Coleman & Coleman
[2021] FedCFamC1F 126
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)Coleman & Coleman [2021] FedCFamC1F 126
File number(s): BRC 15612 of 2019 Judgment of: CAREW J Date of judgment: 13 October 2021 Catchwords: FAMILY LAW – PROPERTY – Contributions – Where each party claims to have made greater contributions than the other – Where there are a number of disagreements about balance sheet items such as the add back of the husband’s insurance payout to meet his legal fees and the value of unsold apartments – Where the Court is concerned with a holistic assessment of the myriad of contributions made by each party throughout the relationship – Where the contributions made by the parties are many and varied and should be considered equal – Where there is to be an adjustment of 2.5 percent in favour of the husband to count for s75(2) factors – Where the property will be divided so to reflect the husband receiving 52.7 percent and the wife receiving 47.5 percent.
FAMILY LAW – PROPERTY – Equitable interest –
Non-disclosure – Where the husband alleges that the wife had an equitable interest in her father’s business – Where the husband alleges that the wife has failed to account for a half share of the proceeds of sale in the proceedings and given the absence of proper disclosure the Court should not be overly cautious in making adverse findings against the wife – Where there can be little doubt that the wife’s involvement was more than a normal employee but can be explained by loose family arrangements giving the impression of proprietary interest – Where it is found that on balance the wife did not have an equitable interest in the business – Where open to infer that the wife nevertheless has available to her funds that have not been disclosed.Legislation: Corporations Act 2001 (Cth)
Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Income Tax Assessment Act 1977 (Cth)
Cases cited: Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337
Black & Kellner (1992) FLC 92-287;
Chang and Su (2002) FLC 93-117
Chorn & Hopkins (2004) FLC 93-204
Dawes & Dawes (1990) FLC 92-108
Dickons & Dickons (2012) 50 FamLR 244
Falcken & Weule [2019] FamCAFC 140
Gould & Gould (1996) FLC 92-657
Gould and Gould (2007) FLC 93-333
Grier & Malphas (2016) 55 Fam LR 107
Hamza v Magdi [2011] FamCA 206
In the Marriage of Aleksovski (1996) FLC 92-705
In the marriage of Monte (1986) FLC 91-757
Jabour & Jabour (2019) FLC 93-898
Lenardi v Lenardi [2011] FamCA 266
Miller v Miller [2009] FamCAFC 121
Rodgers & Rodgers (No 2) (2016) FLC 93-712
Stanford v Stanford (2012) 247 CLR 108
Steinbrenner & Steinbrenner [2008] FamCAFC 193
Tomasetti & Tomasetti (2000) FLC 93-023
Trevi & Trevi (2018) FLC 93-858
Wallis & Manning (2017) FLC 93-759
Weir & Weir (1993) FLC 92-338
Williams & Williams [2007] FamCA 313
Yates v Yates [2012] FamCAFC 138
Number of paragraphs: 149 Date of hearing: 16–18 August 2021 Place: Brisbane Counsel for the Applicant: Mr Hackett Solicitor for the Applicant: Hirst & Co Family Lawyers Counsel for the Respondent: Mr Kirk of Queen’s Counsel Solicitor for the Respondent: Hopgood Ganim ORDER
BRC 15612 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR COLEMAN
Applicant husband
AND: MS COLEMAN
Respondent wife
ORDER MADE BY:
CAREW J
DATE OF ORDER:
13 OCTOBER 2021
THE COURT ORDERS THAT:
Interpretation
1.For the purpose of this Order, the following definitions apply:
(a)Suburb A property means the property situated at D Street, Suburb A more particularly described as Lot … on Crown Plan …, Title Reference … in the State of Queensland.
(b)Suburb A Mortgage means the Westpac Bank loan number …84 secured by way of registered mortgage to Westpac Banking Corporation over the Suburb A property, being mortgage number …54.
(c)Suburb A Offset account means the Westpac Bank Offset account number …76.
(d)Suburb B property means the property situated at E Street, Suburb B more particularly described as Lot … on Registered Plan …, Title Reference: … in the State of Queensland.
(e)Suburb B Mortgage means the Westpac Bank loan number …35 secured by way of mortgage to Westpac Bank Corporation over the Suburb B property, being mortgage number …15.
(f)Suburb B Offset account means the Westpac Bank Offset account …09.
(g)Property G means Lots … on Survey Plan … owned by G Pty Ltd.
(h)Property G partnership means the partnership between the Coleman Property Trust, the H Property Trust and the J Trust.
(i)Suburb C property means the property situated at F Street, Suburb C more particularly described as Lot … on Registered Plan …, Title Reference … in the State of Queensland.
(j)Suburb C Mortgage means the Westpac Bank loan number …88 secured by way of mortgage to Westpac Banking Corporation over the Suburb C property, being mortgage number …23.
(k)Suburb C Offset account means the Westpac Bank Offset account number …84.
(l)Husband means Mr Coleman born on … 1966.
(m)L Pty Ltd means L Pty Ltd ACN ….
(n)Settlement Date means the date which is 90 days from the date of this Order or such other date as agreed between the parties.
(o)Shares means the shares held by the Wife in any publicly listed companies.
(p)Coleman Group means the following legal entities:
(i)K1 Pty Ltd ACN …;
(ii)K2 Pty Ltd ACN …;
(iii)G Pty Ltd ACN …;
(iv)G Unit Trust;
(v)M Pty Ltd ACN …;
(vi)Coleman Holding Trust;
(vii)Coleman Property Trust; and
(viii)N Pty Ltd ACN ….
(q)Coleman Holding Trust means the trust settled by the Coleman Holding Trust Deed, of which the Husband is trustee and both the Husband and Wife are primary beneficiaries.
(r)Coleman Property Trust means the trust settled by the Coleman Property Trust Deed of which M Pty Ltd is trustee and the Husband and Wife are named as discretionary and residuary beneficiaries.
(s)Wife means Ms Coleman born on … 1969.
Payment to Husband
2.On or before the Settlement Date, and contemporaneously with the transfer of property required pursuant to paragraph 3 below, the Wife pay or cause to be paid to the Husband the sum of $330,265.
Suburb C Property
3.On or before the Settlement Date, the Husband and the Wife do all things and sign all documents necessary to cause the Husband’s right, title and interest in the Suburb C property to be transferred to the Wife, with the Wife to be responsible for the preparation of all documents referrable to the transfer at her sole cost.
4.The Wife be responsible for and indemnify the Husband in relation to the Suburb C Mortgage and on or before the Settlement Date, the Wife shall do all things and sign all documents necessary to cause:
(a)the Suburb C Mortgage to be released and refinance the said mortgage debt into the Wife’s sole name; and
(b)the Husband to be released from any liability or personal guarantee provided by him in respect of the said Suburb C Mortgage.
5.Pending the transfer and refinance pursuant to paragraphs 3 and 4 of this Order, the Wife be responsible for the following and indemnify the Husband and keep him indemnified in respect of:
(a)the outgoings associated with the Suburb C property including but not limited to rates, utilities, and insurance; and
(b)all repayments to the Suburb C Mortgage as required by Westpac Bank.
Suburb A property
6.On or before the Settlement Date, the Husband and the Wife do all things and sign all documents necessary to cause the Husband’s right, title and interest in the Suburb A property to be transferred to the Wife, with the Wife to be responsible for the preparation of all documents referrable to the transfer at her sole cost.
7.The Wife be responsible for and indemnify the Husband in relation to the Suburb A Mortgage and on or before the Settlement Date, the Wife shall do all things and sign all documents necessary to cause:
(a)the Suburb A Mortgage to be released and refinance the said mortgage debt into the Wife’s sole name; and
(b)the Husband to be released from any liability or personal guarantee provided by him in respect of the said Suburb A Mortgage.
8.Pending the transfer and refinance pursuant to paragraphs 6 and 7 of this Order:
(a)the rental income received from the Suburb A property be paid into the Suburb A Offset account;
(b)the outgoings associated with the Suburb A property including but not limited to rates, utilities, and insurance be paid from the Suburb A Offset account; and
(c)all repayments to the Suburb A Mortgage as required by Westpac Bank be paid from the Suburb A Offset account with the Husband and Wife to be equally responsible for any shortfall.
9.In default of the payment from the Wife to the Husband referred to in paragraph 2 above, the Suburb A property shall be sold, and the Husband and Wife shall do all things and sign all documents necessary to effect the sale of the Suburb A property as follows:
(a)Within fourteen (14) days of the Wife receiving written notice by the Husband of her default, the Suburb A property shall be listed for sale by private treaty with an agent or agents as agreed between the parties and failing agreement with an agent as nominated by the Chief Executive Officer of the Real Estate Institute of Queensland (“the agent”);
(b)The listing price for the Suburb A property is to be agreed by the parties and failing agreement as nominated by the agent;
(c)The parties shall do all things and sign all documents necessary to give effect to a sale if an offer is made from a prospective purchaser where the purchase price is at or above 90% of the list price at that time;
(d)Any costs associated with the listing of the property (including any costs associated with appointing the agent, if necessary) be paid equally by the parties as and when they fall due including but not limited to any advertising costs, general maintenance and staging of the property;
(e)The parties co-operate in every way with the agent including (without limitation):
(i)Allowing inspection of the Suburb A property at all reasonable times requested by the agent;
(ii)Doing all things reasonable to assist and not doing or saying anything to hinder or prevent a sale of the Suburb A property being effected;
(iii)Ensuring that the Suburb A property including the grounds, are in a neat and clean condition at the time of inspections by the agent and/or prospective purchasers; and
(iv)Executing all documents as requested by the agent for the sale of the property by private treaty or otherwise by auction.
(f)In the event that the Suburb A property has not been sold on or before a date three (3) months from the date of listing by way of private treaty, the parties shall do all acts and things necessary to procure a sale by auction of the Suburb A property as follows:
(i)The auctioneer shall be as agreed between the parties and if there is no agreement the auctioneer shall be nominated by the Chief Executive Officer of the Real Estate Institute of Queensland (“the auctioneer”);
(ii)The auction shall take place on a date agreed between the parties and failing agreement on the first Saturday falling after a date which is four (4) months from the date of listing by way of private treaty;
(iii)The reserve price, shall, unless agreed on by the parties, be as proposed by a valuer nominated by the auctioneer;
(iv)The parties shall sign all documents necessary to sell the Suburb A property at auction and to effect settlement of the contract of sale following settlement;
(v)Throughout the exposure of the Suburb A property for sale by auction, neither the Husband nor the Wife shall give, offer, or volunteer to any third party any opinion on the value of the property or the possible price range within which either of them considers the Suburb A property will sell at auction, save for the purposes of allocating a reserve price pursuant to the provisions of this Order;
(vi)The parties shall make themselves available to provide instructions at the auction and negotiate with the highest bidder in an effort to achieve a sale of the Suburb A property in the event the reserve price not being reached; and
(vii)If the property is not sold by auction or by private negotiation within fourteen (14) days after the said auction, then the Husband and Wife shall do all acts and sign all documents necessary to hold a second auction within a further two (2) months of that date otherwise on the same terms and conditions as applied to the first auction.
(g)Upon completion of the sale, the proceeds of sale be applied as follows (in order of priority):
(i)To pay all costs, commissions, and expenses of the sale and to pay any council and/or water rates and maintenance levies outstanding in respect of the Suburb A property;
(ii)To discharge the mortgage(s) and any other encumbrances affecting the Suburb A property;
(iii)To the Husband, any sum owing to him pursuant to paragraph 2 of this Order including any interest; and
(iv)The balance to the Wife.
Suburb B Property
10.On or before the Settlement Date, the Husband and Wife do all things and sign all documents necessary to cause the Wife’s right, title and interest in the Suburb B property to be transferred to the Husband, with the Husband to be responsible for the preparation of all documents referrable to that transfer at his cost.
11.The Husband be solely responsible for and indemnify the Wife in relation to the Suburb B Mortgage and on or before the Settlement Date, the Husband shall do all things and sign all documents necessary to cause:
(a)The Suburb B Mortgage to be refinanced into the Husband’s sole name; and
(b)The Wife to be released from any liability or personal guarantee provided by him in respect of the Suburb B Mortgage.
12.Pending the transfer and refinance pursuant to paragraphs 10 and 11, the Husband be solely responsible for and indemnify the Wife and keep her indemnified in relation to:
(a)The outgoings associated with the Suburb B property including but not limited to rates, utilities, and insurance; and
(b)The Suburb B Mortgage repayments required by Westpac Bank.
Joint Accounts
13.Save as provided in this Order, on or before the Settlement Date, the Husband and Wife shall do all things and sign all documents necessary to close and transfer to the Husband the credit balance of any joint bank accounts operated by the parties as at the date of this Order and the Wife shall be restrained and an injunction issues restraining the Wife from drawing funds from those accounts pending the Settlement Date.
14.On or before the Settlement Date the Husband and Wife shall do all things and sign all documents necessary to transfer the Suburb C Offset account and the Suburb A Offset account from the joint names of the parties to the Wife’s sole name.
15.On or before the Settlement Date the Husband and Wife shall do all things and sign all documents necessary to transfer the Suburb B Offset account from the joint names of the parties to the Husband’s sole name.
Property Retained and/or Received by the Wife
16.Save as otherwise provided in this Order, the Wife shall retain absolutely without further claim from the Husband all her right, title and interest in the following:
(a)The Suburb C property subject to the Suburb C Mortgage;
(b)The Suburb A property subject to the Suburb A Mortgage;
(c)The balance of any account held by her in her sole name;
(d)Her interest in L Pty Ltd;
(e)The Motor Vehicle 1;
(f)Her interest in shares;
(g)Her interest in superannuation;
(h)Any insurance policy in her sole name;
(i)Her jewellery and personal effects;
(j)The benefit of any legal fees paid by her or on her behalf; and
(k)Any other property or financial resource held in her sole name, possession, or control.
Property Retained and/or Received by the Husband
17.Save as otherwise provided in this Order, the Husband shall retain absolutely without further claim from the Wife all his right, title and interest in the following:
(a)The cash sum payable to him pursuant to paragraph 2 of this Order;
(b)His interest in the Coleman Group;
(c)The Suburb B property subject to the Suburb B Mortgage;
(d)The balance of any account held by him in his sole name;
(e)The long service leave entitlements owing by N Pty Ltd to the Wife in the sum of $11,111;
(f)Motor Vehicle 2 and the Motor Vehicle 3;
(g)Recreational boat;
(h)His interests in superannuation;
(i)Any insurance policy in his sole name;
(j)His jewellery and personal effects;
(k)The benefit of any legal fees paid by him or on his behalf; and
(l)Any other property or financial resource held in his sole name, possession or control.
Legal Entities
18.On or before the Settlement Date, the Wife do all things and sign all documents necessary to:
(a)relinquish any interest which she may have as a beneficiary of any trust within the Coleman Group; and
(b)assign any loan owing to her or by her to any entity with the Coleman Group to the Husband or his nominee;
with the Husband to be responsible for the preparation of any necessary documents to give effect to this Order at his cost.
Indemnities
19.Save as otherwise provided in this Order, the Husband indemnify the Wife and keep her indemnified against any liability arising from her involvement in the Coleman Group and her removal from it, including but not limited to any loan accounts or taxation liability arising from her involvement in the Coleman Group as a beneficiary or otherwise.
20.Save as otherwise provided in this Order, the Wife be solely responsible for all liabilities in her sole name and shall indemnify and keep indemnified the Husband in relation to those liabilities including but not limited to any credit cards, personal loans, mortgage accounts and/or taxation liabilities in her sole name including any taxation liability arising from the transfer to her of any property pursuant to this Order.
21.Save as otherwise provided in this Order, the Husband be solely responsible for all liabilities in his sole name and shall indemnify and keep indemnified the Wife in relation to those liabilities including but not limited to any credit cards, personal loans, mortgage accounts and/or taxation liabilities in his sole name including any taxation liability arising from the transfer to him of any property pursuant to this Order.
Uplift on Sale of Property G
22.Should the Husband through the Coleman Property Trust retained by him pursuant to this Order have a value in excess of $34,337 by reason of 100% of the Property G selling for in excess of $4,650,000 either separately or in one line at any time within five (5) years from the date of this Order, the Husband shall forthwith pay to the Wife 47.5% of the amount in excess of $34,337.
Miscellaneous
23.Any duty levied pursuant to the Duties Act 2001 (Qld) (or equivalent legislation of other States and Territories of the Commonwealth of Australia), payable on transactions arising from this Order or any other document executed pursuant to this Order be paid by the transferee spouse or the spouse receiving the benefit of same.
24.The parties comply with all requisitions issued by the Office of State Revenue in relation to any document executed or transaction entered into pursuant to, or to put into effect, by this Order, in default of either of the parties complying with any requisitions so issued within fourteen (14) days of the date upon which any requisitions issue, the party not in default shall be entitled to comply with any of the outstanding requisitions and recover from the other party in default, the costs and outlays incurred in complying with the requisition, such costs to be calculated in accordance with the Federal Circuit and Family Court (Family Law) Rules 2021 (Cth).
25.In the event that any party to this Order refuses or neglects to comply with any or all of the provisions of this Order, a Registrar of the Federal Circuit and Family Court of Australia (Division 1) at Brisbane is hereby appointed, pursuant to s 106A of the Family Law Act 1975 (Cth), to execute all deeds and documents in the name of the Husband and/or the Wife and to do all acts and things necessary to give validity and operation to this Order and for the purposes of this Order, an affidavit by either party or their respective solicitors is deemed to be sufficient evidence of non-compliance.
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 the pseudonym Coleman & Coleman has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAREW J:
Mr Coleman (“the husband”) and Ms Coleman (“the wife”) are a married couple who separated in May 2018. They are unable to agree on how to divide their property. Each party claims to have made greater contributions than the other, and the husband contends that the wife has an interest in the proceeds of sale of a business previously conducted by the wife and her father which she has not disclosed.
The husband proposes that the property be divided in the proportion 60/40 in his favour. The wife proposes that the property be divided in the proportion 55/45 in her favour.
For the reasons which follow, I propose to divide the property of the parties or either of them in the proportion 52.5 percent to the husband and 47.5 percent to the wife.
ISSUES
The parties identified particular issues requiring determination (see Exhibit 7) but agreed (in the process of addressing the issues) that they might be more efficaciously expressed and were content for amendments to be made without their input. Concessions were also made during submissions which impacted upon the identified issues. Accordingly, the significant issues to be determined are as follows:
(1)In relation to the Balance Sheet:[1]
[1] Exhibit 24.
(a)Item 6: What is the market value of the remaining but unsold interest in Property G?
(b)Items 26 and 28: Should the parties’ annual and long service leave, apart from item 27, be included?
(c)Items 34 to 37: Should the wife’s credit card debt be included?
(d)Items 46 to 50: What tax and realisation costs should be included?
(e)Item 52: Should the wife be able to retain the Suburb A property or should it be sold?
(f)Item 54: Should there be any addback for the husband's legal costs paid from his alleged post separation earnings and trauma insurance receipts?
(2)What weight should be accorded to the myriad of contributions made by the parties respectively over the cohabitation period of 17 years and the three years post separation, with three children borne of the union and, in particular:
(a)What was brought to the commencement of cohabitation by the parties in terms of value?
(b)Do the gifts allegedly received by the wife during the relationship require any adjustment in her favour on account of contributions during the relationship?
(c)What contributions have been made since the parties’ separation in May 2018 and should there be an adjustment in favour of either party?
(3)Did the wife hold an equitable interest in O Company owned by an entity controlled by her father that was sold in 2007?
(4)When considering s 75(2) factors, what adjustment, if any, should be made to either party?
Although Exhibit 7 raises a number of separate taxation issues, the only taxation issues ultimately pressed by the parties are those included as particular items in the balance sheet (Exhibit 24).
The issue raised by the wife about the increase in the husband’s loan accounts and alleged unexplained expenditure was ultimately contended by the wife to be a s 75(2) factor rather than an addback. Likewise, the impact of any finding relating to the wife’s alleged equitable interest in the proceeds of sale of O Company or failure to provide adequate disclosure was ultimately contended by the husband to be a s 75(2) factor rather than an addback.
Other than in relation to possibly ‘hidden’ funds from the sale of O Company, the husband did not press any finding that the wife had an undisclosed source of income.
Each party submitted a form of order that they contend would achieve a just and equitable outcome, and had the opportunity to respond to the order proposed by the other party. The husband, with the consent of the wife, submitted an additional paragraph to address the prospect of a higher sale value for apartments in the Property G complex and a further payment to the wife if that occurred. On that basis, the husband submits that the lower value for the Property G apartments should be adopted.
The husband includes in his minute of proposed order a requirement for the wife to submit amended taxation returns for the financial years ended 30 June 2019 and 30 June 2020. The wife opposed this order and ultimately, no submissions were made by either party in relation thereto. Accordingly, I do not propose to make the order sought by the husband.
The husband concedes that the likely future income disparity in his favour, should reflect a five percent adjustment to the wife.
Finally, the wife’s application for spousal maintenance was not pressed.
Prior to considering the significant issues, it will be useful to provide some background and set out the applicable legal principles.
BACKGROUND
The husband and wife commenced a relationship in about 1997 but did not commence cohabitation until 2001. They married in 2003 and separated in May 2018. The husband left the former matrimonial home in July 2018.
The husband was born in 1966 and is self-employed in his own business, N Pty Ltd (“NPL”), in partnership with another professional.
The wife was born in 1969. The wife is a homemaker and works 20 hours per week for a business, P Pty Ltd (“PPL”).
The parties have three children, namely, X born in 2004, Y born in 2005 and Z born in 2007. Z suffers from diabetes. All three children continued to live with the wife after separation until early 2019 when Y commenced to live with the husband. The children see little of the parent with whom they do not live. The wife attends to the financial needs of X and Z. The father attends to the financial needs of Y.
The wife worked full time until 2007, taking only a few weeks off work before and after the birth of X and Y. The wife reduced her working week to four days shortly before the birth of Z and then took some time off. She returned to employment in 2008 working two days per week.
The husband obtained his professional qualifications in 1990 and established his own practice, R Company, in 1992. He operated his practice from home until 1997. In 1997, the husband established a partnership with Mr T and Mr U known as S Company. Mr T left the partnership in 2000 and NPL thereafter continued the practice.
The wife commenced to work for her father’s business, O Company, in 1993. This was a financial services business which the wife initially joined while waiting to be offered a position as an educator, but never left. The wife remained in the business until it was sold in 2007 and continues to work for the new owner, two days per week. The wife’s father operated the business via a corporate structure i.e. V Pty Ltd as trustee for the V Family Trust trading as O Company (“OPL”).
Commencing in 1990 the husband and three other partners bought land and developed properties which were sold in 1992.
During the period 19 April 1990 to 6 February 2000 the husband and his brother purchased vacant land at four sites through a company owned by the husband, his parents and his brother. The husband and his brother developed and sold them.
In 1997 the husband incorporated K1 Pty Ltd and he remains the sole director and shareholder.
Also in 1997, the husband purchased land with partners and built three developments which were sold in 1999.
In 1998, the husband inherited a quarter interest in a property at Suburb W. The property was rented for a period before it was sold in 2002 for $254,000. The husband contends that he received about $63,000 upon sale.
Also in 1998, the parties purchased in joint names as tenants in common, a property in Suburb B, Queensland (“the Suburb B property”) for $180,000. The husband and wife contributed equally to the deposit and obtained a joint loan for the balance. The house was rented out until 2011 when the house was demolished and a new house constructed in 2015. The husband was involved in the construction of the home and completed some physical work such as landscaping. The husband and Y live in the Suburb B property.
In 1999, the parties jointly purchased vacant land at Suburb RR, Queensland (“the Suburb RR property”) for $130,000 or $140,000 and sold it a year later for $140,000 or $150,000.
Also in 1999 the parties purchased in joint names as tenants in common, a property in Suburb A, Queensland (“the Suburb A property”) for $185,000. The parties contributed equally to the deposit and borrowed the balance in joint names.
In 2000, the parties demolished the house on the Suburb A property and commenced renovations which continued until 2002. The parties lived in the Suburb A property from 25 April 2001 until 2009. The husband was significantly involved in the renovations. The wife contends that she too was significantly involved in the renovations, a claim disputed by the husband.
On 3 April 2000 the wife incorporated L Pty Ltd and remains the sole director and shareholder. Apart from the receipt of a few consultancy payments from the wife’s father, it does not appear that this company operated any business.
The parties commenced living together in the Suburb A property in April 2001. In the same year, the parties purchased a property in Suburb C, Queensland for $340,000 (“the Suburb C property”) and a unit at the Property BB in Suburb CC, Queensland for $258,000 (“the Property BB unit”). The Property BB unit was owned by K1 Pty Ltd, the wife and the wife’s parents in equal shares.
In 2002 the husband (via K1 Pty Ltd), purchased land at DD Town, Queensland for $18,000 with his cousin in equal shares. The property was not developed and sold in 2016 for $72,000.
In April 2002, the husband and wife jointly purchased vacant land at Suburb EE, Queensland for $150,000 and constructed a home on it in 2007. The property was sold in 2009 for $557,000. The husband was engaged in the development of this property.
In 2005, the husband (via K1 Pty Ltd), jointly purchased a property at FF Town, Queensland with Mr U for $350,000. The husband contributed $25,000 and borrowed the balance. The husband’s half share was sold to Mr U in 2016 for $50,000.
The husband established the Coleman Property Trust in 2006.
In 2007 or 2008, the house on the Suburb C property was demolished at no cost to the parties due to the husband’s contacts in the construction industry and another house built at a cost of about $900,000. The construction was project managed by the husband.
A partnership between the Coleman Property Trust (the husband), the H Property Trust (Mr U) and the J Trust (Mr QQ) developed the Property G apartments which was completed in 2009. The husband’s proportional interest (via the Coleman Property Trust) is 20 percent as is Mr U’s interest and Mr QQ holds a 60 percent interest. The respective interests are held through the G Unit Trust. The management of Property G and operation of the function room and restaurant was initially conducted by the owners. The development contains 38 studio and 28 one bedroom apartments and two commercial tenancies. Management rights were created for the hotel. Twenty-two of the one bedroom units were sold and the proceeds used to reduce debt. In 2015 the management rights were sold for $2,500,000 and of this sum $333,000 was paid into the Suburb C property offset account and $130,000 paid into the Suburb B property offset account. In 2017 the restaurant was sold for $500,000 and utilised in debt reduction. The 38 studio apartments and six of the one bedroom apartments have remained unsold for about ten years.
In 2011 or 2012 the husband purchased a property in Suburb HH, Queensland with partners and developed four properties which were sold in September of 2012.
In December 2013, the Property BB Unit was sold for $325,000. The net sale proceeds received by the wife and the husband (via K1 Pty Ltd) were about $30,000.
The child, Z, was diagnosed with diabetes in August 2013 at age six. Her presenting condition was serious and she spent a number of days in hospital including in an intensive care unit (“ICU”). Upon discharge, the wife administered the required insulin injections, sometimes as frequently as eight times a day, which was often a challenging task given Z’s age. Z’s condition required regular monitoring of her carbohydrate consumption and calculation of her insulin dosage. In addition, Z’s finger had to be pricked four to five times a day at regular intervals to obtain blood glucose levels. This included during the night at 10.30 pm and 2.30 am. Z required insulin injections during her school day, initially at her morning break and at her afternoon break. The wife generally attended the school for this purpose, although the husband did do so on occasion. Z now wears an insulin pump and a continuous glucose monitor which is synchronised to the wife’s phone. Z is required to register her carbohydrate count for each food item and the wife receives updates on her phone when the child’s levels are low so that the child can be contacted and reminded to eat something to regulate her levels. If Z attends school excursions the wife generally accompanies her to attend to her medical needs. In June 2021, Z had a dangerous episode with her diabetes. She had mistakenly entered 200 rather than 20 for her carbohydrate consumption and as a consequence her insulin dose was incorrect. The wife had to keep the child awake for an extended period throughout the night to give the child enough food to regulate the carbohydrates in her blood and then monitor her for the balance of the night.
Additional renovation work commenced at the Suburb C property in 2017 and included building in the roof deck, fixing water damage and fitting out the basement as a granny flat.
There are a number of inter-related entities and trusts, namely, M Pty Ltd as trustee for the Coleman Property Trust, G Pty Ltd as trustee for the G Unit Trust, K1 Pty Ltd, K2 Pty Ltd, NPL, and the Coleman Holding Trust which are collectively referred to by the parties as “the Coleman Group”. The main business activity of the Coleman Group is the operation of an architecture practice through N Pty Ltd.
Throughout the relationship the husband was able to split income with the wife as a tax minimisation method to the benefit of both parties during the relationship.
APPLICABLE LEGAL PRINCIPLES
In property settlement proceedings, the Court may make such order as it considers appropriate, altering the interests of the parties to the marriage in the property of the parties or either of them, including an order for a settlement of property in substitution for any interest in the property for the benefit of the parties, and an order requiring either or both of the parties to the marriage to make, for the benefit of either or both of the parties, such settlement or transfer of property as the Court determines (s 79(1) of the Family Law Act 1975 (Cth) (“the Act”)).
The Court cannot make an order unless it is satisfied that, in all of the circumstances, it is just and equitable to make the order (s 79(2)).
In considering what order (if any) should be made in property settlement proceedings, the Court is required to take into account the following (s 79(4)):
(a)The financial contribution made directly or indirectly by or on behalf of a party to the acquisition, conservation or improvement of any property of the parties or either of them, whether or not that property still exists;
(b)The contribution (other than financial) made directly or indirectly by or on behalf of a party to the acquisition, conservation or improvement of any property of the parties or either of them, whether or not that property still exists;
(c)The contribution made by a party to the welfare of the family constituted by the parties and any children, including any contribution made in the capacity of homemaker or parent;
(d)The effect of any proposed order upon the earning capacity of either party;
(e)The matters referred to in s 75(2) of the Act so far as relevant;
(f)Any other order made under the Act affecting a party;
(g)Any child support under the Child Support (Assessment) Act 1989 (Cth) that a party has provided, is to provide, or might be liable to provide for a child of the marriage.
The High Court of Australia in Stanford v Stanford[2] identified certain principles to be applied in property settlement proceedings. In particular, when considering whether it is just and equitable to make an order, it is firstly necessary to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.[3] Secondly, the discretion as to whether or not to make a property settlement order, although extraordinarily wide, must nevertheless be exercised in a principled way.[4] Thirdly, there is no presumption that the parties’ rights to or interests in property are or should be different from those that currently exist.[5] The consideration of whether it is just and equitable to make an order should not be considered by reference only to the matters in s 79(4). It is necessary to give separate consideration to s 79(2) and (4) and not to ‘conflate’ the two subsections.[6]
[2] (2012) 247 CLR 108 (“Stanford”).
[3] Ibid at 120, [37].
[4] Ibid at 120–121, [38].
[5] Ibid at 121, [40].
[6] Ibid.
Is it just and equitable to make an order?
The husband and the wife contend it is just and equitable to make an order. That position is understandable given that the husband and wife separated over three years ago and “there is not and will not thereafter be the common use of property” by the parties.[7] Additionally “the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the relationship”.[8] In such cases, the “just and equitable requirement is readily satisfied”[9] and I am satisfied in this case that it is just and equitable to make an order.
[7] Stanford (n 2) at 122, [42].
[8] Ibid.
[9] Ibid.
BALANCE SHEET ISSUES
The balance sheet (Exhibit 24) is reproduced below (with some amendments) and it is apparent that there are a number of disagreements about particular balance sheet items which will be discussed seriatim. Before doing so, I note that Exhibit 24 incorporates some items about which concessions or clarifications were made during submissions as follows:
(a)It is agreed that item 19 (balance of husband’s NAB account #...91) is $3,801;
(b)It is agreed that item 23 (the husband’s boat) should be included at a value of $25,000;
(c)It is agreed that item 27 (wife’s long service leave entitlements from NPL) will not be paid to the wife and should appear on the husband’s side of the ledger when calculating property to be retained;
(d)It is agreed that item 28 (wife’s long service leave entitlements from PPL) should be left out of the balance sheet but treated as a financial resource;
(e)The husband did not press the addback at item 29 of $730,000 (wife’s alleged undisclosed interest in OPL) but contends it should be taken into account as a s 75(2) factor. Accordingly it will not be included in the balance sheet;
(f)At item 52, if the wife is not permitted to keep the Suburb A property as sought by her, the quantum of capital gains tax (“CGT”) and realisation costs are agreed but as I intend to accede to the wife’s request that she retain the Suburb A property, the deduction is not included in the balance sheet but will be discussed when s 75(2) factors are considered;
(g)The addback at item 56 (“$142,651+” loan account increases) is not pressed by the wife but will be discussed when s 75(2) factors are considered. Accordingly, this sum is not to be included in the balance sheet.
I should also observe that although there was disagreement about the inclusion of a bank account in the wife’s name, self-styled as a trustee account for the child, Z, with a balance of $32,702, this account was not included by the parties in Exhibit 24. Each party made reference to the account in written submissions with the wife contending the funds are for Z’s future use and are sourced from the receipt by the wife of a carer’s allowance for Z given her diabetes. The husband contends that the funds should be included as the wife concedes that the funds were received by her as a carer’s payment and she controls the funds. No oral submissions addressed this issue and no explanation was made for the absence of the bank account in the balance sheet. I do not propose to include the funds. The wife gave a reasonable explanation for the setting up of the account and her intentions in relation thereto i.e. for Z’s future use.
Balance Sheet
As is apparent, the parties agree on most items in the balance sheet set out below, which sets out the property of the parties or either of them and the value to be attributed thereto. The items in bold type are the ones about which there is disagreement:
Ownership Description Wife's Value ($) Husband's Value($) ASSETS 1. 1 Joint D St, Suburb A 1,275,000 1,275,000 2. 2 Joint F Street, Suburb C 2,450,000 2,450,000 3. 3 Joint E Street, Suburb B 1,675,000 1,675,000 4. 4 W Shares in publicly listed companies 48,039 48,039 5. 5 H 10 ordinary shares in K1 Pty Ltd.
(Owns 50 percent interest in M Pty Ltd (trustee company for Coleman Property Trust))
1,281,810 1,281,810 6. 6 H Interest in Coleman Property Trust.
(Owns 20 percent interest in G Pty Ltd, 20 percent interest in G Unit Trust and 20 percent interest in partnership between Coleman Property Trust/H Property Trust and J Trust)
304,337 34,337 7. 7 H
Trustee
Interest in Coleman Holding Trust
(Owns:50 percent shares in NPL Pty Ltd and 100 percent shareholding in K2 Pty Ltd)
1,122,827 1,122,827 8. 8 W Shareholding in L Pty Ltd 41,309 41,309 9. 9 Joint Westpac offset account #...09 (Suburb B) 10 10 10. 10 Joint Westpac offset account #...84 (Suburb C) 10 10 11. 11 Joint Westpac offset account #...76 (Suburb A) 0 0 12. 12 Joint Westpac account number #...29 (@ 11 August 2021) 21,145 21,145 13. 13 W OO Bank account number #...44 (@ 11 August 2021) 23 23 14. 14 W OO Bank account number #...02 (@ 13 August 2021, as per updated disclosure from Wife) 3,862 3,862 15. 15 W Westpac account number #...74 (@ 11 August 2021) 6,690 6,690 16. 16 W Westpac account number #...37 (@ 11 August 2021) 1,417 1,417 17. 17 W Westpac account number #...27 (@ 11 August 2021) 15,547 15,547 18. 18 H NAB account number #...23 284 284 19. j9 H NAB account number #...91 3,801 3,801 20. 20 H Motor Vehicle 2 25,000 25,000 21. 21 Third party Motor Vehicle 3 (leased by husband) 0 0 22. 22 W Motor Vehicle 1 11,600 11,600 23. 23 H Recreational boat 25,000 25,000 24. 24 W Jewellery – wife 5,000 5,000 25. 25 H Jewellery (watches and wedding band) - husband 200 200 26. 26 H Long service leave / annual leave accrued from NPL 31,161 0 27. 27 W Long service leave / annual leave accrued from NPL
While these are the wife’s leave entitlements it is agreed that they will remain on the husband’s side of the ledger in property to be retained.
11,111 11,111 28. 28 W Annual leave and long service leave from PPL 0 0 29. 29 W Wife's undisclosed interest in OPL (as per husband's case)
The husband does not seek an addback of this sum but rather it should be taken into account as a s 75(2) factor.
0 0 Total Gross Assets 8,360,183 8,059,022 LIABILITIES 30. 30 H NAB Visa# …72 (@July 2021) 0 0
31. 31 Joint Suburb B Westpac Investment Loan #...35 (@ July 2021) 255,010 255,010 32. 32 Joint Suburb C Westpac Investment Loan #...88 333,502 333,502 33. 33 Joint Suburb A Westpac Investment Loan #...84 529,182 529,182 34. 34 W American Express account #...06 (incl JJ Accountants fees of $8,250, as per wife’s disclosure to husband on 15.08.2021) 8,250 0 35. 35 W Westpac credit card #...84 / # …44 (incl KK School fees of $8,462, as per wife’s disclosure to husband on 15.08.2021) 9,179 0 36. 36 W ANZ credit card #...94 / …10 0 0 37. 37 W LL Company American Express #...08, as per wife’s disclosure to husband on 15.08.2021) 92 0 38. 38 H Monies owing to Coleman Property Trust
236,022 236,022 39. 39 H Monies owing to Coleman Holding Trust 538,221 538,221 40. 40 H Monies owing to K1 Pty Ltd
177,284 177,284 41. 41 H Monies owing to K2 Pty Ltd
307,743 307,743 Total Liabilities 2,394,485 2,376,964 SUPERANNUATION 42. 42 H Super Fund 1 (@ July 2021) Accumulation 270,332 270,332 43. 43 H Super Fund 2 (@ July 2021) Accumulation 2,741 2,741 44. 44 W Super Fund 3 (@ 11 August 2021) Accumulation 123,978 123,978 45. 45 W Super Fund 4 (@ 11 August 2021) Accumulation 60,204 60,204 Total Superannuation 457,255 457,255 NET ACTUAL POOL 6,422,953 6,139,313 Addbacks/Notional Adjustments 46. 46 CPT Contingent realisation costs on sale of Property G as per report of single expert Mr MM para 21 (to be sold on husband’s case) 0 (28,900) 47. 47 CPT Contingent tax on sale of Property G as per report of single expert Mr MM para 21 (to be sold on husband’s case) 0 (6,355) 48. 48 K1 Pty Ltd Contingent tax liability to be paid (if Div 7A tax paid as per husband’s case) 0 (43,055) 49. 49 K2 Pty Ltd
2
Contingent tax liability to be paid (if Div 7A tax paid as per husband’s case) 0 (74,578) 50. 50 NPL Contingent tax liability to be paid (if Div 7A tax paid as per husband’s case) 0 (180,429) 51. 51 Joint Contingent CGT and realisation costs on sale of F St, Suburb C ($178,949, but included as $0 as neither party seeks orders for sale) 0 0 52. 52 Joint Contingent CGT and realisation costs on sale of Suburb A property as per supplementary report of single expert Mr MM (Suburb A property to be retained by wife on her case and to be sold on husband’s
case) ($166,368)The quantum is agreed and if the property is sold it is agreed this sum should be deducted but the wife wishes to retain the property and if she does it is agreed there will be no deduction.
0 0 53. 53 Joint Contingent CGT and realisation costs on sale of E Street, Suburb B ($251,776, but included as $0 as neither party seeks orders for sale) 0 0 54. 54 H Addback for Legal Fees paid by husband 234,914 0 55. 55 W Addback for Legal Fees paid by wife 122,856 122,856 56. 56 H Addback for increase in loan account balances owed by husband to K1 Pty Ltd, K2 Pty Ltd, CPT and CHT since 30 June 2018 and unexplained expenditure (as sought by wife)
$142,651+ not pressed as an addback but as a matter to take into account under s 75(2).
0 0 Total Notional Liabilities
0 (333,317) Total Addbacks 357,770 122,856 Net Overall “Pool” 6,780,723 5,928,852 Item 6: What is the market value of the remaining but unsold interest in Property G?
Item 6 values the Coleman Property Trust which has a 20 percent interest in G Pty Ltd, a 20 percent interest in G Trust and a 20 percent interest in the partnership between Coleman Property Trust, H Property Trust and J Trust. The difference between the parties in relation to value, relates to the value to be attributed to the unsold apartments in the Property G.
There are 6 one bedroom and 38 studio apartments remaining for sale in the Property G complex. Twenty-two of the one bedroom apartments were sold at about the time the building was strata-titled in 2012. The remaining apartments have been available for sale for about 10 years. The size of the apartments varies from 15 square metres to 54 square metres. Historically, the one bedroom apartments have been listed for sale individually but the studio apartments have always been listed in “one line” and never individually. The husband contends that although several offers have been received for the studio apartments, none have proceeded beyond due diligence. The studio apartments are subject to a management rights agreement which expires in 2025 but can be extended. One of the one bedroom apartments and 17 studio apartments can only be rented short term.
Mr NN is the single expert appointed to value the remaining apartments. The dispute between the parties is whether the apartments should be valued at a gross realisation value on an “as is” basis which takes into account the individual value of each unit and sale process over 18 months, or an “in one line” value on an “as is” basis which envisages the apartments would all be sold in one transaction. The difference in value ranges from $6,000,000 (gross realisation) to $4,650,000 (in one line). As can be seen from the balance sheet, the difference this makes to the value of the Coleman Property Trust is $270,000.
At the conclusion of the trial the husband proposed that if the lower value is adopted (as contended for by him) and the apartments eventually sell for a greater value, he would account to the wife for any sale greater than $4,650,000. I note that the apartments have been for sale for a very long time and any offers received have been at the lower end of the value assessed by Mr NN. In my view, the husband’s proposal appropriately avoids possible injustice to either party, particularly in circumstances where the husband cannot control how the apartments are sold. I propose to adopt the lower value of $4,650,000 for the Property G apartments.
Accordingly, the value of the Coleman Property Trust will be $34,337 for the purposes of the proceedings, but I will make an order for the husband to account to the wife should a higher sale price be achieved for the remaining apartments in the Property G complex.
Items 26: Should the husband’s annual and long service leave be included?
The husband’s long service and annual leave entitlements with NPL are $31,161 and have been deducted from the value of NPL by Mr MM as a future liability of NPL. The husband contends that he does not intend to take his leave entitlements as a lump sum and accordingly they should be treated the same as the wife’s entitlements from P Pty Ltd i.e. as a financial resource.
Generally speaking such entitlements are treated as a financial resource unless there is evidence that they will be received as a lump sum.[10] However, in this case the leave entitlements have had the effect of reducing the value of NPL, which benefits the husband. In those circumstances I consider it appropriate to include the sum in the balance sheet in order to neutralise the effect of the liability included in the valuation of NPL.
[10] Dawes & Dawes (1990) FLC 92-108 at 77,726 (“Dawes”); Gould & Gould (1996) FLC 92-657 at 82,774 (“Gould”); Tomasetti & Tomasetti (2000) FLC 93-023 at 87,379-87,381 (“Tomasetti”).
Items 34, 35 and 37: Should the wife’s credit cards be included?
The wife has a combined credit card debt of $17,521. The husband opposes the wife’s credit card debt being included in the balance sheet, contending that to do so would be unfair when the parties have been separated for over three years and there is no evidence “of the composition of these debts and why they ought be treated as a joint liability”. If the wife’s credit card debt is included then the husband submits that his credit card debt of $2,456 should also be included.
I was not taken to any evidence identifying the purpose of the expenditure creating the wife’s credit card debt but note that Exhibit 24 includes reference to the wife’s American Express credit card debt “including” fees to one of the joint experts and her Westpac credit card debt “including” school fees. In my view it would be unfair to include the wife’s credit card debt in circumstances where to do so would result in the husband contributing to the wife’s share of the joint expert fees, and there is an absence of evidence about how much of the credit card fees related to school fees when the husband has also paid school fees.
The fact that each party has a credit card debt will be a factor taken into account under s 75(2) of the Act.
Items 46 to 50: What tax and realisation costs should be included?
It is not in dispute that the Property G apartments are to be sold. Accordingly, I am not clear why the wife opposes items 46 and 47 being included in the balance sheet. Mr MM opines that on a sale of the Property G apartments for $4,650,000, the tax and realisation costs for the Coleman Property Trust will be $6,355 and $28,900 respectively.
The wife’s written submissions oppose the inclusion in the balance sheet of all notional tax and realisation costs (for all properties) as “neither party has any intention to sell/wind up entities” (save that if the Suburb A property is sold the parties agree that costs should be deducted).
The husband’s written submissions state only that the husband seeks to include the tax and realisation costs as quantified by Mr MM that will be incurred if the order sought by the husband is made.
No oral submissions addressed items 46 and 47. It seems to me that the tax and realisation costs assessed by Mr MM should be included as it is common ground that the Property G apartments are to be sold.
Items 48 to 50 concern contingent tax liabilities arising if the following Division 7A[11] loans are repaid now rather than deferring the repayment over a number of years. The husband does not wish to defer the repayment of these loans, which relate to the following:
(a)Loan owing by Coleman Holdings Trust to NPL;
(b)Loan owing by the husband to K1 Pty Ltd; and
(c)Loan owing by the husband to K2 Pty Ltd.
[11] The reference to Division 7A is a reference to Division 7A of the Income Tax Assessment Act 1977 (Cth) which requires loans made by a company to a shareholder or associate to be recorded in a formal loan agreement with interest payable. Without the loan agreement, the loan received by the husband will be treated as assessable income in his hands if he does not repay it in the same financial year of its receipt.
Mr MM identifies some practical issues with the husband paying out the loans now, as follows:
7. I observe that there may be practical issues likely regarding the Husband being able to declare and pay a dividend in [N Pty Ltd]. This is because Mr U is a 50% shareholder (via his Trust) and a Director and declaration of dividends is likely to require Mr U’s agreement. A dividend would also need to be paid to Mr U’s Trust in the same amount as any of the [Coleman Holdings Trust], as both [Coleman Holding Trust] and Mr U’s Trust hold 1 ordinary share each.
I note Mr U’s subsequent evidence that he does not oppose a dividend being declared to enable the payout of the loan owing by Coleman Holding Trust to NPL. Whether the loans are repaid now or in the future, the wife concedes that it is a “significant matter”[12] that needs to be taken into account, but contends that as she wishes to retain the Suburb A property the contingent liabilities should be taken into account as a s 75(2) factor. As long as the loans are taken into account, I do not propose to accede to the husband’s request that the wife be precluded from retaining the Suburb A property, which is an investment property producing an income and a property she sees advantage in retaining. I will take the contingent taxation liabilities into account as a s 75(2) factor.
Item 54: Should there be any addback for the husband’s paid legal costs from his alleged post separation earnings and insurance receipts?
[12] Rodgers & Rodgers (No 2) (2016) FLC 93-712 at 81,505 (“Rodgers”).
Whether or not legal fees are notionally added back is a matter for the discretion of the trial judge.[13] The source of the funds is of course important.[14] The Full Court of the Family Court of Australia (“the Full Court”) in Trevi & Trevi[15] said at [34]:
The guidelines emerging from Chorn should be read together and read conformably with the Full Court authorities upon which they are based. That being so, the delineations there referred to — “the funds used existed at separation … such that both parties can be seen as having an interest in them”; or “funds used to pay legal fees have been generated by a party post separation from his or her own endeavours” or received by a party “in his or her own right (for example, by way of gift or inheritance)” - cannot be seen as determinative of the exercise of discretion but, rather, as informing it.
[13] Chorn & Hopkins (2004) FLC 93-204 at 79,322, [56] (“Chorn”)
[14] Ibid.
[15] (2018) FLC 93-858 at 78,455, [34] (“Trevi”).
The wife argues that given the husband’s expenses as set out in his financial statement, it cannot be the case that he has paid the legal fees of $234,864 from post separation income. Although the husband’s weekly average income is $4,363 and his weekly personal expenditure is $2,554 i.e. he has an apparent surplus of $1,809, the husband agreed during cross-examination, that his average weekly dividends from K1 Pty Ltd of $1,634, “are required to be paid in order to meet the Division 7A [loan] obligations” and that without the dividends his income and expenses are almost “line ball”.
On 25 January 2020 the husband was admitted to hospital suffering from a serious virus which resulted in him spending 10 days in an ICU in an induced coma and on a ventilator. He was moved from ICU on 11 February 2020 and discharged from hospital on 17 February 2020. While the husband was able to undertake some work at home after his discharge, he did not return to his workplace until 1 July 2020. He received a lump sum trauma insurance payout of $191,441 on 11 August 2020. The husband received additional lump sums totalling $51,747 from the same insurance company which I assume represent his income protection payments. The husband’s entitlement under his trauma insurance cover was triggered by his stay in ICU for an extended period.
The husband is now in good health.
During cross-examination, the husband agreed that the premiums for the insurance policies were paid by NPL and that if not paid in this way he “would have received a more significant income”. Accordingly, it is argued by the wife that, at least up until separation in May 2018, she has made an indirect contribution to the policy premiums and, as such, the sum used to pay legal fees from the insurance payout should be added back into the balance sheet i.e. the wife contends for an addback of $234,914.
It is not in dispute that the husband has used the insurance payout (at least in part) to meet his legal fees. However, the husband argues that he used a combination of his post-separation income and the trauma insurance payout to meet his legal fees and the trauma insurance payout should be regarded as his alone. Given the husband’s concessions during cross-examination, it seems more likely that he used the trauma insurance and income protection payments to pay his legal fees than post separation income.
During the trial, I was not taken to any authority on the treatment of insurance payouts in property proceedings but the following authorities have considered this issue.
In Miller v Miller[16] the husband suffered a heart attack and received an insurance payout of $64,000. This payout was received after separation and treated by the trial judge as a
post-separation contribution. On appeal, Strickland J, sitting as the Full Court stated at [101]:In relation to “iii” and “iv”, this indicates the misguided premise on which the wife has pursued this ground of appeal. This payment was not a windfall. It was a payment received by the husband because he suffered a heart attack. It matters not that it was a minor attack from which he recovered. Despite the husband’s good fortune in this regard, his health into the future is “significantly compromised” as a result according to the evidence of his cardiologist. Thus, although the fact that it was a joint decision to take out the insurance and the fact that the premiums were maintained out of the parties’ joint funds can be treated as contributions by each of the parties, there still needed to be a life-threatening event before a payment could be made. It is simply not open to the wife to argue that the parties have contributed equally to this payout. It is the husband’s money to which the wife has made an indirect contribution of a relatively minor nature. Thus again there is no error by the Federal Magistrate here.
(Emphasis in original)
[16] [2009] FamCAFC 121.
In Yates v Yates[17] the Full Court considered whether the proceeds of an insurance policy should be treated as a contribution made by the wife or made by the parties jointly. In that case, the wife was diagnosed with cancer and received a lump sum payment of about $190,000 during the marriage. The parties used most of the proceeds to pay towards the home mortgage. From [99] the Full Court states:
However, we consider that this case is distinguishable from the decision in Miller because there the heart attack occurred and the proceeds were paid out to the husband after separation, and the issue was how to treat the use made by the husband of those proceeds. Here, all the relevant events including the circumstances surrounding the taking out and the maintenance of the insurance policy as well as the use of the funds during the marriage, but more particularly their use as an aspect of the parties’ ongoing financial relationship, occurred prior to separation.
In any event, it is still a matter of determining whose contribution it is, and there may be many permutations of that. In other words, it may be a sole contribution by the party whose insurance policy it is, it may be an equal contribution by both parties, or it may be that it is a joint contribution but with one party making a greater contribution than the other. Importantly that decision as to whose contribution it is will depend very much on the evidence that is before the judicial officer, and the difficulty in this case is the paucity of evidence in relation to the policy. Indeed, the policy was not even before the court and the only evidence was comprised in paragraph 82 of the wife’s affidavit where she deposed as follows:
In March 2007, I was diagnosed with cancer … I had an insurance policy and I received a lump sum payment of about $190,000. We used the sum of $120,000 to pay towards our home mortgage.
There was no evidence of when the policy was taken out, the circumstances in which it was taken out, who paid the premiums, how those premiums were paid, or what the financial or other arrangements were in relation to the policy.
[17] [2012] FamCAFC 138.
In Falcken & Weule[18] the Full Court considered whether a disability insurance payment to the respondent should have been treated as a joint contribution as the premiums of the policy were paid from joint funds. The wife suffered a severe stroke (prior to separation) and received $235,152.92 insurance payout. From [10] the Full Court states:
[18] [2019] FamCAFC 140.
The husband submitted that the primary judge erred by treating the receipt of the disability insurance payment as a significant contribution by the wife, instead of it being a joint contribution by both of them, because the premiums of the policy had been paid from joint funds. He also complained that the primary judge erred when he described the payment as having been received “quite late in the marriage” and over-emphasised the weight to be given to it.
…
The husband correctly points out that the primary judge did not expressly refer to any contribution made by him to the premiums for the income protection policy pursuant to which the wife received her payment. He submitted that this was an error and that his Honour should have found that the receipt and use of the capital disability insurance payment was an equal contribution by both of them and not one that favoured the wife.
…
We accept that this can be a relevant consideration but we do not accept the husband’s contention that it follows from the facts relied on by him that there has been an equal contribution to the receipt and use of the benefits of the policy.
…
As these authorities make clear, the issues is one of weight...
…
The upshot of these authorities is that a joint decision to take out insurance is a contribution by both parties. It is worth recording that in none of these cases was that contribution regarded as being anywhere close to equal.
The primary judge recognised the disability insurance payment was received by the wife for being totally and permanently disabled. It was compensation for her not being in a position to receive income for what would otherwise have been the rest of her working life.
It was, however, not used by the wife to support her over those years, but was entirely spent on supporting the family prior to separation.
Consistent with the above authorities, the primary judge found that this was a significant contribution by the wife.
In the current case, there is no evidence that the decision to take out trauma or income protection insurance was a joint decision, but the policies were taken out or at least maintained during the marriage and premiums were paid as part of the husband’s remuneration package. By the time the husband received the lump sums, the parties had been separated for over two years. The funds were paid as a result of a serious illness suffered by the husband, although there is no suggestion that the husband suffers any ongoing health consequences. I find that the wife has made an indirect contribution to the funds ultimately received but to a limited and minor extent. I do not propose to add back the funds used by the husband to pay his legal fees. I will nevertheless take into account when assessing contributions, the use of the funds by the husband to which the wife has made a minor contribution.
WHAT WEIGHT SHOULD BE ACCORDED TO THE MYRIAD OF CONTRIBUTIONS MADE BY THE PARTIES RESPECTIVELY OVER THE COHABITATION PERIOD OF 17 YEARS AND THE 3 YEARS POST SEPARATION, WITH THREE CHILDREN BORNE OF THE UNION?
It is apparent by the description of this issue, that the parties acknowledge that the Court is concerned with a “holistic” assessment of the “myriad” of contributions made by each party throughout the relationship.[19] Nevertheless, the parties have identified a number of additional issues relating to particular contributions i.e. initial contributions, gifts and post-separation contributions. The Full Court has emphasised in numerous cases that trial judges should avoid placing too much weight on any particular contribution at the expense of the “myriad” of contributions made by parties over many years of a marriage,[20] and that placing a percentage or “value” on any particular contribution is not an approach required by the Act nor approved of by the Full Court.[21] A trial judge should not weigh the myriad of contributions against a contribution introduced into the relationship by one party but rather treat that contribution as one of the myriad of the contributions made.[22] The Court is, of course, required to identify, weigh and assess all contributions made by each party throughout the relationship and subsequent thereto.[23]
[19] Dickons & Dickons (2012) 50 FamLR 244 at 250, [20]-[24] (“Dickons”).
[20] Wallis & Manning (2017) FLC 93-759 at 77,031, [19]-[20], [23] (“Wallis”); Williams & Williams [2007] FamCA 313 at [26], [32]; In the Marriage of Aleksovski (1996) FLC 92-705 at 83,437, 83,443; Dickons (n 20) at 249, [18]–[26] ; and Jabour & Jabour (2019) FLC 93-898 at 78,940, [73] (“Jabour”).
[21] Dickons (n 19) at 249, [26].
[22] Jabour (n 20) at 78,940, [73].
[23] Dickons (n 19) at 249, [20]; Wallis (n 20) at 77,031, [20]; Jabour (n 20) at 78,937-78,939, [60]–[64].
The Full Court in Dickons & Dickons[24] stressed that the “essential task [of a trial judge] is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship”.[25] The Full Court said from [20]:
Put another way, consistent with authority, the s 79 discretion involves as a necessary requirement that “... trial Judges weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such an assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment.” (In the Marriage of Aleksovski (1996) FLC 92-705 at 83,437). In Aleksovski, Kay J outlined the well-known “gold bar” analogy and said “[w]hat is important is to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship” (at 83,443).
Those same principles can be expressed as saying that the requirements of the section are met by approaching the assessment of contributions holistically and by analysing the nature, form, characteristics and origin of the property currently comprising that to which s 79 applies, and, in turn, analysing the nature, form and extent of the contributions (of all types) contemplated by s 79). That task is also undertaken by reference to the nature and form of the particular marriage partnership manifested by the particular circumstances of this particular marriage. Is it, for example, a relationship, as Deane J put it in Mallett at 640-641 “...where the parties have adopted the attitude that their marriage constituted a practical union of both lives and property...” or is it, for example, a union where parties lived very separate domestic and financial lives?
The analysis just referred to might, obviously enough, also involve an examination of when contributions were made and the use made of contributions. But that is quite different to attributing to, or searching for, a necessary causal connection between contributions and the available property as a requirement for a particular contribution having significance in the overall assessment of what is just and equitable.
We wish also to refer to the approach of the Federal Magistrate in attributing percentages to differing periods within the relationship, or types of contribution made. There is in our view little to be gained, and much to be said against, approaching the task of assessing contributions by attaching percentages to components of it. (The same, it might be said, applies to attributing a percentage to each of the relevant s 75(2) factors).
There can be little doubt that the classification of contributions by reference to terms such as “initial contributions”, “contributions during the relationship”, and “post-separation contributions”, can be helpful as a convenient means of giving coherent expression to the evidence in a s 79 case and to giving coherence to the nature, form and extent of the parties’ respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
Doing so is also consistent with the demands of authority that the ultimate assessment of contributions should be made without “...giving over-zealous attention to the ascertainment of the parties’ contributions...” (Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 at 524) and the well-established recognition in the authorities (acknowledged specifically by her Honour in this case) that the process required of the Court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise.
The necessarily imprecise “wide discretion” inherent in what is required by the section is made no more precise or coherent by attributing percentage figures to arbitrary time frames or categorisations of contributions within the relationship. Indeed, we consider that doing so is contrary to the holistic analysis required by the section and, in the usual course of events, should be avoided.
[24] (n 19).
[25] Ibid at 250, [24].
When considering the myriad of contributions made by the parties throughout the entire period, I note that both parties entered the relationship with property and both parties were employed full time until 2007. The husband was a professional and used his skills to develop a number of properties during the marriage. The wife reduced her employment to two days a week coinciding with the birth of the parties’ third child. By 2007 the parties had three children under four years of age. The wife played a greater role as homemaker and parent after that time and the husband played a greater “breadwinner” role. The parties had the assistance of their respective mothers in providing child care. I also note that Z’s diagnosis of diabetes at age six created additional responsibilities which were significantly met by the wife. Likewise, Y’ requirement for speech therapy which involved attendance at a speech therapist twice a week from 2008 to 2011 and once a week from 2012 to 2013 were largely attended to by the wife. All three children were active in sport and other activities and both parties were involved in facilitating the children’s participation. The parties were able to take advantage of the wife’s lower income in a tax effective way by distributing funds, earned by the husband, to the wife. [26] The husband had the use of insurance funds to which the wife made a minor contribution. Each party contributed to the best of their ability in their respective spheres.
[26] Grier & Malphas (2016) 55 Fam LR 107 at 132, [141].
The parties have identified particular contributions about which they each claim superiority and they are discussed in more detail below.
What was brought to the commencement of cohabitation by the parties in terms of value?
It must be acknowledged that identifying each party’s initial contribution and attributing a value thereto is an imprecise exercise and may or may not properly recognise the significance of such a contribution at some later time. Some assets will generally depreciate over time e.g. motor vehicles and furniture. Some assets may be attributed a value at the commencement of cohabitation but when realised, achieve a lower value e.g. shares. Other assets, when realised, may achieve a much higher value than that attributed to them at cohabitation e.g. a real property. Assets contributed to a relationship may prove to be the stepping stone from which other assets are created or expanded e.g. the proceeds of sale of real property may be utilised towards the purchase or improvement of other real property or a business introduced to the relationship may expand. Accordingly, while recognising all of those variables, I turn to consider the particular contributions by each party at the commencement of cohabitation on 25 April 2001.
Prior to the commencement of cohabitation, the parties jointly purchased three real properties. The Suburb B property was purchased by the husband and wife in 1998 for $180,000 and each party contributed equally to the deposit (the husband says they each contributed $9,000 and the wife says they each paid half of the $34,000 deposit) and jointly borrowed the balance. The old house on the property was rented out during the marriage until it was demolished in 2011 and a new house constructed in 2015.
In 1999, the parties jointly purchased the Suburb RR property for $130,000 or $140,000 and sold it a year later for $140,000 or $150,000. The parties equally contributed to the purchase price.
The Suburb A property was purchased in 1999 for $185,000 with the parties contributing equally to the deposit and jointly borrowing the balance. The Suburb A property was extensively renovated between March 2000 and 2002.
At the commencement of cohabitation it is not in contention that the husband owned the following property:
(a)A half interest in NPL owned through K1 Pty Ltd which had commenced in that form on 20 June 2000 (but was in effect a continuation of an existing business);
(b)100 percent shareholding in K1 Pty Ltd with net assets as at 30 June 2000 of $142,177 and as at 30 June 2001 of $166,838;
(c)An inherited one quarter interest in a Suburb W property which was sold on 6 June 2002 for $254,000;
(d)The balance of a NAB account #...91 of $1,749;
(e)A half interest in the Suburb A property;
(f)A half interest in the Suburb B property;
(g)A motor vehicle (purchased on 5 April 2001 for $55,124);
(h)Furniture; and
(i)An interest in superannuation of about $15,000.
The husband places a value on his initial contributions of at least $399,972. The wife concedes the nature of the contributions contended for by the husband although she contends the value of his interest in K1 Pty Ltd was $153,427 and the wife did not concede any value for the husband’s interest in the Suburb W property or his car. Leaving aside the husband’s interests in the Suburb A and Suburb B properties, the wife contends that the husband’s initial contributions were about $185,176 and about $20,000 more than her initial contribution.
At the commencement of cohabitation the wife owned the following property:
(a)Various bank account balances of about $72,935;
(b)Savings plan of $8,538;
(c)L Pty Ltd of $536;
(d)Share portfolio of $55,301;
(e)Superannuation of $11,380;
(f)Personal effects of $15,000;
(g)A half interest in the Suburb A property; and
(h)A half interest in the Suburb B property.
It is problematic that the wife did not explain why she was able to produce some documents but not others. For instance, she did not say that she asked her father and he refused to provide them to her or that they no longer exist. As already noted above, the wife’s father seemed more than willing to assist the wife in these proceedings. In the absence of any evidence that the wife even made an enquiry of her father to produce the proof that the funds were paid into his superannuation fund, it is difficult not to draw some adverse inference against the wife for her failure to “give full and frank disclosure of all information relevant to the case”[31] (emphasis added).
[31] The rule applicable at the time was r 13.01 of the former Rules which is now r 6.01 of the Rules.
I accept the husband’s submissions that when a failure to comply with obligations of disclosure are established the following principles apply: [32]
(a) A party should not be able to take advantage of his or her own non-disclosure;
(b) If there is sufficient evidence to support a finding that a party has failed to make full disclosure the court has jurisdiction to make an order in relation to unidentified or undisclosed property;
(c) Where there is clear evidence of non-disclosure the court should not be unduly cautious in making findings in favour of the other innocent party;
(d) Failure by a party to fulfil its duty of disclosure does not relieve the court of its responsibility of applying the provisions of the Act in light of such findings as can be made.
[32] Black & Kellner (1992) FLC 92-287; Weir & Weir (1993) FLC 92-338; cf In the marriage of Monte (1986) FLC 91-757. See also: Chang and Su (2002) FLC 93-117; Gould and Gould (2007) FLC 93-333; Hamza v Magdi [2011] FamCA 206; and Lenardi v Lenardi [2011] FamCA 266.
The conduct of the wife and her father in relation to the operation of bank accounts and in relation to the operation of OPL certainly raise more questions than they answer and it seems to me that, having established a failure to comply with her obligations to make full and frank disclosure, it is open to infer that the wife has available to her funds that have not been disclosed although determining a quantum is impossible. In my view this issue is a matter that should be taken into account as a s 75(2) factor.
Conclusion on contributions
As acknowledged by the parties, their respective contributions were many and varied i.e. there were a “myriad” of contributions. Each party introduced assets of value and each party made direct and indirect financial contributions throughout the marriage, although the husband’s direct and indirect financial contributions likely exceeded the wife’s. Each party also made contributions to the welfare of the family, although the wife’s contribution likely exceeded the husband’s at least from 2007. In the main, each party contributed to the best of their abilities in their respective and overlapping spheres. When making the leap from qualitative to quantitative,[33] I conclude that contributions should be regarded as equal.
[33] Steinbrenner & Steinbrenner [2008] FamCAFC 193 at [234].
WHEN CONSIDERING S 75(2) FACTORS, WHAT ADJUSTMENT, IF ANY, SHOULD BE MADE TO EITHER PARTY?
The following matters have been identified by the parties as relevant factors when considering s 75(2):
(a)The likely future earning disparity between the husband and the wife;
It is accepted by the husband that there will continue to be an earning disparity favouring him even if the wife increases her employment and as such he concedes an adjustment of five percent should be made in the wife’s favour for this factor.
While that concession is made by the husband, I do not propose to apportion a percentage to each party for each relevant s 75(2) factor that may favour them. It is not a requirement of s 79 of the Act and it is an approach disapproved of by the Full Court.[34] All factors relevant under s 75(2) will be taken into account and an overall adjustment made if required after weighing each factor.
(b)The unexplained expenditure by the husband of $142,650 enabled by the increase in his personal inter-entity loans in the period 30 June 2018 to 30 June 2020 in circumstances where the husband continued to receive his salary but also had additional funds comprising trauma insurance of $243,199 (as noted earlier in these Reasons, it is more likely that the sum for the trauma payout was $191,000 and the balance income protection payments) and funds from an offset account of $158,095 (the wife retained a similar sum from the offset account);
[34] Dickons (n 19) at 250, [23].
The husband contends that an allegation of ‘unexplained expenditure’ was not an issue addressed by him in his material because it was not raised as an issue in the proceedings until very late. He disputes any extravagant or unexplained expenditure and contends that his expenditure is transparent as all funds have gone into and out of the one account – #...91 (Exhibit 14 was tendered in answer to challenges to his expenditure for the period from 23 May 2020 to 30 June 2021). The husband also relies upon evidence from his accountant that his personal loan accounts increased by $105,315 not $142,650 and that $82,819 relates to interest charged on the Division 7A loans and $19,030 related to vehicle expenses. The husband’s invitation for the wife’s accountant to contact his accountant to clarify the husband’s loan accounts was not taken up by the wife.
Exhibit 21 appears to corroborate the wife’s contention that the husband’s personal loan accounts increased from 1 July 2018 to 30 June 2020 by $142,650. This was the sum upon which the wife focussed during cross-examination of the husband. However, I have no reason to doubt the husband’s accountant’s evidence that $105,315 was not received by the husband as cash, and the balance of $37,335 could have been explained had the wife taken the opportunity to have her accountant pursue the issue as invited. When considering the husband’s after separation expenditure, I note that the husband obtained and furnished rental accommodation before moving into the Suburb B property in May 2020 while the wife had the advantage of remaining in the Suburb C property. (Although the wife is critical of the delay by the husband moving into the Suburb B property after the tenant vacated, this period coincided with the husband’s acute illness). I further note that after separation, both parties had access to offset accounts and joint funds until December 2019. I was not taken to any particular item/s of expenditure in Exhibit 14 by the wife and invited to find extravagance by the husband in his expenditure. A trial is not a place for a de facto audit. If this were an issue to be pursued, the wife could have utilised the single expert to address the issue. I am not persuaded that alleged unexplained expenditure is a factor to be weighed against the husband.
(c)The failure by the wife to provide full and frank information about the sale proceeds of OPL in 2007;
As already discussed earlier in these reasons, the unsatisfactory evidence relating to the numerous deposits and withdrawals from the wife’s numerous bank accounts and absence of evidence to substantiate the bare denials of the wife and her father that the wife did not receive a share of the proceeds of sale of OPL, together with the unusual arrangements and unsatisfactory explanation surrounding the wife’s involvement in the OPL business permit, a robust view to be taken of the wife’s financial circumstances. While it is impossible to quantify any undisclosed funds, I find that it is more likely than not that the wife has access to funds that she has not disclosed in the proceedings.
(d)Credit card liabilities;
The wife has credit card liabilities of $17,521 as compared with the husband of $2,456. The fact that the wife has a greater liability than the husband is a matter that favours the wife.
(e)Wife’s long service leave entitlements of $14,987 from P Pty Ltd;
The wife’s long service leave entitlements are a financial resource available to her in the future although in a modest sum.
(f)The contingent taxation liabilities on repayment of Division 7A loans by the husband;
The single expert has calculated contingent taxation payable on the repayment of the husband’s Division 7A loans in the sum of $298,062. The husband proposed in his case that the loans be repaid from the proceeds of sale of the Suburb A property. The wife wishes to retain the Suburb A property and I intend to permit her to do so. The loans owing to NPL by Coleman Holding Trust could be repaid if a dividend is declared and paid by NPL and Mr U contends that he would not oppose that course. The husband might also use funds received from the wife pursuant to the order I propose to make but I cannot predict with certainty that he will do so. He has the option not to pay out the loans at this time. Nevertheless, the wife concedes that the contingent taxation liability is a “significant matter”[35] that should be taken into account and I intend to do so.
(g)Wife has a debt to her parents for $100,000 for legal fees and has entered into a loan agreement with them to repay that sum;
[35] Rodgers (n 12) at 81,505.
The husband disputes the existence of any loan agreement and no such document was tendered. The loan agreement is not included as a document disclosed in Exhibit 15. The wife has not satisfied her evidentiary onus in relation to this alleged debt.
(h)Each party will retain property, which, when sold will attract CGT.
Neither party has an intention to sell the home in which they plan to live in the foreseeable future. The wife intends to sell the Suburb A property “within several years”. Given the uncertainties surrounding any contingent CGT neither party submitted any adjustment was warranted.
The single expert estimated the capital gains tax on the various properties as follows:
(i)Suburb A property - $128,106;
(ii)Suburb C property - $105,449; and
(iii)Suburb B property - $201,526.
Each party will retain property for which future CGT will be payable, if sold. If the wife retains the Suburb A property and the Suburb C property as proposed by her, the contingent CGT will be more than the husband’s on the Suburb B property.
If the wife is required to make a payment to the husband to achieve a just and equitable outcome, and is unable to raise the funds, she may have to sell the Suburb A property. In such circumstances she would also incur realisation costs. No submissions were made to this effect but it is nevertheless a factor to which I have some regard. Accordingly, while a sale is a possibility, it would not seem to be inevitable because the wife has a capacity to work more than two days per week (despite her wish not to) and the Suburb A property is an income producing asset. The combination of these latter factors may improve the wife’s capacity to borrow sufficient funds to pay out the husband without resorting to a sale.
(i)The wife has the care of two of the parties’ three children. X is in grade 12 and will be 18 years of age next year but intends undertaking tertiary studies. Z is in grade nine and 14 years of age. Z suffers from diabetes.
The wife will likely have the ongoing financial and emotional support of X (to a limited extent once she turns 18) and Z. Both children attend private schools and X plans to undertake a double degree commencing in 2022 and the wife anticipates she will continue to live with her from some years (although the husband contends that X is likely to move interstate). While Z’s condition involves less intervention and management by the wife than it did when she was younger, the recent mix up in the insulin dosage demonstrates that the wife will continue to have an added responsibility in assisting Z manage her illness.
(j)The husband has the care of Y who has recently turned 16 and is in grade 10.
Y also attends a private school and it seems likely that he will continue to be supported financially and emotionally by the husband.
(k)The interest only periods for the three loans secured on the Suburb B property, the Suburb C property and the Suburb A property are about to or have expired and may result in higher repayments unless some further arrangements are negotiated.
Increased loan repayments will impact both parties but if the wife retains the Suburb A property she will have higher repayments and if she borrows money to pay out the husband her repayments will be higher still. The wife will nevertheless receive rent for the Suburb A property and has a greater earning capacity that currently utilised. Despite the wife’s preference not to increase her employment hours, she has extensive experience in financial services, having been employed in that sector since 1993. While her current employer may not be able to offer her increased hours, the evidence does not persuade me that the wife could not increase her employment elsewhere, if she chose to do so. I accept that the management of Z’s diabetes is a factor which may place some limitations on the wife’s earning capacity although not to the extent claimed. In this context, I note that Z’s condition is able to be monitored by the wife remotely.
(l)The single expert raised in his report dated 2 August 2021 an “asymmetry” in inter-entity loans of $73,191 (NPL loan to Coleman Holding Trust of $642,600 compared with the liability recorded by Coleman Holding Trust of $569,409) and stated – “[t]he extent to which this amount .. may misstate the overall position depends on how the amount … advanced by N Pty Ltd to Coleman Holding Trust has been applied (i.e. used) by Coleman Holding Trust”.
When the husband’s accountant was asked about this apparent disparity he responded as follows:
The 2021 financial statements for N Pty Ltd have not been finalised. I'm not sure where they got the figure of $642,600 from. I suspect this is because in the MYOB records the dividends paid by NPL are recorded by the bookkeeper as loans by NPL to Coleman Holding Trust. But after the bookkeeper passes the file to us, we record the dividends that were declared. Whilst the file is still mid-preparation at the moment, it looks to me like the loan balance may actually slightly decrease at 30/6/21 rather than be increased from the 30 June 2020 balance.
Ultimately, the evidence does not permit me to make a finding one way or the other as to the impact of this “asymmetry”.
(m)Each party will retain a home to live in and other assets that will provide them with a reasonable standard of living.
It is agreed between the parties that the wife will retain the Suburb C property and the husband will retain the Suburb B property. In addition, each party will retain other assets of some significant value and each party has an earning capacity, although it is conceded by the husband that his earning capacity is greater than the wife’s.
Conclusion on s 75(2) factors
Various factors favour each party but the significant factor favouring the wife is the earning disparity and the significant factors favouring the husband are the wife’s failure to comply with her obligations of disclosure and the contingent Division 7A taxation liabilities. On balance, when considering and weighing all factors, I conclude that an adjustment of 2.5 percent (from my finding of equality of contributions) should be made in the husband's favour i.e. an overall differential of five percent.
WHAT PROPERTY ORDER IS APPROPRIATE TO ACHIEVE A JUST AND EQUITABLE OUTCOME?
The property of the parties or either of them will be divided so to reflect the husband receiving 52.5 percent and the wife receiving 47.5 percent of the net overall asset pool. The wife will retain the Suburb C and Suburb A properties and the other assets and liabilities listed on her side of the ledger and will be required to pay the husband $330,265. The respective positions of the parties is reflected in the table below:
Ownership Description Wife to retain Husband to retain ASSETS 1. 1 Joint D St, Suburb A 1,275,000 2. 2 Joint F Street, Suburb C 2,450,000 3. 3 Joint E Street, Suburb B 1,675,000 4. 4 W Shares in publicly listed companies 48,039 5. 5 H 10 ordinary shares in K1 Pty Ltd.
(Owns 50percent interest in M Pty
Ltd (trustee company for Coleman Property Trust)
1,281,810 6. 6 H Interest in Coleman Property Trust.
(Owns 20 percent interest in G Pty Ltd 20 percent interest in G Trust
20 percent interest in partnership between CPT/H Property Trust and J Trust)
34,337 7. 7 H
Trustee
Interest in Coleman Holding Trust
(Owns:50 percent shares in NPL and 100percent shareholding in K2 Pty Ltd
1,122,827 8. 8 W Shareholding in L Pty Ltd 41,309 9. 9 Joint Westpac offset account #...09 (Suburb B) 10 10. 10 Joint Westpac offset account #...84 (Suburb C) 10 11. 11 Joint Westpac offset account #...76 (Suburb A) 0 12. 12 Joint Westpac account number #...29 (@ 11 August 2021) 0 21,145 13. 13 W OO BANK account number #...44 (@ 11 August 2021) 23 14. 14 W OO BANK account number #...02 (@ 13 August 2021, as per updated disclosure from wife) 3,862 15. 15 W Westpac account number #...74 (@ 11 August 2021) 6,690 16. 16 W Westpac account number #...37 (@ 11 August 2021) 1,417 17. 17 W Westpac account number #...27 (@ 11 August 2021) 15,547 18. 18 H NAB account number #...23 284 19. j9 H NAB account number #...91 3,801 20. 20 H Motor Vehicle 2 25,000 21. 21 Third party Motor Vehicle 3 (leased by husband) 0 22. 22 W Motor Vehicle 1 11,600 23. 23 H Recreational boat 25,000 24. 24 W Jewellery – wife 5,000 25. 25 H Jewellery (watches and wedding band) - husband 200 26. 26 H Long service leave / annual leave accrued from NPL 31,161 27. 27 W Long service leave / annual leave accrued from NPL (although in the wife’s name it will be retained by the husband)
11,111 28. 28 W Annual leave and long service leave from PPL 0 29. 29 W Wife's undisclosed interest in O Company (as per husband’s case)
0 Total Gross Assets 3,858,497 4,231,686 LIABILITIES 30. 30 H NAB Visa# …72 (@July 2021) 0
31. 31 Joint Suburb B Westpac Investment Loan #...35 (@ July 2021) ( 255,010) 32. 32 Joint Suburb C Westpac Investment Loan #...88 (333,502) 33. 33 Joint Suburb A Westpac Investment Loan #...84 (529,182) 34. 34 W American Express account #...06 0 35. 35 W Westpac credit card #...84 / # …44 0 36. 36 W ANZ credit card #...94 / …10 0 37. 37 W LL Company American Express #...08 0 38. 38 H Monies owing to Coleman Property Trust
(236,022) 39. 39 H Monies owing to Coleman Holding Trust (538,221) 40. 40 H Monies owing to K1 Pty Ltd
(177,284) 41. 41 H Monies owing to K2 Pty Ltd
(307,743) Total Liabilities (862,684) (1,514,280) SUPERANNUATION 42. 42 H Super Fund 1 (@ July 2021) Accumulation 270,332 43. 43 H Super Fund 2(@ July 2021) Accumulation 2,741 44. 44 W Super Fund 3 (@ 11 August 2021) Accumulation 123,978 45. 45 W Super Fund 4 (@ 11 August 2021) Accumulation 60,204 Total Superannuation 184,182 273,073 NET ACTUAL POOL 3,179,995 2,990,479 Addbacks/Notional Adjustments 46. 46 CPT Contingent realisation costs on sale of Property G as per report of single expert Mr MM para 21 (28,900) 47. 47 CPT Contingent tax on sale of Property G as per report of single expert Mr MM para 21 (6,355) 48. 48 K1 Pty Ltd Contingent tax liability to be paid (if Div 7A tax paid as per husband’s case)
Taken into account as a s 75(2) factor
0 49. 49 K2 Pty Ltd Contingent tax liability to be paid (if Div 7A tax paid as per husband’s case)
Taken into account as a s 75(2) factor
0 50. 50 NPL Contingent tax liability to be paid (if Div 7A tax paid as per husband’s case)
Taken into account as a s 75(2) factor
0 51. 51 Joint Contingent CGT and realisation costs on sale of F St, Suburb C ($178,949, but included as $0 as neither party seeks orders for sale) 0 52. 52 Joint Contingent CGT and realisation costs on sale of Suburb A property as per supplementary report of single expert Mr MM (Suburb A property to be retained by wife on her case and to be sold on husband's case) ($166,368)
The possibility of a sale is taken into account as a s 75(2) factor
0 53. 53 Joint Contingent CGT and realisation costs on sale of E Street, Suburb B ($251,776, but included as $0 as neither party seeks orders for sale) 0 54. 54 H Addback for Legal Fees paid by husband 0 55. 55 W Addback for Legal Fees paid by wife 122,856 56. 56 H Addback for increase in loan account balances owed by husband to K1 Pty Ltd, K2 Pty Ltd, CPT and CHT since 30 June 2018 and unexplained expenditure (as sought by wife) 0 Total Notional Liabilities
0 (35,255) Total Addbacks 122,856 0 Net Overall “Pool” 3,302,851 2,955,224 Cash payment (330,265) 330,265 Net assets retained by each party 2,972,586 3,285,489
I am satisfied that the proposed property settlement achieves a just and equitable outcome with a differential of $312,903 in the husband’s favour. The wife will have 90 days in which to pay the cash sum of $330,265 to the husband.
I certify that the preceding one hundred and forty-nine (149) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carew. Associate:
Dated: 13 October 2021
0
9
0