Abbott and Langton
[2010] FamCA 1128
•10 December 2010
FAMILY COURT OF AUSTRALIA
| ABBOTT & LANGTON | [2010] FamCA 1128 |
| FAMILY LAW – PROPERTY – APPLICATION FOR REVIEW OF JUDICIAL REGISTRAR'S ORDERS – Where case guardian appointed to represent the husband – Where parties in dispute as to value of assets – Where dispute about funds to be "added back" to pool of property available for division – Where husband's mother died after orders made by Judicial Registrar and husband inherited one half of her estate – Where contributions to date of separation agreed to be equal – Assessment of all contributions led to finding of equality of contribution – Whether asserted failure by case guardian to make and full and frank disclosure should result in adjustment in wife's favour under s75(2)(o) – Whether adjustment should be made in wife's favour on basis of disparity in husband and wife's financial circumstances – Wife awarded a 5 per cent adjustment under s75(2) Held – The husband and wife's assets should be adjusted as to 55 per cent to the wife and 45 per cent to the husband |
| Child Support (Assessment) Act 1989 (Cth) Evidence Act 1995 (Cth) s 68 Family Law Act 1975 (Cth) ss 37A, 75(2), 79 Family Law Rules 2004 (Cth) |
| Clauson & Clauson (1995) FLC 92-595 Coghlan & Coghlan (2005) FLC 93-220 Davuat & Raif (1994) FLC 92-503 Ferraro & Ferraro (1993) FLC 92-335 Hickey & Hickey & the Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 In the Marriage ofBiltoft (1995) FLC 92-614 In theMarriage of Townsend (1995) FLC 92-569 Kannis & Kannis (2003) FLC 93-135 Le Steere & Le Steere (1985) FLC 91-626 Makita v Sproules (2001) 52 NSWLR 705 Norbis v Norbis (1986) 161 CLR 513 Prpic & Prpic (1995) FLC 92-574 Whiteley & Whiteley (1996) FLC 92-684 |
| APPLICANT: | Ms Abbott |
| RESPONDENT: | M Langton as case guardian for the husband |
| FILE NUMBER: | SYC | 2523 | of | 2007 |
| DATE DELIVERED: | 10 December 2010 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Boland J |
| HEARING DATE: | 20 and 21 September 2010 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Gould |
| SOLICITOR FOR THE APPLICANT: | Beswick Solicitors |
| COUNSEL FOR THE RESPONDENT: | Mr Hill |
| SOLICITOR FOR THE RESPONDENT: | Kenneth Harrison Solicitor & Attorney |
By way of settlement of property under section 79:
Orders
That the orders of Judicial Registrar Johnston made 28 August 2009 are discharged.
The wife shall within 3 months of the date of these orders:
(a) transfer to and or forego in favour of the husband all her right, title and interest in K Family Holdings Pty Ltd (“K Holdings”);
(b)resign as a director of K Holdings.
Simultaneously with the transfer pursuant to Order 2(a) the case guardian shall do all acts and things necessary to ensure the husband refinances the mortgage (membership no … mortgage breaker home loan) with Sydney Credit Unit Ltd secured over the property at S (“the S property”), and thereafter the husband shall indemnify and keep indemnified the wife against any further liability in respect of that borrowing.
The husband is declared the sole owner of the business known as L Business presently conducted by L Pty Ltd (ACN …) and the wife shall forgo any claim she may have to that business.
Simultaneously with compliance with Order 2(a) and (b) and Order 3 of these orders the case guardian shall do all acts and things necessary to ensure that the husband pays by cash or bank cheque to the wife the sum of $225,213.00 (“the principal sum”).
That until payment of the sum due pursuant to Order 5 of these orders, or in the event of default by the husband, the case guardian shall do all acts and things necessary to ensure the husband pays as and when they fall due all payments of principal and interest in respect of any mortgage secured against the title of the S property together with all water and council rates, strata levies and land tax in respect of the said property.
In the event that the case guardian and/or the husband fails to pay to the wife in compliance with Order 5 of these orders then the case guardian shall:
(a) forthwith do all acts and things necessary to ensure the husband causes K Holdings to be reinstated;
(b) that immediately upon K Holdings being reinstated, cause K Holdings to list the S property for sale and the husband and wife shall do all acts and things necessary to forthwith place the S property for sale by public auction until sold, and in respect of such sale, the parties shall:
(i)appoint a Real Estate Agent or Agents as may be agreed between the parties as auctioneers to conduct the auction either solely or at that company's discretion in conjunction with any other real estate agent or auctioneer appointed by the agent;
(ii)not less than fourteen (14) days from the date appointed by the said Real Estate Agents or auctioneers for the conduct of any public auction, agree on the reserve price to be fixed in respect of the property to be sold and in default of such agreement for any period in excess of seven (7) days the reserve price shall be the fair market value as determined by a registered valuer appointed by the President for the time being of the Real Estate Institute of New South Wales whose determination to that Appointee and whose Appointee’s determination as to that value shall be final and binding upon both parties;
(iii)where the bidding at public auction does not reach the reserve price, sell the property to a prospective purchaser (whether or not that prospective purchaser was in attendance at the public auction) who within fourteen (14) days thereafter shall make any offer for the purchase in an amount which is equal to or greater than 90% of the amount which was fixed as the reserve price for that property at auction and the amount of such offer (or if more than one the highest of such offers) shall be deemed to be the fair market value of the property as if same had been otherwise agreed or determined pursuant to these orders.
That in the event of no sale being effected of the S property at auction in accordance with Order 7(b) hereof the husband and wife shall resubmit the property for auction within a period of twelve (12) weeks from the date of the auction and in that event the husband and wife shall take all steps necessary and in particular do all things specified by Order 7(b) hereof inclusive as are necessary to effect such sale by auction. The selling procedures for the S property provided by Order 7(b) inclusive hereof shall continue successively until the property is in fact sold.
Subject to Order 10 of these orders, that as soon as practicable after completion of the sale of the S property, the proceeds of sale shall be paid and directed as follows:
(a)to all amounts due and payable for Agent's Commission and legal fees and expenses associated with the sale;
(b)in discharge of any mortgage secured thereon;
(c)in payment to the wife such sum as is necessary to ensure the wife receives 55% of the parties’ net assets and liabilities as set out in paragraph 92 of my Reasons for Judgment (save and except for the value of the S property which shall be the actual sale price of the S property less sale costs and capital gains tax), together with interest under the Family Law Rules, 2004 from the due date until date of payment; and
(d)the balance then remaining to the husband.
Prior to the distribution to the parties pursuant to Order 9(c) and (d) of these orders the parties shall:
(a)retain from the proceeds of sale an amount equivalent to the estimated capital gains tax payable as a result of the sale;
(b)cause the solicitor acting on the sale of the S property to invest the sum retained for capital gains tax in a controlled monies account in the name of the husband and wife pending assessment and payment of the capital gains tax;
(c)instruct the solicitor to apply the funds held on account of capital gains tax in payment of such tax when assessed; and
(d)in the event the sum retained exceeds the amount payable for capital gains tax any excess remaining in the controlled monies account shall be paid as to 55% to the wife and 45% to the husband.
That the wife forthwith do all acts and things and sign all documents necessary to cause the diamond ring in her possession to be listed for sale by O Auction House for sale by public auction on the next available jewellery or general auction date and the net proceeds after deduction of commission is to be divided 55% to the wife and 45% to the husband.
Save and except as provided in these orders the husband and wife shall retain all property registered in his or her sole name, including but not limited to shares, banks accounts, motor vehicles, furniture, chattels, personalty and superannuation entitlements presently in his or her possession or control.
The case guardian shall do all acts and things necessary to ensure the husband pays to the wife within 21 days of these orders the sum of $632.00 being one half of the property valuation expenses for the property valuation carried out by Mr A of A Valuers.
Pursuant to rule 15.47 each party is responsible for half of costs of the updating report of Mr B the single expert accountant.
That after 28 days all exhibits be returned.
That all documents produced on subpoena be collected by the solicitor who issued the subpoena and returned to the owner thereof as soon as possible.
That each party have liberty to apply on 7 days notice in relation to the interpretation or implementation of these orders.
IT IS NOTED that publication of this judgment under the pseudonym Abbott & Langton is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 2523 of 2007
| MS ABBOTT |
Applicant
And
| M LANGTON as case guardian for the husband |
Respondent
REASONS FOR JUDGMENT
Introduction
At the end of their cohabitation which extended over some 22 years Ms Abbott and Mr Langton were unable to agree about a division of their property.
Although the parties’ marriage has been dissolved I will, for convenience, refer in these reasons to Ms Abbott as “the wife” and Mr Langton as “the husband”.
Proceedings were commenced in this Court by the wife on 11 April 2007. A final hearing of the competing property claims of the parties under s 79 of the Family Law Act 1975 (Cth) (“the Act”) was listed for hearing before Johnston JR (as his Honour then was) on 24 August 2009 and final orders were made on 28 August 2009. Shortly prior to final hearing, on 19 August 2009 the Judicial Registrar made orders appointing the husband’s son from a prior relationship, M Langton, as his case guardian under Part 6.3 of the Family Law Rules 2004 (“the rules”).
On 21 September 2009 the wife filed an application for review of the Judicial Registrar’s orders. These reasons are in respect of that application.
Although no formal application was made by the wife for the removal of the case guardian for the husband, at the commencement of the hearing the wife sought in her Outline of Case document an order that the Judicial Registrar’s order of 19 August 2009 be discharged. No material was filed in support of that application, and it was abandoned at the commencement of the hearing. Thus the parties before me were the wife as applicant and M Langton as case guardian for the husband as respondent.
At the commencement of the hearing it was acknowledged, as it had been before the Judicial Registrar, that the parties’ contributions under s 79(4)(a), (b) and (c) of the Act up to the date of separation should be regarded as equal. It was also not in dispute that neither party sought to place any reliance on a pre-nuptial agreement entered into by them prior to the marriage.
At the conclusion of the hearing the wife’s counsel submitted that the parties’ net assets should be divided as to 67.5 per cent to the wife, and the balance remaining to the husband. In order to effect such a division the wife sought the husband pay a cash sum to her to achieve her entitlement, that each party retain their individual superannuation entitlements and other assets in their sole ownership. Orders were also sought by the wife that she transfer to the husband her interest in K Family Holdings Pty Ltd (“K Holdings”), that the husband procure the refinancing of a mortgage over the home unit at S which was the former matrimonial home (“the home unit”), and that the parties each be responsible for one half of the expert property and accounting valuation fees.
It was not in dispute that K Holdings was the corporate trustee of a discretionary trust. Nor was it in dispute that:
·K Holdings had been de-registered; and
·K Holdings is the registered proprietor in its capacity as trustee of the discretionary trust of the home unit.
The case guardian’s counsel submitted that the husband’s overall contribution entitlement should be assessed at between 55 to 60 per cent, and that there should be an adjustment in the husband’s favour of 15 per cent for factors under s 75(2). In other words, he sought that the husband retain assets equivalent to 70 to 75 per cent of the net assets, excluding the husband’s inheritance. He also sought, in the event the home unit was sold, that an unspecified sum for capital gains tax should be deducted from the sale proceeds.
Issues in dispute between the parties
I was able to distil with the parties the matters in issue in the review application.
Before identifying those issues it is useful that I record that, following the hearing before the Judicial Registrar, the husband’s mother died and the husband became entitled to one half of her estate. While there was dispute before me about the quantum of the husband’s entitlement under the estate, there was no dispute it was in the range of approximately $280,000.00 to $330,000.00.
The identified issues were:
· the manner in which the husband’s inheritance should be treated (ie should it be included in the net assets and liabilities, should there be a “two pool” approach, or should it be omitted from the list of assets and liabilities, but taken into account under s 75(2));
· in determining the net assets and liabilities of the parties what values should be attributable to:
- the husband’s interest in his mother’s estate;
- the husband’s brokerage business;
- the engagement ring retained by the wife; and
- the quantum of loans obtained by the husband, and his liability to repay those loans;
· whether there should be an “add back” for:
- funds retained by the husband from the proceeds of sale of a persona services business operated by the parties;
- legal costs expended by the husband;
- legal costs expended by the wife, and
·whether the parties’ credit card liabilities should be included in the list of assets and liabilities;
·the assessment of post-separation contributions; and
·the adjustment, if any, to be made under s 75(2).
Procedure on review
Section 37A(9) of the Act provides that a party to proceedings in which a Judicial Registrar has exercised the power of the Court may seek within the time provided in the rules to review the exercise of that power.
Section 37A(10) provides as follows:
The Court may, on application under subsection (9) or of its own motion, review an exercise of power by a Registrar pursuant to a delegation under this section and may make such order or orders as it considers appropriate with respect to the matter with respect to which the power was exercised.
Part 18.2 of the rules deals with review of decisions. Rule 18.10 provides as follows:
(1) A court must hear an application for review of an order of a Judicial Registrar, Registrar or Deputy Registrar as an original hearing.
Note In an original hearing, the court rehears the whole matter and does not simply review the decision of the original court.
(2) The court may receive as evidence:
(a) any affidavit or exhibit tendered in the first hearing;
(b) any further affidavit or exhibit;
(c) the transcript (if any) of the first hearing; or
(d) if a transcript is not available, an affidavit about the evidence that was adduced at the first hearing, sworn by a person who was present at the first hearing.
The affidavits before me in this application are identified in Appendix “A” to these reasons. The competing applications, which were in each case reduced to a Minute of Order Sought, became Exhibits “B” and “1” in the proceedings. I also had the benefit of the transcript of the proceedings before the Judicial Registrar. Both parties agreed I should read the reasons for judgment of Johnston JR.
Background
The relevant background appears in the reasons of Johnston JR. Neither party contested the accuracy of any matter set out in that background which I now set out:
5.The husband was born in 1952 and he is therefore 57 years of age. The wife was born in 1961 and she is therefore 48 years of age. They commenced cohabiting in 1984. They married in November 1989 and they separated in August 2006. There is one child of the marriage, a son born in 1991. The child is now an adult.
6.The husband has two children by his previous relationship, an older son who was born in 1977 and a younger son born in 1978.
7.At the time that the parties commenced cohabiting the husband’s property consisted of two properties at 38 and 40 C Street, Sydney subject to a combined mortgage of approximately $260 000. The husband also owned his brokerage business “Langton & Associates” which he operated from one of these properties and a BMW motor vehicle. At this time the wife had a small amount of savings and some personal effects. She was working as secretary / receptionist in the husband’s brokerage business.
8.In 1986 the husband purchased a 50 percent share in a personal services business called “F Business” for $145 000, his partner being Mr M. This was conducted from premises in D.
9.In September 1987 the wife purchased another unit at 9/27 C Street, Sydney, for $64 000. The husband purchased unit 10/27 C Street, Sydney. The parties lived in the wife’s unit at 9/27 C Street, Sydney and the wife rented out her D unit.
10.In mid 1988 the parties separated for a few months. Then they reconciled. The wife resumed working in the husband’s brokerage business. She purchased four shares in the husband’s company Langton & Associates Pty Limited for $3000.
11.In approximately 1988 the husband purchased the property at 42 C Street, Sydney which enabled him to extend his office.
12.Shortly before their marriage the parties became involved in the preparation of a pre-nuptial agreement. In fact they entered into an agreement by signing it on the day of their marriage, in November 1989. Neither party has sought to make any relevant submission about any effect of such agreement. In my view it has no more significance than simply being part of the history of the background to these proceedings.
13.On 6 December 1989 the parties purchased the property at P for $232 000. A loan was provided on mortgage by CML. CML had also extended finance in respect of the husband’s business operations. The wife raised a loan of $45 000 secured on her unit at C Street. Some of these funds were used to renovate the property.
14.In approximately 1990 the husband purchased Mr M’s interest in F business.
15.As indicated above, the parties’ child was born in 1991. The wife stopped working just before the child’s birth. She returned to work in May 1991 taking on the position of office manager in the husband’s brokerage business.
16.Shortly after the birth of the parties’ child it started to become clear that the family was living beyond their means. The business was not generating sufficient money to pay all outgoings. There appears to have been some confusion about the terms of the CML loan secured over the P property. The parties had understood that at least some period of the loan was to be interest free. This was apparently linked to a business arrangement between the husband and CML. But it did not turn out to be the case that part of the loan was to be interest free and the mortgage fell into default. At approximately this time the wife sold her C Street unit. The net proceeds of sale of approximately $49 000 were applied to the payment of bills.
17.In June 1993 the P home was sold in a mortgagee sale. CML also forced the sale of the husband’s business premises at 40 and 42 C Street, Sydney.
18.The parties moved both the business and their residence to separately rented premises.
19.In December 1993 the parties purchased a home unit at S for $218 000 in the name of a company K Family Holdings Pty Ltd. The majority of the deposit came from the remaining balance of the net proceeds of sale of the wife’s unit at C Street, Sydney.
20.In March 1994 the wife took over the management of the personal services business.
21.In approximately 1995 the husband moved the brokerage business to a unit in S which was in the same unit block as the parties’ residence.
22.In March 1995 the parties were both made bankrupt.
23.In 1998 the wife’s bankruptcy was annulled.
24.Between July 2000 and 31 December 2001 the husband was prohibited from registering as a broker.
25.In February 2003 the parties moved the parties moved the personal services business to rented premises at X Street, S. A new company F Australia Pty Limited was established to operate the personal services business. They auctioned some of the business’s equipment but the price realised fell well short of their expectations.
26.In March 2003 the parties spent approximately $65 000 on renovations to their home unit. At approximately this time the husband recommenced business as a broker.
27.In late 2004 the company leased a Smart Car for the wife’s use.
28.In September 2005 the company L Pty Limited leased a Mercedes Benz motor vehicle for the husband. This was the source of some disputation between the parties because the wife was opposed to this lease which cost approximately $1100 per month. She said that the parties could not afford such expenditure.
29.In December 2005 the wife informed the husband that she no longer wanted to be married to him.
30.On 18 June 2006 the wife asked the husband to leave the former matrimonial home which he did. But on 27 August 2006 the husband moved back into the home against the wife’s wishes. They then had an arrangement under which each would spend certain evenings at the home, particularly to enable them to spend time with their son.
31.The wife subsequently moved to reside with her partner Mr N and the husband and the parties’ child continued to occupy the former matrimonial home.
32.The business of the service business was declining and the parties decided that the business had to be sold. In late 2006 the personal services business was sold to the company NG Pty Limited for $599 900 the sale being completed on 7 February 2007. Numerous debts were paid from the proceeds of sale. There is an issue about how the proceeds of sale were dispersed and how the Court should regard this. I shall refer to this matter again below.
33.After the commencement of these proceedings various sets of interlocutory orders were made by this Court including injunctions to restrain each of the parties from dealing with monies which they had in specific accounts. This particular matter has become the subject of an application for costs and I shall refer to this again below.
34.On 13 June 2007 orders were made pending further order restraining the husband from dealing with funds which had been paid to his investment account at the Bendigo Bank following the sale of the personal services business so as to reduce the balance of such account below $178 000. An order was also made pending further order restraining the wife from dealing with funds in her investment account at the ANZ Bank from the same source so as to reduce the balance below $33 000.
35.On 9 June 2009 an order was made permitting the withdrawal of funds from the husband’s Bendigo Bank investment account to pay outgoings in relation to the former matrimonial home as well as $12 000 to the wife for her own use. The total amount to be withdrawn was in excess of $32 700.
36.On 19 August 2009 I made an order appointing the husband’s older son M Langton as case guardian for the husband.
Relevant legal principles
The approach to the determination of an application under s 79 is well established by authority (see Le Steere & Le Steere (1985) FLC 91-626; Ferraro & Ferraro (1993) FLC 92-335; Davuat & Raif (1994) FLC 92-503; Prpic & Prpic (1995) FLC 92-574; Clauson & Clauson (1995) FLC 92-595; Whiteley & Whiteley (1996) FLC 92-684; Hickey & Hickey & the Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143).
Section 79(2) provides:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
I am required, in considering what Order, if any, I should make, to take into account the respective contributions of the parties referred to in paragraphs (a), (b) and (c) of s 79(4), the effect of any proposed Order upon the earning capacity of either party to the marriage (see s 79(4)(d)) and the matters referred to in sub-section 75(2) so far as they are relevant; and any other Order made under the Act affecting a party to the marriage or a child of the marriage and any child support under the Child Support (Assessment) Act 1989 (Cth) that a party to the marriage is to provide, or might be liable to provide in the future, for a child of the marriage.
The first step to be undertaken by me is to determine the extent and value of the property, liabilities and financial resources of the parties at the time of the hearing (see In theMarriage of Townsend (1995) FLC 92-569 and In the Marriage ofBiltoft (1995) FLC 92-614).
Following the preferred approach discussed in Hickey I must thereafter assess and weigh the parties’ respective contributions, then consider all relevant factors under s 75(2) of the Act, make such adjustment, if any, to the contribution assessment to reflect those matters, and make orders which are just and equitable.
Identification of the pool
The parties prepared a joint statement of assets and liabilities (Exhibit “6”) in which they set out those assets and liabilities which were agreed, and those the subject of dispute. I now set out that table but note an item for the husband’s credit loan account (Item 17) was conceded by the wife’s counsel as included in the valuation of the brokerage business:
ASSETS No Asset Ownership Husband Wife Comment 1 Home unit situated at [S] (family trust) Joint $620,000 $620,000 2 [Brokerage business, L Business] Husband -17,000 to $36,000 $36,108 to $96,000 3 Household contents Husband $20,000 $20,000 4 Household contents Wife $20,000 $2,400 5 Moneys held in restricted Bendigo account Husband $20,175 $20,175 6 Moneys held in Bendigo account […]24 Husband $949.32 $1,666.28 7 Moneys held in Bendigo account […]20 Husband $99.54 $0.46 8 Moneys held in NAB account […]13 Husband $81 $81 9 Moneys held in ANZ account […]16 Wife $2,593 $2,593 10 Moneys held in ANZ account […]69 Wife $19 $19 11 ING Superannuation […]07 Husband $3,129 $3,129 12 ING Superannuation Husband $4,439 $4,439 13 ING Superannuation Wife $17,774 $17,774 14 Jewellery Wife $3,100 15 Smart Car FourTwo Wife $8,750 $8,750 16 Mercedes Husband $25,000 $30,950 17 Loan to [L Business] Husband $99,015 18 Add-back of monies utilised by husband from sale of [personal services business] Husband $275,273 19 Add-back of paid legals Husband $105,524 $105,524 20 Add-back of paid legals Wife $53,803 $53,803 Gross Assets $1,327,247 LIABILITIES No Liability Ownership Husband Wife Comment 21 Credit Union Mortgage Joint $276,530 $276,530 22 Legal fees re husband's mother's estate Husband $34,000 23 David Jones storecard Husband $2,345 Nil 24 Citibank Mastercard Husband $9,494 Nil 25 ANZ Visa Wife $1,672 $1,672 26 Car loan Husband $40,245 $40,245 27 [G Abbott] loan Wife $14,000 28 [Mr G] loan Husband $100,000 Nil 29 [Mr O] loan Husband $20,000 Nil Gross Liabilities $332,726 Net property of parties $994,521 Financial Resources 30 Interest in late mother's estate Husband $330,000
I now propose to deal with each of the contested items.
(a) the husband’s interest in his late mother’s estate
The husband’s mother died in December 2009, that is, approximately three months after the publication of Johnston JR’s reasons for judgment and orders.
The wife’s evidence, which was not challenged, was that the parties’ son, J, in response to a question from the wife told her on 31 March 2010 that the husband’s mother had died months ago, “but Dad asked me not to tell you”.
On 11 June 2010 the wife’s solicitors wrote to the husband’s solicitors and requested a copy of the husband’s mother’s will. Eventually the husband’s brother’s solicitors, Victor Bizannes, wrote to the wife’s solicitors and informed the wife of proceedings in the Supreme Court of New South Wales in respect of the estate.
Tendered in these proceedings by counsel for the case guardian was a bundle of documents, being documents filed in the Supreme Court of New South Wales. The husband as plaintiff commenced proceedings in the Probate Division of that court against his brother as first defendant, and Mr Y, solicitor, as second defendant. The husband and his brother were named as executors of their late mother’s will, and her estate was left to them in equal shares.
At paragraphs 13 and 14 of an affidavit sworn by the husband’s brother on 7 July 2010 in the Supreme Court proceedings he deposed as follows:
13Prior to these proceedings, on the 11th June last, I attended a meeting with [my solicitor] at the offices of [the plaintiff’s solicitor] to discuss finalising an amicable arrangement for me to acquire the plaintiff’s half interest in the unit. At that meeting, the solicitor produced an estate agents estimate which was in excess of the figure I had obtained from a registered valuer and I was told that the plaintiff’s price for his half share was $400,000 nett without any estate expenses or other adjustments.
14I did not consider the figure to be a realistic figure and I later instructed my solicitor to write a short letter making a proposal to pay him the sum of $330,000 nett clear without any regards to reimbursement to me of the expenses which I had previously claimed and which in addition took into account the legal fees on the cost of obtaining probate. (Exhibit “C”)
The husband’s brother also deposed to claims against the estate by him. The estate, which was valued by the husband at approximately $750,000.00, (affidavit of husband, sworn 20 June 2010) comprised a small parcel of shares, cash, and a home unit at R (“the R unit”). A valuation carried out by a licensed valuer on behalf of the husband’s brother valued the R unit at $625,000.00.
Included in the tender bundle was an affidavit sworn by the husband’s brother on 31 August 2010. At paragraph 2 of his affidavit he deposed, inter alia, that:
At approximately 4.30pm on 23 March 2010 a meeting was held in my office at […] between the Plaintiff, the First Defendant and myself. At that meeting I said to the Plaintiff, “I have prepared a draft Affidavit of Executor and the reason for having you both here today is to settle the affidavit in order that the application can be made to the Court seeking a Grant of Probate”. The Plaintiff said to me, “I’m not prepared to sign the affidavit at this point in time as I know that I have at least six months from the date of my mother’s death to make the application”. I said to the Plaintiff, “that’s all very well [Mr Langton] but your brother wishes to make the application as soon as possible, is there any reason why we can’t do so?” The Plaintiff said to me, “I have read the Probate Rules and I know that I have six months. In any event, it is not appropriate for me at this time to make the application as I have other things happening and I don’t wish to make the application at this time”. I said to the Plaintiff, “perhaps you could tell us why you don’t wish to make the application”. The Plaintiff replied, “I’m involved in some matters in the Family Court in relation to my ex-wife, some orders have been made but an appeal is pending and I really don’t want any interest in my mother’s estate disclosed whilst the Family Court proceedings are still going on”. I then said to the Plaintiff, “[your brother] wants to make the application as soon as possible, if you don’t wish to join in the Application for Probate, you can renounce probate if you wish and [your brother] will make the application on his own”. The Plaintiff replied, “No, I won’t do that, I want to join in the application but I don’t want to do it at the moment”… (original emphasis)
There was no admissible evidence before me from the case guardian, or anyone on his behalf, as to the result of the Supreme Court proceedings although in final submissions counsel for the case guardian asserted the Probate proceedings were finalised, and the NSW Guardian appointed administrator of the estate in lieu of the husband and his brother.
I sought submissions from the parties’ counsel about how the husband’s half interest in the estate of his late mother should be treated. Neither party sought to include the interest in the estate in the agreed list of assets and liabilities. Counsel for the wife asserted the inheritance should be treated as a relevant matter under s 75(2). The case guardian’s counsel did not seek to include the inheritance in the list of assets of the parties, and submitted that no adjustment should be made in the wife’s favour under s 75(2) in respect of the husband’s inheritance.
In these circumstances, I do not propose to include a sum for the inheritance in the list of assets, albeit I am satisfied it is property of the husband which has vested, but the precise value of the husband’s interest is not presently known. I accept that if I did include it in the list of assets it was not asserted that any contribution had been made by the wife to the inheritance.
(b) the value to be attributed to the husband’s brokerage business (L Business)
Mr B, chartered accountant, was appointed as the single expert to value the husband’s broking business. Mr B provided a report dated 27 February 2009 (“the principal report”) and an updating report filed in Court on 20 September 2010 (“the updating report”) was also before me. Mr B gave oral evidence and was cross examined by each party’s counsel.
Counsel for the wife submitted that I should find, based on Mr B’s evidence, that the business had a value of between $36,108.00 and $96,000.00. Counsel for the case guardian contended that the business had a negative value of $17,000.00 or, at the highest, a value of approximately $36,000.00.
Mr B commenced his principal report by noting that he had experienced “considerable difficulties obtaining relevant information to enable a timely completion of our report”. In his updating report Mr B explained that the limitations which had affected the preparation of his principal report “still apply”. In his oral evidence Mr B explained that some of the issues raised in correspondence were “more a frustration than of substance” although he said he had not seen any income tax returns of the husband, nor did he know whether tax returns for the business had been lodged. He further explained that L Pty Ltd (“the company”) was the company which undertook the broking business, but if the business was sold a purchaser would be interested in the client base, not the corporate structure.
In his principal report, Mr B set out a number of factors he had taken account, including assertions by Mr L, the husband’s accountant (whose evidence I will refer to shortly), that the husband had entered into agreement with SN Services Pty Ltd (“SN Services”) to act as its authorised representative and that the clients the business serviced belonged, not to the business, but SN Services. Mr B also noted that the husband had advised on 26 September 2008 that the agreement with SN Services was to cease on 8 December 2008.
I pause here to note that it was not in dispute before me that the husband, despite the evidence before the Court which lead to the appointment of a case guardian, had continued to operate the business, and there was simply no up to date evidence before me which would support a finding that the client base attached to NS Services, or that it had been lost to the husband.
At paragraph 6.1 to 6.5, Mr B recorded the deficiencies in the material provided to him, and that, at the time of his primary report, the latest financial statements available to him, although incomplete, were those for the year ended 30 June 2008.
Before me Mr L, the husband’s accountant, who freely conceded he was a close friend of the husband, gave evidence that he had prepared the taxation returns for the business in draft form, and then gave them to the husband. He was unable to say whether or not the returns had been filed. He also testified that he had not retained copies of the returns he prepared, and that he had not charged for the work. His evidence was that he did not prepare the books of the business, nor had he examined the general ledger, although he was aware of the profit and loss statements which included wages.
Mr L conceded he had written a letter dated 1 September 2009 in which he said he had reviewed the books and records of the company and based on the books and records the husband had, during the year 2007, taken the sum of $64,728.00 by way of wages and drawings. He then said in order to write the letter he had looked at the general ledger. He also agreed that the husband had drawings and wages of $67,122.00 in 2008 and $107,814.00 in 2009, and he recollected that the “wages” component of these amounts, for the three years, was $6,000.00 per annum.
Mr L’s evidence was that he did not prepare the financial statements for the business but rather prepared draft tax returns based on the financial statements which were provided to him by the husband.
Turning back then to Mr B’s primary report. At paragraph 7, Mr B referred to valuing the shares in the company on the basis of future maintainable earnings, and concluded that the company did not derive a maintainable profit upon which a value could be based.
In his updated report, Mr B explained that he had, in the primary report, attributed a value of $60,000.00 to the client base (based on 50 per cent of a maintainable fee base) but on the basis of updated figures, he had reduced that value to $54,000.00.
Mr B found the net adjusted assets to be $36,108.00. The significant differences from his earlier report were that the cash previously held by the company of $85,184.00 had reduced to $5,173.00, that there was an increased in unpaid liabilities of $31,630.00, and, as noted above, a reduction in the client base of $6,000.00.
I am satisfied that the value of $36,108.00 calculated by Mr B (comprised of residual net assets of $1,984 plus the husband’s adjusted loan account) should be ascribed to the company. I find, given the husband’s continued operation of the business, that it is inherently improbable that SN Services acquired ownership of the client base.
(c) the engagement (wedding) ring retained by the wife
The parties were in dispute as to the value of the wife’s ring described by her counsel as “the engagement ring”. In his Minute of Order the husband, at paragraph 7, sought the following order:
That the yellow gold ladies wedding ring with 1.06 carat diamond set, be sold at auction forthwith and the net proceeds be divided equally between the parties. (Exhibit “B”)
The wife sought to retain the ring and that it be included in the list of assets and liabilities together with her other jewellery at a value of $3,100.00.
It was not in dispute before me that before the Judicial Registrar the parties had agreed the ring should be sold and the proceeds divided between the parties.
In the agreed list of assets and liabilities the case guardian did not attribute a value to the ring, but counsel for the case guardian tendered a valuation prepared for the wife on 19 September 2008 (Exhibit “A”). The valuation at $24,000.00 was expressed to be “fair market value based on current prices”. A letter dated 23 January 2009 addressed to the husband from the wife’s solicitor formed part of the exhibit. The letter stated inter alia:
We enclose a copy of the jewellery valuation as requested but note that it constitutes an opinion as to the replacement cost of the jewellery rather than its current market value.
I am simply, on the evidence before me, unable to properly determine the value of the ring. I am satisfied that it would not be appropriate to attribute a value of $24,000.00 to the ring, nor could I, absent any admissible evidence, find its value to be something less than $3,100.00. Unfortunately, it appears to me the only satisfactory manner of resolving this issue is to provide for the ring to be sold. That will not of course preclude the wife, if she wishes to do so, from bidding at the auction for the ring.
(d) loans obtained by the husband
The case guardian sought to have two loans included in the list of liabilities of the parties. The first loan is an asserted loan of $100,000.00 from Mr G. The second loan is an asserted loan from Mr O in the sum of $30,000.00 (but asserted to be $20,000.00 in the case guardian’s list of liabilities).
The case guardian sought to rely on an affidavit of Mr G filed 11 June 2009 in the proceedings before the Judicial Registrar. Mr G was not available for cross-examination. It was asserted on behalf of the case guardian Mr G was in Israel. I indicated that I would permit him to give evidence by telephone but I was later informed that could not be arranged. In his affidavit Mr G deposed that he had, on 8 May 2008, agreed to loan the husband $100,000.00 on an interest free basis. He deposed to a conversation with the husband about repayment the thrust of which was that it would be satisfactory if the loan was repaid to him in a year.
The case guardian relied on two affidavits of the husband sworn respectively 19 March 2009 and 14 August 2009. He does not refer to the loan in either affidavit.
There was only one financial statement sworn by the husband before me. That document was sworn on 19 December 2008 and witnessed by Mr O. The husband disclosed a liability of $30,000.00 to Mr O in respect of a loan, but no other loans.
It is important that I record at this point that Mr L gave evidence that the case guardian provided him with financial information, but no material by way of updating was filed on the husband’s behalf by the case guardian. That failure has made my task considerably more difficult. The Full Court (Nicholson CJ Buckley and Kay JJ) in Kannis & Kannis reported in part in (2003) FLC 93-135 set out the obligations of a case guardian (then referred to in the rules as a “next friend”) at paragraphs 59 and 60 of their reasons. The Full Court dealt with the authorities relating to non disclosure and, at paragraph 51 (unreported), the Full Court said:
Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances it may be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour. This is the course the trial Judge adopted. It was a course clearly open to him and one that does not merit appellate interference
The Full Court found, at paragraph 54, the trial Judge was entitled to rely on the inactivity of the next friend, who was the husband’s son in determining there had not been a full and frank disclosure by the husband.
No submissions were made to me as to why there had not been compliance with the notice provisions s 68 of the Evidence Act 1995 (Cth) to rely on the affidavit because Mr G’s unavailability would cause undue expense and delay.
Counsel for the wife submitted that I should have regard to the following matters:
· the husband (or the case guardian) led no evidence about the debt;
· Mr G was not available for cross-examination on his affidavit; and
· the evidence at its highest was there was an interest free loan for one year advanced in May 2008 [semble March 2008].
Counsel for the wife submitted, in these circumstances, an inference could be drawn that in the absence of a call for repayment it had been forgiven, or was on some other terms. It was submitted having regard to the income received by the husband post separation it would be unjust to include the loan. Alternatively, counsel for the wife submitted that it was open to me to discount the loan significantly.
In respect of the loan allegedly owing to Mr O, counsel for the wife drew my attention to the fact there was simply no evidence, save and except the husband’s financial statement, to support this alleged debt.
Counsel for the case guardian sought to rely on the transcript of the evidence before the Judicial Registrar and in particular evidence given by Mr G at that time to support his position that the debt to him remained was $100,000.00 and he expected to be repaid.
The transcript of the previous proceedings was received by me pursuant to r 18.10 without objection by counsel for the wife.
The transcript of Mr G’s evidence includes the following:
Well, is it the case that you don’t have any particular time frame in mind for when you should be paid by [the husband]?‑‑‑Yes.
So if [the husband] paid you back, say, in seven years, that would be a matter that you would be content with?‑‑‑No. I think I would want it before then.
Sure.
THE J.REGISTRAR: It’s a pretty good answer, with respect.
[MR LANGTON]: That’s probably right.
THE J.REGISTRAR: It’s a pretty good answer.
[MR LANGTON]: I take it, if you’re going to be repaid you want to be paid back as soon as possible?‑‑‑As soon as convenient.
But you – as soon as convenient, and by the term convenient you don’t mean your convenience, because no doubt moving up to the Blue Mountains it would have been convenient for you to have the money last week?‑‑‑No.
It wouldn’t have been convenient?‑‑‑No.
Why wouldn’t it have been convenient for you to have the money last week?‑‑‑Because I have enough money.
All right. So you’ve got enough money at the moment, so there’s no particular pressing need, and you haven’t pressed [the husband] for repayment of the loan?‑‑‑Yes.
And you haven’t said to [the husband], “Could you make an instalment on the loan”?‑‑‑I haven’t. (Transcript, 25 August 2009, p 110)
I accept that Mr G’s evidence was given over a year ago, and no attempt was made to update the position. Mr L’s evidence, which I will refer to shortly, discloses a payment to Mr G on 15 October 2009 of $3,500.00. No effort was made to obtain any updating evidence from Mr G of other payments made to him. In short the evidence was most unsatisfactory.
I am satisfied that the evidence establishes that in March 2008 the husband borrowed the sum of $100,000.00 from Mr G on an interest free basis. The loan was undocumented, and no precise date for repayment was agreed. There is no evidence how or for what purpose the husband had applied the loan funds. As at August 2009 when Mr G gave evidence before the Judicial Registrar no repayments had been made, and the tenor of his evidence was that the husband would not be pressed to immediately repay the loan.
In these circumstances, I find it is unlikely the husband will be called upon to repay the loan in the immediate future, although there is nothing to support a conclusion that Mr G will discount the loan. Not without some hesitation, I propose to include the loan in the list of assets and liabilities at its full value less the $3,500.00 paid on 15 October 2009.
I am not satisfied to the requisite standard that the case guardian has established the loan to Mr O and I intend to disregard that asserted loan. In any event I note that the husband made a payment to Mr O of $5,000.00 on 15 October 2009 (schedule “C” to Mr L’s affidavit sworn 20 September 2010.)
(e) funds retained from the proceeds of sale of the personal services business
Counsel for the wife submitted that the sum of $275,000.00 should be “added back” (relying on the principles enunciated in Townsend & Townsend) to the parties’ assets and liabilities. This sum he asserted represented the proceeds of sale of the personal services business not otherwise accounted for which had been retained by the husband as a premature distribution to himself.
Prior to commencing my discussion of this topic I propose to deal with the sums received by the wife from the proceeds. It was not in dispute that the wife received $80,000.00 from the proceeds of sale on 14 February 2007 and that she received $12,000.00 on 9 June 2009. Each of these payments are included in the spreadsheet prepared by Mr L. The wife’s counsel asserted the spreadsheet was in error in that $80,000.00 was asserted to have been deducted twice by Mr L in his calculations. As will become apparent from my findings in respect of the loan it is unnecessary I deal with that assertion.
I note that the wife was, prior to the hearing, restrained from dealing with the balance of the proceeds of the sale then retained by her ($33,000.00), but that injunction was dissolved on 25 January 2010 and the wife required to account for the use of the funds. The wife testified she expended approximately $29,280.00 on legal fees. I accept that evidence which was not challenged.
I accept it would be a “double count” to “add back” the whole of the $80,000.00 taken by the wife and to also include her paid legal fees. I am satisfied from the wife’s affidavit that the balance of the funds retained by her were used for her reasonable living expenses. I propose (and which course I note was not disputed by either party’s counsel) to add back only legal fees paid.
The case guardian’s counsel sought to rely on an affidavit of Mr L filed in Court on the second day of the hearing immediately before Mr L gave evidence. No objection was taken to the filing of the affidavit, but objections to paragraphs 5 and part of paragraph 7 raised by counsel for the wife were upheld.
Mr L’s evidence was that he had constructed an excel spreadsheet from information obtained from the husband the previous week. Mr L accepted as correct that the parties had sold the business for $600,000.00 and that the husband had received proceedings of sale of $447,250.00. The sum received by the husband was after the wife had withdrawn $80,000.00.
Mr L’s spreadsheet (Annexure “A”) showed the following sums paid by the husband:
Less: paid to liquidator to settle company tax liability $69,864.00
Less: paid to settle tax liability $50,000.00
Less: amount released for land tax in 12 July 2007 $19,400.00
Less: amount released to pay strata levies arrears 9 June 2009 $11,374.00
Less: Payment to Sydney Council $1,015.80
Less: Payment to OSR for land tax $8,322.40Less: Payment to [the wife] $12,000.00
Mr L’s evidence was that the figures in Annexure “B” had been constructed for the proceedings before the Judicial Registrar from his examination of a bank account. Annexure “C” was a schedule compiled from a bank account operated by the husband styled the “Bendigo Cash Management Account”. This account was opened on 1 November 2007. He also testified he was aware the husband operated another Bendigo Bank account but that he had not had regard to that account because “I wasn’t asked to” by the husband. Included in the sums paid was $61,650.00 for legal costs. Mr L was unable to say how the legal costs had been incurred.
Also included in schedule “C” were cash sums totalling $36,456.10 which Mr L said were retained by the husband and represented by cash withdrawals identified to him by the husband. He was unable to verify how a cash withdrawal of $5,000.00 on 9 September 2009 was applied nor was he able to verify how $50,000.00 apportioned in the spreadsheet as to $40,000.00 for legal costs and $10,000.00 payable to the husband was established except by asserting this was what he had been told by the husband.
In re-examination Mr L clarified that a cheque payable or sent to him for $50,000.00 shown as “paid to settle tax liability” in schedule “A” was not in fact a tax liability but was payment of the liquidator’s fees from which he had deducted $10,000.00 for his own fees for work which he had done to assist the husband. I note that the evidence in the spreadsheet is not identical to that set out in Annexure “C’ to the husband’s affidavit sworn 19 March 2009, being a letter from Mr L to the husband’s solicitors dated 25 May 2007.
The evidence about how the proceeds of sale of the business were applied was, to say the least, far from satisfactory. The evidence clearly established the husband was able to give instructions to Mr L about this matter. This indicates to me he should have given instructions to the case guardian, or the case guardian should have endeavoured as far as possible to provide relevant and up to date information to the Court. This he failed to do.
I am also satisfied that it would be unsafe to uncritically accept Mr L’s evidence because he had not inspected source documents, other than the bank statements for one account, but not all accounts operated by the husband. Further, in respect of the statements from which he reconstructed the spreadsheet he accepted, without reference to any corroboration, the husband’s explanation of cash withdrawals (see Makita v Sproules (2001) 52 NSWLR 705).
Reconstructing as best I can from the evidence and of necessity taking a somewhat broad brush because of the failure of the case guardian to put evidence before the Court I find:
(a)the personal services establishment sold for a combined total of $599,900.00 (settlement statement, 7 February 2007);
(b)F Pty Ltd received from the proceeds on settlement $505,755.84 (this did not include the total deposit of $59,990.00);
(c)the husband received at least $447,250.00 from which the wife received $12,000.00;
(d)the wife received $92,000.00 (including the $12,000.00) which she expended on legal fees and living expenses;
(e)initial expenditure by the husband from $447,250.00 was approximately $160,000.00 (spreadsheet marked Annexure “A” to the affidavit of Mr L, filed 21 September 2010). This was legitimate expenditure and should not be “added back”; and
(f)additional expenditure for which there is some explanation is (rounded) rates and levies $22,413.00, loan repayments $8,500.00, bank charges $64.00, fines $1,740.00 and legal fees $61,650.00, a total of $94,367.00.
It is likely that the husband used some of the funds retained by him to pay for day to day living expenses, but there is no evidence before me to enable any precise finding to be made. There is no evidence as to whether the $42,359.94 paid by the husband to the broking business was credited to his loan account or otherwise used for the business. I am satisfied, given Mr L’s testimony, that evidence could have been adduced.
I was provided with evidence that the loan repayments in respect of the home unit were up to date, but no statements disclosing amounts paid by the husband were before me. The only evidence of the quantum of mortgage payments actually made is found in Annexure “B” to Mr L’s affidavit. The two payments were made in April and May 2007 and total $3,500.00. Doing the best I can I accept it is likely the husband made loan repayments from June 2007 to August 2010. I propose to allow $57,500 for such payments.
I accept that it is reasonable to find that the following expenditure from the proceeds of sale should not be “written back”:
Net proceeds in dispute $447,250
Less: Agreed expenses ($160,000)
Expenses – spreadsheet ($94,367)
Allowance for mortgage ($57,500) $311,867
Balance $135,383
As it was agreed paid legal fees should be “added back” to the list of assets and liabilities I have, for the purpose of calculating the sum to be added back against the husband, taken into account that the amount to be added back should be reduced by $61,650.00 to avoid a “double count” or “double add back” of this expenditure ($135,383.00 - $61,650.00 = $73,733.00).
Consistently with not “adding back” that portion of the sale proceeds received by the wife not expended in legal fees but used for living expenses, I find that the sum which should be “added back” in respect of the husband is a sum of $40,000.00.
(f) the husband’s credit card loan account in the broking business
Item 17 in the agreed list of assets and liabilities was the husband’s credit loan account in the business. This may be disposed of shortly. The loan account is taken up in the value of the business. Counsel for the wife conceded to include this item would represent “double counting”.
(g) the car
The husband is the owner, subject to a lease arrangement, of a Mercedes Benz car. There was no dispute that the residual amount owing to the leasing company is $40,245.00. But the parties, as with the ring, were unable to agree the value of the car each relying on differing Red Book valuations. There was simply no evidence before me as to the state of repair of the car or its mileage. The figure sought to be relied on by the case guardian was the lowest range of the trade-in prices. Doing the best I can on the evidence before me I propose to adopt a figure of $30,000.00 for the car.
(h) credit card liabilities
Neither the wife nor the case guardian adduced any evidence of how the credit card debts were incurred. There was nothing to suggest the debts were incurred before separation. I propose to ignore, for the purposes of constructing the table of assets and liabilities, each of the husband and wife’s credit and store card liabilities.
legal fees
I have already indicated that both parties agree that paid legal fees should be added back to the pool of assets and liabilities. No evidence was adduced by the case guardian of legal fees asserted to have been paid by the husband in respect of the estate of his late mother. I have not included the husband’s interest in the estate as an asset. In those circumstances, I do not find it appropriate to include the asserted legal fees referable to the estate as a liability. They will be taken into account by me when assessing the inheritance under s 75(2).
Conclusions on the parties’ assets and liabilities
There were no submissions made to me about the parties’ respective bank accounts, or that their superannuation entitlements should be treated other than as property at the values in the agreed list of assets and liabilities. In these circumstances I propose to treat their superannuation interests as property (see Coghlan & Coghlan (2005) FLC 93-220). I propose to adopt the wife’s values as to the parties’ bank balances as the case guardian failed to adduce any up to date financial evidence. In any event, the discrepancy between the parties on this issue is de minimus. Having regard to my findings set out above, I find that the parties’ assets and liabilities for the purpose of the s 79 proceedings are:
ASSETS Home unit situated at S (family trust) H 620,000 Brokerage business, L Business H 36,108 Household contents H 20,000 Household contents W 2,400 Moneys held in restricted Bendigo account H 20,175 Moneys held in Bendigo account …24 H 1,666 Moneys held in Bendigo account …20 H 0 Moneys held in NAB account …13 H 81 Moneys held in ANZ account …16 W 2,593 Moneys held in ANZ account …69 W 19 ING Superannuation …07 H 3,129 ING Superannuation H 4,439 ING Superannuation W 17,774 Smart Car FourTwo W 8,750 Mercedes H 30,000 Add-back of monies utilised by husband from sale of F Business H 40,000 Add-back of paid legals H 105,524 Add-back of paid legals W 53,803 Total Assets 966,461 LIABILITIES Karpaty Credit Union H 276,530 Car Loan H 40,245 G Abbott Loan W 14,000 Mr G Loan H 96,500 Total Liabilities 427,275 TOTAL ASSETS AND LIABILITIES 539,186
Global or asset by asset approach
The parties have agreed that the assessment of contribution up to the date of separation should be regarded as equal. The submissions were made to me of the basis that contribution should be assessed globally and I propose to adopt that approach (see Norbis v Norbis (1986) 161 CLR 513).
Assessment of contribution post separation
The wife’s evidence was that up until 2007 she contributed to mortgage repayments, and thereafter she paid for clothing, medical and dental expenses for the child, and expended money on him for meals. Counsel for the wife pointed out that the wife had incurred the cost of rent while the husband had the benefit of occupation of the matrimonial home. He also asserted the husband had the benefit of access to the income of the broking business. Again, absent any evidence to the contrary, I infer the most likely source of the mortgage repayments was from the proceeds of sale of F Business.
Assessing and weighing the parties’ post separation contributions I take into account for a period after separation they lived under the one roof. I find that the husband made a greater contribution to the care and welfare of the parties’ child, although some contribution was made by the wife to his expenses and welfare. I take into account the husband had the benefit of occupation of the home unit and the use of the bulk of the proceeds of the sale of F Business whilst the wife was required to pay board as part of her financial arrangements with Mr N.
Overall the difference or imbalance between the parties’ respective contributions from separation to date of hearing was not significant. I would assess contributions overall as equal up to the date of the hearing.
Section 75(2) factors
The husband is currently aged 58 years. There was simply no expert or current evidence before me about his health. The evidence of Mr B and Mr L was that he was continuing to operate the broking business.
The wife is currently aged 49 years. There was nothing to suggest that she was otherwise than in good health.
I accept that the wife has a greater potential earning period than the husband, and some weight should be given to this factor.
As a result of my contribution findings the husband will retain or have had the benefit of assets to the value of $269,593.00 and the wife will retain or have had the benefit of assets of an identical value. The husband will also receive, relative to the total net assets of the parties, a significant sum by way of inheritance. Whilst appreciating that s 75(2)(b) is not a vehicle for “social engineering”, I am satisfied some adjustment should be made in the wife’s favour having regard to the overall imbalance of the parties’ financial positions at the conclusion of their long period of cohabitation and marriage.
The parties’ only child J is now over the age of 18 years. There was no evidence before me about his present occupation or financial needs.
The evidence before me did not indicate that either party was eligible for an income tested benefit or pension. While the wife’s superannuation entitlement exceeds that of the husband, she will not be able to access that entitlement for some years. Accordingly I find no adjustment is necessary for this factor.
At the hearing of these proceedings the wife did not oppose the husband retaining the home unit. I accept that, by reason of the inheritance from his mother’s estate, the husband will have the capacity to maintain the unit after payment to the wife, but his circumstances will, as will those of the wife, be modest.
So far as I can ascertain there is no creditor whose interests I am required to have regard.
The marriage and cohabitation extended over 22 years. I am not satisfied it has affected the earning capacity of either party. The husband continues, as he has for some time, to operate the brokerage business, and the wife has gainful employment.
I accept the wife is now in a de facto relationship and she derives a very limited financial benefit from the sharing of expenses with her partner. I do not find this requires a significant adjustment in the husband’s favour.
Before me counsel for the wife strongly submitted that I should find the case guardian had failed to make a full frank and proper disclosure of the husband’s financial affairs and be robust in those circumstances in my approach to the assets and liabilities. In the alternative, he submitted that I should under s 75(2)(o) make an adjustment in the wife’s favour for the failure to disclose and the additional costs she had incurred because of that failure. I indicated the appropriate way to deal with the matter of additional legal costs may be under s 117 rather than an adjustment under s 75(2)(o). However, as indicated earlier in my reasons, it was regrettable that no attempt was made to provide any relevant updated information to the Court, notwithstanding a year had elapsed since the Judicial Registrar’s orders, and procedural orders had been made to enable the matter to be properly re-heard. I find the dicta of the Full Court in Kannis about the duty of the case guardian apposite in this matter. There was simply no attempt made to place any relevant up to date material before the Court until I permitted an indulgence to the case guardian to rely on a proof of evidence by Mr L and for him to be called on the second day of the hearing. I am, however, satisfied that the appropriate manner to address losses suffered by the wife by way of additional legal costs is under s 117 of the Act.
Overall, I am satisfied the matter to which I must give the most weight under s 75(2) and which favours the wife is s 75(2)(b). I take into account in the husband’s favour my findings in respect of s 75(2)(a). Balancing these matters I find there should be an adjustment in the wife’s favour of 5 per cent or $26,960.00.
Are the orders just and equitable orders?
The effect of my contribution findings and findings under s 75(2) are that the wife will retain or have had the benefit of 55 per cent of the net assets, or assets to the value of $296,552.00, and the husband will retain 45 per cent of the net assets or $242,634.00. Additionally the husband will be entitled to the whole of his share of his mother’s inheritance which on the evidence before me I estimate to have a value of not less than $300,000.00.
Thus the wife will retain the following assets and liabilities:
WIFE WILL RETAIN Household contents 2,400 Moneys held in ANZ account …16 2,593 Moneys held in ANZ account …69 19 ING Superannuation 17,774 Smart Car FourTwo 8,750 Add-back of paid legals 53,803 Total Assets 85,339 LIABILITIES G Abbott Loan 14,000 Total Liabilities 14,000 TOTAL ASSETS AND LIABILITIES 71,339 Adjustment by Husband 225,213 Wife's entitlement 296,552
The husband will retain the following assets and liabilities:
HUSBAND WILL RETAIN Home unit situated at S (family trust) 620,000 Brokerage business, L Business 36,108 Household contents 20,000 Moneys held in restricted Bendigo account 20,175 Moneys held in Bendigo account …24 1,666 Moneys held in Bendigo account …20 0 Moneys held in NAB account …13 81 ING Superannuation …07 3,129 ING Superannuation 4,439 Mercedes 30,000 Add-back of monies utilised by husband from sale of F Business 40,000 Add-back of paid legals 105,524 Total Assets 881,122 LIABILITIES Karpaty Credit Union 276,530 Car Loan 40,245 Mr G Loan 96,500 Total Liabilities 413,275 TOTAL ASSETS AND LIABILITIES 467,847 Adjustment by Husband 225,213 Husband's entitlement 242,634
Husband's Entitlement 45% 242,634 Wife's Entitlement 55 % 296,552
I am satisfied that the division of the parties’ assets in this manner and proportion results in an order which in all the circumstances is just and equitable.
Conclusions
The only issue remaining for determination is the form of the orders. Both parties were in substantial agreement about the form of the orders. In the event that the sum due to the wife is not paid in the time provided in the orders, interest will run at the rate imposed under the rules. I propose to make an order that, in the event the sum is not paid within three months of the date of these orders, the case guardian must take steps to reinstate the company, and cause the home unit to be sold. In that event, capital gains tax will be paid from the proceeds of sale.
I certify that the preceding one hundred and thirteen (113) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Boland delivered on 10 December 2010.
Associate:
Date: 10 December 2010
“A”
Wife’s Affidavits
Affidavit of ND filed 23 April 2009 (sworn 27 March 2009)
Financial Statement of wife filed 14 September 2010 (dated 13 September 2010)
Affidavit of wife filed 14 September 2010 (affirmed 13 September 2010)
Affidavit of wife filed in Court 20 September 2010 (affirmed 20 September 2010)
Affidavit of EY filed in Court 20 September 2010 (sworn 19 September 2010)
Husband’s Affidavits
Affidavit of Mr L filed 19 December 2008 (sworn 17 December 2008)
Financial Statement of husband filed 19 December 2008 (dated 19 December 2008)
Affidavit of Husband filed 19 March 2009 (sworn 19 March 2009)
Affidavit of Mr G filed 11 June 2009 (sworn 10 June 2009)
Affidavit of Mr L filed 7 August 2009 (sworn 6 August 2009)
Affidavit of Husband filed 19 August 2010 (sworn 14 August 2009)
Affidavit of Mr L filed in Court 21 September 2010 (sworn 20 September 2010)
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Costs
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Injunction
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Res Judicata
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Procedural Fairness
0
2
4