Abbott and Langton
[2009] FamCA 834
•28 August 2009
FAMILY COURT OF AUSTRALIA
| ABBOTT & LANGTON | [2009] FamCA 834 |
| FAMILY LAW – PROPERTY – Settlement in relation to marriage – Case guardian |
| Family Law Act 1975 (Cth) ss 75(2), 79 |
| Lee Steere and Lee Steere (1985) FLC 91-626 Ferraro and Ferraro (1993) FLC 92-335 Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355 Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414 Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693 |
| APPLICANT: | Ms Abbott |
| RESPONDENT: | Mr Langton |
| FILE NUMBER: | SYC | 2523 | of | 2007 |
| DATE DELIVERED: | 28 August 2009 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Johnston JR |
| HEARING DATE: | 24 & 25 August 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Livingstone |
| SOLICITOR FOR THE APPLICANT: | Beswick Solicitors |
| COUNSEL FOR THE RESPONDENT: | Mr Stewart |
| SOLICITOR FOR THE RESPONDENT: | Kenneth Harrison Solicitor & Attorney |
Orders
That orders 1 and 2 of the orders made in these proceedings on 13 June 2007 are discharged.
That within 28 days the husband pay to the wife the sum of $187 024.
That upon compliance by the husband with the terms of order 2 above, the wife forthwith do all acts and things and sign all documents necessary to transfer to the husband the whole of her interest in the property situate at and known as Unit 37, S property in the State of New South Wales.
That upon compliance by the wife with the terms of order 3 herein, the husband cause a discharge of the wife’s legal or equitable liability for the mortgage that currently is secured over the title to the S property.
That as against the wife, the husband is solely entitled to the income, assets and value of L Pty Limited and the business operated and managed by the husband under that name.
That within 28 days the wife do all acts and things and sign all documents necessary to transfer to the husband or at his direction, the whole of her right title and interest in any shares or other assets in L Pty Limited.
That the husband indemnify the wife and keep her indemnified in respect of all liabilities of L Pty Limited, whenever they were incurred.
That as against the wife, the husband is solely entitled to all motor vehicles, bank accounts (including but not limited to the funds in Bendigo Bank BSB … Account …), superannuation and personalty currently in his possession, power or control.
That as against the husband, the wife is solely entitled to all motor vehicles, including Smart Car registered number …, bank accounts (including but not limited to the funds in ANZ Bank BSB … Account …), superannuation and personalty currently in her possession, power or control.
That in the event that the husband fails, refuses or neglects to pay the wife the sum of $187 024 within the time specified in order 2 hereof, then forthwith upon the expiration of the said time each of the parties do all things and sign all documents necessary to cause the sale of the property situate at and known as S property in the State of New South Wales at the best price reasonably obtainable.
That upon completion of the sale of the S property, the husband do all things and sign all documents necessary to cause the proceeds of such sale to be paid in the following manner:
(a) Estate agent’s commissions and fees of the sale;
(b) Municipal and water rates owing (if any);
(c) Legal costs of sale;
(d)Sum necessary to discharge the mortgage currently secured over the title to the S property;
(e) 58.803 percent of the balance to the wife and
(f) The balance to the husband.
That the wife forthwith do all things and sign all documents necessary to cause the diamond ring in her possession to be listed for sale by B Auctioneers 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 equally between the parties.
That the above orders not commence operation until 11 September 2009.
That both parties have leave to re-list these proceedings for further submissions in relation to the form of the orders only at any time until 10 September 2009.
That both parties have leave to re-list these proceedings on 7 days notice in relation to the implementation of these orders.
That all exhibits be released.
That the husband’s application that the wife pay his costs of the three interlocutory applications resulting in orders on 13 June 2007, 10 December 2007 and 9 June 2009 is dismissed.
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
| MR LANGTON |
Respondent
REASONS FOR JUDGMENT
Introduction and Applications
The parties in these proceedings are Ms Abbott and Mr Langton. For convenience I shall refer to them as “the wife” and “the husband” respectively. The parties have approached the Court to determine their property dispute having been unable to resolve various issues.
The wife seeks orders to the following effect:
·That the husband transfer to her his interest in the former matrimonial home at S, New South Wales;
·That the husband transfer to her his interest in the Smart Car motor vehicle registration number …;
·That the husband pay to her the sum of $50 000; and
·That otherwise each party be declared the sole owner of property in their respective possession and / or control and indemnify the other against any liability encumbering any item of property.
The wife also seeks an order to the effect that the parties arrange for the diamond ring in her possession to be listed for sale by public auction and that the net proceeds after deduction of commission and sale costs be divided equally between the parties. The husband would consent to such an order.
On the other hand, the husband seeks orders to the following effect:
·That orders 1 and 2 of the orders made on 13 June 2007 (freezing identified monies in accounts) be discharged;
·That within five weeks the husband pay to the wife the sum of $83 000;
·That upon compliance with the above order the wife transfer to the husband her interest in the former matrimonial home at S, New South Wales and the husband discharge the mortgage registered thereon;
·That it be declared that as against the wife, the husband be solely entitled to the income, assets and value of L Pty Limited and the business operated and managed by the husband under that name;
·That within five weeks the wife transfer to the husband her interest in any shares or other assets in the above company;
·That the husband indemnify the wife and keep her indemnified in respect of all liabilities of the said company;
·That otherwise each party be declared the sole owner of all other property in their possession and / or control respectively including superannuation; and
·Certain orders in the event that the husband failed to pay the wife in accordance with the second order sought above.
Background
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.
The husband has two children by his previous relationship, an older son who was born in 1977 and a younger son born in 1978.
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.
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.
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.
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.
In approximately 1988 the husband purchased the property at 42 C Street, Sydney which enabled him to extend his office.
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.
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.
In approximately 1990 the husband purchased Mr M’s interest in F business.
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.
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.
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.
The parties moved both the business and their residence to separately rented premises.
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.
In March 1994 the wife took over the management of the personal services business.
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.
In March 1995 the parties were both made bankrupt.
In 1998 the wife’s bankruptcy was annulled.
Between July 2000 and 31 December 2001 the husband was prohibited from registering as a broker.
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.
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.
In late 2004 the company leased a Smart Car for the wife’s use.
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.
In December 2005 the wife informed the husband that she no longer wanted to be married to him.
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.
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.
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.
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.
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.
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.
On 19 August 2009 I made an order appointing the husband’s older son M Langton as case guardian for the husband.
I also excused the husband from being cross-examined in these proceedings because of his fragile state of mental health at the present time.
The Applicable Law
Sub-section 79(1) of the Act provides that in property settlement proceedings, the Court may make such order as it considers appropriate.
Sub-section 79(2) provides that the Court shall not make an order under the above sub-section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
There is a long-standing preferred approach to the determination of an application brought pursuant to the provisions of s 79. This involves four inter-related steps. Firstly, the Court should make findings about the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g), including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.
This approach has been confirmed in numerous cases in this Court including for example Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355; Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414 and Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693.
Property available for division
An ultimate finding about the property available for division depends, amongst other things, on a determination of a number of issues between the parties. I shall deal with these now.
Value of the husband’s business
The first of these issues involves determination of the value which the Court would place on the husband’s interest in his business of broker conducted through the company L Pty Limited. Mr B, chartered accountant, was appointed as single expert for the purpose of undertaking such a valuation. Mr B prepared a report dated 27 February 2009.
Mr B indicated that there were a number of generally accepted methods of valuation which comprise net asset values, discounted cash flow, capitalisation of future maintainable earnings, capitalisation of excess earnings and capitalisation of future dividends. He said that the net asset based approach is generally adopted in situations where the entity is not a trading entity, where value rests in the marketable value of individual assets within a business or if a business is unprofitable or unlikely to continue, however realisation is not imminent. Mr B also said that the capitalisation of future maintainable earnings is generally only appropriate when a trading business is being undertaken and profits are being derived on a regular basis.
Mr B expressed the opinion that in his view the net assets value was the appropriate basis for valuation in this case. He said that whilst he had considered the future maintainable earnings of the company he had the opinion that the level of maintainable earnings did not give rise to profits beyond remuneration attributable to the husband. In other words, the earnings generated were not greater than the amount of salary that one would have to pay to a person appropriately equipped to run the business as the husband is. Using the net assets as the basis of valuation Mr B arrived at a valuation of the company as being $153 749 based on the balance sheet of the company as at 30 June 2008.
At Annexure 2 to his report Mr B arrived at this valuation as follows. He noted that the company had cash at the bank of $85 184, he valued the plant and equipment at $15 000 and good will in the form of a client base at $60 000. This gave a total of $160 184 described as business assets. From this figure was deducted the external business liabilities in the amount of $6435 to arrive at net business assets worth $153 749.
Mr B was cross-examined at the hearing. He was handed a balance sheet for the company as at June 2009. This balance sheet described current assets as consisting of a business bank account in the amount of $3491.73 and fixed assets of $632.62. If one was to add to these assets the $60 000 client base value for goodwill, this would provide total assets of $64 124. The balance sheet described total liabilities as being $32 453. Subtracting liabilities from total assets, the net assets would be $31 671.
Learned counsel for the wife urged the Court to arrive at a finding that the business has a value of $153 749. This was said to be on the basis that this was the valuation provided by the single expert based on the material that was before him at that time. Learned counsel for the wife also said that the husband had been generally uncooperative in the proceedings and certainly uncooperative in providing information to the single expert. It was also submitted that the Court would have some concerns about the balance sheet which purports to be the balance sheet as at June 2009 because it was said that the authorship of this balance sheet is unclear.
On the other hand it was submitted on behalf of the husband that the Court should adopt the value arrived at by Mr T, chartered accountant, who was engaged by the husband as an adversarial expert. Mr T placed a value of $0 on the entity.
Mr T said that there are three key business valuation methods that are generally accepted. These are the asset valuation method which calculates the value of tangible and intangible assets available to be transferred on the sale of the business. The second is the discounted cash flow analysis which determines the present value of future opportunities for cash flow. The third is capitalisation of profit methodology which multiplies a business’s adjusted net profit before tax by a capitalisation factor which is specific to each business at a specific point in time. In essence Mr T said the business in its current form is a loss-making business and that accordingly, from an investment point of view, it has no commercial value. He said that it has a diminishing client base, is loss-making, has no secure premises from which to operate, is totally reliant on the husband and has a negative balance sheet. Mr T said that accordingly, he made no attempt to determine the business’s specific capitalisation rate. Mr T said that whilst a third party might be willing to pay a notional amount for the (diminishing) client base, such proceeds would be likely to be less than the debts reported on the 30 June 2008 balance sheet.
I must say I am not persuaded that this business has a nil value. Obviously it is worth something to the husband. He has invested a lot in the business over many years and is highly experienced in operating the business. True it is that he has his health problems at the present time but the opinion of Dr R, his psychiatrist, is that within a fairly short space of time after the stresses of these proceedings are behind him the husband should be able to be productive again.
Having said this, I am also not persuaded that the business has a value of anything like the $153 749 urged on the Court by learned counsel for the wife. This valuation depended on, amongst other things, the amount of $85 184 in the bank. On all present indications there is nothing like such an amount available to the company at the present time.
Looking broadly at this business, the business has been successful over many years until fairly recently, which period coincides with the disintegration of the husband’s health following the breakdown of the marriage. Doing the best I can in all these circumstances I accept the basic methodology provided by Mr B and adopt the figures in the balance sheet as of June 2009 despite the misgivings of learned counsel for the wife. This leads me to the conclusion that the business on the basis of net assets has a value of $31 671.
The wife’s jewellery
The wife has a number of items of jewellery. In particular she has a diamond ring in respect of which a valuation was tendered by a Sydney jeweller which expressed the opinion that fair market value as at September 2008 for the diamond ring was said to be $24 000. The wife took great exception to this and said that on the basis of her enquiries she understands the ring would not have a value of anything like that amount.
To their credit the parties were able to resolve this part of their dispute on the basis that the Court would attribute a value to the wife’s jewellery, leaving aside the diamond ring, of $1580. It was agreed that an order would be made by consent to the effect that the parties would arrange for the sale of the diamond ring and pay the net proceeds of sale to them in equal shares.
Disposition of the net proceeds of sale of the personal services business
This was a major issue in these proceedings. The wife is concerned about the manner in which the net proceeds of sale of the business were paid. There was considerable time spent in cross-examination and by way of tendering documents during the hearing about this matter.
Mr L, chartered accountant, had assisted the parties as accountant in settling the sale of the two businesses and paying liabilities. This was against a background where the two companies which formed the business, namely F Pty Limited and F Australia Pty Limited had been put into administration.
It is common ground that the amount of $477 187 from the proceeds of sale had been deposited to the parties’ joint ANZ Bank account on 7 February 2007. On 8 February 2007 the husband withdrew $430 000 from this account. Of these monies $170 000 was transferred to the investment account of the husband at the Bendigo Bank. These were the monies which were the subject of the orders for injunctions referred to above. The amount in that account is currently $123 651. There was a transfer of $10 000 to the company F Australia Pty Limited on 22 February 2007, the purpose of which is unclear to me. There was cash paid to the wife worth $3800 and a payment to the Australian Tax Office in the amount of $69 864. The administrator of the two companies was paid $50 000, loan repayments were made to the husband in the amount of $17 000, there was $39 094 remaining in the account and the balance of the $430 000, which was $70 242, was the total of a whole variety of payments made. These payments were set out in an Excel spreadsheet which had been prepared by Mr L.
There were numerous concerns raised on behalf of the wife about this matter. Firstly, there was a general concern submitted that the Court would be cautious about accepting the evidence of Mr L on the basis that he has been a personal friend of the husband over many years. On this basis it was said that he was hardly an appropriate expert and partisan to the husband being a close friend. In fact learned counsel for the wife described Mr L as not being an expert but rather as being an “amanuensis” for the husband.
In particular concern was expressed on behalf of the wife about an amount of $9950 which was recorded in the spreadsheet as having been a loan repayment to the husband. It was said that in fact these monies were not paid to the husband but were in fact paid to a company owned by his son. This appears to be correct. In fact what is recorded is an amount in excess of $58 000 over a period of some months paid into the brokerage business to support the business. This money went largely to the husband’s living costs including meeting mortgage and car repayments, living expenses and there was approximately $4000 paid on behalf of the husband in relation to his legal costs in these proceedings.
One can understand the wife’s concern about these matters because in broad terms it would appear that of the capital produced on the sale of the personal services businesses the husband or his company have had the benefit of an amount in the vicinity of $100 000. This compares with an amount of approximately $59 000 which the wife enjoyed by reason of approximately $47 000 of the $80 000 which she withdrew from the bank account and she also had the payment of $12 000 in June 2009. But of course some of the funds which the husband had the use of went to supporting the business and some went to preserving the property in the form of the former matrimonial home.
I must say I reject the criticism on behalf of the wife directed at Mr L. Notwithstanding the fact that he is clearly a close friend of the husband, in my view he gave his evidence in an appropriately professional manner. True it is that he did not on all occasions demonstrate detailed knowledge of movement of funds but a couple of years have gone by since these matters were originally attended to. In any event, without the evidence provided by Mr L including the balance sheet, it would have been very difficult indeed to attempt to reconstruct what had happened to the funds produced from the sale of the personal services businesses.
How should the Court deal with this matter? There was a very strong submission on behalf of the wife that on the basis of the evidence provided by Mr L, out of the $430 000, when one takes account of external liabilities there is an amount of $200 154 which appears to have been paid to the husband and used for his purposes. I do not accept this submission but I do accept that the husband through his business account has had the benefit of an amount in excess of $100 000. As indicated above, this is substantially more than the amounts which the wife has enjoyed from the sale of the personal services businesses. In my view, it would be unfair for there not to be some adjustment made in relation to this. I note again that the husband has had the best part of $4000 from these funds which he has been able to pay towards his legal costs. In all the circumstances I propose to add back $10 000 in respect of this matter.
Husband’s alleged personal debts
The husband said that in May 2008 he borrowed $100 000 from a friend Mr G. The husband said that that money was deposited into a cheque account conducted by his business L Pty Ltd with the Bendigo Bank. This money appears to have been almost entirely spent. There was an affidavit filed by Mr G, albeit very late in the proceedings. Mr G was cross-examined about this loan and he presented as an excellent witness. I have no hesitation in finding that the debt from the husband to Mr G exists. It is also clear that Mr G requires repayment by the husband although he indicated that he would be prepared to wait for repayment, but not for years. In these circumstances although the husband has not been cross-examined in these proceedings I accept that he owes Mr G $100 000.
The husband said that in approximately May 2007 he borrowed $50 000 from Mr O. He says that he has repaid $20 000 to Mr O. I must say I have some difficulty about this alleged liability. There was no affidavit filed by Mr O although it was suggested that he could be available on the telephone to provide evidence. This is not a course that I found acceptable and, of course, the husband was unavailable for cross-examination in relation to this or any other matter. In these circumstances I indicated that I would not be making a finding that this money was owed by the husband to Mr O. The husband also deposed in his affidavit filed on the first day of the trial that he owes Citibank Mastercard $9000 and David Jones $3000 in respect of a credit card. There was no other evidence placed before me to confirm these liabilities and in these circumstances I do not propose to deduct these from the pool of available property.
Wife’s alleged debts
The wife has a liability on her ANZ Visa credit card account of $2662. The wife also has various liabilities in respect of legal costs including a liability to her relative G Abbott for $16 300. But this was money borrowed to pay legal fees.
I do not propose to take account of legal fees other than to the extent indicated above in relation to the husband. Each of the parties have outstanding legal costs which are substantial.
Consideration of these personal liabilities
It was submitted on behalf of the husband that the Court should simply deduct the husband’s personal liabilities from the pool of available property. On the other hand it was submitted on behalf of the wife that it would be most unfair on the wife to do this. I must say I agree with the submission by learned counsel for the wife about this. These are post separation liabilities. To give the husband credit for these in the manner involved in the submission by learned counsel on the husband’s behalf would in my view be quite unfair. I propose instead to adopt the other course suggested by learned counsel for the husband and that is to take account of these liabilities pursuant to s 75(2) of the Act.
The balance sheet
On this basis the property available for division between the parties is as follows:-
Assets
$
1. Former matrimonial home at S
610,000
2. Husband’s business
31,671
3. Husband’s NAB bank account
81
4. Husband’s Investment account Bendigo Bank
123,651
5. Husband’s Mercedes motor vehicle
35,000
6. Husband’s jewellery
2,800
7. Husband’s ING superannuation fund (1)
3,144
8. Husband’s ING superannuation fund (2)
4,430
9. Husbands’ disposition of proceeds of sale of personal services business add back
10,00010. Wife’s money in frozen account
33,167
11. Wife’s Smart Car
10,250
12. Wife’s jewellery
1,580
13. Wife’s ING superannuation
14,773
14. Wife’s ANZ account
139
_____________
$880,686
Liabilities
$
1. Credit Union (mortgage)
291,947
2. Lease on Mercedes motor vehicle
40,000
_____________
$331,947
Surplus
$548,739
Contributions
There is no question that each of the parties worked very hard and over a long period of cohabitation and marriage. They have raised their only child to adulthood. It is unnecessary to record details of all the contributions made by the parties. This is because the parties agree that, certainly from the period of commencing their cohabitation until they separated, their contributions are to be assessed as having been equal.
But there is a strong submission on behalf of the husband to the effect that the Court should assess his contributions post separation as having been higher than those of the wife. This is on the basis that for much of the period since separation he has had the major responsibility for the care of the child and for making financial provision for the child in the absence of any child support having been paid by the wife.
I must say I have a different view about this submission. Firstly, the marriage was a long marriage which of course involves a long period over which the parties made their many and varied contributions. But in addition to this, it is the case that the parties were living under the same roof for a considerable part of the relevant period. In addition, I propose to take account of the loan from Mr G pursuant to s 75(2) of the Act. In these circumstances, in my view, it would not be appropriate to make some separate adjustment based on a finely calibrated assessment of the contribution by the husband in relation to the child over what is really quite a short period.
In these circumstances I assess the contributions by the parties overall to have been equal.
s 75(2) matters
The wife is 48 years of age and she is in reasonable health. The wife is a trainee manager. Her weekly salary is $769 and in addition she receives $48 per week interest in respect of the monies in her ANZ account. This is a total of $817 per week. She lives with Mr N as indicated above and estimates that his weekly income is $384. Her personal expenditure is set out in her financial statement. Obviously she shares some of her weekly expenditure with Mr N. The wife indicated that upon receiving her certificate of registration as manager she will be able to work in that capacity. In my view the wife should be able to earn income at approximately her present level or more for many years into the future.
On the other hand the husband is 57 years of age and there are problems in terms of his health. As indicated above, shortly prior to the commencement of the trial I appointed the husband’s son M Langton as case guardian for the husband and excused the husband from having to submit to cross-examination. This was on the basis of the opinion by the husband’s consultant psychiatrist Dr R set out in her report dated 17 August 2009. In that report Dr R expressed the opinion that the husband is unable to cope with and manage his personal business affairs. Furthermore, he is unable to give instructions to his legal advisers in his current state. Dr R believed that the husband’s mental state is fragile and the prospect of a three day hearing may overwhelm him in a further deterioration of his mental state. Dr R said that were this to occur she would be concerned for his personal safety.
I note that during the course of the hearing the husband was present in Court for what I would estimate was less than half the time taken in the hearing.
I also had the benefit of oral testimony by Dr R during her cross-examination in the hearing. In essence, Dr R has the view that the husband is suffering from cognitive impairment largely brought about by depression. She said that the major stresses flow from this litigation including the prospect of facing a hearing and some of the machinery aspects of it such as having been subjected to service of subpoenae. Dr R said that a consequence of such cognitive impairment is that the husband would be unable to concentrate and this in particular would preclude him from serious work. She says that he has found it almost impossible to undertake work because of his condition.
Having said that, Dr R also said that she thought that with the major stressor behind him, that is completion of these proceedings, the husband would be able to regain an appropriate cognitive state which in turn would enable him to make appropriate life decisions and also, significantly, to be able to function at work at a competent level. Dr R thought that once the proceedings were behind him and the result of the proceedings was known a significant improvement should be achieved within weeks rather than months.
On this basis, in my view, the husband’s capacity for producing income has been seriously affected in recent times by his mental state. But on the basis of this expert opinion one would expect in a short time that the husband would once again be able to function in his well established career. In these circumstances, in my view, it would not be appropriate to make a significant set off of property based on the view that the husband’s future capacity for employment is impaired. But there is some relevance to the problems that he has had in not being able to be fully employed now over some time which is a relevant consideration pursuant to s 75(2) of the Act. But this goes hand in glove, in my view, with the fact that he has borrowed the $100 000 from Mr G. Clearly the husband has used much of this money to fund his living costs and also to subsidise some of the business.
Another relevant s 75(2) matter is the fact that during the course of their marriage and cohabitation the parties have provided for the children of the husband’s previous marriage although there is no quantification of what this involved. Nevertheless this is a matter which has to be taken into account at least in a general sense, in my view. And this must favour the wife. So this has some effect on the set off that is appropriate in all the circumstances to make in favour of the husband taking account of the other relevant matters.
Another submission pursuant to s 75(2) of the Act was that the husband has been somewhat uncooperative in the proceedings and that he has failed to make a full and frank disclosure of his financial circumstances. It is true that Mr B the single expert made complaint about considerable difficulty experienced by him in obtaining relevant information to enable a timely completion of the report, notwithstanding that requests for information have been made on no less than eight occasions between 31 July 2007 and 18 February 2009. Mr B also noted that he had not received any income tax returns of the husband and that he was unaware of his circumstances other than as disclosed in the L Pty Ltd accounts. It was also submitted on behalf of the wife that the wife and her solicitor from time to time had difficulty in achieving production of documents which they sought from the husband. I accept this to some extent. It is clear that the husband could have been much more forthcoming in assisting the investigation of his financial circumstances. Having said this, however, I am not persuaded that these failures on his part have been at a level which would justify the Court making some adjustment of property on the basis that the husband had failed to make a full and frank disclosure.
In all the circumstances in my view it is appropriate to make a modest set off of property in favour of the husband in particular to take account of his indebtedness. But in my view great care has to be taken with this. I am certainly not persuaded that it would be appropriate to make a set off which would reflect an adjustment in the vicinity of the total of the husband’s debt to Mr G. It is true that his health suffered as a consequence of the breakdown of the marriage and that this affected his capacity to produce income. Simply to reimburse him for his living costs in the sort of amount which is reflected in the debt in my view would visit on the wife a serious unfairness and I do not propose to do so. In all the circumstances, in my view the appropriate set off is 5 percent of the available property in favour of the husband.
Conclusion and fourth step
The wife is to have 45 percent of the property available for division ($548 739). This is property with a value of $246 933.
The wife has the following property:
Assets
$
1. Money in frozen account
33,167
2. Smart Car
10,250
3. ING superannuation
14,773
4. ANZ account
139
5. Jewellery
1,580
_____________
$59,909
To achieve property with a value of $246 933 the wife will require further property with a value of $187 024 ($246 933 - $59 909 = $187 024). This can only come from the husband or the sale of the former matrimonial home.
On the other hand the husband is to have 55 percent of the available property. This is property with a value of $301 806.
The husband has the following property:
$
1. His business
31,671
2. NAB bank account
81
3. Bendigo Bank investment account
123,651
4. Mercedes motor vehicle
35,000
5. Jewellery
2,800
6. ING superannuation fund (1)
3,144
7. ING superannuation fund (2)
4,430
8. Disposition of proceeds of sale of personal services business add back
10,000_______
$210,777
But the husband owes $40 000 on the Mercedes Benz motor vehicle. Accordingly, the husband has net property with a value of $170 777 ($210 777 - $40 000 = $170 777).
To achieve property with a value of $301 806 the husband would require further property with a value of $131 029 ($301 806 - $170 777 = $131 029).
The husband wishes to retain the former matrimonial home. This has an agreed value of $610 000 and a mortgage balance of $291 947. Accordingly, the equity is $318 053. For the husband to retain this home he would have to pay the wife $187 024 ($318 053 - $131 029 = $187 024) and refinance the mortgage.
The orders I propose will not affect the capacity of either party to earn income.
Within the near future, with the stress of these proceedings behind him, the husband should be able to resume concentration on working in his business. If he is able to arrange finance to pay the wife in accordance with these orders and re-finance the mortgage he will be able to retain the former matrimonial home for his use. If not, it will have to be sold and the net proceeds will be paid in accordance with these orders.
The wife will almost certainly be able to work in her chosen career as a manager. She will have some funds which she will be able to use either as a deposit towards purchasing modest accommodation or to assist her in renting appropriate accommodation.
Unfortunately through their inability to arrive at an accommodation about their various issues the parties have accumulated substantial legal costs and each of them, particularly the husband has other personal liabilities.
Costs
There was an application on behalf of the husband that orders be made requiring the wife to pay the husband’s costs of each of the proceedings involving orders made by the Court on 13 June 2007, 10 December 2007 and 9 June 2009.
The first of these applications resulted in orders being made restraining the husband and the wife from dealing with the funds in the husband’s investment account and the wife’s account.
The second application related to the proceedings which resulted in the orders restraining the wife’s then solicitors continuing to act for her.
The third application related to the orders for release of funds to pay the specified outgoings in respect of the former matrimonial home and the release of $12 000 to the wife.
I am aware of the parties’ financial circumstances. It was said on behalf of the husband that it should have been unnecessary for him to have had to make the applications and therefore the wife should pay his costs.
In my view, the only one of these applications which has merit is that involving the order to restrain the wife’s former solicitors from acting for the wife. In my view this application should have been unnecessary. But bearing in mind the substantive orders I propose, I do not propose to make any order for costs.
I certify that the preceding one hundred (100) paragraphs are a true copy of the Reasons for Judgment of Judicial Registrar W P Johnston.
Associate:
Date: 28 August 2009
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Appeal
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Costs
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Remedies
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Injunction
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