Essex & Essex (No. 2)
[2007] FamCA 639
•2 July 2007
FAMILY COURT OF AUSTRALIA
| ESSEX & ESSEX (NO. 2) | [2007] FamCA 639 |
| FAMILY LAW - PROPERTY SETTLEMENT – Contributions by third parties – contributions by the parties –Liabilities incurred by a party subsequent to separation – loan from related third party – Contribution at commencement of relationship, during relationship and after separation – 75(2) factors – Capacity of wife to earn income – Treatment of discretionary trusts created with assets not from parties and providing capital trust for parties’ children |
| Bailey and Bailey (1978) FLC ¶90-424 Black and Black [2006] FamCA 972 Crapp and Crapp (1979) FLC ¶90-615 Harris and Harris (1991) FLC ¶92-254 Hickey and Hickey and A-G for the Commonwealth of Australia (Intervener (2003) FLC 93-143 Kelly and Kelly (No 2) (1981) FLC ¶91-108 L & L [2004] FamCA 1010 Milankov and Milankov (2002) FLC ¶93-095 AJO and GRO [2005] FamCA 195 Pellegrino & Pellegrino (1997) FLC 92-789 TWN & PAQ [2005] FamCA 67 |
| APPLICANT: | Mrs Essex |
| RESPONDENT: | Mr Essex |
| FILE NUMBER: | HBF | 1141 | of | 2004 |
| DATE DELIVERED: | 2 July 2007 |
| PLACE DELIVERED: | Hobart |
| JUDGMENT OF: | Benjamin J |
| HEARING DATE: | 18, 22 and 23 May 2007 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Trezise |
| SOLICITOR FOR THE APPLICANT: | Dobson Mitchell & Allport |
| COUNSEL FOR THE RESPONDENT: | Mr Welch |
| SOLICITOR FOR THE RESPONDENT: | Phillip Welch |
Orders
THAT both parties do all acts and things and execute all deeds, documents, instruments and writings necessary to procure the sale of J property being described in Certificate of Title Volume … Folio ... (“[J Property]”) by public auction and in particular:
a)Place J property with auctioneers agreed to between the parties, or failing such agreement, as nominated by the President of the the Auctioneers’ and Real Estate Agents Council (“the auctioneers”), for the sale of J property by public auction at the earliest possible date;
b)Execute all documents requested by the auctioneers for the sale of J property;
c)The reserve price shall be $190,000.00 or as otherwise agreed in writing by the parties;
d)Give instructions to a solicitor (mutually agreed upon by the parties or if they are unable to agree a Solicitor nominated by the President of the Law Society of Tasmania) for acting on the sale of J property including the preparation of a contract and other documents as are necessary for the sale of J property;
e)Co-operate in every way with the auctioneers in relation to the auction of the property including making a key available, allowing inspection of J property at times requested by the auctioneers and ensuring that the property is in a neat and clean condition at the time of inspection by prospective purchasers;
f)Attend at the auction sale of the property and negotiate with the highest bidder if the reserve price is not reached;
g)Accept the advice of the auctioneers regarding whether to accept a price less than the reserve price;
h)Execute the contract of sale;
i)That both parties do all acts and things necessary to procure that upon the sale of J property the proceeds of sale be paid in the following manner and priority:
i)in payment of any amount required to discharge the mortgages registered over J property being mortgage number … to the T Building Society and mortgage number … to the U Bank;
ii)in payment of legal costs of sale;
iii)in payment of agents fees, commisions and auction expenses on the sale
iv)in payment of the sum of $30,000.00 to the solicitor acting on the sale of J property, for such sum to be held on trust for the parties or invested by that solicitor in such other financial institution as trustee as may be agreed between the parties (“the CGT Account”). The principle and interest of such account (“the funds”) shall be applied by the parties to meet their obligations under this order. The parties shall;
(a)Not less than 5 months after the conclusion of the financial year in which J property is sold, each do all acts and things and sign all documents necessary to obtain a final assessment of their respective capital gains tax liability in relation to the proceeds of sale of J property.
(b)as soon as practical thereafter direct the trustee of the CGT Account to pay the parties respective CGT liabilities,
(c)authorise and direct payment of the balance of the fund, once both CGT liablities are paid, as to 55% to the wife and 45% to the husband.
(d)in the event the funds are insufficient to meet the total CGT liability the wife shall contribute 55% and the husband 45% to such shortfall.
v)In payment to the wife of 55% of the then nett proceeds of sale and payment to the husband of 45% of the nett proceeds of sale.
THAT both parties do all acts and things and execute all deeds, documents, instruments and writings necessary to procure the sale of F property (including the window fittings removed from the turret) being described in Certificate of Title Volume … Folio 1, (“[F property]”) by public auction, after the expiry of 5 months from the date of these orders and in particular:
(a)Place the sale of F property with auctioneers agreed to between the parties, or failing such agreement, as nominated by the President of the Auctioneers” and Real Estate Agents Council (“the auctioneers”) for the sale of F property by public auction at the earliest possible date after the expiry of 5 months from the date of these orders;
(b)Until completion of the sale the husband has the right to occupy F property, to the exclusion of the wife, subject to the husband paying the rates, paying normal periodic mortgage instalments in respect of the mortgage to the Westpac Banking Corporation, mortgage number … and building insurance as they fall due, keeping the property tidy clean and in repair (having regard to its present condition) and permitting inspection by agents and prospective purchasers at all reasonable times, including days when it is open for inspection (‘open days’).
(c)Execute all documents requested by the auctioneers for the sale of F property;
(d)The reserve price shall be $420,000.00 or as otherwise agreed in writing by the parties;
(e)Give instructions to a solicitor (mutually agreed upon by the parties, or if they are unable to agree a Solicitor nominated by the President of the Law Society of Tasmania) to act on the sale including the preparation of a contract and other documents as are necessary for the sale of F property;
(f)Co-operate with the auctioneers in relation to the sale of F property including making a key available, allowing inspection of the property at times requested by the auctioneers (including open days) and ensuring that the property is in a neat and clean condition at the time of inspection by prospective purchasers;
(g)Attend at the auction sale of F property and negotiate with the highest bidder if the reserve price is not reached;
(h)Accept the advice of the auctioneers whether to accept a price less than the reserve price;
(i)Execute the contract of sale;
(j)That both parties do all acts and things necessary to procure that upon the sale of F property the proceeds of sale be paid in the following manner and priority:
(i)in payment of legal costs and disbursments of the sale;
(ii)in payment of agents fees, commisions and auction expenses on the sale.
(iii)in payment of the balance outstanding to the Westpac Banking Corporation in respect of mortgage number …, together with any discharge of mortgage expenses (being the Westpac equity Access Account loan of about $9,610.00).
(iv)in payment to the wife of 55% of the then nett proceeds of sale and payment to the husband of 45% of the nett proceeds of sale.
(k)Each of the parties has the right to bid at the auction of F property, and if one or other of the parties is the successful bidder at the auction the transfer of the property pursuant to that contract is a transfer of the property to such party to be pursuant to these orders.
THAT within sixty (60) days of the date of these Orders the Husband shall pay to the Wife, by way of bank cheque, the sum of one hundred and eight thousand eight hundred and eighty six dollars ($108,886.00).
THAT the Husband hereby transfers to the Wife all his right, title and interest in:-
(a)household furniture and effects including antiques formerly used by the parties jointly but now in the possession or control of the Wife;
(b)the balance of the parties joint CBA Cash Management account of about $18,000.00 (and in this respect the husband shall forward to a wife a signed withdrawal slip for the balance held in that account within 14 days from the date of this order);
(c)the three pieces of art work, namely the AZ print the PG work and the EN work formerly used by the parties jointly but now in the possession or control of the Wife;
(d)the funds paid to the Wife from the parties joint CBA Cash Management account, totalling $37,900.00;
(e)the SAAB motor vehicle in the possession of the Wife;
(f)the Toyota Camry motor vehicle in the possession of the Wife;
(g)any monies at banks, credit unions or savings accounts in the sole name of the Wife;
(h)the property situate at and known as L;
to the intent that the Wife be the sole and absolute legal owner thereof as against the husband.
THAT the Wife hereby transfers to the Husband all her right, title and interest in:-
(a)any monies at banks, credit unions or savings accounts in the sole name of the Husband;
(b)household furniture and effects including antiques formerly used by the parties jointly but now in the possession or control of the Husband including the items as sited at F property by Mr S in reports dated 16th March 2007 and 22nd March 2007;
(c)the Nissan Navara utility in the possession of the Husband;
(d)the Triumph motorcycle in the possession of the Husband;
(e)the Husband's interest in E Pty Ltd;
to the intent that the Husband be the sole and absolute legal owner thereof as against the wife.
THAT unless otherwise specified in these Orders:
(a)each party is solely entitled to the exclusion of the other to all other property or chattels of whatsoever nature and kind in the possession of such party as at the date of these Orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the bank’s record thereof, insurance policies are deemed to be in the possession of the beneficiary thereof, superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides a condition for payment out of such entitlement; and
(b)each party is solely liable for and indemnifies the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders.
THAT the Wife's application for spousal maintenance be and is hereby dismissed.
THAT liberty is given to the parties to apply in respect of implementation of these Orders.
THAT this case be removed from the list of cases requiring determination.
THAT the subpoena filed 13 April 2007 to The Managing Partner, HQF Lawyers and The Managing Partner, Archer Bushby are discharged and the said partners are released from their respective obligation to comply with the subpoena.
THAT all subpoenaed documents be returned to the persons or institutions from which they emanated and all exhibits are returned to the person or persons who tendered the same.
THAT leave be granted to the parties to apply in respect of the form of these proposed Orders within 7 days from the date of the Orders.
IT IS CERTIFIED
THAT pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.
| FAMILY COURT OF AUSTRALIA AT HOBART |
FILE NUMBER: HBF 1141 of 2004
| Mrs Essex |
Applicant
And
| Mr Essex |
Respondent
REASONS FOR JUDGMENT
These are property proceedings between Mrs Essex (“the wife”) and Mr Essex (“the husband”).
The wife seeks property orders and spousal maintenance.
The orders the wife seeks are for division of property on the basis of 70% to her and 30% to the husband. The percentage division would apply to all of the property, which she says must include an interest that she claims the husband has in two discretionary family trusts. If the discretionary trusts are not treated as property then she seeks orders on the same percentage basis but with the trusts treated as a financial resource. The wife seeks a continuing spousal maintenance order for $250.00 per week.
The orders the husband seeks are for distribution of property as to 55% to him and 45% to the wife, being on the basis that the contributions ought be assessed as 60% to 40% in his favour and an adjustment of 5% in favour of the wife for the other factors. The husband proposes that the wife’s application for spousal maintenance be dismissed.
Each of the parties raises issues as to what assets and liabilities should be included in the asset pool. There is some agreement and one issue as to which of the assets should be retained by each of the parties. The wife submits that there need not be a superannuation splitting order. The husband submits that if the property is adjusted substantially as he seeks there should not be a splitting order but if the adjustment is substantially as sought by the wife then there should be a splitting order.
Background
The wife was aged 51 at the date of hearing and the husband was aged 50 at the date of hearing. The parties married and commenced cohabitation in June 1981. The wife had been previously married.
There are two children of the marriage. The elder child is a daughter who is aged seventeen and will attain the age of 18 in October 2007, she is in her final year of high school. The younger child is also a daughter who will be aged 13 when these reasons are delivered.
The wife asserts that separation occurred in January 2000. The husband considered the marriage failed and separation occurred in January 2003. For the reasons contained in this judgment I find that separation occurred in January 2000.
The wife asserts that the parties separated when she remained primarily in Hobart in 2000.
In late 1999 or early 2000 the husband lived primarily in N and the wife and children in Hobart. From about 2000 the wife claimed benefits from Centrelink and claimed child support from the husband. The wife and children visited N and I accept the husband’s evidence that the visits of the wife and children to the N home over weekends diminished as the years progressed from 2000 to the end of 2003.
The husband’s evidence was that it was in January 2003 that he accepted that the marriage was at an end at that time.
The husband is a company manager who has occupied the former matrimonial home in N from late 1999 to date.
The wife and children have resided primarily in Hobart since 1999. They have lived in rented homes until the wife purchased a home at L in about January 2006.
There are issues as to the characterisation of money, property and benefits provided by the husband’s family to the benefit of the parties. There is no issue that the husband’s parents made significant contributions to the benefit of the parties and their children.
The parties did not agree over the education of the children, particularly when that involved their move to Hobart in 1999 and remaining in Hobart after that time and attending I School in Hobart. The husband did not consent to that approach but in the end he acquiesced to it.
The principles to apply
The Full Court in Hickey and Hickey and A-G for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 78,386, reiterated the preferred approach to the exercise of discretion in property matters, pursuant to s.79:
“39. The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79 (4) (a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79 (4) (d), (e), (f) and (g), (“the other factors”) including, because of s.79 (4) (e), the matters referred to in s.75 (2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Davut and Raif (1994) FLC 92-503; Prpic and Prpic (1995) FLC 92-574; Clauson and Clauson (1995) FLC 92-595; Townsend and Townsend (1995) FLC92-569; Biltoft and Biltoft (1995) FLC 92-614; McLay and McLay (1996) FLC 92-667; JEL and DDF (2001) FLC 93-075 and Phillips and Phillips (2002) FLC 93-104.
40. Section 79, unlike s.78, requires the Court to consider the whole of the property of the parties, however and whenever acquired, notwithstanding that the parties may only seek an alteration of interest in some of that property. As a consequence of the first step in the preferred approach to the determination of the s.79 proceedings, each party to the proceedings has an obligation to make a full and frank disclosure of his/her financial circumstances and all matters relevant thereto: Oriolo and Oriolo (1985) FLC 91-653; Black and Kellner (1992) FLC 92-287; Weir and Weir (1993) FLC 92-338 and Tate v Tate (2000) FLC 93-047.”
Thus the approach in this case involves a number of steps:-
a) The identification of the property and its value;
b) An evaluation of the parties’ contributions having regards to ss. 79(4)(a)(b) & (c).
c) Consideration of any adjustment to that assessment having regard to the relevant matters in ss. 79(d),(e),(f) & (g) (“the other factors”) including the matters referred to in s.75(2).
d) A review of the outcome against a just and equitable requirement.
In the matter of AJO and GRO [2005] FamCA 195[1] the Full Court reviewed authorities in respect of wastage and add-backs, the Full Court said;
[1] (2005) FLC 93-218 and (2005) 33 Fam LR 134
30. To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In DJM and JLM (1998) FLC ¶ 92-816 the Full Court said at 85,262:
``11.6 For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.''
(b) Where there has been a premature distribution of matrimonial assets. In Townsend and Townsend (1995) FLC ¶ 92-569 Nicholson CJ as he then was 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.''
(c) In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC ¶ 91-092 at 76,644:
``As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec 75(2)(o) to applications for settlement of property instituted under the provisions of sec 79.''
31. As the Full Court said in Browne v Green (1999) FLC ¶92-873 at 86,360:
``44. We agree with her Honour that the principles stated by Baker J in Kowaliw certainly do not constitute any form of fixed code. They are no more than guidelines for use in the exercise of the discretionary jurisdiction conferred by s 79 of the Family Law Act 1975. Nevertheless, they have over the considerable period of time since they were enunciated, become a well accepted guideline in this jurisdiction — a guideline the use of which assists in the achievement of the important goal of consistency within the jurisdiction.''
Credit of the parties.
Credit of each of the parties was in issue in these proceedings. Counsel for each party submitted that their client ought to be believed and the other party’s credit was impeached.
The wife’s Counsel said that the husband could only grudgingly find positives about the wife, in particular with regard to her parenting and in terms of her support of his career. A primary submission on behalf of the wife was that the husband had an obligation to disclose that he was in a class of beneficiaries under the discretionary trusts created by his mother and did not do so. I do not accept this submission. I found the husband to be straightforward and non evasive in his evidence and, from time to time, made concessions against his interests.
The husband’s counsel submitted that the wife was histrionic in giving her evidence. He submitted that she ‘demonised’ the husband and took available opportunities to attack him. Further, that the wife’s ‘fraudulent’ withdrawal of the funds from the joint CBA account, as discussed later in these reasons, was indicative of her untrustworthiness. The husband’s counsel submitted that the wife took issue with some of the history set out by the single expert in circumstances where the expert had a clear recollection of that part of their interview. The wife was not an impressive witness. Her demeanour was poor and she took many opportunities to minimise the husband’s contributions to the family and to expand her own. From time to time she prevaricated. She had a tendency to exaggerate. An example of this was in terms of her initial evidence that the furniture and furnishings that she brought into the marriage had a value of some $17,000.00[2] and in evidence in chief she said it had a value of over $20,000.00. The wife gives the husband very little credit for his contributions to the family. Furthermore, the wife engaged in fraud in order to procure funds from the joint account of the parties and in addition she took the benefit of monies mistakenly deposited into her account by the Department of Education in circumstances when she knew the deposit to be a mistake. These incidents cast further doubt on the wife’s credibility as a witness of truth, and as such her evidence is, from time to time, unreliable.
[2]Wife’s trial affidavit paragraph 7.
On balance I generally prefer the evidence of the husband to that of the wife, except where the wife’s evidence is supported by some objective facts.
Various Issues
The parties acknowledge that there is a scholarship to which money has been paid into and which has a value of about $17,421.00. The parties agree that this fund should be regarded as money on trust for the benefit of the children and should not be included as property of the parties. I have accepted their submissions in that regard. This means that some of the ongoing costs of the secondary and tertiary education of the children will be met in by this fund. It is not of great weight but it is a factor to which I have had regard in terms of the other factors.
There was significant debate as to the education of the children and the wife determined to adopt the view that the children attend I School notwithstanding the opposition of the husband. As I have said earlier, the husband has acquiesced to that approach.
The wife tendered in evidence a letter addressed to the husband from the Child Support Agency with the words “fuck off” scrawled across them. She said the husband sent the letter to her. The husband in his evidence said that he had received the letter and was quite upset by the level of child support and had written those words across it. He said that those papers were part of his private papers that were removed from his home in January 2006 at the time of the events set out in paragraphs 130 and 131 of his trial affidavit. In that regard I prefer the evidence of the husband.
There was an issue between the parties as to the husband’s threatening suicide to persuade the wife not to attend the former matrimonial home in N. The husband denies that allegation. It is clear that at least up to the end of 2003 the husband was anxious that the relationship between he and the wife and the children be restored. On balance, and in the absence of objective evidence supporting the wife’s allegation, I prefer the husband’s evidence that he did not make such a threat.
A preliminary issue was raised in the commencement of the hearing with regard to subpoenae issued to solicitors who held wills or copy wills of the husband’s mother. The solicitors who were the subject of the subpoenae objected to the production of those documents. The conclusion of that argument was to take place later in the trial. However, when it became clear that the husband’s mother had few assets, the wife’s counsel withdrew the request for production of the documents and as such the obligations by those solicitors to comply with the subpoenae will be discharged, and orders will be made accordingly.
Identification of property and its value
There are various issues about the identification of the property. Such property is:-
-Former matrimonial home
F property (‘[F]) agreed value[3] $420,000.00
-J property (“[J]”) agreed value[4] $190,000.00
[3] There is an issue as to whether this property ought to be transferred by the husband to the wife, the wife to the husband or sold at public auction. That issue is dealt with later in these reasons
[4] The husband wants this property transferred to the wife. The wife does not want this property.
- L property (“[L]”) agreed value $265,000.00
- Antiques in possession of husband, agreed value $113,520.00
- Antiques & paintings in possession of wife,
agreed value $ 37,200.00
- Balance of funds in joint CBA cash
management account, agreed value $ 18,000.00
- Partial distribution of property being
withdrawal of funds by wife from joint
CBA account on 20 September 2006[5] $ 7,900.00
[5] The amount of the withdrawal of $7,900 is agreed, but the issue is whether it is to be added back as an asset in the hands of the wife. For the reasons set out herein I have added this sum back as property of the wife.
- Husband’s Nissan Navara, agreed value $ 4,850.00
- Silver ingots, agreed value $ 2,400.00
- Husband’s Triumph motor cycle, agreed value $ 6,100.00
- Wife’s SAAB motor vehicle, agreed value $ 1,850.00
- Wife’s Camry motor vehicle, agreed value $ 1,400.00
- Husband’s interest in E Pty Ltd agreed value $ 3,446.00
- Husband’s interest in E Superannuation
fund, agreed value $167,495.00
- Wife’s R superannuation interest, agreed value $ 7,242.00
- Wife’s C Superannuation interest,
agreed value $ 38,909.00
- Further deduction by wife from joint CBA
Management account[6] $ 30,000.00
[6] The amount of the withdrawal of $30,000 is agreed, the issue is whether it is added back or not. For the reasons set out I have added back this sum as property of the wife
- Furniture and furnishings of the wife[7] $ 2,442.00
[7] The value of $2.442 is agreed and the wife’s unchallenged evidence is that of that sum all but $325.00 of the furniture and furnishings were acquired post separation. For the reasons set out I have included the whole of this property in the pool of assets
TOTAL ASSETS $1,317,754.00
Liabilities
- Westpac Equity access loan, agreed amount $9,610.00
- Loan to wife from Liberty Finance
on L property, agreed amount $221,157.00
- Husband’s Capital Gains Tax liability on sale
of M property, agreed amount $5,458.00
- Wife’s Capital Gains Tax liability on sale of
M property, agreed amount $5,200.00
- Wife’s liability to her father for loan on
L property[8] $ 70,000.00
[8] For the reasons set out I have allowed this liability
- Wife’s loan to father in respect of purchase
of Camry motor vehicle[9] $ 10,000.00
[9] For the reasons set out I have allowed this liability
- Interest claimed by wife as liability to her
father for the debts of $80,000.00[10] Nil
[10] For the reasons set out I have not allowed this alleged liability
- Husband’s loan from his mother $ 12,000.00
- Wife’s liability to Centrelink[11] Nil
[11] The wife claimed $1,500.00 in respect of this liability but for the reasons set out below I have not allowed that sum
- Wife’s MasterCard debt[12] Nil
- Wife’s G liability for furniture included in the
above assets[13] $ 2,300.00
- Wife’s dentist liability[14] Nil
- Wife’s liability to BC Mechanical Repairs[15] Nil
- Education Department debt[16] Nil
- Telstra debt $ 600.00
- Electrician[17] Nil
- Q Plumber[18] Nil
- DL Builder[19] Nil
[12] The wife claims $6,400.00 (up from $4,200.00 in her financial statement sworn 8 March 2007) I have not allowed that debt for the reasons set out below.
[13] I have allowed this liability for the reasons set out.
[14] For the reasons set out I have not allowed this claim
[15] For the reasons set out I have not allowed the $1,906.00 claim in this respect
[16] The wife claimed $1,800.00 and for the reasons set out I have not allowed that sum
[17] The wife claimed $950.00 and for the reasons set out I have not allowed that sum
[18] The wife claimed $3,470.00 for the reasons set out I have not allowed that sum
[19] The wife claimed $2,400.00 for the reasons set out I have not allowed that sum.
TOTAL $336,325.00
The value of all of the property is generally agreed. There are issues as to what should happen to the properties F and J, but there is agreement as to their present value. There is agreement between the parties as to the value of the antiques, the balance in the CBA cash management account, the motor vehicles, silver ingots, E Pty Ltd, superannuation and the wife’s furniture. There is an issue as to whether the CBA cash management “add-backs’ of $7,900.00 and $30,000.00 should be included as property of the wife, but there is no issue as to the amounts involved.
As to the liabilities there is agreement as to the Westpac Equity access loan, the loan to the wife from Y Company and capital gains tax liabilities. There is no issue as to the amounts of the advances of $10,000.00 and $70,000.00 to the wife by her father and of $12,000.00 to the husband by his mother. There was no issue as to the G liability of the wife of $2,300.00 or the Telstra debt of the wife.
Superannuation
Both parties have significant superannuation funds but the husband’s outweighs that of the wife. The parties both seek a no splitting order except than the husband submits that if the percentage division is at or near the level sought by the wife, then the superannuation should be split in accordance with the proposed property division. Bearing in mind the division I will put in place, I do not propose to make a splitting order although one of the other factors I have considered is the relatively large superannuation amount retained by the husband. I note that all three funds are accumulation superannuation funds.
F property
In respect of F property, the husband initially sought to retain that property although in submission his Counsel said that the husband would be content for it to be sold by auction provided both he and the wife were able to bid at the auction. The wife seeks the transfer of F property to her.
F property was purchased by X Pty Ltd (a property investment company which was apparently owned by the husband’s late father). It is agreed by the parties that the husband and wife occupied that property from 1981 or 1982 until X Pty Ltd transferred the property to the parties in 1992. The parties paid no rent whilst occupying the property and rates were paid by the X Pty Ltd. The transfer of the property to the parties was made without consideration and the expenses of the transfer were met by X Pty Ltd. This was a significant contribution by the husband’s family to the parties.
F property has been the matrimonial home of the parties since about 1981/1982, although the wife has not been in occupation of it on a regular basis since before the year 2000. It has been the primary residence of the husband since separation in 2000.
There is no issue that the value of that property is $420,000.00.
In paragraph 73 of her affidavit, the wife sets out her attachment to F property. In evidence, she conceded that the husband was also involved in the restoration and improvement work on that property.
The wife wishes to retain F property as she gives evidence that it is the home for herself and her children and is the place with which she identifies. The husband gave evidence that it is the home that was provided by his parents. The wife proposals are somewhat unclear, as she chose to live in Hobart from 1999 to date and the education of the younger child continues in Hobart, the wife’s evidence is also that the elder child will be attending University in 2008.
In any event I find that each of the parties have reasons to retain F property to themselves and it is difficult, and in the circumstances unjust, to prefer one party over the other. The wife is likely to remain in Hobart for the immediate future and the husband has occupied F property for many years. The elder child attains 18 later in 2007 and the younger child has been established in school in Hobart since 1999, the overwhelming period of her education so far.
Neither party will be seriously prejudiced if the home is lost to such party. The parties are both willing to acquire the property for $420,000.00 and with the proposed orders they will be free to bid at the auction of the property. If the property sells to either party or another buyer for more than $420,000.00 the party who loses out of the purchase is likely to have a proportion of the additional sale price to assist in the cost of re-housing that party.
Accordingly, I will order the sale of F property by public auction. On the evidence before me there are two willing buyers at $420,000.00 and the husband at one stage expressed a view that the property may have a higher value. The orders will provide that either party is able to bid at the auction. If one party or the other is successful then the transfer of the property to that party will be regarded as a transfer pursuant to the property orders.
I am conscious of the wife’s financial position and her need to put in place financial arrangements so that she is able to have a real opportunity to bid at the auction. As such I will delay the auction sale of F property by 5 months. This will enable the sale of J property and give the wife a reasonable opportunity to otherwise put in place financial arrangements so that she can bid on F property.
The wife sought an Order that she be allowed into F property during the sale period and for orders for the parties to undertake repair or renovation work on that property.
With regard to access to the property there are claims and counter claims about violence between the parties and there have been endeavours by the wife to resume occupation of F property. As recently as this year the wife sought exclusive occupation of the F property, notwithstanding her ownership of the L property and the children attending school in Hobart. To allow the wife to enter the home in the context of such a high degree of hostility between the parties would invite trouble with the risk of further allegations, further proceedings and further conflict. The husband has exclusively occupied the property since about 2004. There seems to be no serious issue that he has not kept it in fair condition, reasonable wear and tear excepted. The selling agent is able monitor the state of the property and orders can be made requiring the husband to keep the property in a clean and tidy state. The wife will be able to make enquiries of the selling agent as to the condition of the property.
The wife tendered a letter from W Property Group dated 17 May 2007[20] signed by Mr D (‘the valuer’) as to a repair of the eastern wing of F property. The valuer estimated the cost of repairs to the wing at between $6,500.00 to $8,500.00. The valuer was not called to give evidence and there is no evidence of his expertise. In his report he comments;
we are not Quantity Surveyors and therefore the following advice and estimate is not provided in the capacity as an “ expert”…
[20] Exhibit “W17”.
Therefore, I give no weight to the valuer’s estimate of the cost of repairs.
The evidence of the husband, which I accept, is that the problem with the turret has been evident since prior to separation and that he removed and commenced restoration of the window frames which will reduce the cost of remedial repairs. He has preserved the parts of the turret and window frames for re-installation. The impact of the work on the value of F property is not apparent on the evidence. What is apparent is the value of the property in its present state, under the orders both parties will have a right to bid and both are aware of the state of the building. The proposed order to repair the property will simply create another area for possible conflict between the parties, and as such I will not be ordering work to be done to F property.
J property
In the proceedings the parties agree that the value of J property is $190,000.00. This is a property which neither the wife nor the husband want to retain. The wife wants J property sold and the husband seeks orders that this property be transferred to the wife. The proposed transfer to the wife is opposed by her. It would be harsh to impose such an asset on the wife particularly when there is an effective alternative, such as sale. In the circumstances of these parties, the better solution is to order the sale of J property. Accordingly, I will make orders to that effect, including provision for payment of capital gains tax out of the proceeds of sale.
The parties are in agreement that on the sale of J property both parties will incur a tax liability as a consequence of the capital gains made on that property. The tax will be about $28,220.00 if the property is sold for $190,000.00. This amount will vary with any change to sale price, the inclusion of sale expenses and the respective incomes of the parties in the financial year of sale. As such, I accept the submission of the wife’s Counsel to put aside a sum of money for the payment of that tax in a similar form to the approach adopted by the Full Court in TWN & PAQ [2005] FamCA67. The order for sale will then include a division of the then net proceeds of sale in accordance with the general approach to property that I have determined in these reasons.
In coming to that determination in respect of property I have had regard to the agreed values of both F and J properties.
L property
In about January 2006 the wife purchased L property for about $280,000.00 which was financed by a loan of about $226,000.00 from Y Company and $70,000.00 from the wife’s father, making a total advance of $296,000.00. Of that sum $8,750.00 was paid in stamp duty and $131.00 in transfer fees. No satisfactory explanation was given by the wife as to the disposal balance of that sum. Some part was applied to legal costs but the evidence of the wife was that such amount was well less than $7,000.00. The wife said that part of the funds were applied for repairs to the house, yet only limited invoices and receipts were provided and amounts for a builder, a plumber and an electrician remain outstanding.
Counsel for the husband argued that the payment by the wife’s father ought not be treated as a debt but ought be treated as a gift by way of advancement. On the wife’s evidence I find that both the advance of $70,000.00 by her father and the earlier advance by her father of $10,000.00 for the purchase of a car were loans.
For a period of between 12 and 18 months prior to her purchase of L property the wife was leasing that property at a weekly rental of $240.00. Once she acquired the property she had a liability to Y Company of $389.00 per week (an additional sum of about $149.00 per week). In addition to this increase in her regular expenses the wife became liable for she rates, insurance and maintenance on the home. Some of the liabilities she claims arise from this decision to purchase rather than rent.
The decision to buy L property was made in circumstances where the wife was struggling to make “ends meet” and I find the wife had no serious regard to her financial circumstances in terms of this acquisition and I find that the wife was either negligent, wanton or reckless in that decision. The wife was, in the circumstances, profligate in that purchase. She put herself in a position where she was living beyond her means and the fact that she was unable to meet expenses did not seem to detract or deflect her once she had made up her mind. Her evidence was that it was to provide a secure home for the children pending the outcome of these proceedings, yet the wife put her financial security at risk with that purchase.
This purchase led the wife to be unable to meet all bills when they fell due. This can be seen in the claims for the balance of her dental accounts, mechanical repairs, electrician, plumber, and builder.
In terms of expenses for the home some documentation was provided from the wife[21]. Such documents as are produced show the following expenses;
[21]Exhibit “W6”.
2 Feb 2007
Q, Plumber – repairs to downstairs bathroom and alterations and tiling
$5,802.80
27 Feb 2007
H – quotation for removal of vegetation and soil from side of house
$4,800.00
20 April 2007
AP Electrical – repairs to lighting
$ 970.00
23 Feb. 2007
ME Electrical – supplies
$ 55.76
14 July 2006
WT Plumbing Centre
$ 70.00
29 Aug 2007
KS Glazing supply and fit mirror
$ 236.00
7 March 2007
KS Glazing supply and fit shower screen
$1,342.00
Mowing company
$ 49.50
Mitre 10
$ 598.00
September 2006 to March 2007
Miscellaneous hardware invoices and receipts
$1,134.40
Total
$15,058.46
.
In terms of a person who asserts she is struggling financially this expenditure is at odds with such assertion. This list does not include invoices for the debts alleged to Mr DL of $2,400.00 and Mr M of $950.00[22]. From the evidence I am unable to reconcile the invoice from Q the plumber of $5,802.80 and the debt to the same person of $3,420.00 in Part O of the wife’s March 2007 financial statement.
[22]In fairness the invoice from AP Electrical for $970 may be one in the same as the Mr M claim of $950
The documentation also contained an invoice from an auction company dated 13 March 2007 marked “paid” showing an amount of $1,800.00 for a “Teak Dining setting round table and 8 chairs”. This likewise sits uncomfortably with the wife’s claims about her financial circumstances. If the wife’s circumstances were as parlous as she deposed her purchase of this furniture would seem wanton or negligent.
In terms of the dentist the invoice shows expenditure of $5,610.00 as at 23 April 2007[23]. There are invoices for airfares to Melbourne totalling $437.00. What is not provided is the invoice for the outstanding dental work of $7,640.00 claimed in Part O of the wife’s financial statement filed 8 March 2007 nor an explanation or reconciliation as to the money the wife used after she withdrew $30,000.00 from the parties joint CBA account. The wife was asked to produce the invoices and accounts to provide objective support for her claims and the material she provided was of limited scope[24].
[23]Duplicate estimate of HL 24/4/2007 (prosthodontist) and $410 TS (periodontist).
[24]Exhibit “W6”.
The wife’s evidence about her dental needs are not completely supported by the invoices nor is there expert evidence about the need for such treatment, as I have said earlier I have concerns about the quality of the wife’s evidence. She says a part of the $30,000.00 was spend on dental treatment, the invoices show expenditure of $5,610.00 and the wife claims a further liability of $7,640.00. The wife ought not have the benefit of that liability set off against the asset pool. It is possible that it does not exist or if it does, it is not to the extent alleged by the wife. Further the need for this post separation expense has not been satisfactorily explained. If the debt is at that level it is up to the wife to satisfy the court both of its existence and need.
I find that the wife was negligent, reckless or wanton in respect of incurring such debts claimed in this paragraph I do not propose to treat the debts to the electrician $950.00, plumber $3,470.00, builder $2,400.00, wife’s MasterCard debt $6,400.00 and BC Mechanical repairs as liabilities against the assets. The debts were incurred in circumstances where the wife chose to live beyond her means or alternatively or additionally there is doubt about whether they exist at all or at the level alleged.
As to the MasterCard liability it has arisen post separation and at a significant rate. It has increased from $4,200.00 in March 2007 to $6,400.00 in May 2007. I infer this has occurred because of the wife’s continued rate of spending which was beyond her means and as such was wanton or reckless.
As to motor vehicle expenses, the wife owns 2 cars and she said in evidence that she only requires one car. She borrowed $10,000.00 from her father to buy the Camry, for which she paid $6,500.00. The balance of the loan, according to the wife, was used for upgrading or repairing that Camry (about $2,000.00) and for a trip for one of the children to Canberra.
The wife says she has not been able to sell the SAAB but keeps it registered and insured. I do not accept that the wife’s evidence that she is unable to sell the SAAB. In retaining 2 motor vehicles the wife incurs ongoing recurrent expenditure, which on the evidence is beyond her means and I find it is reckless and/or wanton. The invoices the wife provided to the Court disclose some of the costs in respect of the motor vehicles. These invoices total expenditure of about $1,700.00 between July 2006 and March 2007. Had the wife sold the SAAB on acquisition of the Camry much expense would have been saved. In her financial statement the wife claims a further sum of $1,906.00 due to BC Mechanical Repairs, although no invoice is provided for that alleged debt. I do not propose to allow that sum as a liability against the pool of assets.
The wife claims $6,000.00 interest due to her father on the debts of $70,000.00 and $10,000.00. No interest has been paid by the wife to her father and the loans are not documented. I accept that the loans themselves were made and that there is a liability to repay them. I do not accept that interest is payable. The wife’s father was in court on day one of the hearing and was available to give evidence and no evidence was provided by him. On that basis I infer that his evidence would not have assisted the wife in regard to her claim for interest.
I accept that since separation the wife has borrowed money to acquire some furniture. I propose to include the debt of $2,300.00 due to G Company, which is said to be a debt for furniture. The wife submitted that I ought not to include the value of majority of her furniture and furnishing (agreed value $2,442.00) as only $325.00 in value related to pre separation furniture and the balance of $2,117.00 was post separation furniture and furnishings. The wife cannot have it both ways, either all of the post separation furniture goes into the pool of assets together with the G Company debt (which created part of such asset) or all of the value goes out, together with the debt. At the end of the day it is six of one or half a dozen of the other. I will include the whole of the wife’s furniture and furnishings of $2,442.00 and the whole of the G liability of $2,300.00.
The wife claims a debt of $600.00 to Telstra and some invoices have been provided, I will include that liability in the pool.
The wife claims a debt due to the Education Department of about $1,800.00. This liability to the Education Department arose at a time when the Department inadvertently paid about $2,000.00 into the wife’s bank account. The wife said she knew that she was not entitled to the money, but, notwithstanding that circumstance, she spent the money in any event, I find this to be wanton and reckless. The wife had no insight into her behaviour in spending that money, it was not her money and she had no right to it, yet she took it and spent it and now seeks an outcome that the husband contribute to repayment of part of that amount.
The wife is required to repay the money to the Department and I accept that it is a debt due by her. However, I do not accept that it should be set off against the pool of assets, as it was incurred wantonly or recklessly. The wife was at the time otherwise in receipt of child support, income and government assistance. The wife’s explanation of her need for this money was ambiguous and I find that it arose out of the wife’s purchase of L property and general her inability to properly manage her finances.
There is a claim by the wife to include a liability to Centrelink of about $1,500.00. The evidence of the wife was that after separation she was receiving higher Centrelink benefits at a time when child support payments from the husband had not come through. She subsequently received a lump sum child support payment to cover the period when it was payable but delayed, apparently as a result of bureaucratic issues within the Agency. She applied the lump sum for living expenses and did not put aside part of the lump sum aside to meet the Centrelink liability. The Centrelink liability ought not to be set off as it was a liability, which was in the power of the wife to repay, but she did not do so, and her approach was negligent, wanton or reckless. It would be unjust upon the husband to effectively impose a proportion of this payment upon him, which would amount to a double dipping in terms of his then child support obligations.
The parties sold a property at M (‘[M property]) in about November 2003. The proceeds of sale, which I find on the evidence of the husband, amounted to about $88,000.00. That sum was paid into a jointly controlled CBA cash management account. The parties agreed that this money was to be used for the education expenses of their children. The account was set up so that withdrawals could only be made with the authorisation and signatures of both parties.
In October 2006 the parties had agreed to a withdrawal of $1,080.00 from the CBA account. The husband prepared a withdrawal slip for $1,080.00 to pay some expenses, as agreed between the parties. He gave or sent that withdrawal slip to the wife.
The wife improperly altered the withdrawal slip provided to her by the husband by converting the withdrawal amount to $31,080.00, thus increasing the amount withdrawn by $30,000.00. The wife took this $30,000.00 from the CBA account without the husband’s knowledge and without his consent and used that money for her own purposes. The wife did not dispute the circumstances of the withdrawal as alleged by the husband. Her reasons were that she said she needed the money. It is significant that this event occurred after the wife had purchased L property. The wife took and used this money despite the agreement that it was to be used for the education of the children.
It was submitted to me, on behalf of the wife, that her admission in regard to the alteration of the withdrawal slip should be seen as a factor in support of her credit. I do not accept that submission. I find that the wife used the $30,000 for her own purposes.
The wife said she used that $30,000.00 to;
oPay for dental work. In that regard, I repeat the comments made earlier in these reasons as to the invoices and the lack of evidence as to the cost of the dental work and the need for such work.
oReduce her MasterCard liability of about $5,500.00.
oRepay a Commonwealth Bank loan of about $8,500.00, which the wife says was a loan taken out to meet living expenses subsequent to separation.
oRepay money she says she borrowed from the children’s accounts of about $500.00.
The documentary evidence in respect of the use of these funds is limited and the wife has had reasonable opportunities to provide it to the court and the husband.
I find on her evidence that the wife had earnings of about $20,814.00 in the 2004/2005 financial year, in addition she received parenting benefits of about $7,000.00 and child support in excess of $20,000.00 in that year. In the 2005/2006 financial year the wife had earnings of about $23,000.00 plus she was paid parenting benefits of about $6,241.00 and was paid in excess of $20,000.00 in child support. Her annual net income over each of those two years was around $50,000.00.
In the 2006/2007 financial year the evidence is that the wife worked most of the final two school terms full time, she has done little paid work in 2007. I find that her income, government benefits and child support in the 2006/2007 financial year will be about $50,000.00. For reasons set out later, I find that the wife has a good working capacity. The school fees and some expenses for the children were paid, at least in part, out of the CBA account.
I do not accept the accuracy of the wife’s explanation as to how she disposed of the $30,000.00. Even if I had accepted her evidence as to the expenditure, there is the underlying failure of the wife to live within her means. That circumstance should not be visited upon the husband. What the wife did was to distribute to herself an asset in which the husband had a legitimate interest.
Taking all of those factors and facts into account, the $30,000.00 will be added back into the pool as an asset of the wife, as being a premature distribution to her.
In September 2006 the husband agreed to a withdrawal of $7,900.00 to enable the wife to pay some of her legal fees and expenses for an expert report. The husband says, and I accept, that it was agreed that the wife would repay the sum from her share of the property settlement. The wife objects to the amount being included as an asset of hers on the basis that the husband paid some of his legal fees from his post separation income.
Counsel for both parties indicated, and I accepted, that legal costs of each of the parties were about the same. The husband has paid some of his legal costs from his income and borrowed money shortly before the trial to fund the trial. I find that the wife either owes money to her lawyers or has applied other funds for that purpose. The wife has had the use of the sum of $7,900.00 from the CBA account and in fairness it should added back, and I will do so. This again is a premature distribution of an asset to the wife, in this case it was done with the husband’s consent but on the basis that it would be added-back.
Each of the parties has incurred a tax liability arising out of capital gains made on the sale of M property. The husband’s capital gains tax liability is agreed at $5,458.00 and the wife’s capital gains tax liability is agreed at $5,200.00. The husband gave evidence that shortly before the hearing he borrowed some money and paid out this tax liability and other liabilities. I accept that he, therefore, still has a debt of $5,458.00 but it is now with a financial organisation. I am satisfied that the CGT debts arose out of the sale of M property and such debts should be accepted as liabilities for the purposes of the proper identification of the property.
Husband’s loan from his mother
The husband borrowed $12,000.00 from his mother, this loan was documented between the husband and his mother (“mother’s loan”). The money so borrowed was applied by the husband to repay a debt due by him to E Pty Ltd, (“the company loan”), a company owned by the husband. The mother’s loan paid out the company loan. The company loan was made by the company to the husband, it was a liability of the husband and an asset of E Pty Ltd. The repayment of the company loan was needed because that loan by E Pty Ltd to the husband would have been a deemed dividend to the husband if not repaid on or before 30 June 2006. This would have created taxation liabilities in both the husband and his company.
If the company loan made by E Pty Ltd had not been repaid then the value of that company would have included the asset of the $12,000.00 loan to the husband, and the husband would have, conversely, had a liability of $12,000.00 due to the Company. With the repayment of the company loan, the company has the $12,000.00 as part of its assets and the husband now owes $12,000.00 to his mother. There is no overall change.
I accept that the $12,000.00 loan is a liability of the husband to his mother. I find that the husband is not making loan repayments and I find that he is unlikely to pay interest on the loan. I find the loan is a liability to be taken into account for the purposes of the proper identification of the property.
The S and N Trusts
There are issues between the parties about the characterisation of two trusts created by the husband’s mother. Two trusts were created from assets provided by the husband’s mother. I find that no funds of or from the parties form any part of the assets of these trusts, on the evidence all of the assets of the trusts came from the husband’s mother or the estate of her late husband, or entities controlled by them. The trusts are the S Trust (“[S Trust]”) and the N Trust (“[N Trust]”).
The wife claims that the husband has entitlements to assets and/or income from either one or both of the trusts, the amount of which is not clear. Her counsel submitted that the assets of the trusts should be treated in full or in part as property in the hands of the husband or they are otherwise available to him. Alternatively, the wife submits that the assets and income of the trusts or either of them are financial resources available to the husband.
S Trust is a trust created by a Deed of Trust dated 18 May 2004.
S trust was created after the death of the husband’s late father. I find that S Trust was created at a time when it was planned that the husband’s mother was to move to N and live in assisted care.
W Pty Ltd is the trustee for S Trust. W Pty Ltd is a company whose shares were owned by the husband’s parents. I find that it is a company in which the husband had no interest. The shares in that company were owned by the husband’s late father and/or his mother and were assigned to and are now owned by the husband’s brother. He is now a director and sole shareholder of W Pty Ltd. He is also the “principal” of the S Trust and under the S Trust deed he has the power to appoint and remove trustees, he has effective control of the trust.
The husband gave evidence that he was a director of W Pty Limited in the 1980’s when it owned F property but has not been a director since F property was transferred to the parties in about 1991 or 1992. The husband treated W Pty Ltd as the same entity as X Pty Ltd.
The primary beneficiaries of S Trust are, W Pty Ltd, the husband’s brother and the husband. The husband’s brother gave evidence that the husband was not to be a primary beneficiary in S Trust and that his inclusion as a primary beneficiary was made in error. The husband’s brother said that he had arranged for the husband to be removed as primary beneficiary, and produced a document prepared by his accountant. I am not sure that such document had the desired effect.
There are secondary beneficiaries of S Trust, and these include relatives of the primary beneficiaries, including spouses and children.
The trust has two capital beneficiaries, namely the children of the parties to these proceedings. The capital of the trust is reserved to the children of the parties including, if the trustee so determines, a parent of a capital beneficiary. The power to pay capital to the parent of a beneficiary by the trustee ceases when each of the children attains the age of eighteen years. There is no evidence that a capital payment has been made to either of the children nor is there any evidence of payments of capital or income to the parties to these proceedings. There is provision for distribution of the income to the parties’ children and to the other beneficiaries.
Clause 4 and 5 of the S Trust set out how the capital of the trust is to be disbursed. The trust provides that on termination the trust fund shall vest in the children of the parties. That date is set out in the definition section of the trust deed as the “perpetuity period”.
Clause 5.1 of the S Trust deed provides:
The Trustee shall have and may exercise in its absolute discretion and at any time and from time to time prior to the perpetuity date, power to pay or apply the whole or any part of the Capital to or for the benefit of all or any one or more exclusively of the others of the capital beneficiaries, and/or the income for the benefit of all or any one or more exclusively of the others of the income beneficiaries then living or in existence and in such proportion and manner as the trustee shall think fit.
Clause 5.2 of the S Trust deed provides:-
Where any Beneficiary has chosen by the Trustee has not attained the age of Eighteen (18) years, the Trustee may pay such amount or thing by payment to the Beneficiary or his parent, guardian or to a bank account in the name of the Beneficiary and/or the parent or guardian of such Beneficiary, and the receipt of such Beneficiary, parent, guardian or banker shall be a good and sufficient discharge to the Trustee and the Trustee shall not be bound to see to the proper application of such amount or thing.
In essence the trust deed provides that capital is payable to the capital beneficiaries and, in the absolute discretion of the trustee, the parents of the capital beneficiaries whilst the capital beneficiaries are under the age of eighteen years. The elder child attains the age of eighteen years later in 2007. The younger child attains the age of eighteen years in June 2013.
I find that it is possible but unlikely that the income will be available for distribution to the husband and the wife, but that the trust is primarily set up to provide the capital for the benefit of the parties’ children.
The wife did not seek to join the husband’s brother, W Pty Ltd or the children as parties to these proceedings. That issue was raised with the wife’s counsel during the hearing.
The N Trust was created on 31 May 2004 and the husband’s brother is the appointer. W Pty Ltd is the trustee. I find that the husband’s brother has effective control of N Trust. The primary beneficiaries of that discretionary trust are the husband’s brother and his wife. The husband, the wife and their children fit within the definition of general beneficiaries under that trust deed of this discretionary trust. The pool of “general beneficiaries” is quite large as is generally the case in such trusts. There is no evidence that the husband, wife or children have had any benefit from N Trust, except as set out in these reasons. I find that both the husband and wife are in a class within the definition of general beneficiaries. I find that it is unlikely that either party to these proceedings will receive any capital from the N trust and that neither of the parties has any legal or equitable right to the trust’s capital or income[25]. I find that in the particular circumstances of this case the inclusion of the husband as a general beneficiary in this discretionary trust does not give the husband any interest in the property contained within the trust nor does the trust constitute a financial resource of the husband.
[25] See clauses 7 and 13D of the N Trust deed, annexure “B” to the affidavit of the husband’s brother filed15 May 2007.
N Trust had all of its assets provided by the husband’s mother and/or the estate of the husband’s father or entities controlled by them. There has been no intermingling of funds with those of the parties and I find that the husband has not at any time exercised control over the trust, except in the capacity of an ‘errand boy’ for his brother when he was overseas. Prior to June 2005 the husband’s brother went to live overseas with his family and asked the husband to undertake some day-to-day duties with regard to both the trusts. The overall management of the trusts remained with the husband’s brother. He returned to Australia in late 2006 and has resumed day-to-day management of the trusts and W Pty Ltd. There is no evidence that the husband received any benefits from the trust and there is no evidence that he used any assets in the trust except the airfare referred to later in these reasons.
From the evidence it appears that W Pty Limited as trustee for the two trusts has shares in a number of public companies including BB Limited, PT Limited, FW Limited, NS Limited, SB Limited and ET.
W Pty Ltd, as trustee for the two trusts owns two warehouses in N. W Pty Ltd as trustee for S Trust has about $546,000.00 invested in a bank and as trustee for N Trust has about $468,000.00 invested with a bank. The trusts each have assets in the form of the bank accounts, interest in the warehouses, and shares in public companies. The precise asset value of each trust was not available to me, but on the evidence provided I infer that each trust has assets in excess of $700,000.00.
As I have said earlier, I find the trusts and the properties are controlled by the husband’s brother. The husband has from time to time assisted his brother in minor capacities in terms of managing the assets of the trusts.
The only benefit the husband has received from one of the trusts was the cost of airfare from Tasmania to Queensland to attend his uncle’s funeral in 2006. This was the funeral of his father’s brother and permission for use of the funds for the airfare was given by the husband’s brother.
The husband’s mother has few assets, almost all of the assets previously owned or controlled by her and her late husband were placed into the two trusts.
The husband’s brother gave evidence, which I accept, that the primary purpose of creating the trusts was to enable the husband’s mother to receive social security benefits in the circumstances of her failing health and her need for assisted care. This was done after consultation by the husband’s brother with Centrelink.
There was a document produced by the trust accountant[26] which said that the primary intent was to enable the husband’s mother to obtain a pension and the other intent was to ensure the wife did not receive any benefit from her estate. This later intent was not accepted by the husband’s brother, who gave evidence that the accountant did not have such instruction, I accept his evidence in that respect. However, even if it was the case, the husband’s mother is entitled to disperse her estate as she thinks fit. If the husband’s mother wishes to ensure that the wife receives none of her estate the husband’s mother is entitled to do so.
[26] Exhibit “W9A”.
There seemed to be some issue as to the capacity of the husband’s mother. However, parts of the materials before me are Powers of Attorney which were signed by the husband’s mother in 2005 in the presence of a solicitor. In the light of theses facts I am entitled to infer that these documents were created in accordance with the law and in circumstances where the husband’s mother had capacity.
The husband was cross-examined as to monies used in the sum of $3,000.00, on one occasion and another similar sum on another occasion. The husband gave evidence, which I accept, that this money was the husband’s brother’s money and was used to pay for spraying blackberries and other agricultural purposes on his brother’s rural property. This was done in accordance with the directions from the husband’s brother.
There was a payment in 2006 to the husband out of his mother’s bank account or on behalf of his mother for a birthday present to the husband of $500.00 which the husband says he transferred at his mother’s request for that purpose. I accept the husband’s evidence in that regard.
The wife claimed that the husband’s father created an educational trust for either one or both of the parties’ children. I find that the husband’s late father paid some education expenses for his granddaughter, K. In the husband’s father’s will[27] he proposed that an education trust be established for the elder child after his death. The creation of this testamentary trust was subject to the husband’s mother predeceasing him. She did not predecease him and the whole of the husband’s father’s estate passed to her, with the exception of a motor vehicle, accordingly the educational trust was not created.
[27] Exhibit “W4”.
The wife was given leave to file an affidavit of Mr Y. His evidence was about an educational trust he believed the husband’s brother had created, although no detail of the trust was provided. There is no other evidence of a trust being created for the education of the parties’ daughter or money being put aside for that purpose, except for the proposed testamentary trust under the will of the husband’s late father. As such I infer that the education trust referred to by Mr Y is that proposed in the will of the husband’s father. The final paragraph of Mr Y’s affidavit is framed in such a vague way such that it can be given no weight. It cannot be said that it implies that the wife was to be included or excluded from the husband’s late father’s estate. Mr Y’s association with the family ended in about 2000.
At or about November 2003 the husband’s mother, in consultation with the husband’s brother, determined to move from Queensland to retirement accommodation in the N area. To facilitate that move and to entitle her to a pension she transferred the majority of her assets to the two trusts. Mr RO, a principal of AN Accountants, who assisted in the creation of the trust and the transfer of the assets and in a file note observed that:
Trust restructure – it is proposed that two trusts be formed, one for [the husband] and one for yourself. Initially you will be the appointer of primary beneficiary on both trusts, however on resolution of [the husband’s] matrimonial problems you would retire from [the husband’s] trust handing control to him. You would need to update your will and [the husband’s], possibly hold a power of attorney in relation to his proposed trusts.
The husband’s brother denied that this reflected the instruction given to the accountant and said that such comment was neither his proposal nor that of the mother. Mr RO’s file, with exhibit W9A was available for inspection by the parties and Mr RO was not called to give evidence. I accept the husband’s brother’s evidence in that regard. I find that the two trusts, N Trust and S Trust were created by the husband’s mother to divest her of assets so that she could receive Centrelink benefits. This appears to have been done with the knowledge of Centrelink and appears to have been done lawfully[28].
[28] See letter emailed to Mr TB - Exhibit “W9A”
The husband’s brother gave evidence in accordance with his affidavit. His evidence was straightforward and he made concessions against interests and I accept his evidence to be truthful. He obtained independent advice in respect to the trusts and I find that he arranged to set up the trusts without discussion with his brother (the husband) and were set up in a way that the husband’s brother believed was appropriate for his mother.
I am satisfied that the husband’s brother retains control of the trusts for the eventual benefit his family in terms of N Trust and for the eventual benefit of the parties’ daughters in the case of S Trust. I find that the capital of the trusts is likely to be preserved by the husband’s brother whilst the husband’s mother is alive.
In terms of the relationship between the wife and the husband’s mother I am satisfied it was not a good relationship and in that regard I prefer the evidence of the husband and his brother to that of the wife.
The husband and his brother both gave evidence, which I accept, that the wife made requests direct to the husband’s mother for expenses for the children of the marriage, which included horse riding, airline tickets and theatre tickets. The husband’s brother’s evidence, which I accept, was that he was concerned about the impact of those demands upon his mother and he stopped them. It being within his power and that of the husband’s mother to make that decision. I accept evidence of the husband’s brother and the husband that the husband did not request or induce the husband’s brother or the husband’s mother to reject the wife’s request for education funding.
Considering all of the evidence with regard to the trusts and the company I am not satisfied that it is a financial resource available to the husband. I find that the husband, and for that matter the wife, are discretionary beneficiaries under the deeds of trust but and neither have control of such trusts. Whilst it is possible for the husband to receive monies under either the S Trust or the N trust this is at the absolute discretion of the husband’s brother or his alter ego, W Pty Ltd.
In particular, given the purpose of the S trust and, on the evidence before me of the husband’s brother’s unfailing compliance with this purpose, I find that there have been no payments to the husband (except perhaps the airfare referred to above) from the trust and I find that it is unlikely that any payment will be made to him. Further, I find that if the husband were to be paid any money from this trust it would be to enable husband to disburse such payment for the children or either of them bearing in mind their place as capital beneficiaries. If some capital of the S Trust were disbursed to the husband for his own purposes it may well be that such distribution would constitute a breach of the terms of the trust deed bearing in mind the entitlements of the capital beneficiaries under that trust, namely the parties’ children.
With regard to N Trust I find that this trust has been set up for the eventual benefit of the husband’s brother and his family. Given the management of the trust to date, the discretionary nature of the trust and the large number of general beneficiaries I find and that it is possible but unlikely that the husband, the wife or their children will receive benefits from that trust, there is no evidence that this technical possibility can be relied upon. Any monies the husband may conceivably receive from the N Trust would be akin to a general gift made by the husband’s brother in the absence of any trust, rather than by recourse to a financial resource in the hands of the husband.
The facts in this matter are distinguishable from the majority of family law proceedings involving discretionary family trusts. Typically when discretionary trusts are involved in family law proceedings one of the parties is the appointor and, frequently, that party is also a director or major shareholder in the Trustee company. In such scenarios, the requisite degree of control may be established relatively easily. This is a significant distinguishing factor from the present case, where there is little evidence that the husband has or will have control of either of the trusts. Such evidence as exists, viz the note from Mr RO, exhibit W4, is not persuasive.
Peter Trimbos and Michael Taussig QC[29] state;
Under a discretionary trust the beneficiaries as a group are entitled to the entire trust property but an individual beneficiary has no entitlement to any part of the trust property. Trustees of discretionary trusts have wide powers as to the distribution of trust property between beneficiaries and, indeed, whether any distribution is made at all. The nature of discretionary trusts means that an individual's interest to share in the trust property cannot be valued until it has vested.
[29] Peter Trimbos and Michael Taussig QC, “Trust Busters: Does the Family Court Ignore Trusts?” (Paper presented at the 11th National Family Law Conference, Gold Cost, September 2004).
There is general duty of parties to make a full and frank disclosure of their financial circumstances which specifically includes a positive obligation to disclose any interest in a trust. Subrule 13.04(1)(f)(iii) of the Family Law Rules 2004 requires each party to make a full and frank disclosure of their financial circumstances including any trust “of which the party, the party's child, spouse or de facto spouse is an eligible beneficiary as to capital or income”.The notation in rule 13.01 states that “failure to comply with the duty may result in the court excluding evidence that is not disclosed or imposing a consequence, including punishment for contempt of court”. It would appear that neither of these consequences would assist the determination of a just and equitable property division in this case. In the particular facts of this case the entitlement to a benefit under either trust is remote as to not fall into that category envisaged under the rules.
Even if there is a technical breach of the rules by the husband, and presumably by the wife, in the particular circumstances of this case such breach is of little consequence.
The available options for taking a party’s interest in a discretionary trust into account in determining a final property division are:
-As property of the parties or either of them;
-As a financial resource of the parties or either of them; or
-Under s 75(2)(o), as a other fact or circumstance which the justice of the case requires to be taken into account.
The Full Court held in Harris and Harris[30] that in determining the nature of the relevant party’s interest in a trust “it is necessary to consider the trust deed in the light of the relevant factual circumstances”[31]
[30] Harris and Harris (1991) FLC ¶92-254.
[31] Harris and Harris (1991) FLC ¶92-254 at 78,706.
Trimbos and Taussig discuss the definition of ‘property’ and whether an interest as a beneficiary to a discretionary trust qualifies. They state:
In a family trust situation the parties have apparently divested themselves of beneficial interest in all or part of their assets, notwithstanding that one of them (usually the husband) has retained effective control over them. Effective control over assets, not based on enforceable legal right, arguably cannot be described as a right of property; nor does the control of a trust through a power of appointment amount to an interest in the asset of the trust itself. Thus in Stacy (1977) FLC 90-324 the interest of the beneficiary under a discretionary trust was held not to be property within the meaning of the Act and therefore could not directly become the subject of a section 79 order; see also In the Marriage of Spellson And George (1989) 13 FamLR 242 at 253 per Murray J.
If the interest of a beneficiary of a trust is vested, then it is clearly the property of that beneficiary. However in the normal family trust arrangements the entitlement of a beneficiary is dependent on the trustee exercising discretion in his or her favour. The beneficiaries have no enforceable rights, other than their right to have the trust properly administered. Therefore their interests are essentially contingent. Accordingly the assets of the family trust are not strictly "property of the parties to a marriage or either of them" within the meaning of the Act, and the Family Court is limited in its ability to make orders directly in relation to them.”[32]
[32] Peter Trimbos and Michael Taussig QC, “Trust Busters: Does the Family Court Ignore Trusts?” (Paper presented at the 11th National Family Law Conference, Gold Cost, September 2004).
In the facts of this case the assets of the trusts were never property of the parties and as such they have not divested themselves of property into the trusts, and as I have found above, the husband exercises no control in regard to these trusts.
The court may still, however, categorise a party’s interest as a beneficiary in a discretionary trust as a financial resource available to that party. In Crapp and Crapp[33] “financial resource” was considered a “widely embracing” term which indicated “a source of financial support which a party can reasonably expect will be available to him or her to supply a financial need or deficiency”.[34] In Kelly and Kelly (No 2),[35] the Full Court upheld the principal enunciated in Bailey and Bailey[36] that –
a beneficiary in a discretionary trust who has no legal control over the trustee, but who has reasonable grounds to expect that the discretion will be exercised in his or her favour has to that extent a ''financial resource''.[37]
[33] Crapp and Crapp (1979) FLC ¶90-615.
[34] Crapp and Crapp (1979) FLC ¶90-615, 78,183.
[35] Kelly and Kelly (No 2) (1981) FLC ¶91-108
[36] Bailey and Bailey (1978) FLC ¶90-424
[37] Kelly and Kelly (No 2) (1981) FLC ¶91-108, 76,803.
In Makita, Heydon J noted that an expert whose opinion is sought to be tendered should differentiate between the assumed facts upon which the opinion is based, and the opinion in question: Ramsay v Watson[41]; Arnott’s Ltd v TPC[42].
[41] (1961) 108 CLR 642.
[42] (1990) 24 FCR 313 at 347-348.
He also noted that the provisions of s.79 would often have the practical effect of emphasising the need for attention to requirements of form. By directing attention to whether an opinion is wholly or substantially based on specialised knowledge based on training, study or experience, the section requires that the opinion is presented in a form which makes it possible to answer that question.
Heydon J said that the above statement of the law corresponds with the views of Black CJ, Cooper J and Emmett J in Ocean Marine Mutual Insurance Association (Europe) OV v Jetopay Pty Ltd[43], where the justices said:
[43] 2000 FCA 1463 at 21-23
"21. The primary judge considered that it was permissible to examine the reports and draw inferences from the form and contents of them. His Honour considered that it was permissible to take into account:
· the factual context in which the report was produced;
· the description and designation of the person making the report;
· the contents and language of the report and the nature of the assertions made in it;
· the form of the report;
· the expressed qualifications of the person making it as set out in the report.
"22. However, it is not permissible to conclude from those matters alone that an author of a report has any specialised knowledge, except to the extent that the report states (or it otherwise appears from admissible evidence) what that knowledge is. Nor is it permissible, by reason of those matters alone, to conclude that any specialised knowledge that the author of a report has is based on any training, study or experience of the author. Thus, it is not permissible to conclude, simply because a person expresses an opinion on a particular subject, referring to particular technology, that that person has any specialised knowledge in relation to that subject. There must be specific evidence as to specialised knowledge of the person in relation to that subject and as to the training, study or experience upon which that specialised knowledge is based.
"23. The further requirement that an opinion be based on specialised knowledge would normally be satisfied by the person who expresses the opinion demonstrating the reasoning process by which the opinion was reached. Thus, a report in which an opinion is recorded should expose the reasoning of its author in a way that would demonstrate that the opinion is based on particular specialised knowledge. Similarly, opinion evidence given orally should be shown, by exposure of the reasoning process, to be based on relevant specialised knowledge."
Heydon J noted that the last quoted paragraph had been applied by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd 2001 NSWSC 123 at 19, and summarised the application thus:
"Evidence not complying with the principles described in it might be inadmissible as irrelevant (s.56(2)), as not complying with s.79, or on discretionary grounds (s.135)."
In his analysis, Heydon J added:
"There is no doubt about Professor M's authority, experience, qualifications and skill. It is also the case that Professor M's report is quite lengthy and detailed. But, given that the court is not obliged to take the opinion of an expert as conclusive even though no other expert is called to contradict it, can it be said that Professor M's report goes beyond a series of oracular pronouncements? Does it usurp the function of the trier of fact? More vitally, did it furnish the trial judge with the necessary scientific criteria for testing the accuracy of its conclusions? Did it enable him to form his own independent judgment by applying the criteria furnished to the facts proved? Was it intelligible, convincing and tested? Did it go beyond a bare ipse dixit? Did it contain within itself materials which could have convinced the trial judge of its fundamental soundness?"
The Full Court of the Family Court in Re W and W [44] considered the nature of an expert's report where the facts upon which the opinion was based were impeached to the extent that the report demonstrated bias and thus little, if any weight, should have been attached to the opinion. In this case, involving allegations of child sexual abuse, the expert had not seen either of the parties nor the children, and had stepped out of the role of an expert witness and assumed the role of advocate for the husband. In their joint judgment, Nicholson CJ and O'Ryan J discussed at 157-165 principles to be borne in mind when dealing with expert evidence, and at 192 -193 argued for reform in the area of expert evidence.
[44] (2001) FamCA 216.
I am concerned about the history provided by the wife to the experts. I find that Dr T’s analysis of the wife and her condition is better based than that of Dr E. Accordingly, and having regard to all of the evidence I prefer the findings of Dr T and find that the wife is able to work part time or full time as a teacher.
Notwithstanding that finding, I accept that the wife’s health is problematic and that she does not have the income earning capacity of the husband. I do not accept her submission that her income earning capacity is severely restricted but I do find that it is moderately restricted.
Counsel for the wife submitted that she does not have the benefit of permanent income, cash, real estate and financial resources presently available to the husband. In terms of income, I will be making an adjustment in respect of the other factors but otherwise the wife will have a significant capital amount as a consequence of these orders that pool of assets will be larger than that of the husband. The wife will have a significant capital pool from which she will be able to house herself.
Included in the capital to be retained by the husband will be his superannuation entitlements to which he will not be able to access for some years into the future.
The wife submits that she has a need to provide for the children, particularly the younger daughter for a number of years to come. I accept that the wife will have the care of the younger daughter for some years to come, but her care and control of the elder daughter, within the meaning of s75(2)(c) of the Family Law Act will end later in 2007. The parties have put aside funds for the children in forms of scholarships and the proceeds of the sale of the investment property and the husband has paid child support since separation. The CBA investment fund will not remain available due to the orders that I will make. I give some weight to the wife’s ongoing care of the children.
In terms of the elder child, from the end of 2007, her expenses may be assisted by way of the scholarship funds. Both the elder child and the mother have entitlements to seek ongoing adult child maintenance for the elder child, if the circumstances warrant and if she undertakes tertiary education. This is not to be seen as an encouragement or discouragement to that course.
The wife has the commitments to support herself and the children and, with the aid of child support and her ability to work in paid employment as a teacher, she is able to support herself and the children.
Neither of the parties has re-partnered, and as such they have no responsibility to care for any other person apart from themselves and the children of the marriage.
The proposed orders do not have any impact on the earning capacity of the parties to the marriage and I have had regard to the child support which the husband has provided and is to provide for the children.
The standard of living of both parties in their respective circumstances is reasonable, subject to the wife taking effective control of her finances and her spending.
This is a long marriage but in circumstances where the wife has developed and maintained employment skills throughout that time. Her ability to earn income is somewhat diminished by her health but not to the extent to which she asserts.
The wife submits that the Court ought to have regard to the father’s alleged failure to make disclosure of the financial circumstances in particular the trust. I have made comments in relation to that earlier in these reasons and I reiterate those comments.
The wife will be able to continue in her role as a parent for both children, notwithstanding that she will need to find either full time or part time employment.
The husband submits in relation to other matters there should be a contribution in favour of the wife in of 5%. Having regard to all of the facts in respect of the other factors I am not convinced that five per cent is an appropriate adjustment in favour of the wife.
The wife submits that there should be an adjustment in her favour in respect of the other factors to the extent of thirty per cent, on balance that seems somewhat high.
Having regard to all of the facts, findings and inferences in these proceedings and all of the other factors, including those under s75(2) of the Family Law Act, I determine there ought to be an adjustment made in favour of the wife at a rate of 15%.
A review of the outcome against a just and equitable requirement
I have had regard to the contributions and other factors and the net property should be adjusted so that the wife receives 55% and the husband receives 45%.
I take into account the contributions made by the parties including that the husband took his work seriously. He took whatever jobs he could and that sometimes meant he was away from the home. His evidence, which was unchallenged, was that when he was away he stayed at cheap hotels. I accept that evidence. I also accept the evidence that over the period he was away about one day and one night in seven after the children were born. From time to time this involved a series of nights when the husband was away.
There was an issue as to the wife’s move to Hobart in late 1998 or early 1999. The husband agreed that he did not want the wife to move to Hobart. He was ambivalent about the type of education provided by I Schools but his wife insisted and moved to Hobart. The husband’s objection, which I accept, was that it would add considerably to the cost of maintaining two homes. However, he agreed the children would remain in Hobart with the parties until the end of 1999. His work in Hobart was completed in September 1999 when he found work in the N area and returned to N in the anticipation that the wife would return with the children in late 1999 early 2000. I accept his evidence in that regard. From that time the wife has, to all intents and purposes resided in Hobart although she initially visited N regularly on weekends.
The husband has earned considerable income through his working life and has paid child support in accordance with that income. There have been disputes between the parties as to the level of child support but that has been determined by the Child Support Agency.
Neither party sought a splitting order in relation to superannuation if they achieved the outcomes that they sought. The husband submitted that if an adjustment were made more in line with the orders sought by the wife then the court should consider a splitting order. After considering all of the issues in these proceedings I have determined to maintain one list of assets and leave the husband’s superannuation of about $167,495.00 with him and the wife’s superannuation of about $46,000.00 with her. This leaves the bulk of the superannuation with the husband and I have had regard to that fact in reaching the conclusion I have in respect of these proceedings.
The effect of these orders will mean that the home at F will be disposed of for $420,000.00 or more. Both parties expressed a desire to purchase the property at that price. The net equity of that property after payment out of the Westpac Equity Access account will be about $410,000 with the wife receiving, in property or in money (depending on whether she acquires the property at auction) about $225,500.00 and the husband receiving about $184,500.00 from that property. The property at J should be sold for about $190,000.00. This would mean the wife receiving about $104,500.00 and the husband receiving about $85,500.00.
Included in the adjustment will be an order that the wife retains the following property:-
- L property $265,000.00
- Antiques & paintings situated at
L property $ 37,200.00
- Partial distribution of property
being withdrawal on or about
20 September 2006 $ 7,900.00
- Partial distribution to wife being
withdrawal from CBA account or
or about October 2006 $ 30,000.00
- SAAB motor vehicle $ 1,850.00
- Camry motor vehicle $ 1,400.00
- Wife’s R superannuation interests $ 7,242.00
- Wife’s C superannuation interests $ 38,909.00
- Furniture and furnishings of wife $ 2,442.00
- Balance held in joint CBA account $ 18.000.00
TOTAL $409,943.00
I have taken into account the following liabilities which will remain with the wife:-
- Loan on L property $221,157.00
- Capital gains tax on sale of Mproperty $ 5,200.00
- Housing loan from wife’s father $ 70,000.00
- Car loan from wife’s father $ 10,000.00
- Gfurniture loan $ 2,300.00
- Telstra account $ 600.00
Total Liabilities $309,257.00
Net Balance held by wife $100,686.00
I will order the husband to pay to the wife the sum of $108,886 giving the wife a total of $209,572.00 out of the pool (excluding F property, J property and the Westpac Equity account loan). This represents 55% of $381,039.00 (being the total net pool excluding F property, J property and the Westpac Equity account loan).
Property to be retained by the husband:-
- Antiques in the husband’s possession $113,520.00
- Husband’s interest in E Pty Ltd $3,446.00
- Silver ingots $2,400.00
- Nissan Navara $4,850.00
- Triumph motor cycle $6,100.00
- Husband’s superannuation interest in
EJ superannuation fund $167,495.00
TOTAL $297,811.00
The husband’s liabilities are:-
- Husband’s CGT paid in respect of
M Street $5,458.00
- Loan by husband from his mother $12,000.00
TOTAL $17,458.00
NET BALANCE $280,353.00
As I have said above, I will order the husband to pay to the wife the sum of $108,886, which will increase this pool to the wife from $100,686 to $209,572.00 and will decrease the husband’s pool to $171,467.00.
The combined assets, excluding J property and F property, and disregarding the Westpac Equity access loan (which will be paid out from the proceeds of sale of F property) is $381,039.00, Fifty five per cent of that sum is $209,572.00 and forty five per cent of that sum is $171,467.00.
Overall the wife will receive $209,572.00 plus her share of the proceeds of sale of J and F properties of about $330,000.00, making a total of about $539,572.00. The husband will receive $171,467.00 plus about $270,000.00 making a total of about $441,467.00.
It is my view that such result is just and equitable.
Spousal Maintenance application
In respect of the question of spouse maintenance the wife seeks an order for $250 per week into the future. The wife’s ability to earn income is somewhat limited by her health but not to the extent where she cannot obtain at least part time employment with the likelihood that she can obtain full time employment. I do not accept her evidence that work is not available to her. She was able to work and earn income over the last 2½ years. She earned $20,814.00 in 2005 and $23,113.00 in 2006. I find that the wife would have earned at least $23,000.00 in the 2006/2007 financial year.
The wife was employed full time for two of the three school terms in 2006. The wife has the capacity to earn income as a teacher and has the necessary qualifications in that regard. She keeps her skills up to date. The wife claims for herself, education expenses of $32.00 per week, which she asserts, is to keep up her skills and qualifications as a teacher. This seems somewhat in contrast to her approach that she is unable to work except on a limited basis. I find that the wife is able to work, at least part time and probably full time.
The wife has earned about $1,400.00 from relief teaching for the period 1 January 2007 to the date of hearing of this matter. She says that she has not refused any work. The wife gave evidence that she needs to work six consecutive terms to obtain full time employment. I find that the wife is looking for reasons to satisfy the court that she cannot work when the evidence is, including particular evidence from Dr T, that she enjoys her work and gets great satisfaction from it and has worked as a part time teacher in recent years. As I have found earlier, the wife’s health is not such as would prevent the wife from part time or full time work.
The wife spends some $50.00 per week on maintaining two cars, this is some $2,500.00 (approximately) per annum. I have made other comments in relation to cars earlier in these reasons. The wife is able to reduce this expenditure by selling or otherwise disposing of the SAAB motor vehicle.
Some of her other expenses seem somewhat high and reflect my concerns about the wife’s exaggeration with expenses or, if not an exaggeration, her failure to live within her means or a combination of both. Included in this is $60 per week for telephone for herself and $30.00 for the children making a total of about $4,500.00 to $5,000.00 per year for telephone services. Whilst the wife gave evidence that this amount includes internet access this cost seems somewhat high in the context of her financial circumstances.
In the wife’s financial statement filed 8 March 2007 she deposes to the weekly amounts she spends on various items. She deposes $140.00 per week on house repairs. In that regard I reiterate my comments as to the approach by the wife in acquiring L property. In addition she claims a further sum of repairs in the sum of $40.00 per week. (This being repairs to furnishings and appliances). Thus the wife claims to spend about $180.00 per week in house repairs and furnishings and appliance repairs which seems somewhat high and reflects the wife’s approach to expenditure
The wife claims in her financial statement expenditure of $1,980.00 per week for herself and for the children.
This is made up of the following: -
- House contents insurance $6.00
- Comprehensive motor vehicle insurance $5.00
- Comprehensive motor vehicle insurance $6.00
- Motor vehicle registration $22.00
- G loan $40.00
- Refrigerator loan $20.00
- MasterCard $45.00
- Other expenditure $1,387.00
Of the expenditure set out by the wife in items 26, 27, 28, 29 and 30 in her financial statement, I infer that it is open for the wife to sell a motor vehicle and pay out her various loans. This would leave her with the following liabilities: -
- House contents insurance $6.00
- Comprehensive motor vehicle insurance $5.00
- Motor vehicle registration $11.00
TOTAL $22.00
Subject to the comments I have already made in relation to telephone and motor vehicle expenses, the wife’s expenses set out in Part N total $581 making a total of $603.00 per week vis about $30,000.00 per year.
The wife will have sufficient resources to purchase a home for herself in either Hobart or N, including F property if she arranges her affairs to bid at that auction. I am satisfied on the evidence before me that the wife has a capacity to earn $30,000.00 per year and meet her reasonable living expenses. The wife will continue to receive child support including at an increased rate for the support the younger child once the elder child completes her secondary education.
I find that the wife is able to support herself.
The husband is employed as a Manager with FT Pty Ltd and earns a gross income of about $1,546.00 per week from which tax and child support are paid.
The husband is provided with a car in his employment upon which the company pays fringe benefits tax of about $9,000.00 per year. In addition he receives rental from an investment property of about $90.00 per week. As a consequence of these orders that rental property will be sold and the rent income will cease.
The husband would pay income tax of about $385.00 per week and child support of about $403.00 per week leaving him with about $758.00 per week from which would need to be deducted health insurance which the husband pays for the family in the sum of about $49.00 per week, leaving a balance of about $709.00 per week.
The husband’s liability to pay child support for the elder child will expire at the end of this calendar year, he may have a liability to assist her with her support in her tertiary studies.
The husband has reasonable expenses to maintain himself which are set out in part N of his financial statement. In addition he has the other expenses set out in his financial statement.
These expenses do not take into account the husband’s costs in spending time with the children. The husband sees the younger child about once per fortnight. Sadly his relationship with the elder child has deteriorated over the last six months in the run up to the hearing of these proceedings. The parties facilitated the elder child to have a six-week exchange program in Paris, and on this evidence I infer this trip would have involved both of the parties in some cost.
The wife submits that the husband is a “mean” person in terms of money. I find on the evidence that the husband endeavours to live within his means and endeavours to meet expenses for himself and the children in a balanced way. His approach to the education expenses of the children out of the joint CBA account is indicative of that approach.
The husband has a capacity to pay periodic spousal maintenance which may increase in 2008 when his child support liabilities for the elder child conclude. This must be subject to any payments he may make for her, either voluntarily or pursuant to orders.
The elder child may be able to look to the S Trust to assist her in her university expenses. She will receive about $5,000.00 in her first year of university as a consequence of the contributions made by the parties to an ASG scholarship policy.
In the circumstances of this case I determine that this is not a matter where there ought to be a spousal maintenance order. I propose to dismiss the wife’s spousal maintenance application.
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Court delivered this day will for all publication and reporting purposes be referred to as Essex & Essex.
I certify that the preceding 239 paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin.
Associate:
Date: 2 July 2007
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