BENNISON & BENNISON
[2015] FamCA 243
•13 April 2015
FAMILY COURT OF AUSTRALIA
| BENNISON & BENNISON | [2015] FamCA 243 |
| FAMILY LAW – PROPERTY – Final – Adjustment to existing property interests pursuant to s 79 – Where a schedule of assets, liabilities, add backs and superannuation is compiled for the purpose of the s 79(4) assessment process – Where re-opening of evidence was necessary in the interests of justice – Whether there should be an adjustment under s 75(2) – Where the husband is terminally ill– Where it is alleged by the wife that the husband has undisclosed sources of income – Where there has been a deliberate failure on the part of the husband to make full and frank disclosure –– Where the sale proceeds of assets sold post-separation are brought back into the divisible pool of property on a notional basis – Circumstances justifying the notional add back of assets to the divisible pool of property – Where it is not possible to quantify in dollar terms the value or amount of the initial contributions made by the husband on the evidence before the Court – Where a single pool approach is appropriate given that neither party sought a different percentage division for superannuation and FAMILY LAW – CHILD SUPPORT – Application for departure from administrative assessment – Where the husband is willing to meet payment of the children’s private school fees and associated expenses – Where the Court is not satisfied that a departure otherwise from the administrative assessment under s 117(2) would be just and equitable. |
| Child Support (Assessment) Act 1989 (Cth) Family Law Rules 2004 (Cth) |
| Aleksovski v Aleksovski (1996) FLC 92-705 |
| APPLICANT: | Mr P Bennison |
| RESPONDENT: | Ms J Bennison |
| FILE NUMBER: | BRC | 338 | of | 2011 |
| DATE DELIVERED: | 13 April 2015 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Kent J |
| HEARING DATE: | 19, 20, 21 March 2013; 5 April 2013; 15 July 2013 and 12 August 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Hackett |
| SOLICITOR FOR THE APPLICANT: | Hirst & Co |
| COUNSEL FOR THE RESPONDENT: | Mr Wilson QC |
| SOLICITOR FOR THE RESPONDENT: | Phillips Family Law |
Orders
It is ordered that:
K Street Property
Within thirty (30) days of the date of these Orders:
(a)The Husband and Wife do all things and sign all documents necessary to transfer the Husband’s right, title and interest in the Suburb J property (being the property located at K Street, Suburb J in the State of Queensland, more particularly described as Lot … RP … Parish of Tingalpa County of Stanley) to the Wife’s sole name;
(b)The Husband transfer to the Wife all of his right, title and interest in and to any insurance policies in respect of the Suburb J property;
(c)The Husband, at his expense, cause the first registered mortgage in favour of Westpac Banking Corporation registered over the Suburb J property, being mortgage number …, to be discharged and released from the Suburb J property such that the Wife is the registered owner of the Suburb J property without mortgage.
Pending the transfer of the Suburb J property pursuant to paragraph 1:
(a) The Wife has the sole right to occupy the Suburb J property;
(b) The Husband is responsible for the payment of all moneys due and owing to Westpac Banking Corporation in respect of registered mortgage number …;
(c) The Husband is restrained and an injunction issue restraining the Husband from borrowing any further money against the security of the Suburb J property;
(d)The Wife is solely liable for the following outgoings on the Suburb J property:
(i)all rates and water expenses;
(ii)any land tax;
(iii)the cost of all reasonably necessary repairs and maintenance to
the structures and or buildings;
(iv)the premiums for the continuation of current insurance policies;
(v)utility expenses including but not limited to gas, electricity and
telephone usage.
The Bennison Group
In these Orders “the Bennison Group” means:
(a) F Pty Ltd;
(b) G Pty Ltd;
(c) CC Pty Ltd;
(d) DD Pty Ltd;
(e) The I Property Unit Trust;
(f) L Pty Ltd; and
(g) The Bennison Family Trust.
On or before a date sixty (60) days from the date of these Orders, the Wife shall convey to the Husband (and in the event of his death, his legal personal representative) all and any interests of the Wife in the settlement known as the Bennison Family Trust including but not limited to:
(a) Any loan account with the Bennison Family Trust;
(b) Any interest arising as a taker in default of either income or capital arising under the Deed of Trust of the Bennison Family Trust; and
(c) Relinquishing and foregoing any powers conferred upon the Wife by the Deed of Trust of the Bennison Family Trust.
On or before a date sixty (60) days from the date of these Orders, the Wife shall transfer to the Husband, or to his nominee as directed by him, her interests as a shareholder in any of the companies in the Bennison Group, provided that the Husband shall prepare any documents required to do so at his expense.
On or before a date sixty (60) days from the date of these Orders, the Wife shall do all things necessary to resign from any office she holds in any company in the Bennison Group, including any office as Director or Secretary.
Save to the extent referred to elsewhere in these Orders, the Wife shall be permanently restrained from doing any act or thing with respect to any company or trust in the Bennison Group, or bringing any action, cause or claim whatsoever against any company or trust in the Bennison Group, and further be restrained from taking any step or doing any act or thing in purported reliance upon any right or power conferred upon her under Deed of Trust of the Bennison Family Superannuation Fund.
The Husband shall indemnify the Wife and keep her indemnified in respect of any claims, demands, liabilities or debts of whatsoever nature as may exist or arise in respect of the Wife’s involvement as a Director, shareholder, borrower or otherwise in the Bennison Group, including any tax which might be assessed (of an income, capital or penalty nature) on dividends, distributions or other benefits of whatsoever nature purporting to come from any of the Bennison Group which have not been paid directly to the Wife (payment in this context does not include entries made in books of account, journal or otherwise).
The Husband shall use his best endeavours to release the Wife from all and any guarantees given by her alone or jointly with others in relation to the activities, operations, property or otherwise of the Bennison Group, or any property or other interest retained by the Husband pursuant to this agreement, and in the event that such guarantees are not released, the Husband shall indemnify the Wife and keep her indemnified in respect of any claim relating thereto with such indemnity being intended to include costs (legal and otherwise), interest and other charges for which she may be liable/and incur in dealing with any such claim.
The Bennison Superannuation Fund
Within seven (7) days of these Orders the Wife shall pay $51,745.31 to the Bennison Superannuation Fund.
Following the payment by the Wife pursuant to paragraph 9, the Husband and Wife will jointly do all things and sign all documents necessary to:
(a)Instruct Z Accountants to prepare an updated balance sheet for the Bennison Superannuation Fund to determine the member balances for each of the Husband and Wife, and to calculate the outstanding and anticipated liabilities, taxes and costs, if any, of the Bennison Superannuation Fund;
(b) Set aside any amount representing the outstanding and anticipated liabilities, taxes and costs, if any, of the Bennison Superannuation Fund;
(c) Cause the Wife’s membership entitlement from the Bennison Superannuation Fund to be rolled out to her separate account, in another complying superannuation fund nominated by her;
(d) Following that setting aside of funds and roll out of the Wife’s entitlement, cause the balance of the assets in the Bennison Superannuation Fund representing the Husband’s membership entitlement, to be rolled out from that Fund to another complying superannuation fund nominated by him.
Following the roll out of their membership interests in the Bennison Superannuation Fund, the Husband and Wife will do all things and sign all documents necessary to:
(a) Cause the Bennison Superannuation Fund to pay all of its outstanding and anticipated liabilities, taxes and costs; and
(b) Cause the Bennison Superannuation Fund to be wound up.
For the purpose of complying with these Orders, the Husband and Wife are to jointly instruct the accountant for the Bennison Superannuation Fund, Z Accountants, in writing only and neither party shall unilaterally communicate with the accountant for the Fund in respect of the implementation of these Orders without the consent in writing of the other party.
KK Pty Ltd
The Wife shall assign to the Husband her interest in the investment held by the parties with KK Pty Ltd, and shall do all things and sign all documents to enable that to occur.
The Husband shall indemnify the Wife against any liability to KK Pty Ltd or to UBS in respect of the investment, and shall meet all obligations, including the payment of interest, associated with the investment and any borrowings associated therewith.
The Townsend Superannuation Fund
Paragraphs 16 to 18 (inclusive) of these Orders are binding on the Trustee of the Townsend Superannuation Fund (“the Fund”).
The Court allocates as required by s 90MT(4) of the Family Law Act 1975 (Cth) a base amount of $178,000.00 to the Husband, Mr P Bennison, out of the interest of the Wife, Ms J Townsend, in the Townsend Superannuation Fund.
Pursuant to s 90MT(1)(a) of the Family Law Act 1975 (Cth), whenever the Trustee of the Wife’s account (“the Wife’s account”) makes a splittable payment under the Wife’s interest in the Wife’s account, the Trustee will:
(a) Pay to the Husband or his legal personal representatives, the entitlement calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
(b) Make a corresponding reduction to the entitlement to the person to whom the splittable payment would have been made but for this Order.
Paragraph 16 of this Order has effect from the operative time and the operative time is the date of this Order.
The Wife direct and authorise the Trustee of the Fund to communicate with the Husband and/or any person authorised by him in writing:
(a) To answer any reasonable inquiries as may be made by his or on his behalf from time to time in relation to her entitlement in the Fund; and
(b) To provide to the husband and/or his authorised representative with a copy of any notice of any application or request by the Wife which seeks release of entitlements in the Fund insofar as that release may affect the Husband’s entitlement in the Fund pursuant to these Orders.
The Wife by herself, her servants and/or agents be and hereby are restrained from doing any act or thing which would prevent the Husband, his heirs, executors, administrators or nominees from receiving the benefits in the Fund to which he is entitled pursuant to these Orders.
In the event that the superannuation split to the Husband pursuant to these Orders can be rolled over into a separate account to the Husband in another complying superannuation fund nominated by him, each of the parties do all such acts and things and execute all such documents as may be necessary to facilitate and to implement that rollover.
Property to be Retained
The Wife retain absolutely and without further claim by the Husband:
(a) The former matrimonial home situated at K Street, Suburb J;
(b)The proceeds of the sale of property at EE Street, Suburb FF received by the Wife;
(c) Her European motor vehicle;
(d) Her cash at bank;
(e) The furniture and contents located in the K Street property;
(f) Her jewellery;
(g) The partial property settlement (from sale of Suburb M property);
(h) The proceeds of sale of the Wife’s share portfolio;
(i) The proceeds of sale of the Wife’s diamond ring;
(j) The monies paid to the Wife pursuant to Order of Justice Kent dated 25 January 2013;
(k) The amount expended by her on legal costs; and
(l) The loan owing to Bennison Superannuation Fund (until discharged).
The Husband retain absolutely and without further claim by the Wife:
(a) His cash at bank;
(b) The proceeds of sale of property at GG Street, Suburb Q;
(c) The proceeds of sale of property at Suburb T;
(d) The property at HH Street, II Town;
(e) The 30 per cent interest in JJ Pty Ltd;
(f) The Bennison Group;
(g) The KK Pty Ltd share fund;
(h) His cash at bank;
(i) The partial property settlement (from sale of Suburb M property);
(j) The proceeds of sale of the boat;
(k) The proceeds of sale of the motorcycle;
(l) Any monies withdrawn by the Husband from the Bennison Group;
(m) The furniture and contents in his possession;
(n) The amount expended by him on legal costs;
(o) The loan re: monies paid to the Wife pursuant to Order of Justice Kent dated 25 January 2013; and
(p) Any loans owing to the Husband.
From the date of these Orders, unless otherwise specified in these Orders:
(a) Each party will be solely entitled to the exclusion of the other to all property and/or financial resources in the possession of such party as at the date of these Orders including but not limited to any jewellery, furniture, furnishings, appliances, shares, motor vehicles, debtors, choses-in-action and any other property and/or financial resources, whether realty or personalty, wheresoever situate and/or of whatsoever kind presently in the possession of or registered in the name of that party;
(b) Monies standing to the credit of the parties in any bank account standing in their sole name as at the date of these Orders will be the property of the party in whose name such bank account is held;
(c) Each party will be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders;
(d) The parties will be and remain solely responsible for each and every debt/liability standing in their separate names respectively as at the date of these Orders, including but not limited to credit card liabilities and debts owing to the Australian Taxation Office, and indemnify the other party and hold them harmless in relation to any such debt/liability.
Indemnities
From the date of these Orders, the Wife shall be solely responsible for and indemnify the Husband and keep him indemnified in relation to all credit card liabilities incurred on accounts in her own name.
From the date of these Orders, the Husband shall be solely responsible for and indemnify the Wife in relation to all credit card liabilities incurred on accounts in his own name.
Furniture and Chattels
Within thirty (30) days of the date of these Orders the Wife cause to be made available to the Husband or his nominee for collection any of the following items still remaining in her possession, power or control:
(a) The sports memorabilia located in the pool room of the former matrimonial home;
(b) The safe and any contents relating to the Husband and/or his family’s historical documents;
(c) A pool cue gifted to the Husband by a person named Mr LL;
(d) Two canvas portraits of the children (one of each child); and
(e) The red, white and blue glass vase.
Miscellaneous Orders
The parties comply with all requisitions issued by the Office of State Revenue in relation to any document executed or transaction entered into pursuant to, or to put into effect, by these Orders. In default of either of the parties complying with any requisitions so issued within fourteen (14) days of the date upon which any requisition issues, the party not in default shall be entitled to comply with any of the outstanding requisitions and recovery from the other party in default, the costs and outlays incurred in complying with the requisition; such costs to be calculated in accordance with the Family Law Rules 2004.
In the event that any party to these Orders refuses or neglects to comply with any or all of the provisions of these Orders, the Registrar or a Deputy Registrar of the Family Court of Australia at Brisbane is hereby appointed, pursuant to s 106A of the Family Law Act 1975 (Cth), to execute all deeds and documents in the name of the Husband and/or the Wife and to do all acts and things necessary to give validity and operation to these Orders.
Unless otherwise specified in these Orders and save for the purposes of enforcing any monies due under these or any subsequent Orders:
(a) Each party be solely entitled to the exclusion of the other party to all property (including choses-in-action in the possession of such party as at the date of these Orders);
(b) Insurance policies remain the sole property of the owner named therein;
(c) Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders.
Child Support Departure
Pursuant to Part 7, Division 4 of the Child Support (Assessment) Act 1989 there be a departure from the administrative assessment:
(a) For the period from the date of the final Orders until the date of the Husband’s death, of child support payable by Mr P Bennison to Ms J Bennison for the child, B born … 2001;
(b) For the period from the date of the final Orders until the date of the Husband’s death, of child support payable by Mr P Bennison to Ms J Bennison for the child, C born … 2005.
In lieu of assessed child support the Husband pay the private school expenses and associated expenses relating to the private school attended by each of the children.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Bennison & Bennison 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 BRISBANE |
FILE NUMBER: BRC 338 of 2011
| Mr P Bennison |
Applicant
And
| Ms J Bennison |
Respondent
REASONS FOR JUDGMENT
Mr P Bennison (“the husband”) and Ms J Bennison (“the wife”) are in dispute as to the orders that ought be made:
a)in property settlement proceedings pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”); and
b)in the wife’s application for a departure order pursuant to ss 117, 118 and 123 of the Child Support (Assessment) Act 1989 (Cth) (“the Child Support Act”).
The parties commenced cohabitation in 1996. They married in 1998 and finally separated on 29 March 2010 ending a cohabitation of about 14 years. They divorced on 25 October 2011.
The husband, currently aged 59 years, was approximately 40 years of age when cohabitation commenced and then had one, now adult child Ms K then aged approximately eight years, from a previous relationship who did not live primarily with him.
The wife, currently aged 43 years, was approximately 25 years of age when cohabitation commenced and had two sons, Mr N Pearce and Mr O Pearce, who were then aged approximately eight and five years respectively.[1] Those two boys were in the care of the wife, and were thus part of the parties’ household for most of their relationship; and looked to the parties for their financial support during that period.
[1] The wife acknowledged in oral evidence that her affidavit was incorrect as to the ages of her sons when cohabitation commenced.
The parties’ marriage produced two children, B born in 2001 who is 13 years of age and C born in 2005 who will soon turn 10 years of age. Final parenting orders were made by consent in the then Federal Magistrates Court on 22 November 2011 which provided, inter alia, that the parents have equal shared parental responsibility for the children; and that the children live with the parents on a week-about basis and spend half of each school holiday period with each parent.
The husband has not re-partnered since separation in March 2010 when he vacated the former matrimonial home. The wife has re-partnered with Mr Townsend and they married in 2013 and have two children of their relationship, R born in 2011, now four years of age and S born in 2012, who is three years of age. The wife, Mr Townsend and their children continue to reside in the former matrimonial home of the parties at Suburb J which the parties own jointly and, as noted, the children of the marriage live in that household on a week-about basis.
The process that occurred with respect to the trial of these proceedings is outlined further below but where necessary for convenience the trial heard on 19, 20 and 21 March 2013 and 5 April 2013; together with the further hearing on 15 July 2013 (with written submissions in August 2013) is collectively referred to in these reasons as the first stage of trial and the re-opening of the evidence that occurred in August 2014 is referred to as the second stage of trial.
Disparity between the parties of capital contributed to the relationship and how that disparity ought to be weighed in the contributions assessment is in issue. Whilst the wife accepts that the husband brought to the relationship either at its commencement or thereafter significant business and property interests, the extent of that is disputed. As will be discussed the wife’s contribution of capital was modest.
At the commencement of the relationship the husband owned and operated a business “F Pty Ltd” (“the business”). The wife was employed in that business when the parties commenced living together in 1996. The wife continued to work in various positions in the business, from service, then sales and then in an administrative role before reducing her employment to a part-time role following the birth of the parties’ first son in October 2001. There is dispute between the parties as to when it was that the wife permanently ceased working in the business. The husband’s contention is that the wife ceased her involvement shortly before their second son was born in 2005 although it was clear from his evidence on 12 August 2014 that the wife continued to be responsible for some administrative matters such as superannuation fund issues well beyond April 2005. The wife contends that she continued to work in the business until 2008.
During the relationship and as at the time of the parties’ separation on 29 March 2010, the husband derived income from a group of companies and trusts conveniently referred to as “the Bennison Group”. The Bennison Group included:
·F Pty Ltd;
·G Pty Ltd;
·CC Pty Ltd;
·DD Pty Ltd as Trustee for the I Property Unit Trust;
·An interest in L Pty Ltd;
·H Pty Ltd; and
·The Bennison Family Trust.
As at separation CC Pty Ltd was the trustee of the Bennison Family Trust.
As at the first stage of trial CC Pty Ltd owned:
·50 per cent of the shares in F Pty Ltd;
·50 per cent of the shares in G Pty Ltd;
·50 per cent of the units in the I Property Unit Trust;
·50 per cent of the shares in L Pty Ltd; and
·25 per cent of the shares in the H Pty Ltd.
As at the first stage of trial G Pty Ltd and H Pty Ltd had ceased to trade. The property owned by DD Pty Ltd as Trustee of the I Property Unit Trust had been sold, with the entire proceeds used to pay down debt.
In October 2013 the husband borrowed funds from his superannuation fund to purchase his former business partner, Mr MM’s 50 per cent interest in each of F Pty Ltd and G Pty Ltd, for $475,000.00.
Aside from the issue of whether the husband’s remaining debt to his superannuation fund for that acquisition is to be accounted for at $200,000.00 (as the wife contends) or whether the full initial borrowing of $475,000.00 is to be brought to account (as the husband contends); a central issue in the trial (at both the first stage and the second stage) relates to the funds available to and used by the husband from the Bennison Group in the post-separation period. Associated with that is the wife’s contention that the husband must have undisclosed sources of income which he has used for his sole benefit in the post-separation period.
In summary and in paraphrased form a substantial part of the wife’s case focused upon the following related contentions concerning the husband and the Bennison Group:
a)the husband has controlled the Bennison Group from separation to the exclusion of the wife and has used the assets of the Bennison Group as if they were his own;
b)
the husband has failed to make full and true disclosure in relation to the Bennison Group and as to the income available to the husband
post-separation or income available to the Bennison Group;
c)the husband has had the benefit of significant income sourced to the Bennison Group in the post-separation period;
d)numerous transactions by the husband are unexplained by his failure to make full and true disclosure and failure to provide information and the husband’s use of funds ought be the subject of notional adding back to the divisible pool and/or form the basis for application of the principles established in cases such as Black and Kellner (1992) FLC 92-287 and Weir and Weir (1993) FLC 92-338.
For reasons discussed later, I did not find the husband to be a convincing witness.
Throughout the relationship the husband and wife were engaged in the buying and selling of real estate. There was also, as will be discussed, the development of property the husband brought to the relationship and that development of property involved also property inherited by the husband from his mother after the parties’ cohabitation had commenced.
The parties give opposing accounts as to the nature and extent of the wife’s contribution resulting in profits made from property transactions during the relationship. To the extent that these were funded via the Bennison Group the parties have competing versions as to the duration and nature of the wife’s involvement in the Bennison Group; and similarly differ as to the extent of the wife’s involvement in the property development of townhouses constructed on property brought to the relationship by the husband combined with property inherited from his mother; which development was financially successful. They are also apart on which of them funded some of the property transactions.
It is not disputed that throughout their relationship the husband provided financial support for the wife’s two children from her previous relationship, Mr N Pearce and Mr O Pearce, but the parties are at odds as to the extent of that and its consequences in terms of the extent to which that factor ought impact the outcome of property settlement orders.
As will be discussed, as at the second stage of trial the husband had been diagnosed with a terminal illness and a dramatically reduced life expectancy. The wife sought a s 75(2) adjustment being made in her favour on that basis. The husband disputed any basis for such an adjustment by reason of this factor primarily on the basis of the financial provisions he has put in place for the children of the marriage to take effect upon his death.
Trial proceedings
The trial of these proceedings was initially heard over four days on 19, 20 and 21 March 2013 and 5 April 2013.
An issue foreshadowed at the outset of the trial was the proper value of the parties’ self-managed superannuation fund known as the Bennison Superannuation Fund (“the Fund”). Specifically, the husband took issue with the single expert’s evidence of value of the main asset of the Fund being the real property situated at V Street, Suburb W (“the Suburb W property”). The single expert’s report was received by the parties only shortly before the trial was to commence and the husband had sought evidence in relation to a sale relied upon by the single expert as a comparable sale to support the single expert’s opinion of value (evidence directing to establish it was not a comparable sale); and from a potential adversarial expert valuer.
The difference was substantial in that the single expert opined that the Suburb W property was worth $2.9 million whilst the expert retained by the husband had opined that the property was worth $2.2 million.
In the course of the trial this issue was obviated by the parties reaching agreement that the Suburb W property would have to be sold to facilitate property settlement. Obviously, it was envisaged that sale would result in the market determining the proper value of the Suburb W property.
Thus on 17 April 2013 interim property orders were made (amended in an immaterial particular on 24 April 2013) for, inter alia, sale of the Suburb W property; and subsequent rolling out of the parties’ membership interests in the Fund, and its winding up. In the result the Suburb W property was sold on 26 June 2013 at a sale price of $2.65 million and the other interim orders referred to took effect from that sale.
As already noted a central issue at the trial centred upon the wife’s related contentions concerning alleged non-disclosure by the husband; substantial funds available to, and used solely by the husband which the wife contended in some respects was unexplained; and consequent amounts or items the wife sought to have notionally added back to the “pool” for adjustment; and/or which were the basis for an adjustment she contended for in her favour under s 75(2) of the Act.
As at the trial’s conclusion to that point in April 2013 it was contemplated by counsel for each party in final submissions that an agreed schedule would be subsequently provided to the Court detailing the differences between the parties as to the funds available to the husband in the post-separation period and the use made of those funds.
Another issue at the first stage of trial concerned the husband’s historical health difficulties, particularly in relation to his cardiac history. The husband’s history of coronary disease and episodes of heart failure (and surgical interventions for this condition) dated back to 2004. The husband had also had a diagnosis of diabetes and lymphocytic leukaemia.
Subsequent to the time of trial submissions made by counsel for each party on 5 April 2013, the husband suffered a further myocardial infarction requiring surgical intervention. Further, the task of compiling the schedule setting out competing contentions as to the husband’s income and expenditure post-separation concerning the issue of add backs was, it seems, more complicated or required more detail than might have been first contemplated.
Thus it was that the proceedings were re-listed to be heard on 15 July 2013. On that date further material was tendered in evidence including:
a)an extract from the single expert accounting report with handwritten adjustments incorporating the sale figure for the Suburb W property, together with a copy of the sale contract (Exhibit 35);
b)a report of the husband’s treating cardiologist Dr NN dated 18 June 2013 was admitted subject to counsel for the wife having the opportunity to cross-examine Dr NN (Exhibit 36); and
c)a series of tables or schedules setting out the parties’ competing submissions as to the amount of the husband’s post-separation income and expenditure (relevant to the wife’s case concerning notional add backs) (Exhibit 37); as well as the husband’s prior financial statements filed in the proceedings (Exhibit 38).
Dr NN was not available to be cross-examined on 15 July 2013 as was sought by the wife and the proceedings were adjourned to allow for arrangements to be made to have the doctor available for that purpose.
In the result the parties, via correspondence with Dr NN, were able to obtain the doctor’s further opinions so as to obviate any need for counsel for the wife to cross-examine the doctor; but the parties sought to address further submissions in the light of Dr NN’s evidence. The correspondence referred to comprises Exhibit 39 and the further submissions of each party were filed under an agreed timetable expiring on 1 August 2013.
In summary, those further submissions were directed primarily to the husband’s life expectancy, by reason of his history of cardiac problems; with the wife contending for, and the husband opposing, an adjustment in the wife’s favour pursuant to s 75(2) of the Act referable to that.
As at May 2014, given my inordinate delay in delivering judgment to that point following the further submissions in August 2013 referred to, it may have been necessary in any event to allow the parties an opportunity, before judgment was delivered, to address any relevant events or material changes in their respective financial circumstances.
However, on 26 May 2014 the husband filed an application to re-open the evidence primarily because by then his treating oncologist had made a diagnosis that the husband was suffering malignant melanoma which was terminal; and had opined that the husband’s prognosis was poor by reference to a median survival rate of less than 12 months for such a condition.
Aside from the husband’s health situation, the other significant changes in financial circumstances that had occurred included:
·The interim orders of 24 April 2013 with respect to the Bennison Superannuation Fund had been complied with – the property at V Street, Suburb W, had been sold on 26 July 2013 and the parties’ respective interests in the Fund had been rolled out in August 2013. At the time of the roll out the husband had an interest of $2,137,390.30 and the wife had an interest of $605,340.99.
·The wife and her parents had sold their jointly owned property at EE Street, Suburb FF on 5 August 2013, and the wife had received approximately $260,000.00 from that sale and held that amount in a bank account.
·On 26 August 2013 the husband sold a property at OO Street, Suburb T for $211,000.00 receiving net proceeds of $202,151.49.
·The husband had purchased his former business partner’s (Mr MM) 50 per cent interest in F Pty Ltd and G Pty Ltd for $475,000.00 in October 2013 using funds borrowed from his superannuation fund.
·
The husband had sold the property he had acquired post-separation at GG Street, Suburb Q, which sold on 18 December 2013 for
$1. 26 million. The husband applied the proceeds to sales commission and to discharge of the mortgage on the property.
·On 10 March 2014 the husband had acquired a 30 per cent interest in what is described as a business known as JJ Pty Ltd. The husband asserted it was acquired for $350,000.00 but as will be discussed below the wife contended that $450,000.00 was paid for the interest.
·On 23 March 2014 the husband had purchased a property at HH Street, II Town, for $440,000.00 using part of the proceeds of sale from the Suburb Q property and had made provisions by his will for this property to be left to his three children, Ms K and the two children of this marriage.
·On 28 March 2014 the husband had caused G Pty Ltd to acquire the property at V Street, Suburb W for $2.19 million. The property was to be held by that company as trustee until a debt owing to Westpac was retired upon which the property was to be transferred to the husband’s self-managed superannuation fund I Superannuation Fund.
·On 23 May 2014 the husband had lodged a document in the Titles Office to sever the joint tenancy with the wife with respect to the former matrimonial home at K Street, Suburb J.
The application for re-opening was heard on 6 June 2014. The wife did not oppose the application and indeed by her response also sought that the evidence of subsequent transactions be received. The combined effect of the husband’s health issues and the changes in financial circumstances referred to rendered the conclusion that there could not be any doubt that it was in accordance with the fundamental principle of the interests of justice being better served, to allow the re-opening in the circumstances. The new evidence was material such that the interests of justice required its admission; and it could be concluded that the new evidence would most probably affect the result of the trial. The further evidence as to changes in financial circumstances was not disputed and was not controversial, save in respect of those areas that will be discussed. (See Gelley & Gelley (No. 1) (1992) FLC 92-290 and Stephens & Stephens (2009) FLC 93-425).
Orders were made on 6 June 2014 for the parties to have leave to re-open the evidence and directions were made for the further hearing. The parties were given leave, by that order, to re-open the evidence to update each party’s financial position and to provide evidence as to any significant change in the parties’ financial position (including as to the sale or disposal or acquisition of any asset, liability or financial resource) in the period between the trial in March 2013 and the re-opening. The husband had leave to re-open the evidence in respect of his health.
For a number of reasons including the capacity of the Court to provide dates; and that the husband had arranged to take the children of the marriage overseas for a month or so; the further hearing was not set down until 12 August 2014.
Thus it was that on 12 August 2014 the evidence was re-opened to include not only the evidence concerning the husband’s health condition but to also include relevant events, in terms of changes of financial circumstances of each party, in the intervening period as outlined above.
Just and equitable requirement – s 79(2) and notional add backs
As at the first stage of trial the husband contended for orders involving a sale of the former matrimonial home and an overall 80 per cent/20 per cent apportionment in his favour of that which he contended to be the pool of property interests of the parties or either of them, including some adjustments within that pool for notional add backs.
The husband opposed the wife’s application for a child support departure order on the grounds that there existed no special circumstances warranting a departure from the administrative assessment. However, by the conclusion of the trial proceedings it was the husband’s position that he would be prepared to pay all of the children’s private school fees and associated expenses provided he otherwise did not have to pay child support to the wife. It did not seem to be in issue that payment of private school fees and associated education expenses would involve approximately $40,000.00 per annum.
As at the second stage of trial the husband sought orders largely in conformity with those sought at the first stage of trial, that is, he still contended for an 80 per cent/20 per cent apportionment in his favour, with some adjustments to his position in light of the parties’ updated financial circumstances. The main difference in the husband’s proposed orders as at the second stage of trial was that he sought to retain the former matrimonial home by an order transferring the wife’s interest in that property to him, rather than orders for sale of that property being made as he had previously contended for.
It was not in issue as at the second stage of trial that the husband had executed a new will providing for the bulk of his estate to go into testamentary trusts to be established on the husband’s death to provide for the maintenance and education of the children of the marriage. The husband also provided evidence of execution of a binding death benefit nomination with respect to his
self-managed superannuation fund, the I Superannuation Fund in favour of the testamentary trusts for the children of the marriage.
As at the first stage of trial in April 2013, it was the wife’s contention that the contributions based entitlement of the parties ought be assessed at 65 per cent/35 per cent in favour of the husband and that there ought be a 5 per cent adjustment in the wife’s favour for s 75(2) factors producing an overall 60 per cent/40 per cent apportionment in favour of the husband, of the pool for which the wife contended which included notional add backs.
Following the husband’s further cardiac problems and the evidence of Dr NN referred to, the wife contended as at July/August 2013 that 10 per cent, rather than 5 per cent, was the appropriate s 75(2) adjustment in her favour or, in summary, an overall 55 per cent/45 per cent apportionment in favour of the husband of the pool for which she contended.
The “pool” initially contended for by the wife included a significant number and amount of notional items to be “added back” to the divisible pool for the purposes of adjustment. As reflected in the wife’s written submissions filed on 4 April 2013 the “add backs” overall for which she then contended, in a variety of categories including legal fees paid by both parties, totalled in excess of $1.77 million.
As at the hearing on 15 July 2013, by reference to Exhibit 37, the wife reduced her claim for notional add backs to $1,218,993.50 mainly referrable to, on her case, the difference between the total of income received by the husband and the expenditure he had accounted for in the post-separation period. Within that income were proceeds of sale of certain assets sold post-separation.
As at the conclusion of the second stage of trial the wife contended for the notional add backs set out in the schedule discussed below, significantly different in overall amount to her earlier contentions. However, the wife contended for a 50 per cent/50 per cent apportionment of the pool for which she contended with something in the order of 5 per cent of that being referrable to an adjustment for the husband’s alleged non-disclosure.
Included within the following discussion and reflected in a schedule set out below are the findings made as to the existing legal and equitable interests of the parties in property.
As noted, each party seeks orders for adjustment of existing property interests pursuant to s 79 and in doing so advance the contention that it would be just and equitable for such orders to be made. That is unsurprising in the circumstances of this case. As referred to by the High Court in Stanford v Stanford (2012) 247 CLR 108 (“Stanford”) at [42] these parties ended their marital relationship by choice and thus their common use of property, and the express and implicit assumptions which underpinned their property arrangements prior to that, also then ended. I am satisfied, from the starting point of having regard to the parties’ existing legal and equitable interests in property as set out below, that the just and equitable requirement in s 79(2) for the making of orders under s 79 is met.
In approaching the s 79(4) assessment and adjustment process I propose to adopt the approach taken by counsel for each party of compiling a schedule of assets, liabilities and financial resources for the purpose of that assessment and adjustment. To the extent that the schedule does not include every item of existing property interests of the parties or either of them; or includes notional items (for example paid legal fees) this will be identified and distinguished from the parties’ existing property interests. The process of compiling such a schedule is simply a methodology of achieving appropriate and just and equitable orders adjusting the parties’ interests in existing property in the s 79(4) assessment process, separate and distinct from the s 79(2) requirement. In my judgment it does not follow from Stanford that the methodology of adopting such a schedule or “divisible pool” is not legitimate. Stanford mandates that the s 79(2) requirement not be conflated with the s 79(4) assessment process. However, when it is appreciated that compiling a schedule of this kind is a methodology for the s 79(4) assessment and adjustment process, and is not the basis for determining the s 79(2) requirement, it is an approach consistent with long-standing authority of this Court establishing guidelines in undertaking the s 79(4) assessment and in determining appropriate orders to give effect to that assessment. Thus understood, it is not an approach which conflicts with Stanford but, rather, is consistent both with Stanford and the guidelines established by authority of this Court concerning the s 79(4) assessment process.
Schedule of existing interests in property and notional add backs contended for by each party
Taken from the Amended Balance Sheets submitted by counsel for each party respectively on 12 August 2014 (and as modified or clarified in oral submissions then made) the following represents each party’s ultimate contentions as to the findings the Court ought make concerning the existing property interests of the parties or either of them; and their respective contentions as to notional “add backs” for the purpose of the s 79(4) assessment. The formatting and numbering used by the parties in the Amended Balance Sheet handed up in submissions on 12 August 2014 has been largely adopted for ease of reference.
As is reflected in the following schedule, based upon the evidence and the Amended Balance Sheet (as refined during submissions) there was no issue concerning the identification and valuation of many items which were agreed and the Court can accept and finds on the evidence that the parties or either of them have those property interests as agreed. The parties’ agreement, or disagreement as the case applies, is noted in the following schedule.
Schedule
| Ownership | Description | Husband’s value | Wife’s value | Agreed/ Disagreed | ||||||
| Assets | ||||||||||
| 1. | Joint | Property at K Street, Suburb J | $1,300,000.00 | $1,300,000.00 | Agreed | |||||
| 2. | Wife | Proceeds of the sale of property at EE Street, Suburb FF owned with her parents | NIL – brought into account at [12] below | NIL – brought into account at [12] below | Agreed | |||||
| 3. | Husband | Proceeds of sale of property at GG Street, Suburb Q · Net sale proceeds · LESS funds to purchase 4(a) below · LESS funds to purchase 4(b) below · Balance from funds in 4 below | NIL $302,481.33 -$149,000.00 -$350,000.00 ($196,518.67) | NIL $302,481.33 -$149,000.00 -$350,000.00 ($196,518.67) | Agreed | |||||
| 4. | Husband | Proceeds of sale of property at Suburb T · Net sale proceeds · LESS funds shortfall in 3 above | $202,151.49 $5,632.82 | $202,151.49 $5,632.82 | Agreed Agreed | |||||
| 4(a) | Husband | Property at HH Street, II Town | $149,002.00 | $149,002.00 | Agreed | |||||
| 4(b) | Husband | 30 per cent interest in JJ Pty Ltd | $350,000.00 | $450,000.00 | Disagreed | |||||
| 5. | Wife | European motor vehicle | $100,000.00 | $75,000.00 | Disagreed | |||||
| 6. | Joint | Furniture and contents | E$50,000.00 | E$50,000.00 | Agreed | |||||
| 7. | Joint | KK Pty Ltd share fund | $463,202.16 | $463,202.16 | Agreed | |||||
| 8. | Joint | 50 per cent Interest in the Bennison Group of entities · L Pty Ltd. · H Pty Ltd. · F Pty Ltd. · G Pty Ltd. · DD Pty Ltd atf The I Property Unity Trust. (LESS inter-entity loans) | $483,288.00 +$475,000.00 -$475,000.00 | $483,288.00 +$475,000.00 -$200,000.00 | Agreed Agreed Disagreed | |||||
| 9. | Wife | Jewellery | $30,000.00 | $30,000.00 | Agreed | |||||
| 10. | Husband | Westpac a/c … | E$16,000.00 | E$16,000.00 | Agreed | |||||
| 11. | Wife | Westpac a/c … | $588.60 | $588.60 | Agreed | |||||
| 12. | Wife | ANZ a/c … | $285,537.00 | $285,537.00 | Agreed | |||||
| 13. | Wife | ANZ a/c … (50 per cent) | E$2,000.00 | E$2,000.00 | Agreed | |||||
| Total | $3,235,250.50 | $3,585,250.50 | ||||||||
| Add Backs | ||||||||||
| Ownership | Description | Husband’s value | Wife’s value | Agreed/ Disagreed | ||||||
| 14. | Husband | Partial property settlement (from sale of Suburb M property) | $38,859.03 | $38,859.03 | Agreed | |||||
| 15. | Wife | Partial property settlement (from sale of Suburb M property) | $66,478.99 | $66,478.99 | Agreed | |||||
| 16. | Wife | Proceeds of sale of Wife’s share portfolio | $21,667.24 | $21,667.24 | Agreed | |||||
| 17. | Wife | Proceeds of sale of Wife’s diamond ring | $35,000.00 | $35,000.00 | Agreed | |||||
| 18. | Wife | Funds removed from the parties’ joint funds shortly after separation | $0.00 | $0.00 | Agreed | |||||
| 19. | [Deleted] | |||||||||
| 20. | Wife | Monies paid to Wife pursuant to order of Kent J dated 25.01.2013 | $116,000.00 | $116,000.00 | Agreed | |||||
| 21. | Wife | Legal costs | $7,353.77 | $7,353.77 | Agreed | |||||
| 22. | Husband | Legal costs | $233,044.14 | $233,044.14 | Agreed | |||||
| 23. | Husband | Proceeds sale of Boat | NIL | $117,466.06 | Disagreed | |||||
| 24. | Husband | Proceeds sale of motorcycle | NIL | $31,668.00 | Disagreed | |||||
| 25. | Husband | Monies withdrawn by the Husband from the business and unexplained | NIL | $182,584.97 | Disagreed | |||||
| 26. | Husband | Loans owing to Husband | NIL | Not known | Disagreed | |||||
| Total | $518,403.17 | $850,122.20 | ||||||||
| Liabilities | ||||||||||
| Ownership | Description | Husband’s value | Wife’s value | Agreed/ Disagreed | ||||||
| 27. | Joint | Debt associated with KK Pty Ltd investment | $500,000.00 | $500,000.00 | Agreed | |||||
| 28. | [Deleted] | |||||||||
| 29. | Joint | Loan exit costs re KK Pty Ltd investment | $15,520.00 (Only if investment is sold) | $15,520.00 (Only if investment is sold) | Agreed | |||||
| 30. | Wife | Loan owing to Bennison Superannuation Fund | $36,000.00 | $36,000.00 | Agreed | |||||
| 31. | Husband | Loan re: monies paid to Wife pursuant to order of Kent J | $68,309.35 | NIL | ||||||
| Total | $619,829.35 | $551,520.00 | ||||||||
| Net non-superannuation pool | $3,133,824.30 | $3,883,852.70 | ||||||||
| Superannuation | ||||||||||
| Member | Name of Fund | Type of Interest | Husband’s value | Wife’s value | Agreed/ Disagreed | |||||
| 32. | Husband | Bennison Superannuation Fund | Self-managed fund | $2,137,390.30 | $2,137,390.30 | Agreed | ||||
| 33. | Wife | Townsend Superannuation Fund | Self-managed fund | $605,340.99 | $630,000.00 | Disagreed | ||||
| Total superannuation | $2,742,731.29 | $2,767,390.30 | ||||||||
Pool Issues
Husband’s interest in JJ Pty Ltd
Whilst described as the acquisition of an interest in a business, it is clear from the husband’s oral evidence at trial on 12 August 2014 that there was no actually trading business yet involved in the interest conveniently described as JJ Pty Ltd. It is in fact a concept or idea which is yet to reach the manufacturing stage. In other words the husband has acquired a 30 per cent interest in the entities holding, essentially the intellectual property in an idea or concept of a future business product yet to be introduced in terms of the manufacture and sale of the equipment the subject of the idea or concept.
At [7] of his affidavit filed 3 July 2014 the husband deposed:
On 10 March 2014, I acquired a 30 per cent interest in a business, [JJ Pty Ltd] for $350,000. I now hold 30 ordinary shares in each of [PP Pty Ltd] and [JJ Pty Ltd].
In that same paragraph the husband then annexes company searches with respect to his shareholding and in subparagraphs b. and c. sets out the following:
b. I acquired my interest in these entities using funds held in my personal bank account number 50-1221 arising either from the sale of the [GG Street] property or savings as follows:
i.25 November 2013 - $100,000
ii.15 January 2014 - $150,000
iii. 18 February 2014 - $200,000.
c.Annexed hereto and marked “MJB13” is a true copy of bank statements showing the payment of $350,000 for my interest in these entities.
Thus whilst the husband deposed on two occasions within the same paragraph that he paid $350,000.00 for this interest, the amounts referred to in subparagraph b. of his affidavit total $450,000.00.
Thus it was that on 12 August 2014 the husband was cross-examined by counsel for the wife as to whether he had paid $450,000.00 for the relevant interest (given the total of the amounts referred to) or $350,000.00.
Whilst at one point of this cross-examination the husband appeared to accept, at least as a possibility, that he may have paid a total of $450,000.00 for the interest, it is my assessment of the husband’s evidence that he more consistently referred to $350,000.00 and it is thus more likely on the balance of probabilities that he had in fact paid $350,000.00 in total. The husband suggested that the withdrawal for 25 November 2013 for $100,000.00 must not have been used for the investment. As the husband put it “obviously there’s an error there somewhere. I know how much I paid. I didn’t pay 450,000.”
I am fortified in the conclusion that the husband was not deliberately misrepresenting what he had paid for the interest, and hence its value, because the husband also freely gave evidence that he expected his interest was then worth, in his estimation, more than $350,000.00. The figures came from his own affidavit.
In the end I am satisfied on the husband’s evidence that he paid a total of $350,000.00 for this interest and that the interest should be brought to account at that figure. One consequence of that finding, relevant to other aspects addressed below, is that the husband’s use of the $100,000.00 withdrawn on 25 November 2013 is, as contended by the wife, not otherwise explained.
Wife’s European motor vehicle
As at the first stage of trial the parties agreed that the wife’s European motor vehicle should be taken in at a value of $100,000.00.
As at the second stage of trial the wife asserted that the value for this asset to be adopted was $75,000.00 rather than $100,000.00.
That alteration was not the subject of any expert valuation evidence. The wife had asserted in her financial statement filed for the purpose of the second stage of trial a value of $75,000.00 for the vehicle, despite the earlier agreement.
Cross-examined about the basis of that assertion the wife’s evidence, putting it at its highest, was that it was based on hearsay information obtained by her husband Mr Townsend upon making enquiries as to a trade in value for the vehicle from a dealer.
In my judgment, if there was to be an issue agitated as at the second stage of trial as to the value of the European motor vehicle the appropriate course was for the wife to obtain expert evidence. I do not accept the hearsay evidence the wife sought to rely upon for asserting a value of $75,000.00. I therefore include this item at $100,000.00 being the pre-existing agreed value as between the parties.
Furniture and contents
The parties agree that the jointly owned furniture and contents which remained in the former matrimonial home from separation has an agreed value of $50,000.00.
The husband identifies in his affidavit filed 6 September 2012 (at [95]) the following particular items of chattels he seeks to receive from the “joint” items, which items he deposes were all located in the former matrimonial home when he left in March 2010:
a)A red, white and blue vase;
b)A pool cue gifted by a friend named Mr LL;
c)Sports memorabilia in the pool room of the home such as:
i)Boxing – framed and signed photographs;
ii)Football (uniform, league and soccer) – signed and framed jerseys and signed footballs;
iii)Cricket – signed cricket bats and signed photographs;
iv)Golf – a decorative golf club.
d)A safe in the downstairs section of the home “and the documents relating to my family (such as my father) which are in the safe”;
e)The children’s portraits (photographs) which were hanging on the wall of the media room in the former matrimonial home. (I note the husband deposes that he is “content to share the costs of copying these photographs with the wife so that we each have a copy of the portraits.”)
The wife does not appear to have challenged the orders sought by the husband either by way of her formal documents or in cross-examination of the husband. There would thus seem to be no reason not to make orders for delivery to the husband of those items as sought by the husband.
Moreover, it did not seem to be in contention that the particular items in the nature of memorabilia have any particular value (other than a personal value to the husband) or a value that ought be deducted from the agreed $50,000.00 for jointly owned furniture and chattels retained by the wife. Such a contention was not advanced by the wife.
Superannuation
Both parties contended that there ought be a “two pools” approach with
non-superannuation assets in one pool and superannuation in the other. That was the contention notwithstanding that each party sought that the same percentage division be applied to both superannuation and non-superannuation assets for the purpose of assessment, albeit that the wife sought a splitting order with respect to her superannuation if that were necessary for her to achieve her ambition of receiving a transfer of the husband’s interest in the former matrimonial home so that she retains that property.
Driving, at least in part, the “two pools” approach contended for by both parties was the feature that each party has historically borrowed or used funds from superannuation and/or is obliged to return funds to superannuation. Each party made submissions on 12 August 2014 as to the orders to be made to address that.
The orders of 24 April 2013 provided for the parties to undertake various actions to wind up the Bennison Superannuation Fund including the opening of a new joint bank account to be operated with joint signatures, and the sale of the property held by the Bennison Superannuation Fund situated at V Street, Suburb W.
On 26 July 2013 the parties sold the Suburb W property for a gross sale price of $2.65 million. After payment of costs of sale, $2,375,595.71 was received by the Bennison Superannuation Fund.
Subsequently the interest of each party was rolled out of the Bennison Superannuation Fund into the parties’ respective own self-managed superannuation funds. The wife and her husband Mr Townsend established the Townsend Superannuation Fund and the husband established the I Superannuation Fund.
As already noted, at the time of the roll out from the Bennison Superannuation Fund the husband’s interest was valued at $2,137,390.30 and the wife’s interest was valued at $605,340.99.
Taken from [14] of the husband’s affidavit filed 30 July 2014 there is a calculation provided by the accountants for the Fund setting out the capital loan to the wife of $36,000.00 and the fact that the wife was overpaid her entitlement in the Bennison Superannuation Fund by an amount of $12,235.31 at the time of the roll out.
Associate:
Date: 13 April 2015
Key Legal Topics
Areas of Law
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Family Law
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Property Law
Legal Concepts
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Remedies
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Injunction
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Costs
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Statutory Construction
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Duty of Care
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Fiduciary Duty
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