Bateman & Bowe

[2013] FamCA 253

FAMILY COURT OF AUSTRALIA

BATEMAN & BOWE [2013] FamCA 253

FAMILY LAW – PROPERTY SETTLEMENT – DE FACTO RELATIONSHIP – where the parties are agreed that there was a de facto relationship for the purposes of Part VIIIAB of the Family Law Act 1975 (Cth) (“the Act”) – where the parties seek property settlement orders pursuant to s 90SM of the Act – where the de facto wife made significant initial financial contributions via unencumbered real properties – where the de facto husband made significant financial contributions during the relationship – where the parties engaged in property development during the relationship – where the de facto wife was primarily responsible for such development – where the de facto wife was primarily responsible for caring for parties’ only child – where, post-separation, a property of the parties’ was sold and the proceeds of sale used unilaterally, and without notice to the de facto husband, by the de facto wife, together with drawings on loan facilities secured over other real properties, to purchase another real property and commence development on same – where that real property and the attendant liabilities are now included in the pool of the parties’ existing legal and equitable interests – whether it would be just and equitable to make adjustments to the parties’ current legal and equitable interests – where it is just and equitable to make an adjustment – consideration of what adjustment ought be made – where the contributions during the relationship and post-separation favour the de facto wife – orders made that the property pool be distributed in the proportion 55:45 per cent in favour of the de facto wife.

Family Law Act 1975 (Cth)

Family Law Rules 2004

Af Petersens and Af Petersens (1981) FLC 91-095
Biltoft and Biltoft (1995) FLC 92-614
Black and Kellner (1992) FLC 92-287
C & C [1998] FamCA 143
Chorn and Hopkins (2004) FLC 93-204
Coghlan and Coghlan (2005) FLC 93-220
Kowaliw and Kowaliw (1981) FLC 91-092
M & M [1998] FamCA 42
Norbis v Norbis (1986) 161 CLR 513
Omacini and Omacini (2005) FLC 93-218
Prince and Prince (1984) FLC 91-501
Stanford v Stanford (2012) 293 ALR 70
Watson & Ling [2013] FamCA 57
Weir and Weir (1993) FLC 92-338
Zalewski and Zalewski (2005) FLC 93-241

APPLICANT: Mr Bateman  

RESPONDENT: Ms Bowe

FILE NUMBER: SYC 5565 of 2010

DATE DELIVERED: 19 April 2013

PLACE DELIVERED: Brisbane

PLACE HEARD: Sydney

JUDGMENT OF: Murphy J

HEARING DATE:

27-28 February 2012

17 May 2012
21 May 2012
18 September 2012
16 November 2012

WRITTEN SUBMISSIONS: Applicant on 30/11/2012
Respondent on 21/12/2012
Applicant on 25/02/2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Hodgson

SOLICITOR FOR THE APPLICANT: Sharon Moss Legal

COUNSEL FOR THE RESPONDENT: Mr Schonell SC

SOLICITOR FOR THE RESPONDENT: Swaab Attorneys

Orders

That as and by way of property adjustment order pursuant to s 90SM of the Family Law Act 1975 (Cth) it is ordered that:

1. The existing legal and equitable interests of the parties be adjusted such that the wife receive 55 per cent of the value thereof and the husband 45 per cent and so as to give effect to that adjustment, the parties shall, within 21 days of the date of this Order, jointly file Minutes of Order giving agreed effect to that adjustment in accordance with the “Property Adjustment Order Table” (at paragraph 176) and paragraph 178 of the Reasons for Judgment delivered contemporaneously herewith.

2. In the event that the parties are unable or unwilling to reach agreement as contemplated by paragraph 1 of these Orders, the matter be listed before Murphy J, or another Judge if Murphy J is unavailable, at a date and time to be advised.

3. In the event that it becomes necessary to list the matter as contemplated by paragraph 2 of these Orders, each of the parties shall file and serve not less than seven (7) days prior to the said listing, all such material as might be necessary so as to allow the Court to determine the issue of the costs of and incidental to that listing, including, if appropriate, any issue of indemnity costs.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Bowe & Bateman has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC5565 of 2010

Mr Bateman

Applicant

And

Ms Bowe

Respondent

REASONS FOR JUDGMENT

1. A relationship, conceded by both parties[1] to be a “de facto relationship” within the meaning of s 4AA of the Family Law Act 1975 (Cth) (“the Act”), subsisted for about eight years from mid to late 2001 until the parties separated under the one roof in mid-2009 and, finally, at the end of that year. The proceedings to which these reasons relate pose two questions: should a property adjustment order be made (s 90SM(3)); and, if so, what property adjustment order, if any, reflects a just and equitable settlement between the parties when s 90SM is otherwise applied.

   [1]For ease of reference and to assist in the publication of anonymised reasons, the male applicant will be referred to in these reasons as the husband and the female respondent as the wife (as each was frequently during the hearing).

2. The issues between the parties are directed to the second of the two questions; each agree that the former question should be answered in the affirmative.  However, as answering the former question must be dealt with separately from the latter and not conflated with it (see Stanford v Stanford (2012) 293 ALR 70 at [40]), the Court should itself be satisfied of that conclusion.

3. The existing legal and equitable interests of the parties are the subject of agreement which will later be set out.  Yet, significant issues in respect of those interests remain.  Primarily (but not exclusively) they are:

   ·    Should certain liabilities be “ignored” in the sense that they should not be attributed as owing by both parties by deducting them to arrive at the net value of the parties’ property interests;

   ·    Should monies expended by one party or the other be “added back” as against the entitlement of the “spending party”.

4. The resolution of those issues is governed, as the husband contends, by findings relating to the wife’s asserted lack of disclosure which, in turn it is asserted, leads to an adverse finding as to her credit generally.  Central to that issue is a consideration of the transaction surrounding the post-separation purchase of the real property in the wife’s sole name at Suburb H.

5. The parties are also at odds as to how contributions should be assessed pursuant to s 90SM(4). As will be seen, the wife can be seen to have made a significantly greater initial direct financial contribution. The husband made a significant capital contribution during the relationship emanating from his employment with a company, Y Pty Ltd, which coincided with cohabitation. In May 2003, the husband commenced as General Manager of that company. Over two years, he “became a one-third shareholder and director in the company and as a result [his] salary increased to approximately $147,000 per annum”. He “also received dividends depending on the performance of the company”. His interest was sold in August 2007 netting him just short of $1 million, but subject to some significant later taxation liabilities. He also received shares at that time in the acquiring company and continued to work for it until he terminated that employment about six months after final separation in July 2010. A loan for his shares in that company became due as a result. Those shares were later sold and the loan repaid.

6. Issues pertaining to the development of the Suburb H property and the use of funds for the support of the parties’ son, L (born in May 2002), inform disputes about the respective contributions in the more than three years between separation and the conclusion of proceedings. The parties are also in dispute about what might be called “the s 90SM(4)(e) adjustment”.

The Parties’ Existing Legal and Equitable Interests?

1. These inordinately protracted proceedings span twelve months.  The trial commenced in February 2012 and did not conclude until 7 March, 2013, the date provided for in my directions for the delivery of written submissions in reply.  The decision of the High Court in Stanford was delivered at the end of 2012.   I have not been referred to any decision (whether of the Full Court or at first instance) which looks at the effect of Stanford.  I am myself unaware of any decisions of the Full Court in that respect. 

2. In those circumstances, I propose to refer to what I consider to be the applicable principles emerging from Stanford by reference to the views I expressed in Watson & Ling [2013] FamCA 57.  I make it clear that I rely upon the principles there expressed as relevant to this case.

3. In respect of the applicability of the principles enunciated in Stanford to de facto relationships (as defined in the Act), I hold to the following view expressed in Watson:

   4.The issues to be decided derive from s 90SM(8) of the Act. The provisions of that section (and Part VIIIAB more generally) can, in my view, be seen to be directly analogous to s 79 (and Part VIII more generally). Section 79(2) has its analogue in s 90SM(3); s 79(1)(a) has its analogue in s 90SM(1)(a). Whilst the principles enunciated in Stanford v Stanford[2012] HCA 52; (2012) 293 ALR 70 pertain to s 79, and s 79(8) in particular, they should, in my view, be held to be equally applicable to s 90SM(3) and s 90SM(8) in particular. …

   (Bold emphasis added).

4. The plurality in Stanford held (at [37]):

   First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself, which refers to “altering the interests of the parties to the marriage in the property”. The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.

   (Emphasis in original).

5. Much has happened pertaining to interests in property in the more than three years since the parties have separated and, in respect of the value of the Suburb H property, in the 12 months that it has taken to complete this trial.  Exhibit “B” which was tendered jointly on the second day of trial (28 February 2012), represents the agreed “existing legal and equitable interests of the parties” in property at that time.   

6. As will be seen, there are disputes as to how the Court should take account of transactions (and, in particular, borrowings) which have occurred since Exhibit “B” was tendered.  In particular, liabilities incurred by the wife in respect of the acquisition of, and renovations to, the Suburb H property have increased significantly.  Those borrowings are cross-collateralised against the other real property in which the parties have existing legal or equitable interests.  Centrally, the husband contends that the net value of those interests now is less than what was earlier the case and, in particular, at or shortly after separation.  

7. All such submissions as are made by each of the parties in respect of those issues are made by reference to Exhibit “B” together with agreed changes to it which, for example, updated an earlier agreed value of the Suburb H property and various liabilities. 

8. Those agreed changes, together with the matters upon which the parties remain apart, are incorporated into Schedule “A” to the written submissions on behalf of the wife.  The husband in written submissions in reply makes the point that “this represents a significant departure” from what the wife initially contended “at the commencement of the hearing”.  That said, the husband’s written submissions indicate that “no issue is taken [as to] the correctness of the additions of assets and liabilities” contained in Schedule “A”.   It is, then, convenient to reproduce Schedule “A” here and to discuss issues by reference to it.

SCHEDULE “A”

ASSETS

Ownership		Description	Wife/de facto partner’s value	Husband/ de facto partner’s value
1	Joint	B Street, Suburb D	$640,000.00	$640,000.00
2	Wife	R Street, Suburb M	$415,000.00	$415,000.00
3	Wife	S Street, Suburb M	$399,167.00	$399,167.00
4	Wife	Sale proceeds on trust	$Nil	Nil – See Point 1[2]
5	Wife	Motor vehicle 1 (purchased Aug 2011)	$27,900.00	$27,900.00
6	Husband	Motor vehicle 2 (purchased Aug 2011)	$68,000.00	$68,000.00
7	Joint	Household contents	$20,000.00	$20,000.00
8	Husband	K Pty Ltd Shares	$9,307.35	$Nil
9	Husband	Commsec Trading Account	$14.90	$14.90
10	Husband	Shares (Commsec CDIA)	$5,930.64	$Nil
11	Husband	Bank Accounts (NAB & ANZ)	$5,902.96	$2,000.00
12	Husband	ING Bank (held with partner)	$1,170.48	$1,170.48
13	Wife	E Shares	$Nil	$10,000.00
14	Wife	Commsec	$Nil	$150,000.00
15	Wife	A Pty Ltd	Nil	Nil
16	Wife	C Street, Suburb H	$1,425,00.00	$1,425,000.00
17	Wife	Bank Accounts	E$Nil	$25,000.00
TOTAL	$3,017,393.33	$3,183,253.38

[2]          Schedule A as presented does not contain a point 1.

ADDBACKS

Ownership		Description	Wife/de facto partner’s value	Husband/ de facto partner’s value
18	Wife	Sale proceeds that have been used over and above the normal day to day expenses and repayment of debts by the de facto wife	$	E$118,000.00
19	Wife	Sale proceeds of the former home were used to pay the de facto wife’s solicitors fees	Nil	$20,000.00
20	[Left blank in original]
TOTAL	Nil	$138,000.00

LIABILITIES

Ownership		Description	Wife/de facto partner’s value	Husband/ de facto partner’s value
21	Husband	Tax Assessment (2008)	E$174,970.62	E$174,970.62
22	Husband	NAB Mastercard	$10,866.00
23	Husband	ANZ Mastercard	$9,922.68
24	Husband	ANZ Visa Card	$16,061.76
25	Husband	Citibank Ready Credit	$26,565.90
26	Husband	Citibank Gold Card	$6,644.72
27	Joint	Debt to parents	$126,000.00	$126,000.00
28	Wife	Debt to Ms F (Wife’s mother)	$90,000.00	TBC
29	Husband	Motor vehicle 2 Lease	$68,000.00	$68,000.00
30	Wife	Mortgage to Commonwealth Bank	$900,000.00	$900,000.00
31	Wife	Renovation Loan with NAB	$140,000.00	TBC
32	Wife	NAB Visa (0980)	E$3,600.00	E$3,600.00
33	Wife	NAB Visa (7759)	E$520.00	E$520.00
34	Joint	Strata Levies arrears for B Street	E$4665.75	E$4,665.75
35	Wife	Mortgage R Street	$204,000.00
36	Wife	Mortgage S Street	$262,000.00
37	Wife	Loan to Mr and Mrs J	$220,000.00
TOTAL	$2,193,756.37	$1,347,817.43

SUPERANNUATION

Member		Name of Fund	Type of Interest	Wife/de facto partner’s value	Husband/ de facto partner’s value
38	Wife	Bankers Trust	$6,397.62	$6,397.62
39	Husband	Netwealth	$107,550.26	$107,550.26
TOTAL		$113,947.88	$113,947.88

SUMMARY

Wife/de facto partner’s value	Husband/ de facto partner’s value
Gross value of Assets	$3,017,393.33	$3,183,253.38
Addbacks	Nil	$138,000
Liabilities	$2,193,756.37	$1,347,817.43
Net Value of Assets	$823,636.96	$1,973,435.95
Superannuation	$113,947.88	$113,947.88
Net Assets plus Superannuation	$937,584.88	$2,087,383.83

Should Existing Interests be Altered?

1. In Watson, I said:

   11.The circumstances of the parties’ relationship (its nature, form and characteristics) is plainly important to the exercise of the s 90SM(3)/s 79(2) discretion. The High Court held in Stanford:

   41.Adherence to these fundamental propositions in exercising the power in s 79 gives due recognition to “the need to preserve and protect the institution of marriage” identified in s 43(1)(a) as a principle to be applied by courts in exercising jurisdiction under the Act. If the parties have made a financial agreement about the property of one or both of the parties that is binding under Pt VIIIA of the Act, then, subject to that Part, a court cannot make a property settlement order under s 79. But if the parties to a marriage have expressly considered, but not put in writing in a way that complies with Pt VIIIA, how their property interests should be arranged between them during the continuance of their marriage, the application of these principles accommodates that fact. And if the parties to a marriage have not expressly considered whether or to what extent there is or should be some different arrangement of their property interests in their individual or commonly held assets while the marriage continues, the application of these principles again accommodates that fact. These principles do so by recognising the force of the stated and unstated assumptions between the parties to a marriage that the arrangement of property interests, whatever they are, is sufficient for the purposes of that husband and wife during the continuance of their marriage. The fundamental propositions that have been identified require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interests during the continuance of the marriage.

   42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).

   43.By contrast, the bare fact of separation, when involuntary, does not show that it is just and equitable to make a property settlement order. It does not permit a court to disregard the rights and interests of the parties in their respective property and to make whatever order may seem to it to be fair and just.

   (Italics in original. Footnotes omitted). (See also at [36], [39] and [40]).

   12.Provided the discretion is exercised judicially, it is at large; it is neither possible nor desirable to specify its “metes and bounds” (Stanford at [36]-[40] and [46]). Recognition is given to the fact that the circumstances of individual marriages (their nature, form and characteristics) can and do differ and those differences – the way in the which the parties have organised and lived their marriage/relationship – may be relevant to the exercise of the s 90SM(3)/s 79(2) discretion. Equally, provided that the questions required by s 90SM(3)/s 79(2) and s 90SM(4)/s 79(4) are seen as separate and applied as such, and not conflated, the enumerated factors within s 90SM(4)/s 79(4) can inform the s 90SM(3)/s 79(2) discretion together with any such other considerations as are properly relevant (see, Stanford at [40]).

   13.As a result of those matters, the Court’s approach to s 79/s 90SM may be less compartmentalised than what a strict or unthinking adherence to four (or three) “steps” might otherwise reveal. The task is essentially holistic; is it just and equitable in the particular circumstances of the particular relationship or marriage under consideration to make an order and, if so, its terms must similarly meet that criteria. Of course, holistic though the approach is, it must be referenced to what the Act requires and care must be taken to ensure that the Court’s reasons make that clear. (See, for example, Davut & Raif (1994) FLC 92-503 at 81,237).

   14.As Stanford makes plain (see, especially at [39]), the breakdown of a marriage (or de facto relationship as defined in the Act) does not bring, as an automatic consequence, an alteration of existing legal and equitable interests. Just as, if an order is to be made, equality is neither to be assumed nor is a starting point (Mallett v Mallett [1984] HCA 21; (1984) 156 CLR 605), so too, the making of an order at all is not to be assumed.

   15.The emphasis by the High Court in establishing the existing legal and equitable interests of the parties as a precursor to answering the question required by s 79(2)/s 90SM(3) can be seen to derive from the fact that s 79/s 90SM is concerned with rights in property which “...have their source in [the] relationship...” but which “...are created by curial order...”; “... orders made under s 79 [cf s 90SM] ... perform a dual function by creating and enforcing rights in one blow, so to speak...” (per Mason and Deane JJ, Fisher at 453). Given that the relationship does not itself create interests in property, due recognition must be given to existing legal and equitable interests because, as Macrossan CJ said (in a different context) in Turner v Dunne[1996] QCA 272 “[i]f it were otherwise, it might have to be concluded that ordinary categories of legal ownership could be not much more than provisional in all domestic relationships.”

1. Importantly, as can be seen, the plurality in Stanford, (at [41]) referenced the essential initial inquiry to the axiomatically idiosyncratic characteristics of a particular relationship.  Equally crucially, there is recognition (at [42]) that many relationships are not based upon specific agreements as to the manner in which property is held or is used.  Rather, each is, “in many cases” based on both “stated” and “unstated assumptions” inherent in those relationships. 

2. There is in the majority judgment recognition, too, that, upon a “voluntary separation”, “ … the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end”:

   42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).

3. In the instant case, as both parties acknowledge, their interests in, and the use of, property has not been governed by agreement.  So much is evident not only from the absence of any evidence about any such agreement but also by reference to the manner in which the parties made respective contributions to property during the course of their relationship.  In short, those contributions and the manner in which properties were acquired and used were based on assumptions, both stated and unstated, emanating from the de facto relationship and, during its subsistence, the common hopes and plans it embraced.  Those assumptions (and the hopes and plans) have altered by reason of the breakdown of the relationship and the “voluntary separation” effected as a result.

4. The wife’s legal interest in the Suburb H property was acquired by her post-separation and without agreement by, or reference to, the husband. However, the manner of its acquisition should not, for the purposes of s 90SM(3) of the Act, be seen as falling into a different category (although, for the purposes of s 90SM(4) of the Act, different considerations might apply to it).  The Suburb H property was acquired using, in part, funds obtained from those prior property dealings by the parties.  Although, in one sense, separate to the relationship, the acquisition and renovation of the property can in my view be seen to be integrally connected to the assumptions underpinning the acquisition and use of property during the relationship. 

5. There is here, as a result of the voluntary separation of the parties, no longer a common use of property.  Furthermore, the common assumptions upon which property was acquired and used during the currency of the parties’ relationship and which is represented now by the property of the parties or either of them, have been brought to an end by that voluntary separation.

6. In my judgment it is just and equitable to make a property adjustment order within the meaning of s 90SM(3).

Disclosure and Credibility

1. An attack was mounted by both parties on the credibility of the other.  Each is essentially based on assertions of lack of disclosure.  The assertion by the husband as to the wife’s lack of disclosure is central to his ultimate submissions and is centred upon what is said to emerge from the purchase by the wife of the Suburb H property, an issue discussed in more detail below. 

2. The cross-examination of the husband contained assertions that the husband failed to disclose, or properly disclose, the post-separation disposal of about $100,000 in shares and the subsequent disposal of shares in a public company valued at about $10,000.  In a related assertion, the wife asserts that the husband did not contribute $20,000 to the property and points to a failure to refer to it in the Financial Questionnaire signed by him.

3. I find that the husband did not disclose the matters to which I have referred; indeed he conceded as much in cross-examination. 

4. As will be seen in more detail below, it is asserted that the wife did not disclose important information and documents relating to the purchase of the Suburb H property and borrowings associated with its purchase and renovation.  The assertions made by the husband have substance.  I find that the wife failed to properly disclose documents and information pertaining to the purchase and renovation of that property.

5. The importance of disclosure, and the ramifications of a failure to disclose, or disclose adequately, have repeatedly been referred to in decisions of the Full Court.  Failure to disclose is always serious and, often, has ramifications for findings generally in respect of credibility and can lead to robust views being taken when evidence ought to be before the Court but, by reason of lack of disclosure, is not (see, for example, Weir and Weir (1993) FLC 92-338; Black and Kellner (1992) FLC 92-287).

6. Yet, in the circumstances here, the broad-based attack on the wife’s credibility based on the failure to disclose requires further analysis – albeit that no part of that is a means of excusing the failure to adequately disclose. 

7. As counsel for the husband properly concedes, the lack of disclosure does not occur in the context of a case where it is said that monies are hidden or have been misappropriated to the disadvantage of the husband.  For example, to the extent that there has been lack of disclosure relating to development costs, it was not part of the wife’s case that those costs would be attributed to the husband (just as it was not part of her case that any increase in value of the property was to be included as an asset to be shared in by him).   It is difficult to see what the sinister intent was, or is, on the part of the wife; there is little if any apparent advantage to her in her failure to disclose properly.  That does not excuse the lack of disclosure.  Rather, it seeks to place it into context as an asserted basis for rejecting entirely the wife’s evidence or drawing an adverse inference generally about her credibility. 

8. The wife seeks to explain her failure to disclose by asserting a failure to understand the process of acquisition of the Suburb H property.  I accept that the wife did not entirely understand the transaction.  I do not, however, accept that as the reason for her non-disclosure or as a basis for excusing it.

9. There is, as I perceive it, a barely concealed animosity between the parties bordering on contempt and, as I find, their post-separation relationship has been marked by significant mistrust and suspicion.  Most, if not all, of that mistrust has involved their respective financial positions.  The mistrust has in my view been exacerbated by the failure to resolve the instant claims.  I consider that each party’s failure to disclose was motivated by their animosity toward the other and, more specifically, an attitude post-separation of, in effect, “what is mine is mine” and that “their business” was “no business of the other”.  Those things said, the wife cannot avoid the fact that her disclosure has been manifestly inadequate, particularly in respect of the events occurring after the sale of the G Street property and, specifically, the purchase of the Suburb H property and the transactions associated with it.  However, I decline to draw adverse inferences generally against the credit of either party and, in particular the wife, resulting from any failure to properly disclose and nor do I reject the evidence of the wife entirely where it conflicts with that of the husband.  The lack of proper disclosure by the wife will result in my being robust about the findings to which it is related where there is an absence of evidence which I do not otherwise accept.

Issues Pertaining to Assets and Liabilities

The Husband’s Submissions

1. The central issues relating to the parties’ assets and liabilities pertain to the acquisition of the Suburb H property and its renovation, as well as the expenditure of money by the wife subsequent to separation, particularly, from the proceeds of sale of the G Street property. It is convenient to outline the husband’s central arguments in respect of this issue by reference to the written submissions filed on his behalf (references to Item numbers are references to Schedule “A” earlier reproduced):

   Item 31 – The renovation loan from NAB had been repaid after the sale of the [G Street property] and then subsequently drawn down by the [wife].  It is submitted that she should be solely responsible for repaying it.  It should not be deducted as an asset from the net asset pool.

   Items 33 and 34[3] – the mortgages in relation to the [R Street] and [S Street] properties had been discharged after the sale of the [G Street] property and subsequently drawn down by the [wife].  It is submitted that she should be solely responsible for repaying these mortgages as she has had the use of these funds.

   Item 37 – the loan to Mr and Mrs [J] has never been drawn down and having regard to all of the circumstances relating to the transaction with Mr and Mrs [J], even if this liability exists (which is not conceded), it is submitted it should be the sole responsibility of the [wife].

   It is submitted that it was not an unreasonable expectation on the [husband’s] part that the liabilities of the parties would be discharged with the net proceeds of sale of the [G Street property], as initially appeared to have been the case.  The [wife] had paid off the amount of $203,326.00 in relation to the [R Street] mortgage and the amount of $259,864.00 in relation to the [S Street] mortgage to discharge totally these mortgages.  She had also repaid the renovation loan of $141,520.00 to the National Australia Bank and deposited an amount of $150,000.00 to the Commsec account for the purpose of repaying the loan to her parents.  This is a total amount of $754,710.00.  She was thereafter debt free and left with some $600,000.00, save that she owed her parents $126,000.00.  Deducting the monies owed to her parents she conceded her net position was some $475,000.00 (Transcript 17 May 2012 page 43.5).  She had also paid off rates, strata fees and credit cards in a total amount of some $53,000.00. 

   Upon the basis that the [wife] contributed $400,000.00 towards the acquisition of the [Suburb H] property (including the additional $100,000.00 paid to the vendors) disclosed for the first time in her Financial Statement sworn 27 February 2012, and paid stamp duty of some $51,510.00 this is a total of $451,510.00.  By also paying credit card debts of $53,000.00 this extinguishes the $475,000.00 she had left from the proceeds of sale of the [G Street] property and a requires a further amount of $29,510.00 to be used towards the credit card debt.

   The [wife] deposed that as at 1 September 2010, she had no personal or business debt and there was a balance in her Business Account of $250,335.00.  On 15 October 2010 an amount of $250,000.00 was paid to her solicitors’ trust account (Affidavit of [wife] sworn 2 December 2011 paragraphs 66, 67 and 68).  This amount was ultimately divided as to $230,000.00 to the [husband] and as to $20,000.00 to the [wife].

   From this time until the time of swearing this Affidavit, a period of less than fifteen (15) months, the [wife] has drawn down on the mortgages on [R Street] and [S Street] in the total amount of $466,000.00.  The amount of $126,000.00 was not repaid to her parents, who are still owed this amount and the total amount of $150,000.00 was retained and used by her.   The renovation loan was also drawn down and now stands at $140,000.00.  This in total is an amount of $756,000.00. 

   The [wife] stated that since September/October 2010, she had largely drawn on the paid down mortgages for day to day expenses and towards the purchase of the [Suburb H] property.  Deducting the amount of $250,000.00 paid to her solicitor’s trust account and the $29,510.00 relating to credit card debt, this leaves an amount of some $476,490.00 which the [wife] expended in a fifteen (15) month period until the commencement of the hearing in February 2012.  It is submitted that the [wife] provides no adequate explanation for the expenditure of such a large sum in such a short period of time.  Clearly the net asset pool has been diminished by this amount.  She has also borrowed a further $90,000.00 from her mother which has now been totally expended. 

   It is submitted that adjustments must be made to the Balance Sheet to reflect the significant diminishing of the parties’ net assets as a consequence of the [wife]’s arbitrary actions.

   [3]          In fact, Items 35 and 36 as per Schedule “A”.

“Ignoring” Liabilities?

1. What the submissions suggest is that a number of specific liabilities should be “ignored” based upon the premise that at the time of the settlement of the sale of the G Street property in early 2010 (that is about a year after the parties separated under the one roof and about four of five months after they began living separately and apart), significant debt had been paid down and there was equity of about $425,000 “available”.   In addition, it is said that monies spent by the wife from the G Street proceeds should be “added back”.

2. As argued, the husband’s submissions can be expressed in a slightly different form – albeit, perhaps, to the same effect.  The contention can be seen to be that a property settlement should be effected by reference to the value of the parties’ interests, not at the date of trial, but at a point about nearly three years ago and after the parties had separated. 

3. The husband’s submissions do not refer to any authorities in support of the proposition that liabilities can be ignored in the sense referred to.  However, clear authority of long standing exists for the contention that they might.  (See, for example, Prince and Prince (1984) FLC 91-501, per Evatt CJ; Af Petersens and Af Petersens (1981) FLC 91-095, per Nygh J; Biltoft and Biltoft (1995) FLC 92-614).

4. In respect of the alternative formulation of the husband’s argument, the discretion inherent in the making of property adjustment orders is wide enough to encompass arguments – based on a proper evidentiary foundation – that a time other than the date of trial should be used in arriving at orders that are just and equitable (noting that, as Stanford makes clear, any such order is made in respect of existing legal and equitable interests and only after a separate question of whether an order should be made at all is answered in the affirmative).  However, existing property interests and liabilities are almost always taken at the value at the date of trial (see M & M [1998] FamCA 42 at [2.10] where it is said that this should occur “save in exceptional circumstances”).

5. Part, at least, of the reason for that approach is because, as here, there is frequently a significant delay between separation and trial and, as here, much can occur between those dates relevant to the s 79/90SM discretion.  It is also partly because, as it was expressed in C & C [1998] FamCA 143 at [46], “[t]he parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives. …” or, as was said in Marker, at [2.11] (in the context of a discussion of “addbacks”):

   Neither the Family Law Act nor the case law requires that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge.

6. A determination of what is just and equitable governs both the issue of whether expenditure should be added back (see, for example, C & C and Omacini and Omacini (2005) FLC 93-218). So, too, the requirements of justice and equity will, in many cases, require the Court to take account (either in respect of contributions or in respect of relevant ss 75(2)/90SF(3) matters) facts and circumstances relevant to the values of assets or liabilities at trial that differ from those that pertained at an earlier time and, in particular, at separation.

7. For reasons about to be expanded upon, I reject the contention on behalf of the husband that justice and equity requires in this case that certain of the liabilities contained in Schedule “A” should be “ignored”.  I accept, however, that it is necessary to take account of a number of matters connected with the property that was available at separation and at about the time of the G Street sale in looking to the adjustment that is just and equitable in respect of the existing interests of the parties in property.  I also accept that it is necessary to look at some of the issues between the parties emanating from the fact that, as counsel for the wife contends, the agreed schedule of assets and liabilities is “a snapshot” of values at the date of trial but in circumstances where it is uncontroversial that much has happened financially between separation and trial.

Disputes as to Assets

1. It will be appreciated that Schedule “A” represents the existing interests in property and agreed values (and agreed issues of dispute) as at the commencement of the trial – specifically 28 February 2012.  Schedule “A” does not include, for example, significant liabilities owing by the wife associated with the renovations to the Suburb H property totalling over a million dollars.  It is not said by the wife that the husband should share in responsibility for any of those liabilities incurred in the period after 28 February. 

2. I use the word “renovations”, but the scale of the project can be gleaned from the fact that the property was purchased for over $1.5 million and the wife’s deposition (at [28] of her affidavit filed 14 August 2012) that:

   The object of the improvements to the [Suburb H] property was to change a double level dwelling comprised of 3 bedrooms and one toilet into a 3 storey dwelling comprised of 5 bedrooms, 4 bathrooms, an internal double garage together with a pool with screening in the front yard.

Shares and Bank Accounts

1. It can be seen that the parties are apart in respect of Items 8, 10, 11, 13, 14 and 17 listed under the heading Assets.   

2. It is contended on behalf of the wife that the evidentiary source for the amounts attributed to Items 8 (husband’s K Pty Ltd shares), 10 (husband’s Commsec shares) and 11 (two bank account’s of the husband) is the husband’s own Financial Statement filed sworn 13 January 2012.  The husband contends that the K Pty Ltd shares were sold in order to meet “payments of joint expenses and particularly the ATO debt [arising from the sale of the interest in Y Pty Ltd] and living expenses of [the husband].”  In asserting a nil value it is said “[c]orroborative documents were produced at the hearing.”  No reference to any Exhibits is given, nor is there any reference to any oral evidence given at the trial in support of that assertion. 

1. Evidence in chief was led from the husband on the first day of trial that the K Pty Ltd shares deposed to in the husband’s January 2012 Financial Statement were sold “last week”, that settlement was occurring that day (i.e. 27 February) and that he “would receive” an amount of $10,695.76.  Given that the list of assets is otherwise a representation of values as at that date, it is appropriate to include this sum as an asset at the (slightly lower) value attributed by the wife.

2. The husband’s evidence-in-chief also revealed that shares in Commsec CDIA to which the husband deposed in his January Financial Statement were sold after that document was sworn and before the trial resulting in the husband receiving $5,930.64.  He deposed that that sum “is being used” for living expenses.  There is no evidence as to how much had been used and how much remained.  Subsequently in these reasons, reference will be made to the husband’s rent free occupation of the B Street property, his failure to pay expenses associated with it, his non-payment of school fees and his relationship with a new partner who is residing with him and who earns income.  I consider it just and equitable to include the sum referred to.

3. Perforce of the same reasoning and because as counsel for the wife contends, the list of assets and liabilities represents a “snapshot” of values at a particular point in time when much had happened between separation and the trial and because parties are not expected to “go into a state of suspended economic animation once their marriage breaks down”, in respect of Item 11 (the husband’s bank accounts) I will include the amount contended by the husband at trial.

4. In respect of Item 13 (“E Shares”) the wife contends that “there is no evidence to support” the husband’s assertions in each respect.  The husband contends in response that the wife “produced no evidence in relation to the sale or disposal of these shares.”  Of course, that contention has as its premise that there is evidence of the shares’ existence.  No reference is made in the husband’s submissions to any such evidence.  Having searched for the evidence myself, I note that a Financial Statement filed by the wife some 15 months before the trial lists “E Shares” valued at $10,000.  They are not listed on any updated Financial Statement. Perforce of the reasoning in the previous two paragraphs of these reasons, I do not propose to include these shares.  

5. Item 17 (“Bank Accounts [wife]” in respect of which the husband claims $25,000 and the wife nil) is more problematical.  The wife again contends in respect of this Item that there is no evidence to sustain it.  The wife’s 2010 Financial Statement deposes to over $400,000 in bank accounts.  I have considerable difficulty in understanding the written submission in reply by counsel for the husband in respect of this Item:

   The [wife] did not provide corroborative evidence in relation to monies in bank accounts.  In her Financial Statement sworn 14 February 2012, the [wife] disclosed no monies in bank accounts.  In her Financial Statement sworn 27 February 2012, she disclosed bank accounts in which there was a total amount of $39,783.26.  This amount was apparently part of the further amount of $90,000 borrowed from her mother.

6. No submission, nor any evidence to which I was taken or of which I am otherwise aware, elucidates the amount claimed at Item 17 by the husband.  As reference to matters later to be discussed in these reasons will reveal, the “snapshot” of values as at 28 February occurs at a time when substantial monies were flowing through the wife’s bank accounts in respect of renovations to Suburb H (including loan funds from the wife’s mother to which reference will later be made).  I do not consider it just and equitable to attribute the sum of $25,000 to the wife in respect of Item 17.  I adopt her nil value because of her general financial position at that time to which reference will later be made in more detail.

7. Item 14 relates to an amount sought to be “added back” by the husband.  This issue will be dealt with in the context of addressing more broadly the issue next to be addressed, that of “addbacks”.

Alleged “Addbacks”

1. Some of the principles relating to addbacks have been addressed earlier in these reasons.   It must be remembered that addbacks are “the exception rather than the rule” (C & C at [46]). That principle has been emphasised by other statements of the Full Court seeking to point out the limited nature of including property (usually money) which does not now exist as part of an adjustment of existing interests in property. (Those principles may need to be examined in light of the decision of the High Court in Stanford).  In Omacini the Full Court referred to three specific circumstances where “addbacks” may occur:  where the parties have expended monies on legal fees; where there has been a premature distribution of matrimonial assets; or where there has been what is commonly called “waste” (by reference to what was said by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092).

2. As those, and other, authorities make clear, however, even if the use of property or money by one party can be identified as coming within the narrow set of circumstances where “addback” may be justified by principle, it is nevertheless a matter for the trial judge exercising, in the particular circumstances of the case, his or her discretion by reference to what is considered just and equitable, as to whether “addback” should occur. It may be considered more appropriate, for example, to make an adjustment pursuant to s 75(2)(o) to take account of the relevant circumstances.

3. A particular consideration in that respect is that an addback brings to account, in current dollar terms and in current circumstances, a dollar for dollar accounting of past actions undertaken in past circumstances expressed in past dollar terms. It is, axiomatically, a mathematical exercise occurring within a broader overall assessment of contributions, including post-separation contributions, and the exquisitely discretionary s 90SF(3) considerations which is quintessentially not a mathematical exercise (see Norbis v Norbis (1986) 161 CLR 513).

4. There the High Court makes clear this last point is fundamentally important.  Far too frequently cases for property adjustment descend into an attempt to conduct an ex post facto audit of the parties’ financial affairs, particularly post-separation.

5. Here, insofar as the issue is referred to in the Items in Schedule “A”, Items 18 and 19 are both referenced, in terms, to the use of the G Street sale proceeds.  Item 14 (“Commsec CDIA” in an amount of $150,000) is also a claim for “addback” although not included under the heading “Addbacks” in Schedule “A”. 

6. For the reasons which follow, I do not consider it just and equitable to add back any of the sums claimed.

The $20,000 – Item 19

1. No specific submissions on behalf of the husband identify this sum.  It seems tolerably clear, however, that it represents the sum paid to the wife as part of an interim order that saw the parties receive $250,000.  As will be seen, the remaining $230,000 was paid to the husband to discharge a debt owing in respect of the loan attaching to the shares from his previous employment and a tax debt also emanating from that.

2. The sum of $20,000 was identified as payable in respect of legal fees and it seems relatively clear that it was used in that way.  It is, then, susceptible to being added back as one of the three categories referred to in Omacini above.  (See, also, Chorn & Hopkins (2004) FLC 93-204). However, I do not consider it just and equitable to do so. The payment was made within the broader post-separation financial circumstances about to be discussed which, in my judgment, do not point to justice and equity requiring the sum to be added back.

Items 14 and 18 – Expenditure from G Street Proceeds

1. In respect of the two larger sums claimed, Senior Counsel for the wife can be seen, in effect, to make submissions consistent with the statements earlier referred to emanating from decisions of the Full Court in C & C and in M & M (although neither of those authorities, nor any other authority, is mentioned within the submissions). Counsel contends in respect of Item 14, “this sum did exist at the time of separation just like the [K Pty Ltd] shares which the applicant retained and sold but he does not seek to add-back.” The submission then goes on to contend that monies were utilised by the wife to meet her post-separation expenses and those of the child “particularly in circumstances where her income was minimal and the applicant was paying no child support”. The submission goes on:

   In circumstances where the applicant had an income post-separation of in excess of $150,000 per annum and sold [K Pty Ltd] shares post-separation and received in excess of $217,000 and the respondent does not seek an add-back of same there is no warrant to include the $150,000 at Item 14.

2. Although submissions on behalf of the husband assert that money emanating from the sale of G Street has “vanished” or is otherwise unexplained, it is difficult to discern precisely the submissions that are said to sustain the amounts claimed as addbacks.  Insofar as submissions made on behalf of the husband refer specifically to this issue, they do not elucidate how the claimed amounts in the specific Items referred to are arrived at.  

3. In respect of one component of the claim, Item 18 in an amount of $118,000, this was said (transcript of proceedings 16 November 2012, p 61, lines 5-23):

   HIS HONOUR:         Sorry.  Is the 118, as it appears in the balance sheet, designated by “ownership [Wife]”, intended to be that $118,000 your client contends should be added back as against the wife?

   MR HODGSON:      Well, your Honour, we have obviously moved a little further.  Your Honour asked me how that was calculated.  It’s my understanding it was calculated that the wife had $475,000 from the sale of [G Street], which was left over.  Then she put 300 into [Suburb H] and there were some other costs and other things that she paid, which we accepted, and there was a difference between the 475 and what she put into the [Suburb H] property, or what was allowed in relation to payment of credit cards or whatever, and that there was 118,000 left over.  Now, it may well be that that’s not going to be advanced, depending upon the attitude that your Honour takes, but that was, I suppose, the unexplained part of the 475 as we perceived it then.  But of course now we know that another $100,000 went to the [Js], and that probably wipes that out.  Remember, we didn’t really know much about the [Js] (sic) until 27 February, but it was the difference, as I understand it, between what we asserted she had left over after she had become debt-free and what she had put into the property at [Suburb H].  Does that make sense, your Honour?

4. Initial written submissions by the husband (marked for reference, Exhibit “S1”) do not refer to the issue at all.  The written submissions in reply on behalf of the husband filed 25 February 2013 simply reassert in respect of Item 18 that which is contained within Schedule “A” and Item 19 is not specifically addressed at all.  In respect of Item 14 it is contended simply that:

   [T]he Commsec account has now been reduced to nil and the monies in this account came from the net proceeds of the [G Street] property.  It is submitted that this amount should be added back and this will be more fully explained in the analysis of the use by the Respondent of the net proceeds of sale of the [G Street] property.

5. The fuller explanation referred to has been quoted earlier in these reasons.  As can be seen there, it is made clear that the claim by the husband for addbacks emanates from the central contention that equity of about $475,000 (or about $425,000 if account is taken of rates, strata title fees and credit card debts paid off) was available after the sale of the G Street property which settled in July 2010.  It is asserted that “the wife has spent about $750,000 since the payment of the debts from the [G Street] proceeds” and that she “does not account for the expenditure of about $476,000 in a period of 15 months until the commencement of the hearing”.

6. It is difficult to see how that submission is sustained by the evidence and, more particularly, by the evidence of the husband himself.  

7. The claimed amount of $118,000 has its foundations in what is deposed at paragraph 36 of the husband’s affidavit of evidence-in-chief:

   I do not have an issue with the payments referred to at paragraph 35 from (a) to (e) and (g) to (i) as they were debts incurred during the relationship. I do however, have an issue with the remaining payments which amounts to $118,016.00 of which I seek to be added back. The reason why is from 9 December 2009 to 31 May 2010, I transferred the sum of $95,064.42 to [Wife’s] bank account for her to meet joint expenses such as the mortgage repayments and council and water bills. In addition to this I paid for some joint expenses directly in the sum of $17,845.77 which was during the period from 3 December 2009 until [G Street] was sold.

8. Paragraph 35 of that same affidavit, to which the quoted paragraph refers, sets out the explanation given by the wife through her solicitors as to “how [the wife] applied the net proceeds [of sale of G Street] of $1,162,214.76.”  In paragraph 34 of that same affidavit, the husband sets out how the amount of the net proceeds is arrived at and annexes to his affidavit documents relating to same.

9. In cross-examination, Senior Counsel for the wife carefully took the husband through precisely what it was that the husband alleged was the amount of money which he was not prepared to accept.  It is important to understand that the husband agreed with the premise that about $250,000 of the proceeds of sale of G Street was not explained to his satisfaction.  That agreed fact was the premise for the questions which the husband was then asked. 

10. It is important, I think, to quote that part of the cross-examination.  First, the premise to which I have referred is established at Transcript of Proceedings, 27 February 2011, pp 28-30 when Senior Counsel is referring the husband to the paragraphs of his affidavit earlier referred to:

    MR SCHONELL: …you identify there  … that the net proceeds of sale of [G Street] after payment of the various expenses was one million, 162-odd thousand dollars.  Do you see that amount?

    HUSBAND: Yes

    MR SCHONELL:      And you accept that proposition as I understand it?

    HUSBAND: Yes

    …

    [After asking the husband to identify the items of expenditure he agreed with and referring to the items with which the husband did not take issue]

    MR SCHONELL:      … they’re the ones you say totalled $118,000?

    HUSBAND:             Yes.

    MR SCHONELL:     And so what you also say in the … middle paragraph on that page? You say:

    The total sum used by [the wife] was $1,028,000

    HUSBAND:             Yes

    MR SCHONELL:      Continuing:

    The difference between the net proceeds with the funds expended by [the wife] is $133,000

    HUSBAND:             Yes

    MR SCHONELL:     So 133,000 is the difference after we’ve taken the one million, one hundred and sixty-two off those items; correct?

    HUSBAND: Yes, yes.

    MR SCHONELL:     So, on your analysis, what you say is there was 133,000 that she had in the bank, or somewhere or other; correct?

    HUSBAND: Yes

    MR SCHONELL:      And you say, “I don’t accept that she should have spent $118,000 on debts of the relationship”?

    HUSBAND: Yes

    MR SCHONELL:      Correct?

    HUSBAND: Yes

    MR SCHONELL:      So … when you add those two amounts together, about $250,000?

    HUSBAND: Yes

    ...

    MR SCHONELL:      We’re all on board – the same page?

    HUSBAND: Yes

    MR SCHONELL:     Right.  After [G Street] was settled, she paid $250,000 into her solicitor’s trust account, didn’t she?

    HUSBAND: Yes.

    MR SCHONELL:      And there was nowhere else for it to come from; it came from [G Street]; correct?

    HUSBAND: Yes

    MR SCHONELL:      Right.  So, think for a moment.  That accounts for all of the money, do you agree with that?

    HUSBAND: Yes

11. The reference in submissions by counsel for the husband to a number of alternative figures makes it necessary for me to find that the maximum amount susceptible to addback as against the wife is $250,000 (noting that this figure agreed to by the husband is rounded down by about $1,000 from the addition of the two figures put to him.)

12. Having established that figure, Senior Counsel for the wife then continued the cross-examination addressed to the separate issue, namely whether the expenditure by the wife was reasonable or ought more properly be viewed as falling into the narrow band of cases referred to in Cerrini above and Omacini above.

13. The cross-examination continued:

    MR SCHONELL:     Right.  Now – so can I then take you up to (a) at the top of the page.  Now, she told you that she was going to use this $150,000 to pay back the debt to her parents, which you understood to be $126,000?

    HUSBAND:Yes.

    MR SCHONELL:     And you now know subsequently that she didn’t in fact do that, and that she – and you know subsequently that she has had the benefit of the use of that money?

    HUSBAND:Yes.

    MR SCHONELL:     Right.  I see.  And you’re not seeking that it be contended that that amount should be added back, are you?

    HUSBAND:126?

    MR SCHONELL:     Yes?

    HUSBAND:No.

    MR SCHONELL:     No.  But you say, “Well, look, I provided or she took $150,000, ostensibly to pay out that debt, and why should it be levied against me, when that’s what she said she was going to use that money for.”?

    HUSBAND:Yes.

14. Thereafter, the cross-examination centred upon a number of aspects of whether or not the expenditure by the wife was reasonable in the sense used in the authorities.  An important component of that cross-examination, and the evidence given by the husband in answer to it is, Exhibit “E” to the affidavit of the husband filed 25 November 2011.  That document is a budget – it should be noted prepared jointly by the parties – at a time when they had been separated under one roof for about six months and the husband was preparing to vacate the former matrimonial home to reside at the B Street property.  It should be observed, then, that much of the cross-examination of the husband pertaining to whether expenditure from the G Street proceeds should be considered reasonable came from an Exhibit forming part of the husband’s own evidence.  

15. That evidence makes clear that the parties agreed that the combined monthly expenditure budget was $22,408.33 of which the wife would bear $17,898.33 and the husband $4,510.00.   The amount falling to the wife included mortgage payments, interest, credit card debts and school fees totalling about $12,600 per month.  It will be appreciated that these can all legitimately be seen as “joint expenses”.

16. The husband was cross-examined about the use of the identified $250,000 by reference to the respective post-separation financial positions of the parties including the expenses met by the wife by reference to Exhibit “E”.   The husband paid to the wife about $95,000 between December 2009 and May 2010.  As can be seen from Exhibit “E”, the wife’s budgeted expenses during that time were about $107,000.  She was not remuneratively employed outside of work on the Suburb H development. Exhibit “G” to a further affidavit of the husband filed 24 November 2011 reveals that, during that period, one of his bank accounts had credits of $177,789.96 and debits of $82,725.96.  It is submitted on behalf of the wife, and I accept, that “expressed another way” he had available $13,787.96 per month in circumstances where his expenses as identified in Exhibit “E” were $4,510 per month.

17. The husband ceased making any payments to the wife in May 2010 (that is, about five months after leaving the former matrimonial home).  The husband accepted in cross-examination that he ceased making payments, not because he could not afford to, but because he “just felt that [he] had paid enough at that point in time”. In making that concession, the husband conceded that he had available to him (by reference to his bank accounts) about $50,000 net. 

1. Between 31 May 2010 and May 2011 the husband made no financial contribution to the support of the wife or the child. 

2. During that period of time, the wife was renting prior to moving into the Suburb H property.  Her rent was about $3,400 per month.  From the time that he left the former matrimonial home, the husband has lived rent free in the B Street property.  He did not pay the strata levies of about $4,600 (which are included as a liability of the parties in Schedule “A”) in respect of the property.  From about October 2010 his new partner, who earns about $78,000 per year, has resided with him.  She does not pay rent or board.  She does not share expenses save for food and paying her own telephone.  The B Street property had, prior to the husband’s occupation of it in about December 2009 produced an income.  After the husband assumed occupation of that property the rental income ceased.

3. The husband commenced making child support payments in May 2011.  (L lives, during school terms, six nights per fortnight with his father and eight with his mother and with his father for four one-week periods during the approximately 12 weeks of school holidays).  The husband paid about $205 per week in child support until shortly prior to the commencement of trial when payments increased to about $208 per week.  School fees for the child are about $20,000 per year.  The husband agreed that he had made one payment of school fees in June 2010 in an amount of $4053; none in 2011 and none up to the point of trial in 2012.  School fees were otherwise borne by the wife.

4. The husband agreed that since separation he has had an income in excess of $150,000 per annum at least and prior to accounting for any dividend income received from shareholdings.  The amount of the husband’s credit cards have remained essentially constant since December 2009 because he has paid the interest only and did not reduce any “principal”.

5. By reference to Exhibit “E” to his affidavit, the husband agreed that the wife needed about $10,000 per month “for herself and the child to live on” (this amount was calculated by adjusting the budget there contained consequent upon the sale of G Street and adding $3,400 per month rent).  The husband agreed that, for the first two months after May 2010 the wife needed to make all of the mortgage payments for the G Street, S Street and R Street properties.

6. Ultimately, the husband agreed that in the 12 months after he stopped making payments, it was reasonable for the wife to “have spent about $120,000 on her own support.” He agreed that this “made sense” mathematically and also agreed, by reference to the Exhibit “E” budget, that such an amount “was reasonable”.

7. The husband was also asked about amounts owing by way of tax. Specifically, he lodged his 2008 tax return in October 2010.  An additional tax liability had arisen by reason of the husband’s sale of his K Pty Ltd shares.  The husband deposes to about $300,000 owing by way of tax as at November 2010.  An earlier order provided for the payment of $250,000 to be paid as to $230,000 to the husband and $20,000 to the wife (I assume the latter figure is that referred to in Item 19 of Schedule “A”).  About $165,000 was paid by the husband to K Pty Ltd in repayment of his share loan and about $64,000 was available to pay tax.  However, previously, the husband had negotiated an instalment repayment of tax of $13,000 per month.  He used the $64,000 to pay instalments incurred as a result of a liability for interest which, he agrees, is deductible in future years by him.  The husband also agreed that, as at February 2010 he had about $240,000 in shares which, if sold then, could have reduced his tax debt by about 70 per cent.   As a result, the husband agreed, he incurred about $55,000 in interest owing to the ATO.

8. I do not consider that the husband establishes that the expenditure by the wife was unreasonable.

9. I do not consider that, by reason of any other circumstance, it is just and equitable to add back any of the sums contended by the husband at Items 14, 18 or 19. 

Disputes as to Liabilities

1. It can be seen from the husband’s written submissions that the liabilities which it is contended can be “ignored” fall broadly into two categories.  There are, in addition, more minor issues relating to the respective credit card debts of the parties.

2. The first centres on the central assertion earlier identified, namely that the unilateral actions of the wife in respect of Suburb H had resulted in the value of the existing property interests being significantly less than what they should have been had debt remained repatriated and the remaining equity retained consequent upon the sale of G Street. 

3. The second broad category pertains to the money allegedly owing to Mr and Mrs J.  This issue has the additional component of an assertion that the debt may not exist at all. 

Credit Card Debts and the Debt to the Wife’s Mother

1. The husband claims a total of just short of $70,000 in respect of five credit cards.  The individual amounts owing can be seen at Items 22-26 of Schedule “A”. The wife has two credit cards the liabilities in respect of which are agreed (Items 32 and 33).

2. As has been seen from the evidence extracted above the husband intentionally, during the period after separation, paid only the minimum interest owing in respect of each credit card.  That is, he made no payments in respect of the principal owing in respect of each card.  The evidence relating to the broader financial positions of the parties post-separation has also been referred to above.  Further, the evidence reveals the husband’s admission that he “certainly had funds available to pay off [his] debt” (Transcript of Proceedings, 27 February 2012, p 32, lines 4-5) and the use of funds by him for travel overseas and the steps taken by the husband in respect of indebtedness to the ATO earlier described for which he offers no reason.

3. I do not consider it just and equitable for the wife to share in the liabilities owing by the husband on his credit cards.  That is, I consider the husband should be responsible for those liabilities.

4. The wife’s Financial Statement sworn prior to the commencement of the trial deposed to an indebtedness to her mother in two separate amounts (presumably two different loans).  One loan was for $126,000.  That loan, granted some years previously when the wife’s father was alive, is accepted as a liability by the husband.  The other loan is in an amount of $90,000.  Each of those loans and their amounts are reflected in Exhibit “R5” – a Financial Statement presented on the first day of trial about which more will be said in a moment. 

5. Those same amounts are reflected in an updated Financial Statement filed 15 May 2012.  That Financial Statement records for the first time the wife’s first deposition about the makeup of the $90,000 loan from her mother.  The loan was made on 3 January 2012 and, the wife deposes, was used in and about the Suburb H renovations and toward the Commsec account save for $30,000 which went “to my solicitor for counsel and legal fees for the hearing in February 2012”  (Financial Statement filed 15 May 2012, Part O, Note 53)

6. By the time the wife was cross-examined six months later on 16 November 2012 the wife deposed that her mother had “lent me $60,000 since the May hearing”.  Cross-examination confirmed that the wife now owes her mother $276,000.  It will be noted that, consistent with other liabilities incurred by the wife since February 2012, including the more than $1 million borrowed to meet renovation costs and ordinary living expenses earlier referred to, the additional $60,000 is not claimed as a liability in which the husband should share.

7. The dispute, then would appear to only be in respect of the $90,000 borrowed by the wife from her mother in January 2012. I accept that, of that amount, $30,000 went toward legal fees and, despite the post-separation financial circumstances earlier described the husband should not share in that liability. The balance, however, falls into the category of liabilities incurred by the wife in the post-separation life that are reflected, at least in part, in the Schedule of Assets (albeit that s 90SM(4) considerations might come into play in respect of that issue).

8. I will, then, include the wife’s indebtedness to her mother as a liability of the parties not in the sum of $90,000 as claimed at Item 28, but, rather at $60,000.

The Suburb H Purchase and Mr and Mrs J

1. The contest on this issue is reflected at Item 37 of Schedule “A”.

2. The wife purchased the Suburb H property from Mr and Mrs J.  A contract settled about two years after the parties separated under the one roof and about 18 months or so after they separated finally.  The contract provided for a purchase price of $1.2 million.  The wife disclosed same in a Financial Statement ahead of the start of the trial.  A similar assertion was made in an affidavit filed by her in December 2011.

3. In fact, the “effective purchase price” of the property is asserted by the wife to be $1.5 million.  That expression is used because the purchase was structured in an unusual way.  The contract provided for a purchase price of $1.2 million.  (Exhibit “B” to the affidavit of Mr L filed 3 May 2012).  A separate deed of loan between Mr and Mrs J and the wife provided for a loan by them of $300,000 repayable with interest “on 14 March 2013 or upon sale of the [Suburb H] property” (see [6] and Exhibit “C” to the affidavit of Mr L).  Yet, despite this document containing a “drawdown date” of 15 March 2011, no money was ever provided by the vendors to the wife.

4. Those matters emerged on the second day of trial by reason of the wife seeking to present an updated Financial Statement which contained notes alluding to the above matters. It became Exhibit “R5”.  At the commencement of the trial in February, the wife had deposed, in a Financial Statement filed 15 February 2012, that the value of the property was $1.2 million (its contract price) and had claimed no debt owing to Mr and Mrs J.  Exhibit “R5” (sworn on 27 February 2012, the first day of trial) deposes to Suburb H having a value of $1.3 million.  No amount owing to Mr and Mrs J was shown as a liability in that document.  The document annexed nine paragraphs of “notes”.  Within those paragraphs it is said that an amount of $100,000 additional to the contract price was paid to the vendors as a result of “caveats”.  The conveyancing file in respect of the purchase was produced on 28 February by the wife.

5. Unsurprisingly, the differences just described were the subject of cross-examination of the wife by Mr Hodgson for the father resulting in a question from Mr Hodgson: “So the real purchase price of this property is $1.5 million” to which the wife responded “That’s correct”.  It will have been observed that this is not the figure listed within Exhibit “R5” which records $1.3 million as the value of Suburb H.

6. The “notes” to Exhibit “R5” could not purport to be an adequate explanation for what had in fact occurred in respect of the purchase and nor could the production of the conveyancing file on the second day of trial purport to be adequate or timely disclosure consistent with the wife’s obligations under the Family Law Rules 2004. The failure to properly disclose on the part of the wife should be condemned. But, it is necessary – as I attempted to make clear to counsel for the husband – to look at what the evidence actually reveals before conclusions are drawn.

7. It should be noted that the effect of the changes in Exhibit “R5” was to increase the value of an asset in which the husband might share but to not attribute any responsibility for a debt which (as it was later to transpire) contributed to the acquisition of the asset.  That is, the deed of loan and “effective purchase price” did not prejudice the husband if the wife did not seek to have the husband share in any of the liability to Mr and Mrs J which, at that point, was her position. 

8. Equally, and by way of corollary, while the circumstances just described might lead to understandable anger and suspicion on the part of the husband (and the Court) the evidence, once examined, reveals that there was, and is, no basis for three serious assertions made by counsel for the husband during the process of cross-examining the wife: it was asserted, first, that the deed of loan was “a sham”; that there may have been a fraud on the revenue relating to the payment of stamp duty; and, thirdly, it was implied that the solicitor who had given advice to the wife and acted for her in the purchase had acted improperly. 

9. The wife and her conveyancing solicitor, Mr L, provided affidavits and were each cross-examined about the purchase of the Suburb H property upon the resumption of the trial in May.  Mr L’s affidavit deposes to him drawing the deed of loan between Mr and Mrs J and the wife and to writing to the Stamps Office explaining the transaction. E-mails passing between the Stamps Office and the solicitor are exhibited to his affidavit. Stamp duty was paid in accordance with that Office’s assessment

10. I accept, on its face, the transaction is unusual and that, in the circumstances in which it emerged during the trial for the first time, it created significant (and understandable) suspicion. But, the wife and the solicitor provide the same explanation for the transaction and that explanation is supported by documents including correspondence with the Stamps Office.

11. The property had been on the market for some time at around

    
    

    $1.5-$1.6 million.   The vendors would not move off that price.  The wife would not pay more than $1.2 million, primarily because that is the value upon which the bank would lend.  The wife was of the view that if she developed the property as she planned, it would increase in value and, in terms of the overall intended value post-development, $1.5 million was a price worth paying.  The impasse was in the payment of that sum now.  The only way the deal could be done was if the wife paid $1.5 million for it.  The only way that could occur with bank finance was for $1.2 million to be paid under the contract at settlement and for an additional $300,000 plus interest to be paid to the vendors some two years after settlement.  A contract of sale between Mr and Mrs J and the wife evidenced the former and a deed of loan evidenced the latter. 

12. That deal was subject to an unexpected hitch – the vendors had caveated and demanded $100,000 at settlement which the wife, despite frustration and anger to which she deposed in the witness box, paid.  Thus, at settlement she paid to Mr and Mrs J $1.3 million: $1.2 million pursuant to the contract and $100,000 pursuant to the deed of loan.  There was owing to Mr and Mrs J as a result $200,000 plus interest, a total of $220,000. The reason the H loan has “never been drawn down on”, as the husband asserts, is because of the manner in which the purchase transaction was structured as earlier described.  By reference to valuation evidence, the parties agreed as at the start of the trial that the property then had a value of $1.425 million.

13. That outline, which reflects what is ultimately contained in Schedule “A” above, emerges from the evidence of the wife, her conveyancing solicitor and documents, the authenticity of which (despite the reference to “sham” by counsel for the husband) was not, and is not, challenged by reference to any evidence.  I accept the wife’s evidence (see, for example, Transcript of Proceedings, 17 May 2012, pp. 20, 60).  I also accept the evidence of the solicitor, Mr L, in that respect (see, Affidavit filed 3 May 2012 and Transcript of Proceedings, 17 May 2012, pp. 48 – 50).  In short, whatever might be drawn from the wife’s failure to disclose, I am satisfied by reference to the evidence before me that:

    §   The Suburb H property was purchased for $1.5 million;

    §   An amount of $1.3 million was paid at settlement;

    §   There was owing to Mr and Mrs J at trial the sum of $220,000; and,

    §   The value of Suburb H at trial was $1.425 million.

14. Having found that this debt exists and is owing, it remains to consider whether it, and the other contested liabilities should be “ignored”.

Other Contested Liabilities

1. It is, I think, important to put the purchase by the wife of Suburb H and its associated liabilities into a factual context within this relationship which, in my view, is marked by the acquisition, renovation and sale of real property.  A short history is as follows:

Property	Purchase	Description
N property	Purchase date unknown (sold 2005)	Property in Queensland owned by husband at commencement of relationship.
R Street	2000	Owned by wife at commencement of cohabitation in 2001.  Parties’ home for short period and rented after wife became ill in her pregnancy with the parties’ child.
S Street	2001	Rented during relationship.
B Street	2002	Rented during relationship.  When parties finally separated at the end of 2009, husband resides in it and continues to do so.
O Street	2002 according to the wife 2004 according to the husband	Purchased as home for parties.  Parties resided there until 2006 when sold.
P Street	2006	Purchased after sale of O Street and parties reside there.  Sold in 2008.
G Street	2008	Purchased contemporaneously with sale of P Street.  Parties lived there until final separation at end of 2009.  Sold April 2010.
Suburb H property	2011	Purchased by wife alone without knowledge of, or reference to, husband.  Substantial renovations.

1. As has been seen, the husband’s contentions emanate from the proposition that expenditure on Suburb H not agreed to by him should see a property order made by reference to, in effect, the situation which pertained prior to the sale of G Street.  In order to do so, it is just and equitable, he contends, to ignore liabilities incurred since that time.

2. No submissions on behalf of the husband (nor any cross-examination of the wife at trial) sought to establish a “balance sheet” of assets and liabilities as at the date of settlement of the G Street property that took account of circumstances other than the indebtedness incurred in respect of the purchase of the Suburb H property.  On the contrary, the balance sheet with which the husband agrees reflects agreed values of assets and liabilities as at the date of trial.  The husband seeks to include in that balance sheet the Suburb H property at an agreed value as at February 2012 but to ignore liabilities, at least some of which were incurred in purchasing the property and contributing to its then value (noting that the February 2012 is the value of a property under significant renovation/construction). 

3. The husband asserts that the debts owing in respect of the mortgages on the R Street and S Street properties should be ignored (Items 35 and 36).  There could be no challenge to the evidence of the wife that borrowings in respect of the purchase (and later renovation) of Suburb H are cross-collateralised against that property and the two properties just referred to.  The wife deposes (at [70], [71] of her affidavit filed 2 December 2011) to borrowing $900,000 from the Commonwealth Bank and to the balance of the purchase price for Suburb H being “paid by offset mortgages for the [R Street] Property and the [S Street] Property”.  That evidence was not challenged.  It accords with the evidence as a whole.  The Suburb H property is included in Schedule “A” as an asset; the funds which acquired it are included as a liability. 

4. No submission is made as to why those amounts secured by mortgage over those two properties should be “ignored” save for the argument made more generally and quoted above that the G Street proceeds retired then existing debt and produced equity which now does not exist as such.  So much is true, but each is represented by the fact that Suburb H is included in the Schedule.  (Of course, what Suburb H might be worth when completed and how that property in the wife’s hand at its completed value might be treated is a different matter).

1. The written submissions which underpin this contention quoted earlier in these reasons have already been referred to in the context of the earlier discussion of “addbacks”.  As has been seen, they refer to “amounts drawn down on the mortgages on [R Street] and [S Street] in the total amount of $466,000” and to a total of $756,000.  They sit together with an assertion that the wife spent “an amount of some $476,490 … in a fifteen month period [i.e. between the sale of G Street and trial]”.  It is said that the wife “provides no adequate explanation for the expenditure of such a large sum in such a short period of time” and the assertion is made that “clearly the net asset pool has been diminished by this amount”.

2. Those submissions individually and taken together ignore, in my respectful view, two very significant factors.  The first is that, on any view of the evidence, the wife is undertaking a very significant renovation that involves very considerable expenditure.  The evidence that she has required over a million dollars since the commencement of the trial (none of which is sought to be attributed to the husband) with which to live and to complete the renovation is of itself evidence of that.  Secondly, the submission appears to me to ignore the direct evidence of the husband himself discussed in some detail above.  To repeat, the husband admits in his own affidavit to his satisfaction with the expenditure as listed in the affidavit save for a disputed amount to which he was taken carefully in cross-examination. 

3. I am not persuaded either that the disputed liabilities should be “ignored” or that about $475,000 in expenditure is “unaccounted for” nor of the submission made otherwise on behalf of the husband that this amount, or any amount, “has vanished”.

Conclusion As To The Property of the Parties

1. Taking account of the findings earlier outlined, I consider the existing interests in property of the parties together with the value of that property as at the date of trial should be seen as follows:

ASSETS

Ownership		Description	Value
1	Joint	B Street, Suburb D	$640,000.00
2	Wife	R Street Property	$415,000.00
3	Wife	S Street Property	$399,167.00
4	Wife	Sale proceeds on trust	$Nil
5	Wife	Motor vehicle 1 (purchased Aug 2011)	$27,900.00
6	Husband	Motor vehicle 2 (purchased Aug 2011)	$68,000.00
7	Joint	Household contents	$20,000.00
8	Husband	K Pty Ltd Shares	$9,307.35
9	Husband	Commsec Trading Account	$14.90
10	Husband	Shares (Commsec CDIA)	$5930.64
11	Husband	Bank Accounts (NAB & ANZ)	$2,000.00
12	Husband	ING Bank (held with partner)	$1,170.48
13	Wife	E Shares	$Nil
14	Wife	Commsec	$Nil
15	Wife	A Pty Ltd	$Nil
16	Wife	C Street, Suburb H	$1,425,000.00
17	Wife	Bank Accounts	$Nil
TOTAL	$3,013,490.37

ADDBACKS

Ownership		Description	Value
18	Wife	Sale proceeds that have been used over and above the normal day to day expenses and repayment of debts by the de facto wife	$Nil
19	Wife	Sale proceeds of the former home were used to pay the de facto wife’s solicitors fees	$Nil
20	[Left blank in original]
TOTAL	$Nil

LIABILITIES

Ownership			Description		Value
21		Husband	Tax Assessment (2008)		E$174,970.62
22		Husband	NAB Mastercard		$Nil
23		Husband	ANZ Mastercard		$Nil
24		Husband	ANZ Visa Card		$Nil
25		Husband	Citibank Ready Credit		$Nil
26		Husband	Citibank Gold Card		$Nil
27		Joint	Debt to parents		$126,000.00
28		Wife	Debt to Ms F (Wife’s mother)		$60,000.00
29		Husband	Motor vehicle 2 Lease		$68,000.00
30		Wife	Mortgage to Commonwealth Bank		$900,000.00
31		Wife	Renovation Loan with NAB		$140,000.00
32		Wife	NAB Visa (0980)		$3,600.00
33		Wife	NAB Visa (7759)		$520.00
34		Joint	Strata Levies arrears for B Street		$4665.75
35		Wife	Mortgage R Street		$204,000.00
36		Wife	Mortgage S Street		$262,000.00
37		Wife	Loan to Mr and Mrs J		$220,000.00
TOTAL		$2,163,756.37

SUPERANNUATION

Member		Name of Fund	Type of Interest	Wife/de facto partner’s value
38	A	Bankers Trust	$6,397.62
39	G	Netwealth	$107,550.26
TOTAL		$113,947.88

.
  SUMMARY

Gross value of Assets	$3,013,490.37
Addbacks	$Nil
Liabilities	$2,163,756.37
Net Value of Assets	$849,734.00
Superannuation	$113,947.00
Net Assets plus Superannuation	$963,681.88

The Wife’s Evidence about Suburb H’s Value into the Future

1. The findings just described do not amount to a finding that the circumstances of the purchase of Suburb H are irrelevant or that the use of monies to which the husband may have been entitled is irrelevant in arriving at just and equitable orders.

2. It is important to record aspects of the wife’s evidence relating to Suburb H given under cross-examination in the later parts of the trial. It will be appreciated that the trial process spanned nearly 12 months during which, on any view of the evidence, significant renovation/construction was occurring at the Suburb H property and such work was funded by further borrowings which, it is repeated, the wife does not contend ought be shared by the husband. 

3. During her cross-examination on 16 November 2012, the wife stated that:

   §   The “bank valuation” is that, upon completion, the Suburb H property will be worth $2.7 million.  The wife said she could not remember the exact figure but was prepared to accept that it was $2.75 million.  (Exhibit “A9” is a bank valuation recording that figure as an “as if complete” valuation);

   §   That the wife “assumed” that the property “may sell for in excess of that figure”;

   §   That work on the property had “slowed down” when “the construction loan ran out” but the wife was “hoping to get it finished in the first half of next year” (i.e. 2013);

   §   That “the plan is to sell immediately”;

   §   The bank loan “goes to” “the end of May”.  (Exhibit “A8” is a letter of offer from the Bank that indicates the facility expires at the end of March 2013, but the wife contends, and I accept, the bank has extended to the end of May because of the difficulties with the Suburb H property caveat at settlement of the purchase);

4. The effect of that evidence, as I apprehend it, is that the wife will sell as soon as the renovation is complete which, she hopes, will be shortly after this judgment is delivered.  I am confident that the bank will take a significant interest in the property being sold expeditiously as a result of their exposure and the evidence of the end of the loan facility dictates as much.  The wife could legitimately hope for a selling price greater than the bank valuation but that, of course, depends upon market conditions and the like.

5. That same process of cross-examination by counsel for the husband reveals an approximate calculation of indebtedness in respect of the property.  The wife agreed that, at that time, she owed the bank some $1.9 million and that she intended to borrow another $200,000 – a total of $2.1 million and owed her mother a total of $276,000 and her partner Mr Q just short of $200,000.

Contributions

1. As has been seen, the parties commenced cohabitation in the middle of 2001 according to the husband and at the end of that year according to the wife. I prefer the evidence of the wife in that respect. The relationship subsisted, then, for about eight years. It is to be noted, however, that a period approaching half the length of the relationship extends between separation and the end of trial.

2. On any view, the wife owned the property at R Street at cohabitation. The property at S Street was purchased in the middle of 2001. That property was purchased and financed solely in the name of the wife which I consider to be a significant pointer consistent with her evidence that cohabitation commenced some six months later. That property was then, as I find, owned prior to cohabitation.

3. In paragraph 16 of her affidavit filed 2 December 2011, the wife deposes that in April 2002 (when the property at B Street 2002 was purchased) there was equity in the R Street and S Street properties of about $320,000. She puts this forward as the value of equity in the real property owned by her at the commencement of cohabitation. The husband submits as follows:

   Even if the values ascribed to both these properties by the respondent are accepted without any supporting evidence, the total value of the properties would be $730,000. Assuming the mortgage had been obtained in September 2001 of $522,000 remained constant, the respond’s net equity in these properties, would have been $730,000 minus $422,000, which equals $208,000 [sic – plainly the value should be $308,000]. It is submitted that this is the maximum amount which could constitute the respondent’s equity in both of those properties.

4. An alternative calculation is thereafter performed.

5. I repeat the comments made earlier in these reasons with respect to mathematical calculations in the context of property adjustment orders. I am content to find for the purposes of arriving at an assessment of contributions up to the point of separation that at the commencement of cohabitation, the wife owned two pieces of real property which together had a substantial amount of equity. I also find that those properties together formed the basis for future property transactions including providing cross-collateralised security for those transactions. There is in my view merit in the submission that the properties provided the “springboard” for the future property development which lay at the heart of the parties’ relationship which, as I have earlier said, seems to me to have involved the purchase of highly-geared property for the purpose of renovation and subsequent sale.

6. The husband contends that he contributed $20,000 towards the acquisition of the S Street property. I reject that evidence. I prefer the evidence of the wife. In that respect I note, in particular, that the alleged capital injection is not referred to in the husband’s Financial Questionnaire filed for the purposes of these proceedings, and nor is it deposed to at paragraph 7 of his affidavit that he had any savings at the commencement of the cohabitation.

7. At the commencement of the cohabitation, the husband owned a property at N Suburb in Queensland. He concedes that this property had no equity at that time. Otherwise the property of the parties or either of them consisted of motor vehicles and some superannuation interests.

8. Each of the parties contend for differing contributions made by them in the role of home-maker and parent and to the welfare of the family. I accept the evidence of the wife that she was the primary carer for the child during the course of the relationship in the sense of being the primary source of attending to his day to day needs. I accept that the husband contributed in that role.

9. The husband worked hard and in particular involved himself in a business which counsel for the wife describes in written submissions as “employment with some significant financial risks attached to it”, referring to the husband’s affidavit where he deposes that the P Street property was purchased in the wife’s name as “we wished to protect ourselves from any liability arising from my position in the Company.” In a similar vein, he deposes that the G Street property was placed into the wife’s name “for tax purposes and for protection against any liability as a result of my former involvement in a company.”

10. The husband’s employment with Y Pty Ltd continued for about four years (2003‑2007) after which time he sold his shares in that company and received a cash payment of $979,000 together with shares in the company that acquired Y Pty Ltd. There was a loan attached to the shares in the sum of about $136,000. As referred to earlier in these reasons, that loan was discharged at a later time. The husband deposes to what might be described as a performance-based level of remuneration with Y Pty Ltd. Plainly he worked hard during that employment and was successful.

11. The husband sold his property in Queensland for $191,000 and received about $33,000 less agent’s fees. That money was, he contends, contributed to joint expenses. When the interest in Y Pty Ltd was sold, it was sold to K Pty Ltd in which the husband received the shares earlier referred to. He continued to be employed by the latter company earning about $170,000 gross per year. Included with the employment was an option to purchase 200,000 shares with a $136,000 loan back to K Pty Ltd. The employment with K Pty Ltd ceased in July 2010 and the $136,000 became payable. Tax was payable on the transactions relating to the cessation sale of the husband’s interest in Y Pty Ltd.

12. There is no doubt that the husband earned, by way of regular salary income, more than the wife during the course of the relationship. The comparable taxable incomes of the parties taken from tax returns became Exhibit “A4”. This document shows a significantly greater taxable income earned by the husband when compared with the wife during the period 2002-2011.

    EXHIBIT “A4”

    COMPARABLE INCOMES OF PARTIES TAKEN FROM
    INCOME TAX RETURNS

    Husband  Wife

    $130,953  2011  $21,391

    $182,649  2010  -$40,996(L)

    $166,742  2009  $12,139

    $139,000  2008  $30,748

    $110,000  2007  $43,361

    $118,683  2006  $10,781

    2005  $10,236

    $69,656  2004

    $95,627  2003

    $75,419  2002

13. The wife deposes that property development during the period of the relationship returned “$1,240,606 in profit over the course of our relationship of which $873,056 was tax free”. This evidence was not challenged when the wife was in the witness box. I accept that evidence. Secondly, the wife deposes that significant tax deductions were, and are, available to her as a property developer and those deductions reflect in a lower taxable income for her when compared to that of the husband. Again this evidence was not challenged and again I accept it.

14. In essence the wife contends that she acts as the project manager for all of the real estate developments. I accept her evidence in that respect.

15. The husband makes assertions as to various contributions made by him in respect of work in and around the property. I accept that he did some work in and around the various properties bought by each of the parties, but not to the extent which he claims. I consider that the wife made a significantly greater contribution in that respect.

16. I accept that the wife was the “prime mover” in the choosing and development of the real property during the course of the relationship. In that respect I consider it by no means insignificant that the agreed budget which is Exhibit “E” to the affidavit of the husband attributes to the wife responsibility for the real properties post-separation. While the husband worked, I accept, extremely hard in a high risk business that produced significant gains for the parties, the wife worked hard in the development of real estate which was also productive of gain for the parties.

17. In summary, I have taken the following contributions into account in arriving at an assessment of contributions covering the period up to separation:

    ·   The wife made a significantly greater initial capital contribution.

    ·   The capital contribution made by the wife served as a “springboard” for initial future property transactions undertaken by the parties.

    ·   Each of the parties worked hard in their respective spheres – the wife as the Project Manager of real estate renovations and sales; the husband in the businesses of which he was General Manager.

    ·   The wife was the primary initiator of and instigator of real estate development by the parties.

    ·   The husband earned significantly greater income by way of salary than the wife, but the wife’s income as revealed in her tax returns does not represent “true available income” by reason of there being significant deductions available to her in and around her work as a developer.

    ·   Each party contributed financially to the relationship. The husband made a very significant capital contribution by reason of applying the net proceeds of sale of his interest in a business and subsequently shares, noting that taxation liabilities and a loan have been met.

    ·   The capital sum invested as a result of the husband’s employment and profits generated from earlier real estate transactions, allowed further real estate development by the parties.

    ·   The wife was the primary caregiver to the parties’ child, but the husband made contributions in that respect.

18. The parties to this relationship organised their financial lives such that each contributed to it in differing but interconnected ways.  The greater contributions of the wife to the welfare of the family permitted the husband to work hard and achieve as the General Manager of a company and, as a result to obtain an interest in it.  Fortuitously, that company was sold with a consequent windfall to the parties expressed in cash and shares.   The greater direct financial contributions by way of salary and the injection of the funds and shares received upon sale permitted the wife to take a role as the project manager for successful developments.  The capacity of the parties to invest in more valuable transactions over time arose from the initial capital contribution of the wife and the use of her real property, profits arising from successful renovations and sales and the later use of the capital arising from the husband’s employment (together, of course, with the parties’ respective efforts in their respective roles).

19. I find that the parties’ contributions to the point of separation are equal.

Post-Separation

1. The separation of the parties in this case effected a significant difference in the nature, form and characteristics of the contributions made by each of the parties subsequent to that time. In particular, as has been seen, the sale of the last of the properties forming a sequence of real estate developments undertaken by the parties produced the retirement of debt and equity. That equity and further borrowings was used to acquire the Suburb H property. That development occurred without the knowledge, or consent, of the husband. By reason of the findings earlier described, the husband can be seen to have had an entitlement to the equity used by the wife at the time of the commencement of the purchase and development of the Suburb H property.

2. It might be argued that the husband’s lack of participation in the decision to purchase the property and its development, including decisions with respect to borrowings and other costs incurred in that development, when combined with the length of time that the parties had been separated when the matter came on for trial, is productive of an argument that the Suburb H property ought be treated separately from other property when assessing contributions (see, for example, Zalewski and Zalewski (2005) FLC 93-241, per Finn J. As to the concept of having “two pools’, albeit in a different context, see, for example, Coghlan & Coghlan (2005) FLC 93-220). No such submission was made by either party. I do not consider it just and equitable to approach the task in that way.

3. The wife has made a greater direct contribution to the purchase and development of the Suburb H property in terms of labour and assumption of risk (albeit by reason of the fact that she has provided no opportunity to the husband to do so). Equity in the G Street proceeds to which the husband plainly had an entitlement were contributed. In the husband’s case, he had no control over that investment but he shares in it by reason of the Suburb H property being included as part of the property to be divided.

4. Otherwise, in the post-separation period, all of the matters discussed at some length earlier in these reasons with respect to the issue of addbacks, the incurring of expenditure by the wife and the amounts paid by the husband by way of child support and other expenses, are relevant in assessing the respective contributions of the parties, in particular, to the welfare of the family. I consider the wife has made a greater contribution in that respect. I note that the parties have effectively shared the care of the child with the wife caring for him eight nights per fortnight and the husband six. The husband spends time with the child during four one-week periods during the approximately 12 weeks of school holidays. The wife otherwise supports him. The level of child support paid by the husband is noted, as, too, is the lack of payments by him towards the child’s school fees.

Conclusion as to Contributions

1. It has been said that in the past, a comparison of the respective contribution of each of the parties, and an assessment of them, is made all the more difficult because, frequently, one is comparing apples with pears. That is all the more so in this case where the nature and form of the contributions made by each of the parties during the course of the relationship was different and where it has been very different in the post-separation period.

2. Taking all of the matters which I consider to be relevant in respect of contributions to which I have earlier referred, I consider that the contributions up to the date of separation might be seen as equal but, that the contributions in the post-separation period favour the wife.

3. The husband contends that contributions (expressed in percentage terms) should be assessed as 55-60 per cent to him and 40-45 per cent to the wife. The wife contends there should be “an adjustment in the [wife’s] favour on a contribution-based finding at 65%.” In my judgment, neither contention represents a just and equitable assessment of the contributions of each of the parties across the whole of their relationship up to the conclusion of the trial.

4. In my view, the contributions should be assessed as 52.5 per cent to the wife and 47.5 per cent to the husband.

Section 90SM(4)(e) – The Section 90SMF(3) Factors

1. The husband was aged 52 years at trial and the wife 47. The wife gives evidence of health difficulties experienced by her at the commencement of the relationship and other health issues suffered since.

2. It seems plain to me that the Suburb H property will need to be sold. The husband seeks to retain the B Street property. The orders proposed by the wife suggest a sale of that property and retention by her of the R Street and S Street properties. The wife’s orders also contemplate her retaining the Suburb H property. Obviously each of the parties’ proposed orders are based on the percentage divisions for which they each contend.

3. A division of the property in the proportions as found on an assessment of contributions is likely to see the property holdings of the parties altered whether by way of sale of a property or properties or the incurring of borrowings necessary to pay one party or the other their entitlement. The assessment of contributions applied to the net value of the property interests of the parties as found by me will see the parties with property valued in the region of $506,000 in respect of the wife and $458,000 in respect of the husband.

4. There is nothing to suggest that the husband will not continue to earn income at about the same level as he has been earning in the past. I note that the means by which he has been able to earn income in the past has been productive of him working within companies that produce for him significant benefits.

5. The wife’s evidence is silent as to her future plans. In a general sense, the implication is that she would continue to do that which she has done which is to attempt to acquire, renovate and sell property. Apart from that, she deposes to having a company “A Pty Ltd” which, at least at the commencement of cohabitation, “turned over $100,000 a year” “of which I received 10% net.” I assess each of the parties as having the capacity for effective gainful employment, although I assess the wife’s capacity for regular predictable future income as less than that of the husband. If she continues in her role as a developer she will have significant tax deductions available to reduce her taxable income.

6. The parties currently share the care of the child who is now approaching 11. The child spends six nights per fortnight with the husband and four one-week periods a year during the school holidays (coinciding with the husband’s annual leave). The mother cares for the child during the other periods of school holidays.

7. I have earlier referred to Exhibit “E” and the budget it outlines. Plainly enough those figures will change by reference to the orders made in these proceedings. I reiterate the evidence concerning the level of financial support provided by the husband in particular relating to school fees and the absence of any financial support in the twelve month period earlier referred to. I consider it likely that the mother will shoulder the greater share of the day-to-day and incidental costs associated with caring for the child and, not incidentally, the greater burden of paying for his school fees. In that respect I note that, at age 11, he has much of his (expensive) schooling ahead of him.

8. The standard of living of each of the parties will, in my view, be diminished from that which they enjoyed when together. However, each of them has re-partnered. In the wife’s case her partner has had the capacity to borrow and to lend to her a significant sum of money so as to complete the Suburb H renovation. The living circumstances of the husband have earlier been referred to. His partner has remunerative employment and has been living rent and board free in the B Street property. I accept the submission by Senior Counsel for the wife that Capital Gains Tax losses of approximately $380,000 which have accrued to the husband represent the potential for a significant future financial resource.

9. Counsel for the husband contends that the effective sole decision making and control over the Suburb H property and all of the borrowings and expenditure associated with it should be taken into account (presumably, although not stated, pursuant to s 90SF(3)(r)).

10. As has earlier been discussed, principle suggests that where the actions of one party result in unjust and inequitable consequences for the other party, adjustments can be made in the manner contended for by the husband.  Adjustments in the manner suggested have been rejected by me for the reasons given earlier.  An alternative means of dealing with any injustice is pursuant to s 90SF(3)(r).

11. It should be understood that not all unilateral actions of the type undertaken here by the wife are causative of ultimate inequity or injustice, despite the actions being perhaps capable of categorisation as “wrong” or occurring such that an atmosphere of “unfairness” attends them. As has often been said, complaints are uncommon when unilateral actions by one party are productive of significant potential benefit to the other party by adding to the value of the interests to be decided.  The first question to be asked in each case is whether there is in fact any inequity or injustice if the property at agreed value is divided.

12. The husband contends that injustice occurs in this case because he can point to a time not long after separation when the property dealings of the parties during the relationship can be seen to have come to a “natural conclusion” with the sale of G Street with the result that debt was retired and an amount of capital remained.

13. The point is again made that the actions of the wife have not resulted in money or property disappearing; they have resulted in the acquisition of real property included among that in which the husband is sharing.  Debt is included because it is productive of that property and because, otherwise it, together with net equity available from the sale of G Street, has met reasonable expenditure by the wife in the manner, and by reason of the comparative post-separation financial circumstances earlier found.  Moreover, the Suburb H property will be sold at today’s value, not at the value agreed for the purposes of the trial.

14. If, as is the case, the husband will share in Suburb H and its attendant debt in amounts certain (albeit different to current values of each) and cannot point to any “waste” or “recklessness” on the part of the wife in the expenditure and borrowings relating to Suburb H in respect of the value as agreed and the level of indebtedness at the value agreed – and in my view, he cannot – the issue becomes whether the fixing of a sum payable to him by reference to those values wreaks an injustice when the wife will sell Suburb H at a value not yet known.   Of course, significant additional expenditure has been made and borrowings supporting it which will need to be paid, but that has not been the subject of analysis in these proceedings.

15. Thus, as it seems to me, a potential injustice to the husband arises if Suburb H sells for significantly more than bank value (because he won’t share in any net increase beyond 27 February 2012 as reflected in Schedule “A”).  There is no evidence from which any confident conclusion can be drawn save that:

    §  The wife says she believes the property is worth more than bank value and hopes to achieve more upon sale;

    §  Finance will “run out” shortly after these reasons are delivered and the bank, all else being equal, will press for payment (although there is no evidence about the prospects of refinancing);

    §  The wife desires to keep Suburb H which, despite her evidence about a present intention to sell immediately, might be possible depending upon the orders arrived at by this Court;

    §  If sold, the price will depend upon market conditions.

16. The second potential basis for a conclusion of injustice to the husband results from him not having access to equity remaining after the sale of G Street. That might be expressed as resulting in a “loss of opportunity” to use the money other than the manner in which it was used unilaterally by the wife.  But, that argument depends upon the property proceedings being determined and an order being made at that time.  The determination of the financial landscape in which such an adjustment would have occurred at that time has not been undertaken in these proceedings.  Moreover, of course, the position of the wife may well have been different had a property settlement been effected then.

Conclusion as to s 90SF(3) Matters

1. Leaving aside the issue just canvassed, a consideration of the matters earlier discussed leads me to conclude that an adjustment might be made in favour of the wife.   However, the adjustment I would otherwise make should in my view be ameliorated to take account of the matters just addressed.

2. Taking into account all of the factors I consider that an adjustment of 2.5 per cent in favour of the wife is warranted overall.

Conclusion

1. As a result of the findings made for the reasons above, I conclude that the existing property interests of the parties should be adjusted and that they should be adjusted so as to effect division of the value of those interests as to 55 per cent to the wife and 45 per cent to the husband.

Justice and Equity of the Proposed Orders

1. Regard should be had to the means by which the property adjustment is to be effected. 

2. The effect of the proposed division can be examined by reference to the list of property and values, as found. 

3. I propose to order that the furniture be divided by agreement.  It is listed as a “joint” asset with a value of $20,000.  In order to calculate the entitlements, I have removed it from the list of assets.  

4. The husband seeks to retain the B Street property which is where he has resided for more than three years.  It is currently mortgage free.  I see no reason why he ought not receive that property.  He will need to raise and pay to the wife a relatively modest sum slightly in excess of $160,000.  The wife would retain the two real properties with which she entered the relationship.  Each is currently mortgaged but the sale of Suburb H (which the wife said will occur as soon as possible) should, all else being equal, extinguish the debts attached to those properties.  They currently earn rental income.

5. The sale of the Suburb H property will see the wife (and the child during the times he is with her) needing to find accommodation.   That would trouble me more but for the fact that shifting accommodation has in the past been part of the development of real properties by the parties.  It will also see the retirement of very significant debt.  The wife will effectively be in a similar position to that which she was consequent upon sale of G Street; significant debt will be retired and she will have the sum paid by the husband pursuant to the orders and any net gain from the sale of Suburb H.

6. I consider the orders just and equitable in all of the circumstances of the case.

7. I propose, then, to adjust the existing interests of the parties (or maintain them as the case may be) as follows:

DISTRIBUTION OF PROPERTY TABLE

Item	Asset	Wife	Husband
1	R Street	$415,000.00
2	S Street	$399,167.00
3	Suburb H Street	$1,425,000.00
4	Motor vehicle 1	$27,900.00
5	Commsec  CDIA (Shares)	$5930.64
6	B Street	$640,000.00
7	Motor vehicle 2	$68,000.00
8	K Pty Ltd Shares	$9307.35
9	Commsec	$14.90
10	Bank Accounts	$2,000.00
11	ING Bank	$1,170.00
Total	$2,267,067.00	$726,422.89
Add Superannuation	$6397.62	$107,550.26
Total Gross	$2,273,464.62	$833,973.15

Item	Liability	Wife	Husband
12	R Street	$204,000.00
13	S Street	$262,000.00
14	Mr and Mrs J	$220,000.00
15	CBA	$900,000.00
16	Renovation Loan	$140,000.00
17	Credit Cards (total)	$4,120.00
18	Parents	$126,000.00
19	Mother	$60,000.00
20	Tax	$174,970.62
21	Motor vehicle 2 lease	$68,000.00
22	Strata Levies	$4,665.75
Total	$1,916,120.00	$247,636.37

1. The total of the net property and superannuation interests is about $943,681.  The wife, then, is entitled to $519,025 and the husband is entitled to $424,657 (rounded).

PROPERTY ADJUSTMENT ORDER TABLE

Distribution	Wife	Husband
Net as per above	$357,344.62	$586,336.78
Cash Adjustment	$161,680.15	($161,680.15)
55:45 per cent	$519,024.77	$424,656.63

The Terms of the Orders

1. Minutes of Order previously promulgated by the parties reflect very different entitlements to those which I have ultimately arrived at.

2. It is appropriate to provide that the parties file agreed Minutes of Order within 21 days of the date of the delivery of these Reasons which such orders will reflect the distribution set out in the table above such that the orders will provide for the parties to do all such things and sign all such documents as might be necessary so as to:

   §  Transfer title and extinguish entitlement such that the wife receives title to the exclusion of any right, title or interest of the husband in the property listed at Items 1 to 4 inclusive of the above “Distribution of Property Table”;

   §  Transfer title and extinguish entitlement such that the husband receives title to the exclusion of any right, title or interest of the wife in the property listed at Items 5 to 11 inclusive of the above “Distribution of Property Table”;

   §  The wife assume sole responsibility for and indemnify the husband in respect of the debts listed at Items 12 to 19 inclusive of the above “Distribution of Property Table”;

   §  The husband assume sole responsibility for and indemnify the wife in respect of the debts listed at Items 20 to 22 inclusive of the above “Distribution of Property Table”;

   §  Each party retain their current superannuation interests to the exclusion of any right or claim by the other party;

   §  The furniture jointly owned by the parties be equally distributed between them by agreement;

   §   The husband raise within 42 days of the date of order or earlier agreed date, the sum of $161,680.15 and pay same to the wife within that time contemporaneously with the transfers and indemnities provided for;

   §  Such further or other orders as might be agreed in writing between the parties giving effect to these reasons.

3. Orders will be made to give effect to the conclusions and process required by reference to these reasons.  

I certify that the preceding one hundred and seventy-nine (179) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 19 April 2013.

Associate:

Date:  19 April 2013