SIENA & ZAPPA
[2019] FamCA 403
•3 July 2019
FAMILY COURT OF AUSTRALIA
| SIENA & ZAPPA | [2019] FamCA 403 |
| FAMILY LAW – PROPERTY SETTLEMENT – assessment of contributions – marriage of four years – two children of the marriage – where husband made a significant contribution at commencement of cohabitation – where wife is the primary carer of the children – consideration of s.75(2) matters – justice and equity – orders made. |
| Family Law Act 1975 (Cth) ss 75(2), 77A, 79 |
| NHC & RCH (2004) FLC 93-204; [2004] FamCA 633 Trevi & Trevi [2018] FamCAFC 173 |
| APPLICANT: | Ms Siena |
| RESPONDENT: | Mr Zappa |
| FILE NUMBER: | MLC | 2031 | of | 2017 |
| DATE DELIVERED: | 3 July 2019 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Hartnett J |
| HEARING DATE: | 24 - 25 June 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Williams |
| SOLICITOR FOR THE APPLICANT: | Galbally & O'Bryan |
| COUNSEL FOR THE RESPONDENT: | Mr Combes |
| SOLICITOR FOR THE RESPONDENT: | Lakey Family Law and Mediation |
Orders
Within 30 days of the date of these orders the husband pay to the wife the sum of $1,665,329.70.
Pursuant to s 77A of the Family Law Act 1975, the amount of $45,000 payable to the wife pursuant to order 1 herein be attributable to her maintenance.
Contemporaneously with order 1 herein the wife do all things and sign all such documents as may be necessary to remove any caveats registered by the wife over any or all of the real properties in respect of which the husband shall retain sole ownership of his interest therein pursuant to these orders.
The wife retain sole ownership of:-
(a) her Vehicle 1: and
(b) her superannuation entitlements.
The husband retain sole ownership of:-
(a) his interest in the following real properties:-
(i)P Street Town S, New South Wales;
(ii)R Street Town S, New South Wales;
(iii)Q Street City V, New South Wales;
(iv)Z Street W Suburb, New South Wales;
(v)BB Street City V, New South Wales;
(vi)BB Street City V, New South Wales.
(b) his Vehicle 2; and
(c) his superannuation entitlements.
Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:-
(a)each party be solely entitled to the exclusion of the other to all property (including choses-in-action) owned by or in the possession of such party as at the date of these orders, the furniture and chattels in the property at P Street Town S in the State of New South Wales being deemed to be in the possession of the husband, save as provided for in order 7 herein;
(b)insurance policies remain the sole property of the owner named therein;
(c)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
(d)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
The husband make available to the wife the wife’s childhood books, currently located in the husband’s real property situate at P Street Town S in the State of New South Wales, that property being the former matrimonial home. The husband shall make same available to the wife by the transportation to the wife, at his expense, of such books, within a 28 day period of this date or, alternatively, as otherwise agreed in writing between the parties.
Otherwise all extant applications are dismissed and the matter removed from the list.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Siena & Zappa has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 2031 of 2017
| Ms Siena |
Applicant
And
| Mr Zappa |
Respondent
REASONS FOR JUDGMENT
Before the Court are competing applications for final property orders. The wife relies upon an amended initiating application filed by her on 23 May 2019. The wife seeks orders as set out in that application save that at trial, the wife withdrew from her application in respect of a capitalised child support payment for the parties’ children, X born in 2014 and Y born in 2016. X is now four years and eight months of age, approximately, and Y is now three years and three months of age, approximately.
In essence, the wife sought that each of the parties retain those assets currently in their respective possession and ownership, including superannuation entitlements, and in respect of that retention, there be an adjustment of property interests such that the Respondent husband pay to the Applicant wife a sum equivalent to 40 per cent of the net value of the asset pool, as defined by the wife, excluding the parties’ superannuation entitlements.
In support of her amended initiating application and orders sought therein, the wife relied upon the following:-
a)a trial affidavit sworn 28 May 2019;
b)an affidavit in reply sworn 20 June 2019;
c)a financial statement sworn 28 May 2019;
d)an affidavit of Mr B, valuer, sworn 27 May 2019;
e)an affidavit of Mr C, valuer, sworn 19 June 2019; and
f)an affidavit of Ms Elizabeth Mary Gray, solicitor, sworn 21 June 2019.
In response, the husband relied upon:-
a)an amended response filed by him on 13 June 2019;
b)an affidavit of evidence sworn 11 June 2019; and
c)a financial statement sworn 11 June 2019.
In essence, the husband sought that each of the parties retain those assets currently in their respective possession and ownership, including superannuation entitlements, save that by way of alteration of property interests as between the parties, the husband pay to the wife such sum as is equivalent to 15 per cent of the total net assets of the parties as defined by the husband. He also excluded from that calculation and any alteration, the parties respective superannuation entitlements.
The wife’s abandonment of her seeking of orders for capitalised child support narrowed the matters to be considered by the Court, but at trial, the wife sought, in the making of an oral application, to have included in the orders made by the Court an order made pursuant to s 77A of the Family Law Act 1975 (Cth) (‘the Act’) for capitalisation of a spousal maintenance sum. The Court grants leave for that application to be made and notes the concession made by Counsel for the husband that there is some merit in a consideration of that matter at this time. It will be to the benefit of the parties to avoid further litigation between them.
Section 77A of the Act is as, relevantly, follows:-
Specification in orders of payments etc. for spouse maintenance purposes
(1) Where:
(a) a court makes an order under this Act (whether or not the order is made in proceedings in relation to the maintenance of a party to a marriage, is made by consent or varies an earlier order), and the order has the effect of requiring:
(i) payment of a lump sum, whether in one amount or by instalments; or
(ii) the transfer or settlement of property; and
(b) the purpose, or one of the purposes, of the payment, transfer or settlement is to make provision for the maintenance of a party to a marriage;
the court shall:
(c) express the order to be an order to which this section applies; and
(d) specify the portion of the payment, or the value of the portion of the property, attributable to the provision of maintenance for the party.
…
By the second day of the trial, the asset pool was largely agreed. Those matters that remain in dispute are addressed commencing at paragraph 10 of these reasons.
The asset pool of the parties is as set out below:-
Asset
Ownership
Value
P Street Town S in the State of New South Wales
Husband
$1,000,000
Q Street City V in the State of New South Wales
Husband
$870,000
BB Street City V in the State of New South Wales
Husband
$790,000
Z Street W Suburb in the State of New South Wales
Husband has a one-third proprietorship
$208,333
BB Street City V in the State of New South Wales
Husband has a one-third proprietorship
$263,333
R Street Town S in the State of New South Wales
Husband has a one-third proprietorship
$153,333
Husband’s cash in bank
Husband
$2,450,000
Vehicle 2
Husband
$5,000
Vehicle 1
Wife
$7,000
The total value of the assets is $5,746,999.
Liabilities - Mortgages
BB Street City V, NSW
Husband
$308,000
NAB mortgage encumbering BB Street City V, NSW
Husband’s one-third liability
$54,300
NAB mortgage encumbering Z Street W Suburb, NSW
Husband’s one-third liability
$79,600
The total of the liabilities is $441,900. The net asset pool is $5,305,099.
Superannuation
Wife’s superannuation with DD Super as at 12 June 2019
$252,000
Husband’s first superannuation plan with F as at 30 June 2018
$5,084
Husband’s second superannuation plan with F as at 30 June 2018
Current immediate cash out value of $352,197.66 as at September 2018, but a deferred benefit to which the husband will be entitled, usually at age 58, with a value of $509,089.03. Added to this is an incremental increase on this sum as at the date of trial, evidence as to which was not placed before the Court by the husband.
Disputed Matters
Superannuation
The value the Court should ascribe to the husband’s superannuation entitlements was disputed between the parties. The husband argued that his superannuation entitlements should be valued in the sum of $352,197.66. The wife argued the husband’s superannuation entitlements should be valued at $509,089.03 with the Court noting that that amount would be slightly higher as at the date of trial.
The Court finds that the husband’s superannuation must be taken at a value in excess of $509,089.03. No evidence was put before the Court as to the husband seeking to cash in his superannuation entitlements at this point in time. Indeed, the husband’s careful financial planning would lead the Court to infer on the evidence that the husband will not seek the cashing in of his superannuation entitlements until at least the age of 58 years, which is in approximately four years. The husband himself conceded the figure of $509,089.03 in his financial statement sworn by him on 11 June 2019 when he indicated that his superannuation plan with F Company as at 30 June 2018 had a gross value of $509,089. That sworn document also referred to a Superannuation Plan 1 with F as at 30 June 2018 with a gross value of $5,084, making his total superannuation $514,173. Both those figures were provided as at 30 June 2018 and would have incrementally increased by the date of trial. The husband also deposed in paragraph 31 of his affidavit sworn 11 June 2019 that he had two superannuation accounts with F Superannuation Scheme ("F"), deposing that the total of his superannuation was $514,173.
The husband’s financial statement and affidavit evidence indicated to the Court that the husband accepts the valuation of his superannuation to be accurately stated as his deferred benefit amount, as indicated in the tendered exhibit ‘…’ being correspondence of 10 September 2018 to the husband from F Super which noted his deferred lump-sum benefit at early retirement age (usually 58) to be $509,089.03.
The husband placed no evidence before the Court – indeed, placed contrary evidence before the Court – that he intended to or would access any part of his superannuation account balance prior to his reaching his early retirement age, that being usually 58. Nor, did he place any evidence before the Court that he intended to access all or part of his superannuation account balance in the immediate years thereafter. The husband cannot argue, on the evidence, that the lesser figure of $352,197.66 is the figure which should be taken into account by the Court.
Addbacks
There was also dispute between the parties as to two amounts referred to in the “trial document” of the wife filed 21 June 2019 with those items being stated as:-
a)to the wife, a partial property settlement of $125,000;
b)expended by the husband, legal costs and disbursements in the sum of $151,000. The Court notes this figure was not part of the evidence before the Court, and was not supported by the evidence given.
The wife argued that the above amounts should be added to the asset pool, save that in the instance of the wife’s receipt of a partial property settlement pursuant to earlier orders of the Court, and so described, only $105,000 of such monies should be added to the parties’ asset pool, that being the amount spent by the wife on her legal costs. The remaining $20,000 which the wife received as a partial property settlement by order of the Court, was spent by her on her necessary living costs. That expenditure was unchallenged by the husband. In those circumstances, the wife contended that the payment took on more the character of a spousal maintenance payment, and accordingly only the sum of $105,000 should be added back to the parties’ asset pool.
The husband argued that $125,000 of the monies already received by the wife should be included in the asset pool, but that his legal costs and disbursements payment was out of income earned by him, post-separation, and should not be included in the asset pool.
In Trevi & Trevi [2018] FamCAFC 173, the Full Court considered a party’s expenditure on legal fees. The Court noted the earlier Full Court decision in NHC & RCH (2004) FLC 93-204.
In Trevi & Trevi,[1] the Full Court said, relevantly, as follows:-
[1] [2018] FamCAFC 173, [31]-[39].
31. To the considerations just discussed must be added the propositions emerging from authority that paid legal fees as a category of addback is imbued with considerations specific to that expenditure. The Full Court said in NHC & RCH:
56. In summary, we consider that the above mentioned decisions of the Full Court establish that, while the treatment of funds used to pay legal costs remains ultimately a matter for the discretion of the trial Judge, in determining how to exercise that discretion, regard should be had to the source of the funds.
57. If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
58. If funds used to pay legal fees have been generated by a party post‑separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance), they would generally not be added back as a notional asset; nor would any borrowing undertaken by a party post-separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties. Funds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post‑separation income or acquisitions.
32. Those passages can be seen as an attempt to establish “guidelines”, undertaken after a detailed examination of earlier authorities, for the treatment of paid legal fees within s 79 proceedings. There can be little doubt that the statements made in that case have been applied by trial judges ever since.
33. The word “guidelines” is used advisedly so as to distinguish the same from “binding principles of law”. The distinction is important. Failure to follow a binding principle of law is an error of law. By contrast, the failure of a trial judge to follow a guideline:
…does not of itself amount to error, for it may appear that the case is one in which it is inappropriate to invoke the guideline or that, notwithstanding the failure to apply it, the decision is the product of sound discretionary judgment. [However] [t]he failure to apply a legitimate guideline to a situation to which it is applicable may… throw a question mark over the trial judge’s decision and ease the appellant’s burden of showing that it is wrong...
34. The guidelines emerging from NHC & RCH should be read together and read conformably with the Full Court authorities upon which they are based. That being so, the delineations there referred to – … cannot be seen as determinative of the exercise of discretion but, rather, as informing it.
…
37. An order failing to add back legal costs is a pre-emptive decision about one party paying the other’s legal costs. The statutorily prescribed default position is that neither party pays all or some of the other party’s costs.
39…The decision to addback or not addback paid legal fees remains a matter of discretion. But, a finding that it is just and equitable to not addback an amount of legal fees so paid is a finding that it is just and equitable for the other party to contribute to the costs of the first party in that proportion as part of an overall assessment of the justice and equity governing their property division.
(footnotes omitted)
The Court notes that adding back monies which have been expended should not be seen as creating property interests which do not exist. The purpose for the consideration of this addback is to enable the Court to consider matters relevant to ss 79(2) and 79(4) of the Act.
The husband’s legal costs and disbursements have been met by the husband out of income earned by him from rental receipts in respect of the investment properties in the parties’ asset pool, and from the husband’s interest earned on the husband’s cash deposits. The husband’s paid legal costs, on his evidence, which the Court accepts, are $103,000 together with $38,000 in disbursements, making a total sum of $141,000. The wife’s legal costs have been met by an earlier payment to her by way of a partial property settlement from monies held by the husband in cash reserves at the bank. The sums of $105,000 and $141,000 (a total of $246,000) should be notionally added back to the asset pool to enable the Court to look at the totality of the asset pool in the exercise of its discretion as to matters of contribution; s 75(2) of the Act matters; and in arriving at a decision that is just and equitable. The Court determines, in the exercise of its discretion, to add back those amounts in those quantums. The remaining $20,000 already received by the wife went to her necessary support and no longer exists. There was no challenge to that factual assertion of the wife.
Thus, the total asset pool is $5,992,999 and after deduction of liabilities, the net total asset pool is $5,551,099, excluding superannuation.
History
The husband was born in 1965, and is now aged 54 years. The wife was born in 1970 and is now aged 48 years. The parties met in February 2012. At that time, the husband was aged 47 years and the wife aged 41 years. Neither had been married before and neither had any children. The wife had lived in her mother’s home at H Street Suburb G in the State of Victoria continuously since 1977, when she was six years of age. The husband was residing with his mother in City CC in New South Wales.
The parties married in 2012. They did not live together before their marriage. They separated on 14 February 2017 when the wife left the former matrimonial home at Town S in New South Wales and returned to take up residence with her mother in her mother’s home in Suburb G in Victoria. At the time of separation, the wife left the former matrimonial home taking with her the parties’ two children. At the time of separation, X was two years and four months of age, approximately, and Y was eleven months of age, approximately.
On 17 May 2019, final parenting orders were made by consent of the husband and wife and unopposed by the Independent Children’s Lawyer. The parenting orders provide in essence, that:-
a)the husband and wife have equal shared parental responsibility for the children;
b)the children live with the wife in Melbourne; and
c)the husband spend time with the children in 2019 each alternate weekend from 10.30am on Saturday until 4.30pm on Sunday in Melbourne, and additionally for some block periods of time during school term holidays and during the summer holidays in 2019/2020; and that commencing in 2020, alternate weekend times continue and the children spend holiday time with the husband for a block period of seven days each term, and in summer holidays building up to, in 2021 and 2022, one half of the summer school holidays.
In the orders made 17 May 2019 there is also provision for the husband’s time spent with the children to occur also in New South Wales. Whilst the husband is responsible for many of the costs of transporting the children between New South Wales and Victoria, the wife, pursuant to the orders, is responsible for the costs of delivering the children to Newcastle/Port Stephens domestic airport at the commencement of the children’s time spent with the husband when it shall occur in New South Wales.
Additionally in those orders is, relevantly, provision for the following:-
22. The mother and father do all necessary acts and things to engage Ms L or other agreed psychologist (“the therapist”) for the purposes of family therapy. The mother and the father shall comply with the directions of the therapist with the costs of the therapist to be shared equally by the mother and the father. The mother and the father shall supply to the therapist a copy of the reports of Dr K, Dr M, Dr N and Dr R prepared in these proceedings.
…
26. The mother and the father do all acts and things necessary to enrol the children at J School in Suburb FF.
…
28. There be liberty to the father to apply for a change of these Orders in the event that he relocates to the Melbourne metropolitan area.
Contribution
At Commencement
At the time the wife moved into the husband’s home in Town S (being the commencement of cohabitation) the wife had the following assets:-
a)a Vehicle 1 which she had purchased some 12 months earlier for $37,790 and which she gave evidence at trial may have decreased in value by approximately $5,000;
b)NAB shares, which the wife had at commencement of cohabitation and which she continued to hold upon separation, selling them in January 2018 for approximately $10,400. No evidence was before the Court as to the value of the shareholding in 2012;
c)superannuation entitlements of approximately $110,800.
In 2000, well prior to cohabitation the wife’s mother gave to the wife the sum of $25,000. The wife applied same toward the purchase of a motor vehicle. Subsequently, and in June 2011, the wife traded that vehicle in to purchase the Vehicle 1 which she currently owns. To complete the purchase, the wife borrowed $25,290. Those funds were withdrawn by the wife on the mortgage encumbering the Suburb G property of her mother, and the mortgage repayments by the wife during the course of cohabitation as discussed hereafter, were, in part, the repayment of her own motor vehicle loan. This vehicle is included in the above described asset pool.
At the commencement of cohabitation the husband had significant net assets. All of the real properties referred to in the asset pool described in paragraph nine above, in the ownership described, were held by the husband. Likewise, the motor vehicle and funds now held by the husband existed at the commencement of cohabitation, save that the husband had cash reserves of approximately $2,630,617, being a greater sum than that which presently exists. The husband’s superannuation entitlements were approximately $306,009.
The parties put before the Court no valuation evidence as to the value of the real properties held by the husband at commencement of cohabitation, and each conceded that the valuations of the properties, as now ascribed by Mr B in his affidavit evidence, are the values the Court should take into account as being a valuation of each of the respective properties as at the commencement of cohabitation.
Each of the parties continues to retain the superannuation entitlements that they brought into the marriage; the motor vehicles that they brought into the marriage; and otherwise, the husband retains those assets he had at the time, save some diminution thereof as referred to above. The wife no longer holds her NAB shareholding, she having post-separation sold same and applied the proceeds thereof to her necessary living expenses.
As can be seen from the above, the husband’s initial contribution at the commencement of cohabitation has provided almost the entirety of the existing asset pool available for alteration of property interests as between the parties. However, neither party, sensibly, ran an argument that there should be no alteration of property interests.
Additional to the described asset pool, there exist two NAB savings accounts in the name of the parties’ children held in trust by each of the husband and wife. Each account has a cash balance of approximately $7,000. The accounts are controlled by the parties and they seek no adjustment in respect of those bank accounts.
During
Upon the parties’ marriage, the wife received and accepted a transfer to the City GG office of her employer. The parties had decided to live in nearby Town S where the husband maintained a residence and a workspace for his work with a major client operating from Town HH. During the marriage, the wife’s employer agreed to allow her to work from the local branch in Town S. The parties resided throughout their cohabitation in the home at Town S, a property purchased by the husband in August 2003. The property was an apartment. Both of the parties contributed to the conversion of the apartment into a home for them and their children.
At the commencement of the marriage, the wife was in full-time employment and she continued to be employed in a full-time capacity. The husband was not working at the commencement of the marriage and he did not engage in paid employment at any time during the marriage. The husband’s evidence is that he and the wife agreed that he should become the “house husband”, engaged in the performance of all the domestic duties, and in the looking after and supporting of the wife. The wife disputes that the parties agreed that the husband would become a “house husband” for the entirety of their marriage, and her evidence is that, to the contrary, whilst she wished him to be so present for a short period of approximately one month to enable her to establish herself in a new environment, she thereafter encouraged him to seek out job opportunities, but to no avail.
Both parties agree that the husband was offered a contract of employment as a professional in January 2014, but he declined that offer of employment. The husband’s evidence is that he declined any offers of employment so that he could remain the primary homemaker and in the later years of the parties’ cohabitation, the primary parent to the children. The wife disputes that he was ever the primary caregiver of the children.
During the marriage the husband continued to receive rental income from his investment properties and interest earned from his cash reserves. The wife earned income of approximately $65,000 per annum, which increased to in excess of $70,000 per annum from her employment. She continued to receive income whilst on 12 months maternity leave at a lesser rate, but equal to approximately $50,000 per annum.
During the marriage the wife paid for the majority of food and groceries. She also paid her own personal expenses. She contributed toward some of the joint expenses of the husband, the children and she, and the parties adopted an equal sharing of many expenses of the household from their respective income streams. The husband paid the expenses associated with his real properties.
The wife otherwise provided monies to her mother, and the husband provided some monies to his mother. Prior to X’s birth in 2014, the wife worked and the husband remained at home. Both the husband and wife are highly qualified and have significant skills that enabled them to be gainfully employed, a matter to which I shall return.
The wife took maternity leave in 2014 for a period of 12 months returning to work in 2015, the day before X’s first birthday. Her return to work was for four days each week. The wife again took maternity leave in 2016 prior to Y’s birth. She remained on maternity leave to the point of separation.
The parties agree that whilst the wife was engaged in full-time employment prior to X’s birth, the husband cooked and cleaned during the week, and on the weekend they shopped for food and household supplies together.
Following X’s birth, and whilst the wife was at work, the husband cared for X, and the wife did likewise in those periods when she was not working. After the wife ceased work prior to Y’s birth, both the wife and husband performed household and parental tasks. Both were involved in the care of their children.
For the first three months of Y’s life, the wife breastfed Y and took care of him. The husband provided assistance to her where needed. Y was very unsettled for the first two months of his life, and in late-2016 Y was diagnosed with a condition, being excess fluid on the brain, and had a shunt placed in his head to drain the fluid into his stomach. In mid-2017 Y’s condition was diagnosed as subdural haematoma. His condition improved somewhat.
The Suburb G property
The property situate at H Street Suburb G in the State of Victoria (‘the Suburb G property’) is registered in the sole name of the wife’s mother. The wife’s mother purchased that property in early 1977. The purchase was funded in part by a mortgage which was repaid by she and her husband by 2000.
In May 2005, and well prior to the parties’ cohabitation, a further sum was borrowed by way of mortgage registered against the title to the Suburb G property, that sum being approximately $110,000 (‘the 2005 mortgage’). The monies were borrowed for the purpose of repairs and renovations to the property. The 2005 mortgage was taken out in the name of the wife’s mother and the wife. At the time of that mortgage, the wife’s sister and the wife were living in the Suburb G property with their mother.
In March 2006, the wife’s sister paid $92,000 off the 2005 mortgage. Otherwise, the wife made the repayments in respect of the 2005 mortgage until its repayment in full on 10 August 2016. At the date of the parties’ marriage, the amount outstanding on the Suburb G property mortgage was approximately $24,300. The wife repaid that amount, together with the applicable interest payments, in a four year period during which the parties cohabitated.
The Suburb G property was valued by Mr C on 17 June 2019 and its value at trial was $655,000. The property has not vested in the wife and does not appear in the asset pool agreed to by the parties, quite properly.
The evidence before the Court is that the wife made monthly payments of $500 out of her bank account from her earnings from the date of the marriage until July 2016, before making a final payment of $4,500 on 10 August 2016. The wife’s contribution to her mother’s welfare and that of her sister and niece was an ongoing one. The wife’s father had ceased employment in 1986, and her mother, in mid-2000. After the cessation of their employment, the wife’s parents received Centrelink pensions. Once the wife commenced employment, she gave most of her wage to her mother. She did not consider herself to be buying an interest in the Suburb G property, rather she was living in her parents’ home and she provided cash payments to her parents to assist in the payment of the mortgage; the utilities; and household expenditure. Other members of the Suburb G household also paid money toward the expenses of the household which included the private school fees of the wife’s niece to which the wife also contributed.
It is the wife’s understanding that her mother has left the Suburb G property to her sister and she in equal shares by provision to that effect in her will. She thus has an expectation of an inheritance, but not a guarantee.
In late 2016, the wife’s mother said to her that she wished to borrow against the Suburb G property. This alarmed the wife. She was not in a position to assist her mother with any further borrowings, and she did not wish the Suburb G property to be encumbered. She did not wish her sister’s interest in the property to be affected, and after discussion with the husband, whom she concedes may have been looking after her own interest in the property, she sought legal advice. She then lodged a caveat over the Suburb G property claiming an equitable interest in the Suburb G property being an implied resulting or constructive trust. Such caveat was lodged on 20 February 2017 by solicitors acting on her behalf.
The husband was aware, save for the first few months of cohabitation, of the wife’s ongoing financial contributions to the mortgage repayments on her mother's home. He was also aware that additionally the wife was providing to her mother monies to assist in the payment of her living expenses. He did not object to these payments when he became aware of them. He also had an arrangement with his mother as to providing assistance to her in the payment of her expenses as and when necessary. The husband’s evidence that his mother always repaid the sums advanced to her by him, and in cash, is not accepted by the Court. During the marriage and since separation, the husband has contributed to the expenses of his mother, including her rates, electricity, Foxtel, insurance and motor vehicle expenses. During the marriage, the husband purchased for his mother a new dishwasher and taps and, following separation, a TV. Some of these expenses were paid from accounts in the name of the husband and his two brothers, including the $1,870 cost of the TV in August 2018.
Section 75(2) Matters
Neither the husband nor the wife are in paid employment. The wife is in receipt of a Centrelink Parenting Payment. The source of the husband’s income is net rental receipts from his real estate investments and interest on his cash deposits.
Notices of assessment for the financial years ended 30 June 2016, 30 June 2017 and 30 June 2018 indicate that the husband’s taxable income in each of those years respectively has been $61,568, $48,926 and $34,710. His current assessment of child support for the assessment period of 1 October 2018 to 31 December 2019 is a monthly rate of $655.33. The income used to provide that assessment was a provisional 2018 taxable income of $57,299. This current assessment has provided for the wife a child support debt wherein she owes the husband the sum of $2,250.50. The husband agreed in evidence during the running of the matter that he would waive that debt and notify the child support agency to that effect. The husband previously waived a child support amount owing by the wife to him of approximately $2,828. These child support debts have arisen as a result of the husband’s provisional income being higher than his taxable income. That situation will continue given the taxable income of the husband as described above.
From October 2018, by agreement, the husband has paid to the wife an additional $354 each month by way of child support as a consequence of a reduction in his assessed monthly child support, from an assessed amount of $1,305 each month to then $951 each month and now to the current monthly amount of $655.33.
The parties agree that X will commence school at J School in Suburb GG in 2020. The school fees for preparatory class in this year are $7,865 per annum. The fees increase each year. The parties have also agreed that Y will attend the same school when he is five years of age. The parties’ agreement is that they will each contribute equally to the fees.
The wife has been the primary carer of the children since February 2017, being a period of approximately two years and four months. They remain very young children. The husband has only recently commenced to have overnight time with them. X is attending kindergarten, and Y currently attends preschool. He shall commence kindergarten in 2020.
An MRI performed in March 2018 confirmed that Y’s head was normal and there were no further blood collections above his brain. He currently attends upon a specialist and his paediatrician once every six months. Y nevertheless still has some development delays around speech and fine motor skills. He sees a speech therapist every fortnight, and in addition the therapist works with him at preschool approximately once a month. Y has been assessed under the National Disability Insurance Scheme (‘the NDIS’) as requiring ongoing care. He has some toileting difficulties and in May 2019 was still in nappies. He is awaiting an operation to reduce excess fluid, and the cord leading out of the shunt in his head needs to be moved. Ultimately, the shunt will be removed.
Y requires a significant amount of care, relative to other children of the same age. These delays in his self-care skills include dressing and toileting. Y requires extra care and attention for 14 hours or more each week according to the NDIS assessment.
Whilst the parties were residing together, and the wife did not return to work, the husband commenced to pay her $500 a week from August 2016. That payment continued following separation, and ceased in early March 2017.
Since October 2017, the husband has paid the wife $300 in spousal maintenance, not by order of the Court, but by agreement between the parties.
The husband’s mother resides in City CC, which is some 500 kilometres, approximately, from where the parties resided in Town S and where the husband continues to reside. The husband’s evidence is that his mother is 85 years of age and suffers from various health difficulties that require his consistent attending to her needs. His evidence was that he spends in each fortnightly cycle some number of days with his mother assisting her, and that he does not foresee any relocation, if that were to occur, of him from Town S to Melbourne to reside in closer proximity to his children in the short term. Rather, he sees that as a possibility in the medium to longer term, if at all. The husband’s evidence is the average weekly cost for his fortnightly visits and one week school term visits in Melbourne, and the children’s visits in New South Wales will be around $525 each week by way of expenditure for him.
Consideration
The wife did not challenge the significant financial contribution made by the husband at the commencement of cohabitation. She did, however, challenge the husband’s assertion that there was an agreement between them that he would remain at home engaged in home duties and subsequently the care of the children whilst she worked. The wife conceded that for a period of perhaps one month, while she was finding her feet in Town S, she desired her husband’s presence.
Thereafter, the wife asserts and the Court accepts, that the wife encouraged the husband to work, but that the husband declined to do so. The husband has now not worked for a period of some seven years. His income stream has been the rental receipts and interest earned on his cash deposits. He has not felt the need to earn any other income. He is highly qualified, having completed a first class Honours Degree from the MM University, and thereafter worked in a number of different areas obtaining significant skills. However, since separation on 14 February 2017, which is a period of approximately two and a half years, he has not applied for any job. He is only 54 and has a clear earning capacity that he is not exercising.
Whilst the parties were together, the wife encouraged the husband to work. In particular, in January 2014, she encouraged him to take the employment then offered to him. She was at the time not yet pregnant. The wife was concerned for the husband not only to work and bring income into the household, but also to work to be engaged and not lonely during her long absences from the home when she was at work. To that end, she encouraged him also to work in a voluntary capacity. The husband declined.
The Court is satisfied that the husband will not exercise his earning capacity and will not seek out income beyond that which he can generate from rental investment and cash deposit interest. This will see his assessable income fall below $34,000 per annum, and may well result in, despite his evidence given at trial, no payment of one half of the school fees for J School’s in each and every of the many schooling years ahead for the children, and importantly no payment of child support when merely looking to his assessable income.
It is, on the evidence before the Court, not likely that the husband will move to Melbourne to reside in close proximity to his children, and, accordingly, the responsibility for their care will remain significantly primarily with the wife. The husband’s evidence as to the prospects of him residing in Melbourne was essentially that those prospects were not good. His evidence included that he had never lived in Melbourne, that he had “zero” social connections, that he had no network, that his health suffered whilst in Melbourne, and that he is more of a country dweller. Another reason for the husband’s disinclination to move to Melbourne to be in closer proximity to his children and to incur considerably less cost in spending time with them is that he wishes to provide support to his elderly mother. His evidence was that he spent three to four days a fortnight with her to “help her out”. He was concerned about his mother and her frailty and felt the need to prioritise her care.
The wife, in her evidence, expressed her concern to be able to support herself and the children in a reasonable manner. She is fortunate to be able to have moved back to her mother’s home and to be able, with the children, to take up occupation there whilst paying to her mother an amount of $300 board each week. She is in receipt of a Centrelink pension of $397 each week and a Centrelink family allowance of $95 each week. These amounts, essentially, cover the shortfall between her expenditure and her income. Her income is the maintenance provided to her voluntarily by the husband at the present time of $300 each week and that sum is then paid out by her in the board payment to her mother for herself and two children. Her expenses are $730 each week. They were not challenged by the husband. Her income is $793 each week, estimated. In the period since separation the wife has expended on living expenses for herself and the children the $20,000 she received of the $125,000 partial property settlement with the balance going to the payment of her legal expenses; the $10,000 approximately share sale proceeds from the sale of her NAB shares; and $20,000 in savings in a bank account in her name at separation that she kept and has used. She has had this $50,000 of capital sum and expended it in the necessary living expenses of herself and the children in a two and a half year period. Additionally, she has received, as conceded by the husband, approximately $35,000 in child support and $26,000 in spousal maintenance. This is a total sum of $111,000 approximately that she has had available to her for the support of herself and the children. This equates to approximately $854 each week.
It is appropriate, given the ongoing voluntary payment of $300 a week of spousal maintenance from the husband to the wife since October 2017, and the ages of the children and the wife’s need to care for them – largely in the absence of the husband – that there be a capitalised spousal maintenance component to the property orders which the Court makes as a result of these proceedings. The Court shall make an order pursuant to s 77A of the Act, so that there is capitalisation of a spousal sum to the wife for a period of three years from this date.
The husband seeks to cease payment of spousal maintenance and he seeks to pay child support as assessed in accordance with the legislative scheme which is dependent upon his assessable income. The history of his receipt of assessable income is that it has significantly declined in the last three years and is likely to continue to decline, in particular, because the husband will make a payment out to the wife by way of alteration of property interests and claims that he will thereby have significantly reduced income. Whilst he could supplement his rental and interest receipts by engaging in employment for which he has the necessary skills, he does not wish to do so and on the evidence, may not do so. The scenario, thus, for the wife in the years ahead is minimal payments of child support for two children for whom provision of support is necessary over many years ahead, and no receipt of spousal maintenance. Whilst the husband indicated in the witness box that he would honour his commitment for the children to attend J School, “she has my honour. I will pay”, the Court finds on the evidence that may or may not occur dependent upon the financial circumstances the husband finds himself in from time to time.
During the course of the marriage, the wife made payments of the Suburb G property’s mortgage in the sum of $25,000 and further payments of $16,500 towards her mother’s support. That was a total of $41,500 over four and a half years out of the earnings of the wife during the period of the marriage. Some part, of course, of the mortgage repayments made by the wife related to the purchase by the wife of her motor vehicle as earlier described.
Y has special needs. He currently has an integration assistant at kindergarten, and the wife has been his primary carer from the time, at least, that he was a few months old. Whilst the wife herself has significant educational qualifications, she having an honours Degree from LL University and Master’s Degree and a PhD from KK University, she is currently unable to exercise any earning capacity that these qualifications might bring her as a result of her need to care for two very young children, one with some current special needs.
The s 75(2) of the Act matters sharply favour the wife. She will need to continue her primary care of the children and upon Y entering school or in the year thereafter, obtain some form of employment. She will be little assisted in the payment of the children’s necessary living expenses by the husband.
The husband’s earning capacity is an income in the vicinity of $200,000 or more if he were able to obtain employment in his specialist field. His evidence is that employment is impossible for him now to obtain. Even if that were the case, and it is not a matter that he has tested, he would still be able to be gainfully employed as a professional on an income perhaps something less than that, but still an income that will exceed any potential income of the wife. Post-separation, the wife’s contributions have been substantial, and will be going forward, in her care of the children and her inability to work at all, or to work, in a restricted way, because of that responsibility of care.
The Court determines in the exercise of its discretion that a property adjustment wherein the husband makes a payment to the wife of 30 per cent of the total asset pool is just and equitable. Included in that sum would be an amount for capitalised spousal maintenance over a three year period, with the Court also taking into account the disparity in superannuation entitlements of the parties in the husband’s favour. That adjustment provides for a recognition of the husband’s significant contribution to the asset pool at commencement of cohabitation and the wife’s significant but lesser in terms of percentage adjustment s 75(2) of the Act needs.
Neither party seek a splitting order of their superannuation entitlements. They seek, instead, that they be generally taken into account by the Court in the division of the parties’ assets. The Court has done so.
The Court is satisfied that in all the circumstances it is just and equitable to make the orders which it does.
I certify that the preceding seventy-six (76) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hartnett delivered on 3 July 2019.
Associate:
Date: 3 July 2019
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Injunction
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Costs
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