SYME & WROE
[2010] FMCAfam 247
•18 March 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SYME & WROE | [2010] FMCAfam 247 |
| FAMILY LAW – Property – what s.75(2) adjustments should be made where parties are of a similar age and income, with the father spending substantial time with the children. CHILD SUPPORT – Special circumstances – lump sum payment. |
| Family Law Act 1975 ss.75(2), 79 Child Support (Assessment) Act 1989 ss.117, 125, 129, 130 |
| Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 Norbis v Norbis (1986) 161 CLR 513 Syme & Wroe [2008] FMCAfam 536 Syme & Wroe [2009] FamCAFC 89 |
| Applicant: | MR SYME |
| Respondent: | MS WROE |
| File Number: | SYC 3519 of 2007 |
| Judgment of: | Altobelli FM |
| Hearing dates: | 8-10 July, 17 August, 30 November 2009 |
| Date of Last Submission: | 30 November 2009 |
| Delivered at: | Sydney |
| Delivered on: | 18 March 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Richards |
| Solicitors for the Applicant: | Blanchfield Nicholls Partners |
| Counsel for the Respondent: | Mr Batey |
| Solicitors for the Respondent: | Maclarens Lawyers |
ORDERS
That the wife pay to the husband, by way of property settlement, the sum of $150,372.00 within 28 days.
Order 8 of the orders dated 3 June 2008 be varied to read as follows:
“That pursuant to s.124 of the Child Support (Assessment) Act 1989 the husband pay to the wife 50 percent of the following expenses of the children relating to their attendance at [S] from 1 January 2010 until each child completes his secondary education:
(a)Tuition fees;
(b)Local excursion fees;
(c)Uniform costs including sports uniforms, school and sport shoes;
(d)Other compulsory expenses relating to the children’s attendance at the school;
(e)Extracurricular activities including costs of equipment required for those activities, provided that the parties have agreed in writing to the child enrolling in such extracurricular activity.”
That pursuant to s.125 of the Child Support (Assessment) Act 1984 the annual rate of child support payable by the husband pursuant to any assessment shall be reduced by the amounts paid by the husband pursuant to Order 2, and the annual rate of child support shall be reduced by 50 percent.
Except as provided for in these Orders, Each party be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the banks’ record thereof, insurance policies are deemed to be in the possession of the beneficiary thereof and superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements.
Parties have leave to relist as regards the interpretation, implementation and enforcement of these orders.
IT IS NOTED that publication of this judgment under the pseudonym Syme & Wroe is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 3519 of 2007
| MR SYME |
Applicant
And
| MS WROE |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment relate to an application for alteration of property interests under section 79 of the Family Law Act, and applications under the Child Support (Assessment) Act. This matter first came before Sexton FM whose reasons for judgment were delivered on 3 June 2008 and is reported at [2008] FMCAfam 536. The matter proceeded on appeal to the Full Court, which heard the appeal on 15 December 2008 and delivered its reasons for judgment on 28 May 2009, reported as [2009] FamCAFC 89. The matter before me is the rehearing of those parts of the orders made by Sexton FM in respect of which the appeal was allowed. The rehearing commenced before me on 8 July 2009 and continued on 9 and 10 July 2009,
17 August 2009 and 30 November 2009.
Sexton FM made the following orders on 3 June 2008:-
1. Within 14 days, the wife sign documents and take all necessary steps to transfer to the husband all Telstra shares in which she holds an interest.
2. Within 14 days, the parties do all things necessary to authorise the payment of funds held in trust on their behalf by Maclarens Solicitors, being the net proceeds of sale of the former matrimonial home and of the parties’ investment properties, as follows:
(a) In payment of $104,344.40 to the husband;
(b) In payment of $803,497.60 to the wife;
(c) In payment of any balance to the wife and the husband such that the wife receives 62% and the husband 38% of the total net pool, having regard to the assets each will receive set out in paragraphs 84 and 85 of the Reasons for Judgement.
3. Except as otherwise provided in these orders, the husband and the wife retain all other items of property currently in the possession or control of each of them respectively, including but not limited to their superannuation entitlements.
4. Except as otherwise provided in these orders, the husband and the wife remain liable for any debts, howsoever arising, in their own name at the date of these Orders and in this respect shall indemnify, keep indemnified and hold harmless the other from any liability in relation thereto.
5. In the event the husband or the wife refuses or neglects to comply with any of the Orders herein, the Registrar of this Court at its Sydney Registry be appointed pursuant to section 106A of the Act to execute, in the name of the husband or the wife as the case may be, all deeds and instruments necessary to give effect to the orders herein, or any of them, and do all acts and things necessary to give validity and operation to the said deeds and instruments.
6. The husband’s application for departure from the current child support assessment be dismissed.
7. Until each child completes his secondary education, or attains the age of 18 years, whichever is the later, the husband be responsible for the children’s private health cover.
8. Pursuant to s.124 of the Child Support (Assessment) Act 1989 the husband pay to the wife 75% of the following expenses of the children relating to their attendance at [S] from 1 January 2008 until each child completes his schooling:
(a) Tuition fees;
(b) Local excursion fees;
(c) Uniform costs including sports uniforms, school shoes and sports shoes;
(d) Other compulsory expenses relating to the children’s attendance at the school;
(e) Extra curricular fees including costs of equipment required for those extra curricular activities, provided that the parties have agreed in writing to the child enrolling in such extra curricular activity.
9. The payments referred to in Order (8) not to be credited against any administrative assessment for child support for which the husband is responsible to make payment.
10. The payments referred to in Order (8) not be used by either party as a basis for departure from any Child Support Agency assessment including as a non-agency payment.
11. The husband pay child support in accordance with the Child Support Agency’s assessment from 1 January 2008, such assessment to be re-calculated from 1 January 2008 to exclude any component for school fees or school related expenses.
12. Order (8) and (11) be implemented as follows:
(a) The wife forthwith provide the husband with written confirmation of the account name, BSB and account number into which she requires the funds due to her to be paid;
(b) The wife forthwith provide the husband with copies of invoices, receipts relating to expenses listed in Order (8) from 1 January 2008 and the husband to pay the wife the amount owed to the wife to give effect to Order (8) within a further 14 days;
(c) The wife otherwise forward a copy of invoices or receipts (if already paid) within 7 days of her receipt of such invoices or receipts relating to expenses listed in Order (8);
(d) The husband transfer/deposit the amount due to the wife’s account within 14 days of receipt of invoices or receipts;
(e) The husband forthwith serve a sealed copy of these Orders on the Registrar of the Child Support Agency with a request that his periodic child support liability be re-calculated from 1 January 2008 in accordance with these Orders as soon as practicable.
13. All existing applications be otherwise dismissed save as to any application for costs by either party.
The Full Court, on 3 June 2008, made orders allowing the appeal against orders 2, 9, 10, and 11 of Federal Magistrate Sexton’s orders, set aside those orders, and remitted the application for property settlement for rehearing before a Federal Magistrate other than her Honour.
In effect, the application for alteration of property interests was remitted for fresh hearing before me. No stay had been sought, or granted, of the orders made by Sexton FM and thus, until the order of the Full Court, the orders had been implemented.
For all practical purposes, therefore, I have before me competing applications for property settlement, and for various orders under the Child Support (Assessment) legislation.
Background
In circumstances where the background facts have been clearly articulated by Sexton FM in her reasons for judgment, and then adopted by the Full Court in paragraphs 9 to 29 of its reasons for judgment, I do not intend to set them out once again. By way of update, however, the husband is now 42 years and old and he is an [occupation omitted] with [N], earning a base salary of $135,000 per annum. The wife is now 43 years old and she is [employed in the legal industry], and has a salary of $140,000 per annum. Their children are now 10, and nearly 9. They both continue to attend the private school that they were attending at the time of previous hearings.
After the orders made by Sexton FM, the moneys held in trust by Maclarens Solicitors were divided in accordance with her Honour’s orders. Thus, the husband received about $104,000 and the wife about $803,000. The overall division of property was found by her Honour to be 62 percent to the wife and 38 percent to the husband. Some of the moneys in question have been spent but as will be seen below, the pool of assets including both superannuation and non superannuation assets, is not significantly different to that found by Sexton FM.
In the present proceedings, the husband asserts that there should be a finding as to contribution expressed as to 60 percent in his favour and 40 percent to the wife. He asserts that there should be no adjustment under section 75(2). The husband claims that an order for payment of cash should be made in his favour. The husband also makes an application under the Child Support (Assessment) Act, the effect of which is to discharge or vary order 8 made by Sexton FM (i.e., that he pay 75 percent of the children’s schooling expenses) and that otherwise his assessment to pay child support be reduced, and or credit be given for payment he makes for the benefit of the children. It should be borne in mind that order 8 made by Sexton FM remains intact.
The wife’s application before the court is that contribution should be assessed as being equal, and that a 10 percent adjustment should be made in her favour under section 75(2), thus leading to an overall settlement of 60 percent in her favour. She seeks a cash payment from the husband in order to implement this. In addition, she resists the husband’s application for child support orders and seeks orders to the effect that the payments that the husband currently makes pursuant to order 8 of Sexton FM, not be credited against administrative assessment for child support, or be used as the basis for departure of any assessment.
In describing the competing proposals of the husband and the wife, I have referred to the same in general terms, but where it is relevant the orders sought will be described with particularity.
Issues
A number of discreet issues were raised by the parties for determination by the court. There are a number of issues in relation to the constitution of the pool of assets, but for the most part the parties have reached agreement in relation to the same. There is an issue about the assessment of contribution, and in this regard I will need to have regard to the date of cohabitation, the date of separation and the date of the hearing. There is an issue about assessment of s.75(2), with the wife claiming 10 percent and the husband saying that none apply. I will need to ensure that any order I make under section 79 is just and equitable on the facts of this case. There are then the issues raised by both the husband and the wife under the Child Support (Assessment) Act and in this regard, I recognise that the child support issues, and the issues under s.79 and s.75(2) certainly overlap and are related. The findings I make in relation to the property settlement will no doubt inform determination of the child support issues.
Applicable Law
The preferred approach to the determination of an application under s.79 of the Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
The Full Court states that there are four inter-related steps:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
One of the legal issues that arises is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5. It is clear from this statement of the law that either approach is available to me, in part or in whole. My discretion in this regard should be exercised having regard to the facts of this case.
In relation to the child support issues, the applicable law is adequately set out in the judgment of Sexton FM, and of the Full Court. I do not intend to repeat that material here. In discussing those applications in my reasons below, I will refer to the legislation where necessary.
Assessing the Evidence of the Husband and the Wife
I had the benefit of observing the husband and the wife in the witness box over a period of several days. In the husband’s case, his cross-examination commenced at about 2.15 pm on 8 July 2009 and concluded at about 12 noon on 9 July 2009. The husband was cross-examined by Mr Batey, counsel for the wife, who was, as usual, firm and thorough. In the wife’s case her cross-examination commenced at about 12.40 pm on 9 July 2009 and continued into the fourth day of the hearing on 17 August 2009. The wife was cross-examined by
Mr Richards, counsel for the husband, who was, as usual, robust, persistent and thorough.
There was, therefore, ample opportunity for me to observe both the husband and the wife very carefully over an extended period of time. This is relevant because there are a number of significant factual issues raised in the evidence of the parties, but especially the wife, in their respective cases. Findings of fact are therefore necessary and underpin the necessary assessment of contribution and s.75(2) considerations in this case.
The husband’s affidavit, sworn 1 July 2009 contains evidence dealing with the relevant issues before the court. It is a “fact-heavy” affidavit which contained little irrelevant or inadmissible material. The cross-examination of the husband led me to conclude that his evidence was deficient insofar as it relates to the financial circumstances of his cohabitation with his current partner, and in particular her income and assets. In this regard, I found him to be less than frank with the court.
The reality is that his partner has quite substantial assets, but not a great income. The husband’s income subsidises, in effect, the living expenses of his partner and her children. The husband says that, in return, he receives accommodation in that he lives in his partner’s home. The financial circumstances of his cohabitation with his partner and her children means that the husband’s evidence about the actual cost to him of maintaining his children is uncertain and probably unreliable. The only other significant issue about his financial statement is that he overstates his commission income, not understates it.
In cross-examination the husband was responsive, cooperative, and willing to make sensible concessions. Insofar as the wife’s case was that he had failed to properly disclose relevant matters to the court (other than in relation to the financial circumstances of his partner) the wife’s case was not made out. There are two particular aspects of the husband’s evidence that warrant specific comment because of the significance they assume in assessing contribution and future needs.
Firstly, the husband’s cross-examination did nothing to undermine his evidence about his financial and non-financial contribution during the marriage, including his contribution as a homemaker and parent.
I accept the husband’s evidence in this regard. Secondly, the cross-examination did nothing to undermine the husband’s evidence about his current income and the relatively modest levels of commission that he currently earns.
The wife’s affidavit sworn 1 July 2009 contains much more irrelevant and inadmissible material compared to that of the husband. It does not have the same factual focus as that of the husband. Several times in her affidavit the wife makes assertions which created the impression that one of her main concerns was in relation to the husband’s nondisclosure of relevant evidence. By contrast, however, her counsel’s cross-examination of the husband did not have that as its primary focus, and this created a strange dissonance between the wife’s affidavit evidence, and how her case was conducted before me.
The wife is [employed in the legal industry]. This is a relevant consideration in the assessment of her evidence. This court expects a high standard of evidence from any witness, let alone a witness who is, [employed in the legal industry]. This standard subsists even when the [person] giving evidence is a party to proceedings which often have an emotional overlay.
The wife was an unimpressive witness. She was frequently unresponsive in cross-examination. She rarely made sensible and obvious concessions, and when she did it was mostly because she was confronted with contradictory documents. She had a distinct tendency to exaggerate her own contribution, whilst minimising that made by the husband. She was quick to assert the failings of the husband and the shortcomings of his evidence, but exceedingly slow to acknowledge her own failings, and the shortcomings of her evidence. A number of examples can be provided in support of these conclusions.
The wife understated the character of a personal loan that she had at cohabitation, thus creating the impression that she may have had equity in a motor vehicle when clearly she did not. She exaggerated her earnings at the time of cohabitation. She understated her debts at this time. She exaggerated her income at times during the marriage e.g. for the financial year 1999. In the context of what I will describe as the wife’s various complaints about the husband’s nondisclosure, the wife was confronted with the fact that the husband had sworn an affidavit on 11 October 2006 in which he provided answers to specific questions that had been posed of him by the wife’s solicitors. The wife somewhat reluctantly agreed that she had seen this affidavit, but stated that it was not in the forefront of her mind when she swore her own affidavit, even though the husband’s affidavit tends to deal with many of the issues of which the wife complains. It is significant to note the absence of cross-examination of the husband about this affidavit.
The wife was equivocal in cross-examination in relation to the circumstances that led to [A] being registered to play rugby, and the wife was plainly unconvincing in cross-examination as regards her evidence about occupational therapy for the children.
I have quite serious concerns about the wife’s evidence in relation to how and when she communicated to the husband and his lawyers about her recommencement in employment, and the conditions thereof, after the date of separation. In a case where the wife asserts that the husband was guilty of nondisclosure, quite appropriate focus ought to be placed on her own disclosure.
The wife conceded that she started work on 14 June 2005. She says that she told the husband about this on 15 June. This evidence is not in her affidavit. The husband was not cross-examined about this assertion, either before me or before Sexton FM. I do not accept the wife’s evidence in this regard. I accept that the wife told her solicitor about this on 15 June, but there is no evidence to suggest that the husband was informed about it before 5 August 2005 when he received a letter from the wife’s solicitors. I find that it is likely that the husband became aware of the wife’s employment because of comments made to him by one of the children. This may well explain the inquiries that he caused to be made through his solicitors, of the wife’s solicitors, during the relevant period.
There is no evidence that I accept that indicates that the wife told the husband at any time before 15 July and it is more likely than not that the first communication that formally confirms her employment, and provides details of her remuneration, was provided in a letter dated
5 August 2005 which was in response to a letter from the husband’s solicitors dated 15 July 2005. The wife’s salary was $60,000 per annum in this job. She did not swear to this until her financial statement sworn 15 October 2005.
Moreover, the wife’s evidence in cross-examination leads to me find that when she first applied for child support on 4 August 2005, resulting in an assessment on 9 August 2005, she had not disclosed to the child support agency that she was in employment, and earning $60,000 per annum. This fact, with its consequent impact on varying the quantum of child support, appears to be first recorded in a notice of decision dated 6 December 2005.
All of this evidence is relevant not just in relation to the wife’s credit, and as to her obligation to disclose, but also in the context of her case for post-separation contribution. The wife says, in effect, that she was struggling financially in the post-separation period, and she was particularly aggrieved by the husband’s decision not to continue to pay the mortgage on the home after July 2005. She agreed, however, that this was in circumstances where the husband was also paying lease payments and outgoings on two motor vehicles, outgoings on the former matrimonial home, the shortfall between income and expenses on two negatively geared properties, the wife’s mobile telephone, the school fees for the children to attend [S], and a payment to the wife of $500 per month. It should be borne in mind that the mortgage did not go into default as a result of the husband’s non-payment after July 2005, because it was so far in advance. It is no wonder, therefore, that the wife in cross-examination, in a comparatively rare moment of acuity, conceded that the husband was probably right when he asserted that he could not afford to keep making all of these payments.
The significance of the wife’s new employment and income, and the importance of disclosing the same, is that it shows she had some capacity to contribute towards the financial needs of the children and herself, from the time she commenced that employment. In her affidavit the wife describes the financial struggles that she experienced in the period from March to June 2005 (paragraphs 40-43). I accept that this would have been a difficult period.
In context, however, her own return to work in June 2005 provided some relief, and her failure to make timely disclosure about this reflects poorly on her, as well as complicating the assessment of the claim for post-separation contribution.
There are other examples of the wife’s unsatisfactory evidence. I find that the wife was evasive and vague about the nature and extent of her relationship to her boyfriend, which relationship she described as something in between an acquaintance and a member of the family. They have travelled on holidays together. The boyfriend is known to the children.
I found the wife to be evasive and vague about the circumstances that led her to lend $700,000 to her mother, after the appeal had been lodged against the decision of Sexton FM. I am satisfied, however, that the wife will be able to get this money back if she needs it.
In relation to homemaking and parenting contribution, yet again I found the wife was exaggerating the role that she played in this regard. Moreover, she sought to almost completely exclude any role for the husband though, in cross-examination, especially when confronted with her own prior inconsistent representations about the husband’s role, she had to concede the role he played. She clearly was minimising the husband’s role in homemaking and parenting.
The wife was critical of the husband for causing bank statements on one of his accounts to be sent to his parents’ address during the marriage. However, she was then confronted with evidence that she had done precisely the same thing with one of her own advance bank accounts.
There are other aspects of the wife’s evidence in respect of which it is possible to be critical, but the matters to which I have referred above are adequate, in my opinion, to lead me to conclude that where the evidence of the husband and the wife conflicts, I will generally prefer that of the husband unless there are documents indicating to the contrary. In particular, I prefer the husband’s evidence over that of the wife, in relation to contribution.
Constitution of the Pool of Assets and Liabilities
By the time that submissions had commenced on day five of the hearing the parties had made substantial progress towards resolving most of the outstanding issues relating to the constitution of the pool of assets and liabilities. I was presented with the following document, representing the agreement between the parties, and identifying the points of difference:-
| Non-Superannuation Assets | Ownership | Wife’s Value | Husband’s Value | Agreed/Not Agreed | |
| 1 | Bank accounts | Husband | $192,015 | $192,015 | Agreed |
| 2 | Shares – NIB, Telstra, AMP | Husband | $5,315.72 | $5315.72 | Agreed |
| 3 | Shares – Cisco (gross of tax) | Husband | $120,403 | $120,403 | Agreed |
| 4 | Mazda CX 9 | Husband | $40,200 | $40,200 | Agreed |
| 5 | Home contents | Husband | $10,000 | $10,000 | Agreed |
| 6 | Cisco options (net of tax) | Husband | $2,500 | $2,500 | Agreed |
| 7 | Bank accounts | Wife | $1,372 | $1,372 | Agreed |
| 8 | Shares – Wesfarmers & Telstra | Wife | $3,676.04 | $3,676.04 | Agreed |
| 9 | VW Passat | Wife | $35,000 | $47,500 | |
| 10 | Home contents | Wife | $10,000 | $10,000 | Agreed |
| 11 | Loan to mother | Wife | $700,000 | $700,000 | Agreed |
| 12 | Husband’s [N] shares | Husband | $26,731 | ||
| Total Non-Superannuation Assets | $1,147,212.76 | $1,132,981.76 | |||
| Add-backs to property pool | |||||
| 13 | Interest forgone on funds lent to mother (at 5%) | Wife | $35,000 | ||
| 14 | Husband’s legal fees paid | Husband | $94,266 | $38,815 | |
| 15 | Wife’s legal fees paid | Wife | $89,659 | $89,659 | Agreed |
| 16 | Monies received by husband from either retrenchment and/or share sales not included in bank accounts | Husband | $64,215 | ||
| 16a | Monies received by wife from orders of Sexton FM | Husband | $6,077 | ||
| Sub-total | $248,140 | $169,551 | |||
| Liabilities | |||||
| 17 | Tax on sale of Cisco options | Husband | $15,000 | $15,000 | Agreed |
| 18 | Credit Cards | Wife | $3,200 | ||
| 19 | Debt to mother | Wife | $9,000 | $9,000 | Agreed |
| Total Liabilities | $27,200 | $24,000 | |||
| Total Non-superannuation assets | Wife Asserts | Husband Asserts | |||
| Non-super assets | $1,147,212.76 | $1,132,981.76 | |||
| PLUS add-backs | $248,140 | $169,551 | |||
| LESS Liabilities | $27,200 | $24,000 | |||
| TOTAL | $1,368,152.76 | $1,278,532.76 | |||
| Superannuation Assets | Ownership | Wife’s Value | Husband’s Value | Agreed/Not Agreed | |
| 20 | Husband’s ING | Husband | $159,428 | $159,428 | Agreed |
| 21 | Wife’s Legal Super, IOOF, IAG | Wife | $73,180 | $72,180 | Agreed |
| Subtotal Super | $232,608 | $232,608 | |||
| Total Superannuation and Non-Superannuation Assets | Wife Asserts | Husband Asserts | |||
| Non-super assets | $1,147,212.76 | $1,132,921.76 | |||
| Plus Superannuation | $232,608 | $232,608 | |||
| Plus add-backs | $248,140 | $169,551 | |||
| Less Liabilities | $27,200 | $24,000 | |||
| TOTAL | $1,600,760.76 | $1,511,140,76 | |||
The first item in contention is a VW Passat motor vehicle purchased by the wife after the orders of Sexton FM. The evidence indicates that the purchase price was $47,500 of which $30,000 came from the property settlement, and $17,000 represented the trade-in of the vehicle that the wife owned at the time. The husband asserts that this is a premature distribution of matrimonial assets and therefore needs to be added back into the property pool at the purchase price. The wife contends that $35,000 represents the current market value of the vehicle, and that is the appropriate figure to adopt. The wife contends that to use the purchase price would ignore the reality of depreciation. Hence, there is common ground that the value of the vehicle ought to be included in the asset pool - the issue is, at what value? There was no evidence before me to indicate that the value of the vehicle was $35,000. In these circumstances, the best evidence available to the court is the purchase price of $47,000, and that is the figure to be included in the balance sheet.
The next issue relates to item 12, the husband’s [N] shares. The wife asserts that these have a value of $26,731, but the husband asserts that they have no current value. The [N] shares represent a benefit relating to the husband’s employment. Both counsel described these shares as being like options. Counsel for the husband asserted that they are, at best, a financial resource but probably not even that. Counsel for the wife asserted that they are, at the very least, a financial resource and probably property. The only evidence I have about these options are contained in exhibit H1, a letter from the husband’s employer. The letter refers to these options as “an unfunded right to receive one share of [N], Inc. common stock upon vesting and issuance of share provided you remain in active service through the vesting date.” The letter makes it clear that these options vest and become non-forfeitable on the basis of continuing employment with [N] over a period of four years.
The husband joined [N] on 15 May 2009. For there to be any value for this particular item, he would need to be there for at least four years. Exhibit H2, a statement of account from [omitted] for the period ending 15 June 2009 tends to indicate that these options have no value. If these options are property, they have no value. However, they will potentially become valuable depending on the period of the husband’s service with [N] and, on that basis, they are a financial resource to him. Accordingly, I will treat the husband’s [N] share options as a financial resource available to him, but not as property to be included in the relevant pool of assets.
The next item in dispute is whether or not the pool should include the husband’s estimate of the interest forgone on the $700,000 advanced by the wife, to her mother. This cannot be property under any description of that term. However, I accept that it income foregone by the wife in the sense that if she had advanced the moneys at arm’s length she would have been able to receive some benefit for the same. As it is, the evidence indicates it was an interest free loan to her mother. I prefer to treat this issue as a s.75(2) consideration, and in a general sense.
Insofar as the wife’s case is dependent on the inadequacy of her own income and resources to meet the reasonable needs of the children and herself, I need to take into account that the $700,000 could be turned into an income producing asset, at any time. In this regard, the wife reassured me that she was confident that the money could be repaid to her, should the need arise. Of course, the $700,000 loan to the mother is included in the pool of assets, and it is not suggested that either that advance, or any interest foregone, is a premature distribution of assets, or wastage of funds. Nonetheless, it is something that I take into account in a general sense under s.75(2).
The next item in dispute is item 14. The wife contends that there should be added back into the pool the husband’s legal fees paid in the sum of $94,266. The husband contends that the payback should be only $38,815. The husband contends that the balance, i.e. the difference between the two figures, represents legal fees paid from his income, and not out of an asset which would be brought into account for the purposes of these proceedings. In cross-examination the husband could not satisfactorily explain how the figure of $38,815 was calculated.
Whilst I accept that exhibit W4 does represent a breakup of legal fees paid, and the source of payment, there is nothing on the face of that document to explain how the figure of $38,815 was calculated. If it is asserted, for example, that all payments after 20 February 2008 explain the figure, on my calculation, this amount would be $35,090.35, not the amount asserted by the husband. It is by no means clear on the evidence before me what source the husband used for the payment of his legal fees. Given the amount of time that has passed since the date of separation, a reasonable inference is that, having regard to the husband’s relatively high income, the payment of his fees accumulated after separation was from his post-separation income.
In all likelihood, at least some part of the legal fees were paid out of funds that ought clearly be added back. Indeed, the husband concedes $38,815. However, he does not explain why the balance should not be added back, and how precisely this was funded from post-separation income. Even in the circumstances of this case where there has been a considerable period of time since the date of separation, the general principle applies i.e. that I need to take the assets and liabilities of the parties as they are at the date of the hearing. In a situation where I can make no finding as to the precise source of the funds used by the husband to meet his legal fees, and in a situation where the husband has been able to earn a substantial income to which the wife has at least indirectly contributed, and moreover in a case where there is an agreed substantial add back for legal fees paid by the wife, I find that the full amount of the legal fees ought to be added back i.e. $94,266.
It must follow, however, that if the husband has used his Visa credit card to pay legal fees, and this is apparent for the period 2 May 2008 to 5 January 2009, then any current liability on that card should be included on the balance sheet. In this regard the husband’s financial statement sworn 1 July 2009 discloses at item 51 that the husband owes $1500 on his Visa card. Whilst I hold that at item 14 the husband’s legal fees paid should be $94,266, I also hold that there should be a new item 19A, husband’s Visa ANZ card, $1,500, that should be included in the asset pool.
The next item in dispute, is item 16. The wife asserts that $64,215 should be included in the pool as an add back, being monies received by the husband from either his retrenchment as Cisco, and/or share sales not included in the bank accounts which are otherwise referred to in the balance sheet. The husband says that these funds have already been accounted for and should not be included in the balance sheet. The husband gives evidence about these funds, and how they were expended, in his affidavit. This evidence is summarised as part of the husband’s counsel outline of submissions document. I am satisfied that the husband has adequately explained how these funds have been used, and how they are otherwise represented in other items of the balance sheet. In this regard, the husband’s evidence was not challenged by the wife.
In any event, in view of the finding I have made about item 14, the add back of husband’s legal fees paid, if I were to accede to the wife’s arguments in relation to item 16, I think there would be a real risk of double counting because the husband’s explanation is that at least some of these funds were used to pay legal fees. In the circumstances of this case, therefore, I decline to make the adjustment sought by the wife at item 16.
Item 16A is an add-back sought by the husband of monies received by the wife from the first property settlement, whose expenditure has not been adequately explained. I accept the evidence of the husband in this regard – the wife has not explained where $6,077 went and, on this basis, would amount to a premature distribution of matrimonial assets. Accordingly item 16A should include the figure of $6,077.
There is a dispute about item 18, a credit card debt of the wife in the sum of $3,200. The husband asserts that there is no adequate explanation as to why a post-separation liability should be included in the pool. The wife submits that in the context of the case where there are child support issues, it does not necessarily follow that a post-separation credit card debt ought not to be included in the asset pool. Whilst there is merit in the wife’s submission, there is no evidence to in any way link the credit card debt of $3,200 towards the needs of the children, or towards any necessary expenditure. Indeed, I have evidence from the wife that she has travelled on holidays overseas with her boyfriend, and that at least some of this travel was funded on her credit card. In these circumstances, it would not be appropriate to include this on the balance sheet.
Having regard to all of the above matters, I find the balance sheet to be as follows:-
| Non-Superannuation Assets | Ownership | Value | |
| 1 | Bank accounts | Husband | $192,015 |
| 2 | Shares – NIB, Telstra, AMP | Husband | $5315.72 |
| 3 | Shares – Cisco (gross of tax) | Husband | $120,403 |
| 4 | Mazda CX 9 | Husband | $40,200 |
| 5 | Home contents | Husband | $10,000 |
| 6 | Cisco options (net of tax) | Husband | $2,500 |
| 7 | Bank accounts | Wife | $1,372 |
| 8 | Shares – Wesfarmers & Telstra | Wife | $3,676.04 |
| 9 | VW Passat | Wife | $47,500 |
| 10 | Home contents | Wife | $10,000 |
| 11 | Loan to mother | Wife | $700,000 |
| 12 | Husband’s [N] shares | Husband | Nil |
| Total Non-Superannuation Assets | $1,132,981.76 | ||
| Add-backs to property pool | |||
| 13 | Interest forgone on funds lent to mother (at 5%) | Wife | Nil |
| 14 | Husband’s legal fees paid | Husband | $94,266 |
| 15 | Wife’s legal fees paid | Wife | $89,659 |
| 16 | Monies received by husband from either retrenchment and/or share sales not included in bank accounts | Husband | Nil |
| 16a | Monies received by wife from orders of Sexton FM | Husband | $6,077 |
| Sub-total | $190,002 | ||
| Liabilities | |||
| 17 | Tax on sale of Cisco options | Husband | $15,000 |
| 18 | Credit Cards | Wife | |
| 19 | Debt to mother | Wife | $9,000 |
| 19a | ANZ Visa | Husband | $1,500 |
| Total Liabilities | $25,500 | ||
| Total Non-superannuation assets | |||
| Non-super assets | $1,132,981.76 | ||
| PLUS add-backs | $190,002 | ||
| LESS Liabilities | $25,500 | ||
| TOTAL | $1,297,483.76 | ||
| Superannuation Assets | Ownership | 54. | |
| 20 | Husband’s ING | Husband | 55. $159,428 |
| 21 | Wife’s Legal Super, IOOF, IAG | Wife | $72,180 56. |
| Subtotal Super | $232,608 | ||
| Total Superannuation and Non-Superannuation Assets | |||
| Non-super assets | $1,132,921.76 | ||
| Plus Superannuation | $232,608 | ||
| Plus add-backs | $190,002 | ||
| Less Liabilities | $25,500 | ||
| TOTAL | $1,530,031.76 |
Accordingly, the total non-superannuation assets amount to $1,132,981.76. The agreed total value of superannuation is $232,608. I have found that there should be add backs to the extent of $190,002. There should be liabilities totalling $25,500. Accordingly, the net pool of assets, including superannuation, is $1,530,031.76.
Contribution
I note at the outset that the case of both the husband and the wife proceeded on the basis that contribution should be assessed on a global basis, rather than by an asset by asset basis.
In order to make a global assessment of the contribution made by the husband and the wife, and in order to do justice and equity to both parties, I need to consider contribution as at the date of cohabitation, as at the date of separation, and as at the date of the hearing, particularly having regard to the post separation period.
Commencing with the assets available to the parties at the date of cohabitation, I am satisfied that the evidence is more than adequate to justify a finding that the husband had assets at the date of cohabitation of approximately $100,000. This consisted of his equity in the Property N property of about $70,000, some savings, superannuation, shares and a motor vehicle. The wife did not seriously contend otherwise. By contrast, the wife had negligible assets at the commencement of cohabitation. What assets she had were probably offset by debts she had.
After the husband and the wife lived in the husband’s property at Property N for a period of about seven years, the property was sold. The evidence indicates the parties received about $370,000 which was then applied towards the purchase of what became the former matrimonial home at Property W. In a very simplistic way the husband’s equity of $70,000 at the date of cohabitation became equity of $370,00 when Property N was sold seven years ago. It would not be appropriate, however, to give him sole “credit” for this. For example, the evidence indicates that substantial improvements were effected to the Property N property, and that the mortgage over that property was reduced. All of this took place during a period when the husband and the wife had “pooled” their income in the partnership of marriage sense, and I am satisfied that that was the case even if the pooling was structured in a way in which they maintained their separate accounts.
Assessing the value to the parties of the husband’s initial contribution is a difficult exercise having regard to the joint contributions they made which contributed, in both specified and unspecified ways, to the initial $70,000 becoming $370,000. Whilst it is the case that the benefit of the husband’s initial contribution was not fully appreciated until it was realised seven years later, the fact remains that, in all likelihood, without that initial contribution the parties would not be in the comparatively strong financial position that the are in today. I note that the risk is as great of over‑valuing the husband’s initial contribution, as it is to under‑valuing the wife’s contribution during this relevant period. The husband is certainly entitled to an adjustment in his favour to reflect his greater initial financial contribution at the date of cohabitation. It cannot be assessed in isolation and I believe is better assessed having regard to the date of separation.
When one has regard to the entire period of cohabitation, there can be no doubt that the husband’s employment led him to making a greater financial contribution to the marriage. The wife worked as well, and there was no criticism whatsoever about whether she worked to her capacity, particularly having regard to the child‑bearing and child‑rearing roles which she adopted, presumably with the support of the husband. The evidence indicates that whatever moneys were earned by the parties were used for the benefit of the family and I make this finding notwithstanding the veiled assertions that each spouse makes against the other about undisclosed bank accounts, and also the wife’s assertions of non‑disclosure, which I reject for the reasons that I have set out in the section of my reasons dealing with assessing the parties’ evidence.
During the course of the marriage the parties purchased and sold shares and real estate and undertook improvements to the properties. They borrowed moneys together, and with other people. They each received additional sums by way of employment‑related benefits, and applied them for the benefit of the family.
Each of the husband and the wife made non‑financial contributions during the marriage. I am satisfied that the husband undertook, participated in, or arranged to be undertaken a range of improvements and renovations to the properties which they occupied. The wife participated in this to the extent that she was able having regard to her responsibility to look after the children, when she was not at work.
One of the real contentious issues in this case related to the nature and extent of the husband’s contribution to the welfare of the family. The evidence leads me to conclude that the wife was primarily responsible for this but her case was that the husband did very little by way of contribution to the welfare of the family, if anything. I reject the wife’s evidence in this regard, and for the reasons I have set out earlier in this judgment, where the evidence of the husband and the wife conflicts about contribution to the welfare of the family, I prefer that of the husband. Even though he worked, I find that he was substantially involved in the life of the children after work and that he cared for them on occasions when the wife was not able to, and that he was able to adjust his work hours to this end.
Viewed as at the date of separation, therefore, apart from the husband’s initial contribution, the husband and the wife made different, but nonetheless valuable contributions during the marriage. Leaving aside the initial contribution, I would have assessed contribution as being equal. Indeed, the only factor that would alter a conclusion of equality on the evidence of this case is the weight to be given to the husband’s initial contribution.
Before exploring this further, however, I proceed to deal with the issue of post‑separation contribution.
After separation in January 2005, the husband continued to be in what was then highly‑paid employment. The wife was not in employment at that time, and in fact did not become employed until June 2005, in the circumstances to which I have referred earlier in these reasons, with criticism of the wife. The husband remained in the former matrimonial home, and the wife and the children moved into her parents’ home until about December 2006 when she moved into rented accommodation. It should be noted that the former matrimonial home, at that time occupied by the husband, was sold in about November 2006.
As a general proposition the financial transactions that the parties entered into in the post‑separation period represent a fairly orderly and appropriate disposal of assets. Thus, for example, the properties were sold, the debts paid off, and the moneys appropriately dealt with pending the outcome of these proceedings. A lease over the wife’s motor vehicle was discharged.
The wife’s evidence leads me to conclude that she struggled financially during at least the first six months of the separation. She then went into employment earning $60,000 per year, and I am satisfied that this mitigated, but did not necessarily eliminate her financial stress. However, the financial stress that she suffered needs to be understood in the context of what financial provision the husband was providing for the children and herself, and whether this was reasonable and appropriate under the circumstances.
As I have indicated in an earlier part of these reasons for judgment, even the wife does not dispute that after separation he paid the outgoings on the former matrimonial home, the shortfall between income and expenses including outgoings on the two investment properties, the lease payments on both cars, at least until the wife’s lease was discharged, outgoings on the vehicles, the wife’s mobile phone bill, school fees for the children at a private school, and until June 2005 $500 cash payments each month to the wife. Indeed, he continued to pay the mortgage on the home until July 2005 but then stopped. The wife is critical of the husband for ceasing these payments. He says, however, that given all the other payments he was making he simply could not continue.
The husband’s financial provision for the wife and children during this period was clearly substantial. Offsetting this, however, is the fact that he was also earning a substantial income. Indeed, his own evidence is that in the 2005 financial year, he had a taxable income of over $305,000, and in 2006 over $255,000. He had a capacity to make the payments that he did.
Was his provision for the wife and children during the first six months after separation reasonable and appropriate? I accept that it was. He was making a significant financial contribution at a time when the wife’s contribution was equally significant, but was of a non-financial nature.
Was it reasonable for the husband to stop making the mortgage payments in June 2005, particularly in circumstances when the property was sold before the end of that year? This is clearly relevant to the question of post-separation contribution. The evidence overall indicates that the husband had sufficient access to other joint funds so that it wasn’t necessary for him to stop paying. From his perspective, he may well have focused on his income and expenses, and concluded that he could not afford to pay the mortgage, but overlooked the fact that based on their joint assets and liabilities, he could easily have afforded to do so. One must not overlook the fact that he was in sole occupation of the home, and thus had the sole benefit of it. Offsetting this is his reasonable provision of the financial needs of the wife and children during the relevant period.
This is not a case like one that is seen all too often in the Family Law Courts where an income-earning spouse remains in occupation of the home at a time when generally he is not making reasonable financial provision for the needs of his family. True it is that the husband did have the capacity, possibly from income but certainly from assets, to continue to service the mortgage. However, the property was sold within a reasonably short period. Moreover, if the husband had in fact used joint assets to pay the mortgage in circumstances where he was in occupation of the home, he may have been confronted with an argument that those payments should be added back to the property pool.
It has been a relatively long period since separation, exacerbated by the lengthy litigation between these parties. The husband has increased the amount of time that he spends with the children, over this period. The wife has returned to the workforce initially earning only $60,000 per annum, but now earning substantially more.
There has been an ebb and flow in the parties’ fortunes, and in their financial circumstances. During the post-separation period, the husband appears to have gone from a very high income to a more moderate income. By contrast, the wife’s sum income has increased from modest to moderate.
Assessing contribution is difficult at the best of times, but there are peculiar difficulties associated with assessment in the post-separation period when the unity of purpose, or common goal, is not so apparent, and the focus is on meeting the needs of children.
As I understood the wife’s case, it continues to be that in the post-separation period she made a greater contribution than the husband, and that, overall, a final assessment of contribution in her favour should still be 50 percent. Indeed, in his closing submissions,
Mr Batey, counsel for the wife, submitted that because the Full Court did not interfere with Sexton FM’s finding of 52 percent in favour of the husband, that this court should at least have regard to it and not disturb it. Presumably, if I did not find favour with Mr Batey’s submission, then a final assessment of contribution would be
50 percent in the wife’s favour.
The husband’s counsel maintains that a finding of contribution is to
60 percent in his client’s favour, taking into account all the circumstances of this case, is still just and equitable.
The current net pool of assets has the value of $1.565 million. I am satisfied that a very substantial proportion of this represented the sale of real estate owned by the parties. Their largest asset was the former matrimonial home. When that home was sold in October 2006, the parties received the benefit of the net sale proceeds of $762,000. The genesis of this money was the husband’s initial contribution of $70,000 in 1995 which grew to one $370,000 when that property was sold seven years later. The value to the husband and the wife of the husband’s initial contribution cannot be assessed simply by reference to its dollar value at the date of cohabitation as that would undervalue that contribution. However, it would overvalue the contribution to treat it as $370,000 in value, because of all the myriad contributions that happened after cohabitation.
Doing the best I can, I assess the husband’s contribution at 57.5 percent of the current pool of assets of $1,530,000 (rounded up) which, in dollar terms, amounts to about $229,500 in addition to that of the wife. Now, as with all assessment of contribution, the process is necessary imprecise, but I’m satisfied that it is just and equitable in the circumstances of this case. However, I believe there is scope to recognise additional contribution made by the wife in the post-separation period, but I would only assess it at 2.5 percent for the reasons that I have set out above.
Accordingly, I conclude that as at the date of the hearing, contributions should be assessed in favour of the husband as to 55 percent.
An Adjustment under Section 75(2)
The husband asserts there should be no such adjustment, whereas the wife asserts there should be an adjustment of that 10 percent.
There is no significant age difference between the parents, and the evidence reveals no health issues relating to them. The husband earns a base salary as an [occupation omitted] at [N] of $135,000 per annum together with some additional employment related benefits. The wife earns about $140,000 from her employment [in the legal industry]. There was an issue at the hearing about the precise extent of the husband’s capacity to earn commissions, on top of his salary. Even he conceded that in his former employment, he earned substantial commissions, indeed often matching or exceeding his base salary. He says that that is unlikely in his present employment for a number of reasons including current economic condition. I accept his evidence in this regard.
I cannot accept the contention on behalf of the wife that simply because the husband previously earned very high levels of commission, that he will do so again in the future, or that he is in fact doing so. The only finding of fact I can make about his current level of commission is exhibit H3 his pay advice dated 1 July 2009 which contains information about his income, including commissions, for May and June 2009, as well as year to date. In June his commission income was about $600, in May $1,556, and year to date $2,423. This document also confirms the quite substantial benefits that the husband receives by way of a car allowance ($1,500 a month, together with expense reimbursement which in June was $3,938, but year to date was only $8,291).
Whilst I cannot find that the husband earns anything other than quite modest commission income for the time being, clearly his employment package is structured in a way that he receives benefits in excess of his base salary of about $135,000. These are benefits that do not appear available to the wife. I am also prepared to find that he has a much greater capacity to earn income, compared to the wife. Her employment [in the legal industry] will always be circumscribed by a number of factors including a far less flexible remuneration framework, and the fact that she has indicated that she wishes to remain in her role as a mother for the children, thus limiting her promotion prospects. Thus, there is a disparity between the respective earning capacities of the husband and the wife, and a minor disparity in terms of their actual income for the time being. This is a relevant s.75(2) consideration operating in her favour. However, it is significant to note that in the wife’s own financial statement she concedes to a surplus of income over-expenditure of about $70 per week, whereas the husband discloses a shortfall of at least $200 per week.
The wife is primarily responsible for the care of the children. However, since April 2007 the children live with the father for five out of
14 nights per fortnight, and half the school holidays as well as special occasions. His substantial and significant care arrangement relating to the children is a s.75(2) consideration that is as relevant as the fact that the mother has primary care.
Both have commitments that are necessary to enable them to support their children as well as themselves. In addition, the husband has a child support liability which currently is $955 per calendar month together with the obligation created by order 8 of the orders made by Sexton FM on 3 June 2008. This liability involves paying 75 percent of the children’s school fees and other school related costs. In the husband’s affidavit, unchallenged in cross-examination, he calculated that he contributes each year towards school fees the sum of $25,185, compared to the wife’s $8,395. In addition, he contributes $7,000 per annum towards the children’s other school related expenses. He estimates that his total liability for child support pursuant to the current assessment, and pursuant to order 8 made 3 June 2008 to be about $43,645, all in the context of the children spending five nights out of 14 with him. This is another significant consideration to be taken into account under s.75(2).
Subject to any adjustment I make under s.75(2), the wife will receive 45 percent of about $1.565 million, or approximately $704,000. The husband will receive proportionately more.
Both parties are in a position where their respective superannuation entitlements will not be received for many years. However, the husband has almost two thirds of the total superannuation entitlement, and this will affect that part of the property settlement that is available to him in tangible ways, in a manner that does not affect the wife.
I take this into account as well. Neither party seeks a splitting order.
The husband is in a relationship with his de facto partner. I have been critical of him for his failure to adequately disclose the financial circumstances relating to his partner. I am not satisfied that any obligation he has taken upon himself as a result of this relationship is one that should be taken into account under s.75(2).
I take into account in a general sense the fact that the wife has chosen to currently structure her financial affairs so that her most significant asset, the $700,000 loan to her mother, is not income producing. I infer that, for whatever reason, the wife does not need additional income, a fact that is quite consistent with her own financial statement disclosing a surplus of income over expenditure.
In these circumstances I am satisfied that an adjustment under s.75(2) is still warranted in favour of the wife, particularly to take into account the fact that she has primary care of the children, and that there is a disparity in the earning capacity of the husband and the wife. I assess this at five percent, which produces a disparity of 10 percent or about $150,000 on the matrimonial pool. In the circumstances of this case, where both parties enjoy moderately good incomes, and where there are not insubstantial assets to divide between them, I am satisfied that a five percent adjustment is appropriate.
A just and equitable order?
My overall conclusion about contribution and future needs is that there should be an adjustment of 50:50 between the parties. As the net matrimonial pool is $1,530,031 this means each of the husband and wife would receive $765,015. Their respective entitlements in terms of assets they currently have, are expressed in the following tables:-
Wife’s Assets and Liabilities
| Asset | Value |
| Bank Accounts | $1,372 |
| Shares – Wesfarmers & Telstra | $3,676.04 |
| VW Passat | $47,500 |
| Home contents | $10,000 |
| Loan to mother | $700,000 |
| Wife’s legal fees paid | $89,659 |
| Wife’s superannuation | $72,180 |
| TOTAL ASSETS | $924,387.04 |
| Liabilities | |
| Debt to Mother | $9,000 |
| NET ASSETS | $915,387.04 |
Husband’s Assets and Liabilities:
| Asset | Value |
| Bank accounts | $192,015 |
| Shares – NIB, Telstra, AMP | $5,315.72 |
| Shares – Cisco (gross of tax) | $120,403 |
| Mazda CX 9 | $40,200 |
| Home contents | $10,000 |
| Cisco Option (net of tax) | $2,500 |
| Husband’s legal fees paid | $94,266 |
| Monies received by wife from orders of Sexton FM | $6,077 |
| Husband’s superannuation | $159,428 |
| TOTAL ASSETS | $630,204.72 |
| Liabilities | |
| Tax on sale of Cisco options | $15,000 |
| ANZ Visa | $1,500 |
| TOTAL LIABILITIES | $16,500 |
| NET ASSETS | $613,704.72 |
On my calculations, therefore, that the wife would need to make a payment to the husband of about $150,372. This is clearly within her means as she gave evidence to me that she expected that her mother would repay the funds loaned to her when the need arose.
In the circumstances of this case I am satisfied that an order reflecting this would be just and equitable to both parties. The wife will have sufficient funds to reaccommodate herself outside of her parents’ home, on the income that she has. I note that in her current financial statement she pays rent of $576 per week which would be a significant contribution towards a mortgage payment, if the wife were so inclined. The husband has accommodation provided by his de facto partner, so I am satisfied that these orders are just and equitable from his perspective as well.
Child Support Issues
The husband currently pays child support as assessed by the Child Support Agency at $955 per calendar month. The husband also pays 75 percent of school tuition fees and expenses pursuant to the order of Sexton FM. He says that the cost to him of this is $43,645 per annum. The husband’s primary application to the court is that order 8 be discharged in its entirety, so that he is relieved of any responsibility to pay towards private school fees and expenses. In the alternative he seeks an order that he pay 50 percent of the school fees and expenses, and that his child support assessment should be reduced to 50 percent as well. In the alternative the husband seeks an order that whilst he continues to pay 75 percent of the school fees, his periodical child support assessment be reduced to nil.
The basis of the husband’s case is that his financial circumstances have so changed since the orders made by Sexton FM, and his income is so much lower, that having regard to all the circumstances of the case and of the parties it is appropriate to vary the orders as sought.
The wife currently receives the benefit of child support as assessed, and the husband’s contribution of 75 percent of school fees and expenses pursuant to the order of Sexton FM. She opposes the order sought by the husband. Specifically she seeks an order that any payments he makes towards school expenses not be credited against any administrative assessment, and not be used as the basis of departure for assessment. Moreover, she seeks that any assessment be recalculated to exclude any component for school fees and expenses.
There can be no doubt on the facts of this case that both parents intended their children to be educated at a private school.
It is convenient to deal with the wife’s application first. It can be dealt with briefly. In substance, the wife is seeking the very same orders that were made by Sexton FM (orders 9-11) but which were set aside by the Full Court. If the Full Court found that the facts of the case before Sexton FM did not constitute special circumstances, then one wonders what new evidence is before this court that will justify such a finding? The only relevant substantial change in the evidence before me compared to the evidence before Sexton FM is that the husband’s income has gone down, and the wife’s has gone up. This is hardly the special circumstance that was missing before Sexton FM. Indeed, it is strong evidence to indicate the absence of special circumstances.
Mr Batey for the wife suggested that Sexton FM had not been eloquent enough in her reasons for judgment to convince the Full Court about the existence of special circumstances. It must logically follow that
Mr Batey was not eloquent enough to convince the Full Court about this matter either, because the Full Court set aside the orders in question. It must also surely be the case that if neither Sexton FM nor Mr Batey were able to convince the Full Court about special circumstances in the section 125 and 117 context, then on the evidence before me, neither could I find there to be special circumstances. The wife’s application in this regard is dismissed.
The husband’s application under s.129 of the Act to modify the orders by Sexton FM involve him satisfying me that:-
a)It is just and equitable as regards the child, the parent entitled to child support and the liable parent (s.129(2)(a)).
b)It is otherwise proper (s.129(2)(b)).
c)Variation is justified because of a change of circumstances of the child, the parent entitled to child support, and the liable parent (s.129(3)(a)).
d)The variation takes into account the matters considered in s.117(4),(5),(6),(7),(7A) and (8) (s.129(5).
e)The variation takes into account the property settlement effected by the orders I make in that regard (s.129(8)).
Moreover I am required to give reasons for modifying the order (s.130(1)).
In general terms s.129 requires me to comprehensively consider the financial circumstances of the parents and the children in the context of the child support scheme of legislation.
The husband’s unchallenged evidence is that his obligation pursuant to the assessment is $11,460 per annum and that pursuant to order 8 is $32,185 per annum. Thus his total liability is $43,645 per annum, or $839 per week. This represents about 24 percent of his corrected income of $3454 per week (in referring to the husband’s corrected income, I refer to his financial statement, as amended, and being exhibit H5). This may, however, understate the real value to the husband of his employment package which includes superannuation and a car.
On the husband’s evidence he is paying 75 percent of the total costs of schooling pursuant to order 8. The total cost is $42,913 of which he pays 75 percent. The wife’s 25 percent is $10,728 per annum or $206 per week, which represents about seven percent of her income as disclosed in her financial statement sworn 1 July 2009, inclusive of child support income.
The wife says the total costs of her payments for the benefit of the children, including rent, food, school fees and incidental is $1,457 per week. There was no challenge to this amount in cross-examination. It includes her share of the school expenses, not the total cost.
The husband’s financial statement evidences a weekly shortfall of $189 per week but this figure is probably greater having regard to his corrected financial statement (Exhibit H5) in which the commissions are lower, thus increasing the shortfall. He acknowledges in his financial statement that the weekly cost to him of payments benefiting his partner and children is $544 per week. At one level, that is the source of his shortfall, and it is clearly not an obligation that would have priority over his commitments to his own children. But on another level there is force to the husband’s argument that $544 is equivalent to the rent he would be paying if he were not living with his de facto. The figure is hardly an unreasonable one, given that the wife herself pays rent of $576 per week.
I acknowledge that there is some fluidity in the husband’s income. For example, the superannuation benefits he receives are not disposable income in his hands. Conversely, he would probably receive a taxation benefit in relation to at least part of his car allowance, so this is more easily treated like cash in his hands. I accept there is scope for his commissions to increase in future beyond $114 per week, a figure which I accept accurately represents an average of his current level of commissions. I would not want to make any determination that binds either the wife, or the Child Support Registrar, from reviewing an appropriate level of support for these children in future, should the husband’s income change. I appreciate that gives no finality, or even certainty, to the orders I make, but I cannot see how an order could be just and equitable and otherwise proper if it does not take into account the husband’s actual income from time to time. This applies with equal force to the wife’s income.
There was no real challenge to the reasonableness of the husband’s expenses as set out in his financial statement. Indeed the husband had the benefit of reconsidering his evidence about the needs of children overnight. In his corrected, financial statement (exhibit H5) he asserts that his total weekly expenses relating to children are $711. In cross-examination he explained that this is for all four children who may be in his household from time to time i.e. his two children on the five out of 14 nights per fortnight they are with him, and his partner’s two children on the 11 out of 14 nights per fortnight they are with her. He was unable to allocate these expenses as between the two sets of children.
Doing the best I can, however, his unchallenged evidence was that he pays $544 per week by way of expenses for his partner and her children (item 34). At item 60 he asserts his average weekly expenses for other adults (which could only be his partner) is $484 per week. That must logically mean that the expenses referable to his partner’s children is $544 minus $484, or $60 per week. If this is correct, and I recognise that this is a crude measure necessitated by the poor state of the evidence, it means that the husband’s expenses for his children are $711 minus $60, or $651 per week.
I also note that the husband’s evidence in cross-examination was that he preferred an outcome whereby he paid half the school fees and expenses, and half of any assessment from time to time. He thought that this would be the equivalent of almost $20,000 per annum, or about $374 per week. In fact, these figures are not, strictly speaking, correct but this evidence is significant because it indicates what the husband in fact believes to be a reasonable amount of child support that he could pay. On the husband’s own evidence, the annual assessment is $11,640 per annum, and the order 8 expenses are $32,185 per annum, totalling $43,645. Half of that is $21,822, or $419 per week.
If one considers the total costs associated with the children of the marriage, including school expenses, the wife asserts it is $1,457 to her and the husband $651 to him, or a total of $2,108 per week. It must be born in mind that neither challenge the reasonableness of the expenses asserted by the other. I accept therefore that it is reasonable and appropriate on the facts of this case. This means that (excluding child support paid) the husband bears about 30 percent of the costs associated with the children in circumstances where he has them in his care about 40 percent of the time. The wife bears about 70 percent of the costs of the children in circumstances where she has them for about 60 percent of the time. This approach, however, fails to take into account the child support paid by the husband.
The total costs of the children is $2,108 per week. The husband pays weekly child support to the wife of equivalent to $839 per week. In other words, he is paying to the wife about 57 percent of her costs associated with the children, as well as 100 percent of his costs when the children are with him. In other words, each week he pays $1,510 out of the total costs of the children $,2108, or 71 percent of the costs. From this perspective, in a situation where the financial circumstances of the husband and the wife are roughly equal, and he has the children about 40 percent of the time, it is hard to see how the current arrangement is just, equitable, and otherwise proper.
The totality of the evidence before me leads me to conclude that:
a)Even if I vary the orders so that the husband pays half the school fees and associated expenses, and half the amount of child support as would otherwise be assessed, the wife would still be able to meet the shortfall having regard to her income, expenses, assets, liabilities and resources. In other words, I am reasonably satisfied that varying the orders will not prejudice or cause hardship to the children in any way.
b)Prima facie, the current distribution of responsibility for contribution towards meeting the reasonable costs of the children is unfairly distributed having regard to the financial circumstances of the husband and the wife.
c)There has been a significant change in the financial circumstances of both the husband and the wife since the order was made by Sexton FM.
d)The property settlement effected by these orders I make does not detract from any of the considerations referred to in the present context.
e)It is just and equitable, and otherwise proper, to reduce the husband’s responsibility to contribute to school feels and expenses to 50 percent, and to pay 50 percent of the amount of child support that would be otherwise assessed. On the evidence before me this means he would be paying about $412 per week towards the children’s education expenses, and $110 per week by way of periodical child support. This means the contribution that the husband makes towards all costs associated with the children is:
School expenses: $412
Child support expenses: $110
His own costs $651
$1,173
This represents 55 percent of the total costs associated with the children.
In the circumstances of this case, I am satisfied that this is just and equitable, and otherwise proper.
I certify that the preceding one hundred and seventeen (117) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate:
Date: 18 March 2010
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