Conti and Conti
[2012] FamCA 290
•4 May 2012
FAMILY COURT OF AUSTRALIA
CONTI & CONTI [2012] FamCA 290
FAMILY LAW – PROPERTY – Net negative property pool – Treatment of unsecured debts – Whether parties’ superannuation interests should be regarded as separate pool – Power to make a s 79 property settlement order where net negative pool – The need if possible to make an order to finally determine the financial relationship between the parties – If no order made the parties' financial relationship cannot be finally determined – Despite net negative pool the parties' circumstances are such that it is just and equitable to make an order dealing with joint moneys in a solicitors’ trust account for the payment of certain debts – Parties to retain their respective superannuation interests – Husband to retain his motor vehicle – Wife to retain accident moneys when received
Family Law Act 1975 (Cth) s 4, s 79, s 75(2)
Child Support (Assessment) Act 1989 (Cth) s 117(2)Aleksovski & Aleksovski (1996) FLC 92-705
Australian Securities & Investments Commission v Rich (2003) FLC 93-171
Coghlan & Coghlan (2005) FLC 93-220
Farmer and Bramley (2000) FLC 93-060
Figgins and Figgins (2002) FLC 93-122
K & K [2004] FamCA 360
Kessey and Kessey (1994) FLC 92-495
Kowaliw & Kowaliw (1981) FLC 91-092
LAM & RAM (2005) FamCA 868
Pierce and Pierce (1999) FLC 92-844
Phillips and Phillips (2002) FLC 93-104
Prantage & Prantage [2001] FamCA 1198
Sippel & Sippel [2004] FamCA 201
Trustee of the Property of G Lemnos, a Bankrupt & Lemnos (2009) FLC 93-394
Williams & Williams (1995) 61 ALR 215
Wentner & Rater [2010] FamCA 1188
Zorbas & Zorbas (1990) FLC 92-160
APPLICANT: Ms Conti
RESPONDENT: Mr Conti
FILE NUMBER: BRC 436 of 2009
DATE DELIVERED: 4 May 2012
PLACE DELIVERED: Brisbane
PLACE HEARD: Brisbane
JUDGMENT OF: O’Reilly J
HEARING DATE: 20 and 21 October 2011 REPRESENTATION
SOLICITOR FOR THE APPLICANT: Mr Carmont
Somerville Laundry Lomax
(pro bono)
THE RESPONDENT: In person Orders
IT IS ORDERED
1.The parties’ property proceedings be further listed at 9.30am on Monday 4 June 2012 for the pronouncement of s 79 order in the terms of Annexure A, subject to paragraph 2.
2.The Docket Registrar provide a copy of these orders and reasons for judgment to the Proper Officer, Deputy Commissioner of Taxation at Brisbane and the Proper Officer, Centrelink at Brisbane, with a covering letter drawing attention to the s 79 order I propose to make, subject to the Court receiving any letter of objection by 4.00pm on Thursday 31 May 2012.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Conti & Conti has been approved by the Chief Justice pursuant to s 121(9)(g) of the Act.
ANNEXURE A
IT IS ORDERED
Pursuant to s 79 of the Family Law Act 1975 (Cth) the property and assets of the parties and either of them be divided as follows:
1.The parties within 7 days do all things necessary and sign all documents and authorities necessary to direct C Law Firm to pay the moneys in the trust account of C Law Firm as follows:
a. S School $10,447.00
b. B Accounting for wife's debt $3822.50
c. B Accounting for husband's debt $5934.00
d. Bookkeeper debt $2112.00
e. Further fees payable to C Law Firm (if any) in relation to making the payments in this order
f. The balance to the Australian Taxation Office in respect of the husband's taxation debt.
2.The husband have his interest in his Volkswagen motor vehicle.
3.The wife retain the net proceeds (if any) in relation to her accident claim for the accident which occurred on 3 June 2008.
4.The wife be solely liable for the payment of her Centrelink debt.
5.The parties have and retain their respective superannuation interests.
6.Unless otherwise specified in this order:
a. each party is soley entitled to the exclusion of the other to all property and assets (including choses in action) in the possession of that party as at the date of this order
b. each party is solely entitled to the credit of any moneys in any bank accounts in his or her name
c. each party is to forego any claim he or she may have to any superannuation benefits belonging to or earned by the other
AND IT IS FURTHER ORDERED
7.The parties are to sign all documents necessary to give effect to this order and in default a Registrar is empowered to sign all such documents.
8.All other applications in the wife’s initiating application filed 18 January 2011 and the husband’s further amended response filed 11 July 2011 are dismissed.
AND IT IS FURTHER ORDERED
9.The interim order made on 10 June 2011 is discharged.
FAMILY COURT OF AUSTRALIA AT BRISBANE FILE NUMBER: BRC 436 of 2009
Ms Conti Applicant
And
Mr Conti Respondent
REASONS FOR JUDGMENT
Applications
1.Ms Conti (the wife) and Mr Conti (the husband) each seek a just and equitable property settlement by way of order under s 79 of the Family Law Act1975 (Cth) (the Act).
2.The wife seeks (amended initiating application filed 18 January 2011, as modified by her case outline document filed 18 October 2011) that:
a.the balance proceeds of sale of the parties’ former matrimonial home, held in the trust account of C Law Firm, about $60,218, be applied to pay debts of the parties, namely:
i.C Law Firm in payment of any final invoice
ii.S School
iii.outstanding debts in the names of the wife and the husband with:
(i)Australian Taxation Office
(ii)Centrelink
(iii)the parties’ accountant
(iv)the husband’s bookkeeper
b.the husband have his Volkswagen motor vehicle registered in his name
c.the wife have any moneys which she may receive pursuant to a motor vehicle accident claim and
d.the parties have and retain their respective superannuation interests.
3.The husband seeks (further amended response filed 11 July 2011) that:
i.he have 100% “of the remaining assets” of the parties
ii.he have the wife’s “accident claim money” as a “lump sum” for “outstanding child support”
iii.he have his Volkswagen motor vehicle
iv.he have both the husband’s and the wife’s superannuation interests
v.the wife pay him $25,000 for “damage to the husband’s motor vehicle and loss of income caused by the wife when the wife stole and ransomed the vehicle”.
4.I would interpret the husband’s claim in relation to alleged damage to his motor vehicle as one to be regarded as a waste claim, to be considered either as an addback to the property pool against the wife, or to be considered under s 75(2)(o). The parties however chose to have the husband’s damages claim dealt with in relation to the pool as a claimed addback against the wife. (The husband’s claim for loss of income relates to alleged loss of post separation income, however, as will be seen nothing turns on this).
5.The husband’s claim in relation to the wife’s accident claim moneys being awarded to him for “outstanding child support” is incompetent, in particular because at the time of the trial there was no outstanding assessed child support payable by the wife to the husband.
6.If the wife’s accident claim had resulted in any lump sum available to her at the time of the trial, there is no reason why I would not have included such in the pool in the ordinary way.
7.However, at the time of the trial the wife’s accident claim remained unresolved, and so is a matter which, necessarily, I will consider under s 75(2)(o).
Relevant background facts
8.The wife is 43 years and the husband 50 years.
9.The parties married in October 1991, and separated on 12 September 2008. They commenced cohabitation shortly before the marriage, in September 1991.
10.The period of their cohabitation and marriage was thus about 17 years.
11.There are 3 children of the marriage, D 18 years, J 16 years and T 14 years.
12.J and T live with the husband. D attends university in Brisbane. She lives independently.
13.Consent orders were made on 21 October 2011 in relation to J and T, that they live with the husband and spend time with and communicate with the wife as provided in those orders.
14.The parties each live in the Gold Coast region.
15.The husband is a licensed tradesman, operating a business as such as a sole trader. He says that his income is about $26,000 per year. He lives in rented premises with J and T, paying about $500 per week rental.
16.The husband, at the time of the trial, had not repartnered.
17.The wife, at the time of the trial, was unemployed. She has training and experience in clerical work. She also has training in the fitness industry. Her 2010 tax return shows a net income of about $19,000, earned at two clerical positions. At the time of the trial she was and had been in receipt of the Newstart allowance from about April or May 2011, and about to complete a course in the finance industry. She said that she was “trying to get a job”, and had applied for “over 50 jobs”, for office work. If employed in a clerical position she estimated that she could earn $20-22 per hour, with perhaps maximum $48,000 per year gross being, on her best estimate, less than $1000 per week gross.
18.At the time of the trial, in addition to the Newstart allowance, the wife’s father Mr L from time to time would give her ad hoc amounts of about $200. The wife said “I basically live hand to mouth all the time”.
19.The wife has repartnered with Mr P. Mr P is employed in the maritime industry earning at best, according to the wife, USD160,000-200,000 per year if full time, however, because the work is difficult and M P does not wish to be “at sea” 52 weeks per year, he chooses not to work full time.
20.The wife rents an apartment costing $540 per week.
21.When Mr P is in Australia the wife and Mr P share the rent and grocery bills, however, when he is away she relies on the Newstart allowance and cash from time to time provided by her father.
22.Presently neither party owns any real property.
Nature and value of the asset pool
23.The parties provided a joint balance sheet, agreeing on some items, and disputing other items. It is convenient to set out the balance sheet. There were 3 or 4 earlier versions of the balance sheet, as a schedule, showing the areas of agreement and disagreement. The one I set out is the final version.
24.Below the schedule, I will deal with relevant matters concerning each item in it, determine the matters in dispute and make observations.
SCHEDULE
| Ownership | Description | Wife’s value | Husband’s value | ||
| ASSETS - Agreed | |||||
| 1 | J | Trust account from sale of the former matrimonial home at [Gold Coast suburb W] | 60,218.00 | 60,218.00 | |
| 2 | H | Volkswagen [motor vehicle] | 7,500.00 | 7,500.00 | |
| Total | $67,718.00 | $67,718.00 | |||
| ADDBACKS - Claimed by husband against wife | |||||
| 3 | W | Damage to parties' Chrysler […] motor vehicle when in possession of wife post separation | Disputed | 3,994.00 | |
| 4 | W | 120,000km service of Chrysler […] motor vehicle before its sale | Disputed | 1,300.00 | |
| 5 | W | Loss of income or potential income to husband while Volkswagen motor vehicle in wife's possession for 10 days and further 5 days for alleged repairs | Disputed | 25,000.00 | |
| 6 | W | Alleged waste by wife of value of 3 businesses | Disputed | 42,000.00 | |
| 7 | W | Value of alleged insurance claim by wife for stolen jewellery | Disputed | 4,100.00 | |
| Total | Nil | $76,394.00 | |||
| LIABILITIES - Amounts agreed but liability and incidence of liability disputed | |||||
| 8 | H/W? | [S School] | 10,447.00 | 10,447.00 | |
| 9 | W | Australian Taxation Office wife | 28,072.00 | Disputed | |
| 10 | W | Centrelink wife | 29,180.62 | 29,180.62 | |
| 11 | H | Australian Taxation Office husband - subject to his ability to negotiate less - tax years 2000-2009 | 126,673.00 | 126,673.00 | |
| 12 | W | [B Accountants] wife | 3,822.50 | 3,822.50 | |
| 13 | H | [B Accountants] husband | 5,934.00 | 5,934.00 | |
| 14 | J | Bookkeeper | 2,112.00 | 2,112.00 | |
| Total | $206,241.12 | $178,169.12 | |||
| SUPERANNUATION - Agreed | |||||
| Member | Name of Fund | Type of Interest | Wife’s value | Husband’s value | |
| 15 | W | Colonial Super Retirement | Accumulation | 13,687.97 | 13,687.97 |
| 16 | H | Colonial Super Retirement | Accumulation | 16,441.40 | 16,441.40 |
| Total | $30,129.37 | $30,129.37 | |||
| FINANCIAL RESOURCES - Disputed | |||||
| Ownership | Description | Wife’s value | Husband’s value | ||
| 17 | Accident claim wife | E15,000.00 | E15,000.00 | ||
| Total | $E 15,000.00 | $E 15,000.00 | |||
Determination of disputed items and observations
Item 1
25.It is agreed that the balance proceeds of sale of the former matrimonial home, held in the trust account of C Law Firm, is $60,218.
Item 2
26.The husband has a Volkswagen motor vehicle registered in his name.
27.It is agreed for the purpose of these proceedings that its value be regarded as $7,500.
Item 3
28.The parties had a Chrysler motor vehicle, purchased in about 2006. Post separation, this vehicle was in the wife's possession, until about 21 December 2008 when the husband took possession of it. It was sold on 12 January 2009 for $12,000, it being common ground that the proceeds of sale were applied for joint purposes.
29.The husband claims that while this vehicle was in the wife's possession, post separation, it was "vandalised" and that a quotation was obtained to repair damage of $3,994.00. The repairs however (with one exception which I will mention below) were not carried out before the sale of the vehicle.
30.The wife said in her oral evidence, which I accept, that on 23/24 November 2008 the vehicle had been parked outside where she lived and she discovered the damage on the morning after its occurrence.
31.In contrast, the husband alleges that the wife negligently allowed the damage to occur by leaving the vehicle in street parking unattended.
32.The wife said however, which I accept, that whilst secure parking had been available on the night the damage occurred, she had not been able to manoeuvre the vehicle into her parking bay which is a “tough spot”. She was concerned that she might have damaged the vehicle and thus parked it at the top of her street, saying that at that stage there had been no available visitor car parking where she lived.
33.To my mind, even if the wife had left the vehicle in street parking without having endeavoured to use her secure parking bay, I would not regard her as “responsible” for a random act of wilful property damage by a person unknown.
34.The nature of the damage, as explained by the wife, was that the driver’s window had been smashed in and the exterior side view mirrors “kicked in”, such that they were “hanging by the wires”. The wife said that, curiously, all that was taken from the vehicle was a receipt for the car registration. The wife said that the registration label on the vehicle was out of date, but that the husband had refused to give her the new registration label.
35.On discovery of the damage, the wife cleared the broken glass and drove to a police station to lodge a notification: ex 3. I note however that ex 3 is dated 14 December 2010. This was canvassed in evidence as an inconsistency as to the date of her notification to the police. The inconsistency was not resolved in the evidence.
36.As said, the damage was not repaired before sale of the vehicle, with exception that the wife however did have the driver’s window replaced, at the cost to her of $388.00: ex 12.
37.Moreover, the wife said, which I accept, that she kept the vehicle insured: affidavit filed 28 February 2011, annexure J; see also ex 14; but cancelled the insurance only after the husband had sold the vehicle.
38.The husband's case is that the sale price which he achieved for the vehicle was less than might have been achieved, so that $3994 should be added back against the wife.
39.I find however, on the evidence which I accept, that the wife was not responsible for the damage to the vehicle, with effect that the husband's claim is untenable.
40.Accordingly, I reject the husband’s claim for an addback against the wife.
Item 4
41.The husband's claim is that, when the Chrysler motor vehicle was sold, a 120,000km service was due, and the wife did not attend to or pay for this service, post separation, which would have cost $1300. The basis of his claim for an addback appears to be that if the service has been carried out, $13,300 would have been achieved at sale rather than $12,000.
42.The husband relies on a service quote of $1300 obtained by him, seemingly, shortly before the vehicle was sold, dated 2 January 2009: husband’s affidavit 10 February 2011, annexure 13.
43.There is no expert evidence however that if the service had been carried out, the sale price would have increased by that amount, nor indeed that the purchaser paid less because a service was due. There is also no evidence that the wife at the time had the financial capacity to pay for a service.
44.Moreover, the wife said that the vehicle was in her possession only for 3 months between 12 September 2008, when she left the family home, and 21 December 2008, when the husband took the car from her, and that in her view the vehicle did not require to be serviced in this short period of time. Indeed, there is no evidence as to the date of the last service on the vehicle prior to the parties’ separation to indicate the precise timing of when any next service actually was due, nor indeed whether some of the matters set out in the quotation obtained by the husband might have pre-existed the parties’ separation.
45.The husband’s claim is in my view speculative and as such untenable.
46.Accordingly, I reject the husband’s claim for an addback against the wife.
Item 5
47.In relation to the husband's Volkswagen motor vehicle (item 2), at item 5 he claims loss of income or potential income to him for 10 days while the vehicle was “in the wife's possession”, and a further 5 days for alleged “repairs”.
48.The husband alleges that the wife "stole" the vehicle on 18 March 2009.
49.As at this date, the husband was in Perth and returned on 23 March 2009 to find the vehicle missing. He did not recover possession of it until 1 April 2009. He says that when he regained possession of the vehicle, there was damage to the bonnet, and "granular material" in the engine oil, such that it took 5 days to have the engine replaced, so that in essence, his claim is that he lost income by inability to use the vehicle for 15 days.
50.A detailed analysis of his claim appears in his affidavit filed 10 February 2011, par 88:
88.…
Losses: Phone calls $500
Solicitor $1000
Emergency hand tools $150
Lost work 10 days $6800
Lack of work next 10 days: $3400
Loss of 2 clients $10000/pa $7500
Damaged goodwill with other clients $4000
Replacement engine $5000
Total $28350
51.There is also reference in the husband’s material to a quotation for bonnet repair, $400.
52.However, as I understand the husband's evidence, his calculation of the claimed addback of $25,000 has 2 components, first, an alleged $20,000 loss of income or potential income for the 15 days, and an account paid by him for $5000 for engine replacement having regard to the "granular material" which he said was identified in the engine oil after the period the vehicle was in the wife's possession.
53.The husband said that when he returned from Perth, he could not locate the vehicle until 1 April 2009, when he took it back.
54.During the period 18 March 2009 and 1 April 2009, the vehicle, as I find, was in a secure storage facility, having been taken there by a towing company.
55.In an email from the husband to his solicitor, 1 April 2009, (ex 10, third part) the husband told his solicitor that a representative from the towing company had told him that the tow of the vehicle to the storage facility “was organised by a woman named [Ms L’s first name]”, whom the husband identified as his sister in law, Ms L, and that a person at the storage yard had told him that the storage space there had been rented by “[the wife’s first name]” (the wife): same email.
56.“[Ms L’s first name]” is the wife’s sister, the husband’s sister in law, to whom the husband and the wife at the time were indebted for $13,000 lent to them by Ms L to enable the husband to purchase this vehicle for his work.
57.The wife, which I accept, said that on 4 September 2008 (shortly before the parties’ separation) her sister Ms L had lent the husband and the wife $13,000 to purchase the husband’s Volkswagen vehicle on the basis that it would be paid “within a few weeks”, but that this amount had not been repaid nearly 6 months later, 18 March 2009.
58.The wife asserts, which is true, that the vehicle, although registered in the husband’s name, was matrimonial property, asserting that, as such, she did not “steal” the vehicle.
59.The wife, on 18 March 2009, the very day on which she and her sister had taken possession of the vehicle, sent a letter to the husband’s solicitor: wife’s affidavit filed 28 February 2011, annexure F; to which the husband’s solicitor responded by letter 20 March 2009, addressed to the wife’s solicitors: ex 10, second part.
60.The wife’s letter 18 March 2009, addressed to the husband’s solicitor, explained the circumstance of the loan and debt, and that in previous correspondence the husband not only had acknowledged the debt, but had agreed that the wife’s sister be repaid the $13,000 from the balance proceeds of sale of the former matrimonial home in the trust account of C Law Firm, such moneys having been held in that trust account since 18 February 2009.
61.In the letter 18 March 2009 the wife explained that despite request, the husband had not given C Law Firm authority to pay the debt to her sister. The wife said in the letter that, thus, the husband left her with:
… no alternative but to take possession of the abovementioned [motor vehicle], which to my understanding is 50% my property as it is registered to [the husband’s tradesman business] and comes under the term matrimonial property.
62.The wife’s letter concluded that the vehicle would be returned to the husband as soon as he authorised C Law Firm to release $13,000 to her sister, and she had received a cheque in that amount, but that if the husband refused to arrange this, the wife proposed to sell the vehicle “to recoup the money owed to my sister”.
63.The husband’s solicitor’s letter 20 March 2009, to the wife’s solicitor, responded to the effect that there is “a proper methodology” for the wife’s sister to “bring proceedings to recover a debt and enforcement proceedings”, and that the conduct in taking the vehicle amounted to “criminal activity”, and other matters.
64.As events transpired, the husband recovered the vehicle from the storage yard on 1 April 2009, in the manner described in his email to his solicitor 1 April 2009 mentioned already: part of ex 10.
65.In QCAT proceedings Q26610 of 2010, commenced on 20 September 2010, the husband sued the wife’s sister (but not the wife) for $25,105 in relation to this incident. I am uncertain, without the benefit of a transcript, as to whether there was evidence that this litigation was pending or concluded, or if concluded, the outcome. One would think, however, that if it had been concluded favourably for the husband, he would not have included his present claim against the wife.
66.As other events transpired, the wife’s sister obtained a judgment against the husband and the wife in the State Magistrates Court on 20 May 2010 for $13,000, and obtained an Enforcement Warrant on 23 November 2010 directed to the funds in the trust account of C Law Firm: annexure E to the wife’s affidavit filed 28 February 2011.
67.On 24 November 2010, the $13,000 debt accordingly was paid by C Law Firm to the wife’s sister recorded as “judgment payment”: same annexure E.
68.The wife denied that any damage was done to the vehicle while it was in the secure storage yard, asserting that the husband’s affidavit filed 18 February 2011 was “the first time I heard about any damage to the engine”, noting in her affidavit filed 25 February 2011, in response, that at no time had she been supplied with any bill for engine replacement.
69.The husband, as I recall, provided either a quotation or an invoice referring to “granular material” in the engine oil and the need for engine replacement. However, presently I am not able to locate this in the evidence.
70.There is no doubt that the wife and her sister engaged in inappropriate conduct in taking possession of the vehicle during the husband’s absence in Perth. Their conduct was misconceived, opportunistic and wrong.
71.On 18 May 2009, Burnett FM had made a consent order that certain amounts be paid out of the net sale proceeds of the former matrimonial home, and that the balance be held by C Law Firm, pending agreement of the parties or further order.
72.The wife, properly, on 18 March 2009, should have filed an application in the Federal Magistrates Court, where the matter was then pending, for an order that the wife’s sister be paid the $13,000 owing to her out of the net sale proceeds. Indeed, it is surprising that such was not included in the 18 May 2009 order. However, perhaps such was not then sought. Perhaps it was not then sought, or included in the order, because the husband, possibly, had indicated to the wife that he would authorise C Law Firm to release the debt amount to the wife’s sister, as the wife had sought in her 18 March 2009 letter referred to.
73.The wife and her sister, it would appear, were goaded into their inappropriate and wrong conduct by the husband’s prior inappropriate and wrong conduct in not honouring his promise to repay his sister in law her own moneys which, generously, she had made available to the husband and the wife to assist them at a difficult time upon the promise of repayment “within a few weeks”.
74.It is almost unimaginable that the husband could have refused authorisation to C Law Firm to pay out his sister in law immediately from the net proceeds of sale of the former matrimonial home. I accept the wife’s evidence as to the husband’s initial agreement to do so, and subsequent refusal, and find in the circumstances that his subsequent refusal was heinous and unconscionable.
75.Two wrongs however, do not make a “right”. The “wrong” of the wife and her sister, however, it must be borne in mind, would not have occurred but for the husband’s earlier wrong to them, the wrong to the wife’s sister by not having her promised repayment, and the wrong to the wife by her embarrassment of being indebted to her sister beyond the time of the promised repayment, and when she and the husband had the ability to repay her sister.
76.In these family law proceedings, whilst I am able to have regard to the tort principles, analogously, it is not my function, necessarily, to apply the tort principles in determining whether there is a recognisable action for damages for a tort (damages being the gist of the action), and in considering, in this context, the nature of the alleged wrong and then whether the damages claimed by the husband are or were reasonably foreseeable and not too remote.
77.Rather, these being family law proceedings, although as I have said I am able to consider the analogous tort principles, the question is whether there was deliberate negligent reckless or wanton conduct by the wife: Kowaliw & Kowaliw (1981) FLC 91-092 which caused loss to the asset pool (or alternatively loss to the husband, to be taken into account under s 75(2)(o)).
78.In my judgment, the conduct of the wife, whilst inappropriate, misconceived, opportunistic and wrong, and whilst it was deliberate, it was neither negligent, reckless nor wanton. At the time, as I accept, having regard to the contents of the wife’s letter 18 March 2009, she genuinely believed (which in fact is true) that the vehicle was matrimonial property (which it is, and still is) and genuinely believed that she was entitled to do what she did. She acted in desperation, as I find, to address the husband’s wrong to her sister, with genuine belief in her entitlement to seize the vehicle, and, as such, as I find, did not act negligently or recklessly or wantonly. She secured the vehicle in a place in which she believed it would be safe, to be preserved, to be returned to the husband once he agreed to payment to her sister of the long outstanding debt.
79.As to the allegation that the wife “stole” the vehicle, a criminal offence, it is an essential element of the offence that a person intended to permanently deprive possession and ownership of the lawful owner. In the wife’s letter 18 March 2009, whilst it is true that she threatened that if the husband did not authorise payment to her sister of the debt, she would take steps to sell the vehicle, to recoup the debt, it is plain that, as the vehicle was registered in the husband’s name, she could not have done so, so as to give good title. The conduct of the wife in making such threat similarly was inappropriate conduct, misconceived, opportunistic and wrong. However, for as long as the vehicle was registered in the husband’s name, such that the wife could never have sold it and given good title to a purchaser, the concept of stealing, I am satisfied, did not enter her mind, in the sense of my acceptance of her statement in the same letter that although the vehicle was registered in the husband’s name, it belonged to both of them as matrimonial property. Thus, in essence, it is impossible to “steal” from oneself.
80.As to whether damage occurred to the vehicle, it is possible that damage to the bonnet occurred during the towing exercise. There is no evidence as to the towing method, that is, whether only the undercarriage was engaged, or some other part or parts of the vehicle. This is a possibility. Alternatively, the damage could have occurred when the husband repossessed the vehicle. See his description of this, seemingly including somewhat violent actions by him, during his repossession exercise, described in detail in his email 1 April 2009 to his solicitor: part of ex 10; second page of the email.
81.As to the existence of granular material in the engine oil, there is no basis to think that the wife or her sister deliberately would have inserted such material. Put simply, they had no motive to do so. There is evidence that in the storage yard “the truck was on gravel”: husband’s email to his solicitor, part of ex 10, referred to; that the bonnet was ajar (husband’s evidence as to his later discovery of this, after repossession); and that the husband “gave it some” (seemingly, in the yard, on the gravel); and “gave it some again” to get out of the yard: see the same email.
82.I appreciate however that for “granular material” to have become mixed with the vehicle’s engine oil, a cap would have been needed to be removed, and the substance deliberately inserted, to warrant the need for engine replacement.
83.I need not however progress consideration of the range of possibilities that might have caused granular material, or even dust or sand or gravel, to have become mixed with the engine oil (if indeed that occurred).
84.However, I am satisfied on the evidence that the wife and her sister had no motive to sabotage the vehicle, and find, on the balance of probabilities, that they were not responsible for any bonnet or engine damage.
85.As to the husband’s claimed loss of income, or “potential” income, his claim seems to be an ambit one, with little evidentiary foundation. His evidence, at its highest, is expressed in his affidavit filed 10 February 2011, in the following paragraphs:
81.The time I spent without my work vehicle caused and cost me financial loss, as I was unable to work properly without my vehicle as it had my tools of trade in and on it.
82.Having no vehicle for 10 days and working on an 8 hour workday @ $85/hr the lost income is $6800.
83.I had to spend work time trying to find the vehicle myself.
84.As I had no knowledge of when the vehicle was to be located I couldn’t scheduled (sic) my back log of work or accept any new major work. As a result there was limited worked for next 10 days. Lost income $3400.
85.There is also the fact that 2 of my regular clients became upset with the fact that I couldn’t service their needs at the time because didn’t have my work vehicle. Or could advise when I would have a vehicle. As I could not afford to hire or purchase a replacement. As a direct result they no longer use my services.
86.These two clients had previously given me work to the value of $10000/per year each. This is the gross figure of $20000 of lost turnover. That is fixed cost are accounted for. As this was over and above other income. I estimate loss of net income to be $7500/per year total. (emphasis added)
86.However, the husband had been in Perth when the vehicle was taken by the wife and her sister on 18 March 2009, the husband returning from Perth to the Gold Coast on 23 March 2009. The husband does not particularise, by reference to his books of account, any specific jobs he had contracted to perform in the 10 day period 23 March 2009 – 1 April 2009, nor any “backlog” of work which he might have performed in that short period of time; nor any “new major work” offered in that time which he declined. Nor has the husband offered the identity of the two “regular clients” whose work he claims to have lost.
87.A claim for lost gross income or potential income for the 15 days (the husband claims 15 days, being the 10 days 23 March 2009-1 April 2009, plus the 5 subsequent days during which he claims the engine was replaced), at $20,000. This roughly equates to $1333 per day. This would suggest an annual gross income (pro rata over 365 days) of about $486,666; or assuming 5 work days per week (52 weeks x 5 days, 260 days) $346,580 gross per annum. Assuming 4 weeks holiday per year, a little less. However, in proceedings in the District Court of Queensland commenced by the Deputy Commissioner of Taxation against the husband filed 20 October 2011 (ex 1), the DCT claims against the husband for the year ended 30 June 2008 “as per assessment issued 14 September 2009”, $6,881, indicating a taxable income for the year ended 30 June 2008 of considerably less than the lost income claimed which is alleged to have occurred in the year ended 30 June 2009.
88.Moreover, in the husband’s same affidavit as referred to, filed 10 February 2011, relating to child support, he claimed at pars 71-73:
71.Since separation and having the full time care of three (3) children, 2 of school age and one attending University, I do not have the capacity to work a full-time working week. As my two youngest children have Asperges Syndrome requiring significantly more parental care than a child who does not have asperges.
72.The children’s care involves me being available before and after school, which includes conveying the children to sporting activities, study and homework activities.
73.I therefore cannot start to work until after 8.30am in the morning once my children have been taken to school. My work must then finish by 2.30pm so I am available to collect my children from school at 3.10pm and then taken them to their relevant sporting activities, all of which occur outside the school premises. (emphasis added)
89.Moreover, in the same affidavit, at par 70, the husband said:
70.At the busiest time in my business, when I had five (5) employees working for me, I still only managed to earn $60,000. The deposition of the Applicant that I have the capacity to earn $100,000 is simply untrue. I have never earned that amount of money and from what I understand from my colleagues, not many [people engaged in the the husband’s trade] earn anywhere near $100,000. I note [the husband’s trade] is a physical job and I am past my prime. It would be normal for a [person engaged in the husband’s trade] of my age to see a decline in income. A simple twisted ankle/aggravation of my back injury means my capacity to earn income would be nil.
90.This evidence of the husband makes it impossible for me to believe that, for the short period in March/April 2009, during which he could not use his vehicle, he lost $20,000 gross income.
91.Indeed, having regard to the matters which I have mentioned, if the husband as at March/April 2009 had been operating his business functionally, I am entitled to expect that he could at least have produced some genuine “work in progress” records for that period, if indeed there was any “work in progress” at that time.
92.In summary, my conclusions are as follows:
1.The wife was not negligent, and did not engage in any reckless or wanton conduct, in the action she took, in concert with her sister, in relation to the vehicle.
2.Even if my finding had been to the contrary, the husband has failed to prove that the wife is responsible for any damage to the vehicle’s bonnet or engine; and further has failed to prove any loss, or consequential loss to him, to warrant any addback, in relation to the pool, or indeed as to any adjustment under s 75(2)(o).
93.Accordingly, I reject the husband’s claim for an addback against the wife, and will disregard his claim for the purposes of the pool assessment, and/or any adjustment under s 75(2)(o).
Item 6
94.The husband claims against the wife alleged waste of $42,000. Although in the schedule there is the description that the basis of the husband’s claim is “the value of 3 businesses”, as I read his affidavit filed 10 February 2011, pars 27-59, the basis of his claim is as follows.
95.In May/June 2006 the wife was retrenched from E Company, where she had been employed in a clerical position at $42,000 per annum, being $38 per hour for (on average) a 40 hour week.
96.Between June 2006 and October 2007, instead of seeking and obtaining a similar position, that is, as I understand the husband’s accusation, the wife wanted to fulfil a “lifelong ambition” of a role in the fitness industry. Accordingly, she obtained the necessary qualification at the cost of $5000. The husband was concerned about how they would cope financially, but said that the wife “assured me we would be better off in the long run given the potential for large earnings in the fitness industry”, and so accordingly (husband’s affidavit filed 10 February 2011, par 32):
I told the Applicant that she had my support. (emphasis added)
97.Thus, it would appear, that although the wife wanted to fulfil her “lifelong ambition”, the decision for her to achieve her qualification and open a business in the fitness industry was a joint matrimonial decision.
98.The wife commenced in her role in the fitness industry working out of premises by arrangement with the owner of the premises, “Mr A”.
99.Initially, the wife was not required to pay any rental to “Mr A”. Subsequently Mr A sought that she pay weekly rental of $280 for the use of facilities, requiring also payment of 2 months arrears for this. Although, according to the husband, this was equivalent to 6 appointments, the husband alleges that the wife had established a client base of only 2 people. In the meantime, according to the husband, the wife had run up significant credit card debt in relation to her set up costs, and also accessed a draw down facility on the parties’ mortgage.
100.The husband alleges that for the first 12 months of the wife’s business, ostensibly, working in a fitness industry role out of Mr A’s premises, in reality she was doing “unpaid work” for Mr A, in the pair endeavouring to establish a merchandising business “Business I”, so that she was not building up her client base for her own business, which the wife had called “Business F”, for which she had successfully registered the business name under State legislation and applied for a trademark for her logo under Commonwealth legislation: annexures 8 and 9 to the husband’s affidavit filed 10 February 2011.
101.The husband says that the wife established a third business with a business partner to set up a coffee shop (unnamed) inside Mr A’s premises. The husband says he performed tradesman services for the set up: see annexure H to the wife’s affidavit filed 28 February 2011, second page, 10th item, $1,280), the wife having assured him that she was “guaranteed a paid job” running the coffee shop, while she could work on building up “Business I” and attracting a client base for her fitness industry business, “Business F”.
102.The husband says that neither the coffee shop nor the job eventuated, and as the wife could not afford to pay Mr A rental for the use of his facilities, her arrangement with Mr A concerning “Business F”, along with “Business I”, and the coffee shop, ended.
103.The wife then sought to establish a set up in a spare room in the parties’ home to continue to run her “Business F” fitness industry business from there, with the set up costs paid from the husband’s income and Centrelink payments the wife then was receiving, which the husband describes as “Tax A and Tax B” payments.
104.The husband says that the wife did not devote sufficient time to the home business to make it profitable, such that its expenses exceeded its income.
105.Eventually, the husband says, he persuaded the wife to return to paid employment, which she did in October 2007, working in a clerical position, for about $20 per hour, approximately 20 hours per week, which employment the wife continued until separation, but that her income from that source did not cover the losses and debt that the wife’s “Business F” business “continued to sustain”.
106.The wife said, which I accept, that the only business that she established was “Business F”, which she operated from its opening in June 2006 until she was forced to close it in December 2008, when the husband took and sold the Chrysler motor vehicle (earlier referred to). She says that thus she was no longer able to work as in her role in the fitness industry as she had no means of transport. She said the only overheads for her business were herself, petrol, equipment hire and a place for the business and that her business did not operate at a loss.
107.Under the husband’s cross examination, the wife said that after she was made redundant from E Company, she studied 2 nights each week for 1 year, saying to the husband “You knew that!”. She said “I finished my course. I got an ABN. I registered my business”, and that from then until separation she contributed her earnings to the household, from both her business, and her part time clerical work.
108.In more detail as to the expenses of the business, the wife said that her mother paid for her set up costs at the parties’ home, which comprised only a computer for invoices. She acknowledged however other expenses, including insurance, vehicle running costs, minimal advertising, business cards and a sign for the back of her car. She had singlets made with her logo, but she said that clients paid her for purchase of the singlets.
109.The wife reiterated in her oral evidence that her expenses in relation to “Business F” did not exceed her income, and that B Accountants had all her figures and did her tax returns. She said that most weeks she earned more than $220 (the weekly expense estimate put to her by the husband), with the following summary (paraphrasing the wife’s words, without the benefit of a transcript): $120: girl client twice per week (although sometimes that client was away); $50 per session for a male client usually twice per week; $60 per session for a lady client usually twice per week; a group session weekly attended by 3-7 people (“whoever turned up on the day”) at $10 per person; a group of women twice per week; 2 other girls $40 each and another girl $50 per session twice per week.
110.The wife said that “Business I” was not her business. She said that she is a “keen [the sport involved in Business I]”, but “Business I” was Mr A’s. She spent about a year giving time to Mr A “maybe 1 hour per day”, pointing out also, under the husband’s cross examination of her, that at the time “I was a full-time mother!” She said to the husband “I was disappointed, as you knew”. She said in effect that “Business I” had been her idea, along with three similar businesses, and that although there had been some 10 or so prototype screen print jumpers made, as prototype merchandise, Mr A never paid her and “the plan never eventuated for me”.
111.The wife said that by November 2007 Mr A was “being a bit strange”, and their business relationship fell apart.
112.It would appear that Mr A took the wife’s idea as to the businesses and merchandise, and subsequently changed a company name, in relation to a company registered 11 May 1990, to the name I Pty Ltd: see ASIC search, annexure P to the husband’s affidavit filed 15 February 2011.
113.In my view, there is no substance in the husband’s claim for waste by the wife.
114.I find as follows.
115.Having become retrenched, during the marriage, the wife was entitled to pursue her “lifelong ambition”, and studied and worked hard to establish her “Business F” business. On the wife’s evidence, which I accept, once its set up costs were paid (even if by credit card or a draw down facility on the parties’ mortgage) she was earning sufficient to cover its operating expenses and to contribute to the household. If the husband had not taken the Chrysler motor vehicle from the wife in December 2008, and sold it in January 2009, then, on the wife’s evidence, which I accept, her “Business F” business would have continued in existence and continued to be a source of income for her, post separation.
116.Accordingly, I reject the husband’s claim for an addback against the wife for alleged waste of $42,000.
Item 7
117.The husband claims as an addback against the wife $4100, being the value of a ring (valuation certificate: ex 6) which he alleges was the subject of a successful insurance claim by the wife for stolen jewellery.
118.The wife said that her jewellery comprised, in addition to the ring, costume jewellery (sterling silver), a cubic zirconia ring, a necklace and wedding ring. She said that after the separation she took off her engagement ring and wedding ring and kept them in her purse. The rings had been stolen out of her purse at a hotel. She reported the matter to the police immediately: ex 5, asking them to check the CCTV at the premises where she had been, but said that there had been no result in identification of the thief. The wife said that the items were not insured post separation and she had made no insurance claim.
119.There is no reason to doubt the wife’s evidence, which I accept.
120.Further, if the husband wished to prove the existence of any insurance claim, or payout, he could have done that by a subpoena for documents to the insurance company which, as I understand the matter, the parties used before separation.
121.Accordingly, I reject the husband’s claim for an addback against the wife.
Items 8-14 – Liabilities
Item 8
122.The fees owing to S School are for J and T.
123.There is no dispute that the fees were outstanding at the time of the trial.
124.The husband however asserted that the wife should be solely liable for the fees, on the basis that he had a “contra” arrangement with the school to do trade work to the value of his half share of the fees. He said that although the school Principal at the time of the trial was Mr G, this arrangement was “set up with the previous Principal [Ms H]”. This is curious. Exhibits 15 and 16 are 2 letters on S School letterhead signed, apparently, by Ms H, Principal each dated 16 December 2008. Exhibit 15 is addressed to both the husband and the wife and refers to “our discussion regarding fee concessions”, providing that as a result of the discussion a reduction of 100% of the tuition fee component of the school fees for D, J and T had been granted but that this arrangement would be from Term 1 2009 until the end of the 2009 school year only. The second letter is addressed to the husband. It offered a scholarship for D to be taken up for the Year 12 2010 school year for her, the scholarship entitling a 75% reduction of the tuition fee component for D for 2010, but recording that “you would be liable for all additional fees”. The reduction was said to equate to $3788 for D for the 2010 year. The letter otherwise referred to terms and conditions of acceptance of the scholarship.
125.It seems to me to be inherently unlikely that an institution such as S School would have agreed to a “contra” arrangement in relation to school fees for its pupils, and further, that if there had been such an arrangement it is likely to have been documented by Ms H in similar fashion to the 2 letters exs 15 and 16.
126.Possibly, the husband’s reference to a “contra” arrangement may have something to do with the scholarship for D or the fee reduction for D, J and T. However, if this is the case, one would think that Ms H did not intend other than to relieve both the husband and the wife from the fee components of the scholarship and reduction.
127.I note that the date of exs 15 and 16, 16 December 2008, was shortly after the parties’ separation in September 2008. Exhibit 15, it must be noted, addressed to both the husband and the wife, referred to “our discussion” regarding fee concessions, suggesting that the discussion was with both the husband and the wife, or at least, if with the husband only, seemingly not intended to exclude the wife. The matter is uncertain, however, because by December 2008 the wife had left the former matrimonial home and all three children were living with the husband.
128.Exhibit 2 is the trust account statement of C Law Firm in relation to the net proceeds of sale of the former matrimonial home, showing disbursement on 25 February 2009 to S School of $10,308.
129.However, the parties agreed that at the time of the trial the outstanding liability was $10,447.
130.The wife contended that the parties should be equally liable for the payment of that debt.
131.I find myself unable to accept the husband’s evidence that he made a “contra” arrangement with Ms H for “his half share” of the school fees, so that the full amount now due should be paid by the wife.
132.Certainly, there is no evidence from the school in relation to any such arrangement. Even though Ms H is no longer the Principal, one would think that, having regard to the nature of the institution, if such an arrangement had been made it would be noted somewhere in the school records and able thus to have been produced pursuant to a subpoena. The husband, it appears, did not seek or cause any subpoena to issue to the school for the production of documents showing such an arrangement or, if he did, did not tender any such documents into evidence.
133.Even though the husband said at the trial that the “contra” arrangement was made with the previous Principal, Ms H, in his affidavit filed 10 February 2011, par 75, the husband said:
75. Item 1: School fees. I pay my share of any school fees by providing my [trade] services to the school at no cost to the school. This is an informal arrangement I have with the current Principle (sic) and the immediate past Principle (sic) of the school. Any outstanding amounts belong to and are the responsibility of the Applicant/mother. (emphasis added)
134.In his affidavit filed 28 February 2011, par 20, the husband said:
20. As previously deposed by me, my share of any school fees is paid for by the School’s use of my [trademan] Service. (emphasis added)
135.In his oral evidence, as mentioned, the husband said that the current Principal is a Mr G. However, the husband did not call Mr G to prove his “contra” arrangement and, as said, it appears that the husband has not subpoenaed any documents from the school showing such an arrangement.
136.I can only conclude that, unless the husband has fabricated his evidence, he may have made some mistake in relation to the effect of exs 15 and 16 which, as I read them, relieved both the husband and the wife for the amounts involved concerning the 100% fee reduction for all three children in the 2009 year, and the scholarship for D for the 2010 year.
137.If this were not so, the school would not have continued to render invoices for fees for all three children, based upon the letters, which indeed occurred.
138.The first mention of a “private” or “informal” arrangement between the school and the husband in the husband’s material, appears to be in a letter 11 March 2010 from him to the wife’s solicitors referring, at item 5, to “School fees to be offset against [the husband’s trade] requirements of the school”, and that “this has been conservative (sic) estimated at $5000 by the school for the year. Your client’s share is 50% = $2500”: affidavit husband filed 17 March 2011, annexure 9; see also however annexures 7 and 8, which are earlier letters by the husband to the wife’s solicitors 30 October 2009 and 30 November 2009, which do not mention such an arrangement.
139.Thus, if such an arrangement had been made, (despite exs 15 and 16, each dated 16 December 2008) I would infer that it was made between 30 November 2009 and 11 March 2010. However, for reasons already explained, I am unable to accept the husband’s evidence, particularly having regard to his assertion in par 75 of his affidavit filed 10 February 2011 that the arrangement was made both with the current Principal (Mr G) and the “immediate” past Principal (Ms H), suggesting that Ms H remained Principal during the 2010 school year.
140.Further, none of the exhibits, or annexures to the husband’s material, show the existence of any trade work performed by the husband for the school, or any trade invoices issued and marked, for example, “Not to be paid because of fee arrangement”.
141.I will add that annexure D to the wife’s affidavit filed 28 February 2011 includes a commercial agent’s collection notice addressed to the wife 14 January 2011 in the amount of $7786, as being the amount then owing between 17 April 2009 and 16 November 2009 (14 January 2011 being well after the $10,308 was paid out of C Law Firm trust account on 25 February 2009), the commercial agent’s letter attaching two documents headed “Transaction Listing by Family”, each with the name at the top left corner “[Mr Conti]”, the second of which shows a breakdown of the fees and charges for each of the 3 children between 25 January 2010 to 27 September 2010, noting the discounts and concessions for each child (seemingly pursuant to the arrangements in the documents exs 15 and 16) noting the 100% scholarship for D, and, more importantly, not indicating any reduction for any “contra” arrangement as the husband asserts.
142.For all the reasons outlined, I am unable to accept the husband’s claim of a “contra” arrangement with the school and accordingly find that the amount of fees outstanding as at the date of the trial is a joint liability.
Item 9
143.On 10 December 2010 the wife received an Australian Taxation Office statement showing an income tax liability of $26,953.28, being the then amount of the wife’s debt: wife’s affidavit filed 15 February 2011, annexure F.
144.Item 9 includes the debt presently as $28,072.00.
145.It is not in evidence however whether the wife’s taxation debt as at 10 December 2010 related to pre-separation or post separation income, the parties having separated on 12 September 2008. I will return shortly to this aspect of the matter.
146.The husband disputes that annexure F is a present debt of the wife, on the basis that the debt is “non-active”, and that the wife is unlikely to be pursued in relation to it.
147.It is common ground that, at the time of the trial, the Australian Taxation Office was not pursuing the wife in relation to this debt: ex 2, sheet 10, showing $27,971.28 reduced to nil as “uneconomical to pursue”.
148.Mr Carmont, solicitor for the wife, tendered however as ex 8 a copy a publication by the Australian Taxation Office “Practice Statement Law Administration” PS LA 2011/17, pars 74-76 of which I will set out:
74. A debt may be re-raised for a variety of reasons. The most common is where new information becomes available that suggests recovery action is now viable, for example, the debtor's whereabouts have been traced or the debtor has identifiable assets or income, or a later tax return has been lodged. In the case of debts not pursued because:
·they were uneconomical to pursue for some reason under either former section 70C of the Audit Act or section 47 of the FMA Act, or
·because a debtor had no funds or assets under former section 70C of the Audit Act
the situation may have improved and the debtor may be able to pay the debt in full, or be able to pay the debt by instalments over a period of time. Alternatively, legal recovery action may now be a viable option.
75. However, before re-raising a debt, consideration must be given to whether or not the debt can be legally re-raised. If the ground for non-pursuit was one of the following:
(i)uneconomical to pursue under either former 70C of the Audit Act, or section 47 of the FMA Act, or
(ii)the debtor had no funds or assets and there is no prospect of the financial situation improving, under former section 70C of the Audit Act
then the total debt can be re-raised. For all taxes, the additional charges for late payment/GIC should also be updated and imposed. Where appropriate, remission of GIC should also be considered. See PS LA 2011/12 for further information on remission of GIC. Once the debt and any other relevant details have been updated, relevant recovery action may commence.
76. Re-raising the debt will ensure that the full debt will be shown on the account and, if there is a credit, the credit will be absorbed. If a debt is re-raised and, after the allocation of a subsequent credit there is still an amount outstanding, options for recovery of the remaining debt (for example, a payment arrangement) should be considered.
149.Based upon this Practice Statement, I am unable to conclude that the wife’s tax debt may not be re-raised for one of the reasons set out in the extract.
150.I return now to the period for which the wife’s taxation liability in annexure F might refer.
151.Ex 19 comprises the wife’s tax returns for the 2006, 2007, 2008 and 2009 tax years. Ex 20 is her tax return for the 2010 tax year.
152.The wife’s 2006 tax return shows a taxable income of $28,624. Her 2007 tax return shows a taxable income of $1173. Her 2008 tax return shows a loss of $1534. Her 2009 tax return shows a taxable income of $21,707. Her 2010 tax return shows a taxable income of $19,342. However, as ex 20 shows also, tax on her 2010 income of $2,001.30, but with a tax CREDIT on her notice of assessment for the year ended 2010 of $2,481.30 (possibly, because of the application of an earlier version of the “Practice Statement Law Administration”.
153.There is no evidence as to the wife’s tax liability as at 30 June 2011, the closest date to the trial.
154.It is quite impossible, having regard to exs 19 and 20, to determine with any certainty whether item 9, the wife’s tax debt of $28,072, is referable to pre‑separation or post separation earnings, or partly referrable to each.
155.However, having regard to the figures in the tax returns referred to above, I would determine on the balance of probability that it is more likely than not that item 9 relates to both the pre and post separation periods.
156.Be that as it may, as will be seen, nothing in my ultimate decision will turn on whether the wife’s presently non-active tax debt relates to pre-separation or post separation earnings by her or partly in each period, nor indeed on whether (which cannot be predicted) the debt might at any stage be re-raised.
Item 10
157.The wife had a debt to Centrelink of $29,180.62, as at the time of the trial. The wife’s affidavit filed 15 February 2011, annexure I shows the debt as at 29 October 2009 in the amount of $33,038.49.
158.The debt is for overpayment of Centrelink benefits to the wife, during the 2003-2006 tax years, that is, during the marriage.
159.Since April 2011, the wife has received Newstart allowance of $485.97 per week, from which $66.03 per week is deducted as part payment of her Centrelink debt.
160.As the debt accrued during the marriage, the husband and the wife should be regarded as jointly liable for its repayment.
161.However as will be seen, and subsequently explained, I will order that the wife be solely liable for this repayment.
Item 11
162.Item 11 is a claim by the Deputy Commissioner of Taxation against the husband issued in the District Court of Queensland number … of 2010, filed 20 October 2011, claiming $126,673.58 for unpaid tax and general interest charges pursuant to assessments for the income years ended 30 June 1999, 30 June 2004, 30 June 2005, 30 June 2006 and 30 June 2008.
163.The statement of claim (ex 1) shows roughly $76,069 primary tax less, $7,492.48 paid, equating roughly to $68,500 primary liability with the balance claimed as general interest charges as at 23 September 2010, but with general interest charges still accruing, and costs also claimed.
164.The husband said in his oral evidence that he was negotiating with the Australian Taxation Office, and proposed to continue to negotiate to reduce or eliminate this debt. At the time of the trial however there was no evidence as to the progress of the claim or the negotiation process.
165.The assessments, relating to the 1999, 2004, 2005, 2006 and 2008 tax years plainly relate to pre-separation tax liability of the husband, at least in relation to primary tax liability.
166.In relation to the general interest charges, neither party has earned significant income, it would appear, since the separation; and the balance net proceeds of the sale of the former matrimonial home has remained in the trust account of C Law Firm, apart from the agreed payments made, and the payment to the wife’s sister by the Enforcement Warrant, pending the determination of these proceedings.
167.The husband, in his affidavit filed 10 February 2011, pars 60-65, said, in effect, that because the wife trained in clerical work her “role” was to assist him in the bookkeeping for “our business”, meaning the husband’s trade business. He said that the wife “struggled with this task even though she wasn’t working” and that this meant that “we fell behind in our taxes”. He said that the wife constantly promised to “get the books up to date” but this never happened, and that she suggested to the husband that they employ a bookkeeper.
168.Thus, the husband appears to blame the wife in relation to the taxation debt in his name.
169.In contrast, the wife said in her affidavit filed 28 February 2011, par 8, that when they moved to the Gold Coast in 1999 initially she completed all the husband’s bookwork and kept it up to date before it was sent to the accountant but that “after much argument” the husband agreed that he would be responsible for his own bookwork. The wife said that shortly after that she began working from home for E Company, some weeks for over 40 hours, but with other weeks between 10 to 30 hours and that some nights close to the end of the month she would work until 2 or 3am to meet work deadlines. She said she was also responsible at that time for taking the children to school, before and after school swim or run training sessions and any other activities the children engaged in and as well kept the house, did the washing, bought the groceries and did the cooking. She also for 2 years home schooled J who had been struggling badly at school because of Asperges Syndrome. The wife said that she was under a “huge amount of pressure and stress” and that she was “mentally and emotionally exhausted” for most of this time so that she simply did not have the energy to also do the husband’s bookwork, especially when he spent many hours of the work week either “down at the […] club or laying on the lounge watching television”.
170.It is a little unfair I think of the husband to blame the wife, in these circumstances, which I accept, for not also attending to the bookwork of the business he operated.
171.In any event as the primary liability arose during the marriage, and non-payment of the general interest charges, or at least their accrual, seems related to the parties’ financial inability to pay the primary tax it is proper to regard the Australian Taxation Office debt in the husband’s name as a joint liability for the purpose of assessment of the value of the pool.
Items 12, 13 and 14
172.These items are agreed in amount and, as I understood the parties’ positions at trial, agreed that they should each be treated as joint liabilities for the purpose of assessment of the value of the pool.
Items 15 and 16
173.The value of the parties’ respective superannuation interests at the time of the trial is agreed.
Item 17
174.The wife has a claim for damages for injuries suffered in a motor vehicle accident on 13 June 2008.
175.As the parties’ relationship and marriage extended from 1991 until September 2008, it is plain that the injury which she suffered was towards the end of the relationship and marriage of about 17 years.
176.The wife’s personal injury lawyers as at 7 December 2010 advised that settlement negotiations against M Insurance – CTP Department had been commenced and that based on Counsel’s advice it was her lawyer’s belief that she would receive between $10,000 and $20,000 “clear of all refunds including legal costs upon settlement of the claim”: ex 18.
177.In a later letter 21 October 2011 however by her new personal injury lawyers those solicitors advised that they were yet to formulate or assess the quantum of the wife’s claim and would not do so until a date has been scheduled with the CTP insurer for the convening of a compulsory conference. The letter proceeded to set out the usual heads of claim (general damages for pain and suffering; past medical expenses; future medical expenses; past lost income and superannuation; future lost income and superannuation; and home help undertaken by friends or family) but said that even though claims may be mounted in respect of those heads of damage such does not necessarily equate with the CTP insurer accepting the heads of damage or the amounts sought: ex 17.
178.On 10 June 2011 I made an interim order, based upon the husband giving the usual undertaking as to damages, that any amount which the wife may be awarded or which may be agreed in relation to personal injuries suffered by her in the accident, net of any fees, costs and charges of her personal injury lawyers, be held in the trust account of K Law Firm, and reserved the costs of that application to the trial judge.
179.It is convenient to set out the following from the reasons for judgment 10 June 2011, pars 8-12, which I would incorporate also into these reasons:
8. It is plain that whilst the mother’s chose in action is not a property: Zorbas & Zorbas (1990) FLC 92-160 at 78,126; an award, if and when made, is property; and there is no general presumption that the award should be left out of account in determining what order should be made under s 79: Williams & Williams (1995) 61 ALR 215.
9. In Aleksovski & Aleksovski (1996) FLC 92-705 at 83,437 the Full Court by majority said:
In our opinion, in most cases, a damages verdict arising from a personal injury claim, whenever received, is a contribution by the party who suffered the injury. It should not be considered in isolation, for the reason that each and every contribution, which each of the parties makes to the relationship, must be weighed and considered at the same time.
See also Aleksovski as subsequently discussed in K & K [2004] FamCA 360 at [7] –[11] per Finn J (dissentiente as to the result); and [66]-[68] per Holden and Warnick JJ.
10. In Farmer & Bramley (2000) FLC 93-060 Kay J made it clear that contribution assessment is not limited to the assets of which the pool currently is comprised. See at [68]-[69].
11. Thus the award, if any ultimately is made, is capable of forming part of the pool. However, how it will be regarded at trial ultimately cannot be ascertained until the trial, particularly because it is not known at this stage what component of any award will or might relate to, for example, future medical costs, future pain and suffering or future economic loss: LAM & RAM (2005) FamCA 868 at [76]-[84]. In this particular case, if an award is made by settlement, there may not be available a breakdown of the components comprising it. However, that also is a future matter to await evidence at the trial.
12. Often, trial Judges will assess separately contribution which is received post separation. The accident here occurred shortly before separation. However, if there is to be an award, plainly enough it will be received not only post separation but considerably post separation. Even so, whilst often trial Judges will assess separately post separation contribution this is neither required nor proscribed: Sippel & Sippel [2004] FamCA 201 at [17] per Warnick J.
180.As at the date of the trial, as evidenced by ex 17, the claim had not resulted in any award or settlement.
181.Thus, in my view it is not appropriate to retain this item in the asset pool, but rather to consider the wife’s claim as a relevant matter under s 75(2)(o).
Conclusions as to the net value of the parties' property and assets
182.For the reasons explained, the claimed addbacks of the husband items 3-7 will not be included in the pool, and nor will the wife’s accident claim item 17.
183.The value of the parties’ property and assets, not including superannuation, thus amount to $67,718 (items 1 and 2), and their superannuation interests $30,129.37 (items 15 and 16). In relation to the parties’ debts, items 8-14, including for present purposes item 9 the wife’s Australian Taxation Office debt although not presently being pursued, but as I have concluded, which is likely to relate to both the pre-separation and post separation periods, the parties’ liabilities are $206,241.12.
184.Thus, the parties’ property and assets (including their superannuation interests) amount to a negative pool of $108,393.75, and, excluding their superannuation interests, a negative pool of $138,523.12.
The parties' superannuation - separate pool?
185.In relation to the parties’ superannuation interests, in Coghlan & Coghlan (2005) FLC 93-220, the Full Court described superannuation interests as “another species of asset in relation to which orders can be made” (at [53]); and said that a trial judge has a discretion as to how superannuation interests will be treated in a particular case (at [65]).
186.In Wentner & Rater [2010] FamCA 1188 Cronin J did not include the wife’s superannuation in the asset pool “because it is not an asset of the substance or form of the other assets”, nor “something that the wife can use”, such as not having “the same immediate value” as other property in that pool: see at [91]-[96]. In Prantage & Prantage [2001] FamCA 1198, Cronin J similarly dealt with superannuation as a separate pool. In both cases however his Honour referred to the circumstance that s 79(4) of the Act requires the Court to consider contribution to superannuation interests, as much as the parties’ property.
187.During argument, Mr Carmont, solicitor for the wife, urged that the superannuation interests be regarded as a separate pool, whereas the husband submitted that he would leave that matter to my discretion.
188.In this particular case, absent the application of the hardship rules, the circumstance that both parties’ superannuation interests will not be available to them for many years has effect that whether or not I regard the parties’ superannuation interests as a separate pool is academic, and, in this particular case, will not impact upon the making of a just and equitable order.
189.Further, as will be seen, I will make the finding below that the parties’ contribution to their aggregate superannuation interests should be regarded as equal.
190.In all of the circumstances in this particular case I will regard the parties’ assets, including their superannuation interests, as one pool.
Contribution
Principles relevant to the assessment of contribution
191.In Kessey and Kessey (1994) FLC 92-495 (Full Court) at 89,151 the Full Court made clear that ultimately all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party:
… In many – indeed probably in most – property settlement cases the Court has to evaluate and assess contributions to property in the absence of precise valuations of the contributions in question. Indeed, where the contributions to property are indirect or non-financial, precise valuation is impossible, and even where the contributions are direct or financial so that a valuation might be provided, other factors (not capable of precise mathematical statement) may well have eroded the initial value of such contributions. In a case such as the present, it is not necessary to arrive at precise mathematical valuations of the parties’ contributions - all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party. (italics and bold added)
192.In Pierce and Pierce (1999) FLC 92-844 (Full Court) at 85,881 a differently constituted Full Court (except for Baker J) said:
28.In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home: … (italics and bold added)
193.In Farmer and Bramley (2000) FLC 93-060, Kay J clearly stated 2 things, namely:
The Court’s task is to evaluate all of the contributions from the time of the commencement of the parties’ relationship until the time of the hearing and to give such weight to such contributions as the Court thinks is appropriate in the circumstances [68]; and
There is nothing in the legislation that requires s 79(4)(a)(b) and (c) contributions to be measured only in terms of what either party contributed to the assets of which the parties are presently possessed [69].
194.In Figgins and Figgins (2002) FLC 93-122 (Full Court) Nicholson CJ and Buckley J made the timely reminder, at [134]:
134.… Marriage is and should be regarded as a genuine partnership to which each brings different gifts. …
Contribution analysis and findings
195.Although the parties’ liabilities exceed the value of their property and assets, and I am obliged in considering what (if any) just and equitable order to make to have regard to the interests of the parties’ unsecured creditors, it is necessary nonetheless to consider the evidence as to contribution and make findings as to contribution, initially, during the marriage and post separation.
Initial contributions and contribution during the marriage
196.Neither party had significant assets at the commencement of their relationship and marriage.
197.The husband and the wife each had their personal effects.
198.The husband says that shortly after their relationship commenced he purchased a Mitsubishi Wagon “for the wife”. The wife says that this vehicle had been purchased by the husband before she met him and was used as a “recreational” vehicle, the husband then being very involved with a sport club, and that he also had a “single cab” work truck.
199.The parties’ first home, purchased when they were engaged to be married, was at Suburb Y in Sydney. The husband says that “he” purchased this home for $172,500, and that he contributed $35,000 by way of equity from the sale of his 1/3 share in 2 family properties to his brother and father.
200.The wife says that both she and the husband purchased the Suburb Y property, when she was working full time at Suburb N City Council and the husband in his trade business. She said that even with both their incomes, they were unable to obtain a mortgage on their own. The wife said that her father thus provided a third party security by way of his apartment at Suburb N.
201.The wife does not dispute the husband’s contribution of $35,000 in the manner described by the husband. Indeed, his evidence is supported by a statutory declaration by his mother, annexure 3 to his affidavit filed 10 February 2011.
202.The wife says however that her father lent the parties $30,000 for renovations, but when they offered to repay that amount her father said that they should “keep it”, to help them.
203.The husband said that the Suburb Y house was not habitable and he spent his “savings” on the extensive renovations, all of which work was either done by him or by using his contacts in the building industry, the renovation works costing about $12,000. He said also that whitegoods and furniture were purchased at the cost of $10,000. I did not understand his affidavit evidence in this regard to claim that he alone contributed to this cost of the whitegoods and furniture.
204.Also, the circumstance of the wife’s father lending the parties $30,000 for renovations (the loan subsequently being forgiven) would belie I think the husband’s claim that the renovation contribution was solely his own. Moreover, the husband does not offer any evidence that at the time of the renovation he had “savings” of about $12,000.
255.Further, the husband’s financial statement filed 10 February 2011, Part N, a sworn document, lists expenses of $650 per week for the children. Again, this could not be met on an income of $26,000 per year. The husband, however, as I understand the evidence, receives Centrelink assistance for the children’s expenses. The details of these amounts he has not disclosed, but are indicated by reference to the wife’s affidavit filed 28 February 2011, annexure G, as about $794 each 4 weeks, or about $198.50 weekly. This however related to 2010, when D still lived with the husband. Presumably, the amount now is less.
256.The wife said that in her belief the husband is capable of earning up to $122,000 per year: wife’s affidavit filed 28 February 2011, par 18. The husband had said in his earlier affidavit filed 10 February 2011, par 70, that even at the busiest time in his business when he had 5 employees he still only managed to earn $60,000, that the wife is erroneous that he has the capacity to earn $100,000, that he has never earned that amount of money and understands from his colleagues that not many people in his trade earn anywhere near that amount.
257.In his affidavit filed 28 February 2011, pars 8 and 9, the husband referred to reliance by the wife on information provided by the husband to QCAT where in an affidavit filed with QCAT he stated that he earned up to $680 per day, saying that “This figure is a charge out rate not a nett income”.
258.I have referred earlier, in dealing with item 5, to the basis of the husband’s claim against the wife for $20,000 loss of income or potential income for 15 days, and that even taking into account holiday time that claim, if true, would have yielded a gross income of more than $300,000 per year. Thus, unless the basis of the husband’s claim against the wife for $20,000 loss of income or potential income for 15 days was a complete fabrication, and assuming it for the moment to have some element of truth, the husband’s own evidence would tend to show a potential net income of considerably more than $60,000, and certainly considerably more than $26,000 per year.
259.In cross examination of the husband by Mr Carmont, the husband said that he either did not keep or was unable to produce books of account for his business, or any list of expenses or overheads, as I recall, on the basis that when he purchased particular fittings for particular jobs he passed on the cost to clients. In my view there must however at least be a record of invoices. The wife also observed that when the husband purchased fittings for clients, he passes on a 10% or 20% mark up, in addition to his labour costs for each job.
260.I would observe that the husband’s evidence as to his true income, and income earning potential, was so inconsistent as to not be reliable, and further that his tax returns for income he chooses to disclose are also not likely to be reliable. For example, in the 2009 year, the husband’s tax return, as I recall, disclosed $26,000 income, the same figure which he claims for the 2011 year he is capable of earning.
261.The husband said that his trade requires physical work, and asserts that he has declining capacity to continue such work, because of his age. The husband however is only 50 years and, as mentioned earlier, did not adduce any evidence of ill health or incapacity.
262.I have detailed earlier the wife’s work experience and qualifications, and the husband’s assertion that she could be earning about $42,000 per year in a clerical position. The wife’s 2010 tax return however shows that her taxable income was $19,000. The wife also has her qualification in the fitness industry. At the time of the trial, she was about to complete a course in the finance industry. She has experience also in clerical work. She said in her oral evidence however “I am trying to get a job, and I am trying to get ahead”, and that at the time of the trial she had applied for “over 50 jobs”. She estimated that if employed in a clerical she could earn about $20-$22 per hour, “maybe maximum $48,000 gross”, such that she anticipated that her best earning capacity would be less than $1000 per week gross.
263.There is no evidentiary reason to think that the parties, in the future, by reason of any physical or mental incapacity, cannot engage in gainful employment and, subject to lifestyle considerations, each maximise their respective income earning capacities.
Property
264.As the pool is of net negative value, these property proceedings will leave each of the parties with very little.
Children
265.According to the consent orders I made on 21 October 2011 J, 16 years, and T, 14 years, will live with the husband, and spend time with and communicate with the wife as provided in those orders.
266.D, 19 years, now lives independently.
Commitments – including child support
267.The husband and the wife each have a responsibility to maintain themselves, and the children.
268.The husband in these proceedings sought by his further amended response filed 11 July 2011, under the heading “Child Support”, par 17, an order that the wife pay him $200 per week for child support.
269.On 21 October 2011, I dismissed par 17, for reasons then given, to which I would refer without setting out.
270.The wife, as previously mentioned, is paying $44.17 per month child support.
271.As is it presumed that any future Child Support Agency assessments for child support will be just and equitable, or, if not, the s 117(1) and (2) Child Support (Assessment) Act 1989 (Cth) process would ensue, I do not think that the present child support position, having regard to the likely income earning capacity of the parties, is a basis for s 75(2) adjustment.
Responsibilities to support another person
272.The husband and the wife each have a responsibility to support the children, to the extent they are able, and also D in her tertiary education, to the extent they are able.
Pensions etc
273.The wife has had the benefit of her Newstart allowance since April 2011, $485.97 per week, however with $66.03 per week deducted towards repayment of the Centrelink debt in her name.
274.The husband, as I have mentioned, receives Centrelink assistance for the children’s expenses, which during 2010 were about $794 each 4 weeks, about $198.50 weekly, but presumably now less as only J and T remain living with the husband.
275.Presumably, the wife’s Newstart allowance will not be ongoing after qualification in her course, however, there was no evidence as to for how long the wife is or was likely to be entitled to continue to receive the Newstart allowance.
Superannuation
276.I have dealt with this. Neither party presently is in receipt of superannuation benefits. For the future, each presently has a very modest superannuation interest.
Standard of living
277.The parties had a very promising standard of living 17 years ago, with assistance from their families on both sides. However, it would appear that each has made “lifestyle” choices so as not to have maximised their respective income earning potential, the husband by his involvement with various sport clubs, and the wife, towards the end of the marriage, in pursuing a fitness industry career.
278.When the parties came to Queensland in 1999, they had equity in the Sydney Suburb Z property of about $160,000-$170,000. Now, despite nearly 9 years of hard work and contribution since then by each of them until their separation in September 2008, they have gone “backward”, to the extent of their now considerable joint liabilities (as I have determined) far exceeding their assets.
279.Each would like the standard of living which they enjoyed during the marriage. However, it is plain that the standard of living they adopted was beyond their collective and individual means, by reason of their “lifestyle” choices.
Wife’s partner’s financial circumstances
280.The wife gave evidence, which I accept, that whilst Mr P is her partner, he spends little time in Australia.
281.Mr P has an Audi motor vehicle.
282.When Mr P is in Australia he lives with the wife in her rented premises, and contributes to the rent and groceries. When Mr P is not in Australia however the wife pays the full rental and her grocery expenses, supplemented however from time to time, as I understand her evidence, by incidental cash gifts from her father.
283.The wife has had and enjoyed a number of overseas trips with Mr P, who is 48 years. He is employed in the maritime industry.
284.The husband suggested (by reference to a random Google search: see ex 9) that Mr P could earn potentially up to USD500 per day. However, as previously mentioned, according to the wife, Mr P could earn “at best” USD160,000-200,000 per year if full time, but Mr P does not wish to be “at sea” 52 weeks per year, as the work is difficult, such that Mr P chooses to work part time and does not earn “anything like” USD500 per day.
285.The husband submitted that the wife “travels the world” with Mr P, during which time she does not earn the income which she is capable of earning. I have dealt with this already.
Other facts or circumstances – wife’s accident claim
286.I have dealt above with the factual circumstances of the wife’s accident claim in relation to item 17.
287.As will be seen below, I will order that the wife have the net proceeds (if any) of her accident claim.
288.It seems to me that there should be no adjustment for this circumstance for the following reasons. First, the accident occurred on in June 2008, very late in the 17 year period of the parties’ relationship and marriage, and 3 months before their separation. Secondly, although the advices from the solicitors, exs 17 and 18, seem predicated on the basis that liability is not in issue so that definitely the wife will receive an award and, seemingly, a presumption that the matter of quantum will settle, there are many potential variables as to the amount which might be received net of legal costs. Further, it is not yet known which of the specific heads of claim will apply for example, as to past and future pain and suffering, past and future medical expenses, past and future lost income and superannuation and the other heads of claim potentially identified as pointed out in K Law Firm’s advice (ex 17).
289.There is also the circumstance, as I mentioned when dealing with contribution, that the husband will not have contributed to any net proceeds of the wife’s accident claim.
Conclusion
290.In my view, there are no s 75(2) matters which would warrant any adjustment.
291.In relation to the parties’ present and future income earning capacity, or potential, the husband either is not earning to his capacity, or is concealing income from the Australian Taxation Office. Whilst it is not certain, the assessments underlying the DCT claim, ex 1, for the years 1999, and 2004-2008, may be default based assessments.
292.The wife, at the moment, also is not earning to her capacity, however, that is because recently she has been completing a course. Even though the wife’s father, and her partner Mr P, seem to give the wife some financial assistance from time to time, this appears to be incidental and may or may not be ongoing.
293.However, whether in the future each will earn to his and her capacity, for his and her own benefit respectively, and that of the children, is a matter for each of them to address, according to their present and future lifestyle choices.
294.Whilst J and T live with the husband, and he is meeting most of their expenses, he, as I find, has the greater income earning capacity, to compensate for that, and further receives Centrelink assistance for the children, as well as modest child support from the wife.
295.The parties, I should add, have equal shared parental responsibility for the children pursuant to the consent orders which I made on 21 October 2011.
296.In all of the circumstances I find that there should not be any adjustment for the s 75(2) matters.
A legal matter – power to make a s 79 order when there is a net negative pool – and what is the position of creditors in such a case
297.The legal question arises whether having regard to the parties’ net negative pool (whether or not their superannuation interests are included in it) there is power under s 79 to make an order (other than an order dismissing the wife’s application).
298.In Trustee of the Property of G Lemnos, a Bankrupt & Lemnos (2009) FLC 93-394 Coleman J, with whom Thackray and Ryan JJ agreed, concluded that there is no legislative impediment to the making of a s 79 property settlement order “notwithstanding that the parties have unsecured liabilities which may exceed the parties’ total equity in [their] property: Coleman J at [96]; Thackray and Ryan JJ at [201].
299.For full analysis of the question, I would refer to my reasons for judgment in Kawanda & Kawanda (No 3) [2012] FamCA 273, a decision handed down on 1 May 2012, in particular at [193]-[228], involving consideration of the decision of O’Ryan J in ASIC v Rich (2003) FLC 93-171.
300.I would refer to Kawanda further as to the position of unsecured creditors in particular as to whether notice should be given to them of a proposed s 79 property settlement order: see also at [193]-[228].
301.I would observe that in this particular case all of the parties’ identified creditors are unsecured creditors and that neither the husband nor the wife has adduced any evidence of notice to any of the identified unsecured creditors.
Decision – Subject to the fourth step
302.I reject the husband’s claim that he have 100% of the “remaining assets” of the parties, including the net proceeds of the wife’s accident claim and including both the husband’s and the wife’s superannuation interests as not a just and equitable proposition and untenable.
303.Mr Carmont, for the wife, sought ultimately, in his oral submissions, that the parties have and retain their respective superannuation interests, the husband have his Volkswagen motor vehicle, the wife have the net proceeds (if any) of her accident claim, and that the balance sale proceeds held in the trust account of C Law Firm be used to pay the school fees, accountants and bookkeeping fees and the balance be divided equally between the husband and the wife as direct payments to them, saying that the wife in particular would use her cash payment to pay her Australian Taxation Office liability.
304.It is reasonable I think that the parties retain their respective superannuation interests, comprising in aggregate $30,129 in respect of which I have determined contribution should be regarded as equal, their respective interests at the time of the trial being $16,441.40 (husband) and $13,687.97 (wife). If I were to recognise equal contribution strictly, there would be a splitting order in the wife’s favour to have the base amount of $1377 of the husband’s superannuation interest. However, the difference is de minimius, and may be likely to be absorbed in administration costs. Further, a “mathematical” approach is not required, even where there is equal contribution, especially in relation to such a small pool.
305.It is sensible that the husband have his Volkswagen commercial ute motor vehicle, which he needs to earn his income.
306.I have referred already to the circumstance that the wife will have the net proceeds (if any) of her accident claim, but there will be no s 75(2) adjustment for this circumstance. On the available material, if there is an award, it is likely to be a modest amount, and potentially may comprise matters such as past or future medical fees and the like, according to the various heads of claim set out in K Law Firm’s letter: ex 17.
307.The remaining question is to determine what is just and equitable in relation to the balance proceeds of sale $60,218, in the context of a just and equitable order overall.
308.If the school fees, accountancy fees and bookkeeping fees are paid (totalling $22,315.50) the balance proceeds will be about $37,902.50, less any further fees of C Law Firm.
309.Although no notice has been given to the unsecured creditors, I have considered whether even at this late stage the Court should arrange notice by way of procedural fairness, although, in this particular case, no order altering the interest of any creditor is sought or will be made, nor any order substituting any debtor. However, such would I think unduly delay the proceedings and judgment. What I propose to do therefore is to formulate the s 79 order I propose to make, and then request the Court to give notice to the Australian Taxation Office and Centrelink as to whether they have objection, allowing 30 days to object.
310.Whilst I am conscious that in any bankruptcy, unsecured creditors would rank in pari passu, I am not obliged to apply that principle here. In my view the school fees should be paid, to avoid potential embarrassment to the children. The accountancy and bookkeeping fees are small, and should be paid as it is unfair for small businesses to have to sue for the recovery of such small amounts and possibly economically not viable for them to do so.
311.Of the remaining amount, which will be maximum $37,902.50, I propose to order that after the period of notice such be paid to the Australian Taxation Office in relation to the husband’s tax debt, for the following reasons.
312.First, all or most of the parties’ debt to the Commonwealth should be regarded as joint debt. In particular, the husband’s tax liability and the wife’s Centrelink debt, as I have determined, relate to periods before the parties’ separation. The wife’s tax debt, as I have determined, seems to relate partly to the pre-separation period and partly to the post separation period. However, presently it is “non-active”.
313.Secondly, the aggregate debt to the Commonwealth at the time of the trial was $183,925, the wife’s aggregate being $57,252.62 (tax and Centrelink) (about 30%), and the husband’s debt $126,673 (tax) (about 70%).
314.Taking into account that:
a.the husband is negotiating to reduce his Australian Taxation Office debt claimed against him
b.the wife’s Australian Taxation Office debt presently is non‑active and may or may not be re-raised and, in particular,
c.the husband’s greater post separation contribution,
it seems to me to be just and equitable to order that the balance proceeds, which will be of the order of $37,902.50, less any further C Law Firm’s fees, be paid by C Law Firm directly to the Australian Taxation Office in relation to the husband’s taxation debt, preferably to be applied first to his primary tax liability, but that being a matter for the Deputy Commissioner of Taxation.
315.Such would leave the husband with a tax claim against him (as at the time of the trial) of at least $88,770 in relation to the District Court proceedings (ex 1), and would leave the wife with her Centrelink debt and her Australian Taxation Office debt, if such be re‑raised.
316.Such order, in my view, would recognise the husband’s greater post separation contribution by:
a.the husband having his Volkswagen motor vehicle and
b.payment of a portion of his Australian Taxation Office debt taken out of the marriage (his Australian Taxation Office debt being greater than the wife’s, and his not presently being the subject of discretionary reduction to nil, as presently is the wife’s, but subject to its being re-raised).
317.The husband’s remaining debt to the Commonwealth, according to ex 1, at least $88,770, but potentially more with general interest charges and costs of the District Court proceedings, would remain as his sole liability, that being considerably more than the wife’s aggregate debt to the Commonwealth in her name $57,252.62, or her Centrelink debt considered alone, $29,180.62, if her tax debt is not re-raised.
318.If the husband is able to negotiate with the Australian Taxation Office a better position, for example, to have all or some of the general interest charges waived, or to have the whole debt regarded as non-active, he will have that to his further benefit.
319.This however is the best I can do, in the husband’s favour, having regard to his greater post separation contribution, because, put simply, there is nothing further of the parties’ property and assets which presently can be distributed.
320.In relation to my decision not to award the husband the whole of the wife’s superannuation interest, as he seeks, or any part of it, I take into account that the husband and the wife each should have the prospect of some modest superannuation to accumulate for their retirement years.
321.The husband, possibly, will feel aggrieved by my not determining that he should have the wife’s superannuation interest, on the basis that she is yet to receive her accident claim proceeds and could, for example, put such into superannuation when it is received, if she so chose.
322.However, for reasons already explained, I am satisfied that the wife should have the net proceeds (if any) of her accident claim. My use of the expression “if any” in relation to the net proceeds of the wife’s accident claim is a precaution because, until and if there is a settlement of the claim, it cannot be predicted with any certainty that the wife will receive an award. In so saying, however, I would emphasise that I am cognizant, having regard to exs 17 and 18, that these certainly do seem predicated, at this stage, on an anticipated award of some amount to the wife.
323.In summary, I will indicate the order I propose to make, subject to notice to the Australian Taxation Office and Centrelink and those institutions having 30 days to object.
324.Certainly, it is desirable to make an order to finally determine the parties’ financial relationship.
The fourth step – Phillip's Case
325.In Phillips and Phillips (2002) FLC 93-104 at 88,985, the Full Court made clear its acceptance of the principle that at times the application of percentages does not necessarily produce a just and equitable result; that it is the order which is to be just and equitable, not just the underlying percentage division of the net value of the parties’ assets; that in any event it is the real impact in money terms which is ultimately the critical issue; and finally that in the consideration of whether the result is just and equitable it is the justice and equity of the actual order, not just the percentage distribution, which must be considered.
326.For reasons already set out, I am satisfied that the order which I propose to make is just and equitable as between the husband and the wife.
Other matters
Paragraph 2 of the husband’s further amended response filed 11 July 2011
327.I have mentioned that the husband seeks, by par 2 of his further amended response filed 11 July 2011, as part of the s 79 property order he seeks, that he have the wife’s accident claim moneys, as a “lump sum”, for “outstanding child support”.
328.However, as already observed, as at the trial date, there was no amount “outstanding” in relation to Child Support Agency assessed child support.
329.The husband’s claim in par 2 is thus not sustainable, and I will dismiss it.
Interim order made on 10 June 2011
330.On 10 June 2011, I ordered, upon the husband giving the usual undertaking as to damages:
IT IS ORDERED UNTIL FURTHER ORDER
1. Any amount which the wife may be awarded or which may be agreed in relation to personal injuries suffered by her in a motor vehicle accident on […] June 2008, net of any fees costs and charges of her personal injury lawyers, be held in the trust account of [K Law Firm].
AND IT IS FURTHER ORDERED
2.The costs of the husband’s application in a case filed 16 May 2011 are reserved to the trial Judge.
331.I would refer also to the reasons for judgment I gave on 10 June 2011, already referred to.
332.To the extent that the husband sought the order in relation to par 2 of his further amended response for “outstanding child support”, the order now is seen as no longer sound, or warranted, and I will discharge that order.
333.Further, having regard to my reasons for judgment 21 October 2011, I note that the husband has not since 21 October 2011 filed any application for a departure order in relation to assessed child support. Thus, there is no reason to maintain the order which I made on 10 June 2011, for any purpose.
334.As I have said, I will discharge that order.
I certify that the preceding three hundred and thirty-four (334) paragraphs are a true copy of the reasons for judgment of the Honourable Justice O’Reilly
Associate:
Date: 4 May 2012
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