Chapman and Chapman
[2012] FamCA 196
•4 April 2012
FAMILY COURT OF AUSTRALIA
| CHAPMAN & CHAPMAN | [2012] FamCA 196 |
| FAMILY LAW – PROPERTY SETTLEMENT - Where the parties had a long relationship lasting 20 years - Where the husband made the greater contribution - Where no s75(2) adjustment is warranted - Where the wife's application for spouse maintenance is dismissed. |
| Family Law Act 1975 (Cth) |
| Cierpiatka v Cierpiatka and Cierpiatka (1999) FLC 92-864 Doherty & Doherty 1996 20 Fam LR 137 |
| APPLICANT HUSBAND: | Mr Chapman |
| RESPONDENT WIFE: | Ms Chapman |
| FILE NUMBER: | SYC | 5967 | of | 2008 |
| DATE DELIVERED: | 4 April 2012 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Stevenson J |
| HEARING DATE: | 21 & 22 December 2011 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Lloyd SC |
| SOLICITOR FOR THE APPLICANT: | Clynch Long Letherbarrrow Pty Limited |
| COUNSEL FOR THE RESPONDENT: | Mr Wheelhouse SC |
| SOLICITOR FOR THE RESPONDENT: | KDB Holmes Solicitors |
Orders
That each of the parties do all things and execute all documents necessary to distribute the monies lodged in:
(i)Westpac Cash Reserve Account # ... 722
(ii)Westpac Term Deposit Account # … 403
(iii)Westpac Term Deposit Account # ... 011
As to 14 per cent (fourteen per cent) to the husband and the balance of 86 per cent (eighty six per cent) to the wife.
That the wife be declared to have the sole right, title and interest in:
2.1.The property situate at and known as Unit 1, B Street, Suburb P in the State of New South Wales, being the whole of the land contained in Certificate of Title, Folio Identifier … ;
2.2.The property situate at and known as Unit 2, B Street, Suburb P in the State of New South Wales, being the whole of the land contained in Certificate of Title, Folio Identifier … ;
2.3.The Ford Courier motor vehicle registration number … registered in the wife’s name;
2.4.All shares for the time being or otherwise in the wife’s name;
2.5.All jewellery in the wife’s possession; and
2.6.The wife’s superannuation entitlements in the F Super Fund and S Pty Ltd.
That the husband be declared to have the sole right, title and interest in:
3.1.The husband’s one-third interest in Chapman Partners;
3.2.The husband’s one-third interest in the proceeds of sale of the property known as “DA”, situate at W Street, Town T in the State of New South Wales;
3.3.The property situate at and known as “FB”, C Street, Town L, being the whole of the land contained in Certificate of Title, Folio Identifier … ;
3.4.Mitsubishi Challenger motor vehicle registered in the husband’s name;
3.5.Jaguar D-Type motor vehicle;
3.6.Jaguar E-Type motor vehicle;
3.7.Numberplates in his possession;
3.8.Three Indian motorcycles;
3.9.Yamaha agricultural motorcycle;
3.10.Two … Fordson Tractors;
3.11.All artwork by Artist 1 and Artist 2;
3.12.All shares for the time being or otherwise in the husband’s name;
3.13.$45,000.00 payable by Mr N on account of proceeds of sale of a heavy equipment;
3.14.The husband’s one-third interest in the proceeds of sale of the property known as “Q”, situate at Town T in the State of New South Wales, being the whole of the land contained in Certificate of Title, Folio Identifier … and … ;
3.15.All cattle held at Town T Farm;
3.16.All cattle held at B Farm;
3.17.Plant and equipment situate at B Farm;
3.18.The husband’s interest in Chapman Pty Limited and Chapman Company;
3.19.The husband’s bank accounts;
3.20.The property situate at and known as V Street, Suburb D in the State of New South Wales, being the land contained in Folio Identifier … and being registered in the name of C Pty Ltd as trustee for the Chapman Super Fund;
3.21.The whole of the assets of the Chapman Super Fund.
That all applications and responses herein are otherwise dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Chapman & Chapman has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 5967 of 2008
| Mr Chapman |
Applicant
And
| Ms Chapman |
Respondent
REASONS FOR JUDGMENT
THE PROCEEDINGS
Mr Chapman and Ms Chapman are in dispute as to settlement of property. Initially the wife sought an order for spouse maintenance but, at the end of the trial, her counsel conceded that she should not receive the benefit both of that order and an adjustment in her favour pursuant to section 75(2) of the Family Law Act 1975 (Cth). He indicated a preference for a section 75(2) adjustment, so as to bring to an end to the financial relationship between the parties.
There was no agreement as to the balance sheet. The wife contended that the husband failed to disclose the existence of assets, being a unit of heavy equipment and the sale proceeds of two other units of heavy equipment. She asserted addback to a minimum value of $2,280,675.00. A further complication was that the husband alleged that he holds certain assets on trust for the parties’ two sons.
BACKGROUND
The husband was born in 1944 and is now 67 years old. He is retired from the paid workforce and receives income by way of pension payments from a self-managed superannuation fund. The wife was born in 1959 and is now 52 years old. She asserted that a number of health problems prevent her from engaging in paid employment.
There was a dispute as to the date when the parties commenced cohabitation, with the husband and the wife asserting April 1986 and late 1985 respectively. In a relationship of at least 20 years duration, this disputed period of six months is relatively insignificant. The parties separated under one roof in July 2006 and the wife moved out of the former matrimonial home in October 2008. The husband remained in the home until its sale in November 2008.
The parties have two children, Mr NN, born in 1987, and Mr CC, born in 1992. Mr NN lives with the wife and works in a sales position. Mr CC discontinued his university course in 2011 and works on a casual basis. It is a matter of regret that he is presently estranged from his mother.
One of the contentious assets was the proceeds of sale of a rural property at Town T. In about 1947 the husband’s father purchased a property known as “DA” as a soldier’s repatriation plot. In the 1970’s Mr Chapman Senior purchased a 275 acre plot known as “Q”, which is close to ‘DA’.
In about 2003 Mr Chapman Senior transferred both properties to his daughter, in circumstances which concerned the husband and his two brothers. The husband, his father and brothers commenced proceedings to set aside the transfer. This litigation was resolved at mediation in 2005, on the basis that the husband and his two brothers paid to their sister an amount of $800,000.00 and that they each received a one third interest in the land.
The husband and his brothers borrowed $800,000.00 and paid out their sister. They subdivided the ‘Q’ property but retained a small parcel of 2.92 hectares, so as to provide security of tenure to long term tenants. They reduced the mortgage debt with the balance of the sale proceeds, leaving a current payout figure of approximately $400,000.00.
In about 2007 the husband and his brothers sold ‘DA’ for $1.34 million, on condition of a deferred settlement for three years. Settlement is due to take place in May 2012 and the husband expects to receive a net sum of $320,000.00. He maintained that he holds his interest in this property, and hence the proceeds of sale of his share, on trust for the parties’ two sons.
In about 1958 the husband’s father gifted to him an Indian motorcycle. He still owns this motorcycle, which has a present value of $2,500.00. In the late 1960’s the husband’s father purchased for him a National Life Insurance policy, which he owned at the date of the marriage.
After living in the United Kingdom in 1969 and 1970, the husband returned to Australia and established a business in the automotive industry. He engaged in this industry continuously throughout the marriage. The wife asserted that he continued in this field beyond the date of his retirement from the workforce in 2004.
In 1972 the husband purchased R Street, Suburb Z, for $39,500.00, having borrowed most of the purchase money. According to a retrospective valuation by Mr BB, this property was worth $390,000.00 on 1 November 1985 and $400,000.00 as at 31 July 1986. The husband sold this property for $850,000.00 in October/November 1988, at which time two mortgages to the Westpac Bank were discharged.
In 1973 the husband purchased vacant land at Town H in Queensland, utilising funds borrowed from a finance company. In 1987 he sold this property and received net sale proceeds of $4,835.00.
During the 1970’s the husband was involved in a factory development at Suburb Y. He sold out of this project in 1975 and purchased a farm at Suburb W. There was no evidence as to the fate of this property.
During the early 1970’s the husband was involved in a relationship with Artist 1. She gave to him three paintings and two drawings. In 1986 he sold a Rolls Royce motor vehicle to Artist 2, who gave him a painting as part of the purchase price. All of these works of art were included in the list of assets in these proceedings.
In the mid-1970’s the husband purchased an automotive industry business in V Street, Suburb D for $75,000.00. He sold this property in 1980 for $185,000.00. He then purchased YY Street, Suburb BN for $290,000.00.
The YY Street purchase was funded in part by an interest only mortgage of $210,000.00. The husband subsequently refinanced this mortgage to a 10 year principle and interest loan. A single expert, Mr BB, valued this property at $313,000.00 on 1 November 1985 and $321,000.00 as at 31 July 1986.
In 1977, the husband established an aircraft business in Sydney. By 1981 he had purchased three aeroplanes. He acquired two aircraft in 1982 and an aeroplane in 1983. He paid out the lease on another aircraft in July 1983.
In 1981 the husband purchased a half share in commercial premises at M Street, Suburb MM for $105,000.00. He asserted that he borrowed no money to fund this purchase but searches carried out by the wife established that there was a mortgage registered on the title. The husband sold his interest in this property for $167,500.00 in January 1987.
In about 1980 the husband paid $3,000.00 for a “[…]” number plate, which he sold two years later for $14,000.00. In 1982 he purchased a “[…]” plate for $1,400.00.
In August 1984 the husband purchased a property L Street, in Brisbane. In his affidavit he deposed that he purchased this property from a “trading auctioneer” for $170,000.00, which consisted of an aircraft valued at $50,000.00, two Mercedes motor vehicles worth a total of $50,000.00 and $70,000.00 cash from his business account. In cross examination he readily conceded that these details were incorrect. He explained that he had located a document showing that he borrowed funds from Barclay’s Bank after he swore his affidavit. He said in his oral evidence that the purchase price was in fact $97,000.00 rather than $170,000.00. This property was sold in 1988 for $185,000.00.
In May 1986 the husband sold an aeroplane for $47,500.00. He sold an aircraft in 1984 for an unknown amount.
In 1986 the husband purchased an insurance policy with Mutual Life for $20,000.00. He already held superannuation redeemable policies with Zurich Insurance and Guardian Assurance, which he acquired during the 1970’s.
The husband alleged that he and the wife had an “on again, off again relationship” in late 1985, after he returned from a time in the United Kingdom. He maintained that he lived with the wife in her rental accommodation for a few weeks in late 1985, before moving to rented premises in Suburb MM in January 1986. He purchased the property WW Street, Suburb S in July 1986. He claimed that the wife surrendered her rental accommodation when he purchased the WW Street property and they began to live together in this home in July 1986.
The wife maintained that the parties began to cohabit in her rented townhouse in late 1985. She produced a copy of a letter addressed to the husband at these premises to support her contention. The husband said that he did not use the short term rental accommodation as his mailing address, as he was actively seeking to purchase a property early in 1986.
The parties lived in the WW Street property from July 1986 until July or September 1987, when they moved to the home at R Street, Suburb Z. The parties carried out renovations to the Suburb Z property.
The wife maintained, and the husband denied, that she played a significant role in the renovations to the Suburb Z property by way of “project management” and physical work, including painting. The husband conceded that the wife supervised tradesmen and retained a colour consultant. He maintained that her opportunity to participate in the renovations was limited by her responsibility to care for their newborn baby.
The husband alleged that he took on a significant role in the renovations to the Suburb Z property. He produced an invoice from a painter which referred to work carried out over a three week period. I am inclined to the view that the wife exaggerated her role in these renovations, as she did in relation to other aspects of her evidence.
The wife alleged that she carried out substantial work to prepare the WW Street property for sale in 1988. She described her alleged efforts as “a huge undertaking”. According to the husband, he purchased this property “brand new” in 1986 and the tenants of approximately one year left the premises in “spotless conditions save for some minor damage to the skirting boards.” The husband conceded that the wife painted walls in two rooms, cleaned and helped him to move furniture into the property in preparation for sale.
The wife’s own evidence was that the parties lived in the WW Street property from the time of its purchase in July 1986 until September 1987. Her title searches revealed that the property was transferred from the husband to the purchasers on 23 June 1988. The wife’s evidence was that she and Mr NN were in the United Kingdom to visit her relatives in May 1988.
In my view it is reasonable to assume that contracts for sale of the WW Street property were exchanged some weeks prior to the date of settlement and, probably, in May 1988. On the wife’s case, the tenants were thus in occupation of this property for about nine months. It seems to me to be inherently unlikely that they could reduce a new property to “an abominable state” in that timeframe. Further, it seems to me that the wife had insufficient time between her return from the United Kingdom and the placing of the property on the market for sale to carry out the work which she alleged as follows in her affidavit:
73. I restored the garden, removed rubbish, painted, re-grouted bathrooms, wallpapered, stripped the entire slate floor and resealed same, cleaned all surface areas, sandpapered and revarnished the banisters, fixed the damp problem by scraping the paint off, resealing and repainting same. Many walls and doors were damaged and needed to be repaired. I grouted the bathrooms and sanded revarnished furniture. The applicant did not assist me at all. I performed all this work with [Mr NN] in a play pen or at night after he was asleep. I then employed removalists to move furniture from [R Street] to [WW Street] to restyle the property using furniture, beds, art and accessories.
I am of the view that the wife exaggerated her role in the preparation for sale of the WW Street property.
There was a dispute as to the extent of the wife’s role in the management of the YY Street apartments. In her affidavit of 13 April 2011 she alleged that she collected rent, issued receipts, carried out inspections, organised repairs, replaced keys, negotiated rents, performed simple repairs and attended to the gardens from 1987 until 2002. She alleged further in her affidavit sworn on 13 April 2011:
61. I dealt with a whole range of management issues including paying bills, advertising, organising inspections, showing tenants, dealing with unruly and difficult tenants, rent collection and enforcement, and organising council rubbish collection when tenants vacated the premises.
In his affidavit of 18 November 2011 the husband denied that the wife played any role in relation to the YY Street apartments. He maintained that two real estate agents managed the rental of these properties. In his oral evidence, however, the husband conceded that the wife “took over the management” when the family returned from the United States in 1993. The parties and Mr NN lived in the United States between September 1989 and May 1993. They returned to Australia in July 1993, after a two month holiday in the United Kingdom and South Africa.
In her affidavit of 19 December 2011 the wife deposed to an alleged conversation with the husband in 1988, in which it was agreed that she would take over the management of the apartments to save real estate agents’ fees. It was common ground that the wife’s father, Mr NB, managed the YY Street apartments while the parties lived overseas. He swore an affidavit on 20 December 2011, in which he set out the tasks involved in his management role. Mr NB deposed that he took over the management of the YY Street apartments in about July 1989.
The wife annexed to her affidavit of 19 December 2011 copies of Water Board accounts in respect of the apartments issued in August/September 1988, which were addressed to “[Mr Chapman] c/- [Estate Agents 1, … , Suburb BN].” On the wife’s own evidence, therefore, Estate Agents 1 maintained a management role until at least September 1988.
The wife’s father was an impressive witness who presented as entirely truthful and with accurate recall. He deposed to a conversation with the wife in early 1989, when they agreed that he would manage the apartments while the parties lived in the United States. Inter alia, the wife said to him “I have been managing the units for some time and the system is in place.”
In his oral evidence Mr NB said that his management work occupied him for about one half a day per week. He said that he had no discussion with the husband about what he was required to do in relation to the YY Street apartments.
I have no reason to suppose that the wife’s management role was any more onerous than that assumed by her father. Mr NB kept meticulous records (Exhibit 10), which noted that he carried out tasks similar to those described by the wife. Accordingly, I find that the wife fulfilled the role of manager of the YY Street rental properties between approximately September 1988 and July 1989 and from 1993 until 2002. I consider that this work occupied the wife for a similar amount of time to that which was devoted by her father, being about half a day per week. I am thus of the view that the wife exaggerated her evidence as to her role as manager of the YY Street apartments.
In October 1988 the parties purchased the former matrimonial home at SS Street, Suburb BN for $1,240,000.00. The purchase money came from the proceeds of sale of the properties at L Street in Brisbane; R Street, Suburb Z and WW Street, Suburb S. Neither party suggested that any borrowed money was contributed to the purchase price.
The SS Street property was leased to tenants while the parties lived in the United States. The wife maintained that she and her father carried out maintenance work to prepare the property for leasing before she left for the United States in September 1989. Her father gave no evidence that he carried out any such work.
The wife maintained that she organised the initial leasing on the SS Street property and that her father then “managed the property for the four years we were in America.” The husband alleged that he arranged the tenancy through a managing agent. Mr NB gave oral evidence that “I had nothing to do with the leasing of [SS Street]. I went to see it occasionally.” The wife thus gave evidence which might most benignly be regarded as another example of exaggeration.
While the parties lived in the United States the husband engaged in an automotive industry business. In the early 1990’s the wife did administrative work for three to six hours per weekday.
In January 1991 the parties purchased a property in Los Angeles for US$285,000.00. They borrowed US$228,000.00 from Citibank and the balance came from profits of the husband’s business.
The wife claimed that she carried out substantial work to this property. In her affidavit of 13 April 2011 she deposed:
96. I repainted the entire interior of the house. I was pregnant with [Mr CC] at the time. I pulled up all of the carpets. I removed all protruding staples and nails from the floor and applied varnish. I built shelves in the leanto at the back of the property for [Mr NN’s] toys. I borrowed furniture and bargain shopped at Priceclub for our requirements using money I had earned from [an employer]. I was given second hand furniture by some friends of ours.
97. My parents came to visit me in April 1992. They left the evening of the Rodney King riots on 29 April 1992. During this visit, my father helped me install a new bathroom window, make book shelves and repair other parts of the house.
…
99. I built a new kitchen. It was my first kitchen installation. I bought a flat pack from Ikea and I assembled it myself. Then, with the assistance of handymen, I fixed it to the kitchen walls. I designed, planned and supervised the installation. I purchased Mexican terra cotta tiles and sealed them myself. I also retiled and repainted the bathroom walls and flooring.
The husband disputed these assertions but conceded that Mr NB fitted a bay window, with his assistance, during one of the wife’s parents’ annual visits to the United States. He alleged that he employed and paid builders to carry out renovations to the Los Angeles property. He also maintained that two expatriate New Zealander tradesmen assisted with the installation of the Flatpack Ikea kitchen, on a friendship basis, over the course of a few weekends. These friends also assisted with removal and replacement of a rear wall to the property. The husband conceded that the wife contributed to the project but denied that she “assembled and was responsible for most of the installation.”
I am of the view that the wife exaggerated the extent of her physical work on the renovations to the Los Angeles property. I accept the husband’s description of this aspect of her evidence as “a significant overstatement.”
In July 1993 the parties returned to Australia and resumed occupation of the SS Street property. The husband paid $90,000.00 to discharge the mortgage on the title to the YY Street apartments. His uncontradicted evidence was that this money consisted of approximately $60,000.00 saved from his American business and the proceeds of sale of shares. I assume that these shares were part of the husband’s inheritance from his aunt in 1973, as there was no suggestion that either party acquired assets of this nature between the commencement of the relationship and the discharge of this mortgage.
The parties agreed that some repair work to the SS Street property was necessary after four years of occupation by tenants. The wife alleged that she “began renovations” in 1993 and carried out the following work:
105. Initially I tended to the large garden, personally installing a reticulation system. I pulled out four ceilings and walls in order to restore the property to its original design. I organised painters and floor sanders. I personally installed shelving and painted many of the rooms. I used a Porters Acrylic and applied it with a cross hatch stroke in the kitchen as was the fashion at the time. I painted the bathroom and maintained all aspects of the home with no assistance from the applicant.
The husband contended that the parties “pulled up the carpets and polished the floor boards and did some other minor works.” In the absence of any corroboration, I am of the view that the wife exaggerated her evidence as to her work on the SS Street property after the parties returned from the United States.
In November 1993 the husband purchased an automotive industry business, with a derelict building on the adjoining lot, in V Street, Suburb D. The purchase price was $640,000.00, all of which the husband borrowed from Barclay’s Bank. He also borrowed funds to provide working capital for a new automotive industry business. The total mortgage advance was $1.1 million, which was secured on the titles to the Suburb D and the YY Street properties.
In 1994 the Los Angeles property sold after the parties defaulted on the mortgage to Citibank. There was no suggestion that this sale yielded any net proceeds.
In 1996 the husband terminated his Zurich Insurance policy. He received $37,500.00, which he used as working capital for his business.
In 1998 the husband placed the business “[Business 1]” into voluntary administration. He consolidated a number of liabilities into a single debt of $1.15 million and leased out the V Street properties. The rental income was sufficient to meet the loan repayments. The husband then resumed the automotive industry business from home.
In 1999 the wife trained as a designer with a professional renovation business. In 2001 she met Mr BW, an installer, and in about 2003 they established a business known as “[Business 2].” This business has not traded since about 2008.
In 2000 the parties engaged a specialist company to install a swimming pool at the SS Street property. The wife claimed that she played a major role in this project. She alleged:
130. During 2000, after obtaining quotations from seven pool building companies, I supervised the construction of the swimming pool at [SS Street]. I had the property resurveyed so as to determine the exact boundaries. I designed the pool. I staked the pool out with markers and had the pool quoted by each company. The pool was to be at the rear of the property. I organised a bobcat to dig out the pool, rather than have contractors dig by hand. This saved us thousands of dollars. I helped [the pool company] by shovelling concrete and designing the drainage. The foreman jokingly called me the “clerk of works”, such was my involvement. I helped dismantle existing sandstone walls and hired and helped a stonemason reassemble them to provide a retaining wall to support existing plants and a raised bed from the verge of collapse. I relocated plants where possible. I purchased sandstone tiles in Queensland and separated them into different thicknesses so I could direct the tilers as to what thickness went where so that the drainage I had installed would work efficiently.
The husband maintained that the parties stayed at a Queensland island during the period of excavation and most of the initial digging and construction. He maintained that a foreman supervised the job on site and that the contractors engaged all of their own workman. He contended that a colleague of his informed him that sandstone tiles were available at a cheap rate from a supplier at the Gold Coast. During a holiday on the Gold Coast, the parties purchased one pallet of sandstone tiles.
I consider it improbable that the wife played the role which she alleged in the installation of the swimming pool, when qualified tradesman had been engaged to complete this job. There was no challenge to the husband’s evidence as to the circumstances as to the purchase of sandstone tiles for the pool surrounds. It thus seems likely to me that the wife exaggerated her role in the installation of the swimming pool.
In February 2004 the husband sold the YY Street apartments for $1.75 million. He placed $1 million into a self managed superannuation fund known as “[the Chapman Super Fund]” and reserved the balance of the sale proceeds to meet the costs of renovations to the SS Street home. The trustee of the superannuation fund is known as “[C Pty Ltd]”. The husband is currently the sole director and shareholder of this company.
In 2004 the husband gave instructions to a real estate agent to sell one of the two commercial lots at V Street, Suburb D. Ultimately he entered into a joint venture with a developer, who constructed a three storey building on one lot. The husband sold the property in 2006 for $2.2 million, which he received by way of $1.1 million cash and a strata title unit on the ground floor of the new building. He discharged most of the debt to the St George Bank secured over the property, except for a sum of $155,000.00. That amount was transferred to the security of the SS Street property.
There was some confusion as to these transactions but the end result appears to be that the husband’s superannuation fund now owns commercial premises at V Street, Suburb D and receives rent as the major component of its income. The wife alleged that “airspace” above the Suburb D property was sold to the purchaser for $1,210,000.00 but produced no corroborating evidence. The husband denied that any of these transactions involved “airspace” and the available documentation supported his evidence.
After the Chapman Super Fund was established in 2004, the husband transferred $750,000.00 from its cash reserves to “the SH Super Fund”. He also deposited $259,000.00 into a separate fund managed by the same promoters. The SH fund was subsequently acquired by a group known as “[PP Fund]”.
In 2005 the wife and her business partner Mr BW renovated the kitchen and living area in the SS Street property. The husband claimed that this work cost $200,000.00 and the wife produced no evidence to the contrary.
In March 2007, after the parties separated under one roof, the wife commenced renovations to the upstairs section of the SS Street property. Her business partner Mr BW was employed to carry out this work and he engaged various subcontractors. According to the husband, the original cost estimate was $180,000.00 but the final price exceeded $300,000.00. The wife produced no evidence to the contrary.
The husband maintained that he met the cost of these renovations with money drawn from the superannuation fund. The wife sought to add back, inter alia, a sum of $415,000.00 which the husband withdrew from the Chapman Super Fund in the 2007-2008 financial year. I will consider the available evidence in relation to these drawings below, in the context of the assets of the parties.
In 2005 the Australian Taxation Office (“ATO”) conducted an audit of the husband’s business. According to the husband the ATO investigated a discrepancy between his records and their own of approximately $400,000.00.
The wife asserted that she discovered an error which caused the ATO to abandon its investigation. In her affidavit of 13 April 2011 she deposed:
132. In or about 2006 the applicant was audited by the Australian Taxation Office (“ATO”). He had spent weeks examining his books and had been issued a list of transactions for which the ATO required an explanation. Eventually, I examined the list and noticed a typographical error by the ATO. The ATO had not used the “raise key” when typing the number 4 and therefore had printed a number 4 instead of a dollar sign. After this error was pointed out to the ATO the investigation was cancelled.
In his affidavit of 18 November 2011 the husband denied that the wife had any involvement in the audit of his business by the ATO. He deposed:
“22. During the course of the investigation there was discrepancy between my records and that of the ATO of approximately $400,000.00. I investigated the documents prepared by them and noticed, for the first time, that my bookkeeper I had in or about 2003 had recorded the mileage of a vehicle as the value of the vehicle. Once my accountant and I pointed this out to the ATO they concluded their audit.”
The husband annexed to his affidavit copies of correspondence between his accountant and the ATO. These documents indicated that the sale proceeds of two cars were inadvertently omitted from the business income for the period July 2003 to June 2004; that commissions on the sale of two cars were similarly omitted; that creditable acquisitions were claimed twice as a purchase and an expense and that notional input tax credits for the purchase of second hand goods were treated incorrectly. These records provided no support for the proposition advanced by the wife as to her alleged role in the discontinuance of the ATO audit of the husband’s business.
In 2007 the husband became involved in the purchase of heavy machinery. He maintained that he entered into two of these transactions jointly with his brother, whose entire working life had been in the field of heavy machinery. He alleged, further, that he used his business experience to assist his brother with two additional transactions in his (the brother’s) own right. The wife appeared to dispute that the husband’s brother had any involvement in the purchase and sale of three or four units of heavy machinery.
The husband’s professional register (Exhibit 3) (“the register”) included details of the purchase and sale of four units of heavy machinery, being items …77, …79, …80 and …85. Units …77 and …79 were annotated “[the first name initial of the husband and the first name initial of the husband’s brother]” and items …80 and …85 as “[the first name initial of the husband’s brother]” in the register. The husband maintained that his brother Mr NL was involved in two transactions with him and that the third and fourth dealings were of Mr N alone. It was never put to the husband that he added these annotations at a time after the original entries in the register.
These transactions were explored extensively in cross examination of the husband. The wife did not seem to take any issue with the dealings involving item …77, which the register showed was an item of heavy equipment purchased on 10 July 2006 in Japan and sold on 25 May 2007 for $180,000.00.
The register showed that item …79 was purchased in the United States on 21 July 2007. There were no details of its sale in the register, although the husband deposed in his affidavit of 18 November 2011 that a deposit had been paid on the sale of an item of heavy equipment owned by himself and his brother. As noted, item …79 was annotated “[the first name initial of the husband and the first name initial of the husband’s brother].” in the register.
In oral evidence the husband said that a final payment had been made to his brother. He said that the sale price was $150,000.00 and that the total purchase price, including repairs, shipping and GST, amounted to $170,000.00.
In relation to item …80, the husband said that he “had nothing to do with this [unit of heavy machinery], it was all my brother”. As noted, this unit was annotated “[the first name initial of the husband’s brother]” in the register, which showed that it was purchased in the United States on 15 August 2007 and sold for $230,000.00 to TV Pty Limited. The register contained no entry in the box for the date of disposal. The husband said that he thought this unit was sold in 2008 and that the money “went through my account.”
The husband was shown statements for his St George Bank account entitled “[Mr Chapman T-as Chapman Co]” (Exhibit 4). He explained that his handwritten annotations on these statements referred to item numbers in the register.
In the bank statements an annotation “[…85]” appeared beside debits “overseas T - T” of $11,273.96 on 11 January 2008 and $112,956.06 on 14 January 2008. These transfers correlate to entries in the register, showing the purchase of [heavy machinery …85] in the United States in January 2008.
The husband said that he purchased this unit “on behalf of my brother, who is not familiar with overseas transactions.” He said also that these funds came from “money settled in November 2007.” The bank statements showed deposits totalling $219,500.00 from “[TV]” and Esanda Finance in November 2007. These funds thus constitute the proceeds of sale of the unit …80, which was annotated “[the first name initial of the husband’s brother]” in the register.
When asked about unit …85, the husband said that at least $125,000.00 was paid to purchase a unit in the United States. He was firm that this money did not come from the superannuation fund. The bank records verify this evidence, as the only credits between November 2007 and January 2008 were interest of $32.77 on 13 November 2007 and $11.55 on 31 December 2007, together with a “customer deposit” of $23,100.00 on 8 January 2008.
The husband was taken in cross examination to entries in his Financial Statements relating to units of heavy machinery. In his Financial Statement sworn on 3 October 2008 he disclosed that he received $90,000.00 on account of proceeds of sale of a unit of heavy machinery after the separation. He made no reference to ownership of any other unit. In his Financial Statement of 20 December 2011 the husband disclosed that he will receive $45,000.00 on account of one third of the proceeds of sale of a unit of heavy machinery and made no reference to ownership of any other unit. It seems likely to me that this money represents the proceeds of sale of unit …79.
The husband said in oral evidence that his brother made adjustments to the distribution of the sale proceeds because he (the husband) decided to discontinue trading in heavy machinery. He said that he did not include “the other two [units]” in his Financial Statements because these units were not his property. In my view the entries and annotations in the register, together with the bank statements, confirm that the husband purchased two units of heavy machinery jointly with his brother. I accept the husband’s evidence that the other two unit transactions were solely those of his brother. It is thus my view that the husband gave a full and frank account of the four transactions involving heavy machinery.
There was an unfortunate incident between the parties on 11 March 2008, which resulted in the wife being charged with assault occasioning actual bodily harm. She was found guilty of this offence but it appears that no conviction was recorded. A final apprehended violence order for the protection of the husband was issued on the same date as the conviction of the wife.
The husband alleged that the wife used his credit card to pay her mobile phone bills, without his knowledge and consent, on two occasions in 2008. Documents exhibited to the husband’s affidavit of 14 April 2011 showed charges to Optus of $2,000.00 on each of 20 May 2008 and 29 August 2008. The wife did not deny that she used the husband’s credit card in this manner.
In November 2008 the parties sold the SS Street property, which was then unencumbered, for $3,925,000.00. They each received $1 million from the sale proceeds and the balance is invested in controlled monies accounts.
Following the sale of the Ss Street property, each of the parties lived in rented accommodation. In November 2009 the husband purchased a property known as “[B Farm]” at Town L in central west New South Wales. The purchase price of $960,000.00 was initially agreed to be apportioned as to $840,000.00 for the land and improvements and the balance of $120,000.00 for plant, equipment, furniture and sundry items. The husband said that the apportionment was renegotiated but the final breakdown was not made clear by the evidence. During 2011 the husband sealed the road into the property and repaired a bridge at a cost of $45,000.00.
On 23 June 2009 the wife purchased 2,000 Westpac Securities, which she sold for $213,000.00 in December 2011. She used part of these funds to purchase Units 1 and 2 B Street, Suburb P. She contributed approximately $122,000.00 in cash to the purchase price and borrowed $944,000.00 from the Westpac Bank. These properties are negatively geared and are leased to tenants. The wife continues to occupy rented accommodation.
Each of the parties has received payments from interest on funds invested in the controlled monies account containing the balance of the proceeds of sale of the SS Street property. On 12 March 2009 they consented to orders, for a limited period, that the wife receive the greater of $1,000.00 per week or 75 per cent of the last calendar month’s interest and the husband the balance thereof. On 27 May 2009 they consented to similar interim orders on a continuing basis. On 7 April 2011 the parties consented to interim orders which provided that the wife receive the whole of the interest on the funds in the controlled monies account.
APPROACH TO THESE PROCEEDINGS
According to guidelines established through a series of leading decisions, the Court is required to determine the following matters on the evidence:
· firstly, the assets, liabilities and financial resources of the parties to the marriage are to be determined;
· secondly, all relevant contributions of each of the parties, within the meaning of paragraphs (a) to (c) of section 79(4) must be identified and weighed against each other;
· thirdly, the matters in paragraphs (d) to (g) of section 79(4), particularly paragraph (e) which takes up by reference the provisions of section 75(2) must be considered and a determination made as to what, if any, alteration should be made to the entitlements of the parties earlier assessed on account of contribution;
· finally, an order under section 79 must not be made unless the Court is satisfied that, in all the circumstances, it is just and equitable to make the order.
THE EVIDENCE AND WITNESSES
The applicant husband relied on his affidavits sworn on 14 April 2011 and 18 November 2011. He swore a Financial Statement on 20 December 2011. The respondent wife relied on her affidavits sworn on 13 April 2011 and 19 December 2011. She also relied on an affidavit of her father, Mr NB, and her Financial Statement sworn on 19 December 2011.
I found the husband to be a forthright witness, who appeared to do his best to assist the court. As already indicated, I took the view that the wife on occasions gave evidence which was exaggerated or simply incorrect. Where there was a conflict, I prefer the evidence of the husband to that of the wife. As noted, I found the wife’s father Mr NB to be an impressive witness.
A single expert, Mr A, prepared a report dated 16 December 2011 in respect of the commercial property V Street, Suburb D. Mr BB carried out retrospective valuations in his reports dated 7 November 2011 of the property R Street, Suburb Z and the apartments at YY Street, Suburb BN. Another single expert, Mr X, carried out a valuation of motor vehicles, number plates, tractors and motorcycles (Exhibit 17). None of the expert witnesses were required for cross examination.
THE ASSETS, LIABILITIES AND FINANCIAL RESOURCES
There was significant dispute as to the balance sheet, particularly with regard to the existing and notional assets. At the conclusion of the trial I was provided by counsel with a document headed “Balance Sheet – Final”, which indicated the areas of agreement and dispute. This document read as follows:
Ownership | Description | Wife’s Value | Husband’s Value | ||||
| ASSETS | |||||||
| 1. | J | Westpac Cash Reserve Account #[…] 722 | 4,239 | 4,239 | |||
| 2. | J | Westpac Term Deposit Account #[…] 403 | 1,530,445 | 1,530,445 | |||
| 3. | J | Westpac Term Deposit Account #[…] 011 | 107,558 | 105,603 | |||
| 4. | H | 1/3 interest in [… Chapman] trading as [Chapman Partners] (p.15 / Form 13 (Husband)) | 326,076 | NIL - on trust for children (If characterised as an asset $287,060) | |||
| 5. | H | [B Farm, C Street, Town L] | 840,000 | 840,000 | |||
| 6. | W | [Unit 1, B Street, Suburb P] | 640,000 | 640,000 | |||
| 7. | W | [Unit 2, B Street, Suburb P] | 540,000 | 540,000 | |||
| 8. | W | Ford Courier | 7,550 | 11,000 | |||
| 9. | H | Mitsubishi Challenger | 5,000 | 5,000 | |||
| 10. | H | Jaguar E Type | 55,000 | Nil - on trust for children (If characterised as an asset 55,000) | |||
| 11. | H | Jaguar D Type | 60,000 | Nil (If characterised as an asset 60,000) | |||
| 12. | H | Indian Motorcycle […] | 12,000 | 12,000 | |||
| 13. | H | Number Plates | 55,000 | 55,000 | |||
| 14. | H | Indian […] Scout Motorcycle | 2,500 | 2,500 | |||
| 15. | H | Indian […] | 1,500 | 1,500 | |||
| 16. | H | Yamaha agricultural motorcycle | 1,200 | 1,200 | |||
| 17. | H | 2 Fordson Tractors ([…] model) | 2,500 | 2,500 | |||
| 18. | H | Artworks | 990 | 990 | |||
| 19. | W | Jewellery | 5,000 | 5,000 | |||
| 20. | W | [Business 2] (deregistered) | Nil | Nil | |||
| 21. | H | Telstra shares (2,825 held) | 9,097 | 9,097 | |||
| 22. | H | Westpac shares (191 held) | 4,143 | 4,143 | |||
| 23. | H | Aviva Corporation shares (20,000 held) | 2,700 | 2,600 | |||
| 24. | H | Marion Energy (15,000 held) | 90 | 90 | |||
| 25. | H | [Heavy equipment] No. […]79 purchased 21 July 2007 – […] | E150,000 | NIL | |||
| 26. | H | [Heavy equipment] No.[…]80 purchased 15 August 2007 – […] | E230,000 | NIL | |||
| 27. | H | [Heavy equipment] No.[…]85 purchased 10 January 2008 – […] | E230,000 | NIL | |||
| 28. | H | Sale proceeds from Lot […] | 27,555 | 27,555 | |||
| 29. | H | Cattle at Town T Farm | NK | NIL – on trust for children (If characterized as an asset 7,000) | |||
| 30. | H | Cattle at [B Farm] | E19,600 | 7,225 | |||
| 31. | H | Farm Equipment at [B Farm] | 122,000 | 66,789 | |||
| 32. | H | [[Chapman Partners] – Farm Equipment (Ford 6600 Tractor) | 3,300 | 3,300 | |||
| 33. | H | [Chapman Partners] – Caterpillar D Tractor | NK | NIL | |||
| 34. | H | [Chapman Partners] – Bank accounts | 1,500 | NIL | |||
| 35. | W | Commonwealth Securities | 5,425 | 5,478 | |||
| 36. | H | Cartier & Patek Phillippe Watch | NK | NIL | |||
| 37. | W | Bank Accounts | 224,170 | 224,170 | |||
| 38. | H | Bank Account – St George Power Saver #[…] | 10,329 | Nil – on trust for [Mr CC] (If characterized as an asset 10,329) | |||
| 39. | H | Other Bank Accounts | NK | 103 | |||
| 40. | H | Block of Land (adjacent to Town T, not disclosed by Husband) | NK | NIL | |||
| 41. | H | Contents | 10,000 | - | |||
| 42. | W | Contents | 10,000 | NK | |||
| 43. | H | Share of Tractor sale proceeds | 45,000 | ||||
| 44. | H | [Chapman Company] — St George Account | 1,764 | ||||
| 45. | H | [Chapman] UK Bank Account | $766 | ||||
| Total | $5,245,467 + NK | $4,155,057 + NK | |||||
| ADDBACKS | |||||||
| 46. | W | Assault case legal fees | NIL | 20,000 | |||
| 47. | H | Lexus 400 | 10,000 | NIL | |||
| 48. | H | Funds spent since separation (bank accounts) (see Part M of Husband's Financial Statement) | NK | NIL | |||
| 49. | H | Gloucester Coal Limited shares disposed of (see Part M of Husband's Financial Statement) | 28,000 | NIL | |||
| 50. | Shares disposed of (308 Aviva Corporation, 808 Marion Energy, 2,701 NGM Resources Limited) | NK | NIL | ||||
| Sale proceeds from sale of “[Q]” (1st portion sold) see (Part M of Husband's Financial Statement) | |||||||
| 52 | Sale proceeds of vehicles (see Part M of Husband's Financial Statement) | E57 00 | NIL | ||||
| 53. | H | Sale proceeds of [Heavy machinery] (see Part M of Husband's Financial Statement) | 90,000 | NIL | |||
| 54. | H | Reduction in [Chapman Company] St George Account #[…] 304 (in November 2008) | 156,000 | NIL | |||
| 55. | W | Interest received on controlled monies | NIL | 105,419 + NK | |||
| 56. | H | Interest received on controlled monies | 19,420 | 14,913 | |||
| 57. | H | Benefits paid in the year ended 30 June 2008 from the [Chapman Super Fund] | 415,000 | NIL | |||
| 58. | H | Benefits paid in the year ended 30 June 2009 from the [Chapman Super Fund] | 300,672 | NIL | |||
| 59. | H | Benefits paid in the year ended 30 June 2010 from the [Chapman Super Fund] | 247,959 | NIL | |||
| 60. | H | Benefits paid in the year ended 30 June 2011 from the [Chapman Super Fund] | 240,084 | NIL | |||
| 61. | H | Cattle sold and/or transferred to [Mr CC] | NK | NIL | |||
| 62. | H | [Suburb D] rent received by Husband since separation | 418,540 | NIL | |||
| 63. | W | Unaccounted for distribution of interim monies | NIL | NK | |||
| 64. | H | Redemptions taken from [PP Fund] (difference between $810,000 and $488,000) | $322,000 | NIL | |||
| Total | $2,436,675 _+ NK | $140,332 + NK | |||||
| LIABILITIES | |||||||
| 65. | W | Mortgages secured by [Unit 1 & Unit 2 S Street, Suburb P] | 944,000 | 944,000 | |||
| 66. | H | Westpac Visa Credit Card | NIL | 13,000 | |||
| 67. | W | Westpac MasterCard — Amex Earth | 22,363 | 6,707 | |||
| 68. | W | David Jones store card | NIL | NIL | |||
| 69. | W | Outstanding Legal fees | E6,600 | Nil | |||
| Total | $972,963 | $963,707 | |||||
| SUPERANNUATION | |||||||
| Member | Name of Fund | Type of Interest | Wife’s Value | Husband’s Value | |||
| 71. | H | Member entitlement in [Chapman Super Fund]: (i) [PP Fund] capital $592,742 (as at 30/11/2011) (ii) Shares (AED Oil) - $NK (iii) [Suburb D] property $1,600,000 | Self managed | $2,192,742 + NK | $486,170 NIL $1,600,000 | ||
| 72. | W | [F Super Fund] | Accumulation | 4,611 | |||
| 73. | W | [SG] Pty Limited: (i) Bank accounts $74,058 (ii) Shares $21,436 | Self Managed | 95,494 | 95,494 | ||
| Total | $2,292,847 + NK | $2,186,275 | |||||
| FINANCIAL RESOURCES | |||||||
| Ownership | Description | Wife’s Value | Husband’s Value | ||||
| 73. | H | Frequent flyer Points | NIL | NIL | |||
| 74. | W | Frequent flyer Points | NIL | NIL | |||
| Total | $0 | $0 | |||||
THE NON-SUPERANNUATION ASSETS
The parties agreed as to the existence and value of the following non-superannuation assets:
1. Westpac Cash Reserve Account #... 722 J $4,239.00
2. Westpac Term Deposit Account #... 403 J 1,530,445.00
3. Westpac Term Deposit Account #... 011 J 105,558.00
4. B Farm, C Street, Town L H 840,000.00
5. Unit 1, B Street, Suburb P W 640,000.00
6. Unit 2, B Street, Suburb P W 540,000.00
7. Mitsubishi Challenger H 5,000.00
8. Indian Motorcycle … H 12,000.00
9. Number Plates H 55,000.00
10. Indian … Scout Motorcycle H 2,500.00
11. Indian … H 1,500.00
12. Yamaha agricultural motorcycle H 1,200.00
13. 2 Fordson Tractors (… model) H 2,500.00
14. Artworks H 990.00
15. Jewellery W 5,000.00
16. Telstra shares (2,825 held) H 9,097.00
17. Westpac shares (191 held) H 4,143.00
18. Aviva Corporation shares (20,000 held) H 2,700.00
19. Marion Energy (15,000 held) H 90.00
20. Chapman Partners – .
Farm Equipment (Ford 6600 Tractor) H 3,300.00
21. Bank Accounts W 224,170.00
The husband contended that he holds his interest in Chapman Partners and/or the real property previously owned by his father on trust for the parties’ sons. He alleged that this arrangement was put in place on the day that the dispute with his sister, concerning their father’s property, was settled at mediation. The husband deposed:
110. I participated together with my brothers. The mediation was discussed in detail between [the wife] and myself. I also had conversations with both my sons in [the wife’s] presence notifying them that: ‘If we are successful in this case my share of the farm is for you boys.’ I had discussions on the day of the mediation with my father and two brothers and I said: ‘Whatever share of the farm I get out of this is not for me, it’s for [my sons]. I will have it on trust for them.’
The wife denied that the husband ever discussed the beneficial ownership of this property with her.
In Cierpiatka v Cierpiatka and Cierpiatka (1999) FLC 92-864 the Full Court held that there are three requirements for the creation of an express trust, being:
· A manifest intention to create a trust;
· Certainty as to the subject matter; and
· The purpose of the trust and the extent of the benefit must be known.
The Full Court in Cierpiatka considered the circumstances in which a constructive trust can be reasonably be imputed in respect of real property. Their Honours said:
47. After considering Dillwyn v. Llewelyn (1862) 45 ER 1285 and Riches v. Hogben [1985] 2 Qd R 292, the majority of the High Court said (at 475):
[6] In these cases, the equity which founded the relief obtained was found in an assumption as to the future acquisition of ownership of property which had been induced by representations upon which there had been detrimental reliance by the plaintiff. This is a well recognised variety of estoppel as understood in equity and may found relief which requires the taking of very active steps by the defendant.
48. Their Honours went on to say (at 476):
[10] The present case fell within the category identified by the Privy Council in Plimmer v Mayor, Councillors and Citizens of the City of Wellington [(1884) 9 App Cas 699 at 714] where “the court must look at the circumstances in each case to decide in what way the equity can be satisfied”. Before a constructive trust is imposed, the court should first decide whether, having regard to the issues in the litigation, there is an appropriate equitable remedy which falls short of the imposition of a trust.
49. The Court then returned to Riches v. Hogben and cited with approval the following statements of McPherson J.:
“A consequence of applying the principle may be to complete an otherwise imperfect gift, as in Dillwyn v Llewelyn, or to give effect to an agreement that, for want of certainty or consideration or of some other essential element, falls short of constituting an enforceable contract. Many of the reported cases are concerned with imperfect gifts; but there is of course a sense in which all agreements made or promises given without consideration are imperfect gifts of the benefits they purport to confer. What distinguishes the equitable principle from the enforcement of contractual obligations is, in the first place, that there is no legally binding promise. If there is such a promise, then the plaintiff must resort to the law of contract in order to enforce it, it being the function of equity to supplement the law not to replace it. The second distinguishing feature is that what attracts the principle is not the promise itself but the expectation which it creates. In that respect it represents the precise converse of what was said by Jessel MR in Ungley v Ungley to be the basis for enforcing the contract in that case. Finally, the equitable principle has no application where the transaction remains wholly executory on the plaintiff’s part. It is not the existence of an unperformed promise that invites the intervention of equity but the conduct of the plaintiff in acting upon the expectation to which it gives rise. That is why in Dillwyn v Llewelyn, where the son built on land promised but not effectively conveyed to him by a memorandum signed by his father, Lord Westbury LC said that the only inquiry was “whether the son’s expenditure, on the faith of the memorandum, supplied a valuable consideration, and created a binding obligation”.
There was no evidence from either of the parties’ sons as to conversations with the husband concerning beneficial ownership of the properties ‘[DA]’ and ‘[Q]’. There was no written declaration of trust on the day that agreement was reached at mediation or at any subsequent time. There was no certainty as to the subject matter of the alleged trust or its purpose or the extent of the purported benefits to the parties’ sons. There was no suggestion of any contribution by either son to the acquisition or improvement of these properties.
For these reasons it seems to me that the husband failed to establish the existence of a trust in favour of the parties’ sons. I thus find that the husband is the beneficial owner of a one-third interest in the net assets of Chapman Partners, which holds inter alia the property ‘[DA]’ and the remaining portion of ‘[Q]’.
In my view the best evidence of the value of the husband’s interest in Chapman Partners comes from the balance sheet as at 30 June 2011 (Exhibit 7). This balance sheet showed net assets of $978,227.00, of which the husband’s one-third entitlement equals $326,076.00.
Having assessed the value of the husband’s interest in Chapman Partners at one-third of the total net assets, it is inappropriate that I include separately the farm equipment and proceeds of sale of a portion of ‘[Q]’ which he received after 30 June 2011 (Exhibit 9). To include these assets separately would clearly be an exercise in double counting.
There was a dispute as to the value of the wife’s Ford Courier motor vehicle, which she and the husband assessed at $7,550.00 and $11,000.00 respectively. There was no expert evidence as to the value of the wife’s car. I can thus only adopt her admission against interest in her Financial Statement of 19 December 2011 and find that this vehicle is worth $7,550.00.
There was a minor dispute as to the value of the husband’s Aviva Corporation shares, the difference being $100.00. In the absence of expert evidence I can only adopt the husband’s admission against interest in his Financial Statement of 20 December 2011 and find that these shares have a value of $2,600.00.
The husband alleged that he holds a D Type and E Type Jaguar motor vehicle on trust for the parties’ sons Mr CC and Mr NN respectively. He purchased the E Type Jaguar in about 1990 in the United States for US$3,000.00, when Mr NN was three years old. The car was shipped to Australia and the husband’s uncontradicted evidence was that he and Mr NN rebuilt the vehicle over about 10 years.
The husband purchased the D Type Jaguar for ₤5,000.00 in about 1992, as a wreck in England, and shipped the vehicle to Australia in 1994. Mr CC was a baby when the husband purchased the D Type Jaguar. The husband’s uncontradicted evidence was that he and Mr CC rebuilt the car over a period of several years.
The husband deposed in his affidavit of 14 April 2011 that he had conversations with the boys in the mid to late 1990’s. He deposed:
161. I had discussions with both boys in the mid to late 1990’s. I said: ‘Well, which one of the cars will belong to each of you?’ Mr NN said: ‘I love the E Type, I remember it from [the United States].’ [Mr CC] said: ‘Well I love the other one’. I said: ‘Well that’s agreed. The E Type is yours [Mr NN] and the D Type is yours [Mr CC].’
Mr NN and Mr CC could have been no more than 12 and seven years old respectively.
The husband conceded that both cars have always been registered in his name and maintained with his funds. He conceded, further, that both cars were insured in his name until 29 January 2007. There was no issue that both cars are located at B Farm. The husband said in oral evidence “I accept that at present the cars are registered in my name and I own them.” In these circumstances I am of the view that the husband failed to establish that he holds the Jaguar motor vehicles on trust for the parties’ sons.
The wife sought to include in the list of assets heavy equipment …79, at a value of $150,000.00. As set out above, I accept the husband’s evidence that he will receive $45,000.00 from his brother as his share of the sale proceeds of this item. I will include that amount in the list of assets.
As set out above, I accept the husband’s evidence that his brother alone purchased heavy equipment …80 and …85. I thus decline to include these items in the list of assets at the value of $230,000.00 or any other figure.
The husband contended that he holds certain cattle at the Town T farm on trust for the parties’ sons. Again, there was no evidence of any conversation between the husband and the boys concerning beneficial ownership of these cattle. The only evidence which the husband gave on this issue was in his affidavit of 14 April 2011, where he deposed:
113. On the farm there were about 40 head of cattle. My father said: ‘You and [Mr N]should have those.’ I said: ‘I would like to give them to [my sons]. It will give them an interest and a reason to come to the farm and a little bit of money for them while they are at uni.’ He said: ‘A good idea son.’
In my view the evidence fell short of establishing that the husband holds these cattle on trust for the parties’ sons. There is an obvious lack of certainty as to the terms of any trust. The only evidence as to the value of cattle at the Town T farm was the husband’s admission against interest of $7,000.00. Accordingly, I will include cattle at the Town T property valued at $7,000.00 as an asset of the husband.
There was a dispute as to the value of cattle at B Farm, with the wife seeking to include an alleged notional value of eight beasts which the husband sold after 30 June 2011. I decline to adopt this approach, in circumstances where the husband operates a primary production business which generates income by cattle trading. His stock numbers would be expected to fluctuate and it seems appropriate to me to include the value of the cattle as at the date of trial.
The next issue was the value of the plant and equipment at B Farm, which the husband and wife contended to be $66,789.00 and $122,000.00 respectively. There was some doubt about the ultimate apportionment of the purchase price of the property, plant and equipment. The husband said that he had to renegotiate with the purchaser, after agreement was reached in accordance with the real estate agents letter (Exhibit 8). It seems unlikely to me that the current value of these chattels would exceed the purchase price in November 2009. It might more reasonably be expected that these items would decrease in value over a period of two years.
There was no expert evidence as to the value of these chattels. I accept the husband’s contention that the best evidence of the value of these assets is the figure included in his 2011 tax returns. I thus find that the value of the plant, equipment and sundry items at B Farm is $66,789.00.
The wife sought to include in the list of assets a unit of heavy equipment allegedly owned by Chapman Partners. She also sought to include the Partnership bank account. The 2011 balance sheet included “Plant and Equipment” and “Cash at Bank”. I was not told why it would be appropriate to isolate these two assets when the wife assigned a value of $326,076.00 to the husband’s one-third interest in the partnership. As noted, this figure equates to one-third of the value of the net partnership assets as at 30 June 2011. I thus regard the suggestion that these two partnership assets be included separately as a clear case of double counting.
There was a minor issue as to the value of the wife’s Commonwealth Securities, the difference between the parties being $53.00. I will adopt the wife’s admission against interest in her Financial Statement of 19 December 2011 and find their value to be $5,425.00.
The husband contended that the wife failed to include a particular watch in her list of jewellery. Nothing was put to the wife in cross examination about this watch and there was no evidence as to its value. I can thus take this issue no further on the available evidence.
The wife sought to include as an asset an amount of $10,329.00, which the husband alleged that he holds on trust for the parties’ son Mr CC. This money is separate from the sum of $27,555.00 which the husband received from the sale of a portion of the property ‘[Q]’. The only evidence as to this sum of $10,329.00 was a bare assertion by the husband in his Financial Statement sworn on 20 December 2011 “monies held on trust for [Mr CC]”. There was no evidence to establish any such trust. Equally, there was no evidence as to the source of this money. I will not include the sum of $10,329.00 in the list of assets.
The husband conceded that he has $103.00 in “other bank accounts” and this amount should be included in the list of assets. The husband conceded, further, that the Chapman Company St George account and the Chapman UK bank account should be included as assets with values of $1,764.00 and $766.00 respectively.
The wife sought to include in the list of assets “Block of land (adjacent to Town T, not disclosed by Husband)” at a value “NK”. There was no evidence to support this contention.
There was no expert evidence of the value of household contents owned by either party. I will thus omit any reference to these items in the list of assets.
ADDBACKS
The husband contended that a sum of $20,000.00 should be added back to the list of assets, being money spent by the wife on her legal fees in respect of the criminal proceedings in 2008. The wife seemed to infer that the husband was in some way to blame for the fact that she was charged with assault occasioning actual bodily harm. In her affidavit she deposed “the applicant commenced assault proceedings against me”, but this statement does not survive scrutiny.
The husband’s statement to police was exhibited to his affidavit of 14 April 2011 (Exhibit 43). He stated that the wife threw a water glass at him after they returned home from dinner with friends. The glass struck his face and caused lacerations which required stitches. He called 000 and asked for an ambulance but the operator sent police officers as well. Police officers charged the wife with a criminal offence. In my view, it is thus incorrect to suggest that the husband commenced assault proceedings against the wife.
It seems to me that the husband should bear no liability at all for money spent by the wife in relation to a criminal act which she perpetrated upon him. She said that she spent $17,000.00 on account on these legal fees and I will include this sum in the list of assets.
The wife sought to add back a sum of $10,000.00 on account of proceeds of sale of a Lexus motor vehicle. The husband purchased this car for $32,000.00 in 2004 and sold the vehicle for $10,000.00 in April 2010. There was no evidence from the husband as to what use he made of these sale proceeds and he was not asked about this issue in cross examination.
In her Financial Statement of 19 December 2011 the wife disclosed that she sold a BMW motor vehicle for $38,000.00 after separation. She made no suggestion that these sale proceeds should be treated as a premature distribution to her. I see no justification for adding back the proceeds of sale of a motor vehicle sold by the husband and excluding similar funds in the hands of the wife. In these circumstances I am not prepared to add back the proceeds of sale of the husband’s Lexus.
The wife sought to add back “funds spent since separation (bank accounts)” by the husband. She failed to identify any account or specify what amount of money she sought to be included as an asset. I can take this allegation nowhere on the available evidence.
The wife next sought to add back $28,000.00 which the husband received from of the sale of Gloucester Coal Limited shares. There was no evidence as to the circumstances of acquisition or disposal of these shares, nor the use which the husband made of the proceeds of sale. I will not add back the sum of $28,000.00 in these circumstances.
The wife claimed that an amount “NK” should be added back on account of the sale of three other parcel of shares by the husband. Nothing was put to the husband about these sales or the use which he made of any such money. I can thus make nothing of this submission.
The wife next sought to add back the sum of $132,000.00 on account of “sale proceeds from sale of [Q] (first portion sold)”. This contention ignores the husband’s uncontradicted evidence that the proceeds of sale of the first portion of the ‘[Q]’ property were used to reduce the mortgage obtained by the husband and his brothers to settle the litigation with their sister. The submission of the wife was that the husband’s interest in Chapman Partners should be valued on the basis of the 2011 financial statements. By 30 June 2011 the mortgage on ‘[DA]’ had been reduced, hence the net value of the property increased, by the application of the proceeds of sale of the first portion of ‘[Q]’. This submission is, in my view, a clear case of double counting.
The wife sought to add back an asset the sale proceeds of a unit of heavy machinery in the sum of $90,000.00. As noted above, she also sought to include in the list of assets units …79, …80 and …85. I have dealt above with the issue of these units and indicated my findings. I will not add back a sum of $90,000.00.
The wife sought to add back the sum of $57,000.00 on account of proceeds of sale of motor vehicles by the husband since separation. The only evidence in relation to these funds was a bare admission in the husband’s Financial Statement “Private sale (five vehicles) E$57,000.00”. There was thus no evidence of the use that the husband made of this money. I will not add back this money as an asset.
The wife next sought to add back “reduction in [Chapman Company] – St George Account […] (in November 08)” in the sum of $156,000.00. In the absence of evidence, I did not understand how this figure was calculated or what this submission meant. The basis of this contention was never explained to me and I was taken to no evidence to support this alleged premature distribution to the husband.
Each of the parties sought to add back to the list of assets payments which the other received from interest on the controlled monies. The wife maintained that a sum of $19,420.00 should be added back and the husband contended that a figure “$105,419 + NK” should appear as an asset. It seemed that there was a dispute as to the amount in which the husband received but I was taken to no evidence which would enable me to resolve this issue. I was left only with the list of payments to the husband which the wife set out in her affidavit of 13 April 2011, which totalled approximately $19,420.00 but was unsupported by any documentation.
There was no evidence as to the total amount which the wife received by way of interest on the controlled monies. The list set out in her affidavit of 13 April 2011 concluded as at January 2011. There was no further evidence contained in her updating affidavit of 19 December 2011. In these circumstances I consider that it would be unsafe to add back to the list of assets any amount received by either of the parties on account of interest on the controlled monies.
I am mindful also of the fact that the wife had no source of income in addition to interest on the controlled monies after the separation. I appreciate that she had the opportunity to create an income stream with part or all of her interim distribution of $1 million. Instead, she chose to enter into a negative gearing arrangement when she purchased the Suburb P properties.
The wife sought to add back to the list of assets the entirety of funds drawn from the superannuation fund by the husband since 1 July 2007. These amounts were alleged to be as follows:
1/7/07 – 30/6/08 $415,000.00
1/7/08 – 30/6/09 $300,672.00
1/7/09 – 30/6/10 $247,959.00
1/7/10 – 30/6/11 $240,084.00
The financial statements for the Chapman Super Fund exhibited to the husband’s affidavit of 14 April 2011 show that he received $415,500.00 and $300,973.00 as pension payments in 2008 and 2009 respectively. The financial statement for 2011 (Exhibit 5) showed that he received $219,237.00 in that year as pension payments. For the purposes of dealing with this submission, however, I will assume that the figures asserted on the wife’s behalf are correct.
The husband maintained that he continued to pay for renovations to the SS Street property until about July 2008. On behalf of the wife it was suggested that no allowance should be made for the husband’s living expenses or the cost of these renovations because:
a. The amounts were drawn after the completion of the renovation of SS Street; and
b. The husband had other resources to pay his day to day living expenses. These included:
i.His continuing activity in an automotive industry business
ii.His access to the interim property payment in November 2008 following the sale of SS Street.
It seems to me that there are considerable difficulties with these submissions. Firstly, it was clear from documents exhibited to the husband’s affidavit of 14 April 2011 (Exhibit 43) that costs were incurred in respect of the renovations in the 2007-2008 financial year. It is simply incorrect to suggest that none of the money paid to the husband during the 2007-2008 financial year could have been applied to the cost of the renovations.
A significant difficulty with the submission that the renovations were completed in January 2008 was that it flies in the face of the wife’s own evidence. In her affidavit of 13 April 2011 the wife sought to assign blame to the husband for the failure of her installation business. One of the reasons which she advanced was that he failed to pay her business partner, Mr BW, in full for the renovations until July 2008. That evidence is consistent with the husband’s statement in cross examination “I think I made the last payment to the builder in July 2008”.
For these reasons, I reject the submission that no money drawn from the superannuation fund by the husband after January 2008 could have been applied to meet the costs of the renovations. The evidence of both parties established that payments for the renovations continued into the 2008-2009 financial year. For reasons which I now turn, it is readily apparent that the husband must have had recourse to the superannuation money to meet these costs.
I reject the submission that the husband earned sufficient income in an automotive industry business “up to at least January 2008”, to meet his living expenses without recourse to the superannuation funds. The husband’s professional register (Exhibit 3) showed that he received a gross amount of $58,500.00 from the automotive industry business excluding heavy machinery, in the 2007-2008 financial year. It was never suggested that the husband engaged in transactions which he failed to enter into the register. It should be remembered that the husband paid for holidays to China and Mexico during this period. He also paid private school and university fees, including accommodation costs, for the parties’ son Mr CC.
The husband’s unchallenged evidence was that one of the vehicles relevant to the 2007-2008 financial year was a van which he purchased in August 2007 for use in the course of renovations. He said that he sold this van when the work was completed. Item …81 in the register referred to a Mitsubishi Van purchased on 30 August 2007 and sold in January 2008 for $6,500.00. I do not regard the purchase of this van for a particular purpose, and its sale when no longer required, as evidence that the husband continued to engage in an automotive industry business.
I would digress to observe that the sale of the Mitsubishi van in January 2008 does not mean that the renovations necessarily were by that time completed. Certainly, the sale of the van does not mean that the husband had paid for all of the renovation work by January 2008. As noted, the wife herself deposed otherwise.
It was submitted on behalf of the wife that the husband should have used money from his $1 million partial property settlement to meet his living expenses. The suggestion seemed to be that he had some kind of obligation to preserve the entirety of the superannuation money which existed as at 1 July 2007. The husband purchased B Farm, and plant and equipment, in November 2009 after he received the interim distribution of money from the sale of the SS Street property. The farm, plant and equipment are included in the list of assets with a total value of $906,789.00.
I cannot say that the husband directly applied his interim distribution funds to the acquisition of B Farm. The point is that the wife simultaneously maintains that he should not have withdrawn any money from the superannuation fund and that he should have drawn on the interim distribution money. The wife then includes in the list of assets a property which could only have been acquired with money from one of those two sources.
I am satisfied and find that the husband had recourse to superannuation money in the 2007-2008 financial year in part to meet the cost of renovations to the SS Street property. It is clear that his drawings in that year far exceeded those for 2009, 2010 and 2011 and logic suggests that the cost of the renovations is the explanation. I am satisfied and find, further, that the husband used superannuation funds to meet part of the cost of the renovations early in the 2008-2009 financial year.
In my view, it was reasonable for the husband to draw a pension in a generous amount on his retirement. Ultimately the wife conceded in cross examination “[The husband] worked very hard”. It was clear from the husband’s uncontradicted evidence that the family enjoyed a very comfortable lifestyle in Australia. The wife maintained that they lived in straitened financial circumstances in the United States but I reject that contention for reasons which appear below. The superannuation benefit was created in 2004 in order to support the husband, or at that time the family, on his retirement. In my view he was and is entitled to maintain a longstanding comfortable lifestyle. It was abundantly clear that the wife expects to maintain her pre-separation lifestyle. When being cross examined in relation to her application for spouse maintenance she said “yes, I say I cannot adequately maintain myself on $3,392.00 per week.”
For all of these reasons, I decline to add back the money withdrawn by the husband from the superannuation fund since 1 July 2007. The wife’s submission was that the whole of this money should be added back, with no alternative position or analysis being advanced on her behalf.
It was next submitted in the wife’s case that redemptions by the husband from the PP Fund should be added back to the list of assets. It was suggested that these redemptions totalled $322,000.00. This figure was said to be the difference between the fund’s value of $810,000.00 on 30 June 2008 and the balance of $488,000.00 as at the date of trial. In fact, a statement dated 21 December 2011 (Exhibit 11) indicated that the PP Fund was valued at $398,011.00 on that date.
In his oral evidence the husband said that the PP Fund “has substantially diminished in value since 2008 – it lost about 40 per cent of its value through the global financial crisis and also due to the cost of renovations of the [SS Street] home.” The husband’s evidence as to trading losses incurred by the PP Fund was supported by the financial statements for the Chapman Super Fund, which showed a significant diminution in value in 2007-2008. The husband’s proposition that the global financial crisis impacted negatively on the value of the PP Fund seemed to me to be inherently plausible. In my view, therefore, it would be incorrect to attribute the entirety of the $322,000.00 reduction in value of the PP Fund to redemptions by the husband.
A further difficulty with this submission is that it seems that redemptions from the PP Fund form part of the husband’s drawings from the Chapman Super Fund. The financial structure is that the Chapman Super Fund holds units in PP Fund, thus it seems likely to me that redemptions would be paid to the self managed entity rather than directly to the husband. In his oral evidence the husband said that the income stream of the Chapman Super Fund comes from rental generated by the Suburb D property and money from the PP Fund. I accept the husband’s evidence, which is consistent with the financial statements of the Chapman Super Fund. For these reasons, I consider that it would be erroneous to add back redemptions by the husband from the PP Fund.
Another difficulty with this submission is that the husband gave uncontradicted evidence that the sum of $75,000.00 redeemed from the PP Fund on 16 December 2011 was used for his legal costs in these proceedings. There was no suggestion on behalf of the wife that her paid legal costs should be added back to the list of assets. It seems to me to be inappropriate to add back the paid legal costs of one party only. There could be no suggestion that the wife paid her legal costs from post-separation income. She asserted a liability of only “E$6,600.00” on account of “outstanding legal fees” and deposed in an affidavit that she used part of her interim distribution to fund these proceedings. The reality is that both parties paid part of their legal fees from assets generated during the course of the marriage.
The wife next sought to add back an amount of $418,540.00 on account of “[Suburb D] rent received by the husband since separation”. I was not informed of the basis of this calculation. As noted, the Suburb D rental forms part of the income of the Chapman Super Fund. I have already determined that I will not add back any part of the money paid to the husband by way of pension from the Chapman Super Fund.
The wife next sought to add back as an asset “Cattle sold and/or transferred to [Mr CC] – NK”. I was not told which cattle constituted this alleged asset, the circumstances in which their ownership supposedly passed to the parties’ son or what amount was sought to be added back to the list of assets. I can make no sense of this submission.
The “Balance Sheet – Final” included as a suggested addback “Unaccounted for distribution of interim monies (W)” to which the husband attributed a value of “NK”. A figure was never identified and no submission was put on the husband’s behalf in support of the inclusion of some amount in the balance sheet on account of the wife’s interim distribution money. Accordingly, I can make nothing of this contention.
SUPERANNUATION ASSETS
It was common ground that the wife’s F superannuation benefit is valued at $4,611.00 and her self managed fund known as “[S Pty Ltd]” is worth $95,494.00. In his Financial Statement of 20 December 2011 the husband assigned a gross value of $2,130,000.00 to the Chapman Super Fund. This figure was comprised of $530,000.00 for the PP Fund and $1,600,000.00 for the Suburb D property. As noted, a statement dated 21 December 2011 showed that the PP Fund had a value of $398,011.00 on that date (Exhibit 11).
On behalf of the wife it was submitted that “the husband’s member entitlement in the [Chapman Super Fund] should be increased by the sum of $400,000.00, being the valuation of the assets described as [V Street, Suburb D], being the asset which is subject to the valuation of [Mr A]”. The husband included the Suburb D property at a value of $1,600,000.00 in the section of his Financial Statement which dealt with superannuation. Mr A valued the Suburb D property at $1,600,000.00.
I could thus see no basis for the suggested adjustment to the value of the superannuation fund on account of the Suburb D property. It seems to me that there is valid reason to adopt the true worth of the PP Fund. I thus find that the value of the Chapman Super Fund, as at the date of trial, was $1,998,000.00.
LIABILITIES
It was agreed that the wife has a mortgage debt to the Westpac Bank of $944,000.00, which is secured on the title to the Suburb P properties. The only other suggested liabilities were credit card debts and $6,600.00 on account of the wife’s outstanding legal fees.
I was provided with little evidence as to the time and circumstances when the parties incurred these credit card debts. I have not included as assets the parties’ paid legal fees. I will not include the wife’s unpaid legal fees as a liability in which the husband should share, in circumstances where he too is likely to have unpaid costs. I will not include in the balance sheet post separation credit card debts.
FINANCIAL RESOURCES
There was no suggestion that either party holds a financial resource.
Accordingly, I find the assets and liabilities of the parties to be as follows:
Assets
1. J Westpac Cash Reserve Account #... 722 $4,239.00
2. J Westpac Term Deposit Account #... 403 1,530,445.00
3. J Westpac Term Deposit Account #... 011 107,558.00
4. H 1/3 interest in Chapman Partners 326,076.00
5. H B Farm, C Street, Town L 840,000.00
6. W Unit 1, B Street, Suburb P 640,000.00
7. W Unit 2, B Street, Suburb P 540,000.00
8. W Ford Courier 7,550.00
9. H Mitsubishi Challenger 5,000.00
10. H Jaguar E Type 55,000.00
11. H Jaguar D Type 60,000.00
12. H Indian Motorcycle … 12,000.00
13. H Indian … Scout Motorcycle 2,500.00
14. H Indian … 1,500.00
15. H Number Plates 55,000.00
16. H Yamaha agricultural motorcycle 1,200.00
17. H 2 Fordson Tractors (… model) 2,500.00
18. H Artworks 990.00
19. W Jewellery 5,000.00
20. H Telstra shares 9,097.00
21. H Westpac shares 4,143.00
22. H Aviva Corporation shares 2,600.00
23. H Marion Energy shares 90.00
24. H Share of sale proceeds of heavy machinery No. …79 45,000.00
25. H Sale proceeds from … ‘[Q]’ farm 27,555.00
26. H Cattle at Town T Farm 7,000.00
27. H Cattle at B Farm 7,225.00
28. H Farm Equipment at B Farm 66,789.00
29. W Commonwealth Securities 5,425.00
30. W Bank Accounts 224,170.00
31. H Other Bank Accounts 103.00
32. H Chapman Company — St George Account 1,764.00
33. H Chapman UK Bank Account 766.00
34. W Assault case legal fees 17,000.00
Total $4,615,285.00
Superannuation
35. H Chapman Super Fund $1,998,000.00
36. W F Superannuation 4,611.00
37. W S Pty Limited 95,494.00
Total $2,098,105.00
Liabilities
38. W Mortgages secured by
Unit 1 & Unit 2, B Street, Suburb P $944,000.00
THE CONTRIBUTIONS OF THE PARTIES
It was conceded on behalf of the wife that the husband made a greater initial contribution. It was then her case, however, that the significance of this contribution was eroded over the course of the marriage. Ultimately it was suggested that the wife’s contributions over the course of the marriage offset the significance of the husband’s assets at the commencement of cohabitation.
The fact is, however, that the proceeds of sale of three real properties owned by the husband before or very close to the commencement of cohabitation enabled the parties to purchase the SS Street property in 1988 without recourse to any borrowings. Accordingly, all of the purchase money came from the sale of the R Street and Brisbane properties, which the husband purchased prior to the relationship, and the WW Street home which he acquired in July 1986. It may be that the husband made mortgage repayments in respect of these three properties between late 1985 or early 1986 and their sale in 1988. The reality is that the parties could not have acquired the SS Street property, at this early stage of their cohabitation, without this substantial injection of at least $1,240,000.00 by the husband.
The reality also is that the husband owned the following additional assets prior to the commencement of the relationship:
1. Indian motorcycles;
2. Four insurance policies;
3. Artworks;
4. YY Street apartments;
5. Numberplates;
6. Shares.
The sale proceeds of these items and/or their present value amount to approximately $1,800,000.00, which is another indication of the strength of the husband’s initial contribution.
The husband’s father established his rural holdings in the 1940’s and 1950’s, some decades before the commencement of the parties’ relationship. There was no suggestion that the husband contributed any funds to the acquisition, conservation or improvement of the assets which now constitute Chapman Partners or the cattle at the Town T property. Assets to the total value of about $360,000.00, being the husband’s interest in the partnership, sale proceeds of a portion of ‘[Q]’ and cattle at the Town T property, appear in the balance sheet. These assets were in the hands of the husband’s father and/or his sister until 2005, that is, about one year prior to the parties’ separation under one roof in July 2006. In these circumstances, I find it difficult to identify any contribution which the wife made to the acquisition, conservation or improvement of these assets.
There is no doubt that the husband’s efforts in the automotive industry business during the marriage generated substantial income for the benefit of the family. In her affidavit of 13 April 2011 the wife suggested that the husband failed to provide sufficient money for the support of the family while the parties lived in the United States. During this period the wife received rental from the YY Street apartments and the SS Street property and she earned income from part time employment between 1991 and 1992.
The husband denied that the family was short of funds while they lived in the United States. He maintained that they “enjoyed a good lifestyle” which involved travel within the United States and to Mexico, together with trips back to Australia on three or four occasions. He maintained that the wife’s allegation that she was forced to take in a paying lodger was incorrect. He said that a friend of his came to stay for about two months and contributed to the household expenses. It should be remembered that the family holidayed in England and South Africa for two months after they left the United States in 1993. In my view it is difficult to reconcile this fact with the wife’s allegation that the husband failed to make adequate financial provision for the family in the United States for four years.
The husband’s uncontradicted evidence was that he applied $57,000.00 from the income of his business in the United States to the purchase of the California home. He also gave unchallenged evidence that he brought $60,000.00 from the business back to Australia, which he applied to reduce the mortgage on the YY Street apartments. This evidence, coupled with the likely cost of vacations in the United States, three or four trips back to Australia and the two month holiday in the United Kingdom and South Africa, persuade me that the husband provided an acceptable level of income for the family. I am inclined to the view that the wife’s assertion that the family lived in straitened financial circumstances in the United States is another example of her propensity for exaggeration.
The wife maintained that she provided considerable assistance to the husband in the conduct of his automotive industry business. The husband’s evidence was that he operated his business from home for all but five years of the marriage. In these circumstances it seems likely to me that the wife did provide assistance in the husband’s business.
I have indicated above that I accept that the wife played a role in the management of the YY Street apartments but I consider that she overstated the extent of her duties. I also indicated above that the wife overstated her input into repairs and maintenance work carried out prior to the sale of the WW Street property. I have further expressed the view that she exaggerated her role in the installation of the swimming pool at the SS Street property and the development of the Suburb D premises. I have indicated also that I consider that she exaggerated her part in the audit of the husband’s business affairs by the ATO. In my view, these exaggerations taken collectively do much to counter the submission that her contributions during the relationship balance out the husband’s initial introduction of assets.
In her affidavit of 13 April 2011 the wife deposed:
53. From the commencement of cohabitation, I performed all home making duties within our household. The applicant did not assist me. He never, to my recollection, went shopping, cooked, did laundry, cleaned or cared for the children. This was my domain. Except for mowing the grass, maintaining the outside of our home as well, including gardening, taking the bins out and sweeping. I hurt my back laying concrete pavers at [WW Street] when I was pregnant with [Mr NN].
In his affidavit of 18 November 2011, the husband took strong issue with the suggestion that he had little input into the care of the children and household tasks. As noted, he pointed out that he worked from home for all but five years of the marriage. He deposed in his affidavit of 18 November 2011:
60. As I worked from home for all but five years of my marriage I was highly involved around the household conducting all outside maintenance, renovations and other handyman activity, keeping the house neat and tidy together with gardening at the property.
In his affidavit he set out an extensive account of his involvement with the day to day care of the children, their education, sport and extracurricular activities. The wife contradicted none of this evidence and, in cross examination, she conceded ultimately: “he did assist me in raising the children.”
It thus seems to me that the wife attempted to minimise the husband’s parenting role, and to maximise her own, in her affidavit of 13 April 2011. The wife’s evidence on these issues thus appeared to be a further example of her propensity to exaggerate her own contributions and to minimise those of the husband. In my view, it is noteworthy that the parties’ son Mr CC turned to his father for assistance when he began to suffer emotional difficulties in 2009. I doubt that he would have turned for support to the distant, uninvolved parent which the wife sought to portray in her affidavit. Having made that observation, however, it seems highly likely to me that the major homemaking and parenting roles were fulfilled by the wife during the relationship.
It was submitted on behalf of the wife that there should be a finding that she “sacrificed what prospects she had for a separate business career to bear the children of the parties and to support the husband in his business adventures.” I have some difficulty in reconciling this admission with the wife’s account, in her affidavit of 13 April 2011, of the fortunes of her business known as Business 2. She maintained that the renovations to the SS Street property prevented her from developing her business and, further, that she “lost her nerve” following the charge of assault occasioning actual bodily harm of the husband. She made no suggestion, did not suggest that she lacked the skill and ability necessary to establish and maintain a successful business. The situation may well be otherwise at present, however, due to her health problems.
It was submitted on behalf of the wife that she “supported the husband by expending her inheritance on the family and the assets of the parties at a time when the husband’s business, [Business 1], was failing.” This finding is not open because the wife failed to adduce any such evidence.
In her affidavit of 19 December 2011, the wife deposed:
5. In 1996 I received an inheritance from my late Grandmother’s estate in the sum of approximately ₤20,000.00, which was about $AUD50,000.00 at the time. Those funds were applied to reduce my credit card debt, and to purchase household items. I also took our son [Mr NN] skiing.
There was no evidence that the husband’s business “was failing” in 1996. “[Business 1]” was placed in voluntary administration two years after the wife received her inheritance. Of course, the wife’s inheritance is a contribution on her part.
In my view, the husband made substantial post separation financial contributions. His uncontradicted evidence was that he paid for the wife’s holidays in China in 2007 and Mexico in June 2008. He met the costs of Mr C’s three months in Europe as an exchange student between October and December 2008. He paid Mr CC’s private school fees in 2010, including the costs of boarding, in a sum which he deposed to be approximately $30,000.00. He maintained that he paid $7,000.00 for Mr CC’s university costs, which included residential fees at PS School.
In her affidavit of 13 April 2011 the wife alleged that the husband drank to excess and regularly vomited in the matrimonial home. She claimed that she was thus obliged to accept considerable responsibility for the business which he conducted from home. I have found that she did assist with the husband’s business but I consider that it is likely that she again exaggerated her evidence on the issues of the husband’s alcohol consumption and her input into his business.
The husband denied that he behaved in the manner alleged by the wife, although he conceded that he frequented hotels and restaurants in the period to which the wife referred. I note that the wife made no submission that the husband’s alleged conduct assumed significance in the context of authorities such as Doherty & Doherty 1995-96 20 Fam LR 137.
Conclusion as to Contribution
Although I have specifically considered the husband’s pre-relationship property and the assets generated by his father’s rural holdings, I apply a global approach to the assessment of contribution. I do so in the context of a relationship of approximately 20 years duration, during which two children were born to the parties.
For reasons indicated, I cannot accept the submission on behalf of the wife that her contributions during the relationship match or balance out the initial introduction of assets by the husband. I am mindful also that neither party made any contribution to the acquisition, conservation or improvement of the assets derived from the husband’s father’s rural holdings, which have a present value of about $360,000.00. Of course these assets came from the husband’s family, with no suggestion of any gift to the wife.
In final submissions, senior counsel for the husband suggested that contribution should probably be considered equal if not for the husband’s initial introduction of assets. He submitted that contributions therefore favour the husband by 10 to 15 per cent. I have indicated above the significance which I attach to the husband’s initial contributions. I find that contribution should be assessed at 65 per cent to the husband and 35 per cent to the wife, in respect of both superannuation and non-superannuation assets. In reaching this conclusion, I am mindful of the fact that the assets of the Chapman Super Fund were generated during the relationship.
SECTION 75(2) FACTORS
It was submitted that “section 75(2) factors weigh heavily in favour of the wife and justify a substantial adjustment in her favour”. Reliance was placed on the 14 year age difference between the parties, which was said to mean that the husband “does not have the same life expectancy as the wife and the requirement to provide for his long term support is significantly less.” In my view, this assumption ignores the vicissitudes of life, such as the prospect that the husband may live to a great age and require assisted care. Equally, I cannot ignore the prospect that the wife may predecease the husband. A greater age does not necessarily equate to a short life expectancy.
Although the wife failed to adduce expert evidence, I will accept that she labours under health problems. I accept that she suffers from arthritis and residual pain from a hip replacement and that she may require a knee reconstruction. I accept that she suffers from anxiety and depression but I reject any suggestion that the husband is responsible for her short term memory loss and difficulty with concentration. I accept that she suffers from panic attacks, recurrent meningitis and high blood pressure.
The wife established no necessary connection between these health issues and her alleged inability to engage in gainful employment. As noted, her case offered no expert evidence as to the existence of these conditions or her employment capacity. She is only 52 years old and may well recover from these health problems sufficiently to allow her to take on paid employment or to establish a business.
It seems to me that the parties are in approximately equivalent positions, in terms of their respective capacity to engage in gainful employment. The husband is 67 years old and retired from the paid workforce. He may earn a modest income from his farming activities but will continue to derive most of his financial support from the superannuation fund.
As noted, the wife chose to enter into negative gearing arrangements when she purchased the Suburb P properties. It seems to me to be inappropriate that she receive any adjustment pursuant to section 75(2) because the rental income falls short of the monthly mortgage repayments. It was entirely her choice to apply her interim distribution money in this manner and to continue to pay rent for her accommodation.
For the purposes of section 75(2), I consider that the wife could have applied her $1 million interim property distribution in a more financially constructive manner. She elected to put in place a negative gearing arrangement when she purchased the Suburb P properties. The result is a shortfall of $391.00 per week of rental income over mortgage repayments. I appreciate that some taxation advantage may flow to the wife but she currently pays $900.00 for her rented accommodation. She deposed that she paid approximately $133,600.00 in rental between October 2008 and April 2011.
In her affidavit of 13 April 2011 the wife accounted for approximately $690,500.00 of expenditure from the $1 million interim distribution. She deposed that the remainder was used for “my living expenses and that of my family”. The balance of $309,500.00 equates to about $2,700.00 per week or $11,700.00 per month. She also received interest on the controlled monies from February 2009, in amounts ranging from $4,333.00 to $6,508.00 per month. These calculations are not intended to be an accounting or auditing exercise. The salient point is the use made by each of the parties of their $1 million interim distribution, in the context of the wife’s claim for an adjustment in her favour pursuant to section 75(2).
Overall I see no basis for an adjustment in favour of the wife pursuant to section 75(2). Certainly, I can identify no basis for a “substantial adjustment”, as was sought on her behalf.
Conclusion as to Adjustment of Property Interests
The result is that I find that the net superannuation and non-superannuation assets should be divided as to 65 per cent to the husband and 35 per cent to the wife. The assets have a total value of $6,713,390.00 and the liabilities amount to $944,000.00, leaving a net pool of $5,769,390.00. 65 per cent of that sum equates to $3,750,104.00 and the balance of 35 per cent is $2,019,286.00. In my view, the most appropriate path to that outcome is to leave the assets in situ and divide the controlled monies so as to achieve an overall distribution of the net pool in the ratio of 65/35 per cent to the husband and wife respectively.
The husband holds the following assets:
1.1/3 interest in Chapman Partners $326,076.00
2.B Farm, C Street, Town L 840,000.00
3.Mitsubishi Challenger 5,000.00
4.Jaguar E Type 55,000.00
5.Jaguar D Type 60,000.00
6.Indian Motorcycle … 12,000.00
7.Indian … Scout Motorcycle 2,500.00
8.Indian … 1,500.00
9.Number Plates 55,000.00
10.Yamaha agricultural motorcycle 1,200.00
11.2 Fordson Tractors (… model) 2,500.00
12.Artworks 990.00
13.Telstra shares 9,097.00
14.Westpac shares 4,143.00
15.Aviva Corporation shares 2,600.00
16.Marion Energy shares 90.00
17.Share of sale proceeds of heavy equipment No. …79 45,000.00
18.Sale proceeds from … ‘[Q]’ farm 27,555.00
19.Cattle at Town T Farm 7,000.00
20.Cattle at B Farm 7,225.00
21.Farm Equipment at B Farm 66,789.00
22.Other Bank Accounts 103.00
23.Chapman Company — St George Account 1,764.00
24.Chapman UK Bank Account 766.00
25.Chapman Super Fund 1,998,000.00
Total$3,531,898.00
The husband has no liabilities for the purposes of these proceedings. He thus requires $218,206.00 from the controlled monies to constitute his entitlement of 65 per cent of the overall net pool of property.
The wife holds the following assets:
1.Unit 1 B Street, Suburb P $640,000
2.Unit 2 B Street, Suburb P 540,000
3.Ford Courier 7,550
4.Jewellery 5,000
5.Commonwealth Securities 5,425
6.Bank Accounts 224,170
7.Assault case legal fees 17,000
8.F Superannuation 4,611
9.S Pty Limited 95,494
Total$1,539,250.00
She has liabilities of $944,000.00, leaving her with net assets of $595,250.00. She thus requires $1,424,036.00 to constitute her entitlement of 35 per cent of the overall net pool
I propose to make orders for the distribution of the controlled monies in percentage terms, as the current balance of the account is unlikely to be the precise figure presented at trial. The husband will receive 14 per cent of those funds and the wife the balance of 86 per cent.
SPOUSE MAINTENANCE
Section 72 of the Family Law Act provides:
Right of spouse to maintenance
(1) A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
(2) The liability under subsection (1) of a bankrupt party to a marriage to maintain the other party may be satisfied, in whole or in part, by way of the transfer of vested bankruptcy property in relation to the bankrupt party if the court makes an order under this Part for the transfer.
In my view, the wife failed to discharge the onus which rests upon her to demonstrate that she is unable to support herself adequately. The orders for settlement of property will result in the wife having liquid assets of approximately $1,848,000.00. She could surely utilise these funds in a manner which would generate an income stream. In cross examination the wife agreed that she requires the husband to meet the shortfall of rental income and mortgage repayments in respect of her Suburb P properties. She agreed, further, that the husband should subsidise her $70.00 per week cigarette smoking habit. The wife was unable to tell the court, in cross examination, the amount of spouse maintenance which she sought. In my view, this application must fail and will be dismissed.
I certify that the preceding one hundred and ninety eight (198) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 4 April 2012.
Associate: Michael Fogarty
Date: 4 April 2012
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