BISHOP & BISHOP
[2014] FamCA 304
•13 May 2014
FAMILY COURT OF AUSTRALIA
| BISHOP & BISHOP | [2014] FamCA 304 |
| FAMILY LAW – PROPERTY SETTLEMENT – Division of property – Whether residual proceeds of sale of the former matrimonial home, presently held in a conveyancer’s trust should be awarded to the applicant or respondent – Where court followed 4 step process under section 79 – Where first step requires the identification of the parties’ legal and equitable interests in the property and thereafter determine whether just and equitable to make an order altering the interests of the parties in the property – Where interest is uncontroversial jointly owned and impracticable for parties to enjoy jointly upon separation – Where parties concede and the court accepted it was just and equitable to make an order – Where court found the husband had made greater financial contribution to the property and the wife had made greater homemaker parent contribution – Where wife has lower earning capacity – Where parties agree the wife be awarded all the parties’ superannuation – Where balance of proceeds of sale awarded in the proportion of 80 per cent to husband and 20 per cent to wife – Where court considered such order just and equitable in the circumstances. FAMILY LAW – PROPERTY SETTLEMENT – Failure to disclose assets – Where wife asserts the husband has knowingly failed to disclose assets and as such the residual proceeds of sale should be awarded to her – Where there is an obligation on the wife to persuade the court on the balance of probabilities that there are hidden assets based on evidence – Where there is considerable body of evidence to suggest there are no undisclosed assets – Where wife fails to persuade the court. FAMILY LAW – PROPERTY – Superannuation – Where self-managed superannuation fund – Where agreed superannuation should be awarded to the wife – Where practically awarding the wife the super is problematic due to the company de-registering – Where parties consent to the company’s re-instatement – Where no direct evidence of the company’s de-registration or reasons for it – Where no company search or trust deed under which the superannuation fund is held – Where re-instatement is provided by s 601AH of the Corporations Act – Where court not satisfied on the material before it that an order for re-instatement was just at that stage. |
| Australian Securities Investment Commission Act 2001 (Cth) s 8 Caslai v Crisp (2001) 165 FLR 79 | |
| APPLICANT: | Ms Bishop |
| RESPONDENT: | Mr Bishop |
| FILE NUMBER: | SYC | 1567 | of | 2008 |
| DATE DELIVERED: | 13 May 2014 |
| PLACE DELIVERED: | Townsville |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Tree J |
| HEARING DATE: | 17 May 2013 |
REPRESENTATION
| THE APPLICANT: | In person |
| THE RESPONDENT: | In person |
Orders
Within 14 days of the date of these orders, the husband and wife do all things necessary to have the funds presently held by B Conveyancers as Trustee for Ms & Mr Bishop in St George Bank Account …30 paid out to the parties in the proportion of 80 per cent of the balance to the husband and 20 per cent of the balance to the wife;
Within 14 days of the date of these orders, the husband and wife do all things necessary to have the husband’s entitlement as Judgment Creditor in the sum of $174,310.00 in the matter of the husband’s claim against C Pty Ltd assigned to the wife;
Within 14 days of the date of these orders, the husband and wife do all things necessary for the wife to transfer to the husband her shareholding in D Pty Ltd;
Upon the Commonwealth of Australia being afforded procedural fairness in relation to the proposed order, as follows:
(a)that pursuant to s90MT(4) of the Family Law Act a base amount equivalent to 100 per cent of the combined value of the parties’ superannuation entitlements in the Bishop Family Trust as at 13 May 2014 be allocated to the wife out of the parties’ interests in the Bishop Family Trust;
(b)that pursuant to s90MT(1)(a) of the Act, the wife is entitled to be paid the base amount calculated in accordance with Part VI of the Family Law (Superannuation) Regulations 2001 and the husband’s entitlement to payments out of his interest in the Bishop Family Trust is correspondingly reduced by force of this Order;
(c)that these orders bind the Trustee of the Bishop Family Trust and take effect from 13 May 2014;
(d)should the wife advise the husband of her desire to do so, then within 30 days of the date of these orders the parties do all things necessary to roll out the wife’s member entitlements with the Bishop Family Trust to a complying fund nominated by her.
Otherwise each party be solely entitled to the exclusion of the other of all chattels, bank accounts or personal property whatsoever presently in their possession or under their control to the exclusion of the other.
Otherwise, and save for any and all issues of costs, all extant applications are dismissed and the proceedings are removed from the list of active pending cases.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Bishop & Bishop 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 |
FILE NUMBER: SYC 1567/2008
| Ms Bishop |
Applicant
And
| Mr Bishop |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
This is a judgment arising from the trial of proceedings issued by the wife seeking the division of the property of the parties consequent upon the breakdown of their marriage. Essentially however, the trial came down to one contentious issue: should the residual proceeds of sale of the former matrimonial home, which is presently held in a conveyancer’s trust account, be awarded to the applicant or the respondent. The respondent says that they should be ordered to be paid out to him so that he can use them to partially discharge or defray liabilities in his name which at the time of trial were said to be in the sum of $382,292.00. However the existence of those liabilities is denied by the wife. Further, she says that there are, at a minimum, a further $2,100,335.00 worth of assets which either are physically presently held by the husband, or alternatively should be treated as being held by him, so that the payment to her of the balance of the net proceeds of sale is justified.
OVERVIEW OF THE PARTIES’ RELATIONSHIP
The parties first met in April 2001, and commenced residing together in June of that year. In February 2003 the wife advised the husband that she was pregnant. In May 2003, the parties married. In October 2003, their only child, T was born. Although the parties remained living in the same home, it appears as though they moved into separate bedrooms in December 2003, which arrangement continued when they moved from the home that they were then living in to another home at Suburb E in March or April 2004. It is this home that the proceeds of sale held in the conveyancer’s trust account relate to.
Ultimately on 30 June 2006 the parties finally separated, with the wife moving to Brisbane in about January 2007.
In November 2007 the sale of the Suburb E property settled. Since about then, the proceeds the subject of this litigation have been held in trust.
THE CONDUCT OF THE TRIAL
In the trial before me, both parties self-represented. It was listed for one day. Although the parties were able to readily identify the principal issue in dispute between them, by virtue of the allegations which the wife made against the husband, and the way in which she sought to prove them, the matter proved to be anything but simple. The wife fervently believed that the husband had the benefit, after separation, of well in excess of $2 million worth of what would otherwise would have been property of the parties. Perhaps that led to her enthusiastic issue of subpoenae to a large number of organisations. However it became clear that the wife had difficulty in interpreting the subpoenaed documents comprising, for the most part, financial records, and appeared to be floundering in the bewildering morass of material which her subpoenae had caused to be produced.
She tendered into evidence a vast array of the subpoenaed material, but was unable to provide any real assistance to the court as to what significance much of that material had. She appeared to think that somehow or other the court would discern the meaning of the material for itself, and that somehow or other that meaning would assist her case. However absent any structure to her argument – which was largely allegations loosely linked to unintelligible wads of documents – her case did not achieve any real coherence. Despite repeated requests from the court to articulate her arguments in a logical manner, she was unable to do so.
To enable her to properly construct and present her case, the court offered to permit her either to resume making her submissions at a later date, or alternatively, to make written submissions. She wished to do neither. That has made the task of determining the trial of this proceeding far more burdensome than it otherwise ought to have been.
RELEVANT LEGAL PRINCIPLES
Section 79 of the Family Law Act deals with the division of property of parties to a marriage. It has long been established that the preferred approach to be adopted to determining property disputes under s 79 is a four step one which involves:
·The identification of the property of the parties including their assets, financial resources and liabilities;
·The evaluation of the “contributions” or s 79(4)(a), (b) and (c) issues;
·The evaluation of the matters referred to in s 79(4)(d), (e), (f) and (g) including, by reference to s 79(4)(e) the matters set out in s 75(2); and
·A determination as to whether the result is just and equitable by reference to s 79(2) of the Act.
After the High Court’s decision in Stanford v Stanford[1] it may be taken as commonly accepted that the first step requires the identification of the parties’ existing legal and equitable interests in property, and thereafter, it is incumbent upon the court at the outset to determine whether or not it is just and equitable to make an order altering the interests of the parties in that property. However as the High Court itself indicated in Stanford, in many cases that step will be uncontroversial: for instance, if there is jointly owned property which is impracticable for the parties to jointly enjoy consequent upon separation, such as the former matrimonial home.
[1](2012) 247 CLR 108.
In Gould & Gould[2] the Full Court reviewed the previous authorities in relation to the approach of a court where there is a finding that a party has knowingly failed to disclose assets in the course of the proceedings. At [27] the court said as follows:
Rather the appropriate approach for his Honour to have adopted in this case would have been to have increased the asset pool to take account of non-disclosure by the husband, and indeed his Honour had already done this to some extent in accepting the schedule of assets prepared by the wife’s counsel…Alternatively, or even in addition, had his Honour been persuaded that on the balance of probabilities there existed assets other than those contained in the asset pool contained in his reasons, his Honour could have made some adjustment in favour of the wife on account of the husband’s non-disclosure pursuant to the provisions of s 75(2)(i) as did Holden CJ in Kannis.[3]
THE LEGAL AND EQUITABLE INTERESTS OF THE PARTIES IN PROPERTY
[2](2007) FLC 93-333.
[3]See also Jamine & Jamine(No 2) [2012] FamCAFC 104.
Agreed assets, liabilities and values
Although the wife asserted there were more assets, the following were agreed as being assets of the parties, and their values, as at the date of trial:
Residual proceeds of sale of Suburb E property $93,458.00
Jewellery in the possession of the wife $4,500.00
Cash at bank – wife $50.00
Cash at bank – husband $250.00
Motorcycle – husband $8,500.00
The parties also identified that they held shares in deregistered corporations, and the husband had the benefit of a judgment in the sum of $174,310.00 in New South Wales court proceedings. Neither party asserted that either of those assets had any value, and although I will deal with them later in these reasons, I do not include them in the list of assets and liabilities.
It was further agreed that there was a self-managed superannuation fund with a value of $64,644.00. The husband agreed that the entirety of that should go to the wife.
As to the liabilities, it was agreed between the parties that the wife has current liabilities of $90,000.00, mostly comprising post-separation credit card debts.
The issues in dispute as to the identity and value of assets and liabilities are as follows:
·The husband says he has personal assets or chattels of no value, whereas the wife contends they are worth $30,000.00;
·The wife says that the husband has retained undisclosed assets, the identity of which she does not know, and the value of which she cannot specify, however she says that there should be added back into the property pool a minimum of $2,100,335.00;
·The wife says that the husband has a 50 per cent interest in “[FLM Pty Ltd]” which she says is worth $200,000.00. The husband denies that he has any property interest – whether equitable or legal – in that business;
·The husband says he has liabilities in the sum of $382,292.00, which are wholly disputed by the wife.
I will deal with those issues in that order.
Husband’s personal assets and chattels
Although the wife asserted that the husband had chattels in his possession to a value of $30,000.00, there was no evidence led as to what they were, or any argument directed as to how I could find, on the balance of probabilities, that it was more likely than not that he – as distinct from his mother with whom he resided at the time of trial – owned such property. The obligation is on the wife to persuade me. She has failed. I am unable to conclude that the husband has any personal chattels of value in his possession.
That is not altogether surprising. As at the date of trial, the husband had only recently been released from serving several years of actual imprisonment. Although he was apparently working at the time of trial, as will be seen, a feature of his life post-release from incarceration has been attempting to deal with considerable outstanding debt.
Undisclosed assets other than personal chattels
The wife alleged that there should be added back into the pool of assets a notional sum of at least $2,100,000.00. At no point in the trial was it clear what the wife asserted those assets comprised, or how, in the light of successive business failures, it was that the husband had been able to amass such a fortune.
I previously referred to the wife being seemingly mesmerised by the admittedly fairly complicated set of financial arrangements which the husband from time to time seemed to be involved in. For instance, he was, during the course of the relationship, involved in a company which leased Type G vehicles to a transportation operator, seemingly for the sum of $33,000.00 per month. He also appears to have been involved in a related business which imported and re-sold parts for Type G vehicles. Later again, a company with which he was associated imported what was described as “[Type H outdoor furniture]” from a Chinese manufacturer, albeit it seems that there was really no market for them in Australia, or indeed in the UK where they were intended to be sold as well.
Whilst some of the cross-examination of the husband was directed towards these matters, it was more in the nature of an incidental issue. Rather the focus of the wife’s attention, in her affidavit evidence, her cross-examination of the husband and her submissions, was the husband’s involvement in a business which purchased damaged Type J goods, had them repaired, and then sold them on to (seemingly) retailers or wholesalers.
Perhaps unusually, the husband purchased many of these goods at auction using a credit card in his name. Thereafter, he would either be reimbursed by the company which was conducting the repair business, or alternatively receive the proceeds of the ultimate sale when that business had on-sold the repaired goods. The husband conceded that not all receipts, whether by reimbursement or from proceeds of sale, went off the credit cards directly. Rather on occasions they would be paid towards the parties’ mortgage, or alternatively, for a period were deposited into a bank account which he had set up in his father’s name, with the conceded purpose of putting assets beyond the reach of his creditors in the event that his business failed. The sum ultimately able to be so amassed by the husband was something in the order of $160,000.00. However when – as he had anticipated – the business in question ran into serious financial difficulty, in fact he accessed that account and invested the monies into the company in an effort to stave off insolvency.
As far as the evidence goes, it seems that all of this occurred during the course of the marriage.
Ultimately, the husband formed the view that the company in question was, despite the injection of funds, unable to pay its debts as and when they fell due. He therefore placed the company into external administration.
Notwithstanding the wife’s assertions to the contrary, it appears as though administrators that were appointed to the company reconciled the payments which the company had received from the husband, against the payments which it had made to him. The husband asserts, and there is no reason to disbelieve him, that the outcome of that investigation showed that the payments were approximately equal, or to the extent that they were unequal, in the company’s favour. No doubt were it otherwise, there would have been some claim made by the administrators against the husband. In fact there was no such claim, but rather the company was returned to its directors seemingly pursuant to a Deed of Company Arrangement entered into by its creditors and directors. The company then had very slight assets comprising a utility motor vehicle and some left over Type H outdoor furniture stock.
Whilst I accept that the material tendered by the wife during the course of the trial does appear to demonstrate complex financial arrangements, often involving relatively large sums of money being associated with the husband, it is quite another thing to say that based upon that, I should be persuaded on the balance of probabilities that the husband has undisclosed assets. Moreover, despite several hours of cross-examination of the husband by the wife in which these matters were squarely put to him, not only did he deny the allegations, he had plausible explanations for the transactions in general, and when challenged in relation to specifics, in relation to those as well.
Part of the wife’s argument lay in the fact that the husband had, post-separation, been incarcerated for offences which had some component of dishonesty to them. Apparently those offences included being an accessory to fraud, and also withholding information from police, although the evidence really was not of sufficient specificity such that, other than in those broad general terms, I can make any findings about that matter. However even if I were to accept that the husband has a history of serious criminal dishonesty, and was engaged in a complex array of financial transactions from time to time, that does not mean that I could thereby be satisfied that he has undisclosed assets.
Further, there is a considerable body of evidence which would tend to suggest that there are no such undisclosed assets. For instance, as I shall discuss shortly, the husband presently has considerable unpaid debts. They have been outstanding to financial institutions for some years. He says, and there is no reason to doubt, that in consequence of his default with a number of financial organisations, his credit rating is now irreparably damaged, to the point where he could not presently even obtain a credit card. If he had hidden assets, it is most peculiar that has not deployed them to save himself from his present financial predicament.
Moreover, the most recent business conducted by the husband had, as I have indicated above, administrators appointed over it, and ultimately, when returned to the directors pursuant to a Deed of Company Arrangement, had very little in the way of assets. Why the husband would permit that company to go into administration rather than deploy some part of the hidden pool of assets is difficult to discern.
The husband concedes that he did dishonestly seek to skim off funds with a view to concealing them from creditors. However it does not appear to be in dispute that although he successfully achieved that, ultimately he re-invested those funds into the company. Whilst that might show that the husband has the capacity to hide assets, his frank concession that that is what he was doing, makes his denial that there are further hidden funds somewhat more plausible.
Ultimately it is for the wife to persuade me on the balance of probabilities that there are hidden assets of the husband, based upon evidence rather than conjecture. I am not so persuaded. There will be no finding that the husband has undisclosed assets under his control or his possession as asserted by the wife.
FLM Pty Ltd
The wife asserts that the husband has a 50 per cent interest in FLM Pty Ltd, where it appears the husband is presently employed. The husband denied having any proprietary interest in the business.
The wife in support of her contentions tendered into evidence an unsorted bundle of material produced pursuant to subpoena by FLM Pty Ltd. It is difficult to know what to make of it. No submissions were advanced by the wife which would provide me with any context as to how I might construe these documents.
One of the points made by the wife in cross-examination of the husband in relation to FLM Pty Ltd was that his former partner, Ms A was shown in the payroll entries for the financial year ending 30 June 2011 (when the husband was incarcerated) as earning approximately the same amount of wages as the principal of the business, a Mr K, with both earning a little over $91,000.00. Her argument seemed to be that I should infer that these were really payments to the husband in respect of his co-ownership of the business notwithstanding his incarceration. The husband denied that.
The wife also asserted that the “[L]” in FLM Pty Ltd was intended to reflect the husband’s Christian name, being [a Christian name beginning with that letter]. The husband denied that. He said that “[FLM]” was the acronym for “[three words that describe the service the business provides]”. He further said that to his knowledge FLM Pty Ltd was the incorporated operator of a business that had previously been operated by Mr K as a sole trader (albeit perhaps in partnership with his wife).
It has to be said that there are some questions hovering over the husband’s association with FLM Pty Ltd. However even if I were to accept that he had a beneficial ownership of some part of the business, it would be another thing altogether to conclude that his interest has any value. I note that the only evidence as to its value is in the exhibit comprising its books of account which show in the relevant balance sheet entries that as at 30 June 2008 it had net liabilities of $7,838.40, that as at 30 June 2009 it had “total equity” in the credit sum of $8,019.81, a “total equity” as at 30 June 2010 of $11,785.59, and a “total equity” as at June 2011 of $1,408.82. Those accounts also demonstrate that it regularly made an operating loss. For instance as at 30 June 2008 it had an operating loss of $8,038.40, it made a net profit in 2009 of $5,673.21, in 2010 it made a net loss of $24,555.22 and made a further net loss as at 30 June 2011 of $10,376.77.
There is nothing else other than its capacity to pay reasonable salaries which would suggest that it has any value as a business.
In her balance sheet dated 26 November 2012, the wife, rather than asserting that the husband’s asserted interest in FLM Pty Ltd was property, asserted that it was a financial resource which should be valued at “$91,499.00 plus possibly an amount of up to $182,655.00/annum.” That appears to be a reference to Ms A’s wages. She and the husband are no longer in a relationship. There is no evidence as to the husband’s present income post-incarceration.
In all the circumstances I am not persuaded on the balance of probabilities that the husband has any property interest in FLM Pty Ltd, or if he does, that it should be given any attributable value. I am not persuaded his association with the company is a financial resource.
The husband’s liabilities
In his Financial Statement filed 7 March 2012 the husband listed the following as his liabilities:
Overdraft liabilities Citibank Redicredit $36,000.00
Credit card liabilities Citibank Visa $35,000.00
Credit card liability ANZ Visa $98,000.00
Credit card liability NAB Mastercard $44,000.00
Credit card liability GO Mastercard $6,107.00
Credit card liability Lion Finance $8,185.00
Credit card liability Commonwealth Bank Mastercard $35,000.00
[Mr N Bishop]
(personal loan for AST Legal fees paid on my behalf) $25,000.00
[N & I Bishop]
(criminal legal fees and gaol account deposits) $95,000.00
Hurlstone Park legal fees owed –
pre- conciliation conference 18 November 2010 $9,000.00
Hurlstone Park legal fees owed-
conciliation related fees for conference
18 November 2010 $6,000.00
Hurlstone Park legal fees owed –
applicant wife’s subpoenas related costs 2011 $25,000.00
Total $422,292.00
In her balance sheet filed 26 November 2012 the wife identified the following liabilities, seemingly all hers:
Credit cards (post-separation) $59,995.00
Outstanding mobile bills (post-separation) $310.00
Loan from friend (post-separation) $15,000.00
Total $75,305.00
The wife did not appear to deny the historical fact of the husband’s debts;[4] rather her argument was that they were unlikely to ever be recovered. However the husband tendered into evidence[5] a letter from Collection House Limited dated 4 December 2012, on behalf of the ANZ Bank, claiming an amount due as at that date of $94,347.92, and a further letter from HCL Global Processing Services on behalf of Citi Group asserting a liability of $24,320.12 as at the date of the correspondence, being 25 February 2013.
[4]Annexure “B: to the wife’s affidavit filed 25 March 2008 was an email to her from the husband dated 21 November 2007 which set out then still outstanding commercial debt of $103,000.00.
[5]Exhibit H1.
The husband conceded that he had not been in contact with the other persons to whom he owed money, and therefore there is the possibility that some of those debts may have been written off and no longer regarded as recoverable by the lender.
The wife also asserted that either because some of those liabilities were post-separation, they should not be taken into account, or alternatively, to the extent they did arise pre-separation, because they were part of the process by which she asserted that the husband accumulated unidentified assets by purchasing Type J goods on his credit cards, and then not crediting the credit card with the sale proceeds, that they should be ignored. In part, her argument also asserted that the husband had had the opportunity to – and to an extent did – discharge some of his then indebtedness with a large part of the proceeds of sale of the former matrimonial home.
However in her otherwise comprehensive cross-examination of the husband, none of this was explored, nor was his assertion of extant liabilities seriously challenged. I am therefore satisfied that the commercial liabilities asserted by the husband are all outstanding and that as at trial, at least $129,000.00 was still being actively pursued. However it is unclear how much, if any, of the other commercial debt is likely to be actively pursued by respectively NAB, Go, Lion Finance and the Commonwealth Bank. Further, all of the legal bills are post-separation, and in addition, there is no evidence from the husband’s parents as to their intentions in relation of the recovery of the amounts owed to them, nor did the husband tender into evidence anything which would suggest that his lawyers who acted for him in these proceedings at earlier times, are actively pressing the liabilities which the husband asserts he owes them.
In this case I do not propose to regard as liabilities for the purposes of ascertaining the appropriate division of the property of the parties to the marriage, debts which were incurred by the parties after separation, or alternatively relate to legal fees.[6] Moreover, I do not propose to factor in as liabilities pre-separation debt of the husband which has not been the subject of recent recovery attempts by the lender.
[6]See Farnell & Farnell (1996) FLC 92-681.
In a sense, all of this is academic because on any view the parties’ liabilities exceed their assets, however because the husband asserts an overwhelming continuing pre-separation indebtedness as the basis for him receiving all of the residual net proceeds of sale of the former matrimonial home, it does appear appropriate that I should attempt to make some valuation of the current outstanding liabilities. In all the circumstances I propose to only regard the Citibank and ANZ liabilities as current. Therefore the total value of the husband’s liabilities are assessed at $121,668.04.
THE POOL
I therefore identify the following as being the parties’ relevant assets and liabilities as at the date of hearing:
Assets
Residual Proceeds of sale of Suburb E Property $93,458.00
Jewellery in possession of wife $4,500.00
Cash at bank – wife $50.00
Cash at bank – husband $250.00
Motorcycle – husband $8,500.00
Total $106,758.00
Liabilities
ANZ – husband $94,347.95
Citigroup – husband $24,320.12
Total $121,668.04
Superannuation
Self-managed fund – joint $64,644.00
IS IT JUST AND EQUITABLE TO ORDER A DIVISION OF THE PARTIES PROPERTY?
The parties concede and I accept that there ought be a division of their property in order to effect a conclusion of the financial arrangements arising from their cohabitation.
THE PARTIES’ FINANCIAL CONTRIBUTIONS
It does not appear to be in any serious contest that the husband, both initially and thereafter, has made the greater financial contribution to the property of the parties. In her affidavit filed 27 March 2008 at paras 6 and 7 the wife set out her position in relation to the parties’ financial contributions at the commencement of cohabitation in 2001 as follows:
6. At the time of commencement of cohabitation in 2001 I had the following assets and liabilities:
Assets & Liabilities Approximate
Value
Savings$8,000.00
Mazda … motor vehicle worth approximately $35,000.00
Subject to lease $Nil
Furniture and contents $5,000.00
Superannuation entitlements $40,000.00
Total$53,000.00
7. To the best of my knowledge and belief as at the commencement of cohabitation in 2001 [the husband] had the following assets and liabilities:
Assets & Liabilities Approximate
Value
[O Street, Suburb P], which had $25,000.00
been purchased for $122,500.00 in 1997 and subject to
mortgage of approximately $98,000.00 NK
[Q Street, Suburb R]
which was subject to mortgage
[S Street] which was NK
subject to mortgage
3 motor vehicles, including 2 old Mercedes and an $4,500.00
imitation Porsche
Furniture and fittings $6,000.00
Savings NK
A small number of shares NK
Superannuation $40,000.00
Less credit card liabilities -$40,000.00
Total Net Assets $NK
In successive paragraphs of that affidavit, she then went on to detail that the O Street property was sold on 16 May 2005 for $255,000.00, and the Q Street property was sold in December 2003 for $375,000.00, however in both respects she was unable to say what the net proceeds of sale were after the attendant liabilities were discharged.
At paras 5 and 6 of his affidavit filed 24 February 2012, the husband set out his version of events relating to these properties as follows:
5. As disclosed in Financial Questionnaire Disclosure dated 17th August 2010 to the Court, at commencement of the relationship I owned the following properties in new South Wales:
a.[S Street, Suburb T] – 3 bedroom townhouse with value at commencement of the relationship $380,000.00 – contract for sale exchanged May 2001, settled July 2001 – sold to purchase [Suburb U] property (sold July 2001 $380,000.00);
b.[Q Street, Suburb R] – 3 bedroom townhouse valued at $275,000.00 at commencement of relationship (sold December 2003 $375,000.00); and
c.[O Street, Suburb P] – 2 bedroom unit valued at $168,000.00 at commencement of the relationship (sold May 2005 $255,000.00);
6. Each of the properties noted above were subject to mortgages. The borrowings were equal to approximately 70% of their then market value, being $524,000.00 in mortgages plus $45,263.00 line of credit, totalling $569,263.00. Total gross properties value at commencement of the relationship was $823,000.00. net aggregate value at commencement of the relationship was $253,737.00, estimated using market value discount from subsequent sales, as disclosed above and discounted for tax estimated on Capital Gains Tax on sale. Values used are on a conservative valuation basis.
Whilst I do not accept that the husband has the necessary expertise to determine the values of the properties at the time of the commencement of the relationship, and therefore give acceptable evidence as to “net aggregate value” in the sum of $253,737.00 or at all, clearly there was substantial equity in the properties and therefore it is plain that the husband made a substantially greater initial financial contribution to the property of the parties.
Ultimately however, there is really only one asset of any substantial value (leaving aside superannuation), being the residual proceeds of sale of the former matrimonial home. It was acquired in June 2004 for approximately $790,000.00 in the respondent’s sole name. It was purchased using the net proceeds of sale of the previous matrimonial home, being V Street, Suburb U, which had been purchased on 28 August 2001 (ie only two months after the parties had commenced living together) in the respondent’s sole name for the sum of $570,000.00. The funds for its purchase were a mix of the net proceeds of sale of S Street, $8,000.00 of the wife’s savings,[7] and mortgage finance from the National Australia Bank in the sum of $450,000.00. The evidence suggests[8] that the husband’s cash-contribution to the purchase of Suburb U was $148,300.00, including proceeds of sale of S Street. That of course was property which the husband had brought into the relationship.
[7]Probably used to pay stamp duty – see husband’s affidavit para filed 24 February 2012 para 17
[8]Husband’s affidavit filed 24 February 2012 para 15.
The Suburb U property was sold on 28 May 2004 for $751,000.00, and its net proceeds of sale applied to purchase Suburb E. Although in her affidavit filed 27 March 2008[9] the wife says that the mortgage was transferred across from Suburb U to Suburb E, that seems legally unlikely. I assume that what she is intending to say was that the current loan over Suburb U was not increased for the purchase of Suburb E, and the security simply substituted.
[9]Para 15.
In his affidavit filed 24 February 2012, the husband says that the Suburb E property was purchased for “approximately $760,000.00-odd.” He accepts that the net proceeds of sale of SuburbU were used to purchase the property, seems to assert that there was no new borrowings from the bank, but says that the balance of the purchase price was funded “from personal debt held in my name, being credit cards/facilities. Stamp Duty payable on the purchase was in the most part paid from my credit cards/ facilities.”
Whilst I am unable to mathematically ascertain the percentage of direct financial contributions which the parties have made to the purchase of the Suburb E property, it is plain that by virtue of the net proceeds of sale of the S Street property being used to purchase the Suburb U property, and its proceeds of sale then being used to purchase the Suburb E property, that the husband has made far greater direct financial contributions to that property.
Further it appears as though he was always the principal, and for much of the time sole, bread winner during the course of the relationship, and hence was responsible for servicing the debt that that attached to the parties’ property from time to time, including the Suburb U and Suburb E properties. Again it is not possible to mathematically approach the quantification of that contribution, absent any detailed reconciliation of the transactions in question.
In 2002 the wife’s parents gifted her approximately $26,100.00 which she deposited into the husband’s account. These were used to purchase shares, which were subsequently sold and invested in the parties’ business.
THE PARTIES’ NON-FINANCIAL CONTRIBUTIONS
It appears as though the parties undertook renovations of the matrimonial home from time to time. There is little detail in the material as to what that comprised, although at para 17 of her affidavit filed 27 March 2008 the wife refers to renovations of the Suburb E property by a builder, save that she also details that the husband purchased the materials used in the renovations at auctions and outlet centres, and the carpet was purchased by them jointly at a seconds store. The statement (with which she appears to agree) that was said by the husband to her at the time was:
The renovations we completed were equivalent to about $150,000.00 value but we have only spent $50,000.00.
In relation to non-financial contributions to property, I assess each party as being approximately equal.
THE PARTIES’ HOMEMAKER PARENT CONTRIBUTION
It does not appear to be in dispute that the wife was the principal homemaker for the couple, and that she performed most of the home duties, although at para 81 of his affidavit filed 24 February 2012, the husband asserted that “no more than two evening meals per week” were cooked by the applicant. Further, he asserted that cleaners were paid to carry out most of the cleaning duties at the home, albeit when finances became strained he would do most of that work himself. Save for bathing their daughter T, it does not appear to be disputed by the husband that the applicant was her primary carer, and remained so after separation.
I assess the applicant as having made the greater homemaker parent contribution.
RELEVANT SECTION 75(2) FACTORS
The applicant is presently 45 years of age and is apparently in good health. The respondent is presently 37 years of age and apparently of good health.
The most recent income details I have of the wife is that as at 7 May 2012 she was not in employment and only received parenting and family tax benefits. I have no direct evidence as to her employability save that in the past she has been employed in management roles. I have no details as to the husband’s current income. In the past he has had extensive management experience and no doubt will be able to readily obtain employment using those skills and experience.
The wife has the sole care of the parties’ daughter T, and apparently refuses to accept any payment of child support in respect of her by the husband.
ASSESSMENT
The husband has made the greater financial contribution to the property of the parties. On the other hand the wife has made the greater homemaker parent contribution. Because she has the care of the parties’ child and is likely to have a lower earning capacity than the husband, s 75(2) factors favour the wife. However here, on any view, given my findings, the parties have a net debt position. Further, there is the complicating factor that the husband asks me to award to the wife all of the parties’ superannuation, save that of course it will be many years before that becomes available directly to the wife for her enjoyment.
Really the sole question is what should become of the balance net proceeds of sale of Suburb E. On the one hand, the husband says it should be awarded entirely to him so as he can use it to effect reduction of indebtedness, with a view to getting him back on some sounder financial footing; on the other hand, the wife says that it should be awarded entirely to her because the husband has hidden assets (which I reject) and because she has the care of the parties’ daughter (which I accept and give weight to). She further says that all of the husband’s relevant debts are likely irrecoverable (which I reject) and at least insofar as her affidavits were cast when she was represented, seems to suggest that she has a lower earning capacity that the husband (which I accept).
Although not pressed upon me by the wife, a further factor which I have regard to is that the husband has already had the benefit of a substantial part of the proceeds of sale of Suburb E, and has already been able to use that to reduce debt. That amounts to $125,000.00.[10]
[10]Wife’s affidavit filed 27 March 2008 paras 21(b) and 23, although it appears the wife only concedes $93,000.00 of that sum was used to reduce debt.
I reject the husband’s contention that he should receive 100 per cent of the remaining balance of proceeds of sale of the Suburb E property because:
·It does not give sufficient weight to the fact that the wife has the care of the child of the relationship;
·It does not reflect in an adequate way her homemaker/parent contribution during the course of the relationship;
·It does not give any weight to the prospect that the husband may be able to negotiate a lower repayment of debt than that which I have found is his present indebtedness (which in his evidence he said he intended to do);
·It does not give adequate weight to the fact that the husband has already received from the proceeds of sale an amount in the order of $125,000.00.
I reject the wife’s contention that she should have 100 per cent of the remaining balance paid to her because:
·Such an outcome would not reflect the husband’s far greater financial contribution to that asset;
·It does not give adequate weight to the fact that the husband has retained all of the matrimonial debt;
·It does not give sufficient weight to the fact that the wife left the relationship without any pre-separation debt attaching to her;
·It does not give sufficient weight to her sole retention of the superannuation.
Upon balance, it seems to me that the appropriate course is to award the remaining balance of proceeds of sale of Suburb E in the proportion of 80 per cent in favour of the husband and 20 per cent in favour of the wife. That would see the husband left with a net liability of $38,151.60 (save that he may be able to negotiate a better outcome with the two lenders that were pursuing him as at trial) and the wife left with assets of $23,241.60, save that she also will have the benefit of the superannuation with a value of $64,644.00. In my view such an outcome is just and equitable because:
·it reflects the husband’s greater financial contribution;
·it sees the wife leave the relationship with some funds (accepting that on any view these parties really only have debt);
·to the extent that the wife has a lower earning capacity than the husband, the award of the superannuation to her should better secure her in retirement.
OTHER ORDERS
Superannuation Trustee re-instatement
The parties’ superannuation is held in the Bishop Family Trust of which W Pty Ltd is the Trustee. It is said that that company has been de-registered due to non-payment of ASIC fees. Whilst the husband is agreeable that the superannuation should in its entirety be awarded to the wife, practically achieving that is problematic. Perhaps in part to deal with that difficulty the wife seeks in her Initiating Application an order that W Pty Ltd be re-instated at ASIC, with all outstanding fees waived. No argument was addressed to this order. Whilst the Family Court of Australia does have an original corporations jurisdiction, there is simply no material which would enable me to properly determine whether or not W Pty Ltd should be re-instated, or the quantum of any outstanding fees, or be satisfied that ASIC has received notice of the proposed order.
Other than the assertion that W Pty Ltd has been de-registered (which is made in para 3 of the wife’s Amended Initiating Application) and the husband’s consent for an order for reinstatement, there is no direct evidence of the company’s de-registration or the reasons for it. Further, the evidence does not include any company search or similar précis of registered information relating to the company, or indeed the trust deed under which it apparently held the superannuation fund.
The sole evidence is in para 28 of the wife’s affidavit filed 27 March 2008 as follows:
In or about 2004 [the husband] & I incorporated [W] Pty Ltd as trus (sic) our self-managed superannuation, The [Bishop] Family Superannuation Fund, and at or ab (sic) same time I arranged for my superannuation accrued pre-cohabitation to be rolled into our self-managed fund. Although I am a director and shareholder of the trustee company, The [Bishop] Family Super Fund is presently under [the husband’s] control. I am aware that the [Bishop] Family Superannuation Fund holds investments with Macquarie Bank. To the best of my knowledge and belief there is currently approximately $86,437.00 worth of assets held by the [Bishop] Family superannuation Fund belonging to [the husband] and me.
Assuming that indeed W Pty Ltd held investments on trust for the Bishop Family Superannuation Fund, then upon its de-registration, by virtue of the Corporations Act s 601AD(1A), all property which it held on trust immediately before de-registration vested in the Commonwealth. By s 601AE of the Corporations Act, the Commonwealth may either continue to act as trustee or apply to a court for the appointment of a new trustee. Implicit in its powers of continuing to act as trustee is the prospect that it may, assuming that the relevant trust deed provides for transfer of the property to a new trustee, so transfer it. Such may be effected by ASIC on behalf of the Commonwealth: see subsection 8(6) of the Australian Securities Investment Commission Act 2001.
There is no evidence before me that the wife wishes to continue to operate a self-managed superannuation fund. One would ordinarily think it more likely she would wish to roll those funds into a commercially operated fund. I will give her the opportunity to make submissions on this point before pronouncing orders.
Against that background, I turn to consider whether or not the company should be re-instated at this stage. Re-instatement is provided for by s 601AH of the Corporations Act. Relevantly it provides:
(2) The Court may make an order that ASIC re-instate the registration of a company if:
(a)an application for re-instatement is made to the Court by:
(i)a person aggrieved by the de-registration; or
(ii)a former liquidator of the company; and
(b)the Court is satisfied that it is just that the company’s registration be re-instated.
I am satisfied that the applicant would be a person aggrieved: (see Caslai v Crisp (2001) 165 FLR 79) as I am satisfied that, although scant, the evidence allows me to conclude that she was both a shareholder and former director, and there would be a surplus of assets if the company were re-instated. Therefore the sole issue is whether or not I am satisfied that an order for re-instatement at this stage is just.
I am not persuaded that on the material before me it is presently just to re-instate the company. Particularly:
·I do not know the identity of all of the present shareholders and former directors of the company;
·I do not know the quantum of the outstanding fees to ASIC;
·ASIC does not appear to have been approached to re-instate the company administratively as it may under s 601AH(I);
·The sole purpose of its re-instatement appears to be to enable the wife to obtain control of the superannuation fund (to which the husband agrees);
·In fact there are probably avenues available to the wife to have ASIC, on behalf of the Commonwealth, transfer those funds, pursuant to these orders, to a new trustee;
·Only if those avenues do not bear fruit should re-instatement of the company be considered;
·In any event, even if there were orders for re-instatement, there would need to be ancillary orders made in relation to the transfers of shares in the company to the wife, and absent evidence as to who owns them, I would simply not be prepared to make any such order.
Transfer of wife’s shares in W Pty Ltd
It appears as though another company associated with the parties, X Pty Ltd, has also been de-registered. The wife wishes to have an order that she transfer to the husband her 90 per cent interest in the shareholding of that company. She says she wishes such an order to avoid any taxation liability that may attach to the company. The husband agrees to the order. Whilst I am not persuaded that there is any utility in ordering the transfer of shares of a de-registered company, when there is no extant application for its re-instatement, because the parties are agreed that I should make that order, I shall do so.
Assignment of judgment debt
It is agreed that the husband has the benefit of a judgment in the sum of $174,310.00 against C Pty Ltd. This debt arises out of a most unusual transaction involving him, apparently, being robbed of a large sum of cash when he was in Europe. The husband says that the judgment debt is irrecoverable as the judgment debtor has no funds. He agrees that the judgment should be assigned to the wife, although he concedes it should have no value attributed to it. There will therefore be an order requiring the husband to assign the debt to the wife.
CONCLUSION
For these reasons there will be orders in substantial conformity with those argued for by the husband, save that he will only receive 80 per cent of the remaining net proceeds of sale of the former matrimonial home, however I will hear the parties further as to the precise terms of the orders which they seek consequent upon these reasons.
I certify that the preceding eighty-three (83) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Tree delivered on 13 May 2014.
Associate:
Date: 13 May 2014
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