitable” is also against a background of a lengthy period of cohabitation and two young children with substantial contributions having been made by each party in their respective spheres and an assessment of their current overall financial circumstances with the need for ongoing care of the two children by the wife.
[10] Ibid, Norbis v Norbis; Waters & Jurek (1995) FLC 92-635 at 82,379
In addition, I have taken into account the practical implications of orders which may be made reflecting the division to which I have referred.[11] For that purpose I set out the net property which would pass to the wife:
[11] Preece & Preece (1981) FLC 91-048 at 76,404; Elsey v Elsey (1997) FLC 92-727 at 83,799
Wife to retain/receive
Property Sydney Suburb 2 Home $2,375,000 Subaru $18,350 Westpac Joint Account $2,700 Westpac eSaver Account $39 Westpac Choice Account $2,300 Contents - home $11,355 Jewellery $6,250 Funds drawn down $42,095 Legal Fees paid $119,444 Superannuation $36,635 Total $2,614,168 Less liabilities Mortgage $238,719 NAB credit card 0 Westpac credit card $13,402 Income tax 2010 $5,147 Lump sum payable to husband $25,872 Total $283,140 Net property $2,331,028.00
The husband will have the benefit of the remainder of the net property as described in paragraph 65. I have taken into account the current limitations of the tax losses and interest in the Sydney Suburb 3 Unit.
As can be seen from previous paragraphs, I have acceded to the application of the wife that the husband transfer his interest in the former matrimonial home to the wife subject to the mortgage. A lump sum will also be payable by the wife to the husband of $25,872.00. The wife will require a reasonable period within which to attempt to organise refinancing of the securities the subject of the mortgage over the former matrimonial home and to pay the husband the amount to which I have referred. The wife has sought a period of ninety days for those purposes. The husband’s submission is that it be a lesser period namely, sixty days.
I have concluded that it is just and equitable that the longer period of time be afforded to the wife given the limits of her income and income earning capacity and the lack of any substantial prejudice to the husband if that longer period of time was provided. The husband will be moving to Hong Kong. The husband will have the benefit of rent allowance. In addition, the husband has the Sydney Suburb 1 property for investment purposes or possibly future residence.
Unfortunately, the parties were unable to agree to a division of personalty in the former matrimonial home. The reality is that the wife will need to have furniture and contents for herself and the two children. The husband, has had the benefit of furniture and furnishings within the accommodation that he has had in Sydney and will apparently also not be at a loss in that regard when he moves to Hong Kong. There is no evidence to the contrary.
Accordingly, I will make an order as sought by the wife, subject to the wife through her solicitor making arrangements with the husband’s solicitor for the delivery to the husband or a nominee on his behalf any of the husband’s remaining personal effects and such other items upon which the parties may reach written agreement.
Spousal maintenance
Pursuant to the “Amended Minute of Orders Sought by the Wife” being Exhibit 12, the wife has sought an order for spousal maintenance in the sum of $550.00 per week with annual variation in accordance with the Consumer Price Index (All Groups for Sydney). The application is opposed.
The applicable principles are not in doubt. The threshold issue is whether or not the wife is unable to support herself due to one or more of the matters set out in ss 72(1)(a)-(c) having regard to relevant matters pursuant to s 75(2).
The wife does have the care and control of the two children of the marriage who are under the age of 18 years. The two children are very young being aged seven and four years of age respectively. The wife is their primary carer. The extent of her care of the two children will now increase, if it has not already to that of a full-time parent, save and except for the husband’s proposal to travel from Hong Kong to Sydney for perhaps four periods each year, implicitly, to coincide with school holidays and perhaps other times. The husband will be engaged in full-time employment in Hong Kong. Realistically, the periods of time that he may have children in his care may not be greater than about one week on each occasion.
Consequently, the wife proposes to ensure, so far as she is able to do so, that she is available for the outside pre-school and school hours and of course during school holiday periods with the assistance of a nanny supplemented at times by an extended family member. That has been the approach taken by the wife since the parties separated with variations to accommodate the children progressing to pre-school and then school.
The wife has been engaged in part-time work the subject of earlier findings in this judgment which has ranged from two to four days per week. The wife is currently employed pursuant to a six month contract due to expire in or about September 2011. Accordingly, I find that the wife has made out her case to the extent to which it reflects s 72(1)(a). The other relevant matters that I take into account are set out in the following paragraphs.
The wife’s current salary income is approximately $900.00 per week net after tax. In addition, the wife also receives financial support from the husband pursuant to interim orders made by consent on 27 January 2010 providing for him to pay interim spousal maintenance $350.00 per week as well as the expense of building and contents insurance and mortgage instalments in relation to the former matrimonial home; motor vehicle insurance premiums; internet expenses and … family health cover for the wife (and children) as well as “gap” payments. In addition, an interim child support departure order was made by consent on that date providing for payments by the husband to the wife of $400.00 per week and the … insurance premiums referable to the children as well as their gap expenses.
The quantification of the interim consent order for spousal maintenance made 27 January 2010 amounts to $350.00 per week and other payments of which I am excluding child support ($285.00 per week) amounting in total to $635.00 per week.
The wife incurs child care due to her absence in employment in the range of $600.00 to $960.00 per week. The wife has the potential to reduce those expenses considerably by the employment of an au pair instead of a permanent nanny. That is not ideal from the wife’s viewpoint for the reasons that she explained in her evidence. However, her financial circumstances may be such that there is little realistic choice subject to the quantum of spousal maintenance that may be ordered in her favour. It is obvious that currently a major portion of her available income from salary will have to be utilised to meet the cost of child-care.
The wife’s Financial Statement sworn 11 March 2011 demonstrates that essential expenses set out in Part G, excluding living expenses and superannuation guarantee, amount to $371.00 per week. The essential living expenses set out on page 1 of the annexure to her Financial Statement excluding house maintenance and furnishings $99.00, amount $314.00 per week. In addition, there are utility expenses and other expenditure set out on the remaining two pages of that annexure. It is obvious on a combination of those expenses alone including the cost of child care, even if it could be reduced by the employment of an au pair, results in the wife being unable to adequately support herself. That finding is made on her current work commitment of four days per week producing the net weekly income to which I have referred.
Senior counsel for the wife, during the course of his submissions on 25 May 2011 provided an aide memoir. It is a useful guide so far as columns showing an exchange rate of 8.47 which is close to the top of the range for May 2011 as set forth in Exhibit 13. However, in addition to the figures shown in the aide memoir producing a net surplus of $870.00 per week, I take into account expenditure which the husband will undoubtedly incur for land tax, travel and accommodation expenses to spend periods of time with the children in Sydney and rent in Hong Kong, although so far as that subject of expense is concerned the husband will have a rental allowance from his employer. I had rejected evidence of the range of rent and quantum of other expenses on the husband’s application to re-open his case, the subject of the judgment delivered on 9 June 2011.
The husband has been meeting the terms of the interim orders made by consent on 27 January 2010. I find that he has the capacity to continue to pay spousal maintenance in accordance with the monetary quantification of the terms of those orders. As previously referred to, Exhibit 12 sets out the order sought by the wife in the sum of $550.00 per week.
Accordingly, having regard to the findings I have made, including the limitations on the wife’s capacity to earn income due to health reasons and the need to care for the two children, I propose to make the order as sought to continue for twelve months from today. During that intervening period each of the parties’ financial circumstances will become clearer in light of the wife’s ability to refinance the mortgage security on the former matrimonial home, her continued income and work capacity, care of children and impact of health issues. So far as the husband is concerned, he will have settled into his employment in Hong Kong and the pattern and extent of his remuneration package and reasonable expenditure will also become clearer in those new circumstances.
Child support departure application
The wife seeks orders for departure from the child support administrative assessments for the two children in accordance with paragraphs 10 and 11 of Exhibit 12. The wife seeks periodic child support at the rate of $750.00 per week for the two children to be varied annually in accordance with a formula reflecting the inflation factor applicable to each child support year. In addition, the wife seeks orders that the husband pay a range of school expenses associated with attendance by the two children at School 1. The further order sought is that the husband pay the private health insurance premiums for the two children with the … health fund at the current level and any gap medical expenses not otherwise met by that fund.
There is no issue between the parties, having regard to their evidence, that prior to separation their aspirations were that both children be eventually enrolled to attend School 1. By the enrolment form which appears to be dated 30 May 2005, B was enrolled to attend the school in Year 7 in 2016. In addition, the parties also signed an enrolment form in 2008 to enable S to commence at School 1 in 2012.
I accept the husband’s evidence that secondary school for the two children was initially chosen by the parties on the implicit basis that it was preferable for the two children to attend a public school for primary school education, rather than an exclusive private school for the whole of their education. That is consistent with the initial enrolment of B to commence in Year 7.
The husband claims that in order to avoid further stress with the wife particularly after their separation and to, in effect, placate her he signed the enrolment form to enable S to attend School 1 next year. Whether that is an accurate reflection of his attitude at the time, his proposal for change in that regard did not emerge until his email to the wife sent on 15 June 2009. He put forward two main reasons for a change in approach to the effect that both children should attend (public) School 2. Those reasons were that his financial circumstances had changed adversely to the degree that he could no longer afford to send both children to School 1 and secondly, that the public school would be suitable for them.
Over the next few months there was an exchange of email between the parties in which the husband maintained his opposition for the reasons given and the wife, for her part, resisted that approach and was steadfast in her proposal that B continue at School 1 and, implicitly, that S also attend commencing next year. The husband also gave notice to the principal of School 1 on 26 and 28 August 2009 of firstly, his intention to withdraw B from the school at the end of Term 4, 2009 and then informing the principal that he would not be responsible for school fees at the end of that school year.
Matters were resolved between parties on an interim basis pursuant to the consent orders made 27 January 2010 whereby the redraw facility secured over the former matrimonial home would be utilised to meet all educational expenses for the two children at School 1 for B and that school or (private) School 3 for S. That order was complied with.
During the course of his oral evidence the husband stated that he had not had interviews with the principals of the local school and/or School 1 to assess which school was best suited for each child. The wife’s evidence is that the husband has not been actively engaged in seeking information in relation to school progress or attending any school functions. The husband for his part claims that the wife had not been giving him the requisite information. I accept the wife’s evidence. There is no evidence given by the husband that he was unable to access all information that he needed from the school in relation to its programs generally or, so far as B personally was concerned. Accordingly, I infer that the husband has not taken any steps to be better informed in relation to the benefits which may be offered to the children by them attending School 1 or the local school by meetings with the principals or staff or attendance at school functions. He has however, surveyed comparative results producing by the Government regarding school educational achievements.
The husband agreed that he attended the first day at School 1 for B and does not question that the child is doing well at the school. He also accepts that she has a group of school friends with whom she mixes at home and otherwise. He stated that he had not sought from the wife copies of any of the school reports. He acknowledged that S has delayed speech development. He had accepted that education fees amounted to about $500.00 per week in accordance with his Financial Statement and that in 2012 the School 1 fees for both children would equate to approximately $650.00 per week.
During the course of submissions made by counsel for the husband on 25 May 2011 he stated that reliance was not placed on his client’s lack of capacity to pay the School 1 fees. However, he maintained the husband’s case that it was not reasonable in the circumstances for the husband to meet the School 1 educational expenses and, implicitly, the husband’s approach is that it would be more beneficial for the two children to have a mix of public school and later private school education.
I have determined that an order will be made for departure from the child support assessment as follows.
With regard to the periodic payment of child support, I find that the wife has established grounds for departure pursuant to s 117(2) of the Child Support Assessment Act based upon income, earning capacity, property and financial resources of the husband as well as the standard of education and care which the parties aspired for the two children. I have made previous findings regarding the limits upon the earning capacity of the wife due to her sole care of the two children subject to such infrequent periods of their care that may be provided by the husband due to travel from Hong Kong to Sydney. I rely upon earlier findings of fact in that regard.
I accept the evidence of the wife in relation to the financial commitments associated with the expenses incurred for the support of the two children, albeit that significant expenditure is discretionary and there may have to be further limits imposed in that regard due to the lack of availability of funds. I accept the husband’s evidence that he will continue to pay the current rate of $400.00 per week for child support subject to a different amount being agreed upon with the wife or assessed by the Child Support Agency. There is ample evidence to support the proposition, as is required, that it be just and equitable for an order in the rate of $400.00 per week which is currently paid by the husband.
So far as the special circumstances ground pursuant to ss 117(1) and 117(2), I find that special circumstances have been established reflecting the following. The parties had agreed upon private school education for the two children albeit historically that was to commence at the secondary school level. Subsequently, in March 2008 the husband signed the enrolment form also signed by the wife to enable S to attend School 1 next year. Almost 15 months later the husband gave notice to the wife of his inability to meet the fees of both children attending School 1. I find that regardless of his financial position at that time, his current financial position does reveal the capacity to pay. B started in transition at School 1 at the beginning of 2009 following discussion between the parties. B is making good progress at this school and is well settled in that school. There has been an expectation for S to attend School 1 next year. Whilst I take into account the difficulties that may arise should it be that the children are no longer able to attend that school due to the husband and/or the wife’s lack of capacity to pay in the face of rising school fees and expenses, that potential situation will have to be met by the parties, if and when it arises.
The husband has expressed concern that the wife will place obstacles in the way of the two children sitting an entrance exam to a selective high school because of her objective that the two children continue all of their education at School 1. That situation will not be reached for several years having regard to the ages of the two children. The wife did not give any evidence in relation to that particular matter. I will make an appropriate order to ensure that consideration is given by both parties in relation to all options that may be available for secondary education of the two children having regard to their best interests as well as the financial circumstances of each of the parties at that time. The earliest time is likely to be at the end of Year 5.
For those reasons, I have concluded that it is just and equitable for an order to be made requiring the husband to meet the tuition fees, school uniforms, sport expenses and local extracurricular activities for the two children associated with their attendance at School 1 limited to their primary school enrolment unless otherwise agreed between the parties in writing or further order.
I certify that the preceding one hundred and fifty two (152) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rose delivered on 30 June 2011.
Associate:
Date: 30 June 2011
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Family Law
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Equity & Trusts
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