Wacket and Wacket
[2010] FamCA 154
•3 March 2010
FAMILY COURT OF AUSTRALIA
| WACKET & WACKET | [2010] FamCA 154 |
| FAMILY LAW – PROPERTY SETTLEMENT – Assets and Liabilities – Contributions – Adjustments – Just and equitable – Superannuation FAMILY LAW – SPOUSE MAINTENANCE – Need – capacity FAMILY LAW – CHILD SUPPORT DEPARTURE |
| Family Law Act 1975 (Cth) ss 72,75 & 79 Child Support (Assessment) Act 1989 (Cth) s 117 |
In the Marriage of Hickey (2003) 30 Fam LR 355
In the Marriage of Omacini (2005) 33 Fam LR 134
Mallett v Mallett (1984) 9 Fam LR 449
In the Marriage of Ferraro (1992) 16 Fam LR 1
In the Marriage of Shewring (1987) l2 Fam LR 139
In the Marriage of Lenehan (1987) 11 Fam LR 615
In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712
In the Marriage of Zyk (1995) 19 Fam LR 797
In the Marriage of Coghlan (2004) 33 Fam LR 414
In the Marriage of Pierce (1999) 24 Fam LR 377; FLC 92-844
In the Marriage of Mitchell (1995) FLC 92-601; 19 Fam LR 44
In the Marriage of Gyselman [1991] 15 FamLR 219, (1992) FLC 92-279
| APPLICANT: | Ms Wacket |
| RESPONDENT: | Mr Wacket |
| FILE NUMBER: | SYC | 3030 | Of | 2008 |
| DATE DELIVERED: | 3 March 2010 |
| PLACE DELIVERED: | Sydney |
| JUDGMENT OF: | Judicial Registrar Loughnan |
PLACE HEARD: Sydney
| HEARING DATE: | 28 & 29 January 2010 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT WIFE: | Mr G. Johnston |
| SOLICITOR FOR THE APPLICANT: | Johnston Vaughan Solicitors |
COUNSEL FOR THE RESPONDENT HUSBAND: | Mr M. Kearney | |
| SOLICITOR FOR THE RESPONDENT: | Broun Abrahams Burreket | |
Orders
The husband and the wife take all steps and sign all documents necessary to cause the property situated at and known as R property (“the former matrimonial home”) to be sold and in particular shall:
(a)Appoint an agent to market the former matrimonial home for sale, and failing agreement being reached within 7 days the husband shall nominate three agents to the wife from which she will select one agent and if she fails to do so within 7 days, the husband shall select one agent;
(b)Market the former matrimonial home for sale by private treaty;
(c)Execute all documents requested by the real estate agent for the sale of the former matrimonial home by private treaty and in the event the parties cannot agree on the terms of the agent’s contract within 7 days the contract is to be in the agent’s standard form and with the agent’s standard fees.
(d)Give such instructions as are necessary to a solicitor agreed between the parties and failing such an agreement to a solicitor nominated by the President of the New South Wales Law Society for the preparation of a Contract for Sale and for the Contract of Sale to be made available to the real estate agent.
(e)In the event the former matrimonial home is not sold by private treaty within three months then the former matrimonial home is to be placed for sale by public auction to take place on a date within a further period of 8 weeks;
(f)The reserve price for sale by public auction shall be $1.5 million or such other figure as is agreed between the parties;
(g)Attend at the auction sale and negotiate with the highest bidder in the event that the reserve price is not reached;
(h)Execute the Contract for Sale and in the event the husband and the wife fail to agree on the terms of the Contract for Sale the terms recommended by an independent solicitor shall be adopted;
(i)Co-operate in every way with the real estate agent in relation to the sale of the former matrimonial home including making keys available, allowing inspection of the former matrimonial home at all times requested by the real estate agent and ensuring that the former matrimonial home is in a neat and clean condition at the time of inspection by the prospective purchasers;
(j)Execute all other documents necessary to complete the sale within the times required by the Contract for Sale to ensure that the purchasers do not have a right to terminate or rescind due to failure to do so;
The wife shall vacate the former matrimonial home upon or prior to the date of settlement of the sale.
Upon settlement of the sale of the former matrimonial home the husband and the wife shall take all steps and sign all documents necessary to cause the proceeds of sale to be disbursed in the following manner and priority:
(a)Payment of real estate agents commission and auction expenses (if any);
(b)Payment of reasonable legal costs of sale and usual conveyancing adjustments;
(c)In discharge of Australia and New Zealand Banking Group Limited mortgages Nos …9 and …0;
(d)In payment of the remaining balance as to 85% to the wife and 15% to the husband; and,
The husband shall forthwith do all acts and things and sign all documents required to transfer to the wife his interest in Ford Territory motor vehicle registered no. ….
Prior to settlement of the sale the wife shall provide access to the former matrimonial home to the husband to collect the following items of furniture and contents:
(a)… framed water colour painting located in formal lounge room of the property;
(b)Greek Islands Sunset photograph;
(c)Greg Norman photograph;
(d)Small chest of drawers (metal strapped blanket box located in formal lounge room of the property);
(e)Cast iron magazine rack located in formal lounge room;
(f)1,100 diameter pedestal based tea table located in formal lounge room;
(g)Formal cutlery set;
(h)….;
(i)Carved camphorwood box in rumpus room;
(j)Tools and effects located in the backyard shed;
(k)All the husband’s personal papers, files, CD’s and books;
(l)All items gifted to the husband contained in the cabinet in the formal lounge room.
The Court noted that except as to item (g), Order 5 is made by consent.
By consent the wife shall make available to the husband all family photographs and family videos and the parties shall share equally the cost of copying such family photographs and videos as are nominated for copying by each party as and when such costs fall due.
The husband shall pay to the wife as she directs from time to time, by way of spousal maintenance:
(a)Commencing on the date of these orders and continuing for a period of four months thereafter, $400 per week together with the direct amounts payable by the husband for the benefit of the wife pursuant to the orders made on 24 June 2008; and thereafter
(b)$300 per week until the conclusion of the wife’s current course of tertiary studies or 31 December 2012, whichever is the earlier.
Whenever a splittable payment becomes payable in respect of the superannuation interest of the husband in Plum Personal Plan, a sub-plan of the Plum Superannuation Fund the wife shall be entitled to the sum representing 40% of the husband’s entitlement and there shall be a corresponding reduction in the entitlement of the husband to whom the splittable payment would have been made but for this Order.
Order 9 has effect from the operative time and the operative time for the orders shall be the fourth business day from the date of service of the orders upon PFS Nominees Limited, the trustee of Plum Personal Plan, a sub-plan of the Plum Superannuation Fund.
Orders 9 and 10 above shall bind PFS Nominees Limited, the trustee of Plum Personal Plan, a sub-plan of the Plum Superannuation Fund.
Other than as set out above each of the husband and the wife shall be solely entitled to the exclusion of the other to all other assets in their respective possession and control.
Pursuant to Section 117 of the Child Support (Assessment) Act 1989 there be a departure from the Administrative Assessment of child support payable by the husband to the wife in respect of C born … May 1996 (“C”) and J born … July 1997 (“J”) such that the husband shall pay as and when they fall due up until the conclusion of the children’s secondary schooling:
(a)All costs of the attendance of C and J at their present private schools (or such other schools as may be agreed between the parties in writing) including but not limited to:
(i)Tuition fees;
(ii)Books, resources and stationery, excursions;
(iii)Material charges;
(iv)School uniforms;
(v)Extra-curricular activities as are agreed between the parties.
(b)Such moneys as are required to maintain the children in the current level of private health insurance.
The amounts payable by the husband pursuant to Order 13 are to be credited as 25% of the annual rate of child support payable by the husband under all and any relevant Administrative Assessments.
IT IS NOTED that publication of this judgment under the pseudonym Wacket & Wacket is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 3030 of 2008
| MS WACKET |
Applicant
And
| MR WACKET |
Respondent
REASONS FOR JUDGMENT
After living together for more than 13 years the parties cannot agree on a settlement of their property. They are also in dispute about spouse maintenance and child support.
Applications
The wife seeks orders in terms of her Amended Application For Final Orders filed 19 June 2009 as follows:
1.That within 28 days the respondent do all acts and things to cause his interest in the property known as [R property] NSW, (Folio Identifier […]) to be transferred to the Applicant.
2.That within 28 days the respondent do all acts and things to cause the mortgage with ANZ limited in the property known as [R property] NSW, (Folio Identifier […]) to be discharged in full.
3.That the respondent pay spousal maintenance in the amount of $500 per week.
4.That the respondent pay the tuition and education costs and related education costs for [J] born […] July 1997 at [A] School until her conclusion of her studies in Year 12.
5.That the respondent pay the tuition and education costs and related education costs for [C] born on […] July 1997 at [R] College until her conclusion of her studies in Year 12.
6.That the respondent pay the applicant’s costs of and incidental to these proceedings.
In the course of final submissions learned counsel for the wife noted that the wife’s maintenance claim was not indefinite but for the duration of her studies.
The husband seeks orders in terms of the Minute incorporated in the Case Summary document provided in his case, as amended in relation to a proposed splitting order, by an email from his solicitor to my chambers and to the solicitor for the wife sent on 2 February 2010, as follows:
1.That the wife’s Amended Application for Final Orders filed 19 June 2009 be dismissed.
2.That by way of final property alteration pursuant to Section 79 of the Family Law Act:
2.1.That the husband and the wife take all steps and sign all documents necessary to cause the property situated at and known as [R property] (“the former matrimonial home”) to be sold and in particular shall:
(a)Appoint an agent to market the former matrimonial home for sale, and failing agreement being reached within 7 days the husband shall nominate three agents to the wife from which she will select one agent and if she fails to do so within 7 days, the husband shall select one agent;
(b)Market the former matrimonial home for sale by private treaty;
(c)Execute all documents requested by the real estate agent for the sale of the former matrimonial home by private treaty and in the event the parties cannot agree on the terms of the agent’s contract within 7 days the contract is to be in the agent’s standard form and with the agent’s standard fees.
(d)Give such instructions as are necessary to a solicitor agreed between the parties and failing such an agreement to a solicitor nominated by the President of the New South Wales Law Society for the preparation of a Contract for Sale and for the Contract of Sale to be made available to the real estate agent.
(e)In the event the former matrimonial home is not sold by private treaty within three months then the former matrimonial home is to be placed for sale by public auction to take place on a date within a further period of 8 weeks;
(f)The reserve price for sale by public auction shall be $1.5 million;
(g)Attend at the auction sale and negotiate with the highest bidder in the event that the reserve price is not reached;
(h)Execute the Contract for Sale and in the event the husband and the wife fail to agree on the terms of the Contract for Sale the terms recommended by an independent solicitor shall be adopted;
(i)Co-operate in every way with the real estate agent in relation to the sale of the former matrimonial home including making keys available, allowing inspection of the former matrimonial home at all times requested by the real estate agent and ensuring that the former matrimonial home is in a neat and clean condition at the time of inspection by the prospective purchasers;
(j)Execute all other documents necessary to complete the sale within the times required by the Contract for Sale to ensure that the purchasers do not have a right to terminate or rescind due to failure to do so;
2.2.That the wife shall vacate the former matrimonial home upon or prior to the date of settlement of the sale.
2.3.That upon settlement of the sale of the former matrimonial home the husband and the wife shall take all steps and sign all documents necessary to cause the proceeds of sale to be disbursed in the following manner and priority:
(a)Payment of real estate agents commission and auction expenses (if any);
(b)Payment of reasonable legal costs of sale and usual conveyancing adjustments;
(c)In discharge of Australia and New Zealand Banking Group Limited mortgages Nos […]9 and […]0;
(d)In payment of the remaining balance as to 50% to the wife and 50% to the husband; and,
(e)Forthwith and simultaneously upon receipt of payment by the wife in accordance with paragraph 2.4(d) herein, the wife shall pay to the husband the sum of $4,092 being one half of the fees of the single experts in these proceedings.
2.4.That the husband shall do all acts and things and sign all documents required to transfer to the wife his interest in Ford Territory motor vehicle registered no. […].
2.5.That the wife prior to settlement of the sale shall provide access to the former matrimonial home to the husband to collect the following items of furniture and contents:
(a)[…] framed water colour painting located in formal lounge room of the property;
(b)Greek Islands Sunset photograph;
(c)Greg Norman photograph;
(d)Small chest of drawers (metal strapped blanket box located in formal lounge room of the property);
(e)Cast iron magazine rack located in formal lounge room;
(f)1,100 diameter pedestal based tea table located in formal lounge room;
(g)Formal cutlery set;
(h)Office desk;
(i)Carved camphorwood box in rumpus room;
(j)Tools and effects located in the backyard shed;
(k)All the husband’s personal papers, files, CD’s and books;
(l)All items gifted to the husband contained in the cabinet in the formal lounge room.
2.6.That the wife shall make available to the husband all family photographs and family videos and the parties shall share equally the cost of copying such family photographs and videos as are nominated for copying by each party as and when such costs fall due.
2.7.That each party retains a complete set of photographs and videos nominated by each of them.
2.8.That Whenever a splittable payment becomes payable in respect of the superannuation interest of the husband in Plum Personal Plan, a sub-plan of the Plum Superannuation Fund the wife shall be entitled to the sum representing one half of the husband’s entitlement and there shall be a corresponding reduction in the entitlement of the husband to whom the splittable payment would have been made but for this.
2.9.That Order 2.8 has effect from the operative time and the operative time for the orders shall be the fourth business day from the date of service of the orders upon PFS Nominees Limited, the trustee of Plum Personal Plan, a sub-plan of the Plum Superannuation Fund.
2.10.That Orders 2.8 and 2.9 above shall bind PFS Nominees Limited, the trustee of Plum Personal Plan, a sub-plan of the Plum Superannuation Fund.
2.11.That other than as set out above each of the husband and the wife shall be solely entitled to the exclusion of the other to all other assets in their respective possession and control.
2.12.That pursuant to Section 117 of the Child Support (Assessment) Act 1989 there be a departure from the Administrative Assessment of child support payable by the husband to the wife in respect of [C] born […] May 1996 (“[C]”) and [J] born […] July 1997 (“[J]”) such that the husband shall pay as and when they fall due up until the conclusion of the children’s secondary schooling or until each of the children attain the age of 18 years, whichever occurs first;
(a)All costs of the attendance of [C] and [J] at their present private schools (or such other schools as may be agreed between the parties in writing) including but not limited to:
i. Tuition fees;
ii. Books, resources and stationery, excursions;
iii. Material charges;
iv. School uniforms;
v. Extra-curricular activities as are agreed between the parties.
(b)Such monies as are required to maintain the children in the current level of private health insurance.
2.13.The amounts payable by the husband pursuant to Order 2.12 are to be credited as 100% of the annual rate of child support payable by the husband under all and any relevant Administrative Assessments.
2.14.That the wife pay the husband’s costs of and incidental to these proceedings.
Documents read
The wife relied on the following documents:
Financial Statement of the Wife sworn 20 May 2008 and filed 23 May 2008;
Financial Statement of the Wife sworn 5 June 2009 and filed 9 June 2009; and
Affidavit of the Wife sworn 17 June 2009 and filed 19 June 2009.
The husband relied on the following documents:
Affidavit of the Husband sworn 2 June 2009 and filed 16 June 2009;
Further Affidavit of the Husband sworn 22 December 2009 and filed 23 December 2009; and
Financial Statement of the Husband sworn 2 June 2009 and filed 16 June 2009.
Short history
As at the date of the hearing the parties were both 45 years of age. They started to live together in December 1994, were married in 1995 and separated on 29 February 2008. The parties’ divorce became final on 17 May 2009.
Children
There are two children of the marriage:
C was born in May 1996 and as at the date of hearing she was 13 years of age; and
J was born in July 1997 and as at the date of hearing she was 12 years of age.
Application for Adjournment – Section 79(5)
During the course of the husband’s cross-examination, an oral application was made on behalf of the wife to adjourn the proceedings pursuant to section 79(5) to a date after 25 November 2012. I refused the application and without objection from counsel, indicated that I proposed to include reasons for that decision in these reasons:
The husband is the Group Vice President of B Company. He was employed by B Company in various positions and for various periods over recent years but his permanent employment with B Company in that position, commenced on 1 August 2009. Included in his terms of employment is the right to participate in the Short and Long Term Incentive Plans of the company. This hearing was listed to commence on 28 January 2010. On 15 January 2010 an email[1] was sent from B Company to the husband in the following terms:
[1] Exhibit 10
DETAILS OF YOUR 2006 PERFORMANCE SHARE PLAN ALLOCATION
Dear [Mr Wacket],
On behalf of the [B Company] Board, I am delighted to confirm your participation for this year in the [B Company] 2006 Performance Share Plan (as amended on 25 November 2008).
Your allocations under the Plan are outlined below and are subject to the Plan Rules:
(a) [Group one award]
Your have been granted Conditional Share Rights over a total of 1,503 [B Company] shares.
Your [Group one award] will normally vest on 25 November 2012.
You do not have to pay anything for these shares.
(b) [Group two award]
You have been granted Conditional Share Rights over a total of 21,045 [B Company] shares.
Vesting of your [Group two award] is subject to a performance condition based on relative Total Shareholder Return measured over the period beginning on 1 July 2009 and ending on 30 June 2012. Depending on the extent to which the performance condition is met, some or all of your [Group two award] will normally vest on 25 November 2012.
For the purposes of the Total Shareholder Return performance condition the base share price (being the average closing price over the period from 19 November 2009 to 25 November 2009 inclusive) will be A$6.65.
You do not have to pay anything for these shares.
(c) [Group three award]
You have been granted Conditional Share Rights over a total of 21,045 [B Company] shares.
Vesting of your [Group three award] is subject to a performance condition based on achievement of sales revenue over the period beginning on 1 July 2009 and ending on 30 June 2012 set on a compound annual growth rate (CAGR) basis.
The performance matrix for your [Group three award] will be communicated in February 2010 following a [B Company] Board review of group stategy (sic).
Depending on the extent to which the performance condition is met, some or all of your [Group three award] will normally vest on 25 November 2012.
You do not have to pay anything for these shares.
The taxation implications of the Plans are specific to your country of residence. For more information on tax and to view your allocation please refer to the [B Company Share Plan website] by clicking on the link below.
Step 1: Click here to access the [B Company Share Plan website]
Step 2: Enter your PIN
A copy of the [B Company] 2006 Performance Share Plan Terms & Conditions (as amended on 25 November 2008), can be found at […].
If you have any questions about the above, please email […].
Participation in the [B Company] Performance Share Plan aligns the company’s interest to those of our shareholders and provides the opportunity for us to share in [B Company’s] success. I hope that your participation in the Plan is rewarding.
Yours sincerely,
In cross-examination the husband said that he gave the email to his solicitor in the week or so prior to the hearing and that he gave no instructions for it to be served on the wife’s solicitors. The husband conceded in cross-examination that the allocation was 43,593 shares and that the relevant average value for the purposes of the conditions attached to one parcel of 21,045 shares was $6.65. The husband conceded the bare arithmetic that 43,593 shares at $6.65 per share was about $290,000.
Relevantly, section 79 provides as follows:
….
(5) Without limiting the power of any court to grant an adjournment in proceedings under this Act, where, in property settlement proceedings, a court is of the opinion:
(a) that there is likely to be a significant change in the financial circumstances of the parties to the marriage or either of them and that, having regard to the time when that change is likely to take place, it is reasonable to adjourn the proceedings; and
(b) that an order that the court could make with respect to:
(i) the property of the parties to the marriage or either of them; or
(ii) the vested bankruptcy property in relation to a bankrupt party to the marriage;
if that significant change in financial circumstances occurs is more likely to do justice as between the parties to the marriage than an order that the court could make immediately with respect to:
(iii) the property of the parties to the marriage or either of them; or
(iv) the vested bankruptcy property in relation to a bankrupt party to the marriage;
the court may, if so requested by either party to the marriage or the relevant bankruptcy trustee (if any), adjourn the proceedings until such time, before the expiration of a period specified by the court, as that party to the marriage or the relevant bankruptcy trustee, as the case may be, applies for the proceedings to be determined, but nothing in this subsection requires the court to adjourn any proceedings in any particular circumstances.
(6) Where a court proposes to adjourn proceedings as provided by subsection (5), the court may, before so adjourning the proceedings, make such interim order or orders or such other order or orders (if any) as it considers appropriate with respect to:
(a) any of the property of the parties to the marriage or of either of them; or
(b) any of the vested bankruptcy property in relation to a bankrupt party to the marriage.
(7) The court may, in forming an opinion for the purposes of subsection (5) as to whether there is likely to be a significant change in the financial circumstances of either or both of the parties to the marriage, have regard to any change in the financial circumstances of a party to the marriage that may occur by reason that the party to the marriage:
(a) is a contributor to a superannuation fund or scheme, or participates in any scheme or arrangement that is in the nature of a superannuation scheme; or
(b) may become entitled to property as the result of the exercise in his or her favour, by the trustee of a discretionary trust, of a power to distribute trust property;
but nothing in this subsection shall be taken to limit the circumstances in which the court may form the opinion that there is likely to be a significant change in the financial circumstances of a party to the marriage.
It is submitted by learned counsel for the wife that there is likely to be a significant change in the husband’s financial circumstances over the period for which the adjournment is sought. I put to counsel that there may well be further share allocations in 2011 and 2012 and thereby grounds, on the logic of this application, for further adjournments. The wife’s counsel submitted that although there may be further allocations during the adjournment, the Court would have the benefit of the outcome of the 2010 allocation, including the opportunity to hear evidence of the value of that allocation. I was referred to B & B No. 2 [2000] FamCA 734; 26 Fam LR 437; (2000) FLC 93-031. B & B No. 2 was not a case about section 79(5). In that case the Full Court upheld an appeal against a property decision insofar as an adjustment of 15% under section 75(2) at first instance was deemed inadequate and was changed to 30%. In particular the increased allowance on the re-exercise of discretion by the Full Court was because of the disparity of earning capacity between a wife and an equity partner of a large legal firm. If I understand the submission correctly, the argument on behalf of the wife is that it is important to identify the extent of the husband’s future income so that proper regard can be given to section 75(2). The submission would go that such regard cannot be given now and a just and equitable outcome requires an adjournment.
It is submitted on behalf of the husband that before the adjournment sought here would be granted, one of two other courses should be preferred. Either the parties should have the allocation valued now or the court should be asked to make a pro rata order against the ultimate benefit received by the husband, as a result of the allocation. It is conceded on behalf of the husband that the first of those options is likely to reveal the shares to have no value because of the imponderables associated with the criteria of the incentive scheme such as B Company trading performance in the future and the impact of the deferral of payments for nearly 3 years.
Learned counsel for the husband identified the relevant authority on the application of section 79(5) as Grace & Grace (1998) FLC 92-792; 22 Fam LR 442. He submits that the application before me fails to meet each of the criteria described in that case and therefore the court should refuse the extraordinary remedy sought.
There is nothing in the section to suggest that an adjournment under section 79(5) can be accurately described as an extraordinary remedy. I do not know of and was not taken to any relevant authority since Grace. As to Grace - no less than three applications under section 79(5) were made during protracted litigation. In relation to one of those applications the Full Court upheld an appeal against a 1997 refusal to grant an adjournment under section 79(5) and gave guidance about dealing with such applications. At time of the 1997 first instance decision, Mrs Grace (the wife) had a property at Rozelle she bought with the assistance of a $250,000 payment from the husband’s Part X estate. Several years earlier the Part X estate had been finalised with a $10M deficiency. It is not clear what other assets the husband had at the time of the refusal of the adjournment application, however I gather they were modest. The matters relied on for the adjournment application were that the husband had an interest in remainder, in the estate of his late father and an expectation in relation to his mother’s will. In 1993 the husband’s interest in the estate had been valued at over $10M.
In Grace the Full Court noted the difference between adjournments generally and adjournments under section 79(5) and said:
The discretion to adjourn proceedings is guided by the legislature. Taking the words of s. 79(5) on their face, we agree with Mr. Rose that there are certain preconditions which, cumulatively, must be found in order to invoke the power to order an adjournment:
·that there is likely to be a change in financial circumstances;
·that the likely change is a significant one;
·that having regard to the likely and significant change, it is reasonable adjourn the proceedings; and
·that an order made if that significant change occurs is more likely to do justice as between the parties than an immediate order.
We would add in respect of this last precondition that in light of s. 79(2) we read “justice” as incorporating “justice and equity”.
The submission for the wife is that in the context of a property pool that the husband puts at about $1.4M, the value to the husband of the 2010 conditional share allocation, an allocation that may vest in November 2012, represents a likely significant change in his financial circumstances.
Subsection 79(5) does no more than enliven the court’s discretion to adjourn the proceedings in aid of the purpose of section 79 – the identification of a just and equitable settlement of property. Hence:
“(5) Without limiting the power of any court to grant an adjournment in proceedings under this Act, where, in property settlement proceedings, a court is of the opinion:
(a) that there is likely to be a significant change in the financial circumstances of the parties to the marriage or either of them and that, having regard to the time when that change is likely to take place, it is reasonable to adjourn the proceedings; and
(b) that an order that the court could make with respect to:
(i) the property of the parties to the marriage or either of them; or
(ii) the vested bankruptcy property in relation to a bankrupt party to the marriage;
if that significant change in financial circumstances occurs is more likely to do justice as between the parties to the marriage than an order that the court could make immediately with respect to:
(iii) the property of the parties to the marriage or either of them; or
(iv) the vested bankruptcy property in relation to a bankrupt party to the marriage;
the court may, if so requested by either party to the marriage or the relevant bankruptcy trustee (if any), adjourn the proceedings until such time, before the expiration of a period specified by the court, as that party to the marriage or the relevant bankruptcy trustee, as the case may be, applies for the proceedings to be determined, but nothing in this subsection requires the court to adjourn any proceedings in any particular circumstances.
(My emphasis added)
As to what would constitute a likely, significant change in financial circumstances, in Grace the Full Court did not support an adjournment to see out the remaining years of the life of the husband’s mother, then in her 80’s but granted the adjournment to allow the estate of the husband’s late father to vest. Given the 1993 valuation and the compromised current financial circumstances of the parties, the potential change was significant. By way of another example, in an unreported Full Court decision of G & P [2002] FamCA 86, Finn J was dealing with an appeal from a Federal Magistrate who had refused an adjournment until the husband’s superannuation vested – potentially 5 – 15 years later. In upholding the appeal Finn J found that in the context of current assets totalling $105,000 a potential superannuation benefit of $134,000 was a likely, significant change of financial circumstances. Unlike the learned Federal Magistrate, her Honour was satisfied that an order made after an adjournment was, in the terms of the subsection “more likely to do justice as between the parties to the marriage than an order that the court could make immediately”.
In the proceedings before me there is a net pool of assets of at least $1.4M. Albeit in the form of a share allocation, the likely change relates to the husband’s income. Being in the form of a share allocation the change will have an impact on the pool of assets available for distribution. However, in the circumstances the wife will have made no contribution to any increase in the pool from this source. There will be argument in these proceedings about the level of the husband’s remuneration. I am confident that it will be possible to identify the order of magnitude of that remuneration, without knowing the net financial impact of the share allocation made in January 2010. In any event it will be possible to identify differences between the earning capacities of the parties.
As I write the reasons for refusing the adjournment, I do not know whether the wife will take up the tacit invitation made in submissions on behalf of the husband, to seek a short adjournment to allow the allocation to be valued or a deferred order directly against the ultimate net benefit of the allocation. In any event, I am not satisfied that there is a likely significant change in the husband’s financial circumstances that would warrant an adjournment. Nor am I satisfied that, even if there is a likely significant change, an order made after an adjournment until after November 2012 is more likely to do justice as between the parties to the marriage than an order that the court could make immediately.
No submissions were made as to any prejudice to the husband if the adjournment is granted. These proceedings commenced in 2008 and the parties have therefore experienced a significant delay in achieving a property settlement. In circumstances where he provides a substantial subsidy to the wife’s household through spousal maintenance and child support, the further prejudice to him is obvious.
As to other matters that might be taken into account in exercising discretion to adjourn, there is the tension between any adjournment and section 81 and the public policy issues involved in adjournments. These were not matters argued before me and so I will deal with them very briefly. As to the first issue, suffice it to say there is no reason to assume that the aspiration for a clean financial break in section 81 should or could be given priority over the need to do justice between the parties. That need is reinforced in section 79 and in particular in subsection 79(5). As to the second, in Aon Risk Services Ltd v Australian National University (2009) 258 ALR 14 the High Court made a departure from its own approach identified in The State of Queensland v JL Holdings (1997) 141 ALR 353. In Aon the Court was dealing with subordinate legislation in the ACT in relation to the amendment of pleadings. The High Court identified obligations owed by Courts to the public and to the other cases in the queue waiting for a hearing, in making decisions in a particular case that might involve the loss of Court time. Given the order I have made the issue does not arise but had I granted the adjournment those considerations would apply and would have to be addressed.
Background facts
The parties settled an agreed chronology[2]. The following is based on that document but includes agreed corrections[3] and findings resulting from the oral evidence.
[2] Exhibit 1
[3] Such as an agreement that the date of marriage was 22 April 1995
The wife was born in Canada.
The parties met in 1989 in Perth, Western Australia, where the wife was holidaying.
On 19 January 1994 the husband purchased the property at W, WA for $160,000. The husband obtained a mortgage for $127,000 to purchase the property.
The parties commenced their relationship in May 1994.
In July 1994 a visa application was made for the wife, with the assistance of the husband. Her visa was granted in November 1994.
In December 1994 the parties commenced cohabitation in Perth, Western Australia.
At that time the assets of the husband were as follows:
Net equity of W property – E$60,000
Honda Accord - E$5,000
The wife did not have any assets of significance. The husband asserts that the wife had a tax liability of $2,000 Canadian Dollars. The wife denies any such liability.
The wife sold her home in Canada and as a result, brought $5,000 with her to Australia.
The husband says that in February 1995 the wife obtained part-time employment as a teacher and as a Sales Assistant. The wife does not agree. It is her evidence that she worked as a teacher to the end of the fourth school term in 1994, as she was expecting the parties’ first child in May 1995. Neither of the parties was cross-examined on this issue. It is neither possible nor necessary to make a finding about it.
The parties were married in Perth in April 1995.
The wife ceased paid employment in November 1995 and to the date of the hearing, did not recommence paid employment at any time thereafter.
C was born in May 1996.
J was born in July 1997.
In November 1997 the parties and their children relocated to the United Kingdom for the husband’s employment. The children were then 19 months and 4 months of age, respectively.
The parties moved back to Australia in September 1999.
The husband commenced a short term contract position with B Company in October 1999. This position turned into a permanent role as a Manager in January 2000.
In 2000 the husband sold the W property and the parties purchased a home at K, WA. The parties purchased the K property for $407,000 in August 2000, prior to settlement of the sale of the W property in September 2000. The parties obtained a bridging loan of $430,000 to purchase the K property.
In September 2000 the parties sold the W property for the sum of $281,000. The net proceeds of $260,000 were applied to repay the bridging loan.
In February 2001 the husband was offered promotion to the B Company Sydney office. He did not accept the offer.
In May 2001 the husband was again offered promotion to the B Company Sydney Office. The parties jointly decided that the husband should accept the offer.
In July 2001 the K property was listed for sale. It sold in September 2001 for $438,000. The net proceeds of sale of approximately $260,000 were placed in an interest bearing account with the Bank of Western Australia.
The husband commenced working at the Sydney office of B Company in July 2001 and commuted back and forth between Sydney and Perth until September 2001, when the wife and children joined him in Sydney.
From September 2001 to May 2002 the parties resided in rented accommodation in a Sydney suburb. The rent was paid by the husband’s employer.
In September 2001 or March 2002 the property at K was sold. The parties purchased R property for $890,000 of which $760,000 was borrowed.
From March 2002 – May 2002 the parties undertook major renovations to the R property, prior to moving in. The cost of the renovations was approximately $130,000, met from part of the proceeds of sale of the K property.
In the financial year ending 30 June 2007 the husband’s taxable income was $818,108.
On 31 July 2007 the husband contracted to become Executive General Manager with N Company. He commenced that employment in October 2007.
On 16 January 2008 the husband rolled over $261,110.87 into the Plumb Superannuation Fund.
The parties separated on 29 February 2008, when the husband vacated the matrimonial home and moved into a rented apartment.
On 12 May 2008 the husband sold 36,000 B Company shares for $320,047.56. He paid a tax bill of $140,325.20 and paid $41,417 off the home mortgage. He used $138,257.10 to reduce the overdraft on the joint ANZ Equity Manager Account.
On 23 May 2008 the wife filed an Application for Final Orders and an Application in a Case.
On 27 May 2008 a Child Support Assessment issued.
On 20 June 2008 the husband filed his Response to the Application for Final orders and other documents.
On 24 June 2008 interim orders were made by consent whereby the husband was to pay:
· $500 per week spouse maintenance;
· mortgage repayments;
· private health insurance premiums;
· registration and insurance for wife’s motor vehicle;
· water and council rates;
· medical and dental expenses other than for cosmetic purposes;
· building and contents insurance;
· gas, electricity, home telephone to a maximum of $50 per month;
· lawn mowing and pool chemical expenses; and
· interim costs of $16,500.
In addition the husband pays private school fees, extra curricular activity costs and mobile phone costs for both children as well as child support in accordance with the assessments issued by the Child Support Agency from time to time.
On 11 August 2008 the husband was paid a bonus by N Company of $32,100. Those moneys were paid into an ANZ Cheque Account and used for children’s school fees, a holiday to America with the children and eye surgery on the husband.
On 10 December 2008 Registrar George made directions.
On 12 December 2008 the husband received a redundancy notice from N Company. He was paid $124,087.46. That payment included a deferred bonus of $40,000.00. Of the redundancy payment the husband put $100,000 in an ANZ Term Deposit for 3 months. On maturity he put $76,378 in his cheque account, $65,000 of which were then deposited in the ANZ Online Saver account; and he applied $25,000 to reduce the ANZ Equity Manager account overdraft. From the online Saver account in April and May 2009 the husband paid among other payments:
6 April 2009 Child Support Agency $2,453.38
8 April 2009 ANZ Visa card $5,000
20 April 2009 transfer to Equity Manager
Account for 2008 tax $57,000
22 May 2009 R College
(school fees) $4,780
In 2009 the wife enrolled in a Bachelor course at Macquarie University.
On 11 March 2009 the husband told the wife that it was necessary for him to sell shares to meet a taxation liability and accounting fees of about $60,000. In late March 2009 the husband sold the following shares:
13,522 B Company shares; and
5,000 Boom Logistics shares.
The net proceeds of $78,000 were initially deposited into the joint Equity Manager Account.
The husband contends that he has explained his use of funds received in May 2008, in a letter to the wife’s solicitors dated 20 May 2008.
On about 10 or 11 March 2009 the husband commenced negotiations for a position with his former employer, B Company. On 17 March 2009 he was offered a fixed term contract with B Company. On 27 March 2009 the husband commenced a short-term contract with B Company, working in the United States of America.
In May 2009 the husband closed the joint ANZ Equity Manager Account.
The joint chronology has it that on 30 June 2009 the husband’s short term contract with B Company ceased. In his cross-examination I understood him to say that the short term position continued until August 2009 (when he took up his current full-time position). Nothing turns on this issue.
In about July 2009 the wife commenced her studies and commenced receiving Austudy payments of just under $500 per fortnight.
On 1 August 2009 the husband commenced in the permanent position of Group Vice President for B Company. Included in his terms of employment is a base salary of $400,000 per annum – reviewed on 1 October each year; superannuation contributions at the rate of 15% of salary; a car allowance at $30,000 per annum; and the right to participate in Short and Long Term Incentive Plans of the company.
At some point the wife changed courses, enrolling in a similar course to the Macquarie University course with an Australian College of Applied Sciences. The course is 3 years full-time or the part-time equivalent. The college terms for 2009 were 23 February – 22 May; 8 June to 4 September; and 21 September to 11 December. The wife gave evidence to the effect that she has been given credit for the unit/s completed at Macquarie University.
By an email dated 15 January 2010 the husband was advised of the conditional allocation of 43,593 shares in B Company under his employer’s staff incentive scheme.
Credit and Submissions
The evidence of the witnesses
The only witnesses called for cross-examination were the parties.
The wife gave her evidence directly. She filed Financial Statements in 2008 and 2009. Unfortunately she made no effort to update her 2009 Financial Statement as to her living expenses. Apart from educational expenses for the children, all of which were met by the husband, the wife simply transposed the figures for Part N of the form from her 2008 Statement. The wife made no effort to tell the husband or the Court about her receipt of Austudy allowance from July 2009 and so did not treat her duty of disclosure seriously. The wife is not aware of much of the financial dealing within the marriage or since and that has an impact on the value of her evidence about those matters.
The husband presented as a good witness. He did not give the wife immediate notice of the January 2010 allocation of shares under the B Company incentive scheme and so did not treat his duty of disclosure as seriously as he should. He is a CPA, at all times had the carriage of the family finances and of course has direct knowledge of his employment terms and conditions. He has a good memory of relevant facts and when he was pressed on matters, appeared to make proper concessions and was not enticed onto speculating about things he was unsure of. He was not successfully challenged on any material aspect of his evidence.
As it transpired there are no significant issues of fact in the proceedings that fall to be determined only by the uncorroborated testimony of the parties.
Submissions
The wife’s written submissions are as follows:
CONTRIBUTION BASED ENTITLEMENTS
1.The wife made an initial financial contribution of $5,000 (para 9);
2.She was not able to work when she migrated to Australia. In November 1994 on a spouse visa.
3.She obtained part-time employment until March 1996 [teaching] and contributed her income (p 11);
4.In November 1997 the parties moved to [the United Kingdom] with the 2 infant children. The wife was given house 200 pounds per month for housekeeping (p 15).
5.The parties purchased a property in Perth in late 1999 for $407,000 and sold in September 2001 for $438,000 (p 17/18).
6.The parties purchased the FMH at [R] in March 2002 for $890,000. $120,000 from the sale of the Perth property went to the home mortgage over the FMH.
7.The wife managed the renovations of the [R] home (p 21 + H p 33)
8.The wife was the primary homemaker during cohabitation and has been the primary carer of the children up to the present time.
9.Contribution based entitlements are assessed at 50:50.
SECTION 75(2) FACTORS
1.Both parties are 45 years of age. She is unemployed. The husband has a very significant income with a capacity to earn $1M p.a.
2.The wife has health issues adversely affecting her income earning capacity being osteoarthritis in booth knees (p 60).
3.The wife has the ongoing residence of the two girls.
4.The wife commences a 4 year […] degree course at Macquarie University in 2010. She has been out of the workforce since 1996. (now 3 year course with a College)
5.A very significant section 75(2) adjustment in favour of the wife is justified in a range of 25% to 30%.
In oral submissions learned counsel for the wife conceded that the wife’s application to retain the R property unencumbered was “unlikely to occur”
Counsel briefly addressed spouse maintenance and child support. He said that the wife’s spouse maintenance claim was pressed only for the period of her studies – 3 years. Exhibits 5 & 6 will show me the demands of the children on the wife’s time and exhibit 3 reveals the course load for her studies – 400 hours or 133 per year. The wife’s Austudy benefit of about $500 per fortnight cannot be taken into account pursuant to section 75(3) of the Act.
The wife’s child support claim is for the husband to pay the support assessed from time to time in addition to his expenditure on the private school fees. There is no dispute between the parties about the children attending private schools or about the associated expenses being paid by the husband. It is submitted that based on section 117 of the Assessment Act the wife is over the threshold to the extent that she seeks a departure to formalise the current position.
The written submissions on behalf of the husband are:
Asset pool
1.Whilst the position of the Wife is not entirely known, there appear to be very limited issues concerning the net assets to be considered by the Court. Those issues appear primarily to be (references are to the numbers in the list of assets, liabilities and resources above):
1.1items 4 and 7 – Husband’s bank accounts. The Husband has continued to earn income from personal exertion following separation and that income is reflected in both the expenses of the parties and children met by him and also in the funds standing to his credit in various bank accounts. If included in identifying the parties’ net assets (as here), the Husband’s sole contribution of the funds to those accounts needs be recognised in the contribution assessment;
1.2items 14 and 15 – add-back of partial property settlement. Pursuant to the Orders of 13 August 2009 each of the parties received/retained an amount of $41,285 from the proceeds of the sale of shares; and,
1.3items 16 and 17 – paid costs and disbursements. Both parties costs memoranda are awaited to determine the manner in which these entries ought be approached.
Contributions
2.Initial contributions. At the commencement of cohabitation (in December 1994) the Wife had no assets or liabilities of significance [H#11].
3.In December 1994 there is no dispute that the Husband was in the following financial position [H#10]:
3.1registered proprietor of the property at [W], (WA) with a then equity of $60,000; and,
3.2owner of a motor vehicle worth $5,000.
4.It ought also be recognised that by December 1994 the Husband had an established career […] and was earning some $70,000-$80,000 per annum [H#12]. The Husband’s established earning capacity provided the basis from which the parties were thereafter able to acquire, develop and maintain their assets and support their family. In the same way as it is often said that one of the most valuable assets a person can take from a marriage is an established earning capacity (Best (1993) FLC 92-418 at 80,295; Clauson (1995) FLC 92-595 at 81,911), there need here be proper recognition of such a contribution by the Husband at the commencement of this relationship.
5.The [W] property owned by the Husband at cohabitation:
5.1provided accommodation to the parties through the relationship from cohabitation until November 1997 and then again from September 1999 until late 2000 [H#14-22];
5.2provided a rental income in the period from November 1997 to September 1999 [H#15]; and,
5.3provided security for borrowings for the acquisition of the [K] property [H#21];
and was sold in 2000 generating net sale proceeds of $260,000 [H#22] which provided the financial platform for acquisition of the [K] property.
6.During cohabitation. The Husband contends that during the relationship, and whilst the parties contributed in differing ways, their respective contributions ought be found to be equal.
7.There appears little issue that the Husband was the almost sole financial contributor, the Wife only having been employed for a period of some 10 months in 1995 [H#13].
8.There is no issue that the Wife was the primary homemaker and parent, however, the Husband made substantial contributions in those roles around the commitments of his employment, notwithstanding the Wife’s minimisation of such contributions in her affidavit material. The Husband devoted the entirety of his time and efforts over the course of the relationship to the family, household and his partnership [H#77ff]].
9.Following separation. The Husband has continued to maintain the parties’ property and other assets, meeting all of the substantial expenses without contribution by the Wife. The Wife has enjoyed occupation of the [R] property without making any financial contribution to that property [H#53ff].
10.The Husband has provided significant financial support to the Wife and children since separation, both in the form of spouse maintenance and child support and also in the provision of other funds as enumerated in the Husband’s affidavit [H#53ff].
11.Conclusion as to contributions. Subject to the composition and value of the assets to be divided between the parties being as contended for by the Husband, the Husband submits that a contribution finding of 60% to the Husband and 40% to the Wife is appropriate as at the date of hearing.
Section 75(2)
12.Each of the parties is 45 years of age.
13.Notwithstanding opportunity, and indeed invitation, to do so, the Wife has adduced no admissible evidence as to any health difficulties.
14.The Wife is likely to retain primary responsibility for the two children of the marriage (aged 12 and 13 years), however, the Husband has and will continue to be liable to meet substantial expenses in relation to the children. The Husband will continue to seek to maintain an ongoing relationship with the children.
15.The age of the children, and of the Wife, are such that the Wife ought be viewed as having a capacity to earn an income from personal exertion. The Wife has simply not explored the possibility of obtaining any employment in the 2 years since separation.
16.The Husband’s superannuation entitlements have been identified above and a ‘splitting order’ is sought in respect of them.
17.Subject to the composition and value of the assets to be divided between the parties, and the contribution finding, being as contended for by the Husband, the Husband concedes an adjustment is warranted on account of section 75(2) to the Wife of not greater than 10%.
Conclusion as to section 79
18.The Husband contends that an overall finding of 50% to the Husband and 50% to the Wife is both just and equitable and consistent with authority.
19.In the event of findings being made as to the assets, liabilities and resources of the parties, their respective contributions and/or in relation to the matters relevant pursuant to section 75(2) that depart from the contentions advanced by the Husband, the conclusions advanced by the Husband will need to be re-assessed.
Spouse maintenance
20.The Wife seeks an order for the payment of spouse maintenance to her in the amount of $500 per week for an unlimited period of time.
21.The Husband contends that the Wife:
21.1does not satisfy the threshold requirement;
21.2has had the benefit of ongoing and significant financial support since separation which has afforded her with the opportunity to obtain paid employment and attend to any ‘re-establishment’ of her earning capacity that might be necessary;
21.3in any event, is unable to demonstrate on her likely financial position as a result of these proceedings that she has a need as claimed; and,
21.4has an unexplored and unutilised capacity for employment to provide for her own ongoing support;
such that the application ought be dismissed.
22.Further, the Husband contends that:
22.1having provided substantial financial support for the Wife and children since separation;
22.2having regard to the ongoing financial support that the Husband is to provide for the children; and,
22.3in light of his financial circumstances;
the Husband does not have the capacity to provide for the Wife’s support.
23.Finally, and in any event, it is submitted that there is no warrant for an ‘open-ended’ order as sought by the Wife.
Child Support
24.The Wife’s application in respect of child support is not entirely clear and attempts by the Husband to have the Wife provide clarity, including by compliance with the relevant provisions of the Rules, have not been answered.
25.In light of the same, the Husband’s position beyond his own application, is reserved.
26.The Husband proposes that the child support payable by him in respect of the children be set at the costs of the children completing their education which, on one view, may be the Wife’s application.
27.In any event, and whilst such expenses will continue to increase as the children progress through their education, the payment of such expenses will result in the Husband meeting costs of some $47,713 per annum (or $918 per week), providing a just and equitable level of child support.
In oral submissions for the husband it is submitted that the court could not find that the husband has preferred to apply capital (rather than income) to expenses since separation and so there should be no wholesale add backs for that reason.
In relation to spouse maintenance learned counsel for the husband reiterated the arguments outlined above, critically that the wife did not meet the threshold because she failed to explain why she had made no attempt to exercise her earning capacity or to give evidence about her current expenses. I am referred to Mee and Ferguson in that regard and counselled not to replace the lack of evidence by making inferences in the wife’s favour.
In respect of child support, the husband currently obtains a 25% deduction on the periodic assessment for his non-agency payments, Learned counsel for the husband submits that in considering the parties applications for a departure, at the minimum, he should be left with that allowance.
The approach in proceedings under section 79
The case law reveals that there is a permissible approach to the determination of an application brought pursuant to the provisions of s 79. That approach involves four inter-related steps. First, I am to make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Second, I should identify and assess the contributions of the parties within the meaning of s 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Third, I should identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g), (the other factors) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourth, I should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case. [4]
[4] This summary of the effect of the authorities is paraphrased from the comments of the Full Court in In the Marriage of Hickey (2003) 30 Fam LR 355 at 370
There is no mention of steps in section 79 but it is convenient to approach the exercise of discretion in a structured way. The Full Court has supported such an approach.
The property of the parties at the date of the hearing
The Court is required to make a finding as to the property of the parties. That involves identifying assets, liabilities and financial resources and their values.
There are circumstances whereby assets are included in the list for division although they no longer exist. The same logic would apply to the exclusion from the relevant list of liabilities, debts that do exist at the date of the hearing. In the Marriage of Omacini (2005) 33 Fam LR 134 the Full Court noted:
[30] To date, three clear categories of cases have emerged where the court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In In the Marriage of DJM and JLM (1998) 23 Fam LR 396; (1998) FLC 92-816; [1998] FamCA 97 the Full Court said at [11.6]:
[11.6] For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.
(b) Where there has been a premature distribution of matrimonial assets. In In the Marriage of Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at Fam LR 509; FLC 81,654:
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
(c) In the circumstances outlined by Baker J in In the Marriage of Kowaliw (1981) 7 Fam LN N13; (1981) FLC 91-092 at FLC 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view relevant under s 75(2)(o) to applications for settlement of property instituted under the provisions of s 79.
The parties worked off similar balance sheets. The issues left to be determined relate to:
The balances of the husband’s accounts
In the course of final submissions I was informed that account number …5 stands at an agreed $69,939. There was no agreement to a change over the agreed position in relation to the balance of account number …3 and therefore I find that the balance of that account is $450.
Proceeds of sale of BHP, ANX and Oz Minerals shares
In the course of submissions the wife withdrew her claim that the proceeds of those sales be added back to the list of assets.
The balances of the wife’s accounts
Without complaint on behalf of the wife it is submitted that the following balances be included in the pool of assets:
Westpac bonus saver $247; and
Bankwest $543
Paid legal costs
According to the cost advice documents provided to the parties[5] the husband has paid $68,281.97 in disbursements and profit costs to his lawyers and the wife has paid $65,700. I am satisfied that the pool of assets would be greater but for those payments and on the basis of the approach described in In the Marriage of DJM and JLM I will include those payments as notional assets.
Interim distributions
[5] Exhibit 7
It is argued on behalf of the husband that the interim distributions made to the parties be included in the pool. The husband received $41,285 and the wife, a total of $74,741. Distributions were made in accordance with the following orders:
·On 24 June 2009 an order was made by consent to the effect that the husband pay to the wife $16,500 by way of interim costs
·On 24 June 2009 an order was made by consent to the effect that the husband pay to the wife $16,596 by way of interim property settlement
·On 13 August 2009 an order was made by consent to the effect that the each of the parties would receive $41,285 by way of interim property settlement
The distributions pursuant to the orders of 24 June 2009 and 13 August 2009 must be included as preliminary distributions of property. There can be only one exercise of power under section 79, one property settlement order, but that order can be composed of a number of parts and those parts can be made on different days[6]. By the terms of their agreement on each date, the parties asked the Court to exhaust its jurisdiction under section 79 in relation to some of their property.
[6] In the Marriage of Hickey (2003) 30 Fam LR 355 at paragraph 48
On the other hand, the character of the distribution pursuant to the orders of 24 June 2008 is a matter for me. Although no argument was made, the tacit submission on behalf of the husband is that the 2008 distribution should be also deemed partial property settlement. The submission made against that argument was that the wife applied capital advances to a trip for herself and the children to Canada to visit her father. It is submitted that the husband enjoyed more than one overseas holiday since separation and has not been obliged to include the costs of those holidays as notional assets in the pool. Thus it is that the wife seeks only that the amounts paid for costs be included.
I will take the approach advocated for on behalf of the wife. The concept of notional assets is artificial and the reasoning summarised in Omacini reveals that care is needed in departing from the approach of identifying and valuing assets as at the date of the hearing. The touchstone in property proceedings is the identification of a just and equitable settlement of property. The approach proposed here on the part of the wife will ensure that the principles are observed in the husband’s case. I have already included the costs paid by the husband. It would risk double counting to also include against him the $41,285 interim property settlement already received. As to the wife, there is a risk that she has benefited in the sense described in In the Marriage of Townsend, over and above the amount she applied to her legal costs, but only as to about $9,000. On the other hand there is a risk of injustice to her because the husband had less fettered access to matrimonial funds after separation than she.
Joint funds applied by the husband to the support of the wife and children
The wife argues that there should be added back to the pool of assets joint funds applied to her support (spouse maintenance) in the sum of $42,500 and to that of the children in the sum of $90,628. A related claim in relation to credit cards is not pressed. I gather that the argument would be that in resorting to capital the husband has applied joint funds to meet his personal obligation to the wife and children. I do not propose to add back the funds. I accept the logic of the wife’s claim on this point. It would be manifestly unfair if the husband met his obligations for spouse maintenance and child support substantially from joint funds. In each case he (as opposed to both parties) was obliged to make the payments to the wife. However, over the nearly two years since separation money has moved from one place to another and a considerable proportion of the husband’s remuneration has come to him in the form of capital sums (such as redundancy payments) or assets (shares). Albeit a capital sum, redundancy payments by their nature are intended to address a shortfall of income. Here the husband was out of paid employment from 12 December 2008 to 25 March 2009. He may also have been out of employment between June 2006 and 1 August 2009. The wife has not been able to establish that any significant proportion of the assets of the marriage, were applied to the husband’s maintenance payments or to his child support obligations. The husband does not say that was the case and I cannot assume it to be the case.
Shares allocated to the husband
The wife would include in the list of assets, the 43,593 B Company shares conditionally awarded to the husband in January 2010. She would have them included in the pool at a value “not known”. It was asserted on behalf of the wife that the shares are assets in the hands of the husband. It is submitted for the husband that the shares have no value. I am not confident that the entire allocation of shares represents an asset in the hands of the husband. The allocation came in three tranches. About 1200 with no strings attached but for a likely vesting in November 2012 and two tranches of over 21,000 shares, each tranche bearing different conditions. Neither the entire detail of those conditions nor any probative evidence as to the prospective impact of those conditions, is in evidence before me.
There is no evidence of valuation. Based on the deemed share price, the shares would have a value of the order of $290,000. The husband has benefited from a similar scheme in earlier periods of work with this employer. However, neither of those facts enable the court to confidently find as to the status or value of the husband’s interest. The uncertainty arises because of the deferred vesting provision and the conditions. The timing of the allocation precluded any expert evidence as to value and no application was made to me to allow such an opinion to be obtained in the near future.
I find that the husband has rights in respect of over 40,000 B Company shares that may vest in November 2012. I cannot include those rights in the list of assets but will take them into account.
I find that the assets are:
ASSETS
VALUE
R property – joint
$1,300,000
Household Contents at R – wife
$13,039
Ford Territory - wife
$21,000
Wife’s Jewellery
$4,840
Westpac Bonus Saver A/C No. … – wife
$247
Bankwest A/C No. … – wife
$543
Add-back: wife paid costs and disbursements
$65,700
Household Contents at rented property - husband
$5,000
Toyota Camry – husband
$3,600
ANZ Cheque A/C No. … – husband
$14,625
ANZ Online Saver A/C No. … – husband
$69,939
ANZ Etrade A/C No. … - husband
$450
Add-back: husband’s paid costs and disbursements
$68,281.97
Plum Superannuation Fund - husband
$253,328
Mercer Wealth Solutions - husband
$36,186
Gross assets
$1,856,778.97
Liabilities:
The parties agree that the relevant liability is:
LIABILITY
BALANCE
Mortgage on R property
$335,621
Gross liabilities
$335,621.00
Net assets
The net assets have a value of $1,521,157.97 ($1,856,778.97 - $335,621). Of that asset $289,514 is in the form of superannuation.
Financial Resources
The husband’s accumulated tax losses
The wife seeks to have the husband credited with a financial resource in the form of accumulated tax losses of $167,289. I was told by learned counsel that there is no dispute about the existence of the tax losses or that they have the potential to save him an equivalent dollar figure. However, the husband’s counsel argues that the losses are of no real value because the husband is unlikely to be in a position to benefit from them in the foreseeable future. I told the parties I would include the claimed financial resource. The husband has previously bought and sold shares. If for no other reason that the availability of the accumulated losses, the husband is likely to use them. I am confident that within several years the husband will take some advantage of the accumulated losses.
Contributions
The obligations placed on the Court by s 79 call for an assessment of the respective contributions of the parties. The manner of assessing contributions has been the subject of previous decisions. The contributions of a parent and homemaker are to be assessed, not in any merely token way, but in terms of their true worth to the building up of the assets[7]. There are said to be risks in taking an overly technical approach to the assessment of the respective contributions of the parties in that the Court can become involved in questions of the quality of contributions which go far beyond the real world expectations of parties[8].
[7] Mallett v Mallett (1984) 9 Fam LR 449; In the Marriage of Ferraro (1992) 16 Fam LR 1
[8] In the Marriage of Shewring (1987) l2 Fam LR 139
As to whether the Court should apply the considerations in section 79(4) to the assets globally or asset by asset, the authorities have it the former approach is preferred, in appropriate circumstances either approach is permissible and sometimes the asset by asset approach is best. See In the Marriage of Lenehan (1987) 11 Fam LR 615; In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712; In the Marriage of Zyk (1995) 19 Fam LR 797.
In the Marriage of Coghlan (2004) 33 Fam LR 414 the Full Court allowed that superannuation may be included in the list of property drawn up as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. The Full Court suggests that that:
“… approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.”
Here the wife’s case was argued globally. Despite his written submissions being expressed globally, during oral submissions learned counsel for the husband told me that he sought to argue the case asset by asset insofar as the superannuation was concerned. However, no specific submissions followed about contributions to superannuation nor about any adjustments to the resultant division by reference to the remaining elements of section 79(4). The only specific argument related to the question of whether a splitting order should be made in relation to the husband’s superannuation. As I understand the counsel of the Full Court in Coghlan, I am obliged to deal with the assets in a similar way to the approach taken on behalf of the wife.
Contributions
Section 79(4)(a) Contributions
Financial contributions, both direct and indirect were made by each of the parties.
The husband made the greater initial contribution. At the commencement of cohabitation the assets of the husband were as follows:
Net equity of W property – E$60,000
Honda Accord - E$5,000
The wife did not have any assets of significance. The husband asserts that the wife had a tax liability of $2,000 Canadian Dollars. The wife denies having any such liability. Neither party was cross-examined on the point. I can make no findings about a liability. The wife sold her home in Canada and as a result, brought $5,000 with her to Australia.
During cohabitation the husband made the greater financial contribution. He was largely in full-time employment and was on an increasing level of remuneration. The husband has always enjoyed a high level of remuneration. At the commencement of the marriage the husband earned $70,000 - $80,000. His taxable income for the 2008 financial year was about $1,066,000.
The wife did not have paid employment after 1996.
Section 79(4)(b) contributions
This provision deals with direct and indirect non-financial contributions other than those made in the form of parent and homemaker contributions. The husband made improvements to the W property prior to the wife’s arrival in December 1994. They are not mentioned in the joint chronology, presumably to avoid double counting, given the agreed fact that the husband had an equity of about $60,000 in the property at the commencement of cohabitation. That equity reflects the value of the improved property. After the commencement of cohabitation the husband painted the property inside and out.
The parties engaged a builder to renovate the R property but the husband painted the house internally and repaired and painted window frames and seals. He painted the pool fence, cleaned up the front and back yards and repaired the back garden and patio. The wife oversaw the major internal renovations, provided access to the tradesmen and liaised with them during the renovation process.
Each of the parties made non financial contributions.
Section 79(4)(c) contributions
This provision deals with contributions to the family including contributions in the form of homemaker contributions and contributions to children of the marriage. It is an agreed fact that the wife made the greater parent and homemaker contribution. That contribution was made in the context of a family that moved to the United Kingdom when the children were babies, then back to Australia and later from Perth to Sydney. The impost on both of the parties, but particularly on the wife must have been significant. Right through to the current day there have been periods when the husband was working away from home and the wife was virtually a single parent.
The husband concedes that he was often unable to provide homemaker assistance because of the demands of his work. The wife concedes that the husband contributed when he was able. I take it that during periods at home, the husband was a loving father and he made a valuable contribution around the home. The husband undertook pool maintenance and undertook most of the gardening and garden maintenance. He ironed his shirts.
Since separation the wife has continued to provide physical support to the children. In particular the wife drives C to R College each day. The school is 5 minutes away from the former matrimonial home. On three days each week she drives J to A School early in the morning. On the other two days she collects her from school at 6 pm. That school is 15 kilometres away. The wife drives C to sports practice on Tuesday evenings at 6.30 pm. On the way she drops J at R Tennis Courts. She makes the some journey at 7.30pm. During weekends the wife drives C to soccer games on Sundays. For what it is worth in terms of evidence about what happens now, the wife’s 2008 calendar[9] suggests that on weekends the girls had nippers in summer and soccer for much of the balance of the year.
[9] Exhibit 5
The wife made a greater contribution by way of homemaker and parent than the husband.
Conclusion on Contribution
It is agreed that the contributions made during about 14 years of cohabitation were equal. The husband claims that his contributions were 60% compared to 40% by the wife as a result of the imbalance of initial contributions and of post separation contributions. The wife argues that the contributions were equal overall.
The husband brought to the marriage the W property in which he had about $60,000 equity. It is important to look at the use to which the initial contribution was used[10]. The parties lived in that property for about 3 years until they moved to the United Kindgom. During the 2 years they were away, the property was rented out and the rent applied to the mortgage payments and other outgoings. The property was sold in about September 2000 and provided the foundation for the K property purchase. The impact of that initial contribution is not eroded by the passage of time but it must be considered in the light of the other contributions made by the parties[11]. As to the contributions after separation, the financial contributions were made by the husband. He supported the wife’s household and the children while having to provide for his own housing and other needs. He had the means to provide that support because of his income and he had access to the parties’ capital. It is submitted on behalf of the husband that there being no marriage after separation the husband’s financial contribution in that period is more important because it is not balanced by contributions of the wife to the marriage. No authority was cited for that proposition. It is important to note that the post separation contributions represent the events of only 2 years. Care is needed in making an adjustment for those events not to undervalue the efforts of the parties for the previous 14 years.
[10] In the Marriage of Pierce (1999) 24 Fam LR 377; FLC 92-844 at paragraph 28
[11] In the Marriage of Pierce above
In this case the 10% allowance sought on behalf of the husband represents over $150,000 and would create a difference in the parties’ property settlement of over $300,000. That could not be justified here. The husband’s initial contribution was a modest amount in 2010 dollars but because of the use to which it was put I accept that it represents an important contribution. After separation the wife’s contributions continued but with two households to support, the husband’s contributions increased. There must be some acknowledgement of the husband’s greater contributions. I will allow 2.5%.
Significant contributions were made by the parties over a substantial period. I find that the various contributions of the parties would properly be acknowledged by a finding that they were made the proportions 52.5% by the husband and 47.5% by the wife.
The other matters in Section 79
Once contributions have been assessed, the other factors in section 79(4) need to be considered. They are:
Section 79(4) (d)
Pursuant to s 79(4)(d) I am required to take into account the effect of any proposed orders on the earning capacities of the parties. There is no relevant effect.
Section 79(4)(e) - Section 75(2) Factors
The relevant matters in Section 75(2) would seem to be paragraphs (b), (c), (d), (f), (g), (h), (j), (k) and (l).
(a) the age and state of health of each of the parties;
First, as to the age and state of health of each of the parties. The wife and husband are both 45 years of age. The husband enjoys good health. There is no probative evidence about the wife’s health.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
The wife’s income is not properly disclosed in her Financial Statements and the detail had to be drawn from her in cross-examination. In her Financial Statement she disclosed an income of $950 per week made up of spousal maintenance of $500 and child support of $450 per week. She omitted Austudy payments of about $490 per fortnight and a parenting payment of about $110 per week. In fact the current child support assessment is $431.44 per week. On that basis her income is about $1,350 per week. The wife has received Austudy at a rate of $488 or more, per fortnight since about July 2009. That income arose as a result of the course she commenced at the Macquarie University in 2009. She has since transferred to a similar course with an Australian College of Applied Sciences. As far as the wife knows she will continue to receive Austudy payments.
Over recent years Government policy has included encouragements to individuals making better provision for self-funded retirement. In amending the Family Law Act 1975 to permit the splitting of superannuation payments the legislature has indicated a preference for dealing with superannuation in that way. There are advantages and disadvantages to superannuation interests. They cannot normally be accessed before the member reaches a certain age and leaves the workforce. The Court can take judicial notice that in 2008/2009 many superannuation funds made a loss. There is speculation about changes to the legislation about superannuation. On the other hand, the Court can take judicial notice of the fact that preferential treatment is currently afforded to assets and income in the form of superannuation after 60 years of age and that ameliorates the disadvantages of taking funds in the form of superannuation compared to accessible assets. For all those reasons it can be unfair to require one party to retain a disproportionate amount of the superannuation interests and the other to retain a disproportionate amount of the non-superannuation assets. In those circumstances, the Court would not lightly leave one party with most of the superannuation interests and the other with mostly non-superannuation assets.
In the circumstances of this case, notwithstanding the wife’s desire for secure housing, there should be a superannuation splitting order. Without such an order the husband would receive little by way of non-superannuation assets. That is not the end of the matter. There remains the question of the percentage or amount of the split. Although he argues for an equal division of the assets overall, the husband’s proposed orders would have him retaining more of the superannuation than the wife. He seeks a splitting order based on 50% of his interest in the Plum Superannuation Fund at the operative date but no splitting order in respect of his interest in Mercer Wealth Solutions. Of the parties only the husband is likely to be able to build any sort of self funded retirement. In those circumstances there is an argument for the approach proposed by the husband. Nevertheless superannuation is not likely to be of real benefit to the wife. I will order that the splitting order be based on 40% of the husband’s interest in the Plum Superannuation Fund, rather than 50%, as he proposes.
That will mean that of an entitlement of about $1,026,781 the wife will benefit from a splitting order representing superannuation of about $101,331 and non-superannuation interests of about $925,450. Of an entitlement of about $494,376 the husband will have superannuation interests based on about $188,183 and non-superannuation interests of about $306,193.
The trustee of the husband’s fund has been served with the form of orders sought by the wife and but for a correction in relation to the name of the trustee, has no objection to an order in that form.[14]
[14] Letter from the Plum Members Services Team dated 25 January 2010 provided to my chambers by email on 1 February 2010
The wife has or has had the benefit of:
ASSETS
VALUE
Household Contents at R property – wife
$13,039
Ford Territory – wife
$21,000
Wife’s Jewellery
$4,840
Westpac Bonus Saver A/C No. … – wife
$247
Bankwest A/C No. … – wife
$543
Add-back: wife’s paid costs and disbursements
$65,700
Total
$105,369.00
In order to bring her to about $925,450, the wife should receive a further $820,081 from the remaining asset – the parties’ equity in the R property. The wife will owe any current personal debts, including any remaining legal fees.
The husband will have the balance of his superannuation interests. He has or has had the benefit of:
ASSETS
VALUE
Household Contents at rented property - husband
$5,000
Toyota Camry – husband
$3,600
ANZ Cheque A/C No. … – husband
$14,625
ANZ Online Saver A/C No. … – husband
$69,939
ANZ Etrade A/C No. … – husband
$450
Add-back: husband’s paid costs and disbursements
$68,281.97
Total
$161,895.97
In order to bring him to about $306,193 he should receive a further $144,297 from the equity in the R property. He will owe any current personal debts, including any remaining legal fees.
As the husband foreshadowed in his application, the settlement will require the sale of the R property. In order that the parties share in the loss or profit that will arise if the property realises a different amount to the figure agreed by the parties as the net value for the purposes of these proceedings, I will order that the net sale proceeds be divided in the proportions 820,081:144,297 which I will round out to 85% to the wife and 15% to the husband.
Conclusion under Section 79
Significant contributions were made by each of the parties. They acquired assets and provided a secure home for their children. In the course of about 14 years of cohabitation and since, the parties shared the work of the family in different ways. The orders I propose will effect a just and equitable settlement of their property.
Spouse Maintenance
The approach in spouse maintenance proceedings
Spouse maintenance is a remedy available between parties to a marriage, whether the marriage is on foot or not. Section 72 of the Family Law Act 1975 (Cth) says as follows:
(1)A party to a marriage is liable to maintain the other party, to the extent that the first‑mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b)by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
(2)The liability under subsection (1) of a bankrupt party to a marriage to maintain the other party may be satisfied, in whole or in part, by way of the transfer of vested bankruptcy property in relation to the bankrupt party if the court makes an order under this Part for the transfer.
The first matter to be determined is whether the wife is unable to support herself adequately, by reference to the matters referred to in Section 75(2) which are set out above.
If the Court determines that the wife is unable to adequately maintain herself, having regard to those matters, then the husband has an obligation to maintain her to the extent that he is reasonably able to do so.
The wife’s capacity to adequately maintain herself
In considering whether a party is unable to support themselves, the Court is required to consider the income, earning capacity and financial resources of that party, and their reasonable expenses, having regard to the matters in section 75(2).
I refer to the findings in relation to section 75(2) set out earlier in these reasons, and in particular – paragraphs (a), (b), (c), (g), (h), (j), (k) and (l). I will not repeat the findings made above save to note that:
· Section 75(3) says:
In exercising its jurisdiction under section 74, a court shall disregard any entitlement of the party whose maintenance is under consideration to an income tested pension, allowance or benefit.
· The combined effect of section 4 of the Family Law Act 1975, regulation 12A of the Family Law Regulations 1984 and section 23 of the Social Security Act 1991, is that Austudy payments and Parenting Allowance payments fall within the definition of “income tested pension, allowance or benefit” and must be ignored by me insofar as the wife’s income is concerned;
· The child support payments both voluntary and pursuant to the current assessment are not income for the wife’s support;
· I have found above that the wife has unexercised earning capacity. As to the extent of that capacity, doing the best I can, it is modest. The wife has a commitment for the next 3 years to attend coursework for her studies. The wife has a daily commitment to transporting the children to school and to various school related and other activities.
· Pursuant to the orders I will make, the wife will receive a payment of the order of $800,000 by way of property settlement. No part of that sum is earmarked for the wife’s support. The sum will need to address her need for secure accommodation and other expenses, including legal fees. She will not receive that sum until the settlement of the sale of the R property and that will take some months;
I accept that the wife’s case is not fully developed in respect of her maintenance claim. She has not updated her financial circumstances. She did not declare to the husband or to the Court her receipt of Austudy payments. She has made no attempt to obtain paid employment. I am left to reconcile the likely impact of her tertiary course and to divine the impost on the wife’s time of the children’s activities reflected in an old calendar. I have recorded the brief evidence about the wife’s weekly travel associated with the children as set out in her affidavit. I acknowledge that I am making inferences in favour of the wife, a course I was advised by learned counsel for the husband, to avoid.
On the other hand the facts speak for themselves to some extent. The wife has been out of paid employment since 1996. Most if not all school days are affected to some extent by travel arrangements for the children and there is a similar commitment on weekends. The pattern of the marriage and since was that much of that sort of commitment was left to the wife. The wife will be engaged in full-time study. Those are adequate reasons for needing support, for the purposes of paragraphs 72(1)(a) & (c) of the Act. Finally, were the wife to find paid employment to accommodate the other demands on her time, she will not have much available time and is likely to be paid at a modest rate. For example, she could not aspire to an hourly rate of the order of that earned by the husband, or anything like it.
The wife needs support at something like the current level until effect is given to the property settlement. That need is about $400 per week in addition to the direct payments made by the husband. The husband has been paying $500 per week in addition to the direct payments. I will allow four months for the sale of the former matrimonial home. Thereafter the wife has a need for some support until the conclusion of her studies. Once the property settlement is achieved the wife will have options, including some provision for income from the settlement. In my view the wife would struggle to earn much more than $100 per week. The wife’s need is likely to be in excess of $300 per week.
The husband’s reasonable capacity to provide support
Like the wife, the husband’s ‘current’ Financial Statement does not address his current circumstances. The submission on behalf of the wife was that Exhibit 13 suggests that he has a number of non recurring expenses which will ultimately release over $100,000 in his annual budget. Once the former matrimonial home is sold, the husband will be relieved of mortgage payments and other outgoings for that property. If he seeks to purchase accommodation for himself, in addition to whatever capital and income is available, he will have the money he now applies to rent, to address that need. On top of mortgage payments the husband currently spends $500 per week in direct spouse maintenance and $346 per week on other support for the wife’s household. The husband’s expenditure of $1,164 per week on superannuation contributions would give way to his duty to support his wife. Further there is the unquantifiable potential for bonuses and the value to the husband of the incentive scheme and tax losses. The question here is a reasonable impost on the husband. I think it reasonable to require him to pay $300 per week after the house is sold.
Conclusion
The appropriate order is to maintain the interim spouse support at $100 per week less than the current level for a period to contemplate the sale of the former matrimonial home, which I will fix at four months. Thereafter I will reduce the level of support to $300 per week for the duration of the wife’s current studies or until 31 December 2012, whichever is the earlier.
Child Support
The approach in child support proceedings
The Child Support Scheme, involving the application of the Family Law Act 1975 (Cth), the Child Support (Registration and Collection) Act 1988 (Cth) and the Child Support (Assessment) Act 1989 (Cth) provides that upon application, and the establishment of qualifying criteria, the Child Support Agency (“CSA”) will assess the amount of child support payable by a liable parent to an eligible carer in a particular period by reference to taxable income. Section 116 Child Support (Assessment) Act 1989 sets out largely procedural requirements for an application under Division 4 for departure from the assessment. If either the parent or carer wishes to challenge that assessment they may do so on specified grounds in an administrative application determined by a Child Support Case Officer. If unhappy with that determination they may appeal from the decision of the CSA to the Social Security Appeals Tribunal. An appeal then lies to a Court but only on a point of law. However the section permits a Court to hear an application for departure where the carer and payer are already before the Court on another matter and it would be in their interests for the departure matter to be heard notwithstanding that that regime had not bee fully followed. There is no dispute before me as to the jurisdiction to determine the child support application.
In In the Marriage of Gyselman [1991] 15 FamLR 219, [1992] FLC 92-279 the Full Court described the effect of Section 117 of the Act in the following terms:
….
Section 117 is the critical provision.
The structure of that section is that s 117(1)(b) identifies concisely the matters about which the Court must be satisfied and those components are then expanded in sub-sections (2) to (9). Section 117(1)(b) identifies a clear three-step process:
1. Whether one or more grounds of departure in s 117(2) is established.
If so:
2. Whether it is ''just and equitable'' within the meaning of s 117(4) to make a particular order.
3. Whether it is ''otherwise proper'' within the meaning of s 117(5) to make a particular order.
It is clear from the careful way in which s 117 has been structured that the Court must address each of those three separate issues.
The current assessment
The current assessment[15] issued on 10 November 2009 for the period 1 January 2010 to 25 July 2010. Pursuant to that assessment the husband has a child support liability of $431.44 per week. The husband’s case was conducted on the basis that he currently receives an allowance of 25% of the assessed rate because of the education expenses he pays directly. There is no mention of such an allowance in the assessment. In her June 2009 Statement the wife says she receives $450 per week. The husband says he pays $431.44 per week.
The applications
[15] Exhibit 15
The wife seeks
4. That the respondent pay the tuition and education costs and related education costs for [J] born […] July 1997 at [A] School until her conclusion of her studies in Year 12.
5. That the respondent pay the tuition and education costs and related education costs for [C] born on […] July 1997 at [R] College until her conclusion of her studies in Year 12.
The husband seeks the following orders:
2.12That pursuant to Section 117 of the Child Support (Assessment) Act 1989 there be a departure from the Administrative Assessment of child support payable by the husband to the wife in respect of [C] born […] May 1996 (“[C]”) and [J] born […] July 1997 (“[J]”) such that the husband shall pay as and when they fall due up until the conclusion of the children’s secondary schooling or until each of the children attain the age of 18 years, whichever occurs first;
(a)All costs of the attendance of [C] and [J] at their present private schools (or such other schools as may be agreed between the parties in writing) including but not limited to:
i. Tuition fees;
ii. Books, resources and stationery, excursions;
iii. Material charges;
iv. School uniforms;
v. Extra-curricular activities as are agreed between the parties.
(b)Such monies as are required to maintain the children in the current level of private health insurance.
2.13The amounts payable by the husband pursuant to Order 2.12 are to be credited as 100% of the annual rate of child support payable by the husband under all and any relevant Administrative Assessments.
The unusual aspect of this case is that the wife seeks a departure in order to leave arrangements as they are, whereas the husband wants to change the current arrangements. That comes about because the husband has been making voluntary payments.
There is a nice argument as to whether these are departure proceedings or proceedings in relation to payment of child support in a form other than periodic payments (ss 123 & 124 of the Act). As the dispute affects the overall level of support, I will deal with the issue as a departure application.
Ground
In effect both parents seek a departure. I take it, therefore, that they agree that a ground exists. Here the following grounds from s 117(2) would seem to apply:
(b) that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
(i) ……
(ii) because the child is being cared for, educated or trained in the manner that was expected by his or her parents;
And
(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
(i) ….
(ia) because of the income, property and financial resources of either parent; or
As to section 117(2)(b)(ii) – it is a special circumstance that each of the parties wants the children educated as they have been educated. Each of the parties wants the children to enjoy the curricular and extracurricular activities which they have enjoyed. Indeed the father intends to continue to pay and the wife intends him to continue to pay, school fees and related expenses. I have set out above the substantial costs associated with those activities.
As to section 117(2)(c)(ia) – it is a special circumstance that the husband’s income is many times the rate at which the child support formula is capped. The administrative scheme, insofar as it identifies the formula rate, is not relevant to these children.
Only one ground is required. I am satisfied that a ground is made out.
Just and equitable
Section 117(4) provides:
(4) In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3); and
(b) the proper needs of the child; and
(c) the income, earning capacity, property and financial resources of the child; and
(d) the income, property and financial resources of each parent who is a party to the proceeding; and
(da) the earning capacity of each parent who is a party to the proceeding; and
(e) the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
(i) himself or herself; or
(ii) any other child or another person that the person has a duty to maintain; and
(f) the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
(g) any hardship that would be caused:
(i) to:
(A) the child; or
(B) the carer entitled to child support;
by the making of, or the refusal to make, the order; and
(ii) to:
(A) the liable parent; or
(B) any other child or another person that the liable parent has a duty to support;
by the making of, or the refusal to make, the order; and
(iii) to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.
Section 3 says:
(1) The parents of a child have the primary duty to maintain the child.
(2) Without limiting subsection (1), the duty of a parent to maintain a child:
(a) is not of lower priority than the duty of the parent to maintain any other child or another person; and
(b) has priority over all commitments of the parent other than commitments necessary to enable the parent to support:
(i) himself or herself; and
(ii) any other child or another person that the parent has a duty to maintain; and
(c) is not affected by:
(i) the duty of any other person to maintain the child; or
(ii) any entitlement of the child or another person to an income tested pension, allowance or benefit.
I refer to the relevant findings made earlier in these reasons. The wife has not provided adequate detail as to the expenditure on the children because she did not update her Financial Statement. The wife identified $616.00 per week in living expenses for the children, not including educational expenses or any reference to fixed costs. That last fact may be because the husband meets many fixed costs. Included in the wife’s expenditure is a provision of $194 per week for holidays. It is not part of the husband’s case that too much money is spent on the children. It has pleased the parties to ensure that the children have every advantage.
As a consequence of the orders proposed, some of the husband’s expenses will be reduced.
The children have no earning capacity.
As to hardship, there would be hardship to the wife and the children if I made the orders proposed on behalf of the husband. All of the living costs of the children in the wife’s household would then fall to the wife. The consequence would be that the wife would be in desperate circumstances or the children would do without or some combination of those effects. There is the potential for embarrassment if not damage to the children, if they were to be well supported at school and in their father’s household and yet kept in straightened circumstances in the wife’s household.
Otherwise proper
Section 117(5) provides:
(5) In determining whether it would be otherwise proper to make a particular order under this Division, the court must have regard to:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and
(b) the effect that the making of the order would have on:
(i) any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or
(ii) the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.
The focus here is on the balance of support as between the parents and the tax payer. The wife receives two forms of income tested benefit. The reduction of child support received by her could only increase her reliance on such benefits.
Conclusion
I am satisfied that the current approach, put in place by the agreement of the parties, is a proper approach. The husband wants to continue to pay school fees and related expenses and medical benefit fund membership for the children, until they respectively complete their secondary schooling or until each of the children attain the age of 18 years, whichever occurs first. The wife agrees, save that she wants the payments to continue until the children finish school. The issues are the duration of the order and whether those payments should result in a reduction in the periodic amounts paid by the husband to the wife, and if so how much.
There is no contest that a ground exists. It follows from what I have said above that it would be neither just and equitable nor otherwise proper for orders to be made in accordance with the husband’s application. The orders sought on behalf of the wife do not address the matter in issue – the extent to which direct payments should be credited against periodic assessments. The child support scheme places a priority on the administrative assessment of child support liabilities. The format of the orders sought on behalf of the husband preserves the application of the administrative scheme and addresses the matter in issue. I will adopt that format but will provide for the direct payments to represent 25% of the rate assessed from time to time. The husband seeks that the payments continue until the earlier of the children completing secondary school or attaining 18 years of age. No harm would be done by that formulation, in the normal course, in relation C. However, as I calculate it, J will turn 18 in the July of her final year. It would be sensible if the order was expressed to extend to the conclusion of secondary education.
I certify that the preceding two hundred and fourteen (214) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Ian Loughnan.
Associate:
Date: 3 March 2010
Key Legal Topics
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Family Law
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Property Law
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Equity & Trusts
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