WINN & WINN
[2011] FamCA 501
•30 June 2011
FAMILY COURT OF AUSTRALIA
| WINN & WINN | [2011] FamCA 501 |
| FAMILY LAW - PROPERTY - Settlement in relation to marriage – Superannuation – Pension – Valuation FAMILY LAW - CHILD SUPPORT - Application for departure |
| Family Law Act 1975 (Cth) - s 75(2), s 79 Child Support (Assessment) Act 1989 (Cth) – s 4(1) s 116(1)(b), s 117(2), s 117(2)(c), s 117(4), s 117(5) Family Law (Superannuation) Regulations 2001 – r 28, r 40 |
| Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693 Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414 Ferraro and Ferraro (1993) FLC 92-335 In the Marriage of Gyselman [1991] 15 FamLR 219; [1992] FLC 92-279 Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355 Lee Steere and Lee Steere (1985) FLC 91-626 M & M (2006) FLC 93-281 |
| APPLICANT: | Ms Winn |
| RESPONDENT: | Mr Winn |
| FILE NUMBER: | SYC | 582 | of | 2009 |
| DATE DELIVERED: | 30 June 2011 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Johnston J |
| HEARING DATES: | 25 & 26 October 2010 & 14 January 2011 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr P Campton |
| SOLICITOR FOR THE APPLICANT: | Humphreys & Feather |
| COUNSEL FOR THE RESPONDENT: | Mr A Givney |
| SOLICITOR FOR THE RESPONDENT: | Armstrong Legal |
Orders
That not later than 42 days from the commencement of operation of these orders the wife shall pay to the husband the sum of $111 279 and discharge the current mortgage in respect of the former matrimonial home at … Y Street, Sydney Suburb 1 (Westpac Rocket repay home loan … and Westpac Rocket equity loan …).
That simultaneously with the above payment the husband shall forthwith do all things and sign all documents necessary to transfer to the wife his interest in the said former matrimonial home.
That in the event that the wife fails to pay the husband in accordance with paragraph 1 above the following orders shall apply:
3.1.That the husband and wife do all things and sign all documents necessary to place the said home on the market for sale and to sell it at the best price reasonably able to be obtained.
3.2.That the proceeds of sale be paid as follows:
3.2.1.In payment of real estate agent’s commission and selling expenses including legal costs on sale;
3.2.2.In payment of the outstanding mortgage; and
3.2.3.In payment of 83.953 percent of the balance to the wife and 16.047 percent thereof to the husband.
That otherwise the husband and the wife are declared the sole owners of all items of property and interests in superannuation in their possession and/or control respectively.
That except as otherwise provided herein the husband and the wife remain liable for any debts in their own name at the date of commencement of operation of these orders and each shall indemnify the other from any liability in relation thereto.
That in the event that either the husband or the wife refuses or neglects to sign any document necessary to give effect to these orders the registrars of this Court be appointed pursuant to s 106A of the Act to sign such document in the name of him or her and to do all things necessary to give validity and operation to the document.
That all exhibits be released.
That the above orders not commence operation until 19 July 2011.
That both parties have leave to re-list these proceedings by arrangement with the Associate to Johnston J for further submissions in relation to the form of the orders only at any time not later than 18 July 2011.
Child Support
That the current child support assessment in relation to the child J born on … September 1998 be departed from so that for the period from 1 July 2011 to 30 June 2013 the husband pay child support for the child at the weekly rate of $200.
That from 1 July 2013 child support be assessed in accordance with the provisions of the Child Support (Assessment) Act 1989.
That the wife have sole control in respect of the payments out of ASG Scholarship Fund towards the school fees for J to attend School 1.
IT IS NOTED that publication of this judgment under the pseudonym Winn & Winn is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 582 of 2009
| Ms Winn |
Applicant
And
| Mr Winn |
Respondent
REASONS FOR JUDGMENT
Introduction and Applications
These are contested property proceedings. The parties in these proceedings are Ms Winn and Mr Winn. For convenience I shall refer to them as “the wife” and “the husband” respectively.
The wife seeks orders to the following effect:
·That the parties forthwith sell the former matrimonial home at Y Street, Sydney Suburb 1 and the proceeds of sale be paid as follows:
(a)In payment of real estate agent’s commission and selling expenses including legal costs on the sale;
(b)In payment of outstanding mortgage(s);
(c)In payment of the balance then remaining as to 70% to the wife and 30% to the husband.
·That the wife be permitted the opportunity to pay the husband for his interest in the said property;
·That the husband transfer to the wife his interest in the Nissan motor vehicle;
·A superannuation splitting order, the effect of which would be to attribute to the wife a base amount of $275 000 in the husband’s interest in Superannuation Scheme 1 and associated machinery orders;
·That otherwise the husband and wife be declared the owners respectively of all items of property and superannuation within their respective possession and/or control;
·That each party indemnify the other against liability for debts in their own name;
·An enforcement order pursuant to s 106A of the Family Law Act 1975 (“the Act”);
·That there be a departure from the administrative assessment of child support payable by the husband to the wife in respect of the child J born in September 1998 for the child support period from 22 April 2010 until 30 June 2012 so that the husband pay child support at the weekly rate of $300;
·That from 1 July 2012 the child support liability be determined in accordance with the provisions of the Child Support Assessment Act 1989 (“the Assessment Act”);
·That certain orders be made to secure future child support payments;
·That the wife have sole control in respect of the payments out of AGS Scholarship Fund towards the school fees of J attending School 1.
On the other hand, the husband is seeking orders to the following effect:
·That the parties forthwith sell the former matrimonial home and pay the proceeds of sale as follows:
(a)In payment of agent’s commission and legal fees on the sale;
(b)In payment of the Westpac Rocket home loan and the Westpac Rocket equity loan; and
(c)In payment of the balance 76% to the wife and 24% to the husband.
·That the husband be declared the sole owner of various accounts and items of personal property;
·That the wife be declared sole owner of specified items of personalty and liabilities.
Background
The husband was born in 1952 and he is therefore 59 years of age. The wife was born in 1962 and she is therefore 49 years of age. The parties married in 1993 and separated on 27 June 2007.
There is one child of the marriage J born in September 1998 who is therefore 12 years of age.
The husband has two adult children from his previous marriage to Ms L.
The parties met in late 1986 and commenced a relationship. They were both working as federal public servants.
The husband had recently purchased a home unit at S Street, Sydney Suburb 2 for $65 000. This was in September 1986. The purchase had been funded by $16 000 savings with the balance borrowed on mortgage from Credit Union 1.
In November 1986 the husband moved to Melbourne. He rented his home unit out. He had been successful in achieving promotion within the federal public service in Melbourne. While the husband lived in Melbourne the parties continued their relationship, although each of them appeared to have a different view about the nature of their relationship. I shall refer to this matter again below.
In January 1989 the husband returned to work in Sydney. The home unit was still rented out and the husband lived with the wife in her parents’ home at Sydney Suburb 3 for a period which is in issue. I shall refer to this again below.
In February 1991 the husband commenced working in Canberra, initially for a couple of days at a time. In 1992 he moved to Canberra to live.
The parties became engaged in 1992 and they married in 1993. Upon their marriage the parties commenced living in the husband’s home unit. There is also an issue about this and I shall refer to this further below.
At the time of marriage the husband’s assets consisted of his home unit, some modest savings, his household contents and personal possessions. The husband also had an interest in Superannuation Scheme 1 to which he had been making contributions since 1975. He had recently sold a motor cycle and used the sale proceeds towards funding the parties’ honeymoon.
At this time the wife’s assets consisted of her Nissan motor vehicle, some modest savings, her personal property and an interest in superannuation. She had sold a boat and used the proceeds of sale to assist funding the costs of the wedding.
In mid-1994 the husband sold his home unit. The approximately $ 191 000 net proceeds of sale were paid towards the purchase of a home for the parties at D Street, Sydney Suburb 1. The parties purchased this home in joint names for approximately $320 000.
In July 1995 the wife resigned from the federal public service. She received a termination payment of $31 697 which was applied to reduce the mortgage and for general household expenses. The wife then commenced employment as an employee with an airline.
At approximately this time the wife sold her Nissan motor vehicle and purchased a new Holden motor vehicle using hire purchase or a lease.
In March 1998 the wife cashed in her preservation benefit under Superannuation Scheme 2 and received $44 713 after paying tax.
As indicated above the parties’ child J was born in September 1998. The wife took 5 months leave from her employment.
In January 1999 the wife returned to work 4 days per week at the airline.
In November 1999 the parties sold their home at Sydney Suburb 1 for $428 000 and purchased a larger home at Y Street, Sydney Suburb 1. This was funded from the net proceeds of sale of the D Street property and a mortgage and equity loan of $300 000. The wife and child continue to reside in this home.
In approximately 2000 the husband received a payment from the federal public service of approximately $28 000.
In November 2000 the husband undertook a 6 month placement overseas.
In 2001 the wife accepted a redundancy from the airline receiving a payout of $41 148 net. In June 2001 the wife commenced working with R Company and she continues to work there.
In January 2002 the husband resigned from the federal public service. He received a payment of $25 808 for long service and recreation leave credits.
Unfortunately the husband suffered a downturn in his health and in August 2002 he underwent heart bypass surgery. He remained off work for a period of approximately 12 months.
In May 2003 the husband commenced working with O Company and continued in his position until July 2004.
In 2005 the husband commenced working with a state government department.
In May 2005 the wife received an out of court settlement from the airline of $47 000.
In June 2005, the wife received an inheritance of $79 453 from her late father’s estate. Approximately $50 000 of this went toward the purchase of a Nissan motor vehicle and accessories in June 2007. The balance was spent on general family living expenses.
On 27 June 2007, the parties separated. The husband vacated the matrimonial home and moved into a self contained flat off his mother’s garage. J remained in the wife’s care. On the basis that the husband’s accommodation was unsuitable, the husband has spent limited time with J during the school term and a minimal amount of time during the school holidays.
In August 2008, the husband claimed his Superannuation Scheme 1 benefit of $236 392.35 and an annual pension entitlement that is indexed commencing at $45 745.54. The husband also withdrew his Superannuation Scheme 3 benefit of $31 864 after tax in September 2008.
In around 2008, the husband borrowed a total of $24 507 from his mother to purchase a motorcycle and to pay off the outstanding amount on the parties’ joint Westpac MasterCard.
On 8 May 2009, the parties were divorced.
In June 2009, the husband commenced his own consultancy business known as “[Winn Consultancy]”.
In September 2009, the husband underwent further heart surgery this time involving the placement of a stent.
In February 2010, the husband’s mother paid J’s term 1 school fees in the sum of $1817.
In late September 2010, the husband moved into a rental property at R Street, Sydney Suburb 1 with his fiancée, Ms M, and her four children.
In October 2010, the husband married Ms M.
Credit
The husband
The husband said that he lied in his application to the federal public service about the reason for compassionate transfer from Melbourne to Sydney.
There were inaccuracies in the husband’s affidavit. For example the husband deposed in his affidavit that he rented his Sydney Suburb 2 home unit from about November 1986 to April 1989 to a work colleague. But during cross-examination he conceded that in fact he had rented the unit to this colleague only for approximately five months in 1989. He also said that the wife paid the rates on his home unit once whereas he subsequently conceded that she had paid the rates twice.
He said in his affidavit that his mother paid for airconditioning for the Sydney Suburb 1 home for approximately $11 500. But in fact the amount paid by the husband’s mother was $8800 (there was no issue that this was a gift).
The husband said in his affidavit he received a lump sum payment from the federal public service for $55 000 in year 2000 on account of loss of tenure. But he conceded that in fact this was approximately half this amount.
The husband said in his affidavit that upon resigning from the federal public service he received approximately $60 000 in long service leave and recreational leave. In fact it was less than half this amount.
The wife
The wife had a much better recollection of financial details than the husband. But there were also inaccuracies in her affidavit. For example she appears to have been incorrect in her assertion that the husband moved to live in Canberra in February 1991. And there were numerous other inaccuracies. Of more serious concern, in my view, the wife exaggerated the amount of time she spent at the husband’s home unit. I prefer Ms K’s evidence about this to that of the wife.
So neither the husband nor the wife was consistently reliable in their evidence. I have difficulty generally preferring the reliability of one over the other.
Ms K
Ms K gave her answers in a forthright manner and I regard her as a witness of the truth.
Ms R
I regard Ms R as a witness of the truth.
Commencement of Cohabitation
There is a significant issue about when the parties commenced cohabitation.
The wife said in her affidavit that they commenced “a de facto relationship” in approximately November 1986. The husband denied this and said that they did not commence living together until their marriage.
In support of her assertions about this the wife pointed to a number of matters.
The first was that in March 1987 the husband authorised her to operate his accounts with Credit Union 1.
The next was a letter dated February 1988 from the husband to his superior in the federal public service requesting a transfer from Melbourne to Sydney on compassionate grounds. One of the submitted grounds was that his “fiancée”, the wife, was not in a position to seek a transfer to Melbourne and his absence from Sydney was having a detrimental effect on their relationship.
In support of this request the wife wrote a memorandum dated 30 March 1988 to the effect that she and the husband had been engaged for six months, that she was unable to transfer to Melbourne because she needed to care for her parents in Sydney and the fact of the husband living in Melbourne was making it extremely difficult to maintain their relationship.
In September 1988 the wife took out private health cover membership for herself and the husband as a couple, the premiums being debited from the wife’s salary. The wife gave her address as that of the husband’s home unit and described the husband as her spouse.
The wife paid five or six of the strata levies in respect of the husband’s home unit each of approximately $1000 as well as some of the rates and utility bills.
While the husband lived in Melbourne between November 1986 and January 1989 the wife flew there and stayed with him four days per fortnight. She also paid her travel costs as well as some of the husband’s travel costs when he came to Sydney during the period. She also paid costs of the parties’ food and entertainment in Melbourne.
When the husband returned to Sydney to live in January 1989 he and she lived together at her parent’s home at Sydney Suburb 3 until January 1990. They then moved into the husband’s unit upon the husband’s tenant Mr B moving out and remained living there until late 1990. Ms K was also living there.
In April 1991 the parties took out mutual life insurance policies nominating the other as the beneficiary. The wife also organised at this time permanent disability from accident insurance for them both.
When the husband was working in Canberra she would travel to Canberra and spend the weekends with him and he would travel to Sydney and they would stay together at her parents’ home.
The husband was also appointed executor under her late father’s will.
On the other hand, as indicated above, the husband said that the parties did not commence cohabitation until they married.
The husband said in relation to his request in 1988 to his superior in the federal public service for compassionate leave, that he lied about the wife being his fiancée at the time because she was not then his fiancée. He said that he asked the wife to join in this misrepresentation in an endeavour to achieve the transfer.
In relation to the wife paying strata levies and council rates for him the husband conceded that the wife paid two rates instalments for him. But he also said that he repaid her the money spent in this regard.
The husband agreed that when he returned to Sydney to live in January 1989 he lived with the wife at her parents’ home but said that this was for a period only of approximately five or six weeks.
The husband denied that he and the wife moved into the husband’s home unit when his tenant Mr B moved out. The husband said that he was living there at the time and that when Mr B left Ms K moved in. The husband said that the wife was living with her parents at this time.
The husband said that the wife never lived with him at his home unit until the parties were married.
Ms K supported the husband’s version of his living arrangements at the time. She said that she was working for the federal public service in Sydney and met the husband in approximately December 1989. She said they became friendly and that she visited his home unit approximately once a week from that time. She said that Mr B was living in the second bedroom of the unit. She and Mr B were colleagues in the federal public service.
Ms K said that during the first month or so of meeting the husband (in December 1989) she asked him whether he had a girlfriend and that he replied that he did not and that he was seeing a couple of women but preferred being single.
Ms K also said that in approximately June 1990 she moved into the bedroom of the husband’s unit which had been vacated by Mr B. Shortly after she moved into the unit she met the wife. She said that she asked the wife where she lived and that the wife replied that she lived with her parents at Sydney Suburb 3. Ms K said that she had not seen the wife at the husband’s unit before Ms K moved in. Ms K lived at the husband’s unit until October 1991. She disagreed with the suggestion by counsel that during this period the wife spent on average five nights per week with the husband in the unit. But she agreed that the wife would not have spent less than one night per fortnight at the unit during the time when Ms K lived there. Ms K also said that she remembered periods of a month or two at a time when the wife would not be there because she understood that the parties were not speaking.
Ms K also said that during the time she lived there she was introduced to numerous other women on at least twenty different occasions who would spend time with the husband.
Ms K said that she and the husband had a system for paying household bills. She said that the wife was not involved in this system and that the only financial contributions to the household she observed having been made by the wife were that when the wife would stay at the unit she would bring food and cook the dinner.
Ms K also said that in May 1992 the husband informed her that he and the wife were then in a serious exclusive relationship and that in June 1992 the husband informed her that they were engaged.
What does the Court make of all this?
In my view, it is more probable than not that the husband’s assertion that the parties did not commence cohabitation until they were married is correct. And this is despite some misgivings that I have about the reliability of his evidence. I regard the evidence of Ms K as pivotal in shedding light on what was happening at the husband’s home unit. This evidence is quite inconsistent with the claims of the wife that she was living with the husband in the unit primarily and spending only occasional nights at her parents’ home. Based on the evidence of Ms K, I am satisfied that it was far more likely than not that the wife’s primary residence was at her parents’ home and that she was spending occasional nights at the husband’s unit certainly between June 1990 and October 1991.
The following year the husband went to live in Canberra and the parties also became engaged. As indicated above, the wife travelled to Canberra on most weekends to visit the husband and occasionally he travelled to Sydney on weekends.
The husband was still working in Canberra when the parties married.
The Applicable Law
Sub-section 79(1) of the Act provides that in property settlement proceedings, the Court may make such order as it considers appropriate.
Sub-section 79(2) provides that the Court shall not make an order under the above sub-section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
There is a long-standing preferred approach to the determination of property applications. This involves four inter-related steps. Firstly, the Court should make findings about the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of s 79(4) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should consider the effect of any proposed order upon the earning capacity of either party, the relevant matters in s.75(2), any other order made under the Act affecting a party or child and any child support that a party has provided or for which a party might be liable. The Court is to determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of its findings and determination and resolve what order is just and equitable in all the circumstances of the case.
This approach has been confirmed in numerous cases in this Court including for example Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355; Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414 and Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693.
Superannuation
Because of the particular challenges posed by the existence of the superannuation benefits of each of the parties, in my view, this is not a case in which it would be appropriate to consider the parties’ superannuation and non-superannuation assets within the same pool of assets.
In this regard I note the following passages from the judgment of the majority (Bryant CJ, Finn and Coleman JJ) in the well-known case of Coghlan and Coghlan (2005) FLC 93-220 at pages 79,646:
63.… we consider that the preferred approach to the determination of property settlement cases must be to prepare in addition to the list of items of property (which would clearly fall within the definition of that term in s 4(1)), a separate list containing any superannuation interest or interests (valued according to the Regulations if a splitting order is sought in any application before the Court, or if no such order is sought, valued either according to the Regulations or otherwise). …
…
65.… it will be necessary where a splitting order is sought, or extremely prudent where no such splitting order is sought (in order to ensure that justice and equity is achieved) to:
(a)value the superannuation interest (according to the Regulations if an order under Part VIIIB is sought or according to the Regulations or otherwise if no order is sought);
(b)consider and make findings about the types of contributions referred to in s 79(4)(a), (b) and (c) which have been made by the parties to the superannuation interests on either a global approach or an asset by asset approach depending on the circumstances;
(c)consider the other factors in s 79(4) being the matters in s 79(4)(d), (e), (f) and (g); and
(d)ensure that pursuant to s 79(2) the orders in relation to the parties’ property, and any order under Part VIIIB in relation to superannuation interests are just and equitable.
66.In the context of a consideration of the matters referred to in sub-paragraphs (b) and (c) of the last paragraph, the following matters may well be relevant: the relationship between years of fund membership and cohabitation; actual contributions made by the fund member at the commencement of the cohabitation (if applicable), at separation and at the date of hearing; preserved and non-preserved resignation entitlements at those times; and any factors peculiar to the fund or to the spouse’s present and/or future entitlements under the fund.
67.If this approach is adopted, whereby superannuation interests are dealt with separately from property as defined in s 4(1), but are subject to the considerations in s 79(4), then not only will any contributions, both direct and indirect, by either party to such superannuation interests be more likely to be given proper recognition, but the real nature of the superannuation interests in question can also be taken into account, both in consideration of the s 75(2) matters and in the final assessment of whether the ultimate order is just and equitable.
68.When we refer to “the real nature” of the relevant superannuation interest, we are referring to the fact that notwithstanding that its value according to the Regulations may well be calculated to be a very significant amount, that superannuation interest may be no more than a present or future periodic sum, or perhaps a future lump sum, the value of which at date of receipt is unknown.
The husband’s superannuation
The husband was a member of Superannuation Scheme 1 between 1975 and 2008. He was a contributor to the Scheme from 1975 until 2002 when he preserved his benefit until he reached his preservation age of 55 years. Then he withdrew his lump sum of $236 392 and commenced receiving the Superannuation Scheme 1 pension. The pension is currently approximately $47 000.
Mr G was appointed single expert witness to value the parties’ interests in superannuation.
In relation to the husband, Mr G prepared a report dated 16 March 2010 in which he valued the husband’s interest in his superannuation pension to have had a value of $774 265 as at 4 January 2010. This valuation was in accordance with the method for valuing a defined benefit interest in the payment phase set out in r 40 of the Family Law (Superannuation) Regulations 2001 (“the Superannuation Regulations”).
Mr G was subsequently asked further specific questions and prepared a supplementary report dated 4 June 2010. In this report he indicated that to arrive at his valuation of $774 265 he used the factors in the Superannuation Regulations which included the Australian Life Tables for 1995-1997. He said that for a male aged 57 years his life expectancy would be 22.5 years. This would presume the husband to live until he reached the age of approximately 80 years.
Mr G also provided valuations of the husband’s Superannuation Scheme 1 pension based on the following assumed ages the valuation following each age below:
Age 60
$105 104
Age 65
$301 458
Age 70
$463 610
Age 75
$597 490
Age 80
$708 066
Age 85
$799 379
In my view there is an obvious difficulty with the valuation under the Superannuation Regulations of $774 265. This is that it assumes that the husband would live to approximately 80 years and therefore receive the pension until this time. In my view such an assumption, unfortunately, is not supported by the evidence in this case.
Dr K, consultant physician was appointed a single expert witness to report on the husband’s state of health, his prognosis, capacity to work and certain other matters. For present purposes, what is significant is that Dr K reported the husband’s prognosis as “guarded”. This was in the context of the husband having undergone a five-fold coronary by-pass and having had two stents inserted subsequently after an unexpected re-stenosis of the circumflex artery and a “scare” subsequently with chest pain (which however was judged not to be related to further occlusion). There might also be a problem with one of his carotid arteries. Dr K reported that “[i]t is impossible to give a firm prognosis in terms of years but hopefully he will live into his seventies.”. During cross-examination Dr K said that it was very difficult to estimate the husband’s life expectancy but provided that the husband continued to undergo effective preventative treatment and that his blood pressure was maintained at a satisfactory level he thought the husband would live for somewhere between 5 and 10 years. Although there was vigorous testing of Dr K’s opinion, in my view, he was not shaken in respect of this part of his report.
Accordingly, the high point of the prognosis is that the husband would live into his seventies. The low point is that he would live (for five years) to age 63.
On the basis of Dr K’s opinion I propose to adopt the mid-point of Mr G’s calculations of the husband’s pension based on age 65 at $301 458 and age 70 at $463 610. This would be $382 534 ($463 610 - $301 458 = $162 152
:2 = $81 076 + $301 458 = $382 534).Of course this is far from a precise calculation in the sense that it is an attempt to quantify the value of the husband’s pension over a period which can only be an estimate based on the opinion of Dr K. How close this is to reality will only become clear in time. But in all the circumstances, this is the best the Court can do at this point in time.
The next step is to consider the contributions made by the parties to this superannuation.
As indicated above, the husband commenced contributing to Superannuation Scheme 1 in 1975. This was when he commenced working with the federal public service. He contributed during the years from 1975 to 2002, a period of approximately 26 years. Then he preserved his benefits until August 2008 when he claimed his lump sum and commenced receiving his pension. The parties cohabited for approximately half this period.
I note at this point that in the case of M & M (2006) FLC 93-281 the Full Court said as follows at pages 80,817 and 80,818:
121.We do not find a contribution assessment based on a calculation of years of marriage divided by the years the member had been in the fund to be helpful. In the context of considering contributions pursuant to s 79 it has never been necessary to apply a mathematical formula in the way we have described. All that is required is that the contributions of the parties be evaluated in relation to superannuation as they are to other assets. Further there may be real injustice in doing so as there is frequently far less contributed to a fund in the early years of membership compared to later years. A formulaic approach does not take account of the years in which greater contributions were made, often later in a marriage, nor the effect of contributions over many years of marriage which may have diluted initial contribution. (Pierce and Pierce (1999) FLC 92-844).
Taking careful note of this caution, I have to do the best I can in difficult circumstances to assess the parties’ respective contributions to the husband’s superannuation.
Clearly, the major contribution has been made by the husband because he made contributions to the Scheme over approximately 11 years before the parties even met. But the wife has made indirect contributions through her financial and family relationship with the husband and as a consequence of all the subsequent contributions over the period of their relationship.
In my view, to attribute a 25 percent contribution by the wife to this superannuation on the basis that the parties cohabited for approximately half the relevant period, and the wife should be accredited half of this half which is 25 percent, would be too low. It would not give proper recognition to her contributions, particularly all her contributions made subsequent to commencement of cohabitation. On the other hand, to assess her contributions in relation to this superannuation as being equal with those of the husband would not be fair to the husband because it would give no recognition to his contributions made before the parties met.
In my view, the appropriate assessment lies somewhere between these points. I find it to be 37 percent contributions by the wife and 63 percent by the husband.
Going back to the husband’s interest in his Superannuation Scheme 1 pension, Mr G indicated that in the event that this Court made an order for a splitting of that interest a superannuation interest could be created for the wife either by an order requiring a percentage split of the interest or an order nominating a particular sum as a base amount under this split. And further that if the base amount specified in the order was greater than the value of the husband’s interest in Superannuation Scheme 1 such an order could not be implemented.
Mr G said that in relation to whatever the husband’s interest might be in Superannuation Scheme 1, whether before or after any splitting order was made, in the event that the husband died there would be a reversionary benefit to any eligible spouse and any eligible children if such were wholly or substantially dependant on the husband. In the present circumstances of the husband being married to his current wife and her having children and the parties also having a dependant child J it would appear possible that in the event of the husband’s death his present wife and all dependant children would be eligible for a reversionary benefit. However, in relation to any interest which the wife in these proceedings might have pursuant to a splitting order in Superannuation Scheme 1 while the wife would be entitled to the benefit of that splitting order there would be no reversionary benefit in the event of her death to any spouse of hers or eligible child.
Mr G also said that under the rules of the Fund the husband has no entitlement to commute any part of his pension to a lump sum.
In relation to taxation, Mr G indicated that any benefits received by way of pension by the husband or the wife if there is a splitting order would be taxable in the hands of the husband and the wife respectively although the superannuation taxation concessions would be available to each of them.
Although the wife is seeking a splitting order in relation to the husband’s superannuation, in my view this is not a case where it would be appropriate to make such an order.
Firstly, there is ample non-superannuation property available to do justice and equity in my view without seeking such an order.
Secondly, the husband’s pension is his major source of income and one would be reluctant to reduce this.
Thirdly, the wife has significant superannuation herself. She also has well-paid employment, certainly at a considerably higher level than what I consider the husband could achieve. Such employment will also enable the wife to build up the interest she already has in superannuation. And the wife is much younger than the husband and would appear to have many income-earning years ahead of her, certainly many more than the husband could reasonably expect based on the medical evidence before the Court.
The wife’s superannuation
The wife has an interest in the following superannuation schemes:
$
1. Superannuation Scheme 2
147,241
2. Superannuation Scheme 3
67,014
3. Superannuation Scheme 4
52,828
_____________
$267,083
In a separate report also dated 16 March 2010 Mr G valued the interest of the wife in Superannuation Scheme 2 in the growth phase to have a gross value of $147 241. This was in accordance with the method set out in r 28 of the Superannuation Regulations.
Mr G indicated in his report that on 9 September 1998 the wife withdrew from her Superannuation Scheme 2 interest the sum of $49 178. Mr G said during cross-examination that because the wife has made this withdrawal from Superannuation Scheme 2, under the rules of the Scheme, she is no longer entitled to any pension on retirement and would only be entitled to receive a lump sum. Such a lump sum could be rolled over into a different fund but only when she has reached her preservation age (presumably 55 years).
Mr G was also asked to make an estimate of what the wife’s total accumulated superannuation benefits might be assuming that she continued in paid employment until 55 years or 60 years of age. Based on her then current superannuation and her current gross salary of $174 304 per annum. Mr G said that based on the assumptions that he indicated in his report, which included salary increase, continuing 9 percent contributions of salary as well as earnings on the relevant funds, her accumulation interests (Superannuation Scheme 4 and Superannuation Scheme 3) would provide a lump sum of $298 050 at age 55 and $495 693 at age 60. In addition based on the assumptions, Mr G’s preliminary calculation estimated the wife’s interest in Superannuation Scheme 2 would provide a lump sum of $268 611 at age 55 and $313 492 at age 60. But he also indicated that such values were future values not values in today’s dollars.
The wife commenced contributing to what must have been the forerunner of Superannuation Scheme 2 in January 1981 (see Appendix B at page 8, Mr G report 16 March 2010) presumably upon commencing employment with the federal public service. This was more than five years before the parties met.
The circumstances of the wife contributing to Superannuation Scheme 3 and Superannuation Scheme 4 are not before me in any detail except that I assume that the major portion (if not the entirety) of the contributions to these two funds has been made since the wife ceased her employment with the federal public service, that is during the marriage. Having said this, I propose to take a broad approach to the assessment of the contributions to the wife’s superannuation. I adopt a similar approach to that which I used in relation to my assessment of contributions in relation to the husband’s superannuation. Except that I regard his contributions to the wife’s superannuation to have been a little higher than the wife’s have been to his. This is because a greater portion of the wife’s superannuation has been accumulated during the period since the parties commenced cohabitation than in the case of the husband’s superannuation.
Accordingly, I assess the husband as having made a 40 percent contribution to the wife’s superannuation and the wife as having made a 60 percent contribution thereto.
On the above basis the parties have the following interests in superannuation:
$Husband’s 63%
Wife’s
37%1. Husband’s Super Scheme 1
pension
382,534
240,996
141,538
| Husband’s | Wife’s | ||
| 2. Wife’s Super Scheme 2 benefit | 147,241 | 58,896 | 88,345 |
| 3. Wife’s Super Scheme 3 Super | 67,014 | 26,806 | 40,208 |
| 4. Wife’s Super Scheme 4 | 52,828 | 21,131 | 31,697 |
| $649,617 | $347,829 | $301,788 |
I propose to consider the other matters under s 79(4) of the Act in the broader context of my findings about contributions to the non-superannuation assets.
Property available for division
To the parties’ credit they have been able to agree on the values of most of the items of property and the liabilities. Nevertheless, there are some issues.
The first is whether there should be added back into the pool of available property the proceeds of sale of some IAG shares which the wife sold following separation. Those shares have a net value of $2700. The husband submits that this amount should be added back to the pool of property. I do not propose to do so. Firstly, the amount concerned is very modest. Secondly, there is no evidence that this money was wasted by the wife or spent recklessly by her and in these circumstances I do not propose to include it.
There was an issue concerning which of the liabilities the Court should accept to be included in the balance sheet of assets and liabilities. It was submitted on behalf of the husband that the Court should not accept as such liabilities three credit card liabilities of the wife. These are her Citibank Mastercard with an outstanding liability of $17 834, her BankWest Mastercard the outstanding balance of which is $21 453 and her Ignite (Virgin) Credit Card with an outstanding balance of $20 181. This is a total of almost $60 000.
On the other hand it was submitted on behalf of the wife that the husband’s outstanding Westpac Mastercard liability of $5146 should not be included in the balance sheet, nor should an alleged loan to the husband from his mother, Ms R, of $7990 be accepted. It was submitted on behalf of the wife that the $7990 which the husband’s mother paid for the motor bike for the husband after separation was a gift to him rather than a loan. It was submitted that there is no issue that the husband’s mother has provided gifts to the parties over the years and that this payment by the husband’s mother on his behalf was no different from other gifts. Those were gifts of an $8800 air-conditioning system during the course of the marriage and payment by the husband’s mother of $5000 being the costs of installation of some cupboards in the parties’ garage.
Having read the affidavit of the husband’s mother about this matter and having observed her being cross-examined about this matter I have no doubt that she expects these monies paid by her on behalf of the husband to be repaid out of any property that would be available to him upon completion of these proceedings. In those circumstances, in my view, the $7990 should be included in the list of liabilities.
There is no issue that a payment by the husband’s mother towards J’s school fees of $1817 and a loan by her to the husband of $16 517 are legitimate loans and ought to be included in the list of liabilities.
Going back to the issue about whether the wife’s credit cards should be included in the list of liabilities it was submitted on behalf of the husband that these reflect a very high level of expenditure by the wife, apparently without any regard for a budget, and in circumstances where the wife has had the enjoyment of a relatively high level of salary it was only fair that she bear the burden of these liabilities solely. On the other hand it was submitted on behalf of the wife that the proper approach of the Court would be to include these liabilities in the balance sheet and to the extent that it considers it appropriate to do so, take into account in s 75(2) of the Act the circumstances in which such indebtedness arose. I accept this submission on behalf of the wife and propose to include the liabilities in the balance sheet.
On this basis the property available for division between the parties consists of the following:
$
1. Property at Y Street, Sydney Suburb 1
1,000,000
2. Nissan motor vehicle (…)
24,000
3. Camping equipment
400
4. Joint Westpac Classic Plus account …
39
5. Wife’s household contents
5,000
6. Wife’s Westpac account …
1,500
7. Wife’s paid legal fees (add back)
19,025
8. (Wife) single expert – C Accounting Firm (add back)
5509. (Wife) single expert – Dr K (add back)
55010. Husband’s household contents
200
11. Husband’s Westpac eSaver account …
214,000
12. Husband’s Westpac eSaver account …
3,476
13. Husband’s Westpac Choice account …
3,996
14. Husband’s Westpac Choice account …
1
15. Husband’s motor cycle (…)
5,000
16. Husband’s paid legal fees (add back)
31,512
17. (Husband) Single expert – C Accounting Firm (add back)
5,97918. (Husband) Single expert – Dr K (add back)
550_____________
Total
$1,315,778
The liabilities are as follows:-
$
1. Westpac Rocket repay home loan …
281,566
2. Westpac Rocket equity loan …
24,982
3. Loan from husband’s mother Ms R
1,817
4. Loan from husband’s mother Ms R
16,517
5. Loan from husband’s mother Ms R
7,990
6. Husband’s Westpac Mastercard
5,146
7. Wife’s Westpac FlexiLoan
20,000
8. Wife’s Citibank Mastercard
17,834
9. Wife’s BankWest Mastercard
21,453
10. Wife’s Ignite (Virgin) credit card
20,181
11. Wife’s liability to J Accounting Firm
1,340
_____________
Total
$418,826
Net property
$896,952
Contributions (Non-superannuation Assets)
When the parties commenced their relationship the husband owned some equity in his home unit. Apart from this, he did not own any property of significant value. At this time the wife owned a motor vehicle and a boat. Apart from these assets the wife did not own any property of significant value. Each had an interest in superannuation.
When they married some seven years later, their asset position was little different, although the wife had sold her boat and the husband had sold a motorbike. As indicated above, the funds produced from the sale of these items were used one way or another towards funding the wedding and honeymoon.
During their long courtship period which culminated with their engagement in 1992, it is clear that there was some enmeshment of their financial affairs. I accept that the wife paid some rates and strata levy invoices for the husband. He said that he repaid this money to the wife. It is difficult to decide who to believe as indicated above.
The contributions to the husband’s home unit were described by learned counsel for the wife in the context of contributions prior to the parties’ marriage as the “joint endeavour of their lives”. The thrust of this was that it was the wife’s financial contributions to other expenses of the husband which enabled him to keep the home unit. It was submitted that the husband did not have the money to pay the expenses relating to the home unit. The husband denied this. Looking at the matter objectively, the mortgage was relatively modest at $45 000 and for much of the relevant period the costs would have been covered by rent received or contributed to by the husband’s flat mates from time to time. In my view, this submission has not been made out.
Doing the best I can, I am prepared to accept that the wife paid some bills on the husband’s behalf prior to marriage. But even giving her credit for this, in my view, it is more probable than not that the level of her expenditure on behalf of the husband was modest, especially in the context of all the later contributions made by the parties. In my view the parties’ contributions prior to marriage were modest.
So that at the time the parties married and commenced their cohabitation, as indicated above, the husband’s property consisted of his home unit subject to the mortgage, some modest savings, his household contents and personal possessions. The wife’s property consisted of her motor vehicle, some modest savings and her personal possessions. Both parties had an interest in superannuation.
Approximately one year after marriage the husband sold his home unit. As indicated above this produced $191 000 net. I accept that some contributions had been made by the wife to the home unit. But as I have said, such contributions can only have been modest. So at this early point in the marriage, in my view, the financial positions of the parties were quite disparate.
But over the period of the parties’ marriage and especially the period after separation this significant difference between their positions has changed.
As indicated above, approximately one year after the sale of the home unit the wife resigned from the federal public service and received a termination payment of $31 697. A few years later the wife cashed in the preservation portion of her superannuation and received $44 713 net. Some years later the wife received the settlement from the airline of $47 000. And a couple of years before the parties separated the wife received her inheritance from her father’s estate of $79 453. These monies were used to acquire the Nissan motor vehicle and for household purposes.
And of course over the period of the parties’ marriage there were a great number of contributions by the parties both financial and non-financial. The husband’s mother also gave assistance by paying for an air-conditioning system and also for some cupboards in the garage.
I have referred to the respective employment histories of the parties.
In addition to their financial contributions both parties have made significant contributions to the welfare of their family unit as homemakers and as parents. But I am satisfied that the wife has undertaken more of the parenting than has the husband up to the time of separation and she has therefore made a greater contribution than the husband in this regard.
Taking a broad view of all the contributions by the parties to the point where they separated, in my assessment the husband’s contributions would have remained a little ahead of those of the wife because of the initial disparity in their contributions by reason of the husband owning considerable equity in his home unit.
But there is a different picture after separation. As I have said, after separation the husband left the former matrimonial home and commenced living in a modest flat off his mother’s garage. The wife remained living in the former matrimonial home. But she also paid the bills in respect of this. The major differences between the parties after separation have been the facts that the wife has borne almost all the responsibility for the physical care of the parties’ son J, as well as the major part of the financial cost of this. A consequence has been that the wife has incurred very considerable expenses on her various credit cards.
In all these circumstances, in my view, the disparity in contributions which existed at the time of the parties’ marriage, and even to separation, no longer exists. I assess their contributions overall in respect of their non-superannuation assets to have been equal.
s 75(2) matters
The wife is 49 years of age and in good health. Since April 2009 she has been working as a general manager at R Company. Her income from this employment is in excess of $3352 per week which is in excess of $174 000 per year. Some of this income is used to salary sacrifice to the lease of her motor vehicle. In my view, the wife has the capacity to continue to work in her current or similar position for the foreseeable future.
The wife has the primary care of the parties’ child J. As indicated above, since separation the child has spent only limited time with the husband. It is hoped that this situation will change and that J will be able to spend much more time with his father than has been the case in recent years. But this is not clear. In any event, the primary responsibility for J is unlikely to shift from the wife to the husband.
The wife estimates that her commitments necessary to support herself and J are $4062 per week. In my view this is an exaggeration. On present estimates, in my view, the costs are approximately $3700. This would be a shortfall of income compared with expenses of approximately $360 per week. But these expenses include the cost of the mortgage and credit card repayments which on a sale of the home are liabilities which could be retired. The cost of these is more than the shortfall. In any event the husband will be required to pay child support at a reasonable rate.
On the other hand the husband is 59 years of age and there are serious limitations in terms of his health. As indicated above, in 2002 he had heart bypass surgery which involved five grafts. He was absent from work for approximately 12 months. He has subsequently had two stents inserted. As also indicated above, Dr K has the opinion that the husband’s prognosis is “guarded”.
Since retirement the husband has been trying to utilise skills developed during his federal public service career. But he has found that the demand for his consultancy work is sporadic. As indicated above in June 2009 he commenced his own consultancy business “[Winn Consultancy]”. Between mid-2009 and mid-2010 the husband earned $9250 gross.
In his report Dr K said as follows about the husband’s work capacity:
I do not think that an employer would accept him, except for basically sedentary work and there might be a difficulty in longer term “casual” work in view of his uncertain prognosis. He should be able to engage in limited consulting work if available.
Dr K was cross-examined vigorously about this and conceded that the husband had not informed him about assignments which he had worked on. Despite this information, Dr K expressed the opinion that the husband has the capacity to work two weeks at a time full-time but had reservations about whether the husband would be able to perform over a long period. Notwithstanding the assignments which the husband has undertaken as referred to by learned counsel for the wife, I have serious reservations about his future working capacity.
The husband’s income from his Superannuation Scheme 1 pension is approximately $47 000 per annum. He has been supplementing this by his consultancy work. This is income of $1070 per week. In addition the husband has been receiving interest on the remaining part of his lump sum superannuation of $153 per week. This is total income of $1223 per week.
The husband said that his weekly commitments are $1922 per week including child support of $124. As I have also found in the case of the wife, to an extent, in my view this level of expenditure is somewhat exaggerated. And the husband has been paying child support of $72 per week not $124. The husband is now living with his new wife Ms M and her four children in a rented home at Sydney Suburb 1. Her children are 14, 12, 11 and 6 years of age. Ms M is employed and her income is $650 - $700 per week. They share living expenses. Their rent is approximately $507 per week. Ms M does not own any property of significant value.
The husband has spent very limited time with the parties’ child J since separation. Most of this has been when the husband took J on camping holidays and to the motorbike club on approximately twenty Sundays per year.
The husband has paid only modest child support since separation, having paid approximately $100 per week over the period since separation. The current assessment of child support is $72.02 per week.
As indicated above, I also take into account the almost $60 000 credit card liabilities of the wife which I included in the balance sheet notwithstanding the strong objection on behalf of the husband. In relation to these liabilities it was submitted on behalf of the husband that for the wife to incur such a high level of credit card debt either the wife must have been a poor financial manager or she has undisclosed money somewhere. I reject these submissions. In my view, part of the explanation for this liability probably lies in the fact that the wife was supporting the child since separation with only very modest child support being paid by the husband.
The list of items of non-superannuation property includes the $214 000 in the husband’s Westpac eSaver account … which is the remaining part of the husband’s lump sum superannuation payment from Superannuation Scheme 1. The husband has also paid $31 512 towards his legal fees and these have been added back.
To leave the $214 000 in the non-superannuation list of property without comment would be to overlook the fact of the findings I have made about the wife’s contributions to the husband’s superannuation as being less than my finding about her contributions to the property in the non-superannuation list. I take this matter into account at this point. And I also note that the husband did have the benefit of receiving superannuation payouts from Superannuation Scheme 3 and Superannuation Scheme 4.
Is this a case where in order to arrive at a just and equitable order there should be a set-off of property and/or superannuation in favour of one or other party?
The most significant matters are the fact that the wife will almost certainly have the primary care of J until his adulthood or possibly beyond on the one hand, and the fact that the husband must be regarded as having a much lower capacity to earn income than the wife on the other hand.
In my view the wife’s capacity for earning income is more than double that of the husband. Also the wife should have many more income-earning years available to her than would appear to be likely to be available to the husband, as I have said.
Taking account of all these matters, in my view, a just and equitable order requires a modest set-off of property to the wife. In my view the appropriate set-off is 5 percent of the non-superannuation property.
Conclusion and fourth step
The wife is to have 55 percent of the non-superannuation assets, 37 percent of the husband’s superannuation and 60 percent of her superannuation. The non-superannuation assets have a net value of $896 952. Fifty-five percent of this is $493 324. The husband’s superannuation has a value of $382 534. Thirty-seven percent of this is $141 538. The wife’s superannuation has a value of $267 083. Sixty percent of this is $160 250. The total of these amounts is $795 112.
The wife is to have the following:
$
1. Superannuation
267,083
2. Joint Westpac account …
39
3. Household contents
5,000
4. Westpac account …
1,500
5. Paid legal fees (add back)
19,025
6. Single expert – C Accounting Firm (add back)
550
7. Single expert – Dr K (add back)
550
Total
$293,747
But the wife has the following liabilities:
$
1. Westpac FlexiLoan
20,000
2. Citibank Mastercard
17,834
3. BankWest Mastercard
21,453
4. Ignite (Virgin) credit card
20,181
5. J Accounting Firm
1,340
Total
$80,808
On this basis the wife would have assets with a net value of $212 939 ($293 747 - $80 808 = $212 939).
For the wife to achieve property and superannuation with a value of $795 112 she would require additional property with a value of $582 173 ($795 112 - $212 939 = $582 173). This would have to come from the home.
On the other hand the husband is to have 45 percent of the non-superannuation assets, 63 percent of his superannuation and 40 percent of the wife’s superannuation. Of the non-superannuation assets ($896 952) this is $403 628. Of the husband’s superannuation ($382 534) this is $240 996. And of the wife’s superannuation ($267 083) this is $106 833. The total of these amounts is $751 457.
The husband is to have the following:
$
1. Superannuation
382,534
2. Nissan motor vehicle
24,000
3. Camping equipment
400
4. Household contents
200
5. Westpac eSaver account …
214,000
6. Westpac eSaver account …
3,476
7. Westpac Choice account …
3,996
8. Westpac Choice account …
1
9. Motor cycle
5,000
10. Paid legal fees (add back)
31,512
11. Single expert – C Accounting Firm (add back)
5,979
12. Single expert – Dr K (add back)
550
_____________
Total
$671,648
But the husband also has the following liabilities:
$
1. Ms R
1,817
2. Ms R
16,517
3. Ms R
7,990
4. Westpac Mastercard
5,146
_____________
Total
$31,470
Accordingly the husband would have assets with a net value of $640 178 ($671 648 - $31 470 = $640 178).
To achieve property and superannuation with a value of $751 457 the husband would require additional property with a value of $111 279 ($751 457 - $640 178 = $111 279). This would have to come from the former matrimonial home.
The former matrimonial home has a value of $1 000 000. There is the mortgage securing Westpac Rocket repay home loan … for $281 566 and the Westpac Rocket equity loan … for $24 982. This is a total of $306 548. Leaving aside sale costs, this is equity of $693 452 ($1 000 000 - $306 548 = $693 452). From this the wife would be paid $582 173 which would leave the balance of $111 279 ($693 452 - $582 173 = $111 279) for payment to the husband.
Converting these payments to percentages of the equity the payment of $582 173 to the wife is 83.953 percent of the equity. The payment of $111 279 to the husband is 16.047 percent of the equity.
So, after this lengthy period of courtship and marriage, the wife is to have $795 112 of the property and superannuation totalling $1 546 569, and the husband is to have $751 457 thereof.
The wife will have her superannuation and her household contents. She will have almost 84 percent of the equity in the former matrimonial home. But she has more than $80 000 in personal liabilities. She wishes to purchase the husband’s interest in the home. To do this she would have to increase the indebtedness on the home and pay the husband the sum of $111 279.
On the other hand the husband will retain his superannuation intact, as well as the $214 000 remaining part of his Superannuation Scheme 1 lump sum. He will also retain the Nissan motor vehicle, the motor cycle, money in accounts and his other modest possessions. He will receive a payment for his interest in the home of $111 279 or approximately 16 percent of the net sale proceeds thereof.
As I have said the wife asks the Court to permit her a short period to endeavour to consider whether she would be able to afford to pay the husband for his interest in the home. This is strongly opposed by the husband who desires the earliest possible sale of the home.
The wife has the primary responsibility for providing accommodation for the parties’ child J. In my view, she should be permitted a period of say six weeks to pay the husband for his interest in the home. If she is unable to do so the property will have to be placed on the market for sale.
Child Support
As indicated above the wife seeks an order to the effect that there be a departure from the administrative assessment of child support payable by the husband to the wife in respect of the parties’ child J (born in September 1998) for the child support period from 22 April 2010 until 30 June 2012 so that the husband pay child support at the weekly rate of $300.
The wife also seeks an order to the effect that from 1 July 2012 the child support liability be determined in accordance with the provisions of the Child Support (Assessment) Act 1989 (“the Assessment Act”).
The wife also seeks orders to secure child support payments. The first of these would require the husband to pay a lump sum into an interest bearing account in the name of the wife and the wife thereafter to be at liberty to withdraw such sums from the account equivalent to any arrears of child support. The second would require a charge to be created over property received by the husband pursuant to these orders to secure payment of child support.
The wife also seeks an order to the effect that she have sole control in respect of payments out of the ASG Scholarship Fund towards the school fees of J attending School 1.
The husband opposes any order for departure from child support assessment.
Jurisdiction
An assessment of child support payable by the husband for J’s support was issued on 22 April 2010 which required payment at the weekly rate of $72.02 for the period from 22 April 2010 to 30 November 2010. I assume this or some similar amount to be the current liability.
I am satisfied that the Court has jurisdiction pursuant to s 116(1)(b) of the Assessment Act. In effect this provides that a liable parent may in respect of an administrative assessment of child support apply to a Court having jurisdiction under the Act for a departure order in relation to the child in the special circumstances of the case if both of the following apply:
·the liable parent or carer entitled to child support is a party to an application pending in a Court having jurisdiction under the Act; and
·the Court is satisfied that it would be in the interests of the liable parent and the carer for the Court to consider whether an order should be made for departure.
In the circumstances of this case, where the Court is considering in detail the financial circumstances of the parents, in my view, it must be in the interests of them for the Court to consider the departure application. The alternative would be to put the parties through the usual review processes which would involve them in considerable inconvenience and uncertainty yet for some time.
The process
In determining an application for departure from a child support assessment the Court is to undertake the three-step process set out in the decision of the Full Court of this Court in the case of In the Marriage of Gyselman [1991] 15 Fam LR 219; [1992] FLC 92-279. This process requires the Court to consider:
1.Whether one or more of the grounds for departure in s 117(2) of the Assessment Act is established.
If so, then:
2.Whether it is “just and equitable” within the meaning of s 117(4) to make a particular order; and
3.Whether it is “otherwise proper” within the meaning of s 117(5) to make a particular order.
Is there a ground for departure?
Sub-section 117(2)(c) of the Assessment Act, in effect, provides that the grounds for departure include that, in the special circumstances of the case, application in relation to the child of the provisions of the 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 because of the income, earning capacity, property and financial resources of either parent.
The meaning of the expression “in the special circumstances of the case” was considered by the Full Court of this Court in Gyselman (above). The Full Court said (at FamLR 225; FLC 79,065):
… Whilst it is not possible to define with precision the meaning of that term (in the special circumstances of the case), as a generality it is intended to emphasise that the facts of the case must establish something that is special or out of the ordinary. That is, the intention of the Legislature is that the court will not interfere with the administrative formula result in the ordinary run of cases. In Savery’s case (at FamLR 815; FLC 77,897), Kay J, adopting the view in In the Marriage of Philippe (1977) 4 Fam LR 153 at 155; (1978) FLC 90-433 at 77,202 in a different context, said that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. The approach to the interpretation and application of the particular grounds in s 117(2) must be guided by that qualification.
Sub-section 4(1) of the Assessment Act provides that the principal object of the Act is to ensure that children receive a proper level of financial support from their parents.
As indicated above the current child support assessment for J requires his father to pay child support at the weekly rate of $72.02. It is the case that the husband has paid some school fees and ASG Scholarship fees as well as costs of the child’s motor bike. Even taking account of such payments, the current assessment, in my view, must be regarded as a low amount when one considers the standard of living the parties and child enjoyed during the course of their marriage. In any event, the amount of the assessment is so far short of what the proper costs of the child must be that the Court must conclude that application of the child support formula has resulted in an unjust and inequitable determination of the level of financial support to be provided by the husband because of his income and financial resources. Accordingly, in my view the ground in s 117(2)(c) of the Act has been established.
Just and equitable
The next step is to consider whether it is just and equitable within the meaning of s 117(4) of the Assessment Act to make an order for departure from the Assessment. This requires consideration of the matters set out in s 117(4) of the Act.
In relation to the proper needs of J, in her financial statement the wife estimated his average weekly expenses to be $847 per week. To this would need to be added some amount in respect of accommodation. As indicated above, in my view the wife exaggerated her own average weekly expenses and I have the same view in respect of her estimates of J’s weekly expenses.
In my view there needs to be significant trimming of the wife’s estimates particularly bearing in mind the fact that she was living beyond her means at least during the period following the separation of the parties.
Some amount also needs to be included for the educational costs of the child. The parties have been contributing over many years to the ASG Scholarship Fund towards school fees for J attending a private school. The difference between what the ASG Scholarship Fund will pay and what the school requires is approximately $6000 per year. This would of course need to be met by the parents. The reasonableness of the child continuing to attend School 1 is a matter in issue between the parties. Clearly by making contributions over the years to the ASG Scholarship Fund the parties have indicated an intention for J to attend the private school. But it is not an easy matter for them to fund this.
The husband says that he cannot afford for J to continue at the private school. I accept this. It seems to me that for a person on the sort of income which the husband has, in the vicinity of $60 000 per annum, it would be very difficult to have the money required to pay private school fees, even on the basis of the subsidy which would be provided by the ASG. I do not propose to make orders which would be of such quantum as to require the husband to make such a contribution to school fees. In the event that the wife wishes for J to remain at School 1, it will be necessary for her to find a way to fund this.
In all these circumstances I find the proper costs of J to be $600 per week.
Capacity to pay
I have referred in some detail to the financial circumstances of each of the parties above. In relation to their superannuation and property the result is that the wife will have slightly more of this to enjoy than the husband. But as also indicated above, I have the view that the wife has a considerably greater capacity to earn income than does the husband. Given what I regard as a significant difference between them so far as their capacities to earn income are concerned, and the fact that the wife would be likely to have many more income earning years ahead of her than the husband, in my view it is only fair that the wife be expected to assume a greater responsibility for funding the costs of the child than the husband. In my view the husband should be responsible for meeting one-third of the child’s proper costs and the wife two-thirds thereof.
The result will be that the husband will be required to pay periodic child support at the rate of $200 per week. If I was not to make an order for a departure from the child support assessment to reflect this I am satisfied that ultimately a hardship would be caused to the child and to the wife because the wife would have to use more of her own income or even capital to provide for the shortfall between the proper costs of the child and the current assessment of $72 per week.
This does not mean that I would expect the husband to find it easy to find $200 per week. However, he must accept his responsibility for providing at a proper financial level for the child. In the event that he finds it necessary to use capital during the course of the child’s high school years then that will be unfortunate but necessary in my view.
Otherwise proper
It is the parents who have the primary duty to provide for J. The wife is not in receipt of an income tested pension, allowance or benefit so such cannot affect a proper order.
Orders to secure payment
In my view no case has been made out by the wife for the Court to make any specific orders designed to secure payment by the husband of his child support obligations under the orders. The wife said that the husband had informed her following separation that he was not going to pay any bills. Even if this was true, the husband has been paying in accordance with the assessment, at least in recent times. In any event, he is in receipt of regular payments and, in the event of some non-compliance, it would be available to the Child Support Registrar to garnishee the husband’s Superannuation Scheme 1 pension payments.
I certify that the preceding two hundred (200) paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Johnston delivered on 30 June 2011.
Associate:
Date: 30 June 2011
Key Legal Topics
Areas of Law
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Family Law
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Remedies
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Costs
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Jurisdiction
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