Elliott and Elliott and Ors

FAMILY COURT OF AUSTRALIA

ELLIOTT & ELLIOTT AND ORS

[2007] FamCA 1232

FAMILY LAW – PROPERTY – Short marriage – Pool - Asset by asset approach where no contribution by one party to certain assets – Contribution – Assessment of non financial contribution – Special skill contribution claimed by husband – Special skill claim rejected – Just and equitable result – Superannuation asset parcel of land – Other parties with interest in superannuation asset – Approach to superannuation asset having regard to interest of other parties – Just and equitable result as between husband and wife

Family Law Act 1975 (Cth) s 79, s 75(2)

Coghlan and Coghlan (2005) FLC 93,220 at [53], [65]
Farmer and Bramley (2000) FLC 93-060 at [68], [69]

Figgins and Figgins (2002) FLC 93-122 at [134]
JEL and DDF (2001) FLC 93-075 at [152]
Kessey and Kessey (1994) FLC 92-495 at 89,151
Kowaliw and Kowaliw (1981) FLC 91- 092 at 76,644
Omacini v Omacini (2005) FLC 93-218 at [30], [31]
Pierce and Pierce (1999) FLC 92-844 at [28]
Townsend and Townsend (1995) FLC 92-569 at 81,654
Zyk and Zyk (1995) FLC 92-644 at 82,509-10

APPLICANT:

Mrs Elliott

FIRST RESPONDENT:	Mr Elliott
SECOND RESPONDENT:	Y Elliott
THIRD RESPONDENT:	Mr Ascoti

FILE NUMBER:

BRF

747

2005

DATE DELIVERED:

3 August 2007

PLACE DELIVERED:

Brisbane

JUDGMENT OF:

O'Reilly J

HEARING DATE:

23, 24 and 26 April and 3, 4 and 10 May 2007

REPRESENTATION

THE APPLICANT:

In person

COUNSEL FOR THE FIRST RESPONDENT:

Mr Galloway of Counsel

SOLICITOR FOR THE FIRST RESPONDENT:	Mr Foster, Hemming & Hart
COUNSEL FOR THE SECOND RESPONDENT:	Mr Galloway of Counsel
SOLICITOR FOR THE SECOND RESPONDENT:	Mr Foster, Hemming & Hart
COUNSEL FOR THE THIRD RESPONDENT:	Mr Galloway of Counsel
SOLICITOR FOR THE THIRD RESPONDENT:	Mr Foster, Hemming & Hart

Orders

Pursuant to section 79 of the Family Law Act 1975 (Cth) the net property and assets of the parties or either of them be divided as follows to effect a division of 75% to the wife and 25% to the husband as follows:

The seven invoices of J & Associates, valuers, exhibits 25 and 33, amounting to $4,180 be paid from the proceeds of sale of the former matrimonial home presently held in the trust accounts of Hemming & Hart and Client Care Services, within seven days.
The wife have:
(a)the balance proceeds of sale of the former matrimonial home at C3, presently held in the trust accounts of Hemming & Hart and Client Care Services, with accretions (estimated $172,190 being estimated $176,370 less $4,180) to be paid to her within seven days;
(b)her Subaru Liberty motor vehicle, valued at $6,200;
(c)the furniture and chattels in her possession, valued at $22,760;
(d)her jewellery, valued at $8,479;
(e)the add back value of the premature distribution to her, $16,470;
(f)the further add back premature distribution to her, $160,000.
The husband have:
(a)his fishing shack and leased land on S Island, valued at $15,500;
(b)the furniture and chattels in his possession, valued at $3,075;
(c)the add back value of the premature distribution to him, $162,151.
The parties:
(a)list the properties at C1 and C2 (the two C properties) for sale with a real estate agent operating in C for a 60 day listing period;
(b)if they are unable to agree on the appointment of the agent for sale accept the nomination of an agent by the President of the Real Estate Institute of Queensland (the agent);
(c)if the properties or either of them not be sold within the 60 day listing period appoint the agent to sell the property/properties by public auction, the advertising, reserve price, auction date and conditions to be as determined by the agent;
(d)may each bid at any such auction.
The proceeds of sale of the two C properties, net of the costs of sale, including auction costs (if any) and the agent’s fees, outlays and commission are to be paid by the agent into the husband’s solicitor’s trust account to be applied in the following manner and priority:
(a)$40,000 to be retained in the husband’s solicitor’s trust account pending the assessment and payment of capital gains tax in relation to the two C properties and the properties at B1 and B2 (the four properties), and if there be a sale of one of the C properties preceding the sale of the other, the $40,000 be retained from the first such sale;
(b)the balance proceeds of sale of the C properties (that is, after the amount in (a) is retained) be paid to the wife;
(c)after payment by the husband’s solicitors of the capital gains tax in relation to the four properties, the balance of the $40,000 (if any) be paid 75% to the wife and 25% to the husband.
The husband, as soon as possible, lodge a tax return in relation to the capital gains realised upon the sale of the properties at B1 and B2.
The husband and the wife, as soon as possible, after the sale of the two C properties, lodge tax returns in relation to the capital gains realised upon the sale of those two properties.
The husband is to have the redeemable value of the parties’ unused airline ticket, and the ticket issuer is authorised by this order to pay the redeemed value to the husband, that value to be not included in the calculation of the husband’s 25% entitlement.
Within 14 days after the wife has received the balance proceeds of sale referred to in paragraph 5(b), the parties are to:
(a)calculate the percentage interest the wife should have in the E Superannuation Fund (the Fund), of the husband’s and the wife’s aggregate 91.34% interest in the Fund, to effect the result of the wife having 75% of the net property and assets of the parties, using the values in the Schedule set out at paragraph 11 of the Reasons for Judgment but with item 1 adjusted to include accretions less $4,180 and items 2 and 3 adjusted to actual net proceeds after sale, and adjust the wife’s percentage interest in the Fund accordingly (the wife’s percentage Fund interest);
(b)adjust the husband’s interest in the Fund accordingly to that percentage which is 91.34% less the wife’s percentage Fund interest (the husband’s percentage Fund interest);
(c)calculate the cash value of the wife’s percentage Fund interest using the rate of $4,700 for each 1% (the cash value of the wife’s percentage Fund interest).
Unless, on or by 30 November 2007, the husband and the second and third respondents as trustees can arrange for either themselves or another investor to pay to the wife by bank cheque on or by that date the cash value of the wife’s percentage Fund interest, in exchange for the transfer of the wife’s percentage Fund interest, which the husband and the second and third respondents must use their best endeavours to do:
(a)the wife, the husband and the second and third respondents appoint a trustee to sell the land owned by the Fund at G (the Fund’s land);
(b)if by 7 December 2007 they are unable to agree in writing on the appointment of a trustee, they list the matter before me for the appointment of a trustee by the Court, and for directions to be given to the trustee.
If sale by a trustee should become necessary pursuant to paragraph 10, the proceeds of sale of the Fund’s land, net of the costs of sale, including agent’s fees, outlays and commission, auction costs (if any) and the trustee’s fees and outlays be paid by the trustee in the following proportions to the wife, the husband and the second and third respondents:
(a)the wife: the wife’s percentage Fund interest
(b)the second respondent: 5%
(c)the third respondent: 3.66%
(d)the husband: the husband’s percentage Fund interest.
The caveat lodged by the wife over the Fund’s land (noted in the Department of Natural Resources and Water extract, exhibit 31) not be removed other than:
(a)by the wife tendering a signed release in exchange for the payment to her by bank cheque of the cash value of the wife’s percentage Fund interest, as contemplated by paragraph 10; or
(b)by the wife tendering a signed release to the trustee for the purpose of any sale, if sale by the trustee becomes necessary pursuant to paragraph 10.
Upon the payment to the wife of the wife’s percentage Fund interest (whether by purchase by the husband, the second and third respondents or another investor, or upon sale of the Fund’s land):
(a)the parties (including the second and third respondents) do all things necessary to remove the wife as a trustee and member of the Fund; and
(b)the husband indemnify the wife in relation to all liabilities of the Fund.
Otherwise, the parties are to retain all assets, liabilities and financial resources in their respective name or possession.
Unless otherwise specified in this order:
(a)each party is solely entitled to the exclusion of the other to all property (including choses in action) in the possession of that party as at the date of this order;
(b)each party is solely entitled to the credit of any moneys in any bank accounts in his or her name;
(c)each party is to forego any claim he or she may have to any superannuation benefits belonging to or earned by the other;
(d)each party is to be solely liable for and to indemnify the other against any liabilities encumbering any item of property to which that party is entitled pursuant to this order.
Should either party refuse or neglect to sign any documents which may be required to give effect to this order then a Registrar of the Family Court of Australia at Brisbane is authorised to sign all documents and do all things necessary to give effect to this order.
The parties have liberty to apply, on short notice, by arrangement with the Associate:
(a)under the slip rule;
(b)if I should have made any calculation errors in the Reasons for Judgment or this order;
(c)if the parties, by their solicitors, should be unable to agree the calculations required by this order;
(d)if any further machinery or other orders may be necessary to carry out this order or to give effect to the decision; or
(e)if clarification of any part of the decision or order should be required.
In any event, the matter be listed for mention, before me, for monitoring of the progress of carrying this order into effect, and for any further machinery orders which may be necessary to carry this order into effect, at 9.30am on 20 September 2007 and 31 October 2007 and such other dates as subsequently may be required.
Any necessary default or enforcement proceedings be listed before me, by arrangement with the Associate.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice O’Reilly delivered this day will for all publication and reporting purposes be referred to as Elliott & Elliott.

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRF 747 of 2005

Mrs Elliott

Applicant

And

Mr Elliott

Respondent

REASONS FOR JUDGMENT

Applications

The wife and the husband each seek a just and equitable division of their property and assets.
The wife’s claim is contained in her further amended application for final orders filed on 18 October 2006 (original filed on 18 March 2005 and earlier amended on 13 January 2006). In its final form, the wife’s application sought the sale of two investment properties and a leasehold property with the net proceeds to be paid 90% to her and 10% to the husband; the wife have the furniture and contents in storage at B, with the husband being responsible to discharge all liability in relation to the storage costs; all other property, other than the parties’ superannuation interests, be apportioned 90% to the wife and 10% to the husband; and the wife have the whole of the husband’s interest and the whole of her interest in the E Superannuation Fund (the Fund), each to be transferred to a fund of her choosing, with indemnity by the husband against all liability of and in relation to the Fund and those interests.
The husband’s claim is contained in his amended response filed on 30 January 2006 (original filed on 15 April 2005) seeking the sale of the former matrimonial home and the two investment properties, the net proceeds of sale to be paid 45.5% to the husband and 54.5% to the wife; he retain the leasehold property; he retain his interest in the Fund; and that from his portion of the net proceeds of sale referred to (45.5%) he pay $203,104 to the Fund, being the full value of the wife’s interest in it, that amount to be then paid by the Fund to the wife, she at the same time relinquishing her interest in the Fund, being entitled to receive the full value of her interest having regard to the circumstances that her contribution to the Fund is an undeducted contribution and further that she is 55 years old and thus entitled to receive the full value of her superannuation entitlements without exposing the entitlements to taxation.
The wife’s further amended application joined J Elliott (the husband’s son) and Mr Ascoti (the husband’s son in law) as respondents. They are two of the four trustees of the Fund, the other two trustees being the husband and the wife.

Relevant background facts

The husband is 59 years and the wife 55 years.
They met on 6 August 2002 and married in January 2003. Final separation occurred on 12 August 2004.
The wife says that cohabitation commenced almost immediately, in about mid August 2002, although she was in Russia between 24 August 2002 and 2 October 2002. The wife relies on the circumstance that while she was away the husband had the keys to a house property owned by her and her motor vehicle as evidencing the commencement of cohabitation before her trip.
The husband says that cohabitation commenced upon the wife’s return from Russia on 2 October 2002.
The period of the parties’ cohabitation and marriage was thus about two years, or a little less than two years.
It is common ground that nothing turns on the precise date of the commencement of the parties’ cohabitation.

The nature and value of the assets in the pool

The following is a Schedule of the nature and value of the assets in the pool. I will indicate below which items were agreed, and in relation to those not agreed set out my determination.

SCHEDULE

ASSETS VALUE

1 Proceeds of sale of former matrimonial home at C3 E$176,370

2 C1 property 410,000

3 C2 property 210,000

4 Fishing shack and leased land on S Island 15,500

5 Subaru Liberty motor vehicle 6,200

6 Furniture and chattels in husband’s possession (including boat) 3,075

7 Furniture and chattels in wife’s possession 22,760

8 Wife’s jewellery 8,479

9 Proceeds of sale of wife’s property in Russia sold in 2005 (add back initially claimed by husband) nil

10 Add back claimed by husband against wife described as “money from undisclosed resources received by wife since separation”, initially claimed at $364,568 nil

11 Add back wife premature distribution 16,470

12 Husband’s superannuation interest in the Fund (45.18%) 212,346

13 Wife’s superannuation interest in the Fund (46.16%) 216,952

14 Unused airline ticket (redeemable value) nil

15 Add back husband premature distribution (divided net proceeds of sale of B1 property and divided part net proceeds of sale of former matrimonial home, item 1) 162,151

16 Add back wife premature distribution (divided net proceeds of sale of B1 property and divided part net proceeds of sale of former matrimonial home, item 1) 160,000

TOTAL ASSETS E$1,620,303

LIABILITIES

17 J & Associates, valuers 4,180

18 Capital gains tax payable on the sales of B1 and B2 properties E7,198

19 Capital gains tax payable on the sales of C1 and C2 properties E21,750

TOTAL LIABILITIES E$33,128

NET ASSETS E$1,587,175

Item 1

The former matrimonial home was sold in May 2006 for $1,450,000. See exs 6 and 28.
Pursuant to par 7(c) of consent orders made on 8 February 2006, the net proceeds of sale $301,776 were split and deposited to the trust accounts of Hemming & Hart Lawyers (the husband’s solicitors) and Client Care Solicitors (the wife’s former solicitors) “until settlement of the matrimonial property dispute or court order”. Subsequently, in December 2006, by agreement between the parties, $80,000 was released from each trust account for the parties’ own benefit or to their use. The husband, I understand, received his $80,000 in cash. The wife’s former solicitors retained $51,760 for legal fees and released $28,240 to the wife. It is common ground, as mandated by the terms of the consent order, that the E$176,370 remaining (balance remaining plus accretions) has not been appropriated to either the husband or the wife so that, in the exercise of my discretion, I may give the whole or any part of the moneys in either trust account to the husband or to the wife. In particular Mr Galloway of Counsel, for the husband, conceded this during the course of the proceedings on (I think) 26 April 2007 (or possibly 3 May 2007), conceding further that as the solicitors hold the moneys on trust for the parties pursuant to the consent order, and are as yet unappropriated, neither the husband’s solicitors nor the wife’s former solicitors are able to claim a lien on those moneys in relation to any unpaid legal fees.
Exhibit 29 shows that as at 7 January 2007 the amount in the wife’s former solicitor’s trust account was $88,711.94 and that as at 20 December 2006 the amount in the husband’s solicitor’s trust account was $87,658.31. Thus, by the time the moneys are paid out, there may be accretions since those dates so that the available amount may be more than E$176,370.

Items 2 and 3

These properties were included at valuations, I understand, undertaken in about 2005. Their realisable values may now be less than attributed, having regard to the evidence of Mr J, registered valuer, that in 2005 the market in C was relatively strong but from about mid 2006 has slowed down and suffered a retraction. When sold, capital gains tax will be payable on these two properties (affidavit husband filed on 20 December 2006, annexure CJE4). There will also be costs of sale, including commission.

Items 4, 5, 6, 7 and 8

These items were included at values agreed by the parties.

Item 9

The wife was born and raised in Russia.
She came to Australia on 14 April 2000, and lived with her then husband Mr B (whom she had married in 1999).
Mr B died in November 2001.
Before the wife came to Australia, she owned property in Russia including an underground lockup garage property, which earned rental income gifted by the wife to her mother (now deceased) in Russia, who managed the garage property on the wife’s behalf. The wife said that she allowed her mother to have the income “as payment for what she did for me”.
The other property which the wife owned in Russia (an apartment and a motor vehicle) she had sold after she came to Australia, but before she met and commenced cohabitation with the husband.
On any view, the wife’s garage property was owned by her before she met and commenced cohabitation with the husband.
The wife sold the garage property in 2005, after the final separation, for USD22,000, receiving USD20,000 net proceeds.
The wife explained that she went to Russia in August 2005. She arranged for a friend in Russia to sell the garage property. The friend advanced her USD2,000 and then USD18,000, which she paid into her Suncorp Group Call Account, being an account she had held before she had met the husband. Then, when the garage property was sold, her friend in Russia kept the USD20,000 net proceeds (USD22,000 less commission). However, nothing turns on this, the relevant fact being that the wife in effect received USD20,000 net proceeds.

The husband said (affidavit filed on 20 December 2006, par 5) that the wife “did not disclose this asset” in the course of the proceedings, so that his amended response did not “contemplate the garage in Russia”. I infer from this that the husband also did not know of this asset of the wife’s at all during the short period of their cohabitation and marriage, as otherwise he may be likely to have referred to it in his earlier Court material.
Thus, it appears that at all times the wife kept this asset as a separate or exclusive interest, which did not become “mixed” into the parties’ financial affairs during the period of their cohabitation and marriage, and further that the husband made no contribution to it.
A trial Judge has a discretion whether to adopt an asset by asset approach or a global approach to the parties’ property and assets, having regard to what appears to be more suitable to the circumstances of the particular case, provided that contribution is appropriately assessed. The global approach has been described as “the preferred approach”, however, this should not be understood as prescriptive, when the asset by asset approach is more suitable. The asset by asset approach may be appropriate in cases where the financial relationship of the parties during the marriage was such that they treated some property as exclusively the property of one party to which the other party made no contribution. See Zyk and Zyk (1995) FLC 92-644 at 82,509-10. Either approach is permissible, depending on the circumstances. However, whichever approach is used, the important function of the trial Judge is to ensure that contribution is appropriately assessed.
In my view it is appropriate that the asset by asset approach should be used in relation to the wife’s garage property, for the reasons that: (1) the wife owned it before the parties’ cohabitation and marriage; (2) it was, and remained throughout the parties’ cohabitation and marriage, a separate or exclusive interest of the wife, in that it did not become “mixed” into the parties’ financial affairs during the period of their cohabitation and marriage; (3) the period of the parties’ cohabitation and marriage was short; and (4) the husband made no contribution to this asset.
For convenience, I have attributed a nil value to this asset for the purpose of the calculation of the value of the pool, which has the same effect as considering it on the asset by asset approach and then excluding it altogether.
I should add that on the fourth day of the trial, 3 May 2007, Mr Galloway of Counsel, for the husband, conceded that this asset should be excluded from the pool (although earlier claimed by the husband as an asset to be included), largely for the reasons stated.
The wife’s garage property should not be regarded as a separate pool, for the reason that the wife used the proceeds of sale post separation for her living and other expenses so that no amount of the proceeds remains. It is appropriate thus to ignore the asset for all purposes, including contribution and the s 75(2) factors.
It is relevant to mention, in the same vein, that Mr Galloway and the wife agreed that certain precohabitation assets of the husband should be excluded from the pool, and ignored for all purposes, including contribution and the s 75(2) factors. I will refer to these assets in more detail below.

Item 10

The husband initially contended that, after the parties’ separation on 12 August 2004, the wife received money from “undisclosed resources”, which the husband initially sought to include in the pool at the value of $364,568.
On the fourth day of the trial, 3 May 2007, Mr Galloway conceded that this claim by the husband was misconceived, and said it would not be pressed.
However, it is appropriate that I make observations in relation to it not only because of the size of the claim and the seriousness of the allegation against the wife but also because of the undoubted legal cost to the parties of the husband’s raising and prosecution of this issue.
On the first day of the trial Mr Galloway provided a schedule which, for convenience, I have marked as ex 30, showing that the husband maintained this claim up until and beyond the commencement of the trial, until the claim was abandoned.
The husband’s calculation of the amount of $364,568 was explained in his Summary of Argument filed on 17 April 2007 as follows:
1The wife at all relevant times (including before the parties met) held a Suncorp bank account styled Investor Account (the wife’s Suncorp Investor Account)
2The wife has, since the final separation, deposited $484,000 into this account
3The husband was able to identify $119,432 of the deposits, as follows:
·       $80,000 on 20 August 2004 representing the parties’ division of the net sale proceeds of a property at B1
·       $8,470 on 26 August 2004 representing USD6,000 converted currency which the parties had planned to use during a trip to Russia which was cancelled in the aftermath of their separation
·       $1,722.09 on 18 November 2004 representing the redeemed value of one of two unused air tickets in relation to the cancelled trip to Russia
·       $1,000 on 31 July 2006 representing the proceeds of sale by the wife of a gold chain
·       $28,240 on 20 December 2006 representing part of the distribution of $80,000 that the parties each received from the net proceeds of sale of the former matrimonial home (referred to above in the analysis relating to item 1).
4The husband was unable to identify the source of the remaining deposits, $364,568, and accordingly alleged that the wife had received this amount, post separation, from “undisclosed resources” which thus (on his case) should be included in the pool as an “add back” against her.
As ultimately conceded by Mr Galloway, there was always a fundamental flaw in the husband’s claim. First, it is well understood that the concept of a notional “add back” relates to the premature distribution of a proportion of the matrimonial assets, in which the other party had a legitimate interest. In Townsend and Townsend (1995) FLC 92-569, the Full Court (Nicholson CJ, with whom Fogarty and Jordan JJ agreed) said at 81,654:
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
[bold emphasis added]
In Townsend, as is understood, the taxi licence was a matrimonial asset.
Next, in Omacini and Omacini (2005) FLC 93-218, at pars 30-31, the Full Court (Holden, Warnick and Le Poer Trench JJ) held that, to date, three categories of cases have emerged where the Court has determined that it is appropriate notionally to add back to the pool of assets, being “assets that no longer exist”:
(a)    where the parties have expended moneys on legal fees, but in the context where “the pool of available assets for distribution between the parties” has been diminished by that expenditure, citing In the Marriage of DJM and JLM (1998) FLC 92-816 at [11.6];
(b)     where there has been a premature distribution of matrimonial assets, as explained in Townsend (above);
(c)     where there has been waste, as explained in In the Marriage of Kowaliw (1981) FLC 91-092 at 76,644 (although this is sometimes dealt with under s 75(2)(o), depending on the facts and circumstances).
It is implicit in the Full Court’s statement (par 30) that “to date” three categories of cases have emerged, the categories of circumstances which may give rise to an add back are not closed. However, the common factor in the examples identified by the Full Court is diminution in the value of the pool, or of the “matrimonial assets”, which the other party had a “legitimate interest” in sharing.
Thus, in my view, unless the husband had mounted the case that the moneys received and used by the wife post separation were sourced or “resourced” by assets or financial resources which either the wife or the husband owned or to which either had access before the parties’ cohabitation and marriage, or which were acquired during the period of the parties’ cohabitation and marriage, or which were acquired by the wife post separation but sourced by assets or funds in which he could claim a legitimate interest (eg, an inheritance in which legitimately he could claim a share) his case for a claimed add back to the pool was always fundamentally flawed.
That is not to say, however, that as the issue of the wife’s receipt of unidentified moneys post separation was raised by the husband it was not incumbent on the wife to explain the source of her receipt of the moneys not only so the Court properly may examine her evidence but also make relevant findings as to whether the moneys may have been sourced or “resourced” by assets or financial resources in the categories referred to above.
The husband’s add back claim, at its highest, seemed to rely on the inference that because the wife allegedly received unidentified moneys, $364,568 post separation, she must therefore have had assets or financial resources in the categories referred to above, but not disclosed such assets or financial resources to the husband.
The husband’s Summary of Argument, par 1.10, described moneys received into the wife’s Suncorp Investor Account since separation (deposits exceeding $1,000 from unknown sources) as “significant undisclosed deposits” and then set out:
[original emphasis]
The significant undisclosed deposits into the wife’s Suncorp bank account since separation are as follows:

a. 01.08.05 Term Dep Principal From 83224368 5,203.32

b. 30.09.05 B 10.426.16

c. 30.11.05 B 2,688.89

d. 08.12.05 Branch Deposit Treasury Payments 3,982.48

e. 05.01.06 Branch Deposit Treasury Payments 3,981.42

f. 27.01.06 Branch Deposit Treasury Payments 3,968.78

g. 10.02.06 Branch Deposit Treasury Payments 4,032.26

h. 07.03.06 Branch Deposit Treasury Payments 4,029.55

i. 21.03.06 Branch Deposit Treasury Payments 4,139.07

j. 31.07.06 Branch Deposit B 1,000.00

k. 15.08.06 Branch Deposit Treasury Payments 3,926.70

l. 24.08.06 Branch Deposit Treasury Payments 3,916.45

m. 30.10.06 Branch Deposit Treasury Payments 3,929.27

n. 03.11.06 Branch Deposit R 11,000.00

o. 14.11.06 Branch Deposit Treasury Payments 11,000.00

p. 19.12.06 Branch Deposit Treasury Payments 2,550.04

It is noticeable immediately that whilst some amounts are rounded (eg two amounts of $11,000) several amounts are similar but unrounded (eg the six amounts in the vicinity of $3,900, and the three amounts in the vicinity of $4,000) suggesting (when regard is had also to the regularity and incidence of the deposit dates) the possibility of the deposits representing earnings on invested moneys and, if from a foreign source, that the unrounded amounts may be explicable by conversion rates.
The “significant undisclosed deposits” however listed in the husband’s Summary of Argument amount only to $79,774.39. Yet, the husband’s add back claim was not limited to this amount but, as I have explained, $364,568 being the difference between $484,000 which he alleged she banked post separation and $119,432.
On 3 May 2007, I pointed out to Mr Galloway that, on my calculations by reference to the bank statements in relation to the wife’s Suncorp Investor Account annexure CJE1 to the husband’s affidavit filed on 20 December 2006 (statements 3 September 2002 to 2 February 2006) and ex 7 (statements 3 February 2006 to 2 January 2007) the total deposits post separation (12 August 2004 to 2 January 2007) totalled $214,251.81 and challenged Mr Galloway to identify deposits, as alleged, totalling $484,000.
Mr Galloway conceded immediately, without argument, that indeed there was no evidence to suggest deposits of $484,000.
I do not suggest for a minute that Mr Galloway had sought to present any improper case. Indeed, Mr Galloway said that he had noticed the same flaw in the husband’s case during the break in the trial between 26 April 2007 and 3 May 2007, and at the first appropriate interval had proposed to convey that this part of the husband’s case was abandoned. I accept this explanation entirely. However, it is disturbing that the husband required or allowed his solicitors to mount such an unfounded case, alleging deposits by the wife post separation of $484,000, with no evidence to support that allegation. The Court’s busy schedule and resources are strained to deal with genuinely raised issues. The Court cannot condone the raising of false allegations, causing unnecessary increase in the lengths of trials and the consequent waste of a judge’s time let alone unnecessary legal expense to the opposite adversarial party.
As to the $79,774.39, the wife answered the husband’s case by her evidence, which I accept, that all of the amounts, with the exception of the first amount $5,203.32 sourced from a Term Deposit Account, which is identified on its face as such, represented moneys borrowed by her post separation from two sources, first, a friend, and secondly from persons on her behalf by her son to provide for her post separation living and other costs and expenses, including legal fees, because despite having had considerable cash resources before meeting the husband (which will be referred to below) after the marriage and separation she found she had no cash to provide for these expenses and thus had to resort to the borrowing of funds.
Indeed, a cursory glance at the wife’s Suncorp Investor Account annexure CJE1 to the husband’s affidavit filed on 20 December 2006 shows that as at the date of the final separation, 12 August 2004, the wife had a balance of $363.37 which, after the deposit on 17 August 2004 of three amounts transferred from the parties’ joint funds (totalling $7,500.59), the $80,000 referred to being her portion of the proceeds of sale of the property at B1 (not to be confused with the $80,000 released in December 2006 from the proceeds of sale of the former matrimonial home) and the redeemed amount for the cancelled trip to Russia, $8,470.06, the wife then had $91,380.70, with no further substantial deposits (apart from interest and minor amounts) other than the $1,722.09 already referred to, deposited on 18 November 2004 and the $5,203.32 deposited on 1 August 2005 (being a transfer from a Term Deposit Account on 1 August 2005), until 30 September 2005, when her account was depleted to $229.09. Then, leaving aside the $5,203.32 referred to, the deposits set out in the husband’s schedule, par 1.10, above, commencing on 30 September 2005 are shown as deposits on or about the dates in the husband’s schedule (including the $1,000 deposited on 31 July 2006 representing the proceeds of sale by the wife of a gold chain).
The wife further said, which I accept, that she has not and has not had any assets, financial resources or sources of income outside Australia, other than as disclosed.
Thus, although the husband’s claim for an add back of $364,568 ultimately was abandoned by Mr Galloway, it is important to set out for the record, which I have done in case Mr Galloway’s proper concession should be challenged by the husband elsewhere, that the claim never had substance.

Item 11

After the abandonment of the husband’s claim, item 10, Mr Galloway submitted that in any event there should be add backs against the wife in relation to the $8,470.06 deposited by the wife on 26 August 2004, representing USD6,000 converted currency (husband’s affidavit filed on 31 January 2006, annexure CJ8, converted value then $8,479.75 as at 12 August 2004) which, it is common ground, the parties had planned to use during a trip to Russia, cancelled in the aftermath of the separation; and the further amount of $8,000.59 representing $5,000 taken by the wife post separation from the parties joint account with Bendigo Bank, $4,500 of which was deposited to the wife’s Suncorp Investor Account on 17 August 2004 (two deposits of $2,500 and $2,000 each) and $500 of which the wife, it appears, kept as cash, and $3,000.59 representing the redeemed value of $3,000 invested by the parties before the separation in Term Deposit Account …518 held by the parties jointly at separation then deposited by the wife to her Suncorp Investor Account also on 17 August 2004; totalling $16,470 (rounded).
Mr Galloway did not contend for an add back against the wife of the value of the airline ticket redeemed by her, $1,772.09, and banked on 18 November 2004. Mr Galloway sought to include in the pool, however, the parties’ other unused airline ticket of the same value (item 14).
However, to include this ticket at its value would create an imbalance, and “double dipping” on the wife’s part. Thus, in the Schedule I have attributed a nil value to the airline ticket and in the circumstances will order that the husband have the airline ticket to balance the wife’s redemption already of the value of one of the unused airline tickets.
Mr Galloway also did not seek to add back the $1,000 proceeds of sale by the wife of a gold chain, banked by her on 31 July 2006. It may be, but I do not know (there being no evidence on the point) that the wife’s jewellery (item 8) when valued (if valued before 31 July 2006) may have included this gold chain. Even if it did not, in my view in all of the circumstances the matter is de minimus, and thus safely disregarded.
The wife contended that the amounts of $8,470.06 and $8,000.59 ought not be added back, on the basis that all cash which the parties had before the commencement of their cohabitation and during the course of their marriage was her cash, the husband conceding that he had none. However, I will deal below with the matter of the wife’s contribution of cash to the parties’ cohabitation and marriage. It would be “double dipping” to accord the wife an assessment of contribution for the cash which she brought into the relationship, but then not to add back the value of any use by her post separation of such cash. Moreover, by the time of the final separation, to some extent the parties’ moneys had become mixed, as will be seen, by the sale of some of the parties’ real properties owned at the commencement of the period of their cohabitation and marriage, and the mixing of the sale proceeds during the course of the marriage.
It seems fairly clear that the $8,470.06 cash deposited by the wife to her Suncorp Investor Account on 26 August 2004 should be added back to the pool, as a premature distribution to the wife.
It seems clear also that the $5,000 taken by the wife post separation from the parties’ joint account with Bendigo Bank which amount the wife concedes she took and had the benefit, and which is represented by the two deposits on 17 August 2004 $2,500 and $2,000, and $500 which it appears the wife kept in cash (it not being shown as deposited to her Suncorp Investor Account) should be added back.
It seems clear also that the $3,000.59 deposited to the wife’s Suncorp Investor Account on 17 August 2004 should be added back as representing the proceeds of $3,000 initially deposited to the wife’s Suncorp Investor Account on 18 June 2004 before the final separation, transferred from the wife’s Suncorp Investor Account on 30 July 2004 to Term Deposit Account …518, with accretions then of $0.59 by 17 August 2004, when the Term Deposit Account amount was retransferred to the wife’s Suncorp Investor Account.

It is not to the point that, before the final separation, the $3,000 had been sourced from the wife’s Suncorp Investor Account because, as I have said, during the period of the parties’ cohabitation and marriage, the parties’ moneys had become mixed, as explained above.
Thus, I conclude that there should be add backs against the wife of $8,470.06 and $8,000.59, totalling $16,470 (rounded).
I note that on 23 July 2004, shortly before the final separation, a deposit of $2,000 was made to the wife’s Suncorp Investor Account. However, this amount seems to be represented by the redeposit of four withdrawals of $500 each between 16 and 22 July 2004 then redeposited on 23 July 2004 and thus may be ignored.

Items 12 and 13

The husband holds a 45.18% interest and the wife a 46.16% interest in the Fund (collectively 91.34%). The remaining interests are held by the two other trustees, Y Elliott 5% and Mr Ascoti 3.66%.
The only asset of the Fund is a 15.83 hectare parcel of land at G.
The husband contended (ex 30) that his 45.18% interest should be included at the value of $198,792 and the wife’s 46.16% interest at $203,104, on the basis of an attributed value of $440,000 for the land. It appears that the parties obtained a valuation in that amount in about 2005 (that valuation not being in evidence). However, plainly it was not a current valuation as at the date of the trial.
Accordingly, in order to do justice and equity between the parties (particularly having regard to the precise order which the husband sought, namely that in effect he have the wife’s interest at the attributed value of $203,104 – see par 3 above), I relisted the matter on 10 May 2007 and on that date after hearing argument appointed Mr J, registered valuer, as a single expert to provide a current market valuation of the land. (I note that the other real property items in the pool, items 2 and 3, are included at 2005 values. However, as it is common ground that these two properties are to be sold, and not be retained by either party, it was not necessary to obtain current market valuations. As I have said, the remaining items in the pool were all the subject of agreement between the parties. Although, as I understand the matter, some of these, for example items 4-8, were also included at 2005 valuations, the nature of those items and their comparatively smaller values did not appear to me to warrant updating, which in any event the parties did not seek).
Mr J’s valuation is ex 32. In it, he assessed the value of the land as at the valuation date 22 May 2007 as $470,000, assuming sale of the property as a going concern and noting that the assessment made no allowance for realisation expenses. Mr J noted (p 6 of the valuation) the current status of the land as:
Current Status
… City Council advise that there have been no applications lodged for development of the land. As such, the market value is assessed as rural land having regard to an inherent but undefined future potential to develop based on its fortuitous location.
Pursuant to the order made on 10 May 2007 (par 4) the parties each had the opportunity to accept or dispute the valuation.
On 30 May 2007 and 25 June 2007 respectively, the parties notified the Associate in writing that each accepted Mr J’s valuation, ex 32.
In the circumstances I have included at items 12 and 13 the husband’s 45.18% interest as $212,346 and the wife’s 46.16% interest as $216,952.
I would reiterate that, in my view, there is no unfairness or injustice to the parties in including this asset at its current value, not only because it is a principal asset in the pool, but also because it is an asset in respect of which the parties’ interests need to be allocated precisely by the s 79 order which I will make, whereas the only other real properties in the pool (items 2 and 3) are to be sold in the current market. As I have mentioned, the remaining items in the pool are of comparatively smaller values and agreed by the parties themselves. In any event, it is appropriate that real property which is not to be sold (if possible) be included in the pool at current market value, having regard to its nature, to avoid injustice between the parties by a windfall or detriment, as the case may be, if there should be a rise or fall in value between the date of a stale valuation and the date of trial.
In Coghlan and Coghlan (2005) FLC 93-220 the majority of the Full Court (Bryant CJ, Finn and Coleman JJ) held (par 53) that superannuation interests are to be regarded as “another species of asset” in relation to which orders can be made and (par 65) that a trial judge has a discretion as to how superannuation interests will be treated in a particular case.
The parties each agreed to the inclusion in the pool of their interests in the Fund, and neither sought or suggested the creation of a separate pool.

Item 14

In relation to item 14, as I have mentioned, before the final separation the parties had purchased two airline tickets to Russia, $1,772.09 each.
After the separation, the wife redeemed one of the tickets and on 18 November 2004 banked the proceeds to her Suncorp Investor Account.
The other ticket has not been redeemed. It was common ground that it is redeemable by either party, provided there is a Court authority for the release of the redeemed value.
As I have determined above, however, to include this ticket in the pool at its value would create an imbalance, and “double dipping” on the wife’s part. I have therefore included this item in the Schedule at nil value. The wife has had the benefit of the redemption of one ticket, which is not added back, so the husband should have the value of the other ticket, without its value being included in the pool.

Items 15 and 16

Shortly after the final separation, the parties divided the proceeds of sale of B1 property (a property brought into the marriage by the husband) as to $80,000 to the wife and $82,151 to the husband.
Mr Galloway conceded that the $2,151 difference to the husband was an additional benefit to him.
In December 2006 (mentioned already in relation to item 1), the parties each received for their own benefit or use $80,000 from the proceeds of sale of the former matrimonial home (the wife’s being used as to $51,760 for legal fees and $28,240 to her).
It is appropriate therefore to add back $162,151 against the husband and $160,000 against the wife.
Although, plainly, it would have been appropriate to add back only the $2,151 against the husband (the amounts of $160,000 neutralising each other) I have preferred to include in the Schedule the full add back amounts because of an argument put by Mr Galloway in relation to contribution of an increase in the size of the pool during the period of the parties’ cohabitation and marriage, to which I will refer below.
Plainly, as will be seen, if the add backs to the value of $320,000 ($160,000 x 2) were not included, Mr Galloway’s argument could not properly be tested.

Item 17

Mr J, registered valuer, was appointed as a single expert during the trial to provide valuations as at the commencement of the period of the parties’ cohabitation and marriage of several properties then owned by the husband and the wife (there being no reliable expert evidence adduced by the parties at the trial to allow me to assess the value of the parties’ initial contributions), and a current valuation of the land held by the Fund (necessary for me to assess the current value of the parties’ interests in the Fund).
Mr J’s invoices (exhibits 25 and 33) amount to $4,180.
The liability for these invoices should be shared equally.

Item 18

The properties at B1 and B2 were contributed by the husband.
They were sold shortly before the final separation in August 2004. According to a letter of advice from S & Associates, chartered accountants, dated 2 November 2006 (annexure CJE4 to the husband’s second affidavit) the capital gains tax payable on the sale of these two properties (as yet unpaid) is $7,198.
As these properties contributed by the husband comprised part of the pool, it is appropriate that the capital gains tax liability be shared equally.

Item 19

The properties at C1, and C2 (items 2 and 3 in the Schedule) are to be sold. According to the letter of advice from S & Associates, if C1 property were to be sold at $400,000, $58,000 capital gain would be taxable, and if C2 property were to be sold at $200,000, $14,500 capital gain would be taxable.
The advice included that the tax on the capital gains in respect of each of those properties however would depend on other incomes in the year of sale, with tax rates “generally of 15% and 30%” applying to those gains.
I have therefore allowed for 30% capital gains tax on the two amounts referred to ($58,000 and $14,500, collectively $72,500), reflecting the estimate of $21,750 for this item.
As these properties were purchased during the marriage, it is appropriate that the capital gains tax liability be shared equally.

Contribution

Initial contribution

It is common ground that nothing turns on the parties’ disagreement as to the date of the commencement of their cohabitation (wife, mid August 2002; husband, 2 October 2002) in that there were no relevant financial transactions or other relevant events between August 2002 and October 2002.
It is common ground also that although the husband claimed that by the parties’ marriage in January 2003 the wife attained residence status in Australia, which he says was a benefit to her in effect conferred by him, nothing turns on that in relation to initial or any contribution. For the record, however, the wife said that, even if she had never met the husband, her understanding is that because she had significant cash funds offshore, she had the option of obtaining a “business visa” provided that she invested $240,000 of her funds in Australia, which she was able to do given the size of her offshore funds, and could also obtain a “temporary rolling type of visa” which required any Australian citizen to be her sponsor but did not require “upfront investments”. In any event, be that right or wrong on proper legal analysis, as I have said it is common ground as appears to be correct that nothing turns on the circumstance that by the marriage the wife attained residential status in Australia.
At the commencement of the parties’ cohabitation and marriage, the husband said that his principal property and assets comprised:
·B1 property (his residence)
·B2 property
·B3 property
·B4 property
·Fishing shack and leased land on S Island
·a 45.18% interest in the Fund.
The husband said that, based on his personal knowledge of the real estate market in B (the husband also describing himself as a developer) the four real properties held by him as at the date of the marriage were worth $165,000, $195,000, $25,000 and $27,000 respectively, and the fishing shack and leased land $37,000.
Mr J, registered valuer, was appointed by me as a single expert during the trial (there being no independent expert valuations of the husband’s five properties nor the wife’s one property).
Mr J said (exs 19, 20, 21, 22 and 24) that in his opinion, as at the valuation date of August-October 2002, the husband’s properties were worth: B1 property $80,000-$85,000; B2 property $94,000-$98,000, assuming no renovations had taken place prior to the valuation date, and $100,000-$110,000, assuming all renovations were undertaken before the valuation date; B3 and B4 properties $24,000-$26,000 each; and the fishing shack and leased land $27,000-$28,000.
In his oral evidence, Mr J said that it would be reasonable, for the purpose of these proceedings, to attribute a value at the mid point of the range for each property.
The husband said in his oral evidence that the renovations to B2 property were effected in early 2004 (kitchen, floor sanding and painting), and that no renovations had been effected before he met the wife.
I prefer the valuation evidence of Mr J, rather than the husband’s valuation evidence, having regard to the circumstance that Mr J is a registered valuer, whereas the husband is not; and because by the husband’s evidence he put himself in the position of a “witness in his own cause”, and thus his evidence was not independent as between the parties.
Thus, I find that the value of the husband’s properties as at the date of the commencement of the cohabitation was $256,000, comprising:
·B1 property $82,500
·B2 property $96,000
·B3 property $25,000
·B4 property $25,000
·Fishing shack and leased land $27,500.
However, the husband had a mortgage of $137,000.
Thus, his equity in the properties referred to was $119,000.
Mr Galloway submitted, despite the husband’s case as originally presented seeking the attribution of higher values, that in relation to the value of the husband’s properties at the commencement of the period of the parties’ cohabitation and marriage I should find in accordance with Mr J’s evidence (written submissions, par 21).
Mr Galloway however then submitted that what the husband brought into the parties’ relationship in respect of his properties (using B1 property as the example) was “not just a sum of cash” but “the properties themselves”, pointing to the circumstances that during the parties’ short relationship B2 property was sold in June or July 2004 for $198,000 and B1 property was sold in July or August 2004 for $167,000 (inclusive of furniture) each being sale prices greater than the value of those properties at the commencement of the period of the parties’ cohabitation and marriage (the B3 and B4 properties also being sold during the relationship, but at or about the values attributed by Mr J) so that in assessing contribution I should have regard to “the worth of the thing” to the parties, not just the values as at the date of the commencement of the cohabitation.
I did not understand Mr Galloway’s submission to mean that, instead of using Mr J’s valuations for B2 and B1 property, $96,000 and $82,500 respectively, I should regard the values as at the commencement of the relationship as the prices for which they were sold, namely $198,000 and $167,000, collectively $186,500 more, but subject to reduction for capital gains tax, costs of sale and commission (if any), but rather as a submission based upon the principle in Pierce and Pierce (1999) FLC 92-844 (Full Court) at 85,881, that in attaching weight to initial contribution, regard must be had to the use made by the parties of that contribution.
Indeed, Mr Galloway conceded that, if I were to use the sale figures in mid 2004 rather than the values as at the commencement of the period of the parties’ cohabitation and marriage, then in order to treat “like with like”, I would need also to take into account the selling price of the wife’s property at R (to which I will refer below), valued by Mr J at the commencement of the period of the parties’ cohabitation at $157,500 but sold in February or March 2004 for $300,000 ($142,500 more, subject to costs of sale, but not capital gains tax as the wife’s principal place of residence); and further conceded that, in any event, these exercises could not be done for any of the properties sold because the costs of sale were unknown.
It is necessary however, and in accordance with principle, that I first determine the value of the parties’ property and assets as at the commencement of their cohabitation, and then consider the use made by the parties of their contributions, which I will do at the appropriate stage below, when I have completed the exercise of determining the value of the parties’ property and assets as at the commencement of the period of their cohabitation and marriage.
In addition to the husband’s real properties, he held a 45.18% interest in the Fund, the only asset of which was (and remains) the 15.83 hectare parcel of land at G, to which I have earlier referred. The husband said, based on his personal knowledge of the real estate market, and a valuation carried out “a couple of months after the marriage”, that the land was worth about $520,000 at the commencement of the parties’ cohabitation and marriage so that his 45.18% interest then was worth $234,936.
There are two earlier valuations in evidence in relation to the value of the G land (leaving aside Mr J’s valuation, ex 32, to which I have referred), each by B Valuers, the first with the valuation date of 20 June 2000, $500,000 (husband’s first affidavit, annexure CJE4) and the second with the valuation date of 11 June 2003, $520,000 (husband’s second affidavit, annexure CJE3). As the second valuation is closer in time to the commencement of the period of the parties’ cohabitation and marriage, it is reasonable to accept that valuation for the purpose of the proceedings, and thus I accept that the husband’s interest in the Fund, at the commencement of the period of the parties’ cohabitation and marriage, was $234,936.
Before the parties met, the other interests in the Fund (54.82%) had been held by other persons: see annexure CJE5 to the husband’s first affidavit filed on 31 January 2006.
The husband also had a truck, as to which he said in his affidavit (first affidavit, par 103) he contributed “all money that I received from the sale of my truck, after paying Esanda Finance out for the chattel mortgage”. However, in his oral evidence, the husband admitted that the proceeds of sale of the truck were sufficient to “pay out the chattel mortgage only”.
The husband said (first affidavit, par 30) that as at the commencement of the period of the parties’ cohabitation and marriage he “did not hold much cash”, but admitted in his oral evidence that he held “no cash”.
He said that, at the commencement of the period of the parties’ cohabitation and marriage, he earned income from a trucking business, but that most of the income, sometimes $1,000, sometimes $500, was used for the expenses of his trucking business being the purchase of product, the chattel mortgage on his truck and running costs including fuel costs so that there was “next to nothing” as “bring home money”.
The wife challenged the husband that, at the commencement of the period of their cohabitation and marriage, he also owned an engagement ring with a valuation of $12,000, and a gem/jewellery collection comprising sapphires and other gems worth $50,000 (as represented by the husband to Bendigo Bank as at October/November 2003: see annexure MM8 to the wife’s affidavit, which the husband acknowledged is in his handwriting), neither of which had been disclosed in the proceedings.
The husband said that the valuation in relation to the engagement ring in fact had been $13,000, but he had pawned it in about late 2005, that is, after the final separation, for $700 (when, according to other evidence he had “run out of cash” and needed money); and that the gem/jewellery collection had been in an old suitcase and/or old boxes at the former matrimonial home, which items he had never seen again because he had not been allowed into the former matrimonial home to “collect my belongings” after he left it in August 2004.
The wife challenged the husband also as to certain motor vehicles and other chattels not disclosed by him in the proceedings, but included in the list of assets provided to Bendigo Bank in October/November 2003 (annexure MM8), with the following represented values (to Bendigo Bank): 1984 Jaguar motor vehicle $12,000; 1980 Toyota motor vehicle $2,000; 1973 GT Falcon (estimated) $20,000 and boat and motor $6,000.
The husband said that the motor in the Jaguar motor vehicle “blew up”, and the vehicle was taken to “wreckers”. As to the Toyota motor vehicle, and a further Toyota Dina motor vehicle, he said one had got “scrapped” and the other had been “written off”. He said the GT Falcon had been sold in late 2005 or early 2006 for $5,000; and that “the boat” is still in B. The husband denied (in cross examination by the wife) that when he met the wife he had represented to her that he had two boats, one worth $60,000, explaining that in 1999 (before he met the wife) he had sold a boat and its trailer for $30,000 (he said $60,000, but then corrected his evidence to $30,000), but the person to whom he had sold the boat and trailer for $60,000 (or $30,000) had fallen on hard times and not paid him, saying “The boat was in his name but he never paid me for it”. He said that the boat referred to in the list of assets represented to Bendigo Bank was “never sold” and “The only boat I have is still in [B]”. This appears to be a reference to the boat in the list of assets represented to Bendigo Bank as having the value of $6,000, now included as part of item 6 in the Schedule (plainly, of smaller value now).

I have referred above (in the analysis relating to item 9) to the circumstance that the parties agreed that certain precohabitation assets of the husband should be excluded from the pool, and ignored for all purposes. The precohabitation assets of the husband in this category include the truck; the engagement ring; the gem/jewellery collection; and the motor vehicles. (The boat is in the pool, as part of item 6).
It seems to me that, even if there had not been an agreement between the parties to exclude these items from the pool, it would have been appropriate in any event to do so, particularly as the wife made no contribution to them and the husband has not sought any contribution assessment in his favour in respect of them. These items therefore are not included in the pool, and I will ignore them for all purposes, including contribution. Similarly to the wife’s garage property, there is no basis for these items to constitute a separate pool as it appears on the evidence that the items have been sold, and the proceeds already used by the husband, in the case of the motor vehicles “scrapped” or “written off”, and in the case of the gem/jewellery collection, lost.
As to the boat and trailer which the husband said he sold before he met the wife, I find it difficult to believe that, if the husband was unpaid, he would not have sought a retransfer of the registered title from the purchaser back to him on the basis of a total failure of consideration (or even that he would have allowed the transfer of the registered title without prior payment). However, even if the husband’s evidence is false, and he received the consideration of $60,000 (or $30,000) I need not determine this matter as the same observations apply, that is, the wife made no contribution to the boat and trailer and the husband has not sought any contribution assessment in his favour in respect of these items, so it is appropriate that, in any event, they not be included in the pool. I will say however that, in my observation of the husband during the trial, if he had such an amount of money at the commencement of the period of the parties’ cohabitation and marriage it is likely he would have been anxious to say so to achieve a more favourable contribution assessment. That however is now irrelevant because, as I have said, I need not determine whether the husband is or is not to be believed in relation to this aspect of the matter.
Apart from the mortgage of $137,000, and the chattel mortgage, the husband initially said he had no debts as at the commencement of the period of the parties’ cohabitation and marriage. The wife alleged that the husband, at the commencement of the period of the parties’ cohabitation and marriage, told her that he owed his former common law wife $2,000. The husband denied this in cross examination, but admitted that at the commencement of the period of the parties’ cohabitation and marriage he owed $15,000 on credit cards, $10,000 on one and $5,000 on another (which, as will be seen, were later paid).
Thus, it is appropriate to deduct from the value of the husband’s initial contribution the amount of $15,000, having regard to his admission of $15,000 credit card debt.
I am unable to determine, on the evidence, whether the husband did or did not have additional debt to his former common law wife of $2,000 or any other amount, and will therefore ignore this amount.
The wife said that the husband also had an unpaid $16,000 fine, but did not tell her its nature, saying only “It’s a long story, I’ll tell you later on”, which he did not ever do (wife’s affidavit, par 115). The husband said (second affidavit, par 23) that the fine was $1,600 and related to his truck. It seems to me that this matter safely may be ignored, as de minimus.
I conclude, therefore, that the value of the husband’s initial contribution, as at the commencement of the period of the parties’ cohabitation and marriage, should be regarded as $338,936 ($119,000 net of mortgage for his properties; plus $234,936 value of his interest in the Fund; less $15,000 credit card debt).
At the commencement of the period of the parties’ cohabitation and marriage, the wife had the following property and assets (leaving aside the Russian garage property, dealt with above):

·	R Property, which Mr J valued as at August-October 2002 at $150,000-$165,000 (ex 23) saying in his oral evidence it would be reasonable, for the purpose of the proceedings, to attribute a value at the mid point of that range, $157,500	$157,500
·	Cash of AUD1,077,092 comprising: (a) UK£309,242.12 deposited with Bank in the Channel Islands, conversion rate value AUD766,913 (b) USD56,672 deposited with a Danish bank, conversion rate value AUD67,399 (apparently .84 conversion rate) (c) USD54,068.54 deposited with an American bank, conversion rate value AUD62,780 (apparently .86 conversion rate) (d) Suncorp Investor Account	766,913 67,399 62,780 180,000
·	Her furniture at R property, (item 7 in the Schedule) but agreed for the commencement of the cohabitation and the date of trial $22,760	22,760
·	Her Subaru Liberty motor vehicle (item 5 in the Schedule) purchased in 1995 for about $26,700, but agreed for the commencement of the cohabitation and the date of trial $6,200	6,200
·	Her jewellery (item 8 in the Schedule) agreed for the commencement of the cohabitation and the date of trial $8,479	8,479
$1,272,031

Mr Galloway agreed these amounts (written submissions, par 21), but argued for the exclusion of the American Bank amount USD54,068, AUD62,780, as will be dealt with below.
There was some confusion concerning evidence in the wife’s affidavit (par 33) as to her having USD113,000. However, this appears to be the aggregate of her two USD amounts of USD56,672 and USD54,068 (USD110,740), the difference possibly explicable by the application of conversion rates other than .84 and .86.
As to Mr Galloway’s contention for the exclusion of the American Bank amount, the husband said (affidavit filed on 31 January 2006, par 38) that shortly after the parties’ marriage, the wife sent her son in Russia “approximately $95,000” which, in the context of his affidavit, I take to be AUD95,000. It was common ground that part of the wife’s USD funds, namely USD37,643.86, was brought onshore in about February 2003 and deposited to the wife’s Suncorp Group Call Account (see ex 8). Mr Galloway contended that the amount in the wife’s Suncorp Group Call Account had been transferred from the American Bank funds. The wife however was adamant that this amount comprised part of her Danish Bank funds USD56,672, AUD67,399 (see above). There does not appear to be any evidence as to which of these is correct. However, nothing turns on it, or nothing to which my attention was drawn.
Mr Galloway submitted that I should find, on the husband’s evidence, that the wife sent to her son the whole amount of the American Bank amount, USD54,068.54, AUD62,780, so that “nil” should be recorded as the wife’s initial contribution of that sum.
The wife said however, which evidence I accept, that the amount which she sent to her son, which was in September 2003 (after the marriage) was the amount in her Suncorp Group Call Account, USD37,643.86 (ex 8) which was “a bit more than AUD50,000”, and was not AUD95,000. She said that the money sent to her son had been by way of four transfers, each USD9,900 because if amounts of USD10,000 or more are sent offshore a tax is paid. She denied, as put by Mr Galloway, that there had been six such transfers in late 2003. The wife said that the four transfers (amounting to USD39,600) comprised the Suncorp Group Call Account USD37,643.86 and “about another $500” which she had added. The difference between USD39,600 and USD37,643.86 is USD1,956.14. It may be, but I do not know, how this sits with the wife’s explanation of adding “about another $500”. I note however that the amount of USD37,643.86, according to ex 8, was as at February 2003. According to ex 8, interest was payable on the deposit, although the rate is not specified in ex 8. Possibly, by the time of the transfer in late 2003, with interest accretion, the deposit had grown to the vicinity of USD39,600. Although there is no evidence as to such growth, in my view that is an available inference from the known facts namely the amount of the deposit as at February 2003, that interest was payable, and that the transfers were not until late 2003. Growth to the vicinity of USD39,600 or slightly less than that is not inconceivable, especially as the wife said she had added “about another $500” to comprise the total amount sent. The wife demonstrated herself to be fluent in the English language (having attended a language college in Russia). Her Russian accent remains strong and parts of her oral evidence were difficult to understand without requested repetition. However, she was clear in her evidence as to the number and amounts of the transfers which evidence, as I have said, I accept.
On balance, it seems to me to be merely unproved assertion by the husband that (1) the amount the wife sent her son comprised the whole proceeds of the American Bank Account; and (2) the amount sent was AUD95,000. Moreover, the wife’s evidence (and admission) are consistent with her acknowledgement in oral evidence that on a copy document shown to her by Mr Galloway in cross examination (not in evidence, but which may have been a copy of ex 8), the words “To [son’s name]” were in the wife’s handwriting. Mr Galloway put to the wife that the amount sent to her son comprised the amount in ex 8 which, he put, had come from the American Bank, plus a further sum of USD16,460, so as to comprise (roughly) the USD54,068.54 initially held in that account. The wife answered “What?” with shaking of her head, indicating the rejection of both those propositions, in light of her earlier evidence (which I have said I accept) that the funds in ex 8 had comprised part of the Danish Bank funds, and that the total amount sent to her son was as already explained, namely the amount as at late 2003 in the account shown in ex 8 plus about $500.
In all of the circumstances, doing the best I can, it seems appropriate to deduct from the value of the wife’s initial contribution the amount of AUD50,000 from the wife's funds, which it is convenient to do against the Danish Bank funds, so as to regard the Danish Bank contribution as AUD17,399, and the total cash contribution thus as AUD1,027,092 and her total initial contribution as $1,222,031. In adopting this approach, I am conscious that it is not my task to identify initial contribution with mathematical precision (Kessey and Kessey (1994) FLC 92-495 (Full Court) at 89,151).
The wife said that her initial contribution amounted to about $1,495,223.71 (see her Case Summary filed on 23 April 2007, par 6); or $1,495,222 (see her written submissions, page 1). The difference between those amounts and the amount I have determined, $1,222,031, is about $273,192. Possibly, part of the difference between the wife’s contention and my determination may be attributable to her including her R property at $300,000 (it’s ultimate sale price) rather than Mr J’s valuation $157,500; her inclusion of the amount which she sent to her son; the value she initially put on her Subaru Liberty motor vehicle $26,700; and other such matters. However, whatever may be the explanation for the difference between the wife’s estimate and my determination, I am satisfied that it should be regarded as $1,222,031.
In addition, at the commencement of the period of the parties’ cohabitation and marriage, the wife earned about UK£1,000 interest in each month from her UK£309,242 deposited with a Channel Islands bank (wife’s affidavit, par 31), that is, about UK£12,000 per year; and about $6,200 per year interest from her Suncorp Investor Account. (See the statements in relation to her Suncorp Investor Account, annexure CJE1 to the husband’s affidavit filed on 20 December 2006 showing that as at the date of the commencement of the parties’ cohabitation and marriage the wife was earning a little over $500 monthly interest on the balance in that account, for example, for the statement period 3 September 2002 to 2 October 2002 interest $517; and 3 October 2002 to 2 November 2002 interest $514). The wife also had a benefit described as a “bereavement payment” from the United Kingdom as the result of Mr B’s death. The wife candidly said that the “bereavement payment” was not a pension and would not have been likely to have been continued even if she had not married the husband.
The wife’s income, it appears, was contributed until, as will be seen, her significant cash funds were wholly depleted during the short period of the cohabitation and marriage with the husband.
Thus, the joint value of the parties’ property and assets at the commencement of the period of their cohabitation and marriage was $1,560,967 (husband $338,936 and wife $1,222,031), equating mathematically to 78.3% wife and 21.7% husband.

Principles relating to contribution

I will refer now to the principles relevant to evaluating the weight to be given to each parties’ contributions during the course of the relationship and marriage, relative to the contributions of the other party.
In Kessey and Kessey (1994) FLC 92-495 (Full Court) at 89,151 the Full Court made clear that ultimately all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party:
… In many – indeed probably in most – property settlement cases the Court has to evaluate and assess contributions to property in the absence of precise valuations of the contributions in question. Indeed, where the contributions to property are indirect or non-financial, precise valuation is impossible, and even where the contributions are direct or financial so that a valuation might be provided, other factors (not capable of precise mathematical statement) may well have eroded the initial value of such contributions. In a case such as the present, it is not necessary to arrive at precise mathematical valuations of the parties’ contributions - all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party.”
[italics and bold added]

In Pierce and Pierce (1999) FLC 92-844 (Full Court) at 85,881 a differently constituted Full Court (except for Baker J) said:
28. In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home: …

[italics and bold added]

In Farmer and Bramley (2000) FLC 93-060, Kay J clearly stated two things, namely:
· The Court’s task is to evaluate all of the contributions from the time of the commencement of the parties’ relationship until the time of the hearing and to give such weight to such contributions as the Court thinks is appropriate in the circumstances (par 68); and
· There is nothing in the legislation that requires s 79(4)(a)(b) and (c) contributions to be measured only in terms of what either party contributed to the assets of which the parties are presently possessed (par 69).
In Figgins and Figgins (2002) FLC 93-122 (Full Court) Nicholson CJ and Buckley J made the timely reminder, at par 134:
134 … Marriage is and should be regarded as a genuine partnership to which each brings different gifts. …
In the particular circumstances of this case, and as the husband expressly raised for my consideration that he contributed “special” or “extra” skill factors, I would also refer to JEL and DDF (2001) FLC 93-075 (Full Court), in particular at par 152, sub pars (c) – (g);
152   …
(c)     Although in many cases the direct financial contributions of one party will equal the indirect contribution of the other as homemaker and parent, that is not necessarily so in every case.
(d)     In qualitatively evaluating the roles performed by marriage partners, there may arise special factors attaching to the performance of the particular role of one of them.
(e)     The Court will recognise any such special factors as taking the contribution outside the “normal range” in the sense that that phrase was understood by the Full Court in McLay (supra).
(f)    The determination of an issue of whether or not a “special” or “extra” contribution is made by a party to a marriage is not necessarily dependent upon the size of the asset pool or the “financial product”. When considering such an issue, care must be taken to recognise and distinguish a “windfall” gain.
(g)     Whilst decisions in previous cases where special factors were found to exist may provide some guidance to judges at first instance, they are not prescriptive, except to the extent that they purport to lay down general principles.
[bold emphasis added]

The use to which the parties’ initial contributions were put

The husband’s property at B2 was sold in June or July 2004 (just before the final separation) for about $198,000. At that stage, the husband’s mortgage had grown from $137,000 to about $140,000. The net proceeds were thus about $58,000, less the costs of sale and commission (if any) which are unknown. I take into account that I have already deducted the husband’s mortgage in referring to the value of his initial contribution. However, in this part of the exercise, I am concerned with the separate matter of the use of the parties’ properties. The husband said that apart from paying the mortgage he put the net proceeds, which he estimated at $55,000, to “joint expenses”. The wife said that she recalls that on 23 July 2004 the husband placed $20,000 (seemingly part of the proceeds of sale of B2 property) into the parties’ joint account with Bendigo Bank, but the husband withdrew $21,763 in the same month.
The husband’s property at B1 was sold in July or August 2004 for $167,000. Settlement occurred on 17 August 2004, after the final separation on 12 August 2004. As to use the net proceeds were distributed $82,151.40 to the husband and $80,000 to the wife. See the settlement statement, annexure CJE3 to the husband’s first affidavit filed on 31 January 2006.
However, there is as yet unpaid capital gains tax on the sale of those two properties of $7,198 (item 18 in the Schedule). See the advice of S & Associates, chartered accountants, annexure CJE4 to the husband’s second affidavit filed on 20 December 2006.
The husband’s properties at B3 and B4 were sold in June 2003, one for $27,000 and the other for $28,000. The husband said that commission was payable on one of those sales, but not the other. The husband said (affidavit, par 101) that the proceeds were applied “predominantly to our joint living expenses”, but did not offer any evidence as to which account or accounts (if any) the proceeds were paid. The wife said (oral evidence) that $23,500 was placed into a bank account, but that she is unaware of what happened to the balance. There is no evidence that there was any capital gain in relation to these two properties to attract capital gains tax. Indeed, Mr J’s valuations (exs 21 and 22 respectively, each at p 6) show that the land parcels each were purchased from the Crown in April 1997 for $28,000 so that, assuming this evidence to be correct, there was no capital gain.
The husband’s fishing shack and leased land is still owned by him, at the diminished value of $15,500 compared with the value of $27,500 as at the commencement of the cohabitation. Mr J explained however that the value of this property is directly referable to the length of time left in the lease, which, plainly enough, shortened between the valuation date August-October 2002 and valuation date for the purpose of the Schedule, which I understand to have been 2005.

The wife said however, that at the time of Mr C’s approach (late 2004), and continuing into 2005, she did not list the properties for sale jointly with the husband because “I was sick”, explaining that she had depression and was on antidepressants as a result. I have mentioned already the report of Dr L, consultant psychiatrist, which includes that as a consequence of the wife’s depression she had taken an overdose as early as March 2004. According to the wife’s own evidence, her health had been affected as a consequence of the husband’s “abusive behaviour” towards her resulting in her seeking a protection order against him in October 2005 (wife’s affidavit, par 248). (I note the husband’s first affidavit, par 158, refers to her having obtained a temporary protection order against him in August 2004). She said that at the time (2004/2005) she was “like a zombie” not only because of the breakdown of the marriage but also because she regarded the husband as responsible for what she perceived as her financial ruin, having lost her unencumbered home at R, all of her cash resources, two years previously over AUD1million, gone, having a large mortgage to Bendigo Bank of $1milion, and was desperate at her plight of “having come to this country as a foreigner”, and in the vulnerable position as a recent widow when she had met the husband such that “I was such an easy target for that one” (meaning the husband). She said (affidavit, par 208) that just before Christmas 2003 (six months before the final separation), Y (the husband’s son) had told the husband in her presence that “People in town were saying that he married me for my money” and (pars 193, 194) that the husband’s strategic financial plan she subsequently learned was based on a “high risk loan” that had been entered into with Bendigo Bank after being refused finance already by one bank. Thus, her case is that, if she acted imprudently in refusing to permit the sales of the two vacant land properties in late 2004, she is not responsible for that conduct because of her mental health state at the time, so that in all of the circumstances her conduct was not “designed” to reduce or minimise the value or worth of those properties, and was not reckless, negligent or wanton.
Against this, Mr Galloway submitted that despite the psychiatric report by Dr L, and the evidence generally as to the wife’s mental health state, including her depression, there was no expert or other evidence that these things affected the wife’s “ability to make rational decisions at the time”, arguing also that she was legally represented at that stage so that her conduct properly should be regarded as coming within the Kowaliw principle.
However, I am unable to accept that argument and find that the wife’s conduct, even if imprudent, or even irresponsible, was explicable because of her state of health. I do not require expert evidence to prove that her depression at the relevant time did not affect her “ability to make rational decisions” because of the wife’s own evidence, which I accept, that at the time she was “like a zombie”. Further, it must be recalled that, according to information in Dr L’s report, to which no objection was taken, he recorded (par 9.3): “As a consequence of her depression she had taken an overdose in March 2004”. For my part, the taking of an overdose in March 2004 is also not a rational decision so that, per se, I am able to infer quite easily from the wife’s own evidence that at the time she was “like a zombie” that she was not able to make rational decisions about the sale of the two blocks of land at C1 and C2, particularly as she no longer trusted the husband. Moreover, the wife gave evidence that the husband and his son Y had told the wife before the purchase of the C properties that C would be a good area to invest in for future growth. The wife, in my view, could not have foreseen that C area would decline in value from about late 2005 onwards. Indeed, according to the husband’s own evidence as to his strategic financial plan, he also anticipated future growth in the C area. Mr J said in his oral evidence that throughout 2004, 2005 and the early part of 2006 “the much referred to sea change” had a big impact in the C area particularly because of the influx of “a lot of southern buyers”. In my view, in order to label the wife’s conduct as reckless, negligent, wanton or wasteful, it would be necessary to prove that the wife should have been able to predict the “post sea change” fall in the market. On any view, the wife’s conduct was not “designed” to reduce or minimise the value of the two vacant blocks at C, and in the circumstances was not reckless, negligent or wanton. There was thus, in my view, not loss caused by any deliberate act on her part, nor economic recklessness. In my view, the wife was entitled to take proper time to consider her position, and regain her health, before making further economic decisions, especially economic decisions prompted by the husband, in the somewhat desperate health and economic circumstances in which she found herself in the aftermath of the two year relationship and final separation.
In all of the circumstances, I reject the husband’s case that there should be an adjustment in his favour under s 75(2)(o) on the Kowaliw principle for the wife’s post separation conduct in relation to the two C vacant land properties.
The second part of the husband’s case concerning the wife’s post separation conduct relates to her alleged refusal to allow the husband to market the third C property, the former matrimonial home, as a “unique” property, in order to achieve a higher price at sale than ultimately was achieved. It is common ground that, pursuant to a consent order made on 8 February 2006, the former matrimonial home was to be listed for sale with the reserve price of $1.6million, and that it was sold in May 2006 for $1.45million (see exs 6 and 28), representing the difference of about $150,000.
The husband’s case is that the buyer, apparently, was a person introduced by the wife, and that if the wife had permitted the husband to market the property more widely, as a “unique” property it is likely that he would have found a buyer, in particular potentially a southern buyer, or an international buyer, possibly an Asian buyer, at a much higher price. However, at the outset it must be observed (see ex 28) that this property was held in the name of both parties, and the husband signed the contract for sale.
The husband said (first affidavit, pars 157-173) that his “marketing plans” included obtaining video copies of a “virtual tour” of the home; approaching Mr P of P Company for brochures and other marketing material used previously for marketing the former matrimonial home; going to Austcorp, property developer, to arrange upgraded aerial photographs to add to the “virtual tour” video so that potential purchasers could see a comparison in development in the area surrounding the former matrimonial home between 2000/2001 when the last photographs were taken, and 2005; speaking with a Mr W, whose wife’s father is a successful businessman in Japan on the basis that it would be beneficial “to have a contact” to market the former matrimonial home in Japan; and consulting Mr P and Mr W as to marketing the former matrimonial home overseas, in particular the Asian market.
The husband referred to a Deed of Agreement dated 16 February 2005 (ex 28) by which the wife (relevantly) agreed to vacate the former matrimonial home within two months (16 April 2005) and that she had refused to do so; his inability to approach the home for marketing purposes, or to have anyone else contact or try to contact the wife directly or indirectly, because of the protection order; and his concern that as the two vacant blocks of land at C had not been sold (the proceeds of which could have been paid to Bendigo Bank, the mortgagee) he was aware (par 166) that the mortgagee would require “some form of payment” by late 2005 (the fixed rate loan apparently being for the period only of two years, November 2003 – November 2005).
The husband said that, because the wife had refused to vacate the former matrimonial home, as agreed, and had obtained a “further protection order” against him, he was not able to carry into effect his marketing proposal.
Mr J, in his oral evidence, agreed with Mr Galloway that the former matrimonial home would have benefited by “wider marketing” by use of the internet, the creation of a website, aerial photographs and the other measures referred to by the husband as comprising his marketing plan. Mr J agreed also with Mr Galloway that the particular property would appeal “greatly” to the Asian market.
The wife, somewhat imprudently, had placed a sign on the property to the effect that the husband had left the property and the wife was glad. Mr J agreed with Mr Galloway that the sign “could cause a stigma to the property and reduce its value”, and that Mr J knew that the sign had been there “for a while” (“at least a month I think”) because it had been commented upon to him by people in the locality that the sign was on the gate and that people “were having a bit of a laugh about it”. Mr J said however that he knew that the sign had been taken down because he noticed it was gone “later on when they were trying to sell it” and that he was “relieved” that the sign had gone.
Apparently, the reserve price of $1.6million referred to in the consent order made on 8 February 2006 had been based upon a valuation by Mr J which, Mr Galloway submitted, was on the basis of Mr J “acknowledging that a house of this style and kind would need to be widely marketed”.
It seems to be common ground that the property was “unique” because of its size and location, although the wife described it as “ugly”.
The husband’s case is based on the premise that if the wife had not put up the sign, and if marketing according to the husband’s proposal had proceeded, it is very likely that a price greater than $1.45million could have been achieved, and the wife thus caused the loss of opportunity to achieve a higher price, perhaps even more than $1.6million. Thus, as I understand the husband’s case, he relies on the wife’s conduct as being responsible, at least, for a sale price of $150,000 less than Mr J’s valuation (the difference between $1.6million and the sale price $1.45million), or perhaps a greater potential loss.
By the time the property was sold, it appears that Bendigo Bank had issued a notice to exercise power of sale (husband’s first affidavit, par 123). The husband’s case infers however that, if the proceeds of sale of the two blocks of land at C had been available, they could have been “applied” to the principal debt of $1million, inferring that a refinance arrangement could have been put in place in relation to the former matrimonial home, pending its marketing and sale.
The husband’s case, as I understand it, is that by the wife’s refusal to vacate the former matrimonial home in April 2005 pursuant to the Deed of Agreement, and her other conduct, for example, putting up the sign, and lodging a caveat against the title to the property, he lost the opportunity between April 2005 and November 2005 to market the property in the manner outlined, before there was (or would have been) default under the mortgage.
The wife, for her part, said that she had not vacated the property in April 2005, despite the Deed of Agreement, because she had “nowhere to go” and also because the husband had breached the Deed of Agreement (clause 1) by failing to appoint V & Associates, chartered accountants, as the forensic accountants for the purposes of the Deed. Mr Galloway, in cross examination, challenged the wife that V & Associates had been appointed as the forensic accountants, but that she had, contrary to clause 3 of the Deed, failed to provide relevant documents to V & Associates. The wife then said “At that time I was on antidepressants and like a zombie”, and emphasised that, despite the Court order, the husband had never asked her to “list” the property with an independent agent for sale. As to the lodging of a caveat against the title to the property, she said that was done by her solicitor.
As to negotiations between the wife and the ultimate purchaser of the property, a Ms M, the wife said that she told Ms M that she wanted $1.5million but that Ms M had said that was “too much”, but by the wife’s efforts, she “shifted Ms M from her initial offer of $1.3million to $1.45million for the purpose of the contract”.
On all of the evidence, in particular Mr J’s evidence, it may well be the case that if the wife had vacated the property in April 2005, and if the husband had thus been able to activate his marketing proposal, a higher price may have been achieved.
However, I am unable to conclude, on all of the evidence, that the wife’s conduct in this period was “designed” to reduce or minimise the value or worth of the former matrimonial home, or was reckless, negligent or wanton, or that there was any loss caused by any deliberate act on her part, or economic recklessness, because of her mental state at the time which, on her case, was directly attributable to the breakdown of the marriage and conduct by the husband which resulted in her obtaining a protection order against him, the husband at that stage having become a person whom the wife no longer trusted in relation to financial matters. In this regard, I would refer, without repetition, to the wife’s own description of her mental state throughout this period.
I therefore reject the husband’s case that there should be an adjustment in his favour, under s75(2)(o) on the Kowaliw principle for the wife’s post separation conduct in relation to the marketing and sale of the former matrimonial home.
In short, in my view, in all of the circumstances, the husband’s case falls far short of the proving that the wife’s post separation conduct should be characterised in the manner required before warranting such adjustment.
It is sufficient, in my view, that at the time the wife was psychiatrically assessed as suffering adjustment disorder and depression, was on antidepressants, and in her own words “like a zombie”.

Conclusion as to the section 75(2) factors

Mr Galloway submitted, which I accept, that leaving aside the husband’s Kowaliw argument, there is no basis for a s 75(2) adjustment in favour of either of the parties.
In particular, I do not consider that there should be any adjustment for the circumstance that the wife lived in the former matrimonial home until its sale in May 2006, in particular because, it appears, she paid some or most of the outgoings for it in that time. In any event, Mr Galloway did not seek any adjustment based on this aspect of the matter.
It follows that there should not be any s 75(2) adjustment, so that subject to the fourth step the parties’ property division should proceed on the basis of their assessed contribution entitlements.

The fourth step

In Phillips and Phillips (2002) FLC 93-104 (Full Court) at 88,985, the Full Court made clear its acceptance of the principle that at times the application of percentages does not necessarily produce a just and equitable result; that it is the order which is to be just and equitable, not just the underlying percentage division of the net value of the parties’ assets; that usually adjustment for the s 75(2) factors will be assessed in the range of 10% and 20%; but that a number of cases will justify an assessment outside those parameters; that in any event it is the real impact in money terms which is ultimately the critical issue; and finally, that in the consideration of whether the result is just and equitable, it is the justice and equity of the actual order not of the percentage distribution which must be considered.
Subject to the fourth step, the wife is entitled to 75% of the pool, representing E$1,190,381 in value, and the husband is entitled to 25% of the pool, representing E$396,794 in value.
Unfortunately, however, for both of the parties, a significant amount comprises add backs (items 11, 15 and 16 in the Schedule) which are moneys which neither now has, so that the “real impact in money terms” for each is that, in reality, for the future, each will have less than the net pool represents.
In the case of item 1, I propose to order that Mr J’s invoices be paid within 7 days, from item 1, on the basis that it would not be fair for him to await the sale of items 2 and 3 before he is paid. Thus, effectively, the value of item 1 will be reduced to E$172,190.
It is plain that the wife should have the balance of item 1 (E$172,190) and items 5, 7, 8, 11 and 16, totalling E$386,099 ($176,470 comprising add backs), and the husband items 4, 6 and 15, totalling E$180,726 ($162,151 comprising add backs).
In the case of the item 1 distribution to the wife, there is no reason why the balance amount in the solicitors’ trust accounts, including accretions, ought not be paid to her straight away, and in those circumstances, I will order that the payment to her be within seven days.
Items 2 and 3 will need to be sold. After the deduction of the costs of sale, I propose to order that $40,000 be held in the husband’s solicitors’ trust account for the parties’ capital gains tax liabilities, item 18 E$7,198 and item 19 E$21,750, but with a margin for the exigencies described by S & Associates in their letter of advice, that is, that the precise amounts of capital gains tax for items 2 and 3 will depend upon several factors.
The balance proceeds of sale of items 2 and 3 will need to be paid to the wife.
It is plain, on the figures, that to make up the balance of the parties’ entitlements, each will have a percentage interest in the Fund, presently held in the aggregate at 91.34%. However, the precise percentage interests to be allocated presently cannot be calculated, until the net sale proceeds of items 2 and 3 are known.
The husband, plainly (by the terms of his amended response), would prefer to continue to hold whatever percentage interest in the Fund he is left with. However, in order to put an end to the financial relationship between the parties, the wife would prefer to be paid the value of her interest, when that can be calculated.
Thus, when the wife’s percentage interest in the Fund can be calculated for the purpose of a just and equitable division of the property and assets of the parties to give effect to a 75%/25% split, unless the husband, Mr Y Elliott and Mr Ascoti can arrange either for themselves or another investor to pay to the wife her calculated percentage interest at the value of $4,700 per 1% (the total value of the land held by the Fund being $470,000), the Fund’s land will have to be sold.
I appreciate that two of the trustees, who are also members of the Fund, were not parties to the marriage. They are however parties to the proceedings. Their percentage interests in the Fund are Mr Y Elliott 5% and Mr Ascoti 3.66%.
Thus, whilst the husband and Messrs Elliott and Ascoti will and should have the opportunity to introduce another investor, after the calculation of the percentage interest in the Fund which the wife will have, if they cannot do that, there will be no alternative other than sale of the Fund’s land to give effect to s 81 of the Act, namely, as far as practicable, the making of an order to determine finally the financial relationship between the husband and the wife and to avoid further proceedings between them.
As I understand the matter, as both the husband and the wife are over 55 years, and retired, each is entitled to the benefit of their interests in the Fund, if converted to cash. There was no evidence as to whether, if converted to cash, there would be taxation implications for either the husband or the wife, or for that matter the other two trustees/members of the Fund. I note however the husband’s assertion (par 3 above) as to the wife’s position. The husband did not adduce evidence as to his taxation position.

However, hopefully, the husband and the two existing trustees/members other than the wife will be able to arrange another investor to purchase the percentage interest to be allocated to the wife, so that the husband will be able to maintain at least some percentage interest in the Fund, and thus the land held by it.
It is appropriate, in order to resolve all matters between the parties, and also because the husband introduced the wife to the Fund, that there be an order that he indemnify the wife in relation to all liabilities in relation to the Fund. Indeed, there was no evidence as to any liabilities for which the wife should be liable.
In all of the circumstances, I have formulated the s 79 order to include machinery provisions for the later calculation of the wife’s percentage interest in the Fund which she is to have pursuant to the order, and will relist the matter for mention at frequent intervals (commencing with 20 September 2007 and 31 October 2007), to ensure that the calculation exercise is properly carried out, and to monitor generally the carrying out of the order. In many circumstances, such monitoring would be unnecessary. However, as the wife is an unrepresented litigant, and there is a great degree of mistrust between the parties, it is prudent to monitor the timely performance of the provisions of the order, to ensure it is carried out as expeditiously as possible.
In all of the circumstances, I am satisfied that the s 79 order which I propose to make is a just and equitable division of the parties’ property and assets. In particular, even though each party already has had and used the amounts added back, which affects, in each case, the “real impact in money terms” for each, this unfortunately cannot be avoided. The “real impact in money terms” for each of the parties will be exacerbated by their respective liabilities for legal fees. The husband may have insufficient to purchase another residential home. However, if this is the result of the add back process and the incurrence of legal fees, that of itself does not warrant a different percentage division. The wife, it appears, may or may not ultimately be in the position to purchase another home. For her, too, this exigency may depend upon her incurrence of legal fees.
Thus, unfortunately, even though the net value of the pool is slightly more than when the parties commenced their cohabitation, neither, by the s 79 order of itself, will be able to regain what each had in August 2002, and now lost. This is a harsh reality, for both, but one which no s 79 order can fix for either.
As I have conducted the matter for the parties in my capacity as the trial judge, it is appropriate that I include an order that all machinery applications be returnable before me.
It would be appropriate also, particularly having regard to the imminent introduction of the “docket system” that any default or enforcement proceedings be returnable before me, because of my familiarity with the matter, and I will so order.

I certify that the preceding two hundred and seventy seven (277) paragraphs are a true copy of the reasons for judgment of the Honourable Justice O’Reilly

Associate:

Date: 3 August 2007

[2007] FamCA 1232

3 August 2007

Key Legal Topics

Areas of Law

Family Law

Civil Procedure

Legal Concepts

Costs

Remedies

Procedural Fairness

Abuse of Process

Appeal

ASSETS		VALUE
1	Proceeds of sale of former matrimonial home at C3	E$176,370
2	C1 property	410,000
3	C2 property	210,000
4	Fishing shack and leased land on S Island	15,500
5	Subaru Liberty motor vehicle	6,200
6	Furniture and chattels in husband’s possession (including boat)	3,075
7	Furniture and chattels in wife’s possession	22,760
8	Wife’s jewellery	8,479
9	Proceeds of sale of wife’s property in Russia sold in 2005 (add back initially claimed by husband)	nil
10	Add back claimed by husband against wife described as “money from undisclosed resources received by wife since separation”, initially claimed at $364,568	nil
11	Add back wife premature distribution	16,470
12	Husband’s superannuation interest in the Fund (45.18%)	212,346
13	Wife’s superannuation interest in the Fund (46.16%)	216,952
14	Unused airline ticket (redeemable value)	nil
15	Add back husband premature distribution (divided net proceeds of sale of B1 property and divided part net proceeds of sale of former matrimonial home, item 1)	162,151
16	Add back wife premature distribution (divided net proceeds of sale of B1 property and divided part net proceeds of sale of former matrimonial home, item 1)	160,000
TOTAL ASSETS		E$1,620,303
LIABILITIES
17	J & Associates, valuers	4,180
18	Capital gains tax payable on the sales of B1 and B2 properties	E7,198
19	Capital gains tax payable on the sales of C1 and C2 properties	E21,750
TOTAL LIABILITIES		E$33,128
NET ASSETS		E$1,587,175

a.	01.08.05	Term Dep Principal From 83224368	5,203.32
b.	30.09.05	B	10.426.16
c.	30.11.05	B	2,688.89
d.	08.12.05	Branch Deposit Treasury Payments	3,982.48
e.	05.01.06	Branch Deposit Treasury Payments	3,981.42
f.	27.01.06	Branch Deposit Treasury Payments	3,968.78
g.	10.02.06	Branch Deposit Treasury Payments	4,032.26
h.	07.03.06	Branch Deposit Treasury Payments	4,029.55
i.	21.03.06	Branch Deposit Treasury Payments	4,139.07
j.	31.07.06	Branch Deposit B	1,000.00
k.	15.08.06	Branch Deposit Treasury Payments	3,926.70
l.	24.08.06	Branch Deposit Treasury Payments	3,916.45
m.	30.10.06	Branch Deposit Treasury Payments	3,929.27
n.	03.11.06	Branch Deposit R	11,000.00
o.	14.11.06	Branch Deposit Treasury Payments	11,000.00
p.	19.12.06	Branch Deposit Treasury Payments	2,550.04