Don Collinzo and Don Collinzo
[2012] FamCA 352
•17 May 2012
FAMILY COURT OF AUSTRALIA
| DON COLLINZO & DON COLLINZO | [2012] FamCA 352 |
| FAMILY LAW – PROPERTY SETTLEMENT – where four step process of determining matter applied – where husband alleged that over $1.8 million of family money was unaccounted for by the wife – where husband alleged that sum should be added back to the pool of property for division – where there was an independent jointly appointed accountant to analyse and report on the husband’s allegations – where that expert’s evidence did not support the husband’s allegations – where husband’s allegations were rejected - where husband’s disclosure was incomplete – where substantial sums spent on legal costs by both parties were added back - where parties’ contributions assessed as weighing equally – where there is no adjustment for s 79(4)(e) matters |
| Family Law Act 1975 (Cth) s 75(2) and s 79(4) |
| Hickey & Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 Coghlan & Coghlan (2005) FLC 93-220 |
| APPLICANT: | Ms Don Collinzo |
| RESPONDENT: | Mr Don Collinzo |
| FILE NUMBER: | SYC | 2421 | of | 2009 |
| DATE DELIVERED: | 17 May 2012 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Forrest J |
| HEARING DATE: | June 2011 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Kirkman-Scroope |
| SOLICITOR FOR THE APPLICANT: | Smithson Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Connor |
| SOLICITOR FOR THE RESPONDENT: | Argyle Lawyers |
Orders
That within two calendar months of the date of these orders the husband shall transfer to the wife all of his right, title and interest in the real property situated at … R Street, Suburb P in the State of New South Wales more particularly described as Lot … on DP … County of … Parish of … and contained in Certificate of Title Folio … (“the Suburb P property”)
That upon settlement of the transfer to the wife of the husband’s interest in the Suburb P property, the husband shall give vacant possession of the said property to the wife, leaving it in a clean and tidy condition and should the husband wilfully cause any damage to the said property before leaving, that damage shall be repaired at the husband’s sole expense.
That upon settlement of the transfer to the wife of the husband’s interest in the Suburb P property the wife shall provide to the husband a discharge of the mortgage securing the said property for which the husband and wife are currently jointly and severally liable, the wife to refinance the existing debt so as to relieve the husband from any further liability in respect thereof and the wife shall indemnify the husband, from the date of settlement of the transfer, against any further liability in respect of this debt but until the settlement of the transfer the husband shall continue to make all repayments in respect of the existing loan as and when they fall due.
That upon delivering up to the wife vacant possession of the Suburb P property the husband shall deliver to the wife, by leaving them in the Suburb P property, the following items of furniture and personal chattels and the wife shall retain them as her sole property to the exclusion of the husband:
(a)all personal property, including clothing, solely owned by the wife that still remains in the Suburb P property;
(b) the outdoor furniture setting;
(c) photo albums;
(d)all items currently located in the bedroom next to the main bedroom, including boxes and books;
(e) Ornaments;
(f)Items held in the safe including jewellery, save for any jewellery originally owned by the husband’s mother;
(g) Half of the sheets, blankets and towels in the home;
(h) Half of the crockery and cooking dishes in the home;
(i) The bird bath;
(j) The water fountain;
(k) The King Koil bed;
(l) Books;
(m) Any personal property of the children of the parties;
(n) Christmas decorations.
That the wife shall otherwise retain as her sole property to the exclusion of the husband all of her right, title and interest in the following:-
(a)The real property situated at … W Street, Town K in the State of New South Wales more particularly described as Lot … on DP … County of … Parish of … and contained in Certificate of Title Folio … (“the Town K property”);
(b)The real property situated at … B Street, Town A in the State of New South Wales more particularly described as Lot … of Section … on DP … County of … Parish of … and contained in Certificate of Title Folio … (“the Town A property”);
(c)All of the shares in publicly listed companies that are in her name;
(d)The balance of any Bank accounts in her name;
(e)The Toyota … motor car registration number …;
(f)All furniture and personal chattels in her possession.
That the wife shall retain as hers solely to the exclusion of the husband, all of her interests in Superannuation Fund 1 and Superannuation Fund 2.
That the wife shall indemnify the husband against any and all liability in respect of the liability that is secured by mortgage registered over the Town K property and she shall forthwith cause the husband to be released from any guarantee he has given in connection with that liability.
That within two calendar months of the date of these orders the husband shall also pay to the wife the sum of $611,135 (six hundred and eleven thousand one hundred and thirty five dollars).
That the husband is relieved from compliance with the undertaking given by him to this Court on Wednesday 8 June 2011 only in so far as shares owned by G Superannuation Fund are to be sold in order for the husband to comply with his obligation to pay the wife pursuant to paragraph (8) of these orders and the husband shall not otherwise be discharged from his undertaking so given until the total sum of $611,135 and any interest that may become owing on that sum pursuant to the provisions of the Family Law Rules 2004 is paid to the wife in full.
That in default of the husband’s total compliance with paragraph (8) hereof, the following provisions shall apply:
(a)The real property situated at D Street, Suburb C in the State of New South Wales more particularly described as Lot … on DP … County of … Parish of … and contained in Certificate of Title Folio … (“the Suburb C property”) shall upon any such default vest in the wife as sole trustee for the purposes of sale;
(b)The Suburb C property shall be sold by private treaty or public auction within three (3) calendar months of such default but not for a price that is less than $475,000 unless by further order of this Court;
(c)Upon settlement of the sale of the Suburb C property, after payment of all the usual costs of sale and after payment to the wife of so much of the net proceeds of sale as will satisfy the husband’s obligation to pay the wife the total sum of $611,135 plus any interest that may become owing on that sum pursuant to the provisions of the Family Law Rules 2004, any balance remaining shall be paid to the husband;
(d)Upon settlement of the sale of the Suburb C property, and payment to the wife from the net proceeds of sale in accordance with paragraph (10) (c) hereof, should there be any further money still remaining owing to the wife by the husband pursuant to the obligation imposed upon him by paragraph (8) hereof, including any interest that may become owing pursuant to the provisions of the Family Law Rules 2004, then:
(i)The real property situated at … E Street, Suburb F in the State of New South Wales more particularly described as Lots … on SP … and contained in Certificate of Title Folio … (“the Suburb F property”) shall vest in the wife as sole trustee for the purposes of sale;
(ii)The Suburb F property shall be sold by private treaty or public auction within three (3) calendar months of the date of it vesting in the wife as trustee for the purposes of sale but not for a price that is less than $950,000 unless by further order of this Court;
(iii)Upon settlement of the sale of the Suburb F property, after payment of all the usual costs of sale and after payment to the wife of so much of the net proceeds of sale as will satisfy the husband’s obligation to pay the wife the total sum of $611,135 plus any interest that may become owing on that sum pursuant to the provisions of the Family Law Rules 2004, any balance remaining shall be paid to the husband.
That upon receipt by the wife of the total sum of $611,135 pursuant to paragraph (8) of these orders plus any interest that may become owing on that sum pursuant to the provisions of the Family Law Rules 2004:
(a)The husband shall retain as his sole property, to the exclusion of the wife, all of his right, title and interest in the following:
(i)The Suburb C property if it has not been sold in order for the husband to satisfy his obligations pursuant to these orders;
(ii)The Suburb F property if it has not been sold in order for the husband to satisfy his obligations pursuant to these orders;
(iii)All of his shares in the company, G Pty Ltd;
(iv)The Toyota … motor car registration number …;
(v)All of the shares in publicly listed companies that are in his name;
(vi)The balance of any Bank accounts in his name;
(vii)Any cash he holds in his possession;
(viii)All furniture and personal chattels in his possession save for those that are to be delivered to the wife pursuant to paragraph (4) of these orders.
(b)The husband shall retain as his solely, to the exclusion of the wife, any interest he continues to have in the G Superannuation Fund.
(c)The wife shall cause any caveats lodged over the title to the Suburb C and/or Suburb F properties to be released or discharged.
(d)Paragraph 1 of the orders of Federal Magistrate Cassidy of 5 February 2010 providing for the husband to pay spousal maintenance to the wife in the sum of $200 per week shall be discharged.
That save as otherwise provided for in these orders the husband shall indemnify the wife and keep her indemnified against any liability in his name or in the name of G Pty Ltd.
That save as otherwise provided for in these orders the wife shall indemnify the husband and keep him indemnified against any liability in her name.
That the parties shall execute all documents necessary to give effect to these orders and they shall do all acts and things necessary to give validity and operation to any documents executed pursuant to these orders.
That if either party refuses or neglects to sign any document necessary to give effect to these orders within fourteen (14) days of receiving a written request to do so then the Registrar of this Court at Brisbane is hereby appointed pursuant to the provision of s 106A of the Family Law Act 1975 (as amended) to execute such documents on behalf of the defaulting party and if either party so requires the Registrar of this Court to sign any such document then the party refusing or neglecting to sign such document shall pay the other party’s costs of and incidental to any such requirement.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Don Collinzo & Don Collinzo has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: SYC2421/2009
| Ms Don Collinzo |
Applicant
And
| Mr Don Collinzo |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties to this dispute met as long ago as 1966 and commenced a relationship not long after meeting. They had their first child in July 1973 and began living together soon after her birth. They married in November 1974 and had three more daughters by January 1983. They separated on 13 April 2008 and their marriage was dissolved by decree in June 2009.
Although they had lived together as a couple for somewhere between thirty four to thirty five years, and parented four children to adulthood, their separation was not an amicable one and they have been unable to agree on the finalisation of their joint financial affairs and the division of their property ever since their separation. Their disagreement saw the wife commence these proceedings in the Federal Magistrates Court in September 2009.
On 5 February 2010, FM Cassidy ordered the husband to pay the wife $200 per week spousal maintenance after a contested hearing and, on the same day, by consent, gave the wife sole and exclusive use of the motor car that she had retained in her possession, allowed her to access the superannuation standing to her account in the parties’ self-managed superannuation fund and sent the parties to mediation.
On 14 October 2010, mediation having failed, FM Cassidy ordered that the proceedings be transferred to this Court. The matter was heard by me over three days commencing 6 June 2011. Only the husband, the wife and a jointly instructed, single expert witness, Ms J, a chartered accountant, gave evidence. They were all cross-examined extensively.
The issues that remained for determination by me at the conclusion of the trial were:-
(i)The value to be ascribed to a bundle of shares in listed public companies held by the husband at the time of the trial;
(ii)The values to be ascribed to the motor cars retained separately by the husband and by the wife at the time of the trial;
(iii)The value, if any, to be ascribed to the furniture and personal possessions of the parties at the time of the trial and the actual disposition of some of those items;
(iv)Whether or not amounts are to be notionally added back to the pool of property to be divided between the parties, in particular:-
(a)in respect of large amounts of money said by the wife to have been spent by the husband from the parties’ capital since separation; and
(b)in respect of the very large sum of $1,891,644 said by the husband to have gone missing from the parties’ funds over the last twelve years of their cohabitation and said by him to be “not accounted for by the wife”;
(v)The notional percentage division applicable after determination and consideration of all of the relevant contributions made by the parties at the commencement of, during and since the conclusion of their marriage relationship;
(vi)The particular orders to be made in order to effect a just and equitable property division between the parties, having regard, particularly, to the fact that they both seek to retain the former matrimonial home in Sydney.
principles to be applied
Neither party submitted that the determination of the matter should be approached other than in accordance with the four step process that is authoritatively accepted as the generally appropriate method for determining just and equitable property division orders. See Hickey & Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; and also Coghlan & Coghlan (2005) FLC 93-220
Firstly, the pool of property that is owned by the parties or either of them is to be determined and the values to be ascribed to the assets and the liabilities that are included in that pool are to be fixed so as to determine the net value of all of that property and liabilities. Secondly, consideration is to be given to the contributions of the parties, as required by s 79(4)(a) to (c) of the Act, and a notional percentage division arrived at having regard to those contributions. Thirdly, consideration is to be given to the matters set out in s 79(4)(d) to (g) of the Act, including all of those matters referred to in s 75(2) of the Act, so far as they are relevant, to determine whether justice and equity requires adjustment to the notional percentage division of the net pool arrived at after the second step. Fourthly, orders that are just and equitable in all the circumstances of the case are to be fashioned having regard, although not in any absolutely rigid sense, to the positions arrived at upon the first three steps.
In this case, I find no reason to deviate from that four step process, particularly given that the parties themselves clearly accept it is the appropriate means of determining just and equitable property division orders.
relevant factual history
There is no dispute that when the parties commenced their relationship the wife had little in the way of property, save for a Holden motor car encumbered with debt. On the other hand, it is agreed the husband had a registered interest in a real property in Suburb C, south-west Sydney, that he had jointly purchased with his brother soon after the parties had met. The husband bought his brother’s half interest in 1972 before the parties commenced living together in that property. The property was encumbered by mortgage debt. There is no evidence as to the value of that property at the time the parties commenced living together in it.
The husband gives evidence that the property was purchased in 1967 for $12,000 and that the mortgage debt on it was approximately $7,000 when the wife and their eldest daughter moved in with him in that property in 1974. The wife gives evidence that the property was initially purchased for $16,000 and was “fully mortgaged”. Her evidence is that when the husband bought his brother’s half interest in the property he increased his mortgage over the property. Clearly, the wife would have me accept that the husband had little equity in the property when she moved in with him. In contrast, the husband presents his evidence so that I would accept that he had a reasonable amount of equity, in percentage terms, in that property at the beginning of their cohabitation.
Having considered the evidence of both parties in this case, I have formed the view that where their evidence conflicts and there is no other evidence upon which I can rely to decide the issue, on the balance of probabilities, the wife’s evidence is more likely to be correct. I got the impression, both from the way in which she gave her evidence and the manner in which she conducted her case in the Court, that she was the one of the two parties whose evidence could more readily be relied upon as honestly given.
Accordingly, on this point in issue, I find that the husband did not have, relative to the value of the Suburb C property at the time, a large proportion of equity in that property when the wife and their first baby moved in to live with him there.
When the wife and baby did move in, the husband also owned furniture in the home, his own Holden motor car that the wife says was about ten years old, a half interest in the manufacturing business that he had started in 1970 with his brother and two blocks of land that he had purchased in Town M on the mid-north coast of New South Wales in the time between meeting the wife and commencing cohabitation with her. The evidence as to the value of all of that property at the time is limited to the wife asserting that the blocks of land had been purchased by the husband for around $700 each and the husband asserting that they were worth about $2,000 to $3,000 at the time of the commencement of cohabitation. For the same reason I set out before, I consider the wife’s evidence is more likely to be correct on that point. Nevertheless, the husband apparently owned those two blocks of land on an unencumbered basis, whatever they were worth at that time.
After the wife and their baby moved in to the Suburb C property, the husband continued to work at the manufacturing business which was situated nearby and the wife cared for the baby and the home whilst also undertaking some part-time work. The husband assisted the wife with parenting and home duties when he was at home.
The second child of the family was born in May 1975. Around this time, the wife was also doing some part-time unskilled work.
The third child of the family was born in July 1980. After her birth, the wife started working in the manufacturing business doing various administrative tasks whilst she principally parented the children and maintained the household. Their fourth child was born in January 1983.
Around 1980, a factory property at Suburb F was purchased and the manufacturing business moved there and has continued to operate out of that place ever since. Sometime in the early 1980’s, the husband and his brother incorporated a company, G Pty Ltd, and transferred the ownership of the manufacturing business to the company. Soon thereafter, the husband bought his brother’s share in the company. The wife became a director and a shareholder and remained so for many years but the husband is now the sole director and sole shareholder of the company. The wife transferred her share to him and resigned as a director after separation.
The business provided the principal source of income for the family. The parties were paid wages by the company but also ran loan accounts recording additional amounts they borrowed from the company from time to time as the family needed money.
The wife began further supplementing the family’s income by working as a sport teacher from about 1987. She continued doing this on a part-time basis until the separation of the parties.
During the course of the marriage, the parties bought and sold a number of real properties. They also leased a shop premises and sub-let it for several years to a person who operated a hospitality business, making money on the transaction that was utilized for the family’s needs.
In the early 1980’s a property at Town I, Queensland was purchased. It was a vacant block of land and was rented to the neighbouring business. It was sold in 2002.
In the late 1980’s, a property was purchased at Town H on the Tweed Coast of New South Wales for about $65,000. Money was borrowed to buy this property and a mortgage granted to the bank. The rent the parties received was used to make the mortgage repayments. The property was sold in the first half of 1996 for $150,000. The sum of $135,000 from that sale was used to reduce the amount owed on the mortgage taken out by the parties on the property they bought at Suburb P in Sydney a few months before in 1996.
The parties purchased the property in Suburb P for $352,000. A deposit was paid by them but they borrowed $350,000 against a mortgage granted over the property. Approximately $34,000 of that loan was used to pay off the debt still secured against the Town H property at that time. That debt of $350,000 was then reduced by $135,000 upon the sale of the Town H property shortly thereafter.
Another property was purchased in or around 1989 at Town L, Queensland, for $95,000. It was sold in 2000 for $130,000 and about $120,000 retained by the parties from the sale.
In or around 1991, the husband and three other people had purchased a property at Town N, New South Wales, for approximately $50,000. They sold it in 2001 for $255,000 with the husband’s quarter share of the proceeds being retained by the parties.
The Town M blocks of land were compulsorily resumed by the local council in or around 1999 and the husband received $44,000 upon such resumption.
The Town I property was sold for $295,000 in 2002 with approximately $285,000 being retained by the parties on its sale.
In approximately 2003, the wife and one of the parties’ daughters purchased a property at Town K, New South Wales, in equal shares. They bought it for $260,000 but borrowed a total of $300,000 against the property and used $40,000 later in 2007 towards the purchase of another property they bought in equal shares in Town A, New South Wales. That property was bought for $45,000. The husband guaranteed the loan that was secured against the Town K property. The two properties are still owned by the wife and the parties’ daughter.
Also in 2003, the parties began investing in listed public companies, buying shares on the Australian Stock Exchange. The proceeds of sale of properties were the principal source of funds for this investment.
Sadly, the parties’ youngest daughter developed a serious drug addiction as a teenager that she has never truly overcome. Both parties agree that they spent a lot of money over the years as a consequence of their daughter’s drug addiction. They paid drug dealers she owed money to. They paid to redeem chattels that she had stolen from them and pawned for money. They paid for her to have expensive drug rehabilitation. They also accept that their daughter directly stole money from them as a consequence of her habit. Understandably, neither party can accurately quantify their total losses in this respect but I have no doubt that it was in the order of many thousands of dollars over many years.
Another matter of historic fact that I find relevant to refer to is the husband’s poker machine gambling interest. He gave evidence that in 2002 he won $41,437 in jackpots playing poker machines at a local registered Club. He conceded that he did enjoy playing poker machines regularly and that he would draw cash from ATM machines to pursue this past time. Again, understandably, there was no way in which the amount of money otherwise lost by him in poker machines over the years could be accurately calculated.
There was an extraordinarily surprising piece of evidence led by the husband. I consider it surprising in the light of the factual matters discussed in the last two paragraphs. It went to some events that took place some five years prior to separation. The husband gave evidence that he had made enquiries about withdrawals from the parties’ joint bank account between 23 September 2003 and 7 October 2003 that totalled $9,600. He put a copy of the relevant bank statement into evidence as an exhibit to his affidavit as well as a copy of the bank’s response to his enquiries. The evidence establishes that on each of twelve separate days between the said dates the sum of $800 had been withdrawn from the bank’s ATM’s in the suburbs of Suburb F, Suburb O, Suburb Q and Suburb S. The withdrawals were made using the card in the name of the wife and using a PIN number attached to that card.
It was apparent that the husband led the evidence to support his case that the wife acted deceitfully in respect of money during their marriage and that she, therefore, must be responsible for secretly dissipating in excess of $1,800,000 of the parties’ money which should be notionally added back to the pool of property being divided and credited to the wife as partial property settlement already received. Of course, the husband gave evidence that he knew nothing about the withdrawals.
However, a number of matters became apparent during the course of the trial in respect of this interesting evidence. They were:
·The wife was out of the country for all of the relevant dates, on a holiday in Europe and Canada with two of their daughters;
·The wife believed their youngest daughter, who struggled with the drug addiction, was living back at their home at around that time;
·The husband accepted that the wife was out of the country at the relevant time;
·The wife said that she was not using ATMs at around that time but rather attending branches to make withdrawals;
·The wife said that she would simply leave her cards in her drawer in the bedroom when they arrived from the bank and the husband did produce in evidence an example of such a card being sent to the wife still attached to the letter that he had found in the home after separation;
·The parties agreed that the amount of $800 was the apparent daily limit for withdrawals from the account at the bank’s ATMs;
·Six of the twelve withdrawals were at the bank’s Suburb F ATM, the same suburb in which the manufacturing business run by the husband was situated;
·Three of the twelve withdrawals were at the bank’s Suburb O ATM, the same suburb in which is located the registered Club the husband said he regularly visited to play poker machines;
·The husband drew amounts of $800 from an ATM at Suburb O from his own Mastercard on a number of occasions after separation including twice on the same day;
·The wife denied any knowledge of the withdrawals or having authorised any person to use her card and PIN to make the withdrawals.
I was satisfied, at the end of the trial, that it was either the parties’ daughter or, rather more probably, the husband himself, who made these withdrawals. I was left totally unimpressed with the fact that the husband had, in these circumstances, led the evidence in an attempt to discredit the wife and to have the Court accept that she was responsible for “misappropriating” $1,800,000 of the parties’ funds during many years of their marriage. I acknowledge that the husband had also given other evidence that showed, without doubt, that cheques payable to him had been deposited into bank accounts operated solely by the wife from time to time. However, his evidence fell well short of proving that none of the cheques had actually been endorsed by him in favour of the wife or deposited by him directly into her account. None of the actual cheques were produced to the Court and the husband merely asserted that he knew nothing of how the cheques payable to him found their way into the wife’s account and claimed, therefore, that there was deceit and secrecy on the part of the wife. I was not so convinced.
the parties’ property at separation and events since then
The parties agree that at the date of their separation:
· they jointly owned the Suburb P property subject to a mortgage debt;
· the husband solely owned the Suburb C property unencumbered;
· the husband solely owned the Suburb F property unencumbered;
· the wife owned a half share in the Town K property subject to a mortgage debt and she owned a half share in the Town A property;
· the husband solely owned all of the shares in G Pty Ltd that operated the manufacturing business from the Suburb F property;
· the wife had a Toyota motor car in her possession;
· the husband had a different Toyota motor car in his possession;
· they had furniture and chattels in the Suburb P home;
· they had a substantial portfolio of shares in public companies in their joint names;
· the company, G Pty Ltd, as well as owning the manufacturing business, had a substantial portfolio of shares in public companies;
· they had loan accounts with G Pty Ltd and owed the company approximately $142,000;
· they had a self-managed superannuation fund, of which they were both members, the assets of which consisted solely of a substantial portfolio of shares in public companies;
· the wife had her own small superannuation interests in two other superannuation funds;
· they had money in various bank accounts in their joint and sole names.
There is agreement that as at a date in August 2008 the parties’ joint shareholdings were valued at $383,275. The parties agree that the husband transferred to the wife at that time shares that she had herself bought some years earlier that made up part of that portfolio and that were worth, at the time of transfer, $23,000. The wife argues that the balance of $360,000 should be notionally added back to the pool of property for division and treated as partial property settlement already received by the husband.
Relevant to consideration of that submission for the wife, the husband’s evidence is that he sold most of the balance of the share portfolio, retaining a small parcel of shares that was worth only $32,000. He says that he banked the substantial proportion of the sale proceeds of the share sales over a couple of months into the parties’ joint bank account. He says that he paid $93,000 of that money towards reducing the Suburb P mortgage debt. Certainly, statements from the loan account put into evidence by the wife reflect that such a sum was repaid on the loan in September 2008. The husband also says he deposited $135,000 into the company accounts as capital for the company. Clearly, any such payment should be reflected in the company accounts as a reduction in the debt that was owed by the parties to the company at the time of separation. I shall return to the relevance of this observation later.
The husband further deposes to the fact that he subsequently transferred approximately $10,000 from the sale proceeds of the shares he sold out of the joint account to the wife for her use. The wife’s evidence, which I accept, was that it was actually $9,000.
Although the husband deposed in his trial affidavit to having redrawn $72,000 from the joint account from which he put a further $60,000 into the company accounts, he later accepted that he actually redrew that from the loan account secured by mortgage over the Suburb P property, the same loan that he had previously reduced by the repayment of $93,000 from the sale proceeds of the jointly owned shares. Accordingly, on this evidence, the amount he had put into the company accounts post separation now totalled $195,000 but the mortgage loan account had actually only been reduced by $21,000 from the sale proceeds of the shares.
The wife gave evidence in her trial affidavit, accepted by the husband, that she also redrew a total amount of $11,930 from the same loan account in a number of different withdrawals between November 2008 and December 2009. Her evidence was that she used that money to contribute towards the costs of the wedding of one of their daughters and also to making payments against her Mastercard as a result of the husband withdrawing money from that credit card. The wife put copies of the relevant Mastercard statements into evidence and, having seen those and considered her evidence, I accept that is what happened.
There was evidence, which I accept, that as at 30 June 2008 the total value of the parties’ SMSF was $354,936 and that as at 30 June 2009 it was $366,578.
There was further evidence, remarkably given for the first time by the husband during his re-examination at the trial that he also had a superannuation interest with Super Fund 3 at the time of separation and that in the 2009/2010 financial year he rolled the total of $115,866 from there into his account in the SMSF. The wife was, I accept, not aware of that at all until she heard that evidence at the trial and not in any position to contradict, confirm or challenge it. In the circumstances, though troubled about what that says of the husband’s attitude to his duty of full and frank disclosure prior to trial, I accept the evidence. The evidence established that the balance of his superannuation interest in the SMSF at 30 June, 2010 was $476,605.
The wife gave evidence that around the middle of 2009 when she resigned from directorship of the company, the husband had sent her $7,000, saying it was part of her superannuation. Then, during that 2009/2010 financial year, pursuant to orders of FM Cassidy, the wife withdrew from the parties’ SMSF all of her remaining superannuation interest in the total sum of $134,390. She conceded that she had used all of that money, principally paying for her legal representation in this trial. She agreed that the sum of $134,390 should be notionally added to the property pool for division and treated as partial property settlement already received by her. The husband was far less frank in respect of his disclosure of what he had done with capital that had existed at separation. The wife and the Court were presented with quite a task to attempt to work out what the husband had done, made so much harder by the husband’s failure to meet his disclosure obligations as the matter proceeded to trial.
As the evidence ultimately fell, I am satisfied that I can find that of the $383,275 worth of shares that the parties had in joint names in August 2008:
· that the wife got $23,000 worth of shares;
· the husband paid $135,000 and $60,000 from the sale proceeds of other shares to the company, thus directly affecting the parties’ loan account balance in the company’s books;
· the wife received cash of just under $21,000 that was sourced from the sale of other shares;
· The husband was left, ultimately, with shares worth $32,000.
Deducting all of those amounts from the value of the shares as at August 2008 still leaves a balance of $112,275 completely unexplained by the husband. He did give evidence though that he paid other unspecified amounts into the company during that period. I accept that to be true. I am satisfied of that because there was also in evidence a valuation of the company done by the jointly appointed, single expert, Ms J, with the valuation date being 30 June 2010. Ms J valued the company on a net tangible assets basis. That balance sheet included a liability to the husband of $101,180, the then credit balance of the husband’s loan account. Clearly, the husband had turned the loan account balance from a debt of $142,000 owed to the company in March 2008 to an asset of $101,180 in his hands as at 30 June 2010. That can only mean that he had injected a total of $243,180 of the parties’ capital into the company in the period between March 2008 and June 2010. That apparently explains the use of another $48,180 of the proceeds of sale of the shares after taking into account the $195,000 he already expressly deposed to, leaving approximately $64,000 remaining unexplained. The husband gave evidence asserting that he had actually paid the wife that much and that included the $21,000 that the wife accepted she did receive in cash payments and redraws as well as the $23,000 in shares he had transferred to her. Otherwise, the wife denied that she received any other amounts of cash. The husband put no evidence in the form of bank statements or any other documents before the Court that proved or even supported his assertion. I do not accept it.
What was ultimately revealed on the last day of the trial when the husband’s costs memorandum required to be produced pursuant to Rule 19.04 of the Family Law Rules 2004 was handed up and became an exhibit, was the fact that the husband had paid $162,255 in legal fees and outlays, including $21,000 that was in the trust account of his solicitors at the time of the trial. Although that costs memorandum was virtually impossible to understand on its face, the husband confirmed in oral evidence that he had paid $61,000 to his solicitors, $56,000 to his counsel, $2,531 to other counsel, $3,300 for mediation fees, $2,200 for valuation fees, $15,095 for his accountant’s fees and $21,000 into trust on account of further expected outlays. The costs memorandum and oral evidence he gave sourced those funds to the company and his account in the SMSF. The Court was told that two to three weeks before the trial he had sold $100,000 worth of shares in the SMSF account and paid that into the company’s account and that $100,000 was drawn from the company and used towards these legal costs. Of course, that still leaves the source of the balance of $62,255 unexplained. In the circumstances, I am satisfied that this difference was most probably met by the use of the $64,000 that remained unexplained from the sale of the jointly owned parcel of shares that existed in August 2008. In any event, the lack of any more accurate evidence and proper disclosure by the husband leaves the Court in the position of having to do the best it can in respect of these matters, even to the point of a certain robustness, if the Court is satisfied, as I am in this case, that lack of full and frank disclosure has been deliberate.
What remains somewhat problematic is the evidence as to the value of the husband’s interest in his SMSF. In his Financial Statement filed 22 February 2011, he placed a value of $510,000 on his interest. In the balance sheet handed up at the start of the trial by counsel for the husband (exhibit 20) a figure of $350,743 was attributed to the value of the husband’s interest in the SMSF. The husband put into evidence in re-examination a print-out from his internet based share trading account showing the value of a portfolio of shares in account name G Pty Ltd as $350,743 as at 3 June 2011 (exhibit 10). The husband asserted that was the total portfolio of the SMSF, G Pty Ltd being the trustee of the fund. As I have already observed, he maintained that he had sold down that portfolio by $100,000 two or three weeks previously and had put that into the company to cover the $100,000 taken from the company and used to pay legal fees. He asserted that the company had previously sold shares from its own portfolio to provide that $100,000.
When one adds back that $100,000 to the $350,000, the figure is still some $60,000 short of the $510,000 value given in February 2011 by the husband. The husband’s counsel made the task for the Court no easier when he handed up another balance sheet at the conclusion of the trial (exhibit 21) which adopted the figure the wife had put on the husband’s interest in the fund, which was the sum of $476,605, the value as at 30 June 2010. In the end, I expect that the $60,000 difference might well be explained by the general downturn in the value of shares that was experienced on the Australian share market between February 2011 and June 2011 that I accept I can take judicial notice of. There being no other evidence on the point, I am prepared to accept that is the explanation. I consider the only reason the husband and his legal representatives were prepared to concede that the shares in the SMSF were worth $476,605 at the end of the trial is because, inexplicably, they still did not include any amount on the last balance sheet (exhibit 21) for the legal fees the husband had clearly paid from the parties’ capital. I am satisfied that as long as the husband’s paid legal fees and outlays are picked up and notionally added back to the pool of property to be divided and treated as partial property settlement already received by him, that it will be just and equitable to include the husband’s superannuation interest in the pool for division at $350,743, regardless of the fact that the husband was otherwise prepared, at the end of the trial, to concede that the husband’s interest in the SMSF was $476,605.
Also of relevance is the parties’ dealing with the Suburb C property post-separation. From when they moved out of it into the Suburb P property in 1996 the property was rented out. At separation, it was rented and the wife arranged for the rent to be paid into an account in her name. From that, she ensured that the loan repayments on the Suburb P mortgage were paid. Some months later, the husband, in whose sole name the Suburb C property was registered, stopped that and arranged to receive the rent himself. He then began paying the monthly repayments on the Suburb P mortgage. At the time of the trial, the rent the husband was receiving for the Suburb C property was $420 per week. Annualised and then calculated monthly, that is $1,820. The mortgage repayments for Suburb P are $1,434 per month. At first glance, the wife’s assertion that the husband has been retaining the surplus for his own use appeared attractive.
However, in evidence (exhibit 17) is the husband’s tax return for the 2010 financial year. The rental property statement included in that shows expenses in respect of the property such as insurance, rates, agent’s commission, repairs and maintenance to total $5,196 for the year, calculated monthly to be $433. The rent received covers those expenses and pays the Suburb P mortgage and the husband then has to pay tax on the net rental income. It is clearly a fiction to suggest there is a surplus from the rent that the husband has been retaining to his own benefit.
What the husband has been getting the benefit of though, is continued occupation of the Suburb P property since separation, in circumstances where the Suburb C rent pays the mortgage repayments. In other words, his occupation of the jointly owned property and his use of most of the parties’ jointly owned furniture contained in that property has been at no real personal cost to him. Although the wife spent some time in the home after separation, it was not for long and she has been living on the far north coast of New South Wales caring for her mother for most of the post-separation period. I accept that she has only taken a few items of furniture from the Suburb P home since separation, that which she could fit in her motor car, and that the husband has had the use of most of the parties’ chattels situated in that home.
In addition, the husband has continued to operate the manufacturing business since separation. His 2010 tax return reveals he received net wages from the company of around $960 per week for that whole year. He has, of course, been paying the wife $200 per week for her maintenance ever since FM Cassidy’s orders in early 2010. At the trial, the husband gave oral evidence that he was receiving the sum of $780 per week net from the company. It was not clear to me whether that was before or after paying the wife the sum of $200 per week. At the same time, the wife’s only other income is a Commonwealth Government paid Carer’s Pension of around $347 per week paid to her for caring for her 86 year old mother.
Step 1 – determining the pool of property to be divided
At the conclusion of the trial the parties agreed that the following property, add backs, liabilities and superannuation interests be included in determining the pool of property that is to be divided between them, at the values I include in the table beside each such item.
ASSETS OWNERSHIP DESCRIPTION VALUE 1 Joint R Street, Suburb P (“the home”) $1,000,000 2 Husband D Street, Suburb C $500,000 3 Wife’s 50% W Street, Town K $130,000 4 Wife’s 50% B Street, Town A $30,000 5 Husband E Street, Suburb F (“the factory”) $1,000,000 6 Husband 1A and 1B Class Share in G Pty Ltd $124,012 7 Wife Public Company Shares held by wife $22,438 8 Wife Furniture in possession wife $2,000 9 Wife CBA Bank …40 $528 10 Wife CBA Bank …28 $1,157 11 Wife CBA Bank …09 $5 12 Wife/Ms T CBA Bank …19 $1,467 13 Wife St George …13 $1,579 14 Husband CBA …07 $4,250 15 Husband CBA …42 $44 16 Husband Debt owed by G P/L to husband $101,180 Sub -Total $2,918,660 ADDBACKS OWNERSHIP DESCRIPTION VALUE 17 Wife Wife’s superannuation used for legal fees $134,390 Total of assets and add backs $3,053,050 LIABILITIES OWNERSHIP DESCRIPTION VALUE 18 Joint CBA Suburb P Mortgage $146,298 19 Wife 50% share CBA Town K Mortgage (Total $269,655.97) $134,828 Net Total $2,771,924 SUPERANNUATION OWNERSHIP DESCRIPTION VALUE 20 Husband Superannuation in G Superannuation Fund $476,605 21 Wife Super Fund 1 $1,605 22 Wife Super Fund 2 $4,988 Total $483,198
As I have already determined, I do not intend to include the husband’s superannuation in the G SMSF at the sum of $476,605 despite the husband’s concession. I will be including it at the figure of $350,743.
Thus, the total of the pool of net property and superannuation for the purposes of division is $3,129,260 at this point.
THE HUSBAND’S LISTED SHARES
Counsel for the wife submitted that the share portfolio still retained by the husband at trial should be valued at $32,378, a figure said to be attributed by the husband to the value of the shares he retained after selling down the joint share portfolio. For the husband, it was submitted, through the last balance sheet handed up by counsel for the husband and his written submissions handed to me, that the figure of $27,317 should be determined to be the value of the share portfolio. I do not know where that figure was obtained by counsel for the husband. It is not supported by any evidence. The best evidence of the value of the husband’s share portfolio at the time of the trial was the printout from the husband’s internet share broking account dated 3 June 2011 (exhibit 8) that was also belatedly put into evidence for the husband during his re-examination at the end of the trial. It had the figure of $23,317 as the total value of that portfolio in the husband’s name. There being no other evidence about this, I will include that as the value of the husband’s share portfolio.
THE MOTOR CARS
Each of the parties retains a Toyota motor car. The wife gave evidence that the husband’s is a later model than hers and that it is worth more. The husband gave evidence that his is actually owned by the company. For the wife it was submitted that the value attributed to her car should be $8,000 which she says is a “Redbook” valuation. Her submission was that a higher “Redbook” valuation should be the basis of a higher value being attributed to the husband’s car.
For the husband, it was submitted that the wife’s car should have a value of $32,460 attributed to it. The basis of that submission was that the wife provided no expert valuation of the vehicle and that the only value placed on it by an “expert” is that contained in Ms J’s report. For the husband, there was no value attributed to the motor car in his possession that he asserts is actually owned by the company.
It may be that he did not lead any evidence himself about the value of that car as he believed that it had been taken up in the valuation of the company done by Ms J. However, it became absolutely clear from Ms J’s evidence given during the course of the trial that her valuation of the company based on its net tangible assets as at 30 June 2010 did not include any value for a Toyota, be it market based or a depreciated value as per company accounts, as it had not been included in the relevant depreciation schedule that Ms J used in her valuation.
Ms J, who certainly did not profess to be an expert in the valuation of motor cars, did list the two motor cars elsewhere in her report in connection with the other part of her report. She recorded that the two vehicles were a 1999 Toyota, costing initially something like $32,460 to buy and a 2005 Toyota costing initially something like $33,950 to buy. It is clear the husband, by the submission made on his behalf as to the value I should attribute to the wife’s car, accepts that she possesses the older of the two cars.
That no submission was made for the husband as to the value that should be attributed to the car in his possession after the clear evidence given by Ms J was astonishingly brazen in the circumstances where there was a submission made that the car in the wife’s possession should be given a value of $32,460. If the logic that supported that submission followed, I would simply attribute the value of $33,950 to the car retained by the husband and the husband could hardly complain. In fact, that is what counsel for the wife submitted I should do.
This Court is constantly confronted by litigants who, when they cannot reach agreement as to the value of motor cars or furniture and personal chattels, simply resort to putting their own opinion evidence as to value of those items, or reference to “Redbook” valuations, before the Court. In my view, at least, that does not assist the Court at all. Opinion evidence from properly qualified persons that falls within the s 79 (Evidence Act 1995) exception to the provision of s 76 of the same Act is readily and cost effectively obtained in respect of motor cars and furniture and personal chattels. It is a matter of constant disappointment and frustration that it is not.
In this matter, I do not accept the wife’s “Redbook” valuation references as admissible evidence of value of the motor cars. On the other hand, I do not accept the submission for the husband either. I expect the motor car in the husband’s possession, being a later model, is probably worth more than the car in the wife’s possession. I cannot though, on the evidence, properly attribute a value to either car. I will not make an order that the two cars be sold as the alleged ownership of one of the cars by the company and the unknown potential tax implications of that, persuade me against this being the appropriate course. I am conscious that, ultimately, the course I have decided to adopt may be more advantageous to the husband than to the wife, given that the car he retains is probably worth more than the car the wife retains. The failure of the parties to get single expert valuations or even, absent agreement, adversarial valuations of the cars, is the ultimate cause of any disadvantage to one party or the other. Such potential disadvantage must be considered when decisions are being taken during preparation of matters for trial about whether or not to obtain valuations of this type of property.
I will simply be making orders that each party retains the car that is in his or her possession and placing no value for either car in the balance sheet of the pool of property to be divided.
THE FURNITURE IN THE HUSBAND’S POSSESSION
The husband’s evidence was that all of the furniture, other household contents and personal possessions retained by him are worth absolutely nothing. He put no expert valuation opinion evidence before the Court to support that and he did not, as the wife did, even offer an opinion that it was all worth some relatively small amount. Again, given that I simply do not accept that furniture, chattels and personal possessions gathered by a couple in a home over thirty four years of cohabitation is worth absolutely nothing, I consider the position adopted by the husband again to be nothing short of brazen.
Counsel for the husband clearly sought to improve things for his client in this respect at the very end of the trial by submitting that the husband now proposed a “divide and select a pile” type approach. I am satisfied that the effectiveness of that approach as a means of justly and equitably dividing such property depends completely on the honesty of the party in whose possession all of that property is found at the time of the division into two piles.
However, in the very end, the wife, no doubt in exasperation, simply fell back on seeking an order that she be entitled to take possession of and retain all of the items she listed in Schedule 1 attached to her Amended Initiating Application filed 5 January 2011, save for any of the husband’s mother’s jewellery that might be caught by a descriptor in that list. I will make such an order.
I do not include any amount in the pool of property for division for the furniture and the personal chattels that the husband will retain. On the other hand, I do not include any amount in the pool of property for division for the furniture and personal chattels that the wife will retain even though she offered opinion that her things were worth $2,000, a concession the husband, unsurprisingly, was keen to accept. There are orders relating to furniture and personal chattels, but no amount is included in the pool of property for division representing their value.
ADD BACKS
In accordance with what is now well settled authority, and consistent with the concession made by the wife and readily accepted by the husband that money she spent on legal fees be added back, I notionally add back into the pool of property for division the sum of $162,255 that the husband said in oral evidence he had spent on legal fees that was sourced from the company and SMSF assets. That will be treated as partial property division already received by the husband.
Whilst the wife was prepared to have a sum of $9,000 notionally added back, being money she had received post-separation from the sale of the joint share portfolio, I do not consider her expenditure of that amount at a time when she was receiving no spousal maintenance or any other non-pension income was proven to be such that brings it within the principles settled in the authorities. I will not add it back. The husband did not contend that I should.
As to the other amounts that counsel for the wife contended should be notionally added back to the pool of property for division, I consider that the dissipation of the $380,000 worth of shares is adequately explained and that most of it is represented in the turnaround in the parties’ loan account in the company’s balance sheet from a debit of approximately $140,000 to a credit of approximately $101,000. That is reflected in the value of the shares in the company and the inclusion in the pool of property for division of the husband’s asset in the form of the credit balance in the loan account. The balance of the value of the share portfolio, I am satisfied, is otherwise represented as I have earlier discussed. I will not be notionally adding any amount back to the pool in respect of this matter as contended for by the wife.
I am comforted in reaching this decision by the fact that Ms J’s report into the valuation of the shares in the company, shows that the company recorded a loss of $131,051 after tax for the 2008 financial year and a loss of $48,212 after tax for the 2009 financial year, the period of time during which the husband was paying in large amounts of the parties’ capital to the company.
I am also satisfied that the wife is effectively “seeing double” when she contends that another $124,858 was withdrawn by the husband from the joint account and used by him in such a way that the amount should be notionally added back to the pool of divisible property. The statements from the relevant account for the relevant period were put into evidence by the wife. They did not show that sum in the account as at the date of separation. In fact, they showed virtually nothing in that account at that time. They show deposits of a total of around that much at the time the husband started selling the share portfolio. I am quite satisfied that the money that was deposited into the parties’ joint account and subsequently withdrawn by the husband was sourced from the sale of the share portfolio and that its disposition is adequately explained. I will not add any of that amount back as to do so would be catching it twice.
Further, the wife submits that rental income from the Suburb C property retained by the husband should be notionally added back. I have already discussed this issue earlier in these reasons. For the reasons I set out there, I will not add any amount back in respect of rental received by the husband from the Suburb C property since separation.
ADD BACK OF THE SUM OF $1,891,644
This is an issue that occupied a lot of time and energy of the parties, the legal representatives, the single expert and the Court. After hearing the matter and considering all of the evidence, I am completely satisfied that it was a ‘red herring’ of an issue and that there is no “missing” pot of capital “unaccounted for” by the wife such as to justify notionally adding any amount back into the pool of property for division and treating it as having been received by the wife already as partial property settlement.
The husband based his case essentially on the following:
·The wife had principal control of the parties’ finances during the marriage;
·His view, formed post-separation, that the wife was secretive and deceptive in her dealings with their money;
·That he and his accountant had conducted an exhaustive examination of the family’s records, determining that from 1996 to 2008 there were total inflows of money of $4,424,982 and total outflows of $2,533,338 leaving a balance of unexplained outflows equal to $1,891,644;
·That as he could not explain those outflows, the wife must be responsible for them and must have either used the money to her own benefit or secreted it away somewhere and is failing to disclose its existence now.
In April 2010 the single expert, Ms J, was jointly instructed to provide an independent report into the source and application of funds for the parties for the period 1996 to 2008. Early in her report, Ms J explains that a source and application of funds report is prepared by classifying cash flows into the following elements:
·Income earned (inflows); and
·Expenses incurred (outflows); reconciled to
·Net asset changes between two points in time.
Ms J pointed out that the analysis undertaken by the husband and his accountant has regard to inflows and outflows but does not address the changes in the assets of the parties from the beginning of the period to the end of the period reviewed. Ms J said that their analysis ignores the additional assets that the parties accumulated during the relevant period. She said that the methodology applied is done on a costs basis so that increases or decreases in market value of assets purchased and sold during the period under review are not treated as sources or applications of cash.
Although counsel for the husband cross-examined Ms J extensively, he did not challenge the methodology that she had applied nor did he make any submission to the Court that it was an incorrect methodology. I have no reason to consider it other than correct.
Ms J set out in Appendix 12 to her report her calculation, on all the material she was provided with, as to the net assets of the parties at 1 January 1996 at their cost value. The figure she arrived at was $276,535. I found no reason to consider that incorrect.
In Appendix 13 to her report, Ms J set out her calculations, on all the material she was provided with, as to the net assets of the parties at the date of separation in April 2008. The figure she arrived at was $1,385,285. I do have reason to consider that incorrect.
Ms J includes in that list a joint share portfolio of the parties at cost, a share portfolio of the wife at cost and a share portfolio of the husband at cost. She relied on evidence of the wife to find these three separate portfolios existed at separation in April 2008. Ms J has, not unreasonably I respectfully find, accepted that evidence as accurate, when in fact I am satisfied that it is not. I am quite satisfied that the evidence establishes that at separation there was only one portfolio of shares and it was jointly held. Later on, after separation, the portfolio was sold down unilaterally by the husband and a small selection of shares was transferred to the wife and became her own share portfolio, whilst a small parcel was retained by the husband and became his portfolio. To include in Appendix 13, the two separate portfolios of shares owned by the wife and the husband would be counting those shares twice. I am satisfied that they are all actually included in the larger, jointly owned portfolio that did exist at separation. Accordingly, I would deduct the figures of $39,100 and $49,223 from the bottom line of that Appendix.
In similar fashion, Ms J has included the sum of $133,858 as the balance of the parties’ joint CBA account as at the date of separation. Again, she says she has relied upon the wife’s assertion in that regard. The evidence, put before the Court by the wife, shows that there was not $133,858 in that account at the date of separation and that it was deposited into that account later by the husband on the sale of some of the share portfolio. Accordingly, I would deduct the figure of $133,858 from the bottom line of that Appendix.
The bottom line of that Appendix should therefore be $1,163,104 and that should be the figure inserted for the “closing assets – April 2008” in the table headed Source and Application of Funds at page 19 of Ms J’s report.
There is another figure in that table that I am also satisfied needs adjusting. It is the Net Cash Flows figure. That figure comes from the table on page 18 of Ms J’s report. Ms J has taken the Inflows and Outflows figures from the calculations of the husband and his accountant.
The Funds Inflow figure is to be found at the foot of the table that is on page 56 of the annexures to the husband’s trial affidavit. The Funds Outflows figure is to be found at the foot of the table that is on page 59 of the annexures to the husband’s trial affidavit.
The evidence satisfies me that those figures that Ms J relied upon in the Funds Outflow table actually misstate the purchase price for the Suburb P property. Both parties accept that property cost them $352,000 to purchase and it has only been included in the table at $300,000. Accordingly, another $52,000 should be added to the bottom line of the Funds Outflow. Further, the evidence satisfies me that when the Town H property was sold later in 1996, $135,000 from its sale proceeds were used to reduce the mortgage debt secured over the Suburb P property that had just been purchased. Ms J agreed with my proposition that if that was the case, that sum should also be included in the Funds Outflows chart and added to the bottom line. Her agreement was not challenged. I will therefore amend the Funds Outflows figure to the sum of $2,720,338. That is the figure that should be inserted for Outflows in the table on page 18 of Ms J’s report.
$4,424,982 less $2,720,338 less $595,172 equals $1,109,472. That is the figure that should be inserted as the Total Net Cash Flows figure in Ms J’s report.
The total of Unallocated Funds in the table on page 19 then becomes $222,903 and the annual average becomes approximately $18,000. This is the figure that remains, strictly speaking, unexplained, as opposed to a figure of approximately $187,000 originally included by Ms J and nearly $1.9 million dollars asserted by the husband.
Ms J’s inclusion of the figure of $595,172 in the page 18 table as the average cost of living expenses calculated by her for the 12 year period was challenged by counsel for the husband. Ms J says in her report that she did this because she could not identify where a general cost of living allowance had been allowed for in the analysis of the husband and his accountant. She did not accept that the figures the husband and his accountant had included in their Funds Outflow schedule under the heading Home and Property Expenses could include a general cost of living expense for a family such as this one. Ms J assumed that the costs included under Home and Property Expenses were costs on all properties owned by the parties during the relevant period and that the figures, which appeared to her to be estimates, were materially correct but could not have included general cost of living expenses.
I accept the reasonableness of Ms J’s approach. I do not accept that the total sum of $315,000 listed under Home and Property Expenses for the entire relevant period could reflect actual expenses on all properties as well as all other cost of living expenses for this family during that period. I do not accept the husband’s protestations to the contrary. Ms J did not accept that when she was challenged on it by counsel for the husband during cross-examination and I consider her position entirely reasonable in that regard.
I accept that it is also entirely reasonable that approximately $18,000 per year on average could be spent on discretionary expenditure for this family in a way that the parties cannot now recall or explain. Indeed, I was not persuaded in the slightest that the wife was responsible at all for unexplained expenditure that could be somehow solely attributed to her and then added back to the pool of divisible property and treated as partial property settlement already received by her. I was not persuaded in the slightest that the wife has hidden away assets and was wilfully refusing to disclose them to the Court in these proceedings. Having regard to the acceptance of the fact by both parties that their youngest daughter stole from them over a relatively long period of time and my acceptance that the husband himself gambled regularly on the poker machines, I consider it not unreasonable at all to accept that some, if not large amounts, of the unallocated funds were dissipated in one or both of these ways. Indeed, if Ms J is completely, or even partially wrong about the addition of the average cost of living amount to her consideration of the source and application of funds, I consider it more probable that the husband and/or the youngest daughter are responsible for any missing funds than is the wife.
I will not be adding any amount back into the pool of divisible property as contended for on behalf of the husband in respect of this issue.
CASH HELD BY THE HUSBAND AT DATE OF TRIAL
During his oral evidence at the trial, the husband also admitted that he held $3,000 to $4,000 in cash in his home at that time. Accordingly, I will add the mean of that estimate, namely $3,500, to the pool of divisible property and leave it with the husband.
TOTAL OF NET PROPERTY, NOTIONAL ADD BACKS AND SUPERANNUATION INTERESTS
Adding these additional amounts of $23,317, $162,255 and $3,500 to the pool of divisible property that I am going to consider for the purposes of making just and equitable property division orders brings the total of net divisible property, notional add backs and superannuation to $3,316,332.
STEP 2 – CONTRIBUTIONS CONSIDERATIONS AND NOTIONAL DIVISION
I am satisfied that the husband’s initial contributions of property at the commencement of the parties’ cohabitation exceeded those of the wife. However, the wife cared for the first child of the parties herself for several months before the parties actually took up cohabitation, a contribution by her that is also to be given proper weight. Nevertheless, I would assess the husband’s contributions at the commencement of the marriage as greater than the wife’s.
Then, satisfied as I am that the parties’ respective contributions across all facets of their relationship and family life during the thirty four years of their cohabitation were equal and also that the wife’s post-separation contributions exceed the husband’s because of her contribution associated with his continued occupation of the Suburb P property and use of almost all of the couple’s furniture and personal chattels since separation, I find that the contributions of each of these parties from commencement of their relationship until point of trial ultimately weigh in equally. Accordingly, at this point of the process, I would notionally divide the pool of property on a 50/50 basis.
STEP 3 – SHOULD THERE BE AN ADJUSTMENT SO AS TO ACHIEVE JUSTICE AND EQUITY HAVING REGARD TO THE S 79(4)(e) MATTERS INCLUDING THE RELEVANT S 75(2) MATTERS
The husband is 67 years of age and it is not contended that he is in other than good health. The evidence is that he continues to work in his manufacturing business and earns between $780 and $960 per week in wages. The business was not valued on a future maintainable earnings basis as Ms J determined it had none. Accordingly, the husband’s wages are all the income he can expect to receive from the business. The wife, who is 62 years of age and in good health, concedes it is not likely that the husband will work for long into the future in any event and the property that he retains in this property division will be, as it will be for the wife, the real source of his financial support into the future.
For the wife, at the end of the trial, it was conceded that there should be no adjustment at this stage of the process. This was a position that counsel for the husband appeared happy to accept. In the circumstances where I have determined a $3,316,332 pool of property should be divided equally between the parties having regard to their contributions, thus entitling each of them to property valued at $1,658,166, I am satisfied that the concession made by the wife is one that I can accept as one that will allow orders to be made that are just and equitable.
STEP 4 – DETERMINATION OF THE ORDERS TO BE MADE
The husband retains the following property, superannuation and the benefit of the money spent on legal fees and outlays:
ASSETS OWNERSHIP DESCRIPTION VALUE 1 Husband D Street, Suburb C $500,000 2 Husband E Street, Suburb F (“the factory”) $1,000,000 3 Husband 1A and 1B Class Share in G Pty Ltd $124,012 4 Husband CBA …07 $4,250 5 Husband CBA …42 $44 6 Husband Debt owed by G P/L to husband $101,180 7 Husband Cash retained at home $3,500 8 Husband Portfolio of shares in listed companies $23,317 9 Husband 2005 Toyota motor car 10 Husband Furniture and chattels Sub -Total $1,756,303 ADDBACKS OWNERSHIP DESCRIPTION VALUE 11 Husband Amount paid in legal fees and outlays $162,255 Total of assets and add backs $1,918,558 SUPERANNUATION OWNERSHIP DESCRIPTION VALUE 12 Husband Superannuation in G Superannuation Fund $350,743 Total of assets, add backs and superannuation $2,269,301
The wife retains the following property, superannuation and the benefit of the money spent on legal fees and outlays:
ASSETS OWNERSHIP DESCRIPTION VALUE 1 Wife’s 50% W Street, Town K $130,000 2 Wife’s 50% B Street, Town A $30,000 3 Wife Public Company Shares held by wife $22,438 4 Wife Furniture in possession wife 5 Wife CBA Bank …40 $528 6 Wife CBA Bank …28 $1,157 7 Wife CBA Bank …09 $5 8 Wife/Ms T CBA Bank …19 $1,467 9 Wife St George …13 $1,579 10 Wife 1999 Toyota … motor car Sub -Total $187,174 ADDBACKS OWNERSHIP DESCRIPTION VALUE 11 Wife Wife’s payment of legal fees $134,390 Total of assets and add backs $321,564 LIABILITIES OWNERSHIP DESCRIPTION VALUE 12 Wife 50% share CBA Town K Mortgage (Total $269,655.97) $134,828 Net Total after deduction of liability $186,736 SUPERANNUATION OWNERSHIP DESCRIPTION VALUE 13 Wife Super Fund 1 $1,605 14 Wife Super Fund 2 $4,988 Total of net assets, add backs and superannuation $193,329
The wife is $1,464,837 short of her just and equitable entitlement on an equal division of the parties’ property and superannuation.
The parties retain joint ownership of the Suburb P home and agree that it is worth $1,000,000 with an agreed mortgage debt of $146,298, giving it a net value of $853,702. The wife seeks the transfer of that property to her as part of the property division and that is what I order. My orders also require her to refinance the joint mortgage liability secured by that property thus releasing the husband from any liability in respect of it.
Even with the transfer of the Suburb P property to the wife, she remains $611,135 short of her entitlement. She also seeks the transfer of the Suburb C property to her. It is agreed to be worth $500,000 and is unencumbered. Even with that she would still need another $111,135 in cash. That could come from the husband’s interest in the superannuation fund that at the time of trial was around $350,000. He is clearly able to access that money, as he did so only weeks before the trial. He also gave an undertaking to the Court at the end of the trial not to dispose of, sell, encumber or otherwise deal with any of the assets of that fund. All of the shares should, accordingly, still exist.
The husband seeks to retain the Suburb C property. He has had an interest in that property since prior to commencing cohabitation with the wife. He lived in that property until 1996 when they bought the Suburb P property. The wife lived in it too, of course, for some years, but she continues to live on the far north coast of New South Wales caring for her mother and she will have the Suburb P property as well as the Town K property where she could otherwise live. The husband will have to move out of the Suburb P property upon transfer to the wife and will need to find somewhere else to live.
The husband could use all of his interest in the SMSF to pay a substantial part of the further amount of $611,135 that the wife is entitled to. He could then, if he chose to, borrow against the Suburb C property and/or even the unencumbered Suburb F property that he owns, out of which the business operates. The income he earns in the business, and the security he could offer in the form of the two properties, should help him achieve such borrowings and be able to retain the Suburb C property as his residence. My orders will give the husband a reasonable amount of time within which to pay the wife all of the cash sum she is entitled to be paid to receive her just and equitable property division, and then provide default sale provisions in respect of the Suburb C and Suburb F properties, in the event that the wife has not been paid all of her entitlements in time.
I am satisfied that the orders that I make that are set out at the outset of these reasons are in all respects just and equitable.
I certify that the preceding one hundred and eight (108) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 17 May, 2012
Associate:
Date: 17 May 2012
Key Legal Topics
Areas of Law
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Family Law
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Property Law
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Equity & Trusts
Legal Concepts
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Remedies
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Costs
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Injunction
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