Calder & Calder (No. 2)
[2014] FamCA 1106
•11 December 2014
FAMILY COURT OF AUSTRALIA
| CALDER & CALDER (NO. 2) | [2014] FamCA 1106 |
| FAMILY LAW – PROPERTY – Final Orders – marriage of 33 years duration – farming property – assets in excess of $13,000,000 – where husband made significant initial contribution – husband asserts acquisition of partnership property can be traced to his pre-marriage assets – contributions made by husband’s mother – where wife made significant homemaker contribution – wife asserts notional add backs in excess of $3,500,000 – adjustment in favour of the husband in recognition of initial contribution – orders made for a distribution of property 55/45 in favour of the husband with an equal division of partnership plant, livestock and equipment. |
| Family Law Act 1975 (Cth) s 75(2), 79 |
| Bevan & Bevan (2013) FLC 93-545 Bremner & Bremner (1995) FLC 92-560 Brown & Brown (2005) 33 Fam LR 245 Bulleen & Bulleen (2010) 43 Fam LR 489 Chorn & Hopkins (2004) FLC 93-204 Farnell & Farnell (1996) FLC 92-681 Hickey & Hickey (2003) FLC 93-143 Kessey & Kessey (1994) FLC 92-495 Kowaliw & Kowaliw (1981) FLC 91-092 La Costa & La Costa (2008) 38 Fam LR 412; [2007] FamCA 1176 M & M [1988] FamCA 42 Money & Money (1994) FLC 92-485 Petruski & Balewa (2013) 49 Fam LR 116 Pierce & Pierce (1999) FLC 92-844 Quaresmini & Quaresmini [1999] FamCA 1314 Stanford v Stanford (2012) 247 CLR 108 Todd & Todd [2014] FamCA 101 Truman & Truman [2013] FamCA 765 Watson & Ling [2013] FamCA 57 Woolands & Todd (2005) FLC 93-217 Wunderwald & Wunderwald (1992) FLC 92-315 |
| APPLICANT: | Ms Calder |
| RESPONDENT: | Mr Calder |
| FILE NUMBER: | MLC | 9627 | of | 2009 |
| DATE DELIVERED: | 11 December 2014 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 26, 27, 28, 29 November 2013, 2,3, and 4 December 2013, 17 and 18 July 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Geddes QC with Mr Wilson |
| SOLICITOR FOR THE APPLICANT: | Kennedy Partners |
| COUNSEL FOR THE RESPONDENT: | Mr Brown QC with Ms Williams |
| SOLICITOR FOR THE RESPONDENT: | Nedovic Lawyers |
Orders
In full and final settlement of any claim that either party may have against the other by way of settlement of property or variation of or alteration of their separate interests in property pursuant to Section 79 of the Family Law Act1975 (Cth):-
(a)That within sixty (60) days of the date of this order, the husband do pay or cause to be paid to the trust account of Kennedy Partners for and on behalf of the wife the sum of EIGHT HUNDRED AND TWENTY SIX THOUSAND FOUR HUNDRED AND EIGHTY FOUR DOLLARS ($826,484) (“the settlement of sum”);
(b)Contemporaneously with the payment of the said settlement sum, the husband and wife do all things necessary both personally and in their capacity as directors and shareholders of X Pty Ltd and Y Pty Ltd to transfer to the husband absolutely the wife’s right, title and interest in and to the farming property known as “Property A” situate at CH in the State of Victoria;
(c)The parties do all things necessary to:-
(i)cause the Calder Partnership 2008 (trading as Calder and Co), the Calder Farming Trust and the Calder Family Trust (“the farming partnership”) to be dissolved as at 31 December 2014 NOTING that the farming partnership livestock, plant and equipment is already divided pursuant to these orders AND that each of the parties entitlement to income from the farming partnership shall conclude as at the date of dissolution;
(ii)Transfer to the husband absolutely all livestock owned by the farming partnership and all other livestock currently located at Property A and/or the husband’s mother’s land and/or Property G;
(iii)Transfer to the husband absolutely all plant and equipment owned by the farming partnership and all other plant and equipment currently located at Property A and/or the husband’s mother’s land and/or Property G;
(iv)Transfer to the wife absolutely all livestock owned by the farming partnership and all other livestock currently located at Property C;
(v)Transfer to the wife absolutely all plant and equipment owned by the farming partnership and all other plant and equipment currently located at Property C;
(vi)Forthwith instruct the accountant for Calder and Co farming partnership to prepare and lodge taxation returns for the partnership for the financial years 2013, 2014 and for 2015 as at 31 December 2014;
(d)For the purposes of these orders the parties do all things necessary and sign all such documents required to make an election pursuant to Section 70 of the Income Tax Assessment Act 1997 (Cth);
(e)That the parties do all that is required to give effect to paragraphs 6 (a) and 6 (b) of the orders made 16 August 2013 in relation to the J Superannuation Fund, but that thereafter each of the parties will retain all superannuation benefit in the J Superannuation Fund belonging to each of them or to which they are entitled;
(f)That the husband do all things necessary to provide a release of the wife from all or any liability in respect of the mortgage in favour of the National Australia Bank (“NAB”) which encumbers Property A and which secures the loan facility for the balance of the purchase price of Property A together with the purchase of plant and equipment and the overdraft facility of the farming partnership and to indemnify the wife against all liability arising from any encumbrance affecting the plant and equipment as transferred to the husband pursuant to these orders;
(g)That the wife do all things necessary to transfer to the husband in accordance with his direction, all shareholding in Y Pty Ltd, X Pty Ltd and DS (1) Limited, including but not limited to:-
(i)Resigning as a director from all offices held by her in the companies;
(ii)Relinquish any power she may have pursuant to the Deeds of Settlement of the Calder Farming Trust and Calder Family Trust;
(iii)Relinquish any rights or entitlements which she may have in relation to the companies and the trusts including any monies standing to her credit in the accounts of the companies or the trusts;
(iv)Assign to the husband all her right, title and interest in the farming partnership.
(h)That the parties do all things necessary to request the trustees to vest the J Trust and to distribute equally between the husband and the wife all funds in any bank account standing to the credit of the trust;
(i)That each of the husband and the wife be responsible for and indemnify the other in relation to their personal income tax liabilities for the financial years ended 2012, 2013, 2014 and 2015 and subsequent years and to do all things necessary to prepare and lodge their respective income tax returns at their separate expense;
(j)That the wife be liable for and indemnify the husband against all liabilities incurred by her either personally or in the name of F Pty Ltd of any nature whatsoever arising from the wife’s ownership and/or occupation of Property C;
(k)That each party otherwise retain to the exclusion of the other party all real and personal assets in their respective ownership, possession and control;
(l)That each party shall be otherwise solely responsible for all of their individual personal liabilities and liabilities encumbering any property which they retain or is to be received by them and indemnify the other in relation to such liabilities;
(m)That each party will do all such things and sign all such documents as may be required to give effect to these orders PROVIDED THAT if the parties or either of them shall refuse or neglect to execute any transfer or other documentation pursuant to the terms of these orders within seven (7) days after the same shall have been tendered to him or her by or on behalf of the other party for that purpose THEN and in such case a Registrar of the Family Court of Australia upon proof by affidavit of such refusal or neglect is hereby appointed to execute and if in his/her opinion it shall be necessary so to do to settle the same and to do all such other acts and things and to execute such other documents as may be necessary to give full force and effect thereto.
(n) The proceedings be certified fit for counsel and senior counsel.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Calder & Calder 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 |
FILE NUMBER: MLC 9627 of 2009
| Ms Calder |
Applicant
And
| Mr Calder |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
The proceedings are for settlement of matrimonial property concerning a period of marriage of 34 years. Ms Calder (“the wife”) commenced the proceedings by the filing of an Initiating Application on 27 October 2009. She seeks orders for settlement of property pursuant to Part VIII of the Family Law Act1975 (Cth) (“the Act”). Mr Calder (“the husband”) opposes the orders sought by the wife in his Response filed 18 December 2009.
By Further Further Amended Initiating Application filed 25 October 2013, the wife seeks orders which in summary would result in the following outcome:-
·That the wife retain for her sole use and benefit the property known as “Property C, Town H” (being the whole of the land described in Certificates of Title Volume … Folio … and Volume … Folio … (“Property C”).
·That the farming equipment, plant and machinery owned by Calder and Co Farming Partnership, the Calder Family Trust and the Calder Family Trust (“the farming partnership”) be divided equally between the parties pursuant to certain lists as prepared by the wife.
·That the livestock of the farming partnership be divided equally between the parties as provided for in lists prepared by the wife.
·That each of the parties retain their respective superannuation entitlements with the J Superannuation Fund.
·That taking into account the property and superannuation entitlements of each of the parties including assets and resources held by each of them jointly or severally inclusive of the J Trust and the value attributed to the husband’s shareholding or former shareholding with Calder Limited and all sums notionally added back into the matrimonial asset pool, but excluding the husband’s interest as primary beneficiary within the K Trust, the husband shall pay to the wife a settlement sum representing 50 per cent of the asset pool less property that she retains.
·That upon the payment of the settlement sum, the wife will transfer her interest in the farm property known as “Property A”, CH (“Property A”).
·Save and except for the release of the wife as a guarantor for all leases, loans and debts relating to the property or the farming interests of the parties and that the husband pay to the Australian Taxation Office any income tax owed by the wife for the financial years ending 30 June 2012, 2013 and 2014, each of the husband and wife are responsible for their separate and personal liabilities.
·The wife will have no further claim in respect of the husband’s interests in Calder Limited and associated entities, the JJ Trust, the K Trust and his Scottish and National Australia Bank accounts.
·The husband will have no further interest in the wife’s National Australia Bank and Westpac accounts and her interest in F Pty Ltd.
By Response to Further Further Amended Initiating Application filed 8 November 2013, the husband seeks the following orders:-
(1)Paragraphs 1 – 15 inclusive of the Further Further Amended Initiating Application be dismissed.
(2)That by way of final property settlement, the husband be entitled to retain for his own use and benefit absolutely 60 per cent of the matrimonial asset pool including the farm property known as “Property A” together with all livestock, plant and machinery thereon and the wife be entitled as to the remaining 40 per cent of the matrimonial asset pool including the farm property known as “Property C” together with all livestock, plant and machinery thereon.
DOCUMENTS RELIED UPON
The wife relies upon the following documents:-
(1)Further Further Amended Initiating Application filed 25 October 2013
(2)Trial Affidavit of wife filed 25 October 2013
(3)Affidavit of wife in reply filed 19 November 2013
(4)Financial Statement of wife filed 25 October 2013
(5)Affidavit of Mr S filed 7 March 2012
(6)Affidavit of Ms PY filed 25 June 2012
(7)Affidavit of Mrs DD filed 25 June 2012
(8)Affidavit of Mr DD filed 25 June 2012
(9)Affidavit of Mr I filed 14 August 2013
(10)Affidavit of Mr JA (single expert) filed 3 April 2012
(11)Affidavit of Mr N (single expert) filed 3 April 2012
(12)Affidavit of Mr SS sworn 21 November 2013
(13)Affidavit of Ms W filed 19 November 2013
Additionally, I was assisted by an Amended Outline of Case document dated 25 November 2013 and written submissions dated 11 August 2014.
The husband relied upon the following documents:-
(1)Response to Further Further Amended Initiating Application filed 8 November 2013
(2)Financial Statement of husband filed 8 November 2013
(3)Financial Statement of husband filed 8 November 2013
(4)Trial Affidavit of husband filed 8 November 2013
(5)Affidavit of Ms J Calder filed 22 August 2011
(6)Affidavit of Ms J Calder filed 12 July 2012
(7)Affidavit of Mr ON filed 20 November 2013
(8)Affidavit of Mr L filed 23 May 2013
(9)Affidavit of Mr SH filed 8 June 2012
(10)Affidavit of Mr JC filed 27 June 2012
(11)Affidavit of Mr AC filed 27 June 2012
(12)Affidavit of Mr V filed 12 June 2012
The husband relied upon a Summary of Argument document dated 22 November 2013 including a Minute of the final orders sought. Whilst providing more detail, the husband seeks an overall division of the assets as between the parties in the following proportions, namely 60 per cent to the husband and 40 per cent to the wife. Written submissions were presented on behalf of the husband in the form of a document dated 1 August 2014 and a reply dated 11 August 2014 in response to the wife’s written submissions.
GLOSSARY OF TERMS
Property A – farming property situate at CH. Husband and wife are the registered proprietors as tenants in common in equal shares.
Property C – farming property at H. The wife is the registered proprietor of the property pursuant to a consent order made by Justice Dessau on 30 March 2012.
Calder & Co – farming partnership. The partnership comprises the husband and wife each as to 25 per cent and Y Pty Ltd as trustees for the Calder Farming Trust as to the remaining 50 per cent.
J Superannuation Fund – the husband and the wife are trustees and members of the super fund.
X Pty Ltd as trustee for the Calder Family Trust. A discretionary family trust with the husband and wife as directors of the trustee company.
F Pty Ltd – business operated by wife post separation.
F Superannuation Fund – super fund set up by wife post separation.
Calder Limited – a Scottish company in which the husband held shares.
DS Farm – a farm in Scotland in which the husband acquired tenants’ rights.
K Farm – a farming property located in Scotland and purchased by Calder Limited.
BD Farm – this property is adjacent to K Farm and was sold to Calder Farming Partnership.
DS (2) Limited – Calder Farming Partnership transfers a portion of BD Farm to DS (2) Limited, which later transferred its interest to DS(1) Limited.
CHRONOLOGY
1923Date of birth of Ms J Calder (husband’s mother).
1947Date of birth of husband in Scotland.
1953Date of birth of wife in India.
1956Calder Limited established by husband’s father.
196910,000 shares in Calder Limited gifted to husband by his father. Husband appointed as a company director.
1970Calder Limited acquires DS Farm in Scotland. Husband acquires tenants’ rights at the farm. Property purchased for £90,283.
1973Husband and wife meet.
1973Husband is allocated a further 2,000 shares in Calder Pty Ltd.
1975The parties marry in Scotland.
1975-1976Husband and wife travel to Australia.
1976-1979Husband and wife reside at various times in Scotland.
Mid 1977Wife joins farming partnership of Calder and Co.
1977Date of birth of Ms MC.
Oct 77 –
July 79Portions of DS Farm sold to Z Company in three transactions:-
·… 1977 – 20- 30 acre parcels for GBP £51,700.
·… 1978 – unspecified acreage for GBP £18,325.
·… 1979 – 200 acres for GBP £560,250.
Proceeds of sale for each transaction transferred to the offshore company namely, DS (2) Ltd.
Late 1978 BD Farm transfers Calder Farming Partnership from Z Company. Contemporaneously, one half of BD Farm transferred/sold to Calder Limited.
Early 1979Husband and wife migrate to Australia and reside in Perth. Parties eventually purchase farming property in south east Western Australia.
April 1979DS (2) Limited is incorporated and husband transfers remaining portion of DS to this company.
April 1979Second offshore company incorporated namely, DS (1) Ltd.
1979Date of birth of Mr JC.
Late 1979Husband and wife purchase C property in Victoria for $660,000. DS (2) Limited advances $706,385 to fund purchase price and stamp duty. Calder Family Trust established with X Pty Ltd as trustee.
Feb 80The husband and wife commence living at Property C.
19.2.80Husband and wife transfer part of BD Farm to DS (2) Limited. The J Trust holds 100 per cent of the shares.
Mar 80Husband and wife commence living at Property C.
1980Husband and wife sell south east WA farming property.
28.5.80Parties transfer remaining one half of BD Farm to Calder Limited (husband’s father).
1981Mr AC born.
7.12.83One half portion of BD Farm held by Ds (2) Limited transferred to Ds (1) Limited.
1984Husband and wife purchase investment property in Far North Queensland for about $80,000.
Late 1984Date of birth of Ms LC.
Approx 1985 Parties purchase office in Perth by Calder and Co for $36,000.
3.6.856.375 acres of DS Farm sold … for GBP 75,000. Funds retained by DS (1) Limited.
9.6.864.458 acres of DS Farm sold … for GBP 5,000.
16.6.8612.2 acres of DS Farm sold … for GBP 4,000.
1989Husband and wife sell XX Farm and Queensland property. XX Farm sold for $400,000.
13.3.901.442 acres of BD Farm sold … for GBP 94,20 0.
1990Husband and wife purchase a farming property “ER” near Town GH for $2,400,000.
·$1,686,976 of the purchase price supplied by DS (1) Limited
·Proceeds of sale of XX, Perth and Queensland properties also applied to purchase price.
11.10.90Small plot of BD Farm sold … for GBP 700 and small plot sold … for GBP 3,500.
1986Husband’s father dies.
1996-97Husband and wife receive $70,000 from Calder Limited after severe flooding on the ER property. Husband’s mother gifted $130,000 to farming partnership after GH flood.
1999Husband’s mother purchases K Farm near Town GH in north east NSW for $800,000.
2002Parties establish self-managed super fund known as “J Superannuation Fund”.
5.8.2002Husband and wife acquire Property A. According to the wife, the purchase price was $6,700,000 with vendor finance to Mr and Mrs NN of $3,000,000. Husband says that the purchase price of Property A was $4,058,639, with his mother purchasing 906 acres for $864,881 and additional stock and equipment of $831,000.
5.8.2002$300,000 provided by DS (1) Limited to husband to partially fund deposit, with an advance from the husband’s mother of $273,000.
2003Wife receives $50,000 by way of inheritance upon the death of her mother, with the funds paid into the partnership account.
2004Husband and wife repay husband’s mother $86,490 transferred to her to partially repay monies lent for the Property A deposit.
4.2.2004Husband’s mother establishes the K Trust with the husband, the husband’s mother and T Firm (solicitors) as trustees. Husband’s mother transfers shares in Calder Limited (owner of two thirds of K Farm, CT Farm, DS Property, DS Farm and one half of BD Farm) to the K Trust.
2004-2005$51,588 transferred to husband’s mother for part repayment of Property A deposit payment.
20.4.2004 – 10.6.2005
$500,000 advanced by DS (1) Limited towards purchase price of Property A.
2006Calder Limited acquires the RR Farm property with Mr JC.
June 2006ST Limited becomes trustee of the J Trust. This entity is managed by T Firm solicitors.
2007Outstanding debt to Mr and Mrs NN is discharged.
6.12.07Calder Limited purchases remaining half of BD Farm (50 acres) for GBP 650,000 from DS (1) Limited.
30.6.2008Y Pty Ltd incorporated. Y Pty Ltd holds a 50 per cent share in the farming partnership with the husband and wife each holding a 25 per cent share.
Aug 2008Husband and wife separate but under the same roof.
31.12.08Wife moves out of former matrimonial home to Property C.
Mar-
May 2009Parties unsuccessfully attempt a reconciliation.
27.10.2009Wife initiates proceedings.
Nov 2009Distributions made to husband and wife’s children from the J Trust of $250,000 each. Wife asserts a larger sum distributed.
20.4.2010Husband is removed as a director of Calder Limited ostensibly by his mother.
June 2010Husband seeks to dissolve farming partnership.
29.6.2010Consent Order made by Cronin J:-
·Husband restrained from dissolving farming partnership.
·Further orders made for discovery.
·Husband to be solely responsible for farming operations at Property A, Property C and the farming partnership.
18.9.2010Husband and wife obtain a divorce order.
8.11.2010Consent Order by Cronin J:-
·Valuation generally but including husband’s interest generally in Calder Limited.
·Discovery.
·Advance of $400,000 from J Trust to each of the husband and wife.
7.12.2010Mr JC purchases sheep for $27,000.
Jan 2011Son receives canola from farming partnership to the value of $70,796. Dispute between the parties as to the extent that this sum is offset by an alleged debt owed to JC by the partnership.
Mar 2011RR property sold by son and Calder Limited.
19.4.2011Orders by consent providing for the husband to receive $3,000 per month from the partnership and the wife to receive $5,500 per month.
27.6.2011Husband’s shares in Calder Limited compulsorily acquired.
26.7.2011Husband received GBP 200,000 from Calder Limited for his shares.
25.8.2011Advance from J Trust of $200,000 to each of the husband and the wife.
30.3.2012Consent order by Dessau J:-
·Trial vacated and relisted.
·Property C transferred unencumbered to the wife providing that the husband continues his involvement in stock management until 7 July 2012.
·Wife at liberty to crop and receive income from cropping Property C.
30.4.2012Husband vacates Property C.
April 2012Wife incorporates F Pty Ltd to conduct her farming business at Property C.
May 2012Wife alleges that husband removes machinery and other equipment from Property C and transports 674 lambs to southern NSW without her knowledge or consent.
May 2012Husband sends 179 calf heifers to another property for agistment without wife’s knowledge.
8.7.2012Wife takes over farming operations at Property C pursuant to orders made 30 March 2012.
17.7.2012Second trial date vacated.
1.10.2012DS (1) Limited dissolved.
Late 2012Wife sells partnership livestock (lambs and cattle) and retains proceeds from sale of wool.
Dec 2012-
Feb 2013J Trust wound up. Wife receives $305,684 and husband receives $266,184.
25.11.13Matter listed for trial.
Oct – Nov
2013Husband transfers $60,000 from his superannuation entitlements to farming partnership overdraft account.
BACKGROUND
The husband is presently aged 67 years and the wife 61 years. The parties were married in 1975 and separated in December 2008 representing a period of about 33 years of cohabitation. There was an unsuccessful attempt at reconciliation but ultimately the parties finally and physically separated on 31 May 2009.
There are four adult children none of whom are dependent financially or otherwise on the parties. Each of the parties has re-partnered.
At the time of marriage, the wife was a senior health professional and the husband was a tenant farmer of DS Farm, holding 12,000 shares in Calder Limited which owned the farming property.
The tenancy rights acquired by the husband are a matter of some contention. The parties agree that the consideration was £132,000, but the wife disputes the husband’s contention that the only consideration was 7,000 shares in Calder Limited valued at £4 per share. According to the husband, the balance of the purchase price was a gift but in any event remains unpaid. The wife says that she specifically recalls that the purchase was a “genuine purchase”.
In 1977, Z Company entered into negotiations to purchase farming land in the area of DS and K Farms. The husband’s father sold a portion of DS, as did the husband in respect of three portions of his holding in the farm.
Between October 1977 and June 1979 the husband received a total of £630,275. The proceeds of sale were deposited into an account held by an offshore company known as “DS (2) Limited”.
Whilst the history of acquisition by Z Company of the portions of DS Farm is not disputed, the wife asserts that the transaction either came about or was significantly assisted by a social relationship that the wife had with an employee of Z Company. Not surprisingly, the husband denies that the purchase was prompted by anything other than clear commercial justification.
The wife says that as a result of the sale to Z Comnpany, only a small proportion of the original farm remained described as the “DS Property” which was transferred to the trustee of the J Trust in 1979. The husband states that the trust was not set up until 1993.
It appears that acting on tax advice, the remaining portions of DS were transferred to DS (2) Limited and then in 1983, a further transfer to DS (1) Limited. Between 1985 and 1986, this second offshore company transferred a further three tranches of the farm to three separate purchasers with the total purchase price of £480,000 being retained by DS (1) Limited. The final portion of the farm namely, DS Property, was sold to the husband’s mother Ms J Calder in December 2007 for $182,500. This money was also retained by the offshore company.
The farming partnership entity namely “Calder and Co” purchased 100 acres of farming property from Z Company in 1978. The property was known as “BD Farm” This property was immediately adjacent to K Farm and following an agreement with Calder Limited for the purchase of 50 acres for an amount that approximated the total sale price of 100 acres, the farming partnership effectively received the remaining 50 acres for no consideration.
In 1990, three portions of BD Farm were sold for a total sum of £98,400.
The final 50 acres was transferred to Calder Limited for £650,000. Those monies were held and retained by DS (1) Limited.
The parties migrated to Australia in early 1979. In that year, a farm in south east Western Australia was purchased. The husband contends that the farming property was purchased by his father’s company namely Calder Limited and agrees that ultimately it was sold at a profit. Whilst the husband admits that he assisted his father in the negotiations which resulted in an ultimate sale, the wife contends that the purchase of the property was effectively a joint venture between the parties and Calder Limited. “Property C” was purchased at auction in late 1979 for about $760,000 (including stock) plus stamp duty and other charges. The purchase price was entirely funded from a distribution of $706,385 from DS (2) Limited. The stock component being $100,000 was funded by way of a private mortgage. The family took up residence on the property in early 1980.
In 1990, the parties purchased a property in Town GH in north east New South Wales known as “ER”. The property was purchased for about $2,400,000. According to the husband, the purchase price was funded by a distribution from DS (1) Limited of $1,686,976 and the proceeds from the sale of a farm purchased by the parties in 1982 at XX, Victoria, the far north Queensland unit, an office in Perth and some shares. The parties operated both farms, but it seems that the farming business operating ER was financially supported by the more profitable enterprise at Property C.
In about 2002, the family made the decision to return to Victoria. It would appear uncontroversial that in late 2002, the ER farm was sold and Property A was purchased. The parties are in dispute as to the purchase price and the method and manner by which it was raised. The husband asserts that Property A comprised a number of titles and that the parties as tenants in common in equal shares purchased all but four titles, which were purchased by the husband’s mother Ms J Calder.
According to the husband, the portion of Property A purchased by the parties was $4,058,639 and that portion purchased by his mother was $864,881. There was plant and equipment together with stock in the total sum of $831,000.
The contract of sale provided for vendor finance of 40 per cent of the purchase price to be repaid subject to interest at the end of a five year period.
The wife refers to the purchase price of Property A in the sum of $6,700,000, with vendor finance of $300,000. It is not suggested by the wife that the husband’s mother was integral to the purchase of or the viability of Property A.
The evidence of the husband sets out the financial arrangements necessary to effect the purchase of Property A but ultimately, he summarises the effect of his pre-marriage assets that he says can be directly traced to the purchase of Property A namely:-
·Pre-marriage asset $2,319,592
·DS (1) Limited $ 880,000
·Ms J Calder $ 273,000
Whilst there is no agreement as to the extent of the farming land held by the husband’s mother adjacent to Property A, it is conceded that her land was used to farm crops and graze partnership livestock. The weight that should be given to that contention is sought to be offset by the wife by highlighting the land management of the adjacent land by the partnership but also, to bring to account the arrangements that existed in respect of an acreage owned by the J Trust which comprised 50 acres of farming land, the cottage on BD Farm and the DS Property all used by Calder Limited but without any rental payment. The husband submits that rent was paid and the wife is in error in that contention.
In late 2007, BD Farm was sold to Calder Limited for £650,000 and DS Property to the husband’s mother for £182,500.
Following the breakdown of the marriage and the parties’ separation on 1 August 2008, the wife moved out of Property A on 31 December 2008.
Following separation, the wife worked as a health professional on a casual basis until about January 2010 when she says she largely ceased employment. The husband continued as a farmer and operated the farming partnership.
It soon became apparent that the wife sought to either remain involved or to seek involvement in the farming partnership which was resisted by the husband. This soon became a source of controversy between the parties and, on the wife’s instructions, proceedings were issued in this Court on 27 October 2009.
On 20 April 2010, the husband was removed as a director of Calder Limited. The advice in respect of same was under cover of correspondence from T Firm (Scottish lawyers) to the husband and then via his solicitors, advice was given to the wife.
Relevantly, by consent order made by Dessau J on 30 March 2012, Property C was transferred from its registered proprietor namely, X Pty Ltd, to the wife.
COURT PROCEEDINGS
Relevant Court Events
By Application in a Case filed 9 August 2011, the wife sought orders summarised as follows:-
·The joinder of Ms J Calder (second respondent), Calder Limited (a Scottish company) (third respondent), T (Trustees) Limited (a Scottish company) (fourth respondent) and Mr U (fifth respondent).
·An injunction restraining the husband from resigning or relinquishing any position as officer holder, shareholder, trustee, beneficiary or appointer in the following:-
(a)Calder Limited;
(b)K Trust;
(c)J Trust;
(d)Calder and Co;
(e)Y Pty Ltd and the Calder Family Trust;
(f)X Pty Ltd and the Calder Family Trust; and
(g)The J Superannuation Fund.
·That the husband be restrained from accessing any funds from the J Superannuation Fund.
·That the purported acquisition or transfer by the second and/or third respondents on or about 23 June 2011 of 8,000 shares held by the husband in the third respondent company be set aside.
·That the third party respondents are restrained from giving effect to the acquisition of the husband’s minority shareholding and from taking any steps in relation to K Trust that would see the husband’s interest and/or involvement diminished or extinguished.
·Orders that would enable experts, whether single experts or otherwise to inspect and value various properties in Scotland.
·The seeking of discovery from the second, third and fourth respondents.
The husband filed a Response to the Application on 22 August 2011 seeking that the orders sought by the wife be dismissed.
On 22 August 2011, a Response under protest was filed by the second, third, fourth and fifth respondents objecting to the jurisdiction of the Court and seeking that the wife’s Application in a Case in so far as it sought orders directed to the second to fifth respondents be dismissed.
The interim proceedings were resolved by a consent order made 25 August 2011 which provided for the following:-
·An Undertaking was given by the husband and second respondent that no steps would be taken to remove the husband as trustee or primary beneficiary of the K Trust and that they will do all things necessary not to remove the husband as a trustee or primary beneficiary.
·That the second and third respondents are joined to the proceedings.
·That the purported transfer and acquisition of the husband’s minority shareholding in Calder Limited be determined at trial.
·That the third party respondents are restrained from taking any action in relation to the K Trust which would cause the trust to be vested, cause a change to its current structure or operation or deal with or diminish the assets of the trust without notice to the wife.
·Orders to facilitate the valuation of farming and other property in Scotland.
·The provision by the third party respondents (second and third respondents) of particularised discovery.
The proceedings were listed for final hearing on 26 March 2012. By Application in a Case filed 20 March 2012, the husband sought orders that the trial be adjourned to a date to be fixed. That application was supported by his solicitors affidavit filed in support of the application. Essentially, neither parties’ case was ready to proceed. Whilst the parties were to engage in mediation, if unsuccessful the dispute at trial would encompass the issue of the value of the husband’s 20 per cent shareholding in Calder Limited, the claim by the wife seeking to add back substantial payments made to the parties’ sons, issues arising in respect of the wife’s drawings from the partnership which required further exploration, the wife’s argument that monies paid to the children from the J Trust should be added back and further valuation issues arising generally. By orders made 30 March 2012, the trial was vacated and the matter relisted for hearing in July 2012.
The orders further provided for further trial directions, discovery and valuation issues but importantly, the orders set out with precision the manner in which the parties in their capacity of office bearers and shareholders of both X and Y Pty Ltd as trustee of the Calder Family Trust and also in respect of the farming partnership Calder Farming Trust and the Calder Family Trust to do all things necessary to:-
21.3At the expense of the wife, transfer to the wife, and perfect the ownership or control of the wife in her personal name, free of all encumbrances, within the farm property known as “Property C, Town H” situate at an address at Town H, and being the whole of the land more particularly described in Certificates of Title Volume … Folio … and Volume … Folio … (Property C);
21.4In order to give effect to paragraph 21.3 hereof, cause all liabilities, including those secured by way of loan and mortgage to the National Australia Bank, and currently secured wholly or in part over Property C to be transferred to and secured against the farm property “Property A”, situate at CH (Property A); and
21.5Also in order to give effect to sub paragraph 21.3 hereof, to discharge any further debts on Property C and to cause the mortgage to the National Australia Bank, being mortgage registration number … (“the National Australia Bank mortgage”), currently registered against the title to Property C, to be discharged.
Up to and including 7 July 2012, the husband was permitted to attend the property to shear sheep, care for livestock and to cause the sale of any other wool in bales situate on Property C with the proceeds of such wool to be paid into the farming partnership. Specifically, the husband was restrained from effecting any further cropping or preparation for cropping on Property C.
As and from 8 July 2012, the following provisions applied:-
22.1The wife shall be entitled to sole occupation of Property C to the exclusion of the husband;
22.2The wife will be at liberty as and from 30 April 2012 to crop the cropping acreage of Property C as identified in sub paragraph 18.5 of volume 2 of Mr SP’s valuation dated 20 February 2012 or to receive income from the said cropping of that acreage, or to permit a tenant to crop such acreage (“the cropping acres”);
22.3The wife shall advise the husband of such cropping of the cropping areas, or proposed cropping, by herself or a tenant between 30 April 2012 and 7 July 2012, at least two days prior to same commencing;
22.4To give effect to the foregoing, the husband shall, on or before 30 April 2012, provide the wife with keys to Property C;
22.5To give effect to the foregoing, the husband shall permit the wife’s agents to attend Property C for the sake of advertising the property or the cropping acres for rental as and from this day (including, in this regard, permitting such agents to show interested and prospective tenants around Property C) upon reasonable notice being given by the wife and her agents to the husband; and
22.6That also to give effect to the foregoing, no later than midnight on 7 July 2012, the husband shall otherwise cause himself, his servants and agents, and the servants and agents of the farming partnership, (other than the wife), and all livestock currently on Property C, or which is or will be on Property C by 7 July 2012, to have vacated Property C, save that …
The clear intention of the parties was that the wife would retain Property C free from encumbrance and that she would be free to operate and manage a separate farming enterprise distinct from the previous farming partnership with the husband.
Whilst it ultimately did not come to pass, the order contemplated that the wife may not farm the property but rather, that it could be the subject of tenancy and that she would be entitled to and retain rental income.
As matters transpired, the livestock that was situate at Property C at the time of the order remained, was not removed or sold by the husband and ultimately, was sold by the wife. The proceeds of sale were not paid into the farming partnership but rather, into the account of the wife’s company F Pty Ltd. A dispute then arose as to whether the proceeds retained by the wife should properly be treated as partnership funds and if so, whether the wife had a legitimate entitlement to claim agistment costs in respect of the said partnership livestock which would see the money received by the wife for the sale of the livestock offset by the agistment costs.
Ultimately, the matter was resolved by a concession made by the husband that the amount likely to be involved did not justify the claim being pursued.
The orders of 30 May 2012 did not set out how any profit or loss made or incurred by the wife from the farming enterprise on Property C would be brought to account. The wife subsequently incurred substantial liabilities in respect of the operation of Property C and it is controversial as to how those liabilities should be brought to account as between the parties if at all.
LEGAL PRINCIPLES TO BE APPLIED
Section 79 of the Act provides:-
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them – altering the interests of the parties to the marriage in the property; or
(b)…
Including:
(c)an order for a settlement of property in substitution for any interest in property; and
(d)an order requiring:-
(i)either or both of the parties to the marriage; or
(ii)the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
Section 79(2) provides:-
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
“Property” is defined in s 4(1) of the Act as meaning:-
Property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.
In Stanford v Stanford (2012) 247 CLR 108 the majority held:-
35.It will be recalled that s 79(2) provides that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the 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.
36.The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds…
Importantly the Court found:-
Whether it is just and equitable to make the order is not to be answered by assuming that the parties’ rights to all interests in marital property are or should be different from those that then exist.
It is therefore not to be assumed that a party to a marriage has a right to an interest in property by reference to matters arising under s 79(4). In effect, a party cannot pull themselves up by their own boot straps by asserting contribution under s 79(4) and then using that position to satisfy the obligation created by s 79(2). To do so would be to “conflate” the relevant sections.
The High Court in Stanford sought to define its likely application to cases in the following manner:-
[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 a result of the choice made by one of both of the parties, the husband and wife are no longer living in a marital relationship. It would 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 the 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 applying s 79(4).
The parties were married for 33 years, with cohabitation ending in 2009.
Both parties seek that there should be an alteration of their respective interests in property and taking into account that:-
The husband and wife are no longer living in a marital relationship…and […] there is not and will not thereafter be the common use of property by the husband and wife…
I am satisfied that it is just and equitable in the circumstances of a mutual commitment made by each of the parties during the course of a long marriage that the Court should embark upon a consideration of an adjustment to the property interests of each of the parties.
CONTENTIOUS ISSUES
The parties do not agree the asset pool. At the commencement of the proceedings, I received a document entitled “Amended Table of Assets, Add-backs, Liabilities and Superannuation 26/11/13” which was used as an aide-memoire. This document sets out the parameters of the respective interests of the parties that each of them claim should comprise the pool of assets available for division.
The extent of disagreement between the parties is significant both as to assets to be included but also the extent to which the Court should bring to account substantial liabilities, in particular, the wife’s debt to the ATO in the sum of $54,596 and debts owed by F Pty Ltd in the sum of $1,319,222.
The discussion also extends to a list of add backs that each of the parties seek to be notionally included in the pool. Whilst some of those issues are no longer pressed, an indication of the magnitude of the argument in relation to add backs is highlighted by the initial claim of the wife (now modified) that $3,859,537 should be added back specifically arising from the husband’s behaviour, whereas the husband seeks an add back of $657,690 arising from the wife’s behaviour.
A further issue focusses on the extent of the value of the husband’s interest in K Trust asserted by the wife to be $7,972,749.
In terms of matters of general consideration, the weight to be given to the respective contributions of the parties but with particular focus on the acquisition by the husband of 12,000 shares in Calder Limited, the subsequent acquisition by the company of DS Farm and its disposal principally to Z Company.
A consideration of the financial resources of each of the parties also requires a focus on the extent to which, if any, weight is given to the husband’s interest in K Trust.
A significant issue in the proceedings has been to consider the treatment of plant and equipment and livestock as may be situate on Property A and Property C. The wife seeks orders that would cause the plant and equipment and livestock held variously by the parties to be divided equally between them, with the husband at his election to choose either Option A or B from alternative lists of farm equipment, plant machinery and livestock as prepared by the wife with the intent that either alternative will be of equal value.
The husband’s position is that the plant and equipment and livestock should remain as currently situate on both Property C and Property A and should therefore be brought to account as an item of property. There is of course substantial difference in treatment between the parties. Irrespective of the selection of plant and equipment and livestock as promoted by the wife, the net effect is that they will be divided to equality. If I accede to the orders sought by the husband, plant and equipment and livestock would be included in the property pool and adjusted on the basis of 60/40 in favour of the husband.
The farming enterprise was conducted by the Calder and Co farming partnership. Both parties agree that there needs to be a dissolution of the farming partnership, but the parties are not able to agree the date upon which such dissolution should take place. The husband’s position is that a dissolution should be deemed to have occurred on 30 June 2012 with a “taking of accounts of the farming partnership debtors and creditors” as at that date. The wife’s position is that the partnership should be determined as at the date of the delivery of judgment.
Each of the parties was ordered to prepare and subsequently tender a Costs Statement as to the extent of their legal fees incurred, leading up to the commencement of the proceedings. Whilst the husband seeks to include a liability to his daughter Ms MC in respect of monies borrowed from her to assist in the payment of his legal fees, the wife considers that the treatment of the respective legal fees of the parties should be restricted to a concession by the wife that a proportion of her F Pty Ltd debt the sum of $400,000 should be excluded but adopting the same approach would bring to account that proportion of the husband’s legal costs paid from capital.
ASSETS AND LIABILITIES OF THE PARTIES
The following list of assets and liabilities appear to be agreed:-
Property A (husband)
6,800,000
Property C (wife)
4,900,000
Plant and Equipment Property A
1,016,510
Plant and Equipment Property C
100,910
Plant and Equipment F Pty Ltd
104,675
Livestock Property A
1,624,415
Livestock Property C
489,711
Crops Property A (Calder Partnership)
370,894
Crops Property C
73,564
Hay at hand
45,348
Total of wife’s superannuation entitlement
304,789
LIABILITIES
Partnership Overdraft
700,000
NAB Loan facility
1,000,000
Wife’s debt to ATO
54,596
DEBT OWED BY F PTY LTD
At the commencement of the proceedings, the wife sought that the F Company debt of $1,319,222 be brought to account on the basis that it was used to fund the farming operation conducted by the wife on Property C.
The wife conceded that this sum also included a substantial component of about $400,000 being monies applied to the payment of the wife’s legal fees. It was her position that the outstanding liability net of the legal fees component namely $919,000 should be brought to account.
If I accede to the position promoted by the wife, it is to some extent offset by the inclusion in the asset pool of plant and equipment in the sum of $104,675 and livestock of $307,555 purchased from that outstanding liability. Accordingly, the net effect of the controversy is $506,770.
The husband refers to the orders made on 30 March 2012 and argues that the clear intention of the wife and the reasonable expectation of the husband was that she would not operate Property C herself but rather, would secure a tenant or lessee for the property. It is argued that the proposition arises from a consideration of paragraph 22.5 of the orders namely:-
To give effect to the foregoing, the husband shall permit the wife’s agents to attend [Property C] for the sake of advertising the property or the cropping acres for rental as and from this day (including, in this regard, permitting such agents to show interested and prospective tenants around [Property C]) upon reasonable notice being given by the wife and her agents to the husband;
The husband submits that the liabilities were incurred by the wife without his knowledge or reference to him. Indeed, the husband proposed that he should lease Property C from the wife, but such a proposition was firmly rejected by her.
The wife concedes that there was no discussion with the husband about the liabilities that were subsequently incurred.
The husband argues that it would not be proper for the Court to bring to account the wife’s underlying liability in circumstances where she had the opportunity to lease the farm, she chose not to in preference to managing the farm herself and the fact that she was demonstrably unsuccessful at least in the short to medium term, is a responsibility that should be borne by her without contribution from the husband. In summary, the husband argues that the wife had options which would have seen her receive a substantial income if she had leased Property C but rather, the choice she made was to her financial disadvantage.
It is also promoted by the husband that the wife led a lifestyle that was generous and involved significant overseas and interstate travel. She was not able to manage the farm property and needed the services of a farm manager and other employees. This should be contrasted against the husband’s position of continuing to manage the farming partnership to the ongoing advantage of the parties, resulting in the wife receiving the sum of $5,500 per month from the Farming Partnership pursuant to consent orders made 19 April 2011.
In cross examination, Senior Counsel for the husband put to the wife that she was not able to operate the farm without the assistance of one manager who made decisions in respect of the livestock and another manager who assisted in decisions in respect of the farming enterprise in general. The wife concedes in her evidence that the major management decisions in respect of the farming operation on Property C were made with significant input from the two farm managers. The wife also had assistance from an agronomist in respect of good farming practice.
Whilst the wife would not concede that the farm was not viable, she did accept that the losses for F Pty Ltd were about $170,000 for each of the 2012 and 2013 financial years.
The wife argues that she should be entitled to make a decision to run the farm and in circumstances where the bulk of the plant and equipment and quality livestock remained in the partnership but effectively under the control of the husband, it was inevitable that at first instance it was likely that losses be incurred whilst the Property C farming operation stabilised. It is strongly argued on behalf of the wife that whilst she must acknowledge a debt was incurred by her, it was not done so in a reckless or wilful fashion. It was put to the wife that at the very least she was unwise to have decided to run the Property C farming enterprise rather than lease the property as had originally been contemplated by her. Her response was that no opportunity existed and that it was unlikely a lessee would be found. The husband of course was prepared to step into that role but, in any event, I think the answer is more straight forward namely, that the wife simply changed her mind. Taking into account the inability of the wife to farm Property C without the assistance of farm managers and a consultant, whilst that may be considered either poor or at the very least unnecessary management costs, that is different to the wife being reckless and/or negligent.
In Woodland & Todd (2005) FLC 93-217 the Full Court was required to consider whether the trial judge had failed to have regard to the identity of, the value of and the contributions to property as it existed at the time of trial.
The Court found that the trial judge “was required to refer to the asset pool at the time of the hearing and consider the contributions of both parties to that property.”
It may be the case that issues of contribution arise, but other than in unusual circumstances, it is an appropriate starting point to bring to account the assets and liabilities of the parties as they properly exist at trial and then give consideration to the behaviour of the parties in respect of the manner in which asset and liability may have been affected by their respective behaviour.
In Kowaliw & Kowaliw (1981) FLC 91-092 Baker J held as follows:-
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint of several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets; or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in paragraph 18 (a) and (b) above having economic consequences is in my view a relevant consideration under s 75(2)(o).
It is now trite to observe that his Honour’s proposition represents an enduring and often relied upon statement of general principle.
Accordingly, I propose to bring to account the liability owed by F Pty Ltd in the sum of $919,000, but to include F Pty Ltd plant and equipment and livestock of $104,675 and $307,559.
NOTIONAL ADD BACKS
Treatment of husband’s prior shareholding in Calder Limited
The wife seeks to agitate the inclusion either by way of a direct add back or to bring to account as a factor relevant to s 75(2)(o) the husband’s shareholding in Calder Limited, money paid to the children following separation and excess capital expenditure on Property A.
I have been reminded that in a recent decision of Todd & Todd [2014] FamCA 101 at [92] I said:-
Following Stanford, I consider that it is open to a Court to consider the appropriate way forward is to add property back to the interests of each of the parties, such an outcome would be rarer and may well be restricted to those circumstances where there is a realistic possibility that the property might be retrieved…
Whilst the issue of add backs is considered against the background of the decision in Stanford, this Court gave proper consideration to the controversy in La Costa & La Costa (2008) 38 Fam LR 412, following its consideration of Chorn & Hopkins (2004) FLC 93-204 and M & M [1998] FamCA 42 said:-
2.10It is well settled that save in exceptional circumstances a trial Judge should deal with the property as at the date of the hearing and make adjustments taking into account the various matters set out under s. 79. (Wells v Wells (1977) FLC 90-285); Wardman v Hudson (1978) FLC 90-466; In the Marriage of Geyl 7 Fam LR 219). However, the particular justice of the case may make it appropriate to notionally add back assets which have been demonstrated to have been dissipated either during the marriage or post-separation. Normally it is necessary to demonstrate an appropriate basis for doing so, for example by wastage such as gambling or extravagant living. (Kowaliw v Kowaliw (1981) FLC 91-092…). Additionally, because of the requirement for each party to bear their own costs, it is generally appropriate to add back to the pool of assets notionally any legal costs that have been spent on the litigation and to deal with the costs as a separate issue at the end of the litigation (see Farnell (1996) FLC 92-681).
The husband argues that the contributions made by the husband both at the commencement of the marriage but also during its course were overwhelming and can be directly traced to the husband’s tenants’ rights in respect of DS Farm in 1970. He seeks that there be a division of 60/40 in favour of the husband to give proper weight to the husband’s purported contribution.
The wife properly argues that during the course of the marriage she was employed and made a valuable contribution from her income. Furthermore, whilst she does not seriously contend that the husband’s pre-marriage contributions were unimportant, she argues that it is “artificial and unrealistic” to attempt to assess the weight of the husband’s contribution by a strict tracing exercise, particularly given that Property A was purchased some 27 years after the commencement of the marriage.
Not surprisingly, each of the parties has made substantial financial and non-financial contribution and the wife would argue that she made significant personal sacrifices in moving to Australia and supporting the husband notwithstanding there was personal hardship to her in residing in remote and rural locations.
It should be said that there is no quarrel or question in respect of the significant contributions made by the wife, in particular as a homemaker but also in her role as part of the farming partnership finding as I have that the husband actively undertook the role of the farmer.
In Kessey & Kessey (1994) FLC 92-495, the Full Court considered the treatment of a contribution by a parent of a party. At 92-495:-
The critical case is where a relative of one of the parties gifts property to both of the parties to that marriage. Dependent upon the circumstances of the case it is, in my view, open to the court in such a case to look at the actuality and treat that as a “financial contribution made directly…on behalf of” the relative spouse…
In many such cases that gift was made only because of that relationship and in reality as a means of benefiting that relative in that marriage. It was made “because she was a daughter of that family”…
In the early decisions of Bremner & Bremner (1995) FLC 92-560 and Money & Money (1994) FLC 92-485, the Court considered that a substantial initial contribution “may be eroded to a greater or lesser extent by the later contributions of the other party even those later contributions do not necessarily at any particular point outstrip those of the other party” (Money at 81,054).
This approach was considered by the Full Court in Pierce & Pierce (1999) FLC 92-844 and was ultimately criticised as follows:-
In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contribution by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home…
In Quaresmini & Quaresmini [1999] FamCA 1314, the Court stressed that there:-
…is no principle that the length of the marriage leads to a likelihood that other contributions will outweigh or weigh equally with “a particular contribution”.
Similarly, in Brown & Brown (2005) 33 Fam LR 245 at paragraph [62] the Full Court acknowledged a substantial contribution on behalf of the husband but that:-
…those contributions must be weighed and balanced against the myriad of other contributions made by the wife during the course of the marriage, including the period of over 20 years prior to separation, of the occupation and operation of the cane farm.
There must be caution in attributing any and all increase in value to the party who brought the asset into the relationship without further consideration (see Petruski & Balewa (2013) 49 Fam LR 116).
In the decision of Bulleen & Bulleen (2010) 43 Fam LR 489, the Court was faced with a net asset pool of $151,000,000 and a relationship of some 44 years. At the commencement of cohabitation the husband had an interest in the family business and received a significant inheritance early in the marriage. The trial judge noted that on the evidence before him:-
It is impossible to do more than identify the initial contributions in a very nebulous way.
And he:-
Could not be satisfied as to the impact of the initial contributions on what now exists.
Nonetheless, the trial judge considered the initial contribution of the husband warranted an adjustment of 6.6 per cent, which in the context of that case translated to an adjustment of about $10,000,000 for initial contribution alone.
In the present case, the property of the parties excluding partnership livestock, plant and equipment is $10,403,880. The adjustment sought by the husband at 10 per cent would amount to a little more than $1,000,000, but taking into account the differential between the parties, the net effect is about $2,000,000.
The consideration of the weight to be given to contribution is not an arithmetical exercise, nor indeed is it a process that should be considered by reference to the allocation of each individual aspect of contribution. To do so would be artificial, particularly against the background of a long marriage.
It could be said that whilst the wife accepts that the tenancy rights of the husband acquired prior to the marriage represents a significant foundation stone for the current pool, both parties would agree that thereafter they each did what was required of them as part of the marital partnership.
I do not ignore the various arguments of the parties, in particular in respect of the assistance provided by the husband’s mother or indeed, the offsetting aspects as argued by the wife in terms of the lack of rent paid for the use of property and the significant assistance provided on an ongoing basis by the husband and the wife to her.
The circumstances of the contributions by the parties post-separation is however a little more problematic. Up until March 2012 the parties remained involved in the single farming partnership entity, although it must be conceded that the primary effort was expended by the husband. Following the transfer of Property C, the wife was able to run her own farming enterprise whereas the husband continued to manage the farming partnership on behalf of both parties. There is argument as to the manner in which the wife drew monies down from the farming partnership, together with the expenditure and liability incurred in the operation of Property C noting the significant complaint by the wife as to the alleged over-capitalisation of Property A by the husband.
It must also be said that in the operation of the farming partnership, whilst orders provided for the drawings of each of the parties to be fixed, it is reasonable to find that the husband did not receive any adjustment for a notional wage involved in the management of the ongoing farming enterprise.
In all the circumstances, I consider that it is appropriate for an adjustment in favour of the husband of 7.5 per cent to properly reflect the weight that should be given to the contributions by each of the parties.
SECTION 75 (2) FACTORS
Section 79(4)(e) requires the consideration of s 75(2).
The husband is 67 years old and the wife 61 years. The husband has re-partnered. There is contention as to whether the wife has re-partnered. Nothing turns on this issue.
Whilst it is difficult to assess the future income of the parties, it is clear that the asset pool is substantial and there is no suggestion that the parties suffer from any physical and/or mental incapacity which would see them being unable to continue their designated plans namely, that each will continue to run and operate a farming enterprise. The husband will retain Property A and the wife Property C. The property to be retained by each of the parties and the effect of the orders made herein will enable them to pursue their future goals with an appropriate level of financial security.
Neither of them has any responsibility to support any other person and it is reasonable to opine that each of them will enjoy a standard of living that “is in all the circumstances reasonable”.
There are no issues of maintenance as between the parties and consequent upon the orders made as to the dissolution of the Calder farming partnership, they will have no residual financial connection with each other.
Significantly, it is argued that the husband may well receive a substantial benefit from the K Trust being an entity controlled by the husband’s mother.
The husband holds the position of a primary beneficiary which under the provisions of the trust enables him to receive income, although he says that he has not received income and is not likely to. The evidence of his mother is that he will not receive income.
He is also a secondary beneficiary of the trust with other family members. The position of Ms J Calder Snr is that she would wish the K Trust to continue into the future and that the benefit may well flow to her grandchildren or great-grandchildren. In short, the husband argues that the assets are to be held in trust for future generations of the Calder family. The wife argues that the evidence indicates the husband is likely to be entitled to the assets of the K Trust. The value of the trust is likely to be substantial and this must be considered as a significant resource.
Whilst I have found that the husband does not control the trust and is not likely to be influential over any decision making to be exercised by his mother, I do find that the husband’s mother is kindly disposed towards the husband and that there will be a cooperative relationship that will continue between the husband and his mother including the use of Property A land owned by Mrs Calder Snr for no fee.
Finally, I am urged on behalf of the wife to have regard to matters in respect of s 75(2)(o), particularly in relation to issues of notional add back which whilst not being reinstated to the pool, nonetheless needs to be given consideration.
As discussed, I do not consider that there is merit in the broad argument of the wife in respect of the husband’s 20 per cent shareholding in Calder Limited, monies paid to the children post-separation , or the alleged over-capitalisation of Property A. Equally, whilst not pursued, I do not consider there was merit in the husband’s claim that the wife drew excess drawings from the partnership, or that monies received from the J Trust by the husband had been unaccounted for.
There was however some merit in the argument that the husband had provided sheep to the parties’ son and that whilst not likely to have been in the absolute control of the husband, the sum of £200,000 received by the husband for his 20 per cent shareholding in Calder Limited was significantly undervalued according to the evidence of the single expert. It may be argued that the husband could have better explored the assessment of the value attributed to his shares.
Taking into account the above matters and the disparity between the parties as a result of the orders that I propose to make, an adjustment of 2.5 per cent in favour of the wife.
CONCLUSION
Accordingly, the entitlements of the parties in respect of matrimonial property held jointly and severally should be adjusted to reflect 55 per cent of the total (including superannuation) to the husband and 45 per cent to the wife, noting that the partnership plant and equipment and livestock is divided to equality.
Of a total pool of $10,310,470, the wife should retain $4,639,711. With the partnership adjustment of $903,760 her total entitlement is $5,543,471.
If the wife retains the following:-
Property C
4,900,000
Plant & Equipment F Pty Ltd
104,675
Livestock F Pty Ltd
307,555
Crop – Property C
73,564
F Superannuation
302,051
Uni Super
2,738
TOTAL
$5,690,583
Less
ATO Debt
54,596
Glenco Pastoral Debt
919,000
TOTAL
$973,596
she would retain net property of $4,716,987. The difference and therefore the amount the husband is to pay to the wife is a settlement sum of $826,484.
The settlement sum will be payable within 60 days.
In addition, the Calder & Co farming partnership will be dissolved as at 31 December 2014.
Orders will be made as set out at the commencement of these reasons.
I certify that the preceding two hundred and seventy one (271) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 11 December 2014.
Associate:
Date: 11 December 2014.
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