Barkly and Holmes
[2016] FCCA 686
•31 March 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BARKLY & HOLMES | [2016] FCCA 686 |
| Catchwords: FAMILY LAW – De facto property proceedings – relationship of approximately seventeen years in duration – relationship produced three children – assessment of contributions – weight to be given to initial contribution of capital – add backs – assessment of section 90SM factors – assessment of section 90SF(3) factors – just and equitable. |
| Legislation: Family Law Act 1975 (Cth), ss.4(1); 75(2); 79(4); 90MC; 90SF(3); 90SM Evidence Act 1995 (Cth), s.140 |
| Cases cited: NHC & RCH (2004) FLC 93-204 Ferraro & Ferraro (1992) 16 FamLR 1 D & D [2003] FamCA 473 |
| Applicant: | MR BARKLY |
| Respondent: | MS HOLMES |
| File Number: | ADC 4796 of 2013 |
| Judgment of: | Judge Brown |
| Hearing dates: | 7, 8 & 9 December 2015 & 29 February 2016 |
| Date of Last Submission: | 8 March 2016 |
| Delivered at: | Adelaide |
| Delivered on: | 31 March 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr McQuade |
| Solicitors for the Applicant: | Voumard Lawyers |
| Counsel for the Respondent: | Mr Anderson |
| Solicitors for the Respondent: | Northside Lawyers |
ORDERS
In full and final settlement of all claims for settlement of de facto property:
That within fourteen (14) days of the date of these orders, the parties do all things necessary to cause a payment of $20,000.00 to be made, from the moneys standing in the parties’ joint account, in the Voumard Lawyers trust account, to the respondent herein Ms Holmes.
That within fourteen (14) days of the date of these orders, the parties do all things necessary to pay their joint liabilities, as calculated in the table contained in paragraph 288 of these reasons for judgment, apart from the moneys due to the (omitted) Bank account, payment of which is secured against the parties’ former home, from the monies standing in their joint account in the Voumard Lawyers trust account, with the remaining balance of those moneys to be disbursed 65% to the respondent Ms Holmes and 35% to the applicant, Mr Barkly.
That within fourteen (14) days of the date of these orders, the parties do all things necessary to place the former family home, being the property known as and situated at Property A in the State of South Australia and being the land contained in Certificate of Title (omitted) Folio (omitted) (hereinafter referred to as the “former family home”) on the market for sale with an estate agent and at a price to be agreed between the parties and failing agreement as nominated by the court.
Pending the sale of the former family home the applicant Mr Barkly be responsible for outgoings in respect of the property, including payment of council rates and other charges secured against the property.
Upon the settlement of the sale of the former family home the proceeds of sale be distributed as follows:
(a)In payment of the commission due to the selling agent;
(b)In payment of all legal costs relating to the sale;
(c)To discharge all moneys secured against the title in favour of (omitted) Super arising from the (omitted) loan account;
(d)The sum of $30,000.00 to the respondent Ms Holmes;
(e)As to the balance remaining:
(i)65% to the respondent, Ms Holmes;
(ii)35% to the applicant, Mr Barkly.
Including but without limiting the effect hereof the applicant Mr Barkly shall retain for his sole use and benefit absolutely free from any further claim or demand of the respondent Ms Holmes:
(a)The real property located at Property M, New South Wales;
(b)The plant and equipment located at the former family home;
(c)The motor vehicle currently in his possession;
(d)His furniture and personal affects; and
(e)The superannuation standing in his name with (omitted) Superannuation.
Including but without limiting the effect hereof the respondent Ms Holmes shall retain for her sole use and benefit absolutely free from any further claim or demand of the applicant Mr Barkly:
(a)The real property registered in her name located at Property F;
(b)The motor vehicle currently in her possession; and
(c)Her furniture and personal affects;
All applications be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Barkly & Holmes is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 4796 of 2013
| MR BARKLY |
Applicant
And
| MS HOLMES |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties to these proceedings are Mr Barkly and Ms Holmes. Although the parties have never been married, it is convenient to refer to them as “the husband” and “the wife” respectively, as this was the nomenclature adopted by their lawyers, during the trial. The proceedings relate to the settlement of de facto property issues pursuant to Part VIIIAB of the Family Law Act 1975.
The husband was born on (omitted) 1961. He is a jack of all trades, having been an (omitted); a (omitted); a professional (omitted); and more recently, a (omitted).
The wife was born on (omitted) 1966. Her family own a (business omitted), the (business omitted), in (omitted), on the (omitted) of South Australia. It is her case that she began to work in the (business omitted) from an early age. She was not always paid wages, but was generously provided for by her family, particularly her mother, Ms M.
The parties met in mid-1995, when the husband came to work at the (business omitted) as a (omitted). They began a de facto relationship in December of that year. The relationship produced three children: Z born (omitted) 2000; and twins, X and Y, born (omitted) 2002.
The parties finally separated on 10 February 2013, when the wife and children left the former family home at Property A “the Property A property” and moved to Property F, approximately sixty kilometres away. In October of 2013, the wife purchased a house for herself and the children located at Property F “the Property F property”.
It is the wife’s case that her relationship with Mr Barkly was characterised by significant family violence, to which the children were regularly exposed. From her perspective, the catalyst for the end of the relationship was an attempt, by Y, to hang himself on the back porch of the Property A property. This incident triggered Families SA involvement and the wife and children were placed in a safe house, for some months, in Property F.
Initially, the husband commenced these proceedings in December of 2013, seeking orders for the children to spend regular weekend and holiday time with him. The wife opposed these orders, largely on the basis of family violence concerns and because the children did not wish to see their father.
The children’s issues have now been resolved, following the intervention of an independent children’s lawyer and a family report. The family report writer found the children’s presentation[1] to be consistent with children, who had been exposed to family violence. She also noted Z and X’s opposition to spending time with their father. In these circumstances, she recommended Mr Barkly and the children undertake a process of reunification counselling.
[1] Apart from Y, who declined to attend the family report interviews
Regrettably, this therapy was unsuccessful and, on 30 April 2015, the court made orders that the children live with Ms Holmes, who was conferred with sole parental responsibility for them. It was further agreed that Mr Barkly would spend time with the children, as agreed between the parties, in accordance with their wishes and as recommended by any therapist, involved in their treatment.
There can be no doubt that the circumstances surrounding the parties’ separation and afterwards, have precipitated extreme emotion in each of them. At a fundamental level, the parties do not trust one another and suspect that the other is intent on securing an unfair financial advantage over him or her. As a consequence, these proceedings have been bitterly contested and each party has spent a significant sum of money on legal costs.
Ms Holmes is currently in receipt of a carer’s pension. It is her position, that all three children, but particular Y, have significant health, emotional and educational issues, which require her constant attention and prevent her returning to the paid workforce. In addition, it is her position that she herself is not emotionally robust.
As a consequence of these matters, Ms Holmes contends that she is currently in somewhat straitened financial circumstances. She receives no child support from Mr Barkly, although she has not apparently sought an administrative assessment in this regard.
Until recently, Mr Barkly worked as a (occupation omitted), with a firm known as (employer omitted). For the five months from 1 July 2015 to 1 December 2015, he earned $38,116.30 gross, which equates to around $1,800.00 per week.[2]
[2] See exhibit A
Following the hearing of evidence, in the case, he was involved in an accident, which led to him resigning from his employment. As a consequence of this incident, Mr Barkly applied to the court to re-open his case and place this recent evidence before it.[3] This application was granted on 29 February 2016.
[3] See application in a case and affidavit of the husband both filed 18 February 2016.
Accordingly, the relationship between the parties lasted around 17 years and produced three children. During much of this period, the parties were in a business partnership, which operated first a (omitted) business and more recently a (omitted) business.
The husband ceased this latter business, around the time the parties separated and its assets and liabilities have been rationalised, in a somewhat piecemeal fashion, in the period since, against a background of hostility and mistrust between the parties. Much of the moneys realised have gone into funding the proceedings between them and in other general living expenses.
However, following the sale of a (omitted) and (omitted) licences, a significant sum of money remains in a solicitor’s trust account. The sum in question is around $112,000.00. It is Mr Barkly’s case that this sum should be earmarked to pay debts relating to the now defunct business, which he would characterise as being joint debts of the parties. How the court should categorise these debts and deal with monies advanced to each of the parties from the sale of assets, prior to trial, is a matter of controversy.
It is the wife’s case that she was the family’s main homemaker, during the relationship, as well as working in a number of paid positions. It is also her position that she assisted Mr Barkly in the (omitted) business and more recently in the (omitted) business. As such, it is her case that she has made many and varied contributions during the parties’ relationship.
Significantly, it is Ms Holmes’ position that, by dint of her hard work and the generosity of her family, she had already acquired assets of significant value, in the form of several pieces of real property in (omitted), when she met Mr Barkly.
It is her case that these assets were translated into the Property A property and both provided capital and collateral enabling Mr Barkly to go into business, particularly when a significant capital outlay was required to purchase a (business omitted) and (omitted) licences.
The parties agree that the Property A property is worth about $475,000.00 and is not subject to a mortgage. Mr Barkly currently occupies the property but, in the past, due to his work, was often away. Initially, Mr Barkly conceded that the property needed to be sold, but in closing submissions, his counsel, Mr McQuade indicated that his preference was to retain it, so he could have a firm home base from which to re-build his relationship with the children.
How Mr Barkly would be able to fund such a transaction was not altogether clear to me at the time the submission was made other than he anticipated being able to borrow funds, whilst he was in paid employment.
However, since his redundancy from (employer omitted), Mr Barkly has deposed that his purchase of the Property A property is no longer feasible and he agrees with Ms Holmes’ position that the property needs to be sold for the best possible price.
The husband concedes that the wife had some assets, at the commencement of the parties' relationship, but asserts that she has overstated their value and significance, in these proceedings, for tactical reasons.
He disputes her assertion that these various assets enabled the parties’ commercial activities later on in the relationship. In any event, it is his position that much water had flowed under the bridge between the realisation of these assets and certainly the beginning of the (omitted) business.
It is his position that he was comfortably off when he met Ms Holmes and had significant assets at the commencement of cohabitation, including a house at Property D; two motor vehicles; and an extensive collection of tools. He also asserts that he provided extensive work to renovate Ms Holmes’ real property, which increased their value prior to sale.
Between the late 1990s and 2000, the parties operated a (omitted) business, with Mr Barkly doing the necessary (duties omitted), with one other employee. Thereafter, it is his case that he went (employment omitted), north of (omitted), with Ms Holmes’ father. It is his evidence that he and Mr Holmes had a lucky strike, which provided (omitted), later sold for around $250,000.00.
In his oral evidence, Mr Barkly indicated that it was common practice for (omitted) buyers to deal in cash. As such, the sum in question was not deposited into a bank account. However, it is Mr Barkly’s evidence that it was this sum, which enabled the purchase of an existing (omitted) business, which included a (omitted) and licences.
In all these circumstances, it is Mr Barkly’s position that the financial contributions of the parties, including initial ones, should be regarded as essentially equal. It is also his case that he was the family’s main breadwinner, working long and dangerous hours as a professional (employment omitted).
Ms Holmes does not agree in respect of the husband’s assessment of contributions. It is her position that she owned real property located at Property H “the Property H property”; Property S “the Property S property” and at Property W “the Property W property” which she had either purchased with her own funds or been gifted by her parents prior to the commencement of the parties' relationship.
In these circumstances, it is her case that these contributions must be given some form of special recognition, when the court makes assessment of the parties’ various contributions, during their lengthy relationship. In the submission of her counsel, Mr Anderson, these properties were the springboard from which the parties were able to launch themselves to secure their current financial situation. As such, it is the wife’s position that her contributions, in this respect, are superior to those of the husband.
In addition, she categorises the husband’s evidence regarding the (omitted) windfall, as being inherently unreliable. She concedes that the husband did go (employment omitted) from time to time and did make some finds of (omitted) but she refutes the assertion that he ever made a strike of the magnitude which he now alleges.
In all these circumstances, particularly given her responsibility to parent three children with limited financial resources, it is Ms Holmes’ case that she should receive 70% of the parties’ net assets. In order to secure this outcome, she proposes that the Property A property be sold. It is her case that any contribution Mr Barkly has made into the Property F property must be regarded as extremely limited.
It is Mr Barkly’s case that he has few, if any, trade or professional skills. In addition, as he reaches his mid-fifties, it is his case that his years of being a professional (occupation omitted) which he characterises as a physically onerous job, are limited. As such, he would characterise himself as facing an uncertain financial future, particularly since his resignation from (employer omitted).
The incident which led to his resignation occurred when the truck he was driving collided with an overpass bridge, which was too low for the dimensions of the vehicle concerned. Following the accident, the company determined that Mr Barkly was not capable of (employment omitted). It indicated to him that he would not be offered any further (omitted) jobs of (omitted) and its other work, in regards to (employment omitted) was limited. In these circumstances, Mr Barkly, to use his own words “decided to move on.”
In addition, Mr Barkly contends that Ms Holmes’ financial position is not as dire as she would want the court to believe. It is Mr Barkly’s case that Ms Holmes, as a consequence of her many years of hard work at the (business omitted), is owed a significant sum of money in accrued wages. These are recognised, in the accounts of (business omitted), as a loan account, from Ms Holmes, standing in an amount of $77,490.00.
It is also Mr Barkly’s understanding that Ms Holmes will have access to other funds, as a consequence of having a vested beneficial entitlement, pursuant to a family trust effectively operated by her parents. Again, Ms Holmes does not accept, in practical terms, that she will receive any significant sums of money from either the (business omitted) or the family trust. It is her case that the (business omitted) is struggling financially and is not in a position to pay her anything. This position is supported by the (business omitted) accountant, Mr A, who gave evidence in these proceedings.
The Property F property was purchased by Ms Holmes for the sum of $257,371.20. At the time, she had some accumulated savings standing in her own name ($36,000.00), but was not in paid employment and, as such, was ineligible to apply for housing finance from any lending authority. Yet it was her case that she had a pressing need for accommodation for herself and the children and was not receiving any financial assistance from Mr Barkly.
In these circumstances, it is her case that she borrowed monies from her mother and other family members, as well as from a gentleman, Mr H, but was still short. As a result, she looked to other sources of funds to complete the purchase, which were as follows.
The wife withdrew $36,000.00 from her term deposit account to assist her to complete the purchase of the Property F property. She also utilised some monies in an amount of $30,000.00 held on term, in the name of the children, to the same end. Ms Holmes asserts that her mother had contributed the term deposits, for the children and she herself had paid regular amounts into the term deposit from Centrelink benefits. Mr Barkly regards the term deposit as being joint funds.
It is Ms Holmes’ position that Mr Barkly has had the benefit of being able to live in the Property A property essentially rent free, whilst she was struggling financially. She also contends that he had the benefit of other jointly held funds to finance his living expenses.
In these circumstances, she contends that it was not unreasonable for her to have recourse to nominally joint funds and it would represent an injustice to her if they are dealt with on a strict dollar by dollar basis, when no such accounting is made of the benefits accruing to Mr Barkly of living in the former family home.
On the other hand, it is Mr Barkly’s case that the monies withdrawn, in this way, should be added back into the court’s calculation of the parties’ asset pool and distributed in the wife’s favour, dollar for dollar, against all the other items appearing in the parties’ asset pool. To do otherwise, in his submission, would be to wreak an injustice on him.
Other controversies arise between the parties, as to how monies expended on legal fees should be approached. In particular, Mr Barkly contends that Ms Holmes utilised around $25,024.40, standing in another term deposit, in her name, to pay her solicitor. Again, although this money is long spent, Mr Barkly contends that it should be notionally added back into the parties’ asset pool.
Accordingly, as is the case in many matters coming before the court, the parties disagree about how their balance sheet of assets, available for distribution between them, should be calculated. In addition, they disagree about how assets should be distributed, particularly what should be the disposition of their former family home.
Most significantly, they disagree on the percentage basis, which should be adopted as the basis for any division. The husband contends that the parties’ contributions, although different in form, before, during and after their relationship are essentially equal, particularly given the length of their involvement with one another.
Thereafter, he concedes that Ms Holmes faces some financial challenges but he contends that, if and when she seeks an administrative assessment of child support, as either a PAYG taxpayer or a person in receipt of social security, he will be amenable to meeting such an assessment and therefore Ms Holmes will receive an appropriate level of financial support for Z, X and Y, as properly assessed against his income and care arrangements for the children.
In these circumstances, Mr Barkly proposes a further 10% allowance in Ms Holmes favour, leading to a 60/40% division. He has not altered this position as a consequence of his recent unemployment.[4] As previously indicated, Ms Holmes proposes a 70/30% division in her favour.
[4] See affidavit of the husband filed 18 February 2016 at paragraph 3(d)
At this point, of course, it needs to be emphasised that it is all well and good to talk in terms of percentages, but what is important to the parties is what those percentages mean in terms of dollars and cents. In this context, much time was spent, during the trial, in competing attempts to define the asset pool, to which any subsequent percentage would be applied.
These proceedings are intended to resolve the various disputes between the parties and, as far as is possible, finalise their financial relationship with one another, so that each may move on with the remainder of their lives.
The evidence
In these reasons for judgment, findings of fact are made on the balance of probabilities, from my observation of the demeanour of each of the witnesses concerned.[5] I have tried to reach my conclusions on credibility and reliability on the basis of contemporary materials, objectively established facts and importantly, on the apparent logic of events.[6]
[5] See Evidence Act1995 (Cth) at s.140
[6] See Fox v Percy (2003) 214 CLR 118 at 129 [31] per Gleeson CJ, Gummow and Kirby JJ
In addition, I bear in mind s.140(2) of the Evidence Act, which indicates that in applying this standard of proof, I am entitled to consider the nature of the subject-matter of the proceedings and the gravity of the matters alleged.
The wife’s case and the affidavits drafted in support of it were exhaustively prepared. In particular, her trial affidavit was some 475 paragraphs in length and contained five volumes of annexed documents. In total, the affidavit was some 402 pages in length. In these circumstances, although there are some gaps in the financial record, it is my view that the wife has applied herself diligently to these proceedings.
It is Ms Holmes’ evidence, which I accept, that during the relationship, Mr Barkly was secretive about his financial affairs and largely determined the financial enterprises in which the parties would engage. She categorises him as a domineering person. In particular, she asserts that he would purchase major and expensive items of property, particularly motor vehicles and vessels, without any prior reference to her.
It is clear from the extensive financial records, which Ms Holmes has disclosed, that, by habit, she is a financially scrupulous person, whose natural predilection is to retain all her financial records. However, when the parties separated, she was forced to leave the Property A property suddenly and in difficult circumstances. As a consequence, she was not in a position to take her financial records with her.
It is Ms Holmes’ evidence, again which I accept, that, following the parties’ separation, Mr Barkly arrived unannounced at the (business omitted) and began dumping some of her possessions, including financial documents, from the tray of his utility, parked outside the (business omitted). Some of these items included the financial records, which Ms Holmes has subsequently done her best to collate. The record is not complete. I accept that this is not due to any omission on the wife’s part.
I found Ms Holmes to be a credible and honest person. It is also my finding that she is extremely hardworking and frugal. To his credit, Mr Barkly accepts that this is the case. However, he refutes any suggestion that he can be characterised as some sort of domestic tyrant during the parties’ relationship. I accept that he has been deeply saddened by the children’s aspect of these proceedings. In these circumstances, he has struggled emotionally from time to time.
Mr Barkly’s affidavit material has also been professionally prepared. However, in my estimation, it lacks the degree of detail characterised by Ms Holmes’ material. In my estimation, he has a more easy come easy go attitude to money than does the wife. He is inclined not to worry too much about the consequences of any particular financial arrangement. He lives in the moment and is disinclined to keep extensive financial records, leaving that to others.
One particular instance, in my view, is illustrative of the differences in detail between Mr Barkly’s material and that of Ms Holmes. As previously indicated, it is a significant aspect of Mr Barkly’s case that he contributed moneys, in an amount of around $250,000.00, from (employment omitted), which enabled the purchase of the parties’ (omitted) business. On any view, this is a significant sum of money.
However, in his trial affidavit, Mr Barkly alludes to the issue in the following terms:
“In the meantime Ms Holmes’s father had always wanted to go (omitted), I was not that interested, I had had enough over the years, however, we got on well, he was very keen and so decided to go up to (omitted) and stake a claim. Ms Holmes’s father and I worked together for approximately 4 to 5 years, during my time in (omitted), I had raised enough money to buy a (omitted) licence and (omitted) and towards the latter years I would spend 6 months in (omitted) and then 6 months (business omitted).”[7]
[7] See husband’s affidavit filed 16 April 2015 at paragraph 30
It was only in his oral evidence that Mr Barkly crystallised his financial contribution in the specific sum of $250,000.00. He conceded that he was unable to produce any financial verification of the sum, in the form of bank deposit statements, as he deposed that the various transactions relating to the sale of the (omitted) by him had been in cash.
I did not find this evidence convincing. It had the air of a recent embellishment or perhaps an example of wishful thinking or exaggeration. It seems to me to be improbable that such a significant lucky strike, on Mr Barkly’s part, is not capable of some form of independent verification.
Mr Barkly is an intelligent person. However, he did not seem to me to exhibit the same degree of financial diligence, as did Ms Holmes. In particular, he does not share Ms Holmes’ propensity to retain financial records. My impression is that he is somewhat laissez-faire, so far as financial matters and record keeping are concerned. In all these circumstances, Ms Holmes is likely to be the more reliable of the two parties.
Mr Barkly relies on the following documents:
i)Three affidavits of himself filed on 16 April 2015; 7 December 2015; and 18 February 2016;
ii)An affidavit of Mr S filed on 23 April 2015;
Both Mr Barkly and Mr S gave additional oral evidence and were cross-examined by the counsel for the wife, Mr Anderson. Mr S has known Mr Barkly for many years. He gave evidence regarding a loan of $30,000.00, which he made in March of 2013, to Mr Barkly, to enable him to commission the construction of a (omitted) in (omitted). There is now no longer any controversy that this loan is a genuine one, which is to be accounted a joint liability of the parties, together with interest which has accrued in respect of it.
Ms Holmes relies on the following documents:
i)Three affidavit of herself filed on 15 April 2015; 1 December 2015; and 8 March 2016;
ii)An affidavit of her mother, Ms M, filed on 15 April 2015;
iii)An affidavit of Mr M, filed 15 April 2015;
iv)An affidavit of Ms D, a conveyancer, filed 15 April 2015;
v)An affidavit of Mr K, the respondent’s brother, filed 14 April 2015;
vi)An affidavit of Mr H, a money lender, filed 15 April 2015; and
vii)An affidavit of Mr A, a chartered accountant for Ms M, filed 15 April 2015.
Of these witnesses, only the wife, Ms M, Mr Holmes and Mr A were required for cross-examination. Mr M is a (occupation omitted), who lives in (omitted). He has known Mr Barkly and Ms Holmes for many years. Mr K is his (Mr M’s) brother-in-law. In the past, Mr M operated a (business omitted), which adjoined Mr Barkly’s (business omitted). As such he knows Mr Barkly well and is familiar with the (omitted) industry in (omitted).
In his affidavit, Mr M deposed that he regularly saw Ms Holmes (business omitted) in the (omitted) ready for Mr Barkly to take out to (omitted). He described the work as being stinky and dirty. He also deposed that he regularly saw Ms Holmes unloading and packing (omitted) which she would take to market, in Adelaide, in the early hours of the morning.
As previously indicated, this is not contentious evidence. Mr Barkly concedes that Ms Holmes was very good at (business omitted). He describes her, with a degree of laconic understatement as being a worker. I unequivocally accept that this is the case. It is in line with Mr M’s evidence, which is complimentary of Ms Holmes’ overall work ethic.
Ms D and Mr H gave evidence about the source of moneys, which were utilised by Ms Holmes to purchase the Property F property. This evidence is not controversial and is confirmed by evidence provided by the wife and Ms Holmes.
The parties’ have a poor and mistrustful relationship with one another. In these circumstances, each considers that the other is intent on manipulating circumstances and understating their own level of financial security, to advance each of their respective financial agendas. In particular, Mr Barkly is of the view that Ms Holmes is likely to benefit significantly from her parents, whom he believes are financially well off.
Ms Holmes and Mr A were called to refute this assertion. Mr A was an assured and accomplished person who gave his evidence in an unflustered manner. I accept his evidence that there are no pots of gold available to the wife via (business omitted) or the Holmes Family Trust and although she is owed money by the (business omitted), given its poor financial circumstances, she is unlikely to be paid the moneys due to her.
Both Ms M and Mr K have known Mr Barkly for many years. Ms Holmes indicates that she and her husband and indeed the wife, had gone (business omitted) together in the past. She regarded this as being largely a hobby, which when (omitted) was found, basically only covered the costs involved. Mr K confirmed that he knew of no major funds involving his parents or Mr Barkly. I accept this evidence.
a) Background
Ms Holmes is now around fifty years of age. She left school at fourteen or fifteen and began working at the (business omitted). She did everything involved with running a (business omitted) including (omitted); and cleaning, including the (duties omitted).
Ms Holmes deposes that her daughter did not always draw her full wages, although these were properly calculated. The wife confirms this to be the case. Her expenses, at the time, were limited, as she lived at the (business omitted) and ate her meals there. She worked long hours, up to twelve hours per day.
Against this background, at some time in 1989, Mr and Mrs Holmes elected to give the wife her first real property, located at Property H. The property remained registered in the name of (business omitted), although the wife lived in it and it was regarded by all concerned as her property.
I accept that this situation arose partly as a gift from her parents and also partly in recompense for her wages accrued at the (business omitted). No one concerned calculated the value of the property but there can be no doubt its acquisition pre-dated the parties’ relationship. It was sold in August of 2002, netting the wife the sum of $102,131.41, which she received.[8]
[8] See annexure U to the wife’s affidavit filed 15 April 2015
Mr Barkly is now around fifty-four years of age. He left school at fifteen and, as a young person, worked in an (employer omitted). He married in his early twenties and has a child, who is now in her mid-thirties. Following the breakdown of his first marriage, Mr Barkly had limited financial resources. Prior to the parties meeting in 1995, Mr Barkly did some (employment omitted) and worked, as a (employment omitted) for (employer omitted).
At the time the parties commenced their relationship, I find that Mr Barkly owned a number of motor vehicles; some tools; and had an interest in a house at Property D, which was subject to a significant mortgage in favour of the (omitted) Bank. The purchase price of the property, in January 1995, was $60,000.00 of which $55,000.00 was borrowed.[9]
[9] Ibid at annexure H
I do not consider that the evidence available to me is sufficient to enable me to conclude that the vehicles or the tools had any great value, which needs to be accorded special significance in these proceedings. I accept that the vehicles were important to Mr Barkly. However, they have long since been sold and their previous value is imprecise.
It is the wife’s evidence that when she and Mr Barkly met, shortly after he had purchased the Property D property, Mr Barkly was on sickness benefits and having trouble maintaining the loan. It was at this stage that Mr Barkly commenced employment at the (business omitted) as a (occupation omitted). In my view, it is not material now whether Mr Barkly was having a break from work or otherwise.
The parties lived both at Property H and at the Property D property. It seems probable that they spent more time at the Property H property than at Property D. It is also the case that when the parties were not occupying it, Property H was rented. Banking records sourced by the wife indicate that the Property D property was sold, in May 2001, netting Mr Barkly the sum of $16,497.47.[10]
[10] Ibid at annexure U
In April 1995, very shortly prior to the parties beginning their cohabitation, the wife purchased another real property located at Property S for the sum of $36,000.00.[11] The property was registered in the wife’s name but the funds came from Ms M. The wife’s intention was to renovate the property.
[11] Ibid at annexure A
It is common ground that Mr Barkly performed some of the renovations at the Property S property and did other work at Property H. However, the parties disagree about the extent of the work involved with the husband asserting that it was major in its implications and the wife asserting to the contrary.
At a remove of almost twenty years, it is impossible to resolve this issue now. However, in my view, there is no evidence to indicate any significant improvements, which materially altered the value of either property. No doubt Mr Barkly performed some work, which he was happy to do but so did other tradespeople paid for by Ms Holmes and so did members of her family. It is difficult now, if not impossible to assess these contributions exactly.
Property S was sold in September of 2001 for the sum of $50,000.00.[12] At the time of its sale, the property was used as a security for a loan, which the parties had jointly taken out in January 1997, in the sum of $67,300.00. It is unclear to me what was the purpose of the loan other than it seems more likely than not that it was used to fund the parties’ business activities, particularly the (omitted) business.
[12] Ibid at annexure C
The third property, which the wife owned at the commencement of her relationship with Mr Barkly, was situated at Property W. Ms Holmes purchased this property, in August 1995, for $31,500.00.[13] The property was subject to a mortgage, in favour of (omitted) Bank, in the sum of $20,000.00, with the balance coming from Ms Holmes’ own funds.
[13] Ibid at annexure D
I accept the wife’s evidence that this loan was paid off, in its entirety, by mid-1996 through an inheritance, which the wife received from the estate of her late grandmother. [14] Unlike a marriage, where there is an obvious date for which to calculate the commencement of a financial relationship, in many de facto relationships there is no obvious demarcation point from which it can be said that the parties concerned are financially involved with one another.
[14] Ibid at annexure F
However, in the current case, the parties agree that they began to live together, at Property H in December of 1995. Accordingly, at this point, I accept that the wife had significant interests in three pieces of real property –Property H; Property S; and Property W; – which represented a significantly greater capital value than that contained in the husband’s property at Property D.
In early 1996, the husband began work as a (occupation omitted). Thereafter, he went into business on his own account, (business omitted). The truck operated in the business was purchased on finance. No details have been provided of this arrangement by either party. It seems more likely than not that the wife’s various real properties were used as some sort of security for the business. The business purchased other trucks and trailers and employed some other workers, as time went on.
The wife continued to work for her parents in the (business omitted). In early 1996, in addition, the parties jointly purchased a further property located at Property T for the sum of $52,550.00. This was a shop to which a residence was attached. From the shop, the wife operated a (business omitted).
Neither party has provided any details as to how the Property T property was purchased or indeed when it was sold and what was recouped. Ms Holmes operated the business, whilst Mr Barkly continued (business omitted). I have not been provided any details regarding the parties’ respective level of income during this period. I accept however that both were fully engaged and worked hard. Their relationship was a happy and commitment one, which both treated as a partnership to which both contributed as best they could.
Ms Holmes seems to have something of an entrepreneurial streak and to be extremely hard working. In addition to working in her (omitted) business, she continued to work for her mother, from time to time, at the (business omitted). She also trained to be a (occupation omitted) and operated a (omitted) business from time to time, both from her home and the shop.
After the birth of the children, she obtained (omitted) qualifications and worked at the (employer omitted). In addition, prior to the sale of her real properties, they were rented out, with the rent contributed to joint family purposes. As previously indicated, Z was born in (omitted) 2000 and the twins born in 2002. It is Ms Holmes’ evidence, which I accept, that she was predominantly responsible for the day to day care of the children and provided the vast majority of home making contributions.
In addition, I also accept that, wherever possible, she worked in whatever employment was available to her. I reiterate my impression of the wife, that she is an honest, self-motivated and extremely hard working person. I also accept that Mr Barkly utilised his skills as best he could and was always in one form of work or another. He too seems to have an eye for seeking out business opportunities, with a view to making a profit.
It is the wife’s evidence that she was kept in the dark about the profitability of the husband’s (omitted) business and was largely unaware of what income it produced. It is also her case that whatever moneys Mr Barkly earned, he retained for his own use, not providing her with any regular sources of housekeeping funds. It is also the wife’s evidence that the husband was inclined to purchase expensive items, such as trucks, boats and plant, without reference to her. The import of this evidence is that she considered money burnt a hole in Mr Barkly’s pocket.
Again, at this juncture, it is hard to ascertain the truth or otherwise of this assertion. However, in general terms, I accept that Ms Holmes has an extremely frugal attitude to life and financial matters, which is not reciprocated by Mr Barkly. In particular, I accept her evidence that she rarely, if at all, got her hair done or spent any money on luxuries for herself. In these circumstances, I accept her evidence that whatever earnings she had, from the (business omitted) or from providing (omitted) or from her (omitted) business, was utilised on day to day living expenses for the family.
b) The purchase of the Property A, property
In mid-2001, the parties decided to build their own home in Property A. Two adjoining blocks of land at Property A, were purchased from the wife’s aunt for the sum of $64,000.00.[15] Of this sum, approximately $30,000.00 was borrowed. The purchase coincides with the wife’s sale of Property S and Property W, which I accept netted the wife approximately $55,000.00, with other moneys going to reduce liabilities relating to the (omitted) business.
[15] Ibid at annexure R
In October 2002, the parties sold lot (omitted) for $59,000.00, which represented a significant profit. After payment of expenses, approximately $50,000.00 was netted, which again, was paid into an account relating to the business. It is the wife’s evidence, which I accept, that her aunt was prepared to sell both blocks of land, at a discount, because of her affection for her niece. This assertion is corroborated by the sale price achieved for lot (omitted) approximately one year after its initial purchase.
In my view, this must be accounted as a contribution largely referable to the wife. In addition, it is clear that her real property interests, acquired prior to commencement of the parties’ relationship, significantly financed both the acquisition of the Property A property and the (omitted) business.
In 2003, the parties contracted with a builder to build a house on the remaining lot, number (omitted) at Property A. The price for the dwelling was $82,970.20.[16]I accept the wife’s evidence that the construction of the Property A property was financed by the sale of Property H.
[16] Ibid at annexure T
Although this property was registered in the name of (business omitted), the proceeds of sale, which amounted to $102,131.41 were paid into a joint account operated by the parties and I accept that it was from this account that the various progress payments were made to the builder concerned.
The Property A property is registered in the parties’ joint names. It is utilised as security for a business loan relating to the now defunct (omitted) business. The parties jointly instructed (omitted) Valuers to value the property in June of 2014. This valuation attributed a value of $475,000.00 to the property concerned.
As previously indicated, the parties now agree that the property must be sold, as Ms Holmes has no interest in utilising the property for herself and Mr Barkly has no means of funding the acquisition of Ms Holmes’ interest in it.
During the relationship, the Property A property was improved through the installation of a swimming pool. I accept that Ms M provided the money for the pool. No evidence has been provided as to the cost of the swimming pool.
The Property A property constitutes the parties’ current major asset available to be divided between them. In my view, an analysis of the evidence indicates that contributions emanating from Ms Holmes and her family constitute the major mechanism through which the property was acquired. In my view, this is a significant factor, which favours Ms Holmes.
c) The purchase of the (omitted) business and licenses
In my assessment, the circumstances surrounding the purchase of the (omitted) business are clouded with uncertainty. In their respective affidavit material, neither party ascribes the sum actually defrayed to purchase the business and its actual date of acquisition. More likely than not, it was around 2002/2003.
In cross-examination, Mr Barkly asserted simply that there was a lot of money around at the time which he attributes to his (employment omitted) and the (omitted) business. Ms Holmes accepts that Mr Barkly did go (employment omitted) and did earn some money from it, which was probably not banked. Ms Holmes asserts that she frequently accompanied Mr Barkly and her parents on these (omitted) trips. It is her evidence that she helped with the (omitted) activities and cooked all meals consumed. Her parents supplied the necessary (omitted) equipment.
Given Ms Holmes’ evidence, which is supported by her son, I consider Mr Barkly’s evidence regarding the moneys earned by him, which he asserts were completely translated into the (omitted) business, to be a gross exaggeration. Ms Holmes’ recollection is that the initial (omitted) license cost around $36,000.00 and a (omitted) went with it. She does not know precisely where this sum came from. In her evidence, she deposed as follows in respect of the issue:
“All I know is that my places got sold.”
Ms Holmes categorises the (business omitted) as being very expensive to finance. However, she agrees that there was a three or four month period, when a lode was struck and good finds of (omitted) occurred. She does not think that this load produced anywhere near $250,000.00 of (omitted). On my view, Ms Holmes’ recollection as to the purchase price of the (omitted) business and licenses appears to be the more plausible one. It also seems likely that the business was purchased, at least in part, from moneys realised from the sale of her various properties.
However, the parties’ mutual finances, around this time, are a tangled skein, with moneys coming from a variety of sources, including the (omitted) business; (omitted business); as well as sources relating to the wife’s real estate. However, in my view, the wife’s interest in the Property H property; the Property S property and at the Property W property were integral to the purchase of the Property A property and the (omitted) lease and related (omitted).
In my view, Mr Anderson’s use of the metaphor of the springboard is an apt one. Without these significant contributions, I do not believe that the parties would have been able to acquire their former family home or much of the other property, which is now available for division between them.
The (omitted) business provided seasonal work. In addition, Mr Barkly took (employment omitted) and did work for the (employer omitted) from time to time, as well as having a (omitted) licence. In winter he continued (business omitted). He also continued to (employment omitted) on occasion. No evidence has been provided as to his level of income at the time other than Mr Barkly asserts that he made good money.
This may be so, but it is now difficult to trace what happened to this comfortable level of income. Given the frugality of Ms Holmes’ lifestyle, it cannot be the case that she squandered assets or was living beyond her means. In these circumstances, it seems more likely than not that Mr Barkly utilised his income, as the wife asserts, in buying bits and pieces of equipment and various vehicles. I accept the wife’s evidence that these were not always financially astute purchases, particularly when viewed with the benefit of the hindsight in provided by these proceedings.
I also accept Ms Holmes’ evidence that she was also involved in the (omitted) business as well as other commercial activities. In particular, I accept that she frequently (duties omitted); (omitted); and collated records to enable Mr Barkly’s accountant to put in tax and GST returns. On a less frequent basis, Ms Holmes was also a (duties omitted). However, in 2012, she began to suffer (illness omitted) and stopped going out.
I accept Mr Barkly’s evidence that commercial (business omitted) is an arduous and dangerous occupation. However, it seems to me that the evidence indicates that Ms Holmes was also integrally involved in the business, as well as contributing in other significant ways to the welfare of the family.
As previously indicated, it is Ms Holmes’ evidence that Mr Barkly adopted a controlling attitude in respect of the parties’ finances. As a consequence, from the wife’s perspective, it was a constant struggle to supply her and the children’s needs. In this context, Ms Holmes concedes that she was secretive in respect of her earnings, which she needed to maintain a basic standard of living for herself and the children. In contrast, she characterises Mr Barkly as being impulsive and wasteful in respect of money.
In her affidavit evidence, which I accept, Ms Holmes deposes that she was not permitted to spend money on anything other than groceries and other household necessities. She further asserts that, in the event that she purchased something of which Mr Barkly did not approve, he would become angry with her. On the advice of her accountant, she withdrew $500.00 per week from the parties’ joint account to finance housekeeping expenses and the children’s needs. I accept that Ms Holmes lived extremely frugally.
d) The purchase of land at Property M
In May of 2009, Mr Barkly purchased a vacant block of land at Property M, New South Wales for the sum of $15,000.00. He intended to use the land for (business omitted). The property was valued, in June of 2014, at $9,000.00. The parties agree that this is an appropriate valuation. The property is registered in joint names.
e) The children’s money
In 2005, a school saver account was opened in Z’s name with (omitted) Bank. Modest amounts were regularly deposited into this account. However, the statement is far from complete. In July of 2013, the account held around $9,500.00. It is Ms Holmes’ evidence that her mother made the various deposits, over the years, with the intention of benefiting Z, particularly in respect of his future education needs.
It is Ms Holmes’ evidence that her mother adopted a similar practice in respect of bank accounts opened in X and Y’s name. It is her evidence that their accounts held similar amounts to that invested in Z’s name. I accept this evidence. In particular, I accept that the moneys standing in these accounts came from Ms M, without reference to Mr Barkly.
On 14 October 2013, in conjunction with her purchase of the Property F property, the wife withdrew the sum of $10,000.00 from each of the children’s accounts. The moneys were forwarded to Ms Holmes’ conveyancer and were utilised to complete the purchase.[17] Following these withdrawals, each child was left with a modest amount standing in their respective account. Z was left with $1,639.81; X with $92.88; and Y with $76.98.[18]
[17] Ibid at annexure AY
[18] Ibid at annexure AE
It is the wife’s evidence that she regards these moneys as an advance from the children, which she is obligated to repay. However, given her parlous circumstances, which the children shared, she felt that she had no viable alternative other than to utilise the money in question as a means of providing accommodation for both herself and the children.
As at the date of the filing of her trial affidavit (15 April 2015) Ms Holmes had reimbursed some moneys to the children, so that each of their accounts held the sum of $1,066.00. I accept the wife’s evidence that she intends to fully reimburse all the moneys borrowed from the children. More significantly, I accept her evidence that the ultimate source of these moneys was Ms M. In all these circumstances, I do not consider that these sums should be taken into specific account in these particular proceedings and be added back as a joint asset of the parties.
f) The wife’s term deposit
It is Ms Holmes’ evidence, which I accept, that her mother gave her a sum of $5,000.00, as a gift intended to be used to benefit the children, at some appropriate stage. This gift predated the parties’ separation by many years and was lodged in a term deposit with (omitted) Bank.
It was augmented by a further deposit of around $6,000.00, in October 2010. This sum was raised as a consequence of the wife selling a small parcel of shares, which she had owned since before the parties began their relationship.[19] The wife deposited a further sum of around $3,200.00, in August 2013, after separation. Ms Holmes believes that it was probably a tax refund.
[19] Ibid at annexure P
It was Mr Barkly’s position that the term deposit represents joint moneys. From Ms Holmes’ perspective the money is long spent, having been largely utilised on legal fees and other living expenses. In all these circumstances, she opposes the sum being notionally added back, into the parties’ pool of marital assets and allocated to her.
Following the parties’ separation, I accept that Ms Holmes found herself in straitened financial circumstances. She had no source of financial support, other than social security. In these circumstances, I accept that she had little option other than to utilise the term deposit, in the manner in which she did.
g) The wife’s financial relationship with (business omitted)
It is Mr Barkly’s position that, as a consequence of her many years of hard and frequently unpaid work, at the (business omitted), (business omitted), the operator of the (business omitted), owes the wife a significant sum of money related to unpaid wages; unpaid holidays; and accrued long service leave. It is further his position that, during the parties' relationship, Ms Holmes was frequently called upon to go to the (business omitted) often at short notice, to cover for other staff, but was not paid.
In these circumstances, he contends that his wages were used to support the family and he provided the necessary homemaking required, for the children, in Ms Holmes’ frequent absences from the home. In his evidence, Mr Barkly presented as being somewhat resentful that the wife had placed the interests of the (business omitted) before those of him and the children.
In all these circumstances, Mr Barkly contends that any moneys due to the wife, from either the (business omitted) or the Holmes Family Trust, should be included in the parties’ pool of joint assets because, on his case, he has made significant indirect contributions to the acquisition of these sums.
Ms Holmes concedes that, when she started work at the (business omitted) as a teenager, she did not draw her full wage, as she had no accommodation expenses and limited daily expenses. It is also her position that her parents were also very generous to her in other ways, particularly in respect of the provision of the property at Property H.
In her trial affidavit, Ms Holmes deposes as follows:
“I never concerned myself with what wages were owing to me as I was sufficiently provided for by my family and it was a family duty for me and my brothers to work at our parent’s (business omitted). It was not a business arrangement. I supported my family without concern for such detail as wages.
I was always aware that I had some unpaid wages owing to me by the (business omitted). It was my belief that all or some of the money my mother provided to me when I was buying my first houses was in lieu of the wages that I had not previously taken.
I think that all the wages owed to me by the (business omitted) were paid to me years ago in one way or another by the things I was given by my mother.”[20]
[20] Ibid at paragraph 400-402
So far as any family trust operated by her parents, Ms Holmes deposes that she has no personal knowledge of such a trust and does not believe that she has any current entitlements from it. She concedes that there was such a family trust, in the past, and she was probably a beneficiary, when it existed.
It would seem to be the case that considerable time and money has been spent on unpacking these issues. This has involved a close examination of records relating to the (business omitted) which have been compiled over many years. In addition, it has necessitated the wife calling Mr A, who has been the accountant for Ms M; (business omitted); and related entities; since about 1976.
Mr Barkly himself has little personal knowledge of these matters. As previously indicated, he is however deeply suspicious of the Holmes family at present. As a consequence of his scrutiny of the produced financial records of the (business omitted), he contends that Ms Holmes is owed $77,490.00 by (business omitted) and has a beneficial entitlement, in a family trust, in the sum of $16,640.00.
It is the submission of his counsel, Mr McQuade that these sums should be included in the parties’ pool of joint assets and divided between them in whatever proportion the court determines. Mr A was called to provide explanation of these matters.
In her affidavit, Ms M indicates that she has always done the bookkeeping for the (business omitted) and seen to the payment of wages for it. However, it is her evidence that she has no understanding of the structure of (business omitted) and the Holmes Family Trust, as these structures were set up by her accountant.
In these circumstances, she has authorised Mr A to provide Ms Holmes’ solicitors all necessary financial information regarding her, her husband, Mr G, the Family Trust and (business omitted). He provided an affidavit, in which he answered specific questions put to him by Ms Holmes’ solicitor. In addition, he was cross-examined by the husband’s solicitor. As a consequence, in my view, the various issues relating to both the (business omitted) and the family trust were thoroughly canvassed.
In her oral evidence, which was confirmed by Mr A, Ms Holmes deposed that the (business omitted) was no longer as profitable as it once had been. It was also her position that as far as she knew, the businesses accounting and taxation affairs were in order. It was her evidence that she had no personal knowledge that (business omitted) owed Ms Holmes any money whatsoever.
Ms Holmes indicated that she and her husband Mr G had initially bought a large parcel of land, through the (business omitted) at Property H. This was subdivided into three blocks, the last of which was Property H. It was this land, which was gifted to the wife in 1989. It was a significant gift, which occurred many years prior to the parties beginning their relationship.
As previously indicated, I accept the evidence of both the wife and Ms Holmes that this was in recognition of the wife’s then desire to live independently of her family; in part recompense for wages foregone by the wife; and as a gift. Thereafter, Mr and Mrs Holmes purchased, from their own funds, a second-hand transportable home. The property concerned was cheap and needed a lot of work done on it, which was supplied by various members of the Holmes household. The funds to purchase the transportable home were sourced from Mr and Mrs Holmes’ personal finances, not the (business omitted).
I further accept Ms Holmes’ evidence that she and her husband saw no necessity to transfer the title of Property H from the (business omitted) to the wife. However, when Ms Holmes sold the property, it was recognised by all concerned that she was solely entitled to the proceeds of sale, which she indeed received. In my mind nothing of significance turns on the fact that the title was not formally transferred to the wife.
It is Ms Holmes’ evidence that she did not tell Mr A of this transaction and, as a consequence, no allowance was made in the company’s records to recognise the transaction, in a formal sense. In all the circumstances, I can discern nothing sinister in this state of affairs.
Mr A has indicated that Ms Holmes does not hold any shares in (business omitted) and is not the beneficial owner of any such shares. She does however have a loan account with the company. As at 30 June 2003, (business omitted) owed Ms Holmes $59,263.86.
It is Mr A’s understanding, confirmed by both the wife and Ms M that this sum comprised unpaid net wages earned by Ms Holmes, during previous years of employment by (business omitted), less small amounts paid for her personal expenses.
Mr A does not have any accounting or other records for (business omitted) prior to the financial year ending 30 June 2003. These records have been destroyed, as the statutory holding period relating to them has expired.
However, it is Mr A’s understanding that, by agreement between Ms Holmes and her parents, she was not paid her wages in full. Rather, the unpaid amount was credited to a loan account, in her name, standing in the accounts of the (business omitted). In addition, her accrued long service leave was dealt with in the same manner.
However, it is Mr A’s evidence, confirmed by Ms M, that although the wages were not paid in full, a proper accounting was made in order that the proper level of tax was paid, as it accrued, to the Australian Taxation Office, each financial year.
Significantly, between 30 June 2003 and 30 June 2011, which coincides with the larger proportion of the period during which the parties were in a de facto relationship, whilst Ms Holmes was casually employed by (business omitted), her wages were paid in full in a conventional manner, other than so far as long service leave was concerned, which has never been taken by Ms Holmes. In these circumstances, as at the end of the 2010/2011 financial year, Ms Holmes was nominally owed the amount of $65,483.52 by (business omitted).
As previously indicated, Mr A has been Ms M’s accountant for around forty years. It is his recollection, which I accept is accurate, that the vast majority of the moneys notionally standing in Ms Holmes’ loan account were accrued by her from the mid-1980s to the mid-1990s, prior to the parties commencing their relationship together.
Mr A confirmed Ms M’s evidence that he had not been informed, in his role as the company’s accountant, of the sale of Property H and the prior circumstances surrounding it. As such, he had not made any accounting for it in the company’s records. If he had known these details, Mr A indicated that he would have done the following:
“A portion of the rent received by Ms Holmes would have been accounted for in the books of the company representing the portion of the rent that related to the use of the land and should have been derived by the company. The journal entry would have reflected rent earned by the company and a reduction in the balance owing to Ms Holmes.
Likewise, when Ms Holmes was living in the Property H property, rent for the use of the land would have been accounted for in the books of the company by reducing the balance owing to Ms Holmes.
At the date of sale of Property H, an assessment of the value of the land portion only would have been requested, and this amount would have been accounted for in the books of the company by reducing the balance owing to Ms Holmes.”[21]
[21] See page 114 of the affidavit of Mr A filed 15 April 2015
I accept the evidence of Mr A in this regard. Mr A further deposes that the company has made small profits for the three years ending up to 30 June 2013 and is anticipated to run at a loss for the past two financial years. In these circumstances, it is his opinion that the company has no capacity to pay the wife any moneys, in any event.
In all these circumstances, I find that there is no viable loan account between (business omitted) and the wife. I accept that any loan was extinguished by the equitable transfer of Property H to her in 1989.
In these circumstances, Ms Holmes is unlikely to either institute proceedings against the (business omitted) or be successful in them. In any event, the loan is not likely to be recoverable. As a consequence of these findings, I do not consider that it would be either just or appropriate to include the sum in the parties’ statement of joint assets.
Mr A has given evidence that the Holmes Family Trust is a discretionary trust, which was established in 1976. The trustee is (omitted) Pty Ltd. The wife does not hold any shares, either legally or beneficially, in (omitted) Pty Ltd.
As at 30 June 2005, the trust owed Ms Holmes $16,600.40. It is Mr A’s evidence that distributions were made to Ms Holmes, from the trust, between 1997 and 2005. These sums were included in Ms Holmes’ various tax returns and appropriate levels of tax were owed.
It is Mr A’s evidence that the trust has two assets. Firstly a loan to (business omitted) of funds in turn lent to the trust by Mr and Mrs Holmes. Secondly, shares in (business omitted). It is Mr A’s view that neither of these assets is currently realisable and therefore the trust has no funds to pay out any beneficiary loan, including to Ms Holmes. I accept this evidence and do not propose to include the sum of $16,600.40 in the parties’ schedule of assets.
h) Events since separation
The events surrounding the parties’ separation were traumatic and difficult for all concerned. The powerful emotions unleashed, at the time, continue to reverberate and be a considerable source of bitterness and sadness, particularly for Mr Barkly. The separation was sudden and resulted in Mr Barkly being in control of the vast majority of the parties’ assets. These included at least (omitted); (omitted) licenses; and (business omitted) equipment.
It is uncertain to me as to specifically why Mr Barkly elected to cease operating the business. It is however clear that, since separation, the financial position of the parties has gradually eroded. This period has coincided with the liquidation of most of the assets of the (omitted) business and, at the very least, reduced commercial activities reported by Mr Barkly.
At separation, the parties had an overdraft business account, with (omitted) Bank “the (omitted) account”. This account was secured against the Property A property and had a limit of $90,000.00. It was opened in October of 2008 and it was from this account that Ms Holmes withdrew her weekly housekeeping expenses of $500.00.
At the date of the parties’ final separation (9 February 2013) the (omitted) account was $37,650.11 in debit. In the period since, the amount owing has inexorably increased, until June of 2013, when it was close to its limit. By November of 2014, it was $4,261.67 overdrawn.[22]
[22] Ibid at annexure AJ
Ms Holmes has attempted, successfully in my view, to reconcile the amounts withdrawn from the account and attribute the person who has utilised the funds in question. In my view, this reconciliation clearly indicates that Mr Barkly has received the larger proportion of the moneys overdrawn.
I accept the wife’s evidence that, in December of 2012, she sold her motor vehicle for the sum of $4,500.00.[23] On the day following separation (14 February 2013) Ms Holmes withdrew the sum of $11,000.00 from the (omitted) account.
[23] Ibid at annexure Z
She utilised this sum to buy another car for herself and the children, as otherwise she had no transport. I also accept her evidence that she utilised the remainder of the moneys for her own living expenses and those of the children, including rent and bond on accommodation, prior to the purchase of the Property F property.
I accept the wife’s evidence that these moneys are now long in existence and she has made no further withdrawals from the (omitted) account. Mr Barkly continued to use the account for business related matters. In particular, on 23 April 2015, a deposit of $12,000.00 was made, which related to a sale of a truck.
As previously indicated, in March of 2013, Mr Barkly arranged to borrow the sum of $30,000.00 from Mr S to complete the purchase of a (omitted), being constructed in (omitted). This sum was deposited into the (omitted) account. Mr S gave evidence that he had accessed this sum from a redraw facility secured against his home, which attracted interest. Originally, the loan was intended to be a short term one, but it remains outstanding.
In these circumstances, Mr S has claimed the interest accumulated by him, as a consequence of the loan. As at April of 2015 the amount owing was $34,811.90. As at the date of trial, Mr McQuade asserts the amount is $35,600.00. Ms Holmes acknowledges that this is a joint liability of the parties.
An analysis of the (omitted) account indicates that between March 2013 and August 2013, Mr Barkly deposited around $16,500.00 into the account, but withdrew approximately $33,500.00 from it, which sum he clearly utilised on his own living expenses. On this basis, I accept that Mr Barkly utilised around $16,900.00 of joint funds, in this period, during which Ms Holmes was struggling financially.
I have not been provided with copies of the (omitted) account statements since August of 2013. However, it is agreed between the parties that as at 31 October 2015 the (omitted) account was in debit to the sum of $90,245.70. Throughout the proceedings to date, the wife has been anxious at the prospect of the overdraft being increased.
Mr Barkly instituted these proceedings in December of 2013. Initially he was only concerned about litigating issues to do with arrangements for the parties’ children. However, in late February of 2014, Ms Holmes instituted property proceedings. As a consequence, in March of 2014, an order was made restraining Mr Barkly from increasing the joint liabilities of the parties or otherwise selling any item of property, particularly capital items relating to the (omitted) business.
The parties attended a financial mediation conference on 22 May 2015, which obviously did not assist them to compromise the proceedings between them. However, on 4 June 2014, it was agreed that the (omitted) license, held by the parties, would be sold for $155,000.00, with the proceeds to be held in trust.
At this stage, it was hoped that the competing applications of the parties could proceed to trial on 30 April & 1 May 2015. Regrettably, due to the pressure of other business on the court, the trial was not reached on this occasion, although as previously indicated, the parties were able to reach agreement on final arrangements for Z, X and Y.
In these circumstances, the final hearing of the matter was refixed for 7, 8 & 9 December 2015, the dates on which it proceeded. In addition, on 1 May 2015, it was agreed that the sum of $55,000.00 would be dispersed to each of the parties, from the moneys realised from the sale of the (omitted) license.
In August of 2014, the parties agreed to sell the (omitted) , which was being constructed on their behalf, in (omitted) for the sum of $125,000.00 plus GST. It was also agreed that the net proceeds of sale, after selling costs, would also be deposited into the trust account containing the remaining proceeds of the sale of the (omitted) license.
Regrettably this crystallisation of funds did not assist the parties to resolve the matter. Nor were they able to agree on the payment of other debts, which the husband asserted arose during the marriage and were therefore joint liabilities. However, on 9 January 2015, it was agreed that a further sum of $20,000.00 be paid to bring the (omitted) overdraft to bring it back within its limit of $90,000.00 and thereafter keep it, at that level, until trial.
It was estimated that the loan was accruing interest and attracting other direct debit payments, at the rate of $1,600.00 per month. In addition, it was agreed that each party would be able to withdraw a further sum of $30,000.00 each, from the proceeds of sale of the (omitted) licenses and (omitted) held in trust.
Following separation, Mr Barkly placed another (omitted) described as a (omitted) for sale in Adelaide. It was sold, in July of 2015 for the sum of $130,000.00. After payment of brokerage and storage fees, an amount of $92,675.00 was deposited into the trust account.
On the day these proceedings were listed for final hearing (7 December 2015) Mr McQuade, counsel for the husband, sought a further release of $20,000.00 to pay counsel fees to be incurred for Mr Barkly at the forthcoming trial. Mr McQuade indicated that if such an order was not made, he would withdraw from the proceedings and Mr Barkly would be unrepresented. In these circumstances, with some reluctance, I made the order sought.
Accordingly, at the present time, the sum of $114,065.66 remains in trust.[24] I assume that this sum is accumulating interest. Other consumer debts, relating to the business, for which both parties are responsible, are undoubtedly attracting interest, as is the debt to Mr S, as has been previously explained.
[24] See annexure E to the wife’s affidavit filed 1 December 2015
Mr Barkly did not prepare his tax returns promptly for the years ending 30 June 2011 onwards. For obvious reasons, the wife was desirous of knowing what tax, if any, would be assessed for those years. As a consequence, it was agreed that the costs of preparing the various returns in question would be met from the moneys held in trust. The amount in question was $8,780.00. The accountant, who prepared the relevant returns reported as follows, in respect of Mr Barkly’s taxable income:
Date Profit/taxable income Tax refund 30 June 2011 $9,385.00 Nil 30 June 2012 $3,887.00 Nil 30 June 2013 $8,569.00 $3,593.00 30 June 2014 $13,930.00 $11,386.00[25] [25] See annexure AM to the wife’s trial affidavit
It is the wife’s position that the refunds in question, which are largely referable to the period of the parties’ relationship, should be included in the pool of assets available to be divided between the parties. It is Mr Barkly’s positon that the moneys have been spent and it would not be fair, in these circumstances, to notionally add them back into the pool of joint assets.
It is clear that the monies advanced to each of the parties, from the sale of joint assets - $85,000 in the wife’s case; and $105,000.00 in the husband’s case; - have been largely spent on legal fees arising from these proceedings. In addition, the wife has utilised her term deposit of $25,024.00 to the same end. The proceedings have cost the parties somewhere in the vicinity of $200,000.00.
i) Other joint liabilities
It is agreed between the parties that they are jointly responsible for a debt to (omitted), in an amount of $4,528.00; to Mr R, an accountant, in the sum of $2,090.00; (omitted) Finance, in an amount of $2,612.85; (omitted), in an amount of $455.75; (omitted), in an amount of $3,593.00; and the ATO, in an amount of $7,910.00.
Ms Holmes does not accept that there is a joint liability to a Mr L in respect of a pot hauler in an amount of $3,500.00. It is her position that she knows nothing of the transaction involved. Mr Barkly was cross-examined about the matter and I accept that he is obliged to pay the sum to Mr L. Accordingly, I will include it as a joint liability.
j) The trailer
Controversy arises in respect of a boat trailer, which Mr Barkly had purchased shortly prior to separation. Ms Holmes believes that is has a value of approximately $21,000.00 and remains in Mr Barkly’s possession. He asserts otherwise. In cross-examination, he indicated that he had discovered the trailer on a buyer’s site on line and liked the look of it. Thereafter, he arranged with its owner to swap it for a campervan, together with $3,000.00 in cash.
The trailer was in Queensland. Accordingly, Mr Barkly arranged for a friend of his, who is a long distance truck driver, who regularly drove to Queensland at the time, to collect the vehicle and return it to South Australia. However, this friend let him down, because he left it on the side of the road, intending to collect it later. However, when he returned, he discovered that the trailer had apparently been stolen.
Although this account seems somewhat implausible, there is no evidence to rebut it. Mr Barkly ruefully said that he and the gentleman were no longer friends, but otherwise, he did not believe that anything could be done about recovering the trailer, which he considered was lost to him. The matter had been reported to police, who indicated similarly. In all these circumstances, I do not think that it would be fair to include the trailer in the parties’ table of joint assets.
k) The purchase of the Property F property
In October 2013, Ms Holmes purchased a home for herself and the children located at Property F. The purchase price was $245,000.00. The purchase attracted stamp duty; registration fees; and other expenses amounting to around $12,000.00.[26]
[26] Ibid at annexure AT
It is Ms Holmes’ evidence that she borrowed the sum of $30,000.00, from a Mr H; a further sum of $140,799.05 from her mother, Ms M; a sum of $20,000.00 from her brother Mr K; and $10,000.00 from each of the accounts held by the children, to which reference has already been made, which I have found were donated by the children’s maternal grandmother.
Mr H has provided an affidavit in these proceedings. As previously indicated, Mr Barkly elected not to cross-examine him. It is his evidence that the loan is a commercially genuine one, which is repayable and attracts interest. Ms Holmes is paying the interest on the loan.
It is the wife’s evidence that the loans from her mother and brother are also genuine and she will be liable to repay each of them, in due course. Each of these loans has been memorialised by a loan agreement, prepared by Ms M’s conveyancer.
In each case, the principal is repayable on demand, but no regular or periodic repayments are required. It would seem that neither Mr Holmes nor Ms Holmes is currently receiving any payments of the principal and no interest is calculated on either loan, which is expressed to be advanced because of the love and affection between the borrower and each of the lenders.
In their respective oral evidence, both Ms M and Mr K indicated that they were not wealthy persons and did not regard the advance made as being in the nature of a gift. I accept this is so. However, it seems unlikely that the wife will be in a position to repay the sums due at any time soon. It was undoubtedly a great struggle for her to put the purchase price of the Property F property together. At the last minute, she discovered that she was approximately $600.00 short, which (business omitted) advanced to her.
One particular source of moneys to complete the purchase is the most controversial between the parties. At separation the wife had a savings account with (omitted) Bank, which contained approximately $36,000.00. It is her evidence that, over a number of years, she had saved such things as the family tax benefit; the schoolkids bonus; and some of her own social security benefits. She used the sum to complete the purchase of the Property F property.
As I have indicated, I accept that Ms Holmes is capable of exercising a great deal of financial control and has the ability to live extremely frugally. In my view, her capacities in this regard are in marked contrast to Mr Barkly. In all these circumstances, I accept the wife’s evidence in respect of the provenance of the moneys in this savings account.
The wife seeks the add back of the husband’s tax refund for the years ending 30 June 2013 and 2014. From Mr Barkly’s perspective, these sums are long since spent, largely on legal fees and living expenses. In my view, given the approach I have taken to the wife’s term deposit, it would not be just to add back the refunds dollar for dollar. However, in my view, these are matters which can be weighed and assessed pursuant to the provisions of section 90SF(3)(r).
The Property F property was acquired after the parties’ separated and, as I have found, without any direct contributions from the husband. I accept that the wife is indebted to her mother, brother, Mr H and the children’s trust funds for the purchase. In these circumstances, I do not propose to list the property in the parties’ balance sheet. I reach this conclusion because, in my view, the wife’s contributions to the acquisition of the property must be assessed as being 100%.
In assessing the parties’ contributions to the acquisition of the various assets of their relationship, the court has a discretion as to whether it should adopt a global approach or an asset by asset approach. In the former, the court assesses the parties’ contributions to their assets in a total or comprehensive manner. In the latter, the court assesses the parties’ contributions to individual items of property.
In general terms, it is hard to see that the husband has made any specific contribution to the Property F property, which in any event holds little equity. In these circumstances, it seems appropriate to assess contributions to this asset only on an individual basis and exclude it from the asset balance sheet.
Pursuant to section 90MC of the Family Law Act, superannuation interests are to be treated as property. As such, they attract the provisions of section 79(4) of the Act.
Superannuation has been described as “species of asset” from other forms of property. [54] This is because superannuation, particularly in its accumulation phase, cannot be easily translated into cash, unlike other more “conventional” assets, such as land and personal property, and so its value accurately determined by sale.
[54] See Coghlan & Coghlan (2005) FLC93-220
Superannuation is a form of compulsory saving for retirement. As such, it must be preserved until its crystallisation on the occurrence of some specified event, usually permanent retirement from the workforce.
In this case, the parties’ respective holdings of superannuation are modest in value. In the husband’s case, his modest holdings are likely to reflect the fact that he has been in self-employment, for lengthy periods of time, during which periods he has not put a high store on preparation for retirement. The wife has also been self-employed from time to time, as well as being out of the workforce, whilst engaged in parenting and homemaking duties.
Neither party seeks that a splitting order be made in respect of the other’s superannuation holdings. As will be discussed in due course, under the considerations arising under section 90SF(3), both parties face an uncertain financial future in retirement, which it is difficult to seeing being redressed, at this juncture, through any future accumulation of significant stores of superannuation.
In these circumstances, I do not propose place the parties’ superannuation in a separate pool. Rather, I will assess contributions and section 90SF(3) considerations in respect of a total pool which includes both non-superannuation and superannuation assets.
Accordingly, I find that the parties’ pool of assets consists of the following items:
Assets $ Property A (to be sold) 475,000.00 Land at Property M 9,000.00 Money in trust from sale of assets 114,065.66 Advance of funds from trust (husband) 20,000.00 Wife’s car 6,000.00 Husband’s car 10,250.00 Plant and equipment at Property A 21,225.00 Total 655,540.66 Liabilities (omitted) Account 90,245.70 Mr S 35,600.00 (omitted) Finance 3,593.00 (omitted) Finance 2,612.85 (omitted) 455.75 (omitted) 4,528.00 Mr R 2,090.00 Mr L 3,500.00 ATO 7,910.00 Total 150,535.30 Net Assets 505,005.36 Superannuation Wife’s superannuation (omitted) Super 2,338.42 Wife’s superannuation (omitted) Super 30,416.95 Husband’s (omitted) Superannuation 17,744.00 Total Superannuation 50,499.37 Total Net Assets and Superannuation 555,504.73
Step Two – assessment of contributions
The various and different contributions of the parties must be assessed and weighed against the background of a relationship of over seventeen years in duration, which produced three children. On any view, the relationship is one of significant length.
Given the length of the relationship and my finding that both parties contributed extensively, in a variety of capacities and forms during this period, the main focus of the court’s deliberations, in terms of the assessment of contributions, must be on the periods falling prior to cohabitation and after separation.
During their relationship both parties worked very hard in a variety of capacities. The wife also contributed extensively in regards to parenting and homemaking responsibilities. Although the wife has some criticism now that the husband was financially reckless from time to time, particularly in regards to imprudent purchases, I do not consider that it can be established that he was going it alone in respect of these matters. As such, these matters cannot be characterised as being tantamount to waste or some form of negative contribution.
In my view, the evidence indicates that both parties were fully involved in the (omitted) enterprise, with Ms Holmes leaving it to Mr Barkly to make technical decisions, whilst she was engaged in both administrative matters and lending more than a hand in the hard work involved in its day to day operations. In round terms, I assess the parties’ various contributions, during their relationship as being essentially equal.
One of the more significant areas of controversy, arising in the case, concerns what weight, if any, is to be given to the property which the wife held prior to and around the time the parties commenced living together.
In my view, this property, in the form of Ms Holmes’ interests in the Property I property; the Property S property; and the Property W property; must be regarded as highly significant. In round terms, when realised, these properties netted well in excess of $150,000.00.
All of these properties were acquired as a consequence of contributions extraneous to Mr Barkly. The major asset – the Property I property was acquired in recognition of Ms Holmes’ work, over many years, at the (business omitted) and in part as consequence of the gift of her parents; Property S was the gift of Ms M; Property W was acquired by means of Ms Holmes’ pre-relationship savings and paid off through the bequest of her grandmother.
These contributions outweigh, by a very significant degree, the husband’s modest equity in the Property D property. The proceeds of sale of the wife’s three properties were the major source of funds to purchase first the land and then construct the dwelling on the Property A property, which now constitutes, far and away, the parties most significant asset. In addition, due to the wife’s relationship with her aunt, the parties were able to advantageously purchase the two blocks of land at Property A and then sell one at a significant profit.
In addition, I am satisfied that the capital liquidity occurring as a result of the sale of these properties also funded the parties’ various business activities. In this context, I reject as exaggerated and far-fetched, the husband’s contention that his (business omitted) achieved this objective.
It is implicit in the wife’s case that the court needs to give special recognition to the fact that she largely acquired these three properties as a consequence of her own efforts or as a consequence of gifts of her parents and they have been central to the financial fortunes of the parties during their long subsequent relationship. I agree.
Issues of this kind confronted the Full Court of the Family Court in Pierce v Pierce.[55] In the case, the Full Court (Ellis, Baker and O’Ryan JJ) said as follows:
[55] See Pierce v Pierce (1999) FLC 92-844 at 85,811
“In our opinion it is not so much a matter of erosion of contribution but a question of what weight should be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions both of the husband and the wife. In considering the weight to be attached to the initial contribution, in this case the husband, regard must be had to the use made by the parties of that contribution.”
“…there is no principle that the length of the marriage leads to a likelihood that other contributions will outweigh or weigh equally with ‘a particular contribution’. It is a matter of assessing the contributions of all relevant kinds in each case to arrive at an outcome, which is both appropriate and just and equitable. In some cases particular contributions may be outweighed or equalled by other ones. In other cases particular contributions may be so disproportionate to other contributions as to merit special recognition.”
I accept Mr Barkly has made some contribution to the improvement and conservation to the Property I property and the other two. But, in my view, these cannot be regarded as major, when compared to the significance of how the parties subsequently utilised the wife’s capital in the purchase of their family home and in order to prop up their business activities.
The period, since the parties finally separated, has been one of financial vicissitude for each of them. In this period the (omitted) business has produced no income. This has also been a period of significant conflict between the parties, as a slow moving financial catastrophe has unwound around them, marked by the sale of assets and the deferral and intensification of debt. Against this background, each has spent very large sums of money on legal fees.
In this period, the wife has had the sole financial responsibility for the parties’ three children. She has discharged this responsibility in extremely straitened circumstances. She has, however, had the support of her family, who have assisted her to re-house herself and the children.
Bearing in mind all these circumstances, including the special recognition to be given to the wife’s initial contributions of capital, I would assess the wife’s overall contributions as being superior in a range of around 7.5%, leading to the parties’ various contributions, in percentage terms, being assessed 57.5%/42.5% in the wife’s favour.
Step Three – section 90SF(3) – the prospective needs of the parties
I am now required to consider the various matters set out in section 90SF(3) and in particular to consider whether any further adjustment should be made in favour of either party. The section 90SF(3) factors are mainly, but not only, prospective in nature. They are as follows:
The matters to be so taken into account are:
(a)the age and state of health of each of the parties to the de facto relationship (the subject de facto relationship ); and
(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; and
(c)whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years; and
(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; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (4), 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; and
(g)a standard of living that in all the circumstances is reasonable; and
(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; and
(i)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; and
(k)the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
(m)if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 90SM in relation to:
(i) the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(o)the terms of any order or declaration made, or proposed to be made, under this Part in relation to:
(i)a party to the subject de facto relationship (in relation to another de facto relationship); or
(ii)a person who is a party to another de facto relationship with a party to the subject de facto relationship; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(p)the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
(i) a party to the subject de facto relationship; or
(ii)a person who is a party to a marriage with a party to the subject de facto relationship; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(q)any child support under the Child Support (Assessment) Act 1989 that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship; and
(r)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(s)the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship; and
(t)the terms of any financial agreement that is binding on a party to the subject de facto relationship.
Paragraph (a) – the husband is fifty four years of age. The wife has just turned fifty. The husband enjoys good general health, although he anticipates the physical demands of his previous forms of employment – (occupation omitted) and (occupation omitted) – will become more onerous as he ages. The wife has been diagnosed with mixed anxiety and depression. However, with the resolution of these proceedings, it seems more likely than not that her symptoms will settle down.
Accordingly, in general terms, I do not think there are health considerations germane to either of the parties, which are highly relevant to these proceedings. Depending upon the availability of work, on the (omitted), both are likely to be able to continue working, in a physical sense, for the next decade or so.
Paragraph (b) – neither party has any formal qualifications, apart from the wife’s certificate III in Children’s Services. As such, both are likely to be restricted to unskilled positions in the workforce, for the remainder of their respective careers. As such both, at best, will be modestly paid income earners. However, Mr Barkly has a better track record, in respect of his income earning capacity.
In my estimation, both the husband and the wife are well-motivated and hardworking individuals, who each can demonstrate to prospective employers their status in this regard. In addition, it seems likely that Mr Barkly has many connections in the (omitted) area, which will assist him to find some form of employment, in the short to medium term.
The husband most likely will return to some form of (employment omitted). I accept that he has no desire to return to (employment omitted) at present. The wife will most likely, when she is able, work in (employment omitted) or some related field. These are areas of work which are amenable to being undertaken on a part time basis, which is likely to suit Ms Holmes.
Up until recently, Mr Barkly was earning in the vicinity of $1,800.00 per week, (occupation omitted). If he returns to this form of work, he is likely to receive a significantly greater income than the wife in the short to medium term, particularly whilst the children remain at school.
I accept that Mr Barkly no longer finds this sort of work particularly gratifying because it is onerous and involves long periods away from home. However, given his credentials in the industry, I assess he will likely to be able to return to some form of employment in the (omitted) field.
Ms Holmes’ family, with their strong connections in (omitted), will probably assist her regards to her future employment. Given her connections at the (business omitted), notwithstanding the distance between (omitted) and (omitted), Ms Holmes is likely to find some form of employment there.
Accordingly, in my view, both parties have employment prospects but neither faces an altogether rosy employment situation, given their current ages and level of skills. However, both have demonstrated a great deal of enterprise in the past, particularly Ms Holmes. On balance, Mr Barkly’s prospect appear better than Ms Holmes’ do, given his demonstrated ability to earn around $80,000.00 to $90,000.00 in the recent past.
It has been said, by the Full Court, that the most valuable “asset” a party can take out of a marriage is “a substantial, reliable income-earning capacity”.[56] In this case, it seems to me that Mr Barkly is better resourced, in this regard, than is Ms Holmes.
[56] See Clauson & Clauson (1995) FLC 92-595 at 81,911
Paragraph (c) – I accept Ms Holmes’ evidence that it would be her preference to return to the workforce sooner rather than later. However, I also accept that she is largely precluded from paid employment because of her responsibilities to parent Z, X and Y. Due to the children’s special needs, it will be difficult for her to commit to fixed working hours.
The children have spent extremely limited time with their father since the parties separated. Although Y has recently spent some time in his father’s care, it is Ms Holmes’ evidence that he has now returned to her exclusive care and this situation prevails so far as the two other children. In these circumstances and given the earlier parenting orders made by the court, I have no reason to believe anything other than that the children will remain in Ms Holmes’ care and spend little, if any, time with Mr Barkly.
Accordingly it will be the wife who will be charged with the responsibility of delivering and collecting the children from school, particularly if one of them has to leave school early because of a problem arising in the classroom. In addition, Ms Holmes will have to tend to the needs of the children, if one of them falls ill. She will have no assistance in this regard from Mr Barkly, who will be able to tailor easily any work responsibilities into his lifestyle.
The responsibilities, relating to children’s health, education, socialisation and general well-being have been described, in the past, as being “myriad”.[57] Given that the children live with their mother and are likely to remain doing so for the remainder of their childhood, these responsibilities will fall solely on Ms Holmes, with serious implications for her capacity to provide financial support for herself, through paid work.
[57] See Collins & Collins (1990) FLC 92-149 at 78,043
Inevitably these responsibilities will impact upon the number of hours paid work, per week, Ms Holmes can take on. I accept, at present, they mean that she cannot work at all. If she does obtain some form of work, in future, her responsibilities must also have implications for the type and flexibility of her employment arrangements and so must impact upon her financial bottom-line. In my view, the factors arising under this sub-section favour the wife to a significant degree.
Paragraphs (d) & (e) – these considerations are not generally relevant in these proceedings.
Paragraphs (f) – given the parties current ages, they are reaching the stage of life when concerns about financial security in retirement assume a more pressing importance than previously. At the present time, neither party is well prepared for retirement, in a financial sense, as neither has any great amount of accumulated superannuation.
Given the extent of the asset pool, this has not been a case, which has focussed on superannuation. Whatever is the outcome, it will be the case that neither party leaves the relationship properly prepared for retirement or will be able to put in place necessary arrangements prior to retirement.
Paragraph (g) – the end of the parties’ relationship has been a financial disaster for both of them. With the sale of the Property A property, Mr Barkly will have to find fresh accommodation for himself. Ms Holmes is better placed, in this regard, because of the Property F property. However, she has little, if any, equity in this property.
It seems probable that Ms Holmes will utilise whatever capital she receives as a consequence of these proceedings to pay down debt on the Property F property. However, given that her mother is the major holder of this debt, she will not be subject to commercial pressures in this regard.
If Mr Barkly does purchase a home for himself and Ms Holmes pays down debt, it seems that neither party will have any significant nest egg to fall back on to cover future exigencies in life. In these circumstances, in my view, neither party faces a particular secure financial future. This is likely to have ramifications for the standard of living, which both will enjoy in future.
Paragraphs (h), (i), (j), (k), (l), (m), (n), (o) & (p) – these considerations are not relevant to this particular case.
Paragraph (q) – as previously indicated, Ms Holmes’ responsibility to parent Z, X and Y will place a heavy financial burden on Ms Holmes’ shoulders. Up to this stage, she has not seen fit to seek an administrative assessment of child support from Mr Barkly. Whether she will do so in future is uncertain.
However, in my estimation, Mr Barkly is not likely to be particularly amenable to any such assessment, given his personal antipathy for Ms Holmes and the circumstances surrounding the children coming into her predominant care.
At present, Mr Barkly is not in the paid workforce. On his own evidence, he elected to resign from (employer omitted), notwithstanding the fact that he had at least some prospect of achieving some form of ongoing employment with this firm. Whether he will elect to return to PAYG employment, in the short to medium term, or seek some form of self-employment, as an independent contractor, as he has done in the past, is unclear to me.
In Clauson & Clauson[58] the Full Court said as follows:
[58] Clauson & Clauson (1995) FLC92-595 at 81,911
“The weight to be attached to a child support assessment will vary with the circumstances of each case, including the amount of the assessment, the financial circumstances of the parties, the needs of the children, whether the assessment is being paid regularly, and whether it is likely that it will continue to be paid at a regular and adequate rate in the future.”
In this case, I consider it more likely than not that Ms Holmes will not receive a regular and adequate supply of child support, from Mr Barkly, for the remainder of the period until the children either cease their education or attain the age of eighteen. As such, they will remain the financial responsibility of Ms Holmes for a significant period of time. In my view, this is a factor which greatly favours the wife.
Paragraph (r) – in Ferguson & Ferguson [59] the Full Court of the Family Court held that section 75(2)(o) [the equivalent of section 90SF(3)(r)] was to be read ejusdem generis with the other matters listed in the section 75(2) which enabled the court to bring into account “conduct which has an economic significance in the parties’ dealing with each other or the property in dispute.”
[59] See Ferguson & Ferguson (1978) FLC 90-500 at 77,607
As I have indicated, the task which I must undertake is not a strictly arithmetical one. In the period since the parties separated, they have each utilised joint assets to the exclusion of the other. In the husband’s case, he has the benefit of the Property A property and been able to withdraw money from the (omitted) Account. He has also received tax refund for the two financial years relating to the period after the parties’ separation.
The wife has utilised a term deposit to pay some of her legal expenses and defray other living expenses. Both parties have expended a significant amount of money derived from selling jointly owned assets to fund these proceedings. These sums have been roughly equivalent.
In my view, it is evident that the period since the parties separated has inaugurated a period of financial austerity for each of them. The wife has continued to live frugally and has funded the purchase of her Property F home through loans and the assistance of her family. She has had little, if any, financial assistance from Mr Barkly.
In my view, the wife has behaved in an appropriate and restrained manner, in financial terms, since the parties separated. She has not wasted funds. In my assessment, matters of general economic significance, which have arisen since the parties separated and which I have declined to approach on the basis of a direct arithmetical add back, slightly favour the wife, but not by any marked degree.
Paragraphs (s) & (t) – these considerations are not relevant to this particular case.
Conclusions on section 90SF(3) factors
In my assessment, the section 90SF(3) factors are closely balanced, given both parties face an uncertain financial future, given their respective ages and level of qualifications. However, Ms Holmes is likely to bear financial responsibility for the parties’ three children for the foreseeable future.
This is a very significant factor, which favours her. Also, whilst the children remain at school, I find her employment opportunities to be more circumscribed than those of Mr Barkly. I therefore propose to allow her another 7.5% as a consequence of my assessment of the section 90SF(3) factors which favour her.
The form of orders
In Steinbrenner & Steinbrenner,[60] Coleman J observed that in proceedings dealing with the exercise of discretion, whether in relation to the assessment of disparate contributions in a de facto property case or assessment of damages in a personal injury case, there came a point where it was necessary for the court to make a leap from words to figures.
[60] See Steinbrenner & Steinbrenner [2008] Fam CAFC 193 at [234]
It is now the point of the proceedings when the court must make such a leap and turn to the tin tacks of what each party will receive, particularly how and in what form. This leap from abstraction to the concrete must be undertaken in terms of what is just and equitable to each of the parties concerned.
I appreciate the artificiality, which must arise from the court talking in percentage terms. After all what matters to the parties is not percentages per se but what orders actually mean in terms of dollars and cents and what items of property are retained and what has to be realised.
I have come to the conclusion that it is just and equitable to divide the parties’ pool of assets, as I have calculated it, 65/35% in the wife’s favour. The major components of this assessment reflect the significant level of property, which I have found the wife brought in at the commencement of the parties’ relationship and her on-going financial responsibility for Z, X and Y, against a background of more circumscribed employment opportunities than the husband.
I have also attempted to remain focussed on what actual joint assets remain available to the parties for distribution, rather than on notional assets. In a case, such as this one, in my view, this is likely to be the fairest approach.
In general terms, I accept both parties have expended capital in the period since they separated – the husband in his utilisation of his tax returns and the (omitted) account; the wife in her term deposit. In addition, each party has spent a great deal of money on legal fees.
The major difficulties arising, at this point, are that it is uncertain when the Property A property will be sold and how much it will secure; and the parties’ debts, at present, are more than the available resources to pay them. Accordingly, in the short term, the parties are insolvent, at least until Property A is sold.
The parties have remaining to them, from the sale of assets, a sum of cash amounting to $114,065.00. It will not be possible to discharge the (omitted) loan until such time as the Property A property is sold. However, it makes sense, I think, for their other liabilities to be discharged sooner rather than later.
I will also direct that there be an immediate payment of $20,000.00 to the wife, from the trust account, to equalise the sum advanced to the husband at the beginning of the trial. On my calculations, this will leave a sum of $33,776.06, which I direct will be divided 65/35% in the wife’s favour. This leads to the wife receiving an additional sum of roughly $21,954.43 and the husband $11,821.62, depending on whatever late payments fees, if any, have been imposed.
As previously indicated, given the comparative modestly of the parties’ superannuation holdings, I do not propose to make any splitting order in respect of these holdings. As a consequence, in the form of her motor vehicle ($6,000.00); her superannuation ($32,755.37); her cash advance from the sale of assets ($20,000.00); and her 65% of the remainder of assets following payment of debts ($21,954.43); the wife will take cash, assets and superannuation to the value of $80,709.80.
The husband will have his superannuation ($17,744.00); the land at Property M ($9,000.00); the Property A plant ($21,225.00); his motor vehicle ($10,250.00); the pre-trial payment ($20,000.00); and his 35% of the remainder of assets following the payment of debts ($11,821.62); making a total of cash assets and superannuation to the value of $90,040.62.
In round terms, which do not take into account the sale costs of Property A, but do take into account the overdraft secured against the property in the form of the (omitted) loan, the net asset pool, including superannuation is $555,504.73. 65% of this sum is represented by the figure of $361,078.07 and 35% by the figure of $194,426.65.
Accordingly, if the proceeds of sale of the Property A property are distributed, after discharge of the (omitted) loan, 65/35% between the parties, the wife will receive a further sum of $250,090.30 and the husband the sum of $134,664.00.
I appreciate these calculations are artificial but in approximate terms it will mean that Ms Holmes is short the sum of $30,277.97 from achieving the stipulated percentage division taking into account the items of property otherwise retained by her. This sum will remain consistent regardless of what expenses are incurred in respect of the sale of the Property A property.
I will round this sum down to $30,000.00 and direct that it paid to the wife concurrently with the discharge of the (omitted) account and the payment of selling costs arising in respect of Property A.
Accordingly, at the end of this painful and difficult process for each of the parties, they will leave the relationship with no remaining joint liabilities and with some cash each. The wife will have accommodation for herself and the children, which is of great importance to her.
It will be difficult for Mr Barkly to purchase accommodation for himself but he will have a reasonable sum of money to investigate this prospect. Neither party will have a significant amount of superannuation.
I am satisfied that overall this is a just and equitable outcome of these proceedings. For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding three hundred and sixty-one (361) paragraphs are a true copy of the reasons for judgment of Judge Brown
Date: 31 March 2016
[37] Watson & Ling [2013] FamCA 57 at [13]
Key Legal Topics
Areas of Law
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Family Law
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Property Law
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Equity & Trusts
Legal Concepts
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Remedies
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Costs
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Injunction
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Res Judicata
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