BYRD & BYRD
[2014] FamCA 523
•9 July 2014
FAMILY COURT OF AUSTRALIA
| BYRD & BYRD | [2014] FamCA 523 |
| FAMILY LAW – PROPERTY – Section 79 Application – Where there has been a long marriage – Contributions – Section 75(2) factors – Where there is a substantially greater financial contribution by one party – where the future earning capacity of one party is lower |
| Family Law Act 1975 (Cth) |
| In The Marriage of Prince; General Credits Australia Limited (Intervener); AG For The State of Queensland (Intervening); AG For the Commonwealth of Australia (Intervening) (1984) 9 FamLR 481 at 486 Stanford v Stanford (2012) 247 CLR 108 |
APPLICANT: | Ms Byrd |
RESPONDENT: | Mr Byrd |
FILE NUMBER: | SYC | 767 | of | 2009 |
DATE DELIVERED: | 9 July 2014 |
PLACE DELIVERED: | Sydney |
PLACE HEARD: | Sydney |
JUDGMENT OF: | Stevenson J |
HEARING DATE: | 2, 3, 4 5, 6 December 2013 |
REPRESENTATION
COUNSEL FOR THE APPLICANT: | Mr Lloyd SC |
SOLICITOR FOR THE APPLICANT: | Watts McCray Lawyers |
COUNSEL FOR THE RESPONDENT: | Mr Campton |
SOLICITOR FOR THE RESPONDENT: | Gibsons Lawyers |
Orders and declarations
That, within 42 days of the date of these orders, the husband pay to the wife the sum of $405,000 (four hundred and five thousand dollars).
That, as between the husband and the wife, the husband is declared to be solely entitled to the following properties:
2.1 N Street, Sydney Suburb 2
2.2 G Street, Suburb H
2.3 I Street, Suburb H
That, as between the husband and the wife, the wife is declared to be solely entitled to the following properties:
3.1 R Street, Sydney Suburb 1
3.2 the Suburb B Property
That the wife forthwith do all things and execute all documents necessary to resign all offices and transfer and assign to the husband or as he may direct all of her interest, shareholdings, loan accounts held, due to or accruing to her in the following entities:
4.1 Byrd and Associates
4.2 Byrd Sydney Investment Services Pty Limited
4.3 Byrd Family Trust
That the husband indemnify the wife against all actions, claims, suits and demands arising from her being a shareholder, director, partner or officer of any of the entities named in order 4 or as a trustee or discretionary object of the Byrd Family Trust.
That the husband hold the funds in Summit account … jointly for both parties to be applied toward the secondary education expenses of the child L and, at the conclusion of those obligations, the husband sWW pay to the wife or as she may direct an amount equal to 50 per cent of any funds which remain in the account and he will retain the balance of 50 per cent.
That, as between the husband and the wife and subject to these orders, each party will retain his and her respective assets, superannuation, liabilities and financial resources as currently in his and her possession or control.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Byrd & Byrd has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 767 of 2009
| Ms Byrd |
Applicant
And
| Mr Byrd |
Respondent
REASONS FOR JUDGMENT
the proceedings
Mr Byrd and Ms Byrd are in dispute as to settlement of property, following the breakdown of their marriage in 2008. The proceedings have had a most unfortunate history, being commenced in 2009 and causing the parties to expend between them some $2,000,000 in legal costs and disbursements.
The husband was born in 1963 and is currently aged fifty one years. The wife was born on in 1965 and is presently forty eight years of age. The parties began to live together in 1988 or upon their marriage in 1989, according to the wife and the husband respectively. They separated under one roof on 11 February 2008 and divorced on 26 April 2010.
In February 2010 the husband commenced a relationship with his current partner, Ms O, whom he married in 2012. The wife was in a relationship with Mr Q but it appeared that they separated at some time prior to the trial in December 2013.
The parties have three children:
· Ms C born in 1993 (21);
· Ms D born in 1995 (19); and
· L born in 1998 (16).
For a period after the separation, the children spent significant time with each of their parents. The parties arranged that the children stayed permanently in the former matrimonial home at Sydney Suburb 2 and each of the parents lived there with them on a recurring basis. The husband rented accommodation which he and the wife occupied when not living with the children at the former matrimonial home.
The girls gradually began to stay for longer periods with the wife and now make their own arrangements to spend time and communicate with the husband. L spends time with the husband for six nights per fortnight, half of the school holidays and on special occasions.
The husband holds interests in a number of corporate entities associated with his family. These interests originated from a company known as Byrd’s Pty Ltd. This company, which was incorporated in 1903, traded as a general store in Suburb R for over one hundred years and also acquired various investment properties.
A company known as T Pty Limited owned all issued shares in Byrd’s Pty Limited. The husband is one of three directors of that company but has no control over its management. In 1988 Byrd’s Pty Limited began to dispose of its assets and wind down its operations. Ultimately this company went into a process of voluntary liquidation, which was completed on 25 October 2012.
In 1949 a company known as Byrd’s (Suburb R) Pty Limited was incorporated, with the shareholders being Byrd’s Pty Limited and T Pty Limited. The husband held 32 per cent of the shares in T Pty Limited, via a company known as U Pty Limited. The husband is one of three directors of Byrd’s (Suburb R) Pty Limited but has no control over its management. This company went into voluntary liquidation on 25 October 2012.
The company T Pty Limited was incorporated in approximately 1981 and held 100 per cent of the shares in Byrd’s Pty Limited and 17.83 per cent of the shares in Byrd’s (Suburb R) Pty Limited. The husband holds 32 per cent of the shares in T Pty Limited via the company U Pty Limited. The other shareholders are companies owned by the husband’s mother and two brothers. The husband is one of three directors of T Pty Limited but has no control over its management. On 5 June 2012 this company entered into voluntary liquidation.
The company U Pty Limited was incorporated in 1981. The husband is the sole shareholder in this company and he and three of his siblings are directors. U Pty Limited entered into voluntary liquidation in December 2012.
A company known as V Pty Limited was incorporated in approximately 1991. The husband is a minority shareholder, along with his siblings. The controlling shares are held by the husband’s mother. The assets of this company came from a Byrd family investment company which existed prior to the parties’ marriage. This company meets the living expenses of the husband’s mother.
In his affidavit the husband referred to Byrd’s Pty Limited, Byrd’s (Suburb R) Pty Limited and T Pty Limited as the Byrd (Suburb R) Family companies. For convenience, I will do likewise in these reasons.
The husband is a non-discretionary beneficiary of one of a series of trusts established by his paternal aunt, Ms W. The trust for the benefit of the husband was established in 1964. The deed of trust provided, inter alia, that the husband receive a sum of $320,000 upon his attaining the age of forty five years.
In 1986 the husband purchased a residence at AA Street, Suburb BB, for $135,000 on an unencumbered basis. The parties lived in this home after their marriage in 1989. The husband sold this property for $300,000 in approximately 1991.
The wife asserted that, at the date of the marriage, she owned a National Mutual Life insurance policy with a savings component and her personal effects. The husband contended that the wife had no assets and a credit card debt of some $5,000 at the commencement of the relationship. The wife agreed that she had a credit card debt of $5,000 in March 1989.
In her affidavit the wife deposed that she cashed in her insurance policy after the separation and received approximately $36,000. Although she suggested that she took out this policy when she first entered the workforce in 1983/1984, the only documentary evidence (exhibit 5) indicated a commencement date of 20 June 1991.
It was common ground that, at the date of the marriage, the husband owned the following assets:
· unencumbered property AA Street, Suburb BB;
· motor vehicle;
· shareholding in U Pty Limited, which held shares in T Pty Limited and Byrd’s (Suburb R) Pty Limited.
The husband maintained that he possessed the following additional assets as at the date of the marriage:
· household contents;
· savings of $50,000;
· a portfolio of publicly listed shares;
· an interest as a non-discretionary beneficiary of the Ms W Trust;
· business known as L Byrd Financial Advisor.
It seems likely that the husband owned furniture and household contents, as he lived in the Suburb BSuburb B Property at the date of the marriage. Documentary evidence established that he was a beneficiary of the Ms W Trust. Although there was no independent evidence to corroborate the husband’s contention that he had a share portfolio, $50,000 in cash or a financial advice business, I accept that he did so. Generally, the husband’s recollection of the parties’ financial history seemed to be more detailed and accurate than that of the wife.
In July 1991 the husband sold the Suburb BSuburb B Property for $300,000 and purchased the former matrimonial home E Street, Sydney Suburb 2 for $2,000,000. The balance of the purchase money came from interest-free loans totalling $1,700,000 from persons or entities associated with the husband’s family. The front page of the registered mortgage (page 42 exhibit RXO1 to the husband’s affidavit of 12 November 2013) listed the mortgagees as Mr CC Byrd, Mr Byrd, Mr DD Byrd and Mr EE Byrd. A deed annexed to the mortgage document provided that a Ms W Trust associated with each of the husband’s siblings was to advance $345,000 and that of which the husband was beneficiary $320,000, so as to constitute the loan of $1,700,000.
Until 1998 the parties and their children lived in the upstairs section of the Sydney Suburb 2 property and rented out the lower level. The wife asserted that she always assumed that the rental income from the lower level of the Sydney Suburb 2 property was applied to service the mortgage debt. There was no evidence to that effect. The husband conceded in cross-examination that certain cheques were drawn on the account of Byrd and Associates for the purpose of reduction of the mortgage debt (exhibit 13).
In 1995 the husband purchased a boat for $62,000. These funds came from U Pty Limited but were sourced ultimately to the Byrd (Suburb R) Family companies. In 2007 the husband traded in this boat for $60,000 and purchased another vessel for $197,000. The balance of the purchase money came from dividends paid by the Byrd (Suburb R) Family companies and deposited into the account of U Pty Limited.
In approximately 1998 the husband incorporated a company known as Byrd Sydney Investment Services Pty Limited, of which he is the sole director and shareholder. This company owns two parcels of real estate, which constitute the business premises of the partnership Byrd & Associates. The partnership pays rent to Byrd Investment Services Pty Limited.
In February 2000 the parties opened a Summit account, which the husband maintained was intended to hold funds for the children’s private school secondary education. The wife said: “the Summit account was just a savings account, it was not established to pay the children’s school fees”. The fact is, however, that funds in this account were used to pay school fees. The husband deposited an initial sum of $50,000 into the Summit account, which came from his savings and money sourced from the Byrd (Suburb R) Family companies. On 27 October 2000 an additional sum of $35,700 was lodged into this account, which consisted of rental from a three-week tenancy of the Sydney Suburb 2 property during the Sydney Olympic Games.
In 2001 the parties purchased vacant land at the Suburb B Property in the wife’s sole name for $395,000. The purchase money came from accumulated dividends paid by the Byrd (Suburb R) Family companies, which money was deposited into the account of U Pty Limited.
In October 2003 the husband purchased a European motor vehicle for $85,387. This car was used by the wife and registered in the name of Byrd & Associates. The purchase money came from $65,395 in dividends received by U Pty Limited from the Byrd (Suburb R) Family companies, a $15,000 trade-in of the husband’s car and a $5,000 debit to his MasterCard. The husband sold this vehicle for $18,000 in November 2010.
In 2005 the husband began to conduct his business under the name of Byrd Sydney Financial Services Pty Limited. He operates as a sole trader in conjunction with several other providers of financial services.
In mid-2005 the parties commenced construction of a house on the land at Suburb B. They obtained a loan of $700,000 from the National Australia Bank in the name of Byrd Sydney Investment Services Pty Limited, which was guaranteed by the wife. The husband maintained that he applied dividends sourced from the Byrd (Suburb R) Family companies to meet repayments of principal and interest in respect of this loan. As appears below, I have doubts that a clear distinction can be drawn between funds available from the Byrd (Suburb R) Family companies and the husband’s income from the financial advice business. In 2005 the husband transferred $30,750 from U Pty Limited to an account in the wife’s name. She used this money to furnish the home at Suburb B.
In 2006 the husband purchased a European car for $92,000. He traded in an existing motor vehicle for $30,000, obtained finance of $37,000 from the dealer and contributed cash of $25,000 to fund this purchase. In February 2011 the husband traded in this vehicle for $29,000 on a new motor vehicle which he purchased for $106,000. The balance of the purchase money consisted of cash of $37,000 and $30,000 drawn from accounts in the names of Byrd Sydney Financial Services Pty Limited and the husband, together with a $10,000 debit to his credit card.
In 2006 the husband purchased a property at I Street, Suburb H for $226,000. The purchase money came from a mortgage advance of $200,000 from the National Australia Bank and the husband’s savings which were derived from dividends paid by the Byrd (Suburb R) Family companies.
On 30 June 2007 the parties established the Byrd Family Trust. The husband is the trustee and appointer and the discretionary beneficiaries are the parties and their children.
On 11 February 2008 the parties separated under one roof. The husband moved out of the former matrimonial home in April 2008 and rented a home unit at FF Street, Sydney Suburb 2. The wife rented premises at GG Street, Suburb HH in May 2008. As noted, the parties agreed that the children would live permanently in the Sydney Suburb 2 property and they would move in to care for them on a rotating basis.
On 6 May 2008 the husband provided a sum of $5,000 to the wife. On approximately 9 May 2008 the wife withdrew $20,000 from the partnership account. In June 2008 the husband provided to the wife sums of $8,000, $5,000 and $15,000. In November 2008 the husband provided to the wife an amount of $5,000. All of these payments came from the partnership account and were debited against the wife’s loan account.
In February 2009 the wife cashed in her investment account with X. She received $36,916, which she deposited into a National Australia Bank account in her name. She used $20,000 to meet legal fees and spent the balance on living expenses.
Between January 2009 and May 2010 the husband caused the wife to be paid a fortnightly salary of $1,900 by Byrd & Associates. These payments were debited to her loan account with the partnership.
On 11 March 2009 interim orders were made, which included provision for the sale of the Sydney Suburb 2 property. These orders provided that each of the parties receive a sum equal to 30 per cent of the net sale proceeds. The orders provided further that the husband pay the wife’s private health cover and gap amounts, together with medical, telephone and motor vehicle expenses until she obtained a child support assessment. In July 2010, the Child Support Agency issued an assessment in the sum of $2,215 per month. This amount was varied to $1,425 per month in 2011, after Ms C attained the age of 18 years of age.
On 1 September 2009 interim orders were made which provided, inter alia, that the husband have exclusive occupation of the Suburb B Property each alternate week during term time and when the children were in his care during school holidays. These orders provided that the wife have exclusive occupation of this property at all other times.
On 4 November 2009 the husband exchanged contracts for the sale of the Sydney Suburb 2 property at a price of $8,000,000. On 9 November 2009 each of the parties received a sum of $400,000, being 50 per cent of the deposit.
Between November 2009 and December 2009 the balance of the Summit account was reduced by $62,298, when the husband sold certain shares without the wife’s knowledge or consent. On 14 December 2009 the husband withdrew $70,000 from this account without the wife’s knowledge or consent. It appeared that the husband used these funds to pay school fees.
On 1 March 2010 the sale of the Sydney Suburb 2 property was completed and a sum of approximately $1,101,000 was applied to discharge the mortgage to the members of the husband’s family or associated entities. The husband received a sum of $320,000 from the Ms W Trust when he attained the age of forty five years in 2008. This sum was credited against the mortgage balance, together with annual contributions by the husband which reduced the ultimate payout figure to $1,101,000.
The husband and wife received amounts of $1,635,074 and $1,586,074 respectively from the proceeds of sale of the Sydney Suburb 2 property. The difference arose due to consent orders made on 1 September 2009, which provided inter alia that the husband would cause the Byrd Family Trust to pay a sum of $49,000 from the Summit account to the wife’s solicitors and that she reimburse the Trust upon receipt of 30 per cent of the sale proceeds. The balance of $2,713,432 was deposited into an interest-bearing account. Pursuant to interim orders made on 4 and 5 August 2010, the husband and wife received $639,463 and $2,038,298 respectively from the remaining sale proceeds.
On 31 March 2010 the husband completed the purchase of the property N Street, Sydney Suburb 2. The purchase money came from his share of the sale proceeds of the former matrimonial home and a loan of $500,000 from Byrd’s (Suburb R) Pty Limited. The husband applied $62,902 from the loan funds to meet the cost of renovations to this property. On 12 March 2010 the husband and Byrd’s (Suburb R) Pty Limited entered into a written loan agreement.
On approximately 13 July 2010 the husband withdrew $113,000 from the Summit account. He used these funds to pay the children’s school fees. He had previously withdrawn $7,000 from the Summit account in 2008 and used this money to pay school fees.
In August 2010 interim orders were made which provided, inter alia, for the wife to have exclusive occupation of the Suburb B Property pending its sale. The parties consented to orders for sale of this property at a price of not less than $2,200,000 for three months. Thereafter, in the event that no such sale had been negotiated, the parties were to agree on a figure or effect a sale of the property at a price determined by the President of the Australian Property Institute. No sale had been effected as at the date of the trial. It is now common ground that the wife will retain the Suburb B Property.
In August 2010 the husband purchased a property at G Street, Suburb H for $595,000. The purchase money came from a mortgage advance of $200,000 from the National Australian Bank and the husband’s share of the proceeds of sale of the Sydney Suburb 2 property. He also applied $55,000 from the sale proceeds to carry out renovations to this property.
In December 2010 the wife purchased the property R Street, Sydney Suburb 1 for $2,650,000. She spent an additional sum of $69,000 on furniture and household contents. All of this purchase money came from the wife’s share of the proceeds of sale of the Sydney Suburb 2 property.
On 1 June 2011 the following orders were made:
(1)Orders 9 and 10 of the Minute of Order attached to the Orders made by Justice Cohen on 4-5 August 2010 be discharged.
(2)For the purposes of the final proceedings the wife’s property situate at and known as [R Street, Sydney Suburb 1] (“the [Sydney Suburb 1 property]”) will be included in the Balance Sheet at its unencumbered agreed value and that any mortgage liability secured against the [Sydney Suburb 1] property will not be accounted for on the Balance Sheet.
These orders permitted the wife to proceed with an application to the Commonwealth Bank for a line of credit in the sum of $1,000.000. This liability is secured by a registered mortgage on the title to the property R Street, Sydney Suburb 1. An issue in the proceedings was whether there should now be a discharge of order 2 made on 1 June 2011. The effect would be to allow the wife to assert that she has a liability of $1,096,945, which should be included in the balance sheet.
In July 2011 the wife purchased a property II Street, Sydney Suburb 3 for $515,000. She sold this property for $427,000 in August 2011, thus sustaining a loss of some $88,000 exclusive of acquisition and sale costs.
In August 2011 the wife caused the incorporation of a company known as KK Pty Ltd. Currently the wife is the sole director and shareholder, these offices previously having been held by her sister Ms LL. In October 2011 KK Pty Ltd paid $160,000 for the purchase of a café business. Simultaneously the company entered into a three year lease for the business premises at MM Street, Suburb NN. KK Pty Ltd operates a business known as KK Cafe at the Suburb NN premises.
The companies Byrd’s Pty Limited and Byrd’s (Suburb R) Pty Limited were liquidated on 25 October 2012. The assets of Byrd’s (Suburb R) Pty Limited were distributed as follows:
·
Byrd’s Pty Limited
$1,650,540
·
T Pty Limited
$354,730
·
DD. Byrd
$2,000
·
EE. Byrd
$2,000
The liquidated assets of Byrd’s Pty Limited, amounting to $3,915,671, were distributed to T Pty Limited.
The liquidation of T Pty Limited was commenced on 5 June 2012. Although that process has not yet been completed by a final meeting, on 29 November 2012 its assets were distributed as follows:
·
OO Pty Limited
$896,130
·
PP Pty Limited
$896,130
·
U Pty Limited
$896,130
·
EE Byrd
$134,420
·
V Pty Limited
$100
The husband’s uncontradicted evidence was that the funds distributed to U Pty Limited were offset against its loan from T Pty Limited. That loan was in an amount of $199,286, thus U Pty Limited received a net sum of $696,845. These funds were invested in an iSaver account in the name of the husband.
The husband’s uncWWenged evidence was that his accountants, Mr QQ Pty Ltd, have calculated that he will receive a franked tXble distribution of $720,369 on completion of the liquidation of U Pty Limited. The husband’s accountant estimated that tax of approximately $118,861 would fall due on the amount of $720,369.
APPROACH TO THESE PROCEEDINGS
In Stanford & Stanford (2012) 247 CLR 108 the majority of the High Court of Australia held as follows:
35. It will be recalled that s 79(2) provides that “[t]he court sWW not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under this section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
Their Honours further observed as follows:
42. In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by apply s 79(4).
I have no hesitation in finding that it is just and equitable to make orders for settlement of property in the present circumstances. The parties have lived separate lives for over six years and there is no current nor will there be future common use of property. The parties have made a voluntary choice to end their marital relationship and acted very clearly on that decision. The nature of the orders sought by each of the parties suggest a mutual concession that it is just and equitable that orders be made for settlement of property.
The Assets, Superannuation, Liabilities and Financial Resources
At the conclusion of the trial counsel submitted a “Final Joint Balance Sheet” in the form annexed to these reasons. (Annexure A) There was agreement as to the identity, value and ownership of items: 1 ,2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 23, 24, 25, 26, 27, 28, 29 & 31 in that document.
Disputed Non-Superannuation Assets
1.Summit Account
It was common ground that the balance of this account was $22,938. The husband contended that these funds should be used to meet future school fees for L and thus should be omitted from the list of assets. The husband sought an order to the effect that he apply this money for the sole purpose of meeting L’s remaining secondary school fees and expenses, with any balance thereafter to be divided equally between the parties.
No submission was put on behalf of the wife to counter that proposition. Historically, the funds in the Summit account have been used to meet school fees. Accordingly, I see merit in the husband’s application. I will exclude the balance of the Summit account from the list of assets and make orders as sought by the husband as to the use of those funds.
2. The Business Known as KK Cafe
There was no evidence as to the value of this business, despite the fact that a single expert was instructed to carry out that task. There is little or no doubt that the wife failed to provide the information and documents required by the single expert to prepare a valuation of KK Pty Ltd (see exhibit 3).
Counsel for the wife frankly conceded that there was “embarrassment” for this failure on her side of the proceedings. He suggested that the wife make a concession that the business has a current value equivalent to its purchase price. That admission against interest was the only basis upon which a value could be attributed to this asset. I will accede to this submission and find that KK Pty Ltd has a current value of $160,000.
3. Legal Fees
As noted, each of the parties has spent an enormous sum on legal fees over the past five years. In my view, it would be almost impossible to identify with precision the source of the money used by each of the parties to constitute paid legal fees in the total sum of almost $2,000,000. It seems to me that the safest course, in such circumstances, is to exclude the paid legal fees of both parties from the list of assets.
4. Surrender of the Wife’s X Policy
The wife gave uncontradicted evidence that she cashed in this policy after the parties’ separation and received the sum of $36,916. She asserted that she spent some $20,000 on legal fees and used the balance of about $17,000 on living expenses. There was no evidence to the contrary. In these circumstances, I will not include in the list of assets the funds which the wife received on the surrender of her X policy. The husband’s contention that these funds should be added back to the list of assets did not appear to be pressed by his counsel in final submissions.
5.Alleged Waste by the Wife of Portion of the Sale Proceeds of the Sydney Suburb 2 Property
The husband contended that the wife failed to account for a sum of $544,494 from the proceeds of sale of the Sydney Suburb 2 property and that this figure should be added back as an asset. This amount was said to be the approximate difference between the total of about $4,000,000 which the wife received from the sale proceeds and approximately $2,700,000 which she applied to purchase the property R Street, Sydney Suburb 1.
The wife’s uncontradicted evidence was that the acquisition costs in relation to the purchase of this property amounted to $138,031, being stamp duty of $131,260 and legal costs and disbursements of $6,771. She also gave uncontradicted evidence that she spent $69,093 on furniture and household effects for use in this home. Accordingly, the calculation of a figure of $544,494 allows only about $50,000 for acquisition costs of $138,031 and ignores the purchase price of the household contents.
Another difficulty with the husband’s submission, in my view, is that his counsel conceded that “some” of the funds which the wife received from the sale proceeds of the Sydney Suburb 2 property “would have been living expenses”. In these circumstances, I am not prepared to add back as an asset any part of the wife’s share of the sale proceeds of the Sydney Suburb 2 property.
6.Alleged Loss Caused by the Wife’s Failure to Comply with the Orders For Sale of the Suburb B Property
The husband contended that a sum of $200,000 should be added back to the list of assets and treated as a premature distribution for the wife. It may be that this figure is the difference between the valuation of the Suburb B Property by RR Valuers in an amount of $2,200,000 as at 23 June 2009 and the agreed figure of $2,000,000 as at the date of trial. In cross-examination, however, the husband said: “I can’t say how the loss of $200,000 due to her failure to sell [Suburb B] is calculated. I do not have a calculation.”
It seems clear that the wife was most reluctant to effect a sale of this property at all relevant times. On the other hand the husband removed a substantial amount of the furniture and contents, for apparently no good reason, when the property should have been on the market for sale. Another difficulty with the husband’s contention, in my view, is that there can be no certainty that a sale price of $2,200,000 would have been achieved if this property had been sold in accordance with the orders of August 2010. For these reasons, I am not prepared to add back and treat as a premature distribution to the wife an amount of $200,000.
Liabilities
The only disputed liabilities were the parties’ respective credit card debts and the wife’s Commonwealth Bank line of credit. The husband contended that the credit card debts of each of the parties should be excluded from the balance sheet and the wife offered no real opposition to that proposal. In circumstances where the parties separated some six years ago, the safest course seems to me to exclude the credit card debts of each of the parties from the list of liabilities.
I have referred above to the order made on 1 June 2011 in relation to the wife’s line of credit. Notwithstanding this order, the wife now seeks to include her debt of $1,096,945 in the list of liabilities.
The husband strongly opposed the inclusion of the wife’s Commonwealth Bank line of credit as a liability in the balance sheet. It was correctly submitted on his behalf that he fulfilled all of his obligations pursuant to the orders of 1 June 2011 and received no benefit whatsoever from the sum of $1,000,000 borrowed by the wife from the Commonwealth Bank. It was further submitted correctly on behalf of the husband that he had no control whatsoever over the wife’s use of these funds.
On 10 October 2011 and 15 February 2012 the wife gave undertakings to the court that she would not draw down further on the line of credit except for the following purposes:
·completion of the purchase of the Sydney Suburb 3 property;
·payment of interest on the loan facility;
·payment of legal costs;
·payment of reasonable living expenses for herself and the parties’ children; and
·completion of the purchase of the café at MM Street, Suburb NN.
The wife’s evidence indicated that she may have used funds drawn down from the line of credit for purposes beyond the scope of these undertakings. She deposed that she spent $166,912 for purposes associated with the Suburb B Property between 23 September 2010 and 31 March 2013 (exhibit J to her affidavit of 18 November 2013). It could be that some portion of the amount of $166,912 was drawn down on the line of credit.
In her oral evidence the wife said that she purchased “replacement kitchen machinery, appliances, decorations and furnishings for the café”. She has no record “of money spent from the line of credit on the purchase and improvements.” She said also: “I was putting income from the café into improvements and drawing on the line of credit.”
Obviously, it was the joint intention of the parties that the husband assume no responsibility for any part of the wife’s line of credit debt when she proffered on 1 June 2011 an order that the property R Street, Sydney Suburb 1 be included at its unencumbered value as an asset in the balance sheet. The inclusion of the wife’s line of credit in the balance sheet would have the practical effect of sheeting home to the husband some portion of that liability.
I take guidance from the words of Evatt CJ in In The Marriage of Prince; General Credits Australia Limited (Intervener); AG For The State of Queensland (Intervening); AG For the Commonwealth of Australia (Intervening) (1984) 9 FamLR 481 at 486. Her Honour said:
Of course, the court cannot ignore the fact that there is or may be a liability; the effect is simply that it does not consider that the other spouse should be called upon to in effect “contribute” to the liability by having that spouse’s fair share in the parties’ property reduced by virtue of its existence. The effect may be that the party who has incurred the liability will be left to meet it out of whatever funds remain to that party after the satisfying the property order made under section 79….
In my view, an injustice to the husband would result if the wife is now permitted to resile from the position which she put directly to the court on 1 June 2011. It may be that the wife has used money drawn from the line of credit for purposes beyond her undertakings to the court. The husband has had no involvement in and no control whatsoever over the wife’s application of these funds. I can see no valid basis upon which the husband should now be required to assume liability for any part of the wife’s line of credit. I will not include this liability in the balance sheet.
Financial Resources
The only asserted financial resource was the wife’s remaining interest in the estate of her late mother, being a one-eighth share of a property SS Street, Suburb TT, New South Wales. By the time she swore her affidavit on 18 November 2013, the wife had received most of her entitlement pursuant to the will of her late mother. Her evidence was that she received a sum of $171,262 from the proceeds of sale of a residential property in Suburb UU. She deposed that she expects to receive an additional sum of $11,875 upon the sale of the Suburb TT property.
Balance Sheet
I thus find the parties’ assets, superannuation, financial resources and liabilities to be as follows:
Assets
Description
Value
Ownership
1.
Suburb B Property
$2,000,000
Wife
2.
R Street, Sydney Suburb 1
$2,650,000
Wife
3.
I Street, Suburb H
$290,000
Husband
4.
N Street, Sydney Suburb 2
$2,550,000
Husband
5.
G Street, Suburb H
$650,000
Husband
6.
National Australia Bank Account
$6,967
Husband
7.
National Australia Bank Account Byrd t/as Byrd & Associates
$2,753
Husband
8.
iSaver Account
$786,494
Husband
9.
National Australia Bank Account
$1,186
Wife
10.
ANZ cheque Account
$71
Wife
11.
Macquarie Cash Management Account
$952
Wife
12.
Commonwealth Bank Account
$7
Wife
13.
Commonwealth Bank Account
$15
Wife
14.
Boat
$65,000
Husband
15.
European Vehicle
$60,100
Husband
16.
Japanese Motor Vehicle
$18,050
Husband
17.
European Motor Vehicle 2
$15,000
Wife
18.
4WD Motor Vehicle
$5,300
Wife
19.
Furniture and Effects
$50,000
Husband
20.
Furniture and Effects
$50,000
Wife
21.
AMP Life Endowment Policy
$32,968
Husband
22.
U Pty Limited (including T Pty Ltd)
$1,206,341
Husband
23.
Byrd Sydney Investment Services Pty Limited
$482,119
Husband
24.
Loan to Byrd Sydney Investment Services Pty Limited
$1,223
Wife
25.
Sydney Financial Services
$120
Husband
26.
V Pty Limited
$409,503
Husband
27.
Loan to V Pty Limited
$1,375
Husband
28.
Sydney Financial Planning
$2,267,901
Husband
29.
Byrd & Associates
$22,777
Husband
30.
Loan to Byrd Family Trust
$25,276
Husband
31.
Business known as KK Pty Ltd
$160,000
Wife
$13,811,498
Superannuation
32.
X Superannuation Policy
$730,738
Husband
33.
MLC Navigator Superannuation Fund
$185,935
Wife
$916,673
Financial Resource
34.
Inheritance from late mother’s estate
$11,500
Wife
Liabilities
35.
Mortgage on Title to Property G Street, Suburb H
$177,000
Husband
36.
Tax Payable on Liquidation of U Pty Limited
$113,094
Husband
37.
Loan Account with Byrd & Associates
$105,862
Wife
38.
Loan from U Pty Ltd
$909,341
Husband
$1,305,297
The Evidence and Witnesses
The issues in the proceedings narrowed substantially due to an agreement reached between forensic accountants Ms VV and Mr P in relation to the values of various corporate entities. This agreement was reflected in their memorandum and the “final Joint Balance Sheet” submitted by counsel at the conclusion of the hearing.
On behalf of the wife objection was taken to an affidavit of Mr WW sworn on 10 May 2011, to which was annexed his report of 28 July 2010. Mr WW’s written instructions from the solicitors for the husband were as follows:
Please provide an opinion as to the following:
1.By reference to Commonwealth published data, the annualised interest costs of the finance facility made available from the [Ms W Trust] in the sum of $1,700,000 in or about 1991 to acquire the former matrimonial home at [E Street, Sydney Suburb 2] from the date of acquisition until the date of disposal of the property (allowing for the partial reduction in the principal by way of a distribution of $320,000 received by the husband on reaching 45 years of age, together with other payments made by the husband to reduce the principal;) and
2.Upon calculation of the annual value of such facility, conversion as to the value of the facility to “current day value” – that is, the value of that stream of funds in 2010.
Mr WW summarised his opinions as follows:
Executive Summary
14. I have calculated the interest on principal avoided due to the interest-free loan for the period spanning 1 July 1991 to 1 March 2010 to be $2,413,305. I have calculated the current day value of this interest to 30 June 2010 to be between $3,756,271 (assuming accumulation after tax at top marginal rates) and $5,861,632 (assuming accumulation before tax).
Counsel for the wife objected to this evidence, on the basis that it is inappropriate for one particular contribution to be attributed a mathematical dollar value. In discussion with counsel I compared this evidence to a trend which once prevailed in this jurisdiction for a homemaker and parent contribution to be attributed a monetary value, on the basis of evidence from personnel employed by organisations such as “Dial An Angel”.
I saw no valid basis for this quantification of only one contribution, in the context of a marriage of approximately nineteen years’ duration. During the relationship three children were born to the parties and they adopted complementary roles of primary homemaker and parent and major breadwinner. It seemed to me that the admission of this evidence created an inherent risk of injustice to the wife. In my view this quantification could well result in an artificial elevation of the significance of this particular contribution above others made by the parties during a long marriage.
Accordingly, I declined to admit into evidence the affidavit and report of Mr WW. That being so, the wife did not rely on an affidavit and report of Ms VV dated 26 November 2013, which addressed the same issues as those considered by Mr WW.
The Contributions of the Parties
At the commencement of the relationship the wife held few assets and had a credit card debt of approximately $5,000. She contended that she had an insurance policy which she cashed in for approximately $36,000 after the parties’ separation. As noted above, the only independent evidence in relation to this policy (exhibit 5) suggested a commencement date in 1991. In any event, the wife retained the whole of the funds which she received on the cashing in of this policy.
The husband, on the other hand, introduced substantial assets into the relationship. He owned the unencumbered property AA Street, Suburb BB; a motor vehicle and shares in the Byrd (Suburb R) Family companies. It is more probable than not that he also owned a share portfolio and had cash savings of some $50,000.
During the relationship the husband received substantial benefits from the Ms W Trusts. As outlined above, interest-free loans totalling $1,380,000 from the Ms W Trusts associated with each of the husband’s siblings enabled the parties to purchase the former matrimonial home E Street, Sydney Suburb 2 in 1991. The Trust associated with the husband advanced $320,000 at the time of the purchase of the Sydney Suburb 2 property. He received an identical sum of $320,000 when the Trust vested on his forty fifth birthday in 2008.
The parties carried out substantial renovations to the Sydney Suburb 2 property during the marriage. There was a dispute as to the extent of these renovations but it was common ground that the funds applied for that purpose came from the Byrd (Suburb R) Family companies. The husband deposed that a total of $374,565 was applied to the cost of these renovations between 1990 and 2007.
The wife took issue with that figure and the extent of the renovations described by the husband in his affidavit. In cross-examination, however, she said repeatedly that she “did not know” when asked the cost of various renovations. She made no contention that the money used to meet these costs came from any source other than the Byrd (Suburb R) Family companies.
According to the husband, funds from the Byrd (Suburb R) Family companies were also applied for the following purposes:
· purchase of a boat for $62,000 in 1995 and a contribution of $137,000 in addition to the trade-in value when the husband acquired his current vessel in 2007;
· purchase of vacant land at Suburb B for $395,000 in 2001 and $30,750 to meet the cost of furnishings for that property in 2005;
· deposits into the Summit Account applied to meet the children’s private school fees;
· $65,395 for the purchase of a European motor vehicle for use by the business partnership and the wife in 2003; and
· $48,000 for part of the purchase price of the Suburb H property and the cost of renovations.
The wife did not and could not assert that she made any direct contribution to the funds sourced from the Byrd (Suburb R) Family companies. These structures existed for many years before the parties commenced their relationship and they had no involvement in the operations of these entities at any time. The parties received the benefit of dividends paid by the Byrd (Suburb R) Family companies without any input into the generation of these funds. The husband’s unchallenged evidence was that he received dividends from the Byrd (Suburb R) Family companies in a net total amount of $1,882,149 during the marriage.
It was clear that, throughout the relationship, the wife was the primary homemaker and parent and the husband the major breadwinner. I am satisfied that the wife assisted the husband in his business and, in fact, he made a concession to that effect. I am satisfied also that the husband was involved with the care of the children to the extent permitted by the demands of his employment.
After the separation, the husband caused the partnership Byrd & Associates to pay to the wife a fortnightly salary of $1,900, although these payments were debited to her loan account. As outlined above, the husband caused the wife to receive from the partnership payments totalling at least $28,000 in 2008. Additionally, the wife withdrew $20,000 from the partnership account in May 2008. All of these sums were debited to the wife’s partnership loan account.
Between February 2008 and July 2010 the husband paid the outgoings in respect of the Suburb B Property, the wife’s medical insurance and gap costs, motor vehicle and mobile telephone expenses. He also paid various expenses associated with the children’s education.
The husband made significant contributions to his X Superannuation Fund after the parties’ separation. Exhibit 12 indicated that his superannuation policy had a value of $430,366 on 23 May 2008 and its agreed value at trial was $730,738. The husband thus increased the value of his superannuation benefit by some $300,400 after the separation.
In his final written submissions, counsel for the husband contended as follows:
It is submitted that this is a proper case for the assessment of contributions on a modified asset by asset approach and that superannuation not be included in the single pool of property but be considered by the Court pursuant to S.75(2)(f) having regard to the age of the parties and the disparate contributions made by the husband to his entitlements between the date of separation and the current time (compare the value of the husband entitlement by way of exhibit 12 with the value in the balance sheet).
I will include the parties’ respective superannuation benefits in the balance sheet but I am conscious of the husband’s significant post-separation contributions to his fund.
Counsel for the husband submitted that the contributions of the parties would best be assessed in the context of three categories of assets. He suggested that these three categories should be as follows:
1.property owned by the parties which has been derived from contributions from each of them in a joint and traditional sense
2.the remaining Suburb R assets being the husband’s interests in [U Pty Limited], his interest in the Isaver account and his interest in [V Pty Limited] with associated liabilities
3.those assets that originated solely from the husband’s initial financial contributions, or were enabled by, and maintained or improved by, the contributions made by or on his behalf either through [U Pty Limited] and/or the monies available from the [Ms W Trust].
Counsel for the husband submitted that the appropriate contributions findings are 50 per cent/50 per cent in relation to Category 1; 100 per cent to the husband and 0 per cent to the wife in respect of Category 2 and 75 per cent to the husband and 25 per cent to the wife with regard to Category 3.
Counsel for the wife impliedly contended that there should be a global approach to contribution. He submitted that the wife’s contributions should be found to be in the range of 40 per cent to 45 per cent of the net pool of assets and superannuation.
I see merit in the submission of counsel for the husband that a “modified asset-by-asset” analysis of contributions is appropriate in the circumstances of these proceedings. In my view, it is correct that the wife can assert no direct or indirect contribution to the Category 2 assets. There is no connection between these assets and liabilities and any activities of either of the parties during the marriage. The husband came into possession of these assets solely on account of his shareholding in long-existing Byrd family companies.
These assets and liabilities in proposed Category 2 are as follows:
Assets
1.
Husband’s iSaver Account
$786,494
2.
Husband’s Interest in U Pty Ltd
$1,206,341
3.
Husband’s Interest in V Pty Ltd
$409,503
4.
Husband’s Loan to V Pty Ltd
$1,375
$2,403,713
Liabilities
5.
Husband’s Loan From U Pty Ltd
$909,341
6.
Tax Payable On Liquidation of U Pty Ltd
$113,094
$1,022,435
Net
$1,381,278
I do not accept, however, that it is possible to separate the assets in proposed Categories 1 and 3 in the absolute sense suggested by counsel for the husband. He submitted that the assets and liabilities in Category 1 would be as follows:
Property
Value
6
Husband’s NAB account
$6,967
7
Husband’s NAB account
$2,753
9
Wife’s NAB account
$1,186
10
Wife’s ANZ cheque account
$71
11
Wife’s Macquarie Cash Management account
$952
12
Wife’s Commonwealth Bank account
$7
13
Wife’s Commonwealth Bank account
$15
19
Husband furniture and effects
$50,000
20
Wife’s furniture and effects
$50,000
21
Husband’s AMP Life Policy
$32,968
24
Byrd Sydney Investment Services Pty Limited
$482,119
25
Wife’s loan Byrd Sydney Investment Services Pty Limited
$1,223
26
Husband’s Sydney Financial Services
$120
29
Sydney Financial Planning
$2,267,901
30
Byrd & Associates
$22,777
31
Husband’s loan Byrd Family Trust
$25,276
Total:
$2,944,335
Liabilities
42
Wife’s loan account Byrd & Associates
$105,862
Total:
$2,838,473
Counsel for the husband submitted that the assets and liabilities in Category 3 would be as follows:
Property
Value
1
Suburb B
$2,000,000
2
R Street, Sydney Suburb 1
$2,650,000
3
I Street, Suburb H
$290,000
4
N Street, Sydney Suburb 2
$2,550,000
5
G Street, Suburb H
$650,000
14
Boat
$65,000
15
Husband’s European motor vehicle
$60,100
16
Husband’s Japanese motor vehicle
$18,050
17
Wife’s European motor vehicle
$15,000
18
Wife’s 4WD
$5,300
33
Wife’s Paid Legal Fees
$444,033
34
Husband’s Paid Legal Fees
$30,000
35
Waste partial distribution Sydney Suburb 2 by wife
$544,494
38
Wife’s loss on sale of Suburb B
$200,000
Total:
$9,521,977
Less Liabilities
37
Mortgage Suburb H
$177,007
Total:
$9,344,970
I do not accept that every asset listed above in the husband’s proposed Category 3 “originated solely from [his] initial financial contributions, or were enabled by, and maintained or improved by, the contributions made by or on his behalf either through [U Pty Ltd] and/or the monies available from the [Ms W Trust]”. The parties obtained a mortgage advance of $700,000 from the National Australia Bank to construct the Suburb B residence in about 2005. The husband maintained that repayments of principal and interest came from dividends sourced from the Byrd (Suburb R) Family companies. Tab 10 of exhibit RX01, however, contained two cheques totalling $38,500 drawn on accounts in the names of “[Byrd Sydney Investment Services]” and “[Byrd and Associates]”, which the husband described as “the deposit” on the construction of the residence. It may be that the husband deposited funds sourced from the Byrd (Suburb R) Family companies into these accounts but this money would then have become intermingled with the income of the financial planning business.
Similarly, the husband conceded in cross-examination that he drew cheques on the partnership account to reduce the Sydney Suburb 2 property mortgage debt. At best for the husband, therefore, these repayments could have come from dividends sourced from the Byrd (Suburb R) Family companies mingled with income from the financial planning business. The wife worked in that business and/o fulfilled the role of primary homemaker and parent at all relevant times.
When the husband purchased a European motor vehicle in October 2003, part of the funds came from a trade-in of an existing car and finance of $37,000. Accordingly, the acquisition of this vehicle cannot be attributed “solely” to funds derived from the Byrd (Suburb R) family companies or the Ms W Trust.
The purchase of the Suburb H property in 2006 was funded largely by a mortgage advance from the National Australia Bank. Money derived from the Byrd (Suburb R) Family companies accounted for only about 11 per cent of the purchase price. The value of the property is now $90,000 in excess of the purchase price and the mortgage debt has been reduced by some $13,000.
These considerations illustrate my reasons for rejecting the submission on behalf of the husband in respect of the assets in his proposed Category 3. At best for the husband, there was intermingling of funds sourced from the Byrd (Suburb R) Family companies with income from the financial planning business, at a time when the wife worked with the husband and fulfilled the role of primary homemaker and parent.
Accordingly, I will adopt a “modified asset-by-asset approach” but that will be achieved by consideration of contributions in relation to the husband’s proposed Category 2 independently of the remaining assets and liabilities. I accept the submission on behalf of the husband that the wife made no direct or indirect contribution to the assets in his proposed Category 2.
The remaining assets and liabilities are thus as set out below:
Assets: Non Superannuation
1.
Suburb B Property (W)
$2,000,000
2.
R Street, Sydney Suburb 1 (W)
$2,650,000
3.
I Street, Suburb H (H)
$290,000
4.
N Street, Sydney Suburb 2 (H)
$2,550,000
5.
G Street, Suburb H (H)
$650,000
6.
Boat (H)
$65,000
7.
European Motor Vehicle (H)
$60,100
8.
Japanese Motor Vehicle (H)
$18,050
9.
4WD Vehicle (W)
$5,300
10.
European Motor Vehicle (W)
$15,000
11.
National Australia Bank Account (H)
$6,967
12.
National Australia Bank Account (H)
$2,753
13.
National Australia Bank Account (W)
$1,186
14.
ANZ Bank Account (W)
$71
15.
Macquarie Cash Management Account (W)
$952
16.
Commonwealth Bank Account (W)
$7
17.
Commonwealth Bank Account (W)
$15
18.
Furniture and Effects (H)
$50,000
19.
Furniture and Effects (W)
$50,000
20.
AMP Life Policy (H)
$32,968
21.
Byrd Sydney Investment Services (H)
$482,119
22.
Loan to WB Sydney Investment Services (W)
$1,223
23.
Sydney City Financial Services (H)
$120
24.
Sydney Financial Planning (H)
$2,267,901
25.
Byrd and Associates (H)
$22,777
26.
Loan To Byrd Family Trust (H)
$25,276
27
KK Pty Ltd (W)
$160,000
$11,407,785
Superannuation
28.
X Superannuation Fund Policy (H)
$730,738
29.
MLC Navigator Superannuation Fund (W)
$185,935
$916,673
$12,324,458
Liabilities
29.
Loan Account With Byrd And Associates (W)
$105,862
30.
Mortgage on I Street, Suburb H
$177,000
$282,862
Net
$12,041,596
There can be no doubt that the husband’s initial contributions, the interest-free loan of $1,700,000 from entities associated with his family, and the sum of $1,882,149 in dividends from the Byrd (Suburb R) Family companies played a significant role in the accumulation of the parties’ current wealth. On the other hand, the parties took on traditional and complementary roles as principal breadwinner and primary homemaker and parent during their nineteen year relationship. The wife assisted the husband in his business endeavours and he participated in the care of the parties’ three children, to the extent permitted by his employment commitments.
Additionally, the value of the Sydney Suburb 2 property increased from the purchase price of $2,000,000 in 1991 to the sale price of $8,000,000 in 2009. The renovations funded by the Byrd’s Suburb R Family companies, in my view, would have been insufficient to account for such a very large increase in the value of this asset. The husband’s evidence, which the wife disputed unconvincingly, was that the renovations took place over a period of eighteen years at a total cost of $374,565. The wife was unchallenged on her evidence that she provided physical assistance with these renovations. This significant increase in the value of the parties’ principal asset occurred during a period of seventeen years when they occupied the property as their family home.
Having regard to all of these considerations, there must be an imbalance in contribution in favour of the husband, in respect of the net assets and superannuation listed in paragraph 111 above, both as at the date of separation and trial. Additionally, the husband increased the value of his superannuation benefit from $430,366 on 23 May 2008 to the present figure of $730,738. I find that the contributions of the parties should be assessed at 62 per cent to the husband and 38 per cent to the wife in respect of the Category 1 assets and superannuation.
In commercial terms, the result of these contribution findings is as follows:
Category 1
Net assets and superannuation
$12,041,596
Husband
62 per cent
$7,465,790
Wife
38 per cent
$4,575,806
Category 2
Net assets
$1,381,278
Husband
100 per cent
$1,381,278
Wife
0 per cent
-
Husband’s Total:
$7,465,790
$1,381,278
$8,847,068
Wife’s Total:
$4,575,806
Category 1 & 2 Total $13,422,874
On a global basis, the husband’s contributions amount of 65 per cent of the net pool and those of the wife to 35 per cent.
Section 75(2) Factors
The parties are aged in their late forties or early fifties and each enjoy good health. There is thus no physical or mental impediment to the capacity of each of them to engage in gainful employment.
Counsel for the husband properly conceded that his income earning capacity is superior to that of the wife. His taxable income in 2013 was $600,022 (see tax return annexed to his Financial Statement of 12 November 2013). The husband’s taxable income in 2010, 2011 and 2012 was $934,624, $841,061 and $631,778 respectively.
The position in relation to the wife’s future income earning capacity was blurred by her failure to provide all documents requested by the husband’s solicitors and Mr P in relation to the business conducted by KK Pty Ltd. She exhibited to her affidavit financial statements for KK Pty Ltd for the years ended 2012 and 2013. The business known as KK Cafe traded at losses of $74,190 and $91,624 for each of those years respectively. The business expenses, however, included “salaries” of $92,363 in 2012 and $94,871 in 2013. The wife works in the café business and may well have received part of these amounts as salary.
In her Financial Statement of 18 November 2013 the wife deposed to a total gross weekly income of $1,133, which consisted of $11 in bank interest, rental of $860, Family Tax Benefit of $39 and child support of $223. The wife included in her Financial Statement no payment from KK Pty Ltd as a component of her weekly income.
L currently spends time with each of the parties. I assume, in the absence of evidence to the contrary, that both the husband and wife will continue to participate in his care.
The husband will receive a franked taxable dividend of $720,369 on completion of the liquidation of U Pty Limited. That payment will result in a taxation liability which his accountants estimate at $113,094.
The husband has a superannuation fund of $730,738 and the opportunity to increase the value of his benefit commensurately with his high income earning capacity. The wife’s fund has a balance of $185,935 and, unless there is an improvement in the financial fortunes of the KK Cafe, she has little realistic prospect of a significant increase in the value of her benefit.
The wife has a liability in excess of $1,000,000 due to her post-separation borrowing from the Commonwealth Bank. She alone was responsible for the creation of this debt. I do not propose to make any adjustment in favour of the wife on account of this liability for that reason.
I am satisfied, and I find, that section 75(2) factors favour the wife. The husband made a concession to that effect and proposed that the wife receive a fixed sum of $500,000 on account of section 75(2) factors. The wife sought an adjustment in her favour of 5 per cent to 10 per cent of the net pool.
Having regard to all of these matters, I find that there should be an adjustment of 5 per cent of the net pool of assets and superannuation in favour of the wife on account of section 75(2) factors.
Result
The result is that I find that the net pool of assets and superannuation, as set out in paragraphs 102 and 111 above and totalling $13,422,874, should be divided in the ratio of 60 per cent to the husband and 40 per cent to the wife. These percentages equate to $8,053,724 and $5,369,150 of the net pool for the husband and wife respectively.
The husband will take or retain the following assets and superannuation:
1.
I Street, Suburb H
$290,000
2.
N Street, Sydney Suburb 2
$2,550,000
3.
G Street, Suburb H
$650,000
4.
Boat
$65,000
5.
European Motor Vehicle
$60,100
6.
Japanese Motor Vehicle
$18,050
7.
NAB Account
$6,967
8.
NAB Account
$2,753
9.
Furniture and Effects
$50,000
10.
AMP Life Endowment Policy
$32,968
11.
Byrd Sydney Investment Services Pty Limited
$482,119
12.
Sydney City Financial Services
$120
13.
Sydney Financial Planning
$2,267,901
14.
Byrd and Associates
$22,777
15.
Loan to Byrd Family Trust
$25,276
16.
X Superannuation Policy
$730,738
17.
iSaver Account
$786,496
18.
U Pty Limited
$1,206,341
19.
Interest in V Pty Limited
$409,503
20.
Loan to V Pty Limited
$1,375
$9,658,484
Less Liabilities:
21.
Mortgage on G Street property
$177,000
22.
Loan from U Pty Limited
$909,341
23.
Tax on Liquidation of U Pty Limited
$113,094
$1,199,435
The husband will thus hold net assets and superannuation to the value of $8,459,049, which exceeds his entitlement by $405,325.
The wife will take or retain the following assets and superannuation:
1.
Suburb B Property
$2,000,000
2.
R Street, Sydney Suburb 1
$2,650,000
3.
4WD Motor Vehicle
$5,300
4.
European Motor Vehicle
$15,000
5.
NAB Account
$1,186
6.
ANZ Account
$71
7.
Macquarie Cash Management Account
$952
8.
Commonwealth Bank Account
$15
9.
Commonwealth Bank Account
$7
10.
Furniture and Effects
$50,000
11.
Loan to Byrd Sydney Investment Services Pty Limited
$1,223
12.
MLC Superannuation Fund
$185,935
13.
KK Pty Ltd
$160,000
$5,069,689
Less liabilities:
14.
Loan Account with Byrd and Associates
$105,862
The wife will thus hold net assets and superannuation to the value of $4,963,827 which falls short of her entitlement by $405,323.
It is thus necessary for the husband to pay to the wife a sum of $405,323 so as to achieve an outcome which I regard as just and equitable in all of the circumstances. I will round off that figure to $405,000.
I certify that the preceding one hundred and twenty nine (129) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on July 2014
See attached Annexure A – Joint Balance Sheet (4 pages)
Associate:
Date: 9 July 2014
Key Legal Topics
Areas of Law
-
Family Law
-
Property Law
Legal Concepts
-
Remedies
-
Statutory Construction
0