WOODLEY & WOODLEY

[2014] FCCA 2799

FEDERAL CIRCUIT COURT OF AUSTRALIA

WOODLEY & WOODLEY [2014] FCCA 2799

Catchwords:
FAMILY LAW – Property and parenting dispute – most matters not the subject of disagreement – patchwork of discrete dispute issues – Court addressing each matter raised – parties to confer to produce appropriate minute of orders.

Legislation:  

Family Law Act 1975 (Cth)

Stanford v Stanford [2012] HCA 52

Applicant: MS WOODLEY

Respondent: MR WOODLEY

File Number: MLC 9770 of 2013

Judgment of: Judge Burchardt

Hearing date: 6 October 2014

Date of Last Submission: 6 October 2014

Delivered at: Melbourne

Delivered on: 5 December 2014

REPRESENTATION

Counsel for the Applicant: Mr Goddard

Solicitors for the Applicant: DBFS Lawyers

Counsel for the Respondent: Ms Sevdalis

Solicitors for the Respondent: PCL Lawyers

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA

AT MELBOURNE

MLC 9770 of 2013

MS WOODLEY

Applicant

And

MR WOODLEY

Respondent

REASONS FOR JUDGMENT

Introductory

1. The dispute between these parties concerns both property and parenting issues.  The issues are, in a sense, somewhat dispersed and cover a number of matters which in themselves might be thought relatively minor.  I will refer to the parties as husband, father, wife or mother as the context makes appropriate. 

2. The primary dispute in relation to property is what should be made of the respondent husband’s business debts, although there are also contribution and future needs issues.  The parenting issues concern X (“X”), born (omitted) 2005.  It is agreed, broadly speaking, that X will spend equal time with her parents.  It is the manner and timing of the introduction of equal time that is in issue.  There are ancillary issues relating to overseas travel and a desire on the father’s part to restrict X’s access to her maternal uncles. 

3. For the reasons that follow, and subject to any clarification that may be necessary, I propose that the parties’ debts at the date of separation should be regarded as debts of both of the parties and I propose to make the parenting orders sought by the mother. 

Agreed facts

1. The applicant wife was born on (omitted) 1973 and the respondent husband on (omitted) 1966.  They commenced cohabitation in 1997 and were married in (omitted) 2001. 

2. As earlier indicated, X was born on (omitted) 2005 and the parties ultimately separated in March 2013. 

3. A matter of some months before the parties commenced cohabitation in 1997, the husband bought a half share, together with his parents, of the former matrimonial home in (omitted) at a total purchase price, it would appear, of $115,000, of which $10,000 was paid by way of deposit (there is some minor dispute as to exactly what these figures were but they are of no moment now). Other than cars and small amounts of superannuation, the parties had little by way of assets at the commencement of cohabitation save for the husband’s share in the matrimonial home.

4. In 2001, the parties bought out the interest of the husband’s parents for a total of $85,000.  It would seem from the husband’s evidence that this followed some form of valuation at the time.  Because the parties had been paying the mortgage since 1997, the distribution to the husband’s parents was not 50 per cent of the total value of the property. 

5. The husband has carried on business through his company, (omitted), for very many years including well before the commencement of cohabitation.  This business specialises in the (work omitted) both privately and commercially and appears to rely substantially upon word of mouth referrals for clients. 

6. The wife worked up until the birth of X and the husband concedes that she always made a greater amount of income than he did, and indeed she continues to do so although the extent is a matter of some dispute.

7. The wife did not work again until X went to primary school in 2010 but returned to work thereafter. 

8. From 2001 until just before X’s birth, the parties contributed the whole of the wife’s income to the repayment of the mortgage and it was fully discharged by the time X was born. 

9. In the period from 1997 to 2001, the wife made the predominant amount of repayments to the mortgage but the husband’s income, which clearly paid for most living expenses, was from time to time advanced to the mortgage.  

10. The husband has had difficulties with depression over many years, but in about 2009 to 2010, and thereafter for some time, the father became extremely ill with depression.  He candidly concedes that he failed to attend properly to his work and his business ran down.  He also said without challenge in cross-examination that his business suffered from having a number of bad employees at that time. 

11. By the time separation took place in 2013, he had accrued a number of debts in his business and in-related credit cards. 

Parenting issues

1. Although the parties filed extensive affidavit material containing numerous mutual accusations, parenting issues have in the vast majority been now resolved by consent.  As I understand it, the parties agree that X should live on a week-about basis with each parent from 1 January 2015.  The issue that obtains is how long a Wednesday overnight in the alternate week should be continued. 

2. There is an interrelated issue as to the extent to which there should be equal shared time over the Christmas holidays. 

3. The two final issues are whether the mother should be restrained by injunction from bringing the child into contact with the maternal uncles, Mr P and Mr L, and an issue related to travel.  

4. The parties agree that notice should be given before travel occurs and the mother’s position as expressed in her Outline of Case document is that overseas travel should not be restrained and require agreement in writing as the father seeks.  I may have misunderstood counsel for the mother but in final submissions appeared to agree there should be agreement in writing before overseas travel takes place.  In the circumstances, I will give counsel an opportunity to clarify the matter before ruling upon it. 

5. To return to the equal time regime, put shortly, the position of the father is that X should move to a week-about arrangement as from January 2015.  It was submitted that any continuation of the overnight time in the alternate week will merely perpetuate changeover problems and associated anxiety on X’s part. 

6. Counsel for the father also sought that both parties complete a Post-Separation Parenting Program if such had not yet been undertaken. Counsel for the mother was not able to say whether his client had or not.

7. Counsel for the mother relied upon Ms M’s recommendations in relation to the continuation of the Wednesday time. 

8. Ms M had recommended in her written report at paragraph 55, page 15 that:

   “… In order to break the long gap, X spends each Tuesday overnight with the other parent until she is ready for a 7/7 arrangement with changeovers on each Friday.  This can continue throughout the year including during the school holidays.”

9. In her oral evidence, Ms M said that she thought the Wednesday night in the alternate weeks should continue for the whole of the following year.  Under cross-examination by counsel for the husband, Ms M maintained her position that the child did not want to be away from either parent and that there would be nothing lost if the arrangement continued through the whole year. 

10. In the circumstances, it is appropriate, in my opinion that the alternate weeknight remain until the end of 2015.  By then, X will be, self-evidently, a year older, the routine will have settled down to an extent, and she will be better able to sustain the longer absences away from each of her parents.  Ms M’s evidence was given within the area of her professional expertise and she was not shaken in cross-examination.  I accept her recommendation in this regard.  This finding also disposes, subject to further argument, of the dispute as to the forthcoming long summer holiday. 

11. There is no obvious reason why the parties should not undertake a post-separation parenting course and I will make the order that the husband seeks in this regard. These are people who can use, it would seem to me, as much help as they can get to deal with their parenting difficulties.

12. So far as the injunction restraining contact with the maternal uncles is concerned, once again I accept the evidence of Ms M.  The father stuck by his evidence that the uncles have sworn in the most revolting way in front of the child.  The mother conceded that one of her brothers has sworn in front of X but not in the terms alleged. 

13. Ms M, in her evidence, confirmed that the father had raised this matter at interview.  He had complained that the mother’s family swear and were rough and tough. 

14. So far as Ms M was concerned, there was no suggestion by the father that there was any abuse directed at X and it would only be necessary to restrain contact with the uncles in the event of abuse. 

15. The evidence, to my mind, shows quite clearly that only one uncle has come into contact with X, in any event. Ms M assumed that the mother would be present when the uncles might be and did not think it was necessary that the form of restraint that the father seeks be made. Once again, I accept Ms M’s evidence and her recommendation.

Property issues

Should there be a division of the party’s property?

1. As the High Court made clear in the case of Stanford v Stanford [2012] HCA 52, the Court’s first task is to determine the legal and equitable interests of the parties and determine whether there should be a property division at all.

2. In this case, however, as the High Court foreshadowed would often be the case, it is immediately apparent that there should be a property division.  The parties’ relationship has come to an end and both parties seek that there be a division.  It is not necessary in these circumstances to say more than that. 

The pool

1. Of course, this first step, namely to isolate the party’s legal and equitable interests, ordinarily comes first as just explained.  In this instance, it is appropriate to proceed to examine in the asset pool now.

2. The pool of assets, as I understand it, is not of itself the subject of significant disagreement and consists (see the husband’s schedule MFI-1):

   “Assets

   Proceeds of sale of former matrimonial home:  $637,000 (approx).

   Ford (omitted) (wife’s car):  $3,500.

   (omitted) (husband’s car):  $16,000.

   Liabilities

   Wife's (omitted) Bank credit card at separation:  $8,243.

   Wife's (omitted) Bank credit card as at separation:  $2,598.

   Husband's (omitted) Bank credit card at separation:  $14,000.

   Husband’s car loan:  $22,000.

   (omitted) ATO debt:  $13,097.

   (omitted) superannuation payments owed:  $15,172.72.

   Business debts as at separation (subsequently paid by the husband from drawdown pursuant to interim orders):  $8,271.45

   Outstanding unpaid business debts:  $2,475.28

   Costs of husband preparing house for sale:  $1,400 (approx).”

3. It should be noted that the Australian Taxation Office (“ATO”) debt reflects the current figure which the husband himself said has gone up and down over time, and clearly the original figure asserted by him of over $20,000 was inaccurate, including penalties that have since been waived.

4. Paragraph 33 does the best I can to give a snapshot of the parties’ assets at separation. 

5. The superannuation of the parties is:

   “Wife’s superannuation:  $98,000; and

   Husband’s superannuation:  $29,915.”

6. It seems common cause that the husband has had some $89,000 paid to him since separation, pursuant to Court orders made on 17 December 2013 and 19 May 2013. 

Contribution issues

1. Although the parties had some measure of dispute about this area of the evidence, in my view, the outcome is reasonably clear. 

2. The husband had bought the former matrimonial home only a short period of time before cohabitation started in 1997.  He says, and I am prepared to accept, that the purchase price of $115,000 was a good one.  Nonetheless, he only put up $10,000, and while, of course, in a sense, this was a springboard, the lapse of time since then has, in my view, taken the spring out of it. 

3. The fact is that the wife always earned more than the husband, on his version of events (subject to the five years that the wife stayed at home to be a full‑time mother following X’s birth).  It was no doubt predominantly through the wife’s greater earnings that the mortgage was paid out before X was born.  Insofar as the matrimonial home is an asset, it is an asset to which it is entirely appropriate to find that the parties contributed equally. 

4. The other significant area of difference between the parties was the husband’s alleged wastage on gambling and alcohol.  Both parties were, in my opinion, good witnesses who were truthful and whose memory was generally good.  In my opinion, the father’s evidence about the parties’ entertainment and gambling expenses was given with a considerable measure of conviction.  He did not seek in any way to hide his consumption of alcohol, conceding that he was a recovering alcoholic.  He conceded that he had spent a lot of money on taxis and binge drinking towards the end of the relationship. 

5. Bearing these concessions against interest in mind, and having seen both parties give their evidence, I also accept the husband’s assertion that he and the wife lived well when they were together and that they frequently went out together.  Cross‑examination of the wife showed that a number of the sort of expenses of which she complained were, in fact, jointly undertaken, such as holidays in (omitted).  The husband’s evidence that they routinely went out for dinner and that both of them drank and gambled is evidence that I accept. 

6. While it is clear that the dire straits that the business got into in the years following the onset of the husband’s depression in 2009 to 2010 redounds to the husband, and while it is also clear that during this period, the husband would have spent more than otherwise on drinking and related matters, this does not, in my view, save to the extent that it has given rise to the outstanding debts, give rise to some disparity of any significance in contribution.  This was a relationship that endured from 1997 to 2013, a period of some 16 years.  The relatively short period of time during which the husband’s problems were impacting directly upon the parties’ ultimate financial outcome does not, in my view, merit any adjustment. 

7. Both these parties contributed as best they were able over a protracted period of time.  There were at least five years during which the father provided all the income, although, of course, it is important to remember the very important role played by the mother in caring for X during her very earliest years. 

8. In my view, leaving aside the business debts arising out of the husband’s depression and alcohol abuse, contributions would be taken to be equal. 

9. It is, of course, the wife’s case that the husband, whose behaviour gave rise to the business debts, should be responsible for them.  Neither side, in my view, developed any particularly sophisticated analysis as to why it was that either party should bear these debts. 

10. In circumstances where the husband became unwell, as is common cause, through depression (and his related excess drinking was quite plainly another manifestation of his ill health), it would seem to me wholly inappropriate to visit all of the debt arising out of that illness upon the disabled party.  The marriage vow requires each party to take each other for better or worse, and on one view, the husband’s problems form part of the warp and woof of fortune and misfortune that can befall a married couple. 

11. There is nothing to suggest that the husband wilfully wasted his business and caused it deliberately to fail and founder as it did.  Rather, he was unable, through ill health, to prevent it. 

12. He also appears to have suffered from some poor personnel selection problems at about the same time. 

13. In my view, in all the circumstances, the husband should be wholly responsible for the debt in relation to his car.  It is his vehicle, he derives all the benefit from it, he pays for it through his business in any event and should both take its value and its debt. 

14. So far as the taxation and superannuation liabilities of the business are concerned, the taxation liability is, in my view, a debt properly payable by both the parties, who would, after all, have benefited from any moneys that the business made while they were together.  The same, in my view, goes for the credit card and related business debts that the husband had at the time of separation. 

15. So far as the superannuation debts are concerned, the debts to employees, which I understood to be of the order of $9,000 and all to predate separation, should be a joint responsibility.  In the particular circumstances of the case, it is unreasonable to expect the wife to contribute to the husband’s superannuation.  He is the one who failed to pay himself, and, in my view, it is just and equitable that he should make good any shortfall. 

16. It is readily apparent that this approach to the matters in issue between the parties is uncoordinated and somewhat scattergun.  This arises out of the fact that that is the way in which the parties isolated the matters in dispute and ran their cases.  The parties will obviously need to confer to ensure that I have accurately appreciated the positions for which they articulated and to take the matter forward thereafter. 

17. This leaves the characterisation of the moneys already paid to the husband to be dealt with. 

18. In my view, all of the moneys he has received, save the $7,000 in two tranches of $3,000 and $4,000 committed to the home loan for repayments, should be treated as a partial property settlement.  The fact is he has chosen to commit some of these funds to legal expenses himself, and that is a matter for him.  Likewise, he has used this money for living expenses, and once again, that is a matter for him. 

The Future‑Needs issues

1. Each side has sought a weighting in their favour in this regard, as I understand it.  In the father’s case, his future income prospects are uncertain.  He is convinced he will be able to restore his business to its former status but said that this would take years.  Given the history of the business of more recent times, I think that is a reasonable assessment.  He also referred, in a somewhat Delphic way, to a possible business opportunity he proposes to explore in the near future.  He said this would be potentially of startling benefit.  Since, however, he refused to say what it was, and since it struck me that his remarks were wholly speculative, I cannot give it any weight. 

2. The wife’s employment is, as best I understand it, reasonably secure. She is likely, absent some windfall development of the sort the father foreshadowed as being vaguely possible, always to earn more than he does. Indeed, one of the answers that the wife gave that struck me as being demonstrative of her honesty was her candid concession that she is afraid that the father may make an application for child support from her.

3. X will be living in an equal‑time regime, and each parent will be equally responsible for her financial upkeep and wellbeing. 

4. In a case like this where neither party is, ultimately, particularly wealthy, and where the father has had the benefit of continuing to live in the family home, in my view, it is not appropriate to make any adjustment under the s.75(2) factors of the Family Law Act 1975. 

Just and Equitable

1. There are a number of factors which each party has urged upon the Court as justifying a 60/40 division in their favour.  Taking a step back to consider the overall picture of the evidence and the various competing factors, in my view it is clear beyond doubt there should be an equal division of the parties’ property, subject to what I have already said about the debts at the time of separation.  

1. Both parties agree that there should be a levelling up of superannuation between the parties bearing in mind what they had at separation (the figures at the commencement are, I believe, opaque).  The figures at separation are likewise not clear to me.  The parties will need to identify them and calculate the necessary adjustment. 

Conclusion

1. I have said more than once that this is what might be described as a case in various parts. I have endeavoured to address the various discrete controversies that the parties articulated and I am conscious that in doing so, there may be errors of emphasis in my conclusions. On any view, there will need to be further consideration given to tidy up the various outstanding matters. I will give the parties an opportunity to consider these reasons for judgment and hear them further.

2. It should be noted that I have not, save in very general terms, found it necessary to deal with the evidence of the parties or their credit.  Both witnesses were, as I have said, clearly genuinely honest and accurate.  Ms M was an excellent witness.  Given the nature of the matters in dispute and the conclusions that seem to me to follow so readily from the evidence as given, it has been neither necessary nor appropriate to traverse in any greater detail the extensive affidavit material filed, although I should make it clear that I have had full regard not only to the affidavits, but the evidence given in court and the exhibits. 

I certify that the preceding sixty-three (63) paragraphs are a true copy of the reasons for judgment of Judge Burchardt

Date:  5 December 2014