SMART & WATTON
[2014] FCCA 2249
•3 October 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SMART & WATTON | [2014] FCCA 2249 |
| Catchwords: FAMILY LAW – Property – husband’s direct financial contributions – where the husband had invested funds in which the parties had an equal interest – where the husband alleged “special contributions” – where the parties conceded and agreed that the pool of property could only be properly and effectively calculated by reference to that which the parties and each of them had received from an historical distribution of funds. |
| Legislation: Family Law Act 1975, ss.60B, 60CA, 60CC, 60CC(2), 60CC(2A), 61DA, 65DAA(3), 65DAA(5), 65DAA 65DAC, 75(2) |
| Stanford & Stanford [2012] HCA 52 Haset Sali v SPC Ltd [1993] HCA 47 U & U [2002] FLC 93-112 Goode & Goode (2006) FLC 93-286 Marvel [2010] FamCAFC 101 Burgoyne & Burgoyne (1978) FLC 90-467 Kowaliw & Kowaliw (1981) FLC 91-092 NHC & RCH [2004] FamCA 633 Pierce & Pierce [1998] FamCA 74 AJO & GRO [2005] FamCA 707 SJS & NS (2005) FLC 93-214 Rosati & Rosati [1998] FamCA 38 Kane & Kane [2011] FamCA 480 Kane & Kane [2013] FamCAFC 205 Smith & Fields [2012] FamCA 510 |
| Applicant: | MS SMART |
| Respondent: | MR WATTON |
| File Number: | PAC 3966 of 2010 |
| Judgment of: | Judge Harman |
| Hearing dates: | 18, 19 and 20 August 2014 |
| Date of Last Submission: | 20 August 2014 |
| Delivered at: | Parramatta |
| Delivered on: | 3 October 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Greenaway |
| Solicitors for the Applicant: | Lewarne & Goldsmith |
| Counsel for the Respondent: | Mr Calokerinos |
| Solicitors for the Respondent: | Antwan Lawyers |
ORDERS
Property orders
Within fourteen (14) days of today’s date each of the parties shall do all acts and things, and execute all documents necessary to divide the funds held in the (omitted) account BSB: (omitted) account number (omitted) as to 71.6% to the wife and as to the remaining 28.4% to the husband.
Within fourteen (14) days of today’s date the husband shall do all acts and things and execute all documents necessary to transfer to the wife at the expense of the wife the whole of his right, title and interest in the former matrimonial home, situate at and known as Property L in the state of New South Wales, being the whole of the land contained in Certificate of Title Folio Identifier (omitted).
That a base amount of $68,000 is allocated, as required by section 90MT(4) of the Family Law Act 1975, to the wife out of the husband’s interest in the (omitted) Super (Member No. (omitted)).
In accordance with paragraph 90MT(1)(a) of the Family Law Act 1975:
(a)The wife is entitled to be paid the amount calculated in accordance with part 6 of the Family Law (Superannuation) Regulations 2001; and
(b)The husband’s entitlement, and the entitlement of such other person to whom a splittable payment may be made to payments out of the husband’s interest in the (omitted) Super, is correspondingly reduced.
The Trustee of the (omitted) Super (“the Trustee”) shall do all acts and things and sign all such documents as may be necessary to:
(a)Calculate in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the entitlement for the wife created by Order (4)(a) of these orders; and
(b)Pay the entitlement whenever the Trustee makes a splittable payment out of the Husband’s interest in the scheme.
This order shall have effect from the operative time and the operative time is four (4) business days after service of the sealed Orders on the Trustee.
After service of the payment split notice pursuant to r.7A.03 of the Superannuation Industry (Supervision) Regulations 1994, the wife shall do all such things and sign all such documents as may be necessary, including but not limited to, exercising her request pursuant to r.7A.06(1) of the Superannuation Industry (Supervision) Regulations 1994 for the rollover or transfer the transferable benefits out of the husband’s interest in the scheme to a fund of the wife’s choosing in accordance with r.7A.12 of the Superannuation Industry (Supervision) Regulations 1994.
IT IS NOTED THAT:
(a)The value of the transferable benefits from the husband’s interest to the wife’s interest are calculated in accordance with r.7A.12 of the Superannuation Industry (Supervision) Regulations 1994;
(b)Pursuant to r.14F of the Family Law (Superannuation) Regulations 2001, any payments from the husband’s superannuation interest in the scheme made after the Trustee has created a new interest in the wife’s name in the (omitted) Super, as contemplated in order 5 of this order, are not splittable payments; and
(c)The trustee will be relieved of its obligations to calculate and split payments under order 5 of this order in the event that the transferable benefits are transferred to a fund of the wife’s choosing in accordance with the requirements under the Superannuation Industry (Supervision) Regulations 1994.
Pursuant to section 78 of the Family Law Act 1975 each of the parties shall be and is hereby declared to be the sole and absolute owner, at law and in equity, as against the other of all property in their respective possession, custody or control and shall each be liable and hold the other forever harmless with respect to any liability in their sole name.
In the event that either party refuses or neglects to execute any deed, instrument or document that may be considered necessary, the Registrar of the Court be appointed pursuant to section 106A of the Family Law Act 1975, to execute such deed, instrument or document in the name of such party and to do all acts and things necessary to give validity to the operation of the deed, instrument or document.
Parenting Orders
The mother and father shall have equal shared parental responsibility for their children, X born (omitted) 2002, Y born (omitted) 2003 and Z born (omitted) 2004.
The children shall live with their mother.
The children shall spend time with their father at such times as shall be agreed between the parties and failing such agreement as follows:
(a)Each alternate weekend during school terms from 5pm Friday until the commencement of school the following Monday (or Tuesday if the Monday is a public holiday), first such period to occur in accordance with the present pattern of time arising from operation of prior, interim orders.
(b)For one half of each school holiday period as agreed between the parents and absence agreement for the first half of the holidays in the first, second and third terms in odd numbered years and the second half in even numbered years.
(c)With respect to the December/January school holiday period and other than for 24, 25 and 26 December each year, for half of the holiday period in block periods of two weeks as follows:
(i)For the first two weeks and the fifth and sixth week in odd numbered years; and
(ii)For the third and fourth weeks and the seventh and eighth in even numbered years.
(d)In each odd numbered year from 12noon New Year’s Eve until 12noon New Year’s Day.
(e)In odd numbered years from 2pm Christmas Eve until 2pm Christmas Day and alternate year thereafter and in even number years from 2pm Christmas Day until 2pm Boxing Day and alternate years thereafter (and the children shall spend time with their mother in each year for the same periods as above but in reverse order).
(f)For the Father’s Day weekend from 5pm Friday until the commencement of school the following Monday, (and provided that if the Mother’s Day weekend falls when the father is due to spend weekend time with the children, then the father’s time shall be suspended).
(g)On each of the children’s birthdays from 10am until 2pm if a non-school day and, if a school day, from 4-7pm (and if the children’s birthdays fall on a day when they are in or scheduled to be in the father’s care then the children shall spend time with their mother on the same basis).
For the purpose of the children spending time with their father, Ms Smart shall be responsible, at the commencement of any period, for delivering the children to the father at his home or as may otherwise be agreed and, at the conclusion of each period Mr Watton shall be responsible for returning the children to the mother at her home or delivering them to school.
Each parent shall keep the other advised at all times of their residential address, home and mobile phone numbers and email address and shall inform the other promptly and within 48 hours of any change thereto.
The mother and the father shall each keep the other informed and notify the other parent of any specialist medical appointment or other medical issue concerning the children within a reasonable time of the consultation or medical issue and each parent shall keep the other parent informed of any medical problem or illness suffered by the children while in the other parent’s care and notify the other parent of any medication prescribed for any of the children.
Each parent shall immediately notify the other parent of any emergency relating to the health, well-being and medical needs of the children.
Both parents shall provide the other with information regarding overseas travel with the children, including itinerary, flight details and contact details of where the children will be accommodated.
Each parent shall be entitled to telephone the children when they are not in that parent’s care at a reasonable hour and at reasonable frequency.
The mother shall notify the father of any event at the school that is not in the school newsletter or on the school website where the children attend.
Pursuant to S.65DA(2) and S.62B, the particulars of the obligations these orders create and the particulars of the consequences that may follow if a person contravenes these orders and details of who can assist parties adjust to and comply with an order are set out in the Fact Sheet attached hereto and these particulars are included in these orders.
All outstanding Applications and Responses are withdrawn and dismissed and all issues are removed from the list of matters awaiting hearing.
Upon the expiration of the Appeal period and in the event that no appeal is lodged that all exhibits then be returned to the party who tendered same and that all material produced on subpoena be returned to the person or organisation who produced same or securely destroyed.
IT IS NOTED that publication of this judgment under the pseudonym Smart & Watton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 3966 of 2010
| MS SMART |
Applicant
And
| MR WATTON |
Respondent
REASONS FOR JUDGMENT
The proceedings
These proceedings involve competing applications for both property adjustment orders and parenting orders.
The parties to the proceedings are Ms Smart who is the Applicant and wife and Mr Watton who is the Respondent and husband.
The parties were involved in a relationship with each other from 1996 until their marriage on (omitted) 1998. The parties thereafter continued to live together until their final separation on or about 1 December 2008.
There are three children of the relationship, namely:
a)X born (omitted) 2002 (accordingly now aged 12 years);
b)Y born (omitted) 2003 (accordingly now aged 11 years); and
c)Z born (omitted) 2004 (accordingly now aged nine years).
History of the proceedings
These proceedings have, regrettably, been on foot for a significant period of time.
The proceedings were commenced by an application filed by Ms Smart on 15 October 2010.
When the proceedings were commenced they related solely to issues of property adjustment. During the course of the proceedings additional issues have been joined and principally an issue with respect to parenting arrangements for the three children together with an application for relief under the Child Support (Assessment) Act 1989.
The application for child support relief has not been pressed at hearing and is, in effect, withdrawn or discontinued. The application for parenting orders together with the application for property adjustment has been heard and determined by the Court.
Prior to these proceedings the parties had been engaged in contested divorce proceedings. Ms Smart had filed an application for divorce 24 August 2010 and a response thereto was filed by Mr Watton, 23 September 2010. The divorce proceedings were ultimately resolved through a compromised arrangement arrived at between the parties. A divorce order was pronounced by a sessional Registrar 11 October 2010.
The application for property adjustment first came before the Court 19 October 2010. An abridgment of time had been granted by a Registrar regarding the listing of that application. The abridgement was granted on the basis of an allegation by Ms Smart that Mr Watton had received and was in the process of seeking to dispose of certain funds from his former employer (omitted) or seeking to sell shares in that company.
On the first return date of the proceedings both Ms Smart and Mr Watton were represented. On that date a number of interim orders were made which have been referred to by the parties, throughout the proceedings, as “freezing orders". That order related to funds held by the husband in an account with the (omitted) Bank and being a sum of $400,000.
That order has remained in force notwithstanding a number of challenges to it from time to time and including determination of an application for interim property adjustment orders made by Mr Watton which application was heard and a judgment delivered in determination thereof 14 March 2014.
The proceedings next came before the Court on 10 November 2010. On that date a number of procedural orders were made and the proceedings were adjourned with the request and with the consent of both parties as a number of income tax issues had arisen together with what were flagged by the parties as potential “jurisdictional issues”. Each of those issues has now been addressed and need no longer trouble Court.
The matter next came before the Court 2 February 2011. At that time it was noted that the parties had completed enquiries with respect to tax liabilities which arose as a consequence of the sale and distribution of proceeds of certain shares. The matter was, again, adjourned on the joint application of the parties.
The proceedings were next before the Court 14 February 2011. On that date orders were made to facilitate the parties’ attendance upon a Registrar for the purpose of a Conciliation Conference. A number of orders were made with respect to disclosure. It is to be noted that significant volumes of material have been exchanged between the parties and notwithstanding this each has continued to assert throughout the proceedings and, indeed, at hearing, that disclosure has been less than complete.
The proceedings returned before the Court 15 April 2011. During the adjourned period the Conciliation Conference had been scheduled and did proceed. However, no agreement was reached.
When the matter was before the Court 15 April 2011, some time was devoted to dealing with complaints as to suggested nondisclosure and orders were made to seek to remedy those issues.
The proceedings next came before the Court 18 May 2011. On that date further issues were raised by the parties and each of them regarding suggested nondisclosure as well as difficulties as to the valuation of assets, specifically, a parcel of real property in (omitted), Victoria, in which it was asserted that the husband held an interest. Indeed, the statement of financial circumstances which had been filed by the husband at that time asserted an interest in that real property. At hearing, the husband’s evidence did not support such an assertion. Indeed, the husband denied owning or having ever owned an interest in that property and asserted that certain funds were payable to him by way of loan by one of the registered proprietors thereof, namely Mr Watton’s sister.
The matter next came before the Court 17 June 2011. On that date and by consent, a number of restraints were imposed upon Ms Smart whom it was suggested had attempted to or had in fact operated accounts in the name of Mr Watton. Orders were also made to advance the matter to a trial scheduled for 28 and 29 November 2011. Those dates were subsequently vacated at the request of the parties.
On 15 March 2012 the proceedings were again before the Court. On that date a further and more specific order was made restraining Mr Watton from dealing with a (omitted) account being account number (omitted). That application had arisen on the basis of a suggestion that Mr Watton had, notwithstanding the orders previously made and as referred to above, sought to operate that account and had withdrawn funds therefrom. On that day the parties were also in heated agreement that the matter was not ready to proceed to hearing and accordingly the hearing dates previously set were vacated.
On 5 April 2012 the proceedings were again before the Court. On that day it was noted that “since these proceedings were last before the court some progress has been made regarding clarification of income tax payment issues, although the quantum of the assessable liability is yet to be determined”. It was also noted that “there is some optimism as to resolution of all issues upon the clarification of tax liabilities”.
The optimism expressed by the parties as to resolution would appear to have been entirely misplaced as some 29 months after that notation was recorded the proceedings remained unresolved and, in fact, proceeded to a hearing over some three days.
The proceedings again came before the Court on 19 June 2012. On that occasion a number of orders were made by consent to, again, seek to resolve and clarify the income tax liability position of the parties and each of them.
On 13 August 2012 the proceedings were again before the Court regarding allegations by the parties and each of them that full and proper disclosure had not been given. On this occasion it was noted that issues remained outstanding between the parties, particularly regarding “notional add backs”, what adjustments (if any) would be made pursuant to section 75(2) and what value, if any, the husband’s ongoing shareholding in the company “(omitted)” had.
As a consequence of the chronic difficulties alleged by the parties regarding disclosure a declaration was made as to satisfaction that formal discovery and administration of interrogatories was appropriate. Orders were then made to facilitate the administration of specific questions, the giving of answers on oath and the provision of an affidavit of documents by Mr Watton. That is not to suggest that issues were not also raised by Mr Watton regarding the adequacy of disclosure by Ms Smart.
On 26 September 2012 the proceedings were next before the Court. At that time discovery and interrogatories had been concluded and the matter was again fixed for final hearing, now estimated to require three days rather than two days. Hearing dates of 15-17 May 2013 inclusive were allocated and further trial directions made.
The trial dates allocated were subsequently varied although not significantly. They were varied to 14-16 May 2013. Those hearing dates were then varied to 11-13 December 2013. The requirement for change arose due to difficulties with the judicial calendar and provision of relief and assistance to other Registries.
On 12 November 2013 and only some weeks prior to the scheduled final hearing of the proceedings the matter came before the Court in response to an application in a case filed by Mr Watton and seeking interim parenting relief (an amended response having been filed on the same date seeking final orders with respect to parenting). On that date interim orders were made by consent.
When the proceedings came before the Court for hearing 12 December 2013 other issues had been joined by Mr Watton, specifically, the parenting issues. It is to be noted that the joinder of issues after allocation of hearing dates is expressly precluded by the Federal Circuit Court Rules 2001. Prior to the scheduled hearing dates the amended response and application in a case filed by Mr Watton had been listed in a duty list and thus the difficulty was foreshadowed and apprehended. Ms Smart, through her counsel, indicated that she would be in a position to proceed with the hearing and to meet the parenting issue.
Further difficulties arose as Ms Smart had also sought to join a fresh issue namely a plea for relief under the Child Support (Assessment) Act 1989.
The matter did not proceed 12 December 2013. Instead, interim parenting orders were negotiated between the parties and orders were made by consent. Those interim orders remained in force as at the final hearing of the proceedings. Those orders provided that all three children live with their mother and spend time with their father each alternate weekend from Friday afternoon (5pm) until Sunday afternoon (5pm), together with one half of each short school holiday period and for two week rotating blocks during the children's Christmas school holiday period (the Christmas school holiday period being more extensive than the period enjoyed by children attending State schools).
As the matter did not proceed 12 December 2013 the husband also sought to make an oral application to discharge the existing injunctions or “freezing orders” which precluded him from dealing with the (omitted) Bank account. The wife indicated that she was not in a position to deal with that application on that day and accordingly leave was granted to make the oral application and the hearing of that application was adjourned to 7 February 2014 for hearing.
The interim hearing of the husband’s application proceeded 7 February 2014 and occupied a significant portion of the day. Judgment was delivered with respect to that application 14 March 2014 at which time the husband’s application was dismissed and costs with respect to the interim property application adjourned for determination at final hearing.
At final hearing submissions were not made with respect to the costs issue as it was apprehended that an additional application for costs might, subject to the outcome of the proceedings, be made by one or other of the parties. Accordingly those issues remain at large.
The matter then proceeded to hearing on 18 August 2014 being the first of four dates allocated to the matter. The matter did not occupy all of the time which had been estimated as required (four days). The evidence of the parties was completed in two days and submissions then occupied a significant portion of the third and final day of trial.
As indicated the matter proceeded to hearing as regards the applications for property adjustment and parenting only.
While some time had been afforded at the commencement of the matter to enable settlement negotiations to occur no agreement was reached and each of those issues is thus now determined by the Court. As indicated above the plea for child support relief was not pressed.
Material considered
In dealing with these proceedings I have read and considered the following documents:
a)In the wife’s case I have read and considered each of the following:
a)The wife’s Amended Initiating Application filed 8 November 2013;
b)The wife’s Affidavit sworn 5 March 2013 and filed 7 March 2013;
c)The wife’s Affidavit sworn 7 November 2013 and filed 8 November 2013;
d)The wife’s Affidavit sworn 27 November 2013 and filed 28 November 2013; and
e)The wife’s Affidavit sworn 11 August 2014 and filed 14 August 2014.
b)In the husband’s case I have read and considered each of the following documents:
a)The husband’s Amended Response filed 24 October 2013;
b)The husband’s Affidavit affirmed 18 April 2013 and filed 22 April 2013;
c)The husband’s Affidavit affirmed 10 April 2013 and filed 12 April 2013;
d)The husband’s Affidavit sworn or affirmed 14 October 2013 filed 25 October 2013;
e)The husband’s Affidavit affirmed 6 December 2013 and filed the same day;
f)The husband’s Affidavit affirmed 10 January 2014 and filed the same day;
g)The husband’s Affidavit affirmed 15 August 2014 and filed 18 August 2014; and
h)The husband’s statement of financial circumstances affirmed 13 August 2014 and filed 18 August 2014.
In addition to the above a number of exhibits have been received comprising:
a)Exhibit X a Family Report dated 18 August 2014 (which had apparently been provided directly to the parties by the regulation 7 report writer although only provided to the Court until the day the trial was scheduled to commence).
b)Exhibit R1 the Minute of Orders sought by the husband with respect to parenting.
c)Exhibit A1 a contract of employment for the husband (relating to his current employment).
d)Exhibit A2 a number of travel records with respect to the husband’s departure from the Commonwealth of Australia in and prior to 2013.
e)Exhibit A3 similar travel records with respect to the husband’s departures from the Commonwealth of Australia, particularly in March and July 2014.
f)Exhibit A4 the husband’s Financial Statement sworn 8 November 2010 (not relied upon or read in the husband’s case but with respect to which the husband was cross-examined).
g)Exhibit A5 (omitted) Bank credit card statements for the husband for the period March 2013 until September 2013.
h)Exhibit A6 (omitted) Bank credit card accounts with respect to an account evidencing transactions by the husband’s partner.
i)Exhibit A7 incoming passenger cards completed by the husband upon entering the Commonwealth of Australia.
j)Exhibit A8 correspondence to the husband’s superannuation fund evidencing due process afforded to the Trustees of that fund.
k)Exhibit A9 Minute of Orders sought by the wife and tendered prior to the wife’s submissions.
I have also read and considered a Case Outline Document or Summary of Argument provided by each of the parties, together with a number of authorities relied upon in the husband’s case and to which I will turn shortly
Chronology
The factual background of the matter is far from complex. To that end an extensive chronology of events is provided by the wife’s counsel and I adopt and incorporate that chronology herein.
Evidentiary Chronology by reference to the affidavits of the Applicant
(omitted), 1969 husband born (44)
(omitted), 1971 wife born [42]
1996 Cohabitation commenced. At the commencement of cohabitation the asset/liability situation is as follows:
Wife owns property: Wife owns real Estate at Property P (solely in her name). The wife purchased this property in (omitted), 1994 (2 years prior to commencement of relationship with the respondent). The property was purchased for $161,000.00 with a mortgage of $142,000.00. Wife also owns a Barina motor vehicle worth about $12000-$15000 and also had savings of $3000.00 together with furniture contained within the unit.
Husband owns personal property: A motor cycle with a personal loan secured against the motor cycle and some credit card debts. The husband had some furniture but no other assets at the commencement of cohabitation.
(omitted) 1998 Parties marry.
(omitted) 2001 The parties purchase the property at Property N for $378,000 which was subsequently reduced to $368,000.00 The parties borrow an amount of $285,000 from (omitted) bank for the purchase of this property.
19 July, 2001 The wife’s unit at Property P was sold for $230,000.00.
August, 2001 The Respondent’s mother dies. The husband inherits an amount of $119,666.00.
2002 Wife leaves paid employment prior to the birth of the parties’ first child.
April, 2002 Husband commences employment with (omitted) (also known as (omitted) Limited) as (occupation omitted) for NSW.
(omitted) 2002 X born (12 years)
(omitted) 2003 Y born (11 years)
(omitted) 2004 The parties invest an amount of $30,000 in (omitted) Pty Ltd ((omitted) Limited).
(omitted) 2004 Z born (9 years)
4 May, 2005 Mortgage was refinanced to $330,000.00 (increased by $55,000.00) for the husband to buy (omitted) motor vehicle.
1 September, 2005 The first payout for the shares in (omitted) is made. An amount of $461,508 was withdrawn from the company and banked into the account of the Watton Family Trust. The balance of the shares being $800,000 was retained in the company and classified as 724,528 ordinary shares and loan notes of $75,472.00.
23 September, 2005 The Loan over Property N was discharged. The loan balance at the time of $328,403.72 was paid.
October, 2005 Husband gifts to his sister Ms B $10,000. The wife says she was unaware of this gift.
12 May, 2006 The parties settle on the sale of the property at Property N and simultaneously settle on the purchase of the property at Property L. A mortgage was taken out from (omitted) Bank for this purchase of $255,000.00 for the Property L property.
June, 2007 The second return of funds from (omitted) were paid. A capital return was paid out of $793,321.84 into the bank account of the Watton Family Trust. A residual shareholding of 724,528 was retained in the company.
September, 2007 The husband gifts to his sister Ms B $20,000.00. The wife says that she was unaware of this gift.
September, 2008 The husband undertakes a project for his employment which involves the husband travelling to (country omitted) for work.
1 December, 2008 The parties separate under the same roof.
9 March, 2009 The Husband vacates the matrimonial home and moves to rental accommodation.
December, 2009 The husband leaves Australia for employment and moves to (country omitted) in order to prepare for the commencement of his new role in (country omitted) to commence in January, 2010.
January, 2010 The husband was offered and accepted the role of (title omitted) – (country omitted) for (omitted) Limited. The role being based in (country omitted).
6 July, 2010 The third share payout in (omitted) Limited was made. An amount of $2,157,663.06 was paid into the Watton Family Trust for the ordinary shares. An amount of $214,877.52 was paid into the Watton Family Trust for the preferential shares. The husband retained $400,000 in shares within the company. The Respondent takes from the (omitted) Bank account funds totalling $1,367,270.29 and leaves the balance of $1,005,270.29 for the wife to withdraw from the bank account for the Watton Family Trust.
19 October, 2010 Orders made by FM Harman restraining the husband from reducing the funds in (omitted) bank account of the husband below $400,000.00.
June, 2011 Robbery is alleged to have occurred at the place of residence of the Respondent and his partner in (country omitted).
January, 2012 The Respondent’s partner finishes working in (country omitted) and relocates to (country omitted).
10 August, 2012 The husband voluntarily resigns from his employment with (employer omitted) .
10 September, 2012 The husband finishes work with (employer omitted).
January, 2013 The Respondent husband moves back to Australia.
14 January, 2013 The Respondent receives into his (omitted) Bank account $400,000.00 being payout for the final volume of shares held in (omitted) Limited (now known as (omitted)).
February, 2013 The Respondent Husband commenced (studies omitted) doing (qualifications omitted) course.
9 August, 2013 Parties attend mediation for parenting issues.
21 August, 2013 Further mediation date organised for this day but the Respondent husband cancelled the further date for mediation.
28 August, 2013 The Applicant wife’s Application for Review of Child Support Assessment delivered by the Child Support Assessment Agency.
17 September, 2013 Section 60(i) Certificate issues.
24 October, 2013 Respondent Husband files Amended Response seeking Parenting Orders in addition to Property Orders.
25 October, 2013 Respondent Husband files Application in a case seeking Interim Parenting Orders.
12 November, 2013 Interim Parenting Orders made by consent by Judge Harman.
11 December, 2013 Final Application was listed for hearing in the Federal Circuit Court but was vacated as result of the Respondent commencing proceedings for parenting Orders and those final proceedings were vacated on 12 December, 2013.
1 February, 2014 Hearing of the Respondents Application in a case for the Release of $70,000.00 from the funds of $400,000 (plus interest) held in the (omitted) Bank Savings Account solely in the husband’s name and restrained by way of court order.
14 March, 2014 Decision delivered dismissing the Respondent’s Application for release of $70,000.00 costs of the Application being reserved until final hearing.
11 July, 2014 Child Support Agency seize an amount of $7,301.91 from (omitted) Bank account solely in the name of the Respondent to pay arrears of Child Support payments.
I have not incorporated the wife’s chronology of events to suggest a preference for her evidence. It is, however, an extensive and relatively detailed chronology and which highlights the various significant transactions which go to the determination of the property adjustment issue.
In addition to the above chronology, I propose to briefly canvass certain aspects of the evidence of the parties. I do not propose to canvass the evidence in detail. I also do not propose to recite the totality of evidence given by the parties or that which arose from their respective cross-examination. Suffice to say that all evidence identified by the parties has been read and considered and to the extent that material is referred to from the evidence of the parties or either of them it is intended to be illustrative rather than definitive.
Neither party required the Family Report writer for cross-examination and accordingly her evidence is accepted without challenge.
Parenting arrangements
There is little controversy between the parties as to the arrangements which have applied for the care of the children since their respective births.
The wife gives clear evidence as to the arrangements which have applied for the children’s care and I accept that evidence as the best evidence available. The wife’s evidence is in no way at odds with that of the husband. However, what is clear from the evidence of the parties and each of them is that the preponderance of care has been provided to and for the children by the wife since their respective births.
The most significant issue which arises as regards the children’s arrangements is that which follows post separation.
I will deal shortly with the employment history of each of the parties. However, there is a significant overlap between the husband’s employment arrangements and the children’s past care arrangements which is worthy of some brief comment.
The Family Report writer has accurately described Mr Watton’s role within the marriage at paragraph 76 of her Report and in the following terms:
Mr Watton has been the breadwinner and he seems to have assumed this role diligently during the marriage and for some time thereafter. Mr Watton’s concern with providing materially has probably limited his ability and availability to respond emotionally to the needs of his family which he acknowledged were largely met by Ms Smart. From the accounts of the children, it seems Mr Watton was a "fun Dad" whose connection with them was strong but became more eroded as the marriage disintegrated.
The parties agree that their marriage began to “disintegrate” in about 2007 and that for some little time prior to their eventual separation in late 2008 the marriage was strained. A significant contributor to this (although not purposive) was the husband’s work schedule and work arrangements.
Shortly after the parties separated the husband began to work overseas on a substantial basis. Exhibit A2 would suggest, for instance, that in 2010 Mr Watton was absent from Australia for the majority of the year and approaching two thirds of the year.
Prior to separation, significant travel had commenced in connection with the husband’s employment. This had included, at a time when the children were quite young, the parties travelling to (country omitted) for an extended period and Mr Watton travelling at other times from Australia to a variety of countries for varying periods. During each of these periods the children were in the wife’s full-time care.
Since separation the children have, at all times, lived with their mother Ms Smart in the former matrimonial home. There is and has never been any dispute between the parties that Ms Smart will retain the former matrimonial home and included within the orders that will ultimately be made by me will be an order to effect a transfer of Mr Watton’s interest in that property to Ms Smart. That order is agitated by each of the parties and is effectively an order made by consent.
The retention of the home by Ms Smart has been conceded since separation and including within and by reference to the distribution of cash funds between the parties affected post separation (taking account of the then value of the home).
From separation and until the husband’s resignation from his employment with a company which shall be referred to hereinafter as “(employer omitted)”, the husband spent time with the children for portions of some of the school holidays together with occasional weekends.
The husband resigned from his employment with (employer omitted) in early September 2012.
Following resignation from (employer omitted) and in January 2013 Mr Watton returned to Australia and has lived substantially within Australia since that time. That statement is not without some controversy as it is a significant element of Ms Smart’s case that Mr Watton did not at that time and does not at present consider Australia to be his permanent home or place of residence. Indeed, the Court is urged by Ms Smart to find that there is a high probability that Mr Watton will, once these proceedings are concluded, return to overseas employment and residence. That is an issue that will be separately addressed.
After returning to Australia and as is made clear by the Family Report (and as to which neither party significantly cavils) an arrangement for alternate weekend time between the children and their father commenced with weekends commencing on Friday afternoon/evening and concluding on Sunday afternoon/evening.
Periods have also occurred during school holidays and the parties agree that this has “generally” occurred and with one significant exception being the June/July 2014 school holidays when Mr Watton had recently commenced employment, did not have leave and thus did not take the children for a significant period of time leaving them, instead, in the care of Ms Smart.
The arrangements for the children’s financial support are significantly more controversial than their day to day care arrangements.
Ms Smart is highly critical of Mr Watton’s financial provision particularly post-September 2012 when he had resigned from his (employer omitted) employment and had returned to Australia and had taken up full-time study (for an qualifications omitted)) at (school omitted). More recently, Mr Watton has varied his study so as to attend on a part-time basis and has obtained full-time paid employment. As a consequence of Mr Watton’s resignation from employment his income reduced significantly.
There is no issue between the parties that prior to separation Mr Watton was providing significant financial assistance to Ms Smart and the children. This included payment of a cash sum of not less than $2,500 per month together with payment of the children’s private school fees and tuition expenses, private health insurance and other provision from time to time.
Ms Smart alleges (see paragraph 54 of her Affidavit 5 March 2013) that a conversation occurred between she and Mr Watton at separation during which Mr Watton had said to her words to the effect, “I will pay you $2,500.00 per month and I will pay that into your bank account." Ms Smart alleges these payments then continued (together with payments in relation to the children’s education) until August 2011. At that time Ms Smart alleges that Mr Watton said to her: “You have to pay the full (health fund omitted) insurance and to compensate for this I will pay $3084.00 per month which is the maximum amount capped through the Child Support Agency”.
Thereafter it is suggested by Ms Smart that child support arrangements became problematic. Ms Smart suggests that in October and November 2011 she received no payment whatsoever and that in September 2011 she had received a reduced payment.
At about this time it would appear that Ms Smart made application to the Child Support Agency for an administrative assessment of child support. An assessment was issued and payments were collected by the agency including a payment in December 2011 of $5,538.63.
From January until July 2012 regular monthly payments of $2,540.25 were received.
In August 2012 further difficulties arose. The parties are somewhat at odds as to what occurred at this time. However, clearly and as a consequence of Mr Watton’s resignation from his then employment and return to Australia (pursuing study and not being engaged in paid employment) significant changes occurred.
Ms Smart also complains that the previous agreement between she and Mr Watton, (being that Mr Watton would meet all school fees), had been unilaterally varied by Mr Watton in about February 2011.
Ms Smart deposes that Mr Watton informed her in February 2011 (paragraph 57 of her Affidavit 5 March 2013) that “he would not be paying the full amount of the school fees and he would only be contributing half towards the school fees”.
Mr Watton’s evidence with respect to these variations in child support would appear to paint a similar picture if not directly corroborate the evidence of Ms Smart.
Mr Watton gives detailed evidence in his Affidavit 18 April 2013 (commencing at paragraph 79) of the care and child support arrangements which have applied for the children since 2009.
Mr Watton deposes:
Some time in or around April 2009, I received communication from the Child Support Agency advising that a case file had been lodged by Ms Smart and that an assessment of child support payments would be made. The assessment stated at [sic] a payment of $973 be paid monthly to Ms Smart based on the care split at the time.
Mr Watton then indicates that a private agreement was reached between he and Ms Smart for the payments of $2,500 per month together with Mr Watton meeting the children’s school and tuition fees, health insurance and half of their out-of-pocket education and medical related expenses.
Mr Watton then deposes:
In July 2010 a significant amount of monies were received by both Ms Smart and myself through investment income. [Indeed at this time monies had been received and divided between the parties as a consequence of dividends or proceeds received from sale of shares] During the course of the following twelve months I became concerned at the high level of expenditure by Ms Smart on what I believed to be non-essential items…
Mr Watton then indicates that conversations occurred between he and Ms Smart during which he suggested to Ms Smart (paragraph 82), “I will consolidate the payments being made in child support to the amount as stipulated by the Child Support Agency.” Thereafter it is suggested by Mr Watton that he required that Ms Smart takeover “health insurance coverage and other expenses relating to the children” and that Mr Watton advised Ms Smart “I will make the payments scheduled as listed on the Child Support Agency Assessment and ensure that future payments are consistent with this.”
It would appear that neither party was happy with the amount assessed by the agency. Mr Watton deposes that he then undertook an estimate using the Child Support Agency calculator of that which he would be required to pay based upon his previous year’s taxable income. He suggests that he then advised Ms Smart that he would commence payment of the amount he had calculated. Mr Watton then makes clear (paragraph 84) “Ms Smart was unhappy with this arrangement and subsequently contacted the Child Support Agency.” Further calculations were undertaken by the Child Support Agency and further distrust and difficulty arose between the parties. These difficulties were aggravated by Mr Watton’s cessation of employment with (employer omitted) and his corresponding significant reduction in child support payments.
At the time that Mr Watton left his then employment his child support payment reduced to $31.92 per month. This was the amount paid by Mr Watton for the period from at least November 2012 till March/April 2013. There is no doubt that this reduction in child support assessment together with other circumstances then apparent (Mr Watton being engaged in full-time study and not earning significant income and having received, as a consequence of the division of the proceeds of sale of (employer omitted) shares in July 2010 an amount well in excess of $1 million) precipitated the application by Ms Smart for child support relief to be renewed.
Sometime prior to the hearing of the proceedings an amended administrative assessment of child support was issued which required payments by Mr Watton of $2,000 per month.
It is unclear what proportion of the children’s private school fees are presently met by the parties and each of them. That issue has not been canvassed in any detail and on the basis that the plea for child support departure was not pressed.
Ms Smart’s evidence with respect to the children’s school fees would suggest that they were, in the 2013 school year, an amount of $24,340.56 for the three children combined. It is suggested that the fees increase each year (and indeed Ms Smart’s evidence as to the fees for 2011 and 2012 respectively would bear out this assertion) and that the total cost that will be incurred with respect to the children’s school fees and other educational expenses until all three children have completed Year 12 will be in the order of $340,000 in total. That is a significant factor relied upon by Ms Smart as regards section 75(2) adjustments.
The present arrangements for the children’s care are prescribed by the interim orders made by consent and as set out above. Thus the children are presently spending (with the exception of the June/July 2014 school holidays) each alternate weekend Friday to Sunday together with a period of one half of each school holiday period in the care of their father.
Real estate and accommodation
At the commencement of the relationship neither party owned any asset of any considerable net value.
There is relative agreement between the parties, however, as to that which each owned and comprising, in the case of Ms Smart:
a)A unit at Property P. This unit had been purchased by Ms Smart approximately 2 years prior to the relationship and with a mortgage for a significant portion of its purchase price. The parties lived within that accommodation until the eventual sale of that property in or about 2001; and,
b)A motor vehicle together with items of furniture, contents and personalty and modest superannuation entitlements.
At the commencement of the relationship the husband owned a motor vehicle (subject to a line of credit for most if not all of its value), a modest sum of cash (and credit card debt of comparable amount), together with items of personalty and as asserted by Mr Watton, accumulated superannuation entitlements of approximately $40,000.
There is some controversy between the parties as to the arrangements for the servicing of the mortgage covering the Property P property owned in Ms Smart’s name. However nothing of any great moment turns upon that controversy.
The parties lived in the Property P unit until July 2001 when a sale of the property was affected and the net proceeds applied towards the purchase of a property at Property N. From the purchase of that property and until April/May 2006 the parties then lived within that property.
In May 2006 the parties purchased the present matrimonial home at Property L and that property remains occupied by the wife and the three children of the marriage. The home is unencumbered.
During the relationship and in August 2001 (proximate to the purchase of the Property N property) the husband received an inheritance from the estate of his mother. The husband deposes that the inheritance involved his receipt of an amount of $119,666 which is suggested to have been deposited into the joint mortgage account of the parties.
There is some controversy on the evidence (which ultimately need not be determined due to concessions made by the wife) as to whether the husband also received or has ever acquired an interest in a property at Property B, Victoria. The property would appear to be registered in the name of the husband’s sister who resides within that property with the husband’s brother. Issue also arises as to suggested loans made by the husband to his sister and as to which the wife indicates a lack of knowledge of or significant knowledge of.
As indicated no great issue arises regarding the above, save, perhaps an issue of credit in light of the property having been disclosed by the husband as a property in which he holds an interest by his statement of financial circumstances in 2010 (Exhibit A4) and his subsequent disavowal of ownership of that property or any portion thereof.
The wife, through her counsel, put to the Court during submissions that a concession was advanced whereby that property and any portion thereof would not be alleged to be or form part of the pool of property available for distribution between the parties. In light of the evidence available that would appear to be an entirely fair and appropriate concession.
The wife’s employment
At the commencement of the relationship the wife was in paid employment working for (employer omitted). The wife subsequently transferred her employment to a similar role with (employer omitted).
Shortly prior to the birth of the eldest child, X, the wife left paid employment and she has not returned to paid employment since that time.
On the basis of the wife’s absence from paid employment she has not continued to accumulate superannuation or any other employment related benefit during the marriage. The wife has also forgone income and other employment entitlements throughout the marriage to fill the role of full-time homemaker and parent to the children and each of them following their respective births.
It is submitted in the wife’s case that such employment skills as she held (without intending that description to be in any fashion pejorative) are now outdated and of little if any value to her in seeking future employment.
The wife also deposes to experiencing a number of health issues, those difficulties having first manifested themselves in 2004. Whilst no challenge was taken to those portions of the wife’s evidence relating to her health, the existence of those difficulties (whether historical or presently) was not raised as a significant factor in the proceedings nor evidence called by any medical practitioner as to an ongoing disability or impediment to paid employment.
The husband’s employment
At the commencement of the relationship the husband was in paid employment. With the possible exception of a brief period of up to two months the husband has been in paid employment throughout the relationship of the parties.
At the commencement of the relationship the husband was employed by (employer omitted) and subsequently worked for (employer omitted) and a subsidiary of (employer omitted).
In about April 2002 the husband commenced employment with (employer omitted) (also known as (omitted)). The husband continued employment with that entity until the date of separation and, in fact, until his resignation from that employment in the latter part of 2012.
The husband gives detailed evidence as to his employment by (employer omitted) and his movement between various positions (see paragraphs 22 – 31 inclusive of the husband’s Affidavit 18 April 2013). A brief consideration of the husband’s career advancement with (employer omitted) is relevant, important and instructive, particularly, as regards the arguments as to contribution raised in his case.
The husband deposes that when he commenced employment with (employer omitted) that he was engaged as a (title omitted) for New South Wales. The husband then deposes that during late 2008 he was approached to take on the additional role of (title omitted) for (country omitted). As a consequence of this and commencing in mid-September 2008 the husband began to travel overseas for work. The husband deposes that this involved “a cycle of three weeks overseas working and then one week of leave in Sydney”. This project continued for some months.
The husband deposes that in late 2009:
I was offered and accepted the role of (title omitted) – (country omitted) for (country omitted) and commenced this role in January 2010. The role was based in (country omitted) although with responsibility spanning eight countries, a significant amount of international travel was required.
The husband makes clear that whilst it was a difficult decision for him to make in accepting this position (principally because of the significant amount of time that he would then be away from the children) that:
The final decision came down to financial necessity as I was rapidly depleting my cash reserves in the support payments being provided to the Applicant combined with rental and other expenses required to maintain a modest residence for the regular care of the children.
The husband also deposes that corresponding with his accepting this position:
Due to the conditions of my investment within the company, whilst I was not restricted from seeking alternate and higher paying employment, the financial consequences of resigning at the time would have been an actual loss of over $2 million in investment return.
The above statement conflicts somewhat with that alleged by the husband as regards the purchase and acquisition of shares within his employer company or subsidiary or affiliated businesses.
At paragraph 41 of his Affidavit 18 April 2013 Mr Watton deposes:
In September 2003, as part of the (omitted) Team with (employer omitted), I was invited to participate in the (omitted) Shareholding Scheme. The scheme was offered by the private equity owners, (omitted), that had acquired the business from (omitted) and was named (omitted) (“(omitted)"). The scheme was very attractive with an implied minimum six times return on investment without any increase in enterprise value. I had discussed this at length with Ms Smart who was very reluctant and did not want to invest any funds. I said to Ms Smart in words to the effect: “This is a fantastic opportunity to invest and make a very good return. If we invest $100,000, we would make a minimum of $600,000 and that would be if they sold for the same price without any increase in the value of the company." Ms Smart replied in words the effect “I don't want to invest that much, do only half.”
Mr Watton deposes that an application was made by him to invest $50,000 and due to an oversubscription in the share offer only an investment of $30,000 eventuated. Further detail is given regarding the investment and ongoing transactions with respect thereto.
There is no controversy on the evidence that the investment was a substantial success. As a consequence of the investments made within the company (including an additional purchase of shares in 2007 (see paragraph 49 of the Affidavit)) an eventual return to the parties was realised of $2,772,540.
The husband asserts that the efforts that were made by him in accumulating and realising the value of the investment should represent a significant adjustment to him as regards findings of contribution. This is prefaced at least in part upon a submission put by the husband that he had not only demonstrated insight and business acumen in realising the investment (over the initial objection of Ms Smart) but had engaged in a level of diligence and self-sacrifice in pursuing, preserving and protecting the investment by his remaining within employment and pursuing the further, post separation overseas employment in which he was engaged.
What is clear is that the opportunity for investment and purchase of shares arose as a part of the husband’s employment. Whilst most surely the realisation of the investment was a windfall to the parties, I have some difficulty in accepting the husband’s argument that he had solely pursued the investment.
The investment, whilst opposed by Ms Smart (whom in cross-examination conceded that she had been reticent about investing such a large sum particularly that initially proposed, namely, $100,000) involved the application of joint funds and was an opportunity presented to the husband as a part of or in connection with his employment.
Post separation transactions
As a consequence of the husband’s resignation from his employment with (employer omitted) (as to which I am invited by Ms Smart to be critical of but which criticism I do not accept as valid) the investment in (employer omitted) was realised. During the relationship a number of returns were also made to the parties by way of dividend from the investments that had been made. These clearly provided significant financial benefit to the parties.
At or immediately following the husband’s resignation from (employer omitted) the parties received, on about 6 July 2010, two separate funds namely $2,157,663.06 and $214,877.52. In addition to these amounts (totalling $2,372,540.58) an amount of $400,000 was also retained within the company to purchase shares in a new company (the company having been acquired by a further business). Those funds were ultimately released to the husband and formed the majority or totality of that which was then invested in the (omitted) bank account, the subject of restraint or “freezing order”. Thus, the total received by the parties from the sale of shares and payment out of the parties’ entitlements with respect to (employer omitted) was the total sum of $2,772,540.
Following receipt of the first set of payments (totalling $2,372,540) Mr Watton effected a division of those funds equally between he and Ms Smart. An adjustment was made by Mr Watton to take into account the then suggested value of the former matrimonial home ($762,000) and such that Ms Smart was paid by Mr Watton (via the Watton Family Trust) an amount of $1,005,270.29. Mr Watton received the remaining 50% of the proceeds of sale together with an adjustment for one half of the suggested value of the matrimonial home (being an amount of $1,367,270).
The evidence that each party has led regarding their respective dealings with the funds that they have received is far from satisfactory.
The wife has given evidence (both through her affidavit material and in cross-examination) that her funds have been significantly expended in meeting:
a)Living expenses including the children’s school fees;
b)Legal costs (although the amount expended is not quantified);
c)Purchase of household items;
d)Retained funds which remain in the wife’s bank account/s $281,556.
The husband’s evidence is far less clear than the wife’s.
By the time that these proceedings reached hearing in December 2013 it was the husband’s case that all funds that he had received had been expended by him. In addition, the husband alleged that he had, at that time (and at the date of hearing 18 August 2014), significant credit card debts ($70,000–$80,000) and retained no significant asset.
Clearly, the husband had purchased a number of motor vehicles post separation and had disposed of the two vehicles which he had owned at separation (a (omitted vehicle) and Mitsubishi, respectively). However, the level of detail provided by the husband to account for his expenditure of funds is so inadequate that no finding could possibly be made as to how or if those funds have been dealt with or disposed of.
Having regard to the above and whilst the Full Court has been clear that the preferred course would ordinarily be to value the assets of the parties at the date of hearing (indeed the High Court has been clear in Stanford & Stanford [2012] HCA 52 that the fundamental starting point is and should be to ascertain the legal and equitable interests of the parties in property at the date of hearing). The parties sensibly conceded and agreed that the pool could only be properly and effectively calculated by reference to that which the parties and each of them had received from a distribution of funds. On that basis I propose, when turning to the legislative pathway, to ascertain the pool of property by reference to those distributions and that which remains held and invested in the (omitted) Bank account.
The Family Report
A number of portions of the Family Report give some particular insight into the children’s world.
The eldest of the children, X, is described (paragraph 50) in the following terms:
X said that he remembers feeling “sad” and crying when his parents separated and added that he continues to feel that sadness. He commented that what he missed most was doing activities with his father who had moved to many countries overseas. He stated that his father sometimes stayed in touch and called on the telephone but did not visit often. X indicated that his father came to visit him approximately once per month and when he came they stayed with him at a hotel. X said that he fell quote “happy” when his father returned to Australia to live as he hoped he and siblings would then be able to do things with him more often.
At paragraph 54 the following is recited:
X said that he often wishes his father would come back and they could live as a family again but added that he realises that this is never likely to happen. He began to sob quietly at this point.
The above comments and observations are made by and with respect to X notwithstanding the reality and X’s knowledge of same that each of his parents have re-partnered.
The reality for X is that his father also continues to travel overseas regularly (albeit not with the same frequency as previously or for the same periods of time) to continue and practise his relationship with his fiancée (presently resident in (country omitted) and suggested to be a dual (country omitted)/(country omitted) resident).
Finally of X the Family Report writer states:
X stated that he could probably tolerate a bit more time with his father. He said that he would like to return later on Sundays or even stay until the Monday on alternate weekends as presently they do not get to do everything they would like on Sundays. He also stated that he would like to go and do some activities with his father during the week.
Y is described by the report writer in the following terms:
Y said that she recalls the family living together. She commented that it was “better" because both parents were in the same house and she had a Mum and Dad to help her. Y said that she remembers feeling "upset" when her parents separated because she used to do special and fun things including craft and swimming with her father. She described herself as being her father's "little girl" and remembered how her father carried her around. She also said that she recalls her father taking her and her siblings to the park and feeding the animals in the back yard [sic].
At paragraph 61 the following is reported:
Y said that she still really likes her father but sometimes she feels angry with him and does not want to see him. She referred to how her father "left us when we were really little, and it felt like he didn't want us any more". Y commented that it was a lot harder when her father was overseas because it seemed like they only had one parent. She stated that she wishes her parents were together and happy with each other. Y said that inside she knows that both parents love her but on the outside she is sometimes not sure about her father.
What is clear from the balance of the evidence and that set out in the Family Report is that the children and Y in particular might have some basis to describe the tensions they experience as regards their father and created by his past absence (or significant absence) from their lives. These difficulties are no doubt compounded by that which is observed by the report writer that the parents have, wittingly or unwittingly, engaged their children in their dispute, discussed or allowed the children to overhear discussions regarding matters which are unhelpful and inappropriate for them to hear as children, and that the children are fully cognisant of the distrust and dislike the parents hold for each other at this time.
The discussion of the interview with Y concludes with the following statement (paragraph 63):
Y said that she yearns for some "him and me time" with her father as her brother seems to have a greater say in what they do when they are with him. She stated that wishes her father [sic] would spend a bit more time with her and her siblings. She criticised her father for not thinking about them and of “buying stuff for himself like motor bikes and new cars are not buying anything for us". Y commented that her father says he doesn't have money to buy things but is always buying new phones for himself. She said that she would really appreciate if her father could sit down with her and do some craft activities will go somewhere special such as a theme park together.
The Report discusses Z in similar terms. Z, as the youngest of the children, is described as:
… he does not have many memories of when the family lived together. He spoke about both of his parents and living in each household. He said that his mother is "nice, awesome and generous" and "the best Mum in the world". He said that his father is "sometimes nice and fun and sometimes mean". He cited, as an example of his father being mean, as him not allowing them to send text messages to their mother or expecting to see the messages they send when they are in his care.
Z is otherwise described as enjoying the time that he spends with each of his parents, although somewhat aggrieved that “…he did not [sic] get to sleep in past 8.30am when he is with his father”.
The children are observed interacting with each of their parents and with the mother’s new partner, Mr H. Nothing unusual or untoward was observed in such interactions or any dramatic disparity in the children’s interactions, intimacy or attachment.
The Family Report writer opines that the interim consent orders (providing for alternate weekend time) have served the children’s needs and has been beneficial to them. The Family Report writer also observed that Mr Watton’s application (as framed in his amended response but not ultimately pressed at hearing) for equal time was, at best, somewhat ill-conceived.
Concerningly, the Family Report writer observes (paragraph 73):
As the litigation is continued, Mr Watton and Ms Smart have apparently become more and more mistrustful and resentful towards each other and some events have occurred that have left them feeling extremely hurt. They have invested significant emotional and financial resources into the litigation.
The above gives some real credence to that spoken of by the High Court in authorities such as, Haset Sali v SPC Ltd [1993] HCA 47 and represents a significant cost to the parents and the children being a substantial and unfortunate undermining of not only their financial and emotional resources but their parental alliance. Those circumstances must, thus, be taken into account in dealing with and determining the parenting dispute between the parents.
The Family Report writer sagely offers the following at paragraph 79:
Each of the children has strengths but also some vulnerabilities. X and Y, in particular, continue to harbour considerable sadness over the loss of their father and X yearns the family unit to be re-instated. Y misses the special role she had in her father's life. Given their ages at the time of separation, X and Y may have egocentrically believed that they contributed in some way to the separation. Z seems to have much less of a recollection of the family living together and did not share his older siblings’ sadness over the loss of the family life they enjoyed. The parties would be well advised to heed the words of Y who has requested that her parents be more civil to each other.
One becomes used to hearing the wisdom of children as expressed to their parents and, regrettably, unheeded by them. No doubt at least in part as a reflection of Y’s wisdom, the Family Report writer has offered (paragraph 86):
Unless the parties are able to demonstrate and adopt a more child focused communication style and respond sensitively and responsively in a collaborative way to the children's views as they navigate through their adolescence, they may find that the children will feel trapped by the communication impasse between them and will find it difficult to maintain the positive relationships they currently have with each parent.
Based upon this, no doubt, the Family Report writer has recommended (at paragraph 87) “that the parties work on improving their communication so that they can share joint parental responsibility.”
It is to be noted that the parties and each of them propose an order for equal shared parental responsibility and thus the work, which the Family Report writer has identified, will be required to give real life and meaning to the operation of such equal shared parental responsibility and especially if the parties are to operate, as section 65DAC of the Family Law Act 1975 envisages, by consulting each other and making a genuine effort to reach joint and consensual decisions for their children’s future.
With respect to the children’s views the following is offered (paragraph 83):
There were no indications in this assessment that the children are unsafe in their father's household or do not enjoy many aspects of the time the currently spend with him. There are suggestions from this assessment that the children want, at the very least, the current arrangements to continue and would even like marginally more time with him. An increase in the time the children spend with their father by at least one overnight per fortnight would be indicated perhaps overnight on the Sunday at the weekend they spend with him. It might also be beneficial for the children to spend time on the alternate week if not overnight for the afternoon/evening with their father. Mr Watton may even want to consider spending some one-on-one time with each child.
Ultimately, the Family Report writer recommends that the children continue to live with their mother and spend:
…substantial time with their father which would include alternate weekends from Friday afternoon to Monday morning and for at least one afternoon/evening if not overnight in the other week. It is also recommended that the children spend special occasions and one half of school holidays with their father.
Somewhat optimistically the Family Report writer concludes her recommendations with “it is recommended that the parties refrain from exposing the children from denigrating conversations about the other” (at paragraph 91).
Legislative pathway
Parenting arrangements
I must commence with a consideration of the objects and principles in section 60B of the Act and which I incorporated herein.
Objects of Part and principles underlying it
(1) The objects of this Part are to ensure that the best interests of children are met by:
(a) ensuring that children have the benefit of both of their parents having a meaningful involvement in their lives, to the maximum extent consistent with the best interests of the child; and
(b) protecting children from physical or psychological harm from being subjected to, or exposed to, abuse, neglect or family violence; and
(c) ensuring that children receive adequate and proper parenting to help them achieve their full potential; and
(d) ensuring that parents fulfil their duties, and meet their responsibilities, concerning the care, welfare and development of their children.
(2) The principles underlying these objects are that (except when it is or would be contrary to a child’s best interests):
(a) children have the right to know and be cared for by both their parents, regardless of whether their parents are married, separated, have never married or have never lived together; and
(b) children have a right to spend time on a regular basis with, and communicate on a regular basis with, both their parents and other people significant to their care, welfare and development (such as grandparents and other relatives); and
(c) parents jointly share duties and responsibilities concerning the care, welfare and development of their children; and
(d) parents should agree about the future parenting of their children; and
(e) children have a right to enjoy their culture (including the right to enjoy that culture with other people who share that culture).
The objects and principles do not form part of the substantive law but are designed to inform the application of the relevant provisions and, in particular, section 60CC and incorporating therein section 65DAA(5) of the Act.
The objects contained within section 60B(1) mandate that the Court make orders that will, as far as practicable and to the maximum extent consistent with the children’s best interests, allow each parent to have a meaningful involvement in the children’s lives and ensure that children are protected from physical or psychological harm as a consequence of exposure to family violence, neglect or abuse.
The objects are in remarkably similar terms to the primary considerations in section 60CC(2) of the Act.
Refreshingly, the parties do not raise any allegation that would invoke the operation of either section 60CC(2)(b) or give rise to any concern as to the children’s exposure to harm.
Mr Watton and Ms Smart are both good parents. Irrespective of the view that they have come to form of the other (it being abundantly clear from the evidence that there is no love lost between them at this point and to the extent that Mr Watton is suggested by the children to have made comments to them or in their presence as to not liking Ms Smart and, further, to the extent that Mr Watton advances criticism of Ms Smart for her attitude towards him and for making somewhat abusive contact with his fiancée) these parties remain good parents who love their children (albeit that they have expressed that love differently) and who have the children’s best interests at heart.
Too many children who are the subject of proceedings before this Court are not in such a fortunate position as X, Y and Z. These three children have two abundantly decent, caring and competent parents. They also have the benefit of each parent’s partner, extended family, settled arrangements as to their schooling and other activities and an abundantly supportive and appropriate group of peers.
Unlike so many children whose interests are determined by this Court these children are not exposed to significant family violence, neglect or abuse. They are, however, fully aware of the attitude that their parents have towards each other and the distrust and dislike that is manifest between them. They are, to a large extent, matters that can and should be addressed by these parents through simply recognising the benefit to these children which the other parent inherently represents.
Whilst the parents and each of them may very well have a real and valid basis for being wholeheartedly disappointed and disenchanted with the other as a partner there is no realistic or objective basis upon which either could be critical of the other as a parent.
Whilst Mr Watton has been absent from the children’s lives for significant periods of time this has not been through an active or willing choice to do so. It has been a necessary consequence and corollary of his pursuit of employment and the financial betterment of the family whether the family has been intact or separated.
Ms Smart has at all times (and as was conceded in submissions put on behalf of Mr Watton), been an active, loving and supportive mother to these children.
As a consequence of Mr Watton’s significant absences (particularly those which arose post separation and during 2010 and 2011) Ms Smart has played the role of both parents.
It is to be noted that when Mr Watton first commenced overseas employment the children were much younger and aged six, five and two respectively. Even though Mr Watton’s employment in (country omitted) (involving three weeks in (country omitted) and one week back in Australia) was for a limited duration this did devolve to Ms Smart significant and no doubt stressful care of three very young children and occurring at a time, by reference to Ms Smart’s evidence, when her emotional fragility was at its highest.
The impact upon the children’s relationship with their father, of Mr Watton’s absence overseas is, perhaps, not fully appreciated by Mr Watton. To the extent that it is fully appreciated by Ms Smart it is, unfortunately, with some relish, and is used as the basis of significant criticism by her of Mr Watton and thus opposition to any substantial increase in the children’s time with their father beyond that which is presently occurring
The parties’ proposals
Ms Smart, for her part, proposes that the children’s future time with their father would not significantly change from that contained within the interim orders presently in force.
Ms Smart proposes that alternate weekend time from Friday afternoon/evening until Sunday afternoon/evening continue during school term time. Ms Smart resists any extension to that weekend period (such as to the commencement of school Monday as Mr Watton proposes) or any mid-week time.
Ms Smart proposes that time occur for one half of each short New South Wales school holiday period and that time occur for one half of the Christmas school holidays, but in one week periods rather than two week periods or one block equal to one half of the period as Mr Watton proposes.
Beyond the above matters, Ms Smart substantially proposes a continuation of the present interim orders. Ms Smart does, however, seek an additional order in the following terms:
For the purpose of the school holidays the father is only to spend time with the children during the school holiday periods as provided for in these orders if the father is to have leave from work to enable him to spend time with the children during the school holiday periods. In the event that the father is unable to have leave from work during the allocated time with the children, the children shall remain in the care of the mother.
Mr Watton, for his part, proposes modest interference with the present interim arrangements.
At the conclusion of the case each party tendered a Minute of Orders proposed by them and these have been marked as exhibits. The Minute of Orders proposed by Mr Watton (Exhibit R1) would seek a continuation of the interim arrangements and subject to:
a)Weekend time extending to the commencement of school Monday (extending to Tuesday if there is a public holiday on Monday).
b)Time occurring in each alternate week from 5pm Wednesday until the commencement of school the following day (Thursday).
c)The rescission of interim orders which deal with time for the period Christmas Eve to Boxing Day.
On the basis of the above proposals the ambit of the controversy between the parties as regards parenting orders is modest. However, they are not matters which the parties have been able to compromise and resolve and thus must be determined.
On the basis that direct parallels are drawn between the facts and circumstances of the parties in Kane & Kane [2013] and those of Mr Watton and Ms Smart it is, again instructive, to turn to Mr Watton’s evidence as regards the opportunity for acquisition of shares which have resulted in such a generous, indeed, extraordinary return to these parties.
It is to be remembered that the husband, Mr Watton, seeks to submit that his “expertise and knowledge” in sourcing and choosing to invest is that which has given rise to the return to the parties. Based on Mr Watton’s evidence I simply do not accept that this is so.
Mr Watton’s evidence, it is to be remembered, and as set out above, is that the share purchase was made available to the parties as part of Mr Watton’s employment. It was not a specifically sourced investment that involved “research and ingenuity”. An invitation to invest was made to Mr Watton (indeed I am satisfied to the parties jointly as the ultimate decision to invest was joint) to apply to obtain shares through and in the company.
Mr Watton’s evidence, commencing at paragraph 41 of his Affidavit affirmed 18 April 2013, puts the position in exactly those terms.
Certainly there was some reluctance on the part of Ms Smart to invest (and particularly to invest the sum which Mr Watton had initially proposed which, in hindsight, would appear to have been abundantly sensible). However, the ultimate decision to invest was joint. The funds that were invested were joint.
To the extent that it is suggested that special skill and ingenuity (without seeking to engage in any debate as to the status of “special contributions” post Kane & Kane [2013] and Murphy J’s decision in Smith & Fields [2012]) were involved on the part of Mr Watton in the investment, that simply cannot be supported by Mr Watton’s own evidence. The investment was, as it were, an employment related share acquisition which opportunity arose not through studious effort on the part of Mr Watton but simply his employment relationship with (employer omitted).
To some extent the abundant and magnificent return the parties received on their investment was fortuitous, almost “a gift from the gods” (or perhaps more correctly that secular god of market strength and return) rather than through any active endeavour by either party.
Mr Watton did not undertake any significant research or any activity of the nature referred to by Austin J in the first instance decision in Kane & Kane [2011].
Counsel for Mr Watton seeks to make out and through adopting the language of Austin J’s judgment asserts that “…The acquisition of [the] shares was no fluke.” Indeed it was not. The acquisition of the shares was as a consequence of Mr Watton’s employment with a company which made a generous offer to its employees of which he was one and in which employment he was supported by his wife Ms Smart.
Austin J at paragraph 137 of the first instance decision refers to:
The husband’s diligent research of that corporation and his decision to invest the parties’ funds in it was an inspired investment decision, manifesting considerable expertise. His decision is all the more remarkable given that he knew he was making that investment decision without the support of the wife.
There are two distinctions to be drawn between the facts and circumstances of this case and those considered by Austin J. Firstly, the husband did not engage in “diligent research” his decision to invest was not “an inspired investment decision”. It was most assuredly serendipitous and felicitous. However, it arose from his employment and being employment which he had entered and maintained with the full support (indeed corresponding homemaker and parent contributions) of Ms Smart. The invitation to invest was held out to Mr Watton rather than Mr Watton pursuing any particular course of his own volition.
Secondly and to the extent that a parallel is drawn as regards Ms Smart’s “lack of support” for the investment decision, I do not accept that the parallel is valid or relevant. Ms Smart was clear (both in her affidavit evidence and in cross-examination) that she was concerned by the risk of the investment and did not wish to lose, potentially, $100,000. In hindsight clearly Ms Smart’s trepidation was misplaced. However neither she nor Mr Watton could know that at the time.
To the extent that Ms Smart expressed a voice in opposition to such a substantial investment (the initial proposal to invest $100,000), the investment ultimately proceeded with the consent and agreement of both parties and using the joint funds of the parties. It is not the case that Ms Smart actively opposed the transaction or raised any significant issue in opposition.
Whilst the investment has clearly yielded fantastic results for the parties I am satisfied that the results that the parties have each received was through their joint investment.
It is additionally submitted by the husband that his engagement in substantial overseas employment was to secure their investment within the company. That could only be made out, if made out at all, on the basis of Mr Watton’s assertion that he was aware that if he had resigned from his employment at the date of separation that there would, at least potentially (though the basis upon which the assertion is raised in his evidence is not made clear) have been a significant loss of investment. However that circumstance would have applied whether the parties remained together or were separated.
I do not accept that the decision made by Mr Watton to continue in his employment or to receive the promotion which he was offered was altruistic or driven or influenced by his desire to maintain the investment. Indeed, in submissions it was suggested on Mr Watton’s part, that had he not taken up the far more substantial overseas employment in which he engaged post separation that the investment would have been lost and on the basis that he needed to be engaged with the company to somehow manage or control the company’s affairs to ensure that loss was not visited upon the parties. The evidence does not support such a submission.
What the evidence does support is that in or about June 2007 the business was recapitalised and with the result that a capital return of some significance was generated for the parties (it would appear $793,321). Following this, further events outside of the control of either party influenced the return on investment principally the acquisition of the company by a (country omitted) company ((omitted)).
As regards the relevance to contribution of the “requirement” or “necessity” for Mr Watton to travel overseas and thus distance himself, as I accept would have been difficult for him, from the children’s lives for significant periods, this is, again, not made out on Mr Watton’s own evidence.
Mr Watton makes clear in his Affidavit (paragraph 24 of the Affidavit affirmed 18 April 2013) that:
In late 2009, I was offered and accepted the role of (title omitted) - (country omitted) for (employer omitted) and commenced this role in January 2010… The decision to take this role was very difficult for me as it meant spending a significant amount of time away from my children, although the final decision came down to financial necessity as I was rapidly depleting my cash reserves in the support payments being provided to the Applicant combined with rental and other expenses required to maintain a modest residence for the regular care of the children. Due to the conditions of my investment within the company, whilst I was not restricted from seeking alternate and higher paying employment, the financial consequences of resigning at the time would have been an actual loss of over $2,000,000 in investment return.
In purported support of this proposition a document is annexed to the Affidavit (annexure A). That document would not appear to support the proposition raised by Mr Watton. Some submission was put as to Mr Watton being categorised as a “good leaver” or “a bad leaver” and this impacting upon the price ultimately paid out with respect to shares held. However, resignation at that point in time or failure to accept what is clearly described as an offer of promotion is not substantiated by the document nor was any attempt made to explain how it would be so.
I thus reject the above submissions as supporting the contribution findings urged by Mr Watton through his counsel.
To the extent that there may be any merit to the submissions I am conscious that to place significant weight upon them and so as to favour Mr Watton as regards contribution would be to, correspondingly, devalue if not disregard the significant and dramatically disproportionate homemaker contributions made by Ms Smart.
As was raised with Mr Watton’s counsel during submissions and ultimately conceded by counsel, the value of a parent’s contribution to the care, nurturing and upbringing of children is, as was ultimately conceded, “immeasurable”.
Our society has, over millennia, been arranged such that the care of children has devolved to a broad network of people whether an extended family unit or “the village”. In more recent times this extended family and community responsibility for children has altered and devolved to a “nuclear family” model. Many other perfectly valid structures exist but, until recently, the nuclear family has been most common and is certainly that preferred and implemented by these parties.
The nuclear family comprises two involved parents, whether one as “homemaker” and one “bread winner” (the structure Mr Watton and Ms Smart adopted) or, in more recent times, both as breadwinners and part time homemakers with paid assistance in the nature of school, before and after school and vacation care and child care.
Ms Smart has, for significant periods during her marriage to Mr Watton and following separation, been, for all intents and purposes, a single parent in the most real and tangible sense. She has not only met the role that each parent might have played in the children’s life but has also dealt with the sequelae of Mr Watton’s absence i.e. children who miss their father, crave him, are distressed and are parented through that solely by her.
One could but need not engage in a philosophical debate of feminist jurisprudence to acknowledge, in Ms Smart’s circumstances, the substantial and significant contribution she has made as a homemaker and parent and thus a contribution to her family and her community. The contribution is substantial and self-less.
In addition, Ms Smart has contributed through her support of Mr Watton in furthering his employment opportunities and his ongoing employment. That contribution must also be afforded some value and balanced against all other contributions.
With respect to the parties’ contributions generally the Court is urged by Ms Smart’s counsel to find that Ms Smart’s contributions, post separation, have substantially outweighed those of Mr Watton. There is some attraction to that submission.
Overall I am satisfied that the parties’ contributions should be seen and accepted as being equal. That would allow for any relevant adjustments as between the initial contributions that each party has made (even though no submission of any force was put by either party on that basis) as well as any adjustment which might validly be urged agitated by either party as regards the contributions they each assert, particularly, post separation and with respect to the fantastic yield on investment from the (employer omitted) share investment.
If I were to accept the argument of Mr Watton that his contribution through the (employer omitted) investment should be judged as favourable to him, I am satisfied that it would and should be offset against the submissions put by Ms Smart as regards her post separation contribution.
These parties have been separated for some five years and for most of that period Ms Smart has been left to perform virtually all homemaking and parenting contributions and provide all support, nurturing and maintenance for the three children of the marriage. This includes her increased contribution both during the significant periods that Mr Watton was absent (particularly 2010 and 2011).
Ms Smart has provided far greater financial support for the children since separation and particularly the periods when Mr Watton’s financial contribution has been diminished or virtually non-existent (being the net effect of the period of some months when Mr Watton’s child support contribution was $31 per month). That contribution is described as “virtually non-existent” as the expenses for these children are significant, particularly, noting the undisputed evidence that their school fees alone exceed $25,000 per annum at present.
Conclusion reached on contributions
I am satisfied that the parties have contributed equally and thus their contributions to the asset pool as defined above will be assessed as 50% each.
Adjustments to section 75(2)
Mr Watton concedes that an adjustment of 5% should be made in favour of Ms Smart. The basis upon which that concession is made is not expressly spelt out. However, it is a concession made.
Ms Smart urges for an adjustment in her favour of 15%. As was remarked to the parties at various points during the hearing I am conscious that an adjustment of 15% in Ms Smart’s favour would produce a disparity of 30% between the parties’ entitlements (noting that the 15% adjustment in Ms Smart’s favour corresponds with a 15% reduction in the entitlements of Mr Watton and thus a 30% disparity in that which they would receive and/or retain).
I propose to touch briefly upon the parties’ submissions with respect to section 75(2) of the Act and each of the factors set out within that section which must be entertained.
Age and state of health of each party
The parties are of a similar age (Mr Watton being slightly older than Ms Smart). Each of the parties is in the prime of their life.
Ms Smart leads evidence as to some health difficulties that she has faced both historically and presently and principally relating to anxiety and depression. The form of that evidence, whilst not challenged, is not such that I am satisfied that any significant weight or reliance could be placed upon it.
This factor is accordingly somewhat neutral.
Income, property and financial resources of each party and capacity for gainful employment
Each of these parties has, in July 2010, received over $1 million. Other than addressing a tax liability (and in the case of Ms Smart a modest repayment to Centrelink) there is no specific particularisation of what has been done with those funds.
Notwithstanding the somewhat patronising concern raised by Mr Watton in his evidence that he had “become concerned” as to Ms Smart’s suggested extravagant and frivolous expenditure and thus sought to change his child support contribution (leaving aside how that might have been considered an appropriate or helpful response), Ms Smart has at least retained some significant portion of those funds being a little under $300,000. This is so notwithstanding that she has borne the brunt of the children’s expenses, including, their significant private school fees which she has been forced to meet from capital. Mr Watton has not made similar or equal or consistent contribution to the children’s expenses.
In the same period, Mr Watton, (who received over $1 million net after payment of tax), suggests that he retains not one cent of those monies. The absence of explanation for that position is breathtaking and has led to the position adopted with the consent of the parties of assessing the pool based on that which each received rather than facing a fruitless and unnecessary exercise of seeking to analyse the parties’ evidence to obtain some clarity of accounting.
Neither of the parties is thus in a particularly healthy financial position. Ms Smart’s present financial position is superior in that she retains the use and occupation of the unencumbered former matrimonial home (and there is no issue that that property will become hers and that she will become the sole registered proprietor) together with some savings.
Each party is capable of obtaining gainful employment. However what is clear is that Ms Smart has been absent paid employment for over 12 years and has, during that period, devoted herself to the role of full-time homemaker and parent. In those circumstances Ms Smart is left without the employment related benefits that Mr Watton has been able to accrue extending beyond superannuation to continuity of employment, recent and relevant work experience and up-to-date employment skills. These are all things of which Ms Smart has been deprived as a consequence of the relationship and her role as homemaker and parent, a role which was taken up by her willingly and gleefully and as a joint decision of these parties whilst married.
Ms Smart has been somewhat disadvantaged by that joint decision whereas Mr Watton has been somewhat benefited by his ability to continue in employment and Ms Smart’s support of him in that endeavour.
If Ms Smart were to return to employment she would likely require some degree of retraining or bringing up to date of skills. Even in those circumstances her capacity for employment, having regard to her full-time care of three school-aged children, and her likely income is dramatically less than those of Mr Watton.
Whether either party has the care or control of a child of the marriage who is under the age of 18 years
Clearly Ms Smart has in the past and will continue in the future to have the care of the three children of the marriage under the age of 18 years. Ms Smart will continue to fill that role for some little time and with consequential impact upon her capacity for paid employment and participation therein, as well as a corresponding increase in the expense base of her household.
There is some uncertainty, based on past experience and the suggestion raised in Ms Smart’s case that Mr Watton will (and Ms Smart suggests in all probability and once these proceedings are concluded will) again seek to take up overseas employment.
Overseas employment if pursued will likely impact the level of child support and financial assistance that will be provided by Mr Watton for the children. However, at present, a sufficient and significant level of financial assistance is provided
I am not satisfied that the finding urged upon me by counsel for the wife, namely, that there is a “high probability” that the husband will relocate overseas is open to me. There is, however, a possibility that this might be so.
These factors again favour an adjustment in favour of Ms Smart.
Commitments of each party to enable them to support themselves, any child or any other person
Each of the parties has an obligation to support the children of the relationship and need to support themselves.
Mr Watton is presently in full-time paid employment and earns a comfortable middle-class income.
Ms Smart is not presently in paid employment and earns a modest income from interest earnt upon the funds that she retains (having been less extravagant or more frugal in her expenditure than Mr Watton) as well as receipt of child support. Ms Smart also receives a modest family tax benefit payment of $97 per week.
Each of the parties has re-partnered. Ms Smart lives full-time with her partner Mr H who is described as being employed as a (occupation omitted) and earning an income of $1,250 per week. Even with some contribution by Mr H towards Ms Smart’s expenses and those of the three children and their household generally, clearly Ms Smart’s financial position is far more disadvantageous than Mr Watton’s.
Mr Watton has also re-partnered. Mr Watton’s partner has not given evidence in the proceedings. Nothing is known of Mr Watton’s partner including her financial circumstances. All that is known is that she has children in her care and those children reside with her, presently, in the (country omitted). The father of those children is deceased.
Neither party has any obligation, legal or moral, to support anyone other than the children of the marriage.
I accept that Ms Smart presently meets the majority of the children’s expenses and that the amount paid by Mr Watton, whilst significant ($462 per week) is a contribution to those costs and expenses and which falls well short of one half or greater of the expenses. Thus I accept that Ms Smart will, in all probability, continue to meet the majority of the children’s expenses now and into the future and until the children and of each of them obtain their majority.
This factor favours Ms Smart and an adjustment in her favour.
The responsibilities of either party to support any other person
This has been addressed above.
The eligibility of either party to receive a pension, allowance or benefit from the Commonwealth or any superannuation fund
Neither party is receiving any income or pension from superannuation or other such sources.
Ms Smart is receiving a modest family tax benefit from the Department of Human Services of $97 per week. This does not make any significant contribution towards household expenses incurred by Ms Smart’s three children.
I am satisfied that this factor is neutral.
The standard of living of the parties
Ms Smart will retain, by consent, the unencumbered former matrimonial home in which she presently resides with the children. This will provide her with a comfortable home with which both she and the children are familiar.
Mr Watton is living in rental accommodation and suggests, through his evidence, that he is experiencing a significant level of financial distress and pressure. Mr Watton has no savings available to him and is dependent upon his income from week to week to meet his expenses. Mr Watton has received some level of assistance (whether through a commercial agreement between himself and his partner regarding purchase by her from him of a motor vehicle or as a matter of largess on her part). Notwithstanding this Mr Watton has incurred (and Mr Watton’s partner has contributed to) significant credit card liabilities of $70,000-$80,000 accrued since the distribution of the proceeds of sale of the (employer omitted) shares.
The asset which remains available to effect a division of property between the parties is the sum of $400,000 plus interest contained within the (omitted) Bank account. Mr Watton seeks to retain it in its entirety as does Ms Smart. Those funds, if released to Mr Watton, would enable him to discharge all of his debts and liabilities and leave him with a small deposit towards the purchase of accommodation should he so desire.
Nothing is known of the financial circumstances of Mr Watton’s partner although Mr Watton gives evidence (admissible as first-hand hearsay and as an exception to the hearsay rule) that his partner’s father has offered to purchase her a home in Australia. Leaving aside the contention raised by Ms Smart that Mr Watton’s partner is not or may well not be entitled to relocate and reside in Australia without specific immigration application this would potentially ameliorate the financial distress suggested by Mr Watton.
I am also conscious that whilst Mr Watton’s financial position is presently, on his evidence and which I accept, parlous; he has failed to provide any explanation as to how his circumstances have come to the point they have. Three years ago Mr Watton received funds of over $1million net. He suggests that he spent all of this and yet provided no particularisation of the bases of this other than to assert that he has met living expenses particularly whilst he has not been employed and he has purchased and subsequently sold two motor vehicles (significantly valuable motor vehicles it is to be noted).
Having regard to all of the above I am satisfied that the parties are able to maintain a standard of living through their capital or future income or resources such as may be available to them through their employment and their respective partners and irrespective of such orders as made by the Court.
Neither party seeks payment of spouse maintenance. However, to the extent that the this factor might be considered relevant it is also to be noted that neither party requires education or retraining to return to paid employment or continue in paid employment.
For Ms Smart’s part it is not proposed that she would undertake a course of training nor in the foreseeable future return to paid employment.
For Mr Watton’s part he is presently undertaking an (course omitted). However, that is not a course of training that he need undertake to enable him to obtain employment. It may assist him in obtaining better or more stable employment or better paid employment within Australia.
I am satisfied this factor is neutral.
Impact on creditors
I am not satisfied that there would be an impact upon creditors as a consequence of any order that I might make whether as urged by Mr Watton or by Ms Smart.
Mr Watton certainly pleads that he requires the (omitted) Bank fund or a significant portion of it to render himself debt free. However, there is no reasonable basis nor explanation before the Court as to how Mr Watton has found himself in his present financial position in light of the significant funds that have come to him in recent times being funds of over $1 million net and which, in his evidence, have been wholly expended (and significant further credit card debt incurred) in the space of three years representing expenditure of over $350,000 per annum.
The extent to which each party has contributed to the income, property, financial resources or earning capacity of the other
On the basis of the above evidence and Ms Smart’s fulfilment of the role of homemaker and parent since 2001/02 clearly this is not a relevant consideration as regards Ms Smart’s earning capacity. Indeed the impact of the relationship has been deleterious as regards her earning capacity.
Ms Smart might be suggested to have contributed to the present income and earning capacity of Mr Watton through her support of him throughout the relationship including through her support through willingly undertaking the substantial task of parenting the children of the marriage with little or no assistance whilst Mr Watton was overseas pursuing employment, increasing his employability and his potential earnings.
This factor would have some limited support for an adjustment in favour of Ms Smart.
The duration of the marriage and the extent to which it has affected the earning capacity of each party
As observed above the parties’ relationship has subsisted for a period from 1996 until late 2008 (a period of 12-13 years). More importantly and more relevantly Ms Smart’s absence from the workforce to fulfil the role, as a joint decision, of homemaker and parent to the three children of the marriage has impacted upon her earning capacity, employment skills and, in all probability, employability.
This factor supports an adjustment in Ms Smart’s favour.
The need to protect the party who wishes to continue in their role as parent
Ms Smart has devoted herself to parenting the three children of the marriage since the birth of each of the children. This has been hard work and unpaid.
Whilst parenting and caring duties are often undervalued the contributions that Ms Smart has made are clearly significant and her devotion to the parenting of these children, and no doubt her assumption of sole parenting for significant periods, is high.
Ms Smart wishes to continue in this role and thus seeks an adjustment that will allow her to parent the children both practically and financially. This particularly relates to her estimation that costs in excess of $300,000 will be incurred in meeting the children’s schooling expenses alone to completion of Year 12 for each and all of the children.
I am satisfied that this factor is perhaps one of the more significant impacts upon the adjustment to be made in favour of Ms Smart.
The financial circumstances relating to any cohabitation
Both parties are in new relationships. Ms Smart resides full-time with her new partner Mr H who is in paid employment and his income is disclosed.
Mr Watton does not presently live on a full-time basis with his partner who lives permanently, at least at this point in time, in (country omitted) (she has previously lived in (country omitted) and Mr Watton suggests she has, at least a desire, to come to live in Australia). Nothing is known of the income or resources or financial position generally of Mr Watton’s partner.
In light of the above I am not satisfied that any adjustment could be made in favour of or against either party.
Sub sections (n) and (naa) are not relevant to these proceedings
Child support now and in the future
I am satisfied this is addressed above. However one additional comment is required.
I am urged by Ms Smart’s counsel to find that there is a high probability that Mr Watton will, in the foreseeable if not immediate future, return to overseas employment and residence. If this were to occur, in particular, if Mr Watton were employed by an entity that was not, for tax purposes, Australian based then, in all probability, he would not be assessed for payment of child support and thus Ms Smart would be depending upon agreement or further litigation to obtain an enforceable child support liability.
As indicated above I am not satisfied that such a finding could be made. It does, however, remain possible that Mr Watton might take up overseas employment or residence (including to reside full-time with his fiancée whether before or post marriage).
I do accept, in any event, that Ms Smart has and will continue to meet the majority of the children’s expenses including but not limited to their significant private school expenses. Ms Smart is committed to the children continuing at their present schools and completing their education and consistent with their abilities and hopefully to Year 12.
On the basis that, even on the present level of child support provision, Ms Smart meets the majority of expense I am satisfied that this factor provides some weight and support to an adjustment in her favour.
Subsections (p) and (q) are not relevant.
Other facts and circumstances
I am urged to address each of the above matters within the parameters of the parties submissions namely, in the case of Mr Watton, a suggestion that an adjustment of 5% is adequate and, in the case of Ms Smart, the suggestion that an adjustment of 15% is required.
The various factors to be considered under section 75(2) of the Act are not cumulative nor to be afforded individual weight. They are to be balanced depending upon the evidence in the case, the value of the available pool, how many factors are in play and the disparity between the parties without adjustment.
As indicated at the commencement of this discussion I am conscious to consider not only the adjustment which each party proposes but the disparity between the entitlements it would produce. An adjustment of 5% would produce a disparity between the parties of 10% (that is a disparity double the “adjustment” sort). Correspondingly a 15% adjustment will produce a 30% disparity between the parties.
I not satisfied that a 5% adjustment (10% disparity) would adequately, justly or equitably address the disparity in the parties’ present financial positions nor adequately address future financial needs. However, I am satisfied that a 15% adjustment (a 30% disparity) is, in the circumstances, and having regard to the parties’ evidence and the value of their asset pool, excessive.
Accordingly, I propose to make an adjustment which falls midway between that conceded by Mr Watton and that proposed by Ms Smart. That is not to engage in an exercise of “splitting the difference”. It reflects my satisfaction that the adjustment urged by Mr Watton is too small and that urged by Ms Smart too large. I am satisfied that a 10% adjustment is appropriate.
Ms Smart presently holds or has received 51.3% of the net, non-superannuation asset pool. Thus, in addition to the superannuation splitting order that she seeks (and which could not be opposed by Mr Watton as it represents slightly less than that which is proposed by him) Ms Smart would need to receive a further 8.7% of the asset pool equating to $286,397.
As the only asset from which any adjustment can be made is the (omitted) Bank account, a sum of $400,000, Ms Smart would thus need to receive a further 71.6% of that fund.
Conclusion regarding section 75(2)
As I am satisfied that a 10% adjustment should be made in Ms Smart’s favour. Orders would thus need to be made to effect a 71.6%/28.4% division of the (omitted) Bank account in Ms Smart’s favour. If expressed as a percentage division this will see the parties thus dividing both capital funds and interest proportionally which I am satisfied is the most just and equitable means of achieving this division.
Justice and equity
Whilst justice and equity must infuse and inform each step of the process I am satisfied that I should, lest there be any controversy as to whether there is a three, four or five step process, now step back and determine whether the percentage division to be effected by the above calculations is just and equitable.
Orders, if made on the above basis, will see Ms Smart retain cash funds, including that previously distributed in July 2011, of approximately $1,13,341 net together with the former matrimonial home (unencumbered) and 43% of the total superannuation assets of the parties. Mr Watton would correspondingly receive cash funds of approximately $1,195,344 net together with 57% of the superannuation assets of the parties.
In light of the vastly superior income and future income position of Mr Watton particularly as set against the disadvantaged income position of Ms Smart in the future (both as to earning income, levels of income she is capable of earning and the greater expense base that she will face in caring for the three children and meeting the majority of their expenses) I am satisfied that this is a just and equitable determination of all financial issues between the parties.
Conclusion
I thus propose to make orders for a 60%/40% division of the total, non-superannuation asset pool between the parties and the disproportionate division of the total superannuation interests of the parties as sought by Ms Smart.
I certify that the preceding four hundred and twenty-three (423) paragraphs are a true copy of the reasons for judgment of Judge Harman
Associate:
Date: 3 October 2014
Key Legal Topics
Areas of Law
-
Family Law
Legal Concepts
-
Remedies
-
Statutory Construction
0
2
4