Fadden and Fadden

[2009] FamCA 1364

FAMILY COURT OF AUSTRALIA

FADDEN & FADDEN [2009] FamCA 1364

FAMILY LAW – PROPERTY – Settlement in relation to marriage

APPLICANT: Mr Fadden

RESPONDENT: Mr Fadden

FILE NUMBER: SYC 5297 of 2007

DATE DELIVERED: 6 November 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: STEVENSON J

HEARING DATE: 31 August 2009,
1 & 2 September 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Mundey

SOLICITOR FOR THE APPLICANT: Briggs & Associates

COUNSEL FOR THE RESPONDENT: Mr Schonell

SOLICITOR FOR THE RESPONDENT: John R Quinn Co

Orders

1. Sale of S property by public auction

   That the husband and wife forthwith do all things necessary to effect the sale of the property known as S (“the S property”) by public auction.

2. The parties shall do all things necessary to effect such sale, including but not limited to:

   2.1list the S property with an estate agent in the area (hereinafter called “the real estate agent or the auctioneer”) for sale at the earliest possible date at a reserve price of $1,800,000 or such other figure as the parties shall agree

   2.2execute all documents requested by the real estate agent or the auctioneer

   2.3request the real estate agent or the auctioneer to recommend a reserve price to be placed on the S property for the purpose of the auction sale and accept such recommended reserve price

   2.4pay to the real estate agent or the auctioneer any sum requested for advertising expenses in relation to the sale

   2.5give such instructions as are necessary to John R Quinn & Co., Lawyers, in conjunction with Briggs & Associates, Lawyers, for the contract for sale and to carry out the conveyancing of the sale of the property and to apply the net proceeds in accordance with these orders

   2.6attend at the auction sale of the S property and negotiate with the highest bidder in the event that the reserve price is not reached

   2.7accept the advice of the real estate agent or the auctioneer as to the acceptance of a price less than the reserve price

   2.8execute the contract for sale

   2.9co-operate in every way with the real estate agent or the auctioneer in relation to the sale of the S property including making a key available, allowing inspection at all times requested by the real estate agent or the auctioneer and ensuring that the property is in a neat and clean condition at the time of inspection by prospective purchasers

   2.10execute all other documents necessary to complete the sale.

3. Occupancy of the S property until settlement

   The wife is, until the settlement of sale of the S property pursuant to these orders, granted the right to occupy the home.

4. Payment of outgoings in respect of the S property until settlement

   Until the settlement of the S property pursuant to these orders the husband and the wife will pay equally the mortgage and the wife will pay all rates on the home.

5. Distribution of proceeds of sale of the S property

   Upon the sale of the S property the parties shall effect the distribution of the proceeds in the following manner and priority:

   5.1payment of agent’s commission and any auction expenses

   5.2payment to Westpac Banking Corporation of all monies outstanding under the first mortgage registered on the title of the property

   5.3payment of legal costs on the sale

   5.4payment of water rates, council rates and other applicable conveyancing adjustments

   5.5payment of the sum of $108,230.00 to the husband’s mother

   5.6payment of the sum of $46,700 to Mr V

   5.7in payment to each of the parties of an amount equal to 50% of the balance then remaining

   5.8the husband shall pay to the wife, from his share of the proceeds of sale, an amount of $36,500.

6. Sale of H property

   That the husband and wife forthwith do all things necessary to cause the sale of the property known as H (“the H property”) by public auction.

7. The parties shall do all things to effect the sale by public auction of the H property, including but not limited to:

   7.1list the property with an estate agent in the area (hereinafter called “the real estate agent or the auctioneer”) for sale at the earliest possible date

   7.2execute all documents requested by the real estate agent or the auctioneer for the sale of the property

   7.3request the real estate agent or the auctioneer to recommend a reserve price to be placed on the property for the purpose of the auction sale and accept such recommended reserve price

   7.4pay to the real estate agent or the auctioneer any sum requested for advertising expenses in relation to the sale

   7.5give such instructions as are necessary to John R Quinn & Co, Lawyers, in conjunction with Briggs & Associates, Lawyers, for the preparation of a contract for sale and to carry out the conveyancing of the sale of the property and to apply the net proceeds in accordance with these orders

   7.6attend at the auction sale of the property and negotiate with the highest bidder in the event that the reserve price is not reached

   7.7accept the advice of the real estate agent or the auctioneer as to the acceptance of a price less than the reserve price

   7.8execute the contract for sale

   7.9co-operate in every way with the real estate agent or the auctioneer in relation to the sale of the property including making a key available, allowing inspection of the property at all times requested by the real estate agent or the auctioneer and ensuring that the property is in a neat and clean condition at the time of inspection by prospective purchasers

   7.10execute all other documents necessary to complete the sale.

8. Distribution of proceeds of sale of the H property

   Upon the sale of the H property the parties shall effect the distribution of the proceeds in the following manner and priority:

   8.1payment of agent’s commission and any auction expenses

   8.2payment of legal costs on the sale of the property

   8.3payment of water rates, council rates and other applicable conveyancing adjustments

   8.4payment of 20% of the balance to the W Pty Limited Superannuation fund

   8.5payment to each of the parties of an amount equal to 50% of the balance.

9. Furniture

   9.1that within fourteen (14) days of the date of this order the wife shall prepare two lists of the furniture which was contained in the matrimonial home, with each list to contain items of approximately equal total value

   9.2that the wife transfer to the husband her interest in the items contained in whichever of the said two lists the husband shall so choose and that the husband do all acts and things necessary to transfer to the wife his interest in the items contained on the other such list.

10. Superannuation

    That within three (3) months of the date of these orders the husband and wife, as directors of the trustee company of the W Pty Limited Superannuation Fund, do all acts and things and execute all documents necessary to enable the wife to roll out her superannuation entitlement with that fund to an alternative superannuation fund as nominated by the wife.

IT IS NOTED that publication of this judgment under the pseudonym Fadden & Fadden  is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 5297  of 2007

MS FADDEN

Applicant

And

MR FADDEN

Respondent

REASONS FOR JUDGMENT

THE PROCEEDINGS

1. Mrs Fadden and Mr Fadden are in dispute as to property settlement.  These proceedings concern their competing applications pursuant to Part VIII of the Family Law Act.

Background

1. The husband, who is now 50, and the wife, who is now 48, married and commenced cohabitation in 1986.  They separated on 27 January 2006, when the husband left the former matrimonial home.  The parties have two children, K who was born in 1990 and E who was born in August 1993.  The children remained in the former matrimonial home with the wife after the separation. 

2. In 1984 a company known as W Pty Limited was incorporated as a vehicle for the husband’s business as a technician.  Mr and Mrs Fadden are both directors and they each hold two of the four issued ordinary shares.

3. In 1986 the parties purchased a property at L for $85,000.  The husband contributed his pre-marriage savings of $25,000 and the parties borrowed $65,000 from the Bank of New South Wales. They carried out extensive renovations to this property with the assistance of the wife’s father, Mr V. 

4. In May 1989 the husband and his mother purchased land at B for $212,000.  They obtained a mortgage from the St George Building Society and the husband contributed some savings.  He and his mother held title to this land as tenants-in-common in three-fifths and two-fifths shares respectively. 

5. Both parties worked full time until the wife left her employment as a teacher in 1991.  She had taken twelve months unpaid maternity leave after the birth of K in October 1990. 

6. In 1991 the parties sold the L property, which was then unencumbered, for $255,000.  They purchased a home at C for $335,000, using the sale proceeds of the L property and borrowings of $85,000 from the Bank of New South Wales.  The wife contributed approximately $6,000, from a long service payment, to the stamp duty and other acquisition costs. 

7. In 1992 the wife resumed part-time work as a teacher for three days per week.  She took twelve months maternity leave after E was born in August 1993. 

8. In 1992 the husband and his mother sold the B property for $265,000.  They agreed that her share of the sale proceeds amounted to $75,000.

9. There was a dispute as to what became of the husband’s mother’s share of these sale proceeds.  In his primary affidavit sworn on 3 November 2008 the husband said that she invested $75,000 into the purchase of a property at P, in exchange for a 10% interest.  On 28 August 2009 the husband swore an affidavit in which he said that his mother invested $35,000 in the purchase of the P property.  He said that the balance of $40,000 was used to meet part of the cost of renovations to their home.  The wife denied that any money is currently owed to the husband’s mother.  I will consider this issue below in these reasons.

10. In September 1992 the husband and his business partner, Mr N, paid $750,000 to purchase a property at P as tenants in common in equal shares.  They obtained a mortgage loan of $710,000 from the Westpac Bank and contributed equally to the balance and acquisition costs.  The husband and Mr N operated a technicians’ business from these premises.

11. In 1993 the wife received an inheritance of $65,000 from her mother.  She used this money to reduce the mortgage on the C property, which was originally $85,000. 

12. In 1994 and 1995 the wife worked as a consultant with a Catholic organisation.  She then returned to teaching for three days per week until 2001.

13. In 1997 the parties sold the C property, which was then unencumbered, for $500,000.  They purchased the former matrimonial home at S for $400,000, using the proceeds of sale of the C property.  They demolished the existing home and built a new house on the land. 

14. In 1999 the parties borrowed $100,000 from the wife’s father, on an interest free basis, to assist with the cost of construction of the new house at S and to pay out the residual on the lease of the husband’s car.  It was agreed that the current balance of this loan is $46,700.  There was no dispute that Mr V should receive this sum.

15. In 2002 the wife commenced full time employment with a Catholic organisation.  Her employment has continued on a contract basis.

16. In May 2002 the husband’s father purchased a home unit after the breakdown of his marriage.  He received insufficient funds from the sale of his former matrimonial home to complete the purchase, so he borrowed $12,350 from each of his son and daughter.  The husband, his father and sister hold title to this property as joint tenants.  The husband’s father repaid his son and daughter in full, from an inheritance which he received less than three months after the purchase.  The wife contended that the husband holds owns a beneficial interest of one-third of the current value of this property.  I will consider this allegation below in these reasons.

17. In 2003 the husband and Mr N sold the P property for $1,590,000.  The sale resulted in a capital gains tax liability of $71,315 for the husband. 

18. The mortgage on the S property was reduced by $420,000 from the proceeds of the sale of the P premises.  The payout figure then stood at $6,727.

19. The husband received $18,480 from the deposit on the sale of the P property.  He claimed that he used this money for “family expenses”.

20. In 2004 the parties and a company known as W Pty Limited purchased as tenants-in-common a property at H.  Mr and Mrs Fadden each appear on the certificate of title as the holder of a 40% share and the company has a 20% interest.  The purchase price of the property was $262,000, all of which was drawn down on the parties’ mortgage account. 

21. Also in 2004 the parties purchased a property at H2 as joint tenants.  They borrowed the whole of the purchase price of $260,000 from the Westpac Bank. 

22. In January 2007 the parties executed an authority for a loan of $50,000 for the husband’s business.  They had previously arranged a drawdown of $95,000 for the business in 2002.

23. In April 2007 the wife formed a relationship with Ms X.  She is the principal of a real estate agency known as X Real Estate Pty Limited, trading as X Realty.  It was suggested that the husband is also in a new relationship.  Neither party lives with a current partner.

24. In September 2007 the wife completed the purchase of a townhouse at M for $1,200,000.  The purchase was funded by a mortgage of $970,000 from the Commonwealth Bank and a loan of $297,198 from X Real Estate Pty Limited and/or Ms X and her sister.

25. In December 2007 the husband sold his Subaru motor vehicle for $16,500 and purchased an Impreza for $11,000.  The residual of $16,500 on the Subaru lease had been paid out by a drawdown on the mortgage in April 2007.

26. In March 2008 the wife borrowed $10,875 from Ms X to pay out the residual on her motor vehicle.  Interest accrued at the rate of 10% per annum until this loan was repaid in full in January 2009.

27. In January 2009 the wife borrowed $180,000 from her sister.  She repaid $90,128 to X Real Estate Pty Limited and an additional amount of $42,457 to Ms X personally.  The balance of the loan money went to the wife’s legal costs and living expenses.

28. In 2009 the husband established a new business known as W New South Wales Pty Limited.  This company leased a Volkswagen motor vehicle in June 2009.

Approach To These Proceedings

1. According to guidelines established through a series of leading decisions, the Court is required to determine the following matters on the evidence:

   ·firstly, the assets, liabilities and financial resources of the parties to the marriage are to be determined

   ·secondly, all relevant contributions of each of the parties, within the meaning of paragraphs (a) to (c) of section 79(4) must be identified and weighed against each other

   ·thirdly, the matters in paragraphs (d) to (g) of section 79(4), particularly paragraph (e) which takes up by reference the provisions of section 75(2) must be considered and a determination made as to what, if any, alteration should be made to the entitlements of the parties earlier assessed on account of contribution

   ·finally, an order under section 79 must not be made unless the Court is satisfied that, in all the circumstances, it is just and equitable to make the order.

The Assets, Liabilities and Financial Resources

The Assets

1. It was agreed that the parties have the following non-superannuation assets, with the values listed below:

1.	S property (J)	$1,800,000
2.	Household Contents (J)	$15,000
3.	Jewellery (W)	$4,650
4.	Jewellery (H)	$850
5.	Peugeot motor vehicle (W)	$12,400
6.	Subaru motor vehicle (H)	$10,550
7.	Shares in PH Limited (H)	$1,140
8.	250 Tabcorp shares (H)	$1,675
9.	Jet ski (H)	$5,500
10.	2 Gold Memberships to ANZ Stadium (H)	$3,200

1. It was agreed that the parties have the following superannuation assets, with the values listed below:

1.	W Pty Limited Superannuation Fund (H)	$96,998
2.	W Pty Limited Superannuation Fund (W)	$24,065
3.	Catholic Super and Retirement Fund (W)	$63,215

1. There was dispute as to the following items of property:

1.	H property
2.	M property
3.	Wife’s Termination Payment
4.	Husband’s alleged 1/3rd beneficial interest in R property

H property

1. It was agreed this property has a present value of $300,000.  The dispute was whether W Pty Limited Superannuation Fund holds a 20% or a 31% share, as contended by the husband and the wife respectively.

2. The certificate of title recites ownership of the property as “[the husband] as to a 40% share, [the wife] as to a 40% share and [W] Pty Limited (CAN[…]) as to the remaining 20% share as tenants-in-common”.  The complication arose because, historically, tax returns have represented that the superannuation fund owns a 31% share in this property. 

3. It seems to me that entries in tax returns cannot alter the legal and beneficial ownership of this property, as evidenced by the certificate of title.  I thus find that the superannuation fund holds a 20% interest and each of Mr and Mrs Fadden a 40% share in this property.

M property

1. In her Outline of Case document, and for the duration of the trial, counsel for the wife sought to include the M property and the associated liabilities in the balance sheet.  The wife has incurred a loss of approximately $250,000 on this transaction.  It was rightly submitted on behalf of the husband that the effect of including this asset, and the associated liabilities, in the balance sheet would be to impose part of this capital loss on him. 

2. The wife purchased the property for $1,200,000 but its present value is $1,100,000.  She has borrowed a total of approximately $1,267,000 in association with the purchase. 

3. The wife purchased this property well after the parties’ separation and without the husband’s knowledge or consent.  She alone has made all decisions in relation to the purchase and funding of this property.  The husband had no involvement whatsoever in this transaction. 

4. At the end of final submissions I requested from each counsel a document setting out the effect of the orders sought by each of the parties, in terms of the distribution of assets.  The document submitted on behalf of the wife stated: 

   “The [M] property has been excluded as to both the assets and the liabilities, based on the submission that the wife’s financial position arising from the purchase of the property is to be taken into account pursuant to section 75(2).”

5. I take this statement as a concession on behalf of the wife that the M property and associated liabilities cannot properly be included in the balance sheet and should be considered only pursuant to section 75(2).  In my view this approach was correct.  The effect of this transaction on the current financial circumstances of the wife should not necessarily weigh in her favour pursuant to section 75(2).

Wife’s Termination Payment from the Catholic Organisation

1. In 2009 the wife received a net sum of $14,328 as a termination payment from her employer.  Her unchallenged evidence was that this benefit had accrued since about 2005. 

2. On behalf of the wife it was submitted that this sum should not be added back as an asset because she took long service leave so that the family could take overseas holidays during the marriage.  It was further submitted that this amount should not be added back because the wife obtained the money after the separation.  On behalf of the husband it was submitted that this sum should either be added back as an asset or taken into account in the assessment of overall contribution. 

1. The wife’s entitlement to this money substantially accrued after separation and was received by her over three years from that date.  For these reasons I will not add back this money to the list of assets.

The Husband’s Alleged One-Third Beneficial Interest in the R Property

1. The husband, his father and his sister all gave plausible evidence as to why they are registered proprietors, as joint tenants, of this property.  As noted, Mr Fadden Senior’s share of the proceeds of sale of his former matrimonial home left him with insufficient funds to complete the purchase of his home unit at R.  The purchase price of the unit was $247,000 and he received about $223,000 from the proceeds of sale of his former matrimonial home.  As he said in his affidavit, he thus required an additional sum of around $24,700 to complete the purchase.

2. The husband’s father said that he knew that he would receive an inheritance soon after the purchase, so he did not want to take out a short term loan from a financial institution.  The husband and his sister each loaned their father $12,350, which enabled him to pay the 10% deposit on the purchase.

3. The husband’s father settled the purchase of his unit on 9 July 2002 and received an inheritance of $21,419 on 5 August 2002.  He withdrew $24,700 from his bank account on 6 August 2002 and repaid the husband and his sister in full.  In his affidavit the husband’s father explained why he caused himself, his son and daughter to become registered proprietors as joint tenants.  He said he had a conversation with his son in the following terms: 

   “[the husband] said to me ‘Dad to help you out so you don’t have to take out a loan [my sister] and I will lend you the deposit.’  I said ‘If you do that I insist that the title of the property be in your name, [your sister’s] name and my name in case something happens to me.  I want to protect you and [your sister] for the help you have given me.’”

   He said that he has not “taken [the husband] and [the husband’s sister’s] name off the title” because he cannot afford to pay the stamp duty and also “because they can look after my place”.  None of the evidence of the husband’s father was successfully challenged.  He presented as an entirely honest witness and his evidence was inherently credible and logical.

4. The wife complained that the husband did not tell her that he had loaned this money to his father.  The husband maintained that she was aware that he had done so.  It does not seem to me to matter whether or not the wife knew about this short-term loan.  It is clear that the husband and his sister have been repaid the funds which they advanced, as appeared from the documents annexed to the affidavit of the husband’s father. The husband’s sister’s evidence as to this transaction was entirely unchallenged. 

5. It seems obvious to me that the husband and his sister hold their interest in the R property on trust for their father.  The husband’s father must be regarded as having provided the whole of the purchase money for the property.  Accordingly, there can be no suggestion of a trust on the basis of a contribution to the purchase price by the husband and his sister. 

6. The only other way in which they could have obtained a beneficial interest in this property would be as a gift from their father.  There was no written disposition which might establish any such gift.  The evidence of the husband’s father was that he did not intend to make a gift to his children.  He was cross-examined but it was not put to him that he made any such gift.  The evidence of the husband and his sister was that they intended to provide a short-term loan to their father.  It was not put to them that they intended to acquire a beneficial interest in the property. 

7. In spite of these weighty considerations, counsel for the wife refused to concede that the husband holds his interest in this property as trustee for his father.  I find that he holds legal title to the R unit on trust for his father and that he has no beneficial interest in this property. 

8. I thus find the assets of the parties to be as follows:

Non-Superannuation Assets
1.	S property (J)	$1,800,000
2.	80% interest in H property (J)	$240,000
3.	Household Contents (J)	$15,000
4.	Jewellery (W)	$4,650
5.	Jewellery (H)	$850
6.	Peugot motor vehicle (W)	$12,400
7.	Subaru motor vehicle (H)	$10,550
8.	Shares in PH Limited (H)	$1,140
9.	250 Tabcorp shares (H)	$1,675
10.	Jet ski (H)	$5,500
11.	2 Gold Memberships of ANZ Stadium (H)	$3,200
Sub-Total:	$2,094,965
Superannuation Assets
12.	W Pty Limited Superannuation  Fund (H)	$96,998
13.	W Pty Limited Superannuation  Fund (W)	$24,065
14.	Catholic Super and Retirement Fund (W)	$63,215
Sub-Total:	$184,278
Total:	$2,279,243

The Liabilities

1. It was agreed that the parties have the following liabilities:

1.	Westpac Bank mortgage on the S property	$358,521
2.	Loan from wife’s father	$46,700
3.	Money owed by parties to W Pty Limited	$33,000
4.	Negative value of W Pty Limited	$43,420

1. As noted, it was conceded on behalf of the wife at the end of the trial that her post-separation liabilities should not be included in the balance sheet.  The only disputed liability was thus the money allegedly owed by the parties to the husband’s mother.

2. The wife suggested that the husband increased the mortgage payout figure by drawdowns which he made without her knowledge or consent.  I will consider this allegation in the context of the contributions of the parties.

3. The negative value of the company W Pty Limited was calculated by an expert witness, Mr G, whose evidence was unchallenged.  There are certain debts of the company which are secured by the mortgage on the S property.  It was common ground that this property will be sold, thus these debts will be discharged at that time.

4. The husband’s evidence in relation to the alleged debt to his mother was inconsistent but he readily made that concession.  As noted, he swore an affidavit which specifically addressed inaccuracies in his earlier written evidence as to monies allegedly advanced to the family by his mother.

5. Initially the husband said that he and his mother agreed that her share in the proceeds of sale of the B property amounted to $75,000, which she invested in the purchase of the P property.  The purchase price of the P property was $75,000, thus he and his mother agreed that she acquired a 10% interest.  The husband’s business partner, Mr N, had no involvement in this arrangement.

6. In his affidavit sworn on 28 August 2009 the husband said: 

   “I refer to paragraph 20 of my primary affidavit.  For the purposes of this trial my memory has always been that my mother’s share of the proceeds of sale of [B property] was used to acquire [P property].  Having considered this matter further I now realise this cannot be correct and that there was only $70,000 to complete the purchase of [P property] and my share was 50% of this, being $35,000.  The remainder of my mother’s loan was used by [the wife] and I to assist with renovations to our home at [C] and family expenses at that time.”

7. In his oral evidence the husband said:

   “The [P property] purchase was fully funded before my mother and I received the proceeds of sale of [B property]” and

   “My mother rolled over $75,000 to us, so she became entitled to 10% of [P property],” or words to that effect.

8. On 24 December 1993 the husband executed a will.  He bequeathed to his mother 20% of his half share of the P property, in the event of a sale, and 20% of the income attributable to his half interest, if the property were to be leased.  It seems to me that the provisions of this will support the contention of the husband and his mother that she “rolled over” $75,000 into the finances of the family.

9. The husband’s mother was a very impressive witness who appeared to me to be entirely truthful.  She said that she asked the husband:  “How am I going to be covered if something happens to you?” and he replied “I will make a will”. 

10. This arrangement is consistent with the husband’s alleged wish to protect his mother’s investment in the family’s finances.  His remaining interest in the P property would pass to Mrs Fadden, on his death, pursuant to the provisions of this will.  Despite suggestions to the contrary, there is no significance to the fact that the wife’s will did not make similar provision with regard to the husband’s mother.  The wife had no interest in the P property to bequeath to her former mother-in-law.

11. The wife conceded that she “believed [the husband’s mother] to be a truthful person”.  Nonetheless she maintained that the husband’s mother has been repaid all money due to her. It must therefore follow that she asserted that the husband’s mother gave untruthful evidence.

12. The husband’s mother was adamant that she has not been repaid all of the money which is owed to her.  She said that she could not remember receiving two lump sum payments from the husband in 2005.  She seemed genuinely upset and distressed that her honesty was questioned in cross-examination.

13. The husband said that he made 17 payments, each of $430, to his mother between 23 August 2004 and 11 July 2006, making a total of $7,310.  He calculated the amount now due to his mother as follows: 

·    10% of the net proceeds of sale of the P property	$150,000
·    less 10% of capital gains tax of $344,606	$34,460
subtotal	$115,540
·    less repayments	$7,310
total	$108,230

1. Annexed to the wife’s affidavit sworn on 10 November 2008 was a letter dated 7 May 2007 from her then solicitor to the husband.  Inter alia, this letter set out her contentions as to the assets and liabilities of the parties.  There was reference to “(possibly) an amount owing to your mother”.

2. I am satisfied that the husband’s mother did provide money to him, which he used for family purposes which cannot now be particularised.  It seems likely to me that some of this money was used for renovations to the C property.  I find that the husband’s mother has not been repaid in accordance with her agreement with the husband.  I thus find that the parties have a liability to the husband’s mother of $108,230.

3. Accordingly I find the liabilities of the parties to be as follows:

1.	Westpac Bank mortgage on the S property	$358,521
2.	Loan from wife’s father	$46,700
3.	Negative value of W Pty Limited	$33,000
4.	Money owed by the parties to W Pty Limited	$43,420
5.	Loan from husband’s mother	$108,230
$589,871

The Contributions of the Parties

1. On behalf of the wife it was submitted that there should be a contribution finding of 55% in her favour.  On behalf of the husband it was contended that contributions were equal as at the date of separation but, thereafter, “events call for an adjustment of 7.5% in his favour”.  There should thus be a contribution finding of 57.5% as to the husband and 42.5% in relation to the wife. 

2. On behalf of the wife it was submitted that the husband’s initial contribution of $25,000 to the purchase price of the L property was “equalled or outweighed” by the renovations carried out by her father and his employees.  The purchase price of the property was $85,000, of which $25,000 is close to 30%. 

3. The unchallenged evidence of Mr V was that he worked on the property for periods of eight to ten hours, once or twice per week, for approximately six months.  He also provided labour from his employees.  He summarised this work as follows:

   ·removal of internal walls, floors and the existing kitchen

   ·removal of trees and stumps from the back yard

   ·laying of a concrete floor in the new kitchen

   ·construction of a tool shed and carport

   Mr V also gave unchallenged evidence that he contributed $15,000 to the cost of these renovations. 

4. The wife’s evidence was that the renovation work was carried out over a period of eighteen months and that her father worked on the property “on most weekends” during the last six months.  She said that she and the husband also worked on the property.

5. It does not seem to me to be useful to consider the contributions to the L property in isolation, in the context of a nineteen year marriage.  I am of the view that the husband’s initial contribution of $25,000 must be weighed alongside the many and varied contributions made by and on behalf of each of the parties, during a long relationship.  The submissions on behalf of the husband contained an inherent concession that his initial injection of $25,000 was matched during the marriage by contributions by or on behalf of the wife.  It seems to me that this concession was appropriate.

6. The wife also relied on an inheritance of $65,000, which she received in 1993.  This money was used to reduce the mortgage on the C property, which was $85,000, when the property was purchased in 1991.  Again, I do not consider it useful to consider this contribution in isolation.

7. The unchallenged evidence of the wife’s father was that he carried out building work at the S property.  He also constructed steel benches and sinks in the husband’s business premises at H.

8. It was common ground that Mr V made an interest free loan of $100,000 to the parties in 2000.  They used this money to complete the construction of the S property and to pay out the residual on the lease of the husband’s Lexus motor vehicle.  The husband made repayments on this loan from his business income.

9. Each of the parties claimed to have paid a greater amount in mortgage repayments after the separation.  They each tendered calculations and source documents in support of their contentions.  I agree with the observation of counsel for the husband that it is “impossible to work out what happened with the mortgage”.  On the material available, this tracing exercise cannot be carried out in any reliable manner.

10. There is no doubt that the wife was primarily responsible for the care of the children and the household tasks.  She took time out of the paid workforce to care for the children and, generally, was more available for this purpose than was the husband.

11. On the other hand, the husband conducted his business throughout the marriage and used his income to support the family and to service various loans taken out by the parties to acquire real estate.  He paid $52,967 after the separation to reduce the capital gains tax debt on the sale of the P property.  Of course, it must be remembered that he drew down on the mortgage account a sum of $30,000 for this purpose.

12. On behalf of the husband it was submitted that there should be a contribution adjustment in his favour, referrable to the post-separation period, for the following reasons:

    ·    The wife received a tax refund of $18,000 in 2007-2008

    ·    The wife received a termination payment of $14,328 in 2009

    ·    he paid half of the mortgage repayments after separation, while the wife occupied the former matrimonial home

    ·    he paid capital gains tax of $52,967 on the sale of the P property after the separation

    ·    he has paid $19,600 for the benefit of the children, in addition to child support as assessed, since the separation.

13. It is true that the wife received a tax refund of $18,000 in 2007-2008, as a result of negative gearing of the M property.  Her unchallenged evidence was that she is likely to receive a much smaller refund for the 2008-2009 year, as she applied for an exemption from payment of periodic tax for the months between October 2008 and July 2009.

14. On the other hand, the wife has had to service the substantial debts relating to the M property.  The husband resisted inclusion of this property and the associated debts in the balance sheet.  I have referred already to the concession which was ultimately made on behalf of the wife in relation to this property.

15. I would not have included this asset and associated debts in the balance sheet, because the husband had no involvement whatsoever in the wife’s acquisition and financing of this property after separation.  Consistently with this view, I will not pass on indirectly to the husband a benefit from these transactions by increasing his contribution finding as suggested.

16. I have noted already that the wife’s termination payment of $14,328 accrued largely after the separation.  The husband thus had little involvement with the accrual of this benefit, so I see no reason to increase his contribution finding on this basis.

17. It is true that the wife occupied the former matrimonial home after the separation and that each of the parties contributed to the mortgage.  As noted, I find it impossible to determine how much each party paid in respect of the mortgage.  It is relevant that the children lived in the home with the wife, as both parties had an obligation to provide accommodation for them.  It is also relevant that the husband gave no evidence of any housing costs which he incurred after the separation.  I would not increase his contribution finding on this basis.

18. It is true that the husband paid capital gains tax of $52,967 on the sale of the P property.  He said, however, that he withdrew $30,000 from the parties’ mortgage account on 13 March 2006 and used this money to pay part of this tax debt.  I infer that the remaining payments came from his income.  I would not increase the husband’s contribution finding on the basis of a drawdown on the parties’ joint mortgage account.  The balance of about $22,000 has been outstanding since the capital gains tax was incurred and includes a component for interest.  For that reason, I will not increase the husband’s contribution finding on the basis of these payments of capital gains tax.

19. I accept that the husband has made payments to and for the benefit of the children, in addition to child support as assessed.  On the other hand, the wife has had the responsibility for their day-to-day care and financial support.  I would not increase the husband’s contribution finding on this basis.

20. The wife alleged that the husband effectively reduced the value of the asset pool, by drawing down on the mortgage without her consent.  She also claimed that he failed to reduce two business loans in a timely manner. 

21. It was agreed that the mortgage payout figure is currently $358,521.  The wife alleged that the husband led her to believe that the balance had been reduced to zero when the P property was sold in 2002/2003.  She alleged that, from that point, she authorised drawdowns of $262,000 in 2004, for the purchase of one of the H units, and of $16,500 in April 2007 to pay out the lease on the husband’s car.  She claimed that all other drawdowns on the mortgage account were made by the husband, without her knowledge or consent.

22. Copies of bank statements annexed to the husband’s affidavit show that a sum of $420,000 was deposited into the mortgage account on 8 February 2003.  The payout figure then stood at $6,727.

23. There was no dispute that the deposit of $420,000 came from the proceeds of sale of the P property.  According to the husband, the balance of about $74,000 was spent on ‘credit cards, the Australian Taxation Office and household expenses”.  It was not put to him that he used this money for any different purposes or other than for the joint benefit of the parties.

24. The husband withdrew $30,000 from the mortgage account on 13 March 2006 and used this money to pay part of the capital gains tax on the sale of the P property.  On the wife’s argument, that leaves an amount of approximately $44,000 which the husband drew down on the mortgage account and for which he failed to provide an explanation.

25. The husband said that he regularly drew down on the mortgage account to pay credit card debts.  His unchallenged evidence was that the wife was a holder of supplementary cards and that he arranged for all payments of these debts.  He also said that he drew down on the mortgage account to make income tax payments.  He annexed a schedule of these drawdowns to his affidavit, apparently in response to a series of questions put by the wife’s solicitor.

1. I am not satisfied that the husband’s dealings with the mortgage account were such that there should be a contribution finding in favour of the wife.  As noted, it was not put to him that he used these drawdowns other than for the joint benefit of the parties.  On the above analysis an amount of around $44,000 was drawn down on the mortgage account, and not specifically accounted for by the husband, between February 2003 and 2007.  The wife cancelled the drawdown facility in March 2007.  There was a period of almost three years, after the deposit of $420,000, and the separation in January 2006 when the mortgage debt increased and the parties were living together and mingling their finances.

2. On behalf of the wife it was submitted that “interest and charges should not be visited on the wife”, apparently in regard to the capital gains tax debt.  I was provided with no calculation, or any direct evidence, to support this contention.  I was left unsure of precisely what I was invited to do, pursuant to this submission.  The only evidence as to “interest and charges” was contained in Annexure O to the husband’s affidavit.  This schedule did not seem to distinguish between his personal income tax and the capital gains tax debt.  If there was such a distinction, it was not explained to me.  I can take this submission no further.

3. As noted, it was submitted on behalf of the wife that the husband had somehow failed to service two business loans appropriately.  The implication was that he thereby reduced the value of the net pool of property and that the consequences should rest with him, rather than the wife.

4. Nothing was put to the husband in support of this contention.  There was no evidence that he could or should have paid off these loans in a more effective manner.  This submission ignores the prospect that he gained some taxation advantage by arranging the affairs of his business as he did in relation to these debts. 

5. Overall, I can see no reason for a finding other than equality of contribution as at the date of trial.  Each of the parties made contributions of various kinds during a long relationship.  There was no specific evidence as to the parties’ contributions to their superannuation funds.  I can infer that they each made contributions during their long relationship.  The best I can do is to extend my finding of equality of contribution to the superannuation.  It is my opinion, and I find, that the contributions of each of the parties complemented and matched those of the other and should be regarded as equal.

Section 75(2) Factors

1. On behalf of the wife it was submitted that she is entitled to an adjustment of “at least” 5% on account of section 75(2) factors.  She relied on the “substantial loss” which she has incurred as a result of the purchase of the M property.  She laid blame for her current financial position on the husband, on the basis of his alleged failure to cooperate with the sale of the S property.  She also relied on her alleged ongoing responsibility to care for the children.  Further, she relied on the fact that she had to borrow $10,875 to pay out the residual on her car lease, when the husband was able to use a sum of $16,500 drawn down on the mortgage account for that purpose. 

2. On behalf of the husband, it was submitted that there is no basis for an adjustment in favour of either party pursuant to section 75(2).  Essentially, this contention was that the parties are of similar age and in good health and are able to earn a reasonable income.  It was said that the wife’s income exceeds that of the husband and there is only one child under the age of 18, who will choose where she wishes to live.

3. I have carefully considered all of the factors set out in section 75(2) but will refer only to those matters which appear to me to be relevant to these proceedings.  It is readily apparent that some section 75(2) factors have no role to play in the resolution of this dispute.

   Section 75(2)(a):     the age and state of health of each of the parties; and

   Section 75(2)(b):     the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;

4. The husband is 50 years old; in good health and earns a gross income of $1,600 per week from his business.  He also has the benefit of a business funded motor vehicle.

5. The wife is 48 years old; in good health and earns a gross weekly income of $2,002 from her employment.  She receives rental income from the M property and a tax benefit from a negative gearing arrangement.

6. As noted, the wife has substantial debts in relation to the M property but she created this situation without any input from the husband.  She elected to purchase this property, on the advice of Ms X, without any agreement between the parties for the sale of the former matrimonial home.  She made no attempt to obtain a court order for the sale of the X property.  It is my view that it would be unfair to the husband to take this consideration into account in favour of the wife.

   Section 75(2)(c):     whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;

7. The parties’ daughter E is now 19 years old and is employed as a receptionist.  E is now 16 years old and is a high school student.  E will choose where she wishes to live from time to time.  In my opinion, this factor does not weigh in favour of the wife.

   Section 75(2)(f):      subject to subsection (3) the eligibility of either party for a pension, allowance or benefit under:

   (i)any law of the Commonwealth, of a State or Territory of another country; or

   (ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;

   and the rate of any such pension, allowance or benefit being paid to either party;

8. Each of the parties has superannuation benefits, which will almost certainly increase in value in the future.  At 50 and 48 years of age, it is most unlikely that either party will be able to access a superannuation benefit for a considerable time.

   Section 75(2)(na):   any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage;

9. The husband pays child support of $454 per month, as assessed, and makes additional contributions to the financial support of E.  His unchallenged evidence was that his total financial contribution to her support is approximately $350 per week.

10. Having regard to all of these considerations, I see no basis for an adjustment in favour of either party pursuant to section 75(2) and I find accordingly.

Conclusion

1. I thus find that the net pool of property should be divided equally between the parties.  The most effective way of dealing with the superannuation is to leave the benefits in their current ownership and make appropriate adjustments by way of distribution of the non-superannuation assets.

2. In formulating a structure for orders, it is necessary to have regard to the fact that the company W Pty Limited has a negative value of $33,000.  This value will change when the business debt and overdraft are paid out on the sale of the S property and discharge of the Westpac Bank mortgage.  Counsel for the husband outlined a way of dealing with the company’s negative value, the business loan and cheque account overdraft as follows: 

   “According to page 10 of Mr [G’s] affidavit [W Pty Ltd] is valued at negative $33,000 and the shareholders owe [W Pty Ltd] $43,420.00.  If one ignores shareholder’s loan then assets of [W Pty Ltd] are valued at $102,482.00.  Upon sale of [S property] and discharge of all encumbrances as per husband’s order 6(b) the business Westpac business access loan of $94,667.00 and the cheque account of $39,587.00 will be discharged and the liabilities of [W Pty Ltd] would then total $45,064.00.  The company will then have a net value of $57,418.00.”

3. On behalf of the wife it was submitted that the company and associated debts should be dealt with as follows: 

   “[W] P/L

   Order 11 provides for transfer of the Company to the husband.  The company has a negative value of $33,000.00 however the business loans are secured against the former matrimonial home.  When the loans ($93,888.09 and $40,822.41 = $134,710.00 as per the wife’s affidavit) are discharged on sale of the former matrimonial home the company will have a positive value of $101,710.00.  the shareholder loans stand at $43,420.00 which leave the company with a positive value of $58,290.00 which the husband will receive when the company is transferred to the husband.”

4. Counsel for the wife relied on payout figures, as at 9 September 2008, for the business loan and overdraft contained in Westpac Bank correspondence annexed to her affidavit.  The problem with this approach is that the other elements in Mr G’s valuation of the company are not similarly updated.  For example, there were no corresponding figures as at 9 September 2008 for the assets of the company.

5. I doubt that the company will call in the shareholders’ loans of $43,420, so these debts can be “ignored” as suggested by counsel for the husband.  On the other hand, it is certain that the business loan and overdraft will be discharged on the sale of the S property.

6. The best I can do is to deal with the assets and liabilities of the company on the basis of Mr G’s valuation, which relied on financial statements for the year ended 30 June 2007.  I will thus adopt the approach set out in the document submitted by counsel for the husband.

7. The entries “[W] Pty Limited $33,000” and “Monies owed by the parties to [W] Pty Limited $43,420” can be thus removed from the list of liabilities.  An entry “[W] Pty Limited $57,418” can then be included in the list of assets.

8. I have adopted the basic structure of orders proposed by counsel for the husband, with adjustments to reflect my finding that the net property of the parties should be divided equally between them.  This formula is for a sale of the S and H properties and division of the household contents by a “two list” method.  The remaining property and superannuation is divided between the parties to effect an overall equal division.  The liabilities are discharged from the proceeds of sale of the S property, prior to distribution between the parties.  Once these adjustments are made the total value of the superannuation and non-superannuation assets, excluding the S and H properties and household contents, is calculated as follows, after the above adjustments in relation to the company W Pty Limited:

Assets - Non-Superannuation
1.	Jewellery (W)	$4,650
2.	Jewellery (H)	$850
3.	Peugeot motor vehicle (W)	$12,400
4.	Subaru motor vehicle (H)	$10,550
5.	PH Limited (H)	$1,140
6.	Tabcorp shares (H)	$1,675
7.	Jet ski (H)	$5,500
8.	2 Gold Memberships of ANZ Stadium (H)	$3,200
9.	W Pty Limited (H)	$57,418
Sub-Total:	97,383
Assets - Superannuation
12.	W Pty Limited Super Fund (H)	$96,998
13.	W Pty Limited Super Fund (W)	$24,065
14.	Catholic Super and Retirement Fund (W)	$63,215
Sub-Total:	$184,278
Total:	$281,661

1. I have found that each of the parties is entitled to 50% of the value of these assets, which equals $140,830.  The husband currently holds or will take:

1.	Jewellery	$850
2.	Subaru motor vehicle	$10,550
3.	PH shares	$1,140
4.	Tabcorp shares	$1,675
5.	Jetski	$5,500
6.	ANZ Gold Membership	$3,200
7.	W Pty Limited	$57,418
8.	W Pty Limited super fund	$96,997
$177,331

The wife currently holds or will take:

1.	Jewellery	$4,650
2.	Peugeot motor vehicle	$12,400
3.	W Pty Limited super fund	$24,065
4.	Catholic Super and Retirement fund	$63,215
$104,330

Accordingly, a payment of $36,500 from the husband to the wife is required to effect an equal division of these assets.

1. I will order that the husband pay an amount of $36,500 to the wife from his share of the proceeds of sale of the S property.  The bank liabilities, including the business debt and the overdraft, and the loans from the wife’s father and the husband’s mother will be paid out of the sale proceeds before any distribution between the parties.

2. It seems to me that an equal division of the net assets will achieve justice and equity in all of the circumstances.  Each of the parties will be left with cash, a motor vehicle, superannuation and various chattels.  The both have relatively well-remunerated employment and the opportunity to build on their retirement benefits in the future.

I certify that the preceding one hundred and twenty (120) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson

Associate:     

Date:              6 November 2009