CHURCHILL & CHURCHILL
[2015] FamCA 491
•19 June 2015
FAMILY COURT OF AUSTRALIA
| CHURCHILL & CHURCHILL | [2015] FamCA 491 |
| FAMILY LAW – PROPERTY – FINAL HEARING – Long marriage – issues of waste and add-backs - – issues as to credit of the parties – evaluation of past contributions and future needs |
| Family Law Act 1975 (Cth) ss 75(2), 79(2), 79(4) |
| Churchill v Churchill [2014] FamCA 340
Bevan & Bevan (2013) FLC 93-545 |
| APPLICANT: | Ms Churchill |
| RESPONDENT: | Mr Churchill |
| FILE NUMBER: | BRC | 6562 | of | 2010 |
| DATE DELIVERED: | 19 June 2015 |
| PLACE DELIVERED: | Hobart |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Benjamin J |
| HEARING DATE: | 13, 14, 15 & 16 April 2015 (final submissions on 15 May 2015) |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Thomas Kirk Q.C. |
| SOLICITOR FOR THE APPLICANT: | Anthony Black Family Law |
| COUNSEL FOR THE RESPONDENT: | Mr Tedd Jordan |
| SOLICITOR FOR THE RESPONDENT: | Simmons Steel Lawyers |
Orders
Within ninety (90) days from the date of this order the husband pay to the wife the sum of $1,314,646.00 such that overall the property of the parties is divided as to 53.3 per cent to the wife and 46.7 per cent to the husband.
The wife shall sign all necessary documents, to enable financing for order 1, over property to be retained by the husband or his alter egos (excluding personal guarantees by the wife) and order 6 is interdependent with order 1.
In the event that the wife neglects or refuses to sign documents reasonably required by the husband or the bank as set out in order 2 above, IT IS DIRECTED:-
(a) leave be given to the parties to have the matter ugently re-listed before me upon the giving of seven (7) days notice to the court and to the other party;
(b) interest will not apply on the money payable under order 1 for the period of any such delay; and
(c) IT IS NOTED the wife’s oral application for orders in relation to any default is stood over generally for a period of up to one hundred and twenty (120) days from the date of this order.
Except as is otherwise provided in these orders and as against the husband a declaration that the wife will retain title and possession of and the husband will transfer to the wife and/or relinquish all his interest in the following:-
(a)the property situate at I Street, Suburb H in Queensland, and the wife shall be solely responsible for all expenses, taxes, rates and charges on such property as and from the date of this order;
(b)furniture, chattels, personal effects, timber and jewellery in the possession of the wife;
(c)the legal fees paid by the wife and the partial property settlement sums paid to her pursuant to the orders made on 28 May 2014 and 3 March 2015;
(d)the Commonwealth Bank shares held in her name;
(e)the wife’s German motor vehicle;
(f)bank accounts held in the wife’s name and cash in her possession;
(g)the wife’s entitlement in the G Super Fund subject to these orders; and
(h)other property in the wife’s current possession or control.
The husband will cause:-
(a)the sum of $321,483.00 (with accrued interest) held by Simonidis Steel being the net payment from the B Litigation to be paid to the Wife; and
(b)C Pty Ltd as the trustee of the C Trust to pay to the wife the sum of $220,650.00 (or thereabouts) held in a CBA term deposit (with accrued interest).
Property to be received/retained by the husband
Within ninety (90) days of the date of these orders (the settlement date) the parties take such steps as shall be required to transfer or cause to be transferred to the husband or his nominee any interest the wife has in F Pty Ltd and the property situate at Q Street, N Town in the Northern Territory. The husband and/or his alter egos shall be solely responsible for all expenses, mortgage liabilities, rates, taxes and charges on such property as and from the date of this order.
Except as is otherwise provided in these orders and as between the parties and their respective alter egos, a declaration that the husband will retain title and possession of and the wife will transfer to the husband (or his nominee) and/or relinquish all her interest in the following:-
(a)all of her interests in or by way of shareholding or otherwise in G Practice Pty Ltd, C Pty Ltd, C Trust, F Pty Ltd, E Pty Ltd, E Trust (the Churchill Group);
(b)furniture, chattels, personal effects, gold coins and jewellery in the possession of the Husband;
(c)his interests in Australian Super and the G Practice Super Fund;
(d)the motor vehicles currently in his possession;
(e)the bank accounts in the husband’s name;
(f)other property in the husband’s current possession or control; and
(g)The wife’s interest in L Street, Suburb S in the Northern Territory. The husband shall be solely responsible for all expenses, mortgage liabilities, rates, taxes and charges on such property as and from the date of this order.
The wife shall upon the written request of the husband sign such documents as shall be reasonably required to resign all offices held by her within the Churchill Group including as director, secretary or otherwise and shall relinquish all of her rights as a beneficiary, principal or otherwise in any trusts within the Churchill Group.
B Litigation
The parties shall apply the funds presently in the Trust Account of J Lawyers for the purpose of meeting legal costs and disbursements associated with the recovery of costs orders obtained against Mr B. Once those funds have been expended each party shall contribute one half of any further costs and disbursements reasonably incurred to pursue the recovery of costs orders obtained against Mr B as and when such costs and disbursements become payable.
The net proceeds from the recovery of the costs orders obtained against Mr B (the cost recovery monies) currently estimated to be in the range of $818,000 to $1,147,000 less
(a)any legal costs incurred subsequent to the date of these orders if such costs are deferred or unpaid at the time of recovery of the costs orders; and
(b)the tax payable as set out below shall be divided between the parties such that the wife receives 53.3 per cent and the husband 46.7 per cent and the parties shall provide instructions to the solicitors acting (currently J) to pay the costs so recovered in accordance with this order.
The cost recovery monies shall be held in the Trust Account of the solicitors agreed to by the parties pending receipt by the husband of his income tax assessment (or assessments if such monies are received in more than one tax year) and any objections or appeals in relation to that part of the husband’s income tax assessment that relate to the tax payable in respect of the capital gain (if any) on the damages awarded to the husband in the B litigation and/or the interest paid on the said damages.
The husband shall, in the preparation of his income tax returns for each of the years in which tax is potentially payable in respect of the said damages and interest and costs, take such steps as are set forth in the report of Ms PP (annexed to the Affidavit of Ms T filed 13 May 2015) to lawfully minimise the tax payable in respect thereof and not less than twenty eight (28) days prior to the lodgement thereof shall provide a copy thereof to the wife’s solicitor.
Subject to the time limits otherwise contained in these orders, in respect of this order the parties have liberty to apply on the giving of twenty one (21) days notice in writing to the husband in respect of mechanical or non compliance issues.
Within fourteen (14) days upon receipt of the income tax assessment (or assessments if there be more than one) the husband shall forthwith provide a copy thereof to the wife’s solicitors and shall advise if he intends to object thereto (or not) whereupon:-
(a)the wife shall within 14 days advise the husband (if he has advised he does not intend to object), whether she wishes him to do so and if so, the husband shall within the prescribed period for objection lodge the Notice of Objection prepared on her behalf with the legal and/or accounting costs in respect thereof to be paid from the cost recovery monies;
(b)the wife shall, not less than fourteen (14) days prior to the expiry of the prescribed period (if the husband has advised that he intends to object), be provided with a draft copy of the Notice of Objection intended to be filed and the husband shall, if the wife so requests, add such other grounds thereto as the wife shall provide, with the costs of both parties in respect thereof to be paid from the cost recovery monies;
(c)Upon receipt of the result of the objection (or objections if there be more than one) the husband shall within fourteen ( 14) days provide a copy thereof to the wife and advise the wife if he intends to lodge an appeal thereto (or not) whereupon the same procedure as applies in respect of objections shall apply mutatis mutandis subject to the substitution of the words “appeal” for “objection” and “notice of appeal” for “notice of objection” and it is further provided that the costs of legal representation and accounting advice for such appeals of both parties shall be paid from the cost recovery monies;
(d)The husband shall throughout the objection and/or appeal process take all necessary steps to prosecute the objections/appeals and shall ensure that instructions are given to entitle the wife to have direct access to the legal and/or accounting professionals engaged therein;
(e) The monies required to pay that part of the husband’s income tax assessments that relates to the capital gain (if any) on the damages awarded to the husband and/or the interest paid on the said damages (such part to be calculated by deducting the tax that would have otherwise been payable by the husband excluding the said capital gain on damages and interest, from the tax assessed with those components included) shall be paid from the cost recovery monies and any recovery of monies paid as a consequence of objections or appeals shall be returned to the said Trust Account where the cost recovery monies are held; and
(f)Neither party shall lodge an objection or appeal unless and until they have obtained (at their own expense) professional advice (either accounting or legal) that there is a reasonable chance of success in respect of such objection and/or appeal and provided a copy of the advice and the brief upon which such advice was based.
Forthwith upon payment of the said part of the last assessment the monies held within the said Trust Account shall be apportioned between the parties such that the wife is paid 53.3 per cent and the husband is paid 46.7 per cent.
During the course of the period that the cost recovery monies are held in the said Trust Account, the same shall be invested as the parties shall agree in writing and failing agreement, in a term deposit with the Commonwealth Bank.
Both the husband and the wife have liberty to apply in respect of the matters referred to in these orders on the giving of seven (7) days notice in writing to the other.
Superannuation
Within 60 days of the date of these Orders, the husband and the wife shall take such steps and do all things necessary as shall be required to transfer to such superannuation fund as the Wife shall elect, her entitlement in the G Practice Super Fund of about $408,788 (subject to the Wife providing an indemnity to the Trustee of the G Practice Super Fund prior to the rolling out of her interest in the said Fund that she will pay 53.3 per cent of any costs and penalties that may be imposed to make the superannuation fund compliant in relation to the matters relating to the Fund up to the time of her rolling out her interest in the Fund as and when such costs and penalties fall due).
Upon the said transfer of such funds, the wife shall resign all offices held by her in the G Practice Super Fund.
Indemnities
Save as otherwise provided for in these Orders, as and from the date of these orders the husband will indemnify and keep indemnified the wife in respect of liabilities of the Churchill Group including mortgages, leases, tax, capital gains tax, fringe benefits tax as was discovered or identified by the parties or is contained in financial papers, records or documents provided by the parties to the other or their representatives. The indemnity includes:
(a)liability for payment of tax (income, capital gains or Division 7A) or duty and penalties and interest thereon, to the Australian Taxation Office of State Revenue;
(b)creditors of the Churchill Group;
(c)any guarantee provided for the payment of any monies or the performance of any duties by or on behalf of the Churchill Group;
(d)any liability to any entity in the Churchill Group pursuant to any indebtedness of the wife pursuant to any loan account; and
(e)The husband will forthwith be responsible for indemnifying the wife in respect of any and all liabilities for the payment of income tax, capital gains tax, Division 7A tax, penalties or interest arising as a consequence of the carrying out of these orders.
Spouse Maintenance
The spouse maintenance order made 28 May 2014 shall be dismissed as and from the earlier of ninety (90) days from the date of this order or the payment to the wife of the money set out in order 1 above.
Miscellaneous
Any duty levied pursuant to the Duties Act 2001 (Qld) or the relevant statute in the Northern Territory payable on transactions arising from these orders or any documents executed pursuant to these orders be paid by the transferee spouse or the spouse receiving the benefit of same.
The parties promptly comply with the requirements of the relevant statute and associated legislation and all requisitions issued by the Office of State Revenue (or the appropriate Office in the Northern Territory) in relation to any document executed or transaction pursuant to or putting into effect the terms and conditions of this order.
Each party do and procure the doing of all things and sign and procure the signing of all documents necessary to give full force and effect to the provisions of these Orders.
Save where otherwise noted in these orders, the transferee spouse prepare the documentation necessary to give effect to the provisions of these Orders at their cost and further be responsible for the payment of registration fees, if any, in relation to the transfer of the property to their name.
The transferee spouse shall be liable for payment of any local government rates and charges, body corporate levies or contributions and land tax (including any arrears and interest) on any property transferred to them pursuant to the terms of these Orders.
The parties’ leave to apply shall operate two (2) years from the date of this order or such longer period as is determined within that two (2) year period.
All extant applications (except costs applications) are otherwise dismissed.
Any application for costs, including any reserved costs not otherwise dealt with in these proceedings, are to be made in accordance with the Family Law Rules 2004 (Cth).
Following the expiration of the appeal period, all subpoenaed documents (except for the parties’ case summaries and expert reports) shall be returned to the persons or institutions from which they emanated and all exhibits are returned to the person or persons who tendered the same.
IT IS CERTIFIED
Pursuant to Rule 19.50 of the Family Law Rules 2004 (Cth) it was reasonable to engage senior counsel and counsel to attend.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Churchill & Churchill 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 HOBART |
FILE NUMBER: BRC 6562 of 2010
| Ms Churchill |
Applicant
And
| Mr Churchill |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms Churchill (‘the wife’) and Mr Churchill (‘the husband’) were married in 1978 and separated about 30 years later. This was a very long relationship over which period of time each of the parties in their own ways have worked very hard and consequently they have accumulated significant assets. They parented their children and guided them into adulthood. During the course of their marriage the parties’ economic circumstances waxed and waned as a result of the decisions they made, sometimes separately and sometimes jointly. Many of these changes were as a result of the vagaries of life over those three or so decades of contribution. Good decisions were made and bad decisions were made in the context of this relationship.
Their relationship breakdown has been acrimonious, and has been marked by distrust and blame. In addition to these family law proceedings the parties and their alter egos were engaged in litigation with their former accountant in the Supreme Court of Queensland at both a first instance level and on appeal (‘the B litigation’). Those proceedings are said to now be finally resolved, at least in relation to the principal issues. The precise value of a Supreme Court costs order, to which the parties are entitled, remains unquantified.
In this toxic environment the parties were unable or unwilling to resolve their family law property issues. It now falls to this Court to settle and adjust the property for the parties.
For the reasons set out below I have divided the property as to 53.3 per cent to the wife and 46.7 per cent to the husband.
The parties’ proposals
The wife seeks a division of the parties’ property on the basis of 60 per cent to her and 40 per cent to the husband. In addition she asks the Court to ‘add-back’ and has included in the property a substantial quantity of notional property. As such there is a difference in the net property pool of some $3 million dollars. The wife seeks that any shortfall after division be made up by a money order.
In particular, the wife she seeks to retain:-
(a)the property I Street, Suburb H (‘the I Street property’). The husband does not oppose this retention and as such I will make this order by consent;
(b)the furniture, chattels, personal effects and most jewellery in the possession of the wife. The husband does not oppose this retention and as such I will make this order by consent;
(c)the legal fees paid by the wife and the partial property settlement sums paid to her pursuant to the orders made on 28 May 2014 and 3 March 2015. The husband does not oppose the wife’s retention of these amounts and as such I will make this order by consent;
(d)the CBA shares in the wife’s name. The husband does not oppose this retention and as such I will make this order by consent;
(e)the German motor vehicle purchased by the wife. The husband does not oppose this retention and as such I will make order by consent;
(f)bank accounts held in the wife’s name and cash in her possession. The husband does not oppose this retention and as such I will make this order by consent;
(g)her entitlement in the G Practice Super Fund subject to mechanical orders to enable the wife’s entitlement to be transferred to a different fund. The husband opposes this approach; and
(h)as against the husband, a general order in respect of other property in the wife’s possession or control. Subject to some exceptions, both parties seek this form of order.
While I will make some of the above orders as matters of consent, such orders will be made in the context of the overall property adjustment determined by me. In coming to the conclusions reflected in these reasons I have considered the property as a whole and also as the individual parts.
The wife seeks to take as part of the property adjustment the real property owned by F Pty Ltd at Q Street, N Town (‘the Q Street property’). This is the property from where the husband conducts his business. The wife offers a lease back of the property to the husband. The husband strenuously opposed such an outcome. He says that with the conflict between he and the wife such an outcome would not be good for his business and would not be an outcome he personally could countenance. Given the conflict between the parties and the provisions of s 81 of the Family Law Act 1975 (Cth) (‘the Act’) I have determined not to adopt that course sought by the wife.
C Pty Ltd as the trustee of the C Trust had about $338,307 a CBA term deposit (less $70,000 paid to the wife on 13 April 2015). The wife sought that sum. I have adopted that course, but in doing so I have reduced the husband’s side of the ledger by $268,307 and increased the wife’s by the same sum. There is likely to be a small amount of interest payable to the wife, but given the extent of the property and the small sum involved, I have ignored that interest as de minimis non curat lex.
The wife concedes that the husband should retain:-
(a)his business and associated companies; and
(b)his chattels and personal effects;
(c)his superannuation in their self-managed fund; and
(d)a sum in Australian Super, his motor vehicles and the like.
In addition the wife offered to transfer to the husband her interest in their residential property in L Street. I have adopted that course.
The parties are entitled to the benefit of a costs order in respect of the B litigation. The wife seeks division of this on the underlying basis sought by her. The approach adopted in this regard seems to be mutual, except as to the percentage. I intend that the orders made will enable a division of that chose in action as to 53.3 per cent to the wife and 46.7 per cent to the husband. The parties will be required to contribute equally to the costs of the recovery of such costs.
The husband and wife are in agreement as to the way the superannuation fund is to be managed, if there is to be a split. The wife shall set up her own superannuation fund and her superannuation entitlement (to which she is or will be entitled from the parties self-managed superannuation fund) will be rolled into her new fund. The wife will then cease to have any involvement in the management of the parties’ present self-managed superannuation fund.
The wife sought a series of indemnities of a seemingly draconian nature. Given the findings I made about credit and the nature of the joint endeavours of these parties over the decades of their relationship, I do not intend to make retrospective indemnities, however, I will put in place indemnities in respect of present and ongoing liabilities.
As to spousal maintenance, an order was made in May 2014. The wife seeks a discharge of that order, once she is paid. I will accommodate that application and the order will cease on the payment of the money order or 90 days, whichever is the earlier. If the money is not paid, the wife has significant assets off which she can live, and the money order will accrue interest at a high rate on the amount owing to her.
There is an issue of the tax that may be payable on the proceeds of the B litigation.
The wife asserted that the B litigation was brought about by the husband engaging in taxation evasion. She says that the commercial arrangement with Mr B was to evade tax and led to the B litigation. The wife said this occurred without her knowledge and consent and was in breach of an agreement or an undertaking between them following earlier unhappiness with the Australian Tax Office.
To prosecute and defend the B litigation the parties and their alter egos have spent about $2,300,000 in legal costs and is continuing.
The wife says that her contributions and future needs are in one way and or another greater than the husband.
The husband’s case is that this was a long marriage, that each of the parties has contributed in their own ways equally and that the assets of the parties are such and the circumstances are such that the property ought to be divided equally.
The husband agreed to the wife retaining the property referred to above, including the C funds.
The husband sought an order that the wife receive such sum from the B litigation costs dispute as to bring her overall property entitlement to 50 per cent of the net property as determined by this Court. I do not intend to adopt that particular course. The structure of the orders will be that the B litigation costs are to be divided in accordance with the percentages set out above and each party shall take their respective share when and if it is received.
It will be a matter for the husband to raise funds to payout the wife from his remaining assets. I will allow him 90 days to have those arrangements put in place.
There is no issue that the husband will retain the following property, subject to the overall property adjustment:-
(a)his interests in G Practice Pty Ltd;
(b)the corporate structure that is C Pty Ltd;
(c)the trust that is C Trust;
(d)F Pty Ltd, E Pty Ltd, E Trust (the Churchill Group); and
(e)the furniture, chattels, personal effects, gold coins and jewellery in the possession of the husband.
Given the areas in agreement, there should be no reason why this ought not to be put in place. As to the real property from which the practice operates, I am aware of the conflicting positions of the parties and I have made comment elsewhere in these reasons.
There is a question about the husband’s interest in the timber in the possession of the wife and the husband’s timber in Darwin. The husband seeks orders to enable him to collect the timber upon giving notice. As to that timber and that held by the husband in Darwin, given the passing of time and the other matters to which I have alluded in these reasons, I do not intend to make such an order.
The husband seeks return of two rings; one ring with three diamonds the other one with the ruby and two diamonds, which he says is currently in the wife’s possession. Given the later findings, the making of this order sought serves no utility.
The husband sought return of the personal property set out in annexure “JCC-31” to his trial affidavit.
The husband also sought to retain his interest in Australian Super, the G Practice Super Fund, motor vehicles in his possession, bank accounts in his name and all other proprietary interests of whatsoever nature in his current possession or control.
The husband claims a liability in terms of an alleged debt to the parties’ son, Mr A. The wife disputes that this is a debt and asserted that the initial payments to the children of about $200,000 each ought to be added back or in the case of Mr A the alleged debt disregarded.
The husband seeks mechanical orders to give effect to the proposed orders. These include orders that:-
(a)the transferee or assignee pay stamp duty (if any) on transfers and any registration fees on such transfers or assignments;
(b)the transferee or assignee prepare and submit any appropriate documentation to give effect to the orders, and be responsible for any local government rates and charges, body corporate levies or contributions and land tax (including any arrears and interest) on any property transferred to them (or their alter egos) pursuant to the orders; and
(c)each of the parties sign documents and do acts to implement the transfers.
I generally accept that mechanical approach, with the exception of appointing a Registrar in the event of a default. If default occurs a further application will need to be made to the Court.
In his document entitled “draft minutes of Orders Sought”[1] The husband seeks an injunction to restrain he and the wife both directly and indirectly from ‘disclosing to any other person, entity, organisation or body, any matter of a financial or monetary nature or any matter having a bearing to financial and monetary matters of the other of them (except if required by Law to do so)’. I will not make this order. The general law covers the restriction on publication and use of documents from Family Court proceedings, from the evidence before me I see no reason why this jurisprudential protection ought to be expanded.
[1]Exhibit H3.
THE ISSUES
Add-back sought by the wife as set out in items 8 & 9 of the joint balance sheet[2]
[2] Exhibit H4 & W4.
There are a number of issues to be determined, which include these listed below.
There are issues relating to the reliability of the evidence given by each of the parties. These include issues of fact relating to the parties background and alleged undertakings and promises that may or may not have been made, the nature of the transaction that led up to the B litigation, the alleged gifts to the parties’ children, to name but a few.
As to the pool of property there were issues as to:-
(a)the value of the property at Q Street;
(b)the tax consequences of the non-compliant superannuation fund;
(c)the question of tax on the proceeds of the B litigation;
(d)a series of add-backs claimed by the wife;
(e)add-backs claimed by the husband;
(f)the value of the U lots, if sold other than as a complete parcel; and
(g)the add-back of legal fees.
In terms of the general, contribution and s75(2) factors there were issues about:-
(a)the division of the parties’ property (including some as to which property) and ranges between the equal approach advocated by the husband and the 60 per cent to her and 40 per cent to the husband advocated by the wife;
(b)the impact, if any, of the husband’s imprisonment for maintaining accounts in a false name in the late 1980s and his failure to lodge tax returns with the consequent liability of either $1,300,000 or $1,800,000;
(c)the earning capacity and disparity of the parties; and
(d)the losses sustained by the husband in his endeavours to set up a livestock business.
Excluding costs and some small add-backs sought by the husband, which later grouping I have rejected, the notional adjustments sought by the wife total about $2,100,000.
BACKGROUND
The husband is aged 68 and is a professional by occupation. He says he wants to continue working for only the next two years. Given the reasons set out elsewhere and the husband’s history of working, I do not accept that this is the case. Although he is approaching 70 years of age it is likely that he will continue working for the foreseeable future.
He had an aortic valve replacement in July 2012 and takes blood thinning drugs. He claims he has suffered from depression and anxiety since separation. I am not satisfied that this will prevent him from working full time.
The wife is aged 63. She has qualifications as a health professional. She says that her health is such that she is unable to work full time. In her trial affidavit[3] the wife says that in February 2010 she commenced work at the Q Hospital. She says that she left this position after about 10 weeks. One of the reasons why she said left that employment was because she felt she was physically incapable of continuing the work on the ward. She says that even though she was taking pain medication she found her hips and knees caused her pain, which would not subside even when she went to sleep at night.
[3] Filed the 2 April 2015 at paragraphs 368 and 369.
The wife says further that despite her ill health she registered with Career One and a number of other agencies and applied for 20 jobs due to financial pressures to work. She gained employment from 24 October 2011 to August 2012, but due to the physically demanding tasks, stress toll and impairment to her vision she resigned. She has not been in paid employment since August 2012.
The wife deposes that her prospects for future employment are poor. I do not accept that the wife is unable to work in a paid capacity. I find that she re-trained and had paid work and is able to continue some level of paid employment into the future.
The parties married in 1978. There are two children of the parties’ marriage, Ms D (aged 31) and Mr A (aged 27).
At the commencement of the relationship the husband was a qualified professional and the wife a qualified health professional working in Brisbane.
The husband set up practice in Darwin at about the time they became engaged prior to their marriage.
The wife may have had marginally more assets in savings and a car at the time of marriage, but the parties’ assets were of limited compass.
After their marriage the wife worked as a full time health professional for about three years.
The husband’s practice flourished. The wife eventually ceased work as a health professional and worked as a bookkeeper in the business. The parties worked hard and saved.
In about 1981 the parties purchased property at Q Street in Suburb N. They arranged to build a premise on it and operated the business from that address. In 1988 the parties sold practice and moved to Brisbane. By this time their children had been born.
During this period in the late 1980s the husband was investigated and charged with operating bank accounts with false names. The wife was aware of this practice. In addition, the husband had not lodged tax returns for his business over a long period of time, and he asserted that he paid $1,300,000 in back tax during a tax amnesty offered by Government at that time.
The wife asserted that the tax and penalties amounted to some $1,890,000. I have discussed this issue later in these reasons. The wife deposed that she was the bookkeeper of the business and involved in its day-to-day management of the business. She was aware that the husband had consulted a notorious tax lawyer at that time, Dr V. The wife shared in the capital accumulation as a consequence of the non-compliance with tax obligations and was directly or indirectly affected by the liability arising from their joint business endeavour. Senior Counsel for the wife submitted that I ought to be critical of the husband for not having discovered documents relating to the tax at that time, a period of over 25 years. Given the passing of time and the context of the parties’ litigation with their accountant from about that time of the tax payment/s, it is not unreasonable that the husband was unable to produce such documents.
The husband was imprisoned for six weeks following his conviction relating to the falsely named bank accounts.
It was about this time the parties engaged Mr B to advise them on their tax affairs. This professional relationship continued for many years. I accept the evidence of the husband that he trusted and Mr B relied upon his expertise.
While in Brisbane at about this period of time the parties purchased the I Street Property and arranged for a house to be moved to it and renovated.
In 1991 the family returned to Darwin and reacquired the practice. They acquired it for less than they had sold it. As such, now back in Darwin the husband resumed working almost every day of the week in the business. The wife resumed her role in doing the banking and the bookkeeping. The wife trained in computer use, and in the use of the MYOB accounting software. The wife generally worked from home for the business until late 2009.
The parties’ finances recovered and in 1992 they purchased a residence in Darwin. The evidence of the wife is that they spent tens of thousands of dollars renovating that property.
The parties structured the practice in accordance with advice from Mr B.
During the marriage the parties either individually or together purchased various properties.
In about 1990 the husband became interested in the livestock business. In terms of generating income this business was not successful. I find that the wife was aware of the enterprise and it was part of the commercial enterprises in which they were involved. The wife claims that she tried to encourage the husband out of the livestock business. I have some doubts about that evidence and in that respect, I prefer the evidence of the husband.
In 2005 or thereabouts the parties had purchased a property at W Street, Darwin (‘the W Street property’) in 2005. It was unlet during the time it was owned and it was subject to a large mortgage. It was a costly exercise and caused great financial concern by the parties. After about 4 or 5 years the property was sold for $4,200,000 giving the parties a large capital profit.
The husband placed $400,000 of the proceeds of sale in trust as a gift of $200,000 to each of the parties’ children. The wife says that she was not aware of this, having regard to the evidence of the parties and the wife’s clear knowledge of the parties’ finances, I do not believe her. I accept, as I have indicated later, that these gifts were a joint decision of the parties.
In 1997 the husband purchased livestock to establish his livestock breeding enterprise in partnership with Mr Y. In 2001 the husband dissolved that livestock partnership with Mr Y. He took one half of the livestock and continued livestock farming as sole trader.
In August 2007 the husband entered into complex arrangements with his then accountant, Mr B. There was to be a sale of one half of the then livestock owned by the husband or his alter ego. The wife claimed at least parts of the detail of the sale were kept from her. Given that she signed documents in respect of mortgages and managed the parties’ books of account, I find her evidence in that respect unreliable. The wife’s explanation, given her detailed knowledge of the parties’ finances, appears either fabricated or reconstructed.
In 2007 the parties acquired a pastoral property at U (‘the U property’), in New South Wales. Mr B advanced $1,500,000 to E Pty Ltd (secured by mortgage and guaranteed by F Pty Ltd) and these funds were used in the purchase of one half of the U property by E Pty Ltd. The other half was purchased by the parties’ self-managed super fund. It in turn had apparently received $300,000 from Mr B for sale of embryos. The remainder was financed by cash and investments held in the superannuation fund.
The business and professional relationship between the husband and Mr B subsequently broke down and in February 2009 Mr B emailed the husband to assert no binding contract for him to purchase the husband’s livestock. That agreement or agreements and the relationship between Mr B and the husband failed. This occurred despite attempts by the husband to negotiate solutions and the parties ended up in expensive contested commercial litigation. Those proceedings, although successful, were determined in the Supreme Court of Queensland and were subject to an appeal to the Queensland Court of Appeal.
The husband retained J to act for him in the Supreme Court litigation commenced against Mr B. In December 2010 the wife was joined as a third party to the B litigation.
The proceedings in the Supreme Court of Queensland were heard in about February 2013 over two or three weeks. Reasons were delivered in September 2014. The husband was successful against Mr B, however, Mr B obtained a judgment against the husband and his alter egos on a cross-application.
The overall outcome being, as I said in my 2014 reasons to this litigation:-[4]
15.The husband, [E Pty Limited] and [F Pty Limited] (“the Companies”) commenced civil proceedings against [Mr B] in the Supreme Court of Queensland. [Mr B] counter-sued the husband, the Companies and joined the wife to the proceedings. Judgment was delivered on the substantive proceedings in September 2013 whereby [Mr B] was ordered to pay $2,086,700 to the Companies and there was a verdict in favour of [Mr B] for $1,500,000. There have been orders for interest. Costs are yet to be determined and an appeal has been filed for the husband and a cross appeal has been filed by [Mr B].
16.The husband, the Companies and the wife employed J Solicitors to act for them in the [B] proceedings and they have been paid about $1.8 million dollars in legal costs and disbursements. Significant further costs are anticipated in terms of the costs applications, the appeals and cross-appeals.
17.The result for the parties is a verdict of $500,000, if it stands, plus interest and perhaps costs a costs [sic] order for or against them.
[4] Churchill v Churchill [2014] FamCA 340.
Senior counsel for the wife submitted and I accept that:- [5]
… as to the costs order in respect of both the primary judgment and appeal judgments the Husband has received an order for 75% of his costs of the initial proceeding and standard costs for the appeal
the costs and disbursements incurred by the Husband and the Companies to date with [J] totals $2,367,902 (H1 #132) (plus the extra costs conceded in cross examination) with further costs anticipated in respect of enforcing the costs order
the terms of the judgment have been carried out by effectively offsetting the payment due to [Mr B] against the payment due to the Companies which included interest.
[J] have estimated that the quantum of costs likely to be recovered from [Mr B] will be in the range of $818,000 to $1,147,000 (H Aff Annex “JCC2”).
[5] Senior Counsel for the wife’s written submissions dated 16 April 2015 at page 4.
A further hearing as to the question of interest on the judgment followed and in March 2014 the interest judgment was delivered. In April 2014 Mr B lodged an appeal in respect of the substantive orders. That appeal was dismissed in November 2014. On 4 March 2015 final settlement was reached with Mr B.
The wife asserted that the underlying transaction was a tax avoidance scheme and in breach of the husband’s alleged promise not to do so again. I do not accept that such a promise was made and I have commented later in these reasons as to the B transactions.
From 2006 until 2008 the wife studied and became qualified as a health professional full-time.
In about 2008 the wife inherited shares from her mother’s estate. The wife is one of four children and her father survived his late wife. The wife’s father managed his widow’s estate and distributed it in one quarter shares. The wife inherited shares in the Commonwealth Bank of Australia, Ardent Leisure and Citigold. The wife says[6] that she subsequently purchased an additional $25,000 in Commonwealth Bank shares, that she reinvests the dividends on the shares, and that their market price and consequentially, their value has significantly increased.
[6] The wife’s trial affidavit at paragraph 152.
The wife says[7] that she had retained the share portfolio intact until 4 December 2014, when she sold all of the Ardent Leisure and Citigold Shares for approximately $42,277.78. In that context she says the:-[8]
… Ardent Leisure and Citigold shares and the sale proceeds were paid into my account on 9 December 2014 in the sum of $42,277.78. After I sold my shares I repaid approximately $17,000.00 to my father that I have borrowed from him over the years. I have used these funds to pay [X Pty Ltd] for work performed by them at the [Suburb H] property to replace the staircase and rotting timber supports in the sum of $18,350.64. There is one further invoice for $2,762.50 to be paid once the final work is completed. I am also holding the balance of the funds from selling the shares to pay the anticipated capital gains tax on the sale.
[7] Ibid paragraph 153.
[8] Ibid paragraph 445
The husband asserted the marriage broke down in June 2009. The wife asserted that they separated in March 2010 when she commenced living full time in the parties’ Brisbane home.
I accept that the wife undertook most of the cooking, cleaning and domestic chores. She was primarily responsible for the children. The husband worked long hours in his business.
By an order made on 28 May 2014 the wife received a partial property settlement, payment of tax and spousal maintenance of $600 per week.
A further interim property order was made on 23 June 2014 by way of interim hearing to enable the B litigation to be conducted.
In July 2014 the sum of $296,000.00 from the B litigation judgment was released to husband. He paid $231,000.00 in tax and $60,000.00 to J for litigation costs. It was the opinion of J that the costs recovered by the husband would be about $982,000 although this is an estimate and is subject to variation.
In July 2014 the husband provided a property summary asserting ownership of 618 head of livestock semen inventory and embryos.
In September 2014 the husband sold 333 livestock to Z Pty Ltd being the majority of the herd of the adult females with existing registration certificates with the relevant livestock association. He did not inform the wife of his intention to sell and his intention to effectively wind up the livestock business until a letter was sent on his behalf on Christmas Eve 2014 and received by the wife on 5 January 2015.
On 7 November 2014 the husband sold the livestock semen straws and embryos and did not inform the wife of that sale until 11 February 2015.
It was an agreed fact between the parties that the total turnover for the practice between 30 June 2011 and 30 June 2015 ranged from approximately $1,058,000 to approximately $1,200,000.[9]
[9] Report of Mr AA page 62 line 1 ‘[practice] fees’.
These proceedings were heard by me in Brisbane in April 2015 and final submissions made to me in late May 2015.
Any statement of fact contained in these reasons is to be regarded as a finding of fact unless the contrary is clear from the context.
THE EVIDENCE
The wife
The wife gave evidence in accordance with her affidavit filed 2 April 2015 (‘the wife’s trial affidavit’) and her financial statement filed 25 March 2015. In evidence in chief the wife provided documentary evidence of her superannuation entitlements.[10]
[10] Exhibit W6.
The wife also gave evidence in relation to a number of orders sought by the husband including that:-
(a)the timber the husband sought to recover from the wife’s property ought to be retained by her as she wants to use it for a wardrobe;
(b)the two rings the husband wanted returned to him had been sold some years before for consideration of $1,000 each; and
(c)the other items sought by the husband, had been either sold or taken to the tip.
In cross-examination the wife denied that she knew the husband wanted these items. She clarified that one of the items, some wicker children’s furniture, were given to a woman who was in need of this material. She then said that the bone china, the cutlery and crystal had been sold by her in 2011 and that money was used for her day-to-day expenses. The wife claimed the crystal was not the husbands, rather she said she had purchased it. She said that she was not aware of the husband’s desire for these chattels. Her evidence in relation to these items of chattels was not satisfactory, as there seemed to be an element of reconstruction surrounding it. These items seemed to have little commercial value, although they may be of sentimental or personal value. Given the state of the evidence and the lack of clarity as to the existence of the chattels set out in annexure JCC 31 to the husband’s affidavit, I will not be making the order sought by him.
The wife was cross-examined in relation to her approach in this case where there were profitable investments, such as the W Street venture, she used the term ‘we’ where as when there were losses she endeavoured to say these were faults of the husband. I find some merit to this argument, the wife and husband worked as a team over many years and enjoyed success and sometimes failure. That is often the nature of long relationships.
A good example of this approach by the wife was in relation to the tax difficulties the husband had in about 1990. The wife’s evidence was that this was primarily the husband’s fault. However, she admitted in cross-examination that she went to see Dr V in Sydney with the husband to obtain tax advice. Dr V apparently came to Darwin and visited the husband and sought copies of tax returns.
This was not indicative of her assertion that the husband acted unilaterally. She asserted she did not know the purpose of the meetings. The wife had prior to that time been intimately involved in the day-to-day financial operations of the business as she was the bookkeeper. The wife is well educated and I do not accept her evidence that she knew little or nothing about the parties’ tax affairs. Whilst the husband ought not to have engaged in that conduct I am satisfied that the wife had knowledge of it and at best offered no opposition to it.
The wife conceded that while the husband developed the livestock business, she was aware of the cost of it in terms of the outgoings of the business. I find that the husband engaged in the entrepreneurial endeavour of developing a new livestock business and that the wife at best did not seriously oppose it.
The wife gave evidence that in 2005 there was a family meeting in relation to the husband’s involvement in the livestock business. The husband’s evidence was that the meeting was for him to slow down because he was working seven days a week and not spending time with the family. On balance I prefer the evidence of the husband on this issue.
The wife gave evidence that the parties had known Mr B since 1990 and he had been their accountant from 1992 to 2008. She also conceded that there was some transaction in 2008 and that the husband had tried to solve those problems with litigation. The wife admitted that she signed the mortgage documents but denied that she knew the nature of those documents. I do not believe her. The wife was careful and thoughtful in her evidence, although not always forthcoming, and I am not convinced she would simply sign a document in blank as she asserted.
The wife did not easily become flustered. At one stage during her evidence I asked her if she may have been at that time ‘flustered’ by the questions being asked of her, she explained to me in clear terms that it was counsel for the husband who was ‘flustered’ and she was trying to make her evidence clear to him.
The wife gave evidence[11] that she was not kept informed of the B litigation until she was joined and from that time her sense was that it was not a significant role. I accept that the husband was, to his credit and to the economic benefit of the parties, the primary proponent of the B litigation. The wife was able to access information as a party to the proceedings. She was unhelpful at times and used her reluctance to fund the litigation to extract funds for herself. This was in circumstances where she had available her share portfolio but was reluctant to use it. When cross-examined in relation to this approach to the funding of the B litigation, the wife prevaricated in terms of that evidence. The wife was aware that if she and the husband did not promote the proceedings their financial liability was a risk, but added difficulties in relation to properly funding that litigation. It was her view that the husband’s practice should wholly fund the legal costs, despite the huge amount involved.
[11] The wife’s trial affidavit at paragraphs 171 and 177.
The wife was cross-examined in relation to the $200,000 that the husband had put aside for each of the children. She denied agreeing to that course, but given the context of all of the evidence I prefer the evidence of the husband on this issue.
Overall, I was not impressed by the wife’s evidence. At times she would answer questions with questions and other times she would make up her own question and answer that question. I am concerned that at times it was fashioned to facilitate and maximise her claim. At times she prevaricated in respect of answers. At times her evidence was absolutely precise and other times she asserted a complete or partial memory failure.
I treat the wife’s evidence with caution.
The husband
The husband gave evidence in accordance with his affidavit filed 8 April 2015 (‘the husband’s trial affidavit’) and his financial statement filed 11 April 2015.
The husband gave evidence that the B litigation issues came to a head in 2009 as Mr B did not complete the deal and they were unable to negotiate an outcome.
The husband gave evidence as to the circumstances of separation in May 2009. It may well be that in the husband’s mind separation occurred at that time and in the wife’s mind it was later. Either way in the context of the issues I need to determine it is of little significance, particularly having regard to the very long nature of the parties’ relationship.
The husband gave evidence as to the schedules prepared by the wife in her trial affidavit at paragraphs 304 to 314. That material was at some levels incomplete and was not of great assistance to me. It is not a matter for the Court to undertake forensic accounting exercises for the parties, that is a matter for expert evidence.
The husband gave a general outline of the living arrangements between he and his wife over their long marriage. They lived together from 1978 to 1988 in the Darwin area. His practice was successful over that period of time.
In 1988 he endeavoured to dispose of his practice. He said it was sold to another professional who did not complete the purchase so it was reacquired for a lesser price.
Consequently the husband and wife lived from approximately 1988 to 1992 in Brisbane, during which time they purchased the I Street property. A house was moved to it and extensions were undertaken by the husband and on behalf of the parties. It was over this time that the husband’s failure to file tax returns, pay tax and operate bank accounts in false names came to a head.
The husband was cross-examined in relation to the tax problems. He said that he was imprisoned for operating bank accounts in false names. His evidence was that the wife knew of this practice and to some extent participated in it through banking. The wife conceded she was aware of some such accounts but did not approve of it. The husband’s evidence was that he endeavoured to shield the wife in relation to the events at that time.
The husband gave evidence that he paid arrears of tax after lodging tax returns during a tax moratorium at that time, the amount of tax being $1,300,000 not the $1,890,000 as asserted by the wife. On balance, I prefer the evidence of the husband.
I accept his evidence that he kept the wife informed of what was happening with their tax affairs during the investigation by the Australian Taxation Office and the sequel as set out in the wife’s trial affidavit.[12]
[12] Ibid at paragraphs 39 to 46.
I accept the husband’s evidence that the wife knew of the bank statements and the bank accounts in other names given her involvement with the accounting of the business. The husband said his penalty in relation to the tax and other matters was the time he was imprisoned.
The husband denied that he was asked for the promise or the undertaking asserted by the wife in relation to tax affairs. I accept that evidence.
The husband did apologise to the wife but it was in the context of the pain that the family went through given all of those circumstances.
In 1992 or thereabouts the parties returned to Darwin where they resided until separation in 2009 or 2010. The husband remains living in Darwin. The husband conceded that the parties spent about $2.2 million to $2.3 million dollars in legal costs in the B litigation.
As I said earlier, the nature of the issues between the parties and Mr B was that the outcome of the B litigation had the capacity to hugely impact upon the parties and their overall wealth and I make no criticism of the husband in terms of that legal cost expenditure. Unfortunately, the parties in entering into commercial arrangements with their accountant and then engaging in litigation ‘grasped the tail of the tiger’ and were caught until settlement with Mr B. The husband was significantly involved in the litigation and drove it from the parties’ point of view. I regard that as a positive contribution in terms of preserving the assets of the parties.
Given the wife’s approach to the payment of J’s legal fees and her views that they ought to have been paid out of the income of the practice and her requirement, that at least on one occasion, the release of funds for legal costs was predicated upon a release to her of a large sum of money, I am satisfied that she, at some levels, was unhelpful in terms of the litigation.
At one stage the husband was cross-examined in relation to J having initially acting for him in the family law proceedings in circumstances where the wife may or may not have objected to them acting. The husband in any event ceased his employment of them in that regard and the wife was content to have J act for the parties and their alter egos in the B Litigation. I do not understand the wife’s implicit criticism of the husband in that regard. If the wife did not want that firm to act for them she ought to have said so when she was joined as a party in 2010.
The husband gave evidence as to the costs likely to be recovered in the B Litigation as being between $818,000 and $1,147,000. This was reflective of the evidence given by the wife in her trial affidavit.[13]
[13] Ibid at paragraph 271.
The husband conceded that further costs were paid to J as part of the increasing acrimonious litigation with Mr B as set out in the wife’s trial affidavit[14] in the sums of $50,000 and $55,288.56.
[14] Ibid at paragraphs 282 & 286.
It is my intention to make an order that the costs of winding up the B litigation ought to be borne by the parties in the percentages that I have determined generally for the division of property and the amount received to be divided in terms of such percentages.
In terms of the arrangements to sell half of his livestock to Mr B in 2007 I accept that the husband had known Mr B since he was referred to him by his then lawyers at the time he was dealing with his the tax difficulties in 1990. Mr B had been the parties’ accountant and a trusted advisor. From 1992 to 2008 the wife and husband received accounting services and financial advice from Mr B.
The husband said he entered into an agreement on the basis of the advice he received from that trusted accountant. The husband was vigorously cross-examined as to the nature of that agreement. The husband was not seriously shaken in his cross-examination. The husband said he entered into an agreement which believed was appropriate but lawfully minimised the tax burden. I accept that evidence.
The husband denied that the agreement was a tax avoidance scheme. The husband gave evidence and I accept that the wife was aware of the transactions, albeit not the precise nature of them.
In coming to these conclusions I have had regard to the relevant parts of the judgment of the Supreme Court Judge delivered in 2013[15] and the relevant transcript contained in the reasons of the Court of Appeal at Queensland delivered in 2014.[16] To make it clear I find, on the evidence of the husband, that his view was that the agreement was not a tax avoidance scheme but was a legitimate tax minimisation scheme and the wife had general knowledge of it.
[15] Annexure SC8 to wife’s trial affidavit.
[16] Exhibit W8.
The husband was cross-examined in relation to an email he sent to the wife on 27 October 2011[17] where he said:-
…the time, effort and cost, and guilt I feel regarding this matter is enormous but I believe strongly than ever before in my life that I must bring him to heal and thereby get the correct outcome for you and the kids … That is my entire focus.
[17] Annexure SC16 to the wife’s trial affidavit.
It was put to the husband that this was an admission of the husband’s wrong doing. The husband’s explanation, which I accept, was that he was apologising for the stress that he put his family through.
The husband was cross-examined about the entrepreneurial activities in the practice and in relation to the livestock. The husband frankly conceded in this Court and in the Supreme Court that the livestock business had never made a profit. However, for the husband it was an entrepreneurial endeavour undertaken by him to develop this industry in Australia. The husband is immensely proud of the efforts he made in that regard, and it was not the financial success that he sought. This business was undertaken with his wife’s knowledge over a long period of time.
The livestock business was one of the exigencies of life. It may have done well; it was possible that the parties could have done well materially, but they did not.
The husband gave evidence about the cost of the B litigation and I accept such evidence as set out in the husband’s affidavit.[18]
[18] Filed the 8 April 2015 at paragraphs 131 to 151 (excluding those paragraphs struck out during the objection process).
The husband gave evidence in relation to the acquisition of the W Street property in 2005. At the time the parties purchased the W Street property in 2005 they borrowed extensively. The property was unlet and did not have tenants in it throughout the course of the parties’ ownership of it. The husband gave evidence as to why it was not let, which evidence I accept.
W Street was purchased for about $2 million dollars and the parties borrowed about $1.7 million dollars to complete the purchase. The parties were paying significant interest during the course of ownership of the property, which was a period of about five years. The interest was about $228,000 per year. This clearly placed a financial burden on the parties.
However, the property was eventually sold for $4,300,000 and about $1,886,000 was placed into a term deposit, $410,000 put aside for the payment of GST and $200,000 was put aside for each of the parties’ children.
The husband gave evidence, which I accept, that he and the wife had discussed in advance the allocation of these funds to the children. These conversations took place before July 2010.
I accept that the parties jointly made a gift to each of their children in 2010 of $200,000 and that once that money was placed into the term deposits, albeit in the husband’s name to retain some control over the funds at least for the time being, that gift had been completed. I reject the wife’s evidence to the contrary.
The investment initiated by the husband in W Street was, after some difficulties, an economic success.
The husband’s evidence was that he was now left with about 29 livestock; the others had been sold as was the semen straws and embryos. The husband gave evidence that during the course of his livestock business he was not asked by the wife to get out of that business and I prefer his evidence in that regard, albeit that he was asked to reduce his working hours in the mid 2000s.
As at 22 September 2014 the husband had control of about 618 head of livestock. The husband was asked why he did not inform the wife of the proposed sale of the livestock. His evidence, which I accept, was that the livestock were in poor condition, that it was costing a lot of money to feed them, and that the drought was continuing. Further he was concerned that the wife had been difficult and obstructionist and had at times abused him or been abusive of him to others. Given the evidence provided by the husband I understand the rationale of the husband in that respect.
The husband was cross-examined as to whether the livestock business was a ‘folly’. The husband was passionate in his belief in the livestock and the development of that industry in Australia, albeit not to his direct financial advantage. I accept his evidence that it was a bona fides effort to build up that business.
In terms of the sale of livestock to Mr BB the husband said that he was a business associate who had assisted the husband in 2014 following the illness of the previous manager of the properties in the East Coast of Australia. He sold the semen straws and embryos to Mr BB. He sold the livestock to Mr BB.
Given the submissions made by counsel for the husband as to the previous sales of livestock I am not persuaded that the transaction was otherwise than a normal, albeit not particularly well documented, sale of livestock and the like.
The husband was cross-examined about the CC Brand name (which he used for the livestock) which name the parties had not registered or secured. He did not oppose Mr BB using that name and Mr BB did so.
The husband was asked about the agistment of the livestock since they were passed to Mr BB or his organisation in December of 2014. The husband said he had permitted Mr BB to leave up to 200 livestock on the property and has not sought agistment fees from him at this stage.
The husband was cross-examined as to why he had consented to valuation of the livestock, the semen straws and embryos in December 2014 when they had been sold. His explanation was not entirely convincing given that he said that the sales were not completed until sometime later.
His evidence was that the monies were paid early in 2015. I am satisfied that the husband was not entirely frank with the wife in terms of the sale of the livestock so that he could dispose of them rather than run the risk that he would be left with the livestock on drought affected land where they were in poor condition and where he reasonably anticipated difficulties in terms of the wife.
The husband conceded that Mr BB had cooperated and provided evidence to J in the B Supreme Court proceedings but nothing further had occurred in relation to that.
Issues such as that may give rise to suspicion but they do not, in my view in the circumstances of this case, give rise to the conclusions to which the wife seeks the Court to adopt, which is that this was phoney sale and part of a scheme to defraud the wife of the full value arising from the sale of the livestock.
The husband’s practice is conducted on freehold land at Q Street. I have referred to this elsewhere in these reasons. The wife sought orders that she retain the property. The husband was absolutely opposed to this course as he would be left to try to operate his practice with his wife as a landlord. Given the history of the hostility between the parties that was a justifiable concern by the husband. It would leave the parties engaged in a commercial arrangement, which is likely to lead to ongoing conflict between the parties. Given all of the evidence, I accept that the husband’s concerns in that regard are soundly based.
The husband was cross-examined about timber held in containers on the Q Street property which he said he sold or swapped. I accept his evidence in that regard.
The husband gave evidence in relation to the tax he has paid since separation and the monies he has paid to the wife. These were set out in the husband’s affidavit and were not seriously challenged. I accept that evidence.
The husband gave evidence in relation to the livestock business in his affidavit.[19] I generally accept that evidence.
[19] Ibid at paragraphs 161 to 192 (subject to those paragraphs which were struck out in the objection process)
The husband’s demeanour in giving evidence was careful and at times subjective. His evidence was not seriously impeached although, as in any case, no evidence is or can be perfect as humans are not audio or visual recording machines.
I generally treat the husband’s evidence as subjective but reliable.
Mr DD
Mr DD provided evidence in accordance with his affidavit filed 12 April 2015 (shortly before the commencement of the trial) and that affidavit was the subject of some contention. Mr DD’s resumé was tendered in evidence.[20]
[20] Exhibit H8.
Mr DD gave evidence in accordance with his affidavit although it could only have been said to be evidence as to the surrounding circumstances. I give his expert evidence as to the value of the livestock, if it achieved that status, no weight.
Mr DD did give evidence that the livestock, sold by the husband in 2014 or early 2015, were in extremely poor condition, and that there were very bare paddocks with little feed from the prolonged drought. He said some of the livestock were on the point of delivering offspring. Mr DD went on to observe ‘severe drought conditions’ at the property. To that extent I accept his evidence.
Dr EE
Evidence was provided by Dr EE in accordance with her affidavit filed 11 April 2015 (shortly before the commencement of the hearing). Objection was taken to the affidavit and much of the material contained in her affidavit was rejected.
Those parts of the affidavit remaining in place were paragraphs 1, 2 and 3 and the first part of paragraph 4 which provided:-
this was a period of extreme drought in eastern Australia
Detail of Dr EE’s qualifications was tendered in evidence,[21] and was not put in issue. I accept the evidence of Dr EE that between September 2014 and December 2014, at least, there was a period of extreme drought in eastern Australia.
[21] Exhibit H9.
Mr FF
Mr FF gave evidence in accordance with his affidavit filed 25 March 2015 which had annexed to it his 24 March 2015 expert report.
Mr FF was an expert commissioned by or on behalf of the wife to provide an opinion about the value of the livestock, semen straws and embryos sold by the husband in late 2014 and 2015. His affidavit was read into evidence and it contained his evaluation of livestock property of Mr Churchill.[22]
[22] Exhibit SB4 to Mr FF’s affidavit filed 25 March 2015.
Mr FF had undertaken some research into livestock for another person in a previous year and relied upon that research which included internet searches of material from Mr GG and Mr HH. Mr FF also had some discussions with Mr Y, who is the husband’s former business partner.
Mr FF did not inspect the livestock and his report was subject to limitations arising from the ‘genetic merit’, ‘condition’ and local forces that had an influence. His report did not indicate whether any of the livestock were pregnant.
The expertise of Mr FF was seemingly challenged by Counsel for the wife in that Mr FF described the main role of his business as to:-[23]
…provide specific nutrition advice to the [livestock] industry including for example to the [presentation of livestock produce] for commercial sale. In this role I also assist improve the breeding.
[23] Ibid at paragraph 12.
In his report and affidavit Mr FF observed that he had the following:-[24]
A letter of instruction from Anthony Black Family Law Services dated 17 March 2015.
A further email from Anthony Black Family Law Service of 18 March 2005.
[24] Ibid at paragraphs 15 and 16.
After receiving those instructions Mr FF said he undertook his own analysis of the material, researched advertised sales information, which was referenced against sellers of semen, embryos and breeding stock in the livestock industry to produce the report.
He went on to say:-[25]
…after preparing this report I was provided with a copy of the details of the livestock by [the husband] to [AA Company] on 18 September 2014 and as a result I have updated and finalised my report which is now dated 24 March 2015, a true copy of this report is annexed hereto and marked “SB-4”.
[25] Ibid at paragraph 17.
In an email sent by the wife’s solicitors[26] to the husband’s solicitors at 9.37 am on Sunday 22 March the wife’s solicitors informed the husband’s solicitors of engaging Mr FF and providing a copy of the report. Presumably this is the draft report prepared by Mr FF referred to in paragraph 17 of his affidavit.
[26] Exhibit H7.
On Thursday 26 March 2014 the wife’s solicitors forwarded an email to the husband’s solicitors[27] saying they intend to rely on Mr FF as an expert and that they have relayed Mr DD’s report to Mr FF and asked Mr FF to speak to Mr DD.
[27] Exhibit H7.
In his report which was attached to his affidavit Mr FF did not refer to the information provided by Dr EE or the material of Mr DD. In his evidence Mr FF referred to another report he had prepared.
Mr FF had prepared an updated report and that the wife had an obligation to make that report available. That did not occur. The factual circumstances upon which he based his first report were impeached and he prepared another report, which was not put to the husband, and was not before me. As such I do not regard the evidence of Mr FF in his 24 March 2015 report as being reliable.
Separation
The husband’s evidence was that separation occurred in May 2009 in circumstances where the wife sought to transfer the registration of her car. The parties had owned a property in Brisbane and the husband said the wife moved to that property. The wife asserted that the parties continued living together in Darwin until March 2010.[28] It was the wife’s case that the parties were still in a relationship when in October 2009 she discovered that the husband had been paying money to a foreign website. She said it was only in March 2010 that she ‘plucked up’[29] the courage to confront him in relation to that issue.
[28]The wife’s trial affidavit, at paragraph 4 and paragraphs 154 to 157.
[29] Ibid at paragraph 155.
The husband’s evidence was that the wife moved out of the home and moved to Brisbane in May 2009. He said she came back early the following year to complete her course and he did not object to her staying in the home.
A great deal was made about separation however in effect it meant little in the overall determination. It may well have been that the husband formed the view that the marriage ended in May 2009. It may be that the wife felt the marriage came to an end in March 2010 and then she moved to the Brisbane area in May 2010. Very little hangs on this date of separation.
The husband’s 1988 conviction for operating bank accounts in a false name
The wife claims that in 1988 she first became aware that the husband had been charged with multiple counts of operating bank accounts under false names. The history in this regard is set out in her trial affidavit.[30]
[30] Ibid at paragraphs 39 to 55.
It is not in issue that the husband was charged with and was convicted of operating bank accounts in false names in the late 1980s and was sentenced to a term of imprisonment of some three months, of which he served six weeks.
On the wife’s evidence, she was aware that these accounts had been set up. The wife asserted that she objected to the setting up of these accounts particularly one in her mother’s maiden name.
It is not in issue that the husband, in respect of his businesses, had not lodged tax returns for many years, up to a decade.
The evidence of the husband was that in about 1988 there was a moratorium to allow people who had not lodged tax returns to lodge tax returns. The husband’s evidence was that he went to see an accountant and lodged tax returns over that period of time.
The wife said that as a consequence the husband had to pay tax and penalties of about $1.8 million. The husband, on the other hand, said that because of the moratorium he was required to pay tax of $1.3 million which did not involve any penalties. He was challenged in relation to that evidence in cross-examination.
If the wife’s evidence is accepted then there may be upwards of $500,000 or $600,000 (a considerable sum at that time and now) in penalties, interest and the like.
I accept and prefer the evidence of the husband and I am not satisfied that the wife has established that there were substantial penalties at that time.
The wife’s senior counsel cross-examined the husband as to why he did not produce documents in the three weeks before the commencement of this trial period. Given that the events occurred some 20 years before this hearing, and the husband’s desire to close the door, I am satisfied that the documents from that time are no longer readily available, if available at all, to the husband.
The wife claimed that after the husband had been in prison he had agreed that he would never put the family through that again or words to that effect. I do not make such a finding. I am satisfied that these events would have had a profound impact upon the parties’ as was the intention of the sentencing judicial officer.
The wife asserted that to all intents and purposes this decimated the wealth of the parties, at that time. The husband said it had a profound impact but was not to the level as asserted by the wife.
I am satisfied that the parties had significant assets at that time and I accept the evidence of the husband that they had purchased property in II Town and that they had sold part of that property to fund his litigation costs and that they had the I Street property.
The husband is not absolutely sure whether the I Street property was purchased before or after he was imprisoned, but he said that the parties had the capacity to buy that asset at that time.
I accept the husband’s evidence that he spent about $5,000 on barrister’s fees and about $25,000 on J in terms of legal advice. It was not clear to me about how much, or if any, of that sum represented the fees on lodging taxation returns.
If the parties were obliged to pay over ten years $1.3 million dollars in tax and they paid it as a lump sum at the end of that period of time, even if there was some interest added, it is not an unexpected expense and whilst I give it some weight in terms of some level of waste, I have considered that in the overall impact of contribution.
The wife concedes that they had funds to pay for the block of land at Suburb H outright. They then found a house and moved it onto the block. The husband worked to renovate and place that house on the land, including building a new wing.
The livestock business
The husband had an interest in livestock. In 1991/1992 he imported some livestock embryos and commenced a business in that regard.
In 1997 he and a partner, Mr Y, imported 50 livestock into Australia to set up this business.
The wife was concerned about the amount of money that was being spent on the livestock business although the husband explained that Mr Y worked full time in the livestock business whereas the husband contributed more money.[31] In any event in about 2002 their partnership was dissolved, the herd and other accompaniments of the livestock business were divided equally.
[31] Ibid at paragraphs 83 to 85.
The husband thereafter ran his livestock business himself. In 2007 he bought a property at U in New South Wales and moved some livestock to that property. The husband had some difficulties with running livestock at U which are set out in his affidavit.[32] The husband had the help of a Mr JJ in terms of his livestock business in New South Wales. He finished working for the husband in 2014 after he became sick.
[32] At paragraphs 173 to 176 of the husband’s trial affidavit.
The husband then employed Mr BB to undertake and manage the livestock in New South Wales.
The husband’s evidence was that the properties where he ran livestock were affected by drought. He said in 2014 it became necessary to move livestock off those properties or hand feed them and that it caused major problems and expense.
He said it was necessary to hand feed livestock and he sought advice from Mr DD in October 2014.
Over that year the husband says that he eventually came to the conclusion that he needed to dispose of the livestock business. He did not engage the wife in this process. I do not endorse his approach but given the high level of conflict between the husband and the wife and the wife’s approach to the costs of the B litigation, the husband’s attitude is, in all the circumstances, understandable.
The husband sold virtually all of his livestock apart from about 20 or 30 animals by the end of 2014 or early 2015.
Senior counsel for the wife cross-examined the husband as to the nature of these transactions. The husband permitted Mr BB to use his CC Brand name for the livestock. As I indicated earlier, this was not a brand which the husband or wife had registered or secured.
Mr BB registered a company in that name in early 2014. Mr BB bought the livestock and some embryos and semen straws and these were paid for over a period of time. It was in many ways an undocumented arrangement, however the money was paid.
There was evidence by Mr FF which, on the face of it, may show that the livestock, semen straws and embryos were sold by the husband at far less than their market value. He estimated the value of the livestock semen straws and embryos at approximately $180,000.[33] In his assessment Mr FF says that the value of the livestock was some $1,096,282. To base this he relied upon internet searches, advertised sales in the market and his evidence was impeached by the factors to which I have earlier discussed.
[33] At page 80 of Mr FF’s affidavit filed the 25 March 2015.
[45] To be retained by the wife.
[46] To be retained by the husband.
[47]The husband is to retain ownership and control of these corporate and trust structures.
[48] To be retained by the wife.
[49] To be retained by the husband.
There was a number of difference between the ‘agreed values’ contained in exhibit H6 and W4 with those contained in the wife’s further submissions. These being:-
(a)The C Trust as to $1,366,798 and $1,187,487;
(b)F $1,600, 240 and $1,225,240. Hopefully this is resolved by the determination of the value of Q Street; and
(c)The ‘increased value of plant and equipment at U was included at $6,200 in the later document and not included in the earlier document.
The other differences have, I believe, been determined in these reasons. However, given the request to have these reasons out and orders made before the end of June 2015 to enable orderly division of the property,[50] I will give leave for the parties to make further submission, if needed, on these limited mechanical issues.
[50] Exhibit W15.
The valuer, Mr RR, valued the U properties as a whole at $1,700,000. There are six lots, with three each owned by E Pty Ltd for the E Trust and by the G Super Fund.
If the properties are sold separately their value would be $1,590,000, being some $110,000 less.
Counsel for the husband submitted that as the husband wished to retain the property, depending on the outcome of this litigation, it may be necessary to sell part of the properties to fund the wife’s payments, as such the value of the property ought to be treated at the lesser value. I do not agree.
The husband will have control of the six lots and can sell them separately if he chooses to do so. That is a matter for him, but he ought not visit that commercial decision upon the wife. Accordingly, I find the value that property at $1,700,000.
The parties each, in various ways, sought notional adjustments being legal fees and partial property orders. I have made no direct notional adjustment for the partial property settlement to the wife in respect of the Orders made 28 May 2014 and 3 March 2015 or for the legal fees paid by each of the parties as I have taken them into account in the overall determination.
As to the notional adjustments sought by the wife for the $200,000 gift to the parties’ daughter Ms D, I have determined that the gift to her and another to her brother was a joint decision, and as such no adjustment is necessary.
The legal fees spent on the B litigation, which are unlikely to be re-couped by the costs order against Mr B, was a joint liability legitimately incurred in the need to preserve the assets of the parties’.
The money spent by the husband on the KK website and travelling overseas was taken into account by me in the overall determination.
The wife claims an add-back in respect of the timber in the two containers on Q Street. As I found earlier this timber was sold or traded by the husband. The disposal was just part of the day-to-day expenditure over the period since separation. I have taken this disposal into account in the overall property determination. .
It is submitted that the sale of the livestock semen/embryos is tinged with suspicion. The husband’s solicitor’s letter dated 24 December 2014[51] initially advises the wife for the first time that he has sold “all” of the livestock but that he still holds the semen and embryos for valuation. This is notwithstanding the husband’s current evidence that he had sold all of the livestock semen/embryos to Z Pty Ltd for $77,000 on 7 November 2014.Combined with this was the husband’s evidence that Mr BB collected the livestock semen straws and embryos in May 2014 and retained them at U. In his affidavit filed 25 February 2015, the husband disclosed to the wife for the first time that he has sold the livestock embryos and semen straws for $70,000 and says that he had yet to receive the payment, where in fact he had received the payment into his bank the day before the affidavit was sworn.
[51] Exhibit W9.
I am not satisfied that these circumstances impeach the husband’s evidence as submitted.
It was put to me on behalf of the wife that Mr FF’s evidence was not effectively challenged and his evidence was fairly placed before the Court, but with certain qualifications. Given the circumstance set out in these reasons both as to qualification and the undisclosed subsequent report, Mr FF’s evidence was seriously impeached.
The husband commenced negotiations to sell livestock to Mr BB in March 2014, and he purchased livestock in October 2014. Senior Counsel for the wife submitted that this, together with the payment of management fees to Mr BB and the delayed payments, are such as should give rise to a conclusion or finding that the transactions were a sham. In addition, after advising the wife of the sale of the livestock, the husband advised that some of the livestock were left on the land free of agistment. The evidence that the previous farm manager was unwell and unable to continue, that the area was in drought and that the livestock were in a poor state must be added to that mix of fact. The consent to the use of the unregistered and unsecured ‘CC Brand’ by Mr BB, in my view, makes little difference.
It was also put to me on behalf of the wife that the sale the livestock, the husband had been building up for some 20 or more years at great cost, without involvement of the wife was a significant matter.
As I indicated elsewhere, the evidence is not such that a finding as sought by the wife is one that I would make.
The wife claims that there ought to be added a notional or on her case the real value of semen straws and embryos given that these were sold undervalue. Having regard to the concerns I have in relation to Mr FF’s evidence and the environmental problems confronting the husband last year, I do not find that the livestock, embryos and straws were sold undervalue.
The husband sought a series of notional adjustments, none of which were allowed. As to the monies removed by wife totalling $84,677, I have made no adjustment in that regards. It was simply part of the parties’ day to day expenditure over these periods. I had regard to it in the overall assessment of property adjustment.
One of the issues was the value of F Pty Ltd, in particular the real estate at Q Street in Darwin. Mr NN was appointed single expert and he valued that property at $875,000.[52]
[52] Exhibit W13 - Mr NN’s resumé.
The wife was concerned about that valuation as a previous valuer, Mr LL, had valued the property at about $1,050,000 in 2011. The wife was given leave to adduce evidence of Mr MM in relation to the property. He valued the property at $1,250,000.
There was criticism of the expertise of both valuers. I accept that they both have the expertise to value property and provide expert evidence. Mr NN has significant qualifications, and was initially agreed as single expert. Mr MM has significant expertise in the value of Darwin property.
The valuers met and listed where they agreed and where they did not.[53] The evidence is that the property has a main road position, and that its value for rates is some $1,150,000 as at 1 July 2014. That value in itself is not necessarily an indication of its value if sold. There is a lack of direct comparable sales. Mr NN asserted that there was a limited purchaser and tenant market for a practice in the Darwin area. I had regard to the issues that were not agreed upon which were set out in Exhibit W7. Mr MM said that the Darwin commercial market had grown in recent years, but was in plateau at this time. The approach adopted by Mr NN seemed at times to be somewhat mechanical, albeit based on a rational approach. He built in a developer’s profit in his assessment and I was not entirely comfortable with his approach, given the use of this property over many years. Given the approach adopted by Mr MM, including the direct comparison with a higher application of a rate per square metre, I prefer the approach by Mr MM. The value of the improvement on the land was almost identical between the valuers, being $291,000 and $300,000. The land values differences were substantial: Mr NN on $534,000 and Mr MM on $950,000.[54]
[53] Exhibit W7 - Joint statement of experts.
[54] Exhibit W14.
The value of the land assessed by Mr LL in November 2011 was $1,050,000 and the evidence of Mr MM was that the market for commercial property had increased over the successive years. Mr NN’s February 2015 valuation of $875,000 placed the unimproved land value at $584,000, which in context seemed very low.
I accept the submission by senior counsel for the wife that Mr NN’s approach as to the impact of the spending of $100,000 on repairs to the value of this property is not preferable to that of Mr MM. In his report Mr NN says that the current rental value is $73,800 per year but that rate almost doubles if the repairs were carried out.
I prefer the evidence of Mr MM who said, that using a nine per cent capital rate on the low rental equates to a value greater than $1,250,000.
On balance, I prefer the approach adopted by Mr MM and as such I find that the value of the property is $1,250,000.
I am comforted in this decision in that the wife was prepared to pay that sum for that property.
The parties’ operate a self-managed superannuation fund called G Super Fund, which has an agreed value of $766,826. The evidence was that the wife has an entitlement of $408,788 and the husband has an entitlement of $358,038, being 53.3 per cent to the wife and 46.7 per cent to the husband. The arithmetic in relation to this amount calculation on the percentages seems inaccurate, my figures are $408,718 to the wife and $358,108 to the husband. However, it is for the parties’ to calculate given the agreed value contained in these reasons, and after deducting the costs to make the fund compliant. Work needs to be done to ensure that the fund complies with the law, and each of the parties should contribute equally to the cost of such work.
A significant asset of the fund is three of six adjoining lots at the U property at E Town.
The parties are in agreement that the structure of the superannuation fund is to remain in the control of the husband.
The husband wants the wife’s share of the superannuation fund split to him. The wife opposes that approach, as she wants her share of that fund retained and rolled out into a fund nominated by her. The wife’s view is that, given her age and proximity to retirement, it is much better financially for her to have income from the fund rather than the capital. I accept and adopt that submission.
I raised with the parties as to whether there was any practical difficulty in directing the roll out of the wife’s share or a significant part of that share to the wife and asked counsel to address me if there was such a problem. There is no problem in doing so provided the husband can place liquid assets into the fund. He is only able to pay in $180,000 per year.[55] Given my determination that the fund benefits should be retained by the parties in their current percentage entitlements and I find that the husband is able to provide contributions to provide for the wife’s roll out, I will make such orders
[55] Exhibit W15.
I will be making an order that there be a roll out of that share of the fund substantially in accordance with orders 5.1 and 5.2 of the wife’s draft minute of order filed 10 April 2015.[56] I will allow 60 days for that to occur, given the need for the husband to either deposit funds into the superannuation fund or to acquire assets, at proper value, from the superannuation funds to enable that to occur.
[56] Exhibit W3.
The wife sought an order that the husband indemnify her in respect of any action, claim or demand made against her by reason of her having been a trustee or member of their self-managed superannuation fund. I decline to make such an order as the parties worked together during their marriage to create the fund and any liabilities ought to be their joint responsibility.
Tax payable on funds from B litigation
The submissions in relation to these proceedings were completed subject to the question of tax on the funds in respect of the B litigation. Evidence was provided and submissions were made.
Each of the parties filed further affidavits. This included an affidavit of Mr Steel, the husband’s solicitor. In his affidavit Mr Steel annexed a report from Mr OO addressed to both of the parties’ legal practitioners.
In his report of 30 April 2015 Mr OO calculates that the total tax payable by the husband in relation to the B litigation verdict will range somewhere between $694,000 and $775,000.
The wife takes issue with some of the opinions expressed in the report, including that there may be small business tax concessions that could eliminate the capital gains tax. The husband has carried forward losses and his losses on the E Trust could also be potentially used to eliminate capital gains tax.
Given the submissions made by each of the parties, I am able to conclude that the husband would take every available option to reduce or even eliminate the tax liabilities.
What I intend to do in relation to this tax is order that each party contribute as to their respective divisions to which I have determined elsewhere in these reasons.
CONTRIBUTIONS
The evidence of the wife was that at the commencement of the relationship she had a car and about $4,000 in the bank. The husband said he had a car of limited or no value, and he either could not or would not acknowledge the amount the wife had in her bank account.
In her evidence in chief the wife conceded that the parties each had limited assets. Accordingly, of the very modest asset pool at the time, the wife’s initial financial contribution was greater than that of the husband.
There is no issue that the husband worked extremely long hours and worked hard during the course of the marriage. The wife endeavoured to colour that in terms of his livestock business, however, I am satisfied that this was a method of work that the husband adopted throughout the parties’ marriage and that he was the primary income earner and that he was an entrepreneur in this family.
He built a practice in Darwin from nothing in the late 1970s to a saleable business by the mid to late 1980s. He sold the practice and then reacquired it some time later.
The evidence before me is that that practice has a turnover of in excess of one million dollars per year in recent years. That is a reflection of the hard work undertaken by the husband in creating and maintaining that practice.
In making the above findings, I am also satisfied that this dedication to hard work and the propensity for long hours would have imposed additional burdens upon the wife who was left to the primary task of parenting the children and often in the absence of the husband.
The wife complained about the husband’s approach in respect of the purchase of the W Street property in Darwin. As I set out earlier, in the mid 2000s the parties purchased a property at W Street in Darwin. They owned that property for a number of years and it was never tenanted. The wife complained that the property was not let. The husband’s explanation was that work needed to be undertaken on the property so that he could rent all of the property rather than just the ground floor. I accept his evidence in that regard.
The parties paid significant interest on that property and did so over about five years, probably an expense in excess of $200,000 per year. The W Street property was sold for about $4.2 million dollars. This provided the parties with a significant profit, despite the anxiety of the property costs during the time in which they held it. It was overall a good investment.
The wife’s criticisms of the husband in not letting the property had an air of artifice, as she sought to defend the parties’ position in not letting their Queensland property at Suburb H which the parties owned but did not let over a much longer period of time. The wife asserted ‘once the home was completed in Suburb H we did not place tenants in it as we decided it was too nice to rent out and gave us a place to stay in Brisbane if required but it was rarely used’.[57]
[57] Wife’s trial affidavit at paragraph 62.
I have discussed the question of the livestock business earlier in these reasons. I am not satisfied that this was other than an entrepreneurial endeavour undertaken by the husband which was not successful but was not in any way a waste. It was an endeavour of which the wife had clear knowledge over a period of up to 20 years or perhaps more.
The wife complained about the husband’s expenditure on the “KK” website totalling $52,974. There were some minor inaccuracies in this total. For the reasons set out earlier. As to the costs incurred up to the date the parties ceased to live under the one roof that can be quantified at $6,732.The approach which I have adopted, with regard to the spending of these parties and the considerable wealth and income that they each had over that period of time, is that I have had regard to this expenditure and the general assessment of contributions.
This couple worked very hard over many years in a joint endeavour to accumulate assets. Some of their endeavours have been successful, others have not. It was a domestic partnership.
The wife’s inherited a relatively modest sum of money from her late mother in 2008. This was a late received inheritance, to which I have given some credit to the wife in terms of contribution.
In terms of other contributions, the wife complained about the money spent by the husband in the livestock business over a long period of time. There is no doubt that the livestock business was unprofitable in financial terms, however, it was an entrepreneurial exercise by the husband to develop that industry. I accept the evidence of the husband that, at least prior to separation, he kept the wife informed as to these matters and that during the marriage, at least up to 2009, the wife had access to the business records. It was just part of the normal day-to-day activities of these parties in this particular marriage. There was no waste by the husband in terms of this business venture.
The wife agreed that she has received spousal support of about $252,640 since separation.
The wife has resided in the Brisbane property since that time. That property is mortgage free.
The wife withdrew funds from the C account with the Commonwealth Bank on a number of occasions. These included:-
22 August 2011 $40,000
24 August 2011 $4,500
25 August 2011 $6,000
Total $50,500
Of that sum she used about $22,000 paying a tax liability and used $20,000, approximately, to buy shares. These shares are included in the pool of property. The expenditure of balance of about $10,000 was unexplained. Having regard to the approach adopted by me in terms of the spending by the husband on internet activities, this was likely to be simply used in day-to-day expenses.
To fund the B litigation the husband sought the release of monies. The wife required a payment to her of $135,000 which was in fact made on 10 February 2012. Of that sum the wife used $107,000 to purchase a German motor vehicle.
The wife asserted that in June 2013 she withdrew $11,900 from her self-managed superannuation fund as she was concerned she was not going to have sufficient funds to provide for her own support. That evidence by her was disingenuous. Some few months before the wife felt comfortable enough to spend $107,000 on a German motor vehicle. She travelled extensively over the period of time following separation. She had access to the funds and she took them.
In March 2015 the wife received a further sum of $100,000 from joint assets to assist in the payment of legal costs.
The wife instructed her senior counsel to ask about a number of alleged New Zealand transactions[58] amounting to some $55,693 on 22 December 2010 and $197,000 in April 2011. The husband denied any knowledge of those transactions. There being no further evidence in that regard I can take it no further.
[58] The husband’s trial affidavit at paragraph 82.
Given that I accept that the gift made by the parties to each of their children of $200,000 and I accept that Mr A Churchill advanced to his father his funds totalling $240,446 I will be treating that as a liability of the husband.
In terms of the wife’s credit card liability I will treat her liability at $487 at the time of the hearing.
I will be making no other notional adjustments in terms of the property. It appears that part, if not all, of the $70,000 referred to in the wife’s written submissions being the funds paid towards her costs and $70,000, were included in the $297,000 approximately to which I have referred elsewhere.
The wife’s evidence was that at the time she inherited the money from her mother the shares had a value of about $26,000 and there were other shares of unclear value. It is not clear as to the amount involved. It is a matter for a very modest adjustment in favour of the wife.
The wife seeks an adjustment in terms of the losses allegedly arising from the husband’s tax fraud prior to1990. I have dealt with this elsewhere and I make no adjustment in that regard given my findings.
Similarly, I make no adjustment in terms of the losses on the parties’ livestock business.
As I have said elsewhere, each of the parties worked hard in their respective ways.
As to post separation, given my findings, I make no adjustment in respect of the livestock sale and litigation with Mr B.
I make no findings of behaviour resulting in loss or waste by the husband or by the wife.
Except for the minor differences in initial contributions and the wife’s very modest inheritance received late in the parties marriage I am satisfied that the parties’ contributions are relatively equal.
The Section 75(2) Factors
The husband has the practice, which has its own earning capacity and the value of that business is contained in the property of the parties. The practice was valued at some $1,329,715. Albeit that the husband has an independent ability to earn income. This is a factor to which I have had significant regard. However, despite his age the husband has for the short to medium term a greater earning capacity than the wife.
The wife says that she has retired, although, I am satisfied that she could undertake paid employment as a health professional, if she chooses.
The wife has the capacity to work in the health industry and chooses not to do so. I am satisfied she has an earning capacity but chooses not to exercise that earning capacity which would enable her to earn somewhere between $2,000 to $2,600 gross per fortnight. I do not accept that the wife’s health prevents her from returning to at least some work.
I accept that there should be some modest adjustment in this respect. The future earnings disparity is marked and warrants an adjustment.
I am not satisfied that the husband acted in a reckless or irresponsible manner, in relation to his 1980s tax matters, the livestock breeding, the sale of livestock to Mr B or the B litigation.
Overall Assessment
Considering the various factors, facts and findings, I determine that there should be an adjustment in favour of the wife of a modest sum and I intend to adjust the property at the level the parties did themselves with the superannuation, that is, 46.7 per cent to the husband and 53.3 per cent to the wife.
This is on the basis, of course, that there are no add-backs apart from those amounts I have referred to elsewhere.
Just and equitable consideration
That factual history is long and at times complex.
From 1978 to 1989/1990 the parties accumulated significant assets by their hard work. The parties encountered problems, of their own making through tax non-compliance, which they overcame through their joint endeavours and social and financial penalties.
The husband endeavoured to create and develop a new livestock industry for the parties and the broader community. That effort, over more than 20 years, was not commercially successful, but it was done with the knowledge, and at some levels and at some times, consent of the wife. If it had met with commercial success, then both parties would have benefited. It was an entrepreneurial endeavour to which both parties contributed and which ultimately did not derive the financial returns for which they may have hoped.
Business by its nature is generally risky. For instance, the husband took a risk on acquiring the W Street property and it caused the parties anxious times in the five years they owned it. However, when it eventually sold it made a good profit for the parties.
As at 2000 the husband and wife had sufficient funds to acquire a home with a value of $198,000 without a mortgage.
Given all of the findings, relative to the parties’ respective contributions and their future needs and the like, I consider that such property as is presently in existence should be divided with a modest adjustment in favour of the wife given the different income earing capacities’ of the parties, diminished in part by the greater age of the husband and the size of the asset pool, which is more than modest.
I had regard to the state of health of each of the parties.
I am satisfied that it is just and equitable to adjust property pursuant to the provisions of the Act, given the facts and findings discussed earlier. I am satisfied that in all of the circumstances that it is just and equitable to divide the property on the percentages to which I referred earlier.
Given that the orders for this determination need to be carefully drafted, following these reasons I do not intend to make those orders until 29 June 2015. This will give the parties time to obtain tax and legal advice as to the mechanical nature of those orders, including the structure for the payment of tax, if any, on the proceeds of the B litigation and the approach to be adopted in terms of the outstanding costs on that litigation.
I had drafted some preliminary orders to enable the parties to prepare an agreed (or if not a determined) set of orders for consideration by me given these reasons, they are:-
General Outline of Orders Proposed.
Property to be retained or received by the wife
1.That within ninety (90) days from the date of this order the husband pay to the wife the sum of $ such that overall the property of the parties is divided as to 53.3 per cent to the wife and 46.7 per cent to the husband.
2.Except as is otherwise provided in these orders and as against the husband a declaration that the wife will retain title and possession of and the husband will transfer to the wife and/or relinquish all his interest in the following:-
(a)the property situate at I Street, Suburb H in Queensland, and the wife shall be solely responsible for all expenses, taxes, rates and charges on such property as and from the date of this order;
(b)furniture, chattels, personal effects, timber and jewellery in the possession of the wife;
(c)the legal fees paid by the wife and the partial property settlement sums paid to her pursuant to the orders made on 28 May 2014 and 3 March 2015;
(d)the Commonwealth Bank shares held in her name;
(e)the wife’s German motor vehicle;
(f)bank accounts held in the wife’s name and cash in her possession;
(g)the wife’s entitlement in the G Practice Super Fund subject to these orders; and
(h)other property in the wife’s current possession or control.
3. The husband will cause:-
(a)the sum of $428,358 (or $429,384 – whichever was the agreed amount) held by Simonidis Steel being the net payment from the B Litigation to be paid to the Wife;and
(b)C Pty Ltd as the trustee of the C Trust to pay to the wife the sum of $338,307 (or thereabouts) held in a CBA term deposit (with accrued interest) less the sum of $70,000 paid to the wife on 13 April 2015.
Property to be received/retained by the husband
4.That within ninety (90) days of the date of these orders (the settlement date) the parties take such steps as shall be required to transfer or cause to be transferred to the husband or his nominee any interest the wife has in F Pty Ltd and the property situate at Q Street, N Town in the Northern Territory. The husband and/or his alter egos shall be solely responsible for all expenses, mortgage liabilities, rates, taxes and charges on such property as and from the date of this order.
5.Except as is otherwise provided in these orders and as between the parties and their respective alter egos, a declaration that the husband will retain title and possession of and the wife will transfer to the husband (or his nominee) and/or relinquish all her interest in the following:-
(a)all of her interests in or by way of shareholding or otherwise in G Practice Pty Ltd, C Pty Ltd, C Trust, F Pty Ltd, E Pty Ltd, E Trust (the Churchill Group);
(b)furniture, chattels, personal effects, gold coins and jewellery in the possession of the Husband;
(c)his interests in Australian Super and the G Practice Super Fund;
(d)the motor vehicles currently in his possession;
(e)the bank accounts in the husband’s name;
(f)other property in the husband’s current possession or control; and
(g)The wife’s interest in L Street, Suburb S in the Northern Territory. The husband shall be solely responsible for all expenses, mortgage liabilities, rates, taxes and charges on such property as and from the date of this order.
6.The wife shall upon the written request of the husband sign such documents as shall be reasonably required to resign all offices held by her within the Churchill Group including as director, secretary or otherwise and shall relinquish all of her rights as a beneficiary, principal or otherwise in any trusts within the Churchill Group.
B LITIGATION
7.The net proceeds from the recovery of the costs orders obtained against Mr B (the cost recovery monies) currently estimated to be in the range of $818,000 to $1,147,000 less any legal costs incurred subsequent to the date of these orders and the tax payable as set out below shall be divided between the parties such that the wife receives 53.3 per cent and the husband 46.7 per cent and the parties shall provide instructions to the solicitors acting (currently J) to pay the costs so recovered in accordance with this order.
8.The cost recovery monies shall be held in the Trust Account of the solicitors agreed to by the parties pending receipt by the husband of his income tax assessment (or assessments if such monies are received in more than one tax year) and any objections or appeals in relation to that part of the husband’s income tax assessment that relate to the tax payable in respect of the capital gain (if any) on the damages awarded to the husband in the B litigation and/or the interest paid on the said damages.
9.The husband shall, in the preparation of his income tax returns for each of the years in which tax is potentially payable in respect of the said damages and interest and costs, take such steps as are set forth in the report of Ms PP (annexed to the Affidavit of Ms T filed 13 May 2015) to lawfully minimise the tax payable in respect thereof and not less than twenty eight (28) days prior to the lodgement thereof shall provide a copy thereof to the wife’s solicitor.
10.Subject to the time limits otherwise contained in these orders, in respect of this order the parties have liberty to apply on the giving of twenty one (21) days notice in writing to the husband in respect of mechanical or non compliance issues.
11.Within fourteen (14) days upon receipt of the income tax assessment (or assessments if there be more than one) the husband shall forthwith provide a copy thereof to the wife’s solicitors and shall advise if he intends to object thereto (or not) whereupon:-
(a)the wife shall within 14 days advise the husband (if he has advised he does not intend to object), whether she wishes him to do so and if so, the husband shall within the prescribed period for objection lodge the Notice of Objection prepared on her behalf with the legal and/or accounting costs in respect thereof to be paid from the cost recovery monies;
(b)the wife shall, not less than fourteen (14) days prior to the expiry of the prescribed period (if the husband has advised that he intends to object), be provided with a draft copy of the Notice of Objection intended to be filed and the husband shall, if the wife so requests, add such other grounds thereto as the wife shall provide, with the costs of both parties in respect thereof to be paid from the cost recovery monies;
(c)Upon receipt of the result of the objection (or objections if there be more than one) the husband shall within fourteen ( 14) days provide a copy thereof to the wife and advise the wife if he intends to lodge an appeal thereto (or not) whereupon the same procedure as applies in respect of objections shall apply mutatis mutandis subject to the substitution of the words “appeal” for “objection” and “notice of appeal” for “notice of objection” and it is further provided that the costs of legal representation and accounting advice for such appeals of both parties shall be paid from the cost recovery monies;
(d)The husband shall throughout the objection and/or appeal process take all necessary steps to prosecute the objections/appeals and shall ensure that instructions are given to entitle the wife to have direct access to the legal and/or accounting professionals engaged therein;
(e)The monies required to pay that part of the husband’s income tax assessments that relates to the capital gain (if any) on the damages awarded to the husband and/or the interest paid on the said damages (such part to be calculated by deducting the tax that would have otherwise been payable by the husband excluding the said capital gain on damages and interest, from the tax assessed with those components included) shall be paid from the cost recovery monies and any recovery of monies paid as a consequence of objections or appeals shall be returned to the said Trust Account where the cost recovery monies are held; and
(f)Neither party shall lodge an objection or appeal unless and until they have obtained (at their own expense) professional advice (either accounting or legal) that there is a reasonable chance of success in respect of such objection and/or appeal and provided a copy of the advice and the brief upon which such advice was based.
12.Forthwith upon payment of the said part of the last assessment the monies held within the said Trust Account shall be apportioned between the parties such that the wife is paid 53.3 per cent and the husband is paid 46.7 per cent.
13.During the course of the period that the cost recovery monies are held in the said Trust Account, the same shall be invested as the parties shall agree in writing and failing agreement, in a term deposit with the Commonwealth Bank.
14.That both the husband and the wife have liberty to apply in respect of the matters referred to in these orders on the giving of seven (7) days notice in writing to the other.
Superannuation
15.The husband and the wife shall take such steps and do all things necessary as shall be required to transfer to a self-managed super fund to be established by the wife (at her expense), her entitlement in the G Practice Super Fund of about $408,788.
16.Upon the said transfer of such funds, the wife shall resign all offices held by her in the G Practice Super Fund.
Indemnities
17.As and from the date of these orders the husband will indemnify and keep indemnified the wife in respect of liabilities of the Churchill Group including mortgages, leases, tax, capital gains tax, fringe benefits tax as was discovered or identified by the parties or is contained in financial papers, records or documents provided by the parties to the other or their representatives. The indemnity includes:
(a)liability for payment of tax (income, capital gains or Division 7A) or duty and penalties and interest thereon, to the Australian Taxation Office of State Revenue;
(b)creditors of the Churchill Group;
(c)any guarantee provided for the payment of any monies or the performance of any duties by or on behalf of the Churchill Group;
(d)any liability to any entity in the Churchill Group pursuant to any indebtedness of the wife pursuant to any loan account; and
(e)The husband will forthwith be responsible for indemnifying the wife in respect of any and all liabilities for the payment of income tax, capital gains tax, Division 7A tax, penalties or interest arising as a consequence of the carrying out of these orders.
Spouse Maintenance
18.The spouse maintenance order made 28 May 2014 shall be dismissed as and from the earlier of ninety (90) days from the date of this order or the payment to the wife of the money set out in order 1 above.
Miscellaneous
19.Any duty levied pursuant to the Duties Act 2001 (Qld) or the relevant statute in the Northern Territory payable on transactions arising from these orders or any documents executed pursuant to these orders be paid by the transferee spouse or the spouse receiving the benefit of same.
20.The parties promptly comply with the requirements of the relevant statute and associated legislation and all requisitions issued by the Office of State Revenue (or the appropriate Office in the Northern Territory) in relation to any document executed or transaction pursuant to or putting into effect the terms and conditions of this order.
21.Each party do and procure the doing of all things and sign and procure the signing of all documents necessary to give full force and effect to the provisions of these Orders.
22.Save where otherwise noted in these orders, the transferee spouse prepare the documentation necessary to give effect to the provisions of these Orders at their cost and further be responsible for the payment of registration fees, if any, in relation to the transfer of the property to their name.
23.The transferee spouse shall be liable for payment of any local government rates and charges, body corporate levies or contributions and land tax (including any arrears and interest) on any property transferred to them pursuant to the terms of these Orders.
24.The parties’ leave to apply shall operate two (2) years from the date of this order or such longer period as is determined within that two (2) year period.
25.All extant applications (except costs applications) are otherwise dismissed.
26.Any application for costs, including any reserved costs not otherwise dealt with in these proceedings, are to be made in accordance with the Family Law Rules 2004 (Cth).
27.Following the expiration of the appeal period, all subpoenaed documents (except for the parties’ case summaries and expert reports) shall be returned to the persons or institutions from which they emanated and all exhibits are returned to the person or persons who tendered the same.
IT IS CERTIFIED
28.Pursuant to Rule 19.50 of the Family Law Rules 2004 (Cth) it was reasonable to engage counsel to attend.
I certify that the preceding three hundred and forty seven (347) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 19 June 2015.
Associate:
Date: 19 June 2015
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Injunction
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Costs
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Procedural Fairness
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