CALI and CALI
[2020] FCWA 54
•3 APRIL 2020
JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA
LOCATION: BUNBURY
CITATION: CALI and CALI [2020] FCWA 54
CORAM: SUTHERLAND CJ
HEARD: 16 & 17 OCTOBER 2019
DELIVERED : 3 APRIL 2020
FILE NO/S: PTW 53 of 2014
BETWEEN: MR CALI
Applicant
AND
MS CALI
Respondent
Catchwords:
PROPERTY SETTLEMENT - Assessment of contributions and future needs - Case turns on its own facts
Legislation:
Family Law Act 1975 (Cth)
Representation:
Counsel:
| Applicant | : | Mr Beckerling |
| Respondent | : | Mr Jones |
Solicitors:
| Applicant | : | West Family Lawyers |
| Respondent | : | McAuliffe Legal Pty Ltd |
Case(s) referred to in decision(s):
Bevan & Bevan (2013) FLC 93-545
Biltoft and Biltoft (1995) FLC 92-614
Black and Kellner (1992) FLC 92-287
Chang v Su (2002) FLC 93-117
Fotia & Welsh [2013] FCWA 112
Gable & Yardley (2008) FLC 93-386
In the marriage of Townsend & Townsend (1995) FLC 92-569
Khademollah and Khademollah (2000) FLC 93-050
Reichstein & Reichstein [2006] FamCA 1422
Stanford v Stanford (2012) 247 CLR 108
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466
Trevi & Trevi (2018) FLC 93-858
Weir v Weir (1993) FLC 92-338
Yeates (as executor for Mr Yeates) & Yeates [2013] FCWA 117
WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT – PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED
IT IS NOTED that publication of this judgment by this Court under the pseudonym Cali & Cali has been approved by the Family Court of Western Australia pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
INTRODUCTION:
1[Mr Cali] (the “husband”) and [Ms Cali] (the “wife”) were unable to reach final agreement in relation to financial issues following the end of their marriage. The husband sought an equal division of the parties’ property. On the other hand, the wife’s position was that she should receive 65 per cent. To their credit, the parties were able to reach agreement about the in specie division of most of their property. They also agreed that the wife should receive a superannuation splitting payment from the husband. However, they did not agree on the amount of the superannuation splitting payment or the amount (and mechanics) of any adjusting payment to be made by the husband to the wife.
THE EVIDENCE:
2Both parties were represented by solicitors throughout the proceedings, including at trial. The husband relied upon his trial affidavit filed on 8 March 2019, together with three supplementary affidavits filed on 29 July 2019, 23 September 2019 and 10 October 2019. The husband also relied upon his updated financial statement filed on 16 September 2019, and the affidavit of his general medical practitioner, [Dr D], filed on 16 September 2019.
3The wife relied upon her trial affidavit filed on 27 March 2019, together with two supplementary affidavits filed on 13 August 2019 and 2 October 2019. The wife also relied upon her updated financial statement filed on 2 October 2019.
4The husband also relied upon three Notices to Admit served on the wife, filed on 22 January 2018, 28 June 2019 and 2 October 2019. The wife responded to the latter two Notices to Admit, but not the first. At the commencement of the trial, the wife conceded that she ought be bound by the deemed admissions arising from her failure to respond (at all) to the Notice to Admit filed on 22 January 2018, save for where subsequent events had clearly overtaken the position.[1]
[1] For example, by the time of Trial, the husband’s business was under offer, and it was agreed by the parties that the value of the business should be what the purchaser was prepared to pay, and not the value ascribed in the first Notice to Admit.
5There was some difficulty in the evidence, insofar that certain facts alleged in the various Notices to Admit filed by the husband found no reflection in the affidavits relied upon by him at trial. One example is paragraph 25 of the husband’s Notice filed on 28 June 2019, which asserted: “The purchase of [Property A] was financed by way of a loan for $84,757.00, secured by mortgage over [Property A], with [Bank A].” The wife disputed that fact in her Notice of Dispute filed on 15 July 2019 (see page 2), and again in her Papers for the Judicial Officer filed on 12 August 2019 (see page 7, paragraph 21). Whilst there was no cross-examination of the husband about the source of funds for the purchase of [Property A], there was also no mention of those matters in the husband’s affidavits – and therefore no evidentiary basis on which to make a finding.
6Counsel for each party cross examined the other party. Dr D was not required for cross-examination, and I accept his evidence as to the husband’s health conditions as unchallenged.
7I considered that the husband gave his evidence in an open, forthright and unguarded manner. The husband made appropriate concessions against interest during cross-examination, and clearly identified when he did not know, or was unsure of, how to answer a question put to him, particularly in relation to matters concerning the valuation of the business. On that issue, counsel for the wife submitted that it would be open to me to find that the husband had been disingenuous early in the proceedings in asserting that the business had a negative value, as a strategy to secure an early settlement from the wife on favourable terms. That submission was ultimately made in an attempt to balance the credit of the parties (the wife having performed poorly under cross-examination). I do not accept that submission. Firstly, the wife joined issued on the value of the business in the first affidavit filed by her in the proceedings in July 2017. The wife struck me as an astute woman, and not someone who would be easily fooled or misled. Secondly, I accept the husband’s evidence that his strengths lay in the operational side of the business, and not in relation to issues of accounting and administration. Indeed, the wife was critical of the husband’s business acumen in her evidence. I accept the husband’s evidence that he relied on others to interpret and deal with financial information, including the value to be ascribed to his business for the purposes of these proceedings.
8The husband also impressed as being an optimist, particularly in relation to his future income earning capacity. Despite suffering from debilitating [joint] pain (noting the former will soon require the husband to undergo [surgery]), the husband was adamant that he would continue to work and provide for his children. This constituted a considerable concession against interest on the part of the husband, especially given the uncertainties around his employment prospects following the imminent sale of his business (which, at the time of trial, was due to settle in December 2019 – but which subsequently fell through).[2] The husband was an impressive witness, and I have no hesitation in accepting his evidence.
[2] The husband ran his case on the basis that he wished the court to make final property settlement orders that would provide him with a 12 month window within which to sell the business, failing which he would retain it.
9The wife was far less impressive. The wife’s counsel, in closing, conceded that the wife had real issues in relation to her credit for which he needed to “grasp the nettle”. The wife gave inconsistent and at times exaggerated answers to questions in cross-examination. At one point, the wife told the court that she needed [significant] surgery in the near future, only to later concede that the surgery was in fact in relation to a [less serious] complaint (for which the wife provided no disclosure and no independent medical evidence). The low point in the wife’s evidence was her admission that she had obtained a medical report from her former general medical practitioner (“GP”) as to her various health issues for the purposes of the trial, but failed to disclose it upon receipt because it was – to use the wife’s words – full of errors. The wife also suggested that the GP had deliberately lied in the report, because the GP had become frustrated with her. In circumstances where the wife’s health formed a central part of her case, the wife’s failure to disclose the GP’s report cast a real pall over her credibility. I formed the view that the wife was selective in the evidence that she presented to the court, and many of the concessions made in cross-examination were extracted from her unwillingly, or where she was caught off-guard. The wife struggled to answer questions put to her in a direct and forthright manner; instead on many occasions she attempted to provide extensive background to many of her answers, when a simple “yes” or “no” would have sufficed.
10Despite these criticisms, I have accepted the wife’s evidence in relation to a number of matters, as is evident in the reasons that follow. However, I have found it necessary to adopt a cautious approach in respect of much of the wife’s evidence.
LEGAL PRINCIPLES:
11These proceedings are determined pursuant to Part VIII of the Family Law Act 1975 (Cth) ("the Act"). I must firstly determine whether it is just and equitable to make an order,[3] having regard to the parties’ rights and interests in their existing property.[4] If I so determine, then I must consider the factors set out in the legislation.[5] In this case both parties maintained and I am satisfied that having regard to their property interests, it is just and equitable to make an order by way of alteration of property interests. The parties separated on a final basis in 2012, were divorced in 2014 and both sought to sever their financial relationship with each other.
[3] Refer to section 79(2) of the Act.
[4] Stanford v Stanford (2012) 247 CLR 108.
[5] Refer to section 79(4) of the Act.
12Parties have a clear obligation to make full and frank disclosure of their financial circumstances in a timely manner and present evidence of their financial position in a clear and understandable form.[6] I am satisfied that generally the husband complied with his obligations of disclosure. However, I am not satisfied as to the wife’s compliance, given her admissions under cross-examination that she failed to disclose: documents relating to the receipt and disbursement of an inheritance received by her in mid-2017; and the report prepared by the GP relating to the wife’s alleged health conditions. As a result of the wife’s non-disclosure, I am entitled to take a robust approach and need not be unduly cautious about making findings in favour of the husband in relation to those matters which may very well have been clarified, had the wife complied with her obligation of disclosure.[7]
FACTUAL BACKGROUND:
Introduction
[6] Fotia & Welsh [2013] FCWA 112 [96] - [102]; Reichstein & Reichstein [2006] FamCA 1422 [80]; Chang v Su (2002) FLC 93-117; [2002] FamCA 156 [71] ‑ [72].
[7] Black and Kellner (1992) FLC 92-287; Weir v Weir (1993) FLC 92-338; Chang v Su (2002) FLC 93-117.
13The husband was born [in] 1964 and lives in [Regional Town A]. The husband works full time in the parties’ business, [Business A]. At the time of the trial, the business was under offer for $280,000.
14The wife was born [in] 1971. The wife lives in [Regional Town B] with the parties’ children and is a homemaker and parent. The wife has also for several years been [undertaking further study], but is yet to complete that course.
15The parties met in 1996 whilst both were working and living in Regional Town A. The parties were married [in] 1997 and commenced living together at around the same time. There are three children of the marriage: [Child A] (currently 19 years old); [Child B] (currently15 years old, and turning 16 shortly) and [Child C] (currently 13 years old).[8]
[8] The children’s ages are as at the date of trial.
16At the commencement of the parties’ marriage in 1997, the husband worked as an employed [tradesperson in the construction industry] and the wife had a [contract delivery] business. I am satisfied that at the commencement of their marriage, the husband owned significantly greater assets than did the wife. In particular, the husband owned: (1) a property located in [Street A], Regional Town A (the “[Street A] property”) with net equity of $130,000; (2) a car worth about $5,000; and (3) tools of trade worth about $5,000.[9] On the other hand, the wife owned: (1) a car subject to a loan totalling $12,000; and (2) nominal personal property.[10]
[9] Husband’s trial affidavit filed 8 March 2019, [12(10)-(15)].
[10] Husband’s trial affidavit filed 8 March 2019, [12(16)-(18)].
17I am satisfied that during the parties’ marriage, the husband worked in a variety of jobs, including in the parties’ [construction] business and then in their current business, and he was the primary income earner for the family. Shortly after the parties married, the wife dissolved her contract delivery business and instead worked part time as a [teacher’s] assistant and in the hospitality industry. The wife ceased employment in February 2000 following the birth of the parties’ first child, and thereafter she was the primary homemaker and parent for the children. In addition, the wife also worked to a very limited extent as [a community worker], and in the parties’ businesses to some extent until approximately 2008.
18Early during their marriage, the husband received various gifts of money totalling approximately $22,000 from his parents, including to assist the husband when he was injured and unable to work for a time.[11]
[11] Husband’s trial affidavit filed 8 March 2019, [12(19)-(24)].
19The parties’ marriage was marked by several periods of separation, prior to their final separation.[12] Save for one matter to which I refer below, the husband did not dispute the wife’s evidence in this regard. I am satisfied that from the date of their marriage until January 2012, the parties lived separately for periods totalling just over four years.[13] I accept the husband’s evidence that during these periods of separation, he continued to financially support the wife and the children, including by providing the wife with a regular weekly sum of money, as well as paying other bills and/or expenses when she requested him to do so.
[12] Wife’s trial affidavit filed 27 March 2019, [18].
[13] I am satisfied that the parties separated for the following periods prior to their final separation: from 1 April 2005 to 27 May 2005 (about 2 months); from 2 February 2006 to 4 April 2006 (about 2 months); from 25 May 2006 to 10 October 2006 (about 5 months); from 15 January 2007 to 8 November 2008 (about 20 months); from 27 March 2009 to 10 May 2010 (about 13 months); and from May 2010 to November 2011 (about 7 months).
20The parties were in dispute regarding the date of their final separation: the husband maintained it was in January 2012 whilst the wife asserted it was sometime later when they decided to apply for a divorce (noting that said application was made in November 2013 and the divorce was granted in April 2014). I am satisfied that the date of final separation was in January 2012 for the followings reasons: Firstly, the wife’s own evidence in her affidavit filed on 26 July 2017 was that the parties separated on 15 January 2012. When this was pointed out to the wife in cross-examination, she blamed her former lawyers for making a mistake, despite conceding that other facts in the same paragraph were stated correctly. Secondly, the wife conceded that she had not sought to correct the husband’s Application for Divorce, which application specified the date of final separation as being in January 2012. Thirdly, the wife conceded that she had been in receipt of child support from the husband since late 2011 and the parties had not again lived together after 15 January 2012. Counsel for the husband submitted these facts were indicia of final separation – a submission which I accept.
Purchase of the Street B property and related events
21In July 1999, the loan secured by way of a mortgage over the Street A property was refinanced into the parties’ joint names. It was also extended by a little over $80,000. With those additional funds, the parties purchased a vacant block of land in [Street B], Regional Town A (the “Street B property”) for the sum of $65,000.[14]
[14] There was no dispute between the parties that the equity in the Street A property was used to purchase the Street B property. Refer to paragraph 10 of the husband’s Notice to Admit filed 28 June 2019, and the wife’s Notice of Dispute filed 15 July 2019, noting she did not traverse paragraph 10.
22The loan over the Street A property was again refinanced and extended in 2001 and 2002.[15] The husband’s position at trial was that the parties’ applied the additional credit advanced by the bank on each occasion to pay down credit card debt and inject cash into the husband’s construction business.[16] The wife disputed this,[17] but did concede[18] that the loan over the Street A property was refinanced in 2001 and 2002 as alleged by the husband. There was no cross‑examination about this issue at trial, and I am unable to make any specific findings as to what was done with the additional credit extended by the bank in 2001 and 2002 respectively. That said, there was no suggestion by the wife that the additional credit was spent on anything other than the family.
The sale of the Street A property
[15] Husband’s Notice to Admit filed 28 June 2019, [12] and [16]; the wife’s Notice of Dispute filed 15 July 2019.
[16] Husband’s Notice to Admit filed 28 June 2019, [11] – [20] (inclusive).
[17] Wife’s Notice of Dispute filed 15 July 2019.
[18] Wife’s Papers for the Judicial Officer filed 12 August 2019, page 4.
23At the end of 2004, the Street A Property was sold for $205,000.[19] The husband’s position at trial was that the proceeds of sale were applied towards discharging the loan secured against the property (which then stood at -$152,706), the purchase of a 4WD vehicle for about $13,000, the purchase of [motor vehicle F] for about $7,000, a payment of $3,717.09 into the parties’ business account, and the balance remaining of $28,500 was ultimately spent on maintaining and improving the later acquired [Street C] property.[20] Again, there was no cross-examination about this issue at trial, and I am unable to make any specific findings as to how the proceeds from the sale of the Street A property were disbursed, save that I accept that the loan secured over the property would have been repaid. Whilst the wife did not accept the husband’s position as to how the proceeds were disbursed, she did not suggest those monies were spent on anything other than the family.
Purchase of the Street C property and related events
[19] Whilst there was no evidence about the sale of the Street A property in either the husband’s or wife’s trial material, the fact of the sale, and the quantum of the gross proceeds of sale, were agreed – refer to paragraph 21 and 22 of the Husband’s Notice to Admit filed 28 June 2019, [21] and [22]; and the wife’s Papers for the Judicial Officer filed 12 August 2019, page 4.
[20] Husband’s Notice to Admit filed 28 June 2019, [21] and [22].
24In August 2005, the parties purchased a property located in Street C, Regional Town A (the “Street C property”) for $70,000.[21] The husband asserted that the purchase price was funded by way of a loan from Bank A, and secured by way of a mortgage over the property.[22] The wife disputed this, but did not advance any case at all as to the source of funds for the purchase. There was, unfortunately, no evidence in either the husband’s or the wife’s affidavit material about this issue, no cross-examination on point and no documents tendered to clarify the matter. I am therefore unable to make any findings in relation to the source of funds for the acquisition of the Street C property, other than to observe that neither party contended they should receive additional credit on an assessment of contributions in respect of that acquisition.
[21] Wife’s Papers for the Judicial Officer filed 12 August 2019, page 4, [13] and [14]; and the husband’s Notice to Admit filed 28 June 2019, [23] and [24].
[22] Husband’s Notice to Admit filed 28 June 2019, [25].
25The Street C property was in poor condition at the time it was purchased, and the husband has since undertaken significant renovations[23] – although the nature and the value of the renovations, and the impact of same on the asset pool, was not explored. In this regard, the extent of the husband’s (unchallenged) evidence on this particular issue was that he “also undertook significant work to the Street C property in terms of improvements to it”.[24] Whilst that aspect of the husband’s evidence went unchallenged, there is simply insufficient evidence for me to make findings about the extent and impact of the husband’s non-financial contributions on the value of the Street C property.
[23] Husband’s trial affidavit filed 8 March 2019, [12(32)-(33)].
[24] Husband’s trial affidavit filed 8 March 2019, [41].
26During the marriage and following separation, the husband met all outgoings in relation to the Street C property, including shire rates, insurance premiums and loan repayments.[25]
Business A
[25] Husband’s trial affidavit filed 8 March 2019, [12(37)-(39)].
27In 2007, the parties purchased the business then known as [XYZ and later renamed Business A] for $300,000. It was not clear on the evidence whether the business was purchased by the husband in his own right, or via a corporate entity controlled by the parties. Nothing turns on that issue. In any case, as at the date of trial I am satisfied that the business was owned and operated via [Cali Pty Ltd] as trustee for the [Cali Family Trust] (the “CF Trust”).[26] The parties were directors and equal shareholders of the trustee company until August 2012, at which time the husband assumed full control and ownership.[27] In relation to the trust: (1) the parties were the joint appointors and guardians of the trust; (2) the parties’ children were the primary beneficiaries of the trust; and (3) the parties were additional members of the class of general beneficiaries of the trust.[28]
[26] Husband’s trial affidavit filed 8 March 2019, [27] – [29], and annexure B.
[27] Wife’s trial affidavit filed 27 March 2019, annexure MC6.
[28] Wife’s trial affidavit filed 27 March 2019, annexure MC7.
28There was some evidence to suggest that subsequently changes were made to the trust deed. For example, the husband’s disclosure schedule lists a Deed of Retirement and Appointment in relation to the Trust dated 1 June 2009, however there was no evidence as to the terms of this Deed.[29] In addition, annexure B to the husband’s trial affidavit was an undated letter from the husband’s accountant setting out that the current appointor of the trust was the husband and the current guardian of the trust was the wife. At some point, the husband and/or the parties also established another company, [Cali Investments Pty Ltd], as a vehicle to receive trust distributions from the CF Trust. During the trial, little or no attention was given to the issue of the changes in the corporate / trust structure.
[29] Husband’s trial affidavit filed 8 March 2019, annexure M.
29The purchase of the business was funded by way of a business loan advanced to the CF Trust by Bank A in the sum of $310,000 (the “Bank A business loan”). The term of that loan was 25 years. The parties were in dispute as to the terms of the loan. The husband, in his Notice to Admit filed 28 June 2019, sought that the wife admit the authenticity of a letter from Bank A dated 31 August 2007, together with pages 3 and 4 of the loan document. The documents revealed that the loan was secured by the bank taking an assignment of the business, book debts and goods mortgage over the business itself, together with personal guarantees by both parties and registered mortgages over the parties’ properties at Street B and Street C. The wife disputed the authenticity of the documents in her Notice filed 15 July 2019. Neither the husband nor the wife addressed the loan and security arrangements in their respective trial affidavits and the issue of the authenticity of the documents and the financing arrangements generally were not explored to any great extent, if at all, during the trial. Accordingly, I am unable to make any findings in relation thereto.
30Following the acquisition of the business, the CF Trust traded as [Business A].
31The husband worked full time in Business A after its acquisition. On the other hand, the wife only worked in the business for about the first seven months following its acquisition for approximately two full days per week, including book keeping, administration and serving on the counter. At the seven month mark, the wife’s mother had an accident and was no longer available to baby‑sit the parties’ children. The wife also maintained that she was “not paid” for the work she did in the business, and this was also a reason why she ceased working.
32I am satisfied that the husband worked long hours in Business A each week. Although the wife conceded that the husband was a hard worker, and that she was “happy” to give the husband credit for his hard work and for being a good provider for the family, I do not accept her evidence to the effect that the husband liked to go to work early each morning to just “hang out at the shop” and that he wasn’t really working for the first few hours of each day.
The parties’ separation and arrangements post-separation
33The parties separated on a final basis in January 2012. The wife and children remained in the Street C property and the husband moved into rental accommodation.
34The husband, either personally or via Business A, continued to meet most, if not all, outgoings in relation to the Street C property, including the mortgage payments. The husband also paid child support, paid for private health insurance for the wife and children, paid the wife’s internet and telephone accounts and ensured that the wife had continued access to a car. The wife conceded that the husband also met other expenses, such as the cost of some extra-curricular activities for the children and their medical expenses. Sometime after separation, the parties also agreed to draw down on the Street C mortgage to enable the wife to purchase a [caravan] and on the basis that the husband continued to meet the mortgage payments.
35In 2012, the wife commenced studying for a Diploma of [Management]. The wife is yet to finish that course, with two major and two minor units left to complete. I accept the wife’s evidence that she has had difficulty completing units due to the migraines she suffers in the winter months, and that if she fails to complete a unit within the academic year, the practical consequence is that she must start the unit again the following year.
36In or about August 2012, the wife resigned as a director and shareholder of Cali Pty Ltd and transferred her share in the company to the husband.[30] There was no evidence by either party as to the circumstances surrounding this change.
[30] Wife’s trial affidavit filed 27 March 2019, annexure MC6.
37During the period 2012 to 2016, the children spent limited overnight time with the husband – usually Friday and Saturday afternoons each week. There was a period of six months in 2013 during which the children spent two nights per week in the husband’s care, to facilitate the wife travelling to [City A] to study. Thereafter, the arrangements reverted to the children only spending Friday and Saturday afternoons with the husband.
The wife and children relocate to Regional Town B
38In early 2016, the wife and children relocated to live in Regional Town B.[31] To meet the costs of relocation, the husband agreed to pay to the wife (and did pay) the sum of $12,000. Whether that payment should be characterised as partial property settlement was the subject of dispute between the parties. In this regard:
a)Prior to the institution of these proceedings, the husband and wife signed an “Agreement as to a Partial Property Settlement” dated 26 April 2016.[32] It was a term of that agreement that the payment of $12,000 “is as and by way of partial property settlement” and that the sum would “form part of [the wife’s] entitlements in a final property settlement with no deductions”.
b)Following the institution of these proceedings, orders were made by consent on 24 December 2018 for the wife to receive the sum of $80,000 “as and by way of partial property settlement”. Paragraph 1 of the Minute attached to the order provided that “the parties agree that the Wife received a partial property settlement of $12,000” in April 2016.[33]
[31] Husband’s trial affidavit filed 8 March 2019, [12(43)].
[32] Exhibit A5, the third page of that bundle.
[33] Exhibit A5, the first and second pages of that bundle.
39After the wife and children moved to Regional Town B, the husband proposed that he move into the now vacant Street C property. For reasons that were not explored at the trial, the wife refused[34] and the husband continued to live in rental accommodation until January 2017,[35] with the Street C property remaining vacant the entire time.[36]
[34] Husband’s trial affidavit filed 8 March 2019, [12(47)].
[35] Husband’s trial affidavit filed 8 March 2019, [12(45)].
[36] Husband’s trial affidavit filed 8 March 2019, [12(46) and (47)].
40In January 2017, the parties reached an agreement that: (1) the husband was permitted to move into the Street C property; and (2) the husband would pay the wife the sum of $200 per week as a contribution towards her rental costs[37] in addition to child support as assessed. The wife arranged for the $200 per week to be paid into one of the children’s accounts, rather than into her own account. As at the date of trial, the husband continues to make the weekly payment of $200, albeit he intends to cease the payments upon final property settlement.
Sale of the Street B property
[37] Husband’s trial affidavit filed 8 March 2019, [12(48) and (49)].
41In April 2016, the Street B property sold for the sum of $248,000. The net proceeds were deposited into a Bank A term deposit account in the parties’ joint names.
The institution of family court proceedings and following events
42The husband commenced these property proceedings in April 2017. An order was made by consent on 13 June 2017 that the husband be granted leave to proceed with his application out of time. Procedural orders were made by the Court on 13 June 2017, including for the parties to attend a Conciliation Conference. The wife filed her responding documents in July 2017. The parties attended the Conciliation Conference with their lawyers on 12 October 2017, but no agreement was reached. The parties were ordered on that occasion to exchange offers of settlement, and the matter was listed to a Procedural Conference on 11 January 2018. Directions were made on that day programming the matter to trial, and the trial was ultimately listed before me in the judicial circuit in Bunbury in October 2019.
43The wife conceded that in or about June 2017, after contesting her late mother’s Will, she received a net payment from her late mother’s estate of $28,775.56.[38] She paid the funds into one of the children’s bank accounts. The wife also conceded that in June 2017 she sold the caravan for $23,000 and retained all the proceeds. There was no evidence as to what the wife did with the funds. In particular, I am not persuaded by the husband’s submission that I should find that the wife used her inheritance to purchase motor vehicle [A].
[38] The wife maintained that the amount was net of the legal costs she incurred in challenging her mother’s Will.
44In July 2018, the husband arranged to list Business A for sale with [Business Broker A].
45On 24 December 2018, an order was made by consent that the wife receive “as and by way of partial property settlement” the sum of $80,000 from the Business A term deposit account[39] (being the account into which the proceeds from the sale of the Street B property were deposited). I accept the wife’s evidence that she deposited the $80,000 into Child C’s bank account and then over time, used the funds to pay off her credit card debt, spent $5,000 on the children and herself to celebrate Christmas, paid ongoing living costs, paid her family law litigation costs and purchased the motor vehicle A.
Relevant further matters as at the time of the trial
[39] Exhibit A5, the first and second pages of that bundle.
46I accept the husband’s evidence that he did not spend money needlessly after separation. In addition to continuing to financially support the wife and children, he worked hard to pay off debts and improve his financial position overall. The wife conceded that since separation, the husband took little time-off work. In particular, I am satisfied that:
a)Shortly after separation in January 2012, the balance outstanding on the Bank A business loan was ‑$245,362.21 and the loan still had approximately 12 years to run.[40] However, by February 2019, the husband had fully repaid the debt.
b)As at July 2012, the balance owing on the Street C mortgage was approximately -$16,000. The parties later drew down on the loan to enable the wife to purchase the caravan. The husband then subsequently paid off the entire debt.
c)As at July 2012, the husband’s superannuation balance was $111,200.13.[41] By the time of the trial, the husband been able to increase his superannuation balance to $358,366.
d)After separation, the husband was able to gradually accumulate significant savings in the business offset account.
[40] Exhibit A5, the eighth page of that bundle.
[41] Exhibit A5, the sixth page of that bundle.
47As at the time of the trial:
a)The wife was 48 years old. She continued to live in Regional Town B with the children and was continuing with her [diploma studies].
b)The husband was 55 years old and continued to live and work in Regional Town A. Business A was under offer for the sum of $280,000, with settlement due in December 2019. The husband anticipated that he would continue to work for the new owners in the business for a short time, to assist with the transition. The husband spends overnight time with the two younger children (who are still under 18 years of age) on an infrequent basis. He estimated that they stayed overnight with him on approximately 10 to 15 occasions in 2018 and on approximately six occasions in 2019.
Matters arising following the trial
48Following the trial and in the course of preparing my judgment, it became apparent that the parties had not taken into account or given consideration to a (potentially significant) taxation issue arising from retained earnings in Cali Investments Pty Ltd.[42] Accordingly, I invited the parties to make further submissions on the matter, and for that purpose a further two discrete hearings were held on 13 December 2019 and 23 March 2020 respectively. At the later hearing, I was informed by counsel for both parties that it was agreed that the husband would be solely responsible for, and indemnify the wife against, any tax liability arising in respect of the retained earnings, and that the (potential) tax liability should be excluded for the purposes of determining the constitution and value of the asset pool.
[42] I say more about this entity at paragraphs [75] to [77] of these reasons.
49I was also informed by counsel for both parties that the sale of Business A had regrettably fallen through, and the husband was seeking a new buyer. Importantly, the orders sought by the husband at trial contemplated a scenario in which it may take him up to 12 months to sell the business, failing which property settlement would be concluded on the basis that he retain it and make an adjusting cash payment to the wife. In finally determining the parties’ respective property settlement entitlements, counsel for both parties invited me to: (1) take into account that capital gains tax will only be payable in the event the business sells and that the notional amount included in the Trial Asset Schedule may not be correct; and (2) include in the asset pool two tax liabilities of Cali Investments Pty Ltd for the financial year ending 30 June 2019 at $13,147[43] and $24,825[44] respectively.
[43] Refer to item 50 in the Schedule set out in paragraph [51] below.
[44] Refer to item 51 in the Schedule set out in paragraph [51] below.
50On 16 December 2019, I made an order by consent that the wife receive the sum of $15,000 from the parties jointly held Bank A deposit account, as and by way of partial property settlement.
EXISTING INTERESTS IN PROPERTY:
51I am satisfied that the property interests of the parties is as set out in the following Schedule, which adopts the same format and numbering as the Trial Asset Schedule jointly handed up by the parties at the commencement of the trial:[45]
[45] Save that I have included an additional item 11A to take into account the payment of $15,000 to the wife following trial.
Item #
Assets
$ Value
3
Street C, Regional Town A (joint)
$255,000
4
Cash at bank from the sale of the Street B property (joint), less the sums of $80,000 and $15,000 received by the wife by way of partial property settlement
$152,759
5
5000 shares in Publically Listed Company A
$600
6
Husband’s stockpile of wood
$7,556
7
Husband’s motorcycle
$3,000
8
Husband’s home contents
$2,500
9
Husband’s motor vehicle [B]
$7,000
10
Husband’s cash at bank
$716
11
Wife’s partial property settlement payments received prior to trial being $12,000 and $80,000
$92,000
11A
Wife’s partial property settlement following trial but before judgment pursuant to a consent order made on 16 December 2019
$15,000
12
Proceeds from the sale of motor vehicle [C] retained by wife
$0
13
motor vehicle A
$0
14
Wife’s caravan
$9,000
15
Wife’s household contents
$6,000
16
Proceeds of sale of caravan retained by wife
$0
17
Wife’s motorcycle
$2,000
18
Wife’s cash at bank in a/c XXXX (Child A’s account)
$1,070
19
Wife’s cash at bank in a/c XXXX (Child B’s account)
$68
20
Wife’s cash at bank in a/c XXXX (Child C’s account)
$0
21
Wife’s cash at bank in a/c XXXX (wife’s account)
$554
22
Husband’s miscellaneous vehicles, motor bikes
$0
26
Husband’s paid legal fees
$104,000
27
Cali Family Trust – other assets
$0
28
Cali Family Trust – Business A
$280,000
29
Cali Family Trust – [motor vehicle D]
$29,000
30
Cali Family Trust – offset a/c XXXX
$64,416
31
Cali Family Trust – cheque a/c XXXX
$1,403
32
Cali Family Trust – funds held in trust by West Family Lawyers
$27,275
33
Cali Family Trust – debtors/ accounts receivable
$51,153
Liabilities
41
Wife’s Visa credit card
$0
42
Wife’s VET Help debt
$0
43
Wife’s debt to children
$0
44
Debt owed to a “friend”
$0
48
Cali Family Trust –tax on sale of business – actual amount currently not known
$0
49
Cali Family Trust – creditors
-$22,834
50
Cali Investments Pty Ltd – 2019 tax payable
-$13,147
51
Cali Investments Pty Ltd – IAS tax payable
-$24,825
Superannuation entitlements
59
Husband’s superannuation
$358,366
60
Wife’s superannuation
$705
TOTAL
$1,410,335
52Save for the following items, the parties agreed, did not dispute and/or conceded the items and values listed in the Schedule.
53 Item 5 – Publically Listed Company A shares: Although the value of these shares were recorded as agreed at $600 in the Trial Asset Schedule, I was informed by counsel for the husband during the course of the trial that the wife now asserted that the shares were worth $800 (based on the share price as at 16 October 2019). The value to be ascribed to the shares was not subject of any cross-examination, and it was not addressed by either party in closing submissions. Doing the best I can with the evidence that was before me,[46] I find that the shareholding is worth $600.
[46] Husband’s trial affidavit filed 8 March 2019 and, in particular, the reference to the shareholding in the Table of Assets and Liabilities on page 19. See also annexure H to the affidavit, which noted a price of $0.12 per share as at 5 March 2019.
54 Item 11 – interim property settlement payments received by the wife: It was common ground between the parties that I should treat the $80,000 received by the wife in December 2018 as a partial property settlement payment. I am satisfied that it is appropriate to do so, and I have included that amount on the wife’s side of the ledger. This figure effectively includes the wife’s paid litigation costs in the amount of approximately $35,000.[47]
[47] Exhibit R1.
55The husband submitted that I should also treat the payment of $12,000 made to the wife in April 2016 as an interim property settlement payment, having regard to: (1) the written agreement between the parties dated 29 April 2016[48] characterising the payment as partial property settlement; and (2) the subsequent acknowledgment by the wife in the orders made on 24 December 2018 that said payment was by way of partial property settlement, by which time the wife was legally represented. In response, the wife’s position was that she was pressured to agree to characterise the payment as partial property settlement, and that I should exercise my discretion to not include it in the Schedule. The wife maintained that she “just needed the money” and that she “did not realise the consequences” of agreeing to characterise the payment as partial property settlement, and did not think it would be taken out of her division of property. However, when asked to give her understanding of the words used in the April 2016 agreement, the wife conceded that she understood that the payment was “a receipt” and that “some of my assets and money had been given to me at that point”. Having had the opportunity to see the wife under cross-examination, I am satisfied that the wife well understood the nature of what she was agreeing to.
[48] Exhibit A5, the third page of that bundle.
56I accept the submission by counsel for the wife that I retain the discretion in making a final property settlement order to alter or re‑characterise interim distributions property as required so as to achieve a just and equitable outcome.[49] In this case, I am satisfied that having regard to: (1) the wife’s understanding of the agreement she entered into in April 2016, and (2) that the wife again confirmed that understanding when she consented to the orders made in December 2018 (with the benefit of legal advice), the funds should be treated as a partial property settlement payment to the wife.
[49] Gable & Yardley (2008) FLC 93-386, [69] – [73] (per Bryant CJ and Coleman J), and [126] (per Finn J, in dissent); Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466, [113] (per Boland and O’Ryan JJ).
57 Items 12 and 16 – Proceeds of sale of motor vehicle C and the caravan: The wife conceded that in June 2017 she sold the caravan for $23,000 and retained the sale proceeds. There was little, if any evidence, as to how the wife dealt with the funds. Counsel for the husband submitted that I should notionally include the value of the sale proceeds in the balance sheet as an asset in the hands of the wife, and referred me to the Full Court’s decision In the marriage of Townsend & Townsend.[50] In the alternative, counsel for the husband said that I should have regard to the wife’s receipt and use of the sale proceeds under s 75(2)(o) of the Act.
[50] In the marriage of Townsend & Townsend (1995) FLC 92-569.
58In addition, just prior to the trial in September 2019, the wife sold her motor vehicle C for $11,000. The wife was asked in cross-examination what became of those funds, to which she replied that the funds were “gone”, without elaboration. The husband’s counsel submitted that the wife failed to provide any reasonable explanation for how the proceeds of sale had been disbursed; and given the close proximity in time between the sale and the trial, the wife should be required to account for the proceeds.
59As the editors of CCH Australian Family Law & Practice observe[51] since Stanford v Stanford (supra), courts have been more cautious about notionally adding back property which is no longer in existence. In Bevan & Bevan,[52] the Full Court observed that notional property:
which is sometimes added back to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute property of the parties to the marriage or either of them, and thus is not amenable to alteration under s 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage – and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that s 79(4) and in particular s 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.
[51] CCH Australia, Australian Family Law & Practice Premium Commentary (last reviewed 6 May 2019), [36-125].
[52] Bevan & Bevan (2013) FLC 93-545, [79] (per Bryant CJ and Thackray J).
60In this case, there is no evidence to suggest that the sale proceeds of the caravan and motor vehicle still exist. In my view, the most appropriate way to deal with the matter is to not add back the funds into the Schedule, but to take the matter into account in my assessment of the section 75(2) factors.
61 Items 13 and 20 – motor vehicle A and Child C’s bank account: I accept the wife’s evidence that she banked the $80,000 she received as and by way of interim property settlement into Child C’s bank account. I also accept the wife’s evidence that she used part of the interim property settlement payment to purchase the motor vehicle. In the circumstances, I am satisfied that it would be double counting to also include the value of the motor vehicle and the remaining funds in the bank account in the Schedule. Accordingly, I have included both the vehicle and the bank account at $0 in the Schedule.
62 Items 18, 19 and 21 – the wife’s, Child A’s and Child B’s bank accounts: The wife conceded that she used all the children’s bank accounts as “holding accounts” into which she deposited her own money. It was common ground between the parties that the value of the monies in Child A’s and Child B’s account should be brought to account in the property settlement. Although the dispute as to the value of the monies standing in credit in each account was identified early in the trial, it was never resolved. The husband asserted in the Trial Asset Schedule that the total balance of these accounts stood at $2,008. In contrast, the wife asserted the total balance to be $1,692. The difference is exceedingly modest. As there was no cross‑examination on this issue, I consider it appropriate to accept the wife’s values as an admission against interest.
63 Item 22 – husband’s miscellaneous motor vehicles and motor bikes: The husband conceded that he owned two “[dirt] bikes” that were used by the children. The husband was asked whether he owned trailers for each motorcycle, to which he responded “no”, and that they were simply put on the back of his ute for transport. The wife asserted that these items should be ascribed a value of $10,000, whereas the husband effectively maintained that they had no commercial value.[53] In closing submissions, counsel for the husband submitted that the wife was on notice of the dispute as to the value of these bikes, and nevertheless failed to seek their valuation. Counsel referred me to the case of Khademollah & Khademollah[54] where Finn J said:
the onus lies on the party who is concerned about the disposition of chattels, or at least concerned to see that an adjustment be made for the value of the chattels in the overall property settlement, to put evidence before the Court of the value of the chattels in order that the Court may satisfy itself that it is not devoting its scare resources to the resolution of disputes about assets of no or relatively minimal value.
[53] Refer to the Trial Asset Schedule at item 22.
[54] Khademollah and Khademollah (2000) FLC 93-050, [32].
64In Yeates (as executor for Mr Yeates) & Yeates[55] Thackray CJ cited the above comment with approval and said:
I have consistently applied Finn J’s remarks as a practical and principled means of dealing with [disputes regarding chattels]. Absent refusal on the part of the party in possession to make the item available for valuation, I consider the party who asserts the higher value should bear the onus of proving it. Without such proof, the matter can only be resolved on the basis of the admission against interest made by the party who asserts (without proof) the lower value.
[55] Yeates (as executor for Mr Yeates) & Yeates [2013] FCWA 117, [92].
65I agree with the observations of both Finn J and Thackray CJ. In circumstances where the wife failed to lead any admissible evidence in support of her contended value for the motor bikes, I am unable to do anything other than accept the husband’s case that those chattels are of no commercial value and should be included in the Schedule a $0.
66 Item 26 – husband’s paid legal fees: The husband’s paid litigation costs as at 14 October 2019 were approximately $104,000. The husband paid all his litigation costs from funds derived from Business A.[56] The wife maintained that the costs should be added back on the husband’s side of the ledger in the Schedule; the husband maintained that they should not (and submitted that if the husband’s position found favour with the Court, then, as a matter of fairness, the wife’s paid litigation costs should also be deducted from her $80,000 interim property settlement payment in the Schedule).
[56] It was unclear on the evidence how the payment of the husband’s paid litigation costs was treated in the financial statements for the business: for example, as drawings by the husband, wages or in some other way.
67Counsel referred me to the Full Court decision of Trevi & Trevi[57] in which Murphy J (with whom Alstergren CJ and Kent J agreed) discussed the issue of adding back paid legal fees. At [30] – [32], his Honour said:
[57] Trevi & Trevi (2018) FLC 93-858.
[30]Two fundamental premises emerge from Omacini and the authorities preceding it. First, “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of the case, just and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing interests in property.
[31]To the consideration just discussed must be added the propositions emerging from authority that paid legal fees as a category of addback is imbued with considerations specific to that expenditure. The Full Court said in Chorn:
56.In summary, we consider that the above mentioned decisions of the Full Court establish that, while the treatment of funds used to pay legal fees remains ultimately a matter for the discretion of the trial Judge, in determining how to exercise that discretion, regard should be had to the source of the funds.
57. If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contribution), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
58.If the funds used to pay legal fees have been generated by one party post-separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance), they would generally not be added back as a notional asset; nor would any borrowing undertaken by a party post‑separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties. Funds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post separation income or acquisitions.
[32]Those passages can be seen as an attempt to establish “guidelines”, undertaken after a detailed examination of earlier authorities, for the treatment of paid legal fees within s 79 proceedings. There can be little doubt that the statements made in that case have been applied by trial judges ever since.
68I agree with the observations of Murphy J. In this case, I am satisfied it is appropriate to add back the husband’s paid litigation costs.[58] The husband funded his litigation costs via Business A. It was unclear on the evidence how such payments have been treated in the financial statements of the trust. I am not satisfied that it is appropriate to simply treat the payments from the business effectively as post-separation income and/or drawings attributable solely to the husband’s exertions. Rather, I am satisfied the payments should be regarded as deriving from a business in which both parties have an interest and to which both parties made significant contributions during the relationship and after their separation, including in the case of the wife, her significant contribution to the welfare of the family.
[58] And to avoid any doubt, the wife’s paid litigation costs have also been added back, by virtue of my including in the Schedule the full amount of the $80,000 partial property settlement received by the wife in December 2018, from which she paid her legal fees.
69 Items 30, 31 and 32: At the commencement of the trial, the parties were in dispute as to the current balances of the business bank accounts and the amount of funds held in the husband’s solicitor’s trust account was identified in the Trial Asset Schedule. The husband asserted in the Trial Asset Schedule that the total balance of the business bank accounts was $65,819 and the balance remaining in trust was $27,275. On the other hand, the wife asserted a $0 balance for the business bank accounts (apparently on the basis that the amounts were included in the value of “other assets” at item 27 of the Schedule) and a balance of $57,000 for the moneys remaining in trust. During the trial, both counsel confirmed that the parties agreed that the value of item 27 ought to be $0, but did not otherwise address the values of items 30, 31 and 32, including by leading any further evidence or in cross‑examination. As there was no evidence in relation to the issues, I consider it appropriate to accept the husband’s values as admissions against interest.
70 Items 42, 43 and 44: The wife maintained that she had three debts incurred by her after separation that should be included in the Schedule: a debt to the government in relation to her diploma study, a debt to the parties’ children of $20,000 and a debt to an unnamed friend of $8,000, incurred by her shortly prior to the trial.
71There was little or no evidence in relation to the wife’s study debt or the debt to her friend (including in the case of the friend, the purpose of the loan). The wife’s evidence in relation to her alleged debt to the children was confused and inconsistent. The wife maintained that: (1) she set up bank accounts for the children initially to bank small cash gifts that each of the children received from their paternal grandmother when they were born; (2) at some stage after the children were born, the parties agreed to deposit $10 into the accounts each week, back-dated to the birth of each child; and (3) after separation, she used the funds in the accounts to meet living expenses, on the basis that she told the children she would pay the money back. However, the wife also maintained that she used the children’s accounts as “holding accounts” for herself, for example: to receive the $80,000 interim property settlement payment and the $200 per week contribution made by the husband towards her rent.
72Counsel for the husband submitted that I should exclude those debts from the balance sheet on the basis that: (1) the debts were incurred post-separation; and (2) that aside from the wife’s assertions, there was no evidence before me substantiating the debts. Counsel also referred me to the Full Court’s decision in Biltoft and Biltoft. In that case, the Full Court remarked that the court “may properly determine not to take into account or to discount the value of an unsecured liability in certain circumstances. Such liabilities would include but are not limited to a liability which is vague or uncertain, if it is unlikely to be enforced or if it was unreasonably incurred.”[59] Given the lack of satisfactory evidence in relation to the alleged liabilities, I am not satisfied that it is just and equitable to include them in the Schedule.
[59] Biltoft and Biltoft (1995) FLC 92-614, 82-127.
73 Item 48: It was agreed between the parties and I am satisfied that if Business A does sell within 12 months, then any tax payable on the sale of the business should be paid from the proceeds received from the sale of business, before the balance is then disbursed to the parties in the proportions I so determine. I am not satisfied that it is otherwise appropriate to include a notional figure in the Schedule, given the uncertainties around whether the business will sell within 12 months or not, in which case the husband will retain the business.
74 Item 49: At the commencement of the trial, the parties were in dispute as to the amount of the business creditors. The husband asserted in the Trial Asset Schedule that creditors totalled $22,834. On the other hand, the wife asserted a $0 balance, on the basis that she was not satisfied the husband had properly vouched the liabilities. There was no evidence before me substantiating the liabilities. However, in closing submissions, the husband’s counsel maintained, and the wife’s counsel did not dispute, that vouching documents had been provided. In such circumstances, I am satisfied that I should include the amount in the Schedule, as asserted by the husband.
75 Items 50 and 51: The Trial Asset Schedule did not include as an asset or as a liability the parties’ interests in Cali Investments Pty Ltd. Cali Pty Ltd as trustee for the Cali Family Trust owns all issued shares in Cali Investments Pty Ltd. The company appears to be used as a vehicle to receive trust distributions from the trust and holds significant retained earnings. The financial statements for the company for the year ended 30 June 2019 revealed that the company had total assets of $398,558, including unpaid beneficiary entitlements of $398,548, tax liabilities of $10,342, and a total equity of $388,216, including retained earnings of $388,206.[60]
[60] Husband’s affidavit filed 23 September 2019, annexure bundle page 15 onwards.
76The entity was in effect ignored by the parties for the purposes of the trial, save for the inclusion of two tax liabilities of the company, referred to at items 50 and 51 of the Schedule. Again, at the commencement of the trial, the parties were in dispute in relation to these two liabilities. This issue was never dealt with or resolved during the trial. However, as noted at paragraph 49 above, the parties agreed following the trial that I should proceed on the basis that the liabilities do exist at the values asserted by the husband.[61]
[61] Absent that agreement, I would have ascribed a value of $0 to each of the alleged liabilities at Items 50 and 51 of the schedule given the lack of satisfactory evidence.
77Further and as noted earlier at paragraph 48 above, the parties otherwise consented to an order that the husband be solely responsible for and indemnify the wife against any tax liability arising from the retained earnings in Cali Investments Pty Ltd. The parties agreed that I should proceed on the basis that the value (if any) of that liability need not be included in the Schedule.
SECTION 79(4) (a), (b) (c) FACTORS:
78The husband’s position was that the Court should assess contributions as to 57.5 per cent to him and as to 42.5 per cent to the wife, having regard to: firstly the husband’s significantly greater initial contributions; and secondly the husband’s significantly greater post separation contributions in paying off debt and in increasing the value of his superannuation entitlements and business savings. On the other hand, the wife’s position was that the Court should assess contributions as to 57.5 per cent to her and as to 42.5 per cent to the husband, having regard to her post separation contributions to the welfare of the family against a background of the husband only providing modest financial support.
79I am satisfied that the contributions do favour the husband to some extent for the following reasons: Firstly, I am satisfied that at the commencement of their marriage, the husband owned significantly greater assets than did the wife. In particular, the husband’s equity in the Street A property was the springboard that enabled the parties to purchase the block of land in Street B, which property significantly increased in value over time. I do not accept the wife’s submission that I should regard these contributions as having been “completely eroded”. Secondly, during the relationship, I am satisfied that each party contributed equally in his / her respective sphere: the husband as the primary income earner and the wife as the primary homemaker and parent to the children. Thirdly, the husband’s post separation contributions were very significant, in reducing the parties’ debts, in building up his superannuation entitlements and in enabling him to pay his very significant family law legal fees. Fourthly, I considered that the wife’s post separation contributions were also significant. In particular, she continued to make substantial contributions to the welfare of the family in her role as the primary homemaker and parent to the children and with limited assistance from the husband in this regard. However, I do not accept the wife’s submission that after separation the husband only provided the wife and the children with modest financial support. Given their financial circumstances, I consider that the husband’s financial support of the wife and the children in the years after separation was significant. Fifthly, the wife also received an inheritance post separation. There was no evidence as to what the wife did with the funds and the wife failed to provide any disclosure in relation thereto. In such circumstances, I am not satisfied that the wife should be given any additional credit in relation to contributions in this regard.
80In balancing the various factors, I consider that contributions should be assessed as to 55 per cent to the husband and 45 per cent to wife.
SECTION 79(4)(e) / SECTION 75(2) FACTORS:
81I will now consider the relevant factors as required by the legislation. If I do not refer to a factor, it is because I consider the matter is not relevant in this case.
82The husband is currently 55 years old. The husband’s 2019 income tax return revealed that the husband’s taxable income was $60,778, comprising primarily his wages from Business A. In addition, the Cali Family Trust made a profit of $97,554, all of which was distributed to Cali Investments Pty Ltd.[62]
[62] Husband’s affidavit filed 23 September 2019, annexure B, pages 45 and 76.
83The unchallenged evidence of the husband’s doctor is that the husband suffers from permanent joint degeneration. The husband can expect to suffer from “intermittent episodes of pain which may be disabling for a period of days”.[63] The husband’s doctor also reported that the husband suffers from severe joint pain and that he is due to undergo [surgery], although the timing of the surgery is currently uncertain.[64] The husband also has [another medical condition] that is currently stable, but that the husband may suffer from “episodic [irregularities] which may be severe or disabling and hospital management will be mandated.”[65]
[63] Affidavit of Dr D filed 16 September 2019, annexure A.
[64] Ibid.
[65] Ibid.
84In spite of these various health conditions, the husband’s emphatic evidence under cross-examination was that he intended to continue to work so that he would be in a position to provide for his children, including paying child support as assessed. The husband described himself as a “qualified and experienced [tradesperson]”,[66] and has also previously held sales-type roles, as well as running his own business for a number of years. Having regard to the husband’s concession, I am satisfied that he will continue to earn a reasonable living in the future, whether as a tradesperson or in the sales area, albeit I am not satisfied he is likely to generate the same high level of income as he currently enjoys from Business A (if that business is indeed sold).
[66] Husband’s trial affidavit filed 8 March 2019, [25].
85The wife is currently 48 years old. At present, the wife is not gainfully employed and receives Centrelink entitlements. The wife has historically worked in her own contract delivery business, as a teacher’s assistant, in the hospitality industry and for a short time in Business A, during which she did book keeping, administration and serving on the counter. However, the wife has not worked in any of these roles in the last decade. The wife commenced her diploma in 2012 but has not yet completed it. The wife acknowledged that she saw the attainment of her diploma as the gateway through which she could be self-employed and achieve the degree of flexibility required to work around her illness.[67]
[67] Wife’s trial affidavit filed 27 March 2019, [51] and [52].
86The wife maintained that there were two main issues that adversely impacted on her income earning capacity: her health and her obligations to care for the children, particularly Child C, given his health issues. Firstly, I accept the wife’s evidence that she suffers from [a medical condition] and chronic migraines.[68] Historically, she has suffered debilitating migraines during the colder months of each year, with her condition improving in the warmer months. At trial, the wife maintained that for the past two years, she has also been suffering from migraines during the warmer months. The wife also gave evidence that she would soon need “[significant] surgery” – but later conceded that what was in fact required was [more minor surgery]. The wife conceded that she unsuccessfully applied for a disability support pension from Centrelink in 2016 and has chosen not to make a further application since this time. The wife failed to call any of her treating medical professionals to give evidence at trial about her medical conditions, treatment and prognosis. Further, and as noted earlier in these reasons, the wife also failed to disclose a medical report she obtained from her GP just prior to trial, ostensibly on the basis that it contained information that was not helpful to her case. At the end of the day, whilst I am satisfied on the available evidence that the wife has historically struggled particularly with migraines, I am not satisfied that wife’s health issues will hamper her from initially gaining employment in the future, although I accept the wife’s case that her health issues may hamper her ability to work full time in an office environment.[69] Secondly, it was common ground that the wife will continue to be primarily responsible for the care of the parties’ three teenage children. All three children remain living with the wife, noting that Child A is now an adult. The wife also maintained that Child C suffers from headaches that have resulted in him missing a great deal of school in 2019 and that this factor also significantly limited her ability to seek employment.[70] However, it was only during cross-examination that the wife disclosed that Child C had recently commenced taking new medication that was proving very effective. The wife’s counsel conceded in closing submissions that the wife’s evidence about Child C’s health issues was unconvincing. At the end of the day, I am not satisfied that the wife’s commitments to care for the children hamper her from gaining some form of part-time and eventually full‑time remunerative employment, particularly given their ages.
[68] Wife’s updating trial affidavit filed 13 August 2019, [7].
[69] Wife’s Papers for the Judge filed 12 August 2019, page 10, [7].
[70] Wife’s updating affidavit filed 13 August 2019, [17] and [18].
87However, I am satisfied that the reality is that the wife’s income earning capacity is significantly more limited than that of the husband, having regard to her work experience and skills, and her role as the primary homemaker and parent and resultant significant periods of time out of the work force. I am satisfied that in medium term, the wife’s capacity for remunerative employment is largely limited to low paid and / or unskilled roles such as [admin] and/or retail work.
88In relation to s 75(2)(o) factors there is one matter that I wish to address – the wife’s receipt of funds post-separation for which she failed to account. After separation, the wife sold the caravan and motor vehicle C and retained the net proceeds totalling $34,000. She did not account for how she dealt with those funds. The wife received a benefit to the exclusion of the husband, and in the context of family law litigation she was required to give disclosure as to how those funds were disbursed. In my view, it is appropriate that I take this matter into account.
89Weighing the various factors identified by me I am satisfied that the s 75(2) factors weigh significantly in favour of the wife. I am satisfied there should be an adjustment of 10 per cent in her favour.
SECTION 79(4)(d),(f) & (g) FACTORS:
90The sale of Business A will likely have a detrimental impact on the husband’s earning capacity, if in fact it sells. Nevertheless, the husband has actively sought the sale of the business since July 2018. I have already dealt with the remaining factors, in so far as they are relevant.
DISCUSSION AND CONCLUSIONS:
91I intend to order that the property interests of the parties be divided as to 55 per cent to the wife and 45 per cent to the husband.
Business A
92Both parties agree that the business continue to be marketed for sale. The wife sought an order, in effect, for her appointment as sole trustee for sale and settlement of the business. That position was not the subject of any cross-examination of the husband, nor was there any evidence to suggest that the husband would act in a manner prejudicial to the wife in the conduct of the sale, or was otherwise incapable of effecting the sale. I decline to make the order sought by the wife. I also decline to make the order sought by the wife that the listing price be set at $320,000. Instead, and subject to any further submission the parties may wish to make in relation to the matter, I consider it appropriate to make an order that: (1) the listing price be set at the value recommended by the listing agent in writing from time‑to-time; and (2) the husband shall accept any offer to purchase the business as recommended by the listing agent in writing, upon providing the wife with not less than 48 hours written notice of his intention to so accept.
93The husband also proposed that in the event Business A did not sell within 12 months, then he retain the business and pay out the wife her entitlements within a further three months. Having regard to my earlier findings, this means that the husband will be required to pay the wife the sum of $154,000 for her interest in the business. Given that the husband has been attempting to sell the business since July 2018 without success, I consider the husband’s proposal in this regard is appropriate.
94The husband also proposed, in effect, that he only be required to pay out the wife her full property entitlements from the proceeds of sale of the business, (or within 15 months if the business did not sell). However, I am not satisfied that such an approach is just and equitable. Whilst I consider it appropriate that the wife await the sale of the business (or the expiration of 15 months) to receive her share of the value of the business, I am not satisfied that it is reasonable to adopt such an approach to the wife’s overall entitlements.
The remaining property of the parties
95Leaving aside the parties’ interests in Business A, I intend to order that the remaining property interests of the parties totalling $1,130,335 be divided in accordance with the following table.
Husband
Wife
$ Value
Street C, Regional Town A
$255,000
Cash at bank from the sale of the Street B property
$152,759
Publically Listed Company A Shares
$600
Partial property settlement payments
$107,000
Wood stockpile
$7,556
caravan
$9,000
Husband’s motorcycle
$3,000
Wife’s motorcycle
$2,000
Home contents
$2,500
Home contents
$6,000
motor vehicle B
$7,000
Wife’s cash at bank
$1,692
Husband’s cash at bank
$716
Husband’s paid legal fees
$104,000
Cali Family Trust – FR Utility
$29,000
Cali Family Trust – offset a/c XXXX
$64,416
Cali Family Trust – cheque a/c XXXX
$1,403
Cali Family Trust – funds held in trust by West Family Lawyers
$27,275
Cali Family Trust – debtors/ accounts receivable
$51,153
Cali Family Trust – creditors
-$22,834
Cali Investments Pty Ltd – 2019 tax payable
-$13,147
Cali Investments Pty Ltd – IAS tax payable
-$24,825
Husband’s superannuation
$358,366
Wife’s superannuation
$705
Sub-total
$851,179
Sub-total
$279,156
Super split to wife
-$196,784
Super split from husband
$196,784
Cash payment to wife
-$145,744
Cash payment from husband
$145,744
TOTAL
$508,651
45%
TOTAL
$621,684
55%
96I also make the following determinations in relation to specific orders sought by the parties in their respective minutes:
a)The wife sought an order that the monies currently standing in credit in the joint Bank A term deposit account XXXX be paid to her within 7 days of receipt of the orders. The husband proposed a timeframe of 42 days. I consider that 14 days is an adequate time within which to arrange that particular transaction and otherwise close the account. For other transactions mentioned in the orders (particularly those relating to the transfer of property, and dealings with particular entities) I consider that 42 days is an appropriate timeframe.
b)The parties both agreed there should be a superannuation splitting order – so as to effect a transfer of a portion of the husband’s superannuation entitlements to a fund nominated by the wife. There are two matters arising in relation to such order. Firstly, at the time of trial the court was not provided with any evidence that the trustee for the husband’s superannuation fund had been accorded procedural fairness as required by Rule 14.06 of the Family Law Rules 2004 (Cth). In this regard, I note that the husband and wife each proposed a different form of order. This issue will need to be attended to prior to the making of any superannuation splitting order. Ideally, the parties will be in a position to deal with the matter at the forthcoming judgment hearing, to avoid any further delay in finalising the proceedings. Secondly, and subject to any further submission the parties may wish to make in relation to the matter, given that the husband’s superannuation entitlements comprise a significant proportion of the parties’ total net worth, I am satisfied that the superannuation entitlements should be divided in the same proportions as the parties’ overall entitlements: that is 55 per cent to the wife and 45 per cent to the husband. Accordingly, the superannuation splitting payment to be made to the wife is $196,784 (being 55 per cent of the parties’ total superannuation entitlements).
c)The wife sought an order that she receive the entirety of the monies standing in credit in the business offset account XXXX. Whilst I am not satisfied it is appropriate to make such an order, (given the lack of any evidence or submissions as to the possible taxation consequences), it is clear that (leaving aside the specific payment arrangements for Business A) the husband will have to make a cash payment of $145,744 to the wife for her to receive her property entitlements. As I have previously indicated, the husband appeared to expect the wife to wait until the sale and settlement of the business (or alternatively 15 months in the event the business did not sell) to receive her full entitlements. I am not satisfied that such orders are appropriate. In my view, if the husband cannot afford to pay out the wife the balance of her entitlements within a reasonable period of time, then the Street C property should be sold. I am not satisfied that the period of 30 days for payment (as proposed by the wife) is reasonable. However, I am satisfied that the period of 42 days is sufficient time to enable the husband to raise the necessary funds. Again, for the same reasons as set out in paragraph 92, I am not satisfied that the wife should be appointed the sole trustee for sale of the Street C property. I consider that the parties should jointly manage the sale, if required.
d)The wife sought orders in relation to a [CD player] and a motor vehicle [E]. There was no evidence in relation to, nor any cross‑examination about, these items of property, and I decline to make the orders sought.
e)Although the form of orders sought differed, the parties were otherwise in agreement that the husband should retain Cali Pty Ltd and Cali Investments Pty Ltd to the exclusion of the wife, and the wife would otherwise relinquish/renounce any right she may in respect of the Cali Family Trust. I have largely adopted the orders sought by the husband in this regard.
f)The parties were otherwise in agreement that: (1) they should each be responsible for liabilities encumbering any item of property to which they are entitled pursuant to the orders; and (2) the husband would indemnify the wife in relation to any tax liability arising in relation to the retained earnings in Cali Investments Pty Ltd.
g)The husband sought a s 77A designation be included in the orders, to the effect that $20,000 of the monies received by the wife pursuant to the orders be characterised as lump sum spousal maintenance. There were no submissions made in closing on that issue and, as a result, I treat that aspect of the husband’s case as abandoned and decline to make the order sought.
97Pursuant to my proposed orders, the wife will initially receive property with a total value of $621,684, primarily comprising cash, superannuation entitlements and other modest assets. As and when Business A sells (or in the event that it does not, then in approximately 15 months’ time) the wife will receive a further lump sum cash payment. On the other hand, leaving aside Business A, the husband will receive property with a total value of $508,651, primarily comprising the Street C property, his entities, superannuation entitlements and other modest assets. He will also have an immediate liability to pay the wife the amount of $145,744. If the business sells within the next 12 months, then he will receive a lump sum cash payment, which he can apply in reduction of his liabilities, if he chooses. If the business does not sell and the husband retains it, then he will have to make an additional payment of $154,000 to the wife. I am satisfied that the overall settlement is just and equitable.
ORDERS:
98I propose to issue these reasons from chambers in order to give the parties an opportunity to consider them and my proposed orders. I propose to make the following orders:
The Business
1.The parties shall forthwith do all acts and things and sign all documents necessary to authorise and direct [Business Broker A], the business broker retained to sell the business owned by the [Cali Family Trust] (“the CFT”) and styled “[Business A]” (“the Business”), to:
a)Keep the Business listed on the market for sale at such price as is recommended by [Business Broker A] in writing from time to time;
b)Provide each party with a copy of any offer to purchase the Business forthwith upon its receipt by [Business Broker A];
c)Provide each party and their respective legal representatives all information and material reasonably requested from time to time.
2.Within 42 days of the date of these orders, the parties do all acts and things and sign all documents necessary to effect the following transactions in respect of the Business, the CFT, [Cali] Pty Ltd (“the Trustee”) and [Cali Investments Pty Ltd] (“[Cali Investments]”), hereinafter collectively referred to as “the Entities”:
a)to the extent not already complied with, the wife’s resignation as a guardian and appointor of the CFT;
b)the wife’s resignation as a beneficiary from, and her formal surrender and relinquishment of, any and all entitlement she has in the CFT, including any unpaid present entitlement and loan accounts.
3.If an offer to purchase the Business is accepted within 12 months of the date of these orders, then the parties do all acts and things and sign all documents necessary in a timely way after acceptance of that offer to:
a)quantify the total debt (“the Tax Debt”), comprising of tax, interest, penalties and fees, which the Business accountant advises will be due and payable by the Entities on the day of the settlement of the Business, but excluding any tax due and payable by, or in relation to, [Cali Investments]’ retained earnings; and
b)cause the proceeds of the sale of the Business to be disbursed in the following order of priority at settlement:
i)to discharge any liability secured over the CFT’s assets;
ii) to discharge the debts of any Business creditor;
iii) to meet any unpaid employee entitlements;
iv)to discharge the broker’s fees and the fees of the settlement agent;
v)to pay the Tax Debt to the Australian Tax Office;
vi)to divide the balance between the parties as to 55 per cent to the wife and 45 per cent to the husband.
4.Upon receipt of any offer to purchase the Business, the following provisions apply:
a)the parties forthwith confer with one another and with [Business Broker A], in a timely way, to determine whether the offer will be accepted or rejected or whether a counter-offer will be made;
b)if [Business Broker A] recommends in writing to the parties that a particular offer be accepted, the husband shall do all acts and things and sign all documents necessary to accept that offer on the condition that he provide no less than 48 hours written notice to the wife of his intention to do so;
c)the parties be at liberty to apply to the court on an urgent basis to the extent there is a dispute as to the acceptance of any offer so received.
5.If no offer to purchase the Business is accepted within 12 months of the date of these orders, then paragraph 1 hereof be discharged and in lieu thereof, within 15 months of the date of these orders, or such longer period as agreed between the parties in writing, the husband pay to the wife the sum of $154,000.
Payment, transfers & vesting orders
6.Within 14 days of the date of these orders, the parties transfer the balance in the joint [Bank A] Account ending [XXXX] to an account nominated by the wife and do all acts and things necessary to see that joint account closed.
7.Within 42 days of the date of these orders and contemporaneously:
a) the husband pay to the wife the sum of $145,744;
b)the wife transfer to the husband at his expense all her right, title and interest in the [Street C property] (“the Home”);
c)the wife transfer to the husband at his expense all of her right, title and interest, if any, in the [Publically Listed Company A shares]; and
d)the parties do all acts and things and sign all documents necessary to cause the CFT to transfer the [motor vehicle D] to the husband at the husband’s expense.
8.In the event that the husband does not comply with paragraph 7(a) hereof within the specified timeframe, then paragraphs 7(a) and 7(b) hereof be discharged and in lieu thereof the parties forthwith do all necessary acts and things and sign all necessary documents to sell the Home on such terms and conditions as the parties agree and then disburse the proceeds of sale as follows:
a)in payment of the costs of sale, including agents commission;
b) in adjustment of the rates and taxes;
c) in payment of the sum of $145,744 to the wife; and
d) in payment of the balance to the husband.
9.Subject to any provision to the contrary in these orders, all of the wife’s right, title and interest in the following forthwith vest in the husband:
a)the husband’s wood stockpile located in [Regional Town A];
b) the husband’s motorcycle;
c) the husband’s home contents;
d) the husband’s [motor vehicle B];
e)cash standing to the husband’s credit at banks and other financial institutions;
f)the husband’s present and future superannuation entitlements.
10.Subject to any provision to the contrary in these orders, all of the husband’s right, title and interest in the following forthwith vest in the wife:
a) the wife’s [motor vehicle A];
b) the wife’s Caravan;
c) the wife’s household contents;
d) the wife’s Motorcycle;
e) the wife’s cash at bank and other financial institutions;
f)the wife’s present and future superannuation entitlements.
Superannuation Splitting Order
11.Pursuant to s 90MT(4) of the Family Law Act 1975 (Cth) (the “Act”), the base amount allocated to the wife out of the husband’s interest in the [Super Fund] (Member Number [XXXXX XX]) (the “Fund”) is $196,784.
12.Pursuant to s 90MT(1)(a) of the Act, the husband as a member of the Fund and the Trustee of the Fund:
a)do all acts and things to calculate the wife’s entitlement in accordance with the Act and Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth) (the “Regulations”), using the base amount of $196,784;
b)do all acts and things so that whenever a splittable payment becomes payable in respect of the interest held by the husband in the Fund, that the wife is entitled to an amount calculated in accordance with the provisions above and that there be a corresponding reduction in the entitlement of the husband to whom the splittable payment would otherwise have been made, but for the making of these orders.
13.In accordance with Regulation 59(2)(a) of the Regulations, the parties shall equally bear the costs, expenses, fees and charges associated with the implementation of the payment split pursuant to these orders.
14.Having been accorded procedural fairness, these orders bind the Trustee to observe the requirements of the Act and the Regulations.
15.There by liberty for the parties and the Trustee to apply for orders to implement and to otherwise give force and effect to these orders.
16.Pursuant to s 90MD of the Act, paragraph 11 and 12 of these orders have effect from the operative time being the fourth business day after the day on which a sealed copy of these orders is served on the Trustee.
Other orders
17.The parties indemnify one another and keep one another indemnified in relation to any liability for which that party is responsible in accordance with these orders.
18.Subject to the provisions of these orders, the husband pay, and indemnify the wife in respect of, any and all liability whatsoever arising in respect of the Entities after the date of these orders, including any tax due and payable by, or in relation to [Cali Investments]’ retained earnings.
19.Unless otherwise provided for in these orders:
a)each party be solely entitled to all other property (including choses in action) in the possession of that party as at the date of these orders;
b)each party forgo any claim they might have to any superannuation benefit or entitlement belonging to or earned by the other;
c)money standing to the credit of the parties in any account is the sole property of the party named as account holder;
d)insurance policies are deemed to be the property of the beneficiary named in the insurance policy.
20.The parties have liberty to apply at short notice in respect of the implementation of these orders including in respect of the sale of the Business and the Home (if applicable).
21.All executory interim orders be and are hereby discharged.
22.All documents produced by named persons pursuant to subpoena be returned or destroyed in accordance with the request from the named person on the expiration of 42 days from this order.
23.In relation to material tendered as an exhibit into evidence in these proceedings:
a)all parties must collect the exhibits tendered by them (“their exhibits”), from the Chambers of the Honourable Chief Judge Sutherland, at least 28 days, and no later than 42 days, from today’s date;
b)all parties must contact the Chambers of Honourable Chief Judge Sutherland to arrange the collection of their exhibits; and
c)in default of compliance with subparagraph (a), all material tendered as an exhibit, save and except for material produced pursuant to subpoena, will be destroyed by the court without notice to the parties.
24.In the event of an appeal being lodged prior to the expiration period of 42 days, paragraphs 22 and 23 above do not apply.
25.All outstanding proceedings be and are hereby dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Family Court of Western Australia.
KV
Associate3 APRIL 2020
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