WHAIT and WESTERN
[2019] FCWA 214
•3 OCTOBER 2019
JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA
ACT: FAMILY LAW ACT 1975
CHILD SUPPORT (ASSESSMENT) ACT 1989
LOCATION: PERTH
CITATION: WHAIT and WESTERN [2019] FCWA 214
CORAM: SUTHERLAND CJ
HEARD: 29 & 30 JULY 2019
DELIVERED : 3 OCTOBER 2019
FILE NO/S: PTW 4522 of 2016
BETWEEN: MS WHAIT
Applicant
AND
MR WESTERN
Respondent
Catchwords:
PROPERTY - Assessment of contributions made by parties after separation - Future needs - Case turns on its own facts
CHILD SUPPORT - Failure of applicant to adduce relevant evidence in support of application - Application effectively abandoned at trial
Legislation:
Child Support (Assessment) Act 1989 (Cth)
Family Law Act 1975 (Cth)
Representation:
Counsel:
| Applicant | : | Mr Hanly |
| Respondent | : | Ms Needham |
Solicitors:
| Applicant | : | Hotchkin Hanly |
| Respondent | : | Hearty & Tam Family Lawyers |
Case(s) referred to in decision(s):
Anson & Meek (2017) FLC 93-816
Holland & Holland (2017) FLC 93-798
Stanford v Stanford (2012) 247 CLR 108
WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED
IT IS NOTED that publication of this judgment by this Court under the pseudonym Whait & Western has been approved by the Chief Judge pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
INTRODUCTION:
1[Ms Whait] (the “wife”) and [Mr Western] (the “husband”) were unable to reach agreement in relation to financial issues, following the end of their marriage in 2010. The proceedings were complicated by the following facts: Firstly, in the years after the parties’ separation, the wife made substantially greater ongoing contributions, including significantly reducing the mortgage owing on the former matrimonial home (“the Home”) and significantly increasing her superannuation entitlements. Secondly, after separation, each party received a substantial lump sum payment: the husband through a worker’s compensation payment and the wife through an inheritance. Save for a small amount of savings still retained by the wife, all of the funds received by each party have now been spent.
2The wife sought orders that she retain the Home and be responsible for discharging the associated mortgage and other secured liabilities at her expense, and for the parties to otherwise retain the assets, liabilities and resources in their own names. The wife also sought an order that to the extent the Court found the husband should receive a lump sum payment by way of property settlement from the wife, then the annual rate of child support payable by the husband during the period “6 January 2011 to date” should be varied to reduce that payment to “zero”.[1]
[1] Refer to the wife’s Further Amended Form 1 Initiating Application filed on 10 September 2018, together with her Minute filed on 4 August 2018.
3On the other hand, the husband agreed the wife should retain the Home and be responsible for the associated mortgage debt. He also agreed that each party should otherwise retain the assets, liabilities and resources in their own names. However, the husband sought that the wife pay him such sum of money as required to effect a division of the net asset pool on a 60% / 40% basis in the wife’s favour.[2]
[2] Refer to the husband’s Minute filed on 29 August 2018.
4During closing submissions, the wife’s counsel effectively conceded that the wife’s child support claim had not been established, given the paucity of the evidence in relation to the specific matters the Court was required to consider in relation to the application. In regards to property settlement, both parties’ counsel also submitted that in the event the Court determined that a payment was required to be made from the wife to the husband, then the Court should also consider making a superannuation splitting order in favour of the husband. In particular, the husband’s position was that although he preferred to receive the majority of any adjusting payment by way of cash, he did not oppose a lesser portion of the adjusting payment being by way of a superannuation splitting order.
THE EVIDENCE:
5Both parties have been represented by solicitors since January 2018, noting the proceedings in relation to financial matters were commenced in August 2017. Both parties had the benefit of legal representation at trial. The wife relied on her trial affidavit,[3] an updating trial affidavit[4] and her updated financial statement.[5] The wife did not file any other witness affidavits in support of her case. The husband relied on his trial affidavit and financial statement,[6] together with witness affidavits of his cousin [Ms B], his former partner [Ms M] and his mother [Ms C].[7] Each party was cross‑examined by the other party’s counsel. In addition, the wife’s counsel cross-examined Ms M and Ms C.
[3] The wife’s trial affidavit was filed on 23 July 2018 (the “wife’s trial affidavit”).
[4] The wife’s updating affidavit was filed on 25 July 2019 (the “wife’s updating affidavit”).
[5] The wife’s updating financial statement was filed on 24 July 2019.
[6] The husband’s trial affidavit and financial statement were filed on 29 August 2018 (the “husband’s trial affidavit”).
[7] The husband’s witness affidavits were filed on 29 August 2018.
6I considered that for the most part, both parties, Ms C and Ms M all gave their evidence honestly and as they saw it. However, I had some concerns that the wife was not entirely frank about some minor transactions recorded in her bank account statements on 3 September 2018;[8] and the husband minimised his methamphetamine use prior to June 2016. I also considered that Ms C was either not fully aware of and/or attempted to downplay the extent of the husband’s illicit drug use in 2015 and 2016 and the detrimental impact it had on his financial position as a result. Ms B was not required for cross-examination and, accordingly, I accept her evidence as being unchallenged. However, I considered that her evidence had little, if any, relevance to the issues in dispute in these financial proceedings.
LEGAL PRINCIPLES – PROPERTY PROCEEDINGS:
[8] Refer to Exhibit R3.
7These proceedings are determined pursuant to Part VIII of the Family Law Act 1975 (Cth) ("the Act"). I must firstly determine whether it is just and equitable to make an order,[9] having regard to the parties’ rights and interests in their existing property.[10] If I so determine, then I must consider the factors set out in the legislation.[11] In this case both parties maintained and I am satisfied that having regard to their property interests, it is just and equitable to make an order by way of alteration of property interests. The parties separated on a final basis in 2010, were divorced in 2018 and both sought to sever their financial relationship with each other.
FACTUAL BACKGROUND:
Introduction:
[9] Refer to section 79(2) of the Act.
[10] Stanford v Stanford (2012) 247 CLR 108.
[11] Refer to section 79(4) of the Act.
8The wife was born in Australia in 1975 and is now 44 years of age. The wife is currently employed [in administration], working four days per week. She lives in the Home with the parties’ two daughters: [Child A] born [in] 2005 and [Child B] born [in] 2007. The children do not currently spend any time with the husband.
9The husband was born in [Country A] in 1975 and is also 44 years of age. The husband is currently employed on a full-time basis as a casual [tradesperson]. He lives in a town in [Coastal Town A in Western Australia], having recently separated from Ms M and their young son [Child C], who was born in [mid] 2018.
10The trial commenced before me on 29 July 2019 and was concluded on 30 July 2019. At the conclusion of the trial, I made an order giving both parties liberty to provide further documentary evidence to the Court in relation to debts secured against the title to the Home by Legal Aid Western Australia (“LAWA”). The wife took up the opportunity to do so and in addition, provided further documents establishing that the superannuation trustee had been afforded procedural fairness in relation to proposed superannuation splitting orders. On 10 September 2019, I made a direction from chambers granting both parties liberty to file and serve limited written submissions and/or seek a relisting to make further oral submissions in relation to the further documents relied upon by the wife. Neither the husband nor the wife elected to make any further submissions or seek to re-list the matter.
Employment arrangements and property of parties at commencement of cohabitation:
11The parties commenced cohabitation in 1998 and were married on 12 January 2005. At the commencement of cohabitation the husband was employed as an apprentice tradesperson. He completed his apprenticeship in 1999. The wife had already completed a [business] degree at university and worked [in sales] on a full-time basis. The parties had no significant assets or liabilities when they started living together. Each had a car of modest value, the husband’s car being subject to a small loan. The wife had a HECS debt of approximately $9,000, which she gradually paid off from her income in the usual way.
Relevant financial and other events during the relationship:
12The parties initially lived together in rented accommodation. In November 2002, the parties became the registered proprietors of the block of land on which the Home is now located. In respect of that property:
a)The land was originally part of a larger block of land owned by the husband’s parents. In 2002, the husband’s parents caused the subdivision of that land, and the parties purchased the newly-created block of land. I accept the parties’ evidence that they paid the subdivision costs[12] and the husband’s evidence that he undertook some of the physical work required to sub‑divide the block.
b)I accept Ms C’s evidence that the parties paid the sum of $90,000 for the block. Having regard to the fact the parties also paid all the subdivision costs, I am satisfied that they paid close to (if not full) market value for the block.
c)The parties paid $80,000 to a builder to construct a home on the land. I accept the husband’s evidence that he undertook some of the physical work himself, including roofing, paving, fencing and concreting. The parties received $10,000 by way of the first homebuyer’s scheme, and otherwise obtained a mortgage of approximately $93,000 from National Australia Bank.
[12] The wife maintained that the sub-division costs were approximately $20,000, whereas the husband maintained that they were approximately $17,000. I am unable to make any findings as to the actual amount, but considered that the issue had little, if any, relevance to my determination.
13In 1999, the wife completed a Diploma of [Business]. In 2000, the wife then obtained full‑time employment as [an administrator]. The wife worked as an administrator until taking maternity leave upon the birth of the parties’ first child. I accept the wife’s evidence that she then took further maternity leave after the second child’s birth, meaning that she took a total of four years maternity leave (including in each case, three months of paid leave and the remainder as unpaid leave). I also accept the wife’s evidence that, during her maternity leave, she undertook some very limited [casual] work.[13]
[13] I note the wife’s concession under cross-examination that she did “very little” [casual] work during her maternity leave.
14In 2005, the husband started his own [contracting] business. The husband worked full time in the business, assisted by the wife who undertook some administrative work, including bookkeeping, invoicing and the filing of tax returns.
15I am satisfied that during the period from December 2005 until October 2010 when the parties separated, the husband was the primary income earner and the wife was primarily responsible for caring for the children and attending to home duties.
16In early 2010, the husband’s business effectively closed down after a client failed to pay an invoice totalling over $30,000. Following the failure of the husband’s business, he secured employment with a business in the North West of Western Australia for three months. In February 2010, the husband then commenced employment as a tradesperson with a business in Perth earning approximately $60,000 per annum (gross).
Separation:
17The husband acknowledged that in the lead up to the parties’ separation he was experiencing mental health issues, using alcohol and marijuana on a regular basis, and that these factors contributed to the breakdown in the parties’ relationship.[14] The parties separated at the end of October 2010. The children initially lived primarily with the wife and spent time with the husband. I accept the wife’s evidence that after approximately three months, the parties agreed to a shared-care arrangement whereby the children lived with the wife for eight nights each fortnight and with the husband for six nights each fortnight. On occasions, this arrangement temporarily changed as the husband’s circumstances changed (for example, when he suffered a serious injury at work in 2011).[15]
[14] Husband’s trial affidavit at [24].
[15] Wife’s trial affidavit at [29] – [30].
18I am satisfied that, at the time of separation, the parties had following major assets, liabilities and superannuation entitlements:
a)The Home, subject to the mortgage then totalling approximately $176,000. Although the husband maintained that the Home was then worth in excess of $600,000, I am not satisfied that there was any cogent evidence of the value of the property at this time.
b)The parties’ motor vehicles, furniture and other contents, including in the case of the husband, some tools of trade.
c)The wife’s superannuation entitlements with [Super Fund B] of approximately $31,000.
19I accept the husband’s evidence that, at the time of separation, he still had some outstanding debts in relation to his failed business, including to the ATO,[16] which he repaid within approximately the following two years. Given the paucity of the evidence in relation to the matter, I am unable to make any findings as to the quantum of these debts. Although the husband maintained during his cross-examination that at the time of the parties’ separation he also had a credit card debt, I am not satisfied this was the case. The husband was unable to recall what, if any, amount was owing on the credit card and he did not disclose any documents in relation to the credit card. His evidence in cross‑examination was also inconsistent with his evidence in his trial affidavit, which was to the effect that he had no credit card debts or other personal loans at separation.[17]
[16] Husband’s trial affidavit, [25].
[17] Ibid.
20At the time of the parties’ separation they also had a bank account in trust for the children in the amount of approximately $10,000.
Relevant events after separation:
21After separation, the husband initially remained living in the Home and the wife and the children moved out. After approximately two months, the husband then moved out, allowing the wife and children to move back into the Home. In or about late 2010, the wife then secured employment as a relief [administrative] assistant, working one to two days per week. The husband continued to pay the mortgage repayments for the Home until April 2011. As at 23 March 2011, the closest date available on the evidence before the Court, the mortgage balance was $172,360.[18]
[18] Wife’s trial affidavit, annexure C, page 20.
22In early April 2011, the husband suffered a serious accident at work and was off work for approximately seven months. He stayed with the wife and the children at the Home for a few weeks during the early stages of his recovery. The parties applied to the National Australia Bank to have the mortgage repayments suspended for three months, to which the bank agreed. In July 2011, at the conclusion of that grace period, the wife took over sole responsibility for making the mortgage repayments and she has continued to repay the mortgage ever since. There was no evidence before the Court as to the mortgage balance at the precise time the wife took over making the repayments. Having regard to the interest charges that were likely to have accrued over the grace period, I am satisfied that the balance owing on the mortgage as at July 2011 was approximately $175,000.
23I am satisfied that the husband made some further, limited contributions towards the Home after April 2011, including building a pergola, making some payments towards water and shire rates in 2012 and 2013 and making the payments for the home insurance premiums until about May 2016. I am satisfied that the wife otherwise met the vast majority of the other costs in relation to the property.
24In September 2013, the husband unilaterally withdrew $2,700 from the children’s bank account to pay his own personal expenses. He subsequently promised the wife to repay the funds into the account, but did not.
The husband’s worker’s compensation claim, payout and subsequent relevant events:
25The husband commenced proceedings in respect of his workplace injuries. The proceedings were eventually settled on the basis that the husband received lump sum payments totalling nearly $191,000. Although the husband conceded that part of the payout related to loss of income and part related to pain and suffering, he maintained that he was unable to recollect the specific breakdown or disclose relevant documents about the issue.
26The husband received his payout in two tranches, paid to him in May and September 2015. Over the course of the next year, the husband spent all of the funds. I am satisfied that the husband used a relatively small proportion of the funds to pay off some liabilities that he had incurred well after separation (including to the ATO) and to take the two children on [local and overseas] holidays. However, I am also satisfied that the husband wasted the majority of his payout on purchasing illicit drugs (methamphetamines) for himself and others, including his partner at the time, known as [Ms J].
27In June 2016, Ms C contacted the wife raising concerns about illicit drug use in the husband’s home, including when the children were in his care. The wife then withheld the children, effectively bringing an end to the parties’ shared-care arrangement. Since June 2016, the children have been in the sole care of the wife and have spent only limited, supervised time with the husband. The children have not spent any time with the husband since November 2018.
28The husband maintained that, prior to June 2016, he only used methamphetamine recreationally. After the wife retained the children in June 2016, the husband said that he experienced a “downward spiral”, and that he used methamphetamine heavily until October 2016, at which time he ran out of money. However, I am not persuaded that the husband was entirely frank about his drug use prior to June 2016. For example, the husband maintained that from June 2016 until October 2016 his drug habit was costing him approximately $250 per day (and that this period marked the height of his drug use). The husband conceded that he purchased drugs using cash obtained by him from making cash withdrawals from his bank account. The husband also conceded that his cash withdrawals from locations such as hotels, bars and the TAB were primarily to obtain cash for drug purchases, not for entertainment and / or gambling expenses. When asked how much he spent on methamphetamines, the husband replied “it is not a good number”, but otherwise did not volunteer a figure. An analysis of the husband’s bank statements revealed that from 26 November 2015 until 25 January 2016, the total amount of cash withdrawals from the husband’s bank account was approximately $14,700 (or approximately $240 per day). From 26 January 2016 until 24 March 2016, the total amount of cash withdrawals from the husband’s bank account was approximately $18,600 (or approximately $315 per day).[19] Whilst I accept that some of the cash withdrawals may have been used by the husband to meet payments of other expenses, such as living costs, I consider it very likely that the husband’s drug use prior to June 2016 was considerably greater than the husband admitted.
[19] Refer to wife’s trial affidavit, annexure Z, page 169 onwards, being statements for the husband’s NAB Gold Banking Choice bank account for the period 26 May 2015 to 24 March 2016. Statements for that account after 24 March 2016 were not in evidence before the Court. The wife also annexed to her trial affidavit statements for the husband’s NAB Smart Reward Saver account for the period 19 February 2016 to 22 November 2016 (see annexure AA, page 189 onwards). Those statements reveal the husband disbursed approximately $50,000 from that account during the period 22 February 2016 to early October 2016. The disbursement of those funds was not explored in cross-examination.
29In or about April 2016, the husband started unilaterally transacting on the children’s bank account to meet his personal expenses, with the net effect being that the balance was further reduced. In late April 2016, the wife withdrew $5,000[20] from the children’s bank account (effectively being half the funds in the account as at the date of separation), and the husband subsequently withdrew whatever funds remained before the account was finally closed in January 2018.
[20] The wife established a separate bank account for the children using the funds withdrawn by her. Neither party contended that said account should form part of the asset pool available for distribution between the parties in this case, and I am satisfied that the wife is holding that account on trust for the children.
30The husband conceded that the funds withdrawn by him from the children’s bank account during the period September 2013 through to the closure of that account in January 2018 totalled $5,375.81. The husband also agreed under cross-examination that he should repay the sum of $5,375.81 to the children’s bank account plus interest. No specific interest rate was put to the husband in cross-examination, nor the date from which interest should accrue. These issues were also not canvassed by the parties in their closing submissions.
31On or about 12 July 2016, the husband unilaterally withdrew the amount of $1,000 from the mortgage facility. He subsequently repaid the amount of $500. Under cross-examination the husband agreed that he should repay the remaining $500 to the wife plus interest. Again, the specific rate of interest and date from which interest should accrue were not explored either in cross-examination or in closing submissions.
32The husband’s behaviour deteriorated after late 2015, no doubt in part due to his illicit-drug lifestyle. The husband was candid in acknowledging that 2016 was the worst year of his life and his behaviour detrimentally impacted on others. The wife successfully obtained violence restraining orders protecting her and the children from the husband. The husband was charged with breaching the restraining orders a number of times. He was also charged with a number of violence related offences against third parties, together with drink driving and other driving offences. In or about December 2016, the husband moved to live with his parents in Coastal Town A. The husband also spent very short periods of time in prison: 10 days in [prison] in December 2016, and seven days in [prison] in January 2017.
Commencement of Family Court proceedings:
33The wife commenced parenting proceedings in September 2016.[21] The wife subsequently introduced property proceedings by way of an amended Application filed on 7 August 2017. The husband filed his responding documents in relation to the financial proceedings in September 2017. Financial directions were made by the Court on 18 September 2017, including for the parties to attend a Conciliation Conference on 30 January 2018. At the Conciliation Conference the parties (who were both represented by lawyers) were unable to reach agreement and directions were made programing the matter (both parenting and financial) to trial. On 28 June 2018, the Court made directions bifurcating the proceedings, such that only financial matters would proceed to trial at this time.
The wife’s post-separation inheritance and subsequent relevant events:
[21] The wife’s Form 1 Initiating Application filed on 27 September 2016 sought only parenting orders.
34[In mid] 2018, the wife’s father died and the wife and the two children became entitled to receive a share of his estate. In July 2018 and April 2019, the wife received two payments totalling nearly $200,000 by way of an inheritance. This included the amount of $20,000 ($10,000 each) for the two children.[22] I am satisfied that save for her remaining savings of approximately $9,000, the wife used the inheritance funds to: (1) pay the children’s inheritance into the children’s bank account, together with a “top up” payment of $10,000, (2) repay various debts to her family members, (3) fund an expensive overseas holiday for herself and the children, (4) undertake some minor works on the Home, (5) pay her legal fees in relation to the family law proceedings, and contested VRO proceedings in 2018, (6) host a party with a number of her friends at a cost to her of $6,000, and (7) otherwise spent the balance on her and the children’s day-to-day living costs. The husband maintained that aspects of the wife’s spending of her inheritance were wasteful. The wife’s counsel conceded that some of her expenditure (particularly on the overseas holiday and party) was extravagant and I am satisfied that this was the case.
Child support arrangements after separation:
[22] Refer to the wife’s updating affidavit at [29].
35In late 2010 or early 2011, the wife applied to the Child Support Agency (“CSA”) for an administrative assessment of child support. By letter dated 7 January 2011, the CSA accepted the application and assessed that the husband was liable to pay child support. Over time, the CSA issued various administrative assessments of child support. Although the wife annexed to her affidavits a few of the relevant administrative assessments of child support, she did not provide all the relevant assessments for significant periods of time. Accordingly, there was also no evidence before the Court of the basis for many of the administrative assessments, including the income amounts of both parties and the care percentages adopted by the CSA in undertaking its assessments.
36In his trial affidavit, the husband summarised the various child support assessments for the period from January 2011 until December 2018.[23] However, he also did not set out the basis for the assessments, including the income amounts of both parties and the care percentages adopted by the CSA in undertaking its assessments. Although the wife did not challenge the husband’s evidence in this regard, I was not satisfied that I should rely on the husband’s evidence as it was frequently inconsistent with the few CSA administrative assessments that were in evidence before the Court.
[23] Refer to the husband’s trial affidavit at [75]. This is notwithstanding that the husband’s evidence about annual rate of child support he was assessed to pay from time to time did not, generally, accord with the administrative assessments adduced by the wife, nor with a letter from the from the CSA dated 10 October 2012, contained at annexure O to the wife’s trial affidavit.
37It was common ground that, initially, the parties elected to have a “private collect” arrangement, rather than having the CSA involved in collecting payments. It appears that the CSA directly collected payments for a period of approximately six months in 2013 and thereafter the parties again reverted to a private collect arrangement until 2017.[24] Both parties appeared to accept that the amount of child support the husband was assessed to pay over the years was very low. The wife maintained that the husband’s record in relation to payment of child support was abysmal. However, I am not persuaded that this was the case, for the following reasons: Firstly, as is set out above, I am satisfied that the CSA only administratively assessed the husband to pay low and/or minimal amounts of child support to the wife for considerable periods of time. Secondly, I am satisfied that in early 2011, the wife did not initially seek that the husband make any child support payments, firstly because he was paying the mortgage repayments, home insurance premiums and health insurance premiums, and secondly because he was unable to work after his workplace accident in April 2011. Thirdly, I accept the husband’s evidence that after he returned to work in October 2011, and until June 2016 when the children commenced living with the wife on a full-time basis, the parties largely made private agreements in relation to child support without reference to the administrative assessments, having regard to the fact that they were sharing the care of the children. Fourthly, and as far as I understood the wife’s case, there was no complaint that the husband was behind in his child support payments.[25] Rather, the wife’s criticism was directed at the adequacy of the amounts the husband had been assessed to pay from time to time, particularly since 2015 following receipt by the husband of his compensation payment.
[24] Refer to the wife’s trial affidavit, annexure Q.
[25] This is despite the contradictory evidence before the Court as to the child support the husband has been assessed to pay since 2011, versus the amounts the wife says she has actually received by way of child support: see annexure P to the wife’s trial affidavit, and compare that with the husband’s own evidence as to the amounts he has been assessed to pay over the years – see paragraph 36 above.
38It appears that since approximately February 2017, the CSA has been directly involved in the collection of child support. The husband’s child support payments are collected directly by the CSA from the husband’s employer. As at 25 July 2019, the husband’s child support for the two children was assessed by the CSA to be:
a)$17.46 per week for the period from 2 April 2019 to 31 August 2019;
b)$20.56 per week for the period from 1 September 2019 to 14 October 2020; and
c)$22.31 per week for the period from 15 October 2020 to 30 November 2020.[26]
[26] Exhibit A11.
39It was common ground that the administrative assessments referred to in the preceding paragraph were calculated on the basis: (1) of the husband’s income tax return for the year ended 30 June 2018, which recorded that the husband’s income was only approximately half his current income; and (2) of his obligation to also pay child support to Ms M for Child C. As and when the husband does file his 2019 income tax return, amended assessments will no doubt be issued by the CSA increasing the husband’s child support liabilities for the relevant periods.
EXISTING INTERESTS IN PROPERTY:
40I am satisfied that the property interests of the parties is as set out in the following Schedule:
Item #
Assets
$ value
1
The Home
$445,000.00
2
Wife's NAB account
$9,043.00
3
Wife's money in trust for legal fees
$0.00
4
Wife's contents
$5,000.00
5
Husband's NAB account
$874.00
6
Husband's money in trust for legal fees
$0.00
7
Husband's motor vehicle
$15,850.00
8
Husband's contents
$2,000.00
Liabilities
9
The Home mortgage
-$108,692.00
10
LAWA caveats and memorial
-$5,453.00
11
Wife's unpaid legal fees
$0.00
12
Husband's NAB credit card
$0.00
13
Husband's personal loan – [Ms C]
-$8,136.00
14
Husband's personal loan – [Ms M]
$0.00
15
Husband's debt to his former accountant
$0.00
16
Husband's unpaid legal fees
$0.00
Superannuation
17
Wife's [Super Fund A]
$61,690.00
18
Wife's [Super Fund B]
$54,091.00
19
Husband's Australian Super Fund
$8,820.00
TOTAL
$480,087.00
41I make the following findings in relation to the Schedule:
a)The parties either agreed or did not dispute items 1, 6, 7, 9, 17, 18 and 19.
b)Items 2 and 5: The parties agreed for the purposes of the trial that the wife’s savings were $9,043 and the husband’s savings were $874. The wife’s counsel maintained that the parties’ savings should be excluded from the Schedule as they derived from the parties’ post separation savings and in the case of the wife, her remaining inheritance (received by her well after separation). The husband’s counsel concurred it would be appropriate to exclude the funds from the Schedule, but on the basis that the wife’s savings in particular should be regarded as a financial resource to the wife. The approach of excluding existing property interests from the asset pool, or otherwise treating such interests as financial resources, has been criticised by the Full Court as leading to error.[27] Having reflected on the matter, I am satisfied that both parties’ savings should be included in the Schedule.
[27] Holland & Holland (2017) FLC 93-798, 77,590; Anson & Meek (2017) FLC 93-816, 77,884 (per Murphy J).
c)Items 3 and 6: At the commencement of the trial, the solicitors for both parties held funds in trust to cover the parties’ trial costs. The parties agreed that all the funds would be expended by the conclusion of the trial and that they should be excluded from the Schedule. I am satisfied that such an approach is appropriate.
d)Items 4 and 8: The parties either agreed and/or did not dispute the value of their respective contents and personal effects. The wife’s counsel maintained that the items should be excluded from the Schedule, given the length of time since the parties’ separation. Although it was common ground that the parties attended mediation relatively soon after their separation and agreed upon the division of their contents and personal effects, there was no evidence as to any agreed values or other “set offs”. Little or no attention was given to the issue during the trial. In the circumstances, I am satisfied that the items should be included in the Schedule.
e)Item 10: The existence of the debts to LAWA, secured by caveats and a memorial against the title to the Home, was largely ignored in the parties’ preparations for trial and during the trial itself. On 30 July 2019 (the last day of the trial), I made an order that both parties have liberty to provide further documents to the Court in relation to these debts. Subsequently the wife provided the Court with a letter and other documents from LAWA confirming that the total amount required to discharge the debts and release the title to the Home was $5,452.70, made up as follows:
i) The amount of $1,845.90 owed by the wife;
ii)The amount of $1,845.90 owed by the husband; and
iii)The further amount of $1,765.90 owed by the wife.
f)As neither party took up the liberty granted to them to make further submissions in relation to the debts, I am satisfied that they should be included in the Schedule, in the amount of $5,453 (being rounded up to the nearest dollar).
g)Item 12: The parties agreed for the purposes of the trial that the amount the husband owed on his credit card was $9,288. Initially, the husband maintained that the liability should be included in the Schedule, effectively meaning that the wife would assume 60 per cent of the liability for the debt according to his proposed division of the net asset pool. During his cross-examination, the husband conceded that the credit card debt arose in 2016 when he used the card to make cash withdrawals to fund the purchase of methamphetamines. He also appropriately conceded that the debt should not be included in the Schedule.
h)Item 13: I accept the evidence of the husband and his mother that from late 2016 onwards, Ms C provided the husband with substantial financial assistance. This included Ms C: (1) paying the arrears on his car loan of $3,053.63; (2) making his car repayments totalling $5,082.77; (3) paying for his car to be released after it was repossessed by agents for the finance company; (4) paying the arrears on his rent, together with miscellaneous other living costs; (5) paying his fines in relation to criminal breaches of the VROs relating to the wife and/or children; (6) paying fees and disbursements in relation to his criminal and VRO proceedings; and (7) paying funds to his family lawyers in relation to these proceedings. I accept Ms C’s evidence that the total funds advanced by her to date were $69,342.95 and that she expects the husband to repay her in full.
i)Leaving aside the issue of loans to pay the husband’s family law legal fees (which I will address separately), the husband’s counsel conceded in closing submissions that, except for the repayments relating to the loan for the husband’s motor vehicle, the debt should not be included in the Schedule, but should be taken into account by the Court when considering whether the proposed final orders were just and equitable. On the other hand, the wife’s counsel maintained that the entire debt, including the car loan repayments and arrears paid by Ms C, should be excluded. I am satisfied that that the car loan repayments and arrears should be included as a liability in the Schedule, particularly as the value of the car has also been included as an asset.
j)Item 14: I accept the evidence of the husband and his former partner that Ms M has also provided some financial assistance to the husband. This has included directly paying various expenses on his behalf (including legal fees in relation to the family law and VRO proceedings) and forgoing agreed “board” payments pursuant to their Cohabitation Agreement for a period of time, until the husband was financially in a position to contribute. Although Ms M and the husband originally maintained that the total amount owing by him was $15,000, I am not satisfied this was the case. Ms M conceded that: (1) a credit card payment of $2,760 in July 2019 attributed to the husband did not, in fact, relate to him at all; and (2) from December 2018 until March 2019 the husband made “board” payments far in excess of the Cohabitation Agreement and that it would be appropriate for she and the husband to negotiate a reduction in the amount actually owing by the husband as a result. Ms M also conceded that, although she expected the husband to eventually repay her, she was not in a hurry for payment and anticipated that the husband would have to give higher priority to other liabilities. I am satisfied that the husband owes some funds to Ms M, albeit I am unable to make any findings as to the quantum or whether Ms M will in fact, seek payment from the husband. Again, leaving aside the issue of loans to pay the husband’s family law legal fees (which I will address separately), the husband’s counsel conceded in closing submissions that the debt should not be included in the Schedule, but should be taken into account by the Court when considering whether the proposed final orders were just and equitable. I am satisfied that such an approach is appropriate.
k)Item 15: Having regard to the evidence of the husband and Ms M, I am not persuaded that the husband owes a debt to his former accountant.[28] Even if he does, I am not persuaded that the debt should be included in the Schedule, given that it arose years after the parties separated.
l)Items 11 and 16: As at 29 July 2019, the wife had incurred total family law litigation costs of $32,346.88, of which she had paid $31,978.38, together with a further $20,000 which was being held in trust. The wife’s total estimated costs to the conclusion of the trial were estimated to be nearly $60,000.[29] The wife’s costs were initially paid on her behalf by various family members, by way of loans. As and when the wife received her inheritance, she repaid these loans. The wife has paid the balance of her costs from her inheritance. As at 29 July 2019, the husband had incurred total family law litigation costs of $21,178.65, the vast majority of which had been funded by way of loans from Ms C and Ms M. In addition, Ms M paid a further $30,000 into the husband’s solicitor’s trust account shortly prior to trial, to meet the husband’s further costs, of which $27,324.80 remained as at 29 July 2019. The husband’s total estimated costs to the conclusion of the trial were estimated to be nearly $50,000.[30]
m)Both parties conceded that the Court had a number of options in the treatment of their family law litigation costs. I am satisfied that the most appropriate course of action is to exclude the parties’ paid legal fees, unpaid legal fees and any liabilities in relation thereto, particularly as: (1) the wife has used her inheritance to pay her legal fees, including the debts that she previously owed to her family members in relation thereto, whereas the husband still owes substantial amounts to Ms C and Ms M in relation to his legal fees; and (2) if the paid litigation costs and associated debts are included in the Schedule, the practical effect is that the wife will be heavily subsidising the husband’s family law litigation costs. I am not satisfied that such an outcome is just and equitable, particularly as both the husband and/or the wife can make an application for costs, if appropriate, after the publication of these reasons.
SECTION 79(4) (a), (b) (c) FACTORS:
[28] Under cross-examination, both the husband and Ms M maintained that the husband’s former accountant had been paid in full for services rendered.
[29] Refer to Exhibit A1.
[30] Refer to Exhibit R2.
42The parties agreed and I am satisfied that they each had only nominal assets and liabilities at the commencement of cohabitation. The parties also agreed and I am satisfied that their respective contributions up to the date of their final separation in October 2010 were equal. The parties did not agree on their respective post‑separation contributions or as to how their respective contributions should be assessed overall. I am satisfied that post-separation contributions weigh heavily in favour of the wife for the following reasons:
43 Firstly, since the wife assumed sole responsibility for the mortgage repayments in July 2011, she has reduced the balance owing on the mortgage from approximately $175,000 to $108,692. Given the relatively modest size of the parties’ net asset pool, this is a significant contribution. The husband submitted that I should heavily discount the wife’s contributions in this respect, on the basis that: (1) the wife had the benefit of living in the home to his exclusion; (2) he also continued to make some limited contributions towards the property for a period of time; and (3) he was also required to pay rent. In my view, whilst the husband’s submission has some merit, it ignores that over the years, the wife also made very sizeable repayments in relation to the capital and interest components of the mortgage, as well as towards the other outgoings in relation to the property. In light of those findings, I am not persuaded that it is appropriate to heavily discount the wife’s contribution towards increasing the equity in the Home in the manner maintained by the husband.
44 Secondly, in the nearly nine years since the parties’ separation, the wife has been able to accumulate substantial superannuation entitlements, as compared with that of the husband. At the time of separation, the husband effectively had no superannuation entitlements. By the time of the trial, his superannuation entitlements had increased to approximately $8,800. On the other hand, at the time of separation, the wife’s superannuation entitlements were approximately $31,000. At the time of the trial, her superannuation entitlements had increased to $115,781. I am satisfied, in the context of a relatively modest net asset pool, that this was a significant contribution. However I do not ignore that:
a)Whilst I am satisfied the increase in value has predominantly been as a result of the wife’s employer’s contributions, consequent upon her ongoing employment since separation, a proportion of the increase in value of the wife’s superannuation is likely to be simply as a result of market factors.
b)The children were in the shared care of the parties from 2011 until June 2016, after which they lived solely with the wife. From 2011 until June 2016, each party arguably made some indirect contributions towards the other’s ability to work and thereby contribute to superannuation.
45 Thirdly, the husband had shared care of the children from 2011 until June 2016 and he contributed towards the children’s financial support in various ways. However, I am satisfied that after this time, the wife had the major responsibility for the care and financial support of the children and that this was also a significant contribution by her.
46 Fourthly, included in the Schedule is the wife’s remaining savings, which have been derived from her inheritance received post separation.
47Overall, I consider that contributions should be assessed as to 70 per cent to the wife and 30 per cent to the husband.
SECTION 79(4)(e) / SECTION 75(2) FACTORS:
48I will now consider the relevant factors as required by the legislation. If I do not refer to a factor, it is because I consider the matter is not relevant in this case.
49Both parties were 44 years of age at the time of trial and both maintained that they had health issues. The wife’s unchallenged evidence was that she suffered a debilitating accident at work in May 2000, injuring three discs in her thoracic spine and pelvis, and that she undergoes “regular physiotherapy, massage and rehabilitation as well as taking pain medication”.[31] The husband’s unchallenged evidence was that he continues to suffer significant pain in his left knee, lower back and neck as a result of his workplace accident in April 2011. The husband wakes up in significant pain each day and must do a series of stretches/exercises before he can start the day. He is no longer able to work a full day as a tradesperson due to the heavy load on his back and knees. Instead, the husband has sought employment [in another role within the building and construction industry], which he explained is less physically taxing, albeit not as well remunerated.[32] The husband also currently suffers depression for which he is medicated. There was no evidence to suggest that the parties’ respective medical issues preclude them from continuing to engage in their current occupations, and there was no cross-examination on that issue.
[31] Wife’s trial affidavit, [54].
[32] Husband’s trial affidavit, [112].
50The wife is currently employed as an administrator working four days per week. In 2018 the wife earned $81,779 per annum (gross), and in 2019 she earned $76,728 per annum (gross).
51The husband is currently employed [in the building and construction industry]. In recent times he has also obtained additional work qualifications, including as a [truck] driver. The husband’s income for the period January 2018 to June 2018 was $29,602.05 (gross). I am satisfied that his current income is approximately $60,000 per annum (gross).
52The wife is currently the sole carer for the parties’ daughters. I note that the husband’s ultimate proposal in relation to parenting matters is that the children should spend alternate weekends in his care, and half the school holidays. That being the case, the wife is likely to continue in her role as the children’s primary carer, notwithstanding the parenting proceedings in this Court have not yet concluded.
53The husband and Ms M commenced living together in July 2017, separated initially in or about March 2019 and separated on a final basis in late May 2019. The husband now lives alone, but spends regular time with his young son Child C. The husband pays child support to Ms M for Child C by way of a private arrangement.
54I am satisfied that the parties’ two children currently have a number of ongoing medical/dental/psychological issues and attend upon various health providers on a regular basis. Although some of the health providers bulk bill for their services, I am satisfied that the wife does have added expenses in relation to the children’s health needs. The wife has also been required to take leave without pay from work in order to facilitate the children’s attendances at their various appointments.
55The husband is currently assessed to pay $17.46 per week by way of child support for the children. As and when the husband files his 2019 income tax return, his child support is likely to increase, albeit not substantially. I am satisfied that the reality of the situation is that the major financial burden for the children falls on the wife and this is unlikely to change in the foreseeable future.
56Both parties received considerable lump sum payments after separation. Apart from some extravagant spending in relation to an overseas holiday and party, the wife has largely used her inheritance to repay debts and meet ongoing living costs. On the other hand, the husband wasted a large proportion of his worker’s compensation payment on illicit drugs, rather than, for example, servicing his car loan and meeting his ongoing living costs, in relation to which, he is now indebted to his mother.
57Weighing the various factors identified by me I am satisfied that there should be a further adjustment in favour of the wife, particularly to take into account the wife’s ongoing responsibility to care for, and substantially financially provide for, the children and the husband’s wasteful actions in spending his worker’s compensation payments on illicit drugs, rather than servicing his car loan. I am satisfied that a further adjustment of five per cent is appropriate.
SECTION 79(4)(d),(f) & (g) FACTORS:
58The orders proposed by the parties have no impact on the earning capacity of either party. I have already dealt with the remaining factors, in so far as they are relevant.
DISCUSSION AND CONCLUSIONS:
59I intend to order that the property interests of the parties be divided as to 75 per cent to the wife and as to 25 per cent to the husband in accordance with the following table:
Husband
$ Value
Wife
$ Value
Husband's motor vehicle
$15,850.00
The Home
$445,000.00
Husband's contents
$2,000.00
Wife's contents
$5,000.00
Husband's savings
$874
Wife's savings
$9,043
Australian Super
$8,820.00
Super Fund A
$61,690.00
Super Fund B
$54,091.00
Debt to Ms C
-$8,136.00
The Home mortgage
-$108,692.00
LAWA debt
$0.00
LAWA debt
-$5,453
Super split from wife
$22,330
Super split to husband
-$22,330
Payment from wife
$78,284
Payment to husband
-$78,284
TOTAL
$120,022
25%
TOTAL
$360,065
75%
60Pursuant to the settlement, the wife will receive net assets and superannuation entitlements totalling approximately $360,000. This includes the Home, subject to the mortgage and the responsibility to repay the LAWA debts, her contents and superannuation entitlements (after the superannuation splitting order) of $93,451. She will also have to pay a lump sum payment to the husband of $78,284.
61The husband will receive net assets and superannuation of approximately $120,000, comprising the lump sum payment and superannuation splitting payment, together with his remaining modest assets and superannuation entitlements. From his lump sum payment, the husband will be required to reimburse the children’s bank account and mortgage account, as agreed to by him during the trial. He will also have substantial liabilities to meet, including his credit card debt and debts to his mother and former partner.
62The parties agreed that a superannuation splitting order is appropriate. Given that the superannuation entitlements comprise a significant proportion of the parties’ total net worth, I am satisfied that the just and equitable result is that the parties’ combined superannuation entitlements be split in the same proportions as the other property of the parties: that is, 75 per cent to the wife and 25 per cent to the husband.
63In relation to the amounts to be reimbursed by the husband to the children’s bank account and to the mortgage account, neither the husband nor the wife turned their minds to the issues surrounding the calculation of any interest payable by the husband. In such circumstances, I am not satisfied that it is appropriate to make any orders for the payment of interest.
64In the circumstances, I am satisfied that the proposed financial division is just and equitable and otherwise proper.
CHILD SUPPORT APPLICATION:
65The wife introduced her claim for child support by way of her further amended Application filed on 10 September 2018. The wife sought an order in the following terms (at paragraph 6):
In the event that the Court finds that the husband is entitled pursuant to sections 79 and 75(2) of the Family Law Act 1975 to the payment of an amount of money by the wife to the husband as a condition of the transfer of the Husband’s interest in the home to the wife, pursuant to sections 112, 116(1), 118(1) and 118(2B) of the Child Support (Assessment) Act 1989[:]
a)leave be granted pursuant to 118(2B) for the Court to make an order under Division 4 of the Child Support (Assessment) Act in respect of child support periods more than 18 months earlier and a date on which application for this order is made under section 116;
b)an order be made varying the annual rate of child support payable by the husband from the date of the first administrative assessment on 6 January 2011 to date to the extent necessary to reduce the amount otherwise payable by the wife to the husband pursuant to sections 75(2) and 79 be reduced to zero.
66The wife’s application in relation to child support falls to be determined under Part 7, Divisions 3 and 4 of the Child Support (Assessment) Act 1989 (Cth) (the “Assessment Act”).
67During closing submissions, I raised with the wife’s counsel my concerns about the paucity of evidence adduced by the wife in support of her child support application. In response, counsel said that he “agreed to some extent” with my concern, but further submitted that the court “had enough material to make a broad assessment about whether or not there should be some… retrospective increase”. I then raised the following specific issues for counsel’s consideration: (1) the wife’s failure to address the issue of whether leave should be granted to vary administrative assessments of child support older than 18 months (and up to seven years old), having regard to the matters set out in section 112 of the Assessment Act; (2) the amorphous nature of the wife’s application, insofar that it did not nominate or quantify the annual rate of child support she says the husband ought to have paid over the historical periods under consideration; (3) the wife’s failure to address the matters that I must consider under section 117 of the Assessment Act; (4) the lack of evidence as to the parties’ respective incomes over the historical period under consideration; and (5) the lack of cross-examination about any of the abovementioned issues, that would assist the Court to make findings of fact necessary to determine the wife’s application.
68In response, the wife’s counsel simply said he “accepted” those remarks, and thereafter made no further submissions in support of the wife’s child support application. In those circumstances, I considered the wife’s application in this regard effectively abandoned.
ORDERS:
69I propose to issue these reasons from chambers in order to give the parties an opportunity to consider them and my proposed orders. I propose to make the following orders:
1.Within 28 days from the date of these orders and simultaneously:
a)the Applicant, [MS WHAIT] (“the wife”), pay to the Respondent, [MR WESTERN] (“the husband”), the sum of $78,284;
b)the husband do all things and sign all documents to transfer to the wife absolutely, the property [in Perth] (“the Home”);
c)the parties do all things and sign all documents necessary to discharge the National Australia Bank mortgage secured against the Home (“the Mortgage”) and the caveats and memorial secured against the Home to secure the parties’ indebtedness to Legal Aid Western Australia (“the LAWA debts”) and the wife shall refinance the Mortgage and the LAWA debts into her sole name;
d)the wife indemnify the husband and continue to indemnify the husband for the Home, including but not limited to the Mortgage, the LAWA debts and all outgoings associated with the Home; and
e)from the sum of $78,284 received by the husband pursuant to this order, the husband do pay to the wife:
i)the sum of $500 in reimbursement of monies withdrawn by him from the Mortgage; and
ii)the sum of $5,375.81 withdrawn by him from the Children’s Bank Account.
2.[Trustee A] is the administrator of [Super Fund A] and for the purpose of these orders is referred to as the Trustee.
3.Pursuant to paragraph 90XT(1)(a) of the Family Law Act 1975 (Cth) ("the Act") the base amount allocated to the husband out of the wife's interest in [Super Fund A] ("the Scheme") is $22,330 ("the base amount").
4.In accordance with Section 90XT(1)(a) of the Act, whenever a splittable payment becomes payable in respect of the superannuation interest of the wife in the Scheme, the husband be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth) using the base amount of $22,330 and there will be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for these orders.
5.Pursuant to Section 90XD of the Act, the operative time for the payment split is four (4) business days after the Trustee is provided with a certified copy of these orders.
6.Having been accorded procedural fairness, these orders bind the Trustee of the Scheme to observe the requirements of the Act and the Family Law (Superannuation) Regulations 2001 (Cth).
7.The husband shall do all things necessary including but not limited to, exercising a request pursuant to r 7A.06(2) of the Superannuation Industry (Supervision) Regulations 1994 for the rollover or transfer of the transferable benefits out of the wife's interest in the Scheme to a fund of the husband's choosing in accordance with r 7A.12 of the Superannuation Industry (Supervision) Regulations 1994.
8.Subject to any specific provision to the contrary in these orders, all the right, title and interest of the husband in the following vest with the wife:
a)any funds held by the wife with any bank, building society, credit union or other financial institution;
b) any motor vehicle registered in the wife's name;
c)all household furniture and personal items in the wife's possession;
d) the wife's superannuation; and
e) the wife's jewellery and personal effects.
9.Subject to any specific provision to the contrary in these orders, all the right, title and interest of the wife in the following vest with the husband:
a)any funds held by the husband with any bank, building society, credit union or other financial institution;
b) any motor vehicle registered in the husband's name;
c)all household furniture and personal items in the husband's possession;
d) the husband's superannuation; and
e) the husband's jewellery and personal effects.
10.There be liberty to either party to apply for orders to implement and otherwise give full force and effect to these orders.
11.Except as otherwise provided in these orders, the husband and the wife shall be solely responsible in relation to any and all liabilities presently in the name of each of them respectively and shall indemnify the other party in respect thereof.
12.The matter be removed from the Defended List.
13.In relation to material tendered as an exhibit into evidence in these proceedings:
a)all parties must collect the exhibits tendered by them (“their exhibits”), from the Chambers of the Honourable Chief Judge Sutherland, at least 28 days, and no later than 42 days, from today’s date;
b)all parties must contact the Chambers of Honourable Chief Judge Sutherland to arrange the collection of their exhibits;
c)in default of compliance with subparagraph (a), all material tendered as an exhibit, save and except for material produced pursuant to subpoena, will be destroyed by the court without notice to the parties.
14.In the event of an appeal being lodged prior to the expiration period of 42 days, paragraphs 13 and 14 above do not apply.
15.All outstanding financial and / or child support proceedings otherwise be and are hereby dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Family Court of Western Australia.
KV
Associate29 OCTOBER 2019
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