Salter & Hadswell
[2022] FedCFamC2F 1659
Federal Circuit AND FAMILY Court of Australia (DIVISION 2)
Salter & Hadswell [2022] FedCFamC2F 1659
File number: MLC 8087 of 2020 Judgment of: JUDGE RILEY Date of judgment: 1 December 2022 Catchwords: FAMILY LAW – Property settlement – de facto relationship - substantial tax debts, some in the husband’s name from before, during and after the relationship, and some in the wife’s name accrued from the husband’s business during the relationship – substantial Centrelink debt in the wife’s name accrued during the relationship – negative property pool. Legislation: Family Law Act 1975, ss 79, 90AE, 90RD, 90RG, 90SB 90SF, 90SM Cases cited: Hickey v Hickey (2003) 30 Fam LR 355; (2003) FLC 93-143; [2003] FamCA 395
Stanford v Stanford (2012) 247 CLR 108; (2012) 293 ALR 70; (2012) 47 Fam LR 481; [2012] HCA 52
Number of paragraphs: 77 Date of hearing: 7 November 2022 Place: Melbourne Advocate for the Applicant: No appearance Solicitor for the Applicant: None Counsel for the Respondent: Gerard Thistleton Solicitor for the Respondent: Marcou and Associates Pty Ltd Advocate for the Intervenor: Kerry Davies Solicitor for the Intervenor: ATO Legal & Litigation Services ORDERS
MLC 8087 of 2020
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR SALTER
ApplicantAND:
MS HADSWELL
RespondentDEPUTY COMMISSIONER OF TAXATION
Intervenor
order made by:
JUDGE RILEY
DATE OF ORDER:
1 dECEMBER 2022
The court declares that:
1.Pursuant to s.90RD of the Family Law Act 1975, the applicant and the respondent were in a de facto relationship from July 2014 to 6 February 2020.
THE COURT ORDERS THAT:
2.The wife retain all right, title and interest in:
a.the net proceeds of the sale of the property at B Street, Suburb C; and
b.the deposit for B Street, Suburb C.
3.The wife and the husband forthwith do all such acts and things as are required to transfer the title to the parties’ caravan at Town F Holiday Park into the husband’s sole name.
4.The husband retain all right, title and interest in the caravan at Town F Holiday Park.
5.The husband be liable for and indemnify the wife against any and all liabilities in relation to the caravan.
6.The husband indemnify the wife against any and all liabilities accumulated by the business, Company G (ABN: …), including but not limited to the Australian Tax Office debt and the superannuation debt of the business.
7.Unless otherwise specified and except for the purposes of enforcing the payment of any money due under any orders:
a.each party be solely entitled to the exclusion of the other to all other property (including choses-in action) in the possession of that party as at the date of these orders;
b.money standing to the credit of the parties in any bank account remain the property of the account holder;
c.each party forgo any claims they may have to any superannuation benefits belonging to or earned by the other party;
d.all insurance policies remain the sole property of the owner named therein;
e.each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
f.any joint tenancy of the parties in any real or personal estate be hereby expressly severed.
Note: The form of the order is subject to the entry in the court’s records.
Note: This copy of the court’s reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Salter & Hadswell has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE RILEY:
introduction
This is an application under s.90SM of the Family Law Act 1975 (“the Act”) for a de facto property settlement. The application was brought by the husband for parenting and property orders. At the time, he had solicitors acting for him. The husband’s solicitors filed a notice of withdrawal on 28 January 2021.
Following that, the husband did not participate in the proceedings. I am satisfied, however, that he has been given proper notice of the final hearing that was scheduled for 7 November 2022, and other court events, via his email address contained in his solicitor’s notice of withdrawal. The final hearing on 7 November 2022 proceeded without the husband’s participation.
With the exception of the passport issue, final parenting orders were made by Judge Cole at a callover on 22 November 2021, which the husband did not attend. Those orders relevantly provided that:
1.The mother have sole parental responsibility for the child [X] born [in] 2018.
2. The said child live with the mother.
3.The child spend such time with the father as is agreed between the parties in writing.
Final orders were made on the passport issue at a final hearing on 23 May 2022, which the husband did not attend. Those orders provided for a passport to be issued for X without the husband’s consent, and for the passport to be kept by the wife.
The property aspect of the proceeding was adjourned on 23 May 2022 to enable the wife to consider whether to join the Commissioner of Taxation as a party to the proceeding. The wife subsequently decided to seek an order pursuant to s.90AE of the Act that:
The current debt owed to the Australian Taxation Office by the Respondent (which has been incurred by the business [Company G] (ABN: […]) be transferred to the Applicant [Mr Salter].
The Commissioner of Taxation intervened in the proceedings on 7 October 2022. The Commissioner was represented at the final hearing by a solicitor and opposed the making of the wife’s proposed order. The wife, at the commencement of the final hearing, accepted the Commissioner’s written submissions on the s.90AE proposed order and withdrew her application for such an order.
The wife gave some oral evidence at the final hearing. She was not cross-examined. I accept her oral and affidavit evidence.
background
The husband and wife are both 31 years old. They commenced cohabitation in 2014. They separated on 6 February 2020, but lived separately under the one roof until 12 April 2020. The period of cohabitation was five years and seven months.
At the commencement of cohabitation, the husband had two children from two previous relationships, H and J, who were born 10 months apart, and who were three years and two years old respectively. During the relationship, H lived with the husband and the wife full time, and J lived with the husband and the wife in a shared care arrangement with J’s mother. H and J, when she was with the husband and the wife, were primarily cared for by the wife, as the husband worked outside the home and the wife did not.
At the commencement of cohabitation, the wife had twins from a previous relationship, K and L, born in 2012. They were two years old at the commencement of the relationship. They are in a shared care arrangement between the wife and their father.
The parties have one child together, X, who is now four years old. She was just under two years old at the time of separation. Following separation, X has lived with the wife. For the first few weeks after separation, X spent three overnights a week with her father.
However, that time ceased on 10 May 2020 when the husband arrived at the wife’s house uninvited at 9pm and demanded entry. That resulted in an intervention order being made on the application of the police.
On 3 September 2020, the parties agreed for X to spend video time with her father, and four hours on Father’s Day. On 11 September 2020, the parties agreed for X to spend alternate weekends with her father.
On 15 November 2020, the husband had a car accident while X was in the car with him. The car rolled on the M Freeway. They were both taken to hospital. The police found a bag of marijuana in the husband’s car. X has not spent time with her father since the accident, and she has been in the wife’s sole care since that time.
The husband is a tradesman. In 2016, about two years after cohabitation, the father started a business called Company G. The parties agreed that the business would be put in the wife’s name. The husband did the work and the wife did the invoices.
During the relationship, the business accrued a tax debt. The wife arranged a payment plan in 2018 or 2019. Pursuant to the payment plan, the parties repaid about $30,000 of outstanding tax. The wife presently has a tax debt of $140,169, which is almost entirely the debt of the business. The husband presently has a tax debt of $196,226.17, which includes a superannuation guarantee debt for a previous business run by the husband.
The husband and wife both did hair follicle tests in October 2020. The wife’s was negative for all substances. The husband’s was positive for cocaine, methamphetamines, ketamine and cannabis.
On 4 September 2020, a psychiatrist provided an assessment of the husband. The psychiatrist diagnosed the husband with substance use disorder, cluster B personality traits (that is, traits of antisocial, borderline, histrionic and narcissistic personality disorders) and complex trauma syndrome consisting of mood swings and impulsive reactions.
Initially, the parties rented properties together, but bought B Street, Suburb C in 2017 in the wife’s sole name. That property has now been sold.
material relied upon
The husband did not file any trial material. Before his solicitors withdrew, the husband had filed an application, an affidavit in support, and a financial statement. The husband did not attend the final hearing to rely on any of those documents. I rely on them to the extent that they contain admissions.
At the final hearing on 7 November 2022, the wife relied upon:
(a)her further amended response filed on 20 May 2022;
(b)her affidavit, unsworn, filed on 20 May 2022;
(c)her financial statement, unsworn, filed on 20 May 2022;
(d)the chronology filed on 20 May 2022; and
(e)the table of assets and liabilities filed on 20 May 2022.
In his outline of case filed on 3 November 2022, the Commissioner of Taxation said that he relied upon:
(a)his notice of intervention filed on 7 October 2022;
(b)the affidavit of Ms N affirmed on 7 October 2022; and
(c)the supplementary affidavit of Ms N affirmed on 7 October 2022.
the husband’s proposal
The husband proposed final orders in his initiating application filed on 24 July 2020 as follows:
3.That there be a property settlement pursuant to s90SM of the Family Law Act 1975 (Cth)
4. Such further or other Orders as this Honourable Court deems appropriate.
The husband did not attend the final hearing to seek any particular orders.
the wife’s proposal
The substantive property orders proposed by the wife in her further amended response filed on 20 May 2022 are as follows:
17. The mother retain all right, title and interest in:
a. The net proceeds of sale for the property [B Street, Suburb C]; and
b.The deposit for the untitled land in [B Street, Suburb C].
18. It is declared that the parties’ joint tenancy in the Caravan at [Town F] Holiday Park is severed and the mother and father shall do all such acts and things to transfer any title in this property to the father’s sole name.
19. The father shall retain all right, title and interest in the Caravan at [Town F] Holiday Park and the father shall be liable for and indemnify the mother against any and all liabilities encumbering the property.
20. The father shall be liable for [and] indemnify the mother against any and all liabilities accumulated by the business [Company G] (ABN: […]), including but not limited to the Australian Tax Office debt and the Superannuation debt of the business.
21. The mother be permitted to provide a copy of these Orders to the Australian Tax Office.
22. [deleted in the further amended response]
23. Unless otherwise specified and [except] for the purposes of enforcing the payment of any money due under any orders:
a.Each party be solely entitled to the exclusion of the other to all other property (including choses-in action) in the possession of such party as at the date of these orders.
b. Money standing to the credit of the parties in any bank account remains the property of the account holder.
c. Each party forgo any claims they may have to any superannuation benefits belonging to or earned by the other party.
d. All insurance policies remain the sole property of the owner names therein.
e. Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
f. Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
the commissioner of taxation’s proposal
In his written submissions filed on 3 November 2022, the Commissioner explained why the wife’s debt accrued as a result of the outstanding taxation liabilities of Company G could not be transferred to the husband. Otherwise, the Commissioner indicated that he was agreeable to an order that the husband indemnify the wife for any such debts.
the legislation
Section 90RD of the Act permits the court to make a declaration that a de facto relationship existed between two persons. Under s.90RG of the Act, the court is only permitted to make such a declaration if it is satisfied that one or both of the persons were ordinarily resident in a participating jurisdiction when the primary proceedings commenced. On the material before the court, I am satisfied that the applicant and the respondent were both ordinarily resident in a participating jurisdiction when the primary proceedings commenced.
Under s.90SB of the Act, the court may only make an order under s.90SM if the court is satisfied that:
(a)the period or the total periods of the de facto relationship were at least two years; or
(b)there is a child of the de facto relationship; or
(c)the applicant made substantial contributions of the kind mentioned in s.90SM(4)(a), (b) or (c) and a failure to make an order under s.90SM would result in serious injustice to the applicant; or
(d)the relationship is or was registered under a prescribed law of a State or Territory.
In the present case, the de facto relationship lasted for more than two years and there is a child of the relationship. Consequently, the court is empowered to make an order under s.90SM of the Act.
Under s.90SM of the Act, the court may alter the interests of the parties to a de facto relationship in the property of those parties following the breakdown of their relationship if it is just and equitable to do so. Sub-section 90SM(3) of the Act provides that:
The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Section 90SM(4) of the Act sets out the matters the court must take into account when considering what orders, if any, should be made for the alteration of the interests of the parties in property. Those matters are:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c)the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the de facto relationship; and
(e) the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
The matters to be taken into account under s.90SF(3) of the Act are:
(a)the age and state of health of each of the parties to the de facto relationship; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (4), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(i)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
(m)if either party is cohabiting with another person – the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 90SM in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(o)the terms of any order or declaration made, or proposed to be made, under this Part in relation to:
(i)a party to the subject de facto relationship (in relation to another de facto relationship); or
(ii)a person who is a party to another de facto relationship with a party to the subject de facto relationship; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(p)the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
(i)a party to the subject de facto relationship; or
(ii)a person who is a party to a marriage with a party to the subject de facto relationship; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(q)any child support under the Child Support (Assessment) Act 1989 that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship; and
(r)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(s)the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship; and
(t)the terms of any financial agreement that is binding on a party to the subject de facto relationship.
the approach to applications under s.90sm
In Stanford v Stanford (2012) 247 CLR 108; (2012) 87 ALJR 74; (2012) 47 Fam LR 481; (2012) FLC 93-518; (2012) 293 ALR 70; [2012] HCA 52, the High Court explained the proper approach to an application under s.79 of the Act. Section 90SM mirrors s.79, except that it applies to de facto relationships. Accordingly, Stanford is applicable to the present proceedings. In Stanford, the High Court said the following:
37.First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. … The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order. (emphasis added)
38.Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs “as [the judge] thinks fit”, in any question between husband and wife as to the title to or possession of property, is a power which “rests upon the law and not upon judicial discretion”. …(footnotes omitted)
39.Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that the parties’ rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that “[c]ommunity of ownership arising from marriage has no place in the common law”. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”. The question presented by s 79 is whether those rights and interests should be altered. (emphasis added)(footnotes omitted)
40.Third, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”. To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act. (emphasis in original)(footnote omitted)
…
42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4). (emphasis in original)
the four step approach
In Hickey v Hickey (2003) 30 Fam LR 355; (2003) FLC 93-143; [2003] FamCA 395 at [39], the Full Court of the Family Court described the preferred four step approach in property matters as follows:
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the court should identify and assess the contributions of the parties within the meaning of s 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the court should identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g), (the other factors) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case ….
In the light of the High Court’s decision in Stanford, it seems that the basic steps stated in Hickey v Hickey remain correct. That is, the court is required to:
(a)identify the assets owned by the parties, jointly or separately, and the liabilities to which the parties are subject, jointly or separately;
(b)take into account the contributions made by each party;
(c)take into account the so called “future factors”; and then
(d)determine what order, if any is just and equitable.
the assets and liabilities
The husband did not participate in the trial.
The wife filed a table of assets and liabilities on 3 November 2022 that was amended at trial and became exhibit 3 (“the table”). The Commissioner agreed with the table insofar as it concerned taxation liabilities. In the absence of any dispute from the husband, I accept as fact the matters set out in the table. The table is substantially as follows:
Joint Assets
Value
Caravan at Town F Holiday Park
(The husband has had the keys for the caravan since February 2020.)
(The husband agreed with the valuation of $16,000 in his financial statement filed on 24 July 2020.)
$16,000.00
Total joint assets
$16,000.00
Wife’s individual assets
Value
Cash at ANZ
(being the proceeds of sale of B Street, Suburb C)
$27,266.64
Monies held by the maternal grandmother on the trust for the wife
$20,000.00
Cash at home
$7,000.00
Cash at CBA
$1,652.00
Personal property (chattels)
$5,000.00
Arrears of child support owed by the husband to the wife
$3,591.33
Wife’s total individual assets
$64,509.97
Wife’s superannuation
Super Fund 1
$7,411.00
Wife’s total assets plus superannuation
$71,920.97
Wife’s liabilities
Value
ATO Tax Debt
(largely due to the husband’s business Company G)
-$140,169.00
Centrelink Debt
-$78,627.65
Wife’s total debts
-$218,796.65
Wife’s total assets plus superannuation less liabilities
-$146,875.68
Husband’s individual assets
Value
Proceeds of sale for Motorbike
(received in February 2020)
$19,000.00
Proceeds of sale for Motor Vehicle 1
(received in May 2020)
$23,000.00
Motor Vehicle 2
(according to the husband’s financial statement filed on 24 July 2020)
$5,000.00
Husband’s total individual assets
$47,000.00
Husband’s superannuation
(according to the husband’s financial statement filed on 24 July 2020)
$750.00
Husband’s total individual assets plus superannuation
$47,750.00
Husband’s Liabilities
Value
ATO Tax Debt
(As identified by the Commissioner of Taxation at the trial.)
-$196,226.17
Company O Settlement Extension Loan
-$18,750.00
Arrears of child support owed by the husband to the wife
-$3,591.33
Husband’s total debts
-$218, 567.50
Husband’s total assets plus superannuation less liabilities
-$170,817.50
The wife’s individual assets plus superannuation less liabilities total -$146,875.68. The husband’s individual assets plus superannuation less liabilities total -$170,817.50. The parties also have joint assets of $16,000. The combined total of their assets plus superannuation less liabilities is therefore -$301,693.18.
contributions
a. Initial contributions
At the commencement of the relationship, in or around July 2014, the wife was receiving Centrelink benefits for the care of herself and K and L. She owned a Motor Vehicle 3 and about $5,000 worth of furniture.
The father ran his own business and had a car that was subject to finance and a trailer. It appears that he also had a substantial tax debt in his own name.
b. Contributions during the relationship
Upon cohabitation, the parties lived together in a rental property in Suburb P.
The husband worked in his business five to six days per week. He left home at about 8.00am and returned home at about 4.00pm on work days.
The husband paid all the bills and gave the wife a budget for groceries.
The wife did not work outside the home. The wife cared for the husband’s children, H and J (when she was in the parties’ care), the wife’s two children from a previous relationship, and, later, the parties’ shared child, X. That is, the wife cared for five young children. That included school drop offs and pickups, making school lunches, and helping with homework. The husband took the children to activities twice per week.
In addition, the wife did the shopping, cooking, cleaning and gardening. The wife also did invoicing for the husband’s business.
During the relationship, the parties bought, in the wife’s sole name, the family home at B Street, Suburb C. In addition, the wife paid a deposit for another allotment in B Street, Suburb C.
Also during the relationship, the wife improperly continued to claim Centrelink benefits. Presumably, that money was used for the benefit of the family. The wife’s Centrelink debt is now about $78,000.
The parties also accrued a substantial tax debt for Company G, which was in the wife’s name, but which arose from the husband’s business. In addition, from 2014 to 2016, when Company G was established, the husband accrued tax debts in his own name.
c. Contributions post separation
Following separation on 6 February 2020, the property at B Street, Suburb C was sold. The sale price was $366,000. There was a mortgage of $303,786. That means the proceeds of sale would have been $62,214, less the costs of sale, which might have been about $10,000. That would have left about $52,000. Settlement was on 22 February 2021. All of the proceeds of sale were paid to the wife. She now has about $27,000 remaining. She used the balance of about $25,000 for living expenses over a period of about 21 months.
In addition, the wife received the return of the deposit for the other lot in B Street, Suburb C. That was $7,000 and is the equivalent of the $7,000 that the wife is presently holding in cash at home. I understand it to be the same money.
Since separation, the wife has had virtually the sole care of X, as well as her two children from a previous relationship. H and J are cared for by their father, or their own mothers.
Following separation, the husband also appears to have added to the tax debt in his own name.
the s.90SM(4)(d), (e), (f) and (g) and the s.90SF(3) factors
Both parties are 31 years old. The wife is in a good state of health. The husband, at least in the past, had some drug and mental health issues but otherwise seems to be healthy.
The husband has a solid history of being able to work. In the absence of evidence to the contrary, I proceed on the basis that he can continue to work and earn a reasonable income.
The wife was in receipt of Centrelink benefits but has recently trained as an allied health worker. She works 22.5 hours per week and earns about $675 per week.
The parties have the property mentioned elsewhere in these reasons.
The parties both have the care of small children. The wife has the care of the parties’ shared young child. They do not have responsibilities in relation to any other people. They have the usual commitments.
The proposed orders do not affect the ability of the Commissioner of Taxation to recover any debt, because all that is proposed is an indemnity from the husband to the wife. That is, the Commissioner will look first to the wife for the payment of any debt, and the wife can then look to the husband. Similarly, the proposed orders do not affect the ability of the wife to repay her Centrelink debt, which she is repaying by small instalments.
The wife contributed to the husband’s earning capacity by caring for his children while he worked.
The relationship lasted about five and a half years.
There is no suggestion that either party is cohabiting with anyone else.
The husband is in arrears for child support to the extent of about $3,500. It seems likely that he will continue not to pay his child support obligations.
whether it is just and equitable to alter the parties’ property interests
In view of paragraph 42 of Stanford, the fact that the parties are no longer living in a de facto relationship and the various findings made above in relation to contributions and future needs, I consider that it would be just and equitable to alter the parties’ property interests in this case.
what order is just and equitable?
This is a very unfortunate case. The parties basically just have a lot of debt. Most of the tax debt in the wife’s name was accrued through the husband’s business. In addition, he has a large tax debt accrued in his own name. It appears that, during the relationship, the husband and wife both benefited from the husband’s earnings, and from his failure to pay the appropriate amount of tax as and when it fell due.
The wife also has in her own name a large debt owed to Centrelink, which accrued during the relationship. It appears that she continued to claim Centrelink benefits, improperly, after she commenced the de facto relationship with the husband.
On the wife’s proposal, the parties would each receive about the same amount of the positive assets. That is, the wife would keep her $27,000 from the proceeds of sale of the family home, $20,000 held by her mother on trust for her, $7,000 in cash and $5,000 in chattels, totalling about $59,000.
The husband would keep the caravan, worth $16,000, and the proceeds of sale of his Motorbike ($19,000) and his Motor Vehicle 1 ($23,000). That totals about $58,000.
It is probable that the husband has used the proceeds of sale of his vehicles for living expenses in the almost three years since he sold them. And the wife has definitely used some of the proceeds of sale of the family home. Just as the wife wants the proceeds of the sale of the husband’s vehicles to be included in the assessment, the full proceeds of the sale of the family home should also be included in the assessment as addbacks.
That means that about $25,000 needs to be added to the wife’s $59,000, making a total of about $84,000. Adding that figure to the husband’s $58,000 gives a total positive property pool of about $142,000. (I leave aside the superannuation because it is such a small amount, and it will be so long before the parties will be eligible to receive it.) On those figures, the husband would receive about 40% of the positive property pool, and the wife about 60%.
In my view, if it were only a matter of dividing up a positive asset pool, it would be just and equitable for the wife to receive 70% of that pool, because:
(a)neither party contributed very much at the commencement of the relationship;
(b)the parties’ contributions during the relationship were more or less equal, albeit of different types;
(c)the wife has the care of the parties’ young child;
(d)the husband is in arrears of child support and could be expected to not pay child support in the future; and
(e)the husband has a greater earning potential than the wife, not least because the wife works part-time due to her child care responsibilities.
Having said that, the positive assets are almost irrelevant, because they are overwhelmed by the debt.
In my view, it is just and equitable that the husband retains his tax debt of about $196,000. That debt was accrued by him in his own name before, in the first two years of, and after the relationship.
I also consider that it is just and equitable that the husband indemnifies the wife for the tax debt of about $140,000 in her name that was accrued from the husband’s business. That debt was the husband’s business debt. Although both parties benefitted from the husband’s failure to pay tax on his business earnings, it was primarily the husband’s responsibility.
I consider that it is just and equitable that the wife retains her Centrelink debt of about $80,000. The wife improperly obtained that money herself. Although the additional money was probably used for the family’s benefit, it was primarily the wife’s responsibility to not obtain public monies to which she was not entitled.
The effect of this is that the husband will be ultimately responsible for about $340,000 of debt and the wife will be responsible for about $80,000 of debt. That means that the wife will have about 20% of the debt and the husband about 80%. That seems to me, in the context of this case, to be just and equitable. While the parties’ contributions, leaving aside debt, were more or less equal, the husband was largely responsible for the accrual of debt during the relationship, and also brought substantial debt into the relationship at commencement and accrued more afterwards. Moreover, as discussed, the wife has greater future needs than the husband.
For these reasons, orders substantially in the terms proposed by the wife are just and equitable, and will be made by the court.
The parties may wish to each see a financial counsellor, and get advice on whether bankruptcy would be a sensible course in their current predicament.
I certify that the preceding seventy-seven (77) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Riley. Associate:
Dated: 1 December 2022
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