De Fonte and De Fonte

[2019] FamCA 472

FAMILY COURT OF AUSTRALIA

DE FONTE & DE FONTE [2019] FamCA 472

FAMILY LAW – PROPERTY – property division – what orders achieve justice and equity

Family Law Act 1975 (Cth) ss. 75, 81

De Fonte & De Fonte [2018] FCCA 16
Coghlan & Coghlan (2005) FLC 93-220
Kowaliw & Kowaliw (1981) FLC 91-092

APPLICANT: Ms De Fonte

RESPONDENT: Mr De Fonte

FILE NUMBER: BRC 4381 of 2015

DATE DELIVERED: 18 July 2019

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Baumann J

HEARING DATE: 29 October 2018
9 November 2018
14 February 2019

REPRESENTATION

THE APPLICANT APPEARED IN PERSON

COUNSEL FOR THE RESPONDENT: Mr G Gunn (direct brief)

Orders

1. That the wife retain all her right, title and interest, to the exclusion of the husband, in:

   (a)the real property situated a and known as B Street, Suburb C in the State of South Australia;

   (b)       her M Shares; and

   (c)       her superannuation entitlements with M Superannuation.

2. That the husband retain all his right, title and interest, to the exclusion of the wife, in:

   (a)       his member benefits in the Z Superannuation Fund; and

   (b)       his superannuation entitlements with B Company .

3. That the parties sign all such documents to facilitate funds currently held in the Trust Account of K Lawyers to be disbursed as follows:

   (a)       $30,000 to the wife; and

   (b)       The balance to the husband.

4. That Orders 5 and 6 hereof are binding upon the husband and wife as trustees of the Z Superannuation Fund (“the Fund”)

5. That in accordance with Section 90MT(1)(b) of the Family Law Act 1975 (Cth) (“the Act”):

   (a)the husband is entitled to be paid 100% of the wife’s interest in the Fund; and

   (b)the entitlement of the wife in the Fund is correspondingly reduced by the sum described in Order 5(a) hereof.

6. That the husband and the wife, as trustees of the Fund, will do all such acts and things, and sign all such documents as may be necessary, to:

   (a)calculate, in accordance with the requirements of the Act and the Family Law (Superannuation) Regulations 2001 (Cth), the husband’s entitlement pursuant to Order 5(a) hereof; and

   (b)pay, split, rollover or transfer into a fund of the husband’s choosing, the sum described in Order 5(a) hereof within twenty eight (28) days of the date of this Order.

7. That the parties shall, within fourteen (14) days of the date of this Order, facilitate the wife’s resignation as a trustee of the Fund and, as required, the appointment of such additional or other trustee as the husband may direct.

8. That the husband shall, within fourteen (14) days of the date of this Order assign or otherwise transfer to the wife any interest or claim he may have under the ASG Education Policies in place for the benefit of the parties’ children, X and Y, with the intent that any future payments under the said Policies shall be paid to the wife as sole owner, but on the basis that such funds will be used by her to pay towards school fees and the other educational needs of the children.

9. That unless otherwise specified in these Orders, and save for the purposes of enforcing these Orders:

   (a)each of the husband and the wife be solely entitled to the exclusion of the other to all property in the possession of such party as at the date of this Order;

   (b)money standing to the credit of the parties in any bank account is to remain the property of the person in whose name the account stands;

   (c)save as provided herein, each party renounces any claims they may have to any superannuation or employment benefits or insurance benefits belonging to or earned by the other;

   (d)all insurance policies will become the sole property of the owner named thereon unless specified otherwise in this Order;

   (e)each party be solely liable for, and indemnify the other, with respect to any liability encumbering any item of property to which that party is entitled pursuant to this Order or which is in that party’s name as at the date of this Order; and

   (f)       any joint tenancy is hereby severed.

10. That the parties do all such acts and things and sign all such documents as may be required to comply with their obligations arising from these Orders.

11. That in the event that either party refuses or neglects to do any act or sign any documents required to be signed or executed in compliance with the provisions of this Order, then pursuant to s 106A of the Act, a Registrar of the Family Court of Australia at Brisbane is hereby appointed to execute all deeds and documents in the name of the defaulting party and do all acts and things necessary to give validity and operation to the said Order, and the affidavit of the non-defaulting party shall be sufficient evidence of such non-compliance. The party in default is ordered to pay all reasonable solicitor/own costs incurred by the non-defaulting party.

12. That the costs orders below are discharged, namely:

    (a)Order 11 of the Orders made 8 January 2018; and

    (b)Order 8 of the Orders made 12 September 2016 (amended 28 September 2016).

13. That if either party seeks orders as to costs then they shall:

    (a)by written submissions filed and served on the other party within twenty eight (28) days, articulate the basis why it is just to make a costs order, and a quantification of such costs;

    (b)the other party shall within twenty eight (28) days of service of the written submissions seeking costs, file and serve written submissions in response; and

    (c)unless otherwise ordered, any application for costs shall be determined in chambers on the written submissions filed in accordance with this Order.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym De Fonte & De Fonte has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 4381 of 2015

Ms De Fonte

Applicant

And

Mr De Fonte

Respondent

REASONS FOR JUDGMENT

Introduction

1. On 8 January 2018, as a Judge of the Federal Circuit Court of Australia, I delivered Reasons in respect of a parenting and property dispute between the Applicant wife (Ms De Fonte) and the Respondent husband (Mr De Fonte) (see De Fonte & De Fonte [2018] FCCA 16 (“the said Reasons”))

2. At paragraphs 68 to 138 of the said Reasons, the Court at that time determined that:

   a)a notional nett pool of $2,666,534 for non-superannuation interests and $961,018 for superannuation interests existed;

   b)the non-superannuation pool was swelled by an anticipation that $2,825,958 would be available to the parties on the sale of a vacant allotment at C Street, Suburb O (“the C Street property”) for $3 million and after allowance for a liability of $174,042 (see paragraph 119).  Sadly, for reasons set out below, that sizeable capital return did not materialise;

   c)contribution based entitlements were assessed, in respect of both pools, as equal (paragraph 112);

   d)At the time, a 5% adjustment to the contribution based entitlements to the non-superannuation pool of assets was deemed as proper (paragraph 16);

   e)concerns and challenges were identified in the said Reasons in being able to put into “effect in a practical way” a division of the national assets primarily for two reasons:

   i)The forensic accountant and Court Expert Mr D, in identifying that the value of the “De Fonte Group” (“the Group”) had a negative value of $614,046 opined that the Group had external liabilities to the National Australia Bank (“the NAB”) for $2,832,761 secured over the C Street property.  As such, if the debt was paid by the sale proceeds of the C Street property, whilst the husband’s interests in the Group would swell in value, how was the wife to obtain her share; and

   ii)Significant compliance issues by the parties’ self-managed superannuation fund the Z Superannuation Fund, were also identified.

3. At the time of the initial hearing of the proceedings (in July 2017), it was clearly the husband’s position that he wished to retain, manage and operate the various businesses which comprise the Group.  As the reasons which follow reveal, events of a commercial nature meant the businesses have now ceased operating with limited, if any, remaining assets (including bank accounts or chattels) available for distribution.

4. In every respect, this has been a tragedy for the parties and added enormously to the stress that each party has experienced, not only from the breakdown of their personal relationship and the challenges that now exist in co-parenting their two children (now aged 16 years and 14 years), but also the inevitable loss of their expectation that through their hard work and efforts, a reasonably secure financial future would exist for them.  They are now aged in their fifties with less than a prosperous financial future ahead of them.

events since January 2018

1. The significant events that have occurred since January 2018 are shaped also by Court events, and can be summarised as follows:

   a)The proceedings were transferred by the Federal Circuit Court of Australia to the Family Court of Australia, and on 9 February 2018 (when both parties were still legally represented) some significant orders were made as follows:

   “1.  That within seven (7) days of the date of this Order, the parties do all such acts and things, and sign all such documents as may be necessary, to cause and direct J Solicitors to:

   a.   forthwith pay that firm’s current invoice in the sum of approximately $1,727.56 from the monies held in trust by that firm on behalf of the parties; and

   b.   transfer the balance of monies held in trust on behalf of the parties after payment of the invoice described in Order 2(a) hereof into a joint interest bearing account, via K Lawyers’ Trust Account pending written agreement between the parties or Court Order.

   2.   That within fourteen (14) days of the date of this Order, the parties do all such acts and things, and sign all such documents as may be necessary, to appoint U Company to act as trustee of:

   a.   the Z Superannuation Fund; and

   b.   the De Fonte Family Trust;

   c.   the De Fonte Family Trust No. 2;

   d.   the De Fonte Family Trust No. 3; and

   e.   the De Fonte Family Trust No. 4.

   3.   That for the purposes of Order two (2) hereof, the parties provide U Company with a joint letter of instruction prepared by the wife’s solicitors and authorised by the husband’s solicitors which instructs U Company to undertake, including but not limited to:

   a.   the completion of the audit and liaising with F Company with respect to the audit of the Z Superannuation and facilitate communication with the Australian Taxation Office in relation to any penalties incurred, or to be incurred by same; and

   b.   the calling in, management, liquidation and winding up of the De Fonte Family Trusts No. 1 to No. 4 (inclusive) with the sale proceeds (if any) to be held in a joint interest bearing account, via K Lawyers’ Trust Account pending written agreement between the parties or Court Order.

   4.   That for the purposes of Orders 2 and 3 hereof, the parties forthwith do all such acts and things, and sign all such documents as may be necessary, at U Company’s request or direction.

   5.   That within ten (10) days of the date of this Order, but no later than forty eight (48) hours prior to the roundtable conference contemplated in Notation A hereof, the husband make, and continue to make, full and frank financial disclosure with respect to matters relevant to the proceeding including but not limited to the following from 13 July 2017:

   a.   Bank statements for all bank accounts in which following has, or had, an interest whether individually, jointly, beneficially or otherwise:

   i.   the husband;

   ii.   the E Pty Ltd;

   iii.the De Fonte Family Trust;

   iv.the De Fonte Family Trust No. 2;

   v.the De Fonte Family Trust No. 3;

   vi.the De Fonte Family Trust No. 4;

   vii.the Z Superannuation Fund; and

   viii.any other corporate entity/trust in which the husband has (or had) a direct or indirect interest.

   b.   BAS statements, profit and loss statements and financial records for the following:

   i.   the E Pty Ltd;

   ii.   the De Fonte Family Trust;

   iii.the De Fonte Family Trust No. 2;

   iv.the De Fonte Family Trust No. 3;

   v.the De Fonte Family Trust No. 4; and

   vi.the Z Superannuation Fund.

   c.   Any other corporate entity/trust in which the husband has (or had) a direct or indirect interest;

   d.   All correspondence, including but not limited to, emails and letters exchanged between the husband and:

   i.   the National Australia Bank and this Order be and hereby authorises the wife to obtain copies of all documents pertaining to discussion, communications and negotiations between the National Australia Bank and the husband including, but not limited to, correspondence, file notes and memoranda, and applications for finance; and

   ii.   V Company and/or W Pty Ltd and this Order be and hereby authorises the wife to obtain copies of all documents pertaining to discussion, communications and negotiations between V Company and/or W Pty Ltd and the husband including, but not limited to, correspondence, file notes and memoranda, and applications for finance;

   e.   Full particulars of, and source documents pertaining to:

   i.   the disposition of the “S Investment” previously owned by the De Fonte Family Trust including, but not limited to, evidence of the source of the deposit of $95,495.09 and $28,699.37 and the utilisation of any sale proceeds;

   ii.   The disposition, sale assignment of lease or otherwise of the Business R Suburb P including the […] or business conducted at Suburb P including, but not limited to, the content of the email passing between the husband and Mr N dated 11 August 2017;

   iii.Any possible causes in action the husband, or any entity/trust in which he has an interest, may have against V Company and/or W Pty Ltd including, but not limited to, as described in the husband’s email to the Administrative Appeals Tribunal on 20 August 2017;

   iv.The closure of the Business R Suburb Q including, but not limited to, the location of plant and equipment such as fixtures and fittings, together with any correspondence, negotiations or proposals regarding relocation of the business or the lease/acquisition of ne premises;

   v.The disposition, sale assignment of lease or otherwise of any asset or liability owned by the following for the period 13 July 2017, to date:

   1.   The husband;

   2.   The E Pty Ltd;

   3.   The De Fonte Family Trust;

   4.   The De Fonte Family Trust No. 2;

   5.   The De Fonte Family Trust No. 3; and

   6.   The De Fonte Family Trust No. 4.”

   The agreed appointment of U Company as Trustee of a number of the Trusts was designed to provide transparent management, where by that time, the businesses were in significant commercial difficulties.  The other orders speak for themselves and sensibly the parties had indicated to the Court an intention to participate in a settlement conference on 19 February 2018.

   b)The husband gave evidence that at Christmas 2017 he was given notice by “V Company” (the landlord for the centre where the major business of the parties was conducted), that he had to vacate and remove all stock and fittings – for non-payment of rent.  He deposed to “dumping” equipment; giving stock and equipment away and that he stored some items.  He said he received an “offer” to contribute $50,000 to rent arrears to discharge all arrears but was unable to find the funds to continue trading.  The husband says (at 9 November 2018) that he was still liable under a personal guarantee to a level of $400,000 to V Company, however he was pursuing litigation against them and was hopeful of a commercial resolution – seeing as he now has no other assets.  The husband indicated his desire to remain solvent and to avoid bankruptcy;

   c)Although the corporate entities were formally put into liquidation, it is now accepted that there are no nett assets available to either the husband or the wife under a multitude of trusts and other entities forming the previously described De Fonte Group.  The husband says, and I accept, the liquidators are pursuing no actions and have no further interest in the matter.  I accept significant costs were incurred, with no recovery;

   d)The wife, as the sole registered owner of the C Street property, was clearly concerned about the prospect of the secured creditor, NAB, pursuing her for any funds not recovered from a sale of the secured property.  As previously noted, the best offer by a potential purchaser for the property of $2.4 million did not cover the debt at that time of $2.6 million – mostly relating to the business liabilities.  With the benefit of negotiating at the time, on or around 3 April 2018, the wife entered into a Settlement Deed with the NAB, the effect of which was that she would not be pursued by the NAB for any shortfall.  I am satisfied, from the letter of K Lawyers to the husband on 6 July 2018, that the husband was aware of the arrangement made.  On the evidence produced since then, I am not satisfied that the NAB will be pursuing the husband for any liabilities or that a similar arrangement as the wife secured, is not available to him;

   e)With the companies in liquidation, the potential trustee for the trusts not funded to undertake their role and with the secured creditor agreeing to essentially take the C Street property in satisfaction of their debt and not to pursue the wife, the only way the matter could be finalised was for further evidence to be considered.  A date of 29 October 2018 was set, however for reasons clear at the time, and despite significant exchanges between the Bench and directly briefed Counsel for the husband (Mr Gunn), the matter could not proceed and was further adjourned to 9 November 2018, when both the husband and the wife were briefly cross-examined – the wife being unrepresented;

   f)Although the husband directly briefed Mr Gunn, he actually prepared all his own material and offered voluminous documents which he said were all relevant.  Frankly, the majority were not and the focus of the husband became readily apparent.  He blamed the wife for his desperate and perilous financial state; asserted her behaviour had caused him significant losses (essentially a wastage argument) and the wife’s actions were all intentional and vindictive.  For the reasons which follow, I do not generally accept the husband’s arguments.

Court event of 29 October 2018

1. For this event the husband relied upon:

   a)Affidavit filed 25 October 2018;

   b)Financial Statement filed 25 October 2018; and

   c)Minute of orders sought filed 25 October 2018 (which included further parenting orders).

2. The wife relied upon:

   a)Amended Initiating Application filed 23 October 2018 (incorporating for the first time child support relief);

   b)Affidavit filed 3 October 2018;

   c)Financial Statement filed 3 October 2018; and

   d)Written submissions and minute of order.

3. On 29 October 2018, it was not possible for evidence to be taken but the following issues arose and were the subject of extensive submissions, with Mr Gunn of Counsel appearing on a direct brief for the husband and the wife being unrepresented:

   a)Leave was not given to the wife, for reasons given orally, to amend her Application filed on 23 October 2018, for the first time, to formally seek a departure of the administrative assessment of child support. The wife indicated, in effect, she sought to challenge a recent Administrative Appeals Tribunal assessment. Even if leave had been given to amend the substantive application, leave was necessary under s 116 of the Child Support Assessment Act 1989, and that leave would not have been given;

   b)The husband’s attempt, through his minute of orders sought document, to vary the final parenting orders made on 8 January 2018, without a proper application or, as would be necessary, a consideration of the principles arising from Rice & Asplund (1979) FLC 90-725, was without proper jurisdiction and would not be entertained by this Court at that time;

   c)The husband sought to rely upon a substantial Affidavit with a voluminous number of annexures, which the wife had received only on the previous Thursday (25 October 2018).  The husband was raising issues, in a fairly emotional self-prepared Affidavit, attributing losses due to the wife’s conduct - not only before the first hearing held in the Federal Circuit Court of Australia, but since.  It was a “wastage” argument;

   d)Counsel for the husband initially submitted that there were now only “three assets of any significance” (not including cars and furniture), being:

   i)the wife’s property in Suburb C, South Australia (“the Suburb C property”);

   ii)remaining funds held by the wife’s former solicitors from the sale of the L Street property; or

   iii)superannuation interests.

   e)The NAB released their security over the Suburb C property owned by the wife, when reaching agreements with the wife relating to the significant debts owned by the businesses and secured principally by the C Street property.  The result is the wife’s negotiations with the NAB seemed to have caused a debt of at least $195,473 to be extinguished.  The wife claims she ought to get “credit” for that by way of some additional “contribution” by her;

   f)The husband had received an offer from the NAB to release him from the liabilities essentially on the same terms as the wife, but had not accepted the offer at that time;

   g)A dispute existed as to the entitlement of other parties – one of the business trusts (now in liquidation) and the Z Superannuation Fund – to the funds held by the wife’s former solicitors;

   h)At 29 October 2018, although financial statements for the Z Superannuation Fund were “almost done”, they were not available (or it seems audited) at the time.  The need for audited figures and greater certainty about all non-compliance issues had been dealt with, has been a theme of concern since the original hearing in July 2017;

   i)The husband had engaged a Sydney firm of solicitors to “sue the bank”.  It appeared, to some degree, the husband’s desire to pursue such action may have been an impediment (perhaps both legally and tactically), in the husband not entering into a similar arrangement as the wife chose to do with the NAB.  The position, on the husband’s sworn evidence, is far from clear;

   j)There should, on the husband’s case, be consideration given to the fact that in September 2015, the parties received some form of interim/partial property settlement.  The wife received $150,000 and the husband received $100,000.  At the time of the first hearing, the written submissions of both parties (through Counsel retained at that time) about “adding back” their interim distributions were clear and agreed – namely that this distribution not be “added back”.  Order 44 made by consent on 13 October 2015 by Judge Demack provided:

   “44.         That within forty eight (48) hours of the date of these Orders, the net proceeds of sale of the T Shares, being the sum of two hundred and fifty thousand, two hundred and fifty six dollars and sixty two cents ($250,256.62) be divided as follows:

   a.   The sum of forty thousand dollars ($40,000) to the Wife to assist in the costs of her relocation from the L Street property and her bond and rental costs, at a maximum of one thousand dollars ($1,000) per week for a period of six (6) months, with the categorisation of such sum to be determined by the trial Judge;

   b.   The sum of ten thousand dollars ($10,000) to be used in payment of school fees, medical and children’s activities, with the Wife to hold the funds and provide proof of expenditure to the Husband; and

   c.   The balance to be divided equally between the Applicant Wife and Respondent Husband with such distribution to be characterised by this Honourable Court at trial.”

   For completeness, I deal with the characterisation later, although because of the husband’s position at the first hearing, that is not strictly necessary.

   k)The husband asserted that he raised the post-hearing waste issues with the Court during 2018, and that the Court indicated it would allow him to agitate such issues.  The Court does not accept the husband’s assertion.  The Court accepted that in determining what orders do just and equity now, it could consider any relevant conduct since at least January 2018 when Reasons were delivered.  I do so later in these Reasons;

   l)The Court permitted a bundle of documents to be tendered and marked Exhibit 1;

   m)After an adjournment for 50 minutes or so, Counsel for the husband informed the Court he had spoken to Mr G, an accountant who had been retained to prepare the financial statements for the Z Superannuation Fund.  Upon receiving some further submissions, the Court invited the wife to ring the accountant to clarify the position and her concerns as a trustee of the self-managed superannuation fund, about the potential for fines or the like arising from some historical past allegations of non-compliance.  The Court identified for the benefit of the wife, the questions she may wish to ask Mr G over the lunch adjournment;

   n)On resuming at 2.18pm on this day, the Court was further informed by the wife that:

   i)upon review of further material produced by the husband to the accountant on 26 October 2018 (the previous Friday), the accountant was confident that final financial statements would be completed within five business days;

   ii)although no guarantees could be given, Mr G did not believe it was likely that fines or penalties would be incurred for any non-compliance;

   iii)as currently advised, Mr G did not see, and was not aware, of any further monies owing to the Z Superannuation Fund from monies held in trust;

   iv)in respect of any alleged rental debt arising from the wife occupying (with the children) a home vested partly in the Z Superannuation Fund (a potential non-compliance issue), Mr G indicated that any debt would constitute a debt owed to the De Fonte Family Trust, and as the Trust is in liquidation, that issue has no material impact on the financial statements for the Z Superannuation Fund;

   v)Mr Gunn tendered an email dated 25 October 2018 from McLeod Partners, the effect of which was correctly summarised by the husband’s Counsel Mr Gunn, as that “they are not really interested as liquidators in the $91,000 that is in Trust”; and

   vi)as a result of the likelihood that audited and completed financial statements would be available within a short period, it was decided by the Court to adjourn the matter for further hearing (including cross-examination) at 11.00am on 9 November 2018.

Hearing on 9 November 2018

1. When the hearing resumed on 9 November 2018, brief cross-examination was undertaken and the effect of that cross-examination reflects in the findings that follow about some continuing or new areas of controversy.

2. Importantly, the issue surrounding the self-managed superannuation fund was clarified by:

   a)financial statements having been completed and tendered, for the Z Superannuation Fund;

   b)the auditor for the Z Superannuation Fund having “signed off” on the financial statements, which relevantly revealed that:

   i)the husband’s member benefit at 30 June 2018 was $547,415.32;

   ii)the wife’s member benefit at 30 June 2018 was $71,976.03;

   iii)the Fund had no remaining interest in the previous partnership with the De Fonte Family Trust; and

   iv)the balance sheet revealed that the assets of the Fund were comprised of:

-	cash	$608,715.61
-	bronze statue	$10,000

1. The wife cross-examined the husband in respect of his current earning capacity and income as well as to what he claims he did with stock and equipment from the business prior to liquidation.

2. The wife was briefly cross-examined by Counsel for the husband.  She produced evidence, accepted by the husband, that her M superannuation benefit was now a total of $488,316 (being $178,000 defined benefit and the balance being her accumulation fund).  The wife confirmed that she had discussed with the husband conducting an updated valuation of the Suburb C property but points to the fact that no order was made for H Company to be appointed a Single Expert.  I took the view that the wife felt that it was not fair that if the property, occupied rent free by her elderly mother for many years, had improved in value through simply market forces, that the husband should be entitled to share in such increase.  I deal with this issue when considering what now should constitute the divisible pool.  She confirmed that she still held 3553 shares in M Company, being employee vested shares which had been received through her employment with M Company.

3. I now make the required fresh findings on the evidence with a view to deciding what orders now achieve both finality (as required by s 81of the Family Law Act 1975 (“the Act”)) and justice and equity.  In so doing, I adopt earlier findings set out in the said Reasons insofar as they are not revisited by new evidence and now findings recorded in these Reasons.

Pool

1. I find that it is still appropriate to constitute two separate pools, consistent with authority (see Coghlan & Coghlan (2005) FLC 93-220), and that at this point the pool should be assessed as follows:

POOL ONE – NON-SUPERANNUATION
OWNER	ITEM		VALUE
Joint	Funds held in Trust		$91,870
Wife	B Street, Suburb C		$365,000
Wife	M Shares (3553) (at $5.71 per share)		$20,288
$477,158
LIABILITIES
$Nil
NETT POOL ONE EQUATES TO:		$477,158
POOL TWO – SUPERANNUATION INTERESTS
Husband	Z Superannuation Fund			$547,415
Husband	B Company			$7,485
Husband’s total superannuation				$554,900
Wife	M superannuation			$488,316
Wife	Z Superannuation Fund			$71,976
Wife’s total superannuation				$560,292
TOTAL POOL TWO EQUATES TO:				$1,115,192

1. In reaching these conclusions, I make the following further findings:

   a)On balance, I find the mother did not oppose the husband, at his cost, securing a fresh updated valuation of the Suburb C property.  It appears from the valuation tendered, which I accept has been conducted by a qualified valuer, that an inspection was conducted in May 2018 however the valuation date is recorded as being 2 November 2018.  It seems from the husband’s email to the valuer of 2 November 2018, the husband requested the valuer to “proceed with the revaluation”.  The wife says I should adopt a valuation, agreed to by the parties in July 2017, at $317,000.  However, although the husband’s reliance on the H Company report should have been properly introduced into evidence by affidavit, the report represents the best evidence of current value and it would not be just and equitable to ignore the increase.  In submissions, the wife appeared to reluctantly accept this position, although unhappy because, as she desperately seeks to retain the home, she understand that the higher value may be to her disadvantage;

   b)Clearly, as the earlier Reasons reflect, neither the liquidator for the De Fonte Family Trust or the Z Superannuation Fund make a claim on the monies held in Trust.  I therefore include it in the pool as available to the parties;

   c)I do not include the interim property distributions in the pool arising from the consent orders of 13 October 2015 because:

   i)essentially each party received $100,000 which they could, at their discretion, use for personal expenses or legal costs and did so; and

   ii)the order makes it clear that the differential of $50,000 in the wife’s favour related to school fees ($10,000) and costs and relocation costs for the mother and the children.

   It would not be fair for these interim distributions to be “added back”.

   d)At one point the husband asserts that the bronze statue should be included in the pool, however it is clear that “asset” is vested in the self-managed superannuation fund and represents part of the member benefits;

   e)An argument was advanced by the husband that the current value for the ASG Policy (for the purpose of contributing to the education expenses of the children), should be regarded as an asset.  Whilst the Policy appears to be in the joint names of the husband and the wife, in my view any available proceeds or payment to the parties should be entirely used for the intended purpose when established – the education of the children.  The mother raised a concern, arising from earlier issues where I am satisfied the husband withheld a cheque, that as the children live with her the husband should be required to assign his interest in the Policies to the wife on the express trust that the payments received be paid for the children’s school fees.  I agree and intend to so order;

   f)At the time the Reasons for Judgment were published on 8 January 2018, various additional interests of the parties (other than those already set out in the Pool One above) were identified and amounted to:

-	wife (furniture and bank accounts)	$40,037
-	husband (furniture and bank accounts but excluding the statue at $18,000)	$9,061

I take into account the time that had passed since those findings were made, and agree with Counsel for the husband in his final submissions, that those interests should no longer be included in the Pool One.  Similarly, as was conceded for the first hearing, no inclusion of motor vehicles needs to occur.  I assume the husband’s concession reflects his acceptance that the children have had the benefit of the furniture and the savings of the wife;

g)I am not satisfied, on the evidence, the husband retains any funds or stock or equipment from the business of any value and that if he did receive funds in payment for some isolated items, it was a very modest payment;

h)The husband, in his Affidavit (but not reinforced by any final submissions by his Counsel Mr Gunn), suggests some add-back should be included for what he says were greater “drawdowns” on loan accounts established in the entities now in liquidation.  If there was any differential (and the calculations seems to be that since July 2015 a difference in favour of the wife of over $100,000 occurred), then it really is a matter for the liquidator to attempt to recover those loan accounts.  Frankly, I found the calculations confusing; they were not put to the wife; many occurred before the first hearing and a significant part of the expenses related to expert costs of Mr D.  Also, school fees were paid from the business it seems at times.  I am not satisfied any injustice arises to either party by now ignoring transactions so long ago; not asserted in submissions in 2017 and where the business income was, at the time, used by the parties to meet many personal payments;

i)In respect of liabilities, the husband failed to establish that it is likely his contingent indebtedness to V Company is anything like $400,000 or that it will ever be recoverable from him.  Furthermore, the husband seemed to be engaged in both the Queensland Civil and Administrative Tribunal proceedings and negotiations around any alleged liability for rental arrears;

j)           The husband failed to offer any persuasive evidence or argument as to why he had failed to accept the same offer accepted by the wife from the NAB, extinguishing any contingent liability.  I speculate his failure to do so was probably because of the terms of such an arrangement with the NAB would include a condition that he would not pursue the NAB for damages.  I am far from satisfied he has a claim against the NAB and, if he has a claim, he is able to pursue it to finality and a nett benefit (after legal expenses).  In the circumstances, the lack of evidence from the husband satisfies me it is proper to ignore any contingent liability the husband might have to the NAB as well as any possible claim for damages.  I understood the wife’s position, she agreed with that proposition implicitly.

Contributions

1. I adopt the findings at paragraphs 105 to 112 of the said Reasons.  As identified, at that time, I assessed contribution based entitlements as equal in both Pool One and Pool Two interests.

2. However, the Pools at that time were substantially different than now as set out earlier – primarily due to:

   a)the closure and winding up of the businesses;

   b)The removal of the C Street property and the secured debts to the National Australia Bank; and

   c)a clarification of how the member interests in the Z Superannuation Fund should be calculated and the effect, if any, about the possible intermingling of funds in the partnership concerning the L Street property.

3. Other matters on contributions assessment which now must also be taken into account are:

   a)the wife’s actions in reaching an agreement with the NAB to extinguish any indebtedness owing by her, has had the effect of increasing the nett value of Pool One interests by the mortgage secured over the Suburb C property.  At the hearing in July 2017, that mortgage was $195,473.00.  If, post separation, a party had unilaterally discharged a mortgage or reduced a joint debt, it would generally be treated as a contribution by that party.  Of course, this is usually achieved by applying income, an inheritance, a gift or some other financial windfall.  The husband says that the wife should not be regarded as having made an additional contribution because the effect of her actions (although reducing debt) did not reduce the liability over the C Street property.  In the circumstances of this case, it would not be just to ignore the actions by the wife and the benefit (which the husband says he should share in), that arises from the increased value of Pool One; and

   b)the husband, in his Affidavit filed 8 November 2018, which I have taken into account, seeks to advance a proposition that the wife’s behaviour falls within what he described as “wastage”.

4. This was an attempt to invoke the principles enunciated in Kowaliw & Kowaliw (1981) FLC 91-092 which, in limited cases, allows the Court to consider any “negligent or wanton” actions – generally with the consideration of s 75(2)(o).  I refer to the issues raised by the husband (which his Counsel did not press) now so as to satisfy the husband that his plea was not ignored – just not accepted.  By reference to that Affidavit the husband asserts many different claims, which I summarise and deal with as follows:

   a)The wife surrendered the C Street property without the husband’s consent.  The Deed with the NAB does not act as a “surrender”.  Furthermore, all the evidence reveals that the current market value (reflected by the auction results) is less than the debt.  The husband, for reasons known only to himself, has failed to take advantage of the same offer by the NAB;

   b)The agreement for the NAB not to pursue the wife in respect of the Suburb C property debt was open also to the husband and if, as he asserts, he is now burdened by that debt as well - the answer lies in his hands;

   c)The husband’s actions when he was in total control of the business, to try and blame the wife for what he described as the “forced closure of flagship business”, is an attempt to shift responsibility.  In the end result, there are a multitude of likely causes, including possibly poor management, that has resulted sadly in the loss to both parties; of the business built up during the marriage.  The alleged losses arising under the husband’s personal guarantee for corporate rental agreements, again arise from the business closing and have been discussed already;

   d)If the husband chose to seek liquidators then the costs of this decision are his to bear;

   e)In my earlier Reasons I indicated why the alleged loan from the husband’s father would not be taken into account;

   f)Assertions of “underselling L Street”; additional fees incurred by the husband (or the Trusts) to disclose documents; alleged rent paid by the husband post separation; damages for non-investment of funds held in trust and asserted loses from an investment the husband says he wanted to make in “[T Shares]” (which were superannuation funds anyways), do not on the principles to be applied and on the evidence before the Court sound in any adjustment in my view to either Pool One or Pool Two interests; and

   g)Both parties have incurred substantial legal fees – a significant proportion of which remain, at least in the wife’s case, as unpaid.  She asserts the amount approaches $400,000.  If the Court were required to consider any application for costs under s 117, which seems unlikely, then of course the Court would need to be satisfied that circumstances exist to justify a costs award and thereby depart from the usual position that each party pays their own costs (s 117(1)).  That is an issue for another time.

5. Taking into consideration the earlier findings and the matters raised above, I would regard it as proper that the wife’s contribution based entitlements in respect of Pool One interests would now exceed those of the husband but seen, as they must, within the context of a 16 year marriage and many diverse contributions, in the region of 55 % to 60% to the wife and 40% to 45% to the husband – a differential of approximately $95,000 on Pool One interests.

6. I would make no further adjustments to the superannuation interests, maintaining as appropriate an equal contribution based assessment for Pool Two.

Section 75(2) factors

1. I would adopt the findings at paragraphs 113 to 115 in the earlier reasons save for the following findings which can now been made:

   a)As the husband was unable to retain the business (for reasons already discussed) and despite his tertiary education, I am no longer of the view that the husband “has the earning capacity to generate a larger income than the wife”.  The wife’s income, as set out in her latest Financial Statement, reveals a nett wage of approximately $1,000 a week, which enables her to obtain some income tested Government benefits.  The husband in his Financial Statement deposes to a current income of about the same nett amount.  Whilst the husband clearly has “contacts” in the industry, I am no longer satisfied that he has an earning capacity double that of the wife;

   b)The property division orders I make leave the parties mostly with superannuation interests and some modest non-superannuation assets.  Certainly the hopeful position that could have been anticipated (as the husband argued) of the business prospering and the C Street property selling for more than its secured debts, simply have not occurred; and

   c)The wife strongly argued that the husband’s failure to pay child support has placed additional responsibilities on her.  Although the Court would not permit the wife to seek child support departure orders, I do accept her evidence that the current administrative assessment actually requires her to pay child support to the husband because of the current care arrangements.

2. When these additional factors are taken into account I would now make no further adjustment to the contribution based assessments for either Pool.

Just and equitable orders

1. This complex and difficult case does not fit neatly into an analysis of percentage terms alone – although that is of course a guide.  In my view, an order which achieves the following result is just and equitable, namely:

   a)the wife retains the Suburb C property without the need to borrow any funds to pay the husband;

   b)the wife rolls over her entitlements in the Z Superannuation Fund to the husband and otherwise retains all her M superannuation entitlement;

   c)the husband retains all his superannuation entitlements;

   d)the wife retains her M Shares;

   e)the funds held in trust be divided as to:

   i)$30,000 to the wife; and

   ii)The balance to the husband.

2. Looking at a total pool of $1,592,350 this computes to the following distribution:

Wife
Suburb C property	$365,000
M Shares	$20,288
M superannuation	$488,316
Share of invested funds	$30,000
(56.7% of total pool)	$903,604
Husband
Superannuation in Z Superannuation Fund		$547,415
B Company Superannuation		$7,485
Wife’s Z Superannuation		$71,976
Share of invested funds		$61,870
(43.3% of the total pool)		$688,746

1. I regard the orders which reflect this division, and which appear at the commencement of these Reasons do justice and equity to the parties noting that:

   a)the wife retains the Suburb C property occupied by her mother;

   b)the wife, while still employed, can continue to build on her M superannuation benefits, which includes a defined benefit proportion;

   c)whilst the husband’s interests are substantially in superannuation which are protected from bankruptcy, he does receive more of the limited cash funds; and

   d)although the wife receives less cash funds, she could convert her M Shares to cash if she desires.

I certify that the preceding twenty six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Baumann delivered on 18 July 2019.

Associate: 

Date:  18 July 2019