Alden & Alden (No 3)
[2023] FedCFamC1F 791
•22 September 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Alden & Alden (No 3) [2023] FedCFamC1F 791
File number: CAC 1359 of 2022 Judgment of: CAMPTON J Date of judgment: 22 September 2023 Catchwords: FAMILY LAW – PROPERTY – Adjustment of property pursuant to s 79 of the Family Law Act 1975 (Cth) – Where the agrihub central to the rural enterprise of the parties are the farming properties of the wife received by an intergenerational transfer from the wife’s mother or by way of inheritance during their marriage – Where the wife has received other not insubstantial direct financial contributions from her family – Where the husband has received significant gifts from his parents post separation – Where the husband failed to adhere to his duty of disclosure including secreting his own intergenerational benefits – Where a just and equitable division of the parties’ property is found to be 52.5 per cent in favour of the wife and 47.5 per cent in favour of the husband. Legislation: Family Law Act 1975 (Cth)
Income Tax Assessment Act 1977 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Cases cited: Alden & Alden (No 2) [2023] FedCFamC1F 765
Briese and Briese (1986) FLC 91-713; [1985] FamCA 23
Dovgan & Dovgan [2021] FamCA 306
Franklin & Ennis [2019] FamCAFC 91
Gosper and Gosper (1987) FLC 91-818; [1987] FamCA 43
Hall v Hall (2016) 257 CLR 490; [2016] HCA 23
Horrigan & Horrigan [2020] FamCAFC 25
Kessey and Kessey (1994) FLC 92-495; [1994] FamCA 162
Livesey v Jenkins [1985] 1 All ER 106
Mallett v Mallett (1984) 156 CLR 605; [1984] HCA 21
Oriolo and Oriolo (1985) FLC 91-653; [1985] FamCA 54
Pierce v Pierce (1999) FLC 92-844; [1998] FamCA 74
Stanford & Stanford (2012) 247 CLR 108; [2012] HCA 52
Weir and Weir (1993) FLC 92-338; [1992] FamCA 69
Division: Division 1 First Instance Number of paragraphs: 168 Date of hearing: 4–8, 19 and 20 September 2023 Place: Sydney Counsel for the Applicant: Ms Mooney SC with Mr Hogg of Counsel Solicitor for the Applicant: Orman Solicitors Counsel for the First Respondent: Ms Gillies SC Solicitor for the First Respondent: King Cain Solicitors The Second Respondent: Litigant in person (did not participate) ORDERS
CAC 1359 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ALDEN
Applicant
AND: MR ALDEN
First Respondent
B PTY LTD
Second Respondent
ORDER MADE BY:
CAMPTON J
DATE OF ORDER:
22 SEPTEMBER 2023
THE COURT NOTES THAT:
Real property:
A.“D Property” means: The real property known as “D Property” held in the name of the applicant wife, more particularly described as Lot and DP ….
B.“H Property” means: The real property known as “H Property” held in the name of the applicant wife more particularly described as Lot and DP: ….
C.“J Property” means: The real property known as “J Property” held in the name of B Pty Ltd more particularly described as Lot and DP: ….
D.“B Property” means: The real property known as B Property” partly held in the name of B Pty Ltd more particularly described as Lot and DP: ….
E.“B2 Property” means: The real property known as “B2 Property” (formerly L Property) held in the name of the applicant wife and the respondent husband more particularly described as Lot and DP ….
Rural Enterprise:
F.The “Rural Enterprise” means: that undertaken by and includes B Pty Ltd as trustee for the B Trust.
Personal expenses:
G.Personal expenses are defined as:
·Rent;
·Medical expenses;
·Pharmaceuticals;
·Car registration;
·Car insurance;
·Fuel;
·eToll;
·Mobile telephone; and
·Internet.
THE COURT ORDERS THAT:
BY CONSENT:
1.All previous orders be discharged.
2.Within seven days of the date of these orders, the husband is to cause to be paid to E1 Pty Ltd $600,000.
3.The parties will do all acts and things and sign all documents to continue to operate the Rural Enterprise conducted by the B Trust (“the Trust”) in accordance with the cash flows produced in consultation with Mr C of O Company until 15 February 2024 including:
(a)That all defined personal expenses are to be paid by the Rural Enterprise on behalf of both parties where details of the expenses are provided;
(b)That the parties will each draw income from the Rural Enterprise in the sum of $1625 per week;
(c)That the husband is at liberty to incur a business expense up to the sum of $10,000 per month and any account is to be paid or reimbursement made within seven days of the husband providing a tax invoice evidencing the business expense;
(d)That the parties sign all documents necessary to authorise and allow them access to draw upon the accounts of the Rural Enterprise and each party is otherwise restrained from withdrawing any other funds unless otherwise allowed for in these orders and/or agreed in writing; and
(e)That both parties, save for these orders are otherwise restrained from drawing funds from the Rural Enterprise unless otherwise agreed in writing between the parties.
4.The parties will do all acts and things to continue to apply best farming practice in relation to the maintenance of the Rural Enterprise, including but not limited to the adherence to farming operations as outlined in the 2023 Rural Enterprise cropping plan including any activities as recommended by the RR Company specialist.
5.The wife is declared the legal and beneficial owner of:
(a)The real property known as “D Property” more particularly described as Lot and DP …;
(b)The real property known as “H Property” more particularly described as Lot and DP …; and
(c)E1 Pty Ltd & E2 Pty Ltd including each of those entities’ assets and liabilities.
6.B Pty Ltd as trustee for the Trust is declared the legal and beneficial owner of:
(a)The real property known as “J Property” more particularly described as Lot and DP: …;
(b)The real property known as “B Property” more particularly described as Lot and DP: …;
(c)All livestock listed in the report of Mr OO of QQ Marketing filed 2 September 2023 and are currently located on the H Property, D Property, J Property and B Property properties;
(d)2023 crop in ground on D Property, H Property, J Property and B Property; and
(e)Plant and equipment in accordance with the attached schedule “A”.
7.On, or by agreement before, 15 February 2024, the wife is to do all such acts and things and sign all such documents to transfer to the husband, all of her shareholding, right, title and interest in B Pty Ltd and the Trust including the assets and liabilities of the Trust except as otherwise provided for in these orders.
8.Simultaneously with Order 7, the wife shall:
(a)If required by the Constitution of the B Pty Ltd, before she resigns her directorship of B Pty Ltd, she is to join in any resolution for the appointment of an additional director of the husband’s choosing;
(b)Resign all directorship and office-holdings in the B Pty Ltd;
(c)Transfer to the husband all rights and responsibilities for the management and administration of the Rural Enterprise constituted by B Pty Ltd and the Trust, including but limited to termination of her rights to sign, operate and access bank accounts, share accounts including surrender of all passwords and other digital rights and means of access; and
(d)Transfer to the husband all beneficial loans in the B Pty Ltd (if any).
9.Simultaneously with Order 7, the wife is to do all such acts and things and sign all such documents to transfer to the husband all her right, title and interest the “B2 Property” more particularly described as Lot and DP ….
10.Simultaneously with the transfer of the B2 Property at Order 9 above, the husband will do all things and sign all documents necessary to discharge the registered mortgage held with the National Australia Bank Limited Registration Number … and will indemnify the wife forthwith from any and all liabilities and encumbrances.
ON A DEFENDED BASIS THAT:
11.Simultaneously with Order 7, the wife is to pay to the husband $1,602,442 (being the sum of $1,302,442 and $300,000), with such payment to be made to the husband’s solicitor’s trust account or as otherwise directed by them.
BY CONSENT THAT:
12.Simultaneously with Order 7, but prior to the execution of Orders 14 and 15 the husband, and the wife in their capacity as directors of the second respondent are to declare a distribution to the wife of the following items:
(a)Computer hardware including laptop computer, printer and accessories;
(b)Storage unit;
(c)Equipment Item 1;
(d)Equipment Item 2;
(e)Equipment Item 3;
(f)Equipment Item 4 (one each);
(g)Equipment Item 5;
(h)Equipment Item 6 x9;
(i)Equipment Item 7;
(j)Equipment Item 8;
(k)Equipment Item 9;
(l)Equipment Item 10;
(m)Equipment Item 11;
(n)Equipment Item 12;
(i)Equipment Item 13 (not self-propelled)
(o)Equipment Item 14;
(p)Equipment Item 15;
(q)Equipment Item 16;
(r)Equipment Item 16;
(s)Motor Vehicle 1;
(t)Motor Vehicle 2;
(u)Equipment Item 17;
(v)Equipment Item 18 x 6;
(w)Equipment Item 19 x 1;
(x)Equipment Item 20;
(y)Motor Vehicle 3 (“Motor Vehicle 3”); and
(z)Equipment Item 21.
(aa)Equipment Item 22.
(bb)Equipment Item 23.
(cc)Equipment Item 24.
13.Simultaneously with Order 7, but prior to the execution of Orders 14 and 15, the husband and the wife in their capacity as directors of the second respondent are to declare a distribution to the wife of Motor Vehicle 3 and simultaneously with the wife paying $16,127.60 to the second respondent with the wife to discharge and/or refinance that part of the National Australia Bank Equipment Loan Facility which relates to Motor Vehicle 3.
14.Simultaneously with Order 7, the Husband is to vacate D Property and “H Property” including removing all livestock, plant, and equipment to which he is entitled pursuant to these orders.
15.Simultaneously with Order 7, the parties are to do all such acts and things and sign all documents necessary for the husband and second respondent (as far as necessary) to:
(a)Discharge, refinance and / or remove the wife as guarantor in respect of:
(i)National Australia Bank Market Loans (account numbers …96, …02 and …09) and Equipment Finance Loans (Equipment Item 25 and Equipment Item 26);
(ii)National Australia Bank Overdraft account number …36;
(iii)National Australia Finance (Equipment Item 25, Equipment Item 26 and Motor Vehicle 3);
(iv)Rural Assistance Authority Drought loan (Caveat Number …); and
(v)RR Company.
(b)Discharge, forgive and indemnify the husband regarding any loan to the husband, alleged or otherwise, from E1 Pty Ltd and E2 Pty Ltd and Ms SS;
(c)Do all acts and things necessary to transfer Motor Vehicle 4 registration number … to the parties’ daughter Ms TT. Noting that the vehicle is currently registered in the name of the wife; and
(d)Do all acts and things necessary including signing all document required as the Trustees for the Trust to distribute to the parties’ son Mr UU Motor Vehicle 5. Noting that the vehicle is currently registered in the name of the Trust.
16.Concurrently with Order 7 above, in relation to the Trust, the wife do all things as are necessary at the husband’s cost and expense to:
(a)Amend any trust deed;
(b)Instruct any trustee, including the Trustee, to make a family trust election to the Australia Taxation Office with the husband as the ‘test individual’ prior to the wife assigning her beneficiary loan to the husband;
(c)Comply with all applicable legislation;
(d)Instruct any accountant; and
(e)Do any other act or thing as may be required to implement this clause; whereupon the wife shall transfer to the husband all beneficial loan accounts standing in the wife’s name.
17.Simultaneously with Order 7, the wife execute a document relinquishing any entitlement to be considered as a discretionary object of the Trust.
18.Notwithstanding any other provision in these Orders and noting that the parties agree that any claim arising in relation to Supreme Court proceedings (matter number …) and any professional negligence claim attaches to the B Pty Ltd acting for the Trust:
(a)That any damages award received by B Pty Ltd as Plaintiff in the ‘AO’ proceedings in the Supreme Court of New South Wales be shared equally with the wife;
(b)That within 28 days of any written demand the wife shall cause to be paid, at the direction of the husband to a one half (1/2) share and the husband shall cause to be paid a one half (1/2) share of any costs order, legal disbursement, or settlement of outstanding cost issue in respect of the Supreme Court proceedings (Matter Number …) and any professional negligence claim; and
(c)The parties are to do all acts and things necessary to jointly instruct and accept all reasonable advice from VV Lawyers in relation to any claim in damages and outstanding costs application.
19.The husband and the wife otherwise be declared to have sole right, title, and interest in:
(a)Any chattels, goods or other property which are at the date hereof in their respective possession;
(b)Any money, shares, debentures, superannuation which stands in their sole name as at the date hereof; and
(c)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders or any indebtedness standing in that party’s name.
20.Each party do all such acts and things and sign all documents necessary to effect these orders.
21.Within seven days from the date of these Orders, the wife is to provide to the husband solicitors copies of all written correspondence she has received or engaged in with Mr VV or VV Lawyers including any annexures to that correspondence and shall continue to do so until Order 6 is complied with.
22.In the event the wife fails to comply with Order 11, the wife shall cause the property known as D Property to be listed for sale by public auction within three months of such default, and the reserve price shall be as agreed between the parties in writing, or failing agreement, at the discretion of the selling agent.
23.In the event the event that the D Property does not sell at the initial auction it shall be listed for further action each three months until sold.
24.Upon the sale of D Property as provided for in Order 22 the proceeds of sale shall be disbursed as follows:
(a)All selling costs be paid including conveyancing costs and agent fees;
(b)The husband to be paid the amount provided for in Order 11 along with interest to be calculated in accordance with the Federal Circuit and Family Court of Australia Rules 2021 (Cth); and
(c)The balance to the wife or at her direction.
25.Save for any other order herein and simultaneously with Order 7 above, the husband is to indemnify and keep indemnified the wife in relation to the B Pty Ltd and the Trust.
26.Save for any other order herein and simultaneously with Order 7 above, the wife is to indemnify and keep indemnified the husband in relation to the E1 Pty Ltd and E2 Pty Ltd.
27.The parties will be at liberty to sell and / or otherwise deal with, the items of plant and equipment which they are retaining pursuant to and from the date of these orders.
28.If either party refuses or neglects to sign within 14 days of a written request to do so any documents necessary to give effect to the terms of these orders, the Registrar of the Federal Circuit and Family Court of Australia is hereby appointed pursuant to the provisions of s 106A of the Family Law Act 1975 (Cth) to execute such documents on behalf of such party.
THE COURT NOTES THAT:
H.For the avoidance of any doubt, the items of plant and equipment and chattels also to be retained by the husband includes:
a.Workshop contents, small hand tools;
b.Leftover consumables (drenches, chemicals);
c.Mobile home;
d.Water Vessels; and
e.Weapons.
I.For the avoidance of any doubt, the items of plant and equipment and chattels also to be retained by the wife includes:
a.Jewellery; and
b.Trailer.
AND ON A DEFENDED BASIS, THE COURT FURTHER ORDERS THAT:
Extant applications
29.Save and except as to costs, all extant applications and responses thereto are dismissed.
30.Should any party wish to make an application for costs of or incidental to these proceedings, they are to file and serve within 28 days of the date of these orders an Application in a Proceeding specifying the orders sought as to costs, and any affidavit in support thereof.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Alden & Alden has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAMPTON J:
INTRODUCTION
By way of an Initiating Application filed 15 July 2022 in the Federal Circuit and Family Court of Australia (Division 2) in City M, Ms Alden (“the wife”) sought orders for the adjustment of property pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) subsequent to the breakdown of her marriage with Mr Alden (“the husband”). The husband filed a Response to an Initiating Application on 12 September 2022 seeking different orders for the adjustment of property. On 9 December 2022 the proceeding was transferred to Division 1 and placed in the Major Complex Property List.
The husband and wife married in late 1997. The husband contends that they commenced cohabitation prior to the marriage for less than a year. The wife contends that cohabitation commenced upon marriage. That dispute is of no consequence to this determination. They have two children, both of whom are now adults. The husband and wife separated on 27 May 2020 and were divorced in early 2023.
The central issues in dispute throughout the litigation were:
(a)The contributions of each party to their current pool of their property that includes their joint Rural Enterprise conducted from F Street, Town G NSW (“D Property”), in conjunction with other properties, namely 1 WW Street, Town XX NSW (“H Property”), 2 F Street (B Property), 2 WW Street, Town XX NSW (“J Property”), and 3 F Street, Town G NSW (“B2 Property”); and
(b)Their competing claims seeking the adjustment in their favour of those real properties in specie.
D Property and H Property are owned by the wife. The parties jointly own the B2 Property. J Property and B Property are owned by the second respondent in the proceeding in its capacity as trustee of the B Trust (“the Trust”). It is agreed that the Trust is the property of the husband and the wife for the purposes of the s 79 determination. The Trust did not participate in the trial. The Rural Enterprise of the parties conducted through the Trust utilises the properties in aggregation.
During the litigation a significant issue emerged as to a contended failure of the husband to disclose what was described by him during the trial as a post separation “incomplete gift” from his parents of $5,000,000. The focus on this issue had intensified in the shadow of the trial as recorded later in these reasons.
For the reasons that follow, the wife will retain D Property and H Property and pay to the husband $1,602,442. The wife will transfer to the husband her interests in the B2 Property. The husband will retain the interests of the parties in the Trust, including its real properties and the mortgages secured on them, livestock, current crops and plant and equipment save as to some specified items of property to be retained by the wife.
DOCUMENTS RELIED ON
The wife relied upon the following documents:
·Her Amended Initiating Application filed 13 April 2023;
·Her Financial Statement filed 9 August 2023;
·Her affidavits dated 26 May 2023 and 13 April 2023;
·Affidavit of Ms YY (“the wife’s sister”) filed 13 April 2023;
·Affidavit of Mr ZZ filed 13 April 2023;
·Affidavit of Mr AB filed 13 April 2023;
·Affidavit of Ms AC (“the wife’s solicitor”) filed 11 July 2023; and
·Affidavit of Ms NN (the husband’s mother) filed and adduced with leave absent objection on 7 September 2023.
The wife’s sister, her brother Mr AB, and her solicitor were not required for cross examination.
The husband relied upon the following documents:
·His Further Amended Response to Initiating Application filed 18 May 2023;
·His Financial Statement filed 10 August 2023;
·His affidavit filed 8 June 2023;
·An affidavit of Mr AD filed 18 May 2023;
·An affidavit of Mr AE filed 18 May 2023;
·An affidavit of Mr AF filed 18 May 2023; and
·An affidavit of Mr AG filed 26 May 2023.
Mr AD, Mr AE, Mr AF, and Mr AG were not required for cross examination.
The single real property valuation expert Mr AH provided a retrospective opinion as to the value of D Property contained in a report dated 31 August 2023 attached to his affidavit filed 1 September 2023. He was cross-examined by the husband. His opinion remained unshaken. I find that the valuation of D Property as at mid-2006 was $2,700,000 as opined by the single expert.
BACKGROUND AND FINDINGS
The husband was born in 1964 and is currently 59 years old. The wife was born in 1966 and is currently 57 years old.
In 1974, E2 Pty Ltd was incorporated by the wife’s mother. She was its sole director. She and E1 Pty Ltd were its two shareholders. She was also the sole director of E1 Pty Ltd.
E2 Pty Ltd purchased the D Property in 1992.
In 1988 the husband purchased a property with his cousin at AJ Street Suburb AK for $94,000. This was purchased in his name only. The acquisition was funded from savings and the sum of $71,000 borrowed from National Australia Bank (“NAB”) in the husband’s name. Upon the settlement of the sale of the property in 1994 for $150,000, the mortgage was repaid and the husband and his cousin each received in the range of $35,000.
The husband later obtained another loan from NAB. He applied these loan funds and some of his share of the proceeds of sale of the Suburb AK unit to purchase units to the value of $56,000 in the AL Trust.
In 1988 the wife purchased with her sister in equal shares AM Street, Suburb AN NSW (“the Suburb AN unit”) for $176,000. The mortgage for this property held with Commonwealth Bank Australia was discharged by the wife and her sister in 1989. A further mortgage was granted to Westpac in 2003 for $327,000. The wife and her sister sold the property in 2003 for $390,000. The wife received the sum of $190,005 on completion of the sale.
The husband and wife exchanged contracts for the purchase of two blocks of land located next to the husband’s parent’s property in 1997. This was the original B Property. The wife was gifted $200,000 from her mother to part fund the purchase and the husband was gifted $200,000 from his parents to further part fund the purchase. The settlement of the original B Property occurred in 1997 at a total purchase price of $470,272. The parties sold the original B Property in 2006. At settlement of that sale in 2007 they received $1,436,239. They applied the proceeds of this sale to purchase J Property in 2006 for $961,021 by way of the Trust.
In 1997, the husband and the wife by deed established the Trust. B Pty Ltd was incorporated in 1997. The husband and wife are the joint directors and shareholders. It became and remains the trustee of the Trust.
The first child of the husband and wife, Ms TT, was born in 2001. Their second child, Mr UU, was born in 2003. Both are now adults.
In 1999 the husband commenced employment at the AP Centre and remained so employed for a period of four years. In or around the end of 2004 he was medically discharged from that employment. In 2010 he received a compensation payment of $332,825. It was paid into the bank account of the Rural Enterprise.
In 2006 the wife became the sole director of E2 Pty Ltd – the legal owner of D Property.
The wife said that in 2006 she was gifted livestock and plant and equipment from her parents. The husband put the number of livestock gifted into issue. He said that D Property and H Property did not have sufficient capacity to run that number of livestock. When he was tested as to this subject matter in cross examination, including by way of stock number increases at that time as recorded in balance sheets exhibited to the wife’s affidavit, he said he did not know the number of livestock that were gifted, that the wife was responsible for records of this character, and that he drove the tractor and knew “nothing of the books.” He did not proffer evidence as to the number of the livestock he thought had been gifted, notwithstanding his opportunity to do so. I accept the wife’s evidence as to the number of livestock gifted by her parents. I find their value was $155,294 as supported by a contemporaneous valuation from SS Pty Ltd exhibited to her affidavit.
The items of plant and equipment gifted by the wife’s parents were recorded in a letter from NSW Farmers Association dated late 2007 exhibited to her affidavit. The wife was uncertain as to the value of the plant and equipment. The husband put into issue the number and quality of the items of plant and equipment gifted to the wife, identifying in his oral evidence and affidavit that it merely included an old truck that was subsequently given to a workman, a non‑operational machine which was sold a few months later and a vehicle that was sold some years later. On this issue I prefer the evidence of the wife having regard to the contents of the letter dated late 2007 and the findings recorded in these reasons at [91] and [92].
H Property was the subject of an intergenerational transfer to the wife in 2006 by AQ Pty Ltd, being one of her parents’ companies. The wife did not pay any money to acquire the property. A valuation from AR Valuers in early 2006 conducted for stamp duty purposes opined that the property had a value of $333,225.
In 2006, the husband and the wife moved into the house at the D Property.
The wife’s mother passed away in 2006. Probate of the wife’s late mother’s estate was granted in late 2007. There was some delay in the distribution and finalisation of the estate of the wife’s late mother. A succession plan agreement between the wife and other members of her family was entered by way of deed in June 2009.
The wife received by way of distribution from the estate of her late mother:
(a)In 2010 all of the shares in E2 Pty Ltd;
(b)In 2010 either directly or indirectly all the shares in E1 Pty Ltd. The wife's affidavit exhibited documents verifying the then value of the share portfolio at $825,000 and cash of $64,828 held by the corporation. I so find.
(c)In 2013, D Property was transferred to the wife by way of capital distribution from the K Trust. For revenue purposes, a valuation report of D Property was obtained from Mr C in mid-2013 opining the value of D Property at $3,260,000. Mr C was subsequently engaged as a single real property valuation expert in the proceedings.
In 2007 the parties exchanged contracts to purchase a property originally known as “L Property” and later known as B Property. The purchase of B Property was completed in 2008 for $379,896, using the proceeds of sale of the original B Property.
They also at or around this time leased the adjoining property, B2 Property. The parties completed the purchase of the adjoining block, B2 Property, in 2009 for $300,089 as tenants in common.
The wife’s brother Mr ZZ advanced the sum of $300,000 to complete the acquisition of B2 Property. The wife said the advance was a loan. She exhibited to her affidavit a loan agreement dated 2009 and signed by herself, the husband and Mr ZZ. It was prepared by Mr AS, the solicitor for all the parties to the agreement. It broadly provided that the parties would repay Mr ZZ within 21 calendar months, interest would begin to accrue after 18 months, and that the parties would undertake property maintenance. The husband disputed that the sum of $300,000 was advanced by way of loan. He said that the advance was compensation for taxation imposts paid by the wife for estate funds that were not beneficially hers arising from her brother Mr ZZ’s delay in administering and distributing the wife’s late mother’s estate. Both the wife and Mr ZZ did not agree with the husband’s contention in cross examination. The wife said in her affidavit that the reason the interest free portion of the loan was because of a complication with the family’s succession plan which had resulted in the wife having to pay tax on the income generated by the interest accruing money which was ultimately to be paid to Mr ZZ under the succession agreement. Mr ZZ and the wife agreed to an interest free period to offset for the tax that the wife had to incur.
The husband agreed that his signature was on the loan agreement but said he could not remember signing it. He had no other explanation as to how his signature was affixed to the loan agreement. I find it unlikely that the husband would sign a loan agreement if that document did not reflect his understanding at the time it was entered. I do not accept the husband’s contention. I find that the parties agreed to borrow $300,000 from Mr ZZ on the terms recorded in the loan agreement dated early 2009. No principal or interest has been paid. The loan was not called upon to be repaid.
The wife accepts for the purpose of this s 79 determination that the recovery of the loan by Mr ZZ is now statute barred. She does not contend that the loan forms a liability in the balance sheet identifying the property of the parties. She contends that it ought to be taken into account in the contribution findings.
The wife’s father passed away in 2011. Probate of his estate was granted in 2012. The wife received the sum of $109,601 from her late father’s estate.
The husband was involved in a motor vehicle accident in 2011. He received compensation of $143,151 after payment of costs and expenses in 2016.
In 2012 the wife received a gift of $700,000 from her sister on the sale of the wife’s mother’s home. These monies were primarily applied to the children’s private school education fees and the portion not so applied met the parties’ living expenses.
In 2017, the husband and the wife received a compensation payment of $732,674 for a pipeline through D Property, H Property and J Property. These funds were used for the purposes of the Rural Enterprise.
In 2017 the husband and the wife by way of the Trust purchased Equipment Item 27.
In 2019 the parties, on behalf of the Trust, retained AU Lawyers and commenced civil proceedings in the NSW Supreme Court seeking damages from AO Pty Ltd in relation to Equipment Item 27 (“the AO proceedings”).
The parties separated on 27 May 2020. In mid-2020 the husband commenced to live at AT Street, Town XX. The Trust paid his rent. The wife remained living at D Property.
The husband and the wife attended mediation on 19 November 2021 and thereafter agreed to withdraw $2,300 per week from the Trust. This was reduced to $800 per week in March 2002.
In 2021 the husband’s parents sold their property “[FF Property]”. The sale completed in 2022. They received just under $18,000,000.
The AO proceedings were heard in the Supreme Court of NSW in 2022. On delivery of the reasons in 2022 the Trust was unsuccessful. The determination found that whilst misleading and deceptive conduct by AO Pty Ltd had been made out, a lack of evidence in the Trust’s case did not permit a finding that it had suffered any loss. In mid-2022, the husband and the wife on behalf of the Trust retained different solicitors to prosecute a professional negligence claim against AU Lawyers arising from their conduct of the AO proceedings.
Recently an order was made in the Supreme Court for the Trust to pay the defendants costs of the AO proceedings. The precise terms of the cost order were not put into evidence at the trial. The quantum of the defendant’s costs claimed expand over a broad range (see Exhibit 19 dated April 2023, being prior to the date of the recent Supreme Court costs order). The solicitor conducing the professional negligence claim on behalf of the Trust have included the costs payable as part of the damages to be sought by the Trust. The professional negligence claim and the costs claim may be the subject of mediation or settlement conferences later this year.
Without agreement from the wife, the husband purchased Motor Vehicle 6 by way of the Trust in 2022 for the sum of $79,000.
In late 2022 the husband’s parents gifted him a quantity of plant and equipment valued by single expert at $292,300. He retains these items in specie. I shall return to this subject matter later in these reasons.
Consent orders were made on 8 November 2022 providing for the parties to receive weekly drawings from the Trust of $1625 per week and directing the parties to withdraw $300,000 from the E1 Pty Ltd bank account and to pay $150,000 into each of the trust accounts of the parties’ legal representatives by way of litigation funding. It was uncontroversial at trial that these funds could only be paid from the company directly to the husband by way of loan. The orders did not specify that the wife was to pay $300,000 to herself (by way of loan or dividend) and then pay half of it to the husband.
The orders further provided that both the parties were restrained from drawing funds from any matrimonial asset and / or using any of the Rural Enterprises’ assets to draw an income unless agreed in writing, the husband was responsible for the day to day conduct of the Rural Enterprise to the extent of determining the operational use of all plant and equipment, and the wife was responsible for all administrative tasks of the Rural Enterprise. Remarkably, the parties understood that orders had the effect that the wife required the husband’s permission or consent to use a vehicle owned by the Trust. Additionally, the husband was ordered to pay all income generated with the use of the plant and equipment owned by the Trust into the Trust.
On 24 February 2023 the matter was listed for a trial over four days in City M set to commence on 5 June 2023.
The husband traded in Motor Vehicle 6 for $42,000 in early 2023 for Motor Vehicle 7. The difference was paid for with $15,275 sourced from his contract income and $27,324 from the husband’s drawings from the Trust.
The husband alleges that an altercation occurred with the ‘business’ (a reference to the Trust) stock agent in early 2023, and that he unilaterally terminated his contract.
The June 2023 trial was vacated by the National Assessment team on 26 May 2023 due to judicial unavailability and placed in my docket. Arrangements were then made to enable the trial listed to commence in City M over four days commencing 5 June 2023 to be reinstated, however each party contended a restoration of that listing would result in a prejudice and unfairness.
Orders were made on 30 May 2023 joining B Pty Ltd as the second respondent in its capacity as trustee of the Trust, noting that the parties jointly hold the power to appoint and remove trustees to the Trust. The wife’s application to join her brother Mr ZZ as a party to the proceeding was dismissed. Directions for trial were made to commence over five days commencing 4 September 2023 in Sydney.
On 14 July 2023 by way of further consent orders the parties withdrew additional funds of $150,000 each from E1 Pty Ltd by way of litigation funding. The total value of funds withdrawn from E1 Pty Ltd for litigation funding was $600,000.
The husband’s disclosure failures
A party to property proceedings is required to make full and frank disclosure of their financial position (see Oriolo and Oriolo (1985) FLC 91-653; Weir and Weir (1993) FLC 92-338 (“Weir and Weir”)). That case law is reinforced in ch 6 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”). The duty of disclosure is absolute. It is a continuing onus throughout the litigation process which is critical to the function of the jurisdiction and fundamental to achieving justice and equity. The fact that the obligation of disclosure exists as a duty to the court, as well as the other party, is significant. It is also significant that the obligation is in respect to the disclosure of “information relevant to the dispute” and is not simply one that attaches to the production of documents. Importantly in this case, it extends to all relevant and material facts.
In Briese and Briese (1986) FLC 91-713 at 75,180–181, Smithers J applied the House of Lords’ decision in Livesey v Jenkins [1985] 1 All ER 106 in determining that:
…a person in the position of the husband in this case has a positive obligation to set out at an early stage his financial position in a clear and comprehensive manner.
… in financial proceedings between spouses each party must make a full and frank disclosure of all material facts. In that case it was made clear that full and frank disclosure was required as a matter of principle in the light of the fact that it was the duty of the Court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of a discretion.
There is an obligation on each party to act so as to provide a basis upon which the two of them are in a position to resolve the case by agreement, or proceed to a hearing, as expeditiously as may reasonably be done.
In Weir and Weir, the Full Court stated at 79,593 that:
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour’s findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
The husband filed an Undertaking of Disclosure on 12 September 2022 (Exhibit 25) prepared by his current solicitors who have acted for him throughout the proceedings. It recorded, amongst other things, that he:
·Had read, or had read to him, Parts 6.01 and 6.02 of the Rules;
·Was aware of his duty to the Court and to each other party to give full and frank disclosure of all information relevant to the issues in the case in a timely manner;
·To the best of his knowledge, he had carried out and complied with his duty of disclosure;
·Undertook to continue to comply with his duty of disclosure until the conclusion of the case; and
·Understood the nature and terms of the undertaking and that if he breached the undertaking that he may be guilty of contempt of court.
Over much of the course of the litigation the wife has pursued avenues of forensic enquiry to discover the benefits the husband may have received or may receive in the future by way of succession planning arising from the disposal by his parents of their farm. This has included:
(a)Three letters to the husband’s solicitors dated 27 October 2022, 9 December 2022 and 13 February 2023 requesting copies of the husband’s parent’s wills; and
(b)Two subpoenas directed to the solicitors for the husband’s parents, EE Lawyers and AV Lawyers in early 2023 seeking production of both the husband’s parent’s wills and all correspondence relating to specified trusts.
EE Lawyers filed an objection to the subpoena issued by the wife. They filed affidavit evidence and written submissions identifying the husband’s parents and the entities that they controlled as their clients and claiming legal professional privilege to documents.
The husband also filed an objection to each subpoena contending an absence of apparent relevance and abuse of process. The written submissions of the husband in support of the objection said that that there was “no entanglement of the parties’ assets and the financial affairs of the husband’s parents”, that the documents sought were “not relevant to the issues to be determined, amount to a fishing expedition, are an abuse of process and are oppressive in nature.” He further said that his parents’ financial arrangements were “separate to and independent of these proceedings. The arrangements of their financial affairs are outside the control of the Husband.” As is self-evident from these reasons, the husband’s submissions were both false and misleading.
Consent orders were made by Wilson J on 9 May 2023 dismissing both the objections to the said subpoena. The schedules to the subpoena were refined. The wife was ordered to pay the costs of EE Lawyers in the sum of $2,000 and the husband’s costs reserved.
After inspecting the documents produced on subpoena, the wife caused two further subpoenas to issue for the production of documents on 17 May 2023, the first directed again to EE Lawyers and the second directed to AV Lawyers.
An order was made on 30 May 2023 that on or before 4 August 2023 each of the parties were to file a further undertaking as to disclosure in accordance with r 6.06 of the Rules. The wife filed her undertaking on 8 August 2023 (Exhibit 7). The husband did not comply with the order until the third day of trial, being 6 days after the deadline imposed by the Order (Exhibit 15).
The husband’s affidavit verifying his trial financial statement sworn and filed 10 August 2023 said:
I swear* / affirm* that:
(a) I have read Rule 6.06 and I am aware that by law I have an obligation to make full and frank disclosure of my financial circumstances to the Court and each other party. In particular, I have disclosed in this document or in an affidavit filed by me or on my behalf under Rule 6.06(6), all matters I am required to disclose under Rule 6.06
(b)The information in the financial statement and any attachments to it which are within my personal knowledge are true. Where I have given an estimate in this financial statement, it is based on my knowledge and is given in good faith. All other information given in this financial statement and any attachments is true to the best of my knowledge, information and belief.
(c) I have no income, property or financial resources other than as set out in this document or any affidavit filed by me under Rule 6.06(6).
The husband in that financial statement said that his total average weekly income amounted to $1,625, his total weekly personal expenditure amounted to $1,594 and the total value of property owned by him was $3,715,097.
On 9 May 2023 the objections made to the subpoena issued by the wife directed to EE Lawyers and AV Lawyers were dismissed.
Another subpoena directed to EE Lawyers was filed by the wife on 15 August 2023. The wife gained access to the documents produced on this subpoena on 29 August, being in the week before the trial was scheduled to commence.
After inspecting those documents, the wife in her amended outline dated 3 September 2023 (Exhibit 2), being the day before the trial commenced asserted:
There is circumstantial evidence in the form of emails from the succession planning of the file of [the husbands] parents, to strongly indicate that the husband’s parents hold the sum of $5 million in a NAB account for his sole use as a gift, once this litigation is over….
There is circumstantial evidence in the form of emails from the succession planning file of his parents, plus text messages from [the husband] to [the wife] to be tendered, that demonstrate that [the husband] was at all times aware of the $5 million gift and took steps to delay its legal vesting in him until this case was concluded.
On the first day of trial the husband made an oral application seeking orders for the surrender of copies of documents in the wife’s possession that he said were obtained subsequent to inspecting documents produced on subpoena by EE Lawyers and for which leave to inspect was granted on 29 August 2023.
Justice Schonell dismissed the husband’s oral application (see Alden & Alden (No 2) [2023] FedcFamC1F 765)
On 4 September 2023 (the first day of trial) the wife was granted leave to cause a subpoena to issue requiring the husband’s mother, Ms NN, to give oral evidence.
On 7 September 2023 (the fourth day of trial) the wife was granted leave to adduce and rely on an affidavit of Ms NN sworn and filed 7 September 2023. The affidavit recorded:
5. I want to say to the Court, that I have only ever wanted to do the best for my family whom no matter what differences we may have had, [Mr PP] and I love very much, and I am very upset that what should have been a wonderful gift to both [Mr Alden] and [Ms AW] has been muddled in this way.
…
7. [In early] 2022, the sale of [FF Property] settled and together with two Trusts called the [MM Trust] and [LL Trust], we received net proceeds of sale of $17,107,302
8. It was out intention that from the proceeds of [FF Property] that we would cause all the proceeds to flow through both the [MM Trust] and [LL Trusts] to [Mr PP] and I at which time we wanted to gift $5,000,000 to [Ms AW] and $5,000,000 to [Mr Alden] and make a number of other charitable donations and retain the residual of the proceeds of sale together with our other assets, for both [Mr PP] and my benefit and to support us into the future.
9. To give effect to [Mr PP] and my wishes, we have held conversations with our Accountant [Mr AX], our financial Advisor [Mr AY], Lawyer [Mr AZ], and other professionals to assist in what [Mr PP] and I wanted, from the proceeds of [FF Property] to turn into a reality.
…
Gift to [Ms AW]
11. Having received advice from the various professionals, [Mr PP] and I [in] May 2022 gifted $5,000,000 to [Ms AW].
Gift to [Mr Alden]
12. [In] or about […] April 2022, Maurice and I caused to be deposited into the National Australian Bank term deposit account the sum of $5,000,000 to be gifted to [Mr Alden].
…
15. While I again don’t recall the exact details, I know it was ultimately agreed that [Mr PP] and I would hold the $5,000,000 which we are giving [Mr Alden] in our National Australia Bank term deposit account which is currently held in [Mr PP] and my name until such time [Mr Alden] tells us where to transfer the funds.
16. I say that [Mr PP] and I still hold $5,000,000 in a term deposit which are held for [Mr Alden] and we will release those funds to him as soon as [Mr Alden] makes a request for these funds to be released.
The husband’s mother was not cross examined. I accept her evidence.
The husband then gave oral evidence in chief after his mother’s affidavit was filed. He said:
(a)That his financial statement filed 10 August 2023 was correct – except as to his entitlement of $5 million from his parents;
(b)He had read his mother’s affidavit and agreed that his parents had proposed to gift to him the sum of $5 million; and
(c)He had been informed “overnight by email” by his parent’s lawyers that they had arranged for the $5 million to be placed into his solicitor’s trust account on Friday (the next day).
In cross examination the husband said that there was a family meeting in or around mid-2021 at which his parents told him and his sister that they would be selling their property “[FF Property]”. The husband was upset. He said that his sister took him outside and told him that they each may receive some of the proceeds from the sale. The husband’s affidavit, recorded his evidence on the topic as:
In Deed dated 8 October 2015… agreement was reached with my parents and sister, to the effect that when they wish to sell [FF Property]:
(a)That the best way to sell the property would be to sell it all at one time to either one purchaser or to sell different parts of the property to different purchases at the same time.
(b) It would be first offered to me at market value.
(c)That if the property is sold, that the plant and machinery and livestock would also be first offered to me at market value.
In around 2020, Dad announced his intention to sell [FF Property].
I responded and informed him I wish to take up the offer to purchase part of [FF Property] with Dad’s neighbour to purchase the balance of the property.
My father declined my proposal and sold [FF Property] to a third party in 2021.
He also held a clearing sale to sell their livestock, plant and machinery.
He gifted to me the plant and equipment listed in the document as exhibited at Exhibit 24.
The husband was shown a copy of an email he sent to his parent’s solicitors, EE Lawyers, dated 19 January 2022 (Exhibit 22). In it he said:
Would it be possible, and very helpful to me, if dad offered to lend me items in the interim, until after the settlement please?
... With regards to the other generous offer to help, we have a cousin [Ms BA’s] son, who is a whizz financial planner and a partner in [BC Financial Services], WA. Would it be appropriate to consider him to manage any funds in the medium term until after settlement, as opposed to funds sitting idle in a bank account for several years?
The husband agreed that in the second paragraph of the email he was referring to the $5 million gift. He agreed that as at the date of the email (or by February 2022) he knew that his parents had offered those monies to him and that he had told them to hold on to the monies until after these proceedings were over. As recorded earlier, his mother’s evidence was that the $5 million was deposited into a discrete NAB account to which the husband could request access to and receive from early 2022.
He further agreed that it was his proposal for a fiction to be created that the plant and equipment he was to receive by way of gift from his parents would be said to be instead characterised as provided by way of loan.
The husband conceded that the contrivance as to the plant and equipment and his course of secreting the gift were efforts on his part to minimise the pool of property available for adjustment between he and the wife. I so find.
He agreed that he had not told or disclosed to the wife the fact of the $5 million gift and that it only came to light because of the subpoena documents produced at the wife’s request in the week prior to the trial. I so find. I find that the husband’s trial affidavit was misleading by omission as to his beneficial entitlement of the $5 million gift from his parents at the date it was sworn.
The husband accepted that this meant the wife had been forced to make financial decisions directly impacted by his disclosure failures. This included at the failed mediation in November 2021 and by way of her agreement to withdrawing $600,000 from E1 Pty Ltd. I find it also impacted on the fact and the value of drawings from the Trust pursuant to agreements and court orders and the unilateral purchase of Motor Vehicle 6 by the husband through the Trust.
The wife submitted that her forensic efforts have sufficiently disclosed the fact and value of the $5 million gift to be received by the husband. She contends that the balance of the husband’s financial circumstances remains speculative, including that as deposed in his financial statement. It is her case that the course identified by the Full Court in Weir and Weir is applicable to the husband in this case.
Although not submitted in these precise terms, the husband states that it is important to engage in the particular facts of his non-disclosure and the inferences that should be drawn from it in this case, such that a finding of non-disclosure is no more than one which has complicated the fact-finding process (see Franklin & Ennis [2019] FamCAFC 91 at [9]). It is his submission that this is not a case where the nature and extent of the non-disclosure makes the approach described in Weir and Weir permissible.
The wife’s affidavit records substantial complaint as to the husband retaining off-farm income received by way of his contracting post-separation. She identifies the husband using chemicals, fuel, seed, fertiliser, and equipment owned by the Trust for this off farm contracting and diverting the proceeds of contracting into his personal bank account – despite charging GST and using the Trusts ABN. She further alleges that the husband has directed employees of the Trust to undertake some of this contracting work. This avenue of complaint commenced in December 2020 and has been the subject of correspondence between the parties' solicitors from February 2021.
The husband conceded that he retained some off-farm income received by way of contracting. He submitted that I should not be robust in making findings in favour of the wife consistent with the authorities arising from his disclosure failures. He submitted that his long work hours on the farm leave little time for him to achieve other income and hence to have access to other disclosable funds of which the wife could not have been aware. Whilst he conceded that he had retained off-farm income from contract work, he stated that it was agreed by the wife that this amounted to “a mere sum of $12,000.” The wife’s case was that this was only the amount she could identify.
The 2022 financial statements of the Trust (Exhibit 10) record that in the 2021 tax year the off‑farm contract income of the Trust was $95,840 and in the 2022 tax year it was $3,662. Having regard to the husband’s disclosure failures, I find that the off-farm contract income for the Trust in the last tax year ended 30 June 2023 is unknown. It may or may not be a significant sum.
The wife’s affidavit records the husband working as a driver from mid-2022 to late 2022. She gives unchallenged evidence, that I accept, that “after numerous requests” he disclosed pay slips recording him earning about $800 per week from driving. She contrasts these belatedly disclosed documents against the contents of his financial statement sworn 12 September 2022 recording his sworn evidence as to earnings of $100 per week from driving. It is uncontroversial that in addition to the drawings obtained by the husband from the Trust as identified earlier in these reasons, the costs of the husband's rental accommodation were met by the Trust as were his vehicle running and maintenance costs. He has little savings. The available inference that I draw is that the funds and benefits received both directly and indirectly by the husband post separation well exceeded his reasonable periodic expenses.
It is the husband’s responsibility to disclose relevant documents and information to give an accurate portrait of his relevant financial circumstances. It is not the wife’s responsibility to achieve an accurate understanding as to the husband’s financial circumstances. It is not for her to find the needles in the haystack.
I find that the husband:
(a)Engaged in an informed, considered and calculated scheme to deceive both the wife and the court as to his relevant financial circumstances;
(b)Provided an undertaking as to disclosure as filed on 12 September 2022 at a time when he was informed by his experienced legal representatives as to the nature and content of that undertaking, that the undertaking was knowingly false, and it was given while being aware that the wife would rely on its integrity. The $5 million held by his parents was available to him more than three months earlier, being from early 2022; and
(c)Persisted to maintain the fiction as to his true financial circumstances up and including the fourth day of the five day trial event, including by way of the omission of information in his trial affidavit as to the provision of the $5 million gift and the unsuccessful prosecution of his application as determined by Schonell J on the first day of the trial, such that he only admitted his deceptions when ultimately cornered by the wife’s forensic processes.
I find that the husband has not complied with his positive obligation to disclose material facts, information and documents to provide a clear and comprehensive understanding of his relevant financial conduct as to current assets, liabilities and resources. I find that absent verification, any contention made by the husband as to his financial conduct post separation is unreliable, including as to the contents of his trial financial statement.
This is relevant in considerations when dealing with various items on the balance sheet and impacts on findings made as to contribution and adjustments thereto. As to subject matters recorded in these reasons where I have identified disclosure failures on the part of the husband, I need not be unduly cautious in making findings on those topics in favour of the wife.
THE MAZES OF COMPETING RELIEF SOUGHT
At the commencement of the trial the wife prosecuted final relief by way of a Minute of Order contained in her Amended Outline of Case filed 3 September 2023 (Exhibit 2), being broadly that she retain D Property and H Property, that she will transfer all her interests in B Pty Ltd and the Trust (including all J Property and B Property) and B2 Property to the husband. She proposed to make a cash adjustment to the husband. She contended that the effect of her then proposed orders would be that she receive 70 per cent of the property of the parties and that the husband receive 30 per cent.
At the commencement of the trial the husband prosecuted final relief by way of his Further Amended Response to Initiating Application filed 18 May 2023 broadly seeking to subdivide D Property separating the house and the improvements on the property, so as to retain the improvements. He also sought to retain all the livestock, plant and equipment of his choice as owned by the Trust. He contended that the effect of his then proposed orders would be that he and the wife would receive 50 per cent of the property of the parties.
This position of the parties then shifted as the evidence of the husband’s disclosures solidified over the days of the trial.
By way of a Minute of Order tendered on the third day of the trial (Exhibit 20), the husband amended his relief abandoning his application to subdivide D Property and seeking that the parties continue their farming operations by way of the Trust and the amalgam of the real properties until early 2024. At that time the wife is to assign her interest in the Trust to him for him to assume responsibility for some specified secured liabilities, with the wife to pay him a cash adjusting sum. The husband sought that the parties divide or share equally the rise or fall generated from crops currently growing on the real properties, any costs arising from unsuccessful Supreme Court litigation undertaken by the Trust, and any damages the Trust may receive from a professional negligence claim related to those other proceedings. He contended that the effect of his then proposed orders would be that the wife would receive 55 per cent of the property of the parties and that he receive 45 per cent.
On the late afternoon of the fifth and last day of trial, the parties tendered a consent Minute of Order (Exhibit 26) providing an agreed schedule as to adjustment of their property in specie with the sole disputed item for determination being the value of the adjusting sum payable by the wife to the husband. The wife said on the construction of her balance sheet identifying the property of the parties she ought to receive 53 per cent of that property and pay to the husband $1,633,818. The husband said on the construction of his balance sheet identifying the property of the parties he ought to receive between 45 and 55 per cent of that property dependant on whether the $5 million gift was excluded or included in the balance sheet. It was his case that the wife ought to pay him $3,914,412. As recorded later in these reasons, Exhibit 26 as tendered was incomplete in that it failed to annex a schedule of plant and equipment to be retained by the Trust. It further contained some inaccuracies as to some of the plant and equipment to be retained by the wife in specie. Notwithstanding submissions as made by senior counsel on behalf of both parties, dispute still existed when judgment was reserved as to which of them would retain some specific items of plant and equipment (see [154] – [156]). It is all but inconceivable having regard to the history of this litigation, the experience of the legal representatives for each party and the fact of the conduct of a five-day defended trial, that such matters and issues were not the subject of attention, identification, or an appropriate application until the matter was relisted on the courts own motion on 19 September 2023 and again on 20 September 2023.
THE LAW
In determining claims for alteration of property interests between married couples, I am required to:
(a)Make findings as to the identity and value of the property (including superannuation interests), liabilities, and financial resources of the parties, or either of them, at the time of the final hearing, and determine the legal and equitable interests of the parties in such property;
(b)Consider, identify, and assess the contributions by the parties to the acquisition, conservation and/or improvement of their property, including financial and non-financial contributions and any contributions to the welfare of the family before, during and after the relationship came to an end;
(c)After consideration of altering the interests in the property pool on the basis of contributions, to consider whether there should be any further adjustment to either of the parties on account of the matters set out in s 79(4)(d)–(g) of the Act, including any relevant considerations under s 75(2); and
(d)Ensure that any order made is just and equitable.
The balance sheet – identifying the property of the parties
By the time of the conclusion of the submissions, the joint balance sheet identifying the property of the parties, initially being Exhibit 1, updated by way of Exhibit 21, and taking a final form by way of Exhibit 24, was agreed, except for the items that were not agreed appearing in bold as determined in the following table:
Ownership Description Wife’s value ($) Husband’s value ($) Determination ($) ASSETS 1 Wife “D Property” $11,500,000 $11,500,000 $11,500,000 2 Wife “H Property” $2,900,000 $2,900,000 $2,900,000 3 B Pty Ltd ATF B Trust ASSETS:
J Property $4,100,000.00
Lot 1 B Property $1,446,253
Plant and equipment $1,417,680
Livestock $384,030
Commodities $53,100
Payment due by wife $59,802
Share portfolio $3515
NAB bank account $3.00
Motor Vehicle 7 $70,000
Motor Vehicle 1 $16,000
Net of harvest costs inclusive of tax - $300,000
TOTAL ASSETS: $7,850,383
LIABILITIES:
Payment due to husband $10,150
NAB loans $1,641,360
NAB overdraft $12,365
NAB equipment finance $226,786
NSW Rural Assistance Loan $30,000
RR Company loan $303,356
TOTAL LIABILITIES $2,224,017$5,626,365 $5,626,365 $5,626,365 4 Joint Lot 2 B Property $1,253,747 $1,253,747 $1,253,747 5 Husband Plant and equipment gifted to husband $292,300 $292,300 $292,300 6 Husband B Trust, Financial Statements 30.06.2022, profit distribution summary payment due to Husband from B Trust $10,150 $10,150 $10,150 7 Husband Weapons $4,135 $4,135 $4,135 8 Wife Share portfolio $32,330 $32,330 $32,330 9 Husband Shares in DD Company $5,552 $5,552 $5,552 10 Wife E1 Pty Ltd
ASSETS:
NAB account …02 $78,686
Outstanding loans $600,000
Share portfolio $1,077,532$1,756,218 $1,756,218 $1,756,218 11 Wife Cash at bank
NAB account …49 $138
NAB account …16 $163.71
NAB account …49 $5,525.56$5,827 $5,827 $5,827 12 Husband Cash at bank
NAB account …76 $13.00
NAB account …41 $45
NAB account …84 nil
Commonwealth Bank account …60 $1$59 $59 $59 13 Wife Furniture & goods $14,295 $14,295 $14,295 14 Husband Furniture & goods $2,030 $2,030 $2,030 15 Wife 2023 trailer, registration … $1,800 $1,800 $1,800 16 Husband Mobile Home $12,000 $12,000 $12,000 17 Wife Region BD Licence Application … and … (Estate of the late [Mr AB]) $0 $187,500 $0 18 Husband NAB account held by Mr PP and Ms NN for Mr Alden $5,000,000 $0 $5,000,000 Total $28,400,809 $23,604,309 $28,416,808 LIABILITIES 19 Wife B Trust, Financial Statements 30.06.2022, profit distribution summary payment due by Wife to B Trust $59,802 $59,802 $59,802 20 Wife Credit cards:
NAB credit card account …44: DR $407
NAB credit card account …98: DR$12$419 $419 $419 21 Husband Credit cards:
NAB credit card account …19: $1,203
CBA Mastercard account …60 nil$1,203 $1,203 $1,203 22 Husband Loan from Mr BE NIL $2,000 NIL 23 Husband Loan from Mr BF NIL $37,000 NIL 24 Wife Wife’s Director’s Loan from E1 Pty Ltd payment to wife $600,000 $600,000 $600,000 Total $661,424 $701,024 $661,424 TOTAL ASSETS – LIABILITIES $27,755,384 SUPERANNUATION Member Name of Fund Type of Interest Wife’s value ($) Husband’s value ($) Determination ($) 25 Wife Super Fund 1 Accumulation $27,797 $27,797 $27,797 26 Wife Super Fund 2 Accumulation $48,838 $48,838 $48,838 27 Husband Super Fund 3 Accumulation $14,224 $14,224 $14,224 28 Husband Super Fund 4 Accumulation $43,059 $43,059 $43,059 Total $133,918 $133,918 $133,918 TOTAL NET SUPERANNUATION + NON-SUPERANNUATION $27,889,302 Item 17 - Region BD Licence
The husband identified this item in the grant of probate of the estate of the wife’s late father. The wife and her three siblings each receive 25 per cent of any residue of the estate. The estate was distributed more than ten years ago. There was no evidence that any part of the estate of her late father remains undistributed. Save as to what is recorded in the grant of probate, there was no evidence as to the current value of the ‘application’ for a licence. It is not itself a licence. There was no evidence that the “application” can be realised. The item is rejected. The husband submitted that in the alternative to finding this item as the property of the wife, it be considered as a financial resource of the wife. In Hall v Hall (2016) 257 CLR 490 the High Court said the following in relation to ‘financial resource’ for the purpose of the Act:
[54]The reference to “financial resources” in the context of s 75(2)(b) has long been correctly interpreted by the Family Court to refer to “a source of financial support which a party can reasonably expect will be available to him or her to supply a financial need or deficiency”. The requirement that the financial resource be that “of” a party no doubt implies that the source of financial support be one on which the party is capable of drawing. It must involve something more than an expectation of benevolence on the part of another. But it goes too far to suggest that the party must control the source of financial support. Thus, it has long correctly been recognised that a nominated beneficiary of a discretionary trust, who has no control over the trustee but who has a reasonable expectation that the trustee’s discretion will be exercised in his or her favour, has a financial resource to the extent of that expectation.
(Footnotes omitted)
I find there is an absence of evidence to find that the wife can reasonably expect any funds from this source if she made a call on it in the future. The husband has not discharged the onus to establish this item to be a financial resource.
Item 18 – The $5 million gift to the husband from his parents
The husband contended that as this money had not yet “landed in his bank account” it should not be an item of his property in the balance sheet and ought to be taken into account as a financial resource. The wife contended that the gift of funds has been made by his parents and completed, that the fund has been quarantined for some time in a discrete NAB account by the parents for the husband, and that a finding ought to be made that they hold that fund beneficially for the husband. The affidavit evidence of the husband’s mother is that the fund was available to the husband since early 2022. The oral evidence of the husband is that the transfer of the funds to the husband’s solicitors account is imminent. I find this item to be the property of the husband. This finding is supported by paragraph 2 of Exhibit 26 which anticipates the husband receiving the funds and paying $600,000 to E1 Pty Ltd. The item will be included.
Items 22-23 – Loans from Mr BE and Mr BF
In his financial statement filed 10 August 2023, the husband contended that he had these liabilities in the form of loans. There was no evidence in his affidavit of the loans, apart from a summary statement that due to insufficient funds to meet his day-to-day expenses he borrowed $29,000 from Mr BF (a difference of $8,600 from the value in his financial statement that was not explained) and $2,000 from Mr BE. His affidavit recorded that he sought leave to rely upon source documents evidencing this topic as soon as they were to become available. No document was produced to verify the source of funds he received or the deposit of funds into his bank account. No loan agreement was put into evidence. The husband bears the onus to establish on the evidence as to the fact and terms of any loan agreement. The evidence of the husband, as to the fact of loan transactions, is grounded from the integrity of his evidence as to his financial circumstances. This evidence, absent verification, is unreliable.
I accept that these deficiencies in the husband’s case, when coupled with the wife’s submission as to the husband’s disclosure failures and the consequences flowing therefrom as recorded earlier in these reasons, lead to the conclusion that the liabilities ought not to be included in the balance sheet identifying the property of the parties. The items are rejected.
Is it just and equitable to adjust property?
In Stanford & Stanford (2012) 247 CLR 108 the High Court observed that it is necessary for me to be satisfied that justice and equity will be achieved as part of the adjustment process pursuant to s 79 of the Act. The requirements identified in the High Court are readily satisfied in this matter having regard to:
(a)The long period of the relationship of the parties and the myriad of contributions made over that period;
(b)The parties’ relationship having broken down and them now living apart;
(c)The concession of each party as to property being adjusted to one another and the inability of the parties to continue to jointly own their property; and
(d)Title to property needing to be changed or adjusted when consideration is given to the contribution and other factors identified below.
The parties agreed that a single pool approach as to superannuation and non-superannuation property was appropriate.
Contributions
I find that the wife made direct financial contributions at the commencement of the relationship by way of superannuation with BG Financial Services of $7,999, an BG Financial Services Bond of $4,212, Superannuation Fund 5 of $3,586, a personal bank account savings with NAB of $8,634, Motor Vehicle 8 purchased new in 1994 for $29,000, and a share portfolio valued at $7,800. She additionally contributed her equity in the Suburb AN unit later sold in 2003, she receiving $190,005. Each of these direct financial contributions were applied for the benefit of the parties.
I find that the husband made direct financial contributions at the commencement of the relationship by way of Motor Vehicle 9, a vessel later sold for $8,000, savings, and superannuation of $5,235. He also contributed his units in the AL Trust. This unit trust vested on 30 June 2010. The husband attached part of a financial statement of the unit trust to his affidavit recording that he received a distribution of $25,093 at 30 June 2010. The wife said that this distribution was applied in part to pay the NAB loan the husband has obtained to part fund the investment such that the net receipt of the husband was $5,000. The wife in her affidavit said that the value of this NAB loan at the date of the marriage was $28,965, exhibiting a copy of the husband’s loan document dated mid-1997. Having regard to the contents of the loan statement and the disclosure failures of the husband, I prefer the wife’s evidence on this subject matter and so find. Each of these direct financial contributions were applied for the benefit of the parties.
Each party contributed by way of gifts from their respective parents $200,000 to fund their acquisition of the original B Property.
Adopting the reasoning identified by the Full Court in Gosper and Gosper (1987) FLC 91-818 (“Gosper”) and Kessey and Kessey (1994) FLC 92-495 (“Kessey”) I find that in 2006 the wife’s parent’s, on behalf of the wife, directly contributed livestock valued at $155,294 and a quantity of plant and equipment. I accept and find consistent with the wife’s evidence that the gifts in specie from her parents provided additional start-up capital in order for she and the husband to further their farming operations.
The husband's affidavit recorded contributions made by the husband's parents on behalf of him in providing plant and machinery, chemicals and fuel used in the parties farming operations at no financial impost to them. In cross examination the husband “walked back” from his evidence conceding that the parties had in fact paid his parents for the use of machinery and for chemicals and fuel. The husband’s affidavit gave evidence of extensive labour provided by his father for the benefit of the parties on their farms during the period of the marriage. The wife agreed that the husband’s father did some work on the farms but challenged the extent of the work as alleged by the husband. Having regard to the absence of integrity to some parts of the husband’s evidence, I have reservations relying on his evidence alone to ground a finding on this subject matter. In any event, it is difficult to quantify from the evidence the value or extent of this work from the evidence. I take it broadly into account in weighing the respective contributions.
During the period of cohabitation, the wife made additional significant direct financial contributions by way of her inheritance by way of real property that remains in specie, being:
(a)In early 2006 she inherited H Property, then valued at $333,225. It is agreed that the parties have subsequently improved this property. It is now valued at $2,900,000; and
(b)She inherited D Property. It was retrospectively valued at $2,700,000 as at mid-2006. It was agreed that it had been improved by the parties from that time until it was next valued at $3,260,000 in mid-2013. It is further agreed that it has been further improved by the parties since that time. The improvements from 2006 made by the parties have been substantial. The parties disagreed as to the impact of the value of these improvements. It is now valued at $11,500,000.
The Full Court in Pierce v Pierce (1999) FLC 92-844 directed that the weight such financial contributions attract is determined when regard is had to the use made of those contributions. Each of these properties have been integral in the development of the current property of the parties. D Property is the hub of their agricultural enterprise. These inherited properties have not been the subject of borrowings during the marriage. They now comprise in the range of half of the current pool of property available for adjustment between the parties. I find that each of these direct financial contributions attract very significant weight in favour of the wife.
I find that the wife contributed her inheritance of the E1 Pty Ltd shareholding (see [28]). These assets held by E1 Pty Ltd remained in specie throughout the balance of the marriage. As recorded in the joint balance sheet (Exhibit 24) the share portfolio had increased to a value of $1,077,532 and the cash at bank and litigation funding provisions to the parties funded from this source had accumulated to $678,686. The three most recent tax returns of the wife for the financial years ended 2020 – 2022 inclusive (Exhibit 23) record the value of the dividends received by the wife from E1 Pty Ltd for 2020 by way of a franked dividend of $20,000 and a franking credit of $8,572 (total $28,572), for 2021 by way of a franked dividend of $40,000 with franking credits of $17,142 (total $57,142) and none for 2022. This dividend flow benefited the parties. I find that this direct financial contribution by the wife, that remains in specie save as to it being applied to litigation funding, also attracts weight in her favour.
I find adopting the reasoning identified in Gosper and Kessey, that the wife’s brother Mr ZZ, on behalf of the wife, directly contributed the now statute barred loan of $300,000 in 2009 used to acquire B2 Property. I find that the parties could not have acquired that property, considered important to their Rural Enterprise (they previously leased it), without the advance from Mr ZZ. The husband’s parents refused to lend the parties money to enable the acquisition and that they refused to buy the property themselves to lease it back to the parties. The parties could not get approval for a loan from the bank to fund the purchase. There is no evidence that it was not the intention of Mr ZZ to benefit the wife, his sister in not calling on the loan to be repaid. I find that the provision of the advance by the wife’s brother enabled the acquisition of an important piece of property, albeit also now improved by the parties. It is currently valued at $1,253,746. This contribution also weighs in favour of the wife.
In mid-2012, the wife contributed the gift from her sister in the sum of $700,000 sourced from the sale of her parent’s house. A short time later, the wife contributed $109,601 from her father’s estate. I find that each of these direct financial contributions were applied for the benefit of the parties. Each of these items also weigh in favour of the wife.
During the period of cohabitation, the husband made direct financial contributions by way of his workers compensation payment of $332,825 in 2010 and motor vehicle compensation payment of $143,151 in 2016, each being paid into the bank account of the Rural Enterprise. I find that each of these direct financial contributions were applied for the benefit of the parties. Each of these items weigh in favour of the husband.
In final submissions the husband contended that his contributions have been utilised differently to those of the wife, stating that the E1 Pty Ltd money had “sat there in quarantine” and it was able to do so due to the income produced from other streams for the family to live on. The husband said that this is very different from the way that, for example the husband’s personal injury money, has been used, which went straight into the B Trust. This submission was inaccurate as to the dividend income the wife received from E1 Pty Ltd. The wife responded by stating that it was a joint decision to put particular funds to specific applications. I do not accept the husband’s submission. It is contrary to well established authority. In Dovgan & Dovgan [2021] FamCA 306, Harper J restated that “all contributions must be weighed collectively and so it is an error to segment or compartmentalise the various contributions and weigh one against the remainder” (at [347]).
I find the husband has made direct contributions post separation that remain in specie being the gift of the plant and equipment received from his parents valued at $292,300 and the $5 million. These in specie contributions comprise slightly under 20 per cent of the current pool of property available for adjustment between the parties. I find that each of these very recent direct financial contributions attract significant weight in favour of the husband.
The husband’s affidavit contained lengthy and detailed evidence his physical work on the rural enterprise of the parties throughout the period of the marriage and after separation up until the date of the trial, undertaking “long hours” of this work. That portrayal of “hands on” physically hard labour was illustrated to be somewhat inaccurate during his cross examination. He conceded that from 2006 his work on the farm had been in the range of 90 per cent of a supervisory nature of employees and contractors and 10 per cent of a physical nature. That said, the wife agreed that the husband worked hard on the farm, especially during seasonal periods and often for long hours into the night during periods of harvest and shearing. It was not her case that the contributions made by the husband of this character at any time during the marriage or after separation were other than equal to those that she had made by way of her work in the administration of the Rural Enterprise, the work she undertook outside on the farm and her uncontroversial contributions as primary homemaker and parenting of the children.
The wife gave unchallenged evidence that I accept as to her role in the administration of the Rural Enterprise being greater than simple bookkeeping. She completed detailed record‑keeping and extensive clerical activities. She gave particularised and detailed evidence in her affidavit as to physical tasks she undertook in and around the farms. Her evidence on this topic was not eroded over the course of her cross-examination. I accept it.
Each of the parties developed a large volume of affidavit evidence criticising the other for contended failures in their respective farm duties both prior to and after the orders made 8 November 2022. By way of example, the husband was critical of the wife’s management of the farm for a period of three weeks whilst he was on holiday over a Christmas period. This was the subject of extensive cross examination at trial. By the conclusion of evidence, the issue had become somewhat arid, the husband conceding that he had left management of the farm while he was away “in my staff’s hands”. The husband gave pages of affidavit evidence and periods of cross examination directed at attempting to maximise findings as to his physical work on the farm after the November 2022 orders and minimise the wife’s physical work on the farm for the same period. This included putting into evidence self-serving lists of tasks undertaken complying with a specific order made in November 2022.
The husband submitted that the assessment of the contributions of the parties, by way of their physical efforts, should be analysed by way of four distinct periods of time being:
(a)From the commencement of cohabitation until 2015. From that time both of the children had commenced boarding school;
(b)From 2015 until the date of separation in May 2020;
(c)From May 2020 until the making of the consent orders on 8 November 2022; and
(d)From the date of the November 2022 orders until the date of trial.
The husband agreed with the wife that the assessment of their respective contributions by way of farm work, homemaking and parenting until 2015 ought to be assessed as equal. He submitted that his contributions by way of his farm work and hours engaged in that work, coupled with his farming knowledge, skill, and expertise (being superior to the farming skills and knowledge of the wife) after 2015 outweighed those of the wife as her parenting duties had ceased. The husband’s summary of argument (Exhibit 3) records:
Both children attended boarding school as and from […] 2013 (Ms TT) and […] 2015 (Mr UU). The wife continued to perform the administrative tasks connected with the farm from that time. She did not seek paid employment off the farm at that point, or as far as the husband is aware, thereafter. The wife is a qualified [professional]. She has a significant earning capacity not connected with any asserted ability to farm.
The husband submitted that an “actual examination” and realistic qualitative evaluation of the long and hard work undertaken by him from 2015 to separation and from separation to November 2022, when compared to the work undertaken by the wife, ought to conclude a contribution weighting in his favour. He agreed that the consent orders made in November regulated with precision a regime as to farm work and administration that the parties each implicitly conceded was equitable such that his submission lost some, but did not exhaust, foundation during this last period.
I queried if the wife’s contributions of this character post 2015, on his construction, reverted to equal to those of the husband during school holiday periods when the children were “back on the farm”, consistent with that which was the case prior to 2015. The husband avoided engaging with this enquiry and instead submitted that his contention was to the effect that he was “not devaluing the homemaking contribution”. I enquired of the husband as to whether his case had descended into what the Full Court has dissuaded first instance judges from conducting, much like an accounting exercise. He said that he had not.
The wife submitted in her outline (Exhibit 2) that any contention that the husband makes in regard to a “special contribution” argument are to be “consigned to the judicial dustbin”. She highlighted that both parties come from multigenerational farming backgrounds and that she does not wish to diminish the husband’s skills and contributions. She submitted that when the husband was working hard as a contractor, on their farm and at AP Centre, she had two children under school age (who boarded away for school) and a farm, and also worked long hours. She acknowledged that neither could have done the work they did without the other.
The wife firmly submitted that “hours worked” alone does not adequately evaluate respective contributions alone. She further identified that the topic of the roles undertaken by each party had not been an issue between them until the commencement of this litigation such that they were content to continue in the roles that they had developed over their relationship prior to 2015 from that time up to trial.
I accept the gravamen of the wife’s submissions on this topic. There is no evidence in the husband's case, notwithstanding what is contained in his outline document, that there was any discourse between the parties as to the wife obtaining employment off farm after 2015, or even as to a request of the husband for her to do so.
I accept the evidence of the wife in her trial affidavit (at paragraph 78) that the husband’s function within the home environment was one where he worked on the farm and worked hard, whilst the wife did “pretty much” everything else. She stated that this is not to say that she and the husband “ever really talked about roles, rather that these evolved over time” and were largely from her perspective just accepted as their combined normal.
On the facts and in the circumstances of this case, I reject the husband’s contentions that the work undertaken by him on the farm from 2015 to trial, when compared to that undertaken by the wife, ought to achieve a contribution weighting in his favour. His contributions could not have been made without the breadth of all the contributions made by each of the parties in partnership over the prior years since the marriage.
Adopting the statement of Wilson J in Mallett v Mallett (1984) 156 CLR 605 at [636] that “equality will be the measure, other things being equal, only if the quality of the respective contributions of husband and wife, each judged by reference to their own sphere, are equal”, I find that:
(a)Each party applied their best endeavours to the roles they undertook in their respective spheres within the marriage dynamic they created and shaped;
(b)The role of each evolved within the dynamic of their relationship over the course of their marriage up to the time of the trial; and
(c)Throughout the distinct periods identified by the husband, both he and the wife have continued to apply their best efforts to the Rural Enterprise.
I do not accept for the purpose of this determination that suddenly there is some overlay relevant to these proceedings that something should have been happening differently, and that a judge looking at the parties’ affairs in hindsight should qualitatively assess that which was not remarkable to them at the time.
To my mind, in the circumstances of this case, the efforts of the husband to conduct a minuet forensic examination of the details of selective contributions extolling his own efforts and attempting to diminish those of the wife was misplaced.
Conclusion as to contributions
The wife sought a contribution finding as to equality. The husband’s contentions during submission shifted making them difficult to follow. If I understand their final articulation, in the event the $5 million gift is included in the balance sheet identifying the property of the parties, he also said that a finding of equality as to contribution ought to be made.
Notwithstanding, the parties may be agreed as to the contribution finding, the Full Court in Horrigan & Horrigan [2020] FamCAFC 25 emphasised that the proper approach to the assessment of contributions is:
35…well established that an assessment of contributions is not a mathematical exercise, but rather involves the identification and assessment of all of the parties respective contributions, in a holistic way across the course of the relationship and in the post separation period to the point of assessment
As to that holistic assessment, all contributions must be weighed collectively and not by way of so compartmentalising one against others or the remainder. Taking into account all of the contributions identified in these reasons, contributions are assessed as equal. This will see each of the husband and the wife receiving property to the value of $13,944,651.
Adjustment to the contribution findings
The husband is aged 59. The wife is aged 57.
The wife is in good health. She seeks to continue farming until retirement at 75 years of age.
The husband has lived with two injuries for which he received compensation. He consumes a range of medication to achieve some relief from this pain. These injuries have not prevented his capacity to work on the farm for long periods, to drive, or undertake contract work off farm. He too seeks to continue to conduct a rural enterprise. The contract work in the financial year ended 30 June 2021 produced income for the Trust of $95,840. His driving in the second half of 2022 generated income of $800 a week. There was little evidence to make a finding that either source of income would not be available to the husband in the future should he elect to exercise that capacity.
The wife has not worked off the farm since the eldest child was born in 2001. I find she has qualifications by way of a degree. She is not a qualified professional as the husband asserts. Her capacity to work off farm and any future income she may achieve are not known.
The husband submits that the size, characteristics, and features of the real properties he will retain are inadequate to derive a sufficient income for his self-support by way of future farming operations. The wife puts this into issue. There is insufficient evidence as to prospective income and expenses to make a finding as to the financial viability of the real property he will retain. He has the benefit of the plant and equipment gifted by his parents. He will receive the lion's share of the Trusts plant and equipment, all its livestock and the current crop growing on the properties. This is to be contrasted to the wife who will have limited plant and equipment. She may elect to restock. The wife has superior farming infrastructure on D Property and H Property when compared to that available to the husband on his real properties. The husband will have the benefit of the fundamental integers for the continuation of his desire to “keep farming”. He can use his cash to create such infrastructure as he considers prudent on the real properties he will retain in specie.
Each of the parties pursuant to the contribution findings have property available to them just short of $14 million. I find that the value of this property alone would be sufficient to ensure that they can more than adequately support themselves and live comfortably in the future. The desire of either party to continue to invest in a farming enterprise by way of a future lifestyle election is simply that – it is a matter for them to decide how they wish to construct their investments, any returns therefrom or their financial security into the future.
The superannuation entitlements of the parties' form part of the single pool of property being adjusted between them. The parties agree (see paragraph 18 exhibit 26) to equally contribute to any liability of the Trust by way of the AO proceedings upon it crystallizing. The value of this liability is currently unknown, being dependant on the quantum of the Supreme Court costs order payable by the Trust and the success of the professional negligence claim made by the Trust against AU Lawyers.
The wife contended that the contents of the husband's parent's wills made late 2022 providing the husband with a 40 per cent interest in their estates (subsequent to their death) ought to achieve an adjustment to the contribution findings her favour when cast against the circumstance of her inheritances from her parents now forming part of the current property being adjusted as between she and the husband. I give this factor no weight. The husband’s parents could change the terms of their will at any time. The current financial circumstances of the husband's parents are unknown, as are their respective current health presentations and life expectancies. Each of his parents may encounter a vast range of the vicissitudes of life in their futures.
The wife further submitted a “moral obligation” to repay her brother Mr ZZ the $300,000 he advanced 14 years ago ought to achieve an adjustment to the contribution findings in her favour. It is uncontroversial that the wife has not offered to repay her brother the loan funds for many years, notwithstanding that she has had a capacity to do so by way of the assets of E1 Pty Ltd. In any event, as acknowledged by the wife in submissions, to take this factor into account in the adjustment to the contribution findings when it has been the subject of evaluation, consideration and weighing in the contribution findings would occasion a double counting of this item. The wife's submission on this topic is rejected.
The factor in the adjustment to the contribution findings that weighs heavily in favour of the wife is the failure of the husband to disclose his relevant financial circumstances. Such failures, as identified earlier in these reasons, have obstructed the obtaining a clear picture as to the husband’s current assets and resources. I accept the wife’s submissions that these disclosure failures necessitate a robust adjustment in her favour to the contribution findings.
The wife sought an adjustment from the contribution findings of three per cent. The husband submitted that he ought to receive an adjustment to the contribution finding in his favour of five per cent primarily grounded in the wife taking the “jewel and the crown” of D Property and the costs he contends will need to be incurred to make his adjusted real properties financially viable farms.
A holistic consideration of the matters raised above, as are relevant, warrants an adjustment from the contribution findings in favour of the wife of 2.5 per cent. In dollar terms, the value of this adjustment to the wife is $697,232 a difference of $1,394,464.
CONCLUSION – JUSTICE AND EQUITY
As recorded earlier in these reasons, the parties agreed during submissions that their property is to be adjusted in specie in the terms identified in Exhibit 26 save as to the value of the adjusting amount to be paid to the husband by the wife in paragraph 11 of the exhibit. The import of the consent minute is that the wife is to be declared the legal and beneficial owner of D Property, H Property, E1 Pty Ltd and the wife shall transfer to the husband all her shareholding, right, title and interest in the Second respondent and the Trust and her interest in the B2 Property.
The parties said during submissions that a consent order would be made for the husband pay E1 Pty Ltd the sum of $600,000 within seven days from the $5 million gifted by his parents (see paragraph 2 Exhibit 26). The object of this payment was to reimburse E1 Pty Ltd for the monies withdrawn from its bank account pursuant to the Orders made 8 November 2022 and 13 July 2023 utilised by the husband and the wife for litigation funding. Notation C of Exhibit 26 recorded that the wife agreed to pay to the husband half of that sum, being $300,000, at the same time as she made the adjusting payment to the husband. Exhibit 26 did not provide for an order to be made to this effect. As I understand the parties’ submissions, the objective of this arrangement was twofold. The first was to rectify a circumstance should the litigation funding withdrawals accessed from E1 Pty Ltd used to meet each party’s paid legal costs engage with potential consequences arising from Division 7A Income Tax Assessment Act 1977 (Cth). The second was to provide for each party to meet their own paid legal fees from their post s 79 determination adjusted property. The net value of E1 Pty Ltd in the balance sheet would not change, nor would how the items of property to be adjusted between the parties at the date of this determination alter. The equal adjustment of the benefit of the E1 Pty Ltd monies to each party is by way of prospective events on terms that the parties have agreed. I will not interfere in that agreement.
So as to ensure implementation of the express agreement between the parties, an order will be made that the husband receive the adjusting sum, calculated from the balance sheet identifying the property of the parties recorded at [99] as adjusted pursuant to these reasons, together with an additional amount of $300,000 payable by the wife at the same time. Having regard to the propensity of the parties to engage in intractable disputes as to relatively minor items, the making of such an order is appropriate so as to avoid the potential for any future dispute on this subject matter.
The parties in submissions agreed that the net value of the transfer by the Trust to the wife of the specified plant and equipment $238,262 (see notation C to Exhibit 26), being $254,390 (paragraph 6(e) of Exhibit 26) less the liability attaching to Motor Vehicle 3 of $16,127.60 (paragraph 13 of Exhibit 26). They agreed at the time of submissions that this reduced the value of the Trust to be received by the husband from $5,626,365 to $5,388,103. The value of the specified plant and equipment at $238,262 would be an asset in the wife’s hands.
Exhibit 26 identified a schedule at paragraph 6(e) of plant and equipment to be retained by the husband. Exhibit 26 as tendered did not contain or attach that schedule. After judgment was reserved on 8 September 2023 the parties were requested by way of five emails sent from chambers between 12 September 2023 and 18 September 2023 for the omitted schedule. The schedule of plant and equipment was not provided. On 19 September 2023 the following notations and orders were made:
THE COURT NOTES THAT
A. Judgment in this matter was reserved on 8 September 2023.
BPrior to the reservation of judgment, the parties tendered Exhibit 26 being an agreed process of adjusting some items of property in specie between them. That Exhibit at paragraph 6(e) recorded annexing a schedule of plant and equipment. That schedule did not form part of the document being Exhibit 26.
C.Chambers has forwarded 5 email requests since judgment was reserved between 12 September and 18 September 2023 requesting the parties provide the schedule identified in Exhibit 26.
D.The proceedings have been relisted today on the courts own motion to obtain the schedule or to otherwise permit the reserved judgment to be delivered.
E.The parties advise the Court today that the schedule is “not finalised” that there were some items either included or omitted from the schedule as understood between the parties and that this dispute has refined to a […] potentially forming an accessory to a […] or an accessory to another piece of farm equipment.
THE COURT ORDERS THAT
1.That in the event the parties fail or neglect to submit the agreed schedule identified in paragraph 6(e) of Exhibit 26 on or before 11am tomorrow 20 September 2023 the matter will be determined without the benefit of that schedule.
2.In so far as is necessary, I grant the parties leave to reopen restricted to the provision of he agreed schedule to Exhibit 26 upon the basis as identified in the prior order.
A letter from the husband’s solicitors dated 20 September 2023 with several attachments was sent to chambers that day on behalf of both parties. The letter identified continuing disputes as items and values notwithstanding the joint express agreed position of the parties during submissions as recorded at [153]. The matter was re listed again on the courts own motion on 20 September 2023. After receiving submissions leave was granted for the parties to re-open so that the letter directed to chambers from the husband’s solicitors dated 20 September 2023 and annexure A to that letter (being the omitted schedule at paragraph 6(e) of Exhibit 26) were the subject of tender into evidence (Exhibit 27). The letter included the terms of the parties agreed amended list of items of plant and equipment to be retained by the wife in paragraph 12 of Exhibit 26. Further notations and orders were made as follows:
THE COURT ORDERS THAT:
1.Leave is granted to the parties to reopen the proceedings for the purposes of providing the schedule identified in paragraph 6 (e) of Exhibit 26.
2.By consent, the letter from the solicitors for the husband dated 20 September 2023 together with annexure A thereto will be marked as Exhibit 27.
THE COURT NOTES THAT
A.The wife agrees to the typographical errors in Exhibit 26 identified at the midpoint of the letter from the husband solicitors dated 20 September 2023.
B.The husband agrees to the inclusion to proposed order 12 of Exhibit 26 as to the three items at the bottom of that letter.
C.The parties agree that the value of the items retained by the wife from the trust is now $257,640.
3. Judgment is reserved to a date to be advised.
(As per the original)
As recorded, the parties agreed on 20 September 2023 that the value of expanded list of specified items the wife would receive in specie from the Trusts plant and equipment was now $257,640 (it was $238,262). Astonishingly, they could not agree as to the value of the Trust thereafter to be retained by the husband. By application of the agreed formula as articulated by each party during submissions (see [153]), the value of the Trust retained by the husband is $5,626,365 less $257,640, being $5,368,725. The agreed additions of plant and equipment to be received by the wife as recorded in Exhibit 27 will be included in paragraph 12 of Exhibit 26.
Paragraph 7 of Exhibit 26 records that the husband will assume responsibility of any liability of the wife payable to the Trust. Although it was not the subject of submission, Item 18 in the balance sheet is a 30 June 2022 liability of $59,802 payable by the wife to the Trust. It forms an asset of the Trust on the balance sheet. So as to give effect to what has been agreed between the parties in Exhibit 26, it is appropriate for the husband to assume responsibility for this liability.
Paragraph 11 of Exhibit 26 records the proposed order as to the quantum of the adjusting sum to be paid by the wife to the husband. Paragraph 24(b) is directed to how the proceeds of sale of D Property are to be applied if the wife does not pay the primary sum pursuant to proposed Order 11. Paragraph 24(b) in Exhibit 26 identifies the incorrect numbered paragraph referring back to the adjusted sum to be paid to the husband by identifying “order 10”. This slip ought to read Order 11. The proposed Order 24(b) will be amended to record Order 11.
Further, Paragraph 24 of Exhibit 26 references “Order 20” as the order for the sale of D Property in the event of default of the wife paying the adjusting sum. The order for the default sale of D Property is paragraph 22 of Exhibit 26. This slip in paragraph 24 will be rectified to read Order 22.
Exhibit 26 reproduces paragraph 21 again at paragraph 25. Paragraph 25 will be omitted from the consent orders.
Exhibit 26 contained other notations that are unnecessary to incorporate in the s 79 orders to be made, including attaching Exhibit 24 (the final joint balance sheet). Exhibit 24 did not form part of the document tendered becoming Exhibit 26. The unnecessary notations will be omitted as will the attachment of Exhibit 24 to the sealed orders.
Some of the paragraphs of Exhibit 26 contain incorrect cross references (for example interchanging ‘Rural Enterprise’, ‘matrimonial businesses’ and ‘company’) and other inconsistent definitions. The consent orders to be made in terms of Exhibit 26 will be rectified to maintain a consistency in definition and references to reflect what I understand was conveyed during submissions as the intentions of the parties.
The husband’s overall entitlement to the property of the parties identified in the balance sheet above of 47.5 per cent equates to $13,247,418.
Pursuant to the agreed orders, the husband currently has in his possession or will receive the following:
Ownership Description Determination ($) ASSETS 3 Joint B Pty Ltd ATF The B Trust
$5,626,365 less $257,640$5,368,725 4 Joint Lot 2 B Property $1,253,747 5 Husband Plant and equipment gifted to husband $292,300 6 Husband Profit distribution payment from B Trust $10,150 7 Husband Weapons $4,135 9 Husband Shares in DD Company $5,552 12 Husband Cash at bank $59 14 Husband Furniture & goods $2,030 16 Husband Mobile Home $12,000 18 Husband NAB account held by Mr PP and Ms NN for Mr Alden $5,000,000 Total $11,948,698 LIABILITIES 21 Husband Credit cards $1,203 19 Wife 2022 Distribution payable by Wife to B Trust $59,802 Total $61,005 TOTAL ASSETS – LIABILITIES $11,887,693 SUPERANNUATION Member Name of Fund Determination ($) 27 Husband Super Fund 1 $14,224 28 Husband Super Fund 4 $43,059 Total $57,283 TOTAL NET SUPERANNUATION + NON-SUPERANNUATION $11,944,976
So as to achieve $13,247,418 or 47.5 per cent, the husband is required to receive an additional $1,302,442. Pursuant to notation B of Exhibit 26, it is agreed that he is to receive an additional $300,000. Hence, to give effect to this adjustment of property, the wife will be required to pay to the husband $1,302,442 plus $300,000, a total of $1,602,442 pursuant to Exhibit 26 paragraph 11 and notation B.
The wife’s overall entitlement to the property of the parties identified in the balance sheet above of 52.5 per cent equates to $14,641,884.
Ownership Description Determination ($) ASSETS 1 Wife “D Property” $11,500,000 2 Wife “H Property” $2,900,000 3 Joint Plant and equipment from B Trust less specified liability $257,640 8 Wife Share portfolio $32,330 10 Wife E1 Pty Ltd $1,756,218 11 Wife Cash at bank $5,827 13 Wife Household furniture & goods $14,295 15 Wife Trailer, registration … $1,800 Total $16,468,110 LIABILITIES 20 Wife Credit cards $419 24 Wife $600,000 Loan payable to E1 Pty Ltd $600,000 Total $600,419 TOTAL ASSETS – LIABILITIES $15,867,691 SUPERANNUATION Member Name of Fund Determination ($) 25 Wife Super Fund 1 $27,797 26 Wife Super Fund 2 $48,838 Total $76,635 TOTAL NET SUPERANNUATION + NON-SUPERANNUATION $15,944,326
The wife accordingly currently holds $15,944,326, she ought to hold $14,641,884. Hence $1,302,442 is payable to the husband plus the $300,000 payable pursuant to Exhibit 26 paragraph 11 and notation B being a total of $1,602,442.
Standing back, I find the distribution of the property of the parties in the terms identified above is appropriate and otherwise just and equitable. Orders will be made accordingly.
I certify that the preceding one hundred and sixty-eight (168) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Campton. Associate:
Dated: 22 September 2023
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