CORLETT & CORLETT
[2019] FCCA 2129
•6 August 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CORLETT & CORLETT | [2019] FCCA 2129 |
| Catchwords: FAMILY LAW – Valuation of business assets – whether assets should be sold – whether valuation should be determined by sale or by a valuer – not readily realisable assets – whether the proposed orders are just and equitable – allegations of non-disclosure. |
| Legislation: Family Law Act 1975 (Cth), ss.74, 75 Child Support Assessment Act 1989 (Cth) ss.116 and 117 |
| Cases cited: Chang v Su [2002] FamCA 156 Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC ¶93-1436 |
| Applicant: | MS CORLETT |
| Respondent: | MR CORLETT |
| File Number: | MLC 12170 of 2017 |
| Judgment of: | Judge McNab |
| Hearing dates: | 6 and 7 December 2018 and 14 February 2019 |
| Date of Last Submission: | 6 March 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 6 August 2019 |
REPRESENTATION
| Counsel for the Applicant: | Dr Ingleby |
| Solicitors for the Applicant: | Marshalls+dent+wilmoth lawyers |
| Counsel for the Respondent: | Mr Wilson |
| Solicitors for the Respondent: | Warren, Graham & Murphy Pty Ltd |
ORDERS
The Applicant wife (‘wife’) arrange for the money remaining in the parties’ ANZ Bank (no. …) containing the sum of approximately $276,000 to be paid to her as a part property settlement.
Upon request from the wife, the Respondent Husband (‘husband’) sign all documents provided to him by the wife to give effect to order 1 of these orders.
The husband pay to the wife, by way of part property settlement, the sum of $500 per week commencing 13 August 2019 and weekly thereafter until further order.
The husband, his servants and/or agents be prohibited from diminishing the value of any interest he has in the Business G in Town J, the Business J in Town J and the Business J in Town H (collectively, ‘the businesses) or otherwise disposing of or further encumbering the businesses without 14 days prior written notice to the mother and her solicitors, save that it is acknowledged that the Business J in Town H has been sold and the settlement of that sale is pending and that steps taken by the father to effect settlement of that sale will not constitute a breach of these orders.
The husband or his solicitors must notify the wife upon settlement of the Business J in Town H as soon as practicable.
The parties have liberty to apply:
(a)generally;
(b)to have orders made in chambers including a superannuation splitting order if procedural fairness has been afforded to the trustee; and
(c)for any order for costs upon written submissions.
The matter be adjourned to the Federal Circuit Court of Australia in Melbourne on 18 August 2020 at 9:30am for Mention.
Prior to the parties returning to Court to seek final orders (other than by consent), they must engage in mediation with a suitably qualified legal or accounting professional.
The parties’ costs be reserved.
IT IS NOTED that publication of this judgment under the pseudonym Corlett & Corlett is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 12170 of 2017
| MS CORLETT |
Applicant
And
| MR CORLETT |
Respondent
REASONS FOR INTERIM JUDGMENT
Introduction
On 22 November 2017 the Applicant mother (‘the mother’) filed an application in this Court seeking property orders.
On 14 December 2017 the Respondent father (‘the father’) filed his response.
The matter was heard in this Court on 6 and 7 December 2018 and 14 February 2019. At the commencement of the final hearing, the issues in the matter had been narrowed to:
(a) the value of the businesses (conducted by the father in partnership with others) and whether the values should be determined by the market or by the opinion of Mr K.
(b) whether the Respondent should solely bear the risk of the businesses selling badly.
(c) the income the Respondent has derived from the businesses and the extent of his future earning capacity
(d) an appropriate property settlement.
Despite the narrowing of issues, the Court has been unable to determine the value of the main asset being the business.
Background
The mother and the father began cohabitating in … 2004, before marrying on … 2005.
The father brought to the relationship a 20% share in a business which he purchased in 2003 (having previously had a 10% share in 2001). The father currently has a 40% share in the Business G in Town G and Business J in Town J and a 50% share in the Business J in Town H. It appears his share increased during the relationship, but did not give evidence when or how these interests increased.[1]
[1] See, for instance, [45] of the Respondent’s trial affidavit filed 29 November 2018.
The parties also had residential property in their own names prior to their relationship. The mother had a property in Suburb BB and the father had a property in Town H. Both of these properties were sold in 2005 to fund the purchase of L Street, Suburb M, for $404,000. The mother’s net proceeds from her sale of her Suburb BB property was around $50,000. The father’s net proceeds from the sale of his Town H property was slightly higher, being around $90,000.
On … 2006 the parties’ only child, [X], was born (‘the child’).
In … 2011 the parties purchased N Street, Suburb O (‘the Suburb O property’) for $1,040,000. The mother and child resided in Melbourne while the father resided in Town J (where the businesses are based) during the week and lived in Melbourne on the weekends.
In 2013 the mother received an inheritance of $80,000 from her grandfather.
The parties separated in 2015 (being 18 March 2015 on the mother’s evidence and 18 October 2015 according to the father).
In around June 2016 the parties ceased cohabitating and sold the L Street Suburb M property (for $490,000) and the Suburb O property (for $1,300,000 with around $400,000 in net proceeds).
On 23 November 2018 the father and his business partner sold the Business H for $1,250,000. The settlement date for this sale was on 4 March 2019. The mother submits that there is no evidence that any money has changed hands or that the settlement is complete. The Court is not in a position to determine that issue as there is no evidence in relation to it.
At the time of hearing the child was 12 years old. She attends a private school in Melbourne and lives in a rental accommodation with her mother.
The mother works about 15 hours per week on a casual basis for a professional. She also does some cleaning work and has some capacity to work slightly longer hours as her daughter gets older.
The child also lives with the father each weekend from 7:30pm Friday until 8pm Monday, for one week during each term school holiday period, for two weeks during the Christmas school holiday period and other times as agreed between the parties.
Statement of Issues
Pursuant to trial directions made 22 May 2018, the parties provided the Court with an agreed list of issues requiring determination and a statement of agreed facts relevant to the agreed issues.
The document provided:
The proposed list of issues required to be determined by the Court:
1. The nature and extent of the parties’ interests and in particular:
(a) Whether a value is to be attributed to the interests in the Town J businesses or whether the [mother’s] settlement is to be based on a percentage of the sale price;
(b) The [mother] doubts the intention to dispose of the interests and does not accept the commercial rational for same;
(c) Whether the [father] is able to call up his beneficiary loan accounts with the Business D and Business C Trusts and the overall impact of the parties’ loan accounts;
(d) Whether the interests in the businesses should be calculated according to the surplus/deficit of debtors over creditors;
(e) Whether tax liabilities should be deducted from “the pool” or met from future income;
(f) Whether it is just and equitable for the [father] to solely bear the risk of the businesses selling badly whilst the [mother] enjoys a risk-free fixed amount, in the event that the remaining businesses are sold;
(g) The appropriate percentage division between the parties after allowing for all relevant factors including the disparity in their initial contributions;
(h) Whether, after the sale of the businesses (if sold), the [father] will have the capacity to pay for the child’s private secondary school education, and what contribution the [mother] should make to such costs; and
(i) Whether a departure order should be made to provide for [X]'s Years 7 to 12 at Suburb P School.
The proposed statement of agreed facts relevant to the agreed list of issues:
1. The parties’ respective contentions as to the nature and extent of their interests derive from the differences between:
(a) para 84 of the [father’s] Trial Affidavit – to which the [mother] takes objection insofar as it purports to be evidence of value; and
(b) the Statement of Assets and Liabilities in the [mother’s] Outline of Case Document, which she submits is based on Mr K’s expert evidence.
Paragraph 84 of the father’s trial affidavit relates to what the father says is the valuation of the current asset pool. This is contrasted by the Statement of Assets and Liabilities contained in the mother’s Outline of Case.
The parties’ proposals
The mother’s proposal, set out in her final submission filed on 25 February 2019, seeks:
l. That the Applicant retain the balance of the funds held in ANZ Bank account number … held in the joint names of the parties in the sum of approximately $273,000.
2. That the Respondent pay to the Applicant a further sum of $468,000 by way of weekly payments of $1,500 for a period of 6 years and that such weekly sum be adjusted for CPI on 1 January in each year thereafter. Such payments are to commence on the first Monday following the making of orders and each Monday thereafter by way of a deposit of the funds by the Respondent into a nominated bank account of the Applicant.
3. That the Applicant receive a further 65% of the proceeds of any sale of the businesses.
4. That the Respondent indemnify the Applicant in relation to all costs of sale, taxation and/or any other liability that may arise out of the sale of the businesses.
5. That there be an equalisation of the superannuation entitlements.
6. That pursuant to ss 116 and 117(1), (2)(b)(ii), (2)(c)(ia) and (ib) of the Child Support Assessment Act there be a departure from the administrative assessment of child support payable by the Respondent to the Applicant for the support of the child and that in its place the Respondent pay the following:
(i) periodic child support in the sum of $400 per week; and
(ii) non-periodic child support for the child as follows:
a. all school fees, uniforms, books and additional compulsory expenses for the child's attendance at Suburb P School or such other school as agreed between the parties in writing until the conclusion of the child's high school education;
I private health insurance for the child at the current level of cover; and
II 50% of all out of pocket medical and ancillary expenses for the child, save for orthodontic expenses for which the Respondent will pay 100% of the cost of same.
7.That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(i) each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders;
(ii) monies standing to the credit of the parties in any bank account is to become the property of the party in whose name the account is registered save for as referred to above:
(iii) all insurance policies remain the sole property of the named owner;
(iv) each party be solely liable for and indemnify the other against any liability in his or her name, including but not limited to any credit card account and any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(v) any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
The father’s proposal, set out in a letter to the mother’s solicitor dated 15 February 2019, seeks:
Please find our client’s most recent proposal, put on or about 7 December 2018 set out as follows:
1. That within seven (7) days of the date of the orders the parties do all acts and things and sign all documents necessary to close ANZ bank account number businesses held in the parties joint names and to distribute the funds held in that account as to 65% to your client and 35% to Suburb P School, taking into account the $100,000 the your client will receive from this account by the orders made 14 February 2019;
2. That our client’s share of the proceeds of the sale of the three businesses, after payment of all debts, loans, current and outstanding business and personal taxes payable as a result of the sales, be divided 65% to your client and 35% to our client;
3. That in relation to any debts owing that are not paid as part of the sales of the businesses, our client indemnifies your client in relation to same;
4. That until such time as the business(es) sell or become insolvent, our client will continue to pay the interim spousal maintenance as per the orders made 18 December 2017[2] as well as an additional amount of $500 per week cash payment to your client by way of part-property payments additional to your clients other entitlements in this proposal.
5. That our client will continue to irrevocably authorises any Agent or Broker engaged from time to time to sell the business to send all correspondence concerning the sales to your client.
6. If the businesses are not sold within eighteen months from the date of these orders, your client be at liberty to apply to the Court for further orders and Directions in relation to the sales.
7. That there be an equalisation of the parties superannuation entitlements.
8. That unless otherwise specified in these orders and save for the purposes of enforcing any money due under the terms of these orders each party shall be solely entitled to the exclusion of the other to all other property, including choses-in-action, in the possession of such party as at the date of these orders and each party shall be solely liable for an indemnify the other against any liability encumbering any item of property to which at party is hereby entitled pursuant to these orders.
[2] The orders of 18 December 2017 provided by order 4 that by way of ongoing financial support for the mother and child, the father continue to pay the expenses described in [31] of the father’s affidavit affirmed 13 December 2017. Those expenses comprise rent of $400 per week, child support of $275 per week, school fees and expenses of $439 per week, health insurance $53 per week car, registration $13 per week car insurance and $24 per week making total payments of $1,204 per week.
Areas of agreement
At the time of final submissions neither party is, by their respective final proposals, asking the Court to determine the asset pool at the date of hearing.
The parties are in agreement that there should be an adjustment of the property pool of 15% towards the mother. The father puts that this is a fair adjustment given, ‘if not solely, based on the difference in the parties’ earning capacities, as they share the care of their child [….] almost equally’.[3]
[3] Respondent’s submissions filed 4 March 2019, [2].
The parties are in further agreement to exclude superannuation from the 15% adjustment towards the mother. Both parties propose that the parties’ superannuation is equalised, causing around $30,000 from the father’s superannuation account to be transferred to her.
The mother engaged Mr K, a chartered accountant and Senior Consultant for Accounting Firm, to value the father’s businesses. In doing so, Mr K gave evidence of the structures behind the businesses at page 1 and 2 of his report, dated 16 November 2018. There was no dispute in relation to his evidence as to these structures:
Business C Hybrid Trust. (Trustee: Business A Pty Ltd). This trust operates the 2 businesses in Town J, being Business G in Town G and Business J.
Business C Unit Trust. (Trustee: Business A Pty Ltd). This trust acts as a service trust for the above businesses and charges a management fee for operational and overhead expenses.
Business C Pty Ltd. This company acts as a banker to the above entities, borrowing from external parties and then on-lending to these entities.
Business D Hybrid Trust. (Trustee: Business B Pty Ltd). This trust operates the Business J in Town H.
Business D Unit Trust. (Trustee: Business B Pty Ltd) This trust acts as a service trust for the above business and charges a management fee for operational and overhead expenses.
Business D Pty Ltd. This company acts as a banker to the above entities, borrowing from external parties and then on-lending to these entities.
A non-operational entity, the Mr Corlett Family Trust (Trustee: Company E Pty Ltd), holds the Corlett interest in each of the Business C and Business D unit trusts.
Issues in dispute
Despite having agreed on the how the asset pool should be apportioned, the parties are in dispute on the value of the asset pool and how that value should be ascertained (whether by a valuer or by sale on the market). The particular issue is the father’s interest in three businesses and the value of these interests:
Asset Interest Business G 40% Business J 40% Business H 50%
The father is proposing to sell the businesses and apportion the proceeds according to the agreed rate above. He says that he wishes to be employed as a health care worker. He would then earn roughly $90,000 per annum.
The change of role from owner to employee is said to be motivated by changes in the market, particularly the decreasing profitability of his businesses and in the business generally.
The mother submitted that ‘the relevant financial documentation does not justify the decision to sell and in particular does not justify the catastrophizing by the Respondent in the witness box’.[4]
[4] Applicant’s submissions filed 25 February 2019, [24].
The mother believes the Court should draw the inference that, either:
a)the father is deliberately attempting to divest himself of his income earning capacity (following a ‘“purely coincidental” decision in August 2017 to renege on a previously agreed settlement’);[5] or
b)there is no genuine decision to sell.
[5] Ibid [32].
The father denies these allegations. The father’s position is that he is not attempting to divest himself of income earning capacity, rather, ‘that the three partners [of the businesses] have come to a decision to sell the businesses on the basis of a trend towards decline [in the business] that they in their collective wisdom have discerned, and to do so before the situation becomes dire so that something can be retrieved’.[6]
[6] Respondent’s submissions filed 4 March 2019, [8].
The father further submits that his withdrawal from the proposed settlement on the basis of ‘harsh lease terms’ is an explicable and valid reason.[7]
[7] Ibid [9](a).
The father responds to the allegation that he does not intend to sell the businesses by proposing a further order that:
If the businesses are not sold within eighteen (18) months from the date of these orders that the Applicant be at liberty to apply to the Court for further orders and Directions in relation to the sales.
The parties have also been unable to reach agreement on what the mother appears to be calling, interchangeably, a property settlement or spousal maintenance. The mother seeks weekly payment of $1,500 for 6 years, totalling $468,000 (excluding interest).
It is the father’s position that these instalment payments lack a rational basis, failing to state how the overall total is just and equitable and how the instalment payment total is calculated.
If the father does sell his interest in the businesses and becomes an employed health care worker, the mother’s proposed order would be an onerous burden: being a yearly payment of $78,000 from a $90,000 per-annum income. Counsel for the mother submits that the father is placing himself in this situation purposefully: that the father is willing to sell his interest in the businesses to reduce his earnings in order to reduce the amount to be paid to the mother.
The parties are in further disagreement as to how the liquid assets should be treated. The mother seeks an order that all funds held in the parties’ joint bank account be transferred to her. The father disagrees, claiming ‘there is no just and equitable reason why she should receive now all of the presently available cash’.[8]
[8] Ibid [11].
Evidence at trial
As produced from the mother’s Outline of Case filed 3 December 2018, the mother relies upon the following documents:
a)Amended Initiating Application filed on 22 November 2018;
b)Affidavit of Mr K (annexing the business valuation report) filed on 22 November 2018;
c)Trial Affidavit of the mother filed on 22 November 2018;
d)Financial Statement of mother filed on 22 November 2018.
As produced from the father’s Outline of Case filed 4 December 2018, the father relies upon the following documents:
a)Response filed by the father on 14 December 2017;
b)Affidavit of the father filed on 14 December 2017;
c)Financial statement of the father filed 14 December 2017;
d)Amended Response filed on 29 November 2018;
e)Trial Affidavit of the Respondent filed on 29 November 2018; and
f)Affidavit of Mr Q filed on 29 November 2018.
g)Exhibits to affidavits of Mr R and Mr S (being exhibits 1 and 1).
The mother’s evidence
The mother gave evidence by way of her affidavit filed 22 November 2018.
She noted that in the financial year ended 30 June 2017 the father’s taxable income was $560,020 and for the financial year ended 30 June 2018, the father’s taxable income was $572,900. Her taxable income for the respective financial years was $17,372 and $13,370.
In relation to contributions, the mother gave evidence that at the commencement of cohabitation around 2004 she was employed by the Employer CC as a professional on a full-time basis earning approximately $80,000 per year. She owned a house in Suburb BB purchased in 2002 for the sum of $254,000 which was subject to a significant mortgage.
She gave evidence that father was employed on a full-time basis as a health care worker at the Business G in Town H. She further noted that he owned a property in Town H that was heavily encumbered. The mother expressed the belief that the father may have had a 10% interest in the business.
The mother and father sold their separate properties in around 2005 with the net proceeds of the father’s property being approximately $90,000 and the net proceeds from the sale of the mother’s property being proximally $50,000. The net proceeds of sale were utilised to purchase the L Street Suburb M property for $404,000, with a mortgage funding the outstanding amount.
The L Street Suburb M property was sold in January 2016 for $490,000. The net proceeds of this sale were approximately $100,000, and was applied to offset the mortgage secured on the property in Suburb O. The Suburb O property was sold in March 2016 for $1,300,000. The net proceeds of sale of the Suburb O property, being about $400,000, were deposited into an ANZ bank account in joint names. $50,000 of that sum was paid from that account by way of part property settlement in December 2017 in order to fund the mother’s legal fees.
From 2004, the mother worked as a professional on a full-time basis in a business owned by the father, earning about $47,000 per year. She also did part-time work for the Employer CC, earning extra income of about $300 per week.
Following the birth of their child, the mother was responsible for home duties and caring but did some part-time administration work for the businesses. When the parties moved to the Suburb O property, the father would travel to Town J and stay in a flat in Town J from Monday to Friday.
The father worked full-time as a health care worker throughout the marriage and was responsible for managing the family finances.
In 2013 the mother inherited the sum of $80,000 from her grandfather’s estate. Those funds were applied to reduce the mortgage secured against the L Street Suburb M property.
The mother received a further inheritance in the sum of $66,054.09 from her father’s cousin in … 2017, approximately 11 months after the date of separation.
The mother received taxation refunds of $20,701 for the financial year ended 30 June 2015 and $42,452 for the financial year ended 30 June 2016.
The mother by her affidavit gave evidence in support of a departure from the child support assessment for the stated reason that she wishes the father to continue to pay child school fees and any additional educational expenses (as he has always done). The mother gave evidence that the child has attended a private school since prep and that in addition to school fees, the father has been paying uniform costs together with compulsory education items. The mother states that she would like to have the opportunity to take her daughter to the movies or a show from time to time as, at present, she cannot afford to do this.
There was no cross-examination of any significance in relation to the matters raised by the mother in relation to the details of contributions and future needs.
The father’s evidence
The father gave evidence by an affidavit filed 29 November 2018. The father’s evidence in relation to the initial contributions made by the parties is substantially the same as the mother’s in terms of the value of assets contributed.
A significant part of the father’s evidence involved him explaining what challenges he perceives to be facing the businesses and the reasons for the partners deciding to sell the businesses.
In relation to the Business J, the father points to the cost of the lease in the shopping centre where the business is conducted, a reduction in the floor area of the leased premises without any reduction in rent, and the effects of the closure of the Town DD employer in 2017. The father said the closure of the Town DD employer reduced the number of people in the area and changed the spending habits of those who remained.
Similar remarks were made in relation to the Business G which was also said to have been affected by an expansion of a franchise in Town J.
The father gave evidence that there was a unanimous decision by all three partners to sell the businesses in about August 2017.
The father gave evidence that a decision was taken to sell the Town H business first. The Town H business was marketed by a Business Broker with an initial asking price in excess of $1,700,000. The Town H business was subsequently sold in November 2018 for the sum of $1,250,000 after extensive negotiation between June 2018 and the sale date in November. The Town J businesses have been marketed for sale as a pair, with a sale price recommended by a Business Broker of $7,500,000 with the aim to achieve a net sale price of about $7 million after selling costs and commissions. The properties have not been sold and there have been no offers made to purchase either of the outstanding businesses. The father expressed the opinion that his outstanding liabilities associated with the businesses is $4,057,360.00.
The father gave evidence that his taxable income, as shown in his taxation returns, was as follows:
a)for the financial year ending 30 June 2016, $731,167;
b)for the financial year ending 30 June 2017, $558,679; and
c)for the financial year ending 30 June 2018, $417,843.
The father gave evidence that, for the 2016 and 2017 financial years, he received dividend payments from Business C Pty Ltd (‘Business C’) and Business D Pty Ltd (‘Business D ’). He received $200,000 from Business C and $30,957 from Business D for the 2016 financial year. For the 2017 financial year he received a dividend of $79,448 from Business C.
The father also stated that because of the financial structure of the business group and because there were accruing loans that had to be paid to Business C and Business D , the father and his partners received advice that the loan should be repaid by way of non-cash dividends in the 2016 and 2017 financial years. The father stated that dividend payments, while marked as income for the 2016 and 2017 financial year and not actually received by the father, were assessed as being income (being sums of $230,957 and $79,448, respectively).
The father gave evidence that he currently pays $1,204 per week to the mother. He states that this includes payment for rent, child support, school fees and expenses, health insurance, car registration and car insurance.
He also gave evidence that he owes the Australian Tax Office $252,828 and has entered into a loan repayment plan to repay this sum at a rate of $16,700 per month.
He anticipates that he will seek employment once the businesses are sold as an employed health care worker earning about $90,000 per annum.
Evidence of the business broker
As noted above, the mother submits that the Court should draw the inference that, either:
a)the father is deliberately attempting to divest himself of his income earning capacity; or
b)there is no real decision to sell.
The father, as noted above, denies these allegations: claiming that the owners of the business have come to a collective agreement to sell, in part, due to trend in decline and harsh lease terms.
Further, the father gave evidence that he and his business partners decided in August 2017 to sell the businesses and engaged a Business Broker to do so.
The business broker, Mr T, gave evidence by an affidavit sworn 27 November 2018 that he received instructions from the father and his business partners to sell the Business H in August 2017.
Mr T deposed that the father and his partners wished to sell the Town J businesses together (being the Business G and Business J businesses). These instructions were on the basis that the profits from the Business G business was being used to keep the Business J business operating. Mr T was instructed that if the Business G was sold separately, the Business J would be unable to generate enough income on its own to keep it operating. He said that there had been some interest in the Business G, but not in the two businesses being sold together.
Property issues
Approach to Property proceedings
The Full Court in Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC ¶93-143 identified a preferred four-step process in property matters under the Family Law Act 1975 (Cth):
a)to identify the pool of assets and liabilities generally, and usually at the time of hearing;
b)to assess the relative contributions of both the financial, non-financial, direct and indirect nature as specified by s 79(4) of the Act;
c)to consider the factors as are relevant contained in s 75(2) of the Act; and
d)finally, to determine whether the order the Court proposes to make is just and equitable to both parties.[9]
[9] Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC ¶93-143, [39] (Nicholson CJ, Ellis and O’Ryan JJ).
This approach was approved in Bevan & Bevan [2013] FamCAFC 116, where the Full Court of the Family Court of Australia considered the High Court’s decision in Stanford & Stanford [2012] HCA 52 (‘Stanford’).
Asset Pool
The mother submitted that the asset pool is:
Assets Own Mother’s Estimated Value Father’s Estimated Value Comments Business G* H $1,360,000 $1,640,000 Mother relies on Mr K; Father's contention is not supported by admissible evidence Business J, Town J.* 1-1 $1,320,000 $1,216,000 Mother relies on Mr K; Father's contention is not supported by admissible evidence Business J, Town H H $625,000 $625,000 50% interest in sale proceeds at $1,250,000 Father's beneficiary account with Business D Hybrid Trust H $801,848 NIL Father alleges insufficient funds available to pay out this loan Father's beneficiary account with Business C Hybrid Trust H $267,830 NIL Father alleges insufficient funds available to pay out this loan Business C cash at bank H $200,000 NIL 40% interest in $500,000, Mr K's Appendix 4 Trade debtors (Business D + GROUPS H I L $511,839 Not relevant to valuation by Mr K ANZ Account No: … J $373,919 $373,919 Agreed Figure ANZ Account No: … J $115 $115 Agreed Figure ANZ Account No: … W $1,362 $1,362 Agreed Figure ANZ Account No: … W $46,475 $46,475 Agreed Figure derived from tax return refund and inheritance ANZ Account No: … W $272 Monies beneficially owned by [X] Bank of Melbourne Account No: … H $6,044 $6,044 Agreed figure Bank of Melbourne Account No: … II NIL NIL Agreed figure Motor Vehicle U H $10,000 $10,000 Agreed figure Motor Vehicle V H $10,000 $10,000 Agreed figure Shares W 1127 Shares(@ $3.04 H $3,426 $3,426 Agreed figure Total assets $5,026,019 $4,444,452 Liabilities Own Mother’s Estimated Value Father’s Estimated Value Comment Father tax liability H Nil ($252,828) To be paid from future income Westpac Loan Facilities H ($2,923,419) $2,923,419) Subject to vouching and update Mr Corlett Family Trust* H ($113,301) Mr K 3.0 Valuation Summary Mr K report w ($16,000) Trade Creditors (Business D H NIL ($881,113) Not relevant to valuation by Mr K Total Liabilities ($3,052,720) ($4,057,360) Net assets (excluding superannuation) $1,973,299 $387,092 Superannuation Owner Mother’s Estimated Value Father’s Estimated Value Comment Super Fund Y H $143,548 $143,548 Super Fund Z W $84,098 $84,098 Total Superannuation $227,646 $227,646 Net assets (including superannuation) $2,200,945 $614,738
The father submitted that the asset pool is:
Asset
Owner
Estimated
Value
Business G (40%)
Father
$not known — to be sold
Business J (40%)
Father
$not known — to be sold
Business H (50%)
Father
$625,000
Business C Hybrid Trust Trade debtors Business G (40%)
Father
$88,856
Business C Hybrid Trust Trade debtors —Business J (40%)
Father
$41,387
Business D Hybrid Trust Trade debtors — Business H (50%)
Father
$58,079
Business C Unit Trust Trade debtors —Business G (40%)
Father
$48,746
Business C Unit Trust Trade debtors — Business J (40%)
Father
$61,846
Business D Unit Trust Trade debtors – Business J (50%)
Father
$212,925
ANZ account # …
Joint
$373,919
ANZ account # …
Joint
$115
ANZ account # …
Mother
$1,362
ANZ account # …
Mother
$46,475
ANZ account # …
Mother
$272
Bank of Melbourne account # …
Father
$6,044
Bank of Melbourne account # …
Father
$0
Shares W shares (1127)
Father
$3,426
Motor Vehicle U
Father
$10,000
Motor Vehicle V
Father
$10,000
Home contents
Father
$10,000
Home contents
Mother
$10,000
TOTAL ASSETS (non-superannuation)
$not known
Liabilities
Owner
Estimated
Value
Tax assessed and unpaid
Father
$252,828
Westpac Bank — Business C — principal and interest facility (40%)
Father
$787,568
Westpac Bank — Business C — interest only facility (40%)
Father
$763,418
Westpac Bank Business D — interest only facility (50%)
Father
$1,195,773
Westpac Bank Business C refit loan (40%)
Father
$100,550
Westpac Bank — Business C – overdraft facility (40%)
Father
$76,110
Business C Hybrid Trust Trade creditors – Business J (40%)
Father
$217,658
Business C Hybrid Trust Trade creditors - Business G (40%)
Father
$244,184
Business D Hybrid Trust Trade creditors — Business H (50%)
Father
$397,360
Business C Unit Trust Trade creditors (40%)
Father
$9,071
Business D Unit Trust Trade creditors (50%)
Father
$12,840
Total liabilities
$4,057,360
NET ASSETS (excluding superannuation)
$not known
Superannuation
Owner
Estimated Value
Super Fund Y
Father
$143,548
Super Fund Z
Mother
$84,098
Total superannuation
$227,646
Value of the businesses
The financial statement filed by the father (dated 13 December 2017) put the value of the Town J businesses at $8,000,000 and the Town H business at $1,550,000 million. The father’s portion of the $8,000,000 would be 40%; and 50% of the $1,550,000. These valuations were not supported by any evidence – including the evidence of Mr K.
As noted above, there are three businesses that the father has an interest in:
Asset Interest Business G 40% Business J 40% Business H 50%
The father did not provide valuations for these businesses, stating that they are to be sold. However, he did place a value on his company structures that control his interest in the businesses in his Case Outline:
Asset Interest Value Business C Hybrid Trust Trade debtors – Business G 40% $88,856 Business C Unit Trust Trade Debtors – Business G 40% $48,746 Business C Hybrid Trust Trade debtors – Business J 40% $41,387 Business C Unit Trust Trade Debtors – Business J 40% $61,846 Business C Hybrid Trust Trade debtors – Business H 50% $58,079 Business C Unit Trust Trade Debtors – Business H 50% $212,925
Expert evidence
As noted, the mother engaged Mr K to value the businesses. Mr K’s report was filed 21 November 2018 and he gave oral evidence on 7 December 2018.
The parties dispute whether Mr K’s valuation of the businesses is accurate. The mother submits that Mr K was not provided with all relevant documents as the father did not accept his appointment as a joint valuer, and accordingly, did not provide Mr K access to all financial documents. The father’s position has been that the businesses should be sold (thus negating a theoretical value).
The value that Mr K gave the Business G and Business J businesses are:
Business G Business J Total Enterprise Value 3,400,000 3,300,000 6,700,000 Less, external debt
(3,910,000)
Add, surplus cash at bank
500,000
Equity value
3,290,000
Mr Corlett share – 40%
1,316,000
Mr Corlett beneficiary account – Business C Hybrid Trust
267,830
Total Mr Corlett Interest
1,583,830
Mr K valued the Business H at:
Business H Enterprise Value 1,400,000 Less, external debt 2,333,000 Equity value 0 Mr Corlett share – 50% 0 Mr Corlett beneficiary account – Business D Hybrid Trust 801,848 Total Mr Corlett Interest 801,848
The father did not file evidence at trial on the value of the businesses. Rather, he made submissions at [6] of his outline of closing submissions that the businesses are to be sold and ‘therefore the market will determine the real value of the businesses, thus rendering a theoretical valuation otiose’.
The father, at [7] of his submissions, further complains that Mr K made several material errors in valuing the businesses and, presumptively, is unreliable. These material errors include:
(a) he reckoned the Town H business was worth $1.4m, but it sold for $1.25m, $150,000 less than what he thought;
(b) he said that the equity value of the Town H business was “0” (report page 3), but later agreed with Mr Q that there was in fact a shortfall of $1,226,905 of which the Respondent’s share was $613,452;
(c) he said that the “total Mr Corlett interest” in the Town H business was $801,848 (report page 3), being his beneficiary account, but without any mention of the fact that in absence of available funds the beneficiary account could not be paid;
(d) he said that there was surplus cash of $694,617 (Ex. “A.4”) in the Business C group as at 30 June 2018, but he had left out a significant bank loan and had to agree with Mr Q that there was in fact a shortfall of $28,046;
(e) in one of his calculations of what the Respondent had received net over 5 years (exhibit “A.4” at appendices 7 & 8) he both:
(i) failed to carry forward a figure of $574,766; and
(ii) added the Respondent’s paid tax rather than subtracting it; with result that he had to agree with Mr Q that his (Mr K’s) calculation of the Respondent’s net takings over the 5 years was only $525,648, rather than the $2,424,088 he claimed; and
(f) in yet another attempt to calculate what the Respondent had received net over 5 years (exhibit “A.5”), he miscalculated by understating the tax paid in 2017 by about $100,000, with the result that after having to make that correction he had to agree that the aggregate net takings over the 5 year period was only $674,937.
The mother notes that at [11] of the Reply (filed 6 March 2019), with respect to [7](a), that ‘none of the three businesses have actually been sold, with the ownership actually having been transferred’. Whilst it is clear that the Town J businesses have not sold, it was the Court’s impression that the Town H businesses had been sold (with a settlement just prior to these submissions being filed). It was not put to the father that the ownership had never been transferred and Mr K also gave evidence that the business had been sold.
The mother’s Reply does not dispute the other flaws raised above, but blames the father’s lack of disclosure as causing those flaws.
Full and frank disclosure
The mother alleges that the father has failed to make full and frank disclosure. Counsel for the mother submitted that, consistent with Chang v Su [2002] FamCA 156 (‘Chang’) and Spencer v Spencer (2012) FamCA 138, upon finding the father to have deliberately non-disclosed, the Court should not be unduly cautious in making a property order in favour of the mother.
In Weir and Weir (1993) FLC ¶92-338 (‘Weir’) (an extract in both cases Counsel relied on) at [79,593] the Full Court stated that:
We should have thought that the Court's jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her assets.
Upon deliberate non-disclosure, per Weir at [79-593]:
It seems to us that once it has been established that there has been a deliberate non-disclosure […] then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
The father challenges the relevance of these cases, noting that:
1. The Applicant in her submissions has failed to:
(a) quantify what she asserts is the net value of the asset pool;
(b) specify the basis upon which the Applicant should have the outcome she seeks (whether by way of percentage assessments or otherwise); and
(c) demonstrate that the outcome sought by the Applicant is just and equitable.
This criticism is not made for the sake of making it, but because one of the central issues in this case is how a just and equitable settlement can be achieved given the nature and value of the asset pool.
Consideration – Full and Frank Disclosure
The mother, both through the process of cross examining the father and by submissions, has asserted at length that the father has not complied with his duty to make full and frank disclosure. The mother’s submissions of 25 February 2019 lists what are said to be examples of the father’s failure to make full and frank disclosure.
Many of these criticisms focus on the father’s failure to make his business partners available for cross examination on 8 December 2018 and 14 February 2019. The submissions also attack the father for his decision to sell the businesses. The mother’s submissions dated 25 February 2019 set out these allegations at [18]:
Examples of the [father’s] failure to make full and frank disclosure are:
(a) He did not arrange for his partners, Mr R and Mr S. ("his partners") to swear Affidavits until the end of the first day of the Final Hearing on 7 December 2018. Both Affidavits were deficient in that they contained no useful information;
(b) He did not make his partners available to the Court on two separate occasions, being 8 December 2018 and 14 February 2019, despite the relevance of their evidence being transparent;
(c) Despite admissions in the witness box that the Respondent had many spreadsheets about the future profitability of the businesses, no working documentation regarding the future profitability of the businesses was ever disclosed to the Applicant. This was in circumstances where:
(i) the future profitability of the businesses was (allegedly) central to the decision to sell them; and
(ii) the Respondent was clearly on notice that the Applicant challenged the commercial rationale for the decision;
(d) He gave no evidence and provided no disclosure (not even a reference in his financial statement) in relation to the sum of $81,099 owing to him from the Business D beneficiary account. This is in circumstances where he made admissions in the witness box that he had instructed his accountant, Mr Q to look into the matter;
(e) He did not disclose any accounts or working documents regarding the first two quarters of the 2019 financial year and in the witness box effectively attempted to deny the importance and/or relevance of same. That financial documentation was only made available by the Respondent to Mr T (the business broker) at the request of a potential purchaser. The Respondent's position was that the businesses were in dire financial trouble but he did not disclose documentation to support his claim;
(f) He made no disclosure as to the identity of his bookkeeper who was clearly important as to the way that the "day-to-day" figures were translated into the more formal financial statements;
(g) He only put his accountant on Affidavit in response to Mr K's evidence. He did not choose to lead evidence from his accountant about the cogency of the decision to sell the businesses and it was clear from the witness-box (and in particular his reference to a 2011 incident when he became involved from 2015) that Mr Q was simply parroting the Respondent's viewpoint rather than expressing an independent expert opinion;
(h) He did not disclose all documentation relating to his dealings with the Westpac Bank in relation to:
(i) the Commercial Bill rollover discussions;
(ii) whether there could be a transfer of the shortfall from the sale of Business H:
(iii) the bank guarantees for the leases and the amount of money the Respondent and his partners will receive back upon settlement of the businesses (if sold);
The Applicant makes a formal application to seek leave to re-open evidence and add the following Annexures produced from a Subpoena to the Westpac Banking Corporation returnable on 18 February 2019:
(i) The Respondent sent an email to Mr AA (Senior Relationship Manager of the Westpac Business Banking) on 24 January 2019 organising a meeting. The Respondent failed to disclose that he had scheduled a meeting with the bank. Further this meeting was two weeks prior to the Final Hearing of this matter. Annexed hereto and marked with the letter M A" is a true copy of the email from the Respondent to Mr AA of Westpac dated 24 January 2019;
(ii) The Respondent received an email from Mr AA (Senior Relationship Manager of the Westpac Business Banking) on 10 November 2017 attaching the minutes of a meeting regarding the Debt Restructure Plan. The Respondent failed to disclose these minutes to the Applicant. Further the document showed that the business group term debt peaked in 2011 at $9,600,000 and had been reduced to $6,550,000 in 6/7 years evidencing that the businesses have significantly reduced in debt. Annexed hereto and marked with the letter "B" is a true copy of the email from Mr AA to the Respondent dated 10 November 2017;
(iii) The Respondent received an email from Mr AA (Senior Relationship Manager of the Westpac Business Banking) on 24 July 2017 in relation to the bank guarantee over the Business J. This is contrary to the evidence of the Respondent in the witness box that he was unsure of how the bank guarantees operates. Annexed hereto and marked with the letter "C" is a true copy of the email from Mr AA to the Respondent dated 24 July 2017;
(iv) The Respondent failed to disclose the company Company E Pty Ltd. The Applicant is unaware what assets the company has and the role of this company in the Respondent's financial affairs (if any). Annexed hereto and marked with the letter "D" is a true copy of the ASIC search of Mr Corlett on 25 February 2019; and
(v) In a letter to the Respondent dated 2 February 2018 from the Westpac Banking Corporation it is demonstrated that the Respondent can draw a further 20% of the current loan of $3,456,250. Noting the loans are cross security against the businesses the Court should note it appears that the Respondent has a capacity to redraw to pay the Applicant the orders she seeks. Annexed hereto and marked with the letter "E" is a true copy of the letter from the Westpac Banking Corporation dated 2 February 2018.
(i) He gave evidence in the witness box that:
(i) he did not know what his partners intended to do regarding their employment after the alleged sale of the businesses (if sold); and
(ii) there had been no discussion of partners buying each other out.
A number of the matters raised by the mother do not go to nondisclosure: particularly, the lateness of the affidavits from the father’s business partners or their unavailability for cross examination. Similarly, why the father’s failure to disclose the identity of the bookkeeper is material to the dispute is unclear and not justified in the mother’s material.
The most significant purported non-disclosure is found at [18](v), which refers to a letter from Westpac Banking Corporation to the father.[10] The mother asserts the letter enables the father to withdraw 20% of the current loan of $3,456,250. The submission states: ‘noting the loans are cross security against the businesses the Court should note it appears that the Respondent has a capacity to redraw to pay the applicant the order she seeks’.
[10] Letter dated 2 February 2018 attached to Applicant’s submissions filed 25 February 2019, [18](v) and Annexure E.
The father asserts that the mother has fundamentally misunderstood the purport of the letter. The father argues that the letter states that the borrower is Business D and that the father is the guarantor of Business D ’s loan. As stated in the father’s submissions at [5](v): ‘the reference to “a further amount of 20% of that figure” is a reference to the limit of the Respondent’s liability under the guarantee. That limit is a specified amount plus 20% of “excesses” which are defined to mean “unarranged borrowings by the customer”’.
I accept the father’s submission that Westpac Banking Corporation’s letter indicates that the father’s liability under the guarantee covers an extra 20% of an arranged borrowing by Business D . It does not mean that the father can draw a further 20% on the loan. I also note that if the mother seriously contended that the father was able to borrow further monies then the orders sought by mother would have been framed accordingly.
I do not accept that the father has engaged in a campaign of failing to disclose documents and do not think that cases of Weir and Chang are apposite. The Court will not, therefore, make assumptions contrary to the interests of the father on the basis that the father has failed to make full and frank disclosure. Even if there was a finding of non-disclosure, this does not relieve the Court of the obligation to ensure that any orders that it makes in relation to property interests are just and equitable.
The father’s evidence that he would prefer to sell the businesses and take up a position as an employed health care worker, particularly where he has a long-standing experience as the owner of a successful business, leaves his motivations open to challenge. Further, the failure to have his partners available for cross examination is a course of conduct which seems almost guaranteed to raise suspicions in relation to the bona fides of his claims that all of the partners have decided to remove themselves from the businesses even though they live locally and are qualified as health care workers. Those matters, however, do not go to the point as contended by the mother that all inferences available should be drawn against the father. Further, I do not accept that the father has decided with his partners to sell the businesses as a means to reduce his assets. I accept the minute of the meeting of the partners that they resolved to sell the businesses. I also accept that they genuinely appointed a business broker to sell the business.
A difficulty with the mother’s submissions are that the allegations of nondisclosure are not then linked to a rationale for the orders that are sought by the mother. If it had been the case that the mother was asking the Court to ascribe a particular value to the businesses making assumptions contrary to the interests of the father because of nondisclosure, the Court could understand submission of that kind. The mother’s response was to file written submissions which contain a very lengthy extract from Chang without any corresponding submission as to precisely what order the Court should make.
The Court is not now in a position to simply create of its own motion a basis for justifying the orders sought by the mother.
Just and Equitable
The parties presented the Court with a conundrum. There is a dispute in relation to the value of the Town J businesses and the two Town J businesses have not been sold despite being on the market since August 2017. If the Court was to fix a value of the assets and order payment to the mother of 65% of the net asset pool, that payment could not be achieved without the businesses being sold.
Recognising the difficulties posed by this situation, neither party by their closing submissions contend that the businesses should be ascribed a value by the Court. Further, neither party now contends that the Court orders a division of the asset pool and for a portion of that asset pool to be paid to the mother immediately.
By closing submissions the mother seeks orders that the father pay to the mother:
(a) the balance of monies held in the ANZ bank account ($273,000);
(b) $468,000 by way of weekly payments of $1500 for a period of six years and that such sum be adjusted for CPI increases (applicant’s submissions 25 February 2019 at [39.2]);
(c) 65% of the proceeds of any sale of the business (es) [39.3].
The difficulty with the mother’s submissions (both written and oral) is that the submissions have failed to justify how an order of that kind would be just and equitable. It seems that the mother is claiming that the order is just and equitable on the basis that, as alleged, the father has not provided full and frank disclosure.
I have, however, already found that the father has not engaged in a course of conduct contrary to his disclosure obligations.
Even if the father had not made full and frank disclosure, I do not accept that the Court would be justified in making an unreasoned decision where assumptions and suppositions are not set out to explain the basis of the decision.
The father’s submissions of 4 March 2019 at [3] and [10] – [12] raise the issue of whether the mother’s proposed orders are just and equitable and invite a detailed response. None is forthcoming in the mother’s Reply and for that reason, amongst others which I refer to above, I do not accept the approach contended for by the mother is the correct one.
Superannuation
Both parties agree that there should be an equalisation of the superannuation assets.
Conclusion
Neither party is seeking orders that the value of the businesses be ascertained on the basis of the valuation of Mr K (as modified by the corrective analysis performed by Mr Q) and are both seeking that payments be made to the mother pending the sale of the businesses.
The Court must then consider whether it is appropriate to make an interim property order. I must give consideration to whether the orders sought are in the interests of justice: see Strahan v Strahan (Interim Property Orders) (2009) 42 Fam LR 203 at [132].
The orders sought by the father are, largely, reasonable. His proposed orders make an adequate interim provision for the mother and respond to the difficulties faced by the Court where the asset pool is not ascertained. The evidence of Mr K as to the value of the businesses was significantly undermined in the course of his evidence. Mr K quite properly conceded many of the matters raised by the father (which are detailed in [83] above). Further, it appears that Mr K was actively trying to value the business without the full cooperation from the father who did not agree that the businesses should be valued and withdrew from an agreement to appoint a single valuer. Had there been cooperation between the valuer and the father (via his accountant) the task of Mr K as an independent expert could have been made easier. Instead, Mr K’s report was revised as a result of discussion which occurred at Court or shortly before the commencement of the hearing with Mr Q. The Court was left in a position of being unable to fix a value to the parties’ most substantial assets. The mother spent at least $18,000 on obtaining the report from Mr K.
The proposal put by the mother whereby she is to receive about $468,000 over a six year period and 65% of the proceeds from the sale of the businesses strikes me as an example of double dipping and would not represent a just and equitable division of the assets of the marriage. There was no attempt made by the mother’s counsel to break down or explain the basis on which the Court could make orders of this kind other than to put that the orders that the Court could make were at large because of the alleged non-disclosure by the father.
The mother sought a departure order from the administrative assessment of child support payable by the father pursuant to ss 116 and 117(1), (2)(b)(ii), (2)(c)(ia) and (ib) of the Child Support Assessment Act 1989 (Cth).
At [66]-[68] of the mother’s trial affidavit, the mother gave evidence that the father is currently assessed to pay $276 per week as child support. She gives evidence that the father has previously made an application to the child support agency to have his support reduced due to his payment of the mother’s rent (being $400 per week). The mother is seeking a departure from the child support assessment to ensure that father continues to pay the child’s school fees and any additional education expenses (as he has done in the past).
The orders proposed by the father make provision for ongoing child support ($275 per week), rent ($400 per week), school fees and expenses ($439 per week), health insurance ($53 per week), car registration ($13 per week) car insurance ($24 per week) (totalling $1204 per week). In addition, he will pay a further sum of $500 per week by way of part property settlement. In circumstances where the father is not in the position to currently fund the payment of a settlement to the mother but has made provision for the ongoing maintenance of the mother and the child, his proposal is a practical response to the situation the parties are in.
The proposal takes into account and addresses the mother’s concerns particularly in relation to rent and school fees. The father contends that the Child Support Departure order sought by the mother should not be made as the grounds for such an order have not been established, and the existing interim orders made 18 December 2017 are more than sufficient to meet the child’s needs. He also makes the point that the child’s time is shared between the parties on a 4/3 basis.
I accept that the proposal that the payments continue in accordance with the orders made on 18 December 2018 takes account of the mothers concerns in relation to the payment of ongoing school fees and associated expenses and health expenses. For those reasons I also accept that the grounds for making a departure order have not been established.
At [35] of the mother’s written submissions, it was put that where the mother is not aware of the full financial circumstances of the businesses and that situation is directly attributable to the non-disclosing conduct of the father, the ‘court should not be unduly troubled by the distinction between property and spousal maintenance’. No authority was referred to in support of that submission. The sum of $500 per week to be paid by the father should be treated as a part property settlement.
When the businesses are sold, the parties will determine the payment owed to the wife by adjusting the payments she has received by way of part-property settlement in accordance with the property split.
The only modification to the father’s proposed orders that is appropriate is for the wife to receive 100% of the monies currently held in trust in (being the sum of $273,000) and for the father to continue to pay the amount for spousal maintenance and school fees and other expenses which was fixed by the orders of 18 December 2017. Those amounts include the school fees of the daughter. Additionally the father should continue to pay incidental medical expenses as they arise and continue to pay the orthodontic costs. The father by his offer (which was announced in Court and peremptorily rejected by the mother by her counsel) makes provision for the mother, pending the sale of the businesses, and addresses her concerns in relation to financial insecurity.
The payment of the full amount of the $273,000 as a partial property settlement recognises the mother’s on-going need to have some financial security. It also recognises that the father continues to enjoy the on-going benefits of the business pending final settlement.
Orders
The matter will be adjourned for a 12 month period with an order providing the parties with liberty to apply in the event that there is any change of circumstances or that the businesses are sold. I note that the father proposed to adjourn the matter for a period of 18 months to allow for the sale of the business. That period is too long and there was no evidence put before the Court to support a finding that it would take that length of time to sell the businesses. The 12 month period takes into account the time that has passed since the matter was reserved.
The orders will include a provision restraining the father from diminishing the value of the businesses or otherwise disposing of or further encumbering the businesses without notice to the mother.
The Court is of the view that the split of assets as proposed by the father and mother (being 65% in favour of the mother and 35% in favour of the father) may well be just and equitable in regards to the contributions made by each of the parties and the ongoing needs of the mother. However, the final determination of that will depend on whether the businesses sell and at what price, how much has been paid by way of part property settlement and otherwise the total value of the assets.
The parties should consider these reasons and bring to Court minutes of proposed orders. The orders should make provision for liberty to apply as discussed above. That liberty to apply shall be subject to the parties engaging in dispute resolution with an experienced mediator and with the assistance of financial advice prior to returning to Court so as to avoid the further costs of Court hearings.
I reserve the question of costs.
I certify that the preceding one hundred and twenty-five (125) paragraphs are a true copy of the reasons for judgment of Judge McNab
Date: 6 August 2019
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