Forrest and Forrest and Ors

[2013] FCWA 6

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY COURT ACT 1997

LOCATION: PERTH

CITATION: FORREST and FORREST & ORS [2013] FCWA 6

CORAM: MONCRIEFF J

HEARD: 19, 21 MARCH, 26, 28 JUNE, 31 OCTOBER, 1, 2, 6, 7 & 9 NOVEMBER 2012

DELIVERED : 18 JANUARY 2013

FILE NO/S: PTW 3424 of 2009

BETWEEN: SALLY FORREST

Applicant

AND

KEVIN FORREST
First Respondent

AND

COMPANY A PTY LTD
Second Respondent

AND

COMPANY B PTY LTD
Third Respondent

Catchwords:

PROPERTY SETTLEMENT - long de facto relationship - large asset pool - treatment of respondent's significant initial contributions in absence of valuation - assessment of contributions in the course of a long relationship - global approach taken to do justice and equity to parties - potential significant unquantified tax liability - treatment of superannuation

Legislation:

Family Court Act 1997 (WA)
Family Law Act 1975 (Cth)
Income Tax (Assessment) Act 1997 (Cth)
Marriage Act 1961 (Cth)

Category: Not Reportable

Representation:

Counsel:

Applicant: Mr P Dowding SC with Ms C Harrison

First Respondent : Mr K Wilson SC with Mr T Kuurstra

Second Respondent : Mr K Wilson SC with Mr T Kuurstra

Third Respondent : Mr K Wilson SC with Mr T Kuurstra

Solicitors:

Applicant: DCH Legal Group

First Respondent : Anthony R Clarke & Associates

Second Respondent : Anthony R Clarke & Associates

Third Respondent : Anthony R Clarke & Associates

Case(s) referred to in judgment(s):

Brodie and Brodie [2009] FamCAFC 6
Bulleen & Bulleen [2010] FamCA 187
Hickey & Hickey and the Attorney-General for the Commonwealth (Intervener) (2003) FLC 93-143
Mallett v Mallett (1984) 156 CLR 605
Norbis v Norbis (1986) 161 CLR 513
SL v ELH [2005] FamCA 132
Stanford v Stanford [2012] HCA 52
Steinbrenner and Steinbrenner [2008] FamCAFC 193
T v L [2006] WASCA 46

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED

1[Sally Forrest] (“the applicant”) and [Kevin Forrest] (“the respondent”) commenced living together in 1988, having formed a relationship in 1987. It is common ground that they lived in a marriage-like relationship as a de facto couple for 20 years.

2Their relationship produced one child, a son [Christopher Forrest] (“Christopher”) born in 1990, who at the date of trial was aged 22 and was studying overseas.

3The parties separated in 2008.

4They have been unable to resolve their differences as to what is an appropriate financial settlement between them.

5Although the parties were never married, the law in Western Australia as prescribed in the Family Court Act 1997 (WA) (“the Act”) seeks to treat those persons in a de facto marriage on the same basis as those in a de jure marriage that has been entered into under the provisions of the Marriage Act 1961 (Cth).

6The only exception to that treatment is the manner in which superannuation is to be treated as the State, not having the power over superannuation by virtue of the Australian Constitution, cannot legislate as to enable the Court to make superannuation splitting orders as would be available to couples proceeding under the Family Law Act 1975 (Cth), either as a married couple or a de facto couple.

7However, in this case that distinction is less as it is common ground, at the conclusion of the trial, that the superannuation interests of the parties are to be treated as vested, having regard to the parties’ age and circumstances and are therefore to be treated as property in the hands of the parties.

8The applicant is 57 and the respondent is 68 years of age.

The law

9The decision of the High Court in Stanford v Stanford [2012] HCA 52 post dated the trial in this matter. To the extent that a determination that it is just and equitable for the Court to make orders is required at the outset, having regard to the remarks made obiter by the plurality of the High Court in Stanford (supra; delivered in November 2012), I am satisfied that upon the breakdown of a 20 year relationship, where property has ceased to be shared, and in the face of applications for such a settlement by both parties in which both propose orders for settlement, that, if I were required to make such a declaration, I unhesitatingly would do so.

10The approach to be adopted by the Court in a case involving a financial settlement between the parties is a 4 step approach as set out by the Full Court of the Family Court of Australia in Hickey & Hickey and the Attorney-General for the Commonwealth (Intervener) (2003) FLC 93-143 which requires the court to undertake the following:

11Firstly, the Court must identify the pool of assets available for distribution between the parties.

12Secondly, the Court must make an assessment of the parties’ respective contributions to the property available for distribution. Contributions can be financial, either direct or indirect, non financial and as a homemaker and parent.

13Thirdly, the Court must identify any of the factors prescribed under s 205ZD(3) of the Act that are relevant to the circumstances of the parties and, in the circumstances of the parties, warrant an adjustment to the outcome achieved through the Court’s determination based on contributions.

14Finally, the Court must then assess the outcome arrived at as a result of the first three steps and determine whether that outcome produces a result that is just and equitable in all the circumstances of the matter.

15This approach has been specifically adopted for use in property proceedings under the provisions of the Act and by the Court of Appeal in T v L [2006] WASCA 46.

Background

16The applicant was born in suburban Melbourne in 1955. At the time that she met the respondent she had two children of a prior relationship with [Sam Stephens], namely [David Stephens] born in 1980 and [Brian Stephens] born in 1981.

17The respondent was born in 1944. He, like the applicant, has two children from a prior relationship, namely [Janice Forrest] born in 1972 and [Brianna Forrest] born in 1970.

18In 1976 the applicant worked for a business [Company P] undertaking reception, bookkeeping, sales and general administrative duties. She left that employment after some 3 years then undertook short-term employment prior to giving birth to her first child. She separated from Sam Stephens in 1982 and effected a settlement of property with him from which her recollection was that she “got some thousands of dollars or thereabouts”. She received child support from Mr Stephens on a weekly basis until such time as her boys reached the age of 18 years. Her unchallenged evidence was that “the rate would increase several times and Sam gave me extra amounts for school and sporting expenses”. There is, however, no doubt that subsequently the boys also significantly benefited from the relationship their mother had with the respondent.

19In 1985 the applicant recommenced work on a part-time basis with Company P. She was living in rental accommodation. She met the respondent at a Christmas party in December 1986 and the parties commenced “dating” in May 1987.

20At the time that the applicant and respondent commenced their relationship the applicant says she was aware that the respondent was involved in a business [Company K] and that the business involved the manufacture and supply of products such as toilet seats, grab rails and commodes. During her discussions with the respondent during the course of the relationship she learned that the respondent was a director of Company K, a business named after the initials of the respondent and his brother [Michael] and nephew [Colin] who were also directors.

21At the time the parties commenced their relationship Michael and Colin had left the business and the applicant had found a business partner in [Peter Black] in about 1985.

22The applicant understood that the respondent and Mr Black were in an equal partnership and that Mr Black had contributed funds into the business. From what she was told the applicant understood that the respondent was primarily involved in the designing and manufacturing of the products sold by the business and Mr Black was responsible for finances of the business as an accountant.

23The respondent lived in a house at [Property A] at the time the parties commenced a relationship. He owned the house and resided there with his then 14 year old daughter Janice. The respondent’s other daughter Brianna had moved to [Country Town P] and resided there with her mother and her mother’s new husband.

24After a trip to Melbourne and Hobart in 1987 during which the applicant met some of the respondent’s business associates, the applicant says the respondent invited her to move in with him, a request which she accepted, albeit that cohabitation commenced some months later.

25Property A was not large enough to accommodate the combined families of the applicant and the respondent, Janice Forrest and the applicant’s two boys David and Brian, although Janice subsequently went to live with her mother shortly prior to the parties having commenced cohabitation, which they did in April 1988 at a property purchased by the respondent, in anticipation of the parties cohabiting, at [Property B]

26At the time that the parties commenced cohabitation the applicant was 32, the respondent 43 and the applicant’s boys David and Brian were 8 and 7, respectively.

27There is little doubt that at the commencement of cohabitation the applicant had assets of only a limited value. She deposes to having had some savings in 1987, however, she used those to book a holiday to travel with a friend to Singapore, after receiving assurances from the respondent that he would look after her financially and, indeed, he provided some spending money for her holiday in addition to that which she had.

28She subsequently disposed of the household furnishings she had at her rented premises.

29The applicant deposes to the respondent assuring her that she did not have to work but that if she wanted to undertake part-time work that was an option available to her. As a consequence she obtained work at [Company N] for 20 hours a week, which enabled her to look after David and Brian after school and attend to their activities.

30It is not disputed that the respondent was meeting household expenses, nor does the applicant dispute that the respondent was happy to help out with expenses for David and Brian.

31The applicant utilised her earnings for the benefit of the household and assumed a role in the relationship meeting domestic bills and generally administering the household.

32I accept the unchallenged evidence of the applicant that she took her role very seriously and was a diligent housekeeper and parent.

33The respondent and Mr Black had an interest in a property at [coastal town Q] (“the Coastal Town holiday home”) upon which they had placed a transportable house. This was utilised by the parties for weekends, particularly in summer. I accept that the applicant would clean the house upon arrival and departure, and the respondent would attend to any work that needed to be done externally.

34The applicant asserts that the respondent worked very long hours, an assertion that sits comfortably with the respondent’s evidence about his level of involvement in the businesses which he ran during the course of the parties’ relationship.

35Throughout their relationship the applicant accompanied the respondent on business trips overseas and interstate. There is no doubt for her there was a holiday component that was pleasurable, however, I accept that she was fully supportive of the respondent and did whatever she could to assist him, including the maintenance of a diary to assist in maintaining his appointments.

36The applicant fell pregnant with the parties’ son Christopher in May 1989. When she was 5 months pregnant her employer indicated that Company N were reducing staff and that she would be “the first to go”. She then left her employment, however, she says that the respondent was not concerned as he did not expect her to work or look for other employment.

37The applicant changed her name from Sally Stephens to Sally Forrest in December 1989 when she was 7 months pregnant.

38After Christopher was born he had some health issues in his early years, however, I accept that notwithstanding her being the principal carer of Christopher, the applicant was also committed to maintaining the household as well as looking after the respondent and her two sons.

39Despite Christopher now being a member of the household, the applicant continued to accompany the respondent on his business trips.

40At paragraph 130 of her trial affidavit the applicant deposes:

Kevin made it very clear to me that he appreciated me accompanying him on trips. I became responsible for making sure everything went smoothly. I ironed Kevin’s clothes and packed his bags for a number of years. I made notes for myself so that I could prompt Kevin to attend his appointments.

41The parties resolved to build a bigger house which they did at [suburb L]. The respondent, according to the applicant, was heavily involved in the design process and had very high expectations.

42In 1992 the applicant was made a director of two of the entities operated by the respondent, namely, [Company B] and [Company A]. She deposes to the fact that the respondent told her that it would help reduce his tax bill and she deposes to also becoming aware that the respondent had a family trust, the [Forrest Family Trust]. She says, and I accept, that she signed documents that she was requested to sign with little explanation.

43As to the business structure operated by the respondent, it is difficult from the parties’ affidavits to discern exactly what the business structure was at any particular point in time.

44I have no doubt that in the case of the applicant this was because she simply did not know in detail what the structure was, and I accept that the respondent was tardy in his disclosure. Indeed, as early as April 2010 the solicitors for the applicant wrote to the respondent’s then solicitors as follows:

We refer to your letter of March 2010 concerning the tax effective treatment of the advances you have made to our client.

Please provide to us, a copy of the advice of Mr [Newey].

We confirm that our client has not had an opportunity to give some consideration to the financial statement that has been filed by your client.

There is a significant difference between what our client understood to be the asset pool when negotiations took place between the parties and what is now disclosed.

It would seem appropriate that our client consider the terms of her application with a view to amending it.

We invite you to advise us of your client’s interests as to the assets that he held at the outset of the parties’ relationship, their value and generally the activities he undertook leading up to the commencement of the relationship and the early years of the relationship so that we are in a position to advise out [sic] client as to the terms of any amendment that should be made.

45The request was unanswered.

46However, the affidavit material filed by the respondent is not of any particular assistance either in summarising the position of the respondent at the point of the parties’ separation, or in detailing the chronology of the involvement and creation of the various corporate structures. Indeed, it only became clear during the course of the trial, and with the considerable assistance of Senior Counsel for each of the parties, as to what the structures were and when they came to begin.

47I accept that the applicant had a working knowledge of the parties’ domestic arrangements but had little detailed knowledge of the financial or corporate structures.

48I also accept that the applicant was keen to work in the business, however, the respondent did not wish her to do so as Mr Black’s partner did not work in the business and he had some concerns that having the applicant work in the business may lead to some difficulties.

49In July 1992 the Coastal Town holiday home was sold. It had been the applicant’s understanding that the respondent wished to have something of his own and not share with another couple.

50The parties commenced occupying the property at Suburb L, and as Christopher grew to be older he did not always accompany the parties on interstate or overseas trips.

51The respondent worked long hours in the business and expanded the business range and designs.

52In December 1993 the purchase of a farming property [Propery R] was completed with the property being acquired in the name of Company B as trustee for the Forrest Family Trust.

53There is a significant degree of dispute between the parties as to the involvement by the applicant in the Property R.

54According to the applicant, after settlement the parties took the campervan to the farm which was used as accommodation in fairly primitive conditions. Fencing repairs were carried out with the respondent doing the work himself with the applicant’s help pulling down one of the fences, rolling up old wire and taking it to the tip. The applicant says she helped with the clearing of logs from the paddock and burning woodpiles, assisted by Christopher and her children. Regular trips were made to visit the property with the parties staying longer during school holiday periods. A dam was constructed on the property and wood was cut with the applicant painting large timber slabs that had been cut to protect the slabs until they could be used. A wood cutter was utilised and the applicant recorded his hours of work and the hours of work the dam constructers undertook. The applicant helped the respondent to fence off the dam, while the respondent installed water troughs and had a concrete tank built. The respondent installed the reticulation himself. The applicant moved cattle as required and maintained a diary for the farm which recorded the purchase and sale of cattle and losses. She paid the expenses for the farm and provided records each financial year for the farm.

55The parties stocked the property with cattle and were assisted by a local person to check on stock and advise about animal husbandry.

56The respondent was working full-time when the farm was purchased and the parties spent weekends driving down on the Friday and returning on the Sunday afternoon. There is no doubt that the respondent worked hard on the farm, as I find he did in every endeavour. As the applicant records in paragraph 195 of her affidavit:

[Kevin] would get up at 6:00am and begin doing something on the farm. When we visited on weekends and during school holidays [Kevin] usually returned from working on the farm at about 8:00am or 9:00am. By that time I had got up and made breakfast for the family. After breakfast [Kevin] would go back out to do work on the farm. He would come back for lunch or a break. Sometimes I would go out looking to see what he was doing. [Kevin] would ask me to come out and help with things he could not do on his own, like moving the cattle to different paddocks.

57And further at paragraph 205:

[Kevin] could have hired people to do a number of jobs at the farm including clearing the land, tidying, fixing fences, plant trees, put shade clothes over the fruit trees, and completing a rock wall (that stayed unfinished for 10 years). [Kevin] preferred to do things himself.

58The parties erected a kit home on Property R. The parties grew hay on the property for a short period of time and the applicant assisted in the moving of hay bails and in the planting and watering of trees. The parties stocked the dam with marron and the farm became a significant activity of family life. The applicant was responsible for the cleaning of the home on the property and the provision of household services for the family. I accept that she continued to assist around the property and that for one birthday in early 2000 she received a slasher, an attachment for the tractor, as her birthday gift. The parties commenced and subsequently abandoned plans to plant 25 acres of vines. They also assisted in a Department of Agriculture program as part of an experiment to control the growth of bracken with the parties and Christopher involved in the treatment, which I accept involved what would have been a tedious undertaking, of inserting toothpicks into the plants that was ultimately the primary responsibility of the applicant after Christopher and the respondent became bored with the task.

59The applicant describes the farm as “our second home”. “Kevin and I managed the farm together; Kevin made the major decisions on the farm after consulting with me. We were both involved in every aspect of the farm”.

60The business expanded in the early 1990’s and moved to new premises. A further business, [Company S] was established to market mobility scooters after the respondent formed a relationship with a Taiwan manufacturer Mr [Duncan Wren].

61Christopher began school in 1995 by which time David and Brian were in high school at [Suburb H] High School.

62The applicant’s cousin’s son [Jason Wittle] commenced to live with the parties in December 1994 having been drafted [play sport in Perth]. The applicant assisted in looking after Jason who became a part of the household. The respondent was supportive of this arrangement and enjoyed the benefits of the close involvement with the [sporting] club. With the respondent’s agreement the applicant retained some domestic help for the ironing. Jason lived with the family for 3 years before returning to [Brisbane].

63In 1995 the business was further expanded with the development of a property [Property M] through the entity [Company J] which was a corporate entity controlled by the respondent and Mr Black. The applicant asserts, and I accept, that the respondent was heavily involved in the preparation of plans and the construction of the building on the block.

64She says that she visited with him on weekends and that the respondent continued to travel interstate with the applicant’s full support.

65The respondent’s daughter Brianna moved in with the parties for a short period of time. Whilst she was a part of the household there were 7 people living in the house for whom the applicant accepted domestic responsibility. The applicant engaged herself in the safety house program, and when her son David was aged 16 he commenced an apprenticeship as a toolmaker at Company K. The applicant continued to sign documents in her role as a director when requested to do so and deposes to the fact that if she were to ask for details about the documents the response from the respondent would be, “Why are you asking me, why don’t you just do it?”

66In February 1997 the applicant returned to some part-time work at a chiropractic clinic in [Suburb O].

67The parties’ son Christopher subsequently became involved in cricket, football, indoor cricket and karate. The parties travelled and pursued their respective leisure industries. The applicant accompanied the respondent with Christopher on some business trips and on occasions the parties travelled alone.

68The parties resolved to build a home nearer the beach and the applicant located a block at [Property C] and the parties agreed to purchase it. In June 2001 the parties commenced working with an architect to design a new home to be built on Property C.

69In 2002 [Property E] were acquired by the respondent and Mr Black’s respective trustee companies. A development was undertaken at [Property W] again jointly between the respondent and Mr Black’s trustee companies.

70In April 2002 [Company H] expressed some interest in purchasing the main business operated by the respondent and Mr Black, namely the [division KA] and [Company KK] divisions. Ultimately the business was sold to Company H, the sellers being described as Company K, Company KK, Company J in its capacity as trustee of the Bradley Unit Trust and Kevin Forrest, with Mr Black being described as a covenanter.

71The sale price was calculated as a sum of $17,396,874, payable on the date of completion in late November 2002, with an adjustment upon valuation for the net assets and 3 further annual payments of $1,700,000 plus interest, subject to certain performance targets and the respondent’s continued involvement in the business.

72The respondent did not complete his full obligation to remain in the business, by negotiation with Company H, however, his evidence was that the further repayments were not discounted and he and Company H reached a satisfactory separation agreement, although the details of the same were not given in evidence.

73The premises in which the business operated were not sold and Company H paid rent and continues to pay rent at, now, slightly under $1,000,000 per year.

74The respondent retained by arrangement with Mr Black the [Company S] business and continued to be involved in that business as well as in the shorter-term discharge of his obligations to Company H. The respondent and the applicant, although I accept not as frequently as the respondent by virtue of her obligations with Christopher, continued to attend the Property R. The parties also continued with the building of the house at Property C.

75In 2003 the respondent’s daughter Brianna and her twin children returned to reside, although ultimately only on a temporary basis, in Perth, having previously lived in [Queensland]. The respondent resolved to buy each of his daughters a home of their own.

76In 2004 a third party, [Peter Dwyer], became involved in Company S. In that year the respondent also purchased a house for his daughter Janice. Later in 2004 the applicant’s son David and his fiancée advised the parties they were going to buy a house. The respondent suggested that it be purchased for them outright just as he had planned to do with his own children. The respondent made the funds available to purchase the house and whilst there was no obligation placed upon the applicant’s son and his fiancée to repay the sum the applicant considered it appropriate and some of the sum advanced had been repaid, although no payments have been made since 2010.

77The Company S business moved into new and larger premises in [Property D] which was acquired through the parties’ superannuation fund, with the premises previously occupied by the business, Property E, being tenanted.

78In September 2006 the parties entered into a similar arrangement as they had with David with the applicant’s other son Brian for the purchase of his first home with a sum of $410,000 being advanced to him.

79In 2006 the respondent resolved to plant 200 macadamia trees on the Property R, and the respondent cleared, fenced and reticulated the property with the assistance of his brother. The applicant assisted in the planting of some of the trees and with some of the maintenance through hand weeding.

80The relationship between the parties had commenced to breakdown and they separated in March 2008.

81The parties closed their joint credit cards and divided their joint account to provide separate funds of $125,000 for each of them. The applicant found a house in [Property W] and the respondent made funds available to her to complete the purchase at a cost of $1,395,000. Initially the respondent remained in the house at Property C by himself while Christopher resided with the applicant, however, each of the parties contributed to his expenses.

82From July 2008 the applicant received a payment from the [SK Family Trust] equivalent to one half of the rent of Property E by agreement with the respondent. She then intended to undertake renovations to Property W, however, she found they were not practical and resolved to sell the property. The sale did not proceed.

83The respondent agreed that he would advance the applicant a further $1,000,000, together with her share of the proceeds of the sale of Property C from which each of the parties received the sum of $1,374,250. The respondent used his portion of the proceeds to acquire a property at [Property N]

84The applicant purchased new premises at [Property F] for the sum of $1,900,000.

History of the proceedings

85The applicant commenced proceedings in July 2009 filing an application for final orders seeking for, in effect, a payment to her of $5,900,000, and that the respondent thereafter retain all of the assets and other holdings with indemnities in her favour arising from any interest she may have had in the Forrest Family Trust, or any other entity connected with the respondent in which she may have held an interest.

86She was to otherwise retain her own property.

87She subsequently amended her application in February 2011 seeking orders, in lieu of the payment of a sum of $5,900,000, which would provide “such sum that with the assets already held by the applicant will result in a settlement of 45% of the net assets and liabilities of the parties upon the applicant”.

88In March 2010 the respondent filed a response seeking the following orders:

1.Any interest the Husband may have in:

a.[Property Z];

b.[Property F];

c.motor vehicle in the Wife's possession;

d.bank accounts in the Wife's sole name;

e.household contents currently located at [Property F];

f.any superannuation accrued or accruing to the Wife; and

g.any other personal property in the Wife's possession vest in the Wife.

2.That payments made by [David Stephens] and [Travis Stephens] (if any) in reduction of their loans from the parties be paid to the Wife and vest in her, and the balance owing pursuant the loans as at the date of separation be notionally included in the assets received by the Wife.

3.The Husband pay to the Wife or cause to be paid to the Wife the sum of two million dollars ($2,000,000), the precise manner and time of such payment to the Wife to be specified by the Husband, but in any event in as tax effective and cost effective manner as possible for the parties and the related entities of the parties.

4.The Husband shall pay and indemnify the Wife with regard to any tax liabilities or other costs associated with realising assets to enable the lump sum of $3,000,000 [sic] to be paid to the Wife.

5.The parties do all things and sign such documents as may be necessary to transfer to the Husband the Wife's share in [Company B] for no consideration and for:

a.the Wife to resign as director of [Company B];

b.the Wife to forgive any monies owed to her by [Company B]; and

c.[Company B] to forgive any monies owed by the Wife to [Comapny B].

6.The parties do all things as may be necessary for the [Forrest Family Trust] to:

a.forgive any monies owed by the Wife to the [Forrest Family Trust]; and

b.forgive any monies owed by the [Forrest Family Trust] to the Wife.

7.Any interest the Wife may have in:

a.[Company J];

b.[The X Property Trust];

c.[Company X];

d.[The Forrest Superannuation Fund];

e.[Company S];

f.[Company A]; and

g.[Bradley] Unit Trust;

vest in the Husband.

8.That unless specified in the orders, any interest the Wife may have in:

a.[Property N];

b.[Property R];

c.any motor vehicle in the Husband's possession

d.any shares in the sole name of the Husband;

e.the home contents currently located at [Property N];

f.any superannuation accrued or accruing to the Husband's benefit;

g.any bank accounts in the Husband's name;

h.home contents currently located at [Property R];

i.plant and equipment, fertiliser and stock on hand that is currently located at [Property R];

j.any other personal property in the Husband's possession forthwith vest in the Husband.

9.The Husband pay release and indemnify the Wife from any liabilities and creditors associated with any of the entities referred to in paragraphs 5, 6 and 7 above.

89The respondent subsequently amended his response on 22 February 2011 seeking the following orders:

1.Within 60 days of the date of the appropriate order, the Respondent pay to the Applicant such sum as to achieve an overall property settlement, exclusive of superannuation entitlements, of 30% to the Applicant and 70% to the Respondent.

2.The Respondent indemnify the Applicant in relation to any tax liability arising from the payment to the Applicant referred to in paragraph 1 hereof.

3.The whole of the Respondent's right, title and interest (if any) in:-

(a)[Property Z], registered in the sole name of the Applicant;

(b)[Property F], registered in the sole name of the Applicant;

(c)any motor vehicle registered in the name of the Applicant;

(d)any and all funds received by the Applicant since separation;

(e)any funds deposited to the credit of the Applicant in any bank, credit society or other financial institution;

(f)all furniture and items of personalty currently in the possession of the Applicant; and

(g)the Applicant's superannuation entitlements, if any;

forthwith vest in the Applicant.

4.The whole of the Applicant's right, title and interest (if any) in:-

(a)[Property N];

(b)[Property R];

(c)any and all shares in the name of the Respondent or in the name of [Company B];

(d)the Respondent's BMW 5 Series sedan motor vehicle;

(e)the Respondent's interest in [Company B], [Company X], [Company J], [Comapny A], [Bradley Unit Trust], [X Property Trust] and [Company S] along with any assets held by and any dividends due to those entities;

(f)any and all plant and equipment, fertiliser, stock and any other material currently located at the property at [Property R];

(g)any funds deposited to the credit of the Respondent in any bank, credit society or other financial institution;

(h)all furniture and items of personalty currently in the possession of the Applicant;

(i)the Respondent's interest in the [Forrest Super Fund]; and

(j)the Respondent's superannuation entitlements; forthwith vest in the Respondent.

5.Within 28 days of these orders, the Applicant:-

(a)do all such things and sign and execute all deeds, documents and instruments as may be necessary to transfer to the Respondent, or his nominee, her shareholding (if any) in the businesses and trusts known as [Company B], [Company X], [Company J], [Compamy A], [Bradley Unit Trust], [X Property Trust], [Company S] and the [Forrest Super Trust]; and

(b)resign any office she may holds in the said businesses and trusts;

(c)forgive any and all amounts owed to her by the said businesses and trusts, if any;

with the Respondent to prepare and provide to the Applicant any such documents necessary to effect such transfer, resignation and/or registration that may require her signature and with the Respondent to pay the costs (if any) associated with the preparation and lodgement of any such documents.

6.Contemporaneously with the compliance with paragraph 5 hereof, the businesses and trusts referred to in paragraph 5(a) hereof forgive any amounts owed to them, if any, by the Applicant.

7.The Respondent forthwith indemnify the Applicant and keep her indemnified in relation to any liabilities, including any and all amounts due to creditors and taxation liabilities, associated with the entities referred to in paragraph 5(a) hereof.

8.The Applicant pay the Respondent's costs of and associated with these proceedings.

90The respondent was to file a further amended response on 6 June 2012, and the applicant further amended her application with my leave on 22 June 2012, the substance of which is set out later in these reasons.

91The matter first came before me as Judge Manager in June 2011, at which time I made directions as to the preparation of the matter for trial.

92On 13 October 2011 the matter was again before me on the application of the applicant, at which time I made the following orders:

1.Within 7 days the Respondent Husband, [KEVIN FORREST], direct his accountants to prepare the 2011 financial statements and taxation returns for the following entities (where applicable):

(a)[Kevin Forrest Personal Taxation];

(b)[Company A];

(c)[the Forrest Superannuation Trust];

(d)[Forrest Family Trust];

(e)[SK Forrest Family Trust];

(f)[Company S];

(g)[X Property Trust];

(h)[Bradley Unit Trust];

(i)[Company X]; and

(j)[Company J].

2.The Respondent Husband comply with the orders made 7 December 2010 and provide to the Applicant Wife’s, [SALLY FORREST], solicitors within 7 days:

(a)those records that relate to the calculation of capital gains tax payable on properties held by entities under the Respondent Husband’s control; and

(b)copies of leases held by the entities under the Respondent Husband’s control in relation to such property.

3.Within 7 days the Respondent Husband provide to the Applicant’s Wife’s solicitors documents sought under cover letter to the Respondent Husband’s solicitors dated 26 August 2011.

4.Within 7 days the Respondent Husband provide to the Applicant Wife’s solicitors copies of the following documents:

(a)[Company A] 2009 financial statements;

(b)[the Forrest Superannuation Fund]:

(i)2007 taxation returns; and

(ii)2008 financial statements;

(c)[K Forrest] 2007 taxation returns;

(d)[SK Forrest Trust] 2010 financial statements and tax returns;

(e)[Company S]:

(i)2008 taxation returns;

(ii)2006 taxation return and financial statements;

(f)[X Property Trust]:

(i)2006 taxation return and financial statements;

(ii)2007 taxation return and financial statements;

(iii)2009 taxation return;

(g)[Bradley Unit Trust]:

(i)Trust Deed;

(ii)taxation returns and financial statements from 2006 to 2010; and

(h)[Company X] financial statements and taxation returns from 2006 to 2009.

5.Within 14 days the Respondent Husband file an affidavit setting out with precision when it is that any of the documents ordered to be produced herein have previously been provided to the solicitors for the Applicant Wife and by what means.

6.The matter be removed from the callover of cases listed for 14 October 2011 and be included, without loss of priority, in the callover of cases to be conducted on 11 November 2011.

7.The matter is adjourned for further consideration to Wednesday, 9 November 2011 at 9.00 am to monitor the matter's readiness and its continued inclusion in the November callover.

8.Costs reserved.

93I removed the matter from the callover of cases listed for 14 October 2011 as the matter was manifestly not ready and there were significant unresolved issues relating to the production of relevant documents and the preparation of relevant financial returns.

94The trial commenced before me on 19 March 2012. Issues of the preparedness of the matter for trial were apparent and these issues dogged the trial throughout. On 19 March 2012 I made the following orders and adjourned further conduct of the proceedings to 21 March 2012:

1.By 9:30am on 20 March 2012, the Respondent file and serve an affidavit setting out or attaching information as follows:-

(a)confirming the accuracy of the management accounts of [Company S] provided on 19 March 2012 under cover email from the solicitors for the respondent to the solicitors for the applicant;

(b)provide copies of management accounts for [Company C] and for the Respondent's company [Company E] from 1 July 2011 to date;

(c)explaining the relationship of [Company C] and or [Company E] (or similar named company) to other entities in the [Forrest] group of entities or associated entities and the Respondent's interest therein and identify the interests of any other parties;

(d)provide copy of the title and documents in relation to the purchase and the funding transactions for the property at [Property P];

(e)provide copies of [Bank A] eSaver account number ending in [***7] from the date the account was opened to the date the account was closed;

(f)provide a fresh undertaking by the Respondent as to disclosure in the form called for by the rules.

95The trial regrettably had to be adjourned, and I made orders on 21 March 2012 adjourning the trial, to be relisted in June, in the following terms:

1.Orders are hereby pronounced in terms of the Minute of Orders dated 21 March 2012, as follows:

1.The matter be adjourned if possible for a hearing date so that the matter can commence on 26 June 2012.

2.On or before 1 May 2012, the Respondent file and serve an affidavit annexing contemporary accounts for himself and for each of the entities listed in the assets and liability schedule and any other entity associated with those entities and identify any factors which are relevant to the financial position or valuation of the entities.

3.At the time of filing and serving the affidavit referred to in the previous paragraph the Respondent will file and serve a further undertaking as to disclosure in the form required by the rules.

4.On or before 1 May 2012 the Applicant file and serve:-

(a)an affidavit including a statement of her financial circumstances; and

(b)an undertaking as to disclosure in the form required by the rules.

5.Any documents in the undertaking of disclosure of the Respondent not included in the undertaking filed 21 March 2012 be provided to the Applicant in scanned version within 7 days of a request in writing.

6.Should either party give notice to the other that they contest that the other has not disclosed further documents or class of documents and acknowledge the same, within 2 working days provide those documents in a scanned form if requested and complete a further disclosure list.

7.By 14 May 2012, the Respondent serve a copy of a schedule of assets and liabilities in a form of the document handed up by the Applicant being asset and liability schedule 5.3 identifying the relevant assets and liabilities for trial as at 31 March 2012.

8.On or before 21 May 2012, the Applicant file and serve an asset pool summary in the same form, and the same date identifying the Applicant's values and any disagreement with the schedule in paragraph 7.

9.On or before 28 May 2012 the solicitors and counsel (if any) for the Applicant and Respondent meet and identify those items of difference that remain and cannot be agreed.

10.Each party shall 7 working days prior to the commencement of the trial file and serve an affidavit limited to whether there has been any significant change to the assets, liabilities and income of the parties since 31 March 2012 and if so, particularising the same and providing documentary evidence thereof.

11.(a) The Applicant have leave to file an affidavit of her forensic accountant at any time but no later than 7 days after receipt of the documents referred to in paragraph 7.

(b) the Respondent have 7 days to file any affidavit in reply.

12.The parties facilitate a revaluation of all relevant real estate of the parties or the entities as at 31 March 2012. In the event the parties are unable to agree the value of relevant commercial properties then the same are to be valued by an agreed Single Expert Witness. The Respondent is to meet costs thereof in the first instance.

13.Mr [O’Sullivan] be requested to provide an updated valuation of [Company S] and companies and entities as at 31 March 2012, by 7 May 2012.

14.Within 7 days hereof, the Respondent pay to the Applicant or cause to be paid the sum of $1,000,000.00 and the Applicant shall sign any authority presented to her within 7 days hereof for this payment to be the subject of a dividend from any entity of the parties to the intent that the sum of $1,000,000.00 shall be represented in the asset schedule as a partial property settlement and if the tax incurred by the Applicant as a result of receipt of this $1,000,000.00 is to be paid prior to judgment, the Respondent shall pay it in the first instance and in any event, it shall be represented in the asset schedule as a liability.

15.Costs be reserved.

16.The matter be listed for monitoring and consideration of any outstanding interlocutory issues on Friday, 8 June 2012 at 9:30axn.

17.Liberty to apply.

2.The trial in this matter be adjourned part heard before the Honourable Justice Moncrieff to be relisted, if possible, in June 2012 and to commence, if possible, on 26 June 2012.

3.Not later than 2 clear days before the commencement of the trial, the parties file a common assets and liabilities schedule to be prepared as at 31 March 2012.

4.The Applicant, [SALLY FORREST], have leave to adduce separate accounting evidence from [HUGH PERRY] at the adjourned trial.

5.Within 7 days from the date hereof, the solicitors for the Applicant and Respondent, [KEVIN FORREST], shall comply with the Costs Notification Rules [Rule 13A(13)], and provide a copy to the Court.

96The principal difficulties related to the disclosure of accounts and an uncertain tax liability, then estimated at up to $6,000,000, would clearly have a significant impact on the pool of assets, which, at that point, the applicant estimated to be $47,730,458 and the respondent $41,243,954.

97The potential for a tax liability of significant magnitude remained at large during the period of the adjournment.

98On 12 June 2012 I made orders appointing Mr [Richard Smalls], solicitor, as Single Expert. Mr Smalls’ terms of reference were as follows:

Dear Mr [Smalls],

[FORREST] K & S - FAMILY LAW MATTER -PTW 3424/2009

You are jointly requested by DCH Legal Group (instructing the Honourable Peter Dowding SC) and Anthony R Clarke & Associates (instructing Kim Wilson SC) in relation to an issue or issues arising in the Family Court of Western Australia.

DCH Legal Group act for the Applicant and Anthony R Clarke & Associates for the Respondent.

The proceedings are listed before Justice Moncrieff with the Trial due to commence on 26 June 2012.

You are requested to act as a Single Expert pursuant to the Family Law Rules.

We enclose a copy of Chapter 15 of the Family Law Rules and we request that you read and confirm having read and understood the Rules in relation to the duties, obligations and responsibilities of a Single Expert.

Specifically, you are instructed in relation to the matters referred to in two reports, one by Mr [Newey] who is instructed by the respondent and one by Mr [Avery] who is instructed for the applicant. Copies of those reports are attached for your information.

Section 109J Income Tax Assessment Act

1.The Applicant and Respondent are jointly Directors and Shareholders of a company [Company A]. [Company A] is a discretionary beneficiary of the [Forrest Family Trust].

2.The [Forrest Family Trust] owes a significant amount of money, namely $14,666,877 as at 31 March 2012, to [Company A].

3.The [Forrest Family Trust] is effectively controlled by the parties.

4.Enclosed are:

(i)Financial statements for [The Forrest Family Trust] for the years ending 30 June 2006, 2007, 2008, 2009, 2010, 2011 and interim Financial Statements to 31 March 2012 along with amended pages for the interim Financial Statements to 31 March 2012;

(ii)Financial Statements for [Company A] for the years ending 30 June 2001, 2002, 2003, 2006, 2007, 2008, 2009, 2010, 2011, and interim Financial Statements to 31 March 2012 along with amended pages for the interim Financial Statements to 31 March 2012;

(iii)[Forrest Family Trust] Deed;

(iv)Deed of Appointment;

(v)Deed of Variation;

(vi)Deed of Settlement.

Note - The accounts for 2009 on had not been signed off by the Directors and should not be taken as the financial statements but a construction on the recommendation of [Kevin Forrest's] accountant for reasons referred to below in particular in relation to the debiting of [Sally's] loan account. These matters are contentious.

Also enclosed is a schedule of the assets and the liabilities of the parties setting out the Applicant's position in relation to the assets & liabilities pool and the Respondent's view as to the assets & liabilities. You will note that there is significant cash retained in the [Forrest Family Trust] and significant cash amounts owed to it.

5.You will note from the financial statements of the [Forrest Family Trust] that:

(a)The amount owing to [Company A] is shown as an "unpaid trust entitlement" and has not been separated between pre 16 December 2009 or post 16 December 2009;

(b)There are no Division 7A Loan Agreements in place between the Trust and the company;

(c)The unpaid distribution owed to [Company A] is described as a "beneficiary loan" and is not shown as an unpaid present entitlement.

Advice Sought

5.Is it possible for the parties to make Application under Section 109J Income Tax Assessment Act for an order that requires:

(a)The joinder of [Company A] as a party to the Family Court proceedings;

(b)The payment of a dividend by [Company A] to one or other or both of the parties.

Is it your view that:

(i)The Commissioner ought be notified of the orders sought in relation to the Section 109J Application?

(ii)What would be the likely attitude of the Commissioner if the Commissioner were to be involved in the proceedings?

(iii)Is such an Application likely to succeed in avoiding any "top up tax" in respect of the payment of the dividend to one or the other or both of the parties"7

(iv)What are the advantages and disadvantages of such an Application being made?

(v)Is there any other approach that you would recommend?

Dividends

6.Since the parties separated in early 2009 the parties and some of their entities received payment of amounts in respect of which:

(a)No Division 7A loans have been recorded;

(b)No dividends have been declared and tax paid in respect of them.

7.A summary of the payments is set out below:

(a)[Sally's] debit beneficiary loan account balance of $1,244,516 as shown in the accounts drawn on the instructions of [Newey] as at 30 June 2009 ("loan 1")

[Sally] had a debit beneficiary loan account of $1,244,516 as at 30 June 2009 but a resolution was signed resolving to pay a dividend from [Company A] of $1,244,516.00 to [Sally] the "B" class share holding comprising of $124,452 unfranked and $1,120,064 unfranked. That sum was received by [Sally] and repaid to the company by 15 May 2010 to partially discharge the loan, [sic] There is no loan agreement in place.

It would appear that the 2010 financial statements have not been prepared correctly as the dividend declared has not been reflected in the accounts of the company or the [Forrest Family Trust]

(b)"Borrowings" of $92,924 - 30 June 2011 ("Loan 2")

Pursuant to an Order of the Family Court [Kevin] was Ordered to pay [Sally] $92,924. [Kevin] has characterised this as a loan to her. It could have been paid from [Kevin's] own resources but he chose to treat it as a loan in the year ended 30 June 2011. This is not authorised by the Court Order. This was not fully "repaid" by 15 May 2012 and there was no loan agreement in place.

(c)Unpaid trust distribution of $450,260 from [Forrest Family Trust] to [Company A] [(Kevin)]. Total $579,310less $120,690 to [Company A] – 30 June 2010 ("Loan 3")

For the year ended 30 June 2010 the [Forrest Family Trust], [Kevin] has purported to distribute the full profit of $579,310 to [Company A]. The Financial Statements do not reflect a Sub­trust arrangement and no Division 7A Agreement was in place and no interest paid.

[Kevin] purported to create a trustee distribution of income resolution for the year ended 30 June 2010 states the first $700,000 to [Company A] and the balance to [Kevin Forrest]. This has notbeen agreed to by [Sally].

Therefore from the total of $579,310, the amount of $120,690 ($700,000­$579,310) would be a deemed dividend to [Company A] and the balance of $458,620 is a deemed dividend to [Kevin Forrest]. Please note that [Sally's] position is that this is Mr [Newey's] opinion only and in respect of this paragraph Mr [Avery] does not agree (see his report at paragraph 3 and note further that in his view, it is limited to aiding an understanding of Loan 4) and this is a matter for which we seek your advice.

(d)Unpaid trust distribution of $120,690 from Forrest Family Trust to [Company A] - 30 June 2010 ($579,310­$458,620) – [Company A] ("Loan 4")

The reason the sum of $120,690 is a deemed dividend in the year ended 30 June 2010 to [Company A is explained at item (c) above.

Mr [Avery's] position is that the deemed Division 7A issue is overcome by the strategy outlined at as per Loan 3.

(e)Unpaid trust distribution of $1,341,165 from [Forrest Family Trust] to [Company A] -- 30 June 2011 ("Loan 5")

[The Forrest Family Trust] distributed 100% of the income being $1,341,165 to [Company A] in financial year ended 30 June 2011.

The Financial Statements do not reflect a Sub-trust arrangement and no Division 7A Agreement was in place and no interest paid.

Advice

8.Loan 1 - Do you agree that assuming the effect of the "round robin" is ignored that amending [Sally's] 2010 taxation return will resolve this issue and, in the event that this occurs, what will be the likely financial consequences.

9.Loan 2 - If [Kevin] had debited from his beneficiary loan account in the [Forrest Family Trust], instead of being debited from [Sally's] loan account as drawings, would there have been a Division 7A deemed dividend issue and, if so, in what amount.

10.Loan 3 and Loan 4 and Loan 5 - If [Mr Newey's] proposal at 2.1 of his letter of advice is followed, piease [sic] confirm that no resultant Division 7A deemed dividend would arise.

11.Are the amounts referred to at paragraph 8(a) to (e) above as having been received by the parties and their entities likely to be treated as deemed dividends?

12.What is likely to be the Commissioner's view in relation to:

(a)The assessment of any tax in respect of the payments?

(b)Any penalties, fines or interest in relation to the payments?

13.

(a)What would be the appropriate way to ascertain the Commissioner's view and/or to approach the Commissioner in respect of ascertaining Commissioner's view, is it:

(i)To approach the Commissioner and seek to have the Commissioner exercise his discretion to not apply any fines, penalties or interest?

(ii)Seek a tax ruling?

(iii)Is there any other recommended courses of action?

(b)Ought the Financial Statements be amended to reflect the fact that it was intended that the amounts paid would be by way of dividends?

(c)What are the advantages and disadvantages of any of the recommended courses of action referred to above?

14.Is there or are there any other recommended courses of action that might adequately address the issues referred to above? Would you please detail the advantages and disadvantages of any proposed course of action?

Other

If any further information is required, please address any correspondence to Anthony R Clarke & Associates at PO Box 7099, Applecross North WA 6953, with a copy to DCH Legal Group.

If any further documentation is required, please make the appropriate written request to Anthony R Clarke & Associates.

We would be pleased if you could note for your records that the cost of the preparation of this report will be shared by the parties.

We also advise that the timeframe involved in this matter is such that the Trial is due to commence on Tuesday 26 June 2012 and a report will be required as soon as possible from you.

It may well be that you will be required to swear an Affidavit and/or provide oral evidence in relation to these matters. You should note that each party is entitled to ask questions for the purposes of clarifying issues contained in your report.

Yours faithfully

Anthony R Clarke & Associates & DCH Legal Group

99The respondent had filed a further amended response (without leave) which leave I granted retrospectively on 12 June 2012. The respondent’s position as to final orders was as follows:

1.The Respondent have leave to amend his Amended Response filed 22 February 2012.

2.The Applicant be paid such sum so as to achieve an overall property settlement, exclusive of superannuation entitlements, of 30% to the Applicant and 70% to the Respondent.

3.The whole of the Respondent's right, title and interest (if any) in:-

(a)[Property Z], registered in the sole name of the Applicant;

(b)the property situated at [Property F], registered in the sole name of the Applicant;

(c)[Property G] be, registered in the sole name of the Applicant;

(d)any motor vehicle registered in the name of the Applicant;

(e)any and all funds received by the he Applicant since separation;

(f)any funds deposited to the credit of the Applicant in any bank, credit society or other financial institution;

(g)any and all funds payable to her by her sons, [David] and [Brian Stephens];

(h)all furniture and items of personalty currently in the possession of the Applicant, including any artwork and jewellery;

(i)the Applicant's superannuation entitlements;

(j)the [T Family Trust]; and

(k)any shares held in the sole name of the Applicant;

forthwith vest in the Applicant.

4.The whole of the Applicant's right, title and interest (if any) in:-

(a)the property situated at [Property N];

(b)any and all shares in the name of the Respondent and/or in the name of any of the entities in which the Respondent has an interest;

(c)any motor vehicles registered in the name of the Respondent and/or in the name of any of the entities in which the Respondent has an interest;

(d)the entities known as [Company B], [Company X], [Company J], [Company A], [Bradley Unit Trust], [X Property Trust], [the Forrest Family Trust], [the SK Forrest Trust], [Company C], [Company E] and [Company S] including any assets held by and any dividends or tax credits due to those entities;

(e)any and all plant and equipment, fertiliser, stock and any other material currently located at the property at [Property R]

(f)any funds deposited to the credit of the Respondent in any bank, credit society or other financial institution;

(g)all furniture and items of personalty currently in the possession of the Applicant;

(h)the Respondent's interest in the [Forrest Superannuation Fund]; and

(i)the Respondent's superannuation entitlements;

forthwith vest in the Respondent.

5.Within 28 days of these orders, the Applicant:-

(a)do all such things and sign and execute all deeds, documents and instruments as may be necessary to transfer to the Respondent, or his nominee, her shareholding (if any) in the businesses, trusts and superannuation fund known as [Company B], [Company X], [Company J], [Company A] [Bradley Unit Trust], [X Property Trust], [Company S], [Company C], [Company E], [Forrest Family Trust], [SK Forrest Trust] and the [Forrest Superannuation Fund]; and

(b)resign any office she may hold in the said businesses and trusts;

(c)release and forgive any loan accounts or other indebtedness owed to her by the said businesses and trusts, if any;

278Accordingly, I decline to make any further adjustment as I have indicated. Further, I am satisfied that the reasons that I have given regarding the outcome I have determined produces a just and equitable result, taking into account all the matters prescribed under s 205ZG and in the totality of the circumstances of the parties, and I propose to order accordingly.

Proposed orders

279The applicant presently has assets to a value of $12 517 896 inclusive of her superannuation. To effect the result I have determined, an additional payment will need to be made to her of three million, one hundred and two thousand, siz hundred and thirty eight dollars, $3 102 638.

280I will now hear Counsel as to the structure of the retention of the $7,900,000 and as to the structure of the provision of the further payment to the applicant in the sum of $3 102 638.

I certify that the preceding [280] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court

Associate