Blaise & Blaise
[2023] FedCFamC1F 135
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Blaise & Blaise [2023] FedCFamC1F 135
File number: MLC 9534 of 2020 Judgment of: MCNAB J Date of judgment: 3 March 2023 Catchwords: FAMILY LAW – PROPERTY – Orders made on an undefended basis – Where there was inadequate disclosure by one of the parties – Where there is an adjustment for lack of disclosure Legislation: Family Law Act 1975 (Cth) ss 75(2), 79 Cases cited: Chang v Su (2002) FLC 93–117; (2002) 29 Fam LR 406 Dickons & Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
Dovgan & Dovgan [2021] FamCA 306
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143
Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Weir v Weir (1993) FLC 92-338; (1992) 16 FamCA 69
Division: Division 1 First Instance Number of paragraphs: 43 Date of hearing: 1 – 3 March 2023 Place: Melbourne Counsel for the Applicant: Mr Dunlop Solicitor for the Applicant: Kalus Kenny Intelex Counsel for the Respondent: No appearance ORDERS
MLC 9534 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS BLAISE
Applicant
AND: MR BLAISE
Respondent
order made by:
MCNAB J
DATE OF ORDER:
3 MARCH 2023
FOR THE PURPOSES OF THESE ORDERS:
A.B Street means the real property located at and known as B Street, C Town in the State of New South Wales.
B.The water rights means:
(a)diversion entitlement licence number … (… megalitres of high security water);
(b)diversion entitlement licence number … (… megalitres of general security water);
C.The valuation report means the affidavit of Mr D filed in this proceeding and sealed 23 February 2023.
D.The Plant and Equipment means the plant, machinery, equipment and items referred to at part 5 of annexure "MD-3" and part 5 of annexure "MD-4" of the valuation report.
E.E Pty Ltd means the entity E Pty Ltd
F.F Family Trust means the family trust established by Deed dated early 2017
G.G Pty Ltd means the entity G Pty Ltd
H.H Pty Ltd means the entity H Pty Ltd.
I.J Pty Ltd means the entity J Pty Ltd
J.Blaise Family Trust means the Blaise Family Trust established by Deed dated early 2007
K.K Pty Ltd means the entity K Pty Ltd
L.L Pty Ltd means the entity L Pty Ltd
M.Superannuation Fund 1 means the Blaise self-managed superannuation fund
N.M Pty Ltd means the entity M Pty Ltd
O.N Pty Ltd means the entity N Pty Ltd
P.O Investments Family Trust means the O Investments Family Trust established by Deed dated late 2019
Q.Blaise business interests means and comprises:
(a)E Pty Ltd
(b)F Family Trust
(c)H Pty Ltd
(d)J Pty Ltd
(e)Blaise Family Trust
(f)K Pty Ltd
(g)L Pty Ltd
R.ANZ Mortgage means the ANZ Bank liability styled in account number ending …68 secured by registered mortgage over B Street dealing number ….
IT IS ORDERED THAT:
1.The Husband do all acts and things and sign all necessary documents to:
(a)In relation to E Pty Ltd and F Family Trust:
(i)Resign as a director and secretary of E Pty Ltd
(ii)Transfer to the Wife all of his shareholding in E Pty Ltd
(iii)Resign from his role as appointor of the F Family Trust
(iv)Relinquish any beneficial interest in F Family Trust
(v)Assign to the Wife any unpaid entitlements or monies owing to him or standing to his credit within either E Pty Ltd and/or F Family Trust;
(b)In relation to J Pty Ltd and Blaise Family Trust:
(i)Resign as a director and secretary of J Pty Ltd
(ii)Transfer to the Wife all of his shareholding in J Pty Ltd
(iii)Resign from his role as appointor of the Blaise Family Trust
(iv)Relinquish any beneficial interest in Blaise Family Trust
(v)Assign to the Wife any unpaid entitlements or monies owing to him or standing to his credit within either J Pty Ltd and/or Blaise Family Trust;
(c)In relation to K Pty Ltd:
(i)Resign and assign the wife as a director of K Pty Ltd
(ii)Resign and assign the wife as a secretary of K Pty Ltd
(iii)Transfer to the Wife all of his shareholding in K Pty Ltd
(iv)Assign to the Wife any unpaid entitlements or monies owing to him or standing to his credit within K Pty Ltd
(d)In relation to H Pty Ltd:
(i)Resign as a director of H Pty Ltd
(ii)Resign as a secretary of H Pty Ltd
(iii)Transfer to the Wife all of his shareholding in H Pty Ltd
(iv)Assign to the Wife any unpaid entitlements or monies owing to him or standing to his credit within H Pty Ltd
2.To facilitate the operation of Order 1, the Husband shall sign and return to the Wife any and all documents provided to him via email within 3 days of being sent the documents, or if hard copy documents are required, the Husband shall return the signed hard copies to the Wife by registered post within 3 days of such documents being sent to the Husband's accountant, U Accounting.
3.In the event the Husband fails, refuses or neglects to sign any documents and/or instruments and do all things required pursuant to Orders 1 and 2 hereof, the Wife be appointed pursuant to s.106A of the Family Law Act 1975 (Cth) to sign the documents and/or instruments on the Husband's behalf as may be necessary to facilitate Order 1.
4.As and from the date of these Orders the Wife:
(a)have the sole use and exclusive occupation and use of B Street and all buildings, dwelling, plant and equipment, crops, resources including water usage, at B Street;
(b)have effective control of the companies and trusts set out in order 1 hereof, and be at liberty to produce a copy of these orders as may be necessary to evidence same.
5.The Wife, at her sole discretion, be at liberty to complete all outstanding financial reports and lodge all outstanding business activity statements and taxation returns for the Blaise business interests without consultation or input from the husband.
6.Without limiting the Wife's powers or control of the companies and trusts set out in order 1 hereof, the Wife be at liberty to sell assets of the Blaise business interests to continue the operations of the land held by F Family Trust, including making payment of any outstanding debts, claims, actions or liabilities of F Family Trust.
7.Upon service of the these Orders upon the Husband as provided by these Orders, the Husband vacate B Street.
8.The Husband by himself, his servants and/or agents and in any capacity, including that of director as G Pty Ltd or any other entity, be and are hereby restrained by injunction from:
(a)Going to or remaining at B Street;
(b)Using or removing any plant and equipment located on the B Street property referred to in the valuation reports annexed to Mr D's affidavit dated 23 February 2023;
(c)Taking any steps to diminish the value of any of the buildings, dwellings, plant and equipment, crops or other resources located on the B Street property or owned by E Pty Ltd and/or F Family Trust
(d)Accessing, transacting or otherwise dealing with any bank accounts held by any of the Blaise business interests;
(e)Entering into any contracts, agreements, incurring any debts or liabilities for or on behalf of the Blaise business interests, or otherwise encumbering any of the assets held by Blaise business interests.
(f)Removing any produce from E Pty Ltd.
9.By 4:00 pm on 6 March 2023, the Husband must, at his own expense, return to B Street all items of plant and equipment, keys and email to the wife all relevant passwords and login details.
10.The Husband be solely liable for and forever indemnify the Wife and the Blaise business interests in relation to:
(a)Any and all monies owed by the Blaise business interests, or any of them, to the Husband, G Pty Ltd, N Pty Ltd or the O Investments Family Trust;
(b)Any and all debts or liabilities owed by any of the Blaise business interests to the Husband, G Pty Ltd, N Pty Ltd, the O Investments Family Trust and/or any previous employees of the Blaise business interests.
(c)Any and all claims or actions brought against any of the Blaise business interests by the Husband, G Pty Ltd, N Pty Ltd, the O Investments Family Trust and/or any previous employees of the Blaise business interests.
(d)Any debts, claims, actions or liabilities of the Blaise business interests, whether past, present or future, arising from any contractual agreement, guarantee or other commitment entered into by the Husband without the knowledge of the Wife, NOTING THAT the only liability owed by the Blaise business interests (other than to related party entities) is the ANZ Mortgage.
11.By no later than 1 July 2023, the Wife shall elect in writing via email sent to the Husband's email address at …@… whether she seeks to retain the assets of the Blaise business interests (the election).
12.In the event:
(a)The Wife makes the election to retain the assets of the Blaise business interests then orders 13 to 16 apply; or
(b)The Wife does not make the election to retain the assets of Blaise business interests then orders 17 to 22 apply.
If the Wife makes the election to retain the assets of the Blaise business interests
13.In the event the Wife makes the election to retain the assets of the Blaise business interests the Wife pay to the Husband the sum $1,500,000 on or before 1 August 2023 (the date), less:
(a)the payments made to the Husband from the proceeds of sale of the P Street property and from the funds held by the wife's lawyers pursuant to orders 17 and 18 hereof; and
(b)Any monies deducted by reason of Orders 15 and 16 hereof
(the payment).
14.Contemporaneously with the payment:
(a)The Wife do all acts and things and sign all necessary documents to discharge the ANZ Mortgage.
(b)The Husband forever relinquish any right, title and interest he may hold or be entitled to in the Blaise business interests;
(c)The Wife forever indemnify and hold the Husband harmless in relation to all taxes, claims, actions and debts owed by or brought against the Blaise business interests save as expressly provided for by these Orders.
15.In the event any item of plant and equipment is not located at the B Street property as at 4:00 pm on 6 March 2023, the value of the missing item according to the valuation report shall be deducted from the payment.
16.In the event F Family Trust is required to pay out employee entitlements, such as unpaid wages, superannuation, annual leave and/or PAYG tax withheld by F Family Trust arising from such expenses being incurred between the period 30 June 2021 to the date of these orders, such amounts so paid shall be deducted from the payment.
If the Wife does not elect to retain the Blaise business interests
17.In the event the Wife does not elect to retain the assets of the Blaise business interests, the Wife shall do all acts and things and sign all documents necessary to cause the sale of:
(a)B Street
(b)The Water Rights, or the balance of the Water Rights remaining following any sale pursuant to Order 6;
(c)The Plant and Equipment or the balance of the Plant and Equipment remaining following any sale pursuant to Order 6;
(the sales)
18.Upon the completion of each of the sales, the proceeds shall be applied in the following manner and priority:
(a)First, to pay the costs, commissions and expenses in relation to such sale;
(b)Second, to pay such amount as may be required to discharge the ANZ Mortgage;
(c)Third, to pay such amount to the Husband and to the Wife, or at their respective direction, to achieve an overall adjustment of the parties' net property interests in the proportions of 70% in favour of the Wife and 30% in favour of the Husband, with the net property interests to be the sum of the following:
(i)The balance of proceeds of the sales;
(ii)The wife's keep as provided by order 19(a);
(iii)The husband's keep as provided by order 19(b),
(the net property interests);
19.For the purpose of order 18(c):
(a)The Wife's keep comprises:
(i)Her part property payment of $200,000;
(ii)The amount paid to the Wife from the P Street proceeds of sale provided by order 23(b) hereof;
(iii)Motor Vehicle 1 valued at $44,720;
(iv)The loan owed to her father of ($60,618);
(v)Her superannuation entitlements of $91,000;
(b)The Husband's keep comprises:
(i)The husband's part property payment of $100,000;
(ii)The amount paid to the Husband from the P Street proceeds of sale provided by order 23(b) hereof;
(iii)Motor Vehicle 2 sale proceeds of $90,000;
(iv)His superannuation entitlements of $264,000.
(v)An amount equal to the value of any item of plant and equipment not located at the B Street property as at 4:00 pm on 6 March 2023, such value according to Mr D's valuation report.
20.The Husband and the Wife each be personally responsible for capital gains taxation as assessed and payable on account of the distribution of the proceeds of the sales in their respective proportion in accordance with Order 18(c).
21.The Wife provide to the Husband such information and documents relating to the cost base for each of the assets sold as part of the realisation, for the purposes of the Husband preparing and lodging taxation returns.
22.In the event F Family Trust is required to pay out employee entitlements, such as unpaid wages, superannuation, annual leave and/or PAYG tax withheld by F Family Trust arising from such expenses being incurred between the period 30 June 2021 to the date of these orders, such amounts so paid shall be deducted from the Husband's share of the sale proceeds payable to him pursuant to order 18(c) and reimbursed to F Family Trust.
P Street proceeds
23.The balance of the proceeds of sale of the property at P Street, Suburb Q in the State of Victoria held in the ANZ term deposit account ending …47 be distributed to the Husband and Wife in the following proportions, with the whole of such payments to be characterised as part property adjustment in favour of each party:
(a)70% to the Wife; and
(b)30% to the Husband.
AND this order serves as conclusive authority for such release.
24.The balance of funds held by the Wife's Solicitors on behalf of the Blaise Family Trust and the Husband and Wife be distributed to the Husband and Wife personally in the following proportions:
(a)70% to the Wife; and
(b)30% to the Husband.
25.The Husband retain his interest in any entity in which he holds an interest (other than the Blaise business interests) and be solely responsible for and pay, and indemnify the wife and/or any of the Blaise business interests, and keep them indemnified, against all payment and liability, past present or future, of whatsoever nature and kind, including but not limited to taxation liabilities associated with distributions or dividends made by any of the husband's entities to either party or any of the Blaise business interests, costs, claims, penalties or interest associated with the husbands entities.
Superannuation
26.The Wife do all acts and things necessary and sign all documents required to roll over her entitlements in the Superannuation Fund 2 (Superannuation Fund 2) to a complying superannuation fund of her nomination (the New Fund), with such nomination to be made not less than 14 days of the date of these orders.
27.The Wife's entitlement in Superannuation Fund 2 be calculated as at the date of service of these orders upon the Trustee of Superannuation Fund 2, and effected by way of a roll over of the cash at bank held by Superannuation Fund 2.
28.Pending completion of the roll over of the Wife's Super into the New Fund, the parties are hereby restrained by injunction from disposing of any assets of Superannuation Fund 2 and from removing any of the cash at bank from any of the accounts of Superannuation Fund 2, other than as may be required to comply with the obligations of Superannuation Fund 2.
29.Upon completion of the rollover of the Wife's Super into the New Fund in accordance with these orders, the Husband retain his interest in Superannuation Fund 2, and the Wife resign as a director of the Trustee, transfer her shareholding in the Trustee, and as a member of Superannuation Fund 2.
General
30.The parties otherwise each retain, to the exclusion of the other, the assets and liabilities in their respective names and possessions.
31.The wife be at liberty to provide a copy of these orders to the ANZ Bank, or such other organisation as may be necessary to give effect to these orders.
32.The wife's lawyers serve the Husband with a sealed copy of these orders within 24 hours of the date on which they are made available by the Court by email to the Husband's email address at …@….
33.The wife have liberty to apply at short notice directly to the chambers of the Honourable Justice McNab in relation to the implementation of these orders.
AND THE COURT NOTES THAT:
A.IF YOU REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR
B.DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU NOT TO DO,
C.YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT. ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Blaise & Blaise has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
EX TEMPORE
(Revised from Transcript)McNab J:
This matter concerns property proceedings between the applicant wife, Ms Blaise, and the respondent husband, Mr Blaise.
The matter proceeded to final hearing on 1 March 2023 and counsel for the wife made detailed opening submissions for the benefit of the Court and the husband who was self-represented and appeared in person. The submissions of counsel were fair and measured and accurately represented the evidence that had been filed on behalf of the wife in the proceedings. The opening statement also raised in a fair way, discrepancies that had not been explained in the evidence filed by the husband.
The process of the trial was explained to Mr Blaise and his role in the trial was explained. The parties in this matter married in late 2005 and separated on 18 March 2019. There are two children of the relationship aged 10 and 12, and these children live with the wife and have virtually no contact with the husband.
The Court adjourned at the conclusion of opening submissions made by the counsel for the wife at 1 pm on 1 March 2023, and upon resuming at 2.15pm, the Court was informed by counsel for the wife that the wife's solicitors had been notified by the husband that he no longer wished to take part in these proceedings. The husband did not return to Court and orders were made on 1 March 2023 that the matter be adjourned until the following morning at 10.30 am on 2 March 2023, and if the husband did not appear the matter would proceed on an undefended basis.
A notation was included in the orders adjourning the matter which included a reference to the email sent to the wife's solicitors that the husband was "withdrawing all applications and orders" and would not be participating in these proceedings. These orders were forwarded to the husband by the Court and the solicitor for the wife by email. On the evening of 1 March 2023 the Court received correspondence from the husband in the following terms:-
I do not wish to retain any of the assets or water or entities and in my earlier orders I never requested any of the machinery or plant and equipment.
I never wanted to retain the entities as I do not trust their validity or taxation requirements only your client knows the status of these.
At your clients requested 70% it’s not viable for myself to retain the property so I seek complete liquidation.
In further correspondence addressed to the court of the same date he stated:-
Apologies for not reappearing but I cannot defend myself without evidence and I’m not able to obtain information due to non-disclosure from the other side but I can’t prove they are not disclosing and finances I don’t have.
Im not an accountant and concerned there is more undisclosed debt.
I’ve done what I can against an opposition I’ve battled for 4 years where the fights are smoke an mirrors but I can’t prove where the money has gone and so many of my friends and family have been effected I don’t know how to move forward.
I didn’t mean to disrespect the court
I apologise to the Honourable Justice McNab but the money was taken in 2019 2020 and I still can’t find it.
I don’t know what else to do.
Please don’t make a ruling I’m left with scrap metal and no money I need to survive that’s all I ask once again my apologies.
Upon the matter resuming on 2 March 2023 the husband remained absent and orders were made that the matter proceed on an undefended basis. Orders were made at the conclusion on 2 March 2023 restraining the husband from dealing with the assets and property comprised in the matrimonial assets.
In light of this correspondence, counsel for the wife made submissions that she sought to amend the orders sought by her to be in broad terms that she have the right to elect to either retain the property which comprises the substantial asset of the marriage, and make payment to the husband once the value of the property had been assessed to reflect a 70/30 split in her favour, or that she have the right to liquidate the property assets and proceed to have those assets divided 70/30 in her favour. The hearing was adjourned to 3 March 2023 to provide the wife the opportunity to formulate proposed final orders.
The Court, as noted earlier, has made orders that the matter proceed on an undefended basis by reason of the non-appearance by the husband and his clear indications to the Court that he no longer wished to participate in the proceeding. The Court has had regard to the material filed and relied upon by the wife being:
(a)a further amended initiating application filed 7 February 2023;
(b)the trial affidavit of the wife filed 7 February 2023;
(c)the financial statement of the wife filed 7 February 2023;
(d)an application in the proceeding filed 24 January 2023;
(e)an affidavit of the wife filed 24 January 2023; and
(f)an affidavit of the single expert valuer filed 23 February 2023.
I have also had regard to the draft orders that have been provided to the Court this day. The Court has also had regard to the trial affidavit filed by the husband and the minute of orders he sought the Court to make.
CONSIDERATION
In respect to the parties' dispute regarding the division of property in these proceedings, the court has regard to s79 of the Family Law Act 1975 (Cth) (“the Act”).
The High Court in Stanford v Stanford (2012) 247 CLR 108 ("Stanford"), at [35] confirmed that before an order is made adjusting the parties property the court is required to make a determination that it is just and equitable to do so. That determination is to be made, however, not as a discrete or preliminary issue but requires the Court to consider the matters set out in section 79(4) of the Act.
In the leading case of Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143, the Full Court held at [39] that, in considering the matters set out in section 79 (4) of the Act the preferred approach was to adhere to the following four steps:
(1)Identify and determine the value of the asset pool of the parties as at the date of the hearing (this necessarily involves identifying both the assets and liabilities);
(2)Identify and assess each of the parties' financial and other contributions up until the date of the hearing (this can include the financial contributions made before, during and after the marriage);
(3)Assess how future and other events may have a financial impact on either of the parties, such as their age and state of health and their income and property or financial resources (known as the s 75(2) factors); and
(4)Step back and examine this formula-based reasoning against the history of the marriage, intangible considerations and other contingencies so as to consider whether the outcome represents a just and equitable result.
Is it just and equitable to make a property adjustment
The parties are in agreement that in the circumstances where the parties have separated, it is just and equitable for the court to make an adjustment to the parties’ property interests.
BALANCE SHEET
I find that the asset pool is per wife’s case outline being:
Non-Superannuation Assets Asset Ownership Value Joint bank account ANZ One …96 Joint $0 ANZ Access Advantage …87 Husband Nominal Husband’s partial property settlement Husband $100,000 K Pty Ltd (retained profits) Husband NIL ANZ …61 Wife Nominal ANZ …47 (including proceeds of sale of home) Wife $648,590 Motor Vehicle 1 Wife $44,720 Part property settlement Wife $200,000 L Pty Ltd (retained profits) Wife NIL E Pty Ltd F Family Trust $1,790,000 Water rights F $5,705,000 Plant and equipment F Family Trust $395,000[1] ANZ business acc …68 F Family Trust Nominal Funds owed by G Pty Ltd F Family Trust $8,165,000 Plant and equipment G Pty Ltd $8,000 ANZ Account …62 G Pty Ltd $25,550 ANZ USD Account …01 G Pty Ltd Nominal ANZ Bank Account …06 Blaise Family Trust NIL R Pty Ltd settlement funds Blaise Family Trust $14,055 S Bank account …29 H Pty Ltd Nominal Liabilities Loan to Mr T Wife $60,000 ANZ Debt …68 F Family Trust $2,700,000[2] Credit card F Family Trust $7,444 W Bank Finance G Pty Ltd $28,649 V Finance equipment G Pty Ltd $4,281 Total Non-Superannuation Assets (including liabilities) $6,601,167 Superannuation Superannuation Fund 1 Husband $1,309 Superannuation Fund 2 Husband $262,761 Superannuation Fund 3 Wife $6,026 Superannuation Fund 2 Wife $85,276 Total Superannuation Assets $355,372 Total Combined Assets (including liabilities) $6,956,539 [1] As per updataed valuation on 8.2.23
[2] This is based on submissions made that the bank statements shows that the debt has increased since the wife’s outline was filed
Contributions
The Court is required to make an assessment of the nature and the quality of the parties' contributions throughout the entirety of their relationship together with their contributions in the period subsequent to their separation (Dickons & Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154, [14] (Bryant CJ, Faulks DCJ, Murphy J); Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78, [61] (Alstergren CJ, Ryan and Aldridge JJ). See also Dovgan & Dovgan [2021] FamCA 306, [347] (Harper J)).
Prior to the birth of the first child, the wife worked full-time as a finance professional and was a full-time home maker and carer for the children until early 2017 at which time she commenced work for the parties' business.
The wife gave evidence that the husband was working for his family-run business prior to the parties purchasing a 25 per cent interest in a company R Pty Ltd (R Pty Ltd), in 2009 for $275,000. The parties also jointly purchased the family home for $249,000 in mid-2005 of which the husband contributed $100,000 and the balance was from a bank loan. The parties purchased and sold a series of properties in the interim period, and the proceeds of a property at P Street was partially distributed via part-property settlement in early 2022 with the wife receiving $200,000 and the husband receiving $100,000. The balance of the proceeds of the sale of that property is over $600,000.
It is not disputed that the wife was the primary carer of the children during and after the marriage. The wife was sole carer of the children at the time of the hearing and is receiving minimal child support of $20 per month from the husband. Both parties received similar incomes and drawings from the business during the relationship as they were both directors and shareholders. Following separation the husband has continued to work in agriculture and a director of the business, and the wife has resigned her directorship from G Pty Ltd, which is a company which forms part of the business structure by which the business is carried on, and she no longer works for the business.
I acknowledge that the husband has made an initial contribution of $100,000 to the purchase of the family home in 2005 however given the long marriage and the substantial work done by both of the parties to the date of trial, I assess the parties' contribution to the asset pool as 50/50.
Relevant s 75(2) factors pursuant to s 79(4)(e)
Subsection (2)(a) – the age and state of health of each of the parties
The husband is 40 and the wife is 39. There is no evidence before the Court of any health issues.
Subsection (2)(b) – the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment
The wife is a finance professional and is working part-time. She deposed that she earns an annual income of $36,850 from that work. She notes that this role is a lesser capacity than she is qualified but allows her the flexibility to prioritise the care of the children. The husband has continued to work in the business and there is no evidence of mental or physical incapacity for gainful employment.
Subsection (2)(c) – whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
The wife is the sole carer of the children who are aged 10 and 12. The husband does not spend any time with the children.
Subsection (2)(na) – any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage
The husband is currently paying child support of approximately $20 per month. Until 5 December 2022 the husband was assessed to pay $1605 per month but reported reduced income. The wife gives evidence that he his $18,495.98 in arrears and has not lodged tax returns since 2019.
Subsection (2)(o) – any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
It was submitted by counsel for the wife that the wife has been significantly impacted by the husband's failure to provide adequate disclosure over the past several years. He refers to Chang v Su (2002) FLC 93–117; (2002) 29 Fam LR 406 and Weir v Weir (1993) FLC 92-338; (1992) 16 FamCA 69 in submitting that the wife should receive an adjustment on account of the husband's failure to so disclose. Submissions were made on behalf of the wife that the previous business structure had been substantially altered without explanation, and the most obvious explanation was that the husband was attempting to divert funds away from the wife.
The Court was provided with a business structure which shows a reasonably complex financial structure involving trustee companies and family trusts carrying on the business but, effectively, the business was divided into two parts. It is an agricultural business operated, on land owned by the parties through a company, E Pty Ltd (E Pty Ltd). E Pty Ltd is the trustee of the F Family Trust (of which the parties are beneficiaries) and carries on the business of owning the land on which produce is grown and growing the produce. A company, G Pty Ltd, of which the husband is the sole director, is in the business of processing produce. That is a short summary of the arrangements but should suffice for these purposes.
One of the essential aspects of the way the structure operated was that E Pty Ltd would be paid by G Pty Ltd for the produce it sold. Reference was made to the fact that E Pty Ltd was no longer receiving grower’s returns for the produce that was sold via G Pty Ltd despite the business continuing to operate and the produce being sold. This is significant because E Pty Ltd is the legal owner of the property on which the produce is grown, and it has a loan facility with the ANZ Bank which is substantially in arrears. The effect of not receiving income means it is unable to pay the bank and the mortgage is increasing at the rate of $14,000 per month and unpaid interest accrues. The wife gave evidence that G Pty Ltd typically received the produce from E Pty Ltd and packaged it, and produced a grower’s return to E Pty Ltd containing the quality and quantity of the produce which E Pty Ltd would use to produce an invoice to G Pty Ltd.
She notes that G Pty Ltd has not issued a grower’s return since early 2022 and has not made a payment to E Pty Ltd since early 2022. No explanation has been provided, and G Pty Ltd is still receiving produce from the crops maintained on the E Pty Ltd land. Notably, documentation produced by G Pty Ltd in the course of the proceedings produced a profit and loss statement for the period for the year ended 31 December 2022 which indicated a total trading income of that business of over $3,000,000, a cost of sales of over $1,000,000, and a gross profit of over $2,000,000. There are operating expenses of over $1,500,000 leaving a net profit after deducting the cost of sales and total operating expenses of just under $550,000.
As I have said earlier, the evidence of the wife is that there has been no payment from G Pty Ltd to E Pty Ltd since early 2022. The wife also gives evidence that G Pty Ltd formerly paid rent to E Pty Ltd for the use of their shed and equipment of approximately $4000 per month. The wife gives evidence that no rental payments have been made since mid-2022 despite G Pty Ltd continuing to make use of the shed and equipment. The wife resigned from her position as a director of G Pty Ltd in early 2019 following the separation but remained employed until mid-2022 when she ceased all involvement with G Pty Ltd.
The husband has been the sole director of G Pty Ltd since early 2022 when the remaining directors resigned. In late 2022 solicitors for the wife received an email from the husband stating that G Pty Ltd had taken over the property owned by E Pty Ltd. No evidence of any commercial arrangement or payment for that to occur has been produced, and E Pty Ltd remains the registered owner of the property. All of this has occurred in circumstances where the husband's partner has established a company, N Pty Ltd, which appears to have taken over a significant portion of the role of E Pty Ltd, including transportation of the produce.
The wife drew attention to the fact that E Pty Ltd sold a vehicle in early 2020 and within three days N Pty Ltd had purchased a similar vehicle from the same supplier for the same price. This, she submitted, was an attempt to shift assets out of E Pty Ltd and into N Pty Ltd. The husband has filed no evidence in this proceeding in relation to the role of N Pty Ltd or an explanation despite the wife raising very specific claims in her evidence regarding the role of N Pty Ltd. There were claims made when the matter was before the Court on the return of an objection to a subpoena, where counsel for N Pty Ltd made submissions that the husband had no involvement whatsoever in that business. However, the subpoena of documents directed to N Pty Ltd produced documents which included a business card with the husband's name next to the role of sales representative with that company’s branding. That is contained in the tender bundle of documents at page 47 and which tender bundle is exhibit A3.
The husband makes no reference to N Pty Ltd in his trial affidavit and maintains he has no involvement in that business.
The wife counsel produced to the Court a list which shows documents, which it is submitted that the wife still has not received from the husband despite numerous requests both in and out of Court. These include and are not limited to the following:
(1)Payslips relating to income received from any source for the period from 1 July 2022 to date;
(2)Invoices for contracting work undertaken from the period 1 July 2022 to date;
(3)Income transactions from MyGov as to any government benefits received from 1 July 2022 to date;
(4)Any other documents evidencing income received from any source from 1 July 2022 to date;
(5)Screenshots of account summaries from all banks with which accounts are held as at the current date;
(6)Screenshot of MyGov summary of current superannuation interest ;
(7)Holding and transaction statements for any and all shares, investments or cryptocurrency/digital assets held in the period since 1 January 2020 to date;
(8)Any documents evidencing the financial goings on of G Pty Ltd, including taxation returns from G Pty Ltd for the years ending 30 June 2020, 2021 and 2022, financial statements for the periods 30 December 2021 and 2022; grower returns, pack out reports and PAYG Summaries issued for the years ending 31 December 2020, 2021 and 2022 and for 1 January 2023 to date; finance and leasing contracts relating to equipment; and documents evidencing the business insurance policy;
(9)Any documents evidencing the financial goings on of K Pty Ltd, including financial statements for the financial years ending 30 June 2020, 2021 and 2022;
(10)Any documents relating to motor vehicles including redbook valuations, statements for any leases or finance obtained, documents in relation to the sale of the Motor Vehicle 2; and
(11)Any invoices from N Pty Ltd relating to the commission on sale of produce for the period of 1 January 2021 to date.
I accept that the documents sought by the wife are relevant and have not been disclosed by the husband.
The husband has also at times refused to comply with orders including orders made by consent which has caused the wife to incur significant legal costs. Particular reference is made to order 8 of the orders made by consent on 28 April 2022 for both parties to do all acts and things to seek the ANZ Bank to release by way of part-property settlement $100,000 to the husband and $200,000 to the wife. On the same day that the orders were made, the husband contacted the bank to inform them that he did not agree with any funds being released under the consent order. There was a series of communications between the solicitors seeking the husband comply with the orders during which time the husband's lawyers filed a notice of withdrawal and the husband became self-represented. The husband then wrote to the bank to say that he consented to $200,000 being transferred to each party, which the bank did not comply with or agree to do as that was not contained in the order which had been provided to the bank.
The wife brought an application for contempt for non-compliance which was listed on 5 August 2022, and subsequently orders were made in terms sought by the wife and the funds were ultimately released. These orders included a costs order against the husband of $3500, which costs order has not been paid. In my view, the evidence does support a finding that there has been significant non-compliance with the husband's duty of disclosure, and I have dealt with that in relation to the discussion regarding N Pty Ltd and the list of documents which have been sought and not provided.
Without listing each of the interlocutory applications and the list of correspondence relating to this issue, it is apparent that very significant legal costs have been expended by the wife in order to have the matter proceed to hearing so that the Court is properly appraised of the true financial position of the parties. Given that the husband has now indicated that he wishes no longer to be involved in the proceeding and/or the operation of the businesses, whether it be E Pty Ltd or G Pty Ltd, this has left the wife in a very difficult situation where the companies are obviously going concerns and where the Court has been advised by Mr Blaise that the company has an employee and subcontractors have been engaged in order to process the produce.
Obviously, the company will also have liabilities to other third parties arising from the operation of the business which is apparently a business of reasonably substantial size given the level of its turnover and the level of assets. The wife, whilst she has the full time care of two children, is now being placed in the position where she has to effectively take over the running of the business and deal with all those matters without assistance.
In my view, that will be a very significant enterprise in terms of time and perhaps cost. The allocation of the matrimonial assets with 70 per cent to the wife and 30 per cent to the husband is just and equitable and, indeed, given the scope of the exercise she now faces. There are arguments to support her receiving more than 70 per cent.
The orders provide the option for the wife to carry on the business without the husband playing a role. They make provision for him to resign from his positions with the various companies within the group, and they also provide for her to effectively take over the management of the businesses and become responsible for filing the necessary business activity statements and financial reports. This is a very substantial task for her given that she also has the care of the two children. Under this option she is required to pay the husband $1.5 million (subject to orders 14 (a) and (b). The second option is for the wife to sell the assets of the business including the land and water rights attached to the land, to pay out creditors and then to pay the husband 30% of the proceeds (subject to the terms of the orders).
On the figures that have been provided to me, the sum of $1.5 million reflects the division of assets roughly 70/30 taking into account the assets that the husband has already received or is keeping. Alternatively, if the assets are to be sold, then the net proceeds are to be divided 70/30. In relation to superannuation, the wife is not seeking a superannuation split, which is an order that operates in the husband's favour. All she is doing is seeking is an order enabling her to roll her entitlements under the fund as they presently stand into a separate fund. That order is also just and equitable.
In those circumstances, the Court will make the orders in the terms of the minute of orders sought provided to the Court by the counsel for the wife. The very substantial costs that have been incurred will not be the subject of a separate costs order or separate consideration, but I take into account those matters in section 75(2)(o) of the Act and it forms part of the consideration for making the orders for distribution of the matrimonial assets.
These orders effect a just and equitable distribution of the matrimonial assets and make provision to deal with the husband’s chosen course of walking away from the business when it was a going concern.
I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice McNab. Associate:
Dated: 9 March 2023
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