CUTHBERT & CUTHBERT
[2015] FamCA 438
•12 June 2015
FAMILY COURT OF AUSTRALIA
| CUTHBERT & CUTHBERT | [2015] FamCA 438 |
FAMILY LAW – PROPERTY – where it is just and equitable to make an order adjusting the property interests of the parties – where issues as to the matrimonial property pool – where inheritance of the wife late in the relationship – where parties’ contributions post separation are equal – consideration of relevant s 75(2) factors.
| Family Law Act 1975 (Cth) ss 75(2), 79(1), 79(2), s79(4) Aleksovski v Aleksovski (1996) FLC 92-705 Teal & Teal [2010] FamCAFC 120 | |
| APPLICANT: | Ms Cuthbert |
| RESPONDENT: | Mr Cuthbert |
| FILE NUMBER: | NCC | 3270 | of | 2009 |
| DATE DELIVERED: | 12 June 2015 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 2, 3, 4 April and 7, 8 August 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Batey |
| SOLICITOR FOR THE APPLICANT: | Moylan Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Gould |
| SOLICITOR FOR THE RESPONDENT: | Jodhi Coady Lawyer |
Orders
That within two months from the date of these orders the husband pay to the wife $159,470 and in default of such payment and within three months from the date of these orders the wife shall at her election and by giving to the husband notice in writing including SMS or email of her election to either:
(a) Be appointed trustee for sale of the G boat and do all things necessary to effect a sale of the boat for the best price reasonably obtainable and for this purpose the husband shall deliver up the said boat, together with all accessories, equipment, fixtures and fittings on the said boat as at the date of these orders to the wife or her nominee at such place and at such time as is nominated by the wife in writing including SMS or email to the husband and provided further that the boat shall be delivered up to the wife in good order and condition, fair wear and tear excepted, and the husband shall reimburse the wife from the cost of all or any repairs, maintenance, detailing, survey or shipwrights costs incurred by her in relation to the boat provided that such expenses are recommended by a qualified marine surveyor as reasonably necessary to effect a sale at the best price reasonably obtainable and shall be at liberty to reimburse herself the cost of same from the husband’s portion of the proceeds of sale and on sale the proceeds of sale shall be disbursed as to $159,470 plus interest accrued to the wife, any reimbursement to wife as provided for and the balance then remaining to the husband; or
(b) Pay to the husband $125,530 within a further one month of her election in writing to do so and upon such payment the husband shall deliver up the said boat, together with all accessories, equipment, fixtures and fittings on the said boat as at the date of these orders to the wife or her nominee at such place and at such time as is nominated by the wife in writing including SMS or email to the husband and provided further that the boat shall be delivered up to the wife in good order and condition, fair wear and tear excepted.
That pending the delivery of the boat to the wife as provided for, the husband shall ensure that the boat is adequately insured and safely moored and shall indemnify the wife from all or any liability for mooring fees, insurances or other expenses in relation to the boat.
That within 14 days from this date the wife shall do all things necessary to transfer to the husband the jointly owned Telstra shares and funds presently held in joint ANZ cheque access account (9161).
That the husband and wife shall within one month from this date do all things necessary to dissolve the partnership known as Mr and Ms Cuthbert (ABN …) and to cause all assets of the partnership to be made available to the husband for collection if in the possession of the wife and the husband shall hereinafter indemnify the wife from all or any liability howsoever arising in relation to the trading affairs of the partnership including any liability to the Commissioner of Taxation.
That the husband indemnify the wife from all or any liability howsoever arising in relation to the trading affairs of B Pty Ltd and B A Pty Ltd including but not limited to loan accounts and any liability to the Commissioner of Taxation howsoever arising.
That any application for costs be by way of Application in a Case filed within 28 days from this date.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Cuthbert & Cuthbert has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: NCC 3270 of 2009
| Ms Cuthbert |
Applicant
And
| Mr Cuthbert |
Respondent
REASONS FOR JUDGMENT
The matter for determination is the long-running property dispute between the applicant wife and the respondent husband.
The proceedings were commenced by the wife by application filed on 23 December 2009. The husband filed his response to the wife’s application on 22 February 2010. Thereafter the matter has had a long and tortuous history.
In her amended application filed on 27 May 2010 the wife in summary sought property orders as follows:
a)That the husband transfer to her the property at C Street, Suburb D unencumbered;
b)That the husband pay to the wife the sum of $500,000;
c)That the husband do all things necessary to procure a discharge of ANZ loans in the name of the husband and wife relating to the purchase of a boat and truck crane;
d)That the husband transfer to the wife his interest in jointly owned Telstra shares, 4WD motor vehicle and ANZ Bank account …
e)That the husband make available to the wife certain items of personalty and that the wife thereafter be declared solely entitled to those items;
f)That upon the husband complying with the previous orders the husband and wife cause:
i)the partnership known as “[Mr] and [Ms] Cuthbert” be transferred to the husband;
ii)the property at E Street, Suburb K to be transferred to the husband subject to its existing mortgage;
iii)the F boat and G boat be transferred to the husband.
For his part the husband in his response filed on 22 February 2010 sought in summary the following orders:
a)That the husband pay to the wife $650,000;
b)That concurrently with the payment the husband transfer to the wife the 4WD motor vehicle;
c)That thereafter the husband and wife do all things necessary so as to transfer to the husband the wife’s interest in the following:
i)the property at C Street, Suburb D;
ii)the property at E Street, Suburb K;
iii)the property at H Street, Suburb I;
iv)B Pty Ltd;
v)the partnership trading as “[Mr] and [Ms] Cuthbert”;
vi)the F boat and the G boat;
d)That the husband thereafter indemnify the wife from all or any liability including any taxation liability arising from the assets transferred to him.
On 21 December 2010 orders were made restraining the husband from selling or otherwise dealing with the property at J Street, Suburb I and from taking any step to further any development of the said property.
The matter was thereafter before the then Federal Magistrates Court of Australia on various occasions in relation to interlocutory issues and on 29 August 2011 proceedings were transferred from that Court to this Court.
Subsequent to transfer there were significant outstanding issues in relation to valuation and the appointment of appropriate single experts.
On 1 December 2011, by consent interim orders were made in summary as follows:
a)That the husband vacate the property at C Street, Suburb D by 11 December 2011 and that thereafter the wife have exclusive and sole occupation of that property;
b)That prior to vacating the property the husband remove certain items of personalty;
c)That thereafter the husband have exclusive use and occupation of the properties at E Street, Suburb K and J Street, Suburb I.
Over the next six months the matter was before the Registrar on several occasions in relation to issues relating to valuation and single experts. On 29 June 2012 the matter was before Collier J in relation to discrete interim issues and an application for interim property orders. Orders were made on 19 July 2012 that provided in summary the following :
a)That orders made on 21 December 2010 be discharged;
b)That orders made on 1 December 2011 be discharged;
c)That by way of partial property settlement:
i)that on or before 20 September 2012 the husband transfer to the wife his interest in the property at Suburb D and discharge mortgages secured over that property;
ii)that simultaneously with the transfer of the Suburb K property to the wife, the wife transfer to the husband her interest in the Suburb K property and that the wife procure a discharge of any caveat lodged by her in relation to the property at Suburb I;
iii)that for the purposes of compliance with the orders the husband be permitted to obtain funding from the ANZ Bank by way of security over the Suburb K and or Suburb I property of no more than $814,000;
iv)that the husband be permitted to facilitate the Westpac Bank having a second mortgage over the Suburb I property so as to secure a commercial loan agreement between B Pty Limited (“B Pty Ltd”) and the bank relating to the construction of a batching plant facility constructed at the Suburb I property;
v)that otherwise the husband be restrained both personally and in his capacity as a shareholder and officer of B A Pty Ltd from selling or encumbering or alienating the properties at Suburb K and Suburb I;
vi)that otherwise the wife be restrained from selling, mortgaging or alienating the property at Suburb D;
vii)that the husband be restrained from extending the amount of the present overdraft without notice to the wife of his intention to do so;
viii)that the G boat be sold.
d)That the parties’ costs of 29 June 2012 and 16 July 2012 be reserved to the trial judge;
e)Otherwise directions were made to facilitate the matter proceeding to a three day trial to commence on 28 August 2012.
The matter thereafter did not proceed smoothly. On 8 August 2012 the hearing dates were vacated as a consequence of the wife’s ill health. Orders were made placing the matter in the list of matters awaiting allocation for hearing and to be given such priority as could be afforded.
On 6 September 2012 the matter again returned before Collier J in relation to the completion of a single expert report. The wife was ordered to file and serve all material upon which she seeks to rely by 8 October 2012. Costs of both parties were reserved.
On 9 October 2012 the placement of the matter in the list of matters awaiting allocation for hearing was confirmed.
It appears that thereafter there were some attempts by the parties to resolve the matter by mediation.
The matter was next before the Court on 12 August 2013 for the purpose of making trial directions. Orders were made in summary as follows:
a)That the parties file and serve short updating evidence by 13 September 2013;
b)To facilitate the completion of the single expert accounting report by L Pty Ltd, accountants;
c)That a single expert be appointed to undertake updated valuations of the properties at Suburb D, Suburb K and Suburb I and that a single expert be appointed to value the G boat; and
d)To facilitate the preparation of a collaboratively prepared balance sheet to be provided to the Court on 20 September 2013.
On 20 September 2013 the matter was listed for prospective trial on 18 February 2014 allocating three days for trial. On that day the Court noted there were still outstanding issues as to the completion of the single expert accountant’s report, and the sale or valuation of certain stock and equipment not being used by the husband in the conduct of his present business. The matter was adjourned to 9 December 2013 to facilitate the making of final trial directions.
On 9 December 2013 the trial dates were confirmed and final directions for trial were made for the trial to commence on 2 April 2014 allocating three days for trial.
On 4 April 2014 the trial was adjourned part heard to 7 August 2014 allocating one day plus for further hearing. As a consequence of issues that arose during the trial, orders were made facilitating the wife administering a request for answers to specific questions to the husband and thereafter following receipt of the husband’s answers granting leave to administer a request for answers to specific questions to the single expert accountant.
The trial resumed on 8 August 2014 on which date evidence concluded. The matter was adjourned to 6 November 2014 for supplementary oral submissions if necessary and orders were made that the applicant file and serve a written outline of submissions by 29 August 2014 and that the respondent file and serve a written outline of submissions by 19 September 2014. The parties were directed to inform the Court by no later than 10 October 2014 if the listing for supplementary oral submissions was required.
Subsequently the husband made an application to reopen his case. That application was before the Court on 15 September 2014 and orders were made in summary:
a)That the husband be granted leave to reopen his case with reasons to be published concurrently with final reasons;
b)Leave is granted to the parties to approach a list clerk for allocation of further trial dates noting the matter will take approximately a further two days;
c)That the husband be granted leave to rely upon the affidavits of Mr M sworn 25 August 2014 and Ms N sworn 25 August 2014;
d)That further trial dates be allocated with priority on a part-heard basis;
e)That costs of the application to reopen be reserved.
Subsequently the matter was allocated further trial dates for two days commencing 27 January 2015.
On 10 November 2014 further orders were made by consent:
a)That the husband’s application filed 25 August 2014 be withdrawn and dismissed and costs of that application be reserved;
b)That the affidavits of Mr M and Ms N filed 25 August 2014 are no longer relied on and are to be removed from the Court file;
c)Further, the hearing dates be vacated; and
d)That the applicant file and serve a written outline of submissions within 28 days and the respondent file and serve a written outline of submissions within a further 28 days. Leave granted to relist for oral submissions if required.
On 11 December 2014 time for submissions was extended with final submissions due by 28 February 2015.
Final submissions were received on 9 March 2015 with judgment reserved as and from that date.
Background
The wife is nearly 60 years of age and the husband 56 years of age.
The parties commenced cohabitation in about March 1980 and married in 1983.
There are two children of the marriage, Mr O now aged 29 and Mr P now aged nearly 26.
The parties separated on 7 February 2009. At separation the wife left the matrimonial home at Suburb D and was unable to return to that property to reside until orders made were made in December 2011. The convoluted history of the parties’ litigation after separation is referred to above.
At the commencement of cohabitation the wife was in full-time employment as with the Department of Education and the husband was a self-employed bricklayer.
The assets of the parties at the time of commencement of cohabitation were minimal, the wife having a motor vehicle, modest savings and about $3000 in superannuation. The husband had a half interest in a boat, a truck and motor vehicle both of minimal value, his trade equipment and modest savings.
Subsequent to the commencement of cohabitation the wife undertook some administrative work in relation to initially the husband’s bricklaying business and thereafter various businesses conducted by her and the husband over the period of cohabitation.
The concessions as to contributions
On the wife’s part it was conceded early in the trial by her counsel that it was her assertion that contributions should be regarded as equal save for the two issues of her profit from share trading with her brother and the significance of her inheritance late in the relationship.
On the husband’s part it was later agreed that such was the position at least as at separation, with the Court to determine the significance of contributions post separation.
Notwithstanding the concessions, it is of some utility to overview the financial history and from that base the post separation contributions must be considered.
The Suburb D property and thereafter
This property, comprising 6.5 acres of vacant land, was jointly purchased in 1980. The purchase price was $21,000 with the parties applying their then savings towards a deposit and the balance by way of mortgage advanced from the ANZ Bank. The parties obtained a supplementary personal loan for the additional costs of purchase.
The parties resided in various rental premises for the first few years of their cohabitation.
The husband was engaged in various business activities over the first decade of the relationship, although not with great success.
In 1982 a shed was constructed on the property with the shed used initially to store the husband’s powerboat, truck and trade equipment.
In May 1982 the husband’s business ceased to trade. The parties borrowed additional funds from the ANZ Bank to meet the outstanding liabilities of the business and to commence a new business known as “Q Pty Ltd”. This business ceased to trade after six months.
In 1983 the husband commenced a new business partnership venture trading as “R Pty Ltd”. The wife continued in full-time employment with the Department of Education.
In 1984 the parties commenced to reside at the Suburb D property initially in a second-hand caravan and in part of the shed. In 1985 the parties obtained a development approval to construct a dwelling on the property.
Funds for the construction of the dwelling were met from the parties’ income over a period of time. In September 1985 the wife’s mother loaned to the parties $11,500 interest-free to facilitate the purchase of construction materials for the new home. The loan was repaid over a period from the parties’ income and borrowed funds.
In early 1986 the wife commenced paid maternity leave expecting the birth of the parties’ first child. Shortly after the birth of the child the wife returned to casual teaching in May 1986 working four days per week but by the end of that year had returned to permanent full-time teaching at Suburb R High School.
In late 1986 the husband and his brother Stephen commenced a partnership business trading as “[B Pty Ltd]” and obtained a commercial lease to purchase a used pump.
In 1987 the construction of the dwelling on the property was virtually completed and the parties borrowed an additional $40,000 from the ANZ Bank to complete the construction work, purchase appliances and repay the balance of funds owed to the wife’s mother. The parties occupied the home from October 1987.
The wife continued full-time work until the end of 1988 at which time she was expecting the birth of the parties’ second child. The wife commenced paid maternity leave in late 1988 and also received her accumulated long service leave entitlements. The wife formally resigned from the Department of Education in 1990.
From late 1988 and thereafter the wife undertook the administrative work for the husband’s partnership business on a full-time basis. She received no remuneration for that work.
Several sheds were constructed on the property, the larger of which comprised a workshop and garaging for the pumps used in the parties’ business.
In 1989 the husband again became involved in boating. Income from the partnership was used as an advertising expense for these activities.
By mid-1990 circumstances in the construction industry adversely affected the cash flow of the husband’s partnership business.
To assist financially the wife applied for casual employment with the Department of Education in late 1990 and by early 1993 had a permanent part-time position. The wife was offered full-time work in June 1993 but declined the job at the husband’s request to have her stay involved in the business.
In March 1991 the wife’s brother Mr S advanced $11,725 to the parties to pay out a then debt to AGC Finance relating to the purchase of a 4WD utility vehicle. He also assisted the parties in obtaining a refinance of the CBA lease commitment for the boom pump. Later in August 1993 he advanced to the parties’ partnership $60,000 to assist with the acquisition of a 28m boom pump mounted on a truck. There was no formal agreement but the loan was acknowledged in the financial statements of the partnership over a period of years. In 2007 the wife repaid the outstanding loans from an inheritance received in September 2007 several years before separation.
In January 1991 the wife rolled out her then superannuation of $21,443 from the State Authorities Superannuation Board to her Commonwealth Life Limited Rollover Fund Policy. The wife later in March 1993 withdrew $15,000 from this investment to reduce the parties’ debt to the ANZ Bank and then in January 1994 the wife withdrew the balance of her superannuation of $9,598 and applied those funds to ANZ debt.
The partnership
At about this time the husband’s partnership business ended, the partnership was dissolved and the “Mr and Ms Cuthbert” partnership was set up trading as “[B Pty Ltd]”. The business account was with the ANZ Bank and included an overdraft facility.
Melbourne IT Ltd, Billabong Ltd and Pan Pharmaceuticals Ltd
In November 1999 the wife’s brother offered her the opportunity to obtain shares in an initial public offer for Melbourne IT Ltd. The wife had no funds and her brother offered to lend her the initial purchase price of the shares. The wife acquired an entitlement to 1000 shares at a cost of $2200.
In December 1999 the shareholding was sold and the wife received net her entitlement of $7413 from which she repaid the debt to her brother.
In July 2000 the wife’s brother offered her the opportunity to obtain further shares in an initial public offer for Billabong Ltd. The wife was advanced by her brother $4000 to fund the purchase of 1739 shares. The shares were subsequently sold for $5405 from which the wife repaid to her brother $4000.
Similarly in August 2000 the wife’s brother offered her the opportunity to obtain further shares in an initial public offer for Pan Pharmaceuticals Ltd. The wife obtained an entitlement to 2000 shares in respect of which she owed her brother $2000 for the purchase price. The debt to her brother was repaid from the wife’s Credit Union account in November 2000.
The wife sold 1000 of her Pan shares in October 2010 receiving net $1961. The wife authorised the remaining shares to go into the company dividend reinvestment plan. However the company went into liquidation and the wife lost this investment.
The Suburb K property
This property was purchased jointly by the parties in June 2000. The purchase price was $300,000 plus purchase costs. The purchase was funded by way of a collateral borrowing from the ANZ Bank secured by the property and the Suburb D property. Additional purchase costs were drawn by the parties from their then business.
In 2004 and 2005 the partnership sold the two recently acquired pumps, discharging the finance facility that had financed their purchase and discharging the ANZ Bank loan in respect to this property.
Subsequent to separation the husband has met some of the expenses and outgoings in relation to this property from his financial resources substantially comprising the assets of the parties.
Subsequent to the wife obtaining sole use and occupation of the Suburb D property the husband constructed a 40 sq.m mezzanine flat for his occupation inside the industrial shed situated on that property with the assistance of his son.
V Pty Ltd
In 2000 the parties incorporated V Pty Ltd with the husband and wife as directors and equal shareholders. B Pty Ltd thereafter paid the partnership for the hire of its equipment and for “management fees”. This company later ceased to trade in about 2007 and at that time changed its name to W Pty Ltd with the entity being transferred to the eldest son Mr O who is now sole director and shareholder.
Since separation the wife has received no benefit from the partnership.
In 2003, the parties incorporated Y Pty Ltd (“Y Pty Ltd”) to undertake work, essentially for B Pty Ltd. W Ltd hired its equipment from the parties’ partnership.
In 2004, the wife commenced a partnership business with a friend trading as “T Pty Ltd” providing bookkeeping services. In early 2006 the partnership was dissolved with the wife retaining the business name and thereafter trading using the ABN of the parties’ partnership with income derived being paid into the parties’ partnership account with the ANZ Bank. The income derived from the bookkeeping services was modest at best. After separation the wife retained this business, transferring the business name to herself and using her own ABN number.
In July 2006 the wife reapplied to the Department of Education for employment. At that time she commenced work on a permanent part-time basis two days per week.
The wife’s inheritance
On 4 April 2006 the wife’s mother Ms U passed away, having suffered ill-health and dementia for some years. On 3 November 2006 probate of her last will and testament was granted.
It was known to the wife prior to her mother’s death that her mother’s last will and testament dated 2 October 1996 made no provision for her mother’s only other child, the wife’s brother Mr S. Otherwise the will provided for the wife to be executor and subject to a small legacy of $5000 to be entitled to the whole of her mother’s estate.
Prior to her mother’s death the wife engaged in negotiations with her brother in relation to her mother’s estate being well aware that he would have been able to make application to contest the will.
The wife informed her brother that she would provide to him 40 per cent of their late mother’s estate and informed the husband of her decision.
The wife’s late mother’s estate comprised real estate and investments that were called in and converted into cash. Subsequently the wife paid to her brother the sum of $260,969 representing 40 per cent of the net estate. The wife’s brother gave evidence as to this arrangement and was not cross-examined as to it.
The wife received $391,460 in September 2007 and these funds were paid to a joint account of herself and her husband being ANZ Home Loan Interest Saver account ...
The wife’s inherited funds were in summary disbursed as follows:
e)As to a total of $151,021 in reduction of the parties partnership liabilities including repayment of outstanding loan moneys to the wife’s brother;
f)As to a total of $41,028 for the purchase of plant and equipment for the partnership;
g)As to the sum of $50,094 towards expenses for the construction of a shared on the Suburb K property;
h)As to a total of $108,550 by way of funds advanced by loan to B Pty Ltd; and
i)As to a total of $25,891 for household and living expenses in including payment of Marina fees in respect to the G boat.
The Suburb I property: purchase, separation and thereafter
In late 2008 the parties spoke about a prospective purchase of a commercial property so as to operate a business from those premises.
In late September 2008 a suitable property was identified at J Street, Suburb I.
However the parties separated on 7 February 2009 by which time no action had been taken in relation to the proposed new premises and business.
Subsequent to separation and in March 2009 the husband leased the shed at the Suburb D property for $400 per week. Rental payments were paid by the husband to the Y Pty Ltd account with the ANZ Bank. None of the rental payments received were accounted to the wife.
In April 2009 the husband leased a smaller shed on the Suburb D property for $50 per week. Rental payments were again deposited to the Y Pty Ltd account with the ANZ Bank. None of the rental payments received were accounted to the wife.
These sources of rental income continued until March/April 2010 with monies in the Y Pty Ltd account being used to meet loan payments in relation to the ANZ Bank loan obtained for the purchase of the G boat.
Subsequent to separation the husband has met various outgoings in relation to the Suburb D property from his financial resources substantially representing the assets of the parties or income derived therefrom.
In about May 2009 the husband approached the wife with a proposal in relation to the Suburb I property. The husband wished to purchase the property at auction for the purposes of establishing a business thereon in conjunction with the children of the marriage. The husband further requested the wife consider returning to assist with the office work and bookkeeping of the businesses operated by the parties.
Subsequently the relationship between the husband and wife deteriorated with the wife also having concerns in relation to any personal liability she may incur as a consequence of business decisions made unilaterally by the husband. As a consequence the wife transferred her shares in Y Pty Ltd to the husband, although she continued to be a director of Y Pty Ltd and remained in the stagnant partnership.
The wife approached a mortgage broker in relation to finance arrangements for the prospective purchase of the Suburb I property with the jointly owned Suburb D property to be used as security for a proposed line of credit advance from the ANZ Bank with a limit of $600,000. The funds borrowed from ANZ were entered in the books of Y Pty Ltd as a loan by the parties to the company (Exh H) with the company then lending funds to the husband to purchase the Suburb I property. These funds were then debited to the husband’s ongoing loan account.
On 14 July 2009 the property was purchased at auction for $286,000 including GST. The property was purchased in the husband’s sole name. The deposit for the property was drawn from the parties’ partnership account and the balance of settlement funds including purchase costs of about $270,000 were drawn from the ANZ Bank line of credit.
Subsequent to purchase of the property the wife observed extensive improvements being made to the property primarily using the partnership’s plant and equipment and funds drawn from the ANZ line of credit account. Various payments were also made from the ANZ line of credit to meet debts of Y Pty Ltd that had ceased trading while improvements and remediation were being undertaken to the Suburb I property.
From early August 2009 at the request of the husband the wife commenced to attend at the Suburb D property to carry out bookkeeping, administration and other duties for the parties’ various entities one or two days per week.
In October 2009 the husband and wife spoke about using the Suburb I property as plant, not being of the designated use for which the property was approved. The wife made enquiries of Suburb R City Council and was informed that an environmental impact study at a cost of about $60,000-$70,000 would be required.
However shortly thereafter the relationship with the parties again deteriorated and the wife was not further involved in the Suburb I property. An incident occurred between the parties on 12 November 2009 and subsequently on 16 December 2009 an Apprehended Domestic Violence Order was made against the husband for the protection of the wife for a period of two years. The husband was ordered not to assault, molest, harass, threaten or otherwise interfere with the wife and not engage in any other conduct that intimidates the wife and not to stalk the wife. Further the husband was ordered not to enter at premises at which the wife may from time to time be residing or working and not to approach or contact the wife by any means whatsoever except through the husband’s legal representative. A further Apprehended Domestic Violence Order was made by the Suburb I Local Court for the protection of the wife on 8 May 2012 for a period of two years.
Two days after the Apprehended Domestic Violence Order the wife found that her internet access to various bank accounts had been restricted. She ascertained that the husband had unilaterally removed her as a director of Y Pty Ltd. The husband had also frozen the wife’s access to the ANZ home loan interest saver account that at that time had a credit balance of about $15,000. Consequently, and to protect her position, the wife requested the ANZ Bank to freeze the ANZ line of credit account which at that time had a debit balance of about $432,000 with an available draw down balance of $168,000.
Subsequent to the freezing of the line of credit facility, interest on the facility capitalised until the balance outstanding at the time of its refinance later in August 2012 by the husband was $563,464. There is no explanation as to why payments were not made into the account by the husband who controlled the parties’ financial resources or the wife who, at best had a modest income to meet the interest.
It was after these events that the wife commenced the present proceedings.
B A Pty Ltd (“B A Pty Ltd”)
In May 2010 the husband incorporated B A Pty Ltd. The wife did not become aware of the existence of this new company until July 2010. The husband incorporated this company through which he continued to operate the family businesses using the stock and equipment without regard to the wife’s interest in some of those items through the partnership or that some of such items were the property of Y Pty Ltd (Valuation: Exh I).
On 25 May 2010 the husband transferred $16,150 from the Y Pty Ltd ANZ account to the B A Pty Ltd ANZ account and rental payments thereafter received in relation to the Suburb D property were also deposited to the B A Pty Ltd ANZ account.
After the husband incorporated B A Pty Ltd he diverted income that would otherwise have been payable to Y Pty Ltd into B A Pty Ltd. Otherwise payments to the partnership account for hire of the partnership’s equipment to Y Pty Ltd or the other entities ceased notwithstanding that the husband continued to use the assets and equipment of the partnership for the purposes of those entities and for the purpose of development work undertaken at the Suburb I property on his own account.
The husband later leased the Suburb I property to B A Pty Ltd. Rental payments were paid to the husband’s personal ANZ account (Exh D). These payments totalled $45,918 in the 2012 financial year, $79,427 in the 2013 financial year (Single Expert Report Exh C) and were $7150 per month ($85,800 per annum) by early 2014.
Subsequently in November 2010 the husband procured the lodgement of the development application in relation to the property seeking approval for a proposed plant to be erected and that business to be conducted thereon.
On 21 December 2010 the husband was restrained by order pending further order from taking any step to further any development of the property at Suburb I.
Post separation use and disposition of assets
The wife:
In late October 2009 the wife withdrew from the parties’ ANZ line of credit account $46,000 and repaid her ANZ overdraft relating to her business “T Pty Ltd” and in November 2009 the wife withdrew a further sum of $15,000 from the ANZ home loan interest saver account and paid those funds to her ANZ overdraft relating to her business. These transactions were prior to the account being frozen in December 2009.
In June 2010 the wife sold her 631 Commonwealth Bank shares for the net sum of $31,524. Of this sum $12,986 was paid towards her legal fees, $7120 paid in reduction of the parties’ loan accounts to the company and the balance used for the wife’s living expenses. In May 2010 $38,000 was drawn by agreement from the parties’ ANZ Equity manager account for the purpose of the purchasing a motor vehicle for the child Mr P. The motor vehicle was subsequently refinanced by him and the wife received $34,400 from which she paid $22,234 towards her legal fees and $6124 in reduction of the parties’ loan accounts to the company with the balance of funds used for her living expenses. In August 2011 the wife sold the Toyota Land Cruiser motor vehicle in her possession for $10,200 due to its high cost of maintenance and running. The wife applied those funds together with the sum of $13,000 borrowed from her brother to purchase a Mazda motor vehicle in August 2011.
The husband:
Various other assets of the parties’ partnership or that of Y Pty Ltd have been used or disposed of by the husband with the proceeds going into the business, his account or used in relation to the Suburb I property.
In about late 2010 the husband refinanced a lease secured over an excavator owned by the partnership and paid the $45,000 thus obtained into the B A Pty Ltd account to pay for the environmental impact study consultant’s fees relating to the Suburb I property.
In May 2013 the husband used a 4WD motor vehicle owned by the partnership as a trade-in on the purchase by B A Pty Ltd of a new model of the same vehicle. The trade-in value was $3000.
In July 2013 the husband sold products to the value of $9000 including GST. In February 2014 he sold products to the value of $5200 but accounted for most of these funds to the wife. In February 2013 the husband using his personal ABN number sold assorted materials for $51,068. These funds were deposited to the husband’s personal ANZ account.
The construction by B A Pty Ltd of the plant and computer operated batching systems is now complete on the Suburb I property and the plant is operated by the husband through B A Pty Ltd that pays rent to him for the use of the property.
The refinancing of the properties
Subsequently and in May 2011 the wife proposed that the husband refinance the ANZ line of credit secured over the Suburb D property so as to facilitate the advance being secured solely against the Suburb K and or Suburb I properties. The wife sought information in relation to the husband’s application to the ANZ to procure that refinance.
On 27 May 2011 Suburb R Council granted development consent in relation to the Suburb I property with that development consent operating from that date for a period of five years within which the husband was required to commence works as provided for in the approval.
In October and November 2011 the wife observed that certain construction activity was occurring on the Suburb I property. Thereafter on 9 January 2012 the wife ascertained that the ANZ Bank had registered a mortgage over the Suburb I property in October 2011. It was not until 18 May 2012 that the wife, in response to a subpoena to the ANZ Bank, was able to have access to documents relating to the husband’s refinance. The application for finance secured on the Suburb I property was in fact made by B A Pty Ltd and a secured overdraft facility initially in the sum of $350,000 was approved by the Bank.
In June 2012 the wife was informed of a further proposed second mortgage borrowing by the husband from Westpac Bank to be secured over the Suburb I property. This borrowing was to secure commercial finance obtained by the husband for the purchase and construction of a plant on the property.
In response and out of concern for what she perceived to be the diminishing equity in the matrimonial asset pool the wife made application for interim property orders and those orders made on 19 July 2012 are referred to above.
Subsequent to the wife returning to occupy the property and from July 2012 the wife has collected rental payments for the main shed on the Suburb D property. The occupant of the smaller shed vacated in August 2012.
In 2013, pursuant to interim orders made, the Suburb D property was transferred to the wife unencumbered. To facilitate this the husband obtained two loans from the ANZ Bank totalling $814,000:
a)A home loan of $574,000 with those funds disbursed as to $563,464 to discharge the ANZ line of credit security held over the Suburb D property and $9820 paid to the B A Pty Ltd ANZ trading account. This payment was entered as a shareholders loan to the company; and
b)An ANZ business loan of $240,000 with those funds paid to the B A Pty Ltd ANZ trading account and to be used for “working capital, legals and other expenses”. It appears that these funds were in part drawn against by the husband for his legal expenses including payments to Solari and Stock, Solicitors totalling $66,232 and his living expenses.
These loans were secured over the Suburb K property that was transferred to the husband and the Suburb I property that was in any event in his name.
To facilitate the loan approval for the refinance and the transfer of Suburb D to the wife the parties also needed to discharge the G boat loan that was secured over the Suburb D property. This transaction is referred to below in detail.
As at March 2014, the secured indebtedness over the property at Suburb I, comprise the following:
a)ANZ overdraft facility in favour of B A Pty Ltd for $250,000; and
b)Westpac commercial loan in favour of B A Pty Ltd for $215,270 that substantially funded the purchase of the plant erected on the property at a cost of $283,518.
The G boat
In April 2003 the parties purchased a G boat for the sum of $430,000. The purchase price comprised a deposit of $20,000 paid from joint funds, $120,000 paid from the sale of a previously owned boat and $40,000 drawn from the businesses. The balance of purchase price was funded in an amount of $250,000 by a loan from the ANZ Bank (loan account 354137346). The security for the loan was the Suburb D property.
Substantially since separation the husband has had the use and benefit of the G boat and from his financial resources, comprising mostly the parties’ assets, he has met ongoing expenses in relation to the boat including marina fees, registration, insurance, repairs and loan payments.
In March 2010 the husband unilaterally removed the boat from the Marks Point Marina and relocated the boat to another marina at Port Stephens. The wife has had no access to the boat since that time.
Notwithstanding orders made on 19 July 2012 the boat remains in the husband’s possession.
It came to the wife’s knowledge in early 2013 in the context of the refinancing referred to above that the husband had discharged the ANZ loan relating to the acquisition of the G boat. Subsequently in the husband’s affidavit sworn on 12 September 2013 he revealed that the $151,500 used to discharge this loan was funded by five transfers from B A Pty Ltd’s ANZ account between 28 August 2012 and 5 September 2012, such transfers being to the Westpac account of the husband’s partner Ms N who then paid the balance of the boat loan.
As at 11 August 2012 this boat loan had a debit balance of about $192,000. It is the husband’s contention that the balance of funds to discharge the loan of about $40,500 came from his ANZ personal account to which B A Pty Ltd had been paying rent to the husband for its use and occupation of the Suburb I property.
Notwithstanding the husband’s sworn evidence to this effect in his previous affidavit, this issue inexplicably became an issue at trial with the husband conceding that the entries as to the boat repayments were falsely described as payments to a creditor.
The valuation of B A Pty Ltd
These transactions became a significant issue in relation to the valuation of the husband’s interest in B A Pty Ltd, it being contended by the husband that notwithstanding the characterisation of the payments initially as expenses of the company they were in fact posted to one of the husband’s loan accounts as a personal drawing.
The husband’s contention was not supported by the MYOB bookkeeper’s general ledger for the husband’s loan account (Exh P) nor does it appear by movements in the husband’s overall loan accounts depicted in the 2013 Financial Statements for B A Pty Ltd.
The single expert in a supplementary report (Exh N) to his initial report (Exh C) gave evidence that he was asked to review his valuation report as to the value of the company B A Pty Ltd on the assumption that $151,000 was excluded from the company’s expenses for the relevant 2013 year. After relevant adjustments the revised valuation was $675,629, up from $165,249.
The single expert later met with the wife’s shadow expert and the company accountant and reviewed extensive electronic and other records for the company including actual ledger accounts and working papers of the company accountant Mr M as to the impugned transactions.
The effect of the requested adjusted valuation on the stated assumption was to increase the husband’s loan account indebtedness to the company by $151,000 to $444,468.
The single expert agree d that he was unable to say whether $151,000 was incorrectly included in purchases in the context of his first report but was of the view that the true state of the husband’s loan account for the relevant year would be reflected in the journal maintained by the husband’s bookkeeper and provided to the company accountant who prepared the financial statements.
Ultimately the single expert conceded that he was unable to resolve the issue without reference to the whole of the husband’s loan accounts and purchases entries for the relevant financial period. Thus the value of the company was either as per his first report or as set out in the supplementary report based on requested assumptions.
This perplexing situation was the subject of discussion at the conclusion of the evidence and agreement was reached that source documents presumably to resolve the impasse as to valuation of B A Pty Ltd would be provided.
Ultimately the matter was adjourned for written submissions with judgment to be reserved at the completion of those submissions.
It appears that the impasse has not been resolved and it is considered below.
The parties’ present circumstances
The wife has continued her small bookkeeping business post separation earning about $750 per week which is supplemented by rental for the shed on her property of $400 per week. She receives modest board from her children who live with her. She has not working in her profession since 2009, having lost her accreditation and at her age the prospect of retraining is not a viable proposition for the wife.
The husband draws funds from his entities as required and receives rent for Suburb I from B A Pty Ltd of $7150 per month (Exh D). In the 2012 and 2013 years he received total salary of about $28,500, otherwise living on loan account drawings and rent. In the three previous years he was paid no salary at all but lived on loan account drawings and rent. The husband otherwise sold some items of equipment and stock and deposited the funds to his own account including a total of $51,680 in early 2013. For valuation purposes of B A Pty Ltd, the husband’s market salary including superannuation and allowances was agreed at $186,086 (Exh C).
The husband’s evidence as to his financial position and the various entities
The husband was cross-examined at length as to financial transactions during and after cohabitation and as to various entries in financial statements for the entities and as to various bank entries. He displayed a disturbing lack of knowledge as to the intricacies of his financial affairs.
He acknowledged that he had no input into material provided to the single expert accountant but relied on his accountant and his partner, the company bookkeeper. He asserted that he “just signs the affidavits, just breezes through them”.
His evidence such as it was could only be accepted if corroborated by documents or an appropriately qualified witness.
The present property pool
During the course of the trial the parties’ contentions as to the present property pool of the parties became clearer (Exh Q). The pool set out in Exh Q relevantly (as numbered in the Exhibit) comprises the following:
Assets:
1. Wife Suburb D property $1,250,000*
2. Husband Suburb K property $ 850,000*
3. Husband Suburb I property $ 580,000*
4. Joint ANZ chq account (9161) $ 14,869
5. Wife ANZ V2 account $ 60
6. Husband ANZ Access Adv. account (551) $ 1,323
7. Wife Bank accounts as at 24.03.2014 $ 7,659
8. Joint Partnership Plant and equip’t $ 64,408*
9. Husband B Pty Ltd $ 0
10. Husband B A Pty Ltd $ 675,629*
11. Joint Telstra shares (600) $ 3,012
12. Wife IAG shares (2,450) $ 13,500
13. Wife Westfarmers shares (84) $ 3,378
14. Wife Westfarmers shares (424) $ 14,768
15. Wife Westpac shares (424) $ 14,768
16. Joint F boat $ 3,500
17. Joint G boat $ 285,000
18. Wife Legal costs paid $ 321,000*
19. Husband Legal costs paid $ 190,000*
20. (Blank)
21. Wife Motor vehicle $ 11,000
22. Wife Ride on mower $ 2,500
23. Wife Jewellery $ 2,000
24. Wife Bookkeeping business $ 0
24A. Husband Post 6/2013 Plant and equip’t $ 251,635*
24B. Husband Furniture $ 5,000
24C. Wife Furniture $ 5,000
24D. Wife Camera $ 300
24E. Husband Other plant at Suburb D $ 64,408
24F. Husband Loan account B P/L $ 219,403
Liabilities:
43. Husband Mortgage Suburb K $ 539,340
44. Joint Loan account B P/L $ 174,347*
45. Husband Loan account B P/L $ 342,527*
46. Husband Loan account B A Pty Ltd $ 444,468*
49
51. Wife Debt to brother (legals) $ 330,000
Superannuation:
60. Husband CBUS superannuation $ 61,319*
61. Wife Commonwealth Superannuation $ 5,976
62. Wife First State Superannuation $ 13,465
Issues in relation to the present assets of the parties
The parties were at issue in relation to certain aspects of the presently asserted pool of assets. These are asterisked above. They are considered below:
a)The real estate properties: the value of these properties was updated by the single expert. The wife took issue with the single expert’s report and sought leave to rely on an adversarial expert. No evidence was adduced by the wife as to any questions administered to the single expert under Rule 15.65 seeking to clarify the report. No evidence was adduced by the wife to satisfy the Court that she should have leave under Rule 15.49 to tender her own expert report. The wife was refused leave to adduce such evidence. The single expert was cross-examined as to some aspects of his report. That evidence only reinforced his conclusions as to value. The wife again sought leave to adduce adversarial expert evidence as to value. The application was again refused on the same basis. The wife contended that the properties should be auctioned with each party having the right to bid. In circumstances where interlocutory orders as to the Suburb D and Suburb K properties have been made such an approach is inappropriate. The properties will be included at the value ascribed by the single expert.
b)Joint: plant and equipment: the husband retained the use and benefit of plant and equipment post separation. Some as detailed above has been sold by him and will be considered in the context of s 75(2). Otherwise the husband concedes plant and equipment in his possession not included in the valuation of B A Pty Ltd to the value of $64,408. This figure will be adopted.
c)Husband: B A Pty Ltd. This issue is considered above and centres around $151,500 drawn from the company to payout the substantial portion of the G boat loan. The husband asserts it was debited to his loan accounts in the company and not claimed as a company purchase expense. The husband had clear opportunity at trial to put the issue to rest by the production of source documents but left the issue unresolved in circumstances where he and he alone could adduce evidence to resolve it. It is to be inferred that the evidence would not have assisted the husband’s contention. On balance the amended valuation of $675,629 for B A Pty Ltd will be adopted with the consequent adjustments to the husband’s loan accounts.
d)Joint: loan account debt to B Pty Ltd: the 2010 financial statements for this company B Pty Ltd reveals a loan account of $174,437 owed by the parties to the company as at 30 June 2010. The loan allegedly arose after 30 June 2009, that is, after separation. As at 30 June 2009 the company owed the parties $28,101, that credit being drawn by the husband in addition to the debit balance of $174,437 owing as at 30 June 2010. The husband was unable to explain the debt or indeed why it was in the joint names of the parties. No loan account schedules were produced to support the husband’s contention as to the liability, yet his evidence is that in lieu of wages he draws funds from the company that are paid to his ANZ account (1551) (Exh D). The treatment of those drawings is left to his accountant to be debited against loan account (Exh G). This loan account debt is included in the valuation of his corporate interests as an asset so the effect on the asset pool in reality is nil but the husband shall be required to indemnify the wife from any liability in regard thereto.
e)Wife: legal fees and related debt to brother: These fees have been substantially funded by borrowings and are in reality only a notional asset. They are substantially offset by the related borrowing and otherwise have been met by the wife from her post separation resources referred to above. In such circumstance it is inappropriate that they be included in the present asset pool of the parties for division and likewise the related debt should be excluded but had regard to in the context of s 75(2) considerations.
f)Husband: legal fees: the source of payment of the husband’s legal fees is referred to in Exh S as “loans from family, friends and otherwise payments from business earnings”. He proffered no evidence on the issue. The strong inference is that his fees were paid from the resources available to him through the business entities conducted by him particularly loan account borrowings from the companies. He does not assert any outstanding loan in relation to his fees. The businesses retained by him were substantially those retained by him on separation and transposed to his control under the umbrella of B A Pty Ltd. It is inappropriate to consider such as a notional present asset but regard will be had to same in the context of s 75(2).
g)Husband: post 6/2013 plant and equipment: $251,635. Subsequent to 30 June 2013 B A Pty Ltd acquired by leasing additional equipment. The husband has guaranteed the lease liability. As to the husband, it is contingent only and is in reality a B A Pty Ltd balance sheet asset item subject to a liability of the same amount. It thus has no effect on the balance sheet representing the parties’ asset pool.
h)Loan accounts:
i)Joint: loan B Pty Ltd: this loan of $174,437 was the subject of evidence that clearly indicated that it resulted from the husband’s drawings from the company. The wife received no benefit. The husband could have taken the funds as salary but it appears chose not to. As between the husband and wife the husband should bear responsibility for this loan and indemnify the wife.
ii)Husband: loan B Pty Ltd $219,403: this is the balance as at 30 June 2013 as per the single expert’s later report as a result of the assumptions and conclusions contained therein accepted by the Court.
iii)Husband: loan B A Pty Ltd $444,468: this is the balance as at 30 June 2013 as per the single expert’s later report as a result of the assumptions and conclusions contained therein accepted by the Court.
i)Husband: CBC liability $251,365: subsequent to 30 June 2013 B A Pty Ltd acquired by leasing additional equipment. The husband has guaranteed the lease liability. It is contingent only and as the purported asset of the husband is in reality a B A Pty Ltd balance sheet item subject to a liability of the same amount it should be deleted as should this corresponding liability. The husband proffered no evidence of any prospect of the guarantee being called upon.
j)Husband: superannuation: the wife contends for a speculative balance as at date of trial. The balance sheet figure of $61,319 is from the husband’s 30 June 2013 statement. There is no evidence as to any further contribution by the husband thereafter. The balance sheet figure in the circumstances will be adopted.
Other issues
Both parties contended for various other amounts to be included as notional assets for adjustment purposes. In summary these included:
a)The wife’s post separation drawings from the ANZ line of credit;
b)The wife’s proceeds of sale of shares sold by her post separation;
c)The husband’s sale of the excavator post separation;
d)The parties’ rental income from the Suburb D property post separation;
e)The husband’s receipt of rental income from the Suburb I property post separation;
f)The husband’s unilateral use of partnership and plant and equipment post separation;
g)The husband’s use of partnership account funds post separation;
h)The husband’s sale of vehicles post separation;
i)The wife’s sale of vehicle post separation;
j)The increase in the ANZ line of credit balance post separation;
k)Husband’s sale of products post separation;
l)Wife’s inherited funds paid to her brother;
m)Wife’s proceeds of share sales in arrangement with her brother.
It is common ground that the husband retained control over the enterprise of the parties post separation, leaving the wife with modest financial resources.
The various transactions have been referred to above in these reasons in detail. Neither party asserts any waste or improper use of funds post separation. The parties had recourse to what assets and income were available to both of them.
The post separation financial machinations of the parties are more appropriately to be considered in the context of assessing contributions.
Otherwise the result of the wife’s arrangement with her brother, who was not cross-examined on the issue, is that the significance of her inheritance in the context of the present asset pool is accordingly diminished.
An issue arises as to the source of the husband’s legal fees as referred to above and the wife’s debt to her brother. This will be considered in the context of s 75(2) as referred to above.
For these reasons it is not proposed to include any of the amounts relating to the above issues as notional assets.
The pool for adjustment purposes
As a consequence of the discussion above the appropriate pool for adjustment purposes is set out below:
Assets:
1. Wife Suburb D property $1,250,000
2. Husband Suburb K property $ 850,000
3. Husband Suburb I property $ 580,000
4. Joint ANZ chq account (9161) $ 14,869
5. Wife ANZ V2 account $ 60
6. Husband ANZ Access Adv. account (551) $ 1,323
7. Wife Bank accounts as at 24.03.2014 $ 7,659
8. Joint Partnership Plant and equip’t $ 64,408
9. Husband B Pty Ltd $ 0
10. Husband B A Pty Ltd $ 675,629
11. Joint Telstra shares (600) $ 3,012
12. Wife IAG shares (2,450) $ 13,500
13. Wife Westfarmers shares (84) $ 3,378
14. Wife Westfarmers shares (84) $ 3,515
15. Wife Westpac shares (424) $ 14,768
16. Joint F boat $ 3,500
17. Joint G boat $ 285,000
18. Wife Legal costs paid Deleted
19. Husband Legal costs paid Deleted
20. (Blank)
21. Wife Mazda 323 $ 11,000
22. Wife Ride on mower $ 2,500
23. Wife Jewellery $ 2,000
24. Wife T Pty Ltd business $ 0
24A. Husband Post 6/2013 Plant and equip’t Deleted
24B. Husband Furniture $ 5,000
24C. Wife Furniture $ 5,000
24D. Wife Camera $ 300
24E. (Deleted Duplicate of 8. above)
24F. Husband Loan account B P/L $ 219,403
Total: $4,015,824
Liabilities:
43. Husband Mortgage Suburb K $ 539,340
44. Joint Loan account B P/L $ 174,437
45. Husband Loan account B P/L $ 342,527
46. Husband Loan account B A Pty Ltd $ 444,468
49
51. Wife Debt to brother (legals) Deleted
Total: $1,500,772
Superannuation:
60. Husband CBUS superannuation $ 61,319
61. Wife Commonwealth Superannuation $ 5,976
62. Wife First State Superannuation $ 13,465
Total: $ 80,760
The non-superannuation pool is thus $2,515,052 with superannuation totalling another $80,760. Thus the total pool is $2,595,812.
Property: The approach
The approach to the determination of an application under s 79 of the Family Law Act 1975 (Cth) (‘the Act’) is set out in Stanford v Stanford [2012] HCA 52 and further considered by the Full Court in Bevan & Bevan [2014] FamCAFC 19 and Chapman & Chapman [2014] FamCAFC 91.
Thus the process ordinarily involves a staged process.
The Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order.
Such a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist. The question is whether those rights and interests should be altered.
There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 79(4) (Stanford (supra)). This consideration addresses the prohibition in s 79(2) of the Act.
The Court needs to conclude that it would be unjust or unfair to leave property rights intact. Such a conclusion cannot be informed by reference to s 79(4) and s 75(2) factors.
In many cases such as this one, this requirement is readily satisfied where the parties are no longer in a marital or defacto relationship and thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship.
In particular such a circumstance arises, as in this case, where both parties seek adjustive orders but are unable to agree as to same. It is clearly in this matter unjust or unfair to leave property rights of the parties intact where there remain joint assets and liabilities.
Notwithstanding the husband’s submission that it would not be just and equitable to make adjustive orders but simply declare the parties entitled to the assets in their respective possession it is readily apparent that it would be unjust and inequitable for the Court not to make adjustive orders. There remain assets to which the parties are jointly entitled where clearly adjustive orders need to be made.
Once the s 79(2) issue is determined the Court then considers the contributions made by the parties as defined in s 79(4)(a) to (c).
The Court must then consider the subjective considerations as to the parties by having regard to the provisions of s 75(2) in so far as they are relevant. Such a consideration can include arguments as to asserted add backs, alleged waste by a party or other financial resources that it is contended should be added to the actual pool as notional property or liabilities.
In the light of the reconsideration of the role of s 79(2) as a threshold question it would be appropriate for the court then to consider the “justice and equity” of the actual orders to be made (see Russell and Russell (1999) FLC 92-877, Teal & Teal [2010] FamCAFC 120) in the context of the Court’s obligation to make “appropriate orders” as provided for in s 79(1) of the Act.
Contributions
In assessing contributions:
The task of the court in proceedings under section 79 is not akin to an accounting exercise. To borrow a phrase used by McClelland J in Davey v Lee (1990) DFC 95-084; (1990) 13 Fam LR 688 at 689 in relation to section 20 of the De Facto Relationships Act 1984 (NSW) ''the Court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind”. (Harris & Harris (1991) 104 FLR 458 at 464)
The Full Court said some 20 years ago in Aleksovski v Aleksovski (1996) FLC 92-705, per Baker and Rowlands JJ at 83,437:
It is therefore necessary that trial Judges weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment.
It really comes down to questions of weight. Whilst weight would and must be given to a contribution which a party makes shortly before the separation, less weight may be given to a contribution made by one of the parties to a marriage early in the cohabitation period of a long marriage, particularly in circumstances where the contribution has gone into the parties' assets or been used up in the payment of family expenses.
and Kay J said at 83,443:
What is important is to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship. Just as early capital contribution is diminished by subsequent events during the marriage, late capital contribution which leads to an accelerated improvement in the value of the assets of the parties may also be given something less than directly proportional weight because of those other elements.
The Full Court in said in Dickons & Dickons [2012] FamCAFC 154:
23. We wish also to refer to the approach of the Federal Magistrate in attributing percentages to differing periods within the relationship, or types of contribution made. There is in our view little to be gained, and much to be said against, approaching the task of assessing contributions by attaching percentages to components of it. (The same, it might be said, applies to attributing a percentage to each of the relevant s 75(2) factors).
24. There can be little doubt that the classification of contributions by reference to terms such as “initial contributions”, “contributions during the relationship”, and “post-separation contributions”, can be helpful as a convenient means of giving coherent expression to the evidence in a s 79 case and to giving coherence to the nature, form and extent of the parties’ respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
The concessions by the parties as to contributions are referred to above. Subject to what weight is to be afforded to the proceeds of the wife’s share dealings and her inheritance then to separation the contributions of the parties in all aspects are to be regarded as equal.
It must thus follow that the contributions of the wife to separation must be regarded as greater than those of the husband. The whole of her inheritance was absorbed into the parties’ finances in various ways including significant reduction of debt and use as working capital at the time. Those funds totalled $391,460 and were introduced late in the relationship. Those funds equate to about 15 per cent of the present pool for adjustment.
Otherwise in the scheme of things the wife’s share trading made a modest profit only. It had no discernible impact on the accretion of the property pool.
Post separation the parties had recourse to various assets and income as described above with the husband of course having mostly control of the parties’ entities and income stream post separation. They make claim and counter-claim against the other as to the minutiae of transactions, losing sight of the Court’s obligation to assess contributions in a holistic way. The parties to an extent remained inextricably interdependent financially until 2013 when the husband was permitted to refinance the two major real estate assets of the parties so as to permit transfers of real estate to each of them. Overall it is appropriate to regard the parties’ contributions post separation as equal.
It is contended by the wife that contributions should favour her overall as to 55 per cent, and to the husband 45 per cent by reason of her inheritance and the husband’s post separation use of the parties’ assets.
The husband contends that overall the Court should regard the parties’ contributions as equal with the husband’s post separation contribution offsetting the significant inheritance of the wife.
The wife’s contention would see a disparity between the parties of about $259,581. This figure represents a significant diminution of her inherited funds injected late in the marriage.
Overall contributions will be assessed as favouring the wife 55 per cent to the husband’s 45 per cent.
Relevant s 75(2) Factors
No relevant issue arose out of the age and health of the parties nor is there contended to be any.
The wife’s present circumstances are referred to above as are the husband’s. The husband has the capacity to earn substantially more income than the wife. This is evidenced by the capacity of B A Pty Ltd to advance him significant funds by way of loan in circumstances where he could have taken the funds as income. His income for valuation purposes of B A Pty Ltd was agreed at about $180,000. Both parties otherwise have property that generates rental income or has the capacity to do so.
Otherwise their property is referred to above.
Both parties have modest superannuation.
The wife during the marriage was a public servant. Her employment and career were interrupted by reason of her role in the marriage. It is to be inferred that had she remained in full time employment her capacity to earn would be more significant than at present. However that opportunity has been lost to her.
On a contribution basis the wife is entitled to 55 per cent of the pool or in money terms $1,427,696. She has in her present entitlement the following:
Suburb D property $1,250,000
ANZ V2 account $ 60
Bank accounts as at 24.03.2014 $ 7,659
IAG shares (2,450) $ 13,500
Westfarmers shares (84) $ 3,378
Westfarmers shares (84) $ 3,515
Westpac shares (424) $ 14,768
Motor vehicle $ 11,000
Ride on mower $ 2,500
Jewellery $ 2,000
Bookkeeping business 0
Furniture $ 5,000
Camera $ 300
Commonwealth Superannuation $ 5,976
First State Superannuation $ 13,465
$1,333,121
In addition to which she would receive an additional payment from the husband of $94,575.
Otherwise the wife has a debt to her brother for significant legal expenses where on the other hand the husband has it appears sourced the payment of legal fees from the financial resources and assets retained by him post separation.
The husband has the loan account from 2010 representing his drawings from the company.
Overall a further adjustment of 2.5 per cent in favour of the wife is appropriate having regard to the above considerations. Thus creating a further disparity between the parties of 5 per cent.
Appropriate orders
Overall the wife is entitled to 57.5 per cent of the asset pool or $1,492,591. This can be satisfied by the wife retaining her assets set out above and an adjustment from the husband of $159,470.
The husband would appear to have little capacity to borrow to meet this obligation. However he should be given the opportunity to fund the payment and in default the wife shall in the alternative and at her election be appointed trustee for sale of the G boat so as to receive funds plus interest payable to her or the boat is to be transferred to her upon payment to the husband of $125,530.
In all the circumstances orders to give effect to same are appropriate and just and equitable.
Orders will be made accordingly.
I certify that the preceding one hundred and eighty-four (184) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 12 June 2015.
Associate:
Date: 12 June 2015
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
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Commercial Law
Legal Concepts
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Remedies
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Costs
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Fiduciary Duty
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Injunction
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