Cochrane & Underwood
[2022] FedCFamC2F 940
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Cochrane & Underwood [2022] FedCFamC2F 940
File number(s): BRC 14720 of 2019 Judgment of: JUDGE WILLIS Date of judgment: 15 July 2022 Catchwords: FAMILY LAW - contested property – 9 year de facto relationship – weight given to initial greater contribution by husband – allegations husband sabotaged business – findings wife closed business down - treatment of monies taken by wife from company accounts. Legislation: Family Law 1975 (Cth) ss 75(2), 90SF(3)(r) and 90SM. Cases cited: AJO & GRO [2005] FamCA 195; (2005)191 FLR 317.
Calverley and Green (1985) ALJR 111.
Ferraro and Ferraro (1992) 16 Fam LR 1.
Hickey v Hickey [2003] FamCA 395.
In the Marriage of Weir (1992) 16 LR 343.
Muschinski and Dodds [1986] 16 CLR 583.
Pierce v Pierce (1999) FLC 92-844.
Rankin & Rankin [2017] FamCAFC 29.
Stanford v Stanford (2012) 247 CLR 108.
Division: Division 2 Family Law Number of paragraphs: 170 Date of last submissions: 3 September 2021 Date of hearing: 5 and 6 July 2021 Place: Brisbane Counsel for the Applicant: Mr Munsie Counsel for the Respondent: Mr Taylor ORDERS
BRC 14720 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS COCHRANE
ApplicantAND: MR UNDERWOOD
Respondent
ORDER MADE BY:
JUDGE WILLIS
DATE OF ORDER:
THE COURT ORDERS THAT:
1.The property of the parties (excluding superannuation) be divided on the basis of 65% to the de facto husband and 35% to the de facto wife.
2.Each party is to retain the Superannuation standing in their own name, to the exclusion of the other party.
To effect this division the following Orders apply:
3.Within 90 days of the date of these Orders, the applicant wife is to do all acts and things and sign all documents necessary to transfer all her right title and interest (“the transfer”) in the property situated at G Street, Town C in the State of Queensland and more particularly known as Lot … on SP… ("the G Street, Town C property") to the Respondent husband.
4.Contemporaneously with the transfer, the parties are to do all acts and things and sign all necessary documents so as to refinance the existing mortgage for the G Street, Town C property into the sole name of the husband and to discharge the wife therefrom ("the refinance").
5.Contemporaneously with the transfer and refinance pursuant to Orders 3 and 4 herein, the husband shall:
(i)Pay the sum of $58,231.00 to the wife;
(ii)indemnify and keep indemnified the wife absolutely in relation to the mortgage, rates and outgoings associated with the G Street, Town C Property.
6.The wife is deemed to have retained the final dividend together with all of the funds to the credit of the company D Pty Ltd trading as D Pty Ltd ("the company") including all subsequent post separation income derived by the Company as well as proceeds for the sale of the Truck 3. The wife is to indemnify the husband and hold him indemnified in relation to all such income and assets and any liabilities arising thereto.
7.Save and except as specified in these Orders, each party is to retain to the exclusion of the other, all possessions and chattels including bank accounts and each is to indemnify the other in relation thereto.
Default Orders:
8.In the event the G Street, Town C Property cannot be refinanced by the husband into his own name within 90 days of the date of this Order, (or such other times as agreed between the parties) then the following Orders become effective in lieu of Orders 3,4 and 5 of the Orders herein.
9.The property is to be sold forthwith and the net sale proceeds (being the contract price minus costs of sale and commissions and after payment of the mortgage) are to be divided on the basis of 65% to the husband and 35% to the wife, taking account of the non-superannuation assets and add backs retained by them as identified in the asset pool described in the judgment at paragraph 150.
10.All outstanding applications are removed from the pending cases list.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Cochrane & Underwood has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)..
REASONS FOR JUDGMENT
JUDGE WILLIS
This is a contested property matter between the Applicant de facto Ms Cochrane (“the wife”) and Mr Underwood the respondent de facto husband (“the husband”).
These parties first met around 2009. At that time the wife was living in a rental arrangement. The husband lived in a home he already owned at E Street, Suburb F.
At the time of trial the wife who was born in 1965 was aged 56 and the husband who was born in 1954 was aged 66.
The parties started living together at each other’s places slowly from around 2010 building up over time to the wife moving into the husband’s home at E Street, Suburb F, Queensland. (“the E Street, Suburb F property”).
In 2011 the parties purchased a property at G Street, Town C (“the G Street, Town C property) which they were able to do using the husband’s property as security, together with a loan from the husband’s parents.
Their relationship spanned from the period around 2011 until separation in early May 2019, a period just short of 8 years. There are no children of the relationship.
The husband has remained living in the G Street, Town C home. He has solely been paying the mortgage and all costs associated with the G Street, Town C home since separation.
The parties cannot agree about the weight to be given to the initial contributions of the husband and the treatment of the funds derived from various second hand items sold post- separation by the husband. Also in issue is the allegation by the wife that the husband has “sabotaged” D Pty Ltd (“the Company) and the wife’s contention that her mortgage repayments outweigh those paid by the husband and therefore the wife submits that her mortgage repayments have addressed the inequities in the initial contribution of the husband that saw him bring in $208,000 as compared to the wife’s $20,000.
The husband’s alleges that the wife has received monies from the Company which need to be taken account of together with the proceeds of sale of a truck owned by the Company which the wife has also retained. The husband effectively says the wife has had her share of the property division in that she has withdrawn and retained around $50,000 from the Company funds, kept the proceeds of sale of a truck and kept the money generated by the Company in invoices issued at separation.
The case has been conducted on the basis that the smaller chattels and possessions currently in the possession of each party will remain in their possession. Counsel for the applicant wife included both vehicles in his asset pool. Counsel for the husband referred to only the larger assets being their jointly owned home at G Street, Town C and their respective superannuation funds as being realistically the only assets in contention.
At the time of trial, the wife remains working in her job of many years. At the time of the trial, the husband had just secured work with a local employer. The trial was listed for one day, however it was not finished after the first day. The trial continued onto a second day, however started late on the second day to allow the husband time to recover from working the night shift after day one of the trial, in his new position. Each party was legally represented.
At the conclusion of the trial and to save a third day of appearances, the Court agreed to accept written submissions. I requested both Counsel (Mr Munsie for the wife and Mr Simon Taylor for the husband) email me the following day with an agreed schedule for the provision of written submissions. This did not happen. In late July 2021 the Court contacted the Legal representatives to find out what arrangements had been made by Counsel for the provision of written submissions.
Mr Taylor of Counsel for the Respondent provided written submissions received by the Court via email on 28 July 2021. The Applicant’s Counsel Mr Munsie prepared written submission received by the Court via email on 3 September 2021.
A statement of fact represents a finding in this judgment, unless indicated otherwise.
I shall refer to each of the parties as the wife and husband, albeit they were in a de facto relationship, as this is how they were referred to throughout the trial.
COMPETING APPLICATIONS
The Wife.
In her case outline filed on 28 June 2012, the wife sets out Orders she is seeking that the former family home at G Street, Town C Qld be sold, the mortgage paid out, and the balance of proceeds be divided on a 50/50 basis. The wife proposes that until the sale is complete, the husband be solely responsible for the mortgage payments and the house and contents insurance. The wife proposes that the husband retain all joint furniture and chattels currently stored at the property, along with the Motor Vehicle 1.
The applicant wife wishes to retain the Motor Vehicle 2 in her name. And finally, in relation to the Superannuation, that each party retain their own interests in their own Superannuation and all other assets held in their possession.
In the written submissions of Counsel for the wife Mr Munsie, the wife’s Orders sought have shifted from seeking a 50/50 split of the sale proceeds or equity in their G Street, Town C home to seemingly seeking to retain all of the equity (either through acquiring the home and transferring the joint loan into her name, or selling the home and keeping the entirety of the sale proceeds.
Counsel’s submission stated: For reasons submitted, the Applicant seeks orders that the G Street, Town C property be transferred to her, with the associate debt (alternatively, that the property be sold and the net proceeds be provided to the Applicant) with each party retaining their own superannuation, chattels and personal effects.
The Husband.
The husband in his case outline seeks orders that enable the property at G Street, Town C be transferred into his name and that contemporaneously the husband do all acts and things so as to refinance the existing mortgage into his sole name discharging the applicant in the process. Further that if the G Street, Town C property cannot be re-financed by the husband, that within 120 days the property be sold and the net sale funds be paid to the husband.
The husband also proposed that the applicant be deemed to have received the proceeds held at separation to the credit of the company D Pty Ltd trading as D Pty Ltd (“the Company) and all proceeds received for the sale of the Truck 3 and also all proceeds of the work invoiced by the Company and retained by the wife, and that the wife hold the husband indemnified in relation thereto.
In the written submissions received from Mr Taylor of Counsel, essentially the same thing is submitted namely that the husband seeks an adjustment of the pool by which the G Street, Town C property is transferred to him, with the associated debt; and where each party retains their own superannuation, chattels and personal effects. It is submitted that this reflects an adjustment where the husband retains 65% of the pool and the wife retains 35%.
There are various submissions made about add backs and allowances for property disposed of after separation which will be addressed in the following evidence.
The respective cases have been run on the basis that each party would retain the chattels and possessions in their name and likely retain their Superannuation.
Many of the items of chattels do not exist at the time of trial, though I have taken account of what did exist and the subsequent evidence. Broadly the wife alleges the husband sold off items after separation, which he admits to.
I am satisfied that the geographical requirements of the legislation have been met.
The Law.
In approaching this property division, the Court must have regard to first whether it is just and equitable to make a property division as referred to in Stanford v Stanford (2012) 247 CLR 108. If so, the Court is then proceed to adopt the four step approach found in Full Court decisions such as Ferraro and Ferraro (1992) 16 Fam LR 1. Mr Taylor of Counsel for the husband helpfully referred the Court to the decision in Hickey v Hickey [2003] FamCA 395. As stating the steps to follow namely:
(a)Identifying the asset pool at the date of the hearing consisting of all of the property of the parties, the liabilities and their financial resources.
(b)Evaluating the parties’ financial and non-financial contributions to the pool of assets.
(c)Determining if there is any adjustment required after consideration of the factors in section 75(2) equivalent, in this de facto relationship that is the provision.
(d)Determining whether it is a just and equitable division in all of the circumstances.
In this matter the Court will have regard to the significant initial contribution of the husband relying on the authority of Pierce v Pierce (1999) FLC 92-844.
Mr Taylor of Counsel for the husband has referred the Court to the Full Court decision of Rankin & Rankin [2017] FamCAFC 29 in terms of the issues of addbacks (post Stanford) and whether the process of adding back assets into the asset pool should be adopted or rather whether the more appropriate approach should be to determine such issues when considering “any other fact or circumstance” which the justice of the case requires pursuant to section 75(2) or its de facto equivalent of s 90SF(3)(r).
Also Counsel for the husband referred to the Full Court decision in AJO & GRO [2005] FamCA 195; (2005)191 FLR 317 as being authority for the identification of three clear categories where the Court has been willing to notionally add back property to a pool. They were where the parties have spent joint money on legal fees and where there has been a premature distribution of matrimonial assets to one party or where one party has embarked on a course of conduct to reduce the value of the matrimonial assets or acted recklessly, negligently or wantonly with matrimonial assets.
Mr Munsie of Counsel for the wife has referred the Court to various authorities including In the Marriage of Weir (1992) 16 LR 343 regarding the non-disclosure of a party and the approach that the Court can take if it is satisfied there has been deliberate non-disclosure.
Step 1 – Assets and Liabilities
The assets of either or both the parties at the time of trial are broadly as follows:
ITEM OWNER ASSET LIABILITY VALUE G Street, Town C JOINT tenants in common $590,000 MORTGAGE OF $328,000 NET VALUE OF $262,000 Truck 1 HUSBAND $12,000 Motor Vehicle 2 WIFE $3,000 SUPERANUATION HUSBAND $101,860 SUPERANUATION WIFE $110,953
There are issues arising regarding add backs. I will now turn to the evidence of their respective contributions and canvass the issues in dispute which will canvass the add back items.
Step 2 - Financial and Non-Financial Contributions.
At the time the parties met in 2009, the husband was living in the E Street, Suburb F property. He had been doing so since the 1990’s when he was previously married. The E Street, Suburb F property stood in the name of the husband alone when he met the applicant de facto wife in 2009. The home was mortgaged in the husband’s sole name. The husband had re-financed the existing mortgage back in 2006 to pay out his first partner and have the property transferred into his sole name. As I understand it, the husband was with his first partner for around 20 years and owned E Street, Suburb F 18 years before meeting the de facto wife in this matter.
The wife states in her material, several propositions which are her personal opinions, and unsupported by the facts. The wife said at the commencement of the relationship the Respondent has very few assets and I would say was in debt overall. [1] The wife also said although he owned E Street, Suburb F, he had little assets[2]. Throughout her evidence I considered that the wife sought to diminish the value of the husband’s financial contributions, existing assets, and physical work undertaken by him to generate income.
[1] Paragraph 9 wife’s trial affidavit.
[2] Paragraph 12 wife’s trial affidavit.
Through various searches and mortgage values, it is agreed that the husband’s E Street, Suburb F property which he owned well before meeting the wife, was worth around $300,000. This was the value used by the bank when the husband re-financed to pay out his former partner. The mortgage was said to be around $177,000, resulting in the husband’s equity being $123,000. Having heard all of the evidence I am satisfied that the husband arrived at the commencement of the relationship with significantly more in assets and equity than the wife. The husband not only had equity in his E Street, Suburb F property, he had other chattels, a truck $23,000, savings $10,000 and personal effects $20,450 and some superannuation of $32,000. All up as set out in his material he owned assets totalling around $208,000.00.[3]
[3] Paragraph 9 husband’s trial affidavit.
At most the wife bought in $20,000 being a settlement from her former partner.
From October 2010 the wife started coming and going from where she was living to gradually spending more time with the husband in his E Street, Suburb F home and staying over. The husband says that the wife lived with him full time by end of 2011. I accept this.
The wife moved into the husband’s E Street, Suburb F property at the invitation of the husband. He said he felt sorry for the wife as she was staying in a house that was damp, mouldy, had holes in the roof and no guttering and other building deficits. The husband said he felt worried for the wife’s health in living at this very modest accommodation.
The wife says in her material “we moved in together to that property”[4] referring to the E Street, Suburb F property. They did not move into the property together. The husband had been living there for years. When the wife moved into the E Street, Suburb F property, she paid for her own living expenses and paid monies towards groceries and they shared other recurring costs, as she had been doing in her previous rental.
[4] Trial affidavit paragraph 10.
They both worked around the house and there is no evidence to suggest that they did anything other than share out daily tasks and housework during their relationship.
Overall it is my impression is that the husband and wife both worked hard in their respective occupations, the wife in her customer service role, and the husband in running his business. The wife helped the husband clean the truck. The husband liked to keep the truck immaculate. The husband made a point of saying that he was very proud of his truck interior and he had to live in it 60 hours a week.
As will be seen elsewhere in these reasons, on some weekends, the wife sometimes did 2 or 3 hours of work in her book keeping role for which she was paid by D Pty Ltd (“the Company”).
There is no evidence that the husband ever invited the wife to acquire an interest in the E Street, Suburb F property. The wife did not contribute financially to the acquisition or maintenance of the E Street, Suburb F property. No promises were made to her that she would acquire an interest in his property. Nor did the wife pay, nor was she responsible for payment of the mortgage debt which stood in the husband’s sole name. When the wife moved in, the E Street, Suburb F property remained in the husband’s sole name, and he continued to pay all of the mortgage repayments. This home was used as security for the purchase of a home that the parties subsequently purchased together at G Street, Town C.
The husband had a long history of working in vehicle maintenance and then later in the transport industry for about 25 years. He had previously been employed as a transport worker by an entity known as Employer F.
The wife says he was unemployed when she met him. He may have been unemployed precisely at that time, however, he has a good work history and was not unemployed for any length of time. The husband got a part time job as a transport worker with Employer G shortly after the parties commenced cohabitation.
The wife seems to have worked in client service within a retail business.
Shortly after the parties met, the husband decided that he wanted to buy his own truck which he did and he wanted to set up his own business. He took advice from his accountant about doing this.
In 2010, the husband re-financed his own mortgage on the E Street, Suburb F property which had a mortgage of around $144,508. When re-financing the husband extended the existing mortgage of $144,508 by $30,991 to cover the purchase price of a truck for the business. The re-financed mortgage then totalled $177,632. The funds of $30,991 were put into his personal account which was used to buy the Truck 2[5].
[5] Paragraph 6 Trial Affidavit.
I reject the assertion by the wife that the husband extended the loan to “fund his lifestyle” as being unsupported by the evidence. This was at a time prior to the wife permanently moving in with the husband. The parties were not mingling their funds and the husband ran his business based on his many years of experience in the industry.
In 2012 the husband arranged purchase of a Truck 3 for about $96,500. The husband says the truck was specially designed for Employer G. The husband estimated the value of this truck at $40,000 at separation, however, there was no expert valuation.
Ultimately after separation, the wife took control of the Company, she had cancelled the husband’s use of the card in his possession which enabled him to purchase petrol and maintain the truck. He then surrendered the truck to the wife. She sold the Truck 3 unregistered for around $28,000.
The parties lived together and each worked in their respective work roles during their de facto relationship which lasted just under 8 years.
Purchase of the G Street, Town C Property
In 2011 the husband purchased in the company name, the Motor Vehicle 2 4 x 4 using some funds contributed by him.
In 2011 when the parties were living together in the husband’s E Street, Suburb F property, they decided to jointly buy a property. Together they purchased a property at G Street, Town C (the G Street, Town C property). The parties paid $530,000.00
I am satisfied that they were only able to make this purchase at this due to the husband’s ownership of and equity in his E Street, Suburb F property being used as security and further, due to a loan from his parents of $70,000 cash.
The husband and wife purchased the G Street, Town C property before the husband sold his E Street, Suburb F property. The combined borrowings into the new loan was significant to enable this. The purchase of the property at G Street, Town C in 2011 represented a significant acquisition by the parties given the purchase price of $530,000. The wife says that between both mortgages in the period until the E Street, Suburb F property was sold, the total of the loans on both homes amount to $841,632. The evidence as to how the loan operated (bridging or otherwise) is scant. I am satisfied that the husband’s existing E Street, Suburb F property was used as security. The loan to the husband’s parents was in addition to this.
Evidence of the bank valuation obtained at the time shows the valuation of the husband’s E Street, Suburb F property at $300,000[6]. The equity in the husband’s E Street, Suburb F property was noted in correspondence from the Bank H in 2011, as being $122,704. The letter congratulating the husband on being granted a new home loan, (in the name of the husband and wife) states A total of $424,000 together with your equity of $122,704 has been distributed as you instructed[7].
[6] Husband’s affidavit annexure page 25/87.
[7] Wife’s affidavit, annexure C 3, page 16/70
I am at a loss to understand the wife’s opinion evidence included in her material to the effect that the husband had very few assets and was in debt overall. The evidence is clear that these allegations are entirely erroneous. The wife’s evidence generally left me with the impression that she had very little knowledge or understanding about their financial affairs other than superficially, but that she sought to diminish the financial contributions of the husband.
I am satisfied that the husband has been an accurate historian on this topic and the evidence of financial matters. I was also satisfied that the wife wanted to give answers to further her case, and that was loathe to make any admission against her own interests.
The wife says she contributed $10,000 towards the purchase of the G Street, Town C property. The husband disagrees. The husband says he loaned the wife $10,000 once they lived together, so she could finalise a financial settlement with her former partner. He says that the wife received $20,000 from her settlement and that she repaid him $10,000. The husband says the wife did not give him another $10,000 towards the purchase of G Street, Town C. I accept the husband’s evidence as the wife brought in one amount of $20,000 into this relationship, and did not put a second amount of $10,000 into the purchase of the G Street, Town C property.
The documents relative to the purchase of the G Street, Town C property are instructive in understanding how the parties intended to organise their financial affairs. As seen in the title search attached to the wife’s affidavit, the parties have specifically acquired the G Street, Town C property in joint names as tenants in common, not joint tenants. This is a clear indication that the parties wished to organise their financial affairs such that they would each hold a one half interest in the G Street, Town C property[8].
[8] Exhibit C2 – page 14/70 of the annexures to the wife’s trial affidavit.
The parties also obtained a mortgage facility in both names, meaning they both pledged to be responsible jointly and severally for the mortgage debt.
In keeping with their purchase and holding the property in equal shares, the parties agreed that they would each pay equally towards the mortgage. The husband was to pay $340 per week from his income as transport worker and the wife was to pay $340.00 from her income derived from her full time employment in the service industry.
By 2011 the parties were living in the home at G Street, Town C using the bridging loan whilst they awaited the sale of the husband’s property at E Street, Suburb F.
Sale of the husband’s E Street, Suburb F property.
The E Street, Suburb F property was sold in 2012 for a sum of $287,500.
Between leaving the E Street, Suburb F property and moving into their newly acquired property at G Street, Town C, the E Street, Suburb F property remained vacant until it was sold in 2012. The husband covered the expenses associated with the E Street, Suburb F property in the interim period.[9] The bank directed the sale proceeds towards the release of the mortgage on the E Street, Suburb F property. In accordance with the loan agreement with the husband’s parents, their loan of $70,000 was also repaid from the sale proceeds.
[9] Husband’s affidavit, paragraph 13.
There were surplus sale proceeds of $38,378.35 credited towards the mortgage remaining on the G Street, Town C property as set out in the settlement statement from the Bank H[10].
[10] Husband’s affidavit, annexures 34,35 and 36 of 87. Annexure 4.
D Pty Ltd
A reading of the wife’s affidavit contains the following evidence regarding D Pty Ltd
(a)I started a business D Pty Ltd (the business). I employed the Respondent in the Business.
(b)I paid the respondent a salary each week.
(c)He paid $340 to the mortgage and expenses on the G Street, Town C property.
(d)The business was doing quite well, I was contributing $340 each week from my personal funds, as well as $360 from business drawings until I was forced to leave in May 2019.
(e)I estimate that over the 8 years I contributed around 67% of the funds towards the purchase and maintenance of G Street, Town C.
I am satisfied that the wife has not been completely candid regarding the circumstances surrounding the establishment of D Pty Ltd nor the circumstances and events which saw her receiving a salary of $360 per week for typically no more than 2 sometimes 3 hours work each week. Nor has the wife properly described the arrangements which were agreed to at the time they took the accountant’s advice to pay the wife a tax deductable salary and what was agreed about the use of those funds. The wife is now re-telling the events to imply that she had a separate source of income generated by her, without reference to any of these facts and without reference to the major underlying fact that it was the husband who earned the funds to pay her in her role as a bookkeeper.
The wife is not a transport worker and did not drive the trucks for D Pty Ltd. The wife did not just decide to set up a company as is inferred in her affidavit. The wife knew that the husband was a transport worker for years before she met him. He had worked for others and it was his aim and intention to set up his own business.
The husband explained that in 2010 he had discussions with his accountant of 30 years about his wish to set up his own business (primarily for Employer G) instead of being an employee. The accountant advised that to minimise tax on his income and also limit the amount of child support he might have to pay into the future (dependent on his earnings) and protect assets he should set up a Company structure rather than be a sole trader.
Further, the accountant suggested to the husband that he should install a third party to be the Director and shareholder of that company and he should be an employee and receive a wage. The Company was to pay the husband a salary as an employee of the Company for the work he undertook for the company. The husband’s labour and skill was the only work generating an income for the business.
I therefore reject the wife’s explanation in her evidence set out in her affidavit being simply being that she set up a company.
It was clear from the cross examination of the wife, that she knew very little if anything about the transport business or of trucks or buying them, or the mechanical side of trucks or the running of the business. It was the husband who had decades of experience in this field. He was the face of the company to the clients and he did all the day to day work usually 40 to 60 hours a week. He provided the service that the company was selling. He dealt with Employer G the sole customer. The husband worked at his job while the wife worked full time in her own full time employment in the service industry.
The wife did not decide to distribute “drawings” when the company did well as she suggests. On the accountants advice of the husband’s accountant, it was decided that as the wife was already the director and sole shareholder she could be paid a salary by the company, on the basis that she would do some bookwork as recommended by the husband’s accountant. This would reduce the Company tax. It is not denied that the wife did some bookwork, albeit in very modest terms with only one contract and one employee. The evidence shows that doing the bookwork in a company with one client and one employee (the husband) took the wife 2 or rarely 3 hours a week at most. The salary that the wife was paid for this work was $360 per week which is a rate of over $100 an hour.
Importantly the wife agreed to the proposal and she agreed with the husband that she would not retain this new salary of $360.00 each week for her own use, but instead this amount would be regularly paid as an additional payment on their joint mortgage of the G Street, Town C property. This payment was to be in addition to the other payment the husband and wife agreed to pay which was $340 each out of their own salaries equally each week. Repaying a mortgage payment would not have otherwise constituted an expense for D Pty Ltd as D Pty Ltd did not own any real estate. Their joint intention was to direct funds towards the reduction of their joint mortgage. This payment procedure described continued until separation in May 2019.
The repayments schedule attached to the wife’s material (Annexure 7) shows a pattern of repayments confirming their respective payments of $340 per week each, and the additional repayment of $360.
I have heard the wife and the husband be cross examined at length about this arrangement. There were weeks when the wife did very little if any book work, however, she received the salary nonetheless. The husband still was still involved in keeping records for the business and therefore the company and liaised with the accountant; he recorded his hours; he managed his own day to day business affairs; he retained his receipts and expense records.
In written and oral submissions of Counsel for the wife criticism is directed to the husband for setting up a Company that achieved a purpose of minimisation of tax and having his child support based on his salary paid to him by the company. The submission that the arrangement is a sham is directed to the husband only. The recipient of a child support payment is always at liberty to bring a Departure Application to depart from the administrative assessment if does not properly reflect the financial circumstances of the payer.
The further written submission by Counsel for the wife that the husband was perpetrating a fraud against the Child Support Agency ought never have been made. I caution Counsel for the wife not to allege fraud without very compelling evidence to support such a serious submission.[11] Moreover, remembering that the wife has agreed to this entire arrangement, and in her own evidence that “I set up a company” I paid the husband a salary. I organised to take drawings as deposed to by the wife, it is clear that the wife was complicit in the arrangement.
[11] See Barristers Rules.
During their de facto relationship the parties had together taken on significant debt. They were both working hard, and I am satisfied that the arrangement to install the wife as a director and sole shareholder was entered into when these parties were willing to follow the advice of the husband’s accountant to do so for their joint benefit. The wife worked in that structure for around 8 years. The wife has had the added benefit of earning extra superannuation each year through her receipt of a salary from D Pty Ltd. At a salary of $360 per week the wife was receiving $18,720 per annum with the accompanying superannuation contribution. This is in addition to the superannuation in her full time work. Over the period of about 8 years the wife’s superannuation has continued to grow not only from her own full time work, but also from the contributions made by the Company during the relationship.
I am satisfied also, that other than spending a modest amount of time doing elementary bookwork to hand on to the accountant, the wife was a director in name only and a sole shareholder pursuant to an agreement between the parties for reasons of preservation of assets or to minimise tax or child support to their joint advantage.
The reality of the situation was the husband continued to run his day to day business as he had always done and that his labour and goodwill, was the only source of income for D Pty Ltd.
Contrary to their agreement whilst living together, the wife now through her Counsel advances a case that she alone paid an extra $680 a fortnight from her own money over and above the husband towards their joint mortgage. The wife contends now that by paying her own extra money on the mortgage, the wife has paid repayments well above that of the husband. The submission is made on behalf of the wife that the applicant paid $700 per week for 400 weeks, being $280,000 which is 67.3 % of the total “financial contributions” and the husband contributed $136,000 being 32.69% and therefore the wife made greater financial contributions during the relationship. This figure is then extrapolated ultimately for this and other reasons into the applicant receiving the majority share of the asset pool[12].
[12] Counsels submissions paragraph 74 to78.
The calculations prepared on behalf of the wife also ignore the fact that the source of the income generated for the company was exclusively the husband’s. In other words it completely dismisses the reality of his contribution or the holistic approach to the overall financial and non-financial contributions of the parties which the Court must have regard to under the provisions of Section 90SM(1).
I do not accept that the respective financial contributions are properly reflected in this formula for a range of reasons. It fails to take account of a number of factors including but not limited to the life of a mortgage and the effect of payments made in terms of the repayment of interest and principle at various periods during the mortgage.
Moreover, adding up mortgage repayments doesn’t equate or result in the legal interest in property being changed. Mortgage repayments are not payments to the purchase price, they are payments to the lender of the finance needed to buy the property.
In Calverley and Green (1985) ALJR 111 the High Court stated:
It is understandable but erroneous to regard the payment of a mortgage instalments as payment of the purchase price of a home. The purchase price is what is paid in order to acquire the property; the mortgage instalments are paid to the lender from whom the money is to pay some or all of the purchase price is borrowed.
In Muschinski and Dodds [1986] 16 CLR 583 the High Court has explained, the interest of a party in property is determined at the time the property is acquired.
Where there are changes to the status of contributions, eg lump sum reductions in principal payments or payments towards renovations or improvements, or non-financial contributions to maintenance and improvement of property, constructive trust considerations may arise.
In this matter the wife has not herself made any improvements or paid down any lump sum from the source of her work with the company. If one party has paid more mortgage repayments than the other, that does not result in an assumption that the person paying more of the joint debt has a greater interest in the property. It may mean that as between the parties, an accounting may be necessary.
There is no evidence that the wife has acted on the basis of a promise that if she paid the salary for bookkeeping on the mortgage, she would be given a greater interest in the property than she already held. Quite the reverse is the case. It was agreed between the parties that the salary paid to the wife for working a couple of hours on some weekends, would be directed to the reduction of their joint mortgage.
The wife has never put the husband on notice that if she was paid the “book keeping” salary they each agreed be paid to her by D Pty Ltd towards the joint mortgage, she was going to subsequently claim a greater interest in the property in the 7 or 8 years ahead. The wife now relies on that payment as evidence of her greater financial contribution and further asserts these repayments effectively off set the direct financial contributions made by the husband. I do not accept the submissions made on behalf of the wife that her payments towards the mortgage repayments is a contribution which would effectively offset or eclipse the husband’s initial contributions.
I am satisfied that each party worked in their respective occupations, each party paid their agreed share of the weekly mortgage repayment and each party agreed that the “salary” paid to the wife by the Company was to be sent on by her in reduction of the mortgage. The wife knew that the husband’s exertion alone earned the entire income of the company but makes no allowance for this in her calculations. She knew that the husband was the face of the business. I consider the parties have jointly agreed to pay the mortgage debt in the manner which occurred with each paying the same from income from their own “day jobs” and the additional repayment consisting of monies earned solely by the husband, paid into the Company, then paid to the wife as a salary and then paid on towards the mortgage account as agreed by the parties.
The figures put forth by the wife also ignores the significant direct financial contribution by the husband at the commencement of the relationship of the equity in his home and the value of the other items he brought into the relationship, as set out earlier together with securing a loan from his parents for a period of time when they needed it to secure the purchase of the G Street, Town C property. The loan was ultimately repaid from the sale of the E Street, Suburb F property.
I am satisfied that the husband brought in more assets than the wife, as set out in the husband’s material totalling around $208,000.00. This is a significantly higher amount over the $20,000 that the wife brought in. Having regard to authorities including Pierce and Pierce[13] and noting the size of the asset pool and the length of the relationship, I give significant weight to this issue.
[13] Pierce v Pierce (1999) FLC 92-844.
Post separation, the husband alone has been paying the mortgage together with all other costs associated with the upkeep of the G Street, Town C property. This is a period of over two years together with other standing costs, even allowing for his occupation of the home.
Between the years 2010 and 2016, the parties travelled overseas on about five occasions. At times whilst overseas the husband would buy vintage car parts which was a hobby. The husband’s knowledge of all aspects of motor vehicles was evident at the trial as was his interest in vintage cars. I do not regard his decision to channel some of the income he earned into purchasing such items as some sort of prohibited purchase or reckless conduct. This was a personal interest of the husband.
Control of D Pty Ltd at separation.
At separation the wife lodged a Protection Application against the husband. The husband admits to arguments about money missing from the business accounts but denies allegations of domestic violence.
In May /June 2019 after separation, the wife had and took full control of the company and the company assets. The wife took matters into her own hands. The wife cancelled the husband’s ability to pay for fuel and truck repairs, leaving him unexpectedly without access to the business card he used for such purposes. The wife changed the PIN number of the card. The husband said he had possession of and used the card for 8 years to buy fuel and other expenses which was an essential part of being able to keep the truck operating out on the road and maintained, and for him to do work as part of his contract with Employer G.
The husband gave evidence that after the wife cancelled his access to buying fuel, he then told his work friend at Employer G who he dealt with regularly, that the wife had just cancelled his access to company funds and he was having difficulties keeping on going. The husband said his Employer G friend, made the biggest mistake of his life and went and told his boss who immediately said “cancel his contract”. The friend told the husband that Employer G have no tolerance for disputes arising from separations. After years of continuous work, the husband lost his only contract.
The husband told the wife he had lost his contract. The wife’s response was to accuse him of cancelling the contract. In this matter the wife maintains that the husband deliberately cancelled the contract and sabotaged the business. There is no dispute that the wife shut the company down. When asked about this under cross examination, the wife then said she wanted to shut the company down as it had no work as that was the only contract and said “it wasn’t even in writing.”
The truck the husband drove sat idle after the dispute for a period. The husband had been cut off from using everyday funds to operate the truck. He said he did not know if the truck was even still insured. The husband told the wife to come and take the truck. This is occurred amidst much arguing and it seems the involvement of other family members. The wife took some time to sell the truck. The wife kept the sale proceeds of $28,000.
Next the wife shut down the company of D Pty Ltd Pty. Ltd. In her evidence the wife seemed to think because there was only one contract, the Company had no further worth. Stopping the husband’s day to day usage of the truck left the husband unemployed. Selling the truck meant the vehicle which had been driven to derive the income, was gone. The wife subsequently took funds out of the Company account and deregistered the Company. The wife had a meeting of the Company with just herself present, and it was decided that she would be paid out some $42,000 by way of a final dividend, as will be seen later in this judgment. The wife alleges that the husband sabotaged the business. I reject her assertion as being inconsistent with the evidence.
The husband explained how events seemed to unfold with the wife leading to their separation. He said he and the wife had an argument about him spending money on a new computer. The husband decided to follow the advice his local computer repairer and buy a new computer rather than repair the old one. This appeared to incur the wrath of the wife who decided that the husband should stop spending money without reference to her. The wife explained that the parties were having difficulties in their relationship by this time and had resorted to sleeping separately for this and a few other reasons.
The wife alone made the decision to prevent the husband’s ability to access company finances (through the use of his business card) to be able to pay for the expenses relating to the truck starting with not being able to buy fuel. This conduct of the wife left the husband in a dire situation. That was the prelude to him going home and the parties having an argument, and the next day a struggle over the laptop, phone and business records when the wife refused to leave them in the house and refused to give them to the husband. An argument erupted when the wife tried to take all of these items with her to the exclusion of the husband.
The husband said when the wife was threatening to close down the business as he had lost the Employer G contract, he asked the wife for time to find other work. The wife would not entertain any such ideas. Thereafter the husband had no income, no truck and no company and no employer.
After separation the husband has been searching for work, suffered financial distress and found casual shift work. During this time the wife remained fully employed in her own full time work.
These funds can be treated as an add back or alternatively can be considered under Section 90SF (3) (r) when the Court considers whether there is any adjustment required as a result of the justice and equity and circumstances. The submission is made on behalf of the husband that that these funds represent 10% of the property pool having regard to the net value of their home and the total of the parties’ superannuation. This is correct.
CROSS-EXAMINATION
The Wife.
The Wife when questioned about her conduct in shutting down the Company, showed no understanding of the financial ramifications for the husband. Neither the husband nor the wife are sophisticated or have much knowledge of corporate structures. The husband had all of the experience necessary to run the business and the wife did not. The wife gave brief answers under cross examination and appeared to not want to say much at all. I had the impression that the wife knew very little about the financial side of the business but that she had decided to exercise powers given to her as a director to her own advantage. The wife gave no satisfactory evidence as to why she acted so peremptorily and without any discussion with the husband in shutting the company down. I listened very carefully to her evidence surrounding the husband’s loss of ability to use the company funds through his Company card being effectively cancelled by the wife changing the pin, which left the husband standing at the petrol bowser not able to pay for petrol for the truck he used. The wife sent quite dictatorial texts to the husband. The wife just said repeatedly in her evidence “there was only one contract” suggesting that it was somehow impossible for the husband to obtain any other work.
There is no evidence to satisfy me that the wife had any commercial basis to act as she did. There was no evidence of any excessive spending by the husband or of him misusing the company funds on private or frivolous expenses.
There is also no evidence that D Pty Ltd had never been conducted during their relationship on the basis of the wife dictating all of the husband’s working conditions or her being solely conducting the running of the business or the day to day financial transactions or the managing the business connections the husband made to secure work or his day to day operations. The evidence is that the husband ran the business, the wife her own full time employment and sometimes on week-ends she did the elementary book keeping. The wife was very much a hands-off director up until separation when she assumed formal control.
Similarly the wife’s evidence about the happenings at the home on the day of, and the after, the wife shut down accounts was unconvincing. Allegations that she was “locked in the house” were not completely correct. She had the keys to her own car and her car was parked in the garage. The wife as able to walk out the door into the garage through an unlocked door, get into her car and leave. The issue for the wife was really that she knew if she did this, she didn’t have the key to get back in and she wanted to remove important things from the home. The wife failed to tell the Police that she was leaving with the company laptop, records and other documents that she knew the husband would want. The wife told the Police that during the argument the husband was not aggressive and that they had never had an argument of this magnitude before, but that he wouldn’t communicate and they did not speak to each other for the rest of the day. The subsequent physical struggle over possession of the phone ensued. I accept the version of events as given by the husband. He was generally a truthful witness. He was during the course of his evidence, prepared to give evidence openly whether or not it was against his own interests.
Overall the wife’s unnecessary actions were punitive and resulted in the husband’s immediate halt to his ability to earn an income. There was no satisfactory explanation from the wife as to why she refused the husband’s requests to not to shut down the business instead give him time to try and secure other employment contracts. I had the impression that the wife had pre-planned her exit strategy and that it was implemented in a manner and timing to cause the husband financial distress.
I do not accept the submission that the husband knowingly undertook a course of conduct to sabotage the business and the Company. He was the only person who stood to lose anything. The wife retained her own full time employment in customer service and retail; she took substantial cash from the business; prevented the husband earning his income; tried to micromanage his day-to-day operations; sold off the truck which was the truck used to generate income, and finally shut the business down.
I reject any submission to the effect that there ought to be an add back of $100,000 for the conduct of the respondent which was submitted by Counsel for the wife[14]. I do not accept that the husband sabotaged the business. Quite the reverse is the case. Further, there is no valuation of the Company and the reality is that the husband’s work history and reputation with his contractor was the good will of the company. He was effectively a sole trader with nothing to sell but his own reliability in his work performance.
[14] Paragraph 66 of written submissions for the wife.
As to withdrawals from the Company bank account, I am satisfied the wife has removed funds for her personal use from the company account and kept those funds totalling approximately $48,000.00. The schedule prepared by Counsel for the wife[15] shows the $31,354.41 being transferred on 15 September 2020 as the largest single transfer. The wife did this over a period of time with multiple transfers to her personal account as seen in the bank statements. Withdrawals were made by the wife earlier in the year of $5,000 in March 2020, $1,000 in May 2020, $5,000 plus $1,598.33 in June 2020, $1,700 in July 2020, $500 in August 2020 and then $31,354.41 bringing the total to $48,038.
[15] Written submissions paragraph 75
I am satisfied that the wife has had the benefit of the funds withdrawn from D Pty Ltd post separation on the evidence as submitted by the husband’s Counsel[16]. I am also satisfied that the wife did not make proper disclosure of the documents evidencing these withdrawals until the day she was cross examined about such matters. The wife has retained these significant joint funds which ought to have been available for distribution between the parties. The business was a joint enterprise, based on the husband’s experience and skills and labour.
[16] Written submissions paragraph 75 onwards.
In terms of the considerations under section 90SM factors, these funds were contributed to by both parties. Setting up the Company installing the wife as sole Director and shareholder was done at a time when they are both agreed to do so for their joint financial benefit. Once the parties separated however, the wife took control in a manner which the parties had never agreed to.
The wife also retained the sale proceeds of the Truck 3. Once the wife refused the husband access to funds to even buy petrol, the truck sat unused for a period. The husband was not aware whether it was insured. The husband subsequently invited the wife to collect the truck which she did. The wife sold the Truck 3 for $28,000. The wife was questioned about this under cross examination as to the whereabouts of the sale proceeds for the truck. The wife initially said NO the money was in the account until the business was closed. The solicitor then advised that the money was for my disposal.
The wife was then questioned thoroughly by Counsel for the husband about the Company bank statements produced on the first day of trial. The wife agreed that the parties separated in May 2019. The wife agreed that the business was not operating after July 2019 and that there were not debits after July 2019 as the business was not trading. The wife agreed that as at December 2019 there was $49,915 in the business account.
It was suggested to the wife that this sum did not include the truck sale proceeds. The wife said she was unsure of the date of the sale. The wife was taken through the accounts again and it was again suggested to her that the $49,515 which was in the account in July 2019, that after that date no moneys were received or credited to the Account.
Counsel for the husband put to the wife that he had been through every page of the bank statements and that $28,000 was not seen as a deposit in the statements. The wife then accepted that in addition to the $49,515 balance in the Company account, there were funds which existed from the sale of the truck. It was suggested to the wife that It seems likely that those funds were deposited into your account after that date. The wife Yes. Adding $28,000 to the $49,400 is a total of around $78,000. It was suggested to the wife So if we can deal with the $78,000 – that is money you have taken yourself. The wife replied yes.
The wife had memory failure about taxable income in 2018 and 2019 saying I have no recollection. it’s all in the documents. The wife’s understanding of the Company financials was limited. She did not know even broadly what the fuel expenses were. The wife suggested on several occasions that the costs of taxation had to come out of the ongoing business expenses during the period when the company was not trading. The wife was taken through the Financial Records to demonstrate that the Company ran at a loss the year prior. I am in any event satisfied that the Financial Records showing the final accounting of the Company have documented any expenses incurred by the Company prior to arriving at the final figure for a dividend paid solely to the wife.
The wife’s Counsel concedes the Court would decide to apportion all of the net funds of D Pty Ltd of $42,027.91 to the wife. The wife has undoubtedly retained the dividend paid out [17] as seen in the minutes of the Meeting on 14 September 2020, with the wife as the only person present and which reads In confirmation of earlier discussion of the Directors [sic] it was hereby resolved that a fully franked divided of $42,027 be paid on the finalisation and deregistration of the company”.[18]
[17] Paragraph 70 of Counsel for the wife’s written submission.
[18] Exhibit W1.
The wife accepted that she had received $42,027 when the Company was ceased trading. It seems that its assets were sold and the funds received along with all money in the Company’s bank accounts were paid to the wife[19]. When asked by her own Counsel about this money the wife said Yes I paid for my legal fees out of that and confirmed that once the Company account was closed, the money was transferred into her personal account. The husband has not received any share of the value of the sale of the truck which was a company asset. The wife has retained solely any benefit of that sale. The wife retained the $42,027 as the final dividend. Adding the total of the withdrawals seen in the schedule and which the wife was taken through in cross examination, actually results in a slightly higher figure of $49,400.
[19] Exhibit W1.
On another topic involving the wife’s conduct, I am asked on behalf of the husband to take account of the benefit to the wife of receiving a figure of $25,386 representing invoices billed by D Pty Ltd but paid after separation. I am not satisfied that this gross figure is appropriate to use in this manner. It relies on various assumptions including that the payment of the invoices was not banked or accounted for in the Financial Report of D Pty Ltd[20]. The husband provided evidence of the billing of those invoices, but not that they were all paid by Employer G and then withdrawn by the wife separately from the funds already identified as being withdrawn by the wife.
[20] Exhibit W1.
The Husband.
The husband was a difficult witness. He is a man of few words and initially gave most of his evidence in an irritating and defensive style of answering questions with questions. His response at times was to treat Counsel for the wife’s questions with hostility. The husband was asked many times by the Court to answer the question, and not ask questions in his answers. It took a long time for the husband to finally understand this.
The questioning by Counsel for the wife was prolonged, and at times too robust resulting in objections from Counsel for the husband, even allowing for his failure to directly to answer the question.
The incident involving the husband ending up with the wife’s mobile phone as the source of extremely prolonged questioning. At the end of the day, nothing too significant turns on that particular issue. The husband wanted the wife to leave all the business records and laptop at the home. The wife wanted to take all of these things with her. This was the cause of the dispute and struggle. Ultimately the wife handed the computer and the phone back.
During his cross examination the hostility directed to Counsel for the wife by the husband got to the point of the husband being sarcastic. It subsequently became evident through the husband’s answer about not reading the wife’s affidavit, that the husband has a reading difficulty. The husband said a throw away comment I don’t read anything. I have a problem. A little later the husband repeated this. On inquiry from the Court to Counsel for the husband as to what was known as to the literacy of the husband given his comments, after consulting with his instructing solicitor, Counsel then advised the Court that the husband is a man who works with his hands, he has limited reading ability, his whole affidavit has been read out to him and the summary of case explained to him in simple language.
In an endeavour to break the unhelpful dynamic which developed between Counsel for the wife and the witness, I endeavoured to calm the waters somewhat by relaying Counsel’s questions slowly to the husband. This matter was conducted via Microsoft Teams and the technology together with the husband and wife’s Counsel both talking together and over each other at times due to the delay in sound which was occurring lead to the witness and Counsel talking over each other.
When given time and some calm, the husband finally gave evidence that properly told his story. It was clear when listening to the husband explain how he lost his whole livelihood through the actions of the wife that the husband was deeply distressed at the situation he found himself in. His financial position post separation was vastly inferior to that of the wife’s. There was no logical evidence given by the wife as why she caused such financial chaos for the husband at separation.
An issue which the wife clearly wanted the husband questioned about at length during the trial was the husband’s hobby or small home business of reconditioning old white goods, and selling them. The husband was questioned comprehensively about this topic and in serious detail. I formed the view that the husband who said he worked with his hands, was making very modest amounts of money regularly when he repaired old and or non-working white goods. Typically he sold items for between $100 to $200 after they were repaired. The husband was never asked how much he estimated he made each year. The work and effort he went to finding old or non-working white goods for sale for say $50.00 or more and driving around to pick them up, and then doing hours of work in order to resell them seemed like a hobby more than a business. Some of the white goods he worked on were obtained for nothing. He enjoyed doing the repairs. The work resulted in a very modest amount of income. The husband who is very savvy with the workings of cars, trucks and seemingly anything with a motor, would use the parts from old machines and build or repair another machine and sell it on Face Book market place or similar. I would describe this endeavour as a hobby with negligible income given the costs of retrieving the old machines, doing all the work and then selling the second hand white goods. There was ultimately no submission about the overall relevance of this cross examination.
When cross examined about other possessions the husband had sold I note the context in which they were sold. They are all second hand and the sales were generally car parts, bikes and a camper as set out in the husband’s financial statement.[21]The husband was completely transparent about the fact that items were sold[22], and said he needed to get some money fast when he had no income. I accept this. The husband said he also needed money to give to his first solicitor, namely $2,000 or so immediately upon separation.
[21] Husband’s Financial statement 23 June 2021.
[22] See his Financial statement.
I accept when the husband found himself without work that he needed money. I do not expect the husband to have remained in a state of suspended financial animation. The husband still had to support himself.
The husband however, gave confusing evidence about the alleged sale of the camper van. He said that the camper was sold to a friend of a friend through his good friend Mr J. The husband said under questioning that the van was parked in his own garage. When read out a passage from the husband’s own diary that he had taken it to “”K” the husband said he didn’t know where it was. He could offer no satisfactory explanation as to why it was moved from the home the day before the valuation on the home. The husband said that he still had use of the camper when he wanted to. When asked who pays the registration, the husband said he did and that was part of “the deal”. The husband was asked how he made the deal with the person whose name he couldn’t remember. He said he didn’t understand the question. Overall, I accept the van was sold but am satisfied that the husband entered into an arrangement where he has the opportunity to use the van and that was one of the terms of sale.
Through cross-examination the husband revealed he kept a diary and subsequently the diary was called for, along with many other diaries. The diary lead to further lengthy cross examination as many diary entries were inconsistent with the evidence being given in Court. However, largely the evidence was to do with the husband’s practice of selling second hand repaired white goods which at the end of the day, lead nowhere.
The husband set out on his financial statement that he sold the Motor Vehicle 4 spare car parts for $4,000. The husband is a vintage car enthusiast and it is conceded that during the relationship he spent money on buying parts. That was his prerogative. The wife says he spent considerable funds during the relationship on the vintage car. His evidence on this topic was somewhat puzzling. On 4 May 2019 only days before separation, the husband had recorded in his diary that he went to “K” to work on the Motor Vehicle 4. I put running boards in, brought rear guards and parts home.
The husband said he had only a day or so prior to the trial obtained a backdated receipt for the vintage car and car parts he sold for cash. He was trying to get evidence to support the sale. The receipt was dated 8 May 2019 and stated it was for car parts $4,000. The husband said that this figure included the chassis. The husband had an entry in his diary on 22 June 2019 indicating that he went to “K” today and did the running boards.
The husband gave a long explanation of parts from Country L arriving damaged, that he was going backwards and forwards, some issue arose as to the husband reimbursing the alleged purchaser for a second set of parts. Overall I accept that the husband sold the Motor Vehicle 4 for $4,000 and that he is still working on the Motor Vehicle 4 with one of his good mates after he had sold it to him. No valuation was obtained and I do not accept the wife’s opinions as to value. On balance, I accept the $4,000 as being the full sale price for the Motor Vehicle 4.
The husband said he did not own a motor bike and later in his evidence said a bike was purchased in 2020, but said it wasn’t for him, it was for his new friend who was learning to ride a bike and he did the deal for her. Generally I accept that he was helping his current friend in buying a bike.
The husband accepted that after separation he did have money in his account seemingly from the company of $5,000 however, he did not really know much about how it got there. The husband was very hesitant to touch this money as he did not know where it came from. He said the wife withdrew the money and paid it to his account. I am inclined to accept the husband’s evidence. The wife was the book-keeper and she certainly knew how to transfer money out of the Company as is seen in the evidence of her own withdrawals.
Overall and on balance I accept that the husband has sold all of his assets according to his testimony including that he sold the camper for $6,000 albeit he has entered into an arrangement where he still pays the registration for the camper and has use of it. I have no evidence to say that the van was sold at an undervalue and in this matter, I am not prepared to accept the wife’s estimates as I have found her to exaggerate or distort evidence when it comes to financial matters.
The husband gave evidence that he had friends that supported him in what was an extremely difficult and low point in his life post separation when he had no money and no truck due to the wife’s actions. The husband had some good friends who had helped him as could be seen in entries in his bank statements and that he was somewhat embarrassed that he had reached this low point in his life forced to be reliant on hand outs from friends. I considered that he wanted to protect the identify of those who had helped him where possible. The total of the items sold was $13,000.
I accept that the husband retained the money obtained from the sales of the camper, boat, the Motor Vehicle 4 and runabout boat to pay bills for his own day-to-day expenses and mortgage repayments on the jointly owned property at G Street, Town C, when he was in dire financial straits. At least $2,000 was on legal fees.
The husband accessed his Superannuation twice when he could under the Covid provisions enabling him to withdraw $10,000 in each of 2020 and 2021 when the husband could do so, to help relieve the financial pressure he was under. I do not accept that the husband “minimised” his employment opportunities in the second half of 2019 immediately after separation. This is another unsubstantiated opinion of the wife. I intend to include one of those withdrawals as an add back of $10,000 as I accept the husband needed certainly the first withdrawal to go to his day to day living expenses.
Treatment of funds taken by the Wife.
Taking account of all of the evidence, I am satisfied that the wife has retained the $28,000 for the sale of truck and that she has received and retained for her own use a minimum of $42,028[23] upon the Company ceasing to trade. Those figures total $70,028. There are other cash withdrawals shown in the Company statements that take that figure up to closer to $48,000 made up of a multitude of transactions as seen in the bank statements.
[23] Rounded up.
I propose however to include $70,028 (being the total of the dividend paid to the wife $42,027 and the sale of the truck $28,000) in the property pool as an add back as I am satisfied that this was a premature distribution of assets by the wife and that in this matter, the circumstances are such that this is the appropriate way to deal with the retention of these funds by the wife and the depletion of funds which ought to have been available for distribution between the parties. The wife has retained these funds, whilst also retaining her own full time salary and she has not contributed to the mortgage or ongoing costs. .
FINAL PROPERTY POOL.
Having made the decision that there ought to be add backs into the property pool, the result of that finding means that the property pool is as follows:
DESCRIPTION OWNER VALUE ASSETS G Street, Town C Property Joint $590,000. Amount of funds from company paid into husband’s account Husband $5,000 Truck 1 Husband $12,000 Motor Vehicle 2 Wife $3,000 Add back – into the pool from the sale of assets by the husband. $13,000 Add back – for the second distribution of Superannuation. $10,000. Add back – proceeds of sale of truck retained by the wife $28,000 Add back – proceeds of dividend paid to wife $42,028 TOTAL NON-SUPERANNUATION ASSETS $703,028 LIABILITIES Property Mortgage Joint $328,000 NET NON-SUPERANNUATION ASSETS $375,028 SUPERANNUATION: Superannuation Husband $101,860 Superannuation Wife $110,953 TOTAL SUPERANNUATION: $212,813 NET PROPERTY (INCLUDING SUPERANNUATION) $587,841 Step 3 – Evaluation of the respective financial and Non-Financial Contributions.
In terms of the evidence of each of the parties and evaluating the parties respective contributions, taking account the issues I have referred to, the length of the relationship of 8 years and the value of the husband’s initial contributions and the size of the asset pool, I am satisfied that the appropriate division to reflect these factors, is 65/35 in the husband’s favour.
Section 90SF(3) Factors
The wife’s affidavit says the husband was born in 1964, however, the evidence is that the husband was born in 1954[24], making him 66 at the time of trial, turning 67 in 2021. The wife aged 56 is therefore 10 years younger than the husband. The husband is closer to retirement than the wife.
[24] Case outline filed 23 June 2021.
The wife has maintained employment whereas the husband has found himself now looking for work at age 66 where he can get it. His future work seems more uncertain than the wife as she has maintained her full-time employment.
The wife has benefitted from having her Superannuation grow through the joint efforts of the parties from the salary paid to her by the Company as well as her own separate work. At the commencement of the relationship the wife had no Superannuation.
I have had regard to their respective income earning capacities noting the wife earns $955 per week and the husband at the time of trial was earning $1,230 which is his salary from the local employer noting the husband is doing shift work at night.
Overall I am not satisfied that there should be any further adjustment.
That leaves the adjustment of the property as between the parties at 65% to the husband and 35% to the wife.
In working out the actual value of the proposed division of 35% to the wife, the calculation becomes 35% of the net non-superannuation asset pool of $375,028 which equals $131,259. From that figure of course the assets in her possession or that she has already had the benefit of must be deducted. In addition the wife is to retain her superannuation of $110,953. In total the wife’s division is $242,212.
The figure for the husband where he retains 65%, means he retain the house and the debt (net $262,000) plus his vehicle at $12,000. A total of $274,000. In addition he retains his superannuation at $101,860.00, so an overall total of $375,860.
To determine the amount payable by the husband, taking account of the assets already in the possession of the wife or which she has had the benefit of already, involves deducting the amount of 70,028 (add backs of $28,000 for the truck and $42,020) plus the value of her car at $3,000 which brings the total of the non-superannuation assets held or had by the wife to $73,028. The calculation is $131,259 minus $73,028 = $58,231.00.
Is the figure arrived at just and equitable?
I am also satisfied that in all of the circumstances at the end of this de facto relationship, it is just and equitable to make this property adjustment order.
In looking at the proposed division of 65% to the husband and 35% to the wife, I note that the husband came into this relationship owning a home, some superannuation and chattels, the value of which was $208,000.
The wife came into the relationship with $20,000, no home, no car and no superannuation.
There are no children of this relationship and neither party is responsible for the care of another person.
I am satisfied that having regard to the proposed division given the husband’s significantly greater initial contribution, and their respective contributions during the relationship, and the length of the relationship that the proposed amounts and division is just and equable.
In terms of effecting the division, Counsel for the wife submits that the property at G Street, Town C should be transferred to the wife with the associated debt. The alternate position advanced by Counsel for the wife is that the house be sold and the net proceeds be provided to the applicant with each party retaining their own superannuation, chattels and personal effects.
The wife’s case outline sought orders that the house be sold and that husband retain all joint furniture and chattels stored at the property, that the respondent retained his vehicle Motor Vehicle 1, the wife retain her Motor Vehicle 2 and each party retain their respective Superannuation.
I have no confidence that the wife would be able to secure finance given my finding that her interest is 35%. This would mean the wife taking over the full mortgage and securing a loan for an additional 65% of the net pool. Nor was her case conducted on this basis.
The husband’s case has been conducted on the basis that he be given an opportunity to pay out the wife and retain the G Street, Town C property. I intend to give the husband, who brought a home into the relationship with equity, and who is receiving the greater proportion of the division, the opportunity to retain a home and pay out the wife.
Failing that, the G Street, Town C property will need to be sold. I consider 90 days to be sufficient time to organise for a re-finance. I have included default Orders.
I certify that the preceding one hundred and seventy (170) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Willis. Associate
Dated: 15 July 2022
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