Bourne and Bourne
[2008] FamCA 799
•25 September 2008
FAMILY COURT OF AUSTRALIA
| BOURNE & BOURNE | [2008] FamCA 799 |
| FAMILY LAW - PROPERTY SETTLEMENT – Pool of assets – Contributions – Disclosure |
| Family Law Act 1975 (Cth) Sections 75 & 79 |
In the Marriage of Hickey (2003) 30 Fam LR 355
In the Marriage of Omacini (2005) 33 Fam LR 134
Mallett v Mallett (1984) 9 Fam LR 449
In the Marriage of Ferraro (1992) 16 Fam LR 1
In the Marriage of Shewring (1987) l2 Fam LR 139
In the Marriage of Lenehan (1987) 11 Fam LR 615
In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712
In the Marriage of Zyk (1995) 19 Fam LR 797
In the Marriage of Coghlan (2004) 33 Fam LR 414
In the Marriage of Black and Kellner (1992) 15 Fam LR 343
In the Marriage of Weir (1992) 110 FLR 403; 16 Fam LR 154; (1993) FLC 92–338
In the Marriage of Kannis (2002) 30 Fam LR 83
| APPLICANT: | Ms Bourne |
| RESPONDENT: | Mr Bourne |
| FILE NUMBER: | SYF | 3769 | Of | 2006 |
| DATE DELIVERED: | 25 September 2008 |
| PLACE DELIVERED: | Sydney |
| JUDGMENT OF: | Judicial Registrar Loughnan |
PLACE HEARD: Sydney
| HEARING DATE: | 4 & 5 August 2008 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT WIFE: | Ms T. Messner |
SOLICITOR FOR THE APPLICANT: | Doolan Wagner & Callaghan |
| HUSBAND IN PERSON |
Orders
By consent the parties forthwith do all acts and things and sign all documents necessary so as to effect the sale of the property known as N property in the State of New South Wales, being the whole of the land described as Folio Identifier …/… (“the [N]”) for the sum of $1,000,000 with any offer over $950,000 to be considered.
By consent the husband and wife shall agree upon and instruct a solicitor to conduct the sale of the N property and, in the absence of agreement reached within 14 days of the date of these Orders, the husband and wife shall do all things and sign all necessary documents to request the President of the Law Society of New South Wales to appoint a solicitor to act in relation to the sale.
By consent for the purposes of the sale referred to in Order 2 herein, the husband and wife shall agree upon a licensed real estate agent (“the agent”) to conduct the sale of the N property within 14 days of the date of these Orders. In default of agreement as to the agent, within 14 days of the date of these Orders, the husband and wife shall do all things and sign all necessary documents to request the President of the Real Estate Institute of New South Wales to nominate a licensed real estate agent to conduct the sale the N property and the husband and wife must accept such nomination.
By consent the husband and wife shall each co-operate in every way with the agent, including:
4.1.Making the key available to the agent.
4.2.Allowing inspection of the N property.
4.3.By not saying or doing anything that is likely to hinder or prevent the sale being effected.
4.4.By ensuring that the N property, including the grounds, is in a neat and clean condition at the time of inspection by the agent or prospective purchasers.
4.5.Signing all documents requested by the agent in relation to the listing for sale of the N property, except a contract or agreement of sale which has not been authorised by the solicitor for the husband and wife acting in relation to the conveyance.
Upon the sale of the N property, the husband and wife shall do all acts and things and sign all such documents to ensure that the net proceeds of sale are distributed in the following manner and priority:-
5.1In payment of the agent and Solicitor/Conveyancers of expenses referable to the sale;
5.2Payment of any outstanding council rates, taxes and insurances owing on the N property;
5.3Discharge of the Suncorp Mortgage including all fees and charges;
5.4Discharge of the Westpac Home Mortgage;
5.5Discharge of the Westpac Business Overdrafts and secured loans;
5.6In payment to Mr T the sum of $15,000;
5.7In payment of the balance to the husband.
Forthwith upon the settlement of the sale of the N property, the husband sign all documents and do all things necessary to transfer to the wife all of his right title and interest in the property known as V property, in the State of New South Wales (“the [V] property”), being the whole of the land described as Folio Identifier …/….
The husband shall retain, to the exclusion of the wife, all of his right title and interest in all real property, funds and investments of whatsoever nature, located in New Zealand.
Within 28 days of the date of these Orders, the wife shall transfer to the husband all of her interest and shareholding, and resign any office holding, in the company known as D Pty Limited (ABN …) (and the business known as NS Shop, S Shop and/or J Shop) and the husband shall forthwith indemnify the wife in relation to any liabilities or debts of the said company or the business, including but not limited to taxation liabilities or any debts incurred by the husband in association with the business.
Notwithstanding any other Order, the wife shall be solely entitled to the business operated by her and known as BB Business. She shall forthwith indemnify the husband in relation to any liabilities or debts of the said company or the business, including but not limited to taxation liabilities or any debts incurred by her in association with that business.
10. The husband shall forthwith indemnify the wife in relation to any loans owing to members of his family.
11. The wife shall forthwith indemnify the husband in relation to any loans owing to members of her family.
12. Except as otherwise provided herein, the wife shall retain, to the exclusion of the husband, all her right, title and interest in the following:
12.1All furniture, jewellery and other chattels currently in her possession, custody or control.
12.2Any motor vehicle registered in her name.
12.3Any funds standing to her credit in any Bank, Credit Union or Building Society account.
12.4Any shares in any public or private company.
12.5Any superannuation fund in which she has an entitlement.
12.6All and any leave or long service, or any other employment benefits or entitlements.
13. Except as otherwise provided herein, the husband shall retain, to the exclusion of the wife, all his right, title and interest in the following:
13.1All furniture, jewellery and other chattels currently in his possession, custody or control;
13.2Any motor vehicle registered in his name;
13.3Any funds standing to his credit in any Bank, Credit Union or Building Society account;
13.4Any shares in any public or private company;
13.5Any superannuation fund in which he has an entitlement; and
13.6All and any leave or long service, or any other employment benefits or entitlements.
14. If either party refuses or neglects to sign or execute any document, instrument or writing or comply with any order contained herein after seven days of being required to do so, pursuant to Section 106A of the Act, the Registrar of the Family Court of Australia at Sydney be empowered to sign and execute such document, instrument or writing on behalf of either party as may be necessary to give full force and effect to orders herein.
15. The operation of these orders is stayed for a period of 28 days or such further time as may be agreed between the parties or ordered by the Court. The proceedings may be restored by arrangement with the associate to Judicial Registrar Loughnan and the parties in relation to the form of the orders.
IT IS NOTED that publication of this judgment under the pseudonym Bourne & Bourne is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF 3769 of 2006
| MS BOURNE |
Applicant
And
| MR BOURNE |
Respondent
REASONS FOR JUDGMENT
After a marriage involving cohabitation of about 18 years Ms Bourne and Mr Bourne cannot agree on a settlement of their property. I will refer to them as the wife and the husband.
Applications
The wife seeks orders in terms her Amended Application For Final Orders filed 30 July 2008, as amended orally in submissions, as follows:
1. That, within 28 days of these orders, the Husband shall transfer to the Wife all of his right title and interest in the property known as [V property], in the State of New South Wales (“the [V] property”), being the whole of the land described as Folio Identifier […/…] and, simultaneously with such transfer, the Wife shall re-finance any and all borrowings secured over the [V] property into her sole name and shall indemnify the Husband in relation to any outgoings of whatsoever nature with respect to the [V] home.
2. That the parties forthwith do all acts and things and sign all documents necessary so as to effect the sale of the property known as [N property] in the State of New South Wales, being the whole of the land described as Folio Identifier […/…] (“the [N] property”) for the sum of $1,000,000 with any offer over $950,000 to be considered.
3. The Husband and Wife shall agree upon and instruct a solicitor to conduct the sale of the [N] property and, in the absence of agreement reached within 14 days of the date of these Orders, the Husband and Wife shall do all things and sign all necessary documents to request the President of the Law Society of New South Wales to appoint a solicitor to act in relation to the sale.
4. For the purposes of the sale referred to in Order 2 herein, the Husband and Wife shall agree upon a licensed real estate agent (“the agent”) to conduct the sale of the [N] property within 14 days of the date of these Orders. In default of agreement as to the agent, within 14 days of the date of these Orders, the Husband and Wife shall do all things and sign all necessary documents to request the President of the Real Estate Institute of New South Wales so (sic) nominate a licensed real estate (sic) to conduct the sale the [N] property and the Husband and Wife must accept such nomination.
5. That the Husband and Wife shall each co-operate in every way with the agent, including:
5.1.Making the key available to the agent.
5.2.Allowing inspection of the [N] property.
5.3.By not saying or doing anything that is likely to hinder or prevent the sale being effected.
5.4.By ensuring that the [N] property, including the grounds, is in a neat and clean condition at the time of inspection by the agent or prospective purchasers.
5.5.Signing all documents requested by the agent in relation to the listing for sale of the [N] property, except a contract or agreement of sale which has not been authorised by the solicitor for the Husband and Wife acting in relation to the conveyance.
6. Upon the sale of the [N] property, the Husband and Wife shall do all acts and things and sign all such documents to ensure that the net proceeds of sale are distributed in the following manner and priority:-
6.1In payment of the agent and Solicitor/Conveyancers of expenses referable to the sale.
6.2Payment of any outstanding council rates, taxes and insurances owing on the [N] property.
6.3Discharge of the Suncorp Mortgage including all fees and charges.
6.4The balance to be divided between the parties, giving 90% to the Wife and 10% to the Husband.
7. That the Husband retain, to the exclusion of the Wife, all of his right title and interest in all real property, funds and investments of whatsoever nature located in New Zealand.
8. That, within 28 days of the date of these Orders, the Wife shall transfer to the Husband all of her interest and shareholding, and resign any office holding, in the company known as [D] Pty Limited (ABN […]) (and the business known as [NS Shop], [S Shop] and/or [J Shop]) and the Husband shall forthwith indemnify the Wife in relation to any liabilities or debts of the said company or the business, including but not limited to taxation liabilities or any debts incurred by the Husband in association with the business.
9. Notwithstanding any other Order, the Wife shall be solely entitled to the […] business operated by her and known as “[BB Business]”.
10. That the husband shall forthwith indemnify the Wife in relation to any loans owing to his family.
11. That the Wife shall forthwith indemnify the Husband in relation to any loans owing to her family.
12. That except as otherwise provided herein, the wife shall retain, to the exclusion of the husband, all her right, title and interest in the following:
12.1All furniture, jewellery and other chattels currently in her possession, custody or control.
12.2Any motor vehicle registered in her name.
12.3Any funds standing to her credit in any Bank, Credit Union or Building Society account.
12.4Any shares in any public or private company.
12.5Any superannuation fund in which she has an entitlement.
12.6All and any leave or long service, or any other employment benefits or entitlements.
12.7Her [BB] business.
13. That except as otherwise provided herein, the husband shall retain, to the exclusion of the wife, all his right, title and interest in the following:
13.1 All furniture, jewellery and other chattels currently in his possession, custody or control.
13.2 Any motor vehicle registered in his name.
13.3 Any funds standing to his credit in any Bank, Credit Union or Building Society account.
13.4 Any shares in any public or private company.
13.5 Any superannuation fund in which he has an entitlement.
13.6 All and any leave or long service, or any other employment benefits or entitlements.
14. That the Husband be restrained and injuncted from attending the home residence of the Wife and/or approaching within 500 metre of the home residence of the Wife, inclusive of the [V] and [N] properties.
15. That the Husband pay the Wife’s costs of and incidental to these proceedings.
The application was not pressed in relation to paragraph 14.
The husband did not rely on his Response, nor did he produce a minute of the orders he seeks. At the very end of his submissions he told me the orders he seeks. The husband consents to the following orders sought by the wife:
2, 3, 4, 5, 6.1, 6.2, 6.3, 12.2, 12.3, 12.6, 12.7, 13.1, 13.2, 13.6
Otherwise, as I understand it, he wants:
§ the sale proceeds of the N property to be divided equally;
§ the V property sold and the net proceeds divided equally;
§ The shop business sold and all debts paid out;
§ the contents of the V property, except for the wife’s jewellery and any possessions of the children to be divided into two lists with one party to take the items on one list and the other to take the items on the other list;
§ the contents of bank accounts in Australia and New Zealand to be divided equally;
§ the value of the parties’ superannuation entitlements to be divided equally by an adjustment out of other assets.
Affidavits
The wife relied on the following documents:
Affidavit of wife filed 8 August 2007
Affidavit of wife filed 30 July 2008
Financial Statement filed 30 July 2008
The husband relied on the following documents:
Affidavit of husband filed 28 March 2008
Financial Statement filed 14 December 2007
The evidence of the single expert valuers is contained in the following documents:
Affidavit of Mr K filed 8 August 2007 (V property)
Affidavit of Mr K filed 8 August 2007 (N property)
Affidavit of Mr K filed 4 August 2008 (updating)
Affidavit of Mr M filed 1 August 2008 (D Pty Ltd and the wife trading as BB Business)
The hearing
When the hearing commenced I explained the procedure of the hearing to the husband and stood the matter in the list to have him identify the orders he seeks and the parties exchange documents they wanted to tender. That took some time and the orders sought by the husband were not identified by him until the conclusion of the hearing. The husband sought and was refused leave to file a number of affidavits that had been sworn in 2007. Most of the time of the hearing was wasted while the husband rambled from one topic to another or while he looked for his own documents. That left me to impose time limits on cross-examination and submissions.
It must be said at the outset that given the state of the evidence, it is not possible to make adequate findings about some issues. The inability to make findings on key issues has a disastrous impact on the exercise of discretion under section 79. Many aspects of the relevant history and matters going to the pool of assets are within the knowledge or control of the husband and have not been adequately disclosed by him.
Jurisdiction
Each of the parties contends that the gross value of the assets is about $2,000,000. The issue of my jurisdiction was not raised during the hearing and therefore I assume that, to the extent necessary, the parties consent under clause 18.02(3)(c) of the Family Law Rules 2004. In any event Rule 18.03 probably applies.
Issues for determination
The issues for determination are:
The extent of the husband’s property and financial interests in New Zealand;
Whether the husband failed to disclose his property and financial interests in New Zealand;
Issues in relation to add-backs, such as the level of debt incurred by the husband in relation to D Pty Ltd;
The debts alleged by the husband to be owed by the parties to L and Y Bourne.
The initial contributions of the parties;
The post-separation contributions of the parties, in particular their contribution to the financial needs of the children;
Whether there should be an adjustment for the matters referred to in section 79(4)(d) - (g) inclusive and if so, the impact on that adjustment of disclosure issues.
Short History
As at the date of hearing the wife and husband were 48 and 55 years of age respectively. They started to live together in either December 1986 or June 1987, were married in December 1987 and separated in December 2005. The parties are not divorced.
Children
There are four children of the marriage:
Uwho was born in April 1990 and as at the date of the hearing was 18 years of age;
Ewho was born in February 1992 and as at the date of the hearing was 16 years of age;
Rwho was born in November 1994 and as at the date of the hearing was 13 years of age; and
Jwho was born in August 1997 and as at the date of the hearing was 10 years of age.
Background facts
The parties commenced co-habitation in December 1986 or June 1987. It is neither possible nor necessary to resolve this issue.
The wife had an interest in a unit at M Street, subject to a mortgage of about $50,000.
The thrust of the husband’s evidence is that as at December 1986 he had:
ØA 3 bedroom villa in Auckland that was later sold for $NZ155,000;
ØAbout $NZ20,000 invested in tranches of about NZ$5,000 in term deposits with the ANZ Bank in New Zealand;
ØAn interest in a nursing home venture;
Ø$2,000 in cash;
Ø‘commodities’ (I assume personal items) worth $10,000
The husband’s evidence in cross-examination was to the effect that prior to cohabitation he and his brother L Bourne owned a rural property in New Zealand. The property was sold for about $300,000, perhaps $40,000 was owing and the husband thinks his share of the net proceeds was about $120,000. With that money the husband bought a property in Auckland. The husband paid $65,000[1]. He thinks that he also borrowed about $15,000 to complete the purchase and to enable him to negatively gear the property. The husband says that from the remaining rural property proceeds he:
Øinvested $20,000 into a nursing home venture called, with his parents and former de facto partner;
Ølent $5,000 to the brother of an old girlfriend;
Ølent $5,000 to Mr RM; and
Øinvested the balance in term deposits. He does not say what that balance was but on those calculations it could have been about $35,000 or $40,000.
[1] Second page of Exhibit 1
In his Case Outline document the husband asserts that the rural property was sold in 1979 and he invested about NZ$70,000 in various ANZ Bank term deposits. In addition the husband arrived in Australia with $A2,000 and goods which he says were worth $10,000. Although he also deposed to it being bought for $5,000, he says that in February 1987 he bought a HZ Holden Premier motor vehicle for $10,000. When asked about that the husband opted for the higher estimate.
At the commencement of their relationship the wife worked for a Bank and part time at a Hotel.
On 26 June 1987, TA property in New Zealand was transferred by the husband’s mother to the husband and his brothers, L Bourne and H Bourne, as tenants in common in equal shares. That is the evidence of the wife and is unchallenged by the husband. The Certificate of Title to the property, a copy of which is annexure B to the wife’s affidavit, does not show the property as having been owned by the husband’s mother but does record a transfer to the three Bourne brothers as the wife deposes.
In July 1987 the parties bought S shop at W. The husband claims that it was purchased for $30,000. He says that $25,000 came from his term deposits in New Zealand and $5,000 from his aunt. The husband says that some of the moneys invested in term deposits came from his interest in the nursing home venture. It is his evidence that he repaid his aunt at Christmas 1987 on the maturity of moneys invested in New Zealand.
The parties took out a $45,000 business development loan from the Commonwealth Bank and acquired D Pty Ltd. They were both directors and equal shareholders.
In October 1987 the wife ceased work with the Bank and started work in the business.
The parties were married in December 1987.
The husband says that in 1989 he invested $9,500 in refurbishing his property at Auckland. He then sold that property for NZ$155,000. He says that the net proceeds were applied to the purposes of the family.
The husband says that on 4 August 1989 he paid $5,000 off a Westpac loan.
The child U was born in April 1990.
On 25 June 1990 land at TW in New Zealand was transferred to the husband and his brothers, L Bourne and H Bourne, as tenants in common in equal shares.
In 1991 the husband sold his car and bought a new one for $19,000. He says that the trade-in allowance was $4,000 and $15,000 came from D Pty Ltd.
In March 1991 the wife sold the M Street unit and cleared $120,000. Those moneys were applied to the purchase of a property in E Street. The E Street property was rented out and the parties lived with the wife’s parents for about 13 months, rent-free.
The child E was born in February 1992.
In May 1992 the parties sold the E Street property and bought V property for $343,000 as joint tenants. The purchase was funded with a mortgage to Westpac. The husband says that the deposit was borrowed from his mother.
The child R was born in November 1994.
The child J was born in August 1997.
In August 1998 the TA, New Zealand property was valued at NZ$206,000.
In 2000 the parties undertook renovations at the V property. They spent about $9,000 on the kitchen.
On 19 December 2001 the husband, L Bourne and H Bourne contracted to sell the TW property for NZ$132,500.
On 8 April 2002 a Term Investment Certificate in the ASB Bank for NZ$40,000 was endorsed to the effect that it belonged to the husband and was one third of the TW property sale.
On 11 April 2002 a letter was sent by New Zealand solicitors to the husband’s mother about a settlement on 28 March 2002 of the sale of the TW property after the husband attended their office to sign the transfer. An amount of NZ$125,085.35 had been lodged into her account with ASB Bank Limited. The husband says that his share was $20,000. A note from the husband’s mother dated 14 April 2002 record’s the husband’s share of the sale as NZ$41,700.
At all relevant times the husband’s mother had his power of attorney. The husband’s mother lent $45,000 of the husband’s money to L Bourne on 10 December 2002 at 10% interest pa and at one point $55,810 was owed as a result of that loan. It may be that the $45,000 was sourced in the $41,700 being the husband’s share of the proceeds of the TW property.
In 2003 the wife inherited $12,616.07 and a one fifth share of her parents’ home at N. Based on a valuation of $700,000, at that time her share of the property was worth $140,000.
In 2003 the parties bought J shop. Thereafter D Pty Ltd traded at both sites but of the parties, only the husband worked at J shop.
On 28 March 2003 the husband withdrew $19,416 from the home loan account.
It is the husband’s case that on 15 June 2004 Y and L Bourne loaned the parties $160,000 to assist in the purchase of the N property. The wife argues that those moneys may have come from the husband’s assets in New Zealand. On 10 August the parties bought the other four fifths of the N property as tenants in common and borrowed $671,881 from Suncorp to complete the sale. Based on the purchase price of the remaining four fifths, the wife’s initial share was by that time worth $160,000.
The wife went on a cruise with friends for 10 days in early 2005 while the husband ran the business and minded the children.
The husband says that in 2005 the wife removed $5,000 from his secret stash.
In a letter to his wife dated 17 March 2005, L Bourne says that the husband thought he was contributing to a half share in a property in Queenstown. The husband thinks that his share of the sale of TA property of about $100,000 was applied by his brother L to a property near Queenstown.
At the end of the 2005 financial year the wife approached a new accountant as the bookwork for the business was 6 years behind. The business was running at a loss with $250,000 owing to distributors.
The parties separated in December 2005.
At some point after separation the husband closed J shop and continued to trade out of the S shop premises.
On 12 March 2006 L Bourne wrote to the parties asserting that he and his wife had loaned them $160,000 on 15 April 2004 to purchase the N property.
On 11 April 2006 an interim Apprehended Violence Order was granted for the protection of the wife against the husband.
In June 2006 the application for the AVO was dismissed.
In July 2006 the wife ceased receiving any income from D Pty Ltd.
On 21 July 2006 a market appraisal for the V property put it at $840,000 - $860,000.
In August 2006 the wife ceased to have anything to do with the trading of D Pty Ltd.
On 1 September 2006 the wife commenced these proceedings.
On 5 September 2006 Westpac wrote to D Pty Ltd in relation to the husband removing $7,900 from the D Pty Ltd account with only one signature.
On 12 October 2006 a Case Assessment Conference was held. The parties were both present and legally represented. Included in the orders made that day was the appointment of a Conciliation Conference with a Registrar on 15 December 2006. The husband was ordered to file and serve a Response to the Application for Final Orders and a Financial Statement by 26 October 2006. The parties were required to exchange market appraisals in relation to the N property and the company 14 days before the conference.
On 12 December 2006 the wife was told that D Pty Ltd had cancelled the insurance on the car, home and contents.
At some point in 2006 the husband moved the business from the W premises to RR where it continues to trade.
At the Conciliation Conference on 15 December 2006 the parties were both present and legally represented. The conference was abandoned and the proceedings were adjourned to 21 December 2006 for the appointment of an undefended hearing or for the allocation of a fresh conference. The husband was ordered to pay the costs of the wife.
On 21 December 2006 a fresh conference was appointed for 9 March 2007.
On 17 January 2007 a Statement of Claim was served on D Pty Ltd for $5,368.97 for goods sold and delivered.
On 31 January 2007 the D Pty Ltd Westpac account stood at -$9,259.82.
On 31 January 2007 the husband’s mother wrote to the parties saying that she had lent them NZ$58,000 between 4 May 1992 and 1 July 1994.
As at 2 February 2007 Suncorp was owed $588,429.37.
On 13 February 2007 Westpac issued demands for $2,265.86, $1,155.44 and $9,263.82.
On 9 March 2007 the proceedings did not settle at a Conciliation Conference and the parties were referred to the Listing Co-ordinator to set the matter down for a final hearing.
In a letter dated 26 March 2007 the husband’s brother L bourne said in a letter to Mr McLoughlin that it was envisaged that the land near Queenstown purchased in his name was to be divided between himself and his two brothers.
On 29 May 2007 the final hearing commenced before Rose J and the parenting proceedings settled. The following orders were made:
BY CONSENT, IT IS ORDERED:
1. That orders are made in relation to parenting issues in accordance with the “Minutes of Consent Orders” dated today and signed by each of the parties.
2. That the property settlement proceedings are stood over for directions before Registrar Chayna at 11.00am on 19 June 2007.
MINUTES OF CONSENT
BY CONSENT IT IS ORDERED:
1.That both parties have shared parental responsibility of the children [U, E, R and J].
2.That the children [R and J] live with the mother.
3.That the children [R and J] spend time with the father as follows:
a.each alternate weekend during the school term from 6.00pm Friday to the commencement of school on Monday or the commencement of school on Tuesday in the event Monday is a public holiday;
b.for the weekend that falls on Fathers’ Day, in the event that the children are not with their father;
c.for half of each school holidays by agreement between the parties, but failing agreement, for the first half in odd-numbered years and for the second half in even-numbered years;
d.such other times as agreed between the parties, taking into account the children’s wishes and their extra-curricular activities, and provided that the father give the mother reasonable notice of his intention to spend time with the children.
4.That in odd numbered years the mother have time with the children from 4.00pm Christmas Eve to 4.00pm Christmas Day and in even numbered years the father have time with the children from 4.00pm Christmas Day to 3.00pm Boxing Day.
5.In the event that the father is scheduled to spend time with the children on the weekend of Mothers’ Day, then such time shall be suspended such that the children shall live with their mother during such period.
6.That [U] live with each of her parents as agreed between her and her parents.
7.That [E] live with each of the parents as agreed between her and her parents, subject to each party complying with the conditions set out in Order 7 herein.
8.That when the children [E], [R] and [J] are living with or spending time with either of their parents, then that parent will ensure the following:-
a.That they are properly supervised at home at all times by a responsible adult;
b.That neither parent is to allow [U] to sleep in the same bed as her boyfriend;
c.That neither parent is to permit any of the children to consume alcohol.
9.That each parent notify the other of all proposed holiday or travel destinations for any of the children.
10.That each parent give the other at least 25 days’ notice of any proposed holiday or travel for any of the children overseas, including the destination and proposed dates for travel.
On 19 June 2007 a Trial Notice issued in relation to the property proceedings, directions were made for the filing of evidence by 7 August 2007, including expert evidence and a Pre-trial conference was appointed for 21 August 2007. The wife complied with the directions, the husband did not. The Pre-trial conference was vacated and the proceedings were listed in the Defaulters List on 12 October 2007.
On 10 September 2007 a Registrar dealt with an application in relation to valuation evidence. Orders were made for valuations by consent; the husband was to file an offer in the proceedings within 14 days; the time for compliance by the husband with the orders for discovery was extended to 11 October 2006 and the husband was ordered to pay the wife’s costs.
In September / October 2007 the wife’s Volkswagen Golf motor vehicle broke down and was written off. $6,000 was forwarded to the wife from the car’s insurer. The husband re-claimed the car and the cheque was cancelled. The husband had some repairs undertaken and retains the car. In his Financial Statement he says it is now worth $9,000, however in his submissions he asserts it is worth $400.
In October 2007 E ceased living with the husband and returned to live with the wife full-time.
The husband did not attend the Defaulters List on 12 October 2007. The Registrar noted that the husband had not complied with all orders made. The matter was adjourned to the 14 December 2007 to be allocated a trial date.
On 16 November 2007 the parties were served with a Statement of Claim filed in the NSW Supreme Court by Westpac seeking $43,960 and possession of the V property.
On 14 December 2007 these proceedings were adjourned to Fowler J for mention on 20 February 2008.
On 21 January 2008 the wife contacted Westpac debt recovery section and was told that the minimum repayment needed for Westpac to discontinue the Supreme Court proceedings was $18,600. The wife obtained a $30,000 personal loan from the Commonwealth Bank.
On 19 February 2008 the wife deposited $6,630 and $10,328.97 in payment of the Westpac debt.
On 20 February 2008 the wife was represented and the husband attended in person before Fowler J. The matter was adjourned to 31 March 2008 for the purpose of allocating a hearing date. It was noted that if the husband had not filed his material by the adjourned date the matter would be listed for hearing as an undefended matter. If the matter was ready then it would be listed for defended hearing.
On 31 March 2008 the wife was represented and the husband appeared in person. The proceedings were referred to me to allocate hearing dates. I ordered that the matter be listed for hearing over two days on dates to be fixed. I gave leave to each of the parties to restore the matter to the list on 7 days notice in the event that either party became aware of any matter that might mean the matter could not proceed on the dates allocated.
On 9 April 2008 the wife received a letter from Centrelink claiming that she must repay $16,605.83 as the husband had not fully disclosed his financial position.
On 14 May 2008 the parties were advised that 31 July 2008 and 1 August 2008 had been allocated for the final hearing. Following correspondence with the parties those dates were changed by agreement to 4 & 5 August 2008.
From June 2008 U lived with her friend, and is self sufficient.
On 28 July 2008 an order was made by consent for the single expert to update valuations of the V and N properties.
On 1 August 2008 the husband sought that the hearing be vacated on the basis that he was not ready. There was written evidence he had yet to prepare and he had a new lawyer assisting him. He set out his arguments in a letter dated that date. The matter came before me. I invited the wife’s counsel to obtain instructions from her client as to any basis, including the payment of costs, on which she would consent to a vacation of the hearing. The wife did not consent to the vacation of the hearing date. The husband’s application was refused.
Credit and Submissions
The evidence of the witnesses
The only witnesses called for cross-examination were the parties and Mr K, the valuer.
It was hard to assess the wife’s credibility. Few relevant issues were put to her. It was not a good start when one of the first questions asked of her in cross-examination by the husband was about the colour of the front door of the V property! Some of her sworn testimony proved incorrect but not significantly so. As far as I could tell the wife attempted to give accurate evidence.
The husband was a poor witness. His affidavit filed 28 March 2008 is little more than a draft and contains more submissions than facts. In cross-examination he persisted in seeking to address any slight he perceived in the questions, was vague in his answers, had trouble recalling various facts and then was generally unable to locate documents he wanted to rely on to assist with his answers. He often answered questions with questions of his own. He was inclined to jump from one topic to another.
Mr K is an expert witness and his credit was not in issue. The only matter of contention was the valuation of the V property. In the overall scheme of things it is likely to be sold anyway and its value will be determined by the market. The husband put to Mr K that the V property was a good prospect for sub-division and in any event should be worth more than number 6 across the road, which is a smaller block and was sold as a development site (the house on the block was knocked down). Mr K was not shaken – he opined that the occupancy (eg. single residence) rather than the size of the block, determines value; the subject block is not completely flat like number 6, has water seepage issues and a qualified geotechnical rating of E (in a scale of A-worst and F-best) whereas number 6 is unqualified. Mr K had made enquiries of the council about subdivision and was told that permission would probably be given but issues with the site could make the cost impracticable. In the absence of competing expert evidence, I accept Mr K’s opinion.
Submissions
The submissions on behalf of the wife are as follows:
ØThe list of assets and liabilities is as follows:
Assets Value [V property] $995,000 [N property] $950,000 Husband’s interest in land near Queenstown NZ Not known [D] Pty Ltd $4,584 [NS Shop] Not known [BB Business] $0 Suncorp Chatswood $22,700 Westpac Bank (H) Not known Commonwealth Bank (Joint) #[…] $13 Commonwealth Bank ([the wife] trading as [BB Business]) #[…] $925 Commonwealth Bank (W) #[…] $182 Commonwealth Bank (W) #[…] $914 Volkswagen Caravelle motor vehicle (H) $6,000 1987 Toyota Camry motor vehicle (H) $2,000 Volvo motor vehicle (W) $2,000 344 AMP shares (W) $2,257 294 IAG shares and 200 AMP shares (H) $2,417 Household effects (joint) (w says $5,000) $5,000 Total $1,993,992.00
Superannuations Amount REST Superannuation (H)
$4,000
Colonial Superannuation (H)
Not known
Asset Superannuation (W)
$101
$14,710.00
Liabilities:
Liabilities Amount Personal loan from [Mr T]
$15,000
Westpac home mortgage
$17,000
Suncorp mortgage
$675,000
Westpac business overdrafts
$38,000
Westpac Mastercard (H)
Not known
Personal loans (H)
Not known
Commonwealth Mastercard (W)
$2,500
Commonwealth personal loan (W)
$29,148.42
Centrelink (W)
$16,605.83
Car repair (W)
$3,200
Legal fees (W)
$47,913
Children’s school fees
$2,000
[Fees Mr K] (H)
$2,329
[Fees Mr K] (W)
$2,329
[Fees Mr M] (H)
$2,200
[Fees Mr M] (W)
$2,200
[R Bourne]
$789
$856,214.25
ØThe parties contributions were equal;
ØThere should be a 30 – 40% adjustment to the wife because of the husband’s failure to disclose assets and because of the section 75(2) factors. In particular, the wife has some restrictions due to her health; her earning capacity is limited by her care of the children, two of whom have health issues of their own; the husband pays limited child support; the wife has greater time with the three younger children, the husband has a valuable financial resource in the form of his mother and brothers.
The submissions on behalf of the husband were to the following effect:
ØThe husband disagrees with the wife’s list of assets and liabilities. I think he would have them as follows:
Assets Value V property $995,000 N property $950,000 Husband’s interest in land near Queenstown NZ $75,000 D Pty Ltd $4,584 NS Shop $5,000 BB Business $0 Suncorp Chatswood ? Westpac Bank (H) $40 Commonwealth Bank (Joint) #… $13 Commonwealth Bank (the wife trading as BB Business) #… $925 Commonwealth Bank (W) #... $182 Commonwealth Bank (W) #... $914 Volkswagen Caravelle motor vehicle (H) $400 1987 Toyota Camry motor vehicle (H) $300 Volvo motor vehicle (W) $2,000 344 AMP shares (W) $2,257 294 IAG shares and 200 AMP shares (H) $2,417 Household effects (joint) (w says $5,000) $25,500 Total $2,064,532.00
Superannuations Amount REST Superannuation (H)
$4,000
Colonial Superannuation (H)
Not known
Asset Superannuation (W)
$101
$4,101.00
Liabilities:
Liabilities Amount Personal loan from Mr T
$15,000
Westpac home mortgage
$17,000
Suncorp mortgage
$675,000
Westpac business overdrafts
$38,000
Westpac Mastercard (H)
$9,000
Personal loans (H)
$147,500
Commonwealth Mastercard (W)
$2,500
Commonwealth personal loan (W)
$29,148.42
Children’s school fees
$2,000
Fees Mr K
$2,329
Fees Mr K
$2,329
Fees Mr M
$2,200
Fees Mr M
$2,200
$944,206.42
ØThe husband argues for an equal division overall. On that basis I take it that he thinks contributions were equal and that there should be no adjustment for the other matters in section 79(4);
ØThe husband seeks an equal division of household contents except for the wife’s jewellery and unspecified assets owned by or used by the children. He seeks that two lists be made and that the contents of one of the lists go to each of the parties.
The approach in proceedings under section 79
The case law reveals that there is a permissible approach to the determination of an application brought pursuant to the provisions of s 79. That approach involves four inter-related steps. First, I am to make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Second, I should identify and assess the contributions of the parties within the meaning of s 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Third, I should identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g), (the other factors) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourth, I should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case. [2]
[2] This summary of the effect of the authorities is paraphrased from the comments of the Full Court in In the Marriage of Hickey (2003) 30 Fam LR 355 at 370
There is no mention of steps in section 79 but it is convenient to approach the exercise of discretion in a structured way. As I say, the Full Court has supported such an approach.
The property of the parties at the date of the hearing
The Court is required to make a finding as to the property of the parties. That involves identifying assets and liabilities and financial resources and their values.
There are circumstances whereby assets are included in the list for division although they no longer exist. In the Marriage of Omacini (2005) 33 Fam LR 134 the Full Court noted:
[30] To date, three clear categories of cases have emerged where the court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In In the Marriage of DJM and JLM (1998) 23 Fam LR 396; (1998) FLC 92-816; [1998] FamCA 97 the Full Court said at [11.6]:
[11.6] For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.
(b) Where there has been a premature distribution of matrimonial assets. In In the Marriage of Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at Fam LR 509; FLC 81,654:
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
(c) In the circumstances outlined by Baker J in In the Marriage of Kowaliw (1981) 7 Fam LN N13; (1981) FLC 91-092 at FLC 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view relevant under s 75(2)(o) to applications for settlement of property instituted under the provisions of s 79.
As to the disputed issues.
Volkswagen Caravelle motor vehicle
The parties had a Volkswagen Caravelle motor vehicle at separation. The wife had the use of the vehicle. On 12 December 2006 the wife was told that D Pty Ltd had cancelled the insurance on the car, home and contents. She arranged for new insurance.
In September / October 2007 the vehicle broke down, was taken to a repairer and was ultimately written off. A cheque for $6,000 was forwarded to the wife by the car’s insurer. The husband re-claimed the car by paying $400 and the cheque was cancelled. The husband had some repairs undertaken and retains the car. In his Financial Statement he says it is now worth $9,000 but I do not understand that to be his belief. In his submissions he puts the value at $400.
It is the wife’s case that the husband wasted the $6,000 on offer. The husband’s case is that through her inadequate care, a vehicle worth $9,000 was damaged to the point that it was written off. Because he needed the vehicle and was not going to have any benefit from the $6,000, he kept and used the vehicle. Like several other issues in these proceedings, the facts about the car read like a Shakespearean farce. In effect the husband complains that the wife wasted $3,000 of the car’s value, yet he has wasted most of the remaining $6,000 of that value. There is no adequate evidence to support the husband’s case about the damage caused by the wife to the value of the vehicle.
There is no valuation evidence in relation to the vehicle but we know that it had a value of $6,000 at a point after separation. That is the value I will attribute to it.
The husband’s one third share of land in New Zealand
The husband had a one third share land near Queenstown, New Zealand. The wife asserts that part of that property was sold for $1,800,000 in 2007. She puts the value of the husband’s interest at $599,999. The husband variously contends that his share has a value of $75,000 or that his brother L Bourne has had the use of his money to a value of $75,000 and that was in fact used to purchase the property. In any event the husband contends that the $75,000 should be set off against advances made to the husband by L Bourne. There is no adequate evidence on this issue.
Matters are not assisted by the fact that in a letter[3] to his estranged wife dated 17 March 2005 L Bourne asserted that the husband was then owed $55,810 in respect of his interest in the Queenstown property. In cross-examination about that assertion, the husband said words to the effect that his brother was trying to give the impression that assets in his name were those of the husband, to hide assets in his own divorce proceedings.
[3] part of annexure iA to the wife’s affidavit sworn 8 August 2007
It is likely that the husband has an interest in the land at Queenstown but the value of that interest has not been adequately proven.
Other undisclosed property of the husband in New Zealand
The wife asserts that the husband has or has had property in New Zealand. The husband says that his mother has carriage of his affairs in New Zealand and she uses his money as if it was her own. Indeed I take it that she has managed or influenced the financial affairs of all three of her sons. There is a practice of secrecy in relation to the financial affairs of the husband’s family. For example the note from the husband’s mother that is the first page of annexure iA to the wife’s affidavit includes the words –“Tear this up.”. The husband was asked about that and responded with words to the effect that his mother commonly includes that device in written communications. I have referred above to L Bourne’s representation about the husband’s interest in the Queenstown property, which is in conflict with the husband’s case before me and which the husband attributes to his brother seeking to hide assets from his wife.
As to the husband’s propensity for secrecy, the wife relies on evidence of the husband investing in a project in Vanuatu in 1996. The correspondence annexed to the wife’s affidavit of 8 August 2007 reveals the husband’s intent to hide his involvement in that project from the wife. Strangely, in respect of this project, the husband was dealing with a Mr T, who I assume is the wife’s brother. One facsimile transmission from the husband to Mr T includes the following:
“….. Meanwhile [the wife] has blown a fuse about the whole thing and refuses point blank to have anything to do with it. She has forced me to promise I won’t go into your venture. If you hadn’t had to phone up to chase up the money and signed forms, I could have carried on quietly doing it. ….
The husband’s submission on the general issue of disclosure is that he has fully disclosed his assets. He asks why he would have put up with the stress he has been under since separation if he had assets in New Zealand which could have relieved him of financial pressure.
I cannot identify any other property in New Zealand. For all of his lack of attention to these proceedings and disregard for court orders, I have some residual sympathy for the proposition that the husband puts. I acknowledge that the same facts may result in a very different finding from another judicial officer but I find that if the husband has additional assets in New Zealand, they are not of significant value.
NS Shop
The husband moved the shop business that had been conducted by D Pty Ltd to a new entity, NS shop from late 2006. The husband did not provide any documents to the single expert, Mr M, to allow him to value that business. The husband variously says that he was too busy trying to run the business and pay off debts; there are no relevant records; and that Mr M did not ask him for such records. It is the husband’s evidence that four people are employed in the business, all working part time, including CT who used do the accounts but now pays the wages for $30 per week. I think the husband said that altogether the employees make up the equivalent of one full-time staff member. The husband asserts a turnover of about $200,000 per annum, down from over $900,000 when there were two business sites in years gone by.
The husband’s case on this issue is that he has worked hard since separation, without assistance from the wife, to pay off the business debts and to keep a roof over the heads of the parties and the children. He says that he has reduced the business debts over that period.
There is no valuation evidence of the husband’s trading enterprise. The responsibility for that falls to the husband. On the other hand the wife’s own case is that at the end of 2006 the book work for the business was 6 years behind and the business was running at a loss with $250,000 owing to distributors.
It was the husband’s responsibility to co-operate with the valuer and he chose not to. No inferences can be made in his favour as a result.
Suncorp Chatswood
The husband’s Financial Statement puts the account at $21,700. I gather from an exchange at the bar table that the husband would say that the account has less money in it now. As far as I am aware there is no evidence to that effect before me. It would have been very easy for the husband to adduce the relevant evidence and he chose not to. No inferences can be made in his favour as a result.
Household effects
The parties disagree about the value of their household effects. The husband asserts a value of over $25,000. The wife says $5,000. Neither party has obtained a valuation. I cannot make a finding about value. The husband contends that the personalty should be divided except for certain categories. Those categories are not conclusively defined. I am not sure what personalty he has. The husband has not fulfilled his obligations in relation to these proceedings. I therefore cannot rely on him to co-operate in the identification of the excluded categories of personalty or in the division of the remaining items. I will make no order about personalty. By default it will remain where it is.
I find that the assets are:
Assets Value V property $995,000 N property $950,000 Husband’s interest in land near Queenstown NZ Not Known D Pty Ltd $4,584 NS Shop Not Known BB Business $0 Suncorp Chatswood (H) $22,700 Westpac Bank (H) $40 Commonwealth Bank (Joint) #... $13 Commonwealth Bank (the wife trading as BB Business) #... $925 Commonwealth Bank (W) #... $182 Commonwealth Bank (W) #... $914 Volkswagen Caravelle motor vehicle (H) $6,000 1987 Toyota Camry motor vehicle (H) $300 Volvo motor vehicle (W) $2,000 344 AMP shares (W) $2,257 294 IAG shares and 200 AMP shares (H) $2,417 Household effects (joint) (w says $5,000; h says $25,500) Not Known Total $1,987,332.00
Superannuation:
The parties’ superannuation interests are:
Superannuations Amount REST Superannuation (H) $4,000 Colonial Superannuation (H) $10,609 Asset Superannuation (W) $101 Total $14,710.00
Liabilities:
As with the assets, I have worked off a document called a Draft Balance Sheet that was handed up on 5 August 2008. Both parties had the document and where it records an agreement, I have accepted the relevant item. As to the disputed liabilities:
Husband’s Westpac Mastercard debt
It is the husband’s case that he owes $9,000 on a Westpac Mastercard. The joint list of assets and liabilities notes that the wife disputes that liability. The husband shows that debt in his Financial Statement. The wife makes a claim in relation to her own credit card. He was not specifically challenged on it in cross-examination. I am satisfied that the husband has the debt.
Husband’s Personal Loans
It is the husband’s case that he or the parties owe $147,500 in personal loans. The joint list of assets and liabilities notes that the wife disputes that liability. I can find no evidence of a debt or debts that total $147,500. For example, I cannot identify a combination of the categories of liabilities evidenced in the husband’s Financial Statement that add up to that amount. The husband has the onus of proof in relation to these liabilities and he has not discharged it.
Loan from Husband’s brother L Bourne
It is hard to reconcile the list of liabilities put forward by the husband in his case but as I understand it, he contends that the parties owe his brother L and his wife, $160,000. In a letter to the wife of 13 August 2007[4] L Bourne asserts that the advance was made by him and his wife towards the purchase of the N property; that the intention was that he and his wife would thereby acquire a one fifth interest in the property; and repeating a proposal apparently made earlier, to belatedly treat the advance as a loan. L Bourne notes that although his brother, the husband, had agreed to that approach, the wife had not.
[4] Exhibit 2
A problem for the husband in this aspect of his case is that he had the capacity to make repayments to L Bourne at various times and did not do so. He gives evidence about significant amounts of cash being hidden at the former matrimonial home between 2004 and 2007.
Finally, the husband’s brother, L Bourne, has been on notice about these proceedings for more than a year and has not sought to be joined in the proceedings, nor has he given evidence in the husband’s case. It is trite to say that a loan binding the wife, whether with the “very fair and reasonable” 5% interest suggested in a letter from L Bourne or not, cannot be brought into being without her involvement. On that basis I cannot find that a debt is owing by the parties to L Bourne.
However, whether sourced in L Bourne or not, there was an advance made on the husband’s behalf in the sum of $160,000. Credit can and should be given to the husband for that contribution. In that way the issue of the source of the funds can be resolved later, between the brothers.
The relevant liabilities are:
Liabilities Amount Personal loan from Mr T $15,000 Westpac home mortgage $17,000 Suncorp mortgage $675,000 Westpac business overdrafts $38,000 Westpac Mastercard (H) $9,000 Commonwealth Mastercard (W) $2,500 Commonwealth personal loan (W) $29,148.42 Centrelink (W) $16,605.83 Mr K (H) $2,329 Mr K (W) $2,329 Mr M (H) $2,200 Mr M (W) $2,200 R Bourne $789 Total $812,101.25
Net assets
The net assets (including superannuation) have a value of $1,189,940.75 ($1,987,332 + $14,710 - $812,101.25).
Financial Resources
The husband’s financial affairs have been significantly intertwined with those of his mother and brothers. The husband has not put into evidence any formal records maintained in relation to those arrangements. It is the husband’s evidence that transactions have been undertaken by his mother and brothers, with his money, without specific reference to him. The inference I draw from that is that either the intermingling of funds is undertaken on an informal basis or that any records that do exist would not assist the husband in these proceedings. In either event it is likely that the husband has a financial resource in the form of his mother and brothers. It is not possible to assess the significance of the resource because there is no evidence of the financial circumstances of the husband’s mother or brothers.
There is no evidence that either of the parties has any other financial resources.
Contributions
The obligations placed on the Court by s 79 call for an assessment of the respective contributions of the parties. The manner of assessing contributions has been the subject of previous decisions. The contributions of a parent and homemaker are to be assessed, not in any merely token way, but in terms of their true worth to the building up of the assets[5]. There are said to be risks in taking an overly technical approach to the assessment of the respective contributions of the parties in that the Court can become involved in questions of the quality of contributions which go far beyond the real world expectations of parties[6].
[5] Mallett v Mallett (1984) 9 Fam LR 449; In the Marriage of Ferraro (1992) 16 Fam LR 1
[6] In the Marriage of Shewring (1987) l2 Fam LR 139
As to whether the Court should apply the considerations in section 79(4) to the assets globally or asset by asset, the authorities have it the latter approach is preferred, in appropriate circumstances either approach is permissible and sometimes the asset by asset approach is best. See In the Marriage of Lenehan (1987) 11 Fam LR 615; In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712; In the Marriage of Zyk (1995) 19 Fam LR 797.
In the Marriage of Coghlan (2004) 33 Fam LR 414 the Full Court allowed that superannuation may be included in the list of property drawn up as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. The Full Court suggests that that:
“… approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.”
Here the parties have relatively small interests in superannuation. I will apply the section 79(4) considerations to one pool combining superannuation and non-superannuation assets.
The parties agree that contributions were equal. On that basis I will not go into great detail on the issue.
Section 79(4)(a) Contributions
This provision deals with financial contributions, both direct and indirect.
At the commencement of the parties’ relationship she was working full-time at a Bank and at a Hotel on a casual basis. From July 1987 the wife also worked in the parties’ business. She left the Hotel and the Bank positions in 1987 and worked full-time in the business. That included bookwork for the business. She had 6 months off work in 1990 when U was born. She left work again in about 1991 when she was pregnant with E and U contracted asthma. U was hospitalised every 5 or 6 weeks for the next three years. The wife cut back her paid employment with the business to working in sales when she could.
R was born in 1994 with heart problems and the wife had no paid employment for about 12 months thereafter. The wife returned to two to three nights per week and some weekends.
Wife sets out her taxable income for most of the years of the marriage at para 33 of her first affidavit as follows:
Year ending
30 JuneIncome 1986 $18,900 1992 $9,955 1993 $15,499 1994 $9,421 1995 $6,039 1996 $11,180 1997 $19,419 1998 $9,845 1999 $5,200 2000 $6,940 2001 $7,040 2002 $6,148 2003 $8,140 2004 $7,496 2005 $8,389 2006 $6,596 2007 $2,186
The husband has worked in the business since it commenced.
It is not possible to say that all of his funds were applied to the purposes of the marriage but capital funds came with or to the husband during the marriage. His initial funds were:
Ø A 3 bedroom villa at Auckland that was later sold for $NZ155,000;
Ø About $NZ20,000 invested in tranches of about NZ$5,000 in term deposits with the ANZ Bank in New Zealand;
Ø An interest in a nursing home venture;
Ø $2,000 in cash;
Ø ‘commodities’ (I assume personal items) worth $10,000
Some of the New Zealand funds may have been applied to the purchase of a HZ Holden Premier motor vehicle. The husband says that $25,000 came from his New Zealand funds in July 1987 for the purchase of S shop. In 1989 the husband cleared NZ$155,000 from the sale of his Auckland property. In 2001 the husband and his brothers sold the TW property and the husband’s share is likely to have been NZ$41,700. There was an injection of $160,000 from or through the husband in June 2004 which went towards the purchase of the remaining four fifths of the N property. The husband may have been credited with about $100,000 from the sale of a property at TA in New Zealand and that money was used by his brother L Bourne to invest in another property. The husband asserts that about $78,000 of that sum has secured drawings by him from family members in New Zealand.
The wife’s interest in a property at M Street realised $120,000 in 1991. In 2003 she inherited $12,616.07 and a one fifth interest in the N property that was valued in 2004 at $160,000.
Section 79(4)(b) contributions
This provision deals with direct and indirect non-financial contributions other than those made in the form of parent and homemaker contributions. In about 1991 the E Street property was rented out and the parties lived with the wife’s parents for about 13 months, rent-free.
There is no evidence of significant renovations that were undertaken by the parties own hands.
Section 79(4)(c) contributions
This provision deals with contributions in the form of parent and homemaker contributions.
The wife has made the main parent and homemaker contribution and that has been made more difficult because of the children’s health. R was born in 1994 with a leaky heart valve and the wife had no paid employment for about 12 months thereafter. The wife returned to work two to three nights per week and some weekends. R had heart operations at 8 months and 6 years of age and has continued under the care of a Paediatric Cardiologist to this day. Much of the responsibility for that care has fallen to the wife. R is vulnerable to infection and required careful attention to what might otherwise be seen as minor illnesses for most of her life. R also suffers from chronic migraines. E too has suffered poor health from time to time.
That is not to say that the husband has not been involved in the care of the children. The fact is that the division of labour, particularly in the early years left much of that role to the wife.
Conclusion on Contribution
The wife argues that the contributions overall were equal. I take it that the husband agrees. The husband’s submissions did not address that issue but he seeks an equal division of all assets.
This was a long marriage and it is possible to understand why the parties do not argue for an imbalance in the contribution finding. I find that although contributions were made in various ways and in different proportions at different times, the contributions of the parties were equal.
The other matters in Section 79
Once contributions have been assessed, the other factors in section 79(4) need to be considered.
Dealing with the matters identified in the legislation:
Section 79(4) (d)
Pursuant to s 79(4)(d) I am required to take into account the effect of any proposed orders on the earning capacities of the parties. This is a case where the parties have earned their main income through their businesses. Neither party wants to continue to operate the main business. The wife seeks to retain BB Business. There may be an impact but on the evidence, I cannot identify any effect on the parties’ earning capacities in the forms of orders proposed.
Section 79(4)(e) - Section 75(2) Factors
The relevant matters in Section 75(2) would seem to be paragraphs (a), (b), (c), (k), (l) and (o).
(a) the age and state of health of each of the parties;
First, as to the age and state of health of each of the parties. The wife and husband are 48 and 55 years of age, respectively. There is some evidence about the wife’s health. She was hospitalised for 3 days with endometriosis in November 2006, had to have surgery and was off work for about one month. The wife has great discomfort and pain from a lower back condition. She currently receives treatment from a Chiropractor. He says that the wife responds well to treatment but requires treatment once a month. The wife takes prescription pain killers. There is no evidence about the husband’s health.
(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’s income is $525 per week made up of salary of $60 per week from … Evening College, rent of $450 from the N / V property, the use of a mobile telephone worth $15 per week. The wife says she is entitled to about $60 in child support but it is not paid.
The wife lives at the V property with children of the parties. The children have no income.
The wife’s fixed expenses are as follows:
Expense Amount Rates $30 other rates, unit levies and land tax $305 home and contents insurance for both properties $40 registration for the Volvo motor vehicle $20 repayments on the CBA personal loan $150 Mastercard payments to the CBA $30 living expenses $972 Total $1547.00
Evidence about the wife’s assets and liabilities is set out earlier in these reasons.
As to her earning capacity, the wife intends to continue BB Business. The business currently generates little or no income. For the year ended 30 June 2008 the business made a loss of $2,715.42 despite paying her no wages. The wife is concerned that her back troubles will limit the growth of the business. There is no medical evidence to the effect that the wife has no earning capacity. She continues to teach one class a week at the Evening College. The wife is not fully exercising her earning capacity.
The husband earns $451 per week made up of income from his work in the shop business of $300, $1 in dividends from shares, $50 in petrol and $100 reimbursement from NS Shop for storage. His mother pays $300 towards the rent for his business premises and $100 per week in storage costs. He lives alone.
Although the addition in his Financial Statement is recorded as $940 per week, the husband puts his expenditure as follows:
Expense Amount Income tax $170 Rent $500 Rates and unit levies $20 Mortgage payments to Suncorp $1,125/2 $562.50. Mortgage payments to Westpac $30 Westpac life insurance $10 General household and car insurance – Westpac $12 Westpac future life insurance #... $11 Westpac future life insurance #... $18 Westpac home and contents insurance #... $11 Motor vehicle registration – Toyota $8 Loan repayments to family members $0 Repayment of Westpac Mastercard $475 Living expenses $180 Total $2007.50
The husband does not disclose a child support liability. I note that the child support assessment for the period 7 April 2008 to 19 August 2008 fixed the husband’s liability at $304.67 per month[7]. The husband contends that he spends $90 per week on musical instruments and tuition for the children and $40 per week on their school fees and mobile telephones.
[7] Annexure G to the wife’s affidavit
There is no probative evidence as to his earning capacity but on any view he is not receiving a proper return for his labour at the present time. It may be, as the wife contends, that he would do better to focus on repairs rather than sales. I am satisfied that the husband is not fully exercising his earning capacity at the present time.
(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 parties have three children under 18. They live for the preponderance of time with the wife. The youngest, J, has seven years to go before reaching her 18th birthday.
(d) commitments of each of the parties that are necessary to enable the party to support:
himself or herself; and
a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
I have set out the evidence in relation to the parties’ expenses.
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
any law of the Commonwealth, of a State or Territory or of another country; or
any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
and the rate of any such pension, allowance or benefit being paid to either party;
The parties do not receive income tested benefits or any payments from a superannuation fund.
(g) where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
There is little evidence in relation to the standard of living of the parties during the marriage. It is the unchallenged evidence of the husband that as a couple the parties enjoyed holidays to various destinations, including skiing holidays to New Zealand and the Snowy Mountains and they cruised the Great Barrier Reef. The family had holidays to New Zealand (a Christmas holiday and 3 weeks in March April 2002), Nelson Bay, The Basin, Sussex Inlet, Dubbo and Cowra.
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
Neither party intends to undertake vocational training.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant;
There are issues about disputed debts. I know of nothing about the orders proposed that would make it harder for persons who I have found to be creditors to recover on a debt.
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
There is no probative evidence about this issue.
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
The children and in particular, aspects of their health care, have had an impact on the wife’s earnings from paid employment. R was born in 1994 with heart problems and the wife had no paid employment for about 12 months. Thereafter she returned to two to three nights per week and some weekends. R had heart operations at 8 months and 6 years of age and has continued under the care of a cardiologist to this day. Much of the responsibility for that care has fallen to the wife. E too has suffered poor health from time to time. It is hard to identify the impact those things have had on the wife’s earning capacity. It is the wife’s case that she was involved in several aspects of the parties’ business from the commencement of the business in 1997.
(l) the need to protect a party who wishes to continue that party's role as a parent;
The needs of the younger children continue to impact on the wife’s capacity for paid employment.
(m) if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
I have set out that evidence above.
(n) the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;
(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; and
There is a child support assessment. Between April 2008 and August 2008 the husband’s liability was $304.67 per month. As I understand it the husband is in arrears and the wife is contemplating seeking a departure.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
The wife argues that assets have been wasted by the husband in his stewardship of the shop business before and after separation and by gambling. In the latter regard annexure C to the wife’s August affidavit shows the husband establishing accounts with Supatab and a telephone account with the NSW TAB in 2004. There is an available inference that the husband engaged in gambling on horse races. However, there is no evidence of the extent or financial outcome of that gambling.
The husband makes complementary allegations about the wife accessing cash funds hidden in the home and making inappropriate drawings on business funds. It is not possible to make a sensible finding about those allegations.
Financial disclosure is fundamental to the identification of a just and equitable settlement of property[8].
[8] In the Marriage of Black and Kellner (1992) 15 Fam LR 343; In the Marriage of Weir (1992) 110 FLR 403; 16 Fam LR 154; (1993) FLC 92–338).
It is not necessary for the non-disclosure to be deliberate. In In the Marriage of Kannis which is reported as to another aspect at (2002) 30 Fam LR 83; (2003) FLC 93-135; the Full Court said at paragraph 51[9]:
51. Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances it may be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour.
[9] [2002] FamCA 1150
Here the husband’s disclosure is not adequate.
Matters are not assisted by the fact that there is a lack of formality and candour in his financial dealings with members of his family. The husband says he is unclear about certain transactions involving or potentially involving his money. He left his mother to deal with his assets in New Zealand under a Power of Attorney, as she saw fit and without referring to him. As is referred to earlier in these reasons, according to the husband, his brother, L Bourne and his mother have evinced a desire to obscure the financial affairs of family members. Unfortunately the objective evidence is inconclusive. The husband has not called evidence from family members that may have had a bearing on his financial affairs and he has not produced relevant documents.
It is not as though banking records would necessarily provide a complete financial picture. The husband says that he kept significant amounts of cash at home from time to time. For example the husband describes an occasion in 2003 when the wife took $8,000 from the $11,000 accumulated cash stored in the former matrimonial home. He says that in early 2005 the wife took $5,000 in cash from the husband’s ‘secreted storage’. He says that in November 2005 the wife found his $NZ9,500 cash safety stash, representing years of Christmas and birthday money gifts from the husband’s NZ family.
The wife’s complaints include the fact that the husband made a practice of drawing cheques on the business for wages and other disbursements but did not present them. A reconciliation statement from D Pty Ltd dated 30 June 2006 showed 103 outstanding cheques drawn between March 2002 and June 2005. The overwhelming majority of them were drawn to the husband but there are also cheques to various service centres and other suppliers. The husband was asked about this in cross-examination and said that from time to time the business could not afford the wages.
Finally the husband frustrated the work of the business valuer. Mr M is the single expert appointed to value the business entities. In his report of 6 August 2007 he says among other things in relation to D Pty Ltd:
The husband informs me that:
1.The trading operations were transferred to him in October 2006. At that time he took over responsibility for paying the trade creditors which he estimates were in excess of $200,000. The husband offered to provide me with a copy of the debts but it has not been sighted.
2.As he now owns the business it does not form part of my brief and he has refused to release any trading information about the business.
3.He is continuing to pay the old trade creditors.
4.No accounts have been prepared for the company for the year ended 30 June 2006 or later.
Mr Merrell proceeded to value D Pty Ltd as a non-trading entity and in relation to the continuing business, trading as NS Shop, he says:
I note that as I have not seen any recent trading figures for the business I am unable to express any view on the value of that business.
Unlike Mr K, Mr M was not called for cross-examination by the husband. Therefore on the unchallenged evidence of Mr M, the husband has frustrated the process of obtaining a valuation of the business.
In relation to non-disclosure, the effect of the husband’s submissions was: if he has significant assets in New Zealand, why would he have continued under such apparent financial pressure since separation? It is possible that the there is no significant hidden asset, that the husband has simply been doing his best for the family by trading out of a desperate situation and was not able to do that and also meet his obligations in respect of these proceedings. If that was the case then there was no need for the husband not to provide Mr M with copies of the business creditors or to refuse him trading information about NS Shop.
(p) the terms of any financial agreement that is binding on the parties.
There was no binding agreement made between the parties.
Section 79(4)(f)
I have referred to the parenting orders made in these proceedings.
Section 79(4)(g)
I have referred to the child support position.
Conclusion
The relevant matters arising from the remaining elements of s 79, which include the s 75(2) factors referred to above are:
Ø Neither of the parties is fully exercising their earning capacity;
Ø The wife has a bad back which may have restricted her to some extent;
Ø A greater burden falls on the wife than the husband in relation to accommodating the younger children and in relation to their day to day care. R does not enjoy unqualified good health and that has and will impose particular demands of the wife;
Ø The husband provides modest direct financial support to the wife for the children but she has exclusive use of the rental income from N property;
Ø The husband did not provide full disclosure in relation to his financial circumstances and frustrated the work of the business valuer;
Ø The husband has enjoyed financial support from members of his family and that may continue to some extent;
For the wife it is argued that there should be an adjustment in her favour of 30% - 40% by reference to these matters. The husband appears to seek no adjustment.
The matters referred to above favour an adjustment to the wife. In the circumstances of substantial non-disclosure on the part of the husband the authorities support me taking a less critical view of the wife’s claim. The Full Court has said:[10]
….once it has been established that there has been a deliberate non disclosure, which follows from his Honour’s findings in this case, then the court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
[10] In the Marriage of Weir 16 Fam LR 154 at 158
In my view there should be a 30% adjustment.
Just and Equitable
The division of assets that would be appropriate based on the matters discussed above would be 80% to the wife and 20% to the husband.
The net assets have a value of $1,189,940.75. On that basis the wife would receive $951,952.26, leaving the husband with $237,988.15.
The wife wants to retain the V home. That would leave the wife with the following:
Assets Value V property $995,000 Commonwealth Bank (the wife trading as BB Business) #... $925 Commonwealth Bank (W) #... $182 Commonwealth Bank (W) #... $914 Volvo motor vehicle (W) $2,000 344 AMP shares (W) $2,257 Household effects (joint) (w says $5,000; h says $25,500) Not Known Asset Superannuation (W) $101 Commonwealth Mastercard (W)
-$2,500
Commonwealth personal loan (W)
-$29,148.42
Centrelink (W)
-$16,605.83
Mr K (W)
-$2,329
Mr M (W)
-$2,200
R Bourne
-$789
Total $947,806.75
In order to bring the wife to 80% she would receive a further $4,145.51. Even allowing for items used primarily by the children, it is likely that the wife has the greater share of personalty. I will set that off against any further adjustment.
The husband seeks that the business, NS Shop, be sold up and that the outcome be borne equally by the parties. The sale of the business must be a matter for him. He has involved his brother H Bourne in the business and chose not to co-operate with the valuer. It would be unfair to expose the wife to the potential risks associated with a sale. Thus the husband has or has had the benefit of :
Assets Value D Pty Ltd $4,584 NS Shop Not Known Suncorp Chatswood (H) $22,700 Westpac Bank (H) $40 Volkswagen Caravelle motor vehicle (H) $6,000 1987 Toyota Camry motor vehicle (H) $300 294 IAG shares and 200 AMP shares (H) $2,417 REST Superannuation (H)
$4,000
Colonial Superannuation (H)
$10,609
Westpac Mastercard (H)
-$9,000
Mr K (H)
-$2,329
MR M (H)
-$2,200
Total $37,121.00
I will order that the husband receive the net proceeds of sale of the N property after the joint and secured debts are paid out. There are potential inequities in that course because the property is likely to sell for an amount different to the agreed value. If the price achieved is the agreed value or less then the husband will be disadvantaged by virtue of the costs of sale. If the price achieved is greater than the agreed value by more than the amount of those costs, the wife is disadvantaged. Those risks cannot be addressed without greatly complicating the orders but that is a matter the parties might give some thought to in considering the orders I propose.
The wife will owe over $47,000 to her lawyers.
The parties will indemnify each other in relation to the businesses. The husband will indemnify the wife in relation to any claims by members of his family.
Conclusion under Section 79
The exercise of discretion under section 79 has been affected by the husband’s non-disclosure. As a consequence the adjustment for the non-contribution aspects of section 79(4) is significantly affected under section 75(2)(o) by that fact. In the circumstances the outcome I have identified would be just and equitable.
The orders are complicated and I will stay their operation for a period of 28 days to allow the parties to consider the form of the orders, to agree on an amendment to them or to bring the matter back by arrangement with my associate.
I certify that the preceding two hundred and three (203) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Ian Loughnan.
Associate:
Date: 25 September 2008
Key Legal Topics
Areas of Law
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Family Law
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Property Law
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Contract Law
Legal Concepts
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Consent
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Remedies
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Costs
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Offer and Acceptance
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Stay of Proceedings
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Procedural Fairness
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