Filby & Northcott
[2022] FedCFamC1F 529
Federal Circuit and Family Court of Australia
(DIVISION 1)
Filby & Northcott [2022] FedCFamC1F 529
File number(s): TVC 909 of 2016 Judgment of: BAUMANN J Date of judgment: 27 July 2022 Catchwords: FAMILY LAW – PROPERTY – Assessment of contributions – Where the Court regards the parties’ direct and indirect financial and non-financial contributions (save for an inheritance) as equal – Two pool approach – Parties to formulate final property adjustment orders consistent with the Reasons Legislation: Family Law Act 1975 (Cth), s 79, 75, 105, 117 Cases cited: Anson & Meek (2017) FLC 93-816
Black & Kellner (1992) FLC 92-287
Chorn & Hopkins (2004) FLC 93-204
Hickey & Hickey (2003) FLC 93-143
Jones & Dunkel (1959) 101 CLR 298
Rosati & Rosati (1998) FLC 92-804
Trevi & Trevi (2018) FLC 93-858
Weir & Weir (1993) FLC 92-338
Filby & Northcott (No. 2) [2021] FamCA 327
Division: Division 1 First Instance Number of paragraphs: 155 Date of last submission/s: 7 September 2021 Date of hearing: 23–26 March and 12 May 2021 Place: Brisbane Counsel for the Applicant: Mr Fellows Solicitor for the Applicant: J Hamilton & Associates Counsel for the Respondent: Mr Galloway Solicitor for the Respondent: Campbell & Co ORDERS
TVC 909 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR FILBY
Applicant
AND: MS NORTHCOTT
Respondent
order made by:
BAUMANN J
DATE OF ORDER:
27 JULY 2022
THE COURT ORDERS:
1.That should the parties be unable to reach an agreed minute of final property orders they say are consistent with the Reasons for Judgment delivered 27 July 2022 (“the Reasons”), each party shall file and serve by no later than 4.00pm on 17 August 2022 their minute of order they contend is consistent with the Reasons.
2.That unless the parties reach agreement as to the form of final property orders after their separate minutes are filed in accordance with Order 1 hereof, the proceedings be re-listed for further oral (or written) submissions, on a date to be fixed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Filby & Northcott has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
Introduction
The property adjustment proceedings between the Applicant husband Mr Filby and the Respondent wife Ms Northcott commenced in the Federal Circuit Court of Australia (as it was then known) in September 2016 – nearly six years ago – some two years after separation.
Little benefit flows from travelling through the unfortunate delays this litigation has experienced. Whilst the proceedings initially also involved a parenting dispute about the parties’ children X (now aged 12 years) and Y (now aged 10 years), after evidence was completed on 12 May 2021 and oral submissions made, Reasons for Judgment in respect of final parenting orders were delivered on 21 May 2021 (see Filby & Northcott (No. 2) [2021] FamCA 327). Those Reasons note the toxic relationship which has developed between the parties.
The overall litigation about the division of a total net pool of assets, which I find to amount to $4,693,688, has not only been frustratingly delayed, but has also been expensive. Exhibits 1 and 2 reflect the husband has paid or incurred costs and outlays totalling around $780,000 and the wife had paid or incurred costs and outlays (inclusive of a loan from a litigation lender who holds security over the home owned and occupied by the wife) totalling around $1,124,813. These Reasons do not deal with the inevitable applications for costs.
As the reasons which follow reveal, perhaps disappointingly for the parties and also their lawyers, I have not dealt with every issue of conflict between these parties, but am satisfied that by making findings about the major forensic and probative issues, a discernible pathway to my conclusion as to what are the parameters for a just and equitable set of orders, is adequately illuminated.
Principles to be applied
Shortly stated, but more concisely and elaborately described in the Full Court decision in Hickey & Hickey (2003) FLC 93-143, in a property settlement case, the Court must adopt a well-known four-step process, essentially:
(a)to identify the pool of assets and liabilities generally, and usually at the time of hearing;
(b)to assess the relative contributions of both the financial, non-financial, direct and indirect nature as specified by s 79(4) of the Family Law Act 1975 (Cth) (“the Act”);
(c)to consider the factors as are relevant contained in s 75(2) of the Act; and
(d)finally, consider the ultimate analysis to determine whether the order the Court proposes to make is just and equitable to both parties.
As the final written submissions of experienced Counsel contended, Mr Fellows for the husband and Mr Galloway for the wife, the breakdown of the relationship in 2014, coupled with the competing proposals which seek orders that bring to finality any previous arrangements or interests between the parties, satisfy me that it is just and equitable to make property adjustment orders (s 79(2) and Stanford & Stanford [2012] HCA 52).
Competing final applications
The orders sought by the husband, described in written submissions filed 7 July 2021 as the “principal orders sought”, were refined by the time of reply submissions filed 30 August 2021 and those orders are reproduced as Appendix One to these Reasons.
Allowing for the fact that submissions were based on a different quantification of the pool of interests, the husband (at paragraph 10.6) says that “[t]he proposal of the husband in the [o]rders sought by him represents a division of property in her favour of about 44% of the global pool.”
The wife’s position finally articulated, noting the difficulty she had experienced with new Counsel retained shortly before the trial to indicate the orders she sought, was for “75 per cent of the assets as calculated by Mr C (which the wife acknowledges includes her liabilities)”. The final written submissions in response did not include (surprisingly) the detailed orders sought. They were filed on 5 September 2021 and are reproduced as Appendix Two to these Reasons. In written submissions titled “URGENT and additional Reply Submissions for the Applicant” filed 7 September 2021, the Court is asked, for reasons articulated, to “ignore the [o]rders as now sought” by the wife – an objection maintained by an email sent from the husband’s solicitors to chambers on 10 September 2021 when subsequent to filing her orders sought on 7 September 2021, the wife further amended those orders by deleting proposed order 7(b).
Considering I am not bound by the orders sought by the parties, I see no lack of procedural fairness where I have decided, after the analysis of the evidence which follows, to I detail the parameters of the orders I propose to make, but only after receiving further submissions from the parties, will final order be pronounced.
For completeness, I record that no application has been made to re-open the evidence to adduce, for example, evidence of valuation of assets since the final submissions in September 2021 were filed, save for an Application in a Proceeding filed by the wife on 2 June 2022 which was listed before me on 14 July 2022.
As the Reasons for Judgment were in an advanced stage of preparation, I directed that the Application be listed at 2.15pm on 21 July 2022 when I indicated that I intended to deliver and publish these Reasons. As a result, whilst I am aware the wife sought “enforcement” of alleged arears of payment under the Order made 9 February 2017 (which the wife characterised as a spouse maintenance order) and sought an “interim property settlement”, I have not taken into consideration the contents of the wife’s affidavit in support of the Application in a Proceeding, in the Reasons which follow. No re-opening of the evidence has been permitted, and in my view, the interests of justice are better served by delivering these Reasons in his complicated dispute, rather than further delaying the process.
Brief contextual chronology
Statements of fact hereafter shall be construed as findings of fact.
The husband and wife are both approaching their 52nd birthdays, and commenced cohabitation in around 1992/1993 when in their early twenties.
In August 1994 the husband and his brother Mr A Filby purchased a rural property in Town LL known as “Property MM” for over $200,000 with the benefit of loan funds from a bank. In December 1994 the parties began their interest in establishing a real property portfolio attracting the taxation benefits of negative gearing, by acquiring a property in NN Street, PP Town for $34,000.
By the time of the marriage in 1997, the wife (a health professional by training) was working full-time at the QQ Hospital and the husband was working as a tradesperson whilst managing the Property MM property. Other business and property activities were undertaken whilst the couple attempted to conceive a family – a difficult time no doubt for the parties. The business activities seemed to be generally profitable.
In 2003 a business known as V Pty Ltd (which hired specialised equipment to businesses) was started, and with Property MM still suffering the effects of a prolonged drought, most of the stock on the property were sold in 2004. After a trip overseas, the husband suffered a serious injury from a fall. At this time the wife was working at RR Hospital.
In 2006, the husband’s father unexpectedly died, resulting in the husband receiving in 2008 an inheritance of around $878,305. The funds were not quarantined by the husband and were used to meet debt, and towards the purchase of further real estate – including in 2009 entering into a form of joint venture with a third party relating to real estate in SS Town.
The parties finally, and happily, were blessed with the safe arrival of two children – X in 2010 and Y in 2012. Life was busy for the couple with each actively involved in both parenting and developing their financial security. The wife won a scholarship to further her studies … at TT University, which began around 2014. She successfully completed those studies.
The involvement of a United Kingdom resident Mr Z in the family business activities is controversial, although it is not disputed the wife met him socially in the United Kingdom around June 2014 which prompted a visit to Australia by Mr Z in July 2014. He is, it seems, a person of some individual wealth who had expressed an interest in investing in Australian farming properties. Both parties ask the Court to find they were the catalyst for Mr Z’s continued engagement in investments with the family post separation in October/December 2014, solely with the husband.
What is clear is that Mr Z has invested significant funds, initially into the acquisition in March 2015 of the property known as “Property UU”. Exhibit 13 is a copy of a contract dated 12 March 2015 where the purchasers described as “Z Pty Ltd as Trustee for the Z Family Trust and H Pty Ltd as Trustee for the T Trust” agreed to purchase 20,322 hectares of leasehold land and certain plant and equipment for $7.5 million. The terms of the contract provided for some items (which included all livestock) to be “reserved from sale” and had to be removed from the land before settlement (clause 2.2). There is no doubt the transaction occurred after separation. One of the complaints by the wife is that she was “alienated” by the husband, from the business decisions, including importantly the contract to purchase Property UU.
In mid-2015 the husband moved into a house on property owned in CC Street, BB Town and later that year worked on a “fly in/fly out” basis as a tradesperson.
As the parenting reasons more fully explain, in late 2016 the wife unilaterally moved with the children to City DB to facilitate her new employment opportunity in her chosen field of endeavour. This action, not surprisingly, caused distress to the husband who immediately commenced an application for the wife to return with the children. His application was determined on 9 February 2017 when, for reasons delivered by the Federal Circuit Court of Australia Judge, the wife was ordered to return by 6 March 2017. She did so. The husband was ordered to pay the wife $850 per week, the specific orders being in these terms:
1.That that Mother has five (5) days to advise the Father of whether she is moving back to [BB Town] or the greater [BB Town] area with the children, [X] born […] 2010 and [Y] born […] 2010 (“the children”).
2.That the Mother give notice to the Father by close of business on 14 February 2017 in relation to intention to move back to [BB Town] with the children.
3.That the children are to be back in [BB Town] for 6 March 2017.
4.That should the Mother not move back to [BB Town], the children are to live with the Father and spend time with the Mother as agreed in writing between the parents.
5.That should the mother move back to [BB Town] or the greater [BB Town] area, the children are to live with the mother and are to spend time with the father pursuant to the Order dated 24 October 2016.
6.That the Court is to be advised of whether the Mother relocates back to [BB Town].
7.That on the basis that the Mother relocates back to [BB Town], the Father continue to cause to be paid into the trust account the amount of $850.00 per week and the characterisation of that payment is reserved.
8.That the rental from the property in [SS Town] is available for the Mother’s use.
A trial on both parenting and property matters commenced before the same Federal Circuit Court of Australia Judge on 8 March 2018 after attempts by the wife to “bifurcate” the proceedings were initially refused by the Judge in July 2017 and on subsequent occasions before the final trial commenced.
At the conclusion of the evidence on 16 March 2018, the original Judge reserved her judgment, however reasons were not delivered (even when the wife in June 2018 indicated she no longer sought to relocate to City DB), and after the wife had resigned reluctantly from her employment (which she had tried to maintain between March 2018 and June 2018) with “[VV Company]”. In August 2018 the wife, for the first time since separation four years earlier, sought an administrative assessment of child support as the primary carer of the two children.
With all that had transpired between the parties by mid-2018, any element of trust between the parties had extinguished and the hard fought litigation continued at significant cost. As I will explore, at times suspicions and beliefs not properly founded fuelled numerous applications and exchanges of correspondence between lawyers, no doubt on their client’s instructions, which all became somewhat ugly. Other parties got involved and, it is apparent, gossip and innuendos in the rural areas the farms operated in, abounded. I deal with some of the issues that arose in this dynamic later in these Reasons.
In March 2020, the proceedings were listed before a different Judge in Brisbane. On what basis the proceedings moved to the docket of another judge, is not entirely clear to me, but in any event is not relevant for this Judgment, where the original trial judge recused herself on 9 November 2020, curiously again after the Federal Circuit Court of Australia had transferred the matter to the Family Court of Australia (as it was then known) on 12 October 2020.
Whilst all these procedural issues were progressing, in the period from February 2018 to about January 2019, all the livestock held by the J Partnership were sold – it is alleged for a gross sum of $224,042. The use of the funds by the husband from the sale of livestock is controversial.
In December 2018 the wife acquired (with no significant financial input) an interest in a farming enterprise in City WW, New South Wales.
Importantly, and of significant relevance, the husband says, and I accept, his business partner Mr Z advised in February 2019 that he wished the Property UU property to be sold – which happened fairly quickly thereafter, culminating in net sale proceeds of $9,821,762 being received by the vendors on 2 August 2019 – a capital gain in the amount of approximately $3.5 million.
It is hardly surprising that the wife, who properly sought more information to trace the proceeds, seeks a share of those profits and that the husband seeks to retain most of the benefits. With the assistance of two forensic accountants (again a frustrating process of engagement) there is evidence before the Court that enables in some ways some better clarity around how the funds received from Property UU were used. What is clear is that both of the “partners” in the Property UU enterprise accessed funds of around $1 million. That the husband was able to do so was particularly upsetting to the wife who, on her case, was bereft of funds and influence over business decisions.
With the benefit of his share of the proceeds from Property UU, the husband acquired a property called “Property JJ” on 20 December 2019 for $2.2 million. It also is a property that runs livestock. In February 2020 the husband set up an entity controlled by him called Filby Family Company (in which the wife has no direct or indirect legal interest).
Prior to a trial listed in the Federal Circuit Court of Australia to proceed in October 2020 in Brisbane before a different Judge, the wife says, and I accept, she had for the first time received contact from the XX Bank about the state of servicing of “significant” debts of the parties’ entities. The wife says as the husband had failed to make full and complete disclosure to her, and where the husband operated and managed the various business enterprises without seeking input from her, the position of the Bank as communicated to her came as a concerning surprise. I note that attempts to mediate some of the arrangements with the Bank through a “Farm Debt Mediation” process have not been successful.
After the proceedings were transferred to the Family Court of Australia, Justice Kent (just prior to his resignation), used his best endeavours to move the matter forward quickly – no doubt in the hope he might be able to hear the matter or at least narrow issues. On 29 January 2021 his Honour made some extensive Orders as follows:
1.By way of interim property settlement, on or before Friday 12th February 2021, the Applicant shall cause to be deposited to the trust account of Campbell & Co the sum of $150,000.
2.The Applicant and Respondent shall jointly engage [Mr YY] of [ZZ Valuers] as a single expert to value the rural properties ‘[Property MM]’ and ‘[Property JJ]’ and:
[a]on or before 4pm on 2nd February 2021 the solicitors for the Applicant shall submit a draft letter of instructions to the solicitors for the Respondent and thereafter, if necessary, they shall both confer so as to finalise those instructions not later than 5th February 2021;
[b]in particular the expert shall liaise with the Applicant as to the date and time of any necessary inspections and the Applicant will do all acts and things to facilitate such inspection;
[c]save with the agreement of the Applicant the Respondent shall not attend the properties on the date or dates of inspection;
[d]the Applicant and Respondent shall jointly share the professional fees and outlays of the expert and in that regard, each shall cause to be deposited 50% of each valuers quoted price into the Trust Account of Campbell & Co Lawyers
3.The Applicant and Respondent shall jointly engage [Mr AB] of [AC Valuers] as a single expert to value:
[a]plant and equipment located at [Property MM] and [Property JJ] and
[b][hire] equipment of [V1 Pty Ltd] and/or [V Pty Ltd] or any other company under the control of the husband situated at [AD Company] or any other [business] and for those purposes -
[c]on or before 4pm on 2nd February 2021 the solicitors for the Respondent shall submit a draft letter of instructions to the solicitors for the Applicant and thereafter, if necessary, they shall both confer so as to finalise those instructions not later than 5th February 2021;
[d]in particular the expert shall liaise with the Applicant as to the date and time of any necessary inspections;
[e]save with the agreement of the Applicant the Respondent shall not attend the properties [Property MM] and [Property JJ] on the date or dates of inspection;
[f]the Applicant shall ensure that the management of [AD Company] is informed of these orders and do all such acts and things necessary to obtain permission for the single experts access to the machinery to be valued;
[g]the Respondent shall pay the professional fees and outlays of the expert in the first instance with liberty to apply at the trial.
4.On or before 5th February 2021 the parties shall:
[a]confer with a view to agreement upon a value for each of the following properties:
[AE Street, AG Town] otherwise referred to as [AJ Street]
[AA Street, BB Town]
[CC Street BB Town]
[b]confer with a view to agreement upon a single expert or experts necessary to be appointed to value those properties in the event of agreement not being reached and, in that event, -
[c]on or before 4pm on 9th February 2021 the solicitors for the Applicant shall submit draft letters of instructions to the solicitors for the Respondent and thereafter, if necessary, they shall both confer so as to finalise those instructions not later than 12th February 2021;
[d]the Applicant and Respondent shall jointly share the professional fees and outlays of the expert(s).
5.The Respondent shall forthwith sign on 29th January 2021 the contract of sale for [AK Street, AL Town] a copy of which is annexed at [H2] to the affidavit of the Applicant filed 21st January 2021 and:
[a][AO Lawyers] shall be the conveyancing solicitor.
[b]each party shall forthwith do all acts and things necessary to give effect to the sale;
[c][AO Lawyers] shall hold in their trust account any surplus funds arising from the sale pending the written agreement of the parties or Order of the Court.
6.The parties shall forthwith cooperate on doing all acts and things necessary to sell the following properties:
[a][AP Street AL Town] at a price of $175,000 via the agency of [Mr AQ of AV Real Estate, AL Town]; and
[b][AX Street, SS Town] at a price of $187,500 via the agency of [AZ Real Estate]; and
[c]each party shall forthwith sign any offer to purchase which exceeds the respective values set out above or which is within 5% less than the values set out above;
[d][AO Lawyers] shall be the conveyancing solicitor.
[e]each party shall forthwith do all acts and things necessary to give effect to the sale or sales achieved;
[f][AO Lawyers] shall hold in their trust account any surplus funds arising from the sale(s) pending the written agreement of the parties or Order of the Court.
7.The parties shall forthwith cooperate on doing all acts and things necessary to sell the properties at [1 BN and 2 BN Street Town LL] and
[a]the sale price(s) shall be as recommended by the [BA Real Estate] of [BC Town];
[b]each party shall forthwith sign any offer to purchase which exceeds the recommended sale price(s) or which is within 5% less than the recommended sale price;
[c][AO Lawyers] shall be the conveyancing solicitor.
[d]each party shall forthwith do all acts and things necessary to give effect to the sale or sales achieved;
[e][AO Lawyers] shall hold in their trust account any surplus funds arising from the sale(s) pending the written agreement of the parties or Order of the Court.
8.The husband is to provide to the wife within 3 days of the date of these Orders, access to all bank accounts relating to businesses and the mortgage payout figures relating to all real estate. The wife is restrained from delaying a sale in the event a payout figure is higher than the agent’s recommended sale price on any property.
9.Either party is to provide details of any DA Plans or developments to the Conveyancing lawyer and to the agents 5 days prior to a property being marketed.
10.The husband is restrained from authorising any further loans upon or transfer of mortgages onto any property the subject of these proceedings save for the [Property JJ].
TRIAL DIRECTIONS
11.On or before 4pm on Tuesday 16th February 2021:
[a]the Applicant shall file and serve an Amended Application setting out the orders he seeks.
[b]the Respondent shall file and serve an Amended Response setting out the orders she seeks.
[c]each party shall file and serve one consolidated trial affidavit containing their evidence and an updated Financial Statement.
[d]each party shall file and serve one affidavit of any other witness intended to be relied upon.
12.The Applicant’s trial affidavit shall specifically address the sale of [Property UU] and the purchase of [Property JJ] together with the matters raised at paragraphs 14 and 15 of the draft report of [Mr. C] dated 18th January 2021.
13.On or before 4pm on Monday 22nd February 2021 each party shall file and serve one affidavit strictly in reply.
14.Each party shall have liberty to file and serve one additional affidavit strictly concerning expert evidence by 4pm on Monday 15th March 2021.
15.The parties shall confer concerning the balance sheet and on or before Thursday 4th March 2021 the Applicant shall file and serve a Balance Sheet setting out the matters that are agreed and disagreed as to the assets and liabilities of the parties or either of them.
16.On or before Monday 8th March 2021 each party shall file and serve a Case Outline containing:
[a]a minute of orders sought;
[b]a chronology;
[c]the balance sheet that is contended by that party;
[d]a list of the documents relied upon;
[e]a summary of the case to be advanced by that party.
17.On or before Monday 15th March 2021 each party shall file and serve a list of objections (if any) to the affidavit evidence of the other party.
18.On or before Thursday 18th March 2021 each party shall file and serve a reply to the objections (if any) made by the other party.
19.The Respondent’s application for enforcement contained with her Final Amended Application in a Case shall be adjourned to the trial for hearing.
20.Save for the matter referred to in Order 19 the Application in a Case filed 21st January 2021 and the Final Amended Application in a Case filed 28th January 2021 be dismissed.
21.The matter is adjourned for mention at 9am on 25th February 2021 by telephone link.
The trial commenced before me ultimately on 23 March 2021, but further complications transpired and on 26 March 2021 I ordered:
1.That the father has leave to file and serve a further affidavit of himself and any other witness in respect of the issue raised today in respect of Mr B, no later than 23 April 2021.
2.That the mother shall file and serve any affidavit in reply no later than 30 April 2021.
3.That the wife’s Application in a Case filed by leave on 25 March 2021 be dismissed.
4.That for the purpose of [Mr C], the wife’s forensic accountant, and [Mr D], the husband’s accountant, preparing a further updated joint report, the husband do all things necessary to direct [E Accountants] to provide financials as at 31 December 2020 to [Mr C] of [F Accountants] for all entities in the [Filby Group], including but not limited to the entities listed below, by no later than 16 April 2021:
a.[G Pty Ltd];
b.[G Unit Trust];
c.[H Pty Ltd];
d.[J Partnership];
e.[J Family Trust];
f.[K Trust];
g.[L Pty Ltd];
h.[P Trust];
i.[M Trust];
j.[N Trust];
k.[O Family Trust];
l.[Q Trust];
m.[R Trust];
n.[S Trust];
o.[T Trust];
p.[U Trust];
q.[V Equipment Pty Ltd];
r.[W Pty Ltd];
s.[Filby Family Company];
t.[Z Family Trust] & [T Trust Partnership].
5.That for the purpose of the parties’ preparing an updated Conclave Report, the wife do all things necessary to provide financials as at 31 December 2020 to [Mr C] of [F Accountants] and [Mr D] by no later than 16 April 2021.
6.That the husband do all things necessary to provide to [Mr C] of [F Accountants] all login details and full access to all general ledgers for all entities in the [Filby Group] by no later than 16 April 2021.
7.That the parties do all things necessary to direct [E Accountants] and [F Accountants] to conclave and prepare a joint report by no later than 5 May 2021.
8.That the parties shall cause the joint report to be filed on the Commonwealth Courts Portal by no later than … 2021.
9.That the parties shall file and serve an Affidavit annexing an updated report by their respective accountants on the other party by no later than 5 May 2021.
10.That the Final Hearing of these proceedings be adjourned part-heard for a further two (2) days commencing at 10.00am on 12 May 2021 in the Family Court of Australia at Brisbane, with those persons not based in Brisbane to appear by video via MS Teams.
11.That by 12.00pm (noon) on 6 May 2021, the parties shall inform the chambers of the Honourable Justice Baumann whether they require cross-examination of any other witness other than the expert witnesses.
It was a matter of significant frustration to me (and I accept to the parties) that although the two forensic experts (Mr C and Mr D) produced (finally) a joint memorandum on 24 March 2021 (see Exhibit 7) a further memorandum (see Exhibit 28) was not tendered until on 12 May 2021, after compliance with the orders for further production made 26 March 2021. I deal with the evidence of the experts’ evidence (including the evidence that came from the cross-examination of Mr D) shortly in these Reasons. Mr C was not required for cross-examination by the husband, despite being available.
There were a number of lay witnesses in the case not required for cross-examination, with the only witnesses in the property proceedings tested by cross-examination (apart from the parties) being:
(a)for the husband – Mr BD (a stock and station agent); Mr FF (a station hand) and Mr B (a caretaker on Property MM); and
(b)for the wife – Ms BF (a post separation “domestic partner” of the husband) and Ms BF’s son Mr BG (a young man who had some involvement with livestock mustering).
As I have already noted, Mr D (the husband’s current accountant) was the subject of cross-examination, as was the single expert machinery valuer Mr AB.
Although the husband’s elderly mother (aged 83 years) had sworn an affidavit relied upon by the husband, after production of a medical certificate from her general practitioner dated 15 March 2021 (see Exhibit 8), Mr Galloway indicated he did not press to cross-examine her, but would make submissions as to the weight to be applied to her evidence.
Perhaps surprisingly, considering his involvement with some of the parties’ commercial dealings, Mr Z did not given evidence nor was he asked to do so by subpoena. I accept as a resident of the United Kingdom and having expressed to the husband a desire not to be involved in the parties’ “divorce proceedings”, that compelling him to give evidence electronically may have been problematic. I do not make a Jones & Dunkel (1959) 101 CLR 298 inference against either the husband or the wife in the circumstances. To a large extent, the effect of Mr Z’s investment is documented and is available to the Court and was available to the two forensic experts.
Forensic accountants memorandum
Exhibit 28 is the joint memorandum of Mr C and Mr D, both accountants, although Mr C had prepared five previous reports (of some length) as an expert, engaged it seems solely by the wife. It is far from clear whether he was ever appointed by the Court, or the parties as a single expert.
The late involvement of Mr D arose from his engagement by the husband as his business accountant since 2020. As his cross-examination clarified, he only became involved with Mr C’s sixth report, and through two subsequent meetings (the parties described them as “conclaves”) on 22 March 2021 and finally on 4 May 2021. Mr D relied upon the correctness of financial statements prepared previously by external accountants for the husband.
It is not unusual, especially where (as is the case in this matter), the private commercial entities were not audited. The costs of doing so would have likely been exorbitant, and the wife maintained an underlying suspicion that financials from around the time of separation and thereafter may not be accurate.
Ultimately, I generally accept the evidence of the two experts and the compromises that Exhibit 28 reflect, subject to the findings made in these Reasons. I record the following matters for context:
(a)Table 1.0 is described as a “Filby Group Balance Sheet”. I have had reference to those agreements and differences when making the findings as to what is the net pool of legal and equitable interests. As will become apparent, for reasons given, unlike the two accountants, I have determined a two pool approach is appropriate in this case. I note that Mr D says he did not have “sufficient time or information to confirm” the accuracy of all the figures in table 1.0;
(b)At least table 1.0 now reflects broad agreement (with the limitations noted) on most of the line items, reflecting in Mr C’s (post conclave) estimate of $8,520,415 and Mr D’s (post conclave) estimate of $8,651,829 for total assets. The respective difference in “total liabilities” is only $289,573 (Mr C at $3,562,491; Mr D at $3,852,065); and
(c)Mr D asserts “contingent adjustments” totalling $585,116 should be included. In this regard it should be noted the inclusion or not of various “adjustments” calls for, at times, the exercise of a discretion by the Court on established legal principles and is not a pure accounting exercise.
By final written submissions, and after the evidence of the parties had been the subject of examination, both Counsel made further concessions and observations.
Ultimately, the pools, as I have decided should be found to exist, does not wholly adopt either the position of Mr C or Mr D, but as will be seen, reflects on many of their forensically driven agreements set out particularly in Exhibit 28.
I do not ignore the submission of the wife that, for the reasons contended at paragraphs 20 to 25, “in each and every point of difference, Mr C should be preferred”. If the submission suggests in some way that Mr D’s involvement (late though it was) in at least two conclaves designed to narrow valuation issues, offered little value – I reject that suggestion. Issues of credit between the accountants engaged does not arise. I accept that Mr C is independent whilst Mr D is the husband’s external accountant.
However as Exhibit 28 reveals, and by final submissions seemingly adopted, the areas of disagreement between the two experts are discrete.
Before seeking to establish the pool of interests of the parties, I incorporate for context a slightly amended table of entities drawn from the wife’s submissions at paragraph 19, and described as an “aide memoire”, as follows:
No. Entity Description 1 J Partnership A partnership formed early in the parties’ relationship. Its assets consist largely of loans it has made to various others of the parties’ entities. 2 J Family Trust A trust established early in the parties’ relationship. The husband is the appointor and the trustee. It owns “Property MM” and other assets are loans it has made to other related entities. 3 K Trust The trustee is a corporation, V Pty Ltd, of which the husband is the sole shareholder and director. He is also the appointor. The company’s assets are the remaining hire equipment.
The Trust assets are inter-party loans, the most significant of which is one made to the husband’s entity, the T Trust, which is a part-owner of the property Property JJ.4 L Pty Ltd The husband appears to be the sole director although a Mr BH became a Director without the wife’s knowledge and remains so. The shareholder is a corporation in BK Ltd, about which little is known save that it plays no role in these proceedings. L Pty Ltd owns the property at CC Street, BB Town, and its assets otherwise consist of loans to other related entities. One of its liabilities is a borrowing from J Partnership. There are other creditors. 5 P Trust The husband and wife are trustees of this trust. It has small assets, near to matching liabilities and does not trade. 6 M Trust The husband is the trustee and appointor. It owns property variously described as AJ Street, and otherwise as AE Street, AG Town, near BL Town. That property has a value of $415,000, but the M Trust owes money to the bank near to the extent of its value and other money to the J Partnership. 7 N Trust The husband is the trustee and the appointor. The trust
does not trade and appears to have no assets. It need not be considered further.8 O Family Trust The husband and wife are the trustees. The husband is the first appointor; the wife in the alternative. The O Trust owns property at AX Street, SS Town, and owes a bank loan near to that property’s value. 9 Q Trust The husband is the trustee and appointor of this trust,
which appears to have no assets and has not traded.10 R Trust The trustee is the husband and wife together, who own
the units in the trust. It apparently has no assets and
has not traded.11 S Trust The trustee is the husband and the wife, as is the appointor. An asset consists of a debt to it from the J Partnership.
12 BM Trust The husband and wife are the trustee and appointor. The trust owns AP Street and AK Street, both properties at AL Town. The trust ‘owes’ money to the J Partnership and to the bank. 13 T Trust The trustee is a corporation, H Pty Ltd, of
which the husband is the sole shareholder and director.
There are various beneficiaries. The husband and wife
are jointly the appointor. The most significant asset of this trust is its share with the Z Family Trust in the partnership of trusts which relates to the owning and operation of the livestock enterprise at Property JJ.14 U Trust The trustee is a corporation in which the husband and wife are directors and shareholders. It owns two pieces of real estate, namely 1 BN and 2 BN Street, Town LL. 15 V Pty Ltd The wife is the director of this company, but the sole
shareholder is the J Family Trust. It has or was
intended to have plant and equipment that could be hired to third parties. Some of those assets remain, together with moneys owed to it by the J Partnership. The wife’s position is that the husband has had sole control of the assets and income.16 W Pty Ltd The directors of this company are the husband and a third party, and the shareholders are L Proprietary Limited and another company. Its asset and liabilities are not great. 17 Z Family Trust and T Trust Partnership This is a partnership of trusts. The trustee of the T Trust is controlled by the husband; the Z Family Trust is an asset of Mr Z. The most significant asset of the partnership is the Property JJ, with its most significant liabilities are the partner’s funds. 18 G Unit Trust This is a unit trust controlled by Mr Z and the husband. It has some livestock, plant and equipment, and is owed funds by the husband. Its most significant liability is the loan it has taken from the partnership of trusts. It also owes significant moneys to Westpac Bank. 19 BR Super Fund This is a self-managed superannuation fund of which the parties are trustees and members. 20 BU Company An entity created by the wife, but which appears to have no income nor value. 21 BV Pty Ltd A company established by the wife which appears to have no income nor value. 22 BW Pty Ltd A company in which the wife has a shareholding. 23 BX Company A concern in which the wife has a start-up interest and where there is no evidence of value.
The above schedule and the evidence establishes the existence of many inter party transactions and loans, and the final report (Exhibit 28) seeks to take them into account in a sensible acceptance of the principle that a debt in one entity is an asset in the other, which generally results in a balance sheet neutral outcome.
In the examination of the pool that follows, save for the interest of Mr Z and his entities, the Court treats the range of corporate and trust interests as interests essentially of the parties. No arguments were advanced, nor could they have been on the evidence, that the various entities were other than the respective alter egos of the parties – particularly the husband.
Why so many entities were created for what amounts to a limited pool of assets, I infer, was based on accounting and/or tax advice at the time and in the hope that the accumulation of a property portfolio at least would be a great financial gain. This has not proved to be the case despite significant entrepreneurial flair and energy being devoted. Ultimately the number of interconnecting entities with possible taxation implications means that careful consideration to the final form of orders will be required.
Pool
By final written submissions, the ultimate difference between the parties as to the interest which formed the “pool” of divisible property and the values of those interests, had narrowed to some extent. It has proved unhelpful that Counsel chose to articulate a pool in quite different forms. This is a regrettable feature of the order of delivery of submissions.
The Applicant husband contends for a two pool approach, totalling $4,356,889 (Pool A: $1,024,008; Pool B: $3,152,882) whilst the wife asserts (adopting entirely the calculations of Mr C set out in Annexure 1 to Exhibit 28) an adjusted net asset “pool” of $3,562,491. That figure included an allowance for the wife’s legal fees of $1,360,230.80. If that liability of the wife, for the purposes of this summation, is not included then the net adjusted pool contended for by the wife amounts to $4,922,721 – a difference between the parties of approximately $565,832. Before I return to the competing submissions as to whether a separate pool is appropriate, I seek to deal with, sequentially, the differences in the pool by category. I also prefer to give greater detail to the pool items rather than, as the wife’s submissions at paragraph 28 (no doubt being helpful) seeks to articulate, a succinct summary without reference to a number of entities.
J Partnership
The difference in the deficiency in the J Partnership is $2,000. I adopt Mr C’s estimate of ($750,903).
J trust
This entity owns essentially the Property MM property, and after a single expert valuation was undertaken, the agreed valuation is $2,961,584.
K Trust
The major asset set out in the financials is a loan to the T Trust – one of the many inter-related transactions. Of course, the loan is a liability for the T Trust and as earlier noted (at [49]), the T Trust holds an equal interest in the Property JJ livestock enterprise.
L PTY LTD
The agreed excess of liabilities over assets (which includes the property at CC Street, BB Town) is $276,429.
M trust
Although this entity owns AE Street, AG Town, it is security for a bank loan and also owes funds to the J Partnership – leaving an agreed deficiency of ($177,301),
O Family trust
This entity owns the property at AX Street, SS Town but is security for a bank loan. The extent of the borrowings, in my view, make its sale inevitable, such that an allowance of $5,000 for selling costs (as opined by Mr C) is appropriate. The deficiency will be brought into account at ($74,960).
S trust
This entity is owed funds by the J Partnership of $100,732 – an agreed position.
BM trust
This entity has two properties at AK Street, and AP Street, AL Town. The Orders of Kent J (see paragraph 35 above), required the parties to execute the contract for the sale of AK Street, however as I recall the evidence, the transaction did not proceed – such that at the final hearing, the BM Trust still owned both properties. The difference between the parties, similar to the comments made in respect of the SS Town property, is the opinion of Mr C that selling costs of $10,000 be allowed. I agree.
T trust
Noting the earlier reference to the loan owed to the K Trust, and to avoid double counting, it is appropriate to record that the parties agreed that 50% interest in the partnership relating to the Property JJ enterprise had a value of $3,379,428 (approximately with a $33 difference), but owed funds both to the K Trust and other creditors. The other creditors that should be taken into account in the T Trust were calculated by Mr C at $714,902 – and I adopt that estimate. I would therefore calculate the net deficiency in the T Trust at ($1,164,300).
U trust
This Trust owns real estate at 1 BN and 2 BN Street, Town LL with similarly an excess of liabilities over assets, arising from secured debt and inter party loans. I adopt the calculation by Mr C of deficiency of $499,926.
V pty ltd
Mr C’s estimate of net value to the shareholder J Family Trust is $398,360, which I adopt.
AA Street, BB Town
The value of this property, registered in the wife’s name, is $590,000. Although there are debts over the property where the wife had used her interest for raising funds to pay legal expenses, in this case I see no injustice to either party if the “value” of the wife’s interest is adopted at a net figure of $442,000 – where the evidence reveals that the mortgage liability at separation was in the vicinity of $148,000. The parties agree the wife’s HECS liability of $101,194 should be taken into account – the study by the wife having taken place during the relationship and with the support of the husband. I agree.
Filby family company
The husband created this business in February 2020. In his affidavit filed 5 May 2021, Mr D says he provided updated financial statements as at 31 December 2020 to Mr C for this entity (item 25 of the schedule at page 32/33 of the filed affidavit). Mr D reveals how a deficiency of liabilities over assets of $247,309 is calculated.
Because of the manner in which the wife (adopting the summation approach in Exhibit 28) constituted her pool submissions, it is not easily identifiable as to where the deficiency in the Filby Family Company is incorporated. At paragraph 6.9 of the husband’s submissions (item 22), a deficiency of $757,309 is incorporated.
However, this figure has no clear foundation in the evidence of Mr D, who in summary opined:
Assets
$210,554
Liabilities (including loan From G Trust)
$457,863
Nett
$247,309
In circumstances where the wife’s submissions in response do not seem to deal with this discrepancy, I adopt a deficiency of $247,309 rather than $757,309 as contended by the husband in his submissions.
Other disputes
Equipment and farm machinery
As a result of the Orders made on 29 January 2021, Mr AB of the firm AC Valuers provided a single expert report as to the value of plant and equipment (see Exhibit 10). In circumstances where the accountants, Mr C and Mr D, were not experts on the value of machinery, they (noting that limitation) adopted Mr AB’s valuation opinion.
However, what became apparent in this case, where no trust exists between the husband and the wife, was that it is the wife’s case that the husband failed to produce for inspection all available equipment. In this respect, the wife produced photographs of various items that she said were taken at various times. Both Mr AB and the husband were asked about a number of items in a folder of photographs marked for identification, not all of them tendered. In a thorough cross-examination, Mr AB deposed that:
(a)having looked at the folder, he identified some items he could not recall seeing;
(b)a number of the items (for example items 24 – 35) were in the “graveyard” site and he was informed they were owned by a third party;
(c)the “…” he saw at Property JJ were not operational; and
(d)he could not give, in the witness box, a reliable valuation of the items he had not inspected.
The husband, in his evidence, and that of his witness Mr B (the caretaker), said the items in the “graveyard” were not his. Mr B asserted some tools and items were his, and that the husband’s friend “Mr DC” left items on the farm as he had nowhere to store them.
The wife bore the onus of proof to establish that the husband either sold valuable machinery (not otherwise disclosed in financial statements) or that he had “hidden” items from inspection by the joint expert Mr AB. The production of the photographs raised some suspicions – however the husband was tested in cross-examination, and on this issue I accept his denials of “wrong doing”.
Separation occurred many years before the hearing, and I accept that if there was other machinery and farm equipment in existence in 2014, without constant maintenance and attention, the value of old farm machinery would diminish. Operational needs on a working farm for wire and fence posts of course arise, but Mr AB, I am satisfied, took a sensible and practical approach to his valuation task and that the evidence as to value should be accepted by the Court.
I also accept that in a livestock farming operation, that type of machinery necessary, as compared to an activity such as large grain production, is probably less.
I could not, in the application of common sense, completely accept that since 2014 the husband may not have engaged in some sale of equipment, but it is not possible on the evidence to quantify the value of or identify which sizeable item has been sold.
Livestock
Although both Mr C and, more recently Mr D, have made allowance for livestock sales, the wife maintained her entrenched view that the husband moved and sold livestock at a greater number than he was prepared to admit, or had placed through the “books” of the entities.
Under cross-examination, the wife maintained her position that she was highly suspicious of the cash availability and livestock numbers (as disclosed by the husband).
In particular, the wife asserted, somewhat boldly in my view, that she sought an “add back” of $2 million for missing livestock. Her major concerns arise from the sale of livestock from Property UU and, when pressed, the wife conceded that in concluding that the husband has been dishonest, she has relied upon the evidence of Ms BF and the lack (she asserts) of timely disclosure.
I would accept that with the movement of stock (and the inevitable death and birth of livestock), numbers could be difficult to ascertain with exact certainty. As far as the financial returns for the various entities, the second repot of the accountants (Exhibit 28), did not suggest significant under estimation of livestock numbers or a failure to pay proceeds of sale of stock into the necessary entities.
The extent of the asserted add back, not supported to the same extent in the written submissions of the wife, would on an estimate at say $1,000 per head, compute to over 2000 head unaccounted for by the husband. I find that:
(a)the evidence of Ms BF on the issue of livestock numbers was highly unreliable. The breakdown of her relationship with the husband was not of her desire. It would not be unfair to describe her as embittered and staunchly in the wife’s camp and eager to assist her. She was prone to exaggeration – best reflected in her claim (under oath) of the sale of 4,000 to 5,000 head (paragraph 76 of her affidavit filed 22 February 2021) which she conceded in cross-examination was more likely 1,900 head;
(b)without a need to make a specific finding as to the incident at the BZ Hotel between the husband and Ms BF, which caused her to leave the relationship, I accept the husband probably acted poorly;
(c)Ms BF’s son Mr BG (aged 20 years), clearly was empathetic to his mother’s plight and had nothing good to say about the husband. He worked for a period on the Property UU property and he observed some mustering activities, which seems to have become part of his line of work since leaving the Property UU property. When challenged on his estimate of livestock numbers, in his affidavit (filed 22 February 2021) he acknowledged it was the drover’s job to count the livestock, although at paragraph 12 he claims he counted 3,000 head at Location CA. He said the husband told him 3,500 head were moved. Importantly, he conceded that he was incorrect to assert 1,500 head in paragraph 16 of his affidavit – rather he now says it was only 900 head. He denied he told his mother Ms BF the 1,500 head figure. Mr BG denied that his evidence is in “revenge” for the events of October 2020; and
(d)apart from the husband’s evidence that there was no wrongdoing on his part, I found the evidence of Mr CB, a farmer in CE Town, entirely convincing. He simply deposed to purchasing:
…832 head of livestock from [G Pty Ltd] which were from the property “Property UU”. I did not purchase 1,200 to 1,500 head of livestock.
Under cross-examination by the wife’s Counsel, Mr CB confirmed that before he signed his affidavit, he looked at the contract he had signed and movement documents.
To the extent, in the analysis above on this issue, the wife feels I have not engaged in her argument about “livestock numbers” at paragraphs 56 to 58 of the written submissions, I further say and find that:
(a)ultimately, the wife appears to concede that “it is not possible for the wife to say what the stock numbers actually are, because she does not have the advantages enjoyed by the husband”;
(b)at best, the wife’s final submission is that I should make a finding that the husband has failed, since separation to disclose “livestock numbers”, and in such circumstances, I should be cautious about accepting the husband’s evidence (see Weir & Weir (1993) FLC 92-338 and Black & Kellner (1992) FLC 92-287); and
(c)I reject the wife’s submission, and to the extent not already referred to, I accept the submissions (and therefore the evidence of the husband and his witnesses) which I prefer over the evidence of the wife and her witnesses, set out by the husband at paragraphs 8.1 to 8.7 (of the submissions filed 7 July 2021) and further, paragraphs 6.1 and 6.2 (of the submissions in reply filed 30 August 2021).
Again, I find that the wife’s claims are not supported by the evidence. She bore the evidentiary burden. She has simply failed to discharge that burden.
Other interests
I have ignored, as either of no value or, on the evidence, limited value, the following interests:
(a)P Trust;
(b)Q Trust;
(c)R Trust;
(d)CF Company;
(e)BU Company;
(f)BV Pty Ltd;
(g)BW Pty Ltd (in which the wife acknowledges she holds 50,000 shares); and
(h)BX Company (where the husband asserts the wife’s interest is worth $15,000).
I agree with the submissions of the husband that the encumbrance over the husband’s personal motor vehicle (Motor Vehicle 1) equates to its second hand value.
Relying on Mr C’s value of superannuation interests of the parties, I adopt the following:
Husband Super Fund 1 $114,163 BR Super Fund $72,865 $187,028 Wife Super Fund 2 $16,167 BR Super Fund $99,223 $115,390
Add backs
On 29 January 2021, Kent J ordered the husband to pay to the wife “by way of interim property settlement”, the sum of $150,000. The wife submits at paragraphs 30 to 32 that, as the husband “has had the benefit of drawings from the parties’ enterprises for years since separation”, the Court should exercise its discretion not to “add back” the interim property settlement. Although I may not be strictly bound by the characterisation of the payment, in my view, the funds received should be added back as an interim property settlement. In my view, the payment by the husband to the wife on 20 November 2020 should be treated in the same way.
The husband concedes (at paragraph 5.4) that an amount of $360,000 drawn by him post 31 December 2021 should be added back against him. I agree.
The wife relying upon the evidence of Mr C (at paragraph 33), seeks to include as a liability in the pool, the sum of $1,360,230.84 for legal fees paid or still owed, which sum is calculated as follows:
CG Finance plus loan (accruing interest) $314,136.86 Loan from parents $118,233.00 Balance owed to lawyers at 1 July 2018 $340,048.74 Balance owed to lawyers since 1 July 2018 $260,935.42 Owed disbursements $326,876.82 $1,360,230.84
In summary, the wife contends that justice and equity is served by allowing the total fees and disbursements incurred by the wife as set out (or a liability for a debt used to pay legal costs) because:
(a)the husband has had the benefit of drawings from the parties’ enterprises for all the years since separation;
(b)the wife’s description of “parties’ enterprises” is clearly meant to include the G Unit Trust (where Mr C says the husband had received drawings of at least $639,116 between 1 July 2020 and 11 February 2021) and drawings from the T Trust;
(c)it is unfair for the husband to expect the wife to be responsible for her own legal costs “where the business of the partnership of trusts and of the G Unit Trust was enough for the parties to provide wholly for their fees”;
(d)Mr C says (at paragraph 33 of his report dated 6 May 2021) that the husband has used the G Unit Trust financial resources for “considerable personal expenditure” whilst “simultaneously denying [Ms Northcott] access to a commensurate level of funds associated with her share of the Capital Gains from [Property UU]” (emphasis added). I note the wife’s case is that she is entitled to a share of the capital gain from Property UU but this is a matter for the Court when considering contributions; and
(e)equity and justice compel that the position of Mr C be wholly adopted, and the wife ought be allowed to include as a liability those debts she has incurred for legal fees.
In response, the husband submits that:
(a)the argument by the wife to seek to include the total costs as a liability in the pool, “was not flagged in the Respondent’s Outline of Case document…nor at any stage of the trial”;
(b)as a result, Counsel for the husband has not had an opportunity to explore, in cross-examination, a range of matters – including those set out at paragraph 5.3 of the husband’s reply submissions; and
(c)relies upon the well-known authorities of Chorn & Hopkins (2004) FLC 93-204 and Trevi & Trevi (2018) FLC 93-858 to submit it is inconsistent with authority to allow any borrowing undertaken by a party post separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties.
The quantum of costs incurred and payable by the wife may reflect some of the issues raised in the husband’s submissions – but clearly the claim reflects indemnity costs.
Whilst the wife asserts (and this strong submission will be considered when shortly discussing contributions) that the decision of the husband to purchase Property UU post separation and run it for nearly five years with his partner Mr Z means she is entitled to share in the substantial capital gain, the fact remains that the income or capital gain directly arose from the husband’s decisions post separation, and in circumstances where the husband points out his expenditure (whether on legal expenses or other discretionary expenditure) was generated post-separation from his own endeavours.
The wife plainly finds that impossible to accept and it would be mere speculation to muse over her position if the husband’s post separation activities had resulted in a catastrophe financially rather than significant gains.
In my assessment, as a matter of principle, it is inappropriate to apply the wife’s arguments of unfairness to the treatment of legal expenses, in the way she seeks to do, because at least:
(a)until otherwise determined, the law is that each party should bear their own costs of proceedings (s 117(1));
(b)parties are entitled to choose their lawyer and agree to whatever level of fees the client regards as acceptable; and
(c)when the “dust” finally settles on this matter, it seems sadly inevitable that the Court is likely to be asked to considered cross applications for costs – most likely running from as early as 2015. As the Reasons reflect, the litigation journey has been extremely complicated. The husband says for a number of Court events his costs were reserved. At least in respect of the parenting issues (which I infer the total costs claimed cover as well), costs may flow differently from the property issues. Also, regrettably extra costs have been incurred since the need for the final hearing before me, at least arising in part from the decision of Judge Demack to recuse herself. The husband at least seeks a costs certificate for both parties under s 10(3) of the Federal Proceedings (Costs) Act 1981 (Cth), which order I propose to make.
As a result, I do not intend to include the wife’s costs liability of $1,360,230.84 in the pool.
Although at paragraph 7.14 of the husband’s submissions an alternative claim for an “add back” of $66,664 is made arising from an analysis of the enforcement of the Order made on 9 February 2017, I will not add that sum to the pool, preferring to deal with the obligations arising from the 2017 order separately later in these Reasons.
One pool or two pools?
At paragraphs 6.1 to 6.8 of his written submissions, the husband contends that:
the monies derived from the purchase and subsequent sale of [Property UU] will be analysed in a separate pool because:
[a]the asset of [Property UU] was acquired post separation;
[b]no part of the “matrimonial” property was used to finance that acquisition;
[c]because the husband borrowed the monies necessary to make that acquisition form his business partner on an interest free basis (see Exhibit 17) and on terms which did not require any immediate repayment, his income did not need to be diverted from servicing matrimonial debts.
In response at paragraph 14, in seeking to persuade the Court to reject a two pools approach, the wife contends that:
The great difficulty with this approach for the husband is that it seems to ignore the fact that what he brought from the marriage following the parties’ separation, not only in terms of assets but in terms of experience and expertise and the freedom unencumbered by children to do much to advance his interests, has allowed him to generate wealth at the wife’s expense. The authorities cited by the husband in his submissions are far from determinative in his favour, saying or reaffirming that at the heart of any property adjustment order to be made under section 79 of the Family Law Act there must be an analysis of the nature and extent of each party’s contributions. Moreover many of the [livestock on Property UU] were seeded from the [Property MM livestock] or their progeny built up by the husband and wife and the wife was instrumental in the involvement of [Mr F] and the choosing of [Property UU].
Murphy J in Anson & Meek (2017) FLC 93-816 said (Aldridge and Cleary JJ agreeing on this statement) at [20]–[21] that:
20.The reference to “pools” recognises that the interests in property of the parties or either of them can be grouped by reference to the components of each being of a particular nature or having characteristics different from the components of another “pool”. The distinction between, on the one hand, interests in property and, on the other, superannuation interests (which are to be “treated as property”) is a very common, but by no means exclusive, example.
21.That distinction can be important in assessing differing contributions to different types of property. But it can also be very important in answering the essential question posed by s 79(2) which is, of course separate from the question posed by s 79(4) and its constituent elements including contributions.
(Footnotes omitted)
However it is a matter of discretion for a trial judge whether to depart from the usual practice of constituting one pool of interests or, in a particular case, to constitute two or more pools. To do so does not, of course, invite departure from a holistic consideration of contributions or on taking into account the respective interests, for the purposes of s 75(2)(b).
The Court must always be alert to ensure, however many pools may or may not be created at step one, to ensure orders achieve justice and equity. Ultimately, in this case, I have decided to constitute two separate pools for the reasons articulated by the husband (without accepting his argument entirely that the wife made no direct or indirect contribution to Property UU), to add a further element of transparency to the exercise of a broad discretion.
The pools which are set out in Appendix Three to these Reasons form the ultimate conclusion on the evidence and findings made previously – without reference to these contingent liabilities, namely:
(a)Division 7A loans – Although the experts agree this contingent liability of $139,055 exists, I accept the observations made by Mr C at paragraphs 60 and 61 of Exhibit 28. Leaving aside the potential to reduce the liability (see paragraph 64), the fact remains that the subject company is deregistered. In the circumstances, I do not take into account in the pool this contingent liability.
(b)Contingent capital gains tax:
(i)Leaving aside for a moment the fact that the order sought by the husband, if made, would not result in an immediate or even foreseeable sale of either “Property MM” or “Property JJ” (see Rosati & Rosati (1998) FLC 92-804), I adopt the joint opinion in Exhibit 28, that:
57.[Mr C] and [Mr D] agree a tax scenario analysis should be prepared to demonstrate to the Court the manner in which any potential capital gain tax liability (worse case scenario) can be reduced to nil (likely scenario) as any such analysis will be highly relevant to any orders sought by [Mr Filby] and [Ms Northcott].”
(c)Capital gains tax (“CGT”) concessions:
(i)Where the Court has not received any reliable “tax scenario analysis” in evidence, I regard it as too speculative to reduce the pool of assets by any “contingent liability” for CGT tax; and
(ii)As I will discuss further in the final section of these Reasons when considering the parameters of the orders the Court may call upon the two experts (or another expert) to provide evidence if an order is made for the sale of both or one of “Property MM” or “Property JJ”, before final orders for adjustment of property are pronounced.
Before moving to discuss the contributions and s 75(2) factors and other matters touching on the parameters of an order likely to do justice equity, I make at least this observation. If one accepts that the pool two interests represent the remaining benefits of the Property UU property sale – which could be seen as a windfall in many ways, the remaining pool one interests reflect the efforts of the parties during the course of the relationship. Considering the efforts (working for most of the relationship as a “team”) they put in and the risks they took in seeking to create wealth, I am comfortable in observing that pool one is probably not a fair return for effort. It is, of course, hard to assess how the debilitating effects (both emotionally and financially) the duration of this hard fought litigation has had on both the husband and the wife – but it has been sizeable.
Contributions
I rely upon the history of the relationship and earlier findings in acknowledging, as I already have, that when the parties commenced cohabitation in around 1992, both were in their early twenties and had great dreams and energy, but little by way of assets.
In the 22 years from cohabitation to final separation in late 2014, I would regard their contributions, both of a financial and non-financial character; both direct and indirect, as equal (save for the husband’s inheritance). The evidence supports a finding that to the date of separation (when the children were nearly five (X) and two and a half (Y)), the mother’s contributions as homemaker and parent was greater than the husband, who was engaged full-time in employment and managing the Property MM farming operation.
The receipt by the husband in around 2008 of an inheritance of approximately $878,305 was a significant contribution by him which must be taken into account.
Post separation, I would assess the wife’s contributions as homemaker and parent as greater than the husband, but again he did contribute. Whilst he argues he was denied the level of care he sought at times, that does not change my assessment. The reality has been that since separation the wife had greater care of the children than the husband, although the orders made by me in 2021, provided the children with more opportunity to spend time with the father into the future. I do not ignore the husband’s financial support by way of child support and payment of school fees.
I do accept that the wife’s capacity to contribute to the existing commercial activities post separation were restricted by the husband – who, by his choice, took total control. This was an issue that, I accept, caused the wife great hurt. She felt, with some justification, that her past experience and commitment was not valued. As I will explore next, this sense of loss of business connection only got worse when the husband and Mr Z purchased Property UU shortly after separation.
Without any evidence from Mr Z, it is difficult to dismiss, as the husband seeks to do, the wife’s allegation that she met Mr Z in the United Kingdom and encouraged his interest in purchasing rural land in Australia. The evidence of Mr BD supports a finding that however his interest was sparked, the husband post separation grabbed the opportunity. That Mr Z was so supportive of the husband so as to effectively provide some interest-free finance to help acquire Property UU, is somewhat surprising. However, the documents show he did so. I speculate that if the parties had not separated, Mr Z’s attitude to the acquisition of Property UU may have been the same – but there is an absence of evidence from Mr Z in that respect.
The wife, understandably from her perspective, when there is no evidence of direct financial or non-financial contributions to the acquisition and management of Property UU and its ultimate sale and then the husband’s decision to acquire Property JJ, points to her contribution briefly at paragraph 14 of the written submissions. She submits that the husband took from the marriage at separation “experience and expertise and the freedom unencumbered by children to do much to advance his interests” this allowing him “to generate wealth at the wife’s expense”. Furthermore, the wife contends that “many of the [livestock on Property UU] were seeded from the [Property MM livestock] or their progeny built up by the husband and wife and the wife was instrumental in the involvement of [Mr Z] and the choosing of [Property UU]”.
Curiously, the written submissions of the wife relied upon at the end of the trial make few further submissions on either contributions or s 75(2) factors, but rather leaps to a “conclusion” of what is a just and equitable division at paragraphs 69 to 72. Without choosing to delineate or explore any assessment of contributions further, I agree with the submissions of Mr Fellows that the claim for a division of 75% could be construed as an “ambit claim”. I do not so find, accepting Counsel are entitled to make submissions in the form they wish, although it is of some assistance when these submissions do attempt to assist the judge by following the well-known statutory pathway.
The husband’s submissions at paragraphs 9.1 to 9.12 are succinct. The concession is made that other than for the initial contribution and inheritance “contributions during the relationship [until separation] are equal”. In my assessment, the acquisition of Property MM by the husband and his brother was around the time of cohabitation and when the brother’s interest was acquired subsequently, that was very much a joint decision of the husband and the wife. The initial equity in the property was modest. In these circumstances I do not attribute any significant weight to the initial contribution of the husband when weighed against the myriad of contributions by the parties which followed.
It seems available to infer that “Property MM” has been the cornerstone of the parties’ wealth to separation – likely to have permitted the parties to engage in the range of speculative real estate endeavours, many of which are still retained. At the time of the final hearing, the agreed value of Property MM was $3.45 million (see Exhibit 22). Because of the impact of inter party loans on pool one interests, it is easy to lose sight of the good investment Property MM has proved to be through good times and hard times.
In the post separation period, the husband concedes the wife was the primary carer of the children but contends at paragraph 9.1(e) that:
(i)The husband was solely responsible for the maintenance of the matrimonial property pool – all of his income was applied to that purpose…
(ii)The husband invested in and derived the ultimate profit from [Property UU] with no practical or financial contribution from the wife
Even though the wife says she was “alienated” from the business – there is support in the evidence, as a whole, and I broadly accept the submission of the husband in respect of post separation contributions.
I provide this analogy to enable the parties to better understand the Court’s position on the Property UU purchase. If a financial windfall had, without any additional contribution by the husband, come into his possession (such as a lottery win), then the treatment of such windfall can be taken of course into account as authority makes clear. I am prepared to accept that Mr Z deciding to invest in Australia on such favourable terms is a sort of “windfall”.
However, a myriad of contributions solely by the husband followed Mr Z deciding to invest in Australia, including:
(a)looking at properties other than Property UU to seek to secure as an investment (see again the evidence of Mr BD);
(b)negotiating and securing the acquisition of Property UU, including necessary external finance;
(c)as the resident Australian “partner” managing the Property UU property (with staff) for almost five years;
(d)when Mr Z indicated a wish to sell, being the person who ensured a sale took place – at what was a “capital gain” which Mr C estimated was $7 million;
(e)working, no doubt, with professional advisors to minimise capital gains tax; and
(f)identifying and securing the interest in “Property JJ” and, again as the resident Australian “partner” managing that property.
The investments were hardly “passive”. As I now demonstrate, I do not ignore the wife’s indirect contribution, however her case (seemingly accepted by Mr C) that she held an entitlement to a share of the capital gains to the extent she asserts, is not accepted by the Court.
As can be seen from the husband’s submissions, but on a slightly different pool, the husband contends for an adjustment in the following proportions, namely:
Pool one
-
65% to the husband and 35% to the wife
Pool two
-
90% to the husband and 10% to the wife
Taking all factors into consideration, I asses the contribution based entitlements of the parties to the respective pools as follows:
Pool one
-
55% to the husband and 45% to the wife
Pool two
-
80% to the husband and 20% to the wife
Section 75(2) factors
The parties were both born in 1970, so both turn 52 years of age this year.
Although the husband was injured in a fall some years ago, there is no evidence his capacity to continue working as a tradesperson and to run (with assistance) his livestock properties of Property MM and Property JJ is diminished. The husband’s Financial Statement filed 23 February 2021 declares wages of $4,944 (gross) a week. Additionally, as the evidence confirms, he has access to drawings as cash flow (or loan accommodation) permits. He conceded (at paragraph 10.1 of his submissions) an income in the region of $250,000 per annum.
Although the wife is a health professional by training, the completion of an … some years ago and the employment (albeit for a short period) in City DB reveals an intent to continue to explore commercial opportunities which, as the children get older, will become more achievable. Her Financial Statement filed 23 February 2021 revealed no income save for rental income from the SS Town home and modest Centrelink benefits. The wife relied upon evidence of an Orthopaedic Surgeon Dr CJ, who was not required for cross-examination, but he did not offer an opinion of any long term consequences from an injury in 2010. In the circumstances, I regard both parties as relatively healthy for their age.
The Court is required to take into account the effect of any orders made for property adjustment. As will become apparent, the effect of my orders will be that the husband is likely to retain property that is encumbered but of some value. He will have the benefit of the income from his farming activities, but the responsibility to meet and service substantial loans.
The likely effect of my orders is that the wife will have an unencumbered home to live in; perhaps some other properties and cash – even if, against the husband’s wishes, that cash comes from the sale of some property.
The superannuation benefits, at the parties’ age, are modest – although if the husband’s wage is $200,000 per annum then even the statutory payment of 10% or higher means he will continue to receive superannuation which the wife will not – and certainly at his level.
I regard a 20% adjustment to the pool one interests in the wife’s favour for the s 75(2) factors – or a sum equivalent to the husband paying the wife 10% of the pool ($205,000) – as appropriate. In all the circumstances, I would not make a further adjustment to the contribution assessment of the parties to pool two interests, as those interests are already taken into account.
What orders do justice and equity?
Of course it is not the percentage entitlements which demonstrate justice and equity has been achieved, but the form of orders.
If the wife was to receive 65% of pool one interests ($1,351,239) and 20% of pool two interests ($526,971), these combined interests total $1,878,210 (or approximately 39.8%) of the combined pool.
At paragraph 71 of her submissions, the wife says she seeks to retain the following property:
AA Street, BB Town
$590,000
AE Street, AG Town
$415,000
Her superannuation
$16,167
Her motor vehicle
$10,000
$1,031,167
Plus add back
$162,000
$1,193,167
On these calculations, to retain other interests and properties (including Property MM and Property JJ), the husband would have to raise funds of around $685,043 to pay the wife and remove debts on the BB Town and AG Town properties.
Towards the conclusion of the hearing, the husband indicated he had (it seems with the support of Mr Z) applied for a loan from one of his bankers and had conditional approval for finance of around $1,000,000. Whether those funds are still available is unknown. It is to be recalled that at the time of the trial another bank (XX Bank) were pressing for some properties to be sold.
I will require further submissions as to the form of the order to be made. The simplest approach, if it can be achieved, is for the wife to receive cash in the sum above, however the two real estate interests are encumbered. It would not, at this stage, be appropriate for the husband to discharge the wife’s loan to her litigation lender if secured over her home, but the external bank debt should be discharged.
As it seems unlikely that the wife will accumulate superannuation at the rate of the husband, it may be an option for the wife to take the benefit of part of the husband’s superannuation (either in the industry funds or the self-managed superannuation fund).
On the pools I have found to exist for the Reasons now published, the difference between the parties will be approximately 20% of the combined pool – or approximately $940,000.
The wife contended for 75% of the combined pool – a sum of $3,502,026 which I would not regard as just and equitable to the husband on the findings I have made.
I will allow the parties a period of 14 days to negotiate the terms of an order which is consistent with these Reasons. If they cannot agree on the terms, then I will direct within 21 days from today the parties to file and serve their minute of order which they say is consistent with these Reasons.
Unless the terms are agreed after the separate set of orders is received, the Court will list the matter for further oral and (if desired) written submissions.
I accept of course that the issue of costs looms large in this matter. The parties could do well to try and resolve any costs issues.
As a final issue to determine, I must give consideration to the wife’s application to enforce the 2017 Order which was referred to at [23] of these Reasons.
Order made 9 February 2017
During the hearing, the wife disputed the husband’s evidence as to the number of payments made to her by the husband under the Order. As I recall, over an adjournment, she was given access to bank records which were alleged by the husband to demonstrate 16 payments of $850 per week had been made. After inspecting the bank records, I received no submission that the father’s estimate was incorrect. I accept his evidence.
The husband, on learning the wife had lost her employment and was continuing to work in City DB, ceased making the payments – noting the wife did return to BB Town as ordered.
At paragraphs 7.1 to 7.13, the husband submits it is “not appropriate to enforce the order as if it were spousal maintenance”. The wife, in response at paragraphs 52 to 54, submits that arrears of $171,700 have accrued and the husband should be required to pay that sum from his share of the property settlement orders.
The Judge, when making the Order, left the characterisation of the Order to the trial judge – which of course was initially her Honour. I have been taken to no reasons of her Honour for the Order. There was an Application in a Case filed 24 January 2017 by the wife before her Honour, seeking payment of spouse maintenance of $1,000 per week. I note the Order suggests at the time of the Order on 9 February 2017, the husband was paying that sum – so he was ordered to “continue to pay” the sum.
The chronology above confirms (at [25]) that the wife, for the first time in August 2018, sought an administrative assessment of child support for the two children. The husband’s trial Financial Statement says he was paying $115 per week for child support (see item 31).
It seems to me, in the absence of better evidence, that the payment to the wife at the time was a mixture of spouse maintenance and child support (although not assessed). On balance, I would not characterise the payment as partial or interim property settlement.
There is no evidence the wife sought to enforce the Order during the trial conducted by Judge Demack. I know of no enforcement application filed, either whilst the matter remained in the Federal Circuit Court of Australia (and the judgment was reserved), nor do I know of any application by the husband to vary, suspend or discharge the “spouse maintenance” Order.
It seems the parties just let the matter lie. In my view, this conduct by both parties, for whatever reason, shapes the discretion afforded to the Court under s 105 of the Act.
Doing the best I can, I have decided that the payments under the Order should have continued to be paid until 1 August 2018 – at around the time the wife sought an administrative assessment. This was after the trial before Judge Demack had finished on 16 March 2018.
The mother had legal representation and could have brought an enforcement application, but seemingly chose to seek support (as she was perfectly entitled to do) from the Child Support Agency.
I calculate that from 9 February 2017 to 1 August 2018 approximately 77 weeks elapsed, and that $65,450 should have been paid. As only 16 payments were made, I will order the husband, in the property adjustment orders, to pay the wife the additional sum of $49,150.
In exercising my discretion in this way, I take into account the parties’ behaviour to fail to enforce or discharge the 2017 Order; the wife’s decision to seek child support, and the sums received by the wife as detailed at paragraph 7.11 of the husband’s submissions (totalling $54,664), which I accept.
I certify that the preceding one hundred and fifty-five (155) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 27 July 2022
APPENDIX ONE
PREVIOUS ORDERS
1.All previous Orders be discharged save for that part of any Order which reserves the costs of either party.
PROPERTY
2.This Order authorises the Husband forthwith to complete and lodge all Tax Returns for each of the entities referred to in Order 10.1.
3.Within 7 days the Wife shall deliver to the Husband the following:
a. Husband’s antique map of Queensland, which was given to him by his Father;
b. Silver spurs from Country CK;
c. A large bird painting off the wall in the bedroom, bought in Country CL in 2013;
d. Large green backpack.
4.The settlement dates
The settlement dates for compliance with the terms of this Order shall be:
a.Prior to or no later than that date which is 50 days from the date of this Order (which, if falling on a weekend shall be the Monday immediately following that weekend) the Husband and the Wife shall execute all documents that each of them must execute to give effect to this Order including in particular:
i.The Husband’s obligations under Order 5(a), 5(f), 6, 8, 10.2, and 10.3;
ii.The Wife’s obligations under Order 5(e), 10.1 , 10.4 and 10.5.
b.Provided that the Wife has attended to and complied with her obligations under Order 4(a) then on the date which is 60 days from the date of this Order (which, if falling on a weekend shall be the Monday immediately following that weekend) the Husband shall pay to the trust account of Campbell & Co, Solicitors, on behalf of the Wife, $1,000,000 or such other sum as may be determined by the Court.
5.
a. The Husband shall transfer to the Wife all his right, title and interest in the O Family Trust and resign from any position he holds (whether as Trustee, Secretary, Appointor) in the O Family Trust;
b. Subject to the Wife’s compliance herein, the Husband shall pay to CM Finance $75,000.00 with respect to the loan owing by the O Family Trust;
c. The Wife shall thereafter take over responsibility for all other debts of the O Family Trust;
d. That the Wife be responsible for any tax assessed against the O Family Trust and indemnify the Husband against any tax assessed against the Husband as a result of any interest he had in the O Family Trust;
e. That the Wife secure the Husband’s release in respect of any loans owing by the O Family Trust and indemnify the Husband in respect of all and any liabilities of the O Family Trust;
f. To the extent that the O Family Trust owes any money to the J Partnership, the Husband as sole owner of the assets of the J Partnership pursuant to the other terms of this Order shall forgive any debt owing by the O Family Trust to the J Partnership (an amount of $111,313.00 as at June, 2020).
6.Within 60 days, the Husband transfer to the Wife all his right, title and interest in the Sapphire Superannuation Fund and thereafter resign from any position held in the Sapphire Superannuation Fund.
7.The Wife retain the following:
g. The property situated at AA Street, BB Town in the State of Queensland, together with all loans and mortgages secured by that property;
h. Furniture and contents in her possession;
i. Monies standing to her credit in bank accounts;
j. Her superannuation entitlements;
k. Her interest in CF Company; BU Pty Ltd; BV Pty Ltd and BW Pty Ltd and all liabilities of these entities;
l. The interim property payment of $150,000.00 and paid on 9th February, 2021;
m. The interim property payment of $12,000.00 paid on 20th November, 2020.
8.Forthwith the Husband shall undertake all such necessary acts and sign all such necessary documents so as to transfer from V Pty Ltd to the Wife the Motor Vehicle 2.
9.Save as otherwise provided for in these Orders, the Wife shall remain responsible for any debts in her name.
10.1Forthwith the Wife shall transfer/assign to the Husband all her right, title and interest including any interest as partner and/or beneficiary, and/or shareholder in the following entities (referred to as the Filby entities) and she shall resign from any position she holds in those entities not limited to but to include Trustee, Secretary, Appointor, Director including Director of any Trustee company and/or relinquish any right, title, interest and/or claim that she may have in the following properties or financial resources:
a. J Partnership;
b. J Family Trust;
c. K Trust;
d. L Pty Ltd;
e. P Trust;
f. M Trust;
g. N Trust;
h. Q Trust;
i. R Trust (Unit Trust);
j. S Trust;
k. BM Trust;
l. T Trust;
m. U Trust;
n. V Equipment Pty Ltd;
o. W Pty Ltd;
p. Z Family Trust & T Trust Partnership;
q. G Unit Trust;
r. Filby Family Company.
10.2The Husband shall be responsible for the debts owing to XX Bank by the Husband and Wife in respect of the entities referred to in Order 10.1 and he shall cause the Wife to be released from those debts (but not the debt owing by the O Family Trust to XX Bank, which debt is secured over the property situated at AA Street, BB Town).
10.3The Husband shall be responsible for and indemnify the Wife in respect of any other debts and liabilities of the Filby entities.
10.4The Wife will resign from any position she holds in the Filby entities including positions she holds in the Trustee companies of any of the Filby entities.
10.5The Husband shall take such steps as are necessary to re-register V Pty Ltd with ASIC and the Wife shall, as part of her obligations under Order 10.1 consent to that process occurring and surrender to the Husband her directorship of that entity.
10.6The Husband shall indemnify the wife in respect of any taxation liabilities of V Pty Ltd.
11.In the event that the National Australia Bank lawfully pursues either or both parties in respect of liabilities owing by them personally, or as guarantors or as Trustees in respect of debts alleged to be owed by them in respect of loans for:
a. Company Vehicle 1 and attachments previously owned by V Pty Ltd as Trustee for the K Trust;
b. Company Vehicle 2 and attachments previously owned by V Pty Ltd;
c. CN Street, CP Town previously owned by the S Trust;
d. 44 NN Street, PP Town previously owned by the P Trust the parties shall be jointly responsible for those liabilities.
12.That if either party refuses or neglects to sign (within ten (10) days of a request to do so) any documents to give effect to these Orders, then pursuant to the provisions of the Family Law Act 1975 as amended:
a. The Registrar of the Family Court is hereby appointed pursuant to Section 106A of the Family Law Act to execute all such Deed, instrument or documents in the name of the defaulting patty and to do all acts and things necessary to give validity and operation to these Orders; and
b. The Affidavit of the Solicitor for the party seeking to give effect to these Orders shall be sufficient proof of the default of the other party necessary to give effect to this Order.
13.That for the purposes of giving effect to these Orders herein both parties shall be at liberty to provide a copy of these Orders to their Financier, Accountant and Government Departments.
14.This Order is binding on the parties’ heirs, executors and assigns respectively.
15.Each party shall have libe11y to apply back to the Court upon the giving of seven (7) days’ notice each to the other in relation to the carrying out of the terms of these Orders.
16.The Court grants to each party a costs certificate pursuant to the provisions of s. 10 of the Federal Proceedings (Costs) Act being a certificate that in the opinion of the Court it would be appropriate for the Attorney-General to authorise a payment under that Act to each party in respect of such pai1 as the Attorney-General considers appropriate of any costs incurred by each party in relation to the rehearing of these proceedings.
APPENDIX TWO
1.That, within 7 days of the date of these Orders, Mr CQ of CR Accountants (“the appointed Trustee”) be appointed as Trustee for Sale and Manager of all properties and entities for the purpose of transferring assets and/or winding up entities in which the parties are a Director, Trustee, Beneficiary, Appointor or owner and pursuant to the Orders herein, (and dealing with the cross-securitisation of all entities and properties).
2.For the purpose of carrying out the implementation of these Orders a copy of these Orders and any financial documentation prepared for these proceedings be provided to the appointed Trust.
REAL ESTATE SALES AND TRANSFERS
3.That within 21 days of the date of these Orders the parties do all things and sign all documents to place on the market for sale by Auction, the following properties:
a. The property known as Property MM Town LL in the state of Queensland more particularly described as lot …, tenure reference … TRef:…. ('The Property MM property') including plant, equipment and livestock;
b. AP Street, AL Town, Queensland (being lot …);
c. AK Street, AL Town, Queensland (being lot …) and
d. CH Street, SS Town, Queensland (being leasehold land).
3.The appointed Trustee for Sale shall work with the current Real Estate Agent to place the properties referred to in Order 3 above on the market for Public Auction and where there is no agent appointed, choose a Real Estate Agent and Auctioneer and progress the marketing of that property.
4.By way of consequential arrangements that shall be made for the purposes of effecting the sales:
a. The listing and reserve price for the real property shall be as recommended by the agent or auctioneer unless agreed by the parties:
b. The Applicant husband and Respondent wife shall each pay and be responsible for payment of half of the auction expenses.
c. The parties shall do all things to cause all properties being sold to be vacated by the current tenants, unless being sold tenanted, (save for station managers) by settlement of the sale of the relevant property and shall bear the costs of any breach of tenancy agreement currently in place.
5.Upon completion of the sale the proceeds of the sales shall be applied as follows:
a. Firstly, to pay all costs, commissions and expenses of the sale;
b. Secondly, payment of any encumbrance of the relevant property and discharge all bank mortgages attached to the properties and/or loans and debts attached to the entities owning those properties;
c. Thirdly, to pay any Capital Gains Tax (CGT) payable on the sale of any of the four properties referred to in Order 3 above.
d. Fourthly, to pay the appointed Trustee for Sale any fees owing to him;
e. Fifthly, to pay any net monies from the sale of Property MM (Order 3a above) as to 40% to the Applicant husband and 60% to the Respondent wife and
f. Sixthly, to pay any net monies from the sale of properties referred to in Orders 3b, 3c and 3d above as to 50% to each the Applicant husband and 50% to the Respondent wife NOTING THAT there is very little, if any, equity in these properties.
g. Should there be a shortfall owing to the banks after the sale of the properties referred to in Orders 3b,3c, 3d and 6f above, the parties shall share in that payment of that shortfall.
6.Within 30 days of the date of these Orders, the husband shall:
a. Pay out the CM Finance (also known as CM Bank) Stock mortgage loan secured by the property located at AX Street, SS Town, Queensland;
b. Pay out the entire mortgage to CT Limited (ACN …) secured by the wife’s property located at AA Street BB Town, Queensland (“the wife’s BB Town property”) taken out by the husband after separation and estimated to be over $75,000 plus interest and any penalties due and owing.
c. Discharge and remove the debt owed by the O Trust to the J Partnership currently secured by the wife’s BB Town property.
7.Within 40 days of the date of these Orders the husband shall do all things and sign all documents to transfer to the wife the following properties:
a. AX Street, SS Town, Queensland (being Lot … Survey Plan …),
b. 1 BN Street, Town LL Queensland, (being … /SP …, Location CS, Town LL),
c. 2 BN Street, Town LL, Queensland (being …/ SP …, Location CS, Town LL) and
d. AJ Street, AG Town, Queensland also known as AE Street, AG Town, Queensland (being Lot … Registered Plan …).
and the wife shall indemnify and keep indemnified the husband in relation to Capital Gains Tax accrued upon transfer and to any mortgages to XX Bank secured by these properties upon such mortgages being transferred to the wife from the relevant entity owning that property.
For the purpose of these transfers any resignation or transfers to the husband of entities referred to below shall exclude ownership of the above properties. IT IS NOTED that there may be negative equity in the above three properties.
8.Within 40 days of the date of these Orders and simultaneously with the transfer of the properties referred to at Order 8 above, the wife shall do all things and sign all documents to resign as director, shareholder and/or partner in the following entities and transfer her interest in such entities:
a. The J Partnership
b. The K Trust
c. L Pty Ltd
d. P Trust
e. M Trust
f. N Trust
g. Q Trust
h. R Trust
i. S Trust
j. BM Trust
k. T Trust
l. U Trust
m. V Pty Ltd
n. W Pty Ltd
o. G Trust
p. Z Family Trust
q. T Trust Partnership
r. Filby Family Company
s. J Partnership.
AND the husband shall be responsible for and indemnify and keep indemnified the wife in relation to all debts owing between the above entities and to XX Bank and any other financial institution and he shall do all things and sign all documents to release the wife from all these debts, other than those secured by the properties being transferred to the wife and as referred to in Order 8 above.
SHARES
9.Within 21 days of the date of these Orders the husband shall sign all documents and do all things to transfer to the wife at her expense, his right title and interest in the CV Company shares.
TAX and DIVISION 7A
10.That the husband shall forthwith lodge all tax returns for all entities and provide to the wife and appointed Trustee copies of all tax returns and assessments.
11.That the husband shall cause to be paid to the wife all unpaid distributions apportioned to the wife relating to trusts, partnerships and companies.
12.That the husband be responsible for all Division 7A penalties identified by the accounted and or appointed Trustee as due and owing.
LIVESTOCK
13.Until such time as the wife has been paid any monies due and owing to her, the husband shall cause all monies earned from the sales of livestock over the last 12 months to the date of Judgement, to be placed in a joint interest-bearing account with the XX Bank such account to be opened within seven (7) days of the date of these Orders: the distribution and or use of these funds to be decided upon the final Orders being made.
HIRE EQUIPMENT Add Back
14.That within 30 days of the date of these Orders, the husband transfer to the wife 50% of the monies received into either V Pty Ltd or V1 Pty Ltd since separation and as calculated by Mr C in his report dated 6 May 2021, less the $20,000 withdrawn by the wife from that account in 2018 by way of an addback.
BANK ACCOUNTS
15.Within 30 days of the date of these Orders the parties shall sign all documents to close all joint bank accounts and divide the monies as to 50% to each party.
16.That until payment to the wife of any funds due and owing under these or any subsequent Orders, the Husband be restrained from withdrawing funds for any personal expenses or any purpose unrelated to operations specifically conducted by or associated with G Pty Ltd and G Unit Trust, the J Partnership, the Filby Group and related Companies, V Pty Ltd, V1 Pty Ltd or the J Family Trust, G Pty Ltd and G Unit Trust.
ENFORCEMENT OF THE ORDER DATED 9 FEBRUARY 2017
17.That within 14 days of the date of these Orders the Husband pay to the wife the sum of $171,700 in compliance with the Order made by Judge Demack on 9 February 2017.
PAYMENT BY HUSBAND
18.Within 42 days, husband shall pay to the wife the sum of E$2,000,000 (“the settlement sum”) or such sum as to equal 75% of the overall division property pool.
19.In the event the husband fails to pay the settlement sum or any other sum so Ordered by this Court, the appointed Trustee for Sale shall do all things to sell by Auction, the husband’s interest in the property known as Property JJ, CW Town in the state of Queensland (“Property JJ”) and if insufficient nett funds, the property located at CC Street, BB Town in the state of Queensland (“the husband’s coast property”) with the DA plans to be advertised with that sale.
Upon the sale of the Property JJ, and the husband’s coast property if required, the appointed Trustee for Sale shall:
a. Pay any liabilities secured by the property/ies or the entity owning such property;
b. Pay the costs of the Trustee for Sale;
c. Pay to the wife the settlement funds plus interest at the rate as prescribed in the Family Court rules;
d. Pay the remaining monies to the husband.
SOLE OWNERSHIP
20.That the husband otherwise be declared sole owner of:
a. The property located at CC Street, BB Town in the state of Queensland,
b. His interest in the station known as Property JJ and any royalties and leases relating to the quarry located on that property;
c. Assets held by the entities being transferred to the husband pursuant to Order 9 above;
d. Personal possessions located at Property JJ and Claude Street BB Town;
and he shall indemnify and keep indemnified the wife in relation to any loans or mortgages associated with those assets.
21.The wife otherwise be declared sole owner of:
a. The property located at AA Street, BB Town and she shall indemnify and keep indemnified the husband in relation to:
i.The loan to her parents,
ii.The loan to CX Finance, subject to any Costs Order made pursuant to this matter,
iii.The original XX Bank mortgage secured by this property.
b. All contents and furniture in her possession and her personal possessions still located at Property MM and for the purpose of collecting her personal belongings from Property MM shall not be prevented from free uninhibited access upon giving 3 days’ notice to the station manager;
c. The Company known as V Pty Ltd and any plant and equipment, owned by this company.
d. The shelf companies of BU Pty Ltd, BV Pty Ltd and her interest in the CF Company: and the wife shall indemnify and keep indemnified the husband in relation to any liabilities associated with these entities;
BR SUPERANNUATION FUND
22.That in accordance with section 90XT(1)(b) of the Family Law Act 1975 (the Act) whenever a splittable payment within the meaning of s 90XE of the Act becomes payable in respect of the interest of MR FILBY’s interest in the parties’ Self-Managed BR Super Fund (“the fund”) then MS NORTHCOTT being the spouse of the member specified in section 90XE of the Act is entitled to be paid by the trustee of the BR Super Fund in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, 100% of the fund and there is a corresponding reduction in the entitlement that Mr Filby would have had but for these orders.
23.The operative time for Order 23 is seven (7) business days after service of the sealed Orders on the trustee of the BR Super Fund.
24.That Orders 23 and 24 and payments made as a result will be effected by the Superannuation Legislation Amendment (Family Law) Act 2004 which came in to effect on 18 May 2004 and the Family Law (Superannuation) Regulations 2001 which together provide for a separate superannuation interest to be created for the non-member spouse and for consequential effects on payments.
25.This Order binds the trustee of the Self-Managed BR Super Fund.
GENERAL
26.For the purpose of these Orders, should the Pandemic Covid regulations be in force, such signing as is permitted by those rules and electronic online signing is permissible.
27.That, unless otherwise specified in these Orders and except for the purposes of enforcing the payment of any money due under these or any other subsequent Orders:
a. Each party be solely entitled to the exclusion of the other to all property including choses-in-action in the possession of such party as at this date.
b. Monies standing to the credit of the parties in any bank account is to become the property of the party in whose name it is deposited.
c. Each party hereby forgoes any claim they may have to any other superannuation benefits belonging to or earned by the other.
d. All insurance policies to become the sole property of the owner named thereunder.
e. Each party be solely liable for and shall indemnify the other against any liability in his or her name or encumbering any item of property to which that party is entitled pursuant to these Orders.
28.That, if either party refuses or neglects to sign (within 7 days of a written request to do so) any documents necessary to effect the terms of these Orders, the Registrar of the Family Court Brisbane is hereby appointed to execute all deeds and documents in the name of the Respondent and or Applicant pursuant to Section 106A of the Family Law Act 1975 (as amended).
29.These Orders are binding on the heirs, assigns and executors of each party.
30.Both parties have liberty to apply to the Court upon 7 days’ notice in regard to the implementation of these Orders.
APPENDIX THREE
POOL ONE Owner Particulars Amount Joint J Partnership ($750,903) Joint J Partnership $2,961,584 Husband L Company ($276,429) Joint M Trust ($177,301) Joint O Trust ($74,960) Joint S Trust $100,732 Joint BM Trust ($530,243) Joint U Trust ($499,926) Joint V Pty Ltd $398,360 Wife AA Street, BB Town (nett) $422,000 Wife Motor Vehicle 2 $10,000 Husband Filby Family Company ($247,309) ADD BACKS Wife Interim distributions $162,000 Husband Legal fees $360,000 SUPERANNUATION Husband Super Fund 1 $114,163 BR Super Fund $72,865 $187,028 Wife Super Fund 2 $16,167 BR Super Fund $99,223 $115,390 TOTAL POOL ONE ASSETS $2,160,023 Wife Less HECS debt $101,194 NETT POOL ONE $2,058,829 POOL TWO Owner Particulars Amount Husband K Trust $3,799,159 Husband T Trust ($1,164,300) NETT POOL TWO $2,634,859 TOTAL NETT CONSOLIDATED POOLS $4,693,688
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