Campo & Masterson and Commissioner of Taxation
[2022] FedCFamC1F 124
•25 March 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Campo & Masterson and Commissioner of Taxation [2022] FedCFamC1F 124
File number: LNC 580 of 2019 Judgment of: McGUIRE J Date of judgment: 25 March 2022 Catchwords: FAMILY LAW – PROPERTY- Application by wife for a property settlement – add-backs – no children of the marriage – taxation liabilities incurred during and after separation – substitution order sought by the wife pursuant to s 90AE of the Family Law Act 1975 (Cth) – opposed by the third party Commissioner of Taxation – where substitution order not made - contributions - husband asserts superior contributions due to his significant business acumen and experience – parties’ contributions assessed as equal – section 75(2) factors - orders that wife receive 60 per cent of the net property pool and husband receive 40 per cent Legislation: Family Law Act 1975 (Cth) s 90AE
Taxation Assessment Act 1953 (Cth)
Cases cited: Bevan & Bevan (2013) FLC 93-545
Chorn & Hopkins (2004) FLC 92-569
Clauson & Clauson (1995) FLC 92-595
Commissioner of Taxation for the Commonwealth of Australia v Tomaras & Ors (2018) 265 CLR 434
Ferraro & Ferraro (1993) FLC 92-335
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143
In the Marriage of Suiker& Suiker (1993) FLC 92–436
In the marriage of Weir & Weir (1993) FLC 92–338
Kennon & Kennon (1997) FLC 92-757
Norbis v Norbis (1986) 161 CLR 513
Omacini and Omacini [2018] FamCAFC 173
Re Watson; Ex parte Armstrong (1976) 136 CLR 248
Robb & Robb (1995) FLC 92-555
Robb & Robb (1995) FLC 92-555
Stanford & Stanford (2012) 247 CLR 108
Townsend v Townsend (1995) FLC 92-569
Trevi & Trevi [2018] FamCAFC 173
Division: Division 1 First Instance Number of paragraphs: 150 Date of hearing: 20, 21 and 22 December 2021 Place: Hobart Counsel for the Applicant: Ms Trezise Solicitor for the Applicant: Andrea Trezise Barrister & Solicitor Solicitor for the Respondent: Litigant in person Counsel for the Intervener: Mr Livingston SC Solicitor for the Intervener: HWL Ebsworth Lawyers ORDERS
LNC 580 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS CAMPO
Applicant
AND: MR MASTERSON
Respondent
COMMISSIONER OF TAXATION
Intervener
ORDER MADE BY:
McGUIRE J
DATE OF ORDER:
25 MARCH 2022
THE COURT ORDERS THAT:
1.THAT the net property pool of the parties be distributed as to sixty (60) per cent to the wife and forty (40) per cent to the husband in accordance with these orders.
2.THAT within sixty (60) days from the date of this Order the husband, Mr Masterson, transfer to the wife, Ms Campo, all his right, title and interest, if any, in:
(a)the property situate and known as B Street, C Town in Tasmania, as more particularly described in Certificate of Title Volume … Folio … (“the C Town property”) or the nett proceeds of sale thereof;
(b)the property situate and known as D Street, E Town in Tasmania, as more particularly described in Certificate of Title Volume … Folio … (“the E Town property”) or the nett proceeds of sale thereof;
(c)the Motor Vehicle 1 registration number …;
(d)any monies at banks, credit unions, savings accounts or investments in the sole name of the wife;
(e)the furniture and contents, farm equipment and personal effects formerly used by the parties jointly but now in the possession, custody or control of the wife;
(f)the wife’s superannuation entitlements held with Super Fund 1;
(g)the wife’s interest in the entity known as F Pty Ltd ABN …; and
(h)any other proprietary interests of whatsoever nature in the wife’s possession or under the wife’s control;
to the intent that the wife be the sole and absolute legal owner thereof.
3.THAT contemporaneously with the transfer in Order 1 hereof the wife transfer to the husband all that her right, title and interest, if any, in:
(a)any monies at banks, credit unions, savings accounts or investments in the husband’s sole name;
(b)any furniture and contents or personal effects formerly used by the parties jointly but now in the possession, custody or control of the husband;
(c)the husband’s superannuation entitlements with Super Fund 2;
(d)the wife’s interest in the entity known as G Pty Ltd ACN …;
(e)the wife’s interest in the entity known as the Masterson Trust;
(f)Motor Vehicle 2, registration number …, and sign all documents necessary to effect such transfer; and
(g)any other proprietary interests of whatsoever nature in the husband’s possession or under the husband’s control;
to the intent that the husband be the sole and absolute legal owner thereof.
4.THAT the wife pay and indemnify the husband from payment of all liabilities now or hereinafter falling due in relation to the C Town and E Town properties including but not limited to mortgage repayments, rates, land tax, water charges and levies.
5.THAT within sixty days (60) days of the date of these Orders the wife shall pay to the husband the sum of $36,677.20 or such other sum at such other time as is applicable dependent upon the activation, if any, of these Orders but such sum which will divide the crystalized property pool as to 60 per cent to the wife and 40 per cent to the husband.
6.THAT the entity known as H Pty Ltd ABN … be wound up with the wife and the husband to equally pay the costs of the winding up of that company and any costs associated with the winding up and any further taxation liabilities of the company for financial years subsequent to the 30th of June 2018.
7.THAT unless otherwise specified in these Orders:
(a)each party be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of Order and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the bank’s record thereof, insurance policies are deemed to be in the possession of the policy owner thereof and superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements; and
(b)each party be solely liable for and indemnify the other against any liability encumbering or attached to any item of property, or any tax, levy, duty or charge arising out of the transfer of any property, to which that party is entitled pursuant to these Orders.
8.THAT within sixty (60) days from the date of these Orders the wife shall pay the taxation liabilities in her name, and those of H Pty Ltd in the sum of $857,351.61 or such sum as is owing at the date of settlement, together with any interest and/or penalties that may have accrued on such liability to the Commissioner of Taxation for the Commonwealth of Australia.
9.THAT in the event that wife fails, neglects or is unable to pay the outstanding taxation liabilities to the Commissioner of Taxation for the Commonwealth of Australia, referred to in Order 8 herein, on or before the above date provided in these Orders then the parties shall forthwith do all acts and things necessary to sell the C Town and/or E Town properties with the priority of sale to be at the discretion of the wife so as to effect such payment to the Commissioner of Taxation as follows:-
(a)the listing price of the C Town Road and/or E Town properties shall be as agreed between the wife and the husband and if there is no agreement then the value shall be as determined by a Valuer nominated by the President of the Real Estate Institute of Tasmania at the joint cost of the parties.
(b)the C Town and/or E Town properties shall be listed for sale by private treaty with an agent to be agreed and failing agreement as determined by the President of the Real Estate Institute of Tasmania at the joint cost of the parties.
(c)the wife pay and indemnify the husband from payment of all liabilities falling due in relation to the C Town and/or E Town properties including but not limited to mortgage repayments, rates, land tax, water charges and levies.
10.THAT the proceeds of sale of the C Town and/or E Town properties be distributed as follows:
(a)to discharge the mortgage and any other encumbrances effecting the C Town and/or E Town properties;
(b)to pay all Real Estate Agent’s costs, commissions and expenses of the sale of the C Town and/or E Town properties;
(c)to pay any rates, land tax, water charges and levies outstanding in respect of the C Town and/or E Town properties;
(d)to pay the solicitor’s costs in relation to the sale of the property;
(e)to pay the costs of the Valuer nominated by the President of the Real Estate Institute of Tasmania;
(f)to pay the outstanding taxation liability including any interest and/or penalty of the wife and H Pty Ltd to the Commissioner of Taxation for the Commonwealth of Australia; and
(g)the remaining net proceeds shall be divided between the parties so as to effect a settlement of the net proceeds of the parties pursuant to the Reasons herein as to sixty (60) per cent to the wife and as to forty (40) per cent to the husband.
11.That the parties, or any of them, have liberty to apply in respect of the execution of these orders or the non-compliance by either or both of the primary parties and where these orders permit the third party intervenor to secure its entitlement at its own cost, over the real property situate at B Street, C Town and/or D Street, E Town both in Tasmania.
12.That pursuant to s 81 of the Family Law Act 1975 (Cth) the parties intend that these Orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.
NOTATION
A.It is noted that for the purposes of Order 8 herein the husband and wife may negotiate with the Commissioner for Taxation in respect of reducing any interest and/or penalties which may have accrued in relation to the taxation liabilities of the wife and that of H Pty Ltd.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym of Campo & Masterson and Commissioner of Taxation has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
McGuire J
APPLICATION
These are property proceedings which superficially appear to carry a high level of complexity but, after hearing the evidence, perhaps complex mainly because of the degree of obfuscation of the facts and issues by each of the primary parties and the intervention of the Commissioner of Taxation as a third party where the wife seeks a substitution order in respect of the husband for taxation liabilities in her name and in the name of a company of which she was the sole director.
Each of the husband, Mr Masterson, and the wife, Ms Campo, seek orders which would give him or her 80 per cent of the net property pool inclusive of superannuation.
The source of the complexity in this matter arises from the positions taken by the parties as to certain elements of the property pool where during the relationship they operated an apparently extremely successful business model as finance professionals. The business operated by the parties was extraordinarily profitable over a number of years ($3.5 million over eight years on the husband's estimate of income). Sadly, as seems common where individuals enjoy such skills, rather than simply working to their potential and even utilising available and transparent corporate and similar taxation advantages, these parties, or more particularly the husband, utilised a complex web of corporate and trust structures with numerous business names and with various company directors who quite clearly did not possess the husband’s own not inconsiderable skills and knowledge but seem to have been little more than the puppet variety of director. Perhaps not surprisingly the Court did not have the benefit of these people coming to court to corroborate the husband’s general denials of the wife's claim that it was he who was the instigator of and the “genius” of this web of corporate intrigue, although rarely, if ever having his name on the letterhead.
Unsurprisingly given the above, the Commissioner of Taxation has joined as a party in this matter where the most prominent corporate entity in this intrigue known as H Pty Ltd and of which the wife is the sole director has accumulated taxation liabilities on its own part and then together with the wife's personal liabilities currently standing at $857,531.61. The wife, who claims the husband has been the mastermind and beneficiary of these lucrative business enterprises, applies for the husband to be substituted pursuant to s 90AE of the Family Law Act 1975 (Cth) (‘the Act') as to 50 per cent of these combined liabilities. The Commissioner opposes such an order as does the husband who argues that such liabilities are the responsibility of the wife.
BACKGROUND
The husband is 54 years of age. He has tertiary qualifications and considerable experience as well as, on his own admission, aptitude in the financial services field.
The wife is 53 years of age. She has relatively recently obtained qualifications and now works independently and as a finance professional.
The parties met in late 2010 and commenced cohabitation in either November or December of that year. They married in 2015. There is a relevant dispute as to the date of separation where the husband says that separation did not take place until November 2018 whereas the wife says that the parties separated in October 2016, albeit remaining substantially living in separate residences on the joint property at C Town in Tasmania. A final order for divorce was made on 4 October 2019.
There are no children of the relationship. The husband has two children from a prior relationship being Mr J born in 2003 (aged 18 years) and Ms K born in 2001 (aged 20 years).
The wife says that Mr J and Ms K spent their school holiday periods with the parties from 2010 until about March 2020 being post separation. She says that the husband paid monthly child support for a period of their marriage to his former wife of $1,500.
In 2011 the parties set up a business using an existing company structure of the husband namely L Pty Ltd trading as L Company.
In 2011 H Pty Ltd was registered with Mr M and Ms N as directors and shareholders substituted in December 2012 with Ms O as director and shareholder until January 2013.
The wife says that in 2012 the husband was prosecuted by the Registration Authority and fined $32,000 with removal of his registration as a finance professional.
From about 2013 H Pty Ltd commenced trading as a business “H Company”. At this stage the wife assumed directorship of H Pty Ltd.
In September 2014 the property at B Street, C Town in Tasmania was purchased with the title registered solely in the wife's name. The purchase was made with the assistance of a mortgage.
For a short period between September and December 2014 the husband was registered as a director of H Pty Ltd, but with the wife registered again as the sole director from 2 December 2014 until current.
In April 2016 a property being vacant land at D Street, E Town in Tasmania was purchased and the title registered solely in the wife's name with such purchase being assisted by a mortgage loan from P Bank.
Between February and May 2017 the wife undertook study towards completion of certification as a finance professional.
On 4 March 2017 the wife sent an email to the husband confirming separation but with a proposal for living separately on the C Town property and sharing income from the business.
In or about November 2018 H Pty Ltd entered into a form of joint venture agreement with Mr Q of R Pty Ltd to establish S Pty Ltd with a general plan to utilise the business model of H Pty Ltd (and the husband's skills and experience) with the larger client base of R Pty Ltd. R Pty Ltd and H Pty Ltd held equal shares in S Pty Ltd.
On 10 February 2019 the husband vacated the C Town property followed by the issue on the 14 February 2019 of a Police Family Violence Order for the benefit of the wife.
Between June and July 2019 Ms T was appointed as a director of S Pty Ltd. The wife says that Ms T was the husband's then girlfriend.
In 2019 the husband registered the company “G Pty Ltd” with Ms T initially as director but replaced on 9 January 2020 by the husband as director and also the husband's acquaintance Mr U as director. Ms T was initially the sole shareholder until 9 January 2020, at which time the shareholdings were transferred to the husband.
On 30 July 2019 of the Australian Taxation Office (‘ATO’) issued a notice of assessment to the husband for the year ended 30 June 2019 detailing a taxable income of $20,542. The wife asserts that the husband’s tax return for the financial year 2019 does not include payments to him from S Pty Ltd for that financial year.
In February 2019 the husband had asked for $100,000 from the wife.
In July 2019 the wife made a payment to the husband of $50,000 which she categorises as a partial property settlement.
Between July 2019 and June 2020 the wife says that the husband took “income” from S Pty Ltd of approximately $560,696. The husband claims that he was a “contractor” entitled to those monies for his work with S Pty Ltd. It is generally agreed that H Pty Ltd received no income from the short lived S Pty Ltd.
On 11 October 2019 the wife registered a company “F Pty Ltd” of which she is the director and shareholder. On 24 November 2019 the wife lodged an application with the Registration Authority on behalf of F Pty Ltd to be registered as a business.
In 2020 the ATO issued a Position Paper explaining the ATO's position in respect of H Pty Ltd for the period 1 July 2015 to 30 June 2018. On the same date the ATO issued an Audit Position Paper in respect of the wife for the period 1 July 2016 to 30 June 2018.
In January 2020 the wife prepared an analysis of separate expenditure by the husband from July 2016 in a sum of $684,327 not inclusive of the $50,000 paid by the wife to the husband which she says was a partial property settlement.
On 6 February 2020 the parties attended a court ordered mediation with Mr V, barrister, and apparently reached agreement in respect of financial settlement but not ultimately incorporated in court orders.
On 28 May 2020 the Registration Authority rejected the wife's application for registration of F Pty Ltd as a business on the basis of the wife being sole director of H Pty Ltd, not being a person of good fame, integrity, and character. On the same date the Registration Authority terminated registration of H Pty Ltd as a business.
In July 2020 the ATO completed an audit of H Pty Ltd determining a liability, not including interest, of $282,857.94. On the same date the ATO concluded an audit of the wife's personal taxation matters concluding a liability between 1 July 2016–30 June 2018 of $443,758.55.
On 19 October 2020 an order was made in the Federal Circuit Court pursuant to s 102NA of the Act for the appointment of a legal representative for the husband in these proceedings given the wife's allegations of family violence including the obtaining of the Family Violence Orders.
On 22 October 2020 an order was made for the Commissioner of Taxation to be served with the wife's Amended Initiating Application and supporting Affidavit.
On 7 December 2020 orders were made in the Federal Circuit Court for trial directions.
On 17 March 2021 the trial date was vacated and again listed for trial on 17 May 2021.
On 7 May 2021, after a hearing, an order was made granting leave for the lawyer appointed for the husband under s 102NA of the Act to withdraw due to a breakdown in the relationship between the solicitor and the husband. The husband thereafter represented himself.
On 11 June 2021 orders were made transferring the matter from the Federal Circuit Court of Australia to the Family Court of Australia for trial commencing 20 December 2021.
THE ISSUES
The husband says that there is a liability of the marriage namely a loan owing by him to his father in a quantum of $500,000. The wife denies the existence of any loan or liability.
There is an issue as to the status of an amount of somewhere between $440,000 – $560,000 which the wife says should be added back to the pool. These are monies received by the husband, and which the husband agrees that he received, although perhaps not with agreement as to quantum, for a period of approximately eight months or so in 2019 when H Pty Ltd had entered into a form of joint venture with R Pty Ltd operated by Mr Q who gave evidence in these proceedings and where each entity was a 50 per cent shareholder in “S Pty Ltd”. R Pty Ltd provided the client base and H Pty Ltd provided the skills (the husband). The husband says that he worked as a contractor. It does not seem disputed by any of the parties or Mr Q that H Pty Ltd received no actual benefit from the venture whereas the husband received considerable “income”. These monies, as with other “income” received by the husband from other sources, appear to have been channelled through a family trust “Masterson Trust” of which the husband is the appointor and his children, Mr J and Ms K, are named beneficiaries.
The husband claims a liability to S Pty Ltd of $500,000 evidenced by an asserted invoice for ''use of facilities, use of funds, support staff, supervising professional services…”. The wife denies any such debt. She says that the “invoice” is not legitimate. The document provided to the Court purporting to be the invoice is open to scrutiny and interpretation. Mr Q denies any knowledge of the asserted invoice. It is abundantly clear that the husband claims this is a liability which in time could be utilised to “set off” any taxation liabilities arising from the “income” he received as a contractor to S Pty Ltd.
In his trial affidavit at [71] the husband deposes:
I was invoiced by [S Pty Ltd] the sum of $500,000 for the use of facilities, use of funds, support staff, supervising [professional staff] until my new business, [G Pty Ltd] employed its own. The liability was agreed to be repaid after [G Pty Ltd] eared (sic) 1 million for 3 consecutive years. The reason [S Pty Ltd] gave me such favourable rates was because I was the business. No one else performed accounting or marketing or referrals generating or client relationship management beyond resending invoices. The reason I accepted $500,000 fee from [S Pty Ltd] (or from [Mr Q] and the wife should close [S Pty Ltd] after I left) is because I did not want either of them to have any equity in my future businesses of which tax accounting was a very small part – namely the [Masterson Group], but the means by which I generated the critical mass of clients to launch other services.
There is an issue between the parties as to $50,000 advanced by the wife in July 2019 to the husband following his earlier request for $100,000. She says that this was then designated as a “partial property settlement”. The husband says that the $50,000 represents “contractor's fees” and, as his legitimate income, should not be added back to the pool.
The husband says that the wife has “removed” substantial monies from the accounts of H Pty Ltd. At [25] of his affidavit the husband says:
I note that when the wife filed her financial statement in 2019, she had the funds of $693,319 available. The financial statement filed 15 October 2020, suggests she now has $337,403.74 available. I have no knowledge where the balance of the funds have gone.
The wife does not dispute the figures provided by the husband. She says that part of the monies have been spent on legal fees including specialist tax lawyers and accounting experts. Further, the wife's says that she had not had an income for some years from the business where she says that the working account of the business never had a balance exceeding $80,000 as distinct from accounts holding funds being the entitlements of clients. She claims the expenditure as reasonable and argues against any add-back.
The husband says that the wife owns or has an interest in real property in Country W. The wife denies this assertion.
The wife claims a contribution in respect of her care and support of the husband's two children during the course of the relationship and where the parties through their joint business interest contributed to child support for the husband's children and with reference to Robb & Robb.[1]
[1] (1995) FLC 92-555.
There is an issue as to whether the Court should make a substitution order of the husband as to 50 per cent of the taxation liabilities of the wife and H Pty Ltd or the status of those liabilities prima facie in the hands of the wife being liabilities of the marriage.
There is an issue as to monies removed by the wife from mortgage offset accounts in the quantum of approximately $90,425. The wife’s evidence is that she has paid or reserved these monies for legal costs.
There were issues raised on the face of the documents and in opening addresses but ultimately not prosecuted. The wife initially argued for a loading on contributions on the basis of alleged family violence during the relationship.[2] She did not ultimately prosecute this argument.
[2] Kennon & Kennon (1997) FLC 92-757.
An issue arose where there were no formal valuations or inventories of plant, equipment, and chattels. The wife provided an estimate of value of $5,700 whereas the husband gave an estimate of $297,425. Neither party adduced evidence in any proper form. To his credit, and during discussions at final submissions, the husband conceded the wife's values and her possession of effectively all of the plant, equipment and chattels which is listed in detail as an annexure to his affidavit material. He asked only to retain a collection of vintage wine. The wife responded that she had consumed those wines and again the husband, to his credit, did not pursue the issue where the Court offered the parties the option of a further adjournment so as to obtain formal valuations but which they elected not to undertake given the anticipated considerable expense.
There are general issues as to contributions and s 75(2) considerations where the husband claims a superior contribution during relationship by reason of his intellectual and business acumen noting that he asks for 80 per cent of the property pool, whereas the wife claims a superior initial and post–separation financial contributions where she also seeks 80 per cent of the net property pool. The wife also argues for a loading to her on a consideration of the relevant s 75(2) factors.
THE RELEVANT LAW
Section 79 of the Act provides for the settlement or alteration of parties’ interests in property where at subsection (1) it is provided that “the court may make such order as it considers appropriate” thereby giving a broad discretion but one which must be exercised within the statutory parameters. The High Court observed in Re Watson; Ex parte Armstrong[3] as follows:
… The judge called upon to decide proceedings of that kind is not entitled to do what has been described as “palm tree justice”. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down. …
[3] (1976) 136 CLR 248 at 257.
Section 79(2) provides that:
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.
Whereas there had previously evolved a process for trial judges in considering alteration of property interests on a structured “four step basis”,[4] the High Court in Stanford v Stanford[5] reviewed the process for trial judges emphasising the requirement at s 79(2) of an independent determination on the particular circumstances of the case as to whether it be just and equitable to make any orders at all altering those property interests with a warning that the consideration is not one to be simply conflated with the consideration of the contributions and other factors set out in s 79(4). The High Court assisted by setting out three fundamental propositions that should not be obscured:
[37]First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing (emphasis added) legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself, which refers to "altering the interests of the parties to the marriage in the property" (original emphasis). The question posed by s 79(2) is thus whether, having regard to those existing (emphasis added) interests, the court is satisfied that it is just and equitable to make a property settlement order.
[38]Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. …
[39]Third, whether making a property settlement order is "just and equitable" is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised "in accordance with legal principles, including the principles which the Act itself lays down".[6] To conclude that making an order is "just and equitable" only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
[4] Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143.
[5] (2012) 247 CLR 108.
[6] Footnote omitted.
In the matter before me the parties are separated, no longer share joint residence, and are, in fact, divorced. The property pool consists of real property registered in the name of only one party but where the other claims contribution. There are substantial debts also in the name of one party where that party asserts contribution or liability by the other party with the substitution order sought by the wife being notable. Each of the parties mounts argument as to differing actual and potential earning capacity. Neither party argues against the Court altering the various property interests. Each of the parties argue that the other has had the benefit of assets including cash that should be “added back” to the pool. Consequently, in these circumstances where the marriage is at an end but where each of the parties claims contribution by the other to assets of which they might not hold legal interest then, without conflating the issue of contributions but where such contributions may be a relevant to consideration amongst others.[7] I think it is just and equitable to enter into a consideration of altering the parties’ property interests.
[7] Bevan & Bevan (2013) FLC 93-545, at [71] and [89] per Bryant CJ and Thackray J.
The Court is to deal with the property of the parties or either of them. Property comprises assets and liabilities. By reason of amendments to the Act, superannuation is to be “treated as property” although obviously often not capable of crystallisation in the sense of a tangible asset. A “financial resource” might not be capable of being subject to an order under s 79 but can be considered within the discretion of the Court in respect of the distribution of tangible assets.
The Act itself and its Rules obligate parties to make full disclosure of their financial positions in respect of assets, liabilities, and financial resources.[8]
[8] In the Marriage of Suiker & Suiker (1993) FLC 92–436 and In the marriage of Weir & Weir (1993) FLC 92–338.
The Court is to attribute value to the elements of the property pool and hence to the pool itself. In the matter now before me, it is not argued that the Court should consider the property pool on an “in globo” basis as is the more common process rather than the alternative of an “asset–by–asset” approach.[9]
[9] Norbis v Norbis (1986) 161 CLR 513.
The date for ascertaining the contents and value of the property pool is usually the date of the trial.
The Court then considers the contributions of the parties to the acquisition, maintenance, or improvement of the property pool. Contributions may be of a direct or indirect financial type or by non–financial contributions including as a homemaker or parent.
After attributing weight to the various contributions of the parties, the Court then considers the matters at s 79(4)(d)–(g) including any relevant factors under s 75(2) of the Act and hence whether there should be any further adjustment to either of the parties.
THE WIFE’S CASE
The wife seeks a 20 per cent loading for contributions and a 10 per cent adjustment to her on account of relevant considerations under s 75(2) being 80 per cent of the net property pool.
She says that she entered the relationship with approximately $250,000 in cash whereas the husband brought in the E$150,000 in liabilities and minimal assets. She says that the parties contributed equally during the course of the relationship where they each took different and delegated roles in the running of what was essentially a joint business but where she, as now evidenced by the tax liabilities, put her name to the companies and businesses. She maintains some superior post–separation contributions including to the maintenance of the business interests. The wife argues for a contribution consideration by reason of her support of the husband's children during the relationship where she carries no legal obligation whereas the husband does have a legal responsibility. She claims an adjustment under s 75(2) by reason of what she says is the husband's actual and potential superior earning capacity.
The wife asks to substitute the husband in respect of 50 per cent of the taxation liabilities currently sought against her personally and in respect of her directorship of H Pty Ltd. She argues that the business was run as a joint enterprise and with an equal contribution towards the debt to the ATO.
THE HUSBAND’S CASE
The husband also claims 80 per cent of the property pool. His methodology is less specific and coherent than the wife's argument but where the husband conducts the trial unrepresented and is understandably not familiar with the guiding authorities. He does not concede any loading to the wife on account of an initial contribution where he says, to the contrary, that he brought to the relationship his considerable business and financial acumen and intellectual property. As I understand it, and also based upon his considerable acumen in the tax field, the husband argues for a loading to him on account of superior contributions during the course of the relationship whilst his evidence was equivocal and at times demeaning as to the nature and weight of the wife's contributions.
The husband argues that the wife has retained the clientele of H Pty Ltd and hence its intellectual property which was the fundamental company structure operated by them during the relationship. Although not particularised, I understand the husband to argue that the wife should not receive any adjustment by reason of the s 75(2) considerations where she has retained the business and its clients and the business model whereas he is in the throes of re-establishing himself financially but where his current financial situation is dire.
THE EVIDENCE
The husband
The husband gave evidence and was cross-examined at length and in detail. He gave his evidence in a confident manner consistent with his personality and intelligence. His grasp of the relevant legal principles was understandably lacking. My observations of the husband were of an honest and candid witness. He firmly believes that he has considerable acumen in his field. He is assured and assertive as to his skills. He was not so applauding of the wife’s talents and contributions to their enterprises as he was of his own. At times he was complimentary of her but never to the same extent of his perception as to his own contributions which he concedes were initially of an intellectual property type. Comments such as “I didn't need [the wife] for me to excel at any point of my life” and “she was just a $25 an hour administrative secretary” were both revealing and illustrative of how he views himself and the historical operation of H Pty Ltd and other associated enterprises. He conceded “emotional support” but little more from the wife yet purports to leave her with the substantial taxation liabilities accrued during the relationship presumably because her name is on the letterhead but where at convenient times he argues that “she controlled the finances”.
The wife
The wife gave evidence and was cross-examined only relatively briefly by the husband presenting a list of prepared questions which were put to the wife by the Court due to the s 102NA order. She presented often as emotional but able to give a realistic picture of the financial relationship between she and the husband. She did not embellish her own abilities but forcibly and in a detailed fashion put what she saw as her contributions. I saw the wife also as essentially an honest and candid witness albeit, like the husband, unable to give any satisfactory audit and ultimate destination of the apparently large amounts of money earned by them during the relationship where I generally accept the husband's evidence of the income of some $3.5 million over eight years, but where obviously the assessment and payment of taxation in respect of that income was not a priority for either of them.
THE PROPERTY POOL
Each of the parties effectively seeks “add-backs” to the pool of substantial monies of which each claims the other to have enjoyed the benefit, although the husband being self-represented not surprisingly did not show a grasp of the relevant principles in respect of add-backs.
The husband says the wife has had, and without explanation as to reasonable use, some $317,000 disclosed in her sworn Financial Statement of August 2019 but the not evident in her more recent Financial Statement of 30 November 2021.
The wife's affidavit gives no explanation as to the disposal of these monies over a two-year period. Her evidence in court was a little more illuminating. I know only that she claims to have been on a limited income of E$32,000 for the last year or so. No forensic exposé was proffered by her. Her broad explanation is of usage for living expenses where she has had an obligation for two mortgages.
The husband does not contest that he received at least $440,000 or, as claimed by the wife, perhaps closer to $560,000 during a period in 2019 from the joint venture between H Pty Ltd and R Pty Ltd, which he says was his ''income” as a “contractor” to S Pty Ltd which was the corporate entity for the joint-venture. It seems agreed between the parties and Mr Q of R Pty Ltd that the husband received those monies. H Pty Ltd received no benefit from this venture. The best evidence is that the bulk of the monies received by the husband travelled through his Masterson Trust where he is the appointor and trustee but again where the Court did not have the benefit of any forensic investigation even of the most basic type. I do note, however, firstly that the wife generally refers to the husband's financially indulgent lifestyle. Secondly, there seems to be no dispute, particularly from Mr Q, that the husband earned these monies legitimately as a “contractor” and did so some time after the date that the wife says the parties separated although notably where she says that they continued to jointly operate the business H Pty Ltd but with the wife as sole director.
What I do know is that neither party have used these cash resources to pay or even contribute to the significant taxation liabilities that have accrued to the wife and to H Pty Ltd. The husband has not yet paid any tax on his income from S Pty Ltd but may well be liable to do so.
There has been considerable recent jurisprudence in respect of “add-backs”, or alternatively, considerations under s 75(2)(o) of the Act following confirmatory comments by the High Court in Stanford (supra) to the effect that the content of the property pool should normally be determined as at the date of the trial. Nevertheless, I am comfortably satisfied that a discretion remains in the Court to consider and deal with premature allocations, disposals or expenditures from the property pool by a party and to do so by either “add-backs” or pursuant to s 75(2)(o).
The Full Court in Trevi & Trevi[10] has provided an assistance by historical summary and comment at [27]–[30] as follows:
[10] [2018] FamCAFC 173.
(a) Dissipation of property and expenditure other than on legal fees
[27]The Full Court held in Omacini and Omacini[11] that addbacks fall into “three clear categories”: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and “waste” or wanton, negligent, or reckless dissipation of assets.[12]
[28]However, the Full Court also made it clear that an addback does not necessarily occur whenever “a party has expended money realised from the disposition of assets that existed as at the date of separation”, the Full Court describing such a proposition as “unduly simplistic”.[13] An earlier Full Court made the same point, saying that adding back is “the exception rather than the rule”.[14]
[29]The fundamental precept that addbacks are exceptional, reflected in the decisions just referred to, also mirrors what has been said in earlier decisions of the Full Court that, for example, “the Family Court must take the property of a party to the marriage as it finds it” at trial. An important parallel proposition is that the parties do not “go into a state of suspended economic animation” after separation. Thus, reasonably incurred expenditure does not usually come within accepted categories of addback. (Footnotes omitted)
[30]Two fundamental premises emerge from Omacini (emphasis added) 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 a case, justice 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. (Footnotes omitted)
[11] (2005) FLC 93-218.
[12] Omacini at 79,617 [30], referencing in particular Kowaliw and Kowaliw (1981) FLC 91-092; Townsend and Townsend (1995) FLC 92-569.
[13] Omacini at 79,619 [39].
[14] Cerini & Cerini [1998] FamCA 143 at [46].
I find here that each of the parties has had unexplained use of substantial funds since about 2019. Whilst I am unable to categorise either party’s dissipation as “reasonable” with any particularity given the dearth of evidence, I am generally satisfied, however, that each of the parties has had limited income other than the receipt or availability of these monies. I am generally aware of the lifestyles of each of the parties but where the wife has been required to attend to two mortgages. I do not have evidence from either in proper or any forensic form but simply assertions and allegations of a general nature. Neither party point to any particular assets purchased by the other. Indeed, neither party goes further than suggestion or suspicion in respect of the expenditure by the other. In all of those circumstances and where the findings of the Court can only be made on evidence given by or adduced on behalf of a party, and where the role of a court is not inquisitorial, I do not intend to make the “exceptional order” of “add-back” to the pool in respect of either monies received and used by the husband or monies received and used by the wife. In doing so I note that the monies used by the wife were in a form of savings or capital whereas those utilised by the husband were in a greater quantum but the product of his labours albeit where the fifty per cent partner in the business, H Pty Ltd (essentially the wife), received no income or benefit from this enterprise. Further, these monies were “earned” by the husband in a period after separation. Again I note the possibility that the husband will be required to pay tax on what he says was “income” and in reality therefore I find that the parties have had in net terms roughly similar amounts travel through their hands.
The husband claims a liability of $500,000 to his father. He provides no loan document or evidence from his father in the face of dispute from the wife. There is no evidence of either repayment or of a repayment scheme. Indeed, the husband's own affidavit gives little or no assistance as to the rationale for the alleged loan or the dissipation of $500,000. Notably the husband does not apparently dispute the wife's assertion that he entered this relationship with debts of $150,000 and no significant assets. The only reference to this alleged loan is at [27] of the husband's trial affidavit as follows:
[Mr X] is my father. My father is not in Australia. I believe he is either in [Country Y] or [Country Z]. My father lent me the sum of $500,000 prior to the marriage. It was not paid back. The wife is aware of this debt. We had agreed to pay off the loans on the real estate in Tasmania and other debts and then pay the funds to my father.
The wife says that she is not aware of the debt to the husband's father.
In these circumstances where the husband carries the onus of proving on the balance of probabilities his assertion of fact, I cannot be satisfied that this is a debt in fact or recoverable such that it should be included in the property pool as a liability.
The husband also claims to be indebted to S Pty Ltd being the corporate entity of the joint venture between H Pty Ltd and Mr Q's R Pty Ltd, in the sum of $550,000 evidenced by an “invoice” annexed as “B” to the husband's trial affidavit. The husband deposes in his trial affidavit as follows:
[28]I am indebted to the entity, [S Pty Ltd] (“[S Pty Ltd]”) for the sum of $500,000. Annexed hereto and marked with the letter “B” is the invoice issued to me.
…
[65]In or about November, 2018 a partnership was established and operated through an entity known as [S Pty Ltd] [hereafter referred to as “[S Pty Ltd]”]. Ownership of [S Pty Ltd] is as follows:–
(a) 50% [H Pty Ltd]; and
(b) 50% by [R Pty Ltd].
[66][R] is an entity controlled by [Mr Q]. [Mr Q] is the Director and Secretary of [S Pty Ltd].
[67][Mr Q] is also the CEO of [AA Company], which is [a business] which has a large client base and physical business premises situated throughout Australia.
[68]I had been in discussions with [Mr Q] about forming a partnership since 2014. The wife was also involved in those discussions.
[69]Initially I had a good working relationship with [Mr Q] and [S Pty Ltd]. I was working for [S Pty Ltd] and at the same time implementing plans to set up a new business venture, [G Pty Ltd].
[70]For a period of time following separation, I received money from the entity [S Pty Ltd] which was paid to my CBA Account ending …29. Those amounts were banked in the new business ([G Pty Ltd]) accounts. These payments were accounted for as revenue and liabilities to [S Pty Ltd]. [S Pty Ltd] allowed me to use some of the [S Pty Ltd] revenue to fund what was to be my new business on the verbal understanding that I would prepare the appropriate invoices for revenue and repay the liabilities.
[71]I was invoiced by [S Pty Ltd] the sum of $500,000 for the use of facilities, use of funds, support staff, supervising [professional] until my new business, [G Pty Ltd] employed its own. The liability was agreed to be repaid after [G Pty Ltd] eared (sic) 1 Million per year for 3 consecutive years. The reason [S Pty Ltd] gave me such favourable rates was because I was the business. No one else performed accounting or marketing or referrals generating or client relationship management beyond resending invoices. (Emphasis added) The reason I accepted $500,000 fee from [S Pty Ltd] (or from [Mr Q] and the wife should close [S Pty Ltd] after I left) is because I did not want either of them to have any equity in my future businesses of which tax accounting was a very small part–namely the [Masterson Group] but the means by which I generated the critical mass of clients to launch other services.
Mr Q gave evidence and denied being a party to or having any knowledge of the invoice which carries firstly, the date of 25 September 2019 and then a handwritten date of 1 October 2019 rendered to “G Pty Ltd” being an entity which the husband deposes to have established in or about July 2019 but which was not registered for an ABN and GST until November 2019.
The wife goes further and asserts that the document is a fabrication by the husband.
The husband does not adduce evidence from any person he asserts to be the author of the invoice and again where Mr Q denies any knowledge of that document. Significantly, however, the invoice is directed to “G Pty Ltd” being an entity of which the husband himself says has no tangible assets. More importantly, however, is a contingency evident on the face of the document at its foot which says:
It is agreed that payment will be made when [G Pty Ltd] clears a profit of $1 Million for 3 consecutive financial years.
The asserted invoice carries no signature but references S Pty Ltd being its source. The invoice charges for the following:
7 – 8 Months service and support – 9 June 19 – Jan 20 expected separation date 62,500 [per month] $500,000 Sub-total $500,000 GST $50,000 Balance Due $550,000
The husband claims this to be a debt of the marriage where interestingly he does not accept that the taxation liabilities of the wife or H Pty Ltd should have such status. I harbour doubts on the evidence as to the legitimacy of the document noting again the evidence of Mr Q, which I generally accept, that he had no knowledge of this document. In any event, the document relates to a period of either September or October 2019 and with reference to the period June 2019 – January 20 where the husband himself deposes that the parties separated in September 2016 and a divorce order was granted on 3 September 2019 which became final on 4 October 2019. Of persuasive significance, however, is the contingency clause at the foot of the document. On the evidence before me and from the husband himself, it is unlikely in the extreme that the contingency will be satisfied so as to activate the payment of the $550,000. Yet again, it may be that any ruling by the Commissioner for Taxation may obligate the husband for taxation on what he himself acknowledges is post separation “income”.
Where I am not to satisfied as to the legitimacy of the document on its face where subjected to a challenge by both the wife and Mr Q together with the alleged debt being a liability of G Pty Ltd which, on the evidence, is a company devoid of assets, and where the contingency is such that I cannot be confident of it being activated, and where the debt alleged to have been incurred was incurred after separation, I do not intend to include the asserted liability of $550,000 as a liability of this marriage.[15]
[15] AF Petersens and AF Petersens (1981) FLC 91-095
The wife concedes that she has removed monies from the two mortgage offset accounts in respect of the properties at C Town and E Town in Tasmania in an amount of $90,425. She concedes that these monies have gone towards the payment of legal costs, including for taxation matters, or are being held in trust for future legal costs.
In Chorn & Hopkins[16] the Full Court stated at [56]–[59]:
[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 costs 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 contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
[58]If funds used to pay legal fees have been generated by a 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.
[59]Outstanding legal fees themselves are generally not taken into account as a liability.
[16] (2004) FLC 92–569
Given this authority and the lack of contrary argument by counsel for the wife, I intend to add-back the sum of $90,425 on account of the wife’s paid legal costs.
The husband says that the wife owns or has an interest in the real property in Country W. The wife denies that this is the case. Where the husband again carries an onus of proof on the balance of probabilities and based on his assertion, he adduces no evidence. His cross-examination of the wife on this issue was limited or non-existent. He does not particularise his assertion. He provides no documentary or other corroborating evidence. Consequently, I cannot be satisfied to the requisite standard of proof that the wife does own or has an interest in any such property.
The wife says that she paid the husband a sum of $50,000 from H Pty Ltd in July 2019. She says this was by way of a partial property settlement and after a prior request by the husband for $100,000. The husband does not deny receipt of these monies. In fact, he says that they were paid to him by way of a form of income as a contractor. In this respect I prefer the evidence of the wife where she was not challenged in cross-examination but where counsel for the wife did challenge the husband and where the husband's explanation does not sit comfortably with his own evidence as to the nature and structure of H Pty Ltd and, in particular, his own role in that business.
Where the husband gives no evidence or explanation as to the use by him of those monies, I cannot be satisfied that they were used for his reasonable day–to–day expenses and where I am consequently satisfied that this payment represents a premature distribution from the property pool to the husband in a sum of $50,000 such will be added back to the pool as a partial property settlement received by him.[17]
[17] Townsend v Townsend (1995) FLC 92-569.
The husband has drawn down amounts totalling $20,000 from his superannuation entitlement during the Covid-19 Pandemic. The wife says that these monies should also be added back to the pool. I do not agree. The husband presumably satisfied the need criteria for that short lived legislation to allow limited drawdowns of superannuation accruals. Hence I am satisfied in this particular case that the monies were properly and reasonably put to day–to-day living expenses.
The wife says that taxation liabilities of herself and her directorship and shareholding in H Pty Ltd total $857,531. She says that these are properly debts of the marriage. The wife deposes as follows:
[52]… the ATO in earlier months had commenced an auditing of the business operated by [H Pty Ltd] for previous financial years. The ATO also commenced an auditing of me personally arising from my directorship of [H Pty Ltd] for the financial years 2013 to 2017 during which period the business was in effect being operated jointly by the [husband] and myself.
…
[65]As at 3rd September 2020, my personal liability to the ATO, not including interest and/or penalty payments, is $504,942.49, comprising tax payable by me for the period 1st of July 2015 to 30th June 2018 in the sum of $465,860.00 and tax payable for the 2019 financial year in the sum of $39,082.00.
[66]As at the current date, the liability of [H Pty Ltd] to the ATO, not including interest and/or penalty payments, totals $309,182.00.
…
[68]The [husband] has taken from an asset of [H Pty Ltd funds] of $560,696.29. I had no say or input whatsoever as the director of [H Pty Ltd] in the decision by [S Pty Ltd] in payments to the [husband’s] company, [G Pty Ltd], between July 2019 and June 2020. These funds could and should have been applied towards the liability of [H Pty Ltd] and myself to the ATO. The [husband] has retained those funds for his own benefit.
[69]I now see that I have been set up by the [husband]. His insistence that I be the sole director and shareholder of [H Pty Ltd] throughout the period of operation of the business, [H Company], and the business he operated after separation, [S Pty Ltd], was obviously to ensure that any liability arising from his work as a [professional] preparing [work] for clients of the businesses would be solely the tax liabilities of me and the director of [S Pty Ltd], [Mr Q], respectively and that he would have no such liability to the ATO.
…
[70] …
(125) … [The husband] controlled [H Pty Ltd] despite not being a director or shareholder. His culpability could scarcely be more self–evidence. In [the husband’s] email to the ATO in February 2019 he admits his position, “I will of course manage the whole process but given my relocation I will need your help too. I will fly down as needed and certainly prior to [Ms BB] and her colleague’s visit. I've noted that I’m the one who is the [business] manager so whilst they of course wish to talk to the director owner they know to address questions to me”. … (Emphasis added)
I was not involved in preparation of [H Pty Ltd] tax returns and I was not involved in preparation of my personal tax returns; [the husband] prepared the tax returns each year. An income and expense (personal and business) spreadsheet was provided by me at his request.
The husband in his affidavit deposes:
[120] I do not concede the various debts to the ATO.
[121]There should have been sufficient funds in the company account to attend to payment of the tax liabilities.
…
[123]I never had access to the company accounts and if I ever question the wife then she would direct me to spread sheet she created.
[124] Thus I will not participate in any penalties arising from the wife's misappropriation of company money from the company bank accounts to her private accounts.
[125]… The wife as sole owner and sole director of [H P/L], has sole access to the tax lodgement system and bank accounts. Thus I will not be responsible for or participate in any penalties for contraventions of ATO […] rules by the wife for the lodgement of her personal returns, the company returns or […].
[126]I will participate in the tax payable on company profits as that liability and expense would have always arisen. That said I will seek and (sic) adjustment of my liability based on a correctly lodged self–assessment for [H Company] vs. the audited version which tends to result in a higher tax payable.
It seems, therefore, that the husband accepts liability together with the wife for the substantive debts to the taxation office but not in respect of the interest and penalties. Generally, I prefer the evidence of the wife in respect of the management of the business of H Pty Ltd. The husband himself in his trial affidavit deposes as follows:
[31]It is my position that the wife entered into a joint venture with me and contributed all pre–existing assets and labour in exchange for 50% of the profits which my business generated. (Emphasis added)… but I say it is not equitable to enter into an agreement where I contribute the business and sole […] labour that drives all the income and the wife not contribute her pre relationship property into the pot as agreed for she certainly enjoyed the spoils of the joint venture.
…
[43]When I met the Wife, she was working [in casual employment] and living in a caravan. She had returned from [Country W] where she had been undertaking volunteer work. It was the wife's intention to save up some money and return to [Country W]. …
…
[52]Knowing that I had a good business model, I decided to acquire a new company and have it registered […] so as there would be no further difficulties or ambiguities. Therefore in or about 2013, the company [H Pty Ltd] trading as [H Company] was established and was registered […]. It was a shelf company I acquired from an employee. The business which I had previously operated through [L Pty Ltd] was from this conducted through [H Pty Ltd]. Many of the clients continued from [L Pty Ltd] to [H Pty Ltd].
…
[56]I worked very hard in the business. The business was extremely profitable. For the 2018 financial year, the business generated income of approximately $710,000.
…
[58]The business was very successful and as a result the wife and I were able to acquire two properties in Tasmania namely the property at [C Town] and then the block at [E Town]. To the best of my recollection we funded the purchases by way of mortgage which was then paid off using income from the business.
[59]We also used the business income to renovate the property at [C Town] and buy vintage implements, antiques and collectables for the property.
[60]From an asset protection point of view, ownership of assets were placed into the Wife's sole name.
[61]The wife managed our finances and money.
In his evidence in court the husband diminished the relevance and contribution of the wife to the business operated by H Pty Ltd. As in his affidavit, he says that he could have employed a secretary to conduct her role. He says that she was not a contributor to his success other than providing emotional support.
On all of the available evidence, I am satisfied that the parties operated H Pty Ltd as a joint enterprise based substantially on the experience and aptitude of the husband. I do not accept that he left the financial management to the wife. He is aware of the profits of the business. He should, therefore, in my view, be equally responsible for any penalties and interest which accrue on outstanding debts to the ATO for the relevant periods including the wife's personal tax returns where, the husband has gained some advantages, at least potentially, through H Pty Ltd not least being the achievement of E$500,000 during a relatively short period in 2019.
The liability to the ATO as it now stands in respect of interest and penalties will be included in full as liabilities of the marriage. It will then, of course, be for the parties, if so inclined, to negotiate or plead any reduction in respect of penalties and interest.
The husband claims that the wife has retained a valuable asset being the successor of H Pty Ltd in the form of goodwill and clientele. The wife denies that she runs a business model the same as H Pty Ltd and deposes that her skills are limited to that of a finance professional and concedes that she does not hold the skills, acumen, and experience of the husband.
The evidence is that each of the parties had a source of clientele from the demise of H Pty Ltd where one party retained the telephone number and the other the email or domain address. I have no valuation evidence in respect of the business now operated by the wife. In all of those circumstances, I do not intend to either attribute value to the remnants of H Pty Ltd and cannot find that one or other of the parties has retained any business goodwill or asset of H Pty Ltd over and above the other.
The wife's case summary material references three credit cards of the husband in 2020 with total liability of $123,410. I have no evidence directly from the husband. In any event, the husband concedes receipt of the E$500,000 through 2019. The date of the credit card liabilities is post separation. I do not intend to include these as a liability in the property pool.
Consequently, I can determine the property pool of these parties as follows:
Assets
D Street, E Town–vacant land (wife) $450,000 B Street, C Town (wife) $600,000 Motor Vehicle 1 Registered No. … (wife) $1,000 Motor Vehicle 2 Registered No. … (husband) $6,000 The wife’s bank accounts- including mortgage offset accounts x 2 $194,092 The husband's bank account–variable but on wife's evidence $4,876 The wife’s furniture, contents and plant and equipment (as agreed) $5,700 Partial property settlement July 2019 (husband) - Add-back $50,000 The wife's paid (or held on trust) legal fees drawn down for mortgage offset accounts - Add-back $90,425 The husband’s superannuation $31,406 The wife's superannuation $134 Total $1,433,633 Liabilities
B Street, C Town mortgage $125,462 D Street, E Town mortgage $128,242 Taxation liabilities of H Pty Ltd and the wife $857,531 Total $1,111,235 Net asset pool (inclusive of superannuation)
Total Assets $1,433,633 Total Liabilities ($1,111,235) Total Net Assets (inclusive of superannuation) $322,398 SUBSTITUTION ORDER
The best evidence is that the wife, personally and in her role as a director and shareholder of H Pty Ltd, is indebted to the second respondent, Commissioner of Taxation, in a total quantum including penalties and interest of $857,531.61.[18]
[18] Affidavit of Ms CC sworn 26 November 2021 for the second intervenor at [9], [18] and [22].
The wife seeks a substitution order arguing that these are debts of the marriage in that the taxation assessments are struck on the income of the business and of her personally where the husband was the actual operator of the business and a beneficiary of the income. She argues that given the operation of s 79 of the Act and the husband’s earning capacity, then he has a capacity to pay and that the required reasonable foreseeability criteria required is satisfied.
The wife cites the unusual circumstances of this matter where the husband received and diverted for his own use E$560,000 from H Pty Ltd substantially from the joint venture arrangement with R Pty Ltd but where the liabilities to the ATO were accrued during the period of the marriage and following separation during which time the parties continued to operate the business but where the husband had use of those funds without meeting any taxation liability. In this sense, the wife does not contest the liability or quantum claimed by the second respondent intervenor.
The wife argues that any order made by this Court pursuant to s 80(1)(f) of the Act for her to be responsible for the taxation liabilities of herself and H Pty Ltd would be unjust and inequitable given the proper s 79 considerations.
Significantly and relevant to the considerations for the Court as to this issue, the wife's counsel argues at [H5] of the her summary thus:
In the event that the Court, pursuant to section 80(1)(f) ordered that the Husband pay the tax liabilities of the Wife and/or [H Pty Ltd], or any part thereof, the Court could not be confident that the Husband would comply with those Orders and the Wife would not be guaranteed that the ATO would not pursue her where the Husband failed to comply with a pay and indemnify Order (emphasis added).
The wife argues, however, the Court should infer that the husband has assets, income, and financial resources to meet the relevant proportion of the wife's and H Pty Ltd’s taxation liability by reason of the financial history of the relationship and the failure by the husband to make full and proper disclosure.[19]
[19] In the marriage ofWeir & Weir (1993) FLC 92–338.
The husband seemingly does not accept that the taxation debts are liabilities of the marriage for the purposes of s 79. I reject this argument on the basis of the husband's own evidence as to the nature of the businesses operated primarily through the umbrella company of H Pty Ltd where he takes credit for the establishment of the businesses and the profitable nature of those businesses. He emphasises his own business acumen for the purposes of the s 79 consideration. He deflates and diminishes the wife's role in the businesses save and except for her “emotional support”. Put simply, one cannot take the benefit without the responsibility. For the purposes of s 79 of the Act the Court is to deal with “matrimonial property” which consists of the property of the parties, or either of them.
The Commissioner argues against a substitution order. Counsel relies on the authority of Commissioner of Taxation for the Commonwealth of Australia v Tomaras & Ors[20] arguing that the factual platform here does not satisfy the mandatory considerations of s 90AE(1) of the Act and therefore that the applicant's Amended Initiating Application as to orders four and five sought be dismissed.
[20] (2018) 265 CLR 434 (‘Tomaras’).
The Commissioner relies upon the affidavit of Ms CC affirmed 26 November 2021 as to the quantum of the debt and the calculations towards establishing that debt.
Section 90 AE of the Act provides:
(1)In proceedings under section 79, the court may make any of the following orders:
(a)an order directed to a creditor of the parties to the marriage to substitute one party for both parties in relation to the debt owed to the creditor;
(b)an order directed to a creditor of one party to a marriage to substitute the other party, or both parties, to the marriage for that party in relation to the debt owed to the creditor;
(c)an order directed to a creditor of the parties to the marriage that the parties be liable for a different proportion of the debt owed to the creditor than the proportion the parties are liable to before the order is made;
(d)an order directed to a director of a company or to a company to register a transfer of shares from one party to the marriage to the other party.
(2) In proceedings under section 79, the court may make any other order that:
(a)directs a third party to do a thing in relation to the property of a party to the marriage; or
(b)alters the rights, liabilities or property interests of a third party in relation to the marriage.
(3) The court may only make an order under subsection (1) or (2) if:
(a)the making of the order is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and
(b)if the order concerns a debt of a party to the marriage—it is not foreseeable at the time that the order is made that to make the order would result in the debt not being paid in full; and
(c)the third party has been accorded procedural fairness in relation to the making of the order; and
(d)the court is satisfied that, in all the circumstances, it is just and equitable to make the order; and
(e)the court is satisfied that the order takes into account the matters mentioned in subsection (4).
(4) The matters are as follows:
(a)the taxation effect (if any) of the order on the parties to the marriage;
(b)the taxation effect (if any) of the order on the third party;
(c)the social security effect (if any) of the order on the parties to the marriage;
(d)the third party’s administrative costs in relation to the order;
(e)if the order concerns a debt of a party to the marriage—the capacity of a party to the marriage to repay the debt after the order is made;
(f)the economic, legal or other capacity of the third party to comply with the order; …
The power to make orders pursuant to s 90AE is discretionary but a power subject to five conditions of subsection (3) all of which must be satisfied before the power engages. The conditions are rendered mandatory by the wording of the section as “only… if”.
Firstly, the Court must consider whether the substitution order is “reasonably necessary or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage”.
The wife's argument here rests on her quest for around 80 per cent of the property pool. This, however, begs the question as to my determination of the liability to the Commissioner of Taxation being a liability of the marriage within my broad discretion in establishing the elements of the property pool, and where the Commissioner here is a party in the true sense and not simply a non–participating third-party creditor. I am of the view that I am able, therefore, to order the immediate payment of the debt from the assets of the parties which comprise the property pool and, if necessary, from the sale of assets which would then serve to crystallise the net property pool and value for distribution between the primary parties according to my findings thereby giving justice and equity as between them and satisfying a debt being an entitlement of the keeper of the public purse who, of course, has an arguable entitlement as a participating party in these proceedings. I do not, therefore, where I have this available option within my discretion, find that a substitution order is “reasonably necessary” or even a “reasonably appropriate”, course to take.
Secondly, I can make a substitution order only if it is not foreseeable at this time that to make the order would result in the debt not being paid in full. On the evidence before me, and on consideration, I cannot be confident that the husband would or could comply with any order obligating him for one half of the secured debt totalling E$857,000. Firstly, the wife herself articulates an argument in her own case summary document which does not lean towards this condition being satisfied where she says at [H3]:
The liabilities were accrued during the period of the marriage and after separation when the Husband, without the knowledge of the Wife, derived income in excess of $560,000.00 in the name of [H Pty Ltd], absconded with those funds and has paid no tax liability in relation to those funds.
Further, the husband claims to be currently a man of straw albeit one with ambition, acumen, and hope. The relevant debt is large and long overdue accruing significant penalties and interest. The husband himself does not accept that he shares liability to the debt which gives some indication as to his mindset in accepting responsibility for even part–repayment. Still further, there is evidence of the husband organising financial structures to limit or protect his own responsibilities. H Pty Ltd is the prime example where the wife was accorded responsibility by being named director. The evidence is that the husband has continued this practice of utilising “puppet'' directors to veil his own interest in various enterprises.
In Tomaras (supra) at [9], Kiefel CJ, and Keane J observed:
Given that, so far as appears from the record in the present case, the husband is a bankrupt and the wife is solvent, it is not possible to see how the condition in s 90AE(3)(b) could be satisfied in this case. More generally, it is difficult to see how any case where there is a real prospect that the substitution of one spouse for another as the debtor of the revenue authority would create or enhance a risk of non payment would not fall foul of s 90AE(3)(b) of the Act.
In a separate judgment Gordon J noted at [79]:
As we have seen, s 90AE(3)(b) provides that the court may only make an order concerning a debt of a party to a marriage which binds a creditor under s 90AE(1) if "it is not foreseeable at the time that the order is made that to make the order would result in the debt not being paid in full" (emphasis added). Practically, a s 90AE order would rarely, if ever, be made substituting one party of the marriage for another party in relation to a debt owed to the Commonwealth arising under or as a result of the application of a taxation law.
Thirdly, subsection (3)(d) requires the Court to be satisfied that, in all the circumstances, it is just and equitable to make the order.
I accept the submission of counsel for the Commissioner that this condition is not satisfied on the evidence before me. Potentially, difficulties with justice and equity may impact on the husband and the Commissioner and even the wife, as in the situation here. It is relevant to consider the exercise of objection, review and appeal rights in respect of taxation assessments which are provided for in the Taxation Assessment Act 1953 (Cth) (‘TAA’). Whilst the Act provides that a “person” dissatisfied with an assessment may lodge an objection, it is the “taxpayer” to whom such recourse is available and only to the “taxpayer” in this case being the wife and H Pty Ltd and where a substitution order would not confer that right of objection, complaint or appeal on the substituted spouse.
In Tomaras at [85]–[87] Gordon J says:
[85]The objection, review and appeal rights under Pt IVC of the TAA in respect of assessments are limited. Although s 14ZL(1) of the TAA relevantly states that Pt IVC applies if a provision of an Act provides that a "person" who is dissatisfied with an assessment may object against it, the "person" is relevantly the person or persons who may, because of a provision of the taxation law, lodge an objection against the assessment. So, for example, s 175A(1) of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act") provides that a "taxpayer" who is dissatisfied with an assessment "made in relation to the taxpayer" may object against the assessment in the manner set out in Pt IVC of the TAA. Thus, the effect of s 14ZL of the TAA is to confer objection, review and appeal rights under Pt IVC of the TAA upon the person described in s 175A(1) of the 1936 Act – the "taxpayer" – "in relation to" whom the assessment has been made. It is that taxpayer who is the "person" who has rights and obligations under s 14ZU of the TAA …
[86]The difficulties for any court faced with a request, in relation to a debt owed to the Commonwealth under a taxation law, that it make an order under s 90AE(1) that one party to the marriage be substituted for the other party as the debtor are that these (and other) aspects of the taxation law would appear to prevent a court being satisfied of the two matters identified in s 90AE(3)(b) and (d) – that it is not foreseeable that making the order would result in the debt not being paid in full; and that, in all the circumstances, it is just and equitable to make the order.
[87]The fact that the husband in this appeal was bankrupt is reason enough not to make the order sought by the wife under s 90AE. But there are other facts, matters and circumstances which compel the same conclusion in this appeal: the inability of the husband to exercise the Pt IVC rights of objection and review (both because the time allowed to the wife for objections has long expired, and because of the difficulties identified above); the fact that the debt owed to the Commonwealth, in relation to which the Commissioner has obtained default judgment, is long overdue; and the fact that the size of that Commonwealth debt continues to increase, not just on a daily basis, but at a higher rate, because of the accruing GIC. That list is not and cannot be exhaustive. However, those facts and matters, or even some of them, compel the conclusion that a court could not be satisfied of the matters prescribed in s 90AE(3) and, therefore, the court would not be empowered to make a substitution order under s 90AE(1) in Pt VIIIAA.
The above three considerations in respect of s 90AE(3)(a),(b) and (d), individually and cumulatively, dictate that I cannot be satisfied that it is proper, just or equitable for me to make the substitution order.
By way of completion, subsection (3)(c) is satisfied by reason of the Commissioner being joined as a party to these proceedings. Subsection (3)(e) is satisfied by my findings above that the debts to the Commissioner of Taxation are properly liabilities of this marriage.
CONTRIBUTIONS
The parties commenced their relationship in late 2010. The wife had cash of $227,250 plus two motor vehicles with a total value of $50,000. The husband concedes that he had little by way of tangible assets, but had a credit card liability of around $150,000.
The husband did, however, bring into this relationship significant business acumen and experience in discrete and specialised fields of financial services. During the course of the relationship the parties earned considerable income. They did so primarily by utilising the husband skills and acumen that he introduced to the relationship. This contribution by him should not be confused with some “special contribution” claimed during the relationship in the sense considered in Ferraro & Ferraro[21] which dealt with the relativity of contributions during the course of a relationship with reference to the so-called special contribution. To the contrary, the legislation specifically refers to non–financial contributions. They are not tangible and capable of the dollar valuation as might be the funds in a bank account or the value of an asset introduced to the relationship. This does not make them any less valuable in circumstances such as this. That is, each of these parties contributed at the commencement of the relationship. The wife did so financially. The husband did so by his particular acumen and established business model. These contributions were put towards the establishment of H Pty Ltd which then provided a significant income source and hence lifestyle for the parties. Put another way, it is unlikely that one party's contribution without that of the other would have given the same result. In this sense they entered the relationship and marriage as a partnership where the task of the Court is to consider the breadth of the contributions, financial and non-financial, with all their traits, but without prioritising financial contributions over non-financial or vice versa. In this sense, and in all of the circumstances of these initial contributions and noting the successful results for the parties from these contributions, I am of the view that the initial contributions of each of the parties should be seen as equal.
[21] (1993) FLC 92-335.
The husband claims a superior or “special” contribution by him during the relationship and again by reason of his unusual and particular business acumen. I reject this argument. These two parties were effectively in a partnership in every sense. They worked together albeit in different roles. The husband concedes the emotional support from the wife but otherwise demeans her contributions as a “$25 per hour secretary”. Nevertheless, at other parts of his evidence, he acknowledges that the wife assumed sole directorship of H Pty Ltd thereby putting her at jeopardy in respect of liabilities not the least being the substantial liability to the ATO. The wife contributed by effort and commitment in every sense.
In circumstances where there were no children of this relationship, I am satisfied that the parties contributed equally during the course of the relationship.
The wife says that the parties separated in 2016. The husband argues for a later date of separation apparently based on the fact that the parties resided on the same property, albeit in different residences, but continued their intimacy on occasions. I prefer the evidence of the wife where her unchallenged evidence is of a change in the residential arrangements but also importantly a communication by her to the husband in about 2016 of her mindset of separation.
The wife has had the use of the parties’ properties since separation or at least 2019.
The parties did, however, continue in their roles in operating H Pty Ltd. That is, the wife remained the sole director. The husband utilised the business as a “contractor” notably receiving funds of E$500,000 plus for less than a year’s “contracting work” in 2019. The wife, however, by reason of her ownership, had the benefit of the bank accounts of the business including mortgage offset accounts where, on the best evidence, there has been significant reduction in balances from 2019 is as a result of her use of those monies. Put at its simplest the wife has had the use of E$300,000 since separation whereas the husband arguably has had the benefit of post-separation earnings of E$500,000 which did not properly travel through the “parent” entity of H Pty Ltd, but which may well be still subject to taxation assessment in his hands.
Each of the parties has now retained some remnant of H Pty Ltd.
I am not satisfied that there should be any adjustment for superior contributions by either party post–separation.
Consequently, I am of the view generally that these parties contributed equally initially, during the course of their relationship, and post separation and that there should be no adjustment to either by reason of contributions.
SECTION 79(4)(d)-(g) FACTORS – S 75(2)
The evidence of each of the parties currently is that they are in a far less financially satisfactory position than they were during the course of their marriage. The husband is confidentially ambitious in respect of various projects similar to the operation of H Pty Ltd. He is indeed a man of considerable and specialised skill. The striking evidence here is that he was able to achieve an income of some $500,000 albeit by “contracting” but in reality by using the facility of H Pty Ltd in 2019. He has the confidence and wherewithal to achieve his ambitions. I had the benefit during the trial of hearing evidence adduced by the wife of the husband's “pitch” directed to the transport community. Put simply, he is extremely impressive by presentation and skill. Where the Court is to look at the potential earning capacity of the parties under s 75(2), I was left convinced and confident in the husband’s skill-set and acumen translating yet again into significant income. The wife does not have his skills, tertiary qualifications, personality, or experience. I accept her evidence that her current income is currently limited at $32,000 per annum. I expect that this will increase to a degree as she becomes established in her own business but that she does not have the potential of up to $600,000 plus a year income which the husband himself claims that the parties derived from H Pty Ltd. Overall, I find that the husband’s business and financial prospects are brighter than those of the wife and consistent with their relative ambitions albeit still being ambitions rather than guaranteed crystallised income.
The wife says that she should receive some adjustment pursuant to s 75(2)(d) of the Act by reason of her contribution to the care, support and maintenance of the husband’s two children during the marriage. She says that they were frequent visitors to the home particularly during school holidays. Significantly, it does not appear disputed that there was a lengthy period of time during which the husband contributed $1,500 per month to the support of the children. The distinction between the parties is that the husband had a legal obligation to care for his children whereas the wife did not.
In Robb & Robb[22] the Full Court said:
In considering whether the justice of the case require that some act done by a party be taken into account under s 75(2)(o), the Court should, we think have regard primarily to the existence or otherwise of any legal obligations, as between the parties in relation to the doing of that act, and also, perhaps, to ordinary notions of justice and equity between the parties
In this case, the wife had a legal duty to maintain the children of her prior marriage, which duty had a primacy over the duty and any other person, other than the children's father, to so maintain them… The husband, on the other hand, had no legal duty to maintain those children at any time during the marriage because… none of the preconditions (stipulated in s 66G) existed in this case.
Accordingly, in contributing to the support of these children the wife was merely honouring a legal obligation which she owed to the children, whilst the husband, in making his contribution, was acting essentially as a volunteer assisting the wife in the discharge of her legal obligations. Upon that basis, whilst we consider the justice of the case clearly required the husband's contribution to be taken into account under s 75(2)(o), the same cannot be said of the wife's contribution. In making that contribution the wife was in no way discharging or assisting to discharge any legal obligation of the husband.
….ordinary notions of justice and equity… do not call for any allowance to be made in the wife's favour… because she honoured her legal obligation to maintain her own children of a prior marriage. We believe that a failure to make such an allowance would not offend the ordinary reasonable man or woman's notions of justice.
[22] (1995) FLC 92-555 at 81,547.
In Robb the parties’ household included the wife's two daughters from a previous marriage as habitual residents. This is not the situation in the case before me where the children were more school holiday visitors. Nevertheless, the parties, apparently outside of any formal assessment, contributed significantly financially to the support of these children. This was in the circumstances of this relationship and the source of their income, a contribution by the wife. That contribution continued over a number of years. In addition, the children were supported in the substantial periods of school holidays spent with the parties. I am of the view, therefore, consistent with Robb, that there should be some small adjustment to the wife by reason of her contributions which did not come about by way of a legal obligation. Such must, however, be seen in terms of the children not being habitual or permanent residents of the household and where the income of the parties was, in any event, substantial for the relevant period.
Given what I find to be a discrepancy in the earning capacity of the parties and the consideration under Robb, and given the limited nature of the property pool where the authorities say that any adjustment under s 75(2) should be a “realistic” one and not simply a bald percentage,[23] I am of the view that an adjustment of 10 per cent of the net property pool to the wife would be appropriate.
[23] Clauson & Clauson (1995) FLC 92-595.
Consequently, I find that the net property pool be divided as to 60 per cent to the wife and 40 per cent to the husband.
FORM OF ORDERS
There is a liability to the ATO of $857,531. Given my refusal to make a substitution order that liability prima facie sits with the wife. I have, however, found the liability to be a matrimonial debt and hence payable effectively by the parties. Where the creditor is an active participant as a third-party intervener in these proceedings, I am of the view that I can make provision for the payment of that liability so as to avoid, for the primary parties, any further or increased indebtedness by penalty and/or interest. Again, however, it is a matter for the primary parties as to whether they are inclined or able to negotiate with the third-party Commissioner in respect of a reduction of penalties and interest.
I find the property pool to have a value of $322,398. The husband is to receive 40 per of that figure which is $128,959.20. He retains his superannuation ($31,406); his bank balance ($4,876); the partial property settlement ($50,000); and his Motor Vehicle 2 ($6,000) being a total of $92,282. I calculate, therefore, that the wife must make a cash adjustment to the husband of $36,677.20. These calculations are made on the basis of the wife’s case being to retain both parcels of real property.
The wife retains the C Town property ($600,000); the E Town property ($450,000); the Motor Vehicle 1 ($1,000); her bank accounts ($194,092); chattels, plant and equipment ($5,700); her paid legal fees ($90,425) and her superannuation ($134) being gross of $1,341,351.
The wife also retains the following liabilities:
(a)mortgage secured by C Town property $125,462;
(b)mortgage secured by E Town property $128,242;
(c)a taxation liability of $857,531; and
(d)adjustment to the husband of $36,677.20.
Totalling some $1,147,912.20.
Therefore, the wife retains net property of $193,438.80.
I will therefore order that the wife pay the tax liabilities in her name and in that of H Pty Ltd of $857,531, or such sum as is owing as at the date of settlement of that debt, including further interest and penalties but subject to any negotiations between the husband and the wife with the third-party Commissioner for Taxation in respect of reduction of penalties and interest. Such, of course, is a matter outside of the jurisdiction of this Court.
Given that there may be such an opportunity for negotiation and/or the wife may elect to borrow further against one or both of the C Town and E Town properties then she should be given some time to satisfy the liability to ATO in circumstances where I do not expect the husband to be able to contribute other than perhaps by way of his negotiating skills in respect of a reduction of penalty and/or interest. Consequently, I will structure orders whereby the wife be given 60 days to arrange and make payment by whatever means, negotiated or otherwise, with the ATO, failing which I will order the, the sale of the C Town and/or E Town properties so as to effect the payment to the third-party Commissioner for Taxation where obviously it will be to the ultimate benefit of the wife and the husband to obtain the optimum market price for the properties but where provision must be made for the sale price to be bona fide and for the sale to be effected. My orders will allow the third-party Commissioner for Taxation to secure his entitlement over the real property accordingly.
If a sale of real property is required to satisfy the third-party Commissioner's entitlement, then the value of the net property pool as set out above, is likely to vary but the ultimate net property pool will be distributed according to the percentage distributions of 60 per cent to the wife and 40 per cent to the husband.
I certify that the preceding one hundred and fifty (150) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McGuire. Associate:
Dated: 25 March 2022
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