Blaxland & Blaxland
[2023] FedCFamC1F 240
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Blaxland & Blaxland [2023] FedCFamC1F 240
File number: LNC 187 of 2021 Judgment of: MCGUIRE J Date of judgment: 6 April 2023 Catchwords: FAMILY LAW - PROPERTY – When property pool is extensive in content and of substantial value – Long marriage – Where parties agree equal contributions and no adjustments for s 79(4)(d)-(g) considerations – Dispute as to “add-backs” to the pool – Dispute as to distribution of assets Legislation: Family Law Act 1975 (Cth) s 75(2), 79(2) and 79(4)(b)-(g) Cases cited: AJO & GRO (2005) FLC 93-218
Jabour & Jabour (2019) FLC 93-898
R v Watson; Ex parte Armstrong (1976) 136 CLR 248
Stanford & Stanford (2012) 247 CLR 108
Townsend & Townsend (1995) FLC 92-569
Division: Division 1 First Instance Number of paragraphs: 65 Date of last submissions: Written submissions 27 February 2023 Date of hearing: 7, 8, 9 and 11 March 2022 and 9, 10 and 11 January 2023 Place: Launceston delivered in Hobart Counsel for the Applicant: Andrea Trezise Solicitor for the Applicant: Andrea Trezise Barrister & Solicitor Counsel for the Respondent: Mr Hall Solicitor for the Respondent: John Munro & Associates ORDERS
LNC 187 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS BLAXLAND
Applicant
AND: MR BLAXLAND
Respondent
order made by:
MCGUIRE J
DATE OF ORDER:
6 April 2023
THE COURT ORDERS THAT:
1.For the purpose of these orders IT IS DECLARED THAT:
(a)the parties’ matrimonial assets and liabilities are set out in “Annexure A” hereto (“the Balance Sheet/Asset Distribution Schedule”);
(b)the assets are valued as stated in the Balance Sheet/Asset Distribution Schedule;
(c)the amounts owed at items 96 to 102 of the Balance Sheet/Asset Distribution Schedule may fluctuate prior to the Settlement Date, subject to the injunction against drawdowns set out in Order 4(b) below;
(d)Orders 2 and 3 of the Orders of 26 March 2021 and Order 8 of the Orders of 10 January 2023 (as amended) remain in full force and effect for the period up to and concluding upon the Settlement Date as later defined herein and then discharged, with liabilities of the types described in those orders that fell due and payable on or before the Settlement date to remain a liability of and be paid by B Pty Ltd.
2.Within 60 days of the date of these orders (“the Settlement Date”):
(a)Mr Blaxland (“the husband”) do all such acts and things and sign all such documents as may be required to transfer to Ms Blaxland (“the wife”) all his right, title and interest in items numbered 4 to 42 of the Balance Sheet/Asset Distribution Schedule;
(b)the wife do all such acts and things and sign all such documents as may be required to transfer to the husband all her right, title and interest in items numbered 43 to 73 of the Balance Sheet/Asset Distribution Schedule; and
(c)the wife pay to the husband the sum of $1,334,405 (“the Settlement Payment”).
3.Contemporaneously with the performance of the parties’ obligations pursuant to Order 2 herein:
(a)each party do all such acts and things and sign all such documents as may be required to refinance into that party’s sole name one half of the total amount of the liabilities listed in items 96 to 102 of the Balance Sheet/Asset Distribution Schedule, calculated as at the Settlement Date (“the Portfolio Refinancing”) with any fees payable to the secured lenders to effect discharge of the said liabilities to be borne equally;
(b)each party be solely liable for and indemnify the other in relation to any liability of whatsoever nature and kind attaching to any real or other property that party is to receive pursuant to these Orders;
(c)the wife shall procure a release of the husband from liability for all borrowings obtained by C Pty Ltd from the National Australia Bank Limited and National Australia Bank mortgage number … secured against the D Street property; and
(d)the contents of the bank accounts referred to at items 86 to 93 of the Balance Sheet/Asset Distribution Schedule be divided equally between the parties and then closed, save and except for one joint account that shall continue to receive all remaining sale proceeds of E Street, Suburb F until all sale proceeds have been divided and distributed in accordance with the orders of 10 January 2023 as amended on 13 January 2023 and that joint bank account shall thereafter be closed.
4.Pending the Settlement Payment and completion of the Portfolio Refinancing:
(a)B Pty Ltd shall receive all income that it is entitled at law to receive from the real estate and other assets that it owns and declare receipt thereof for the purposes of entity and taxation reporting purposes including:
(i)the rental income from real property owned by the Family Trust;
(ii)the income of the Blaxland Partnership, if any;
(iii)the income of Blaxland Pty Ltd, if any;
(iv)rental income in relation to J Street, Suburb K;
(v)rental income from the existing house at L Street, Suburb F; and
(vi)the sports income including prize winnings and merchandise sales.
(b)B Pty Ltd shall continue to be liable for and pay as and when it falls due all real and other property holding costs, mortgage payments, equipment finance payments, insurances, rates, taxes, outgoings, and all other expenses that it paid in relation to the assets and liabilities of the parties, all of their entities and partnership prior to 31 December 2022 and neither party may draw down upon any credit facility listed at item 96 to 102 of the Balance Sheet/Asset Distribution Schedule for any other reason without the prior written consent of the other party.
(c)The funds held in the bank accounts listed at item 86 to 93 of the Balance Sheet/Asset Distribution Schedule and the borrowing facilities listed at item 96 to 102 of the Balance Sheet/Asset Distribution Schedule shall continue to be applied in accordance with the orders of 10 January 2023 as amended on 13 January 2023.
5.In relation to the expenses of B Investments, pending the payment of the Settlement Payment and contemporaneous Portfolio Refinancing, B Pty Ltd shall remain liable for and pay all outgoings of B Investments of whatsoever nature and kind incurred in the ordinary course of business save and except as provided in Order 6 hereof.
6.In relation to goods and services obtained by B Investments in the course of improving the real property at L Street, Suburb F:
(a)B Pty Ltd shall be liable for the cost of such goods and services incurred in the ordinary course of business for invoices rendered on or before 31 December 2022; and
(b)the husband shall be solely liable for and indemnify B Pty Ltd and the wife against such expenditure incurred thereafter.
7.The parties forthwith do all acts and things necessary to sell the real property at M Street, Suburb N and upon completion of the sale the proceeds thereof net of conveyancing costs be divided equally between the parties (“the M Street sale”). To give effect to the M Street sale:
(a)the parties have the joint conduct of the sale;
(b)Ms O of P Agents be appointed as selling agent;
(c)the property be offered for sale by offers over $1,500,000.00 unless otherwise agreed in writing; and
(d)Q Company be appointed as conveyancers for the vendors.
8.Upon completion of the M Street sale the proceeds be applied as follows in priority:
(a)to pay the costs, commissions and expenses of the sale, including any costs of preparing the property to be placed upon the market and to provide vacant possession to the purchaser;
(b)to discharge any encumbrance upon title; and
(c)to distribute the remaining sale proceeds equally between the parties, on the basis that each is liable to account to the Australian Taxation Office for one half of any capital gain arising as a result of the disposal.
9.In relation to the E Street sales referred to in the Orders of 10 January 2023, the selling costs in Order 5 thereof is defined to include the cost of preparing the properties to be placed upon the market and to provide vacant possession to the purchaser.
10.The husband retain the plant and equipment listed in “Annexure B” hereto.
11.The wife retain Motor Vehicle 1 registration number … and Motor Vehicle 2 registration number … and the husband sign any documents necessary to effect transfer to the wife at her expense and the wife shall on or before the Settlement Date refinance into her sole name any liability/liabilities secured thereon.
12.Unless otherwise agreed in writing, the parties do all acts and things and sign all documents required to effect the sale for the best price reasonably obtainable of all other plant and equipment referred to in the updated BE Pty Ltd valuation report and upon completion of those sales, the proceeds net of selling agent’s commission and any other direct sale costs be divided equally between the parties, with the financial effect of any income taxation consequences of the sales to also be shared equally.
13.Following:
(a)the payment by B Pty Ltd of all amounts that it is obliged to pay pursuant to Order 4(b), 5 and 6(a) hereof;
(b)the completion of the E Street sales and the M Street sale; and
(c)the completion of the sale of plant and equipment ordered herein;
the parties do all acts and things required to complete and lodge the financial statements and taxation returns of B Pty Ltd, the Blaxland Family Trust, Blaxland Pty Ltd, the Blaxland Partnership and the parties personally for each financial year up to and including the year in which the sales referred to in subparagraph (b) and (c) hereof can be declared to the Australian Taxation Office, and for the purpose of this order the parties shall:
(i)engage Mr R of S Financial Services at their equal shared cost;
(ii)provide to Mr R within 14 days of a request copies of all documents required by Mr R in order to complete this work;
(iii)follow Mr R’s recommendations as to the most prudent method of completing the financial statements and taxation returns; and
(iv)be equally liable for and pay as and when required by the Australian Taxation Office one half of the net sum payable by the parties and the said entities as a result of the filing of such taxation returns.
14.For the purposes of completion of the financial statements and taxation returns of the parties’ businesses and the parties individually as ordered herein:
(a)the parties shall allow the debts owed by B Investments to the Family Trust to be offset against any amounts recorded as owing by the Family Trust to the husband;
(b)the parties shall allow any amounts reported as owing by the Partnership to the Family Trust to be offset against any amounts recorded as owing by the Family Trust to the wife and/or the husband;
(c)any amount remaining owing to the husband by the Family Trust after the application of the above two adjustments will be assigned by the husband to the wife; and
(d)the only capital gains taxation liability that is to be shared between the parties is that referable to sales of real and other property that has been expressly ordered in these orders and in the orders of 10 January 2023, namely M Street, Suburb N, E Street, Suburb F, and the CGT consequences, if any, relating to the ordered sale of plant and equipment.
15.Following the transfer and sale of assets out of the Partnership as ordered herein the parties do all acts and things required to instruct S Financial Services to wind up the Blaxland Partnership at their equally shared cost, with the assets of the Partnership being transferred to the husband save and except for Motor Vehicles 1 & 2 to be retained by the wife pursuant to these orders.
16.Unless otherwise specified herein the parties be equally liable for expenses necessarily incurred in the implementation of these orders, including tax payable on the disposal of any real or other property but excluding the legal costs incurred by either party in the course of implementing these orders.
17.Following the completion and lodgement of the financial statements and taxation returns referred to in the preceding orders, the parties shall both do all acts and things and sign all documents necessary to effect the following at the parties’ equal shared cost:
(a)the transfer to the wife of all right, title and interest in B Pty Ltd;
(b)the resignation by the husband as appointor and trustee of the Blaxland Family Trust;
(c)the resignation of the husband as a director of B Pty Ltd;
(d)the resignation of the wife as a director of B Investments;
(e)the transfer to the husband of all right, title and interest in B Investments;
(f)the winding up of the Blaxland Partnership;
(g)the transfer to the wife of all right, title and interest in C Pty Ltd;
(h)the resignation by the husband as a director and secretary of C Pty Ltd and as the trustee and appointor of the C Property Trust; and
(i)the assignment to the wife of rights to recover debts owed by C Pty Ltd and/or the C Property Trust to the husband and/or the wife.
18.With respect to Building Warranties relating to real properties ordered to be divided between the parties herein, the parties remain jointly liable for any claims lodged prior to the Settlement Date, and each party be solely liable for any Building Warranty claim lodged thereafter on any real property that party is ordered to receive pursuant to these orders.
19.With effect from the Settlement Date, each party be solely liable for and indemnify the other against any liability of any company or trust that party is due to receive pursuant to these orders, with effect from the date of transfer by the other party of his/her shareholding or relinquishment of other interest as ordered herein.
20.Unless otherwise specified in these orders, and save for the purpose of enforcing the payment of any monies due pursuant to these or any other orders:
(a)each party be solely entitled to all personalty and chattels in the possession of such party as at the date of these orders, with the contents of any real property being deemed to be in the possession of the party that shall receive that real property pursuant to these orders;
(b)with effect from the date of payment of the whole of the Settlement Payment, each party be solely liable for and indemnify the other against liability for any finance contract that relates to any chattel that party is to receive pursuant to these orders;
(c)superannuation entitlements belong to the account holder named thereon;
(d)insurance policies remain the sole property of the owner named thereon; and
(e)any joint tenancy in any real or personal property is hereby expressly severed.
21.The parties shall forthwith provide to Mr R a copy of these orders and of the orders made on 10 as amended on 13 January 2023.
22.Either party have liberty to apply in the event that they are unable to agree upon which invoices are payable by B Pty Ltd pursuant to Order 4(b), 5 and 6 hereof, provided that party has first sought a written statement from Mr R as to whether the invoice in question constitutes an expense payable by B Pty Ltd pursuant to those orders.
23.Within 60 days of these orders the parties shall sign all documents and do all necessary acts and things to effect a transfer of the sporting track at T Street, Suburb U as more particularly described in Certificate of Title Volume … Folio … to the relevant municipal council for no consideration with any legal costs of transfer to be paid by the parties’ businesses.
24.The parties, or either of them, have liberty to apply in respect of the execution of and the machinery provisions of these Orders.
25.All extant applications be otherwise dismissed.
THE COURT NOTES
That pursuant to s 81of the Family Law Act 1975 (Cth) it is intended that these orders shall finally determine the financial relationship between the parties and avoid the need for further proceedings between them.
“Annexure A”
The Balance Sheet/Asset Distribution ScheduleThe property pool
Item Value Wife to receive Husband to receive 4 V Street, Suburb W $1,431,608 $1,431,608 0.00 5 X Street, Suburb Y Qld $2,000,000 $2,000,000 0.00 8 Z Street, Suburb PP $730,000 $730,000 0.00 9 1 CC Street, Suburb PP $720,000 $720,000 0.00 10 2 CC Street, Suburb PP $740,000 $740,000 0.00 11 3 CC Street, Suburb PP $750,000 $750,000 0.00 12 DD Street, Suburb F $670,000 $670,000 0.00 13 1 EE Street, Suburb FF $480,000 $480,000 0.00 14 2 EE Street, Suburb FF $480,000 $480,000 0.00 15 3 EE Street, Suburb FF $580,000 $580,000 0.00 16 4 EE Street, Suburb FF $510,000 $510,000 0.00 17 5 EE Street, Suburb FF $510,000 $510,000 0.00 18 6 EE Street, Suburb FF $640,000 $640,000 0.00 19 GG Street, Suburb FF $520,000 $520,000 0.00 20 1 HH Street, Suburb FF $540,000 $540,000 0.00 21 2 HH Street, Suburb FF $550,000 $550,000 0.00 22 JJ Street, Suburb LL $650,000 $650,000 0.00 23 KK Street, Suburb LL $540,000 $540,000 0.00 24 1 MM Street, Suburb LL $580,000 $580,000 0.00 25 2 MM Street, Suburb LL $550,000 $550,000 0.00 26 3 MM Street, Suburb LL $560,000 $560,000 0.00 27 1 NN Street, Suburb LL $925,000 $925,000 0.00 28 2 NN Street, Suburb LL $530,000 $530,000 0.00 29 OO Street, Suburb 1 PP $620,000 $620,000 0.00 30 QQ Street, Suburb W $720,000 $720,000 0.00 31 1 RR Street, Suburb N $510,000 $510,000 0.00 32 2 RR Street, Suburb N $570,000 $570,000 0.00 33 SS Street, Suburb N $550,000 $550,000 0.00 34 1 TT Street, Suburb N $700,000 $700,000 0.00 35 2 TT Street, Suburb N $680,000 $680,000 0.00 36 C Pty Ltd & D Street $1,275,250 $1,275,250 0.00 37 Legal costs prepaid early on $68,000 $68,000 0.00 38 Wife's Motor Vehicles 1 & 2 (2) $395,000 $395,000 0.00 49 Asset purchase loan (motor vehicles) (-$189,625) (-$189,625) 0.00 40 Funds held at bank $373,000 $373,000 0.00 41 Prepaid legals from $1million PPS $196,500 $196,500 0.00 42 Wife’s furniture & contents $15,930 $15,930 0.00 43 1 UU Street, Suburb N $3,000,000 0.00 $3,000,000 44 VV Street, Suburb N $2,000,000 0.00 $2,000,000 45 2 UU Street , Suburb N $700,000 0.00 $700,000 46 2 JJ Street, Suburb LL $660,000 0.00 $660,000 47 DD Street, Suburb F $600,000 0.00 $600,000 48 7 EE Street, Suburb FF $460,000 0.00 $460,000 49 8 EE Street, Suburb FF $460,000 0.00 $460,000 50 9 EE Street, Suburb FF $480,000 0.00 $480,000 51 3 TT Street, Suburb N $700,000 0.00 $700,000 52 4 TT Street, Suburb N $700,000 0.00 $700,000 53 5 TT Street, Suburb N $630,000 0.00 $630,000 54 WW Street, Suburb LL $585,000 0.00 $585,000 55 XX Street, Suburb N $1,170,000 0.00 $1,170,000 56 YY Street, City ZZ, Vic $980,000 0.00 $980,000 57 L Street, Suburb F $3,510,000 0.00 $3,510,000 58 BC Street, Suburb LL $1,265,000 0.00 $1,265,000 59 J Street, Suburb K $870,000 0.00 $870,000 60 Legal costs prepaid early on $68,000 0.00 $68,000 61 G Bank …41 $61,345 0.00 $61,345 62 BD Bank …81 $60,375 0.00 $60,375 63 Prepaid legals from BD Bank $25,000 0.00 $25,000 64 Payment to Munro $15,000 0.00 $15,000 65 Superannuation Fund 1 $1,000 0.00 $1,000 66 Partnership livestock $250,000 0.00 $250,000 67 BP Company proceeds on trust $35,134 0.00 $35,134 68 Unpaid Motor Vehicle 4 repair bill (-$45,000) 0.00 (-$45,000) 69 Uncarried out repairs at FMH (-$28,000) 0.00 (-$28,000) 70 Plant and equipment H to retain $416,000 0.00 $416,000 70A Motor Vehicle 4 $130,000 0.00 $130,000 71 Machine $175,000 0.00 $175,000 71A Furniture City ZZ $12,000 0.00 $12,000 71B Motor Vehicle 5 $14,000 0.00 $14,000 72 BF Finance contract liabilities (-$8,000) 0.00 (-$8,000) 73 Items in shed on 1 UU Street $50,000 0.00 $50,000 Subtotal of distribution gross value $42,672,517 $22,670,663 $20,001,854
Item Wife Husband Property retained by the parties $22,670,663 $20,001,854 Settlement payment – wife to pay husband (-$1,334,405) $1,334,405 Nett settlement of all above assets $21,336,258 $21,336,259
Other Value Wife Husband M Street Suburb N To be sold Half of net proceeds Half of net proceeds E Street, Suburb BN Est $9.6 million Half of net proceeds Half of net
ProceedsDebt to BG Trust ($350,000) Pay from E Street proceeds Pay from E Street proceeds Extant trade creditors (-$600,000) B Pty Ltd pays B Pty Ltd pays Plant and equipment being sold To be sold Half of net proceeds Half of net proceeds Total $42,672,517
(plus net sale proceeds)$21,336,258
(plus half of net proceeds)$21,336,259
(plus half of net proceeds)
Business Liquidity and Liabilities Value Wife Husband Funds at bank 86 NAB …77 $520,830 50 per cent 50 per cent 87 NAB term deposit …18 $265,204 50 per cent 50 per cent 88 NAB …97 $49,554 50 per cent 50 per cent 89 G Bank …01 $6,425 50 per cent 50 per cent 90 NAB …89 $255 50 per cent 50 per cent 91 BH Bank …36 $230 50 per cent 50 per cent 92 ANZ …63 $23 50 per cent 50 per cent 93 G Bank …86 $0.00 50 per cent 50 per cent Total $842,521 $421,260.50 $421,260.50
Non-current liabilities Value Wife Husband 96 G Bank (-$729,798) 50 per cent 50 per cent 97 Family Trust – G Bank (-$4,342,318) 50 per cent 50 per cent 98 Family Trust – NAB (-$4,261,433) 50 per cent 50 per cent 99 Family Trust – BH Bank (-$4,069,096) 50 per cent 50 per cent 100 Asset purchase. Loans (excluding Motor Vehicles 1 & 2) (-$723,363) 50 per cent 50 per cent 101 Family Trust – ANZ (-$409,964) 50 per cent 50 per cent 102 Blaxland Partnership - BH Bank (-$1,988,065) 50 per cent 50 per cent Total secured liabilities ($16,524,037) TOTAL OF NET ASSETS $26,991,901 *Plus proceeds of assets being sold “Annexure B”
Plant and Equipment Husband is to retain from BE Pty Ltd Valuation
Report page and lot number Description TVA Value Page 2 number 6 P&E 1 $75,000 Page 3 number 7 P&E 2 $900 Page 6 number 21 P&E 3 $6,500 Page 6 number 22 P&E 4 $1,200 Page 7 number 26 P&E 5 $250 Page 8 number 31 P&E 6 $400 Page 8 number 32 P&E 7 $3,500 Page 9 number 34 2 x P&E 8 $850 Page 9 number 35 Motor Vehicle 6 $12,000 Page 9 number 36 Motor Vehicle 7 $40,000 Page 9 number 37 3 x P&E 9 $10,500 Page 9 number 38 P&E 10 $5,500 Page 9 number 39 P&E 11 $6,500 Page 10 number 42 Motor Vehicle 8 $3,500 Page 10 number 43 Motor Vehicle 9 $2,500 Page 11 number 47 P&E 12 $8,000 Page 12 number 48 P&E 13 $2,500 Page 12 number 52 Motor Vehicle 10 $32,000 Page 13 number 53 Motor Vehicle 11 $100,000 Page 13 number 55 Motor Vehicle 12 $10,000 Page 14 number 57 Motor Vehicle 13 1 only $8,000 Page 15 number 61 P&E 14 $45,000 Page 15 number 62 P&E 15 $4,500 Page 21 number 91 P&E 16 $800 Page 22 number 96 P&E 17 $350 Page 22 number 99 P&E 18 $750 Page 25 number 108 Motor Vehicle 14 $2,500 Page 25 number 116 3 x P&E 19 $1,350 Page 26 number 119 P&E 20 $7,500 Page 27 number 121 1 x P&E 21 $9,000 Page 27 number 126 Motor Vehicle 15 $2,500 Page 27 number 127 P&E 22 $2,000 Page 28 number 132-136 P&E 23 $3,450 Page 29 number 137 P&E 24 $7,000 TOTAL $416,300 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 the pseudonym of Blaxland & Blaxland has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MCGUIRE J:
APPLICATIONS
These are proceedings for property settlement. The matter was listed for trial and the taking of evidence was commenced in March 2022. It eventuated that the trial adjourned on apparent agreement between the parties as to the substantive dispute and evidenced by a Heads of Agreement document, but unfortunately such agreement fell over before the anticipated consent orders.
The parties have been primarily in the business of property development where they have retained a number of developed residential properties giving them a substantial rental income.
The matter has been highlighted by an unusually high number of interlocutory and interim applications not commensurate with the complexity of the substantive issues where there is, in fact, substantial agreement between the parties but more reflecting the high degree of personal animosity and suspicion between the husband and wife.
The trial continued or effectively re-started in January 2023 and ran over three days. On 11 January 2023 I made Orders that the husband file written submissions within 28 days and the wife 28 days thereafter. The husband had a right of reply 14 days following receipt of the wife’s submissions. Judgment was reserved from the 27 February 2023 being the date the husband filed his reply.
To the credit of the parties there remains substantial agreement again reached prior to the taking of evidence where the case summaries of each exposed consensus as to a 50/50 distribution of the net property pool with particularised agreement of equal contributions during their lengthy relationship from an initial position of virtually no wealth and, secondly, that the value of the property pool would not necessitate any consideration or adjustment to either party by reason of the considerations at section 79(4)(b)-(g) of the Family Law Act 1975 (Cth) (“the Act”) including the matters at section 75(2).
THE ISSUES
There is a general issue raised by counsel for each of the parties in their final submissions as to credit between the husband and wife consistent with their mutual suspicion and differences of view as to the interim running of their businesses, and particularly the property development arm, following separation. In particular the wife seems to have operated on an understanding that the Heads of Agreement was operational from its signing until final resolution of this litigation in the sense of an interim court order and despite not being incorporated into consent orders. The husband, on the other hand, considered the interim orders of 26 March 2021 to remain the valid tool with which to operate the businesses until settlement. This dispute had negative practical impact where the parties, or more particularly the husband, continued with property developments but under financial constraints and where he was required to take borrowings given that the wife made decisions based on terms in the Heads of Agreement in the interim which disrupted the continued operation and funding of the developments. Whilst the practical effect on my consideration is now minimal in the sense of the property pool being fundamentally agreed between the parties, I prefer the position taken by the husband where it became clear to each of the parties soon after its drafting that the Heads of Agreement was not going to result in consent orders and then was of no legal import. Where both parties have been legally represented, I find some merit in the husband’s argument that the wife acted tactically and perhaps disingenuously in her argument as to some interim validity of the Heads of Agreement.
There is dispute between the parties as to what portions of $1 million dollars in preliminary advances made to each in April 2022 should be “added back” to the pool.
Where the parties own some 47 properties, there remains dispute as to who should retain the two properties currently partially developed being L Street, Suburb F and BC Street, Suburb LL where both are continuing incomplete developments and valued now respectively at $3,510,000 and $1,265,000.
There is some relatively minor dispute as to the value of furniture and contents in three separate properties apparently retained for residences by the parties. The Court has no evidence of value in proper form and at best only an estimate from the husband in court as to $12,000 value of contents in a City ZZ property to be retained by him. The wife’s financial statement offers a figure of $15,930 but without further explanation or corroboration.
There is an issue between the parties as to the monies retained by the husband from the sale of Motor Vehicle 16 and also as to the proceeds of sale of livestock/value of livestock retained.
There is dispute between the parties as to the status and value of certain assets retained by the husband including a motor vehicle and equipment/parts; Motor Vehicle 4 and Motor Vehicle 5; a machine apparently operated by the parties’ son Mr BK as a business.
Where an amount of $350,000 was borrowed by the husband from BG Trust ostensibly to keep the property development business operational during the above-mentioned dispute between the parties following the Heads of Agreement, the wife says that only $270,000 of the $350,000 has been accounted for by the husband for business expenses.
There remains a dispute between the parties as to the value of their interest in a business operated by the daughter as “C Pty Ltd” in the premises on which the business operates.
There is dispute as to the amount to be “added-back” to the property for the legal costs already paid by the wife.
BACKGROUND
The husband is 52 years of age and the wife is 51 years. They commenced cohabitation in 1989 and married in 1991. Separation occurred on 8 January 2021.
There are three adult children of the marriage.
The primary business operated by the parties is property development. On my calculations, they currently own some 47 parcels of land with many of the properties developed and let to tenants. Properties at L Street, Suburb F and BC Street, Suburb LL remain in the development stage. The property development arm of the business operates through a company, B Investments. A second company, B Proprietary Limited, is trustee for a family trust and is concerned with the considerable rental arm of the business.
There is no indication that either of the parties are otherwise than in reasonable health. Again, no argument is mounted by either party in respect of any adjustments on consideration of the factors under section 75(2) of the Act.
It is generally agreed between the parties that the husband took the responsibility for the construction side of the business whilst the wife assumed the financial management role although with some intermingling of the roles.
RELEVANT LAW
The power for the Court to alter the interests of parties in property is provided at section 79 of the Act. “Property” includes assets and liabilities with amendments to the Act providing that “superannuation, may be treated as property”. The discretion in the Court to alter property interests is a broad one limited only by the Statute itself. In R v Watson: Ex parte Armstrong[1] the High Court observed:
…The judge called upon to decide proceedings of that kind is not entitled to do what has been described as “palm tree justice”. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down…
[1] (1976) 136 CLR 248 at 257.
Section 79(2) of the Act provides:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Following the decision of the High Court in Standford & Standford[2] a renewed focus has been placed on this subsection with the Court emphasising a requirement for a separate, independent and discrete determination by the Court as to whether it be just and equitable in the particular circumstances to make any order altering the property interests of the parties. Importantly, that consideration is not to be simply conflated with a consideration of contributions at section 79(4).
[2] (2012) 247 CLR 108.
The consideration at section 79(2) is not a difficult one here where the parties had a long relationship and it is clear that their marriage has broken down. There are substantial assets most of which are owned under company structures of which the parties themselves are the directors and shareholders. Where their finances are inherently intertwined, I can easily find that it is just and equitable to enter into a consideration of altering the parties’ property interests.
It is normally seen to be appropriate, as it is in this case, for the Court to establish the contents of the property pool as at the date of the trial and also the value of each of the contents and hence of the property pool itself.
The Court considers the various contributions by and on behalf of the parties to the acquisition, conservation or improvement of the property pool. The parties here, however, and to their credit, each acknowledge the contributions of the other and do not argue other than for a finding of equal contribution which in my view is entirely appropriate where the contributions have been financial and non-financial including contributions by both as parent/home maker.
The Court then considers whether there should be any further adjustment of the division of the property pool between the parties on account of the matters under section 79(4)(d)–(g) including relevant factors at section 75(2). Again, given the quantum of the property pool, the parties have reasonably agreed that no such adjustment is necessary or appropriate in this matter.
The entire process of consideration is permeated with a necessary understanding of justice and equity and where the parties here do argue that the distribution of particular assets in dispute does require considerations of justice and equity.
PROPERTY POOL ISSUES
Despite some confusion between the parties as to the current value of a property at L Street, Suburb F, the valuation evidence is of value at $3,510,000.
The parties agree[3] that the amount of $762,000 be added back to the pool from the $1 million dollars received by the wife in April 2022 and that the balance is conceded by the husband as “reasonable expenditure” by the wife.[4] The “add-backs” to the pool retained by the wife and agreed between the parties comprise of identifiable funds as follows:
[3] The husband’s written final submissions 13 January 2023 at [11]; the wife’s written final submissions 13 February 2023 at [6].
[4] AJO & GRO (2005) FLC 93-218; Townsend & Townsend (1995) FLC 92-569; Jabour & Jabour (2019) FLC 93-898.
1. The wife’s bank account holdings $373,000 $373,000 2. Legal costs paid by the wife $196,500 3. Funds loaned to “ C Pty Ltd” $192,500 Total $762,000
From the $1 million dollars advance to the husband also in April 2022, he says that the sum of $321,720 is identifiable and should be therefore “added back” to the pool comprising of:
1. Funds at bank $61,345 $60,375 2. Funds for purchase of machine $175,000 3. Prepaid legal costs from $1 million dollars $25,000 Total $321,720
The husband argues that the remainder of the $1 million dollars received by him was put to ongoing development of properties ultimately for the advantage of both parties reflected in current valuations and yet again with reference to a period when the wife, mistakenly relying on the Heads of Agreement, effectively stopped payment to creditors and the use of joint funds on those relevant developments.
The wife argues for further “add-backs” on the husband’s side of the ledger over and above those agreed including and as set out in her counsel’s written final submissions.
1. Motor Vehicle 17 (current) $100,000 2. P&E 22 $60,000 3. P&E 25 $20,000 4. Motor Vehicle 3 (sold) $50,000 5. Contents of City ZZ property $12,000 6. Motor Vehicle 4 $300,000 7. Motor Vehicle 5 $14,000 8. Purchase of machine $175,000 9. GST payable on the machine $26,000 Total $757,000
The wife also argues for the proceeds of sale of Motor Vehicle 16 at $156,500 to be added back to the pool on the husband’s side of the ledger.
The issue of the chattels retained by the parties is problematic. The wife argues that the sum of $12,000 be included on the husband’s side of the ledger for chattels at City ZZ as conceded by the husband in cross-examination. She, however, retains two residential properties which presumably contain chattels. There is no inventory of chattels in any property. There is no valuation of chattels in any property. The husband concedes $12,000 value in his property. The wife’s sworn financial statement of 3 January 2023 gives an estimate of $15,930 in her possession or control. This is the best evidence. Those figures will be included in the property pool.
The husband has accepted the amount of $175,000 for the purchase of the machine gifted by him to the parties’ son as being appropriately included on his side of the ledger but included already in the conceded amount of $321,720. To separately add it back, as indicated in the wife’s submissions, would be to double count.
I accept the husband’s evidence and submissions that it was the parties’ son who, having purchased the machine, was the taxpayer entitled to the GST refund. Neither party adduced evidence from the son, although during her evidence I invited to the wife to adduce such evidence if she thought fit. She declined the invitation. I am satisfied that the son retained the GST refund. The amount of $26,000 will not be included in the pool.
The husband concedes possession of Motor Vehicle 5 at $14,000 which will be included in the pool on the husband’s side of the ledger.
The wife argues that Motor Vehicle 4 should be included in the ledger on the husband’s side at $300,000. The husband was cross-examined extensively as to the status of Motor Vehicle 4. I accept his explanation that Motor Vehicle 4 was the victim of damage and whilst the gross insurance payout was $300,000 he bought the “wreck” from the insurance company for $130,000 after paying our insurance excess ($3,000); payout of Motor Vehicle 4 finance ($27,711.71) and the balance ($139,288.29) being paid into joint accounts. An account in respect of Motor Vehicle 4 owing to “BL Company” for $45,854.94 remains unpaid despite an order of this Court on 10 January 2023 for such payment. Taking all of those contingencies into account, I am of the view that the value of the damaged Motor Vehicle 4/wreck purchased for $130,000 is the quantum that should be added into the property pool and be attributed to the husband’s side of the ledger.
The husband was cross-examined in respect of the sale of Motor Vehicle 16. The wife raises this issue at [29] of her trial affidavit of 3 January 2023. The husband’s trial affidavit appears silent to the sale. The husband, armed with the wife’s challenge in her affidavit, conceded in cross-examination that he had sold Motor Vehicle 16 with proceeds of sale being deposited into “my account” with re-examination elaborating that the funds were “used for business purposes” after being deposited into “my [BD Bank] account”. Again, where I have evidence of both the husband continuing his development business and the wife “turning off the tap” together with the Court file showing frequent interlocutory application and complaint by the husband of insufficient funds to operate the business in the interim, I prefer on the balance of probabilities, the husband’s assertion that these monies were used in support of the development business and/or remain evident in his bank account balances. In a broader sense where neither party directly pursues arguments of “wastage” in respect of the balance of monies from the $1 million dollar advancements to each. Similarly I accept the husband’s argument that the proceeds of sale of Motor Vehicle 16 are evidenced either by way of the expenditure for the property development business or in his bank accounts. To the contrary the wife could make no more than bald assertions or suggestion of wastage or retention.
Further, the husband obtained a loan of $350,000 from BG Trust in 2022 which he says was necessary to continue the property development business and to pay workers, contractors and suppliers at a time where the wife, in his words, “had turned off the tap” being the period of dispute between the parties as to the validity of the Heads of Agreement. The wife admits that she did effectively “turn off the tap” in not making payments to creditors and, in fact, writing to numerous creditors informing them that credit should not be continued. I am satisfied, therefore, that the husband did, in fact, continue to develop the properties with such value now evident in the most recent valuations. Whilst the husband was cross-examined, he was not shaken in his evidence that the monies were used solely for continuance of the business. Cross-examination did not expose any form of deliberate wastage or hiding away of the funds by the husband. I am satisfied that the whole of the sum of $350,000 was legitimately expended in the face of the wife’s actions to effectively thwart the continued development of the properties where she had historically been the bookkeeper. I am satisfied that any excess remaining monies are evident in the current bank accounts. I am satisfied, therefore, that the sum of $350,000 owing to BG Trust should be included as a liability of the parties. I accept the husband’s proposal that the liability be paid from the proceeds of sale of E Street, Suburb F which is a property the parties agree will be sold.
The wife in her counsel’s final submissions offers the value of the parties’ interest in C Pty Ltd at $58,515 and a 50 per cent interest in the land on which the business operates at $435,000 plus an asset in the form of an outstanding loan to the business of $192,500 being a total on my calculations of $686,015.
Mr R, of S Financial Services, gave evidence on subpoena issued by the husband. Mr R did not provide an affidavit. Mr R’s written advice as to a valuation was tendered as an exhibit “3”. Mr R provides a valuation at $1,179,013 in respect of both business and real estate. That valuation does not note the loan by the wife to the business of $192,500 but does address the contingency of a loan and the methodology in dealing with such a loan. I accept Mr R’s valuation and methodology and, where there is in fact an asset in the form of a loan of $192,500, I accept that the value of the parties’ interest in the premises and business should be included at $1,275,520 but where to include the debt of $192,500 (conceded above as an add-back) would be to double count then that debt should not be included separately.
Where it is clear that the wife maintains good relations with the her daughter and son-in-law who operate C Pty Ltd but where unfortunately the husband does not enjoy such good relations then the benefit of this asset should properly be placed on the wife’s side of the ledger.
There is a discrete difference between the parties as to the amount owing on an asset purchase in respect of the wife’s motor vehicle. The wife in her counsel’s final submissions of 13 February 2013 provides a figure of $189,625 presumably as of that date. The husband says that a proposed “joint balance sheet” provided as an aide memoire to the Court prior to the commencement of the trial states a figure of $183,878. No issue was raised during the trial. On the assumption of the wife having immediate access to a payout figure, I accept her sum of $189,625 being the appropriate figure to be included in the balance sheet.
There is a dispute between the parties as to the amount to be added back to the pool on account of legal costs paid by the wife. The wife says that she has paid $196,500 such conceded as an add-back by the husband in his the counsel’s final submissions of 13 January 2023.
The wife properly provided a costs notice dated 8 January 2020 which confirms “client’s actual costs paid” $196,303.50. The notice goes on to reference “expenses paid to an expert witness-BM Financial Services $30,000. Given that this is an “estimate” I can only assume that it has not yet been paid. As such, I accept the wife’s evidence that the total prepaid legal costs are $196,500 comprising two sources being, firstly, $68,000 from joint funds and a later payment of $128,500 from the $1 million dollar advancement. I will therefore include the sum of $196,500 in the ledger as “added back” prepaid legal costs for the wife.
I accept that the bank account balances evidenced in the balance sheet contain an amount of $28,000 received from an insurance payout. I also accept that the refurbishment work on the relevant property has not yet been undertaken. Given that the $28,000 is specific and contingent in respect of an anticipated the expenditure, then the liability should also be included as a matter of common sense where the amount received is the so included. That is, the $28,000 is not simply an “asset” but relates to a contingent expenditure.
The wife argues that a motor vehicle ($100,000), equipment ($60,000) and spare frames and parts ($20,000) be added back to the pool on the husband side of the ledger. These items have been valued by BE Pty Ltd such being in evidence before me as “plant and equipment” and consequently to further add them back to the pool separately would be to double count. Their values are included in the total BE Pty Ltd Valuation of plant and equipment at $416,300 noted in the balance sheet.
I accept the husband’s evidence that the parties’ son Mr BK was gifted a motor vehicle during the relationship and that Mr BK subsequently sold the vehicle for $50,000 retaining those monies. Again, the wife was offered the opportunity to adduce evidence from Mr BK but declined the invitation.
The wife in Final Written Submissions asserts that the property pool contains an item “stock in shed at [1 UU Street, Suburb N]” $400,000. The husband resides at the 1 UU Street property. I have no evidence in proper form or any form of the corroboration of this assertion. I have no inventory. I have no valuation. When challenged as to this assertion in cross-examination, the husband’s immediate response was that the wife could retain the items in the shed at a value of $50,000 to her. I accept, therefore, the husband concedes a quantity of items at value of $50,000 not valued by BE Pty Ltd. I accept that they are in his possession. Where he was willing to give them up to the wife for $50,000 then this is the best estimate as to value that I have. It will be included in the pool on the husband’s side of the ledger at $50,000.
The wife asks for an amount to be included at (-$374,500) for trade creditors as a liability. The Court has no evidence in proper form as to a list of creditors or quantum of debt, although I assume that there remain creditors of the business. As set out above, I conclude that the orders of 26 March 2021 providing for the interim financial management of the development businesses remain operative as against the wife’s contention of some validity to the Heads of Agreement document. I am satisfied that the wife did, effectively admitted by her and as asserted by the husband, “turn off the tap” of ongoing payments to creditors. It is proper, therefore, that B Proprietary Limited meet all reasonable expenses. The husband proposes that 31 December 2022 be the operative or “cut-off” date. I agree this to be inevitable. The wife has possession of the invoices. Where the Court has no evidence in proper or detailed form as to the nature or quantum of these liabilities there will need to be some negotiation towards agreement between the parties as to invoices or creditors unpaid relevant to 31 December 2022.
Given the above, I find the property pool for distribution between the parties to comprise of the following at attributed values:
The property pool
Item Value Wife to receive Husband to receive 4 V Street, Suburb W $1,431,608 $1,431,608 0.00 5 X Street, Suburb Y Qld $2,000,000 $2,000,000 0.00 8 Z Street, Suburb PP $730,000 $730,000 0.00 9 1 CC Street, Suburb PP $720,000 $720,000 0.00 10 2 CC Street, Suburb PP $740,000 $740,000 0.00 11 3 CC Street, Suburb PP $750,000 $750,000 0.00 12 DD Street, Suburb F $670,000 $670,000 0.00 13 1 EE Street, Suburb FF $480,000 $480,000 0.00 14 2 EE Street, Suburb FF $480,000 $480,000 0.00 15 3 EE Street, Suburb FF $580,000 $580,000 0.00 16 4 EE Street, Suburb FF $510,000 $510,000 0.00 17 5 EE Street, Suburb FF $510,000 $510,000 0.00 18 6 EE Street, Suburb FF $640,000 $640,000 0.00 19 GG Street, Suburb FF $520,000 $520,000 0.00 20 1 HH Street, Suburb FF $540,000 $540,000 0.00 21 2 HH Street, Suburb FF $550,000 $550,000 0.00 22 1 JJ Street, Suburb LL $650,000 $650,000 0.00 23 KK Street, Suburb LL $540,000 $540,000 0.00 24 1 MM Street, Suburb LL $580,000 $580,000 0.00 25 2 MM Street, Suburb LL $550,000 $550,000 0.00 26 3 MM Street, Suburb LL $560,000 $560,000 0.00 27 1 NN Street, Suburb LL $925,000 $925,000 0.00 28 2 NN Street, Suburb LL $530,000 $530,000 0.00 29 OO Street, Suburb 1 PP $620,000 $620,000 0.00 30 QQ Street, Suburb W $720,000 $720,000 0.00 31 1 RR Street, Suburb N $510,000 $510,000 0.00 32 2 RR Street, Suburb N $570,000 $570,000 0.00 33 SS Street, Suburb N $550,000 $550,000 0.00 34 1 TT Street, Suburb N $700,000 $700,000 0.00 35 2 TT Street, Suburb N $680,000 $680,000 0.00 36 C Pty Ltd & D Street $1,275,250 $1,275,250 0.00 37 Legal costs prepaid early on $68,000 $68,000 0.00 38 Wife's Motor Vehicle 1 & 2 vehicles (2) $395,000 $395,000 0.00 49 Asset purchase loan (motor vehicle) (-$189,625) (-$189,625) 0.00 40 Funds held at bank $373,000 $373,000 0.00 41 Prepaid legals from $1million PPS $196,500 $196,500 0.00 42 Wife’s furniture & contents $15,930 $15,930 0.00 43 1 UU Street, Suburb N $3,000,000 0.00 $3,000,000 44 VV Street, Suburb N $2,000,000 0.00 $2,000,000 45 2 UU Street , Suburb N $700,000 0.00 $700,000 46 2 JJ Street, Suburb LL $660,000 0.00 $660,000 47 DD Street, Suburb F $600,000 0.00 $600,000 48 7 EE Street, Suburb FF $460,000 0.00 $460,000 49 8 EE Street, Suburb FF $460,000 0.00 $460,000 50 9 EE Street, Suburb FF $480,000 0.00 $480,000 51 3 TT Street, Suburb N $700,000 0.00 $700,000 52 4 TT Street, Suburb N $700,000 0.00 $700,000 53 5 TT Street, Suburb N $630,000 0.00 $630,000 54 WW Street, Suburb LL $585,000 0.00 $585,000 55 XX Street, Suburb N $1,170,000 0.00 $1,170,000 56 YY Street, City ZZ, Vic $980,000 0.00 $980,000 57 L Street, Suburb F $3,510,000 0.00 $3,510,000 58 BC Street, Suburb LL $1,265,000 0.00 $1,265,000 59 J Street, Suburb K $870,000 0.00 $870,000 60 Legal costs prepaid early on $68,000 0.00 $68,000 61 G Bank …41 $61,345 0.00 $61,345 62 BD Bank …81 $60,375 0.00 $60,375 63 Prepaid legals from BD Bank $25,000 0.00 $25,000 64 Payment to Munro $15,000 0.00 $15,000 65 Superannuation Fund 1 $1,000 0.00 $1,000 66 Partnership livestock $250,000 0.00 $250,000 67 BP Company proceeds on trust $35,134 0.00 $35,134 68 Unpaid Motor Vehicle 4 repair bill (-$45,000) 0.00 (-$45,000) 69 Uncarried out repairs at FMH (-$28,000) 0.00 (-$28,000) 70 Plant and equipment H to retain $416,000 0.00 $416,000 70A Motor Vehicle 4 $130,000 0.00 $130,000 71 Machine $175,000 0.00 $175,000 71A Furniture City ZZ $12,000 0.00 $12,000 71B Motor Vehicle 5 $14,000 0.00 $14,000 72 BF Finance contract liabilities (-$8,000) 0.00 (-$8,000) 73 Items in shed on 1 UU Street $50,000 0.00 $50,000 Subtotal of distribution gross value $42,672,517 $22,670,663 $20,001,854
The husband and wife are to each receive half of the gross value of the above property pool which is $42,672,517 million dollars or property of net value of $21,336,258 each. Thus the wife will need to make a cash payment to the husband of $1,334,405 million dollars to achieve this result. That cash adjustment should come about at the time of the distribution of the proceeds of sale of the E Street property as below.
Item Wife Husband Property retained by the parties $22,670,663 $20,001,854 Settlement payment – wife to pay husband (-$1,334,405) $1,334,405 Nett settlement of all above assets $21,336,258 $21,336,259
There remains other property of the parties not dealt with above. Properties at M Street, Suburb N and E Street, Suburb F are to be sold. The debt to BG Trust should be finalised from the proceeds of sale as should outstanding trade creditors. After the sale of plant and equipment the remaining net proceeds are to be divided equally between the parties.
Other Value Wife Husband 77 M Street Suburb N To be sold Half of net proceeds Half of net proceeds 78 E Street, Suburb BN Est $9.6 million Half of net proceeds Half of net
Proceeds79 Debt to BG Trust ($350,000) Pay from E Street proceeds Pay from E Street proceeds 80 Extant trade creditors (-$600,000) B Pty Ltd pays B Pty Ltd pays 81 Plant and equipment being sold To be sold Half of net proceeds Half of net proceeds Total $42,672,517
(plus net sale proceeds)$21,336,258
(plus half of net proceeds)$21,336,259
(plus half of net proceeds)
Business Liquidity and Liabilities Value Wife Husband Funds at bank 86 NAB …77 $520,830 50 per cent 50 per cent 87 NAB term deposit …18 $265,204 50 per cent 50 per cent 88 NAB …97 $49,554 50 per cent 50 per cent 89 G Bank …01 $6,425 50 per cent 50 per cent 90 NAB …89 $255 50 per cent 50 per cent 91 BH Bank …36 $230 50 per cent 50 per cent 92 ANZ …63 $23 50 per cent 50 per cent 93 G Bank …86 $0.00 50 per cent 50 per cent Total $842,521 $421,260.50 $421,260.50
The non-current liabilities of the parties are:
Non-current liabilities Value Wife Husband 96 G Bank (-$729,798) 50 per cent 50 per cent 97 Family Trust – G Bank (-$4,342,318) 50 per cent 50 per cent 98 Family Trust – NAB (-$4,261,433) 50 per cent 50 per cent 99 Family Trust – BH Bank (-$4,069,096) 50 per cent 50 per cent 100 Asset purchase. Loans (excluding Motor Vehicle 1 & 2) (-$723,363) 50 per cent 50 per cent 101 Family Trust – ANZ (-$409,964) 50 per cent 50 per cent 102 Blaxland Partnership - BH Bank (-$1,988,065) 50 per cent 50 per cent Total secured liabilities ($16,524,037) TOTAL OF NET ASSETS $26,991,001 *Plus proceeds of assets being sold Allocation of properties at L Street, Suburb F and BC Street, Suburb LL
It has now eventuated and only evident in the wife’s Final Written Submissions of 13 February 2023 that she wishes to retain the above-mentioned L Street and BC Street Road properties. They are the properties still in “development stage” in the balance sheet.
The history of Applications and Responses is that the husband has consistently sought to retain both properties. The same has not been the case for the wife. She did not ask for orders for those properties in her Amended Final Application of 2 March 2022 or in a Further Amended Initiating Application filed as recently as 3 January 2023. At [6] of her trial affidavit of 3 January 2023 the wife deposes:
The Heads of Agreement provided that I retain eight (8) of the sixteen (16) [properties] at [E Street], [Suburb F], the [Suburb Y], Queensland property and most of the investment/rental properties, with the Respondent retaining the development/investment properties, some of the rental properties, the Partnership assets comprising the [some of the motor vehicles], [Mr BK’s] machine, most of the motor vehicles (excluding the [Motor Vehicles 1 & 2]), and the [City ZZ] property. I retained the [D Street] property and [C Pty Ltd]. We each retained our homes and the Respondent retained the farm and [livestock].
(Emphasis added)
The wife concedes that in the interim the husband has continued with the developments of the properties owned by B Investments Proprietary Limited including both the L Street and BC Street properties and despite her admitted reliance on the Heads of Agreement resulting in the husband needing to obtain alternative finance to continue those developments. The wife will however, ultimately benefit from any increase in valuations that may have occurred.
The wife’s updated trial affidavit affirmed 3 January 2023 does not ask for either the L Street or BC Street properties to be transferred to her.
In her original trial affidavit of 3 March 2022 the wife deposes at [50] – [51] as follows:
[50]The property owned at [L Street], [Suburb F] by [B Investments] is a substantial property which was intended to be subdivided. … Together with the property at [BC Street], [Suburb LL] are also substantial properties anticipated to be subdivided.
[51]As is set out in the proposal for final settlement I put to the Respondent in January 2021, I am content for the Respondent to retain the businesses once my just and equitable entitlement is paid to me. In the meantime, I want to ensure that the businesses continue to operate under the usual guidelines which they have been operated for the past twenty (20) years.
It was only during cross-examination at the most recent trial that I understood the wife to first claim that she wished to retain the L Street property. She made no reference then as to the BC Street property such occurring only after the completion of her evidence and in her counsel’s final written submissions.
During her cross-examination, the wife varied and prevaricated in her responses as to whether she wished to retain the L Street property or preferred an order that it be sold which I interpreted unambiguously as the wife taking a position primarily as to denying the husband his wish to retain the L Street property. I conclude, therefore, that the wife did not carry the same commitment or continued attachment to the L Street property as consistently exhibited by the husband.
At [25] of her Further Amended Application filed 3 January 2023 the wife proposes an order that both properties at L Street and BC Street be transferred to the husband. That application was not amended pursuant to Rule 2.50 of the Federal Circuit and Family Court of Australia (Family Law) Rules2021 (Cth) and, as such, the husband understood the case that he was to meet was as set out in the Amended Application filed only days prior to the commencement of the trial.
Given the procedural history of the matter where the husband has consistently sought to retain both relevant properties and the wife has conceded such at all times prior to her cross-examination in the witness box, together with my observations of the inconsistency in the wife’s responses with the suggestion of such responses being intended to deny the husband his preference rather than expressing a positive preference herself, I am of the view that the properties at L Street, Suburb F and BC Street, Suburb LL, should be distributed to the husband.
There will be orders which give effect to the above findings. As there are contingencies with some assets such as sale or the payment of ongoing expenses, I give the parties liberty to apply in respect of the machinery provisions towards finalising the alterations of their property which will be distributed in accordance with the tables at [52] – [55] and the Balance Sheet/Distribution Bundle Annexed hereto at “Annexure A” of the Orders.
I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McGuire. Associate:
Dated: 6 April 2023
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