BABBITT & BABBITT
[2010] FMCAfam 722
•16 July 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BABBITT & BABBITT | [2010] FMCAfam 722 |
| FAMILY LAW – Property – competing property applications – where wife sought 58% and the husband sought 60% of the property pool – contributions – where one child suffers from Aspergers syndrome and in care of one parent – shareholders loans and impact on business valuation – post separation contributions – impact of injury on ability to work – dispute over who retains the former matrimonial home. |
| Family Law Act 1975 (Cth), ss.79, 79(4), 75(2) |
| Hickey v Hickey & Attorney-General of the Commonwealth (Intervener) (2003) FLC 93-143 Russell & Russell (1999) FLC ¶92-877; [1999] FamCA 1875; 25 Fam LR 629; 154 FLR 171 G & G (1984) 9 Fam LR 969; (1984) FLC ¶91-582 Norbis & Norbis (1986) FLC ¶91-712; (1986) 161 CLR 513; [1986] HCA 17; 65 ALR 12; (1986) 60 ALJR 335; (1986) 10 Fam LR 819 Brandt & Brandt (1997) FLC ¶92-758; (1997) 22 Fam LR Farmer & Bramley (2000) FLC ¶93-060; [2000] FamCA 1615; (2000) 27 Fam LR 316 Figgins & Figgins (2002) FLC ¶93-122; [2002] FamCA 688; 29 Fam LR 544; 173 FLR 273 |
| Applicant: | MS BABBITT |
| Respondent: | MR BABBITT |
| File Number: | DNC 546 of 2008 |
| Judgment of: | Turner FM |
| Hearing dates: | 28, 29, 30 June & 1, 2, July 2010 |
| Date of Last Submission: | 13 July 2010 |
| Delivered at: | Darwin |
| Delivered on: | 16 July 2010 |
REPRESENTATION
| Counsel for the Applicant: | Ms Holtham |
| Solicitors for the Applicant: | Holtham & Associates |
| Counsel for the Respondent: | Mr Francis |
| Solicitors for the Respondent: | David Francis & Associates |
ORDERS
That within 45 days from the date hereof the Husband shall do all such acts and things necessary and sign all such documents as may be required to transfer to the Wife at the Wife’s expense all of his right title and interest in the property situated at Property O together with all of the furniture and equipment, fittings, whitegoods and other items contained in or situated at the property.
That the Wife retain for her sole use and benefit the property situated at Property K together with all of the furniture and equipment, fittings, whitegoods and other items contained in or situated at the property.
That within 45 days from the date hereof the Wife shall do all such acts and things necessary and sign all such documents as may be required to transfer to the Husband at the Husband’s expense all of her right title and interest in the property situated at Property J together with all of the furniture and equipment, fittings, whitegoods and other items contained in or situated at the property.
That contemporaneously with and in exchange for the transfer by the Wife of her right title and interest in the property situated at Property J as referred to in Order (3), the Husband at his expense shall do all such acts and things necessary and sign all such documents as may be required to discharge the joint mortgage debt to the National Australia Bank over the said property and thereafter indemnify and keep indemnified the Wife against all liability which might otherwise attach to the Wife arising out of or in any way connected with the mortgage debt.
That within 45 days from the date hereof the Wife shall do all such acts and things necessary and sign all such documents as may be required to transfer to the Husband at the Husband’s expense all of her right title and interest in the property situated at Property W.
That contemporaneously with and in exchange for the transfer by the Wife of her right title and interest in the property situated at
Property W as referred to in Order (5), the Husband at his expense shall do all such acts and things necessary and sign all such documents as may be required to discharge the joint mortgage debt to the National Australia Bank over the said property and thereafter indemnify and keep indemnified the Wife against all liability which might otherwise attach to the Wife arising out of or in any way connected with the mortgage debt.
That within 45 days from the date hereof and contemporaneously with all property transfers as set out in these orders the Husband pay to the Wife the sum of $264,765.50.
That the parties shall within 14 days from the date hereof convene properly constituted meetings of the directors of [S] Pty Ltd (ACN [1]), [P] Pty Ltd (ACN [2]) and [D] Pty Ltd (ACN [3]) (hereinafter referred to as ‘the companies”) at which meetings:-
(a)The Wife will resign as office holder of each such companies of which the Wife is an office holder;
(b)The Wife shall transfer at the Husbands expense to the Husband or to the Husbands nominee, her legal and beneficial ownership in the shareholding of such companies including her interests in any shareholders loans;
(c)The Wife shall deliver to the Husband or to the Husband’s nominees all books and records of such companies as may be in the possession of the Wife; and
(d)The parties shall pass all such resolutions and shall do all such acts and things necessary and sign all such documents as may be required to ensure that the matters referred to in Order 8 (a), (b) and (c) are lawfully effected in accordance with the constitutions of such companies.
That in exchange for the resignation of the Wife as an office holder of the companies and her transfer of shares in the companies the Husband shall:-
(a)Procure the release of any guarantees provided by the Wife to the creditors of the companies;
(b)Indemnify and keep indemnified the Wife against all liabilities whatsoever which might otherwise accrue to the Wife in respect to the debts of the companies including the mortgage over Property R; and
(c)Pay all taxation bills which have or may accrue to the Wife in respect to her involvement as an office holder or a shareholder in the companies.
That subject to the compliance by the Husband of the obligations contained in Order 9 the Wife acknowledges and agrees that she has no further claims against the companies in respect to unpaid salary, dividends, shareholders loans or otherwise and that the wife releases and discharges the companies from any such claims.
That the Wife retain for her sole use and enjoyment:-
(a)Toyota Camry;
(b)Jewellery; and
(c)The benefit of any superannuation policies in the Wife’s name.
That the Husband retain for his sole use and enjoyment:-
(a)Quintrex Boats;
(b)Firearms; and
(c)The benefit of any superannuation policies in the Husband’s name.
That otherwise each party retain all other property in their possession, and be responsible for any liabilities associated with such property.
Each party shall do all such things and sign all such papers and documents that are necessary to give effect to the orders provided that in the event a party unreasonably fails or refuses to sign pursuant to these orders, then a Registrar of the Court pursuant to s.106 (A) Family Law Act 1975 is authorised to sign any such document on behalf of the defaulting party.
IT IS NOTED that publication of this judgment under the pseudonym Babbitt & Babbitt is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DARWIN |
DNC 546 of 2008
| MS BABBITT |
Applicant
And
| MR BABBITT |
Respondent
REASONS FOR JUDGMENT
Introduction
This is a matter in which there are competing applications concerning the division of property between the Applicant Wife and the Respondent Husband.
I note that separation occurred in 2007, and since that date the parties engaged in extensive negotiations, and unfortunately due to the parties being entrenched in their respective positions property proceedings were not commenced until September 2009 by the Wife.
Background
The Wife is currently aged 47 having been born [in] 1962 in Australia and is currently unemployed, but is seeking employment as a [omitted].
The Husband is currently aged 45 having been born [in] 1964 and is a director of [S] Pty Ltd, a company situated in Darwin which is the proprietor of the business specialising in [omitted]. The Husband runs the business.
The parties commenced cohabitation in 1993, were married [in] 1994 and separated under the one roof on 15 September 2007.
The parties physically separated in or around January 2008 when the Husband left the former matrimonial home at Property O.
As a result of a work accident the Husband returned to Property O in or around March 2008 and remained living at the residence until December 2008.
The parties divorce became final on 17 March 2009.
There are three children of the marriage, [X] born [in] 1995 (aged 15), [Y] born [in] 1997 (aged 13) and [Z] born [in] 2000 (aged 10).
At the date of separation in September 2007 the children continued in an undisrupted relationship with their parents until the Husband left Property O in January 2008.
The children were then primarily cared for by the Wife and resumed seeing the Husband on a daily basis upon his return to Property O in March 2008 after his accident.
The Husband then left Property O in December 2008.
The parties subsequently entered into a parenting plan in March 2009 whereby it was agreed that [X] live with the father and that [Y] and [Z] have week about with each parent. This arrangement continues to be in place.
Brief History of the Relationship
At the commencement of the relationship in 1993 the Wife owned a unit property at Property K and was working as a [omitted]. The property was subject to a mortgage. The Wife also owned a motor vehicle and some furniture.
At the commencement of the relationship in 1993 the Husband was a partner in the business known as [S] and was working in the business as an [omitted]. The Husband also owned a motor vehicle, some furniture and a share in a ski boat.
Both parties after cohabitation cashed in life insurance policies, and the Husband used the monies towards the wedding in 1994 and the Wife used the funds for living expenses.
At the commencement of the relationship the parties lived in Property K.
In late 1993 the Husband purchased in his name a house property at Property C and the parties moved into this property.
Property K was then rented out and has remained an investment property.
In 1994 the parties married.
In 1995 the Husband bought out the partnership in [S] and became a sole proprietor of the business.
The Wife ceased working before the birth of [X] in 1995.
In January 1997, using the Property C and Property K properties as collateral, the Husband purchased in his name an industrial property at Property S which was then rented out. Monies were borrowed from National Australia Bank to assist in the purchase.
In 1997 the second child [Y] was born.
In 2000, the third child [Z] was born.
In June 2001 [S] Pty Ltd was incorporated with the Husband and Wife as directors and became the proprietor of the business [S].
In February 2002 [D] Pty Ltd was incorporated with the Husband and Wife and [E] Pty Ltd as shareholders.
In February 2002 the business [S] as well similar businesses were purchased by [D] Pty Ltd.
In March 2002 [P] Pty Ltd was incorporated with the Husband and Wife owning 50% of the shareholding and [E] Pty Ltd owning the remaining 50%.
In April 2002 [P] Pty Ltd purchased an industrial property at
Property R which was rented out. Monies were borrowed from National Australia Bank to assist in the purchase.
In October 2004 the Husband and the Wife bought a house at
Property O which became the matrimonial home. Monies were borrowed from National Australia Bank to assist in the purchase.
In or around late 2004/early 2005 Property C property was sold.
In June 2005 the Property S property was sold.
In or around 2005 there was a demerger of [D] Pty Ltd resulting in the Husband and Wife retaining [S].
In July 2005 the Husband and Wife purchased an industrial property at Property W. Monies were borrowed from National Australia Bank to assist in the purchase. The business [S] has operated from the premises since its purchase.
In or around 2006 the Wife commenced employment as the [occupation omitted] for [S].
In September 2007 the parties separated under the one roof.
In October 2007 the Husband and Wife purchased a house property at Property J. The entirety of the funds was borrowed from National Australia Bank. The property was rented out.
In January 2008 the Husband moved out of Property O. The three children remained living with the Wife.
In March 2008 as a result of a work accident the Husband returned to Property O.
In late 2008/early 2009 the Husband moved out of Property O, into the Property W shed and then into Property J in or around February 2009.
In March 2009 the Wife ceased working for [S] and commenced employment at [N].
In or around March 2009, [X] commenced living with his father and [Y] and [Z] commenced the week about arrangement.
In April 2009 the parties applied for Domestic Violence orders, with were subsequently withdrawn with the exchange of undertakings.
In September 2009 the Wife commenced court proceedings for property settlement.
Orders being sought at the date of the hearing
The Wife is seeking 58% of the property pool, with a proposal that Property O and Property K be retained by the Wife together with a cash adjustment.
The Husband is seeking an exclusion of Property J from the asset pool and a 60% division in favour of the husband of the remaining assets. It is the Husbands proposal that he retain Property O and that the Property W property may have to be sold depending on what impact of the findings of the court in respect to the property division.
Evidence
The Wife relied on the following documents:
i)Her affidavit filed on 30 April 2010;
ii)Her financial statement filed on 30 April 2010;
iii)The affidavit of Ms K, psychologist filed on 23 June 2010;
iv)
The affidavit of Mr C, the jointly appointed valuer for
[S] Pty Ltd filed by leave on 30 June 2010;
v)The proposed orders contained in the outline of argument filed on 25 June 2010 and the submissions filed on 7 July.
The Wife and Ms K were cross-examined.
The Husband relied on the following documents:
i)His affidavit filed on 10 May 2010;
ii)The proposed orders contained in the outline of argument filed on 17 May 2010;
iii)The affidavits of Mr L, the jointly appointed valuer for the real properties filed on 18 May 2010 and 25 June 2010;
iv)His financial statement filed by leave on 29 June 2010;
v)His further affidavit filed by leave on 29 June 2010;
vi)The affidavit of Mr B, accountant filed by leave on 30 June 2010;
vii)The affidavit of Mr G, Consultant Physiotherapist filed by leave on 30 June 2010;
viii)The proposed orders contained in the outline of argument filed on 17 May 2010 and the submissions filed on 9 July 2010.
The Husband, Mr G and Mr B were cross-examined.
The jointly appointed valuers Mr C and Mr L gave oral evidence.
In considering the matter, I have had regard to each of the affidavits referred to in the course of the proceedings; to the oral evidence given by each of the parties and their witnesses in the proceedings and to the submissions made on behalf of each of the parties.
Findings of fact are made on the balance of probabilities, having regard to the evidence and my observations of the parties and witnesses.
In what follows, statements of fact constitute findings of fact.
I find both parties to be credible witnesses although it was evident from the evidence provided by the Wife, that she is bitter from the separation and holds a level of resentment to the Husband which I have no doubt will continue to impact on the family dynamics with the children if not addressed. I however congratulate the Wife in being actively involved in counselling to work through these issues.
It was also evident from the Husbands evidence that his long term view of the traditional type marriage whereby the wife is to look after the family whilst the Husband works, has resulted in a somewhat old fashioned view of the limited rights of a Wife should the marriage end.
I have further concern that this view has somewhat impacted and impeded the Husband’s understanding of how family law operates in determining division of property. This was illustrated in his continual referral to “my house”, “my business” and “my children” throughout his evidence.
Further the Husband seemed to be at a loss as why the wife should share in the increased value of the properties which had occurred since separation, a matter which will be addressed later in the judgment.
It further struck me that whilst this couple has amassed a very comfortable property pool in excess of $2,500,000 it appears to be primarily through good fortune only and being at the right place at the right time as opposed to the sound commercial decision making by either party.
Both parties and in particular the Husband seem to have a limited understanding of the operation of business or companies.
Unfortunately this lack of understanding and insight appears to have interfered in the parties’ ability to settle this matter and coupled with the difficulties with the ongoing care for [X] this has resulted in mutual animosity and distrust.
As to the Wife’s witness Ms K, and the Husband’s witness Mr G,
I found their respective evidence to be credible, although of limited weight and this will be addressed later in the judgment in respect to s.75(2) factors.
I found the evidence of Mr L credible and of great assistance to the court in addressing the issues to the valuation of all real properties.
I found the evidence of Mr B credible and provided an insight as to operation of the business [S] Pty Ltd.
I found the evidence of Mr C as credible in setting out the valuation of the business and the shareholders interests.
The Law
The Full Court of the Family Court of Australia in the case of Hickey v Hickey & Attorney-General of the Commonwealth (Intervener) (2003) FLC 93-143 at [39] sets out the 4 step process in determining a property application made under s.79 of the Family Law Act 1975 (Cth) which are as follows:
i)Identify and value, as at the date of hearing, the parties’ property, liabilities and financial resources;
ii)Identify and assess the contributions under s.79(4)(a),(b) & (c) (“the first limb – the contribution factors”) of the parties and express them as a percentage of the net value of the property (examined on either a global approach or an asset by asset approach, depending on the circumstances of the case);
iii)Identify and assess the other factors relevant under s.79(4)(d)(e),(f) & (g), (“the second limb – ongoing needs and effect of orders”) including, because of s.79(4)(e), the matters referred to in s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
iv)Consider the effect of the above and resolve what order is just and equitable in all the circumstances of the case (see Russell & Russell (1999) FLC ¶92-877; [1999] FamCA 1875; 25 Fam LR 629; 154 FLR 171).
Nygh J in G & G (1984) 9 Fam LR 969; (1984) FLC ¶91-582 (at p 79,697 ) stated:
It cannot be required of the Family Court that it assess contributions with mathematical precision, with respect to each item.
(see also Norbis & Norbis (1986) FLC ¶91-712; (1986) 161 CLR 513; [1986] HCA 17; 65 ALR 12; (1986) 60 ALJR 335; (1986) 10 Fam LR 819, Brandt & Brandt (1997) FLC ¶92-758; (1997) 22 Fam LR; Farmer & Bramley (2000) FLC ¶93-060; [2000] FamCA 1615; (2000) 27 Fam LR 316 and Figgins & Figgins (2002) FLC ¶93-122; [2002] FamCA 688; 29 Fam LR 544; 173 FLR 273).
Section 79(4)
The following principles under s.79(4) should be taken into consideration:
a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
e)the matters referred to in subsection 75(2) so far as they are relevant; and
f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Section 75(2)
The following s.75(2) factors need to be taken into account:
a)the age and state of health of each of the parties;
b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
d)commitments of each of the parties that are necessary to enable the party to support:
i)himself or herself; and
ii)a child or another person that the party has a duty to maintain;
e)the responsibilities of either party to support any other person;
f)subject to subsection (3) the eligibility of either party for a pension, allowance or benefit under:
i)any law of the Commonwealth, of a State or Territory or of another country; or
ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia, and the rate of any such pension, allowance or benefit being paid to either party;
g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
l)the need to protect a party who wishes to continue that party's role as a parent;
m)if either party is cohabiting with another person, the financial circumstances relating to the cohabitation;
n)the terms of any order made or proposed to be made under section 79 in relation to:
i)the property of the parties; or
ii)vested bankruptcy property in relation to a bankrupt party;
na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
p)the terms of any financial agreement that is binding on the parties.
Step One – Assets and Liabilities
Agreed assets and liabilities as at the date of hearing
The parties agreed on the identity and value of the following assets and liabilities:
Assets
$
Property W (joint)
$ 1,270,000
Property O (joint)
$ 690,000
Property J (joint)
$ 505,000
Property R (1/2 share)
$ 525,000
Property K (wife)
$ 315,000
Toyota Camry (wife)
$ 4,000
Jewellery (wife)
$ 2,000
Boats and firearms (husband)
$ 18,500
Total non superannuation assets:
$ 3,329,500
Liabilities
$
Loan NAB - Property W
$ 386,495
Loan NAB - Property J
$ 400,304
Loan NAB - Property R
$ 59,458
Total liabilities:
$ 912,589
Superannuation $ MLC (wife) $ 15,822 MLC (husband) $ 19,887 MLC (husband) $ 22,935 AMP (husband) $ 7,688 Total: $ 66,332
Disputed assets at the date of hearing
There is a dispute about the following assets:-
a)The inclusion of Property J in the property pool; and
b)Value of [S] Pty Ltd and the impact of the shareholders loans.
Inclusion of Property J
In October 2007, just weeks after separation the Property J property was purchased in the joint names of the Husband and the Wife with the total purchase price and all outgoings being funded through the National Australia Bank.
The Wife in her evidence expressed concern as to the financial stress it would cause but nonetheless agreed to the purchase.
I accept the Wife’s evidence that at the time of purchase the Wife was of the view that the marriage was salvageable.
Whilst it appears that the Property J property was purchased with a view to be lived in by the Husband, immediately after purchase the property was rented and I accept the evidence of the Wife that she undertook the primary responsibility for the cleaning, preparation and organisation for the property for rental.
I also accept the evidence of the Wife that the Husband had concerns about his capacity to repay the mortgage and that this was the reason why the property was rented.
I do not accept the evidence of the Husband that he was not in agreement as to the renting of the property and that he has no recollection of signing the lease document.
The property remained rented until December 2008, with the rent being utilised to meet the mortgage repayments.
The Husband then moved into the property in or around March 2009 and this has since been his principal place of residence. On his evidence as the mortgage was in credit, the husband lived in the property for five to six weeks without having to pay for the mortgage.
The purchase of Property J occurred so close to separation and was possible due to the financial situation of both parties.
I therefore find that the property at Property J does form part of the property pool and therefore is to be included in the list of assets.
Value of [S] Pty Ltd
There are four areas of dispute in respect to the valuation of [S] Pty Ltd.
I need to point out that initially there was some difficulty in understanding the evidence supplied by Mr C as despite being engaged as a joint expert he was not jointly briefed, with only Mr Francis providing instruction.
Further Mr C was not briefed in writing but by telephone by
Mr Francis.
Lastly the brief appeared to be to assess the shareholders interests as opposed to the value of [S] Pty Ltd, although it was evident that the valuation obtained can and does apply to both.
Firstly the Husband submits that the methodology used by Mr. C was not appropriate.
I accept that experts have differing methodology and note that there was no attempt in this matter for the Mr C and Mr B to “hot tub” to discuss and perhaps resolve the issue of the methodology.
However both Mr C and Mr B viewed each others reports and made comments during evidence as the methodology used.
Mr C however was adamant in his oral evidence that after having considered all the issues raised by Mr B, that he would not change his views as to the value of the shareholders interest.
I have considered closely all the evidence both oral and written from Mr C and Mr B.
Mr C provided a comprehensive and extensive valuation taking into account a number of factors as set out in 3.1 of the Report including the amount of time the business has been in operation, the health issues of Mr Babbitt, and the inclusion of a goodwill component of $25,000.
Further in applying the capitalising rate, Mr C took into account the significant fluctuations in the profit and loss of the business.
Lastly I must consider Mr C’s qualifications as a chartered accountant with over 40 years experience and his familiarity with Darwin, having worked in Darwin for over 10 years.
Mr B understandably has a vested personal interest in the business, having been the accountant for some 15 to 20 years for the business and therefore I am unable to give Mr B’s evidence as to value of the business and the shareholding the same weight as I can give to Mr C.
I therefore find that I must accept the evidence of Mr C as the jointly appointed expert as to the value to be applied to the shareholders interest in the company and the business.
Secondly the Husband submits that a goodwill component should not be included in the valuation of the business.
Mr C comprehensively explained the term “premium” in his oral evidence as “If a person …. wants to purchase a business, a business has been operating for a number of years, it has a reputation out in the marketplace which some people might say should be goodwill …….you may make a payment for the purchase of that above its net tangible assets, even if it was not profitable, so that – to save you the loss of earnings while you build up a business from scratch to that level.”
Mr C described goodwill as “Goodwill is an amount in these calculations generally made between the difference of capitalisation of earnings and net tangible assets”.
When asked Mr C agreed that the difference between the two terms was his reply was “It may be semantics”.
[S] is a business that has been operating under the same name for 21 years and during that time has been located in only three locations in the Darwin area, the last being Property W since 2005.
The Husband’s submissions is that a goodwill component cannot be included in the value as the business wouldn’t be what it is without the involvement of the Husband, and the business has not made a profit until recent years, there are only a small number of repeat clients, and recent profits are because of ‘one offs” such as the economic stimulus.
The concept of goodwill/premium however has been factored into [S] in the past.
The Husband purchased [S] whilst in partnership in 1988 for $24,000 and as stated by the husband in paragraph 20 in his affidavit filed
10 May 2010 “the business was operating profitably at the time”.
Whilst no specific evidence was provided, it is safe to assume that a goodwill component was part of the purchase price.
In 1995 the Husband purchased his partners share in [S] for $40,000.
In evidence Mr B admitted that of the amount paid the sum of $25,000 was attributable to goodwill.
Further a goodwill component was included when the merger occurred in 2002 and I refer to the evidence of the Husband at paragraph 41.1 in his affidavit filed 10 May 2010 says “At the date of the merger of the three businesses, it was agreed that… [S] Pty Ltd had a net worth of……taking into account an agreed value of its goodwill assesses at $25,000.”
Further Mr B explained in cross examination that a goodwill component is included in the balance sheets as at March 2010 for [S] Pty Ltd and is reflected as an intangible asset of $25,000.
On that basis I do not accept that a goodwill/premium component should not form part of the valuation prepared by Mr C.
Thirdly the Husband submits that the approximate costs of $30,000 for the relocation of [S] from Property W should be considered.
I find that there is insufficient evidence to support that such a relocation is to occur, and as I am not ordering for the sale of
Property W, then I give no weight to the submission.
Lastly the Husband submits that the shareholders loans must be taken into account in the valuation of the business and therefore reduce the value.
It is the Wife’s submission that these were not borrowed funds but funds created by the demerger.
Mr C gave evidence that if the shareholders loans were true loans, then the business would have to take into account these loans as debts to the business, therefore reducing the value of the business.
Mr B in his evidence stated that the shareholders liability is a liability to the company and that the shareholder loan is an asset to the individual that is owed the money.
I accept therefore from the evidence provided by Mr B that the shareholders loans are a true debt to the business.
But in accepting this, I must also accept that the shareholders loans are monies owing and payable to the parties and on the evidence provided it is evident that should the business be sold there is sufficient equity to enable these loans to be paid.
On that basis I see it as an academic exercise as to whether to include the value of the business as a whole in the asset column, or to include the reduced value of the business and the shareholders loans as assets as the net effect will be the same.
Accordingly I find that the value of the business is $89,000 and that it is to be included in the asset pool.
Disputed liabilities at the date of hearing
There is a dispute about the following liabilities:
a)The amount of debt to be included from the overdraft facility; and
b)The taxation liability of the wife.
The amount of debt to be included from the overdraft facility
The overdraft facility with the National Australia bank is in the name of both parties and was created in late 2008 as a means to provide funds to assist [S] Pty Ltd.
There is a limit on the account of $120,000.
Prior to its creation the parties had a draw down facility attached to the mortgage over Property O but access to this facility ceased in late 2008 when the mortgage was paid out.
In the second half of 2009, the Wife froze the overdraft facility, and during this time the Husband used his Mastercard to top up funds in [S] Pty Ltd as required.
In February 2010 the account was unfrozen, and the Husband removed from the overdraft facility the sum of $64,500, out of which the Mastercard debt of $28,806.10 was repaid.
As at the date of the hearing there was just under $120,000 owing to the overdraft account.
The issue requiring determination is what proportion of the overdraft account is to be included as a joint debt in the list of assets and liabilities.
Lengthy oral and written submissions were made, but it was not an easy task for either party to put forward a proposal because of the extensive intertwining of personal and business finances.
At the conclusion of submissions that Husband proposed that he accept responsibility for $63,549.50 and that the sum of $56,450.50 be included as the joint debt pertaining to the overdraft facility.
The sum of $63,549.50 was calculated by deducting half of the paid school fees and deducting it from $64,500.
I do not accept that the amount of $64,500 should be reduced by the school fees.
I do however accept that the Husband should take sole responsibility for the sum of $64,500.
The Husband has the capacity to be reimbursed by [S] Pty Ltd either directly or through an adjustment in the share holders loans, for monies paid to the business or on behalf of the business by the Husband.
Accordingly I find that the sum of $55,500 be included as a joint debt, that being the amount owing under the overdraft facility after the deduction of $64,500 from the sum of $120,000.
Taxation liability of the Wife
I find that any outstanding taxation liabilities of the Wife are to be met by the business, as have all previous taxation liabilities and therefore there should be no adjustment to the asset pool.
Assets and Liabilities for Distribution at the date of hearing
I therefore find that the pool of assets is as follows:
Assets
$
Property W (joint)
$ 1,270,000
Property O (joint)
$ 690,000
Property J (joint)
$ 505,000
Property R (1/2 share)
$ 525,000
Property K (wife)
$ 315,000
Toyota Camry (wife)
$ 4,000
Jewellery (wife)
$ 2,000
Boats and firearms (husband)
$ 18,500
[S] Pty Ltd
$ 89,000
Total non-superannuation assets:
$ 3,418,500
Liabilities
$
Loan NAB - Property W
$ 386,495
Loan NAB - Property J
$ 400,304
Loan NAB - Property R
$ 59,458
Overdraft facility
$ 55,400
Total liabilities:
$ 901,657
Net non-superannuation assets
$ 2,516,843
Superannuation $ MLC (wife) $ 15,822 MLC (husband) $ 19,887 MLC (husband) $ 22,935 AMP (husband) $ 7,688 Total: $ 66,332
Total asset pool available for distribution
$ 2,583,175
Step Two – Contribution
Contributions
I now turn to the second of the steps in the exercise under s.79, namely an assessment of the parties’ contributions within the context of section 79(4) (a) to (c).
Initial Contributions
It was submitted by the Husband as at the date of cohabitation his interest in the business [S] outweighed the Wife’s interest in Property K on the basis that it was an income earning enterprise and a means to acquire assets during the course of the marriage.
It is conceded by the Husband in his evidence that the Wife had approximately $20,000 equity in Property K at the time of cohabitation.
There has been no independent evidence put to me as to the value of the [S] business at the time of cohabitation and therefore I must draw a conclusion from the evidence provided by the Husband.
In paragraph 23 of the Affidavit of the husband filed on 10 May 2010, the Husband states that his half share in the business was worth $30,000 and that the half share in the savings account was worth $10,000.
It is not explained as to why the business savings were set out separately from the value of the business and therefore I cannot give much weight to this evidence.
Further it is evident that the parties’ ability to restructure the business and to refinance and acquire further real estate was attributable not only to the existence of [S] but also due to the existence of Property K.
Lastly I must take into account the length of the relationship which was in excess of 14 years.
I therefore find that the initial contributions of the parties were of a similar nature and that no percentage adjustment should be made to either party in respect to initial contributions.
Financial and Non Financial Contributions during cohabitation
It is submitted by the Husband, that whilst it is conceded that the Wife contributed in her role as a parent and homemaker that the Husbands direct financial contributions as the greater breadwinner outweighed the indirect financial contributions of the Wife.
The Husband submits that his indirect financial contributions were significant as he played a large part in parenting the children and in particular [X], who is acknowledged by both the Husband and the Wife as being a difficult child due to behavioural problems brought about by his Aspergers syndrome and other health issues.
I do not accept that the evidence of the Husband supports this submission.
On his own admission the Husband acknowledged that he worked long hours 6 days a week leaving the Wife to look after the children and that the Wife was the primary carer of the children during the marriage.
This does not take away from the significant role that the father has played in the children’s lives, especially that of [X] who has a very close bond to his father, but it does not establish sufficient reason for me to attribute a percentage adjustment in favour of the Husband.
This was a marriage of considerable length in today’s standards – some 13 years which albeit commenced on humble beginnings has fostered the raising of three children and accumulated assets in excess of $2,500,000.
This success cannot be attributed to the efforts of one party over the other, but to both parties who have contributed both financially and non financially to be where they are today, through the Wife in her periods of employment, her primary care for the children, her keeping of the household and her support of the marriage endeavours and of her Husband, and through the Husband in his hard work, his strong work ethic and his ongoing commitment to his business and family.
I therefore find the contributions of the parties equal during cohabitation and that no percentage adjustment should be made to either party in respect to contributions made during the relationship.
Post Separation Contributions
The Husband submits that his post separation contributions were far greater than the Wife’s and therefore should amount to a higher division of the property pool in his favour.
Part of the basis for this submission is that despite the lack of assistance from the Wife together with the serious injuries sustained from his workplace accident where he fell some distance landing and injuring both feet, the Husband still managed to keep working long and arduous hours and turned the [S] business around, making substantial profits for the first time in many years.
Whilst it cannot be and was not disputed that the Husband worked and continues to work hard, there are aspects of this submission that I must address.
It is clear from the evidence that the Husband has always worked long hours whilst the Wife carried out the domestic role as well as in later years working as the [occupation omitted] for [S] Pty Ltd.
Whilst the Husband was highly critical of the Wife’s capacity to perform the [omitted] role and the reduced hours of work in which these duties were performed, the Wife continued in that role until March 2009, utilising the income to support the household.
Further the Husband concedes in his evidence that from the date of separation in September 2007 until his leaving Property O in late 2008/early 2009, that the wife continued to purchase groceries and household items from her income.
Separation in September 2007 occurred initially under the one roof and the Husband did not leave Property O until in or around January 2008.
It was only a matter of weeks before the Husband returned to
Property O in March 2008 as a result of his work accident.
As a result of the accident the Husband spent some 5 to 6 months in a wheelchair and then a number of months rehabilitating.
I do not accept the Husbands evidence that the Wife did little to care for the Husband during this time.
I accept the evidence of the Wife that she assisted considerably in his convalescence and rehabilitation as well as continue to be the primary carer for the children and the runner of the household and a financial contributor to that household.
At this time it appears that the business suffered financially and whilst the Husband contributes the loss to the Wife, there was no evidence offered to substantiate this claim. A more realistic conclusion may be due to the Husband being incapacitated at that time due to his injuries.
Shortly after the Husband moving into Property J arrangements for the children changed and by March 2009 the Husband had [X] primarily in his care and [Y] and [Z] were spending week about at their fathers.
The Husband gave evidence that [S] is now making a profit and it is submitted that the profits are attributable in large to the efforts of the Husband.
This submission is not supported by the evidence of the Husband whose frustration of the situation was evident in the witness box when the husband spoke of reduced hours and increased commitments due to the change in the children’s arrangements.
An explanation was put forward however by both the Husband and
Mr B that the increase can be contributed to the stimulus packages provided by the government.Mr B was quick to point out that there was no guaranteed continued profitability due to these one off transactions no longer occurring.
I find that the decline or growth of [S] Pty Ltd since the date of separation is not attributable specifically to either party and that the contributions of the Husband in the continued running of the business and his increased involvement to the children since March 2009 are balanced by the continued contributions of the Wife to the day to day running of the household, and her assistance to the Husband after his accident.
Further it was submitted by the Husband that a post separation contribution was made due to the direct financial contributions made by the Husband to the repayments and subsequent payout of Property O together with other outgoings related to the property and to the payment of school fees and other expenses for the children.
The incomes attributable to the parties on paper, the continued intermingling of the party’s financial situation up until late 2008 and the complexity of the financial interplay between the overdraft facility, [S] Pty Ltd and the shareholders loans has muddied the waters somewhat in determining what has occurred post separation.
It appears that child support has not been paid on a regular basis from the period of the date of separation until the parenting plan and that since the parenting plan, whilst an assessment has been obtained on a somewhat overinflated income figure for the mother no set arrangement for child support has been put in place.
Further whilst the Husband received a set taxable income of some $55,000 from the business, the Husband had and continues to have flexibility in utilising funds from the overdraft facility/[S] Pty Ltd/shareholders loans arrangements.
Further the payout of Property O on or about December 2008 in the sum of $8,852 was not a unilateral decision taken by one party, but what appeared to be a business decision, although this was not fully canvassed in evidence.
It was admitted by the Husband however in cross examination that the amount for the payout came out of either the overdraft facility or [S] cheque account and therefore paid out of joint funds.
Taking into account all of these factors I find that no adjustment is warranted in favour of the Husband for post separation contributions.
Property J
It is submitted by the Husband that if the Property J was not excluded from the asset pool, then a post separation contribution should be attributed to the Husband for the conservation of the property.
As indicated earlier in my judgment I find that the Property J property is included in the property pool, and therefore I must deal with the submission that a post separation contribution has been made by the Husband in respect to this property.
It is not in dispute that up until late 2008, the property was rented and that the rental covered the mortgage.
It is admitted by the husband in cross examination that when the Husband moved into Property J in February/March 2009, the mortgage was paid in excess which enabled the Husband to not make any repayments for five to six weeks.
I have no evidence before me to support the Husbands submission therefore find that no adjustment should be made to the Husband in respect to his post separation contribution to Property J.
Percentage adjustment based on Contributions
I find that based on contributions only that there is no adjustment to either parties and therefore the Wife is entitled to 50% and the Husband is entitled to 50%.
Step Three – Other relevant factors
Section 79(4) (d) to (g)
I now turn to the third step in the process of apportioning the assets available for distribution between the parties.
Section 79(4) (d) - The effect of any proposed order upon the earning capacity of either party to the marriage;
The orders that I propose making in this matter will not affect the earning capacity of either party to these proceedings.
Section 79(4) (e) - The matters referred to in sub-section 75(2) so far as they are relevant;
s.75 (2) Factors
a)The age and state of health of each of the parties
The Wife is aged 47, and whilst there is no dispute as to her physical health, submissions have been made as to her mental health.
Understandably this has been a traumatic time for both the Husband and the Wife, an unfortunate side effect of most marriage breakdowns.
Add to it the stress of sorting out what is best for the children and the pressures associated in court proceedings, and parties react in different ways utilising different coping mechanisms.
I have no doubt that this has been a difficult time for the Wife, and that the situation of living under the one roof in an estranged and strained relationship has not assisted. It is noted that the Wife has been proactive in working through these issues by attending counselling.
However the evidence provided by Ms K, in my view does not establish that the Wife will suffer any long term effects from the mental anguish suffered to date and I therefore give little weight to this evidence.
Accordingly I find that there should be no adjustment made in favour of the Wife in respect to health issues.
The Husband is aged 45 and unfortunately suffered severe injuries to both feet as a result of a work accident in March 2008.
The injuries suffered by the Husband are not in dispute, but the impact on the Husbands future employment is a matter to which I must give consideration.
The only medical evidence as to the injury provided by the Husband upon which I can give any weight was that of Mr G, a consultant physiotherapist.
I find the choice of expert witness in support of a future need argument as to health issues and long term impact as an inappropriate choice, as Mr G does not have the qualifications to comment on the long term impact of the injury, (such as an orthopaedic surgeon or similar specialist might have), nor is Mr G able to comment on the viability of the Husband continuing in his trade, (such as an Occupational Therapist might have).
Whilst Mr G explained in detail the application of a standards test applied to scaffolders and other people in the construction business, this only leads to an observation as to the Husbands capacity to work at heights and did not address the issue of ability to perform all his tasks as an [omitted] or as a proprietor of a business.
I therefore give minimal weight to Mr G’s evidence, and only to the extent that it confirms that the Husband has had an injury, is in pain and will have ongoing problems with his feet, and none of these issues are not in dispute.
The Husband states in his evidence that he has disability insurance and if in the future he is assessed as being permanently disabled he will receive a lump sum payment of $250,000. However at this point in time he is not entitled to be assessed as he can still get around although he is in pain.
As to the long term impact of the injury on the Husband, in lack of any evidence I can only rely on the testimony of the Husband, and what he considers to be his capabilities.
The husband however in his evidence was inconsistent in the impact the injury is having on his day to day activities.
Whilst the Husband described at great length the difficulties he experienced after climbing up and down ladders, he comments that stairs will not present the same problems.
The Husbands view as to his work and his plan to continue to work is best summed up when he said during oral evidence “And while my children still need to be fed I would – as I have done – crawl to do what I need to do to provide for my children. Whether I go back to [occupation omitted] – it doesn’t matter. I will do whatever is necessary to continue to provide for my children.”
Further there was much discussion as to whether the business could continue if the husband took more of a managerial role as opposed to the hands on role that he presently performs.
But what is the most compelling evidence is that it is not the intention of the Husband to sell the business, nor to reduce his hours or his role within the business.
Taking all this evidence into account, I find that there should be no adjustment in the Husbands favour on the grounds of health.
(b)The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
In light of earlier findings, I find that there was no evidence in support of the Wife not being able to obtain employment due to her physical or mental capacity.
The Wife submits that her ability to earn income and the discrepancy in the income able to be earned as compared to the Husband should result in a percentage adjustment in her favour.
The Wife is currently unemployed, having been terminated from her employment with [N] in early June 2010.
In her evidence the Wife explained that this was a part time permanent position of some 30-34 hours per week, earning $25 per hour.
Her sole source of income now is the rental of $300 received from the Property K property. The Wife gave evidence that she is not entitled to any Centrelink benefit.
The Wife is currently seeking work as a [omitted] and on her evidence has submitted six job applications but as yet has not been successful in securing employment.
The Wife states that whilst she has experience in [omitted], the Wife has not obtained any formal qualifications.
The Husband in his submission states that no adjustment should be made as the Wife has ability to earn a good income on a fulltime basis.
The Husbands evidence is contradictory.
On the one hand the husband maintains that the Wife is able to earn $35 an hour based on the amount of $50 that he pays an hour to his current [omitted] and there are plenty of positions available.
On the other hand the husband admits in evidence that the Wife “was only taught [omitted] by Mr B’s assistant, [name omitted], in 2007” and that her [omitted] skills were “not particularly good”, although he presumes that the Wife would be “quite competent” now.
This was supported by Mr B in his evidence where he was highly critical of the Wife’s skills as a [omitted].
It is unlikely that the Wife will receive a good reference from her employment in the business, or from her last employment which was terminated.
I therefore hold some concerns that the Wife will obtain the high paying position as anticipated by the Husband or that a position will be obtained quickly.
I find therefore that the Wife’s ability to earn income falls short of that of the Husband.
As to the Husband’s ability to work, whilst it is acknowledged that the Husband has suffered injury, the effects of which will continue throughout his life, there is no evidence to support that the Husband will not continue in his business in the foreseeable future.
Further whilst the Husband on paper is earning an income of around $50,000, his flexibility with his financial situation at work coupled with the comments made by Mr B as to what the Husband should be earning, lead to the finding that there is and will continue to be a discrepancy in the amount of the income able to be earned by the Wife.
The Wife however does have the continued income stream from the Property K property and the retention of that property by the Wife was not disputed by the Husband, nor was there an indication by the Wife that the property would be sold.
I therefore make a 3% adjustment in favour of the Wife, therefore making the percentage adjustment at this point as 47% to the Husband, and 53% to the wife.
(c)Whether either party has the care or control of a child of the marriage who has not obtained the age of 18 years;
From the date of separation in September 2007 until January 2008, the parties lived under the one roof and the arrangements for the children remained the same as they were prior to separation.
The Husband then returned to the matrimonial home at Property O in March 2008 and remained until late 2008.
It has only been since the Husband moved out of Property O and set up residence in Property J that ongoing arrangements have been put in place for the children.
It is not disputed that since around March 2009, when the parties entered into a parenting plan, [X] has been primarily cared for by the Husband and [Y] and [Z] spend week about with each parent.
It is further not disputed that these arrangements are likely to be unchanged.
It is submitted by the Husband that an adjustment should be made in his favour because of the ongoing care of the children and in particular [X].
I find that as the two younger children are in a shared care arrangement that no adjustment should be made.
But not the same finding can be made in respect of [X].
[X] suffers Aspergers syndrome and is a high needs child, and has through his short life suffered from other medical conditions.
It is not disputed that the relationship between the Wife and [X] is somewhat strained and I have no doubt that the demonstrated animosity between the parents has not assisted.
Whilst it is hoped that [X]’s relationship with the Wife will now improve it is unlikely that [X] will spend equal time or live with the Wife, and this was acknowledged by the Wife in her evidence.
It is submitted by the Wife, that because of [X]’s age (15) and evidence provided by the Husband that [X] was trying for his [qualification omitted] and therefore should be employed in the near future, would negate any adjustment in the Husbands favour.
I do not agree with this submission.
I accept that the Husband will be intensely involved in [X]’s development in these formative years and on that basis I find that an adjustment should be made in the Husbands favour.
I therefore make a 3% adjustment in favour of the Husband, therefore making the percentage adjustment at this point as 50% to the Husband, and 50% to the wife.
d)Commitments of each of the parties that are necessary to enable the parties to support:
i) himself or herself;
ii)a child or another person that the party has a duty to maintain.
This has been covered and I do not propose to address it any further.
e) The responsibilities of either party to support any other person;
This factor does not apply.
f)The eligibility of either party for a pension, allowance or benefit under:
i)any law of the Commonwealth, of a State or Territory or of any other country; or
ii)any superannuation fund or scheme, whether the fund or scheme was established or operates within or outside Australia;
iii)and the rate of any such pension, allowance or benefit being paid to either party.
The parties each have small superannuation entitlements.
Both parties have a number of years of employment ahead of them. I therefore do not regard that this factor is particularly significant in this case.
g) Where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
I am satisfied that, as a result of the Orders to be made in these proceedings, each of the parties will be able to have a standard of living that is reasonable.
h)The extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
This is not a case where either party makes an application in respect of spousal maintenance.
j)The extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
This factor is not relevant in these proceedings.
k)The duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
This factor is not relevant to these proceedings.
l) The need to protect a party who wishes to continue that party’s role as a parent;
This factor is not relevant to these proceedings.
m)If either party is cohabiting with another person – the financial circumstances relating to the cohabitation;
Neither party is cohabiting with another person nor is there evidence before the Court to indicate that it is likely in the foreseeable future that this situation will change.
na)Any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage;
This factor is not relevant in these proceedings.
o)Any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
The parties have raised additional issues that I must take into account.
Delay in Proceedings
A submission was made by the Husband that whilst the Wife delayed proceedings, the properties and in particular the commercial property at Property W increased in value, and therefore the Wife should not benefit from the improved value of the assets, as the pool would have been smaller if the matter had settled earlier.
I find that line of reasoning difficult to comprehend.
Firstly there was no real evidence put to me as to the delay.
When the parties separated in September 2007 it was under the one roof and this continued with the exception of a few weeks in February/March 2008 until late 2008, early 2009.
In December 2008, the parties jointly applied for divorce which was subsequently granted and became final on 17 March 2009.
The relationship deteriorated in 2009 and no doubt as did communication, which was further hindered by the exchange of mutual undertakings due to Domestic Violence proceedings.
The Wife then commenced property proceedings in this Court on
29 September 2009.
In the circumstances, I do not see this as being an extraordinary delay nor do I see it as attributable to either party.
Further no evidence was put to me as to why the Husband did not commence proceedings at an earlier date.
Secondly, the value of the asset pool is assessed as at the date of the hearing, not at the date of separation, or a date unilaterally determined by one of the parties.
Thirdly, just as parties must share in the downturn in values, they are also entitled to share in any upturns.
Accordingly I find no basis for this submission and therefore make no adjustment in favour of the Husband.
Sale or relocation of the business
Whilst the issue of sale and relocation of the business was mooted throughout the proceedings, it was acknowledged by the Husband that he had no intention of doing either.
Further Mr B in oral evidence stated that he has not had a serious conversation with the Husband as to the sale of the business nor the moving of the business.
On that basis I do not intend to deal with these issues suffice to say that I am satisfied that the asset pool is sufficiently large enough, and that the financial flexibility in light of the equity in the properties is such that an order is not required for the sale of [S] Pty Ltd or the Property W property.
Property O and Property J
Both parties maintain their positions that each wish to retain Property O.
Whilst the Husband submits that he wishes to retain Property J, it was conceded that the Wife can have the property as part of her property settlement.
It should be noted that in the evidence reference was made to Property O being located in a superior area and Property J being in an inferior area although the houses have a similar living set up with four bedrooms and two bathrooms.
Property O has since its purchase in 2004, been the home for all children.
Similarly since March 2009, the children now have Property J as their home, with [Y] and [Z] spending week about with the parties, and [X] living there with the father.
The Wife maintains that she wishes to retain Property O as it will be difficult for her to refinance and obtain a property if it was sold and that the children are happy and comfortable there.
The Husbands attachment to the property however is stronger referring throughout his oral evidence to it as ‘my house” and at one stage saying “That house was my dream house”.
The husband also submitted that as he has many persons visiting and staying over, then Property J is not big enough for his needs.
Further the husband maintains that there is a need to retain Property O for financial purposes as it is unencumbered and could be used to secure further finances if required.
As to the Wife retaining Property O, there was a throw away line in the final submissions by the Husband that there was no guarantee that the Wife was going to remain in Darwin. I give no weight to this submission.
At no time was it suggested that Property J was unsuitable for the children or in an unsafe area.
Further I find that the Wife has little and restricted capacity to rehouse in a similar property.
The sale of Property K is not an option at this stage for the Wife as this would eliminate her only source of income.
I do not accept that the Husband with the substantial equity in Property W and Property R would be seriously disadvantaged if Property O formed part of the Wife’s property settlement.
Further whilst I appreciate the emotional attachment of the husband to Property O, the Husband was actively involved in the purchase of Property J with a view of it being a property that he could live in and spend time in with the children.
Lastly I find that there is capacity within a pool this size for both properties to be retained and that it would be beneficial for the children that there be no further disruption to their lives.
I therefore order that the Wife receive Property O as part of her property settlement and that the Husband received Property J as part of his property settlement.
Furniture
It is frustrating when parties attribute guesstimates to the value of household items and maintain what are often unrealistic expectations without producing the appropriate evidence. References to insurance values and replacement values are of no relevance to this court.
In this matter the Husband guesstimates that the household contents in Property O, which is currently occupied by the Wife is worth $50,000 whilst the Wife maintains it is worth $8,000.
An agreement was reached albeit very late in proceedings as to the value of the items in Property J as being $10,000.
It is not my role as a judicial officer to act as an impromptu valuer and several opportunities were provided to the parties to address this issue.
In the absence of valuations and sensible argument on this issue, I order that the Wife retain the household contents in Property O and the Husband retain the household contents in Property J. It is for this reason that I have not listed the household contents as a separate item in the list of assets.
Property W Rental
The Husband states in paragraph 47 in his affidavit filed on 10 May 2010 “the Applicants actions in committing [S] Pty Ltd to the payment of rental of $5,200 per month for the premises at Property W so as to pay off part of the principal debt ……..over such property when …all the company was required to do was pay interest in respect of the loan which would have amounted to $2,700 per month have caused the company significant ongoing financial difficulties. Such action on the part of the Applicant advantaged the Applicant personally by increasing our equity in…Property W and was a factor in requiring me to work extremely hard despite my health problems in order to meet the company’s ongoing liabilities.”
Whilst other financing options have been investigated by the Husband post separation for an interest only loan, it is evident from the evidence that this arrangement regarding the rental has been required to enable the mortgage to be paid on Property W.
In cross examination the Husband acknowledges that he couldn’t change the amount to be paid as “Even with the 5200 a month that comes in now, I personally – at the moment we currently pay – I think it's about 4700 in the repayment to the actual shed itself, and the rest goes and stays in the [party names omitted] bank account.”
The Husband admitted in cross examination that the Wife was prepared to refinance the loan to interest only in May 2010 but through his own actions he decided not to proceed with the refinancing until after court proceedings were concluded.
It was further acknowledged by the Husband in cross examination that to rent a shed elsewhere it would cost a similar amount.
As to the financial hardship on the business, it is acknowledged that a profit has been made this year, the best in over five years.
Further the husband says in cross examination in reference to the Property W mortgage “from the past year, I’ve shown the ability to service that loan.”
I therefore do not accept firstly that the arrangement was instigated by the Wife; secondly that it has caused financial hardship to the company and thirdly that it is unfair for the Wife to benefit from the increased equity in Property W.
I therefore do not make any adjustment based on this submission.
Adjustment due to nature of Wife’s material
It is submitted by the Husband that an adjustment should be made in his favour by virtue of additional costs that he’s incurred in responding to the wife’s application which the Husband says was supported by a considerable amount of irrelevant or inadmissible material.
This is a two day matter that extended over five days.
The time taken to try this matter is attributable in part to the late preparation by both practitioners and lack of communication between the practitioners.
The blame does not lie entirely with one practitioner over another and unfortunately the fixed positions of each party has not assisted.
Accordingly I am not prepared to give weight to such a submission and therefore will not be making any further adjustment.
By way of final property settlement the percentage adjustment in favour of the Wife is 50% and the percentage adjustment in favour of the Husband is 50%.
Step Four - Effect of the orders and what is just and equitable.
I find that the Orders as to property appearing at the commencement of these Reasons which equates to a 50% adjustment in favour of the Wife and a 50% adjustment in favour of the Husband is just and equitable.
The Order for the Wife to retain Property O enables her to move on with her life and provides the children with continued stability.
The retention of Property K allows the Wife to have an income stream whilst employment is obtained and the cash payment will provide her with security for the future.
The Order for the Husband to retain Property J also provides the children with continued stability.
The retention of the business and the industrial property provides the Husband with options as to the future and the removal of the wife as a director and shareholder in the companies will provide flexibility for the future of the business [S].
Further this will enable the Husband with the financial basis to raise a loan to make a cash payment to the Wife.
Conclusion
This was by no means an easy matter to hear or to determine.
The party’s evident animosity with each other and lack of trust has not assisted the parties in entering meaningful discussions regarding the property settlement, and as a consequence issues were not narrowed and numerous determinations were required to be made.
In reaching the orders, I have given close consideration as to the needs of each party and the effect of the orders on each of the parties.
I am therefore satisfied that the orders reflect a just and equitable outcome.
I certify that the preceding three hundred and fourteen (314) paragraphs are a true copy of the reasons for judgment of Turner FM
Date: 16 July 2010
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