D and D

[2007] FCWA 97

JURISDICTION:

FAMILY COURT OF WESTERN AUSTRALIA

ACT:	FAMILY LAW ACT 1975
LOCATION:	PERTH
CITATION:	D and D [2007] FCWA 97
CORAM:	THACKRAY CJ
HEARD:	17 MAY 2007
DELIVERED:	17 AUGUST 2007
FILE NO/S:	PT 3568 of 2005
BETWEEN:	D

Applicant/Wife

AND

D

Respondent/Husband

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Catchwords:

PROPERTY - Funds held in names of children - Source of funds - Whether funds came from parties' property

PROPERTY SETTLEMENT - Contributions - Significant financial contribution by parent of a party - Where parties regularly paid money back to the parent - Parties failed to keep adequate records - Whether absence of records linked to Social Security entitlements

PROPERTY SETTLEMENT - Property acquired after separation - Where loan from party's family assisted acquisition of property after separation

Legislation:

Evidence Act 1995 (Cth), s 159
Evidence Act 1995 (Cth), s 5
Family Law Act 1975 (Cth), s 75(2)
Family Law Act 1975 (Cth), s 79(4)

Reserve Bank Act 1959 (Cth), s 85A

Category: Not Reportable

Representation:

Counsel:

Applicant:	Mr M Rynne
Respondent:	Mr S Jones

Solicitors:

Applicant:	DCH Legal Group
Respondent:	Bowen Buchbinder & Vilensky

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Case(s) referred to in judgment(s):

Chorn & Hopkins (2004) FLC 93-204
Khademollah and Khademollah (2000) FLC 93-050

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1 I am required to determine applications for property settlement [Mrs D]’s mother for the significant financial support she provided throughout the marriage. My task is a difficult one, since the parties kept no records relating to most of their dealings with [Mrs D]’s mother and have very different recollections of events. arising out of the breakdown of the marriage of [Mr D] and [Mrs D].

The parties and their relationship

2 [Mr D] is 47 years of age and has his own [business]. [Mrs D] is 44 years of age and is employed as a [representative].

3 [Mr D] and [Mrs D] commenced living together in late 1986 and were married in February 1987. They have three children, [K], born in August 1988, [A], born in December 1990, and [P], born in June 1993.

4 The parties, who I will call “the husband” and “the wife”, separated in December 2003, when the wife and children left the former matrimonial home.

Orders sought by the wife

5 The orders sought by the wife were set out in an Amended Minute of Proposed Orders handed up at the start of the hearing. The Minute dealt with child welfare as well as property matters. The child welfare issues were not pursued, as the parties agreed that the current arrangements regarding [P] would continue, namely that he would live with the wife and have regular contact with the husband.

6 The wife proposed a division of assets (not including superannuation) in proportions 72% to her and 28% to the husband. She proposed the sale of the property in [the matrimonial home] (in which the husband is presently residing) and a division of the proceeds to bring about the 72:28 division. The wife also sought orders that:

• she retain the home [her post separation purchase] she acquired after the separation;

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• the husband retain his [business] (and associated entities), the [XYZ] shares and the [block of land] which he acquired after the separation; and

• each party retain the motor vehicles and chattels in their possession ([other than the musical instrument and paintings], which the wife wants to have).

7 The wife otherwise proposed orders and indemnities that were not controversial, save for an issue relating to the capital gains tax liability concerning [the matrimonial home], which will be discussed later.

8 The wife also proposed that the superannuation entitlements be split so that each would have an equivalent amount of superannuation. The proposed “splitting order” lacked specifics and the relevant fund had only belatedly been given the required notice.

Orders sought by the husband

9 The orders sought by the husband were set out in his Papers for the Judge. Apart from the property settlement orders, he sought a child support departure order designed to ensure that capital gains on sale of the parties’ assets would not be taken into account for the purposes of child support. The wife indicated that she would consent to an order along the lines proposed in paragraph 16 of the orders sought.

10 The details of the property orders proposed by the husband were fairly similar to those sought by the wife, including an order for the sale of [the matrimonial home]. The main point of departure between the parties was that the husband proposed an equal division of the assets.

Credibility

11 I had more than usual difficulty in assessing the credibility of the husband, the wife and the wife’s sister, [Ms B] (who were the only witnesses to be cross-examined). The major issues where credibility mattered were precisely those issues for which there was little or no documentary evidence against which the testimony of the parties might be tested.

12 I find that all three of these witnesses had been aware of, and happily prepared to go along with, the longstanding desire of the

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wife’s mother to conceal the full extent of her wealth, apparently with a view to maximising her social security entitlements. As part of this endeavour, each member of the family had ensured over the years that there were few, if any, documents that might reveal the source of funds that passed between them.

13 I am satisfied the wife hoped these proceedings could be resolved without the necessity to provide details that might reveal the matters which the family had tried to keep secret. It seems that the husband, who had been quite prepared to receive the benefits associated with this deception, was also quite prepared to use it as a bargaining chip. It was for these reasons that the evidence given by the wife and her sister which touched on these issues was initially very vague. In some instances it was inaccurate – for example, in her statement of financial circumstances of September 2005, the wife claimed to owe her sister $110,000, when in fact a significant proportion of the funds advanced had come from the wife’s mother.

14 In any event, it became apparent that it would be necessary for the wife and her sister to be more specific about the movement of family funds. Each swore a supplementary affidavit providing much more information than had been first volunteered. Whilst the failure of the wife and her sister to be frank at an earlier stage of the proceedings (and in the case of the wife’s sister, at an earlier stage of her oral evidence) did not show either of them in a favourable light, I was nevertheless fairly well satisfied by the conclusion of their evidence that each had given as accurate a representation of the financial history as was possible, given the lack of documentary evidence to assist recollection. In particular, I was satisfied they had given accurate evidence in relation to the source of the funds in certain term deposits. Although the husband claimed that at least some of these deposits contained “matrimonial funds”, I was satisfied that the wife’s family had provided all of the funds invested, even though the accounts were held in the names of the parties’ children.

15 I consider there was substance in the wife’s proposition that if the parties had ready access to funds such as those held in the term deposits, it is unlikely they would have conducted their financial affairs in the way they did. Indeed, counsel for the husband very properly conceded that the wife and her sister appeared to be “believable” when giving evidence on this topic. My finding that the wife and her sister ultimately gave truthful testimony on this issue

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casts some doubt on the husband’s overall credibility. If the evidence of the wife and her sister is preferred, it follows that the husband was being opportunistic when asserting that the term deposits contained “matrimonial funds”. (On the other hand, it is noted that the wife’s Papers for the Judge originally treated the term deposits quite differently from the position she adopted at trial. These Papers were prepared prior to the wife and her sister providing their supplementary affidavits.)

16 There were two other principal matters in relation to which assessment of credibility was important. The first concerned the assets at the time the parties commenced cohabitation. The main point of difference was that the husband claimed the balance on the mortgage on his unit was $8,000, whereas the wife says it was $18,000. The second, and by far the most important, issue related to the husband’s assertion that the wife’s mother had been repaid much more than she had ever advanced. I will discuss these aspects of the parties’ credibility when I come to consider these issues later.

17 The wife’s mother, [Mrs R], swore an affidavit setting out her recollection of some of the relevant financial dealings. She was required for cross-examination but did not attend the trial. She is of advanced years and her doctor swore an affidavit advising that she was “unfit” to appear in court. Whilst the doctor was not required for cross-examination on his affidavit, I consider the evidence provided by the wife’s mother should be given no weight. I have taken this view because:

• the matters about which the wife’s mother gave evidence were highly controversial and the husband was entitled to test it;

• the credibility of the wife’s mother is suspect, since she has apparently been prepared to engage in inappropriate conduct designed to maximise her social security entitlements;

• the wife’s mother was said to be almost illiterate, yet her affidavit contained no indication that the contents had been read to her; and

• much of the evidence in her affidavit was vague and unsupported by any documents.

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Relevant chronology

18 A great deal of the evidence was given in a vague and confusing fashion. I was also not greatly assisted by the manner in which the cases were presented. Doing the best I can with the information provided, I make the following findings.

19 When the parties met in 1986, the wife was working at a bank (as well as doing part-time work as a waitress). The husband was working as an [emergency co-ordinator] in the [defence services]. The wife did not dispute the husband’s claim that she was earning about $20,000 and he was earning about $45,000 per annum.

20 The wife and her former fiancé had purchased a property in [a new suburb] in April 1985 at a cost of $63,500. Although no mortgage was ever registered, the wife and her fiancé borrowed about $60,000 from the wife’s employer to assist them to acquire the property. In June 1985, the wife paid her fiancé $8,100 to acquire his interest in the property. This money was advanced by her mother. The wife’s mother also made various payments from time to time sufficient to discharge the entire amount borrowed from the bank. (In the period from April 1985 to November 1985 alone, the wife’s mother paid mortgage payments totalling nearly $21,000.) The wife paid her mother a weekly amount of about $50-70 per week by way of repayment of the funds advanced.

21 The husband also owned real estate prior to meeting the wife. He had acquired [a home unit] for $18,000 in April 1985, having borrowed (according to his oral evidence) the entire purchase price. The parties commenced living together in the [home unit] in September 1986. The husband sold the unit in January 1987 for $26,000 and the mortgage was paid out. The balance of the proceeds of sale was used to pay for the parties’ honeymoon and to acquire furniture for the [the wife’s home], into which they moved shortly before their marriage in February 1987.

22 In 1988, the husband obtained a posting in [the Eastern states] and the wife obtained a transfer in her job. They let the [wife’s home] and rented accommodation in [the Eastern states]. The wife gave up employment soon after the parties arrived in [the Eastern states], when [K] was born.

23 In October 1988, whilst living in [the Eastern states], the parties purchased an investment unit in [an industrial area] at a cost of

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$56,500. The wife’s mother advanced $5,000 to assist with the purchase. Although the wife said in her affidavit that she recalled the mortgage was approximately $60,000, I doubt it was this much, (given the purchase price and the $5,000 contribution from her mother). The wife also recalls that her mother assisted to pay off the mortgage on the investment unit. Despite the husband’s denial, this seems likely, since the mortgage was discharged in July 1990 – i.e. less than two years after the property was acquired.

24 The husband resigned from the [defence forces] in 1989. The wife recalls he received a “superannuation” payout of around $13,000. The husband estimates that he had contributed $20,000 to his DFRDB entitlement, but he gave no specific evidence about what he received when his entitlement was paid out. Documents put to the husband in cross-examination (but not tendered) apparently suggested that he did not receive as much as $20,000. Although the husband recalls that his payout was used to discharge the debt on the [industrial] investment unit, his payout was not of sufficient magnitude to discharge the entire liability. (The husband also recalled that his payout from the [defence forces] was used for another purpose mentioned below.)

25 The parties moved to [another city] after the husband left the [defence forces]. The wife worked part-time as a [waitress] and the husband worked [in civilian emergency services]. They remained only a few months before the husband was posted back to [the previous city]. The husband thereupon resigned his civilian employment and rejoined the [defence forces] in Perth in 1990.

26 The [wife’s pre-marital home] was sold in February 1990 for $112,000. There would presumably have been agent’s commission and associated expenses of sale, but no evidence was given as to the precise amount received.

27 At the same time as the [wife’s] property was sold, the parties purchased a new home in [a nearby suburb] for $160,000. All of the sale proceeds of [the wife’s property] were put towards the new home. The wife says the balance required was approximately $48,000 and that most of it came from her mother. The husband says they borrowed about $40,000 from the wife’s mother and the balance came from a term deposit into which his payout from the [defence forces] had been deposited.

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28	The husband resigned from the [defence forces] again in 1991 and commenced full-time tertiary study, whilst at the same time working as a manager of a [shop]. (He had commenced part-time studies towards his degree in about 1986.) I was inclined to accept the wife’s evidence that he was not working full-time in the [the shop] as claimed, but neither party gave any specific evidence to indicate what the husband was paid for the work he did. In any event, the husband not only received income for his work, but also a supplement from the NEIS scheme.
29	The husband graduated with a [degree] at the end of 1992. Although his major was in [a particular area], he was unable to find work [in that area] and instead decided to buy into an existing [business]. He paid $100,000 to acquire his interest in [the firm]. The wife believes he later paid a further sum for his interest, but there is no evidence of this. Funds were once again borrowed from the wife’s mother to assist to pay some of the purchase price of the [business]. The wife believed the amount borrowed was $40,000, whereas the husband thinks it was $45,000. The balance was paid by instalments. (Some of this remaining balance may have been paid using the proceeds from the [industrial unit], which was sold for $65,000 in December 1993.)
30	The husband operated his business from premises he shared with two other [operators]. In December 1995, the husband and the other two [operators] acquired new premises in [the suburb] at a cost of $175,000. They did so through the [Unit Trust] (in which the [D Trust] held one third of the units.) The husband and wife contributed more than $60,000 towards the cost of acquisition and fitting out of the premises. This money was borrowed from commercial sources and secured against the parties’ home.
31	In 2001, the parties purchased an investment property in [a nearby suburb] at a cost of $181,500. They paid only a nominal deposit, the balance being borrowed from commercial sources.
32	In 2002, the parties sold the [current family home] for $254,000. They then bought [a block], on which they constructed a home. The block cost $230,000 and the home $310,000. They also borrowed funds from commercial sources to finance this acquisition. The parties moved into their new home in September 2002, but separated in December the following year.
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33 The principal assets at the time of separation were:

• the newly completed matrimonial home [suburb];

• the investment property [suburb];

• the [business]; and

• the one-third share in the business premises [suburb].

34 Apart from the mortgages on the [newly completed home] and [the investment] properties (about $330,000 and $175,000 respectively), the parties also owed about $10,000 on two credit cards.

35 The husband continued to live in the [new home] after the separation. The home was eventually sold in March 2005 and the husband moved into [the investment] property. The wife insisted that she receive the entire proceeds of sale of the home, amounting to just over $376,000. She put this money towards her new home, [her post separation property]. That property cost $465,000, but after allowing for expenses, the cost was just over $488,000. The wife borrowed $110,000 from her family to complete the purchase.

36 The balance of the relevant financial history could not be ascertained by reference to the affidavit evidence relied upon at trial. As I understand the material is not controversial, I obtained the “missing” information by reference to an affidavit filed by the husband in December 2006. This reveals that the husband disposed of the units in the [Unit Trust] in October 2006 for $90,000. The husband used the proceeds of sale to acquire a vacant, [block of land]. The property cost $310,000 and there were associated costs of $12,500. The total cost of the acquisition was therefore $322,500 – which was the agreed value of the property at trial. The husband borrowed the balance of the purchase price.

Property settlement approach

37 I am required to adopt a four-step process in dealing with applications for property settlement. These are:

• Identify and value the assets and liabilities;

• Assess the parties’ contributions to the assets;

• Assess a range of factors contained in s 75(2) and s 79(4) of the Family Law Act 1975;

• Consider whether the order proposed is just and equitable.

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Assets and liabilities

38 I find the parties’ assets and liabilities at the time of trial were as

set out below.

ASSETS HUSBAND WIFE

$ $

[The investment home]	232,500	232,500
[Her post separation property]	680,000

[The block of land]	322,500
[The business]	103,000
Work in progress	5,000
Debtors	11,000
[XYZ] units	2,212 2,212
His motor vehicle	10,000
Her motor vehicle	8,000
Surfcat	2,500
Furniture	8,000 12,200
Jewellery	3,000

Legal costs & monies in trust added back	59,851	37,995
TOTAL	756,563	975,907
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LIABILITIES	HUSBAND	WIFE

$ $

[The investment home]	85,679	85,679
“Liability” relating to [her post separation property]	110,000

[The block of land]	230,000
MasterCard	10,265
Visa card	16,624
NAB Loan	60,000
Business overdraft	69,582
Business loan	28,854
Liability for GST/PAYG	7,392
Overdue secretarial charges	6,864
[Unit Trust] liability	13,624
CGT liability sale of [Unit Trust]	4,255 4,255

CGT liability sale of [the investment home]	21,943	29,257
CGT liability on [XYZ] shares	1,073
TOTAL	496,155	289,191
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39 I find that in addition to the above assets, the husband had superannuation to a value of $68,579 and the wife had superannuation to the value of $25,534. Treating those superannuation entitlements as if they were property, I find that that the net value of the parties’ assets is $1,041,237.

40 Most of the assets and liabilities were eventually agreed (noting concessions made by counsel for the wife in his closing address). The only matters on which I need to comment are the following:

Valuation of [the business]

41 The husband operates what appears to be a modest [business], largely involving [small projects]. In finding that the business should be valued at $103,000, I have relied upon the report of [Mr G], who was appointed as the single expert. There was no other evidence of the value of the [business].

42 Reference was made during the trial to a supplementary report prepared by [Mr G] at the request of the wife’s solicitors. That report was not introduced into evidence. As I understand its content, [Mr G] was requested to give his opinion about the value of the [business] in the event it was generating fees of $220,000 per annum. In seeking expert opinion on that point, the wife’s solicitors had seized on a cash flow projection the husband provided to his bank, in which he advised that he hoped to render fees of $220,000 from January 2007 to December 2007. Based upon such projection, [Mr G] apparently said that he would value the [business] at around $169,000.

43 In my view, there was no justification for valuing the [business] at the higher figure asserted by the wife, as the evidence indicates the husband’s [business] will not, in fact, generate fees of $220,000 during 2007. I accepted the husband’s evidence explaining why he had hoped that the [business] might generate that level of fees and also his reasons as to why it will not. This relates primarily to the fact that the [an employee] left the [business].

44 In coming to my decision on the value of the [business], I have also accepted the proposition that in valuing a [business] it is necessary to have regard to the fact that some of the clients have such a personal association with the owner that there is no prospect they will continue to use that [business] in the event of a change of ownership. Whilst the husband acknowledged he had a few “cash” jobs, I was not persuaded there were a significant number. I also

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accepted the husband’s evidence that the nature of his [business] is such that a significant proportion of the work done cannot be charged at his usual “hourly rate”.

Work in progress, debtors and business liabilities

45 The assumption made by [Mr G] in preparation of his valuation was that only the fee base of the [business] would be sold. There was no suggestion that an incoming purchaser would acquire the work-in- progress or debtors and, in my view, it is appropriate that they be included in the asset pool. Similarly, as the incoming purchaser would not take over the debts liabilities of the [business], it is appropriate for the overdraft and other debts to be included in the list of liabilities.

46 The husband acknowledged that “on average” there would be $8,000 work-in-progress, although he said this “would not necessarily equate to $8,000 in billings”. I accept this may be the case and I also accept there would be income taxation implications associated with billing the work. In the absence of any more specific information I have therefore (albeit somewhat arbitrarily) rounded down the figure to $5,000. I have also included debtors at $11,000. This is the figure the husband accepted during cross-examination.

Cars, furniture and jewellery

47 The parties asserted different values for cars, furniture and jewellery. There was no admissible evidence to support either assertion. Both counsel agreed I should apply the principle stated in Khademollah and Khademollah (2000) FLC 93-050 at para 32, with the result that I have adopted the lower of the “valuations” in making my findings.

Legal costs added back

48 I am satisfied that the legal costs expended by each party should be added back into the asset pool, since they were paid either with funds accumulated during the marriage or by borrowings included in the list of liabilities: Chorn & Hopkins (2004) FLC 93-204.

49 Although counsel for the wife advised in opening that the wife had incurred legal costs of $37,714, of which $37,005 had been paid, she gave no evidence on this issue. The wife’s own Schedule of Assets and Liabilities proposed that an amount of $37,995 be added back and this is the figure I have included.

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50	The husband’s paid legal fees amounted to $49,851 but, in addition, he had paid counsel $3,150 and his solicitors were holding $6,850 in trust. All of these funds have been included.

Term deposits

51 I have not added back the term deposits that were held in the names of the parties’ children for the reasons I gave when discussing credibility issues.

Undisclosed assets/post separation increase in liabilities

52 Counsel for the wife conceded in his closing address there was no evidence that the husband had been extravagant in his expenditure after separation, but he argued that the husband must have squirreled money away because he had not adequately explained why his liabilities had increased to the extent they had. I accept the husband’s explanation that it was not practicable for him to meet from his earnings all of the expenses he was required to meet post-separation. I accept that he had to incur additional liabilities to meet mortgage payments, child support, cost of repairs to [the investment home] and living expenses. Part of his expenditure also related to the costs associated with acquisition of the [block of land] which has been included in the pool. I was not satisfied that the husband had any funds hidden away and I intend to take into account all of the liabilities he has incurred post-separation.

Liability relating to [her post separation property]

53 The wife was only able to acquire [her post separation property] property because her family provided assistance amounting to approximately $110,000. In the Schedule of Assets and Liabilities tendered on behalf of the wife, no reference was made to this advance, although the property was included in the schedule at its full value. Counsel for the wife, however, submitted that the contribution made by the wife’s family towards [her post separation property] “might attract the Norbis approach”, by which I understood him to mean that the assessment of contributions in relation to that property should be undertaken separately from the assessment of contributions to the other assets. Ultimately, however, counsel for the wife did not clearly articulate what approach he considered the Court ought to take in relation to that property. For his part, counsel for the husband – at least at one stage of his case – submitted that the $110,000 advanced by the wife’s family should be treated as a “liability on [her post

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separation property]”. At the same time, however, he submitted that the Court should not take into account the $60,000 liability to a bank which the wife has incurred post-separation.

54 In view of the approach that I intend to take to contributions, I consider that it is appropriate for me to include the $110,000 advance from the wife’s family as if it were a liability. I also intend to take into account all of the wife’s current liabilities as set out in her Schedule of Assets and Liabilities. I do so for the same reason that I have taken into account the increased liabilities incurred by the husband after separation. I was not satisfied that the wife had been extravagant post-separation. I accept that she was unable to meet her reasonable commitments from her income and that it was necessary for her to incur additional debt to make adequate provision for herself and the children.

Capital Gains Tax calculations

55 During the course of the hearing, the husband amended his earlier calculations of the capital gains tax liability arising on the disposal of the units in the [Unit Trust] and the contingent liability relating to the sale of the [the matrimonial home] property. The figures included in the table above are those given by the husband in the course of his evidence and are based on the assumption that the capital gain would be received in equal shares. The wife’s liability on [the matrimonial home] is greater because the husband is able to claim the primary residence exemption for the period in which he has been living in the property. (As [the investment home] property will be transferred to the husband, he will ultimately carry the entire capital gains tax liability. I nevertheless consider that the CGT should be calculated on the slightly lower amount that would be payable if the property was sold whilst in the joint ownership of the parties, since it is the husband who wishes to have the property transferred to him prior to sale.)

56 It is agreed that the [XYZ] shares should be transferred to the husband. The shares were acquired without cost and are now worth $4,424. It was not disputed that there is a contingent capital gains tax liability associated with the shares. There was a calculation of the liability in annexure “B” to the husband’s affidavit of 10 May 2006, which indicates that the capital gains tax would amount to $1,073 if the shares sold for the price agreed at trial. The wife did not include

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this contingent liability in her schedule, although she did include the estimated capital gains tax liability in relation to the [Unit Trust] and [the investment home]. Whilst the liability is only contingent, I am nevertheless satisfied it should be taken into account as the husband will be left responsible for the tax liability when he does sell the shares. (The likely reduction in this tax liability arising out of changes to the tax rates is de minimis.)

Selling fee on [the investment] property

57 The husband proposed that the anticipated agent’s commission on sale of [the investment home] property should be taken into account. The property will, in fact, be transferred to the husband, who intends to undertake some improvement to the property with a view to achieving a higher price on sale. In such circumstances, I do not propose to take the agent’s commission into account.

Contributions

58 I turn now to consider the parties’ contributions. The husband asserts that these should be assessed overall as having been made in equal proportions, whereas the wife says contributions should be assessed 65:35 in her favour.

Initial contributions

59 The husband asserted that he had made the greater contribution at the commencement of cohabitation, but his counsel submitted it was not of sufficient magnitude to warrant any adjustment in the overall division. The wife asserted she had made the greater initial contribution; however, her counsel acknowledged in his closing address that this greater contribution only “marginally” favoured the wife.

60 The husband acquired his [home unit] in April 1985 at a cost of $18,000. Given that he sold the property for $26,000 in January 1987, I accept the husband’s assessment that it was worth about $25,000 when the parties commenced cohabitation late in 1986. As already noted, the major point of contention in relation to the unit is whether or not the mortgage balance stood at about $18,000 when the property was sold (as the wife firmly claimed) or $8-10,000 as the husband asserted in his oral evidence.

61 The husband gave oral evidence that he borrowed $18,000 to acquire [the home unit] and claimed in his affidavit evidence that he

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paid mortgage payments at the rate of $300 per fortnight during the time he owned the property. If he was, in fact, paying at that rate (which is possible since he was earning about $45,000 per annum) it is feasible he did reduce the mortgage by an amount of about $8-10,000 in the period of two years during which he owned it.

62 I come to this conclusion even though I doubt the husband’s evidence that the interest rate on [the home unit] mortgage was approximately 10%. Reference to Australian Social Trends 1994 (published by the Australian Statistician) and the Bulletin Statistical Tables (published by the Reserve Bank) satisfy me that in the period from January 1985 to January 1987, the interest rate on the mortgage would probably have been in the range of 11.5% to 15.5%. I am entitled to take judicial notice of these publications by virtue of ss 5 and 159 of the Evidence Act 1995 (Cth) and s 85A of the Reserve Bank Act 1959 (Cth).

63 Even allowing for an interest rate of between 11.5% and 15.5%, the husband would have been able to reduce his mortgage to the extent claimed if he had been making payments at the rate of $300 per fortnight, as alleged. Since the husband was not challenged on his claim that he was paying at this rate, I am prepared to accept that he did make the claimed reduction in the mortgage debt.

64 The position relating to the wife’s equity in the [pre-marriage] property at commencement of cohabitation was somewhat confused. The property cost $63,500 in March 1985. Given the increase in the value of the husband’s home unit at around this time, it might be inferred that the wife’s property had also increased significantly in value by the time the parties commenced cohabitation in late 1986. (It will be recalled that the wife had paid her fiancé $8,100 for his half interest in the property only three months after purchase.) The [pre- marriage] property was retained until February 1990, at which time it was sold for $112,000 (i.e. an increase in value of about 80% over the five years it was held).

65 The husband asserts that at the commencement of cohabitation the wife’s mother was owed about $50,000 in relation to her contribution to the [wife’s pre-marriage property], whereas the wife thought the amount outstanding was more. She believed this because her mother had advanced the full amount of the purchase price fairly recently and she had not had much time in which to repay any of the

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money to her mother. She estimated that she had only repaid about $3,000 at the time she met the husband. I am inclined to consider the wife’s assessment to be the more accurate and hence I find that her equity in the property would largely have been represented by the increase in the value of the property over the period of a little less than two years between the date of acquisition and the commencement of cohabitation.

66 The parties had each built up some entitlements with their employers prior to commencement of cohabitation. The wife had hers paid out when she gave up paid work and the husband received his when he first retired from the [defence forces]. The evidence did not allow me to determine to what extent his entitlements exceeded hers. The balance of the parties’ combined net worth at the commencement of cohabitation was represented by their motor vehicles, furniture and savings (and minor liabilities). Little, if any, attention was paid to these in cross-examination and at the end of the day I was left with a somewhat confused picture about the net value of their minor assets when they first started living together.

67 The state of the evidence did not allow me to make any finding as to whether either party made a greater contribution overall than the other at the commencement of cohabitation. In any event, the husband did not seek credit for any greater contribution he may have made and the wife’s counsel conceded that any differential in her favour was “marginal”. I consider the most significant matter to note is that the wife had a liability to her mother for [her pre-marriage property], which I find is likely to have been well in excess of $50,000 at commencement of cohabitation.

Contributions during cohabitation

68 Neither party asserted that their respective personal contributions during cohabitation were of any greater value than the contributions made by the other party. Both were involved in income-earning activity (the husband more so than the wife) and both were involved in the care of the family and of the home (the wife more so than the husband). The wife asserts, however, that the contributions made on her behalf by her mother were of such a magnitude as to carry significant weight. Taking into account what she considered was her somewhat greater initial contribution, the wife argues that

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contributions overall prior to the date of separation should be assessed
60:40 in her favour.

69 It was not suggested by the husband that any contributions made by the wife’s mother should be treated as anything other than contributions made on behalf of the wife. His case, however, was that the assistance from the wife’s mother comprised payments totalling only about $135,000 and that she was repaid approximately $227,500 by regular payments of $250 per week, commencing in February 1987 and finishing in June 2004. The husband went so far as to assert that the parties did the wife’s mother a “great favour” and “helped her out” by taking the advances from her.

70 In his trial affidavit the husband referred to only three payments which he said were made by way of loan to the parties from the wife’s mother, namely:

• $50,000 approximately for the [wife’s pre-marriage property] home;

• $40,000 approximately for the [first marital home]; and

• $45,000 approximately to acquire the [business].

71 The wife’s mother, in fact, provided much more assistance than this. My findings in relation to the assistance she gave the parties are set out below:

Motor vehicles

72 After the marriage, the wife’s mother gave her $15,000 to allow her to purchase a new [small] car. I accept the wife’s evidence that she repaid her mother in full for this loan by instalments of $100 per week (without interest).

73 It is common ground the wife’s mother also paid for the second [large] motor vehicle owned by the parties. The wife suggested in her oral evidence that the amount borrowed for this vehicle was also $15,000. The funds for this purchase were also repaid, but once again without interest.

74 There was no admissible evidence to confirm the wife’s belief that her mother paid $1,000 for the gas conversion of the first [large] vehicle.

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[The Industrial] unit

75 As previously noted, the wife’s mother advanced $5,000 towards the acquisition of the investment unit in [an industrial area]. Again, she was repaid in full but without interest. I have already indicated that it seems likely that the wife’s mother provided significant assistance to the parties in paying off the balance of the debt on the [industrial] unit.

[The Pre-marriage Property of the Wife]

76 I have already found that the amount owing to the wife's mother for [the pre-marriage property] at the commencement of cohabitation was likely to have been well in excess of $50,000. Although it is not possible to quantify the amount, I am satisfied that a significant amount remained owing at the time the parties purchased the home in [a nearby suburb].

[The First Matrimonial Home]

77 Apart from (in effect) allowing the parties to use all of the funds from the sale of [the wife’s pre-marital property], the wife’s mother provided further significant assistance in relation to the acquisition of the [first joint matrimonial home]. I was inclined to accept the husband’s recollection that the additional amount advanced was approximately $40,000 and that the balance came from a term deposit which had been established using his superannuation payout. In accepting his evidence on this point, I note that the wife gave no evidence to indicate what may have become of the husband’s payout.

[The Business]

78 The wife recalls her mother advanced $40,000 towards the acquisition of the [business], whereas the husband recalls it as being $45,000. The husband’s evidence on this point was given with greater certainty than the wife’s and I considered it more likely that his recollection was accurate.

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79	The husband says the parties were disadvantaged by agreeing to borrow these funds from the wife’s mother because any interest paid could not be claimed as a tax deduction. That proposition is true as far as it goes, but it begs the question of whether any interest was, in fact, paid.

Boat

80 I was inclined to accept the evidence of the wife's sister that the husband received $8,000 from the wife’s mother for the purchase of a boat, even though the wife’s mother gave no evidence about it. The husband instructed counsel to cross-examine on this issue but did not seek to give any evidence on the topic himself.

Shares

81 I was inclined to accept the wife’s evidence that her mother advanced the parties $3,500 to allow them to acquire shares in [a large company]. These were sold shortly before separation. The wife wanted to repay her mother the $3,500, but this did not occur, as the husband claimed she had already been repaid for all the funds she had advanced.

82 At the date of separation, the wife had 500 [other] shares she had been given by her mother prior to the marriage. The wife claims she understood she was to have the benefit of any dividends, but was required to return the capital to her mother if the shares were sold. She sold the shares after separation for $1,300 and gave the money to her mother.

Miscellaneous help

83 The wife’s mother provided other assistance to the parties from time to time as detailed in the wife’s affidavit sworn 11 May 2006.

84 It will be observed from the findings above that the contributions made by the wife’s mother were well in excess of the $135,000 acknowledged by the husband in his affidavit. The question remains, however, as to whether the husband was correct in asserting that the

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wife’s mother was repaid $227,500. Given the importance of this issue it is surprising that the wife’s evidence on the topic was given in such a haphazard fashion (see paragraphs 36, 70 and 73 of her affidavit of May 2006).

85 As best I can ascertain the wife’s case, it is asserted that she was initially paying her mother back at the rate of only $100 per week. In 1996, when she obtained regular work during school term time, she paid at the rate of $100 to $150 per week. The payments were increased again in “2000 or thereabouts” to $250 per week. She said the payments increased from $100 per week when the parties were paying back the money advanced for the purchase of the [small car] and the [larger car] (the [small car] was purchased soon after the marriage but the wife gave no evidence to indicate when the second [larger vehicles] might have been purchased). The wife also claimed that repayments to her mother were “at a minimum” during the time the husband was studying for his [degree].

86 I was inclined to consider that the wife’s evidence concerning the level of repayments to her mother was closer to the truth than the husband’s bald assertion that the parties paid at a fixed rate of $250 per week for the specified period. I find it was most likely that the payments to the wife’s mother ranged between $100 to $250 per week, depending on whether they were just making payments in recognition of the general assistance she had provided them or whether they were instead repaying one of the advances for which they had a firm repayment arrangement (i.e. for the cars and the deposit on the [industrial] unit). I also accept that there were times when the parties paid nothing (or less than $100 per week) because their financial circumstances were such they could not afford it. Although it is not the main basis on which I accept the wife’s evidence on this issue, I do note that it was the wife who was largely responsible for delivering the regular cash payments to her mother.

87 Overall, I gained the impression that the repayments made to the wife’s mother represented probably no more than what would have been a commercial rate of interest on the funds advanced. I consider it likely the parties did not keep even private records of what they were repaying to the wife’s mother (other than for the cars and [the industrial unit]) because they understood that they could keep on paying at the same rate indefinitely and still never repay the wife’s mother for the assistance she had provided them.

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88	Although the husband claims that the arrangements were for the benefit of the wife’s mother, I consider this to be a somewhat disingenuous argument. I find instead that the arrangements provided the husband and wife with a significant material benefit. I consider that at various stages the wife’s mother presented the parties with what, in retrospect, can be seen as a springboard from which the husband and wife were able to build up their current pool of assets. They did not have to pay commercial rates of interest on borrowings (and the associated fees and duties) and they could repay as and when they felt able. Had they borrowed the money at commercial rates, it seems to me likely they would still owe a significant proportion of what they borrowed.
89	I consider that the level of assistance provided by the wife’s mother should be recognised in a significant way. Nevertheless, I must keep in mind that these intra-family arrangements were part of a scheme designed to maximise the social security entitlements of the wife’s mother. Public policy considerations alone would justify me in adopting a conservative approach in determining the value to be ascribed to the wife’s mother’s contributions, given the absence of clear and convincing evidence from the wife concerning the level of repayments actually made. In my view, a finding that contributions during cohabitation favoured the wife in proportions 55:45 would give adequate recognition to the assistance provided by the wife’s mother.

Contributions after the date of separation

90 The wife claims there should be a further adjustment of 5% in her favour as a result of matters that have occurred since the date of separation. She refers to a number of reasons at pages 12 and 13 of the Papers for the Judge to justify this.

91 The first limb of the wife’s argument is the claim that she and the children lived in substandard accommodation (in her mother’s granny flat and in a friend’s home) whilst the husband enjoyed the sole occupation of the former matrimonial home for much of the time after separation. The wife says she saved the parties money in doing so, as she was not paying market rent. It is true that the wife’s choices relating to accommodation (which were to some extent forced upon her) did save on rent. On the other hand, for not insignificant periods of time, one (and sometimes two) of the children were living with the husband. Furthermore, whilst the wife complained that the husband

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did not pay all of the mortgage payments he should have, I did not understand her to complain about the way in which he maintained the former matrimonial home during the period in which he was living there. Ultimately, I was not satisfied that this factor warranted any recognition.

92 The next matter the wife relied upon was the fact that [her post separation property] has increased substantially in value since she acquired it. As already noted, the wife contributed $488,301 towards this property, which now has a value of $680,000. This is a significant increase in the context of the asset pool. It needs to be recalled, however, that the wife used $376,351 from the sale of the former matrimonial home to assist with the purchase of this property. The most that she could reasonably hope for is that I would have some regard to the fact that, as a result of the assistance provided by her mother and sister, she was able to inject more funds into what turned out to be a rapidly rising property market. I consider there is sufficient merit in this part of her argument for it to be taken into account.

93 The final matter relied upon by the wife in seeking a post- separation adjustment to contributions arises out of her claim that the husband’s earnings following separation fell below “pre-separation level” and that as a result he did not pay as much child support as he otherwise would have been obliged to pay. Combined with this proposition was her argument that she had been caused “ongoing difficulties” as a consequence (inter alia) of the husband having distributed funds to her from the Family Trust after the date of separation. (According to the husband, he was unaware that this would have a negative impact upon the wife’s social security entitlements and the level of child support she could expect to receive. Whilst it seems difficult to believe that an accountant could overlook such matters, I accept there is a possibility the husband was genuine in insisting that he had not foreseen the consequences.) The parties’ affairs post-separation were not uncomplicated. Adopting a broad- brush approach, I accept that the wife was left in a difficult financial position, but it must be recognised that she dealt with that hardship by increasing her level of liabilities. As I consider it is appropriate to take those increased liabilities into account, it would not be appropriate to “double-dip” by making some adjustment to the contributions on account of the matters relied upon by the wife.

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94	I am satisfied that the parties’ respective personal contributions after the separation should be regarded as being of equivalent value. Each of them earned income and the husband paid child support. Both of them were involved in the care of the children, although I recognise the wife had more responsibility for looking after the children than did the husband.

Conclusion on contributions

95 I have found that the assistance provided by the wife’s mother during the course of cohabitation was such as to warrant contributions being assessed in proportions 55:45 in favour of the wife. I have not been persuaded there should be any further adjustment based either on the parties’ initial contributions or their contributions after the date of separation – save for one factor. That factor relates to the $110,000 which the wife’s family allowed her to invest in a rapidly rising real estate market. The [post separation property] increased in value in a relatively short time by $191,699 (i.e. almost 40%). Of this amount, approximately 22.5% represented funds provided by the wife’s family. The increment in the value of the property referable to the funds provided by the wife’s family is therefore in the region of $43,000. Whilst I do not normally consider it appropriate to adopt such a mathematical approach to the assessment of contributions, I consider that justice and equity would be achieved if the wife’s contribution-based entitlement was assessed as being the first $43,000 of the asset pool, together with 55% of the balance. On this basis, the wife would be entitled to $592,030 from the asset pool and the husband would be entitled to $449,207.

Adjustment for s 75(2) and other factors

96 I turn now to consider the adjustment (if any) to be made on account of the matters set out in s 75(2).

97 As previously noted, the wife submitted that contributions should be assessed at 65:35 in her favour. She went on to submit that a further adjustment of 15% on account of s 75(2) factors would be warranted. This would bring about an overall division of assets 80:20 in her favour; however, it was conceded on her behalf that such an outcome would not be just and equitable and that her entitlement should be scaled back to 72:28. The husband submitted that no adjustment was warranted for s 75(2) factors. I will briefly mention only those s 75(2) factors that seem relevant.

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98	The husband is 47 years of age and the wife is 44 years of age. Neither has any serious health problems.
99	Each party has the capacity to obtain appropriate gainful employment. The wife has not been working on a full-time basis, but has the capacity to do so in the future. I consider that with his qualifications and experience the husband has a somewhat greater earning capacity than the wife.
100	The parties’ property and financial resources are set out above. The wife will be receiving more of those assets than will the husband. Part of the assets the husband will receive are tied up in his business from which he derives his income – and he will also have more tied up in superannuation than the wife, for reasons I will mention later. Another portion of the asset pool is represented by “add-backs” for legal costs, which will not be available to either party unless they obtain an order for costs.
101	It is true, as asserted by the husband, that the wife appears to have a “resource” in the form of the support her mother is able to provide from time to time. This will result, for example, in her probably not having to repay at a commercial rate the funds that have been advanced to her to assist her to obtain her home. It should be noted, however, that the husband has also had support from his family in the period since separation. It should also be kept in mind that some of the wealth of the wife’s mother may now be at risk, in light of the evidence that emerged during the course of the proceedings.
102	[K] and [P] are still living with the wife. [K] is over 18 and has part-time work, for which she can earn up to $200 per week. She has, however, returned to study with a view to obtaining her TEE and may possibly undertake some form of tertiary study next year. [P] is only 14 years of age and is likely to remain living with the wife for a number of years. [A] has lived with both parties from time to time since the separation (much more with the wife than the husband) but for some months prior to trial she had been living away from home. Although the wife is not seeing [A] at present, I accepted her evidence that she is “feeding” her some money through her sister. [P] and, to a lesser extent, [K] are likely to spend regular contact periods with the husband in the future. The husband is likely to continue to pay appropriate levels of child support.
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103	Both parties have normal financial commitments. I accept that the wife still regards herself as bound to continue to pay her mother money in recognition of the assistance her mother has provided over many years. The impression I gained, however, was that the wife’s mother would not require repayment in the event she considered the wife was not reasonably able to afford such payments.
104	I accept that both parties have suffered a reduction in their standard of living since the date of separation. Neither party is cohabiting with any other person.
105	I consider it is a relevant consideration that the husband has been able to obtain a tertiary qualification during the course of the relationship. It should be noted, however, that the husband also worked whilst he was obtaining his qualification.
106	The marriage was lengthy. It has not affected the earning capacity of the husband but it is arguable it has affected the income earning capacity of the wife in that she gave up her full-time [career] in banking to have a family and has since then largely undertaken only part-time and unskilled employment.
107	I do not consider there are any other s 75(2) factors of any significance. Of those factors that are identified above, I consider the one of greatest significance is that the wife is likely to have primary responsibility for accommodating [K] and (more importantly) [P] for a number of years and will also have primary responsibility for maintaining them, albeit the husband will continue to pay appropriate levels of child support. It is also the case that the husband is likely to have a somewhat greater income than the wife in the future. On the other hand, as a result of the assessment of contributions, the wife will have more assets than the husband will have and some of the assets he has are tied up in his business and superannuation.
108	In my assessment, an adjustment of 5% on account of s 75(2) factors would be appropriate, therefore bringing about an overall distribution of assets 60% to the wife and 40% to the husband (after allowing the wife the first $43,000 of the assets for the reason already mentioned).
109	I was not persuaded that any other adjustment is warranted on account of the matters mentioned in s 79(4)(d), (f) or (g) of the Act.
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Just and equitable?

110 As the final step in the process I am required to stand back and determine whether or not the outcome based on the assessment of contributions and adjustment for s 75(2) factors brings about a just and equitable distribution of the parties’ assets.

111 The outcome will involve the wife receiving assets to a value of $641,942 and the husband assets to a value of $399,295. The 5% adjustment in favour of the wife on account of s 75(2) factors was worth $49,912 (but increased the disparity between the parties by double that amount – namely, $98,824).

112 I confess to having a feeling of unease with the outcome, since so many of the factual findings I was required to make were made on a very tentative basis. It is my function, however, to find the facts as best I can and to apply the law to those facts. I am satisfied that the proposed distribution of assets brings about a result that is within the wide ambit of discretion available to me and is just and equitable. I consider it reasonable, however, to give the husband an extended time (up to six months) in which to make the necessary balancing payment to the wife so that he can undertake the work he wants to [the investment] property and then pay her the balance of her settlement from the proceeds of sale.

Superannuation splitting order

113 As already noted, the wife’s application for a superannuation splitting order contained none of what would be regarded as the “usual” specifics – nor had notice of the application been given to the superannuation fund as required by the Rules. I was not persuaded that it was appropriate to order a division of the superannuation as proposed by the wife. I note that any such order would have reduced the amount of funds currently available to her. Both counsel agreed that if the superannuation was not split it should simply be treated as if it were an asset like any of the other property in the pool. I consider this to be appropriate.

Division of chattels

114 There was originally no issue concerning the distribution of chattels. The wife did complain that the husband had not given her an opportunity to take what she wanted from the matrimonial home, but

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she obtained replacement items and the cost of these is reflected in her
current financial position.

115 During the course of the proceedings the wife alerted the husband to the fact that she wanted the [musical instrument and painting], both of which are in his possession. The wife gave no specific evidence about these matters to justify the orders she was seeking. The husband advanced what I regarded as good reasons for him wishing to keep both. That part of the wife’s application will therefore be dismissed.

Family Trust Distribution

116 The wife has challenged the distribution to her of income from the [D] Family Trust in the period after the separation. It is unclear whether she has any significant prospect of success in the representations she has made to the Australian Taxation Office in that regard. If she does succeed, the outcome presumably will be that she will be entitled to a refund and the husband will be required to meet an additional liability. I consider the dispute between these parties has gone on long enough. I propose to order the wife to indemnify the husband against any additional income taxation liability he might incur in the event she is successful in her challenge relating to the distributions. If the issue has not already been resolved by the ATO by the time of delivery of judgment that will be the end of the matter, since there would be no point the wife pressing her complaint. I consider this is appropriate since I have made my decision in relation to the distribution of the property on the basis of the parties’ current liabilities. In the wife’s case, those liabilities take account of the fact that she has suffered financial consequences as a result of the distribution to her of income from the Family Trust. I have also taken into account the fact that the income from the Trust has in the past been distributed to her.

Sale of [the investment] property

117 Both parties originally sought an order for the sale of the [investment] property. During the course of cross-examination, the husband indicated that his preference would be that the [the investment] property be transferred to him so that he would be able to effect improvements to the property prior to its sale. He was only prepared to agree to the transfer of the property to him in the event that the contingent capital gains tax liability relating to the property

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was taken into account in the distribution. As it is clear that the husband does intend to sell the property, I consider it is appropriate that the capital gains tax liability be taken into account. An order for the transfer of the property to the husband will sever one of the remaining financial ties between the parties and save disputation in relation to the manner in which the property is to be sold.

Orders

118 The child support order proposed by the husband was not in a form appropriate for an order of the Court and I will require a minute of the proposed form of order. Subject to hearing from counsel, I otherwise propose making the following orders:-

1. The husband transfer to the wife all of his right, title and interest (if any) in the following:

1.1	The property, [at the address of her post separation property];
1.2	The furniture, chattels and personal effects in the possession of the wife;
1.3	The moneys standing to the credit of the wife in any bank account in her name:
1.4	The [make] motor vehicle in the wife’s possession;
1.5	The jewellery in the wife’s possession; and
1.6	The wife’s superannuation entitlements.

2. The wife shall indemnify the husband and keep him indemnified in respect of:

2.1	any moneys owing or said to be owing by the parties or either of them to members of the wife’s family;
2.2	any credit cards in the wife’s name;
2.3	any income taxation liability arising out of the income notionally distributed to the wife from the [D] Family Trust up to and including 30 June 2005.

3. The wife transfer to the husband all of her right, title and interest (if any) in the following:

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3.1

The property [the investment home]; 3.2 The property, [block of land];

3.3	The interest of the husband in the [business];
3.4	The [XYZ] shares;
3.5	The surfcat;
3.6	The [make] motor vehicle in the husband’s possession;
3.7	The furniture, chattels and personal effects in the possession of the husband;
3.8	The moneys standing to the credit of the husband in any bank account in his name;
3.9	Any claim or entitlement of the wife in respect of the [D] Family Trust; and
3.10	The husband’s superannuation entitlements.

4.

The husband shall indemnify the wife and keep her indemnified in respect of:

4.1 Any moneys owing on credit cards in the
husband’s name;

4.2 Any mortgage or loans concerning the properties [the investment home] and, [the block of land];

4.3	Any taxation or other liability of the wife arising from her involvement in the [D] Family Trust for the period after 30 June 2005;
4.4	Any capital gains tax liability of the wife in relation to the disposal of the units in the [Unit Trust], the [XYZ] shares and the [the investment] property;
4.5	Any outstanding expenses or claims in respect of the husband’s accounting [business]; and
4.6	Any moneys owing by the husband to members of his family.

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5. The wife shall, promptly upon request, sign such documents as the husband may reasonably request to evidence the transfer and assignment by the wife to the husband of any entitlement of the wife in the [D] Family Trust and her resignation as beneficiary and alternate guardian or appointor of the trust.

6.

Within 6 months of the date of delivery of judgment or upon sale of the [the investment home] property (whichever is the earlier) the husband pay to the wife the sum of $45,213.

7.

The husband’s interest in [the investment home] property shall stand charged with payment of the aforesaid sum and the wife be at liberty to register a caveat against the property to secure payment.

8.

Both parties have liberty to apply in relation to the implementation of these orders.

9.

[Intentionally blank to include child support orders when Minute provided]

10.

The applications of both parties be otherwise dismissed.

I certify that the preceding [118] paragraphs are a true copy of the reasons

for

judgment delivered by this Honourable Court

Associate