Bulleen & Bulleen
[2010] FamCA 187
•12 March 2010
FAMILY COURT OF AUSTRALIA
| BULLEEN & BULLEEN | [2010] FamCA 187 |
| FAMILY LAW – PROPERTY SETTLEMENT – Long marriage – Contributions |
| Family Law Act 1975 (Cth) |
| Aleksovski & Aleksovski (1996) FLC 92-705 Browne v Green (1999) FLC 92-873 Clauson (1995) 18 FamLR 693 Figgins v Figgins (2002) FLC 93-122 Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 In the Marriage of Clausen (1995) 18 Fam LR 693 Mallett and Mallett (1984) 156 CLR 605 Mehmet and Mehmet No 2 (1987) FLC 91-801 Norbis and Norbis (1986) 161 CLR 513 Pierce v Pierce (1999) FLC 92-844 Rolfe and Rolfe (1979) FLC 90-629 SL and ELH [2005] FamCA 132 Tataryn v Tataryn (1994) 2 SCR 807 VAK and AK [2005] FamCA 803 Vigolo v Bostin (2005) HCA 11 Williams and Williams (1984) FLC 91-541 |
| APPLICANT: | Ms Bulleen |
| RESPONDENT: | Mr Bulleen |
| FILE NUMBER: | MLC | 12431 | of | 2007 |
| DATE DELIVERED: | 12 March 2010 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | THE HONOURABLE JUSTICE CRONIN |
| HEARING DATE: | 6, 11, 12, 13 & 16 November 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Geddes SC with Mr Dickson |
| SOLICITOR FOR THE APPLICANT: | Gillian Coote Family Law |
| COUNSEL FOR THE RESPONDENT: | Mr Kirkham QC with Mr Strum |
| SOLICITOR FOR THE RESPONDENT: | Gadens Lawyers |
Orders
That the husband retain and the wife relinquish any interest in, the property at Q Street.
That the artwork contained at M Street and L Street and those listed as “unlisted location” in the document annexed to the wife’s “minute of orders sought” dated 12 November 2009 be divided on the following basis:
(a)that all such paintings be grouped according to their artist;
(b)unless the parties otherwise agree, the division be on the basis of the respective artists;
(c)the parties pick their desired artists’ artwork on an alternating basis;
(d)the wife be entitled to the first pick of one artist followed by the husband having the second pick; and
(e)in the event that there is unwanted artwork upon the conclusion of such method of division, the remanents be sold and the proceeds be otherwise divided according to these orders.
That notwithstanding paragraphs (1) and (2) hereof, all property of the parties be divided as to 53.3 per cent to the husband and 46.7 per cent to the wife.
That the ultimate determination of the distribution of assets in specie, sale of assets, the payment of taxes and the payment of cash by one party to the other (if any) be the subject of agreement between the parties adjusting for and taking into account:
(a) the partial distributions in paragraphs (1) and (2) above;
(b) the determination in paragraph (3) above,
and failing agreement, that determination be made by the Court.
That the matter be otherwise stood down to a date to be fixed for further orders.
IT IS NOTED that publication of this judgment under the pseudonym Bulleen & Bulleen is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 12431/2007
| MS BULLEEN |
Applicant
And
| MR BULLEEN |
Respondent
REASONS FOR JUDGMENT
After a marriage of almost 47 years and despite having accumulated significant wealth, the parties could not agree on a division of their property.
The issues in this case are:
(a)what percentage of the total pool of assets (or particular assets) adequately reflects a just and equitable outcome for the parties?
(b)after determining the division, how should certain specific assets be transferred or retained, having regard to each party’s espoused passion or desire for those assets; in particular, who should keep:
(i)the Q property development; and
(ii)the art collection or parts of it?
(c)how should expenses such as an “overspend” on the Q development and transfer costs be dealt with as part of the division of the assets?
The parties have control of corporate entities but the ownership and identification of the pool of assets is not complicated nor was it a matter of significant dispute.
The husband conceded that he controlled and “owned” the assets of all of the entities including the Bulleen Investment Trust.
The entities are:
(a)K Nominees Pty Ltd as trustee for the Bulleen Investment Trust and the Bulleen Protective Trust;
(b)B Holdings Pty Ltd;
(c)R Pty Ltd; and
(d)Bulleen and Sons Pty Ltd.
Both husband and wife are directors of each of the companies and the husband’s accountant is the third director of R Pty Ltd. R Pty Ltd and Bulleen and Sons are in the process of being liquidated because they are not needed any longer.
The shareholders of K Nominees Pty Ltd are the husband and the wife and a godson of the parties who has non-voting shares.
Having regard to the decision to liquidate Bulleen and Sons Pty Ltd and R Pty Ltd, details of the shareholdings of those entities do not need to be mentioned further.
K Nominees Pty Ltd in its capacity as the trustee for the Bulleen Investment Trust and the husband are the shareholders of B Holdings Pty Ltd.
The husband is the sole appointor of the Bulleen Investment Trust.
The Bulleen Protective Trust was settled in June 2002 for the benefit of one of the children. Having regard to the concession made by the husband, its details are no longer important.
The major issue in this case revolves around the question of contribution made by the parties.
Having heard the evidence of each party, I am satisfied that in respect of most issues, each party endeavoured to be truthful. Explanations for inconsistencies in the affidavit material were plausible. Being required to recall events of a commercial nature from many years ago without supporting documents was difficult for both parties.
Each party was able to attach memories to incidents of significance in their lives which gave credence to their evidence. The more intricate detail of business activities was provided by the husband particularly during cross-examination where his recollection expanded upon what he said in his trial affidavit.
The legislative framework is set out in s 79 of the Family Law Act 1975 (Cth) (“the Act”). Under s 79(1), the Court is directed that it may make such order as it considers appropriate. Having said that however, s 79(2) provides that a court shall not make an order unless it is satisfied that, in all the circumstances, it is just and equitable to make that order. Section 79(4) provides that in considering what (if any) order should be made, the Court must take into account (so far as they are relevant to this case):
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant;
Whilst the hearing was conducted on the basis that the argument was about contribution, in her counsel’s written submissions, it was put that if the Court acceded to the husband’s argument “or anything approaching it” then there should be a very significant adjustment in favour of the wife under s 75(2). A very significant pool of assets for division is not a reason to simply ignore the matters set out in s 75(2) and I propose to address that further.
The legislative provisions were all reiterated by the Full Court in Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 at 78,386 where the Full Court said:
Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.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. Thirdly, the Court should identify and assess the relevant matters referred to in ss.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. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.
The focus of the parties was on their respective contributions. Each saw them differently. The problem is that the quantitative measuring of those different approaches is difficult.
In Norbis and Norbis (1986) 161 CLR 513, the High Court of Australia cautioned about an over-zealous attention to the ascertainment of the parties’ contributions. What I am examining is the assessment of the contributions and then the weighting of them. The weighting process is not a simple mathematical calculation based upon financial contributions. It is the disparity in contributions which is important. The disparity is traditionally expressed in percentage terms. (See VAK and AK [2005] FamCA 803; Mallett and Mallett (1984) 156 CLR 605; and In the Marriage of Clausen (1995) 18 Fam LR 693).
The dilemma in the assessment was recognised in MVB and SDB (2005) FamCA 389 where the Full Court highlighted the difficulty of making a “crucial comparison between fundamentally different activities”. As the Full Court pointed out, a financial contributor can be objectively assessed but it is much more difficult to make an assessment of the quality of a homemaker. It is not just the homemaker contribution that creates difficulty. Any assessment of a qualitative nature including for example a home builder or the management of family investments requires careful consideration to ensure that contributions are not just assessed according to money.
Warnick J in SL and ELH [2005] FamCA 132 referred to the “true nature of the assessment of contributions under section 79”. His Honour was examining the often-compared contributions of financial provider and homemaker. That was a marriage of 35 years in which there had been 4 children. The husband had argued that, because he was primarily, if not solely, directly responsible for the acquisition of the parties’ wealth through his “skill, acumen and/or determination”, his contributions outweighed those of the wife. Relevantly for my purposes, his Honour noted that the husband claimed that in the last 10-15 years of the marriage, financial decisions were made by him “without the wife’s knowledge or concurrence”. His Honour’s reference to the position of the wife relating to the same period was that she acknowledged that during those last 10-15 years, her health had “adversely affected her capacity to make contributions in a number of respects”. His Honour drew the inference that the husband had allowed the “diminution in contribution” of the wife to “distort his view of the wife’s contributions” over the totality of the relationship. In that case, during the latter part of the marriage, the husband had continued to earn whilst building on his expertise gained in the earlier part of the relationship and the wife’s significant role as a homemaker for a large family had diminished because of reduced responsibilities for children.
His Honour said:
There are two aspects to the process. Firstly, the “value” given to a role, of itself. Secondly, the assessment of the quality with which a particular role was performed. Within the concept of “value of a role” is the idea of “the reach” of that role, particularly where a variety of assets has been acquired.
Bearing in mind that the ultimate result must be fair to both parties, Warnick J went on to say:
What is fair will depend on the criteria – the values – used for measurement. For example, is marriage a partnership, the fruits of which ought be equally shared, as long as each partner has performed “usual” or “assigned duties” during its course? Or, irrespective of the way that during cohabitation the parties viewed their separate contributions in agreed roles, the partnership agreement having foundered does a “winding up” involve a retrospective re-allocation of the worth of contributions by an external arbiter.
Warnick J ultimately decided that there may be tensions between some pronouncements between the various authorities of courts including the High Court. Resorting to those authorities for definitive statements of the law on an issue such as that which I am facing is largely unhelpful. For reasons to which I shall refer below, resorting to a microscopic analysis of the legislation is also unhelpful. When looked at contextually, all of the provisions to which I shall refer below simply hand the responsibility for a value judgment back to the trial judge.
In this case, over a very long marriage, the value given to each party’s role must be significant. That was the way they intended their relationship to be. Each performed that role to the best of their ability and in this case, more importantly, to the satisfaction of the other. It was only at the end of this long relationship that evidence of dissatisfaction appeared.
This marriage was a partnership and each performed their respective roles admirably. It would be totally inappropriate to retrospectively endeavour to allocate non-financial contributions by some monetary worth. That is not to say however, that their respective contributions as distinct from their roles, was not different and cannot be identified.
The three significant and controversial contributions in this case are:
(a)the initial contribution of the husband when the relationship commenced described by his counsel in their final submission as:
i.approximately a one-third interest in the E Group of Companies; and
ii.a one-quarter share in his family’s one-third in R Pty Ltd.
That contribution has to be seen in the context of and is affected if not ameliorated by, the role that the wife fulfilled during those early years and her own financial contribution through her inheritance and the shareholdings that she received in the various corporate entities;
(b)The husband’s inherited sums in the early part of the marriage but more particularly upon the distribution of the estate of his parents; and
(c)the husband’s financial contribution in recent years subsequent to the completion of the parenting role by both parents as their children became adults.
The husband’s case was that he was essentially the financial provider and the wife fulfilled largely but not entirely, the role of homemaker and parent.
The husband argued that the Court should reflect community standards in the subjective assessment and application of values to be attributed to the parties’ contributions. Counsel referred to a Canadian decision of Tataryn v Tataryn (1994) 2 SCR 807.
The phrase used in Canadian legislation to determine the entitlement from a deceased estate for testator’s family maintenance purposes is that the decision must be “adequate, just and equitable”. Certainly, part of that phrase is used in s 79 of the Family Law Act. The Supreme Court of Canada asked itself what the phrase meant in light of “current societal norms”. The Judges of Appeal said that there were two sorts of norms available both of which had to be addressed. The first was that which the legislature imposed, that is, a legal obligation to make provision for persons beyond the testator’s death. The second was the type of norms found in society’s reasonable expectations of a judicious person by reference to “contemporary community standards”. The court called these “moral obligations”.
I do not find the decision helpful because it was a testator’s family maintenance provision application. Similar applications are made in all states of Australia but those relevant legislative provisions provide for concepts of “moral duty” and “moral considerations”. Morality is defined as meaning conforming to the rules of “right conduct” (Macquarie Dictionary, 4th edit). These concepts arise out of the underlying objects of that sort of legislation which is to ensure a testator fulfils his or her duty if the applicant has been left without adequate provision.
In Vigolo v Bostin (2005) HCA 11 the High Court of Australia dealt with a testator’s family maintenance application and considered and approved the judgments in Tataryn. Gleeson CJ said:
The “testamentary duty” which justified legislative interference with a free exercise of testamentary capacity, that is, the duty of a man to make provision for his wife and children, was seen as a moral duty. The legislation was not merely, or even primarily, concerned with relieving the state of the financial burden of supporting indigent widows and children. The courts were not empowered merely to make such provision for an applicant as would rescue the applicant from destitution. The legislative power was to make “proper” provisions. Judicial explanation of what was meant by proper provision was based upon the idea of a moral obligation arising from a familial relationship. That is one of the fundamental ideas upon which the structure of our society is based.
The Chief Justice then went on to say:
In explaining the purpose of testator’s family maintenance legislation, and making the value judgments required by the legislation, courts have found considerations of moral claims and moral duty to be valuable currency. It remains of value, and should not be discarded. Such considerations have a proper place in the exposition of the legislative purpose, and in the understanding and application of the statutory text. They are useful as a guide to the meaning of the statute. They are not meant to be a substitute for the text. They connect the general but value-laden language of the statute to the community standards which give it practical meaning. In some respects, those standards change and develop over time. There is no reason to deny them the description “moral”.
In s 79(1) of the Act, the court is directed that it may make such order as it considers appropriate. In a testator’s family maintenance case, the community understands the obligation involved and most right-thinking members of the community would agree that a testator’s rights should be interfered with if exercised inappropriately.
The division of property arising out of a marriage is different to testators’ family maintenance because it involves assessments of entitlements determined by money contributions as well as physical and emotional contributions. A community standard in such a case could only be applied if the observer was a reasonably well-informed, independent bystander. Importantly, the Family Law Act gives the trial judge that responsibility.
The conscience of the community lies with the Commonwealth Parliament. If there was discontent about the approach to justice in the division of property, the parliament could alter the law. Until then, the subjective judgment may only be guided by the provisions of the legislation and the jurisprudence determined upon it.
It is also important to note that s 79(2) is also not governed by morality but fairness.
The discretionary approach may appear arbitrary but it is the way the legislation was drafted and has stood for many years. In Mallett v Mallett (1984) 156 CLR 605, all of the justices of the High Court addressed the discretionary nature of the provision.
Gibbs CJ discussed the various factors in s 79 and said that it was proper for the court in dealing with the circumstances of a particular case to discuss the weight which it considered should be given to one factor rather than another. His Honour pointed out that cases do no more than provide a guide which cannot fetter the discretionary power which parliament has left largely unfettered. His Honour then said:
It is necessary for the court in each case, after having had regard to the matters which the Act requires it to consider, to do what is just and equitable in all the circumstances of the particular case.
The Chief Justice then noted that the respective values of the contributions made by the parties must depend entirely on the facts of the case and the nature of the final order made by the court must result from a proper exercise of the wide discretionary power.
In Mallett, Mason J referred to the fact that a court must evaluate the respective contributions even though that was difficult. His Honour then said:
No doubt a conclusion in favour of a quality of contribution will be more readily reached where the property in issue is the matrimonial home or superannuation benefits or pension entitlements and the marriage is of long standing. It will be otherwise when the property in issue consists of assets acquired by one party whose ability and energy has enabled the establishment or conduct of an extensive business enterprise to which the other party has made no financial contribution and where that other party’s role does not extend beyond that of homemaker and parent.
Wilson J referred to the assessment of the contribution of a homemaker and parent not in a merely token way but in terms of its “true worth to the building up of the assets”. His Honour said:
However, equality will be the measure, other things being equal, only if the quality of the respective contributions of husband and wife, each judged by reference to their own sphere, are equal.
Dawson J focussed on the provision of s 79(2) and the importance of not making an order unless in all the circumstances it was just and equitable to do so.
Dawson J contemplated the dichotomy of the breadwinner and the homemaker in regard to the property acquired during the existence of the relationship. His Honour referred to the expressed view of Evatt CJ in Rolfe and Rolfe (1979) FLC 90-629 where her Honour said:
While the parties reside together, the one earning and the other fulfilling responsibilities in the home, there is no reason to attach greater value to the contribution of one than to that of the other. This is the way they arrange their affairs and the contribution of each should be given equal value.
Dawson J seemed to limit the appropriateness of that to cases where the financial contribution of the husband did not extend beyond the provision of the family home and savings for retirement. His Honour said:
It may well be appropriate in other cases where the husband’s contribution extends beyond the matrimonial home and any savings from earnings to the acquisition of property for commercial purposes. There is no necessary distinction between the acquisition of a matrimonial home or savings for retirement and the acquisition of other assets.
His Honour went on to give an example:
If, for example, the husband is engaged in conducting a business, the nature of the business, the skills which the husband applies in it, the way in which he applies those skills and the manner in which the business has been built up, are all factors which may indicate that it is inappropriate to assume equality of contribution towards the acquisition, conservation or improvement of property during the subsistence of the marriage.
All of those matters were set out to highlight the legislative absence of a starting point. Dawson J for example said:
A starting point is, in reality, another name for a presumption and to prescribe a starting point is to invite a disregard for the requirements of the section.
In a marriage of the duration of over 40 years where the parties treated their respective roles as important, to distinguish those roles retrospectively and arbitrarily would be wrong. This was a classic partnership of two people who contributed differently but with one goal. They saw themselves as equals contributing to the best of their abilities. That is the way the community would expect those roles to be viewed. That does not mean that there cannot be contributions outside of the partnership roles which are identifiable and make a discernible difference to the parties’ wealth. I propose to examine those here.
I propose to set out historically, the sequence of events as I have found them. Statements as such, amount to findings of fact. Where the parties have disagreed on a particular issue, I have determined the matter on the balance of probabilities.
Only in respect of one area do I find that the respective positions were starkly at odds with one another. That was in respect of the acquisition of the art collection. Each has approached the question of who bought paintings from their own subjective position. There are two versions of the acquisition of the art work and on the balance of probabilities, the husband is more likely to be right. I am satisfied that the husband’s version of the acquisitions was correct. As I will endeavour to set out below, the acquisition of the art collection is not the basis for its division. The division of any property must be based on a just and equitable outcome.
The proposals
Leaving aside the precise details of what orders each sought, the wife’s overall position was that the pool of assets should simply be divided equally. The husband’s position was that it should be divided as to 37.5 per cent to the wife and 62.5 per cent to the husband.
The parties
The husband is 69 years of age and a company director as well as practicing a profession.
He has been involved in property development. He has carried out much of the professional work associated with the parties’ acquisition of properties.
The wife is also 69 years of age and described herself as involved in home duties. She is an active person who is very much engaged in family activities with her adult children and her grandchildren. She, like the husband, has an appreciation for art.
The relationship
The parties met as university students, married in 1962, separated in December 2006 and are now divorced. Neither party has repartnered.
The children
There are four children of the marriage. Albeit they are all adults, they still have a significant involvement in the family life certainly more so of the wife than the husband. The children are aged 47, 45, 44 and 41 years. The fourth child has significant health issues. Although it was initially an issue between them, the parties agreed that they would make their own financial arrangements for the support of their daughter.
The financial position at cohabitation
The wife brought to the marriage a vacant block of land and what was described as a garage. These were given to her by her father. No evidence was led as to the value of these items. Initially the parties lived in rented accommodation. The husband obtained employment as a trainee after completing his professional degree. His initial income was modest by the parties’ current standards.
The husband came from a business-oriented family. The activities of that family at cohabitation were diverse. Well after the marriage, the husband’s family company was involved in such things as retailing auto parts, art supplies and textiles as well as property development.
At the time of the marriage, according to the husband he had £14,000 and shares in a group of companies which were referred to as the “E” group. In addition, he held one quarter of one third of the shareholding in a property development business referred to as R Pty Ltd. There were a number of families involved in R Pty Ltd. Initially, before the marriage, there were four families. Over a period of time, these families were bought out. The various families were bought out by those remaining, culminating in the husband’s family becoming the owner of all of the shareholdings in the 1970s.
I find that in 1962, the husband had a shareholding but I am unable on the evidence to attribute any precise value to it.
In respect of E Group, it was not until 1969 that the shareholding of the husband and his family was sold to D Ltd. I find the husband had the interest in the shareholdings at the time of the marriage but I could not find on the evidence what specific value was attributable to those shareholdings. Having said that however, like R Pty Ltd, this interest did later assist in the accumulation of wealth for the parties.
The M Street home
In 1965, the husband and the wife acquired the land at M Street upon which the home was built. The land was purchased for £14,000. To do so, the wife contributed the proceeds from the sale of the vacant land and the garage to which I have earlier referred. It was the husband whose memory in respect of that issue is clearer. The husband contributed the balance of the purchase price for the land from his savings of £14,000. At that time, he had been employed for two or three years after the completion of his university studies whilst the wife had already begun to manage the role of homemaker and parent.
Although there was some argument about who found the land, I do not find anything turns on the point.
In his trial affidavit, the husband painted a picture of unilateral decisions and effort only by him but when cross-examined, he made the observation that it was not his case that the wife had had no involvement. That was an important concession and one that permeated most issues.
In 1967, the parties mortgaged M Street to build the former matrimonial home. Whilst the husband was the driving force behind the building, I find there was consultation about various aspects of it. I find that both parties were involved and the degrees are irrelevant. After considerable probing in cross-examination, the husband agreed that there was discussion about various aspects of the design and building of the home but that ultimately he was the person responsible for the execution of the plan. For the reasons to which I have earlier referred about the nature and value of the respective contributions, I do not find that anything significant turns on that distinction.
The M Street home was significant in size and was designed by an architect. The construction was supervised by the husband. Although the parties differed about who did exactly what tasks associated with the choosing of fittings and the like, it was so long ago that little turns upon it. The husband conceded he was the person who executed the plans but I am satisfied that both the husband and the wife discussed various aspects of the building process.
K Nominees
In April 1965, a company, K Nominees Pty Ltd, was incorporated and both husband and wife were appointed as directors. The husband said it was incorporated because of his inherited interest in the family company R Pty Ltd. At the same time that the husband and wife incorporated K Nominees, the husband’s brother incorporated S Nominees Pty Ltd as the trustee of a trust set up for his family.
It will be evident from the facts below that the two brothers did many things together until their ultimate falling out in the 1980s. The brothers were the only children of their parents.
As 1965 was the year the various families who controlled R Pty Ltd asked the husband to come in and manage it, I find it is conceivable that K Nominees was incorporated for some purpose associated with the husband in that company. The husband acknowledged that K Nominees was appointed as the trustee of his family trust but he could not recall its name. This unknown trust apparently had assets because in 1977, they were transferred to the Bulleen Investment Trust. The best that could be said about the evidence concerning the first trust and K Nominees was that the entities were created for the benefit of the family. As the husband said, and it makes sense, the creation of these entities was for the facilitation of income dividend distributions, the accumulation of wealth and estate-planning. Just what property went into these first entities remains unknown but the husband maintained that the wife’s role in respect of them was simply to sign documents. I reject that if it was meant to suggest that the wife’s role from a contribution perspective was nominal.
About one thing concerning the signing of documents, the husband was adamant. He said the wife never signed any personal guarantees in her capacity as a director. Be that as it may, K Nominees borrowed significant sums of money during the years of the marriage and although the wife might have been described as “compliant” in respect of signing documents, it is important to note that the husband acknowledged the wife was a director of the trust company and the holder of shares and as such, to the outside world, she was making decisions related to income distribution, wealth accumulation and estate-planning.
The disposal of the E Group interest to D Limited
In 1969, the various interests of the husband, the wife and the husband’s family were sold to D Limited.
In his affidavit material, the husband said it was his recollection that at the time cohabitation with the wife began, he owned a “one quarter share” in E Group. In his evidence in chief, he changed that to say his interest was closer to one-third. This change came about because he found a copy of what was described as “the agreement in 1969 with [D Ltd]”. When he was cross-examined, the husband conceded that the one-third was actually just over 30 per cent but that calculation, drawn from the 1969 sale document, was the total number of shares held by the husband, the wife and K Nominees. K Nominees had been incorporated during the marriage. Thus, sometime between 1962 and 1969, shares in E Group were transferred to the wife and also to K Nominees. The husband pointed out that the wife did hold shares in 1969 but they were a different class to those held by him. No documents were produced to show how all of this came about let alone the distinction between the various classes.
The absence of documents and the paucity of evidence means I cannot discern what the husband owned in 1962. Whilst it was not disputed by the wife that the husband had an interest in E Group, his interest about owning a one-quarter share was clearly wrong. Similarly, trying to work out what the value was in 1962 is impossible.
The husband endeavoured to link the sale of the E Group interest to D Ltd as an indication of that initial contribution. The evidence does not indicate whether it was the husband who transferred to the wife those shares or whether a new class was created. In response to a question in cross-examination, the husband said that K Nominees had “settled shares in a trust” from his holdings. Just how that occurred, I am unable to say.
The husband’s affidavit evidence was that in 1969, the disposal of E Group resulted in him receiving D Ltd shares to the value of $1.5 million to $2 million. The discovery of the 1969 agreement just prior to the commencement of the trial focussed the husband’s attention on the value at that time. He said that it was his recollection that the D Ltd shares were on the market in 1969 at $2.40 per share. No material was produced to indicate how that conclusion was drawn.
The 1969 agreement is not evidence of the fact that at that time, the market price of the D Ltd shares was $2.40 each. The agreement noted that the price was “deemed” to be $2.40. When an examination is made of the document, reference is made to options that the purchaser had over part of the interest in the entity and it was for that purpose that the deeming provision applied.
It is of some concern that the 1969 copy agreement with D Ltd is unsigned and unstamped. It contains pen and pencil markings although no alterations. It may not be important but the schedules to the agreement are not in sequential order. The husband indicated that this document was found by his lawyers. I note that his lawyers had acted for the husband for a number of years in commercial dealings.
The 1969 agreement is the best evidence available. It shows that for their respective interests in E Group, the husband received about 287,000 D Ltd shares, the wife 1600 D Ltd shares and K Nominees about 595,000 D Ltd shares. I find that by 1969, a clear picture emerges that the husband had significantly more shares either in E Group or in D Ltd to the extent that when they were brought into the marriage in one form or another, the contribution of the husband was greater than that of the wife. I find that the interest in E Group is attributable to the husband’s family for the period prior to the commencement of the relationship and in respect of the timing of its disposal, nothing that the parties did between 1962 and 1969 would have affected the number of shares other than that they had been divided as between the husband, the wife and K Nominees. The evidence does not entitle me to make a finding with any precision, as to the impact of the introduction of that interest upon the other assets of the parties. The best that can be said is that there is an identifiable contribution by the husband which is greater than that of the wife. Further, I can find that the husband’s contribution added some impetus if it was not the catalyst for, the growth of the parties’ assets to the extent that they are as wealthy as they are today. The problem still remains how to assess that.
The flow-on effect of the sale of E Group was that shortly after becoming owners of the D Ltd shares, according to the evidence of the husband, the majority of those shares were sold to acquire:
(a) the farm;
(b)the F Street property and a property in B Street;
(c)the property at Q Street; and
(d)a property in C Street.
The acquisition of each of these properties was also undertaken with the husband’s brother. Each brother apparently contributed equally. There is no corroborative evidence to enable me to find which D Ltd shares were sold to acquire them. Much of the evidence about many of these transactions came from the memory of the husband. Whilst I accept he did his best to recall the events, I could not, with any confidence, accept the precise events nor their impact on the parties’ wealth at that time or later. This is important if the “seed capital” argument is to be the basis of the husband’s assertion that he contributed more than the wife. The evidence does not satisfy me to the requisite standard which is the balance of probabilities.
In assessing the parties’ contributions, a court also has to give those contributions weight. Here I find I am unable to do so in precise terms.
The farm
In December 1969, the first parcel of farming land was bought for $153,422. The property was initially purchased by the husband and his brother as joint tenants but only months later, it was changed to tenants in common in equal shares. At that time, the two families were close and did most things together. The recollections of the husband and the wife differed on the initial finding of the property, the use of an agronomist and the building of two separate family homes.
As earlier mentioned, the sourcing of the funding for the purchase of the farm was contentious. The evidence was not clear as to how much the husband paid because the joint families acquisition was for $153,422. Based on the evidence, I conclude that the husband contributed one half of that but where it came from, I am uncertain for the reasons earlier mentioned. Importantly, on 26 May 1970, only months after the acquisition of the title, the farm was mortgaged. There was no evidence upon which I could make any finding as to why the borrowings were made. The timing may have been consistent with the building of the home on the farm but I cannot presume that because there were other commercial activities occurring around that time and to which I shall refer in a moment.
The wife conceded that after the acquisition of the farm there was an intensive improvement program on it. Pastures were resowed and dams were built much of which was instigated by the husband and his brother. It was initially a working farm property. There is no evidence about the impact of the efforts of the husband and his brother on the value of the property but I find that it was the husband who was the person predominantly responsible for the improvements save in relation to the houses that were built on the property. This all occurred in the 1970s during which time the wife had the major responsibility for the management of four young children as well as organising the parties’ household. I do not mean that to say that the husband did not participate in the activities of the family. However it is quite clear on the husband’s evidence that it was the wife who undertook that major role. It is an appropriate inference to draw that whilst the husband was working on and fulfilling his vision for the farm, the wife was fulfilling her role as a homemaker and parent and there is no distinction between those two contributions.
I make that finding notwithstanding the evidence of the husband. He portrayed a picture of unilateral decision-making and action. However, 40 years after the events, the wife was able to recall and name the building company and interior decorator. She was able to recall trips to furnishing suppliers but not exactly whether the husband went with her. She recalled design planning aspects such as the open kitchen. Each brought their own skills to the task. The farm was used on weekends and during holiday periods when the families travelled there. The wife’s evidence which I accept, was that as years went by, their children invited friends to the farm and it was the wife who drove them there. It was the wife who organised the household supplies and meals for the family. It was the husband who undertook various maintenance activities although tasks were also carried out by paid employees. The maintenance activities were modest and it seems the parties engaged contracted people. The maintenance activities are distinguished from the significant improvements relating to the redevelopment of the farming property. In my view however, the contributions to the creation, conservation and development of the farm are indistinguishable.
1970 – 1980 – additional acquisition of land to the home
In May 1970, the parties jointly acquired land at the back of the former matrimonial home for the purposes of building a swimming pool. The husband undertook the conveyancing. The copy certificate of title tendered in evidence notes stamp duty paid in May 1970 and that the property was subject to the mortgage that encumbered the rest of the certificate of title to the home.
Nothing turns on the acquisition of that land in terms of the outcome of these proceedings.
In about 1980, further adjoining land was acquired upon which a house had stood. That property was demolished to enable further extensions to the M Street home. Although the husband said the wife played no role in those works, I accept the husband’s concession that there were discussions but he was the prime mover in getting things done. Again, nothing significant turns on that fact.
F Street and B Street
In December 1970, the husband and his brother through K Nominees and S Nominees bought two business properties. There is something of a conflict in the evidence as to the acquisition but it matters little. The husband provided evidence that the properties were purchased in the names of the husband and his brother as tenants in common and only months later, an adjoining property was acquired by K Nominees and S Nominees. As the trial commenced, the wife tendered a statement of facts drawn from a large volume of documents. The husband conceded that those were correct. In respect of these properties, the parties agreed that F Street was purchased by K Nominees and S Nominees and that B Street was purchased by the husband and his brother.
The documents tendered in respect of the F Street property do not show any encumbrance at the time of purchase but in respect of the B Street property, its title is noted as encumbered to Australian Investments Pty Ltd from the date of the purchase of the interest.
These properties were acquired for commercial purposes. The husband and his brother managed them and they provided income for the families. Initially, the properties were let to retailers but in the 1980s, they were significantly altered to create carparks, offices and retail outlets. The husband undertook the planning, negotiating and contracting work. Whilst the husband highlighted that, there is nothing unusual about the nature of what he did. As between he and the wife, that was his agreed role in the marriage. During that period of time, the wife fulfilled the predominant homemaker and parent role.
Q Street Property
The parties agreed that on 10 November 1972, Q Street was purchased by K Nominees and S Nominees. The purchase price was $967,765 and on the same date, the property was encumbered by a mortgage to T & G which remained there for 10 years. Q Street is a property development undertaken by the husband now alone which is incomplete. Although many of these acquisitions were made jointly between the husband and his brother, their subsequent falling out resulted in a division of the properties and this is one retained by the husband.
C Street
On 13 September 1974, a property in C Street was bought by K Nominees and S Nominees for $450,000 without a mortgage being registered on the certificate of title. That is consistent with the husband’s evidence that the acquisition came from the disposal of the D Ltd shares. That does not necessarily mean that it was acquired by the husband’s financial contribution alone because the wife and K Nominees had shares. This occurred 12 years into the marriage.
R Pty Ltd
After the husband took over the management of R Pty Ltd, land acquisitions occurred in O and T. Both the husband and his brother were involved in these exercises. R Pty Ltd was then involved in residential building and some industrial sub-division.
In his affidavit, the husband said he brought into the marriage a quarter share of the families one-third interest in R Pty Ltd. He had an interest in a number of different classes of shares. In cross-examination, he agreed that his shareholdings amounted to about 4 per cent of the total number of shares of the company overall. He had a variety of categories of shares which totalled 6286 out of 147,882. This figure came from a company meeting minute in 1959, some three years before the marriage but he said he acquired more shares between 1959 and 1962. These he said, were provided by his father. I accept that.
In 1965, the husband took over the management of R Pty Ltd but there were three families involved in the business at that time. At some time between 1965 and 1988, the wife was appointed a director of R Pty Ltd. The uncertainty arises because there is evidence of her resignation but not her appointment. There is no evidence of what role the wife played in her capacity as a director other than the signing of various documents. In 1997, one of the parties’ adult children was appointed as a director of R Pty Ltd but that son fell out with the husband and his directorship ended. It was the wife who then replaced the son as a director. As best I can determine on the evidence, in 1965, the husband held one-third of the family’s interest, his brother one-third and his parents as joint owners, the remaining one-third. Over the ensuing years, the Bulleen families acquired the interest of the other families.
After the husband took over the management of R Pty Ltd, within 18 months he turned it from a significant loss to a million dollar profit organisation for all of the families then involved.
It was the husband’s evidence which I accept, an approach was made in the 1970s by T & G to take over R Pty Ltd at a figure of $4.2 million but those negotiations were never implemented into an agreement. An offer does not amount to evidence of value.
Thus, I am left with no evidence as to the value of the husband’s interest in R Pty Ltd in 1962 although I accept substantial changes occurred over the ensuing decade. R Pty Ltd was the company which made substantial profits and has significantly contributed to the welfare of the parties. On the evidence before me, the substantial capital value in R Pty Ltd arose predominantly because of the purchase and retention of the Y land.
Y land
On the same day as the property in C Street was acquired, 13 September 1974, R Pty Ltd became the registered proprietor of some vacant land in Y. The purchase price was $435,000 but no mortgage was registered until February the following year. In his affidavit, the husband said that the acquisition was August 1970 but in the hearing, he adopted the 1974 date. That was 12 years after the parties married.
The Y land comprised about 80 acres zoned general industrial land. The husband then through R Pty Ltd, sub-divided the land into two parts. I conclude that the sub-division was undertaken with borrowed funds because of the mortgage. The smaller blocks in the second stage of the sub-division sold quickly but the husband retained the first stage. The husband said he wanted to undertake an industrial development and obtain lease-backs of the properties but the competition in the market was significant. The husband adopted a position of holding on to the land rather than selling the blocks as trading stock. To have sold the blocks would have fixed the market price. The husband prided himself on holding back which meant that the land as a whole retained its capital status rather than as a series of individual holdings.
The considerable portion of the parties’ wealth is reflected in the capital gain they received from the sale of the Y land. Approximately one year after separation, the husband using the R Pty Ltd vehicle as owner of Y, unilaterally sold the remaining land. It involved a significant sale price of $47 million. The husband’s evidence was that his treatment of the asset as capital created a significant taxation saving. After Y was sold, the husband sought an opinion from the Australian Taxation Office that the land could be treated as a capital item rather than as trading stock. If so treated, the acquisition date of Y preceded the commencement of capital gains tax legislation. The husband argued before me that this concept of seeking the successful ruling from the Australian Taxation Office should be acknowledged as a contribution by him. He annexed to his affidavit some 2008 correspondence with the Australian Taxation Office arising out of a meeting between departmental representatives and his own professional advisers. The Tax Office acknowledged that nothing had been done with Y to develop or improve it for the preceding 20 years and therefore, the gain was not subject to taxation.
I find that the Y gain was not acquired by the husband’s ability, ambition or energy. To the extent that the husband can be said to have made a sound commercial decision not to develop the land, he was clearly astute because he knew that time would reap rewards. Most investors act in that way however and I find that there was nothing exceptional about the husband’s activities. In reality, it was one of the roles he played in the marriage and he played it well.
The wealth created by the sale of T accrued because of time, good management and an opportunity to avoid substantial tax because of sound professional advice. It could not be said to have been something to do with the husband’s entrepreneurial skill as a property developer. I also take into account that Y was owned by R Pty Ltd in which both parties had a significant legal interest and during the years subsequent to its purchase, each was involved in risking their wealth by mortgaging it.
Much emotional energy was spent in the proceedings over the ultimate sale of Y. There was much angst between the parties and litigation caused not only by the husband’s unilateral action in the sale but also his appointment of an acquaintance and accountant as a director of R Pty Ltd. Although cavalier, the husband’s view was that he was confronted with a purchaser willing to pay a good price and he knew he needed to obtain substantial cash to settle his obligations with the wife. Despite that position, he maintained to the end, a reluctance to part with control of a large portion of the funds that came from the Y land which was sitting in an investment account. I shall return to that in a moment.
In April 2008, the parties consented to orders relating to injunctions and disposal of the Y monies but a notation to the orders made clear that the wife was of the view that she was entitled to spousal maintenance rather than to having to use her capital upon which to live. Further litigation occurred in the court in February 2009 over related issues.
Having regard to the amount of money involved in the pool of assets overall and specifically the amount of cash arising from Y along with the duration of the marriage, this whole dispute was odd and undignified. In June 2009, the wife filed an amended application for final orders seeking that until the husband did whatever was necessary to complete documents that would have given rise to the granting of a religious divorce, she wanted the husband to pay her $50,000 per week. In cross-examination, the wife acknowledged that it was put that way to encourage the husband to sign the necessary documents associated with the divorce. It was obvious that it was a tactical approach. Hence, my comment about it being undignified. I add to that, it was unnecessary as there was no suggestion that the husband was not supporting the wife.
For his part, during cross-examination, the husband was asked about a “top up” of the wife for some capital payment pending final orders. His response was illuminating in saying that he had been waiting a long time to have the matter resolved and he just wanted the matter resolved in “one hit”. Whilst the wife’s approach to the maintenance was unreasonable, so was that of the husband.
The Holiday Home
In January 1976, the parties jointly acquired the property in Queensland. This was vacant land and over the ensuing three years, a holiday home was built there. The wife’s evidence was that both parties were involved in the contribution and fit-out. The husband’s evidence which was not challenged was that the property was funded from the D Ltd share sale and income and money accumulated through R Pty Ltd.
Having regard to my earlier finding about the E Group and D Ltd transaction, it is hard to discern whether there was anything other than a joint contribution by both parties to the acquisition, conservation and improvement of the holiday home property. Money accumulated by the parties arose from the husband’s management of R Pty Ltd. No evidence was tendered in relation to the various income streams that one might have expected from various trusts. I conclude therefore that the money used for the acquisition, conservation and improvement of the holiday home property came from the parties jointly.
The Bulleen Investment Trust
In April 1977 by Deed of Settlement, a solicitor settled upon K Nominees a sum of money for the purposes of K Nominees making provision for the husband, the wife, their children and a wider class of beneficiary. This was the creation of the Bulleen Investment Trust. Both husband and wife were appointed directors of K Nominees in 1965. It must be presumed that both husband and wife took that role as trustee of what was to be a tax and wealth-planning exercise seriously.
In March 2002, a Deed of Appointment was executed by both husband and wife in their capacities as directors of K Nominees appointing the husband as guardian of the trust. The recital clauses to the 2002 Deed of Appointment referred to a 1993 deed in which it was declared that after the death of the husband, the assets of the trust would be dealt with as the wife “in her absolute discretion directed”. In 1998, it would seem from the 2002 deed, a further Deed of Appointment was executed in which the vesting date was abridged. The operative part of the 2002 deed again altered previous vesting date provisions. On the face of all of these documents, the wife was involved as a director of the trustee. Whilst it was the husband’s view that the wife simply signed documents, it must be said that the consequential effect of the documents must be seen as having given her important responsibilities in respect of the wealth that the parties had created. The husband was quick to say that the wife did not sign personal guarantees that might have put her interests at risk. However, it was the fact that both husband and wife executed these documents with an estate planning intention that I find the wife’s role fulfilled in K Nominees and the management of the parties’ wealth was more than just signing documents.
The inheritances
I have already mentioned the husband’s evidence about shares in his family’s company and how he was given them so long ago. I am unable to assess these matters with particularity as to quantum because the evidence is sparse.
In 1983, the wife received $438,000 from a sale of a property in H Street. The husband and the wife gave evidence that the property was one that the wife owned with her sister. The wife and her sister had received the property as a gift during the marriage. It was the husband who negotiated the sale of H Street. The wife’s entitlement was then used for the acquisition of A Building, which became the husband’s office premises.
The husband’s evidence was that A Building cost $166,000. The remaining funds were invested by the husband. The wife knew nothing about where those funds went. The best the husband could do was say it was his recollection that the money went into improvements in the house “and/or” some shares.
A Building was not subject to any rental arrangement but the husband said he improved it. He also said he improved the H Street property before its sale. Where those monies came from or how they were applied was not stated.
In a similar way to the impact of the husband’s family shares at the date of cohabitation and thereafter, it is impossible to tell what impact to the parties’ wealth the $272,000 over and above A Building had from the H Street sale. What is identifiable is the A Building property but the subsequent improvements to its value and its use are also difficult to assess using any form of dollar yard stick. Accordingly, I propose to assess this H Street contribution very much in a global way as I do the husband’s initial family shareholdings.
In 1989, the husband’s father died and in 1992, his mother died. The husband said that from the father’s estate, he received his father’s shareholding in R Pty Ltd. Although that happened, it was not an accurate statement. His father’s interest went to his mother who in turn left her estate to the two sons. What the husband received was half of the net proceeds of the sale of the mother’s home, half of the R Pty Ltd interest and some shares. The division of the R Pty Ltd interest was subsequently transferred to the husband as part of the restructuring his financial activities with his brother.
The husband tendered in evidence the probate documents of his late mother. Although the home was valued for probate purposes at $1.3 million, it was common ground that it sold for $820,000 and thus, the husband received $410,000.
In respect of the R Pty Ltd shares, the husband relied upon the probate documents to indicate what he received in money value. However, he conceded that the probate document had been prepared under the authority and direction of his brother but that he also signed it. The value attributed to the R Pty Ltd shares came from accountants who the husband said would have done an assessment of what they believed the value should have been for probate purposes but certainly not at a high value.
The dilemma I face is that I have no idea whether the value attributable to R Pty Ltd for probate purposes was drawn from a net value in the balance sheets or on some earnings basis. The husband’s evidence that it would not have been put in “high” simply compounds the problem of trying to assess and give weight to his contribution. Unlike the interests in K Nominees, the R Pty Ltd interests came in from the husband’s family. The only evidence I have is the probate document. I accept the husband’s evidence that the value would not have been lower than the probate document value showed on the assumption that the amount stated would most likely be lower than higher.
The dilemma of trying to assess the importance of the contribution is compounded further by the fact that before the death of the husband’s mother, the husband and his brother had begun a separation of assets that they controlled between them as a result of a falling out. The final link between the brothers to be broken was the mother’s interest in a variety of assets.
It is clear however and I so find, the husband did make a financial contribution to the assets of the parties as a result of his mother’s estate. Doing the best I can, I find that that sum was approximately $3.5 million. That sum is calculated by using the probate document, excluding the E Street home and then substituting its sale value and ultimately dividing the total by two.
Separation from the brother’s interests
The husband and his brother had a falling out by the 1980s and disagreed over businesses and approaches to investment. The division of interests took place over a number of years culminating in a distribution of the R Pty Ltd interests after the husband’s mother’s death. It was the husband who retained all but one share in R Pty Ltd. His brother retained the other. In 1984, C Street was transferred from being jointly owned by K Nominees and S Nominees to K Nominees. In 1986, the husband’s brother took the business side of various interests and the husband took all of the commercial property interests. After the death of the husband’s mother, R Pty Ltd was the subject of a trade-off of assets between the brothers. The husband was left with the Y land as a completed development but in the name of R Pty Ltd and it belonged to that entity.
Much confusion arose from documents sworn by the husband in which he said he “bought out” his brother’s interests. I am satisfied that that statement does not reflect what occurred. I find that there was simply an exchange of interests in assets between the brothers. No money was borrowed for that purpose and doing the best I can on the evidence, the separation of interest did not have any impact on the equity in assets that the husband and wife otherwise had over the decade that the business separation process occurred. What is important in this fog is that it made no difference to the assessment of the parties’ contributions because of my earlier findings about what each party had done to obtain the ownership which was ultimately split between the two families.
Other assets and interests
In 1993, a trust was created named after one of the party’s children who had suffered and still suffers health problems. A second trust was settled in 2002 in which children and grandchildren were named as beneficiaries. Other properties were acquired in three suburbs. There was a significant loan account to the parties’ daughter in law in the Bulleen Investment Trust but it was agreed that the amount would not be included in the pool of assets.
After the parties separated, the husband purchased a property for $2.48 million and that is part of the pool of assets.
The controversy over the artwork and the Q Street property
Although somewhat out of order in the four step process, it is appropriate at this time to mention the artwork and the Q Street property. It is in the fourth step referred to in Hickey (supra) that a court should determine what order is just and equitable. Part of that process is in the distribution of assets in specie.
The art work
The wife’s view was that both parties had an appreciation of art that had been jointly acquired over many years and which was personally and emotionally significant to both. The husband’s view however was that it was he who was solely responsible for sourcing and selecting the art for acquisition and that in the scheme of the pool of assets, it was not a substantial outlay.
The husband described his relationship with the art as an intensely personal one in which he was emotionally committed to all of the paintings because the collection had been part of his passion. Perhaps as a sad reflection on the state of the parties’ relationship, the husband said in his evidence in chief that the wife showed no interest in the art.
The wife’s view was that all of the acquisition and appreciation came about from the parties doing things together. The husband rejected that saying that it was “not all together true”. He said he was the initial instigator but he conceded that there were discussions. The wife accepted that the husband had a passion for collecting.
The husband’s desire is to keep the collection together and ultimately gift it to the National Gallery of Victoria. This however does not appear to have been a concept ever discussed with the wife notwithstanding his concession that there were some discussions and agreement was usually reached but he did not agree that there was ever consultation about an acquisition. There is a distinction between discussion and consultations. Having seen both parties, I accept they did talk about art but the husband would not have consulted her about whether or not to buy a piece.
So sensitive an issue is the artwork that the husband called witnesses in relation to it. Ms G, Ms KT and Ms AN were deponents to affidavits filed on behalf of the husband. None of these witnesses was required for cross-examination.
Ms G is a widow whose husband was the first cousin of the husband. She said that the wife had never been involved in the acquisition of the artwork. Her late husband had been the person who introduced Mr Bulleen to the appreciation of art.
Although the wife denied the assertions of Ms G generally, there is no reason for me not to accept what she said.
Ms KT is the executive director of a Gallery which is a contemporary Australian art gallery dedicated to the promotion of artworks by living artists. Ms KT also filed an affidavit and was not required for cross-examination. Her affidavit said that the husband was a client of the gallery and she had sold to him more than 50 pieces of artwork. She said that the wife rarely attended. In cross-examination, the wife suggested she had gone to the gallery five to six times after separation. That was not the impression I could draw from reading the affidavit of Ms KT.
There is no reason for me to doubt what Ms KT said was true.
Ms AN is the director of the AN Gallery. It is a gallery which is a specialist in the field of Aboriginal Art. Ms AN described the husband as a passionate art collector. She said she had never met the wife. I have no reason to doubt what Ms AN said was true.
The wife gave evidence about her artistic ability and her love of painting. I have no doubt that she is a creative person which is a skill that the husband does not have. The wife treated the paintings as property but I accept that the husband has a strong passion for the particular pieces of artwork in the pool. When I suggested to the husband that the artwork could be delivered to the National Gallery or that I could divide it on a pick-about basis, he became emotional indicating that he had lost his house and other things to which he was attached. I accept that his expression was genuine.
In her evidence in chief, the wife described herself as being “extremely emotionally attached” to the artwork not only because she had a part in choosing them and appreciating them but also because they had been part of her home and life for some years. She said some of them had been “very unceremoniously” taken from her against her better judgment. She said she cried over every one of them that was taken by the husband because she was given no choice.
I have little doubt that the wife is attached to the artwork because they have been part of her home and life for many years but I cannot find on the evidence that she was significantly part of the choosing of the collection. The wife conceded there were occasions where the husband showed her paintings and asked her which one she liked best and if there was disagreement between them, they bought both. However I find that was long ago in the duration of this marriage.
It is impossible in the circumstances to distinguish between the parties in relation to the emotional attachment to the artwork. In those circumstances, the only appropriate fair way of resolving the problem is for the parties to pick the artwork that suits them best on a pick-about basis. However, the unusual feature of this case is that it would potentially breakup part of a collection by a particular artist. Doing the best I can, in the circumstances, I propose that the art be dealt with on the basis of particular artists and each party have a pick and the appropriate amount be adjusted against their share from the valuation undertaken and agreed. I propose that the wife have the first pick on the basis that the artwork remains in her home.
Q Street development.
Initially after its acquisition, Q Street contained warehouses which were leased and therefore provided income for the parties and the brother’s family. In 1983, the property was converted to office space for rental purposes. The funding of that renovation and the subsequent refurbishment in 1990 were all part of the commercial activities of the entities conducted by the parties.
In 2008, the husband embarked on another refurbishment and on the evidence of the valuers, the exercise is almost complete.
The 2008 refurbishment gives rise to an argument about whether the costs should be adjusted against the husband’s share because they have not added value to the property.
The parties’ respective valuers examined the property in June 2009 and calculated their outcomes based upon works being completed at a total cost of about $3.5 million. Ultimately, that cost became $4.49 million.
With leave but over objection, the wife filed an affidavit by her valuer Mr SD. His evidence was not challenged. It was to the effect that the value has not increased as a result of the spending.
The wife’s position was that the expenditure of $4.49 million had been taken into account by the joint experts in assessing the total value of the pool. Her position was that there should be a component added back into the pool for an overspending for which there was no corresponding increase in value.
The wife’s case was that she had repeatedly requested to be consulted about significant projects and that had not occurred. She submitted through her final address that the husband had unilaterally spent an additional $990,000 without adding anything to the pool. In reality, the expenditure depleted the pool. Her complaint was about the unilateral nature of the expenditure. She therefore sought that $990,000 be added back to the pool. The husband’ submission was that the total refurbishment was estimated at $4.49 million which was $2.284 million more than the amount contributed by the former tenant who had to put the building back into its previous position as a result of the conclusion of the tenancy.
The wife’s valuer Mr SD said that because it was a rental property, the capitalisation methodology for the purposes of valuation was the rental value together with an adopted capitalisation rate which could be reduced marginally by the quality of the building refurbishment. Mr SD said that he did not consider the additional costs associated with the refurbishment improved the level of value.
In Browne v Green (1999) FLC 92-873 the Full Court at 86,364 made the following observation:
(P)arties generally expect to share the economic profits of a marriage, which, in our view, requires that there should be good and substantial reasons for departing from the principle that where there are economic losses incurred in the marriage, those losses should be shared, absent any negligence, recklessness or dissipation of assets by one party.
There is a distinction here on the facts because of the unilateral nature of the husband’s action. In Browne v Green, the wife who wanted to distance herself from the losses, had been a willing party in the investment. Her argument was that it was the husband who had overall control of the venture which led to the financial losses and therefore he should be responsible for them. That concept was rejected by the Full Court.
In his opening remarks, Mr Geddes QC on behalf of the wife described the expenditure on Q Street as being without consultation with the wife as well as without adding value. There was no evidence led as to the requests that were made or the demands put that would give me a basis to find that the husband deliberately dissipated the asset or was reckless in ignoring the demands of the wife. There was no evidence as to how the wife would have viewed the refurbishment or renovation and whether it was unnecessary.
There is no evidence here other than the unilateral nature of the husband’s action which would enable me to find that there were good and substantial reasons for departing from the principle that losses should be shared. In this case, much of what the husband did in business life was unilateral and it would seem, it was to the wife’s benefit. The “overspend” as it has been called was another such example but there is no evidence that it was undertaken negligently, recklessly or with a mind to deliberately dissipate the assets. Quite the contrary, everything the husband did seems to have been calculated to enhance wealth.
Accordingly, I propose not to add back the “overspend”.
Who is to retain Q Street?
Each party sought the Q property as part of the division of the assets. The wife was cross-examined at some length about how she would manage the development having regard to the lifestyle to which she had become accustomed. Her response was that she would approach advisors and follow their advice but she wanted a commercial property as part of her ultimate settlement. The husband’s position was that this was part of his way of doing things and had been so for a number of years.
Questions were asked of both parties about the time each devoted to or could devote to, business affairs. The wife has spent time on interests in painting, in her children and grandchildren as well as on travel. Similarly, the husband has the benefit of time to do his business activities at a controlled pace. Neither party is under pressure to get tasks done. Each has the time and financial affluence necessary to devote to the completion and management of Q Street.
The wife’s position was that she wanted a mix of assets for her permanent and secure financial future. Having regard to the size of the pool of assets and what she will receive from it, this is not a case where I should be concerned about the mixture of assets affecting the parties’ respective future; that is, they will make whatever they will from what they receive and I suspect, still be very comfortable.
Q Street is a project upon which the husband has been focussed for a number of years. I observed him in the witness box and can see his passion for developing properties not only for their financial gain but for his interest sake. I accept it plays a very significant part in his life.
He has a definite plan and this has been a project of his for some years. In the circumstances, the husband may retain Q Street.
The Pool
The pool of assets in this case was put by the wife at $150, 913,690. To that, an amount of $123,235 needs to be added towards the wife in relation to the Deposit Guarantee Levee.
The agreed total net asset pool excluding taxation liabilities is $151,037,015. Taxation liabilities, marketing and sale costs should be jointly carried by the parties. Similarly, transfer costs should be borne by the party who wishes to retain any property. Taxation expenses are different from transfer expenses.
That pool includes artwork, Q Street and a significant portfolio of shares.
It was common ground between the parties that the wife was to retain the holiday home property but neither property wanted the farm. They will need to work out whether one or other of them retains that property because otherwise, it needs to be sold. Whilst I clearly have a value as agreed between the parties, the ultimate proceeds may be very different from the valuation.
The same problem arises in respect of the shareholdings. Those may fluctuate in value and number and accordingly, I propose to give the parties an opportunity to divide the assets in specie and to deal with the question of the farm based upon the percentage divisions to which I shall refer below. I will make specific orders having regard to the matters raised above about Q Street and the artwork.
Contributions
Within the framework to which I earlier referred and based upon the findings I have made, I now deal with the assessments and weighting of the parties’ contributions.
In her case outline at the commencement of the hearing, the wife described the husband as the breadwinner and she as the devoted homemaker and parent. She said her application of her efforts to the running of the household enabled the husband to apply his efforts to the business activities undertaken by him throughout the marriage. She pointed to the fact that those contributions did not cease upon the children attaining the age of 18 years particularly in relation to the youngest child. The wife’s submission was that having analysed the direct and indirect contributions, the assessment should be that they contributed equally.
In his case outline at the commencement of the case, the husband said that it was not in dispute between the parties that the business and investments along with the financial affairs were all managed by the husband alone without any input from the wife apart from her contribution in the initial stages of the marriage. He said he did not utilise any of the wife’s money in his business activities and did not involve her in financial obligations associated with the operation of the business or investments. I reject that statement. There is no doubt that the wife’s money went into the A Building purchase which became the hub of the husband’s business activities. The wife was a director of the corporate entities and signed a variety of documents.
The husband argued the accumulation of very significant wealth had to be recognised and that whilst the role of homemaker was important it would not be appropriate or just and equitable in the circumstances to regard the role played by the wife as a homemaker and parent as being equal to that of the husband. He pointed to the fact that that was particularly so having regard to the premarital assets that the husband had used which were reflected in the existing current assets. It was the husband’s case that it was his exceptional hard work and skill that had created the significant wealth. As a bald statement, I have to reject that.
In his evidence whilst being cross-examined, the husband said:
I am just saying that there is no question that everybody had a bona fide intent and did it to the best of their ability, whether it’s her or me, and I am not about to be – or be a party to a cross-examination that is going to do anything to discredit that.
The husband went on to say that he admitted he never did anything unilaterally or singlehandedly. He said:
What I did was take control and responsibility of the execution of putting into effect the planning and the construction, and how the construction would take place. That’s a bit of my forte, and it’s my fashion.
Certainly that was a comment made in respect of the development of the holiday home property.
In final submission, the wife said that the husband’s concession was that the parties had applied their best endeavours in their respective roles during the marriage and the fact that the husband had some role in parenting of the children when they were young did not affect the overall division of the roles. The submission went on to say there was no basis for an argument that the husband’s contributions during the marriage were more “worthy” than those of the wife.
In his final submissions, the husband said that the parties continued the roles to which I have earlier referred but in the last two decades of the marriage, there was no parenting role because the children were adults.
Whilst parenting as an occupation might stop or become less burdensome once children become adults, the ongoing role of both parents and later grandparent is no less an on-going contribution. Section 79(4)(c) refers to the contribution to the welfare of the family constituted by the parties and any children. The provision goes on to refer to the inclusion of any contribution made in the capacity of homemaker and parent. This latter inclusion means that the legislation contemplated contributions other than homemaker and parent. This Court has grappled with this issue a number of times (see Williams and Williams (1984) FLC 91-541 and Mehmet and Mehmet No 2 (1987) FLC 91-801). Both of those decisions indicated a resistance to splitting a “family” into groups or units. If however, it was always an agreed and executed role for a parent to physically, financially and emotionally support a family, the separation from the unit does not mean that that contribution ceases. Far from it, parents in this era continue to play a significant role in their growing and expanding family. For one party to then say such a previously agreed role was no longer a contribution to the welfare of the family cannot be right. Importantly, I do not accept that society would see it that way.
In Figgins v Figgins (2002) FLC 93-122 the Full Court expressed concern about courts considering subjective assessments of the quality of a party’s contributions where it was put that they were “outstanding”. The Full Court said that it was invidious for a judge to in effect give “marks” to one party or the other. I do not intend to approach the matter by giving marks.
The husband ran the corporate entities, acted as a lawyer to draw documents for the various personal and company transactions. He used the entities to identify and buy land for subdivision and in respect of residential land, built houses for sale. In respect of industrial land, in the earlier part of the marriage, he was involved in constructing factories for leasing. All of these commercial activities involved planning. Along with property development work, the husband was the managing director of one of the entities which had diverse corporate activities during the 1980s.
I have dealt with the husband’s activities connected with the home and the farm. In addition, when the A Building was acquired, the husband was the prime mover of the improvement of that. In respect of Q Street, the husband was part of the planning and supervision of the various developments and engaged tradespeople. He organised the agents who let the properties.
It was the husband’s evidence that he also had a significant role in the daily home and school activities of the children but on his own admission, the wife was the person primarily responsible there. That is not to say he did not contribute; I am satisfied he did. The wife acknowledged the husband as a good father. However there were times when the stressors of life such as the breakdown of his relationship with his brother and the consequent cleaning up of those financial issues were difficult for the husband. It was the wife’s evidence that she arranged to keep the children away from him and brought him dinner and breakfast in bed. The husband’s response was to dispute the frequency but he did not deny the wife’s role.
The parties had household paid assistance throughout their marriage but I am satisfied that whether by tradition or agreement with the husband, the wife was the manager of the daily activities of the home. She had his assistance at night with the children but even the husband acknowledged that the wife needed that from which I infer, her role with the four children was busy. One child had soft tissue back palate split which required medical operations. In the early part of the marriage, there were three children under three years of age and eventually, four children under five years. When their youngest child was 17 years of age, a bi-polar disorder was diagnosed. Both parties had had a role in assisting their daughter since that time. That is an ongoing arrangement and each has agreed to make appropriate provision for that child.
The wife did the shopping, cooking and cleaning on a daily basis. I have already referred to her activities in respect of the development of the home and the farm along with her role in bringing other children to the farm and to the holiday home. I find the wife’s role in respect of the welfare of the family has continued into the adult years of her children.
I find both parties led very active roles with which they were both happy. I find that over the last 20 years, the husband did not have significant projects to the same extent as he did in the earlier part of the relationship when the major assets were acquired. In recent years, his developments have become less frequent and he has concentrated on commercial assets at hand. To a large extent, I find on the evidence that he has maintained the assets. His role seems to me to have been no more arduous than that of the wife. She continued her role as was agreed by both parties and expected of both parties. Accordingly, I find there is no distinction between the respective contributions of the parties subsequent to the period that the children of the marriage became adults.
In respect of the wife’s role relating to documents, which arose out of her role as a director of one of the entities, the assessment has to be made against a background of the financial affairs of the parties. The husband conceded that he took risks in some areas and borrowed substantial sums of money in others. The evidence does not lead me to make any finding further than that. The husband was very quick in his evidence to point out that at no stage was the wife ever required to give a personal guarantee for company activities by which I understood him to say that the wife’s personal entitlements were never prejudiced by the execution of documents. The wife’s interest in the corporate entities must however have been placed at risk and in this case, that is of some significance because of the fact that the major asset was owned by the corporate entities. In respect of the execution of documents and the risk arising there from however, it is obviously important to recognise that the husband was similarly making a contribution and similarly taking the risk. Little turns on that issue. In the same way, the wife’s role in the trust(s) enabled the parties to have the advantage of an income-splitting arrangement as well as wealth protection but it cannot be overlooked that the major decisions were in fact made by the husband. Equally, it cannot be overlooked that the major household management decisions were made by the wife. It would be unwise to try and weight them in identical ways.
I am satisfied on the evidence that the husband’s financial contributions in:
(a)the initial financial capital he introduced and in the early years of the marriage;
(b)his income; and
(c)his inheritances,
were greater than those of the wife. In saying that, I have taken into account the wife’s contributions of:
(a) her initial contributions of a financial nature;
(b) her inheritance; and
(c) her role and shareholdings in the various entities.
In Pierce v Pierce (1999) FLC 92-844 the Full Court observed that in considering the weight to be attached to the initial contribution of a party, regard must be had to the use made by the parties of the contribution. Obviously, it is not just the initial contribution that needs to be identified but all relevant contributions and an assessment has to be made of them.
As I have endeavoured to show, it is impossible on the evidence before me to do much more than identify the initial contributions in a very nebulous way. I could not be satisfied as to the impact of the initial contributions on what now exists.
However, it is clear on the evidence that the husband did have an interest in his family’s business before marriage and received a significant inheritance upon the death of his mother. He received one-half of the former home and one-half interest in the shares held by his mother and previously his mother and father jointly in R Pty Ltd. There were other shareholdings as well.
Discretionary though the decision may be, there has to be some methodology to indicate how the decision was reached. In this case, the disparity between what each party receives should be set out in percentage terms but which recognises a clear dollar disparity. (see VAK and AK [2005] FamCA 803 and Clauson (1995) 18 FamLR 693) That is, the adjustment must reflect the myriad of efforts that made up this very long marriage relationship. It is not an exercise that can be done by reference to precise calculations. Early capital contribution is made less significant because of the many and varied efforts thereafter.
The early contributions of the husband whilst being the catalyst for subsequent wealth, have been made less significant because of subsequent and distinctly different contributions during the marriage to which I have referred.
The inherited funds of the husband which came much later in the marriage, blended with the assets of the parties. It is most likely on the evidence, although impossible to quantify, that these amounts led to a conservation or improvement in the value of the parties’ overall assets. Because of the blending of these amounts and the difficulty of quantifying the effect of them being received, these later inheritance contributions cannot be given their full capital weight. (see Aleksovski & Aleksovski (1996) FLC 92-705).
Thus, the initial contributions of the husband and his inheritance are the elements that justify him receiving more than the wife. In a pool of about $151 million, $10 million more to the husband than the wife reflects the impact of the disparate contributions. $10 million is 6.6% of $151 million.
The third step in the process is that requiring an assessment of the matters set out in s 75(2) of the Act as they apply to each party.
The purpose of s 75(2) is to enable a court to make adjustments to achieve a just and equitable outcome. All of the factors are directed to redressing any economic imbalance so that fairness is achieved. In a case such as this, the Court has to be careful not to place greater emphasis on s 75(2) than on s 79 when both sections are considered. In this case, a division based on s 79 creates an economic disparity but it is the underlying value of that disparity that points to the question of whether the outcome is just and equitable.
There are a number of factors to be considered. Both parties are of an age where their economic needs are not as great as couples with young families or younger people endeavouring to establish businesses. Neither party has indicated that any health considerations would require substantial further economic adjustment.
On any view, even with the disparity, the income of each party will be substantial and each will be secure financially. The wife indicated in evidence that she was going to rely on financial advice. No evidence was called to indicate what her future needs were in any special way. She indicated she had a desire to have commercial property as part of her ultimate portfolio but that was very much dependent from advice she was to receive.
Both parties will have ample funds in terms of capital and income enabling them to meet their commitments. Neither party has responsibilities for children or other persons. Whilst the wife clearly has a desire to assist her children and both parties have indicated their willingness to provide support for the youngest daughter, those are matters that do not require court intervention nor specific allowance in any adjustment.
Neither party is of an age or inclination to be retrained and as such, the matters set out in s 75(2)(h) are not relevant.
I have already taken into account the fact that both parties have contributed significantly to the assets that they have for division and that is reflected in the entitlements to which I have earlier referred. This is a long marriage and the parties now deserve the opportunity to enjoy the fruits of that labour.
One factor that I am obliged to take into account is the terms of any order made in relation to the property of the parties. Where the capital disparity between the parties is significant, a court may make an adjustment if it is necessary to achieve a just and equitable outcome. In this case, having regard to the way the case was conducted by both parties, I see no reason for a further adjustment because in my view, the division based on percentages as set out above is just and equitable. Having regard to the size of the entitlements, there is no basis in my view for any further adjustment.
The fourth step in the process requires the Court to be satisfied that the outcome is just and equitable to both parties. To reflect that appropriately and as part of the fourth step which is referred to in Hickey (supra), the husband should receive 53.3% of the pool whatever it turns out to be in net terms and the wife 46.7%. In my view, that represents a just and equitable outcome for both parties. Because of the fact that there may be a requirement for the liquidation of assets including the farm, I propose to give the parties an opportunity to initially divide the assets amongst themselves. Failing agreement, I will determine the precise orders for division.
I certify that the preceding One Hundred and Ninety Five (195) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin
Associate:
Date: 12 March 2010
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