TALBOT & TALBOT

[2015] FCCA 1938

FEDERAL CIRCUIT COURT OF AUSTRALIA

TALBOT & TALBOT [2015] FCCA 1938

Catchwords:
FAMILY LAW – Property to be included – whether payment of school fees affects adjustment.

Legislation:

Family Law Act 1975 (Cth), ss.74, 75, 79

Applicant: MS TALBOT

Respondent: MR TALBOT

File Number: DGC 3670 of 2013

Judgment of: Judge Phipps

Hearing dates: 27 & 28 January 2015

Date of Last Submission: 28 January 2015

Delivered at: Dandenong

Delivered on: 17 July 2015

REPRESENTATION

Counsel for the Applicant: Mr Moisidis

Solicitors for the Applicant: Armstrong Ross

The Respondent: Appearing on their own behalf

ORDERS

1. That the monies held in trust by Armstrong Ross solicitors being the proceeds of sale of Property C be paid as follows:

   (a)firstly in satisfaction of the order made 28 January 2015 for payment of school fees to (omitted) College (if the sum of $40,000 is not already wholly expended);

   (b)secondly the amount of $69,541 to the wife;

   (c)thirdly the amount of $4,266 to the wife in satisfaction of the costs order made 15 June 2015;

   (d)the balance to the husband.

2. That the wife retain for her sole use and benefit the interest in the property situated at and known as Property L.

3. That the husband retain for his sole use and benefit the interest in (business omitted) Pty Ltd and the Talbot Business Trust and the wife do all things necessary to relinquish any interest she has in (business omitted) Pty Ltd and the Talbot Business Trust.

4. That the wife retain the (omitted) Time Share for her sole use and benefit, and in so far as the husband has any interest in the (omitted) Time Share he do all acts and things necessary to transfer his interest to the wife.

5. That the wife retain her Mazda (omitted) motor vehicle for her own use and benefit.

6. That the husband be solely responsible for and indemnify the wife against any liability for:

   (i)the debt to Mr J;

   (ii)the husband’s (omitted) Bank credit card;

   (iii)the (omitted) Loan.

7. That unless otherwise specified in these orders:

   (i)each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at the date of these orders;

   (ii)money standing to the credit of the parties in any bank account in their sole name remain the property of the party;

   (iii)any insurance policies become the sole property of the owner named therein;

   (iv)each party is solely liable for and indemnifies the other party against liability encumbering any item of property to which that party is entitled pursuant to these orders.

IT IS NOTED that publication of this judgment under the pseudonym Talbot & Talbot is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DANDENONG

DGC 3670 of 2013

MS TALBOT

Applicant

And

MR TALBOT

Respondent

REASONS FOR JUDGMENT

Introduction

1. Ms Talbot, the wife, and Mr Talbot, the husband, disagree about the division of their property.  The wife proposes an approximate 70/30% split in her favour while the husband proposes 60/40% in the wife’s favour.  The items in the property pool are largely agreed.  Some inclusions and some valuations are disputed.

2. The final hearing originally involved children’s and child support issues.  They were resolved as was superannuation.  The parties have three children X born (omitted) 1998, aged 17, Y born (omitted) 2000, aged 15, and Z born (omitted) 2003, aged 11.  Final children’s orders made 27 January 2015 provide for the parents to have equal shared parental responsibility for the children and for the children to live with the wife.  The order provides for the children to spend time with the husband:

   a)X and Y in accordance with their wishes and as agreed between the parties;

   b)Z:

   i)in week one from the conclusion of school Thursday until the commencement of school on Monday;

   ii)in week two from the conclusion of school on Thursday until the commencement of school on Friday;

   iii)half school holidays and the various special occasions.

3. The child-support order was made on 28 January 2015.  It provides for the husband to pay child support in the form of non-periodic amounts being 70% of private school fees and charges for the children’s school including 70% of the reasonable costs of school uniforms, including clothing and footwear, textbooks, excursions, school related equipment and school related events including concerts and exhibitions.  The order provided for a payment of $40,000 to the children’s schools from the monies held in trust from the sale of the former matrimonial home for so much of 2015 and 2016 fees and charges for the children attending at the college that the sum of $40,000 covers.  The husband’s liability for 70% of the fees does not commence until the sum of $40,000 was exhausted.

4. The superannuation order provides for a splitting order in favour of the wife of the husband’s superannuation using a base amount of $70,038.50.  This equalises the parties’ superannuation.

5. The parties commenced their relationship in (country omitted) in 1990 and moved to Australia in 1991.  They married on (omitted) 1993.  In 1999 they built the matrimonial home at Property C.  They separated on 6 April 2013.  The wife remained living in the Property C property with the children until it was sold by agreement.  The balance of the sale proceeds is now held in trust pending the resolution of these proceedings.

6. Both parties were employed throughout the relationship, the wife with breaks and part-time following the birth of children.  The husband’s employment since (omitted) 2009 has been with (employer omitted).  This is a (business omitted).  The husband purchased a 40% share of the business which is held by a corporate trustee for the Talbot Business Trust.

Assets and liabilities

1. Section 79 of the Family Law Act 1975 (Cth) provides for the division of property. The first step is to determine the parties’ matrimonial assets and liabilities.

2. The following table sets out each party’s position:

Assets	Husband	Wife
Property C -  proceeds of sale	146,759	146,759
Property L - half share	135,000	135,000
(business omitted) Pty Ltd	150,752	150,752
Mazda (omitted)	2,985	2,985
(omitted) Time Share	11,500	7,000
Holden (omitted)	16,000	N/A
Household contents	17,000	N/A
479,996	442,496
Liabilities
Debt to Mr J	25,082	25,082
Husband's (omitted) Bank credit card	18,845	14,000
The (omitted) Loan	1,000	1,000
Holden (omitted) lease payout	17,653	N/A
62,580	40,082
Nett	417,416	402,414

1. In his financial statement of 16 January 2015 the husband says he has a tax debt of $17,427 for the last financial year. In his oral evidence he said his tax debt is $31,000 which he was paying by instalments. In his financial statement he says the amount of $17,427 is for the last financial year, so the year ending 30 June 2014, and so wholly for a period after separation. When he said in his oral evidence that his tax debt was $31,000 he did not say what year it applied to but I infer that the additional amount applies to a period after separation. It should not be treated as a matrimonial debt for the purpose of determining assets and liabilities but has to be taken into account under s.75(2).

2. Prior to the superannuation splitting order the husband had superannuation of $173,151 and the wife $33,070.

3. (business omitted) Pty Ltd is the trustee of the Talbot Business Trust and holds a 40% interest in (business omitted) Pty Ltd.  (business omitted) Pty Ltd purchased the interest in February 2009 for $144,933.  This was financed by a loan of $137,000 secured against the family home and the balance a loan from the vendor.  The debt to Mr J of $28,082 is the balance of this loan.  The parties agree that the liability should remain with the husband.  The loan secured against the family home at Property C was paid out when the family home was sold.

4. The property at Property L is business premises.  The wife owns a half share of those premises.

5. The parties purchased a platinum membership in (omitted) time share, a time share club, in 2003.  They now have 5000 points.  There are different levels of platinum membership, the parties’ being a 5000 point level, which the wife says, is the entry level of that level.

6. The wife obtained her valuation by looking at a website (omitted).  She said it is a well-known website for purchasing (omitted) Time Share memberships.  The website had three platinum 5000 point memberships advertised with prices of $6,990, $7,250 and $7,490.  She uses the price of $7,000.

7. The husband used a different website to obtain his value of $11,500.  The advertisement he used was for a platinum membership of 5000 points with 9600 holiday points available.  The advertisement had the word “sold” stamped across it.  Answers in cross examination of the husband show that points can be accumulated.

8. There is no evidence of accumulated points for the parties’ (omitted) Time Share.  Of more significance is that these are valuations produced by the parties using information on websites.  There is no evidence by a person qualified to value assets such as this one.  If I was to attempt to analyse the evidence myself and reach a decision about which one is the correct valuation I would be doing the valuation myself which I cannot do.  The parties agree that the wife should retain the (omitted) Time Share and so I will use her valuation of $7,000 as an admission against interest.

9. The Holden (omitted) was owned at the time of separation.  Subsequent to separation the husband leased a Mitsubishi (omitted) and used the Holden (omitted) as a trade-in.  The husband’s evidence is that at the time of the hearing the amount to pay out the lease on the Mitsubishi (omitted) was $18,845.

10. The husband says that the amount received for the Holden (omitted) as a trade-in was greater than its depreciated value and so it increased the tax liability. This is not a reason for including the Holden (omitted) and its lease payout in the assets and liabilities. The transaction happened after separation but prior to the hearing. The proper approach is to leave the Holden (omitted) and the transaction surrounding it out of the assets and liabilities. An application under s.79 concerns property. The Holden (omitted) is no longer an asset of the parties. The husband’s approach is to attempt to use the financial consequence of the transaction of purchasing the Mitsubishi and using the Holden as a trade-in as property. It is not.

11. The husband says the credit card debt should be allowed at $18,845, the amount of his credit card debt at the time of the hearing.  The wife says it should be $14,000, the amount at the time of separation.

12. The husband’s argument is that paying his own living expenses, child support, the mortgage on the former matrimonial home until it was sold and a number of other expenses for the children means he has been unable to reduce the credit card debt.  The wife’s argument is that the husband has used the credit card for his own purposes following separation and so the debt should be allowed at $14,000.

13. The husband is paying $1,801 child support for the children each month.  He has paid for the children’s mobile phones and private health insurance and he paid nearly $7,000 in mortgage payments while the wife and children continued to reside in the home.

14. His financial statement puts his gross weekly income at $2,608 in January 2015.  The amount includes credit card and motor vehicle allowances.  He has a partner who has a gross weekly income of $600.

15. His income tax is $608 a week and in his financial statement he puts his expenditure at $2,723 per week.

16. The husband’s claim that he has been unable to reduce the credit card bill is reasonable.  At the time of separation the $14,000 balance was a matrimonial debt and it is reasonable to treat the $4,885 difference between the credit card balance at the time of separation and the hearing, a period of about 21 months, as interest.  An exact calculation is not necessary.

17. The husband says that the contents of the wife’s home should be included at $17,000.  The wife says that it should be nothing.  The husband’s valuation is based on an early financial statement of the wife.  Her financial statement filed at the time of the trial puts household contents of $15,000.  The wife proposes that nothing be put in.

18. The wife says that the figure of $15,000 is a guess by her.  She purchased a new washing machine after separation but otherwise the contents came from the Property C property.  All of it is 8 to 10 years old.  The husband took some contents from the Property C property but given that the three children live with the wife she retained more.

19. The contents have not been professionally valued.  Given that the wife says it was a guess, that the husband retains some, although less, of the furniture and contents and that much of the furniture and appliances are used by the children I do not consider it appropriate to include any value for the household contents in the wife’s possession.

20. Initially the wife claimed as a liability a taxation debt arising out of a distribution from the Talbot Business Trust.  In her final proposal she did not include it.

21. The assets are:

Property C proceeds	$146,759
Property L half share	$135,000
(business omitted) Pty Ltd	$150,752
Mazda (omitted)	$2,985
(omitted) Time Share	$7,000
TOTAL	$442,496

1. The parties agreed on an order that $40,000 of the proceeds of sale should be set aside for the children’s school fees, which means that the value of assets available is $402,496.

2. The liabilities are:

Debt to Mr J	$25,082
Husband's (omitted) Bank credit card	$18,845
The (omitted) Loan	$1,000
TOTAL	$44,927

1. The net assets, after deducting the $40,000 for school fees, is $357,569.

Proposals

1. The wife’s proposal at the end of the hearing for the distribution of the assets and liabilities, after excluding $40,000 for school fees, is:

Assets	Wife	Husband
Property C - proceeds of sale	106,769
Property L - half share	135,000
(business omitted) Pty Ltd	150,752
Mazda (omitted)	2,985
(omitted) Time Share	7,000
251,754	150,752
Liabilities
Debt to Mr J	25,082
Husband's (omitted) Bank credit card	14,000
The (omitted) Loan	1,000
40,082
Total Net Asset	251,754	110,670
Property available for division	362,424
68%	32%

1. The parties agree that the wife should retain her interest in the Property L property, the Mazda (omitted) and the (omitted) Time Share and the husband retain (business omitted) Pty Ltd, that is that the wife relinquish any right to a share of the trust property which that company holds.

Just and equitable

1. Section 79(2) provides that the court shall not make an order unless it is satisfied that in all the circumstances it is just and equitable to make the order. Both parties propose the making of a property order. The parties’ relationship has come to an end and the basis upon which they shared ownership of property and finances is over. In the circumstances it is just and equitable to make an order.

History

1. Once matrimonial assets and liabilities are established and the determination made that it is just and equitable to make an order, the court must next consider contributions and then the matters under s.75(2). Both these require reference to the history of the parties’ relationship and their employment and income during that time.

2. The husband was born on (omitted) 1967 and is aged 47 years.  The wife was born on (omitted) 1967 and is aged 47 years.  The parties met in (country omitted) in late 1990 and commenced living together in 1991.  They moved to Australia, travelled for some time and then commenced employment.  Neither had any assets at the commencement of the relationship.

3. They married on (omitted) 1993 and separated on 6 or 7 April 2013.

4. In August 1991 the husband commenced working with (employer omitted) on a three-month contract and then obtained full-time employment.  The wife initially worked in a (employer omitted) and then for an (employer omitted).

5. The husband received a promotion to work as a (occupation omitted) in (omitted).  In (omitted) 1994 he moved back to Melbourne again as a (occupation omitted).  He was dismissed in (omitted) 2000 when he lost his driving licence due to drink driving while in his company provided car.  His 2000 taxable income was $60,226.

6. The husband then worked on several short-term contracts.  The last was a six month contract with (employer omitted).  His taxable income for 2001 and 2002 was $66,648 and $68,047.  He obtained a full-time position with (employer omitted) and worked there for nine years until (omitted) 2008.  His taxable income in 2003 was $73,333 and in 2008, $115,249.

7. In (omitted) 2008 the husband commenced working for (employer omitted) on a casual basis.  In (omitted) 2008 he became employed full-time on a salary of $60,000 plus a fully maintained motor vehicle.  In 2009 (business omitted) Pty Ltd as trustee for the Talbot Business Trust purchased a 40% interest in the business and since then the husband’s employment has been as an owner controlling 40%.  His income since then has come from the Talbot Business Trust’s share of the profits of the business.

8. The net profit of (business omitted) Pty Ltd in 2014 was $122,000.98 and 2013, $81,517.55.  The profit and loss statement for 2014 included as income profit on the sale of the Holden motor vehicle of $7,404.01.  In 2013 motor vehicle depreciation was $5,103 and in 2014, $10,256.  The husband uses the company motor vehicle as his motor vehicle and so does not have to provide a motor vehicle for himself out of the net income of the company.  Even taking these into account there is a considerable difference in net income.  The gross receipts from the 40% interest in the business in 2014 was $134,603.38 and in 2013 $102,922.95.  While the motor vehicle figures do make some difference there was a considerable increase in the husband’s income in the 2014 year.  The husband says that this increase will not necessarily be maintained.  His reasons for saying so are dealt with later in these reasons.

9. The wife worked in various (omitted) roles and then worked for (employer omitted) from (omitted) 1995 until (omitted) 2000.  She worked as an (occupation omitted), a (occupation omitted) and was (occupation omitted).  She had a short maternity leave after X was born and then after Y was born took maternity leave from (omitted) 1999 until (omitted) 2000.  She then left her employment and commenced part-time work from home as a (occupation omitted) for (employer omitted).

10. In (omitted) 2008 she commenced part-time work in (occupation omitted) at (employer omitted).  In (omitted) 2010 she commenced working permanent part-time in the (employer omitted).  In (omitted) 2014 she moved to a position in (employer omitted).  She works permanent part time.  Her annual salary is $34,792.83 gross.  The children attend (omitted) College.  The wife says the part-time position enables her to care for the children.  She has school holidays off and her yearly salary is averaged out on a monthly basis.

11. The parties lived in rented premises until they purchased land at Property C and had the former matrimonial home built by (omitted).  They moved in in (omitted) 1999.

12. The wife has Crohn’s disease and suffered from Leukaemia which is in remission.

Contributions

1. Section 79(4) of the Family Law Act 1975 (Cth) provides for the consideration of contributions. These are the financial contributions made directly or indirectly by on behalf of a party to the acquisition and conservation or improvement of any of the property of the parties, the contribution other than a financial contribution made in the same way, the contribution by a party to the welfare of the family including any contribution made in the capacity of homemaker or parent and the effect of any proposed order upon the earning capacity of either party.

1. The husband has made the greater financial contribution while the wife has, after the birth of the parties’ second child had part-time employment.  She has had the greater role in contributing to the welfare of the family as a homemaker and parent and this role balances against the husband’s greater financial contribution.  Contributions are equal.

Section 75(2)

1. The relevant considerations under s.75(2) are:

   a)the age and state of health of each of the parties;

   b)the income property and financial resources of each of the parties and the physical or mental capacity of each of them for appropriate gainful employment;

   c)whether either party has the care and control of the child of the marriage was has not attained the age of 18 years;

   d)the commitments of each of the parties necessary to enable a party to support himself or herself and the children;

   e)a standard of living that in all the circumstances is reasonable;

   f)the duration of the marriage and the extent to which it has affected the earning capacity of the party;

   g)the need to protect a party wishes to continue that party’s role as parent;

   h)if either party is cohabiting with another person the financial circumstances relating to the cohabitation;

   i)any child support paid;

   j)any fact or circumstance which in the opinion of the court of justice of the case was to be taken into account.

2. Both parties are 47.  The wife has health problems but they do not currently affect her ability to work part-time.  She says her medication makes her tired.  Both parties have always been able to find employment.  In his financial statement of 16 January, 2015 the husband lists his gross weekly income as follows:

   a)income from The Talbot Business Trust $2,182;

   b)benefits from business;

   i)(omitted) card $115;

   ii)Car allowance $311.

3. The total is $2,608 per week.

4. He lives with his partner, stepdaughter and stepson.  He gives his partner’s income as $600 a week.  He pays $184 per week for rent and $415 per week child support.

5. The parties’ three children are in year 11, year 10 and year six at (omitted) College.  In 2015 the fees for years 11 and 12 are $9,320 for each student and for year six $7,450.  There is a Capital Levy & Assistance Program of $780 per family and a Parental Assistance Programme of $180 per family.  Since Z is the third child there is a 25% discount for her.  The total fees for 2015 are $25,187.50.  The party’s agreement means that the husband pays 70% and the wife 30%.  In addition there are various other educational expenses.

6. The husband’s share of the fees is $17,631.25 per year.  Child support is assessed at $1,801.17 per month, $21,614.04 per year.  The total is $39,245.29 which will be the husband’s contribution to the care and education of the children, once the sum of $40,000 the parties have agreed to use for school fees, has been expended and until the eldest child finishes school at the end of 2016.

7. The wife’s share of the fees for 2015 is $7,556.25.

8. At 29 January 2014 tuition fees unpaid were as follows:

   Tuition fees 2013 $  5,999.09

   Tuition fees 2014 $22,965.00

   Total   $28,964.09

9. This means that of the $40,000 the parties agree to allocate to school fees about $11,000 is available for payment of the 2015 fees.  The husband’s share of the 2015 fees will reduce by about $7,600 and the wife’s by about $3,300.

10. 40% of the income of the (business omitted) Pty Ltd business comes from the one contract with (omitted).  It is a three-year contract which expires in the middle of 2015.  If not renewed the gross income of the business will therefore drop unless it can be replaced by other business.  (business omitted) had the (omitted) contract until 2009, lost it during the next three years and regained it in 2012.  While the husband’s income is about $115,000 per year plus the benefit of the corporate credit card and car allowance, he is effectively self-employed and his income may decrease.  Nothing in the evidence suggests that his income will increase, or at least increase by any substantial amount.

11. The wife works 27.5 hours a week at $24.33 an hour which is a little under $35,000 a year.  She receives family tax benefit of $509 a fortnight, inclusive of rent assistance.  If she worked full time, if that was available in her current position, she would earn about $47,500 per year.

12. The wife has the major care of the three children, aged 17, 15 and 11.  Her part-time work enables her to care for the children.  In addition, she says that the medication she must take makes her tired.  Her approach is reasonable currently but once the younger child is a little older she should be able to work full time.

13. The eldest child has a part time job and earns $65.00 per week, which the wife says she uses to fund her social life and shopping.

14. I take into account that the husband has a tax debt which is at least $17,427 and it may be $31,000.  He does not have the ability to pay the debt and his evidence was that he has an arrangement with the Australian Taxation Office.

15. I take into account that the wife received a greater share of the contents of the former matrimonial home but in circumstances where she has the major care of the three children.

16. I take into account the reality of assets each will receive, the debts and the amounts of money available for distribution.

17. (business omitted) Pty Ltd owns only a share of (business omitted) Pty Ltd.  Realistically there can only be a limited number of potential purchasers and there is no evidence that there is any such person interested in the business.  As well, if the husband could and did sell he would have to find alternative employment.

18. The wife owns a half share in real estate.  There is no suggestion in the evidence that she might sell it, or whether it can be sold or used to secure finance.

19. Until the end of 2016, assuming 2015 fee rates, the husband’s share of school fees will be $27,662.50 and the wife’s $11,812.50.  In 2017, after the eldest child has left school, the fees for the two remaining children will be about $17,855.  The husband’s share will be about $12,500 and the wife’s about $5,350.

20. The wife’s proposal would leave the husband with all of the matrimonial debt.  He has little ability to do anything but pay the interest on it.

21. Until the end of 2017 the husband will pay $23,000 more towards school fees than the wife.  This is about 6.3% of the net assets of $362,424.  This is in addition to assessed child-support and I will take it into account.

22. The transaction involving the Holden (omitted) and the contents retained by the wife, both already discussed, are part, albeit small of the considerations.

23. The husband’s present income and his income earning ability is considerably higher than the wife’s but his commitment to 70% of school fees is a counter balance to the disparity.  Without the school fees a greater adjustment in favour of the wife would be appropriate but with the school fees and the debts the husband will retain the proper adjustment is 10% in favour of the wife.

24. On 15 June, 2015 I made a costs order that the husband pay the wife’s costs of an application made that day fixed at $4,266 and that that about the adjusted against the final property settlement.

25. 60% of $357,569 is $214,541.  40% is $143,027.

26. The wife retains these assets:

    Property L - half share                $135,000

    Mazda (omitted)  $    2,985

    (omitted) Time Share                   $    7,000

    Total   $144,985

27. The balance to the wife from the proceeds of sale is $69,541.

28. The husband retains (business omitted) Pty Ltd and the balance of the proceeds of sale less the costs order of $4,266.

I certify that the preceding seventy-seven (77) paragraphs are a true copy of the reasons for judgment of Judge Phipps

Date:  17 July 2015