ELKIN & WEARNE

FAMILY COURT OF AUSTRALIA

ELKIN & WEARNE

[2016] FamCA 556

FAMILY LAW – PROPERTY – Where property orders made by consent have been set aside - Where the husband submits that the contributions of each of the parties is equal - Where the husband seeks a 5 to 10 per cent adjustment in his favour based on the disparity of income earning capacity of the parties – Where the wife submits that there should be a 70/30 division in her favour as her contributions exceeded those of the husband – Where the wife submits that her post separation contributions have been overwhelming - Where the wife seeks a 10 per cent adjustment in her favour because she has the children to look after – Where the parties disagree on the date of separation - Where it is just and equitable to make an order altering property – Where orders are made under section 79 – Where weight is given to the wife’s initial and post-separation contributions - Where orders are made for the wife to receive 65 per cent of the current assets and the husband to receive 35 per cent – Where the date of separation is of no relevance when assessing contributions - Where no further adjustments are made pursuant to s 79(4)(d)-(g) – Where the application by the wife to exclude evidence given by the single expert is dismissed

Family Law Act 1975 (Cth)
Carpenter v Lunn (2008) FLC 93-377 Chorn & Hopkins (2004) FLC 93-204 Clauson & Clauson (1995) FLC 92-595 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157

APPLICANT:

Mr Elkin

RESPONDENT:

Ms Wearne

FILE NUMBER:

AYC

2012

DATE DELIVERED:

6 July 2016

PLACE DELIVERED:

Sydney

PLACE HEARD:

Canberra

JUDGMENT OF:

Watts J

HEARING DATE:

26 - 29 October 2015; 6 July 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Hodgson

SOLICITOR FOR THE APPLICANT:

Commins Hendriks

COUNSEL FOR THE RESPONDENT:

Mr Harper

SOLICITOR FOR THE RESPONDENT:

Farrar Gesini Dunn

Orders

Pursuant to s 79 Family Law Act 1975 (Cth) (“the Act”) an order be made in the terms of paragraphs 2 to 11 below.
Within 60 days and contemporaneously:
2.1.The wife pay the husband the sum of $353,336;
2.2.The husband and wife do all acts and things necessary to transfer all shareholding and interest in B Pty Ltd (ACN …) from C Pty Ltd (ACN …) (“C Pty Ltd”) to the wife;
2.3.The husband and wife do all acts and things necessary to transfer all of C Pty Ltd’s right, title and interest in motor vehicles, plant and equipment to the husband and the husband will thereafter:
2.3.1.Discharge the NAB loan number … secured against the 4WD vehicle registration … and indemnify the wife in relation thereto; and
2.3.2.Be responsible for any taxation consequences associated with the said transfer of motor vehicles, plant and equipment.
2.4.The husband and wife do all acts and things necessary to transfer all of the husband’s right, title and interest in the property known as “Property D” situated at E Street, F Town (Certificate of Title Folio Identifier …) to the wife;
2.5.The wife is to payout in full and discharge the joint NAB loan (number …) and provide a copy of the discharge of the mortgage to the husband and thereafter indemnify the husband in relation thereto; and
2.6.The wife is to indemnify and keep indemnified the husband and C Pty Ltd against any liability they may have to G Pty Ltd (ACN …) including but not limited to what is referred to by the parties as “the shed loan”.
Consequent upon the husband and wife complying with each of the subparagraphs of the preceding paragraph, the parties do all acts and things necessary to liquidate C Pty Ltd and to pay to the parties any assets from that liquidation process as to 65 per cent to the wife and 35 per cent to the husband.
The parties are to instruct Mr H or his nominee to be the liquidator with the intent that he would sell shop 1 K Street at a price to be agreed upon between the parties and failing agreement to be determined by him or his nominee.
Each party shall be solely entitled to the exclusion of the other to all other property in their possession or control as at the date of these orders.
Each party is to forego any claims that they may otherwise have to any superannuation benefits belonging to the other party.
Insurance policies are to remain the sole property of the owner named thereon.
Unless otherwise specified in these orders, each party is to be solely liable for and will indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to this order (as particularised in the distribution table contained in the Reasons for Judgment published with these orders).
Each party is to be solely liable for debts in that party’s name and indemnify the other party in relation thereto (as particularised in the distribution table contained in the Reasons for Judgment published with these orders).
The husband shall make available for collection by the wife from the husband’s solicitors, all documents that are the property of C Pty Ltd and other documents provided by the wife during the course of the proceedings between the parties and the wife shall collect those documents within 14 days and thereafter the husband may dispose of any documents not so collected.
In the event the wife fails to comply with the obligation imposed upon her by paragraph 2.1, the following properties will be sold in the following order until the wife’s obligation to the husband pursuant to paragraph 2.1 is satisfied:
11.1.1K Street, J Town (Certificate of Title …);
11.2.2K Street, J Town (Certificate of Title …); and
11.3.The property “Property D”, E Street, F Town (Certificate of Title …)
at prices to be determined by agreement in writing between the parties and failing agreement, by a nominee of the President of the Real Estate Institute of New South Wales or his/her nominee.
If either party refuses or neglects to sign (within fourteen (14) days of a written request to do so) any documents necessary to effect the terms of these Orders, the Registrar of the Canberra Registry of the Family Court of Australia is hereby appointed pursuant to the provisions of s 106A of the Act to execute such documents on behalf of such party.
Either party has liberty to apply in relation to the implementation of these orders.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Elkin & Wearne 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 SYDNEY

FILE NUMBER: AYC 11 of 2012

Mr Elkin

Applicant

And

Ms Wearne

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

This is an application by the husband for final property settlement. The parties asked for some time on the first morning of the hearing because they said they were close to settling the matter. The matter did not settle and the parties ended up 40 per cent apart. During final submissions on the fifth day of the hearing, the wife sought an 80/20 split of the assets in her favour and the husband sought a 60/40 split of the assets in his favour. Apparently the gap between them had widened during the hearing.
The parties had commenced cohabitation by early 1998, married in 2002 and were divorced in February 2012. There is an issue as to the date of separation with the wife contending the parties separated in 2007 and the husband in 2011. There are two children of the marriage who reside with the wife in the former matrimonial home. The parties cohabited for a total of either about 10 or about 14 years during which time they both worked hard to run several businesses. It is not controversial that the parties lived under the one roof for about 14 years.

APPLICATIONS

The orders sought by the husband are set out in Exhibit 28. The orders sought by the wife are set out in Exhibit 27.
The husband wishes to retain his company Company R (“R”). The wife wishes to retain the Property D property and associated business. The parties agree that C Pty Ltd (“C Pty Ltd”) should be placed into liquidation.
The husband submitted that I should find all of the contributions pursuant to s 79(4)(a) – (c) of the Family Law Act 1975 (Cth) (“the Act”) of each of the parties as equal and make a 5 – 10 per cent adjustment in his favour for s 79(4)(d) – (g) factors based on the disparity of income earning capacity of the parties.
The wife submitted that I should make a 70/30 division on contributions in her favour, saying her contributions greatly exceeded those of the husband at every stage and a further 10 per cent adjustment in her favour for s 79(4)(d) – (g) factors primarily because she has the children to look after.

DOCUMENTS RELIED UPON

The documents relied upon by each of the parties are set out in Schedule 1.
Ms I and Ms L both gave oral evidence. The husband and wife, Mr M, Mr N and Mr O were cross examined. The husband’s sister was not called to give evidence.

SHORT HISTORY

The wife was born in 1967 and is currently 49 years old.
The husband was born in 1971 and is currently 44 years old.
The parties commenced cohabitation in J Town by early 1998.
The parties married in 2002.
The parties’ first child was born in 1999 (now aged 17).
The parties’ second child was born in 2000 (now aged 15).
The parties separated under the same roof. The wife says this happened in 2007. The husband says the parties separated in December 2011. The husband left the former matrimonial home on 17 February 2012.
The parties were divorced on 27 February 2012.

DETAILED CHRONOLOGY

The wife was born in 1967 and is currently 49 years old.
The husband was born in 1971 and is currently 44 years old.
In 1993 the wife purchased a home at P Street, J Town. The wife renovated and remodelled each room of the home.
In April 1994 the wife had a motorcycle accident and suffered extensive damage to her left leg. She subsequently received a compensation payout. The details of this are set out below.
The parties met in October 1996. In March 1997 they commenced a casual relationship.
In early 1997 the wife and Mr Q commenced a business partnership trading under the name G. G Pty Ltd (“G Pty Ltd”) was incorporated on 4 April 1997 and thereafter the business was operated by that company.
In late 1997 the husband stayed with the wife for two to three weeks and did physical work in relation to the extension of the P Street, J Town property. The husband was not paid for this work but stayed with her rent and board free.
The parties commenced a more serious relationship by December 1997. At this time the husband was employed by G Pty Ltd.
The parties had commenced cohabitation by early 1998.
In early 1998 the parties started a business, C Pty Ltd.
The parties’ first child was born in 1999 and is 17 years old.
In 2000 Company R was incorporated and took over the operations of C Pty Ltd. The parties are equal shareholders. The wife resigned as director on 12 May 2015, leaving the husband as sole director. This company no longer trades.
The parties’ second child was born in 2000 and is currently 15 years old.
In December 2001 C Pty Ltd purchased 1K Street. This was used as an “office” for the parties.
The parties were married in 2002 in J Town.
In 2004 the parties purchased the Property D property. This is a 210 acre multi use property. The former matrimonial home is on the Property D property. The parties renovated the property and attended to a number of improvement works. The parties operated a business from the property. The parties incorporated B Pty Ltd (“B Pty Ltd”) for the purposes of running business on the property. The wife is currently the sole director and secretary of B Pty Ltd. This company no longer trades. B Pty Ltd owed money to G Pty Ltd and the wife sold its assets to G Pty Ltd in exchange for forgiving debt.
In 2006 G Pty Ltd purchased X1 and 2 Z Street, AA Town.
In 2006 the wife sold the property at P Street, J Town for $380,000. The net proceeds of sale were paid to reduce debt which C Pty Ltd had accrued as a result of the renovation work to Property D.
The wife asserts that the parties separated in 2007 but remained living under the same roof until 2012 when the husband moved out. The husband asserts that separation did not take place until December 2011. The date of separation listed on the joint application for divorce was 1 September 2007. This issue is further discussed below.
In 2008 the wife purchased a property at 1 K Street. The wife arranged for a family trust to be established through which the property was purchased. The wife controlled the trust to the exclusion of the husband. The wife also acquired 2 K Street in 2010 (according to the wife) and March 2009 (according to the husband).
In 2012 C Pty Ltd effectively ceased to trade and the husband incorporated Company R. He is the sole shareholder, director and only employee. The company receives income as a result of the husband’s personal exertion and he receives a wage and other benefits from the company. The husband was disingenuous when he said that he really did not have any reason at all to call his new company C Pty Ltd when he started to work under a new corporate entity. I find the husband was attempting to obtain whatever benefit he could from the previous trading activities of C Pty Ltd. The husband’s new company is going to be his sole source of income. I am aware there is some difference between the new and old businesses. C Pty Ltd built, in the main, “spec” homes (buying land, building a house on the land and then selling the completed home on the land), where the husband’s work for R Pty Ltd was primarily subcontracting to builders to do work for builders.
Also in either 2012 (according to the husband) or 2010 (according to the wife), G Pty Ltd purchased S Street, T Town.
Orders were made by consent in relation to property settlement in February 2012. The husband then commenced proceedings on 27 July 2012 to have those consent orders set aside. In October 2012 the wife consented to set aside the original orders.
The parties were divorced on 27 February 2012.
Final parenting orders were made on 27 November 2013. The parties have equal shared parental responsibility for the children. The children reside with the wife. The eldest child spends time with the husband when he desires and the younger child spends time with the husband for two Sundays, one weekend and one evening each month, and for half of each school holiday period.

APPROACH

In this matter my task is to:
42.1.Identify according to ordinary common law and equitable principles and then value the property, assets, financial resources and liabilities of the parties;
42.2.Determine whether it is just and equitable to make an order altering those interests and if so:
42.2.1.Identify relevant contributions and assess them; and
42.2.2.Consider relevant matters referred to in s 79(4)(d) – (g) of the Act.
42.3.Determine what order adjusting the property, assets and liabilities of the parties is just and equitable.

BALANCE SHEET

The settled balance sheet is set out below. Where values are not agreed they appear in bold as determined by me. The reasons for each determination are set out under item numbers following the table.

Assets
Item no.	Title	Description	Husband		Wife	Agreed/ Determined	Value
1	W	G Pty Ltd	$384,225.00		$368,272.00	Determined	$333,609.00
2	J	C Pty Ltd P/L: 1 K Street	$200,000.00		$200,000.00	Agreed	$200,000.00
3	J	C Pty Ltd P/L: Vehicles, plant and equipment	$32,520.00		$32,520.00	Agreed	$32,520.00
4	J	C Pty Ltd P/L: Harley Davidson loan to husband	$0.00		$0.00	Agreed	$0.00
5	W	B P/L	$0.00		$0.00	Agreed	$0.00
6	H	R P/L	$0.00		$0.00	Agreed	$0.00
7	J	The "Property D" property	$1,325,000.00		n/k	Determined	$1,325,000.00
8	J	Property D: Stock value	$8,400.00		$8,400.00	Agreed	$8,400.00
9	J	Property D: Plant and equipment	$14,700.00		$14,700.00	Agreed	$14,700.00
10	W	1K Street	$100,000.00		$100,000.00	Agreed	$100,000.00
11	W	2K Street	$150,000.00		$150,000.00	Agreed	$150,000.00
12	H	Motorcycle	$8,000.00		$23,000.00	Determined	$8,000.00
13	H	Household effects	$5,000.00		$5,000.00	Agreed	$5,000.00
14	H	Bank account	$1,250.00		$1,250.00	Agreed	$1,250.00
15	W	Motor vehicle	$14,140.00		$0.00	Determined	$0.00
16	W	NAB term deposit	$4,000.00		$4,000.00	Agreed	$4,000.00
17	W	Household effects	$15,000.00		$15,000.00	Agreed	$15,000.00
18	W	Bank account	$0.00		$0.00	Agreed	$0.00
19	W	Plant and equipment	$9,123.00		$0.00	Determined	$9,123.00
20	H	U SMSF	$41,493.00		$41,493.00	Agreed	$41,493.00
21	W	First Super	$73,923.00		$73,923.00	Agreed	$73,923.00
22	H	First Super	$504.00		$504.00	Agreed	$504.00
Total assets							$2,322,522.00
Liabilities
Item no.	Title	Description	Husband	Wife		Agreed/ Determined	Value
23	J	Property D property mortgage	$750,000.00	$750,000.00		Agreed	$750,000.00
24	J	Property D: the 'shed' loan	$0.00	$0.00		Agreed	$0.00
25	J	C Pty Ltd P/L: external creditors	$16,199.00	$16,199.00		Agreed	$16,199.00
26	J	C Pty Ltd P/L: 4wd finance loan	$9,556.00	$9,556.00		Agreed	$9,556.00
27	J	C Pty Ltd P/L: loan	$127,117.00	$127,117.00		Agreed	$127,117.00
28	H	Loan from Ms & Mr V	$0.00	$0.00		Agreed	$0.00
Total liabilities							$902,872.00
Total net assets							$1,419,650.00

Item 1 G Pty Ltd; part of Item 7 the shed on Property D; Item 24 the Property D shed loan

There were three issues relating to the value of the wife’s interest in G Pty Ltd:
44.1.Whether the value should be increased because of an increase in the value of a property it owns at T Town;
44.2.Whether the value should be decreased because the depreciated value of a shed on the Property D property should be ignored; and
44.3.Whether the value should be increased because the single expert used an inappropriate multiple.
Mr O, the single expert reached the conclusion that the wife’s equity in G Pty Ltd had a value of $368,272.
When reaching an opinion as to value, the single expert had made the assumption that none of the inter-entity loans were recoverable. The husband accepted that assumption.
The first issue is the value of G Pty Ltd (item 1 on Exhibit 26) which was listed as to $368,272 for the wife and $418,888 for the husband. That is a difference of about $50,000 and relates to the revaluation of the property at T Town owned by G Pty Ltd. Mr O valued G Pty Ltd as of 30 June 2013.
Counsel for the husband asked Mr O whether or not he would agree to an increase in the value of G Pty Ltd on the basis that T Town had now been revalued. Mr O had adopted the sum of $415,000 as the value of T Town, being its agreed value eight months after June 2013, namely February 2014. An updated valuation of T Town, as at the date of the hearing, was $50,000 more, namely, $465,000. Mr O’s position is that when he did his valuation of the company as at 30 June 2013, it was permissible for him to assume that the value of T Town was as it was valued eight months later. However in his opinion, it was not permissible for him to assume for the purposes of valuing G Pty Ltd as at 30 June 2013, a value of T Town as at the date of the hearing which was over two years later. He explained the reason for this was that many other assets and liabilities would have moved in their value and revaluing one particular asset today and inserting it into a valuation as at June 2013 is an inappropriate exercise and I accept that that is so.

The second issue related to the treatment of the shed on the balance sheet.
The financial accounts for G Pty Ltd are annexed to Mr O’s affidavit (appendix C2) and indicate that G Pty Ltd holds the “building at cost” in the sum of $190,000 (which has been depreciated to $173,798). The financial report for G Pty Ltd dated 30 June 2014 (Exhibit 8) indicates buildings at cost to be a prefabrication shed on Property D at $95,000 and a pre-fabrication shed at W Town at $95,000. In fact, the husband’s evidence is that in his opinion, the W Town construction (which he personally supervised and worked on) cost more in the order of $40,000. W Town is owned by Mr Q (the other part owner of G Pty Ltd). No adjustment is proposed for the value of his shed.
Mr N, who is the real estate valuer who carried out the valuation of Property D, values the cost of all sheds on the property at $25,000. So the shed, originally on G Pty Ltd’s books at $95,000, is not worth any more than $25,000.
There is no item on the accounts of G Pty Ltd that would indicate any loan owed by the wife to G Pty Ltd in the sum of $130,000 for a “shed loan”. Accordingly the wife’s initial claim for a shed loan of $130,000 could not be sustained and she abandoned it in final submissions. For more abundant caution, I shall require the wife to indemnify the husband in relation to any debt the parties or either of them might owe G Pty Ltd.
However, it flows from the above discussion that the depreciated value as an asset of the sheds on the books of G Pty Ltd is over-valued. Both parties seemed to accept that. The depreciated figure for the main shed on Property D is $86,899 ($173,798 ÷ 2).
From that depreciated sum for the shed, one needs to deduct the actual costs attributed to that shed on a valuation of Property D in the sum of $25,000.
The amount therefore agreed to be deducted from the value of G Pty Ltd is in the sum of $61,899 ($86,899 – $25,000).
The wife is a 56 per cent owner of G Pty Ltd and therefore a reduction in her share value is $34,663 ($61,899 x 56 per cent) and the wife’s interest in G Pty Ltd should be reduced by that sum.
The effect of what I have just discussed is that the shed on the property at Property D will remain in the books of G Pty Ltd at a value of $25,000 (the parties agreed that that could be the value that is ascribed to it given what is in the valuation of Mr N).
Further, notwithstanding that Mr N in fact ascribed $25,000 to the value of all sheds on the Property D property including this main shed, the parties agreed that Mr N’s valuation of Property D would have to be reduced by an amount of $25,000.
Accordingly, by final submissions the parties agreed to adjustments to items 1, 7 and 24. Those agreements were that the wife’s interest in G Pty Ltd will be $333,609 ($368,272 - $34,663). The value of item 7 will be reduced by $25,000 from the valuer’s valuation to an agreed amount of $1,325,000 and item 24 will be marked as nil.
The third issue was the assertion by counsel for the husband that the single expert had used a multiple to capitalised earnings which was too low because G Pty Ltd had what amounted to a monopoly. Counsel for the husband asserted there were barriers to competitors entering this area of business.
I find Mr O was correct in not valuing G Pty Ltd on the basis it conducted a monopoly business. I am prepared to infer that a company with a turnover of $1.7 million does not carry out all this form of business in Australia.
Given the lack of a basis for the assumption in counsel for the husband’s questions about the valuer’s multiple, there was no effective challenge by counsel for the husband to the valuer’s multiple.
I also note at this point that Mr O confirmed that in assessing the net maintainable earnings of G Pty Ltd, he used his knowledge of the level of payment of directors’ fees in the J Town area to assign to the wife a remuneration of $100,000 per annum for her role in G Pty Ltd. Accordingly when assessing s 79(4)(d) – (g) considerations, I would assume that the wife’s level of income was $100,000 per annum given that it is an assumption upon which the valuation of G Pty Ltd has been based.
I asked whether or not the wife had any income from B Pty Ltd. Mr O said he had determined very quickly that there were no net maintainable earnings in B Pty Ltd and he did not make any adjustment to allow for remuneration to the wife for her work in B Pty Ltd.

Item 7 – The Property D Property

Mr N is the single expert who valued the Property D property at $1,350,000. The husband accepts Mr N’s valuation. His valuation was challenged in cross examination by counsel for the wife.
During final submissions, counsel for the wife made an application to have the single expert’s evidence excluded in its entirety. I dismissed that application and the reasons for doing so are set out below.
It follows that the only evidence that I had in relation to the valuation of the Property D property was the single expert’s valuation. I am not persuaded that I should give the single expert’s evidence other than full weight and I do so.
As mentioned above, it was agreed that that valuation had to be reduced by $25,000 because the value of one of the sheds has already been included in the value of the wife’s shareholding in G Pty Ltd.

Item 12 – the husband’s motorcycle and Item 15 – the wife’s motor vehicle

I shall deal with items 12 and 15 together. The husband conceded the Redbook value of the motorcycle at $23,000 but he said that he had sold it to his brother-in-law for $15,000 and used the $15,000 for ordinary living expenses. The husband submits that only $8,000 ($23,000 - $15,000) should be counted against him.
The husband’s evidence is that he reached an arrangement with his brother-in-law that he would sell that motorcycle to his brother-in-law for $15,000. It was put on a cycle transportation facility and taken up to Queensland and stayed up there for 14 months. The husband then took it back into his possession and he has had it ever since. The husband’s sister’s evidence, which was unchallenged, corroborates the husband’s version. The husband’s version was also not shaken in cross examination.
The wife disposed of her motor vehicle for $14,600 through Grays Online Auctions.
Both parties are asserting they expended about the same money on living expenses from the sale of these respective vehicles and that money no longer exists. Items 12 and 15 pretty much cancel one another out so I intend to leave the motor cycle on the balance sheet at $8,000 as requested by the husband and write the motor vehicle down to $0.00.

Item 19

In relation to item 19, even though this plant and equipment appears on the wife’s personal tax return, the husband conceded that the plant and equipment on that depreciation schedule is plant and equipment referrable to the operations of the business. The business has no value on a net maintainable earning basis as currently operated by the wife. These assets still have a value. The wife did not provide an expert valuation. The best evidence I have is what is in the wife’s tax return. I therefore conclude this item should be a given that value on the balance sheet.

The wife’s legal fees

Counsel for the husband submitted that the payment of the wife’s legal fees should be added to the balance sheet.
It was agreed the wife had paid the sum of $197,801.99 by way of legal fees which was calculated as follows:

Monies paid to Farrar Gesini Dunn	$107,491.56
Total amount paid to Mr Batey	$13,631.43
Monies paid to wife’s former solicitors Friedlieb Byne	$56,864.00
Monies paid to the wife’s former barrister, Mr Matthew Hogg	$12,250.00
Monies paid to Mr Zakey	$15,000.00
Sub total	$205,236.99
Monies paid by Farrar Gesini Dunn to Peter Batey from trust account	($7,435.00)
TOTAL	$197,801.99

Exhibit 11 contains a statement that the source of funds for legal fees was post separation earnings (as opposed to the use of capital from G Pty Ltd). There was no challenge to that assertion by the wife.
Given where the funds came from, there should not be any “add back” against the wife for paid legal fees (see Chorn & Hopkins (2004) FLC 93-204).

WHETHER AN ORDER ALTERING INTERESTS SHOULD BE MADE

The parties have separated and their partnership has ended. After the separation, there was no longer a continuing commitment to the mutual use of assets and a shared responsibility for liabilities. Both parties seek an order altering their interests in the net property pool. The orders that they seek are very different.
I find that in all the circumstances, it is just and equitable to make an order altering property (including adjusting liabilities).

CONTRIBUTIONS

As set out above, the wife seeks a 70/30 adjustment in her favour based on contributions. The husband says I should find that the parties’ contributions were equal.

Initial Contributions

At the time of cohabitation the husband had the following assets:
81.1.Tools of trade and a tool trailer worth $15,000;
81.2.Savings of $5,000;
81.3.A personal loan owing in the amount of about $8,000;
81.4.A motor vehicle worth $5,000; and
81.5.Basic personal and household items.
At the commencement of the relationship the wife owned the property at P Street, J Town, had household furniture, tools of trade, a motor vehicle she had purchased for $10,000 and superannuation of $7000. The wife also had shares in G Pty Ltd. At the time of cohabitation, the wife had commenced proceedings for compensation for the injury she sustained on her motorcycle.

P Street, J Town

In 1993 the wife purchased a house in P Street, J Town for $111,000. This was financed through the wife’s personal savings and a mortgage of about $80,000. I do not have any evidence about what the mortgage was in early 1998 when the parties commenced cohabitation.
There is an issue between the parties relating to the husband’s involvement in renovations done to the P Street property in the latter part of 1997. The wife’s evidence is that she obtained an owner builder authority to do the work and that the husband was one of a number of contractors who did work on the site. The husband was not paid for the work that he did but he did stay with the wife rent and board free. I find that the parties recommenced a casual relationship at this time and although the husband temporarily went back to Brisbane at the conclusion of the work, the parties commenced to live together in a de facto relationship by early 1998. The wife categorises the work done by the husband as “some carpentry work”. It is the husband’s evidence, which I accept, that he was primarily responsible for doing the physical work in relation to the extension of the P Street property including a rear foyer, dining room, bathroom work, laundry work and a veranda. The only other trades employed were an electrician and a bricklayer. The husband did everything else, including concreting, framing, gyprock and fitout. I infer that the wife paid for the cost of materials. I have no evidence as to whether or not and if so, by how much, the extension improved the value of the P Street property.
In 2006 the wife sold the P Street property for $380,000. I do not have any evidence as to what the mortgage on P Street was at the time but it had not been discharged. After paying out the mortgage, the net proceeds of sale were paid to reduce the C Pty Ltd debt which had accrued through the renovation works at the Property D property including money owed to employees of C Pty Ltd for those works.
I find that the wife had at least $30,000 equity in the P Street property at the time of cohabitation and it was probably more than that. By 2006 the gross value of the P Street property had increased from $111,000 to $380,000. The wife’s interest in the P Street property at the date of cohabitation needs to be given some weight.

Shares in G Pty Ltd

The wife owns 56 per cent of the shares in G Pty Ltd. G Pty Ltd is a company incorporated by the wife and her business partner prior to the commencement of the relationship. As already mentioned, G Pty Ltd operates a commercial business and hire service.
The company owns two residential units which were purchased in 2006. G Pty Ltd also purchased a property in T Town in 2010 (according to the wife) and 2012 (according to the husband).
I find that the wife’s shareholding in G Pty Ltd has been the backbone upon which the parties have accumulated their assets.
As set out above, the wife’s shareholding in G Pty Ltd has a determined value of $333,609 and provides the wife with the ability, through her personal exertion, to earn $100,000 per annum. The evidence does not allow me to assess what the wife’s shares in G Pty Ltd were worth at the date of cohabitation but the introduction by the wife of this asset at the commencement of cohabitation needs to be given some weight. As discussed below, since the physical separation of the parties in 2012, the wife has worked very hard to maintain the value of her shareholding in G Pty Ltd.

Compensation Monies

In April 1994 the wife had a motorcycle accident and suffered extensive damage to her left leg. She sought legal advice and commenced proceedings for compensation.
By 1997 the wife was still seeking compensation for the accident. She had been having ongoing surgery and rehabilitation. In 1998 the wife was awarded compensation of $180,000. After payment of legal fees and expenses, she received $130,000. She advanced $60,000 of these monies to C Pty Ltd for the purchase of a property in X Street, J Town. She placed the balance of monies in a term deposit.
The wife was cross examined about two of her financial statements: April 2014 and February 2015. Neither of the financial statements recorded the existence of the wife’s IBD term deposit at the NAB which at one point was in the sum of $150,000. The wife’s evidence was that she did not include this account in the financial statements because the bank held that term deposit as security for the borrowings made more generally by the companies and she was not free to deal with that as her own monies at all and in the end they actually took it and took control of it and used it to fund the joint loan of the parties in relation to the mortgage of Property D. There is only about $4,000 of it left.
The monies that the wife advanced to C Pty Ltd were repaid to her and then were later used for various other purposes which she sets out in her evidence. I find that the wife’s compensation monies provided a financial resource which has been used throughout the relationship and is reflected in assets that are currently on the balance sheet. The introduction of these compensation monies needs to be given some weight.
I am not able to find, as invited by counsel for the husband, that these monies found their way into the payment of the wife’s legal fees.

Date of Separation

Counsel for the wife submitted that contributions should be assessed in three separate periods: firstly between the date of cohabitation and 2007; secondly between 2007 and late 2011 and then from early 2012 through to the date of the hearing. The distinction between the first two periods is based on the wife’s assertion that the parties separated under the one roof in 2007 and that there was a significant change in the contributions made by each of the parties at that time.
The husband asserts that in 2007 he went to another room in the house because he had sleep apnoea. However, he asserts that the parties separated in 2011, despite having agreed that he read and signed the divorce application which was based on a separation date of 2007.
The wife filed two affidavits in support of that divorce application from corroborative witnesses in the divorce proceedings, although the husband said he did not get to see them. Ms L, one of those witnesses, gave evidence before me.
It was put to the husband in cross examination that he had not had a sleep study done in 2007. The husband asserted that he had. His lawyers subsequently produced and tendered a document to verify the husband’s assertion that he had undertaken a sleep study in 2007.
The husband agreed that the parties may have been arguing during 2007 when he moved to the other bedroom.
The husband contends he signed the divorce application in 2012 because the wife threatened that he would not see the children again unless he signed it. At that time the husband also signed a consent property settlement order which was made and then subsequently set aside by consent.
Counsel for the wife submitted that the main practical difference after 2007 was that the husband withdrew from joint activities, took time off, became less enthusiastic and less engaged and was pulling away from the previous joint endeavours of the parties. Counsel for the husband submitted that there was no appreciable difference in the contribution the husband was making before and after the time that he went to the other bedroom. The wife has not established to my satisfaction that the husband’s contributions in the period from 2007 to late 2011 were diminished.
Consequently, whether or not the parties actually separated in 2007 is of no particular relevance to the assessing of contributions that each party made between 2007 and the date of physical separation.

Financial Contributions

The parties both worked hard during the period of cohabitation. The husband worked as the supervisor for C Pty Ltd and the wife managed that business. When new work was slow for C Pty Ltd the husband worked for G Pty Ltd’s and C Pty Ltd would invoice G Pty Ltd for his time.
The parties purchased Property D in 2004. The wife ran the B Pty Ltd business,. The husband operated the Property D enterprise.

Non-Financial Contributions

I accept the husband’s evidence that much of the work that was done in making the extensive improvements to the Property D property was carried out by the husband outside business hours at nights and on weekends. It is clear from Mr N’s evidence that that work was significant and extensive and carried out meticulously.
The wife was the primary caregiver for the children. The children came to the office during the day or went to day care until they commenced school.
The wife had responsibility for the majority of household chores and she was primarily involved in looking after the children and looking after the financial management of the businesses. The wife had the assistance of babysitters and a full time personal assistant who was employed to help with the children. The wife was responsible for managing the children’s pickup from day care and she would take them home after she finished work, bathe, feed and put the children to bed. I accept the husband’s evidence that he could not attend the children’s functions or events when he was away from the matrimonial home working. I accept the husband’s evidence however that he did attend when he could and that he went to school lunches, school fetes, school performances, his son’s sports competitions and his daughter’s performances.
In this relationship, both parties worked long hours. Although the wife was responsible in the main for organising things, she was assisted in a significant way by others who were paid for that assistance.
The wife primarily performed the household duties, including cooking, cleaning and laundry, although the husband did some laundry and cooking. The ironing was outsourced. The parties disagree upon who was primarily responsible for yard and garden maintenance and it is likely both contributed.

Post Separation Contributions

Counsel for the wife submitted that the wife’s contributions from the end of 2011 have been “overwhelming”. Whilst I would not adopt that description, there is no doubt that the wife, since the physical separation, has done everything that she could to maintain the assets of the parties and to preserve the various enterprises to maximise their worth. The husband has recommenced a new business of his own and has not assisted in any significant way during the post separation period in maintaining any of the assets of the parties. I accept that the wife has been working incredibly long hours each week, spending 70 per cent of her time in running G Pty Ltd, including physically working equipment and participating physically. She has also kept working at B Pty Ltd.

Since separation the wife has also been the primary carer of the children. She has had the advantage of occupancy of the former matrimonial home since separation.
The wife asserted that she lost money because the husband would not agree to raise finance in 2012 to complete three projects that C Pty Ltd were working on at the time. He conceded that he did not cooperate with the borrowing of funds. This was at a time when the parties had physically separated. The husband said that at that time he was attempting to establish his new company and he himself did not have cash flow. The wife in fact completed the project in tandem with her brother which was then sold and the other property was sold as a vacant block of land. The wife has not led any evidence to quantify the money she asserts was lost and I am unable to place any weight on any behaviour by the husband in not cooperating in a refinance.
As mentioned elsewhere, the wife has used some of her post separation earnings to pay her own legal fees.

Conclusion on contributions

There are three initial contributions by the wife: a property she had at the commencement of cohabitation; her entitlement to accident verdict monies and her share in G Pty Ltd which she was operating when the parties commenced a relationship. Certainly since the husband left the matrimonial home in February 2012, I accept the wife has been working very hard to try and keep everything afloat and it is only through her efforts, working an average of 100 hours a week, that the current assets have been maintained.
I find that having considered all of the contributions made by each of the parties, the wife should receive 65 per cent of the current assets and the husband should receive 35 per cent of the current assets.

FUTURE NEEDS - SECTION 79 (4)(d) - (g) MATTERS

The wife submits that there should be a 10 per cent adjustment in her favour for s 79(4)(d) – (g) considerations and the husband submits there should be a 5 – 10 per cent adjustment in his favour.
The wife is currently 49 years of age and the husband is currently 44 years of age.
The parties were living together and making contributions to their common wealth for about 14 years.
The husband says that he has got some problems because he suffers from childhood injuries, however, I have no medical evidence from the husband that would allow me to make any findings in relation to him having a decreased earning capacity. The husband has, throughout the cohabitation period, been involved in physical work and I find that he is able to participate in the foreseeable future in his ordinary field of employment.
The wife suffered injuries as a result of her motorcycle accident but it does not seem to have slowed her down in any appreciable way and she has been able to involve herself throughout the period of cohabitation and since the physical separation in taxing physical exertion.
The single expert allocates a notional wage to the wife in the sum of $100,000 per annum. The husband’s tax returns indicate that he is earning $38,000 per annum. That income is earnt through a corporate structure which conducts the business the husband runs and from which the husband derives certain indirect benefits.
There is a substantial disparity between the parties in the assets they would retain based upon the finding I have made in respect of the relative contributions made by each of the parties; namely, 65 per cent to the wife and 35 per cent to the husband.
The husband is in a new de facto relationship with a woman who is about 50 years of age and who, according to the financial statement filed by the husband in February 2015, was earning approximately $900 per week.
The wife was asked questions about Mr M. Mr M was nominated on the wife’s April 2014 financial statement as her partner who had an income of $700 a week. The wife’s evidence is that they started that relationship as partners at the beginning of 2014 but the wife says that that de facto relationship was over by October 2014 at which time it became a “casual relationship”. I find that Mr M still spends a significant number of weekends each year with the wife. The wife was coy about how much time Mr M lived in the T Town property (owned by G Pty Ltd). It is unclear as to what resource Mr M is to the wife and whether they will recommence a de facto relationship when this litigation is concluded.
The wife will continue to be primarily responsible for the elder child of the marriage who is currently in the final year of high school. The wife anticipated that he will continue to reside in her household whilst he pursues tertiary studies. The younger child of the marriage is currently living with the husband. It is the husband’s case that now that the younger child has chosen to come with him, that should be viewed as a permanent arrangement. That assertion is supported by an email written by the wife to the husband’s lawyers on 17 May 2016. The wife’s current evidence is that it is not necessarily a permanent arrangement. The younger child is almost 16 years of age and has said to her mother since going back to her father that she might come back and live with her. The wife’s evidence is that she is not entirely sure what the younger child really wishes to do but that she has told her on every occasion that she is happy with whatever she decides and that she is able to make her own decisions in relation to her own living arrangements. On balance, I am unable to say that the younger child’s move to her father’s household is a permanent arrangement. Further, the wife’s evidence is that the younger child has a part time job and says that the presence of the younger child in either of their households does not affect the income earning ability or capacity of either herself or the husband. I do not place any significant weight on where the younger child will live from time to time in the future.
The position in relation to child support in relation to the younger child is not entirely certain. Documents attached to the husband’s most recent affidavit indicates that in the period between 1 May 2016 to 30 June 2016, the husband was assessed to pay the wife $27.25 per week but there was then a reassessment for the period 1 July 2016 to 10 January 2017 so that the wife had to pay the husband $62.21 per week. The wife indicated during submissions that there has been a further change to that assessment so that currently the husband is required to pay the wife $10 per week. Wherever that assessment settles, it seems to be moving within a reasonably narrow range and has no great significance in terms of the assessment of s 79(4)(d) – (g) considerations.
The husband submitted that the wife had not made a full and frank disclosure of her financial circumstances. During her evidence, the wife claimed that others assisted her with the day to day accounts of the business operations and left the decision making about the G Pty Ltd accounts to others. I do not accept the wife’s evidence about the minimal level of her involvement in those decisions. Having said that, I was not surprised when the wife responded, when asked questions about individual ledger pages or a set of financials which were shown to her in the witness box, by saying that she could not tell what some entries were about without looking at all of the financials that gave it context. Those types of questions are best asked at an interlocutory stage by way of specific questions. In a case where there is such a large amount of documentation, I don’t make any adverse findings against the wife by the way she answered questions in relation to those matters. In fact, no credit submission was made by counsel for the husband against the wife during final submissions. In relation to counsel for the husband’s suggestion that the wife had not made a full and frank disclosure of her financial dealings, the evidence falls short of establishing that proposition.
Counsel for the husband submitted that notwithstanding the fact that G Pty Ltd has been entered on the balance sheet with a value that has been arrived at with the aid of a single expert, G Pty Ltd has an additional value to the wife as an extra financial resource to the wife as a “cash cow”.
As already mentioned, the single expert had attributed to the wife an annual salary of $100,000.
Counsel for the husband pointed to the fact that the wife had been able to pay approximately $122,000 in legal costs since 26 October 2015 (including $60,000 paid in the week of the hearing). As discussed above, the source of the wife’s paid legal costs was income received from her post separation earnings primarily from G Pty Ltd.
The wife was also cross examined on why she had not filled in item 32 on either financial statement to indicate what her personal living expenses were in circumstances where there was a small shortfall on both financial statements between the income that she was receiving and her expenditure. The wife started by saying that the shortfall was paid on credit cards, however, there is a $20,000 reduction on credit cards between the first financial statement and the second financial statement. The wife then gave what is probably the more accurate explanation; that is that the borrowings were from G Pty Ltd.
Counsel for the husband submitted that G Pty Ltd provided a “cash cow” for the wife. There is little merit in the “cash cow” submission. It is important not to double count the value of G Pty Ltd to the wife. The value to the wife of her shareholding in G Pty Ltd is on the balance sheet. The valuation is based upon a notional salary of $100,000 per annum to the wife which has also been taken into account. Otherwise both parties operate some of their expenditure through corporate structures and both draw similar benefits from operating under those structures.
One factor that might seemingly require particular consideration is whether or not an adjustment needs to be made in the husband’s favour because of the disparity in the assets which the parties will retain. That disparity favours the wife but only as a result of the weight I have placed on her contributions. An adjustment under s 79(4)(d) – (g) “is not an exercise in social engineering” (Clauson & Clauson (1995) FLC 92-595 at 81,912).
Taking into account all of those matters that I have discussed, I find that having regard to all the s 79(4)(d) – (g) considerations, no further adjustment should be made between the parties in any property settlement order.

JUST AND EQUITABLE

Based upon the findings I have made in respect of contributions and s 79(4)(d) – (g) matters, the net assets of the parties should be divided 65 per cent to the wife and 35 per cent to the husband and that could be achieved by distributing the assets in the following way:

Husband gets 35.0 per cent
Assets
Item No.	Description	Percentage	Value
2	C Pty Ltd P/L: 1K Street	35 per cent	$70,000
3	C Pty Ltd P/L: Vehicles, plant and equipment	100 per cent	$32,520
4	C Pty Ltd P/L: Motor cycle loan to husband	100 per cent	$0
6	R P/L	100 per cent	$0
12	Motorcycle	100 per cent	$8,000
13	Household effects	100 per cent	$5,000
14	Bank account	100 per cent	$1,250
20	U SMSF	100 per cent	$41,493
22	First Super	100 per cent	$504
Liabilities
Item No.	Description	Percentage	Value
25	C Pty Ltd P/L: external creditors	35 per cent	$5,670
26	C Pty Ltd P/L: 4WD finance loan	100 per cent	$9,556
28	Loan from Ms & Mr V	100 per cent	$0
Husband receives		$353,336
Net Assets to Husband		$496,878
Wife gets 65.0 per cent
Assets
Item No.	Description	Percentage	Value
1	G Pty Ltd	100 per cent	$333,609
2	C Pty Ltd P/L: 1K Street, J Town	65 per cent	$130,000
5	B Pty Ltd P/L	100 per cent	$0
6	R P/L	100 per cent	$0
7	The "Property D" property	100 per cent	$1,325,000
8	Property D: Stock value	100 per cent	$8,400
9	Property D: Plant and equipment	100 per cent	$14,700
10	1K Street	100 per cent	$100,000
11	2K Street	100 per cent	$150,000
15	Motor vehicle	100 per cent	$0
16	NAB term deposit	100 per cent	$4,000
17	Household effects	100 per cent	$15,000
18	Bank account	100 per cent	$0
19	Plant and equipment	100 per cent	$9,123
21	First Super	100 per cent	$73,923
Liabilities
Item No.	Description	Percentage	Value
23	Property D property mortgage	100 per cent	$750,000
24	Property D: the 'shed' loan	100 per cent	$0
25	C Pty Ltd P/L: external creditors	65 per cent	$10,529
27	C Pty Ltd P/L loan	100 per cent	$127,117
Wife pays Husband			$353,336
Net Assets to Wife			$922,773

Standing back, I find that an adjustment of assets as set out in the preceding paragraph would lead to a just and equitable distribution of those assets.

PROPOSED ORDERS

There was an issue in relation to the orders as they relate to the liquidation of C Pty Ltd. At the conclusion of submissions I discussed with both counsel as to how the orders needed to be structured. I need to have regard to both sets of proposed orders which are Exhibits 27 (wife) and 28 (husband). In Exhibit 27, order 2.1 provides that the parties will cause B Pty Ltd to be removed as an asset of C Pty Ltd before any liquidation. That is because B Pty Ltd holds the debt on Property D. Similarly the husband wants the vehicles, plant and equipment which are on the balance sheet at item 3 to come to him and he will take the debt which is item 26, the 4WD finance loan. It was suggested there may be some tax ramifications of those assets being taken out of C Pty Ltd prior to liquidation and if there are the husband will bear the tax consequences of doing so. The parties agreed Mr H to be the liquidator who is a person in J Town and that liquidator would then sell 1K Street and the proceeds of that sale after liquidator costs would be divided in accordance with the overall percentages; namely 65 per cent to the wife and 35 per cent to the husband. Items 2 and 25 on the distribution table have been calculated in that way.

REASONS FOR THE DISMISSING OF THE APPLICATION BY COUNSEL FOR THE WIFE TO EXCLUDE THE EVIDENCE GIVEN BY THE SINGLE EXPERT IN RESPECT OF THE VALUATION OF THE PROPERTY D PROPERTY

On the last afternoon of the five day hearing and before the commencement of final submissions, counsel for the wife made an application for the exclusion of the evidence of the single expert in respect of the valuation of the Property D property. After hearing that submission, I dismissed that application and reserved my reasons. These are those reasons.
Counsel for the wife made the application on two bases which he said were interrelated. The first asserted that the reasoning process in the report was not transparent nor able to be tested. The second attacked the valuer’s assumption that it was possible to run a successful business upon the property.
Dealing with the first argument, whilst counsel for the wife did not refer to it, the starting point is the judgment of Heydon JA in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 where his Honour summarised as one of the requirements for admissible expert evidence:
So far as the opinion is based on facts “observed” by the expert, they must be identified and admissibly proved by the expert, and so far as the opinion is based on “assumed” or “accepted” facts, they must be identified and proved in some other way.
In Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157, the Full Court of the Federal Court of Australia held that this matter ordinarily went to the weight to be accorded to the evidence rather than to its admissibility and that particularly in trials by a judge alone, they should commonly be regarded as going to weight rather than admissibility (see also Carpenter v Lunn (2008) FLC 93-377 at [215]).
Counsel for the wife alleged there was an inability to determine or follow the process of reasoning that the single expert had used in circumstances where he chose a method which counsel for the wife asserted should have been able to be readily followed. Counsel for the wife asserted that because of the way the single expert had set out his opinion, that opinion was not capable of being tested because there were some elements and assumptions which he had made which had not been reproduced in the report nor had the single expert brought with him his detailed calculations when giving oral evidence.
The Property D property was valued by the single expert using a summation method where the single expert calculated land value at $299,250 and then calculated a value for eight different categories of improvements upon the property.
In determining the land value of the property, the single expert relied upon comparable sales and there was no challenge to that part of the valuation.
When assessing the value of the improvements, the single expert referred to the specialised nature of the buildings upon this property and identified a problem “when there is no market evidence of a similar nature to give guidance”.
The single expert set out market transactions in relation to a number of “unusual buildings” “as a guide to show that sales do exist for a collection of unusual buildings and that a market always exists in some form”.
The focus of the first complaint by counsel for the wife is that when looking at those market transactions for unusual buildings, the reader of the single expert’s report is unable to carry out a calculation as to the value per square metre of each of these unusual buildings. Fundamental to that submission was the assertion that the single expert had not identified in his report his assessment of the land value of each of these unusual buildings.
In oral evidence, the single expert said that the land value of each of these market transactions for unusual buildings would have been in the range of $50,000 - $100,000 each. On that basis it would have been possible for the report to have set out the calculation counsel for the wife asserts should have been included in the report.
There are two comments to make about that submission. The first is that the “unusual buildings” by their very nature were, as the single expert said, not directly comparable. These including a number of older public and private buildings across a number of towns.
Secondly, during submissions, counsel for the wife acknowledged that the single expert during his oral evidence offered to redo the calculations that he had done in relation to the transactions referred to in the market transactions. Counsel for the wife complained that he would have then had to assess, on the run, whether or not the single expert evidence was appropriate.
In the event the wife wished to check the calculations made by the single expert, written questions could have been asked of the single expert under the rules relating to his detailed calculations. No evidence was tendered before me one way or the other as to whether or not any such written questions were put to the single expert.
The general answer to the submission made by counsel for the wife that the single expert had not indicated which of the market transactions were better or worse than the subject property is to appreciate the general nature of the use to which the single expert put these market transactions in the process of his valuation. I accept the submission by counsel for the husband that the single expert was not making a direct comparison between the unusual buildings referred to in his report but only using those other transactions as a building guide.
Further, the single expert did not just rely upon the unusual building market transactions as a guide. He relied upon his own general experience as a valuer in relation to the depreciated value of dwellings of this type on rural property and he also relied in a general way on his knowledge about the replacement costs of the improvements.

In relation to replacement costs, the single expert significantly discounted the value of the buildings and improvements, having reached the conclusion that the improvements to the property had substantially overcapitalised the property.
The following passage appears in Mr N’s report at pages 12 to 13:
The “[Property D]” property is currently run as a [business]. The centre is known as the “B Pty Ltd”.
The property and its buildings are impressive on approach and live up to the advertised capabilities. The property is capable of supplying any of its functions in a separate capacity or all in a full … package. The current buildings have been adapted, altered and improved to cater for all of the required … needs. Buildings are still being altered and improved to maintain the full .. facilities in a modern and receptive manner.
However in todays hard economic times the public are cautious about spending money on such luxury items as .... necessary [business will] still go on but in a reduced spending capacity. These hard economic times are reflecting back on the income producing capacity of the … centre.
The distance from town, especially the City of [J Town] where the main money spending population resides is also a defining factor. People will not travel any distance to [premises] where they cannot drive home with ease. Drink driving today is a big discerning factor in any travel related [business].
Without the continued high patronage of [business] facilities and the consequent reduction in overall income and continued profitability the high cost of maintenance and improvement to the current facilities is a deciding factor in the market value of the property in its present form.
For this reason alone the property has to be severely downgraded in its anticipated realisable market value.
The single expert in his oral evidence indicated that he had in fact significantly discounted the value of the capitalised improvements from their replacement costs. In relation to B Pty Ltd which the single expert has valued at $288,000, his evidence was that a replacement cost for that part of the property would be two to three times that amount. The single expert said his figure for another port of the property of $200,000 was way below cost.
In conclusion, in respect of the first argument by counsel for the wife which attacked the method by which the single expert calculated the improvements on the property, those arguments fail because:
158.1.I find that the improvements on the unusual buildings market comparables were amenable to the subject of testing prior to the commencement of the expert’s oral evidence;
158.2.There is no indication that the single expert was asked to bring his detailed calculations with him;
158.3.The detailed calculations referred to relate to market transactions which were only partly used by the single expert as a guide;
158.4.The single expert used his experience in relation to depreciating value of dwellings on rural properties and his own knowledge about replacement costs to assist him in reaching the value of the improvements; and
158.5.The single expert did not use replacement costs as a bases for valuation but substantially discounted replacement costs as he had formed the view that the property had been significantly overcapitalised.
The second basis upon which counsel for the wife submitted that I should exclude the written and oral evidence of the single expert was that the single expert had valued the property on the basis that there was an ability to run it as a profitable business. Counsel for the wife submitted that the primary basis upon which the single expert had proceeded was an assumption that the B Pty Ltd business was profitable because of the well maintained nature of the property.
I accept the submission by counsel for the wife that the single expert was not prepared to adopt a hypothetical position put by counsel for the wife that asked the single expert to assume that no potential purchaser could make money running the current business. The single expert was not prepared to answer a question based on the hypothetical proposition that B Pty Ltd was not able to be run profitably.
Counsel for the wife accordingly submitted that he was unable to test whether or not, if that hypothetical was accepted, that a use different from its best use would lead to a lower valuation (and if so, what that valuation might be). I accept that counsel for the wife was not able to test that proposition because of the inability of the single expert to accept the hypothetical.
The difficulty with the submission put by counsel for the wife however is that the appropriate valuation method to adopt is “value to user”. In this case, the wife seeks to retain the Property D property on the basis that she would continue to run it as a business.
Accordingly, the hypothetical put by counsel for the wife is without a proper foundation given that his own client wishes to retain the property on the basis that she would continue to run on it the business and that in addition, she would run the G Pty Ltd business from that property.
Further, the hypothetical asks me to accept that there is no person or entity in the country (or even internationally) who would be prepared to buy this property and run it as it is currently run.
I find there is no substance in the submission by counsel for the wife that the single expert’s evidence should be entirely rejected because he had assumed that the property could continue to support its current use.
Counsel for the wife did not in submissions in respect of this application make any submission about the independence of the single expert (which independence he had attempted to attack, in my view unsuccessfully, during cross examination).

THE HUSBAND’S APPLICATION FOR LEAVE TO RE-OPEN THE HEARING

On 6 June 2016 the husband made an Application in a Case for leave to be granted to the husband to reopen the hearing in order to adduce further evidence. I indicated to the parties that I had been in the position to deliver judgment shortly before I received the application for the reopening of the case.
In support of that application he filed an affidavit sworn on 4 June 2016 and an affidavit of his lawyer sworn 6 June 2016.
The wife, who is now representing herself, filed a Response in which she formally asked for the application to be dismissed but her supporting affidavit made it clear that she neither consented to nor opposed the application that the husband made.
The husband indicated that if leave was granted he did not oppose the wife relying upon the affidavit that she had filed on 4 July 2016 and that he did not seek to ask the wife any questions in respect of anything that she said in that affidavit. The wife also indicated that if leave was granted, she would not seek to ask the husband any questions in respect of what he said in his affidavit.
I granted the husband leave to reopen the case. The evidence that the husband wished the court to receive was that the younger child of the marriage, Y, had recently chosen to come and live with him. The husband had made arrangements with Y’s school to update her residential address for the purposes of transport to and from school and he had informed the Department of Human Services so that child support assessments could be recalculated.
The wife gives evidence that she is not entirely sure what the younger child really wishes to do and she has told her on every occasion that she is happy with whatever she decides. The wife says that the younger child has suggested since leaving home that she wanted to return home to live with her. The wife also says that the younger child is now almost 16 years of age and is able to make up her own mind about her living arrangements from time to time. The wife says in her evidence (and the husband did not test her about this) that the younger child may end up returning to her and that either way she has a part time job and her presence in one household or the other does not affect the income earning ability or capacity of either the husband or the wife.

I certify that the preceding one hundred and seventy-two (172) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 6 July 2016

Associate:

Date: 6.7.16

SCHEDULE 1

The applicant husband relies on the following documents:

Affidavit of the husband filed 14 September 2015;
Affidavit of Ms V filed 11 September 2015;
Affidavit of Mr BB filed 4 September 2015;
Affidavit of Mr N filed 26 February 2015;
Affidavit of Mr CC filed 26 February 2015; and
Financial Statement filed 24 February 2015.

The respondent wife relies on the following documents:

Affidavit of the wife filed 28 August 2015;
Affidavit of Ms I filed 11 February 2015;
Affidavit of Ms L filed 12 February 2015;
Affidavit of Mr M filed 12 February 2015;
Affidavit of Mr DD filed 25 February 2015; and
Affidavit of Mr O filed 12 February 2015.

[2016] FamCA 556

6 July 2016

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Remedies

Injunction

Costs

Jurisdiction

Procedural Fairness