This month Ben and Heather tackled some curly family law questions from the community, ending up in a wide ranging discussion on a number of different issues.
The questions included:
There is plenty in here for almost anyone facing family law difficulties.
For more information about business valuation have a listen to E16 on Divorce and the family business
For more information on property valuation in general have a list to E13 with valuers Ken Potter and Glen Aylward talking about Property valuation.
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Benjamin Bryant: Welcome to Episode 18 of The Family Matters Show. I’m your host, Benjamin Bryant from Bryant McKinnon Lawyers. And today we’re doing my favourite type of show: community questions. I’m here with my partner in crime and family law aficionado Heather McKinnon, who was going to help me answer the quite complex questions that we have received from all you wonderful listeners. Heather, are you up to answering some tricky questions?
Heather McKinnon: Yeah. Look I really love these community questions, because the podcast is often about the theory of family law, but these shows are when we apply it to real life situations and it’s really interesting to see the sort of sticky messes people get themselves into.
Benjamin Bryant: I agree. I love these shows. It always feels like we have a chance to really help families.
Benjamin Bryant: Before we get started, I’d just like to do a shout out about last month’s show that featured very experienced family law mediator Philip Theobald. One of the questions we are always asked is how to keep the costs of divorce down. There is no doubt that successful mediation and avoiding court is a great way to prevent blowing the farm on legal fees. So I really commend last month’s episode to anyone going through a contested divorce. You can find it on our website or by searching The Family Matters Show wherever you get your podcasts and selecting Episode 17.
Benjamin Bryant: OK, on with this episode, are you ready to give our listeners some answers?
Heather McKinnon: Yes, absolutely.
Benjamin Bryant: Question one straight into it. I think my ex-wife is trying to turn my 12 year old son against me. We divorced two years ago and our parenting agreement is that my son stays with each of us on alternate weeks. I’ve always been very close to my son, but in the last year, I’ve noticed him withdrawing from me and frequently asking to stay with his mom instead of me. The other day he told me his mother had said that I was too busy with work and didn’t really have time for him, which is completely untrue. I’m worried that she’s filling his head with lies and I’ll end up losing my son. What can I do?
Heather McKinnon: Ben this is really common. Often families separate when children are in those early years of primary school. And so in a case like this, the thing that sticks out really obviously to me is that emerging adolescence. when kids are little, they’re quite happy to just listen to mom and dad say: “this week you’re at dad’s, this week here at mom’s.” Once they get to around year 6, year 7, they are developing autonomy from their parents. And even if you’re in an intact family, they start to sort of flex their muscles.
Heather McKinnon: So there’s a couple of things that could be happening here. It might be that this little boy’s finding the constant moving between the two households exhausting. We know that some children who really like routine don’t find it easy to transition between homes. They want one home. The other thing that could be happening is that, as the listener says, mom may be looking for emotional support with the boy and isn’t really understanding how that’s impacting. So he’s feeling guilty that he can’t leave his mom. And so the listeners may be right. There may be some dynamic that’s causing him to want to stay more with his mom. And it could be just that he is really struggling with the concept of the breakdown of the relationship as he’s entering into adolescence. He’s reflecting on what happened in childhood and trying to make sense of the world.
Heather McKinnon: So obviously, parents need to be very live, if they are in a separated situation, to what happens with adolescence. (4:02) And the big message here is: the parents should enter into some further counselling. You must pull together during adolescence. So it’s important that one of you doesn’t just go off and get a psychologist for the kid. It’s more important that the parents move together to have a look at how they could communicate better to make sure that as he moves through adolescence, he doesn’t go right off the rails.
Heather McKinnon: I mean, Ben, you’ve done your psych degree. You’ve done a lot about that adolescent period. And I’d be interested to hear what you think about that sort of age group.
Benjamin Bryant: Well, I think it’s best to comment to the listeners that in most cases, I think probably in 80 percent or more of cases where our clients say to us there’s parental alienation – filling their head with things, it would be an 11, 12, 13 year old and I think it’s really important to remember, like you said at the start of your answer, there’s so many things going on, with the high school and, hormones and all these different things happening. So 11, 12, 13 year olds already going through a process of change, let alone put something like a separation, which could be quite traumatic for children in the mix.
Benjamin Bryant: The other thing I’ll say to this listener, which is advice that I give pretty much to everyone, and I know you do too Heather, is that part of the way of getting through this and getting through any separation is being able to really identify the things that you can control and the things that you cannot control. You cannot control what the other spouse is doing in their household. You can jump up and down and say she’s filling his head with things, but you cannot control that. Sure, you can go to court and make things messy and try to get somebody else to control it. But you cannot. What you can control is your own household,. And regularly we see that when one parent is the safe harbour, the place where the child can relax and be comfortable and know they’re not getting interrogated and putting pressure on, that parent ultimately later generally has the child moreThe child will gravitate towards them – unless there’s some serious parental alienation going on. Which, as you said, may be very true in this circumstance. But that’s not the only possible solution
Heather McKinnon: And that’s really important to understand. So for this reason, I think, be really honest with yourself and go and have a chat to somebody who’s trained in child development before you assume that the behaviour is just related to the spouse. (6:48)
Benjamin Bryant: And as you said, Heather, counselling or family therapy?
Benjamin Bryant: Onto the second question, my husband and I agreed on a property settlement that involves me buying out his share of the family home by increasing the total mortgage. Consent orders were drawn up over two months ago and sent to him. It’s now coming up to the 90 day deadline and he still hasn’t signed. At the moment, I’m paying for the full mortgage myself, even though he still officially owns half. Should I be able to recoup these mortgage costs? And what happens if he doesn’t sign within the 90 days?
Heather McKinnon: It’s really interesting, I suppose we should give the listeners some understanding of what consent orders are. So most people who are formalising their property settlement do it by way of a thing called a consent order. And part of that process involves drawing up an application that must be signed by both spouses within 90 days of each other. So what’s happened here is that the parties have got what they call a heads of agreement. She’s going to keep the house and she’s going to refinance the mortgage and pay her ex out. Problem is that she’s still got no certainty that he’s going to sign. So you often get heads of agreement after mediation or through negotiation. But that doesn’t mean that it’s going to go through the formal process.
Heather McKinnon: What I would guess is happening here is during Covid lots of people have had the nod on agreements but the banks have not backed them up. So that the problem that you’ve got is that loan approvals are really hard to get at the moment. And I think you’ve been commenting to me during appointments that certain professions, certain jobs are on the blacklist at the moment. And even though you might have income from your job, it might be in an industry where the banks are saying it’s high risk and they’re not prepared to lend. So in this case, there’s lots of things happening.
Heather McKinnon: But the question at the end of it, which is can I get a recoup if I’m paying the whole mortgage back? We don’t sort of break things down, do we, in a settlement to a mathematical calculation. So what we normally say is the person that’s in occupation of the house, they would normally pay the equivalent of market rent, because the spouse who’s moved out is paying rate for their accommodation. So what I try and get couples to do is to actually look at: What’s our combined housing (the mortgage on the home, plus the rent on the other house) and then commit to meeting that in accordance with the ratios of your income. So if you’re on about the same income, you contribute equally to both houses, if you like. If one’s on much higher income, do it as a percentage of your salary. So it keeps that sort of fairness.
Heather McKinnon: But look, Covid’s put a whole different overlay on all of these situations and don’t jump to conclusions that your spouse might be reneging on the deal. I know you and I have got cases where the banks have taken four or five months to give finance approval. We’re told at the moment that the Reserve Bank is encouraging the banks to loosen up their lending guidelines, but certainly on the ground, we’re not saying a lot of that filter through. It’s really hard to get loan approval.
Benjamin Bryant: And my understanding from this listener is that she’s intending to keep the house, therefore paying him out, therefore taking on the mortgage. So the 90 days is actually a protection for her, to make sure that the bank has enough time essentially to get the refinance. And specifically for this listener, I guess we could say that the 90 day deadline, has not actually started yet The time frame doesn’t start until the order is made. Depending, of course, what the order says. If the order says that within 90 days both parties do some things necessary, then that 90 days would not start until the court has approved the consent orders. So that’s the 90 day start. If there’s no orders, the 90 days has not started. The other thing that she can do if she thinks it’s taking too long, of course, is change the 90 days. If she’s confident the bank can lend her the money or whatever the case may be, take out 90 days, put in 60, put in 30 or whatever, but do so at your peril because the bank might not be able to commit to the timeframe that you give them.
Heather McKinnon: It’s really common at the moment. I’ve got a lot of people who’ve been given that formal loan approval a few months ago and they’re petrified they’re about to be made redundant and they want to get the settlement done while they’ve still got the loan approval. So heaps of things are happening out there every case is different.
Benjamin Bryant: Let’s move on to the next question. My husband and I divorced 18 months ago. When it came to a property settlement, I didn’t have a lawyer and I didn’t attend court because I was in a very bad state emotionally. The whole decision went completely in his favour. He retained all of the major assets and I was left with some pretty big credit card debts. My mental health has improved significantly since our divorce, and I now realise how badly I handled things. Is it possible at this stage for me to appeal to the court and change the court order and to come to a fairer arrangement?
Heather McKinnon: Everything’s possible. So these cases are not that uncommon in that we meet people who have signed documents at a time when they really weren’t making a decision that was based in a really good understanding of finance. The issue that we have to assess is whether the person signed documents having what we call legal capacity. Now capacity is a concept in the legal system around a diagnosis of a mental health condition, that means you’re not able to make major financial decisions at that time. So in a year, we might have three or four of these cases Ben where we have to send the client off to a psychiatrist who specialises in capacity to make an historical assessment as to whether this person at the time they entered into the orders had legal capacity.
Heather McKinnon: So there’s a couple of things here. There was no legal advice and the client suspects that they had a major depressive illness at the time. So in setting aside the order or applying to do that, it’s an expensive process. And you need to really start from the beginning and have a look at, what was there for division and is it worth my while to one, invest in the psychiatric assessment, which will cost thousands of dollars. And secondly, if it comes back that I didn’t have capacity, is the pool for division worth doing that or do I just get on with my life.
Heather McKinnon: So they’re the sort of decisions that you and I help people make in these cases? Often what actually happened was that the marriage was just a symptom of the other chaos in their lives. So financially, there may have been very little assets. But to give practical examples: at the moment, you and I have got a couple of cases where the psychiatrist has said, “No, this person did not have the capacity” and the assets that we’re really looking at are things like the other side’s superannuation. Which they got away with, holus bolus, and the other spouse didn’t get any. So it’s a dual sort of assessment, did you have capacity at the time? And if you didn’t have capacity, is it worth your while to invest financially, to apply to the court, to set the original agreement aside and start from the beginning? So you need very specific, good quality advice to help make those decisions.
Benjamin Bryant: Excellent. And our fourth question, Heather, is: I have an interim AVO in place against my ex-husband with a contested hearing scheduled for March next year. The court advised me to provide more details before the hearing. Somehow my ex has gone directly to the magistrates and convinced them to revoke the AVO so that he can file a vexatious litigant restraining order. How can this happen when we haven’t even had the hearing yet and I haven’t had a chance to provide more details? What should I do? I’m truly fearful of this man.
Heather McKinnon: It sounds like Ben that this person is a witness for the police so that it’s not their application for an interim violence order, what’s happened is the police on the night they’ve attended the home probably issued an urgent, what they call, “ex parte” in the absence of the other person, a really temporary order to protect them. It’s gone to court. So it sounds as though the police have since made an application to change the nature of that. What’s very hard to understand here is that couldn’t happen unless the police spoke to this person because they’re a witness
Heather McKinnon: I’ve not heard of a vexatious litigant restraining order.So you would have to actually have a look at the paperwork. But what we do know is that, because the time from when someone gets an urgent temporary interim violence protective order to the final hearing is about a period of six months, and often the police will apply to vary the terms of the interim order. The most common one that you and I would see is on the night the incident happens, there’s little kids in the house. So the order is made to protect the mom and the kids. A few weeks down the track and the police agree that the interim AVO will not affect the children because there’s now a family court order in place that monitors how the kids go between mom and dad So this question raises a lot more questions and we don’t have information on that. But what I think you and I would say is that this person should contact the specialist domestic violence services that are in their area and make an appointment to go to the police station with a specially trained domestic violence worker to meet with the domestic violence officer who is a specialist, in the police station, to go through what’s happened in the matter to get a better understanding. Yeah, definitely. That’s what I would be doing here.
Benjamin Bryant: It does seem there’s something missing, a piece of the puzzle that we’re missing to be able to answer this question completely. And we need more details. But I think it’s important, as you mentioned, for the listener to get a clear understanding of AVOs that the police can issue, like a provisional AVO or AVOs that the court order such as an interim and the final AVO. I think if they met with the DVO, with the police, get a good understanding of the difference in those AVOs, they’ll probably have a better understanding about what’s going on.
Heather McKinnon: Yeah, excellent.
Benjamin Bryant: The next question, Heather, is my ex-partner and I bought a house together a couple of years ago. Then last November he just walked out on me and left the country. I didn’t hear from him for three months. We’re now in touch and have agreed to sell the house. But he’s insisting that I owe him 12 months of mortgage repayments, as well as 50 percent of the proceeds of the sale because he’s paid his share of the mortgage when he wasn’t even living at the house. Is that right? What should I do?
Heather McKinnon: This is another example of people looking at only one tiny part of the overall puzzle. So in a property settlement, we don’t look at just the asset of the equity in the house, but we look at super, shares, everyone’s particular financial circumstances, and we don’t do mathematical payback, if you like. So in this case, you would need to understand how long they lived together, what the various contributions were that they made to the relationship, what their future needs look like, to work out whether or not there should be an adjustment of cash to the person who has left the country or whether there is any other assets they haven’t even looked at. So, again it’s… Really I suppose the message is you can’t do an asset by asset property settlement. You’ve got to look at the whole history, not just one part of it.
Benjamin Bryant: That’s right. So I think it’s fair to answer this question by saying, well, no, you don’t owe him the 12 months of a half mortgage repayments or something like that. But the truth might be you actually owe him more or less. It depends when you look at the contributions overall. And for that, of course, you get independent legal advice.
Benjamin Bryant: And our final question is, I’ve been married for over 20 years and late last year we agreed to separate. I have a small retail business which I started and built on my own. My ex says I have to give her half the value of the business. And my accountant says that based on turnover, it’s probably worth about three hundred thousand dollars. Do I really have to give her one hundred and fifty thousand dollars, even though she had nothing to do with the business over all these years? And despite what the accountant says, I don’t think there’s any way I could sell my business for that much money, especially after Covid. How do I get a more realistic valuation?
Heather McKinnon: Well, really important to remember that we’ve got this library of resources in the podcast series. So in this case, you would go back and listen to the shows that we’ve done with forensic accountants on how to value businesses.
Heather McKinnon: In a situation where an accountant is valuing a business, not for family law purposes, they will often look at a percentage of turnover. But in the family law jurisdiction, we value a business according to a formula called net maintainable earnings. So you look at how much profit the business makes after you deduct all of its expenses, and you pay the key person a wage that’s determined according to what they would get paid if they went to work for a comparable business. So this guy here would be paid a manager’s wage, he’s obviously critical to the business. What that normally means in most businesses is that there isn’t any value. Most small business people buy themselves a job.
Benjamin Bryant: Vehicle for income.
Heather McKinnon: Yeah. And so the other important thing is if you decide to get a valuation of the business, it’s really important that you both agree on a single expert. Otherwise you’ll end up with warring experts. And what traditionally happens is one person will get the business accountant to value it and then the other person will go and get another accountant, neither of whom regularly value in the family court. It’s much better to invest jointly in appointing a single expert who’s recognised as someone who has certain qualifications to value. So I think he’s on the right track. There’d be very few small businesses that would have any significant value. And so it’s important that he now negotiates either directly or through the use of family lawyers to reach an agreement with his ex partner as to who they appoint to value the business.
Benjamin Bryant: And the other thing to mention as well is that even if it was three hundred thousand it mightn’t be he has to give her one hundred and fifty thousand dollars out of it. Again, like the mortgage repayments we had in the previous question, even a 50 50 settlement does not necessarily mean that each of the assets divided 50 50. So even if it did have a value, it’s maybe not the case that he has to give her half of it, because there may be other factors in play
Heather McKinnon: The other thing to remember, too, is that people who work really hard in paid employment often have a value system and a lens that only puts significant weight on things that you can put a price on. And the classic cross-examination, as you know, in a family court matter, when you’ve got a hard working business person saying, I worked 16 hour days and the barrister on the other side or often the judge will say, and what was your partner doing when you were away from the house for 16 hours, cooking, cleaning, washing, ironing, looking after the kids, buying the Christmas presents for Granny. That’s really important to understand that contributions come in a myriad of different ways, not just the money that you earn
Benjamin Bryant: So it’s really questioning whether this listener did, in fact, build the business on their own. Perhaps it was contributions being made by the partner of 20 years. Perhaps, if not direct contributions, indirect contributions or non-financial contributions or the like.
Benjamin Bryant: The other thing I would point the listener to, and all of our listeners, is essentially to our previous resources We have done an episode on Divorce and the Family Business. I think that was Episode 16. And I also know that early on in the piece we spoke to James Davis, HQB Chartered Accountant. That was in one of our earlier ones, perhaps a Facebook show. But you’ll be able to find that in our website if you can’t find it with our podcasts.
Benjamin Bryant: Well, Heather, thank you for providing such excellent answers to these questions.
Heather McKinnon: You’re welcome Ben.
Benjamin Bryant: And a big thank you also to everyone who sent in questions. We really appreciate the opportunity to provide a little bit of perspective and hopefully make your choices easier. We are happy to answer your questions whenever possible. So please feel free to message or email the show at any time and we’ll do our best to get some answers on the podcast.
Benjamin Bryant: Next month, we’re going to dedicate an entire show to men. One thing that comes up frequently when talking about divorce and separation is gender differences. There’s a view that men and women are affected quite differently and have quite different perspectives about what’s important and fair when it comes to separation. There is also a belief out there that the courts are biased towards one gender or another. So in this episode, we’re going to try and look at divorce and separation from the perspective of men. Heather will be with me again to answer questions about how the law views gender differences. And we’ll be joined by Jean Clayton, CEO of the Men’s Resource Center in Coffs Harbour, who will help us get a male perspective on the trauma of separation.
Benjamin Bryant: I think this show is going to be really interesting for both men and women and could be important in helping two genders to see things from the perspective of the other. Obviously, we intend to run a similar episode on women in the months ahead, so don’t worry, we are not being gender biased on this podcast and we also recognise that not all men are the same. So while the show may include some generalities, we are not trying to paint all men with the same brush.
Benjamin Bryant: If you’ve got a story or a question about men and divorce then please send us a message on Facebook or e-mail us on familymatters@bryantmckinnon.com.au. Before we go, one final reminder that links to any resources mentioned, plus a full transcript of today’s show will be available in the show notes on our website.
Benjamin Bryant: Goodbye for now and we hope you’ll be listening again next month.