Downer and Downer

FAMILY COURT OF AUSTRALIA

DOWNER & DOWNER

[2013] FamCA 303

FAMILY LAW – PROPERTY – Part VIII Family Law Act 1975 (Cth) – Where 25 year marriage – Where a property pool of some seven million dollars was accumulated during the relationship – Where parties accept equal contributions during the marriage – Where Husband and Wife continue to receive income from jointly owned company – Where large disparity between post-separation income of the Husband and Wife – Add backs – Kouper v Kouper (No.3) [2009] FamCA 1080 – Where Mother has primary care of the only dependent child of the relationship – Order made for property entitlements of 55/45 in the Wife’s favour.

Family Law Act 1975 (Cth)

Hickey & Hickey (2003) FLC 93-143
Kouper v Kouper (No.3) [2009] FamCA 1080

APPLICANT:

Ms Downer

RESPONDENT:

Mr Downer

FILE NUMBER:

BRC

7003

2011

DATE DELIVERED:

17 April 2013

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

Bell J

HEARING DATE:

15 April 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Bartfeld QC appearing for the Applicant Wife

SOLICITOR FOR THE APPLICANT:

Barry Nilsson

COUNSEL FOR THE RESPONDENT:

Mr Hackett of Counsel appearing for the Respondent Husband

SOLICITOR FOR THE RESPONDENT:

Evans & Company Family Lawyers

Orders

IT IS ORDERED THAT:

Percentage Division

That as and by way of final orders for property settlement made pursuant to s 79 of the Family Law Act 1975 (“FLA”) the assets, liabilities and superannuation interests of the Wife and Husband be divided in the following proportions:

a. 55 per cent (hereinafter referred to as “theWife’s percentage”); and

b. 45 per cent (hereinafter referred to as “the Husband’s percentage”).

G Street Sale Proceeds

That the Wife and Husband retain their partial property settlements of $200,000 received by each of them on 15 December 2011, being part of the proceeds of settlement from the sale of G Street, D Town.

That the Wife and Husband retain their partial property settlements of $100,000 received by each of them on 18 October 2012, being part of the proceeds of settlement from the sale of G Street, D Town.

That within seven (7) days of the date of these Orders, the parties do all acts and things as are necessary to pay out from the St George Maxi Saver account number … containing the remaining sale proceeds from the real property situated at G Street, D Town as follows with the parties to be responsible for the tax which may be assessed against them as a result of the receipt of such amounts:

a. pay to the Husband the sum of $508,905;

b. pay to the Wife the sum of $1,041,070; and

c. any interest and accretion as follows:

i. the Husband’s percentage to the Husband; and
ii. the Wife’s percentage to the Wife.

That forthwith upon the parties’ compliance with the immediately preceding Order they will do all things and sign all documents necessary to close the St George Maxi Saver account number 420819670.

H Street

That within thirty (30) days of the date of these Orders, the Wife shall discharge the mortgage secured against the property situated at H Street, D Town in the State of Queensland more particularly described as Lot … on SP …, County of I, Parish of J, Title Reference 50220024 (“the H Street property”).

The Wife shall retain the H Street property provided always that she shall indemnify the Husband and keep him indemnified for and in respect of any and all outgoings attributable to the ownership of the property including but not limited to rates, water charges and insurance.

K Street

That within thirty (30) days of the date of these Orders, the parties do all acts to discharge the mortgage secured over the property situated at unit K Street, D Town in the State of Queensland more particularly described as Lot …, BUP …, County of I, Parish of J, Title Reference … (“the K Street property”).

That within thirty (30) days of the date of these Orders, the Wife shall transfer all of her right, title and interest in the K Street property provided always that the Husband shall indemnify the Wife and keep her indemnified for and in respect of any and all outgoings attributable to the ownership of the property including but not limited to rates, water charges and insurance.

Bank of Queensland Account Number …

That within seven (7) days of the date of these Orders, the parties shall do all acts and things as are necessary to divide the balance of the Bank of Queensland account number … with the Wife to receive the Wife’s percentage and the Husband to receive the Husband’s percentage and the parties shall be responsible for meeting the tax on their respective distribution.

Except as is provided from in the immediately preceding paragraph, upon the making of these Orders, the Wife and Husband are restrained and an injunction is granted restraining either of them from withdrawing any monies from the Bank of Queensland account number …, without the express written authority of the other party.

Downer Property Trust

That within thirty (30) days of the date of these Orders, the parties do all acts and sign all documents necessary to cause the following to occur:

a.the Wife to pay the sum of $350,000 to the Downer Property Trust to purchase
the property at C Street, D Town in the State of Queensland more accurately described as Lot … on BUP 5136, County of I, Parish of J, Local Government Region L, Title Reference 16344153 (“the C Street property”);
b.contemporaneously with the Wife’s compliance with subparagraph a. above, to release the Bank of Queensland Mortgage number … secured over the C Street property;

c.contemporaneously with the Wife’s compliance with subparagraph a. above, to transfer all right, title and interest in the C Street property from M Pty Ltd as trustee for the Downer Property Trust to the Wife; and

d.to sell the property situated at N Street, O Town in the State of Queensland (“the N Street property”).

That the sale of the N Street property occur on the following bases:

a.the parties shall appoint an agent of the Wife’s choosing to market and sell the property;

b.the property shall be listed with the agent for sale by private treaty with the listing price to be agreed and failing agreement the price shall be $275,000;

c.in the event that the property has not sold within one hundred and twenty (120) days of being listed for sale by private treaty then the property shall be sold by auction as agreed but failing agreement as follows:

i.the auctioneer shall be as agreed but failing agreement shall be the same as the agent to be appointed to sell the property by private treaty;

ii. the reserve price shall be 5 per cent less than the selling price;
iii.the parties shall engage a Conveyancing solicitor by agreement and failing agreement the Husband shall provide a panel of three (3) solicitors to the Wife and the Wife shall choose one (1) solicitor from the panel within seven (7) days of receiving the panel;
iv.the parties shall direct the Conveyancing solicitor to prepare a contract upon the request of the auctioneer;
v.the parties shall otherwise do all acts and things as are necessary to comply with any reasonable request made by the auctioneer;
vi.the parties shall each attend the auction and in the event the property fails to meet the reserve price, the parties shall negotiate with any interested purchaser; and
vii.the parties are each at liberty to bid on the property at auction if they choose;

d.if the property fails to sell at auction, the property shall be sold by agreement but failing agreement each party shall have liberty to apply to a Court with competent jurisdiction to seek further direction for the sale;

e. until a sale of the property is achieved:

i. the property shall continue to be tenanted;
ii.any rental income received on the property shall be applied to meet any and all cost associated with the ownership of the property including payment of the insurance, rates, water and maintenance provided that always any shortfall shall be met:

A. 60 per cent by the self managed superannuation fund; and
B.40 per cent by the parties in accordance with their respective percentage entitlement pursuant to Order (1) hereof;

f. upon achieving sale of the property, the proceeds shall be applied as follows:

i.discharge the Bank of Queensland Mortgage number 701000339 secured over the property;

ii.   pay the Real Estate Agent’s costs and commissions;
                iii. pay the Conveyancing solicitors fees;
                iv. pay any adjustment of water and rates;
                v. pay any GST and other liability of the Trust; and
vi.the balance to be held in the Downer Property Trust and dispersed in accordance with the immediately following Order.

Within thirty (30) days of the date of the sale of the N Street property, the parties shall do all acts and things as are necessary to vest the Downer Property Trust on the following bases:

a.the parties shall take accounting advice as to the most tax effective way to vest the Trust;

b. the parties shall agree upon taking such advice, as to how to vest the Trust;

c.in the event the parties are unable to agree upon the manner in which to vest the Trust within thirty (30) days hereof, the parties shall jointly instruct
Ms P of Q Accountants as single expert pursuant to Part 15.5 of the Family Law Rules to provide her opinion in relation to the most tax effective way to vest the Trust and the parties shall abide by such opinion and the Trust shall meet the expert’s fees;

d.any costs, including accounting fees, associated with the vesting of the Trust shall be met by the Trust; and

e.in the event there are to be distributions paid upon the vesting of the Trust, the Wife is to receive the Wife’s percentage and the Husband is to receive the Husband’s percentage and the parties shall be responsible for meeting the tax on their respective distribution.

Downer Family Trust

That within thirty (30) days of the date of these Orders, the parties shall do all acts and things as are necessary to distribute any remaining funds held in the Bank of Queensland accounts numbered … and … in the name of the Downer Family Trust, with the Wife to receive the Wife’s percentage and the Husband to receive the Husband’s percentage and the parties shall be responsible for meeting the tax on their respective distribution.

Except as is provided from in the immediately preceding paragraph, upon the making of these Orders, the Husband and Wife are restrained and an injunction is granted restraining either of them from withdrawing any monies from the Bank of Queensland accounts numbered … and …, without the express written authority of the other party.

That the parties shall do all acts and things as are necessary to sell the property situated at R Street, S Town in the State of Queensland, more particularly described as Lot … on RP …, County of I, Parish of T, Title Reference … (“The R Street property”), as agreed but failing agreement as follows:

a.within thirty (30) days of the date of these Orders, the parties shall appoint
L J Hooker, Region L to market and sell the property;

b.the property shall be listed with the agent for sale by private treaty with the listing price to be agreed but failing agreement the price shall be $1,100,000;

c.in the event that the property has not sold within one hundred and twenty (120) days of being listed for sale by private treaty, then the property shall be sold by auction as agreed but failing agreement as follows:

i.the auctioneer shall be agreed, but failing agreement shall be the same as the agent appointed to sell the property by private treaty;

ii. the reserve price shall be 5 per cent less than the listing price;
iii.the parties shall engage a Conveyancing solicitor by agreement but failing agreement, the Husband shall propose a panel of three (3) solicitors and within seven (7) days thereof, the Wife shall choose one (1) solicitor from the panel;
iv.the parties shall direct the Conveyancing solicitor to prepare a contract upon the request of the auctioneer;
v.the parties shall otherwise do all acts and things as are necessary to comply with any reasonable request made by the auctioneer;

vi.the parties shall each attend the auction and in the event the property fails to meet the reserve price, the parties shall negotiate with any interested purchaser; and
vii.the parties are each at liberty to bid on the property at auction if they choose,

d.if the property fails to sell at auction, the property shall be sold by agreement but failing agreement each party shall have leave to apply to a Court with competent jurisdiction to seek further direction for the sale.

Until a sale of the R Street property is achieved:

a. the property shall continue to be tenanted; and

b.any rental income received on the property shall be applied to meet any and all costs associated with the ownership of the property including repayment of the loans secured by mortgage as and when due and payment of insurances, rates, water and maintenance provided always that any shortfall shall be met by the parties in accordance with their respective percentage entitlement pursuant to Order (1) hereof.

Upon the sale of the R Street property, the proceeds shall be paid as follows:

a.discharge the National Australia Bank Mortgage number … secured against the property;

b. pay the real estate agent’s costs and commission;

c. pay the Conveyancing solicitor’s fees;

d. pay any adjustments for rates and water;

e. pay any GST and any other liability of the Trust; and

f.the balance to be held in the Downer Family Trust and dispersed in accordance it the immediately following Order.

Within thirty (30) days of the date of the sale of the R Street property, the parties shall do all acts and things as are necessary to vest the Downer Family Trust on the following:

a.the parties shall take accounting advice as to the most tax effective way to vest the Trust;

b. the parties shall agree upon taking such advice, as to how to vest the Trust;

c.in the event that the parties are unable to agree upon the manner in which to vest the Trust within thirty (30) days, the parties shall jointly instruct Ms P of Q Accountants as single expert pursuant to Part 15.5 of the Family Law Rules to provide her opinion in relation to the most tax effective way to vest the Trust and the parties shall abide by such opinion and the Trust shall meet the expert’s fees;

d.any costs, including accounting fees, associated with the vesting of the Trust shall be met by the Trust; and

e.in the event that there are to be distributions paid upon the vesting of the Trust, the Wife is to receive the Wife’s percentage and the Husband is to receive the Husband’s percentage and the parties shall be responsible for meeting the tax on their respective distribution.

U Pty Ltd

That within thirty (30) days of the date of these Orders, the parties shall do all acts and things as are necessary to distribute the funds held in the St George Bank accounts numbered … and … in the name of U Pty Ltd, with the Wife to receive the Wife’s percentage and the Husband to receive the Husband’s percentage and the parties shall be responsible for meeting the tax on their respective distribution.

Except as is provided from in the immediately preceding paragraph, upon the making of these Orders, the Husband and Wife are restrained and an injunction is granted restraining either of them from withdrawing any monies from the St George bank accounts numbered … and …, without the express written authority of the other party.

Within thirty (30) days of the date of these Orders, the parties shall do all act and things as are necessary to wind up the company, U Pty Ltd, on the following:

a.the parties shall take accounting advice as to the most tax effective way of winding up the company;

b.the parties shall agree upon taking such advice, as to the wind up of the company;

c.in the event that the parties are unable to agree upon the manner in which the company shall be wound up, within thirty (30) days of the date of these Orders, the parties shall jointly instruct Ms P of Q Accountants as single expert pursuant to Part 15.5 of the Family Law Rules to provide her opinion in relation to the most tax effective way of winding up the company and the parties shall abide by such opinion and the company shall meet the expert’s fees;

d.any costs, including accounting fees, associated with the winding up of the company shall be met by the company; and

e.in the event that there are to be any dividends paid upon the winding up of the company, the Wife will receive the Wife’s percentage and the Husband will receive the Husband’s percentage and the parties shall be responsible for meeting the tax on their respective distribution.

M Pty Ltd

That forthwith upon the making of these Orders, the Husband and Wife do all acts and sign all documents necessary to appoint the Wife as a director of M Pty Ltd.

That forthwith upon the making of these Orders, the Husband and Wife shall do all acts and things and sign all documents as are necessary to sell the business, M Pty Ltd.

That M Pty Ltd be listed for sale with Mr V, Executive, W Business Sales and that in relation to the listing the following shall apply:

a.that both parties are at liberty to liaise with the listing agent to discuss the sale of the business;

bthat if the business is to be listed at a price, then the price shall be agreed, but failing agreement be in accordance with Ms P’s report;

c.that the parties shall direct and this Order shall act as an authority directing the listing broker to notify each party of any offer received in relation to the sale within twenty-four (24) hours of such offer being received;

d.that no offer in relation to the sale of the business should be accepted without the express written agreement of both parties;

e. that the sale shall be a confidential sale;

f.that neither party say or do anything that might hinder or prevent the sale being affected or the performance of the business suffering;

g.that the Husband and Wife ensure that the business premises be kept in a neat and clean condition at the time of inspection by the agent and prospective purchasers;

h.that the parties cooperate with the agent to allow prospective purchasers to attend the company premises at all reasonable times to inspect the premises;

i.the parties shall direct and this Order shall act as an authority directing the listing broker to notify each party of any inspection of the premises at least twenty-four (24) hours prior to such inspection taking place;

j.that both parties sign all documents requested by the agent in relation to the listing for sale of the business, except a contract for sale that has not been agreed to by both parties in writing;

k.that each party make themselves available for a reasonable time at an appropriate remuneration to facilitate the transition of the business to the purchaser(s);

l.that each party provide a reasonable restraint of trade if required by the purchaser(s); and

m.that otherwise the terms and conditions, including marketing campaign, is to be by agreement by the parties.

That pending the sale of M Pty Ltd, the Husband and Wife cause to be provided to each other, by M Pty Ltd, by the 21st day of each month, monthly reporting relating to the immediately previous month, including:

a. trading account;

b. profit and loss statement;

c. balance sheet;

d. aged debtor trial balance;

e. aged creditor trial balance;

d. general ledger print outs for both directors’ loan accounts;

e. work in progress amount, if not shown in trading account;

f. details of any inter-entity transactions; and

g. details of travel, accommodation and vehicle expenses.

That from the date of these Orders, until the sale of M Pty Ltd, the Husband and the Wife will receive equal remuneration and benefits from the business/company and the amount of the income and benefits to be received will be as agreed between the parties, from time to time, in writing.

Upon the sale of the business, the proceeds of sale shall be applied as follows:

a.the payment of any and all trade creditors of the business as agreed between the parties in writing;

b.the payment of any and all credit card balances of the business relating to business expenses only as agreed between the parties in writing;

c. the payment of any and all employee entitlements including superannuation;

d. the payment of any and all business tax, including inter alia GST, owing;

e.the payment of any and all hire purchase agreements, not otherwise refinanced by the purchaser of the business;

f.the payment of any and all other business expenses as agreed between the parties; and

g. the balance distributed as outlined in Order (31) hereof.

That following the sale of the business, the parties in their role as directors will continue to operate M Pty Ltd for the purposes of collecting any and all monies owning to the business/company by debtors (as at the date of sale) on the following bases:

a.the parties will ensure that any and all debtors pay in full the amount owed to the business/company and in the event that the debts are not repaid in accordance with the billing procedures of the business:

i.the parties will commence debt recovery action against the debtor for the amount outstanding or institute proceedings in a Court with competent jurisdiction; or
ii.in the event that the parties consider that the debt is a bad debt unlikely of being recoverable, they may agree in writing to write off the debt;
iii.any and all monies that are recovered by the parties will be distributed as outlined in the immediately following paragraph.

Upon the parties’ compliance with Order (30) hereof, the balance of the proceeds of sale, will be distributed on the following basis:

a.“A” = the value of the proceeds of sale referred to in Orders (29(g)) and (30) hereof;

b.“B” = the agreed net value of any assets owned by the business/company, which the Husband is desirous of retaining;

c.“C” = the agreed net value of any assets owned by the business/company, which the Wife is desirous of retaining;

d. “D” = A + B + C;

e.the Husband will retain the Husband’s percentage of D, less the amount of B and;

f. the Wife will retain the wife’s percentage of D, less the amount of C.

Within thirty (30) days of the date of the distribution referred to in the immediately preceding paragraph, the parties shall do all act and things as are necessary to wind up the company, M Pty Ltd, on the following bases:

a.the parties shall take accounting advice as to the most tax effective way of winding up the company;

b.the parties shall agree upon taking such advice, as to the wind up of the company;

c.in the event that the parties are unable to agree upon the manner in which the company shall be wound up, within thirty (30) days of the date of these Orders, the parties shall jointly instruct Ms P of Q Accountants as single expert pursuant to Part 15.5 of the Family Law Rules to provide her opinion in relation to the most tax effective way of winding up the company and the parties shall abide by such opinion and the company shall meet the expert’s fees;

d.any costs, including accounting fees, associated with the winding up of the company shall be met by the company; and

e.in the event that there are to be any dividends paid upon the winding up of the company, the Wife will receive the Wife’s percentage and the Husband will receive the Husband’s percentage and the parties shall be responsible for meeting the tax on their respective distribution.

In the event that the parties are unable to achieve a sale of the business twelve (12) months from the date of these Orders, the business shall be sold by agreement but failing agreement, each party shall have liberty to apply to a Court with competent jurisdiction to seek further direction for the sale, if at all necessary.

Related Party Loans

That forthwith upon the signing of these Orders, the Husband and Wife will do all acts and things and sign all documents necessary to cause:

a.M Pty Ltd to loan monies to the Husband and Wife in order to enable the Husband and Wife to cause to repay their loan accounts to U Pty Ltd;

b.the repayment of the Husband’s and Wife’s loan accounts to U Pty Ltd; and

c.the repayment by U Pty Ltd of its loan account to M Pty Ltd.

The Downer Superannuation Fund

That Orders (35) to (44) (inclusive) of these Orders are binding on the Trustee of the Downer Superannuation Fund (“the fund”).

That within thirty (30) days of the date of the settlement of the sale of the N Street property (“the operative date”), the Husband and Wife do all acts and things and sign all documents necessary to instruct and direct the accountants of the fund to do such acts and prepare such documents as is necessary to calculate the net member benefit of the Husband and the Wife in the fund.

Upon the parties’ net member benefits in the fund being calculated, in accordance with s 90MT(1)(b) of the Family Law Act 1975, the Husband is entitled to a split of 100 per cent of the Wife’s interest in the fund and the Wife’s entitlement in the fund is correspondingly reduced.

Contemporaneously with the split referred to in the immediately preceding Order, in accordance with s 90MT(1)(b) of the Family Law Act 1975, the Wife is entitled to split of the Husband’s interest in the fund to an amount equal to the
Wife’s percentage and the Husband’s entitlement in the fund is correspondingly reduced.

Following the split referred to in the immediately preceding paragraph, the Husband and Wife shall do all such acts and things and sign all documents as may be necessary, including but not limited to, exercising the request pursuant to Rule 7A06(2) of the Superannuation Industry (Supervision) Regulations 1994 for the roll over or transfer of the transferrable benefits out of the Wife’s interest in the fund to another fund of the Wife’s choosing in accordance with Rule 7A.12 of the Superannuation Industry (Supervision) Regulation 1994 provided always that such fund be capable of receiving an in species roll out.

The rollover of the Wife’s interest in the fund be an in species transfer of the assets in the fund.

That contemporaneously with the rollover of the Wife’s interest in the fund:

a. the Wife resign and cease to be a member of the fund; and

b.the Husband and Wife do all acts and sign all documents necessary to appoint a new trustee of the Husband’s choosing to the fund at the expense of the Husband.

That the Husband indemnify the Wife in relation to all liability arising under any loans and/or guarantees and/or indemnities given by the Wife in relation to the fund for which the Wife may be liable arising from the course of the marriage and forthwith provide a release to the Wife from such loans and/or guarantees and/or indemnities.

That the Husband indemnify the Wife and keep her indemnified in relation to all actions, claims or demands by the Commissioner of Taxation in relation to any taxation liability (including income tax, Capital Gains Tax, GST or Fringe Benefits Tax) that the Wife may incur by way of assessment, reassessment, penalties or interest or tax howsoever arising as a result of her involvement or association as a director or shareholder or employee of the fund.

That any and all expenses incurred by the fund as a result of giving effect to these Orders be met by the fund prior to the value of the fund being determined pursuant to Order (36) hereof.

Residual Property

The Wife shall retain free from any and all claims of the Husband the following:

a. her investment in Y Farm;

b. any bank deposits in her name;

c. the furniture, jewellery and chattels currently in her possession; and

d.all other proprietary interests of whatsoever nature in the Wife’s current possession or control.

The Husband is to retain free from any and all claims of the Husband the following:

a. his Sailing Boat;

b. any bank deposits in his name;

c. the furniture and chattels currently in his possession; and

d.all other proprietary interests of whatsoever nature in the Husband’s current possession or control.

General

That save and except for the property and financial resources dealt with pursuant to the terms of these Orders, each party retain, without claim from the other, as his or her own property absolutely, all assets and/or all financial resources of whatsoever description and wheresoever situated of which that party is the legal owner or which is/are in the possession and/or control of that party as and from the date of these Orders.

That the Husband and Wife each be responsible for all liabilities incurred in their name including all borrowings, personal loan and credit card facilities and shall indemnify and keep indemnified the other against any other liability that may occur in respect thereof.

That each party be responsible for any capital gains tax and/or any other tax and/or costs incurred as a consequence of the disposal by that party of any assets or resources either being transferred to and/or retained by him or her pursuant to the provision herein and each party shall indemnify the other and keep the other indemnified in respect of any taxation liability arising from the disposal of such assets and/or resources.

That the spouse receiving the benefit of any transaction prepare the legal documentation necessary to give effect to the provisions of these Orders at their cost and further be responsible for payment of all registration fees, stamp duty and/or other outgoings in relation to the transfer of the property into their name.

That the Husband and Wife each do all acts and procure the doing of all things and sign procure the signing of all documents necessary to give full force and effect to the provisions of these Orders and in the event that either party refuses or neglects to comply with any provision of these Orders within fourteen (14) days of a written request to do so, then a Registrar of this Court at Brisbane is appointed, pursuant to Section 106A of the Family Law Act 1975, to execute all documents in the name of that party and to do all acts and things necessary to give validity and operation to this Order.

That the parties promptly comply with all requisitions issued by the Office of State Revenue, Land Titles, Main Roads Department and any other government department in relation to any document executed or transacted pursuant to or put into effect the terms and conditions of these Orders.

That either party have liberty to apply to the Court on the giving of seven (7) days notice in writing to the other for the interpretation and/or enforcement of the Terms and Conditions hereof and for consequential Orders.

Whenever these Orders impose an obligation upon either or both parties, such obligation is also imposed upon:

a.each party in their capacity as a director, shareholder, partner, trustee, appointor of a trust or any other capacity connected with the operation of any company business or trust in which they have an interest or which either of them controls; and

b. their servants or agents.

Whenever these Orders require the parties or any company or trust in which they have an interest to enter into or complete any contract or other transaction the parties shall do all acts and things to ensure:

a. that the transaction is completed in a timely way;

b.that the transaction is structured in such a way as to provide the maximum financial returns to the parties; and

c.that the transaction is structured in such a way as to minimise the incidence of taxation and/or stamp duties to the extent permitted by law.

That the parties acknowledge that the terms of these Orders are intended to end their financial relationship as far as possible in relation to property settlement pursuant to the provisions of s 81 of the Family Law Act.

IT IS FURTHER ORDERED:

Costs

The Wife file and serve written submissions with regard to costs (including the costs relating to the Husband’s Application in a Case filed 8 March 2013), within fourteen (14) days of today’s date, with the Husband to respond within fourteen (14) days after receipt of the Wife’s submissions.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Downer & Downer 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: BRC 7003 of 2011

Ms Downer

Applicant

And

Mr Downer

Respondent

REASONS FOR JUDGMENT

In this matter I make it quite clear that I have on occasions been criticised for the shortness of my reasons and this case is going to be a doozy because it is not going to be very long at all. Of that I can assure you. I am mindful of the case of Hickey & Hickey (2003) FLC 93-143, I will set out the brief resume of the marriage which lasted almost 25 years, two children, one of whom is still under the age of 18, that being E. Mr X is 21 and is attending university.
The parties joined together as long ago as the early 1980s. They had little or nothing and they worked exceptionally well together. I compliment both of them. They have done remarkably well. In a period of something like 25 years they have amassed a fortune in excess of seven million dollars. I indicate that that has been brought about, as has been conceded by both counsel, Bartfeld, one of Her Majesty’s counsel on behalf of the applicant mother and Hackett for the respondent, that the contributions up until separation must be considered to be equal. There might be, as Hackett said, a slight weighting in favour of the husband but he did not press that submission with any great deal of vigour.
Subsequent to separation the respondent husband, had moved to Western Australia where he has entered into a new relationship with a lady and is living with her. She is self-employed. She is in the fashion business and has her own retail outlet. They share expenses. The wife has not re-partnered but she does have a very close friend, a Mr Y, whom she sees frequently. He lives in Brisbane and she lives at the Region L. She is in two forms of part-time employment which gives her approximately $450 per week. She is also assisted by moneys being forwarded from companies which she and the husband control, particularly M Pty Ltd.
As I said, it has been conceded by both parties that it could not be argued strenuously that the contributions at separation were other than 50/50. Subsequent thereto we have on the wife’s side the fact that she is living in a house which she purchased and more of this anon, with E and on occasions Mr X. It appears as though Mr X may be his own man. She has indicated to me in court that she does get somewhat irritated at him when he tends to use her credit card which I am sure with hindsight she may regret the fact that she gave him her PIN, but, however, he does not appear to be a bad boy in any way at all, but rather a 21 year old.
E, on the other hand, is still attending school, The F School and his fees appear to be generally paid by both the husband and the wife and not necessarily equal but once again from funds which I understand have become available from M Pty Ltd.
M Pty Ltd has been particularly successful. Notwithstanding the fact that the husband and it is not suggested to the contrary, is an ill man. He suffers from depression which appears to be biological of origin. He had some depression prior to separation. He himself concedes this. He was drinking too excess, smoking too excess, was very difficult to get on with but subsequent to separation he has had, three bouts, if I can put it that way, which, on one occasion caused him to cease working with M Pty Ltd for a period of about six months.
He recognised that during that period he was away, that the business was not going so well and he came back again, however, he was ill again and has given up work as at February of this year. He has now, in effect, a management committee in force and effect for M Pty Ltd and they are running the business for him. It is his desire to sell the business. The wife, I understand, agrees with that and he will endeavour to live upon proceeds of his income protection policy and, if necessary, upon capital in order to regain his health. He impressed me as a man who obviously is a very astute businessman.
I briefly point out that subsequent to separation, he developed a Western Australian arm, if I may put it that way, of M Pty Ltd which he explained to me. He quoted in Western Australia on Western Australian rates naturally – he, for instance, gave me an example that some of the workers are paid in Western Australia $80 per hour whereas in Queensland it is $30, it being a shop-fitting organisation. He bills the shop fit-out here in Queensland and transfers it to Western Australia and consequently he is quoting on a Western Australian price, or Western Australian cost, and he makes, if I might put it this way, a “killing”.
There is evidence before me that of quotes and costs in one of his affidavits which shows that he does remarkably well. He is a very clever businessman and it is regrettable, in fact, he is suffering from this illness which at one stage necessitated his making application for a case guardian, which I refused. I am quite confident, after seeing him, notwithstanding I consider it was difficult for him, that he handled himself remarkably well.
Whether or no his extension to Western Australia is such that it must sound reasonably substantially, and I say substantially in this case because we are talking about 10 per cent and 5 per cent, reasonably substantially in the s 75(2) factors and also his contribution subsequent to separation. There is evidence from a Ms P a valuer, that it appears as though the income of Queensland Projects has increased by some 14 per cent since the commencement of the Western Australian arm. I take that into consideration, however, on the wife’s side, she puts forward two things: one, that she is at this stage looking after both children, the husband living in Western Australia, she living here at the Region L, at H Street, and that E is with her all the time other than when he is at school.
The husband does see E almost every other weekend, I think I am right in saying that. He flies from Perth to Brisbane and resides with E in a unit which he has at D Town. This unit is used exclusively by the husband. Sometimes as he indicated, Mr X may use it, but it appears to be somewhat rare.
She says she has that expense of the boys, if it might be. She not only has some form of costs which she sets out in her affidavit, a lot of which are supported by the husband through the company M Pty Ltd. He, in cross-examination by Bartfeld QC, indicated that he did not receive much benefit from the company. With great respect to him, I think he does.
Insofar as his flying across is concerned he says that generally he endeavours to include such flights in his quotes. Consequently the company is in fact paying for his flights. On other occasions he says he pays them personally. He has other benefits. For instance, I believe that his share of the rent which is some $1100 per week for the property that he and his present partner reside in, is paid for by the company. I could be corrected on that Mr Hackett. I think it is paid for by the company.

RECORDED : NOT TRANSCRIBED

I have been corrected. I was in a little in doubt about that. She, as I have said, is earning something like $450 per week and receives other income from the company which, of course, will cease. He is in receipt, should he be successful, and I have no hesitation in saying that I am more than satisfied that he will be successful, since Dr B, who is his psychiatrist, quite clearly says and emphatically says that this gentleman, because of the repetitive nature of his depressive illnesses is incapable of working at this stage and which he will see some $8000 per month as and by way of income protection insurance payments.
He is therefore in a much more substantial position income-wise than the wife. Insofar as capital is concerned it may be said, using he old adage, that they will be asset rich and income poor as it stands at present. Should the matter be decided anywhere near 50/50 each will receive something in excess of

3.5 million, since the value of the business has not at this stage been taken into consideration. It is, and I refer to the documents put before me, in particular the document which I have marked with a “C” which was handed up by Hackett of counsel on behalf of the husband, which was conceded by Bartfeld QC to be correct insofar as maths were concerned.
It is noted that the business at this stage has not been valued because it is the intention of the parties to sell it and to divide the net proceeds between the parties in accordance with the percentage which I will be finding.
There is another matter which is in dispute, or another two matters. One, is an amount which the wife received from U Pty Ltd, a company which, was controlled by both of them, of some $558,000. This amount was given to her because she wanted to purchase a home other than the former matrimonial home which was available to her to live in with the children at H Street, which I understand, is fairly close to the residence of the parties which was at Z Street, AA Town.
It is alleged by Mr Hackett that this amount should be added-back because of the following reasons. She purchased this property, notwithstanding he indicated that he was of the view that it was overpriced. Subsequent to the purchase, which was in excess of $1 million, the value of the property has now decreased to something like – slightly in excess of $800,000 leaving a comparatively minor equity of about $100,000.
The mortgage being something in excess of $700,000, just slightly in excess of $700,000. Mr Hackett has referred me to a comparatively recent case of Kouper v Kouper (No.3) [2009] FamCA 1080; decided by Murphy J in the first instance. I do not believe it has been appealed from, as far as you are aware. I do not – anyway, I have read it and I am of the opinion that he sets out quite clearly, as is his want, the existing view of the court in relation to add-backs and, in particular, at paragraph 108, Mr Hackett has referred me to five points which he makes.
The judgment that he quite clearly sets out the principles and he emphasises, not only once but on several occasions, that add-backs are exceptional in nature. They are not just necessarily done. Mr Hackett has referred to and relies upon paragraph 108, the (a) to (e) inclusive points. I have read them. And, in particular, I look at (c) which says:
If it is asserted that any loss to the divisible property results from dissipation of property other than in respect of such expenses, why is it asserted that the results should be a sharing of that loss by the parties other than equally?
Let us put it this way, generally losses of this nature are to be shared equally or in the proportion which I determine. Unless, of course, there are reasons not to do so. And, here, paragraphs 111 and 113 says this:
Reference to those earlier authorities ….. that the answer to the third of the questions –
that is (c):
…just outlined might be, “because the party’s expenditure was ‘reckless’ or ‘wanton’ or ‘negligent’ or ‘wasteful’.
Put another way, the task is not to –
this is 113:
examine conduct for the purposes of fitting it within a particular description, or to reward the prudent and punish the imprudent. Rather, the task is to examine and make findings about the particular circumstances surrounding expenditure and to determine, within that context, the manner in which overall justice and equity indicates the diminution in the pool ought to be treated.

There is a diminution, Mr Hackett has quite clearly pointed that out, of something like $200-odd thousand. But I am satisfied that Murphy J has, in fact, set out the grounds particularly. What is the explanation? The wife says that she wished to move, have one move from G Street to another house where she and the children could reside. It was the decision of the parties to sell Z Street. However, it took a considerable time, and the wife, I do not think, moved there for a period of about a year.

RECORDED : NOT TRANSCRIBED

She then moved to the second house and has resided there. Even if I accept – and she denies that the husband opposed the purchase of this property – even if I accept his – that he advised her against it, he did enter into the purchase of this property. He also became a joint mortgagee of the property. I do not believe that this amount could be added back. To me, it appears that it is not as was suggested by Murphy, “reckless, wanton, negligent or wasteful” – that, of course, is not exclusive. I refuse that.
There is another matter which arises and that is one of $31,263, allegedly joint funds removed by the wife. The wife had been substantially funded by the husband through his wealth, generated by M Pty Ltd, and she was requested to set out how the moneys that she spent, and it was not insubstantial, should have been – how it was expended. She says, as I have heard, she got sick of this and she indicated to him that, in fact, in relation to $31,263, that she had spent it. She told him where she spent it, but she did not offer to him the receipts.
He himself has set out in one of his documents, which unfortunately I am unable to put my hands on just at this moment, what this amount consisted of. In passing, one consisted of amounts as little as $28.46. To me, it appears to have been of a nit-picking variety, and to me it staggers me that he has gone to such almost obsessive depths to ascertain these minor amounts. She did not give him receipts, but she gave him the expenditure, and he concedes that. In those circumstances I cannot see how it could be suggested that all of the matters that were set out in his document –

RECORDED : NOT TRANSCRIBED

which appears to be page 55 of 101 of the spreadsheet, wherein matters that he complains of $80 – the boy’s medical – I think that is one of them. Pocket money – $200. Minor ones, but there are none more, I think, of which he complains than $200 – there might have been one more. I will not accept that that should be paid back.
Consequently I will accept as being the correct addition – that amount is set out in C under the heading Husband – Wife, I am sorry, which comes to $7,323,262.14. May I make it quite clear that, of course, does not include whatever they may receive from the sale of the business.

RECORDED : NOT TRANSCRIBED

So it appears that the amount to be determined is $7.323 million. Yes. It was not agreed. Consequently, I am therefore of the opinion that it should be divided in the amount which I will now determine. It is exceptionally difficult. I have said on frequent occasions everybody tends to think that it is so easy for a Judge to sit down and say it will be 55 per cent, 56.23 per cent, or whatever it may be.
I emphasise the fact that I think the wife is not in as financially a sound a position income-wise as the husband, and will not be until such time as she is able re-organise herself. I consider that his financial position is better than hers insofar as income is concerned. His health is not as good as hers. He does some work in Western Australia. She has the emotional, if I may put it that way, emotional liability to look after E for the greater part of his waking life, and his sleeping life, and consequently doing the best I can, I can find that there should be a weighting in her favour of five per cent.
Therefore I would divide the moneys – divide the property between the parties in the ratio of 55 per cent to the wife and 45 per cent to the husband.

I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bell delivered on 17 April 2013.

Associate:

Date: 17 April 2013

[2013] FamCA 303

17 April 2013

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