FOWLER & FOWLER
[2011] FamCA 273
•21 April 2011
FAMILY COURT OF AUSTRALIA
FOWLER & FOWLER [2011] FamCA 273
FAMILY LAW - PROPERTY – alteration of property interests - issues of contribution and future factors - justice and equity.
Family Law Act 1975 (Cth)
Bonnici and Bonnici, (1992 FLC 92-272)
DJM and JLM (1998) FLC 92-816
Doherty v Doherty (1996) FLC 92-652)
Fane-Thompson v Fane-Thompson (1981) FLC 91-053
Farnell(1996) FLC 92-681
In the Marriage of Geyl 7 Fam LR 219
Koh and Koh (unreported)
Kowaliw v Kowaliw (1981) FLC 91-092
Marker and Marker, [1998] FamCA 42
Omacini and Omacini, (2005) FLC 93-218
Townsend and Townsend (1995) FLC 92-569
Wardman v Hudson (1978) FLC 90-466
Wells v Wells (1977) FLC 90-285
Winnel v Winnel (1984) FLC 91-580
APPLICANT: Mr Fowler
RESPONDENT: Ms Fowler
FILE NUMBER: MLC 11498 of 2009
DATE DELIVERED: 21 April 2011
PLACE DELIVERED: Melbourne
PLACE HEARD: Melbourne
JUDGMENT OF: Mushin J
HEARING DATE: 20 – 22 December 2010 inclusive REPRESENTATION
COUNSEL FOR THE APPLICANT: Ms Smallwood
SOLICITOR FOR THE APPLICANT: Gillian Coote Family Law
COUNSEL FOR THE RESPONDENT: Mr Dixon, SC
SOLICITOR FOR THE RESPONDENT: Taussig Cherrie IT IS ORDERED THAT
1.On or before 21 October 2011, the wife pay to the husband the sum of $1,251,328 (“the payment”).
2.Contemporaneously with the payment, the husband:
a.relinquish all his right, title and interest in the following real properties:
(i)Properties 1 and 2 at C Street, Melbourne Suburb 1 in the State of Victoria more particularly described as the whole of the land comprised in Certificates of Title Volume … Folio … and Volume … Folio … respectively (“C Street”);
(ii)Property at S Street, Melbourne Suburb 2 in the State of Victoria more particularly described as the whole of the land comprised in Certificate of Title Volume … Folio … (“S Street”); and
b.do all acts and things necessary and sign all documents as are required to discharge:
(i)Mortgage dealing number … in favour of National Australia Bank encumbering Property 2 at C Street;
(ii)Mortgage dealing number … in favour of Westpac Banking Corporation encumbering Property 1 at C Street;
(iii)Mortgage dealing number … in favour of Westpac Banking Corporation encumbering S Street; and
(iv)The lease liability in respect of the Mercedes motor vehicle.
3.Contemporaneously with the payment, the wife do all such acts and things and sign all documents necessary to:
a.transfer to the husband, at his expense, all of her right title and interest in the net proceeds of sale of the following real properties:
(i)Unit at T Street, Melbourne Suburb 3 in the State of Victoria (“T Street”); and
(ii)Units 1 and 2 at V Street, Melbourne Suburb 4 in the State of Victoria (“V Street”);
b.resign as a director of:
(i)T Pty Ltd;
(ii)S Pty Ltd;
(iii)L Pty Ltd; and
(iv)C Pty Ltd;
c.consent to her removal as a beneficiary of:
(i)The Fowler Family Trust;
(ii)The S Family Trust;
(iii)The L Family Trust; and
(iv)The C Family Trust
d.resign as a member of The D Pty Ltd Superannuation Fund;
e.transfer to the husband or his nominee any shares she holds in:
(i)D Pty Ltd;
(ii)T Pty Ltd;
(iii)S Pty Ltd;
(iv)L Pty Ltd;
(v)C Pty Ltd;
f.assign to the husband any beneficial entitlements held by her in each of:
(i)The Fowler Family Trust;
(ii)The S Family Trust;
(iii)The L Family Trust; and
(iv)The C Trust.
4.Contemporaneously with the payment, the parties each do all things necessary and sign all such documents as are required to cause:
a.T Pty Ltd as trustee of the Fowler Family Trust to transfer to the wife, by way of distribution in specie, at the wife’s expense the licence registration and its right, title and interest in the Mercedes motor vehicle;
b.D Pty Ltd to do all acts and things and sign all documents to transfer to the wife, at the expense of the wife, the licence registration and its right, title and interest in the Porsche motor vehicle; and
c.T Pty Ltd as trustee of the D Pty Ltd Superannuation Fund to roll over the wife’s superannuation entitlements therein to a complying fund of the wife’s nomination.
5.Unless otherwise specified herein and save for the purpose of enforcing payment of any monies due pursuant to the orders herein:
a.each party be solely entitled, to the exclusion of the other party, to all properties (including choses-in-action) in the possession of such party;
b.each party be liable for and indemnify the other against any liability past, present or future in respect of any item of property to which that party is entitled pursuant to the orders herein, including rates, taxes (including capital gains tax) and all other charges;
IT IS ORDERED BY CONSENT THAT
6.The wife will reimburse the husband one half of the cost of the single expert fees fixed at $31,983, and Mr F’s fees fixed at $14,482.
IT IS FURTHER ORDERED THAT
7.Until the husband’s full and complete compliance with his obligations pursuant to the provisions of these orders:
a.the provisions of the orders 3, 4 and 7 of the orders made 27 January 2010 remain in full force and effect; and
b.the parties hold their respective interests in real properties in trust for one another in such proportions as shall accord with their respective entitlements pursuant to the orders sought herein.
8.Any application for costs or any other order arising out of these orders be made by way of written submissions to be filed and served pursuant to the following timetable:
a.by any applicant by 4:00pm on 18 May 2011;
b.by any respondent thereto by 4:00pm on 8 June 2011; and
c.by any applicant in reply by 4:00pm on 15 June 2011.
9.All applications be dismissed and removed from the list of cases awaiting hearing.
IT IS DIRECTED THAT
10.The subpoenaed and exhibited documents be returned on the usual basis.
IT IS CERTIFIED
11.Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel including senior counsel.
IT IS NOTED that publication of this judgment under the pseudonym Fowler & Fowler is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
FAMILY COURT OF AUSTRALIA AT MELBOURNE FILE NUMBER: MLC 11498/2009
Mr Fowler Applicant
And
Ms Fowler Respondent
REASONS FOR JUDGMENT
introduction
1.The parties were married for 33 years. They have four adult children. The husband is a senior, high earning professional. The wife was also employed as his office manager for many years until their separation in 2009.
2.The proceedings are competing applications for alteration of property interests arising out of the breakdown of their marriage. Apart from the discretionary issues of contribution and future factors, they are in dispute with regard to a number of major aspects of the asset pool. On any view, that asset pool is of significant proportions which will enable the parties to enjoy a reasonable standard of living in the future.
The parties and their children
3.The husband was born in 1951 and is presently aged 59 years.
4.The wife was born in 1952 and is also presently aged 59 years.
5.The parties married in 1975. At that time the wife was in full-time employment in the medical field and the husband was completing his degrees.
6.The parties have four children by their marriage who, at the time of the trial, were aged 32, 31, 29 and 26.
7.The parties separated on 10 January 2009 when the husband left the matrimonial home. A Divorce Order was made by the Federal Magistrates Court on 25 February 2010.
8.On the same day as the husband left the matrimonial home, he commenced cohabitation with Ms L. He has continued in that relationship to the present time. At the time of the trial, they were engaged to be married. They have two children by their relationship who were aged 18 months and 4 months at the time of the trial.
Credibility
9.Very few of the relevant facts in this matter are contentious. I am satisfied that both parties made every effort to relate those facts to the best of their abilities. While each of them had different interpretations of the same facts at times, those differences cannot be attributed to a lack of credibility. Accordingly, it is unnecessary to make a general finding with respect to their credibility.
Relevant facts
10.Neither party entered the relationship with any asset of significant value. The husband was studying with the financial assistance of a Commonwealth Government scholarship. Immediately after the parties' marriage, he was also working for the wife's brother on approximately 1 day of each week. In 1977, the husband commenced employment in his chosen field and has developed and continued his career as a professional to the present time.
11.Also at the commencement of the parties' marriage, the wife was working full-time in the medical field. Before the birth of the parties' first child in May 1978, the wife ceased that employment and continued as primary homemaker and parent until recommencing paid employment on approximately 1 day per week in the medical field in mid 1979.
12.The parties' second child was born in March 1980. Also in that year, the parties purchased their first matrimonial home at Melbourne Suburb 1 which was ultimately sold in 1989. It was not submitted that there was anything about that purchase relevant to these applications.
13.In 1982, the parties moved to live in England to enable the husband to develop his career. They remained there until January 1984 when they returned to Melbourne. Their third child was born in August 1984.
14.The wife commenced employment as the husband's assistant and practice manager in his professional practice in 1988, at first on a part-time basis. That employment was increased to full-time in 2000. She continued in that capacity until September 2009 when she ceased that employment in circumstances described below.
15.In 1989 the parties purchased a property at Melbourne 5 which was sold in the following year yielding minimal net proceeds.
16.The parties purchased Property 2 at C Street, Melbourne Suburb 1, (“the matrimonial home”) in 1993 for $311,000. That property was their matrimonial home until separation and has continued to be occupied by the wife since the separation. It is a relevant asset in these applications.
17.In 1994 the wife inherited the sum of approximately $44,000 from her family. The money was applied for the benefit of the family.
18.In 1995 the parties purchased a property which adjoined the matrimonial home. They built a tennis court on the land and while it remains on a separate title to the home, was effectively incorporated into the original home property.
19.Between June 2002 and December 2008, the parties purchased a number of investment properties in Melbourne Suburb 4, Melbourne Suburb 2, Melbourne Suburb 3 and Melbourne Suburb 6. It is not necessary to detail those properties. Some of them have been retained as relevant assets while others have been disposed of. In no case has it been suggested that either party has made a particular contribution to those transactions over and above the other party. Some of those properties have been leased and the parties have received rental monies from them. The main issue with regard to those properties is their ultimate disposition as between the parties.
20.I have already found that the parties separated on 10 January 2009 and the husband commenced cohabitation with Ms L. The husband swore that initially he moved into Ms L’s flat and then the two of them moved into Property 3 at Melbourne Suburb 2 which happened to be vacant at that time.
21.Following the parties' separation the wife continued as the assistant and practice manager of the husband's practice until September 2009. On 9 September 2009 the wife gave the husband a letter saying that she was taking annual leave. I accept the husband’s evidence that that was done with virtually no notice to him but in the circumstances, nothing turns on that. The husband complained that the lack of notice disrupted the practice and caused “chaos” because the other secretary did not know how to use the computer and additional staff had to be hired.
22.On 21 September 2009 while the wife was on leave, the husband changed the locks of the doors of his offices. I accept the wife's evidence that that effectively terminated her employment at the practice. The husband alleged that he did that because he had discovered that cash and cheques had been removed together with framed photographs of the children.
23.The events of September 2009 were clearly momentous for the parties but of little relevance in these applications. The parties' relationship had broken down and their actions were manifestations of that breakdown. In the circumstances, it is hardly surprising that the wife's employment in the husband's practice came to an end. Perhaps the only surprise is that it continued for as long as it did after the parties' separation.
24.Between 27 January and 13 October 2009 the wife transferred funds totalling $350,000 into accounts which were either in the name, or to the benefit, of two of the parties' children. During approximately the same period the wife removed the sum of $445,638 from joint accounts of the parties without the husband's knowledge. I will consider the issues arising out of the transfer of those funds in my determination of the pool of assets for the purpose of these applications.
25.In November 2009 the husband and Ms L bought a residential property at D Street, Melbourne Suburb 7 (“D Street”). The purchase price was $2,200,000 of which the husband contributed $584,000 from accumulated savings and the balance was secured by way of a first mortgage from the National Australia Bank. The husband swore that the property had been registered in Ms L’s name “as asset protection”.
26.During this trial, significant time was spent on issues relating to the husband's taxation liabilities. As a result of discussions between myself and counsel for the parties, those issues may also be confined to the determination of the asset pool and an assessment of future factors as discussed below. There was some suggestion on behalf of the husband that those liabilities may have been incurred, at least in part, from what could be interpreted as a lack of proper administration by the wife while she was practice manager, together with questions of whether her hasty departure was relevant to those facts. Ultimately, those issues were not relied upon and it is unnecessary to make findings on them.
27.Also during preparation of these applications for trial, submissions were made on both sides that there had been a lack of full and frank disclosure. Again, as a result of the final addresses by both counsel, I do not find it necessary to determine those issues.
28.A number of interlocutory applications were made in these proceedings. On 27 January 2010 consent orders were made providing for the husband to pay to the wife spousal maintenance of $2500 per week together with a partial property settlement in the sum of $50,000 and adult child maintenance of $200 month for one of the parties' children. The sum of $50,000, while classified as a partial property settlement, was provided to the wife to enable her to prepare her case for trial. It is referred to in the asset pool below as a “Barro order”.
29.On 13 August 2010 the parties consented to orders providing for the sale of three of their investment properties together with the distribution of the proceeds from those sales. The consequences of those orders are incorporated in the asset pool relevant for distribution in these proceedings and it is therefore unnecessary to consider those matters any further at this stage.
The asset pool
30.I now turn to a consideration of the asset pool. That consideration involves first, a list of agreed assets and liabilities, secondly the parties’ superannuation, thirdly disagreed assets and finally, disagreed liabilities. I will make relevant findings as necessary.
Agreed assets
31.The parties’ agreed assets are as follows:
Owner Agreed value Property 1 at C Street (tennis court) Wife $1,550,000.00 Property 2 at C Street (matrimonial home) Wife $2,750,000.00 Property at D Street Ms L $2,200,000.00 Property at Melbourne Suburb 6 S Pty Ltd $950,000.00 Property at S Street Wife $720,000.00 Property 2 at Melbourne Suburb 2 T Pty Ltd $800,000.00 Property 3 at Melbourne Suburb 2 C Pty Ltd $1,200,000.00 Property 4 at Melbourne Suburb 2 L Pty Ltd $580,000.00 Property 5 at Melbourne Suburb 2 L Pty Ltd $570,000.00 Unit 1 at V Street Wife $468,000.00 Unit 2 at V Street Wife $513,000.00 Unit at T Street Wife $604,000.00 Mercedes - driven by wife T Pty Ltd $31,050.00 Porsche Husband $119,950.00 Mercedes - driven by Ms L Husband $59,200.00 Mercedes - driven by Ms L Husband $9,000.00 Porsche D Pty Ltd $25,400.00 Shares Wife $105,435.00 Household contents wife Wife $25,510.00 Household contents husband Husband $17,300.00 Add back – Barro Order wife Wife $50,000.00 Total agreed assets: $13,347,845 32.The property at D Street is registered in the name of Ms L and is the matrimonial home of herself and the husband. The husband conceded that Ms L had not made any financial contribution to the purchase of the property and that it should be included in the list of assets for the purpose of these proceedings as being notionally owned by him.
33.These proceedings have been conducted on the basis that the various companies which are the proprietors of relevant property are the alter ego of one or both of the parties and must therefore be considered as being effectively assets of one or both of them with no differentiation as to their precise ownership.
34.The two properties at V Street, Melbourne Suburb 4 and the one at T Street, Melbourne Suburb 3 are all investments of the parties. At the time of the trial the parties had either sold, or were in the process of selling, those properties and had agreed on their values as included in the above list.
35.The parties agreed that the wife is in possession of a Porsche motor vehicle valued in the sum of approximately $25,400. The vehicle was previously owned by the wife's deceased brother and was purchased by the parties from an external source. The husband sought that it be transferred to him. The wife resisted that. In my view, the husband's wish to acquire ownership of the Porsche is somewhat insensitive, given the wife's family attachment to it. Counsel for the wife submitted that it should be excluded from the asset pool. In accordance with other findings made in this matter it is an asset which must be included in the asset pool at its agreed value. It will be retained by the wife.
Agreed liabilities
36.The agreed liabilities are as follows:
Agreed value Westpac mortgages $1,820,000.00 NAB mortgages $4,152,011.00 Property at Melbourne Suburb 6
- selling costs
- CGT$23,750.00E
$46,202.00EProperty 5 at Melbourne Suburb 2
- selling costs
- CGT$15,550.00E
$ minimalProperty 4 at Melbourne Suburb 2
- selling costs
- CGT$15,700.00E
$ minimalCGT – Unit 1 at T Street $40,614.00E CGT – Unit 2 at T Street $27,385.00E CGT - Unit at T Street $39,255.00E Lease on Mercedes - driven by wife $55,600.00 Lease on Mercedes - driven by husband $131,985.00 Lease on Mercedes - driven by Ms L $83,830.00 Total agreed liabilities: $6,451,882.00
37.During this trial, there was significant time spent on the issue of capital gains tax (“CGT”) payable on the sale of various assets. The question of CGT is relevant to the sale of various assets which, in some cases, is only able to be quantified upon the determination of these applications and the consequent need of one or other party to dispose of any particular asset. I will return to that issue in due course.
38.The issue of CGT on the investment properties referred to in the list of agreed assets above is not the only one affecting those properties. While not specified, I assume that any borrowings on those properties are included in the mortgages which are set out in the table of agreed liabilities above.
Agreed superannuation
39.The parties’ superannuation entitlements are as follows:
Agreed value Wife’s superannuation $543,289.00 Husband’s superannuation $1,171,371.00 General reserves $80,243.00 Total superannuation $1,794,903.00
40.It is common ground that all of the parties' superannuation is invested in self managed superannuation funds. The parties have conducted these proceedings on the basis that those funds should be treated as property. I agree that they should be so treated.
Disagreed assets
41.The assets which are not agreed between the parties are as follows:
Wife’s value Husband’s value Wife’s jewellery $103,205.00 $173,205.00 Wife’s inheritance from her mother resource $625,000.00 Husband’s professional equipment $107,150.00 $41,845.00 Wife’s savings $123,477.00 $154,543.00 Husband’s savings $12,109.00 $6,000.00 Add-back – Funds appropriated by wife $256,121.00 $445,639.00 Rental income on investment properties $56,608.00 Nil Film $7,500.00 Not known Total disagreed assets: $666,170.00 $1,446,232.00
Wife's jewellery
42.I have found the way in which the parties have considered the issue of the wife's jewellery somewhat puzzling. It is common ground that the jewellery is valued in the sum of $173,205 which is the figure attributed to it on behalf of the husband. The wife has attributed a value which is $70,000 less than the husband's. The reason for that is that the wife intends to sell part of the jewellery to the value of $70,000 and the real issue is how that amount should be treated in the asset pool. There was some suggestion that the proceeds of sale of a portion of the jewellery should be divided between the parties in accordance with my determination of the overall division of assets in these proceedings.
43.I propose taking a different course. The jewellery will be included in the asset pool at its agreed value of $173,205. It is common ground that as a result of any determination which I make, the wife will be required to pay a sum of money to the husband to achieve that result. In the event that the wife elects to apply the proceeds of sale of part of the jewellery for that purpose, it is open to her to do so. However, the jewellery belongs to her at the agreed value and she may deal with it as she wishes.
Wife's inherited property
44.The wife and her brother inherited a property at Property 3 at Melbourne suburb 1 from the will and estate of their late mother. The wife’s share of that property is valued in the sum of $625,000. At the time of the trial it had not been vested in the wife in so far as a transfer of the title to her name was concerned. However, there is no discretionary aspect to such a transfer and subject to it, the property will be owned by her. In those circumstances, I reject the submission on behalf of the wife that the property should be treated as a resource rather than an asset of the wife. I find that it must be included as the wife's property in the asset pool. I will determine any issue of treatment of that asset in due course.
Husband's professional practice
45.The parties were unable to agree on the valuation of the equipment of the husband's professional practice. The wife asserted a value of $107,150 and the husband asserted a value of $41,845. The wife's figure appears to have been derived from a balance sheet of the husband's practice in 2009 and the husband's figure is derived from the valuation of the single expert, Mr F. The wife's figure includes the full value of the husband's practice rather than that of only the equipment while Mr F's value refers only to the equipment.
46.I found the final addresses of both counsel inconclusive on this issue. On the basis of my analysis of the evidence referred to in the previous paragraph, I prefer the husband's value because it was restricted to the professional equipment and was part of the report of the single expert who was appointed specifically for that purpose.
Wife's savings
47.The parties were also unable to agree on the issue of the wife's savings. In the Outline of Case document filed on her behalf at the commencement of this trial, those savings were included at a figure of approximately $125,000. However, that is not sworn evidence. The wife's sworn evidence included in her Financial Statement filed on 12 November 2010 disclosed savings in the sum of $154,543. That last figure appears to be the best, if not the only evidence on the topic and I accept it as the appropriate figure to include in the asset pool.
Husband's savings
48.Throughout the proceedings, the husband has asserted and sworn to minimal savings of approximately $6,000 which appears to have been at least part of the basis for his interim application for the sale of the three properties referred to above.
49.In her own breakdown of the husband's savings account the wife asserted that the husband’s savings amounted to approximately $12,109. On the basis that the husband's evidence is consistent and the wife has not established the higher figure, I prefer the husband's assertion on that issue.
Add backs
50.Counsel for the husband submitted that the wife had had the benefit of approximately $621,000 from the time of the parties' separation which she had removed from the funds of the husband's professional practice. Of that amount, it was asserted that $445,639 should be added back to the asset pool as a notional asset of the wife. Counsel for the wife conceded that the sum of $256,121 should be added as a notional asset. I turn to a consideration of those submissions.
51.Mr F reported on the wife's withdrawal and depositing of funds between the period 1 January 2009 and 30 September 2009. He determined that the wife had deposited the sum of $431,638.71 into her relevant bank account. He analysed that as having been received from the following three sources:
Unverified deposits $135,661.21
Family Trust $227,358.00
Practice Account $68,619.50
Total $431,638.71
Accordingly, if the Family Trust receipts are included the wife received $295,977 from the husband's practice accounts. Mr F expressed the view that the sum of $53,856 was “a reasonable allowance for the wages of the Wife.” Therefore, the wife received $242,121 from the husband's practice after the allowance for her wages.
52.Counsel for the husband submitted that the wife had received the total sum of $431,638 from the husband's practice. I find that that submission is incorrect and rely on my analysis in the previous paragraph.
53.The fundamental submission of Counsel for the husband was that in addition to the sum of $431,638 referred to above the wife had a further sum of $190,000 of her own savings totalling $621,638 from which the approximate total sum of $621,000 was calculated.
54.During her final submissions, counsel for the husband also referred to amounts received by the wife including $41,000, of which $14,000 was used to pay for the wedding of one of the parties' daughters and $54,700 was drawn down on the mortgage which counsel referred to as being “uncontroversial” as stemming from the wife's evidence. On the basis of the submission that the maximum amount should be calculated as referred to in the previous paragraph, it is unnecessary for me to consider those individual amounts at this stage.
55.Despite the submission that the sum of $621,000 should be added back into the asset pool as a notional asset of the wife as referred to above, counsel for the husband submitted that only the sum of $445,639 be so added back. The reason for that concession was not explained but in view of the fact that it was effectively an admission against interest, I regard that last figure as being the maximum amount which might be added back in this category.
56.The wife conceded that she had transferred the sum of $250,000 into an account in the name of one of the parties' children and the further sum of $100,000 into the account of another of their children. She swore that she had done that in order to protect herself financially in the event that following the parties' separation, her access to funds was curtailed by the husband. She swore that of that sum, $190,000 represented her own savings together with transfers from the husband's professional practice accounts.
57.The wife swore that she had used those funds from November 2009 until the date of the trial for the following purposes:
· day-to-day living expenses;
· the cost of upkeep of the matrimonial home;
· expenses of upkeep of the investment properties;
· the sum of $33,200 to pay for the wedding of one of the parties' daughters;
· the sum of $4,000 towards flights to attend the wedding of the other of the parties' daughters together with $14,000 for wedding expenses for that daughter;
· university and living expenses for the children; and
· the sum of $125,362 for legal expenses.
58.The sum of $256,121 which is conceded on behalf of the wife to be added back as a notional asset in her possession was arrived at by adding the sum of $242,121 referred to above as calculated from Mr F's evidence and the sum of $14,000 for the wedding expenses referred to above. I have been unable to discern the logic by which that figure has been arrived at.
59.I now turn to an examination of the relevant legal principles. In Marker and Marker, [1998] FamCA 42, the Full Court considered the issue of notionally adding an asset back into the asset pool. The Court held:
2.10 It is well settled that save in exceptional circumstances a trial Judge should deal with the property as at the date of the hearing and make adjustments taking into account the various matters set out under s.79. (Wells v Wells (1977) FLC 90-285; Wardman v Hudson (1978) FLC 90-466; In the Marriage of Geyl 7 Fam LR 219) However, the particular justice of the case may make it appropriate to notionally add back assets which have been demonstrated to have been dissipated either during the marriage or post-separation. Normally it is necessary to demonstrate an appropriate basis for doing so, for example by wastage such as gambling or extravagant living. (Kowaliw v Kowaliw (1981) FLC 91-092; Fane-Thompson v Fane-Thompson (1981) FLC 91-053; Winnel v Winnel (1984) FLC 91-580; Townsend v Townsend (1995) FLC 92-569; Doherty v Doherty (1996) FLC 92-652) Additionally, because of the requirement for each party to bear their own costs, it is generally appropriate to add back to the pool of assets notionally any legal costs that have been spent on the litigation and to deal with the costs as a separate issue at the end of the litigation. (see Farnell(1996) FLC 92-681).
2.11 There seems to be no appropriate basis for notionally adding back monies that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge.
60.It is clear from Marker's case (supra) that an application for alteration of property interests must be decided on the basis of the assets as they existed at the date of trial as valued at that date. The mere fact that a party has spent money between the date of separation and the trial does not, of itself, mean that that money must be added back in to the asset pool as a notional asset. There must be something more in the facts to warrant the exercise of discretion in adding back an asset.
61.In Omacini and Omacini, (2005) FLC ¶93-218 a Full Court held (p 79,617-8):
30. To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In DJM and JLM (1998) FLC ¶ 92-816 the Full Court said at 85,262:
“11.6 For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.”
(b) Where there has been a premature distribution of matrimonial assets. In Townsend and Townsend (1995) FLC ¶ 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at 81,654:
“In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband's receipt of those monies is to bring them into the pool of assets on a notional basis and make a distribution accordingly.”
(c) In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC ¶ 91-092 at 76,644:
“As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec 75(2)(o) to applications for settlement of property instituted under the provisions of sec 79.”
62.Omacini's case sets out three categories in which an asset may be added back to the asset pool. The first of those is the expenditure of legal fees prior to the trial. The law relating to that principle is well settled and is detailed in the above quote. In this matter, both parties have expended very large sums in preparing for the trial which would normally be added back to the asset pool in accordance with the principle. The evidence contains some references to the parties' respective legal costs but the various balance sheets submitted to me, together with counsels' final submissions, did not refer to that issue. While I would normally add such legal costs back into the asset pool, on the basis that neither party has sought that I do so I have decided against that course.
63.The second category relates to the add back of an asset which has been received by one or other party as a result of a premature distribution of assets, often referred to as an interim alteration of property interests. In this matter, it is common ground that the wife received the sum of $50,000 on account of her legal costs for the preparation of her case, often referred to as a “Barro order”. It is also common ground that that sum should be added back to the asset pool as a notional asset of the wife. I agree with that course.
64.The third category relates to the ratio in Kowaliw and Kowaliw, quoted above. No submission has been made that any of the criteria referred to in that decision applies in this matter. The evidence does not support any such submission. Accordingly, I agree with that approach.
65.The manner in which the parties have approached the issue of adding back notional assets on behalf of the wife has not been even handed. The wife has received significant monies since the separation and has applied them for various purposes. To the extent that she was criticised for applying some of those monies to the benefit of the parties' children and particularly wedding expenses and living expenses, that criticism has been unfair. While the parties lived together with their children as a family, it was obviously entirely acceptable to the husband to advance monies to them to enable them to live at a reasonable standard of living. That has changed since the separation, particularly resulting from the apparent breakdown of the relationship between the children and their father. He has spent a large amount of money on the purchase of a home for himself, Ms L and their two children which is entirely understandable, particularly in the circumstances that that property is one of the relevant assets in the asset pool. However, he has also managed to maintain a reasonable standard of living with Ms L but seems to begrudge such a standard to the wife.
66.There is no evidence to substantiate the proposition that the wife has lived at an extravagant standard since the separation. She has applied significant monies to the children which appears to have been a continuation of the parties' conduct prior to the separation. It is not suggested that the wife has been profligate or has misspent the money. She has been criticised for applying monies for wedding expenses and attempting to secure her finances arising out of the breakdown of the marriage. She has conceded an add back of a substantial sum which might be inferred to include her prepaid legal costs. No such figure appears to have been included on the husband's side and to that extent, he may regard himself as being fortunate. On any view, I am hard-pressed not to regard his attitude to this issue as involving a double standard.
67.Accordingly, I find that it is appropriate to accept the wife's admission against interest by adding back as a notional asset in her possession the sum of $256,121.
Rental income on investment properties
68.Counsel for the wife submitted that I should include the sum of $56,608 in the asset pool being rental income on investment properties. Counsel for the husband submitted that I should not include any sum for that item. Rental income is income rather than an asset. It is to be included in the appropriate income-tax return and income-tax is payable on it. Accordingly, it is not appropriate to include it as an asset.
Film investment
69.Counsel for the wife submitted that a sum of $7,500 should be included as a joint asset for a film investment. No evidence was led with regard to that and I find that it has not been proven to the appropriate standard. Accordingly, it must be omitted from the asset pool.
70.As a result of my findings with regard to disagreed assets, I find the following further assets in addition to the agreed assets listed above:
Value Wife’s jewellery $173,205.00 Wife’s inheritance from her mother $625,000.00 Husband’s professional equipment $41,845.00 Wife’s savings $154,543.00 Husband’s savings $6,000.00 Add-back – Funds appropriated by wife $256,121.00 Rental income on investment properties Nil Film Nil Total disagreed assets: $1,256,714.00
Gross assets
71.The total gross assets of the parties are therefore calculated as follows:
Gross agreed assets $13,347,845.00 Gross disagreed assets $1,256,714.00 Total gross assets $14,604,559.00
Disagreed liabilities
72.The parties disagree on the following liabilities:
Wife’s value Husband’s value C Street
– selling costs$107,000.00E G Accountants outstanding fees nil $64,584.00 Husband’s outstanding income tax liability nil $479,539.00 Lease on professional equipment $16,422.00 Total disagreed liabilities: $107,000.00E $560,545.00 73.I now turn to a consideration of the disagreed liabilities. The first of those is the cost of selling the matrimonial home. It is common ground that the wife will retain that property as a result of the orders which I will make. The wife did not commit herself to selling it immediately. She expected that the two younger children may return to live with her in the matrimonial home. She hoped to be able to retain it until at least the end of this year and acknowledge that she may well have to sell it at that time.
74.In my view, particularly on the basis of the way in which I will determine these applications, the wife will need to sell at least that part of the matrimonial home on which the tennis court is built. I accept the wife's evidence that she may reasonably expect to obtain a better price for the property if both lots are sold together. Accordingly, I find that the wife will need to incur the sale costs of the property in the relatively near future and it is therefore appropriate to include the sum of $107,000 as a reasonable estimate of those costs.
75.The second disagreed liability is the sum of $64,584 being outstanding fees for G Accountants, the accountants who were engaged by the parties during their marriage and subsequently. That amount was included in the list of assets and liabilities submitted by counsel for the husband at the commencement of her final address. It was shown as being “owned by” the husband. It is conceded that the amount was outstanding at the time of the trial. I note that the husband previously abandoned a claim for reimbursement of the fees paid to G Accountants since November 2009 in the sum of $104,448.
76.During the trial there was some evidence that the husband would be entitled to an income-tax deduction for at least part of those fees. However, no evidence was adduced to clarify that entitlement. In the circumstances, while the fees are owing and may be properly claimed as a liability by the husband, I infer that he will be able to deduct at least a significant portion of it from his gross income. Accordingly, I will allow the liability in the sum of $35,000.
77.The third disagreed liability is in respect of the husband's outstanding taxation in the sum of $479,539. During the trial there was discussion between counsel for the husband and myself with regard to the question of whether that sum should be deducted against income or assets. I expressed the view that income-tax is chargeable against gross income rather than assets. No authority was cited to me by either counsel. Understandably, counsel did not have the benefit of the unreported decision of the Full Court in Koh and Koh, (judgment delivered 18 October 1993). In reference to the issue of whether a liability for income-tax was chargeable against income or assets, their Honours held (p 10-11):
He could have made provision for his ultimate tax liability by putting money aside from his very considerable cash flow during the financial year in question. Had he done that, there would have been no question of his putting forward any future liability for personal income tax as a liability reducing the net value of available property. It would in our view have been properly arguable on the husband's behalf that his future tax liability should be set off against his relevant savings had he made any. However, he cannot properly be heard to say, when he has made no such savings, that his spouse should effectively subsidise his personal tax liability by suffering a corresponding diminution in the net property available for division. In fact, the husband chose, instead of making provision for his prospective tax liability, to allocate much of his available income towards payment of legal costs and accountancy fees associated with the proceedings. Had he not done that, he would have had, at the date of trial, an existing debt to his accountants and legal advisers which clearly could not have been treated as a deduction reducing the pool of available property. Such a deduction would of course effectively make the wife a contributor to the payment of his costs without a costs order being made against her.
78.It appears that while the wife was managing the husband's professional practice, she would set aside funds to meet the husband's taxation liability. That was not done in respect of the husband's present liability which is the subject of this claim. While there was no specific submission that the wife was to be criticised for that, there was some suggestion that an inference may be drawn which I reject.
79.I have already found that subsequent to the parties' separation the husband paid the sum of $584,000 for the purchase of the Property at D Street. Had he, for example, put that money aside for his taxation liability, the property would not be included as an asset in these proceedings. While it is reasonable to infer that the husband has lived at a standard appropriate to his very large income since the parties' separation and some of the evidence with regard to his making allowances for holidays and the purchase of jewellery for Ms L corroborates that proposition, the evidence does not enable me to find that he may have been able to make allowance for that taxation liability from other income.
80.Accordingly, I find it is appropriate to allow the sum of $479,539 in respect of the husband's taxation liability as a deduction as a liability against assets for the purpose of these proceedings.
81.The husband has claimed the sum of $16,422 being the lease on his professional equipment. I have previously found that the value of the professional equipment was to be in accordance with the expert evidence of Mr F in the sum of $41,845. That figure is derived from Appendix F to Mr F's affidavit sworn on 1 December 2010. In the same exhibit, Mr F did not refer to a liability for the lease which I infer has been included as a net figure in the value of the professional equipment referred to in this paragraph. I find that the husband has not established the claim and I disallow it.
82.Accordingly, I find that the parties’ disagreed liabilities are as follows:
Value C Street – selling costs $107,000 G Accountants outstanding fees $35,000.00 Husband’s outstanding income tax liability $479,539.00 Lease on professional equipment Nil Total disagreed liabilities: $621,539.00
83.The total liabilities of the parties are:
Value Agreed liabilities $6,451,882.00 Disagreed liabilities $621,539.00 Total liabilities $7,073,421.00
84.Therefore, the net assets of the parties are calculated as follows:
Value Total gross assets $14,604,559.00 Total superannuation $1,794,903.00 Total liabilities $7,073,421.00 Net assets $9,326,041.00
The parties' proposals
85.At the outset of the trial, counsel for the wife submitted that his client should receive 67.5% of the parties' total net assets on the basis that their contributions were equal and the wife should receive a further adjustment of 17.5% for future factors.
86.Counsel for the husband submitted that the wife should receive 52.5% of the total net assets on the basis of contributions of 52.5% to the husband and 47.5% to the wife with a further adjustment of 5% in favour of the wife for future factors.
The legislation
87.Section 79 of the Family Law Act 1975 ("the Act") empowers me to make such order as I consider appropriate altering the property interests of the parties to the marriage. However, I must not make any such alteration unless I determine that:
… in all the circumstances, it is just and equitable to make the order.
In determining whether to make an order, I am required to take into account the various matters in subsection (4). Those matters primarily relate to issues of contributions and future factors.
Contributions
88.Contributions may be made in three categories. The first two categories are financial and non-financial contributions. Those contributions may be made by or on behalf of a party of the marriage or a child of the marriage and either directly or indirectly. They are contributions to the acquisition, conservation or improvement of any of the property of the parties or either of them, such property including property which has been disposed of since the making of the contribution.
89.The third category of contribution is to the welfare of the family being the parties and their children and includes contributions in the capacities of homemaker and/or parent.
90.The legislation does not prioritise one type of contribution over any other.
Future factors
91.The legislation incorporates the provisions of subsection 75(2) of the Act into the consideration of what are referred to as “future factors”. They include disparity of income, standard of living, age and health together with like matters.
Other matters
92.Subsection 79(4) of the Act also requires me to have regard to several other matters. They are the effect of any order on the earning capacity of the parties, any other order made under the Act affecting a party or a child of the marriage and issues of child support. Neither counsel submitted that any of those matters was relevant in these applications.
Discussion
Contribution
93.At the outset of the parties' relationship, neither of them owned any asset of significant value. The wife was in full-time employment and the husband was completing his qualifications. The parties received some practical support from the wife's parents and the wife received an inheritance of approximately $44,000. These occurred very early in the marriage and in the circumstances, I do not regard either of those matters as being significant in the context of the parties’ financial position. No submission was made to the contrary.
94.The parties lived in England for several years while the husband completed his qualifications. They returned to live in Melbourne where they have been domiciled for the whole of their married life. They had four children who are now adults to whom I shall refer below.
95.The husband has made an enormous financial contribution to the parties' assets. His earnings, to which I will also refer below, have been in the highest range of the Australian community. He has worked extremely long hours, many of which have taken him away from the family at times when most others might have been engaged in homemaking, parenting and recreational activities. He has contributed the entirety of his income to the benefit of the family and that contribution is reflected in a very large asset pool.
96.While the husband was engaged in making that contribution, the wife was also engaged, partly financially but also in many other different ways. She was employed variously on a full and part-time basis as well as forgoing that employment to have and care for the parties' four children. For a period of more than 20 years until September 2009, the wife worked as the full-time assistant and practice manager in the husband's practice. She was paid for that work. As with the husband, she contributed the entirety of her earnings to the benefit of the family and their assets.
97.As with the husband, the wife made similarly enormous contributions in different ways. It follows from the fact that the husband was engaged in his practice for very long hours that the wife was primarily involved as a parent of the parties' four children and the homemaker for the whole family. With no criticism of the husband, his work did not permit him to participate in those regards to other than a small degree. He described his work as being 24 hours a day at times. That left the wife with the fundamental responsibility of virtually all requirements of the family and their living arrangements including management of their investments. While she was not the primary breadwinner, she was also involved in that last regard but to a much smaller extent than the husband.
98.The submission of counsel for the husband that somehow the wife's contribution was less than his was, in my view, less than edifying. While his financial contribution as a breadwinner was enormous and has required extremely demanding and time-consuming work over three decades, his contribution was as the breadwinner and the wife effectively did everything else. The criticism of her which is inherent in the submission that her contribution should be regarded as being less than his is, in my view, a criticism of him. For the period from the commencement of the marriage until the parties' separation this is as clear an example of equality of contribution as might be seen.
99.There are two factors relevant to these applications which require me to consider the question of post-separation contributions. The first of those is the very substantial ongoing contribution of the husband in meeting various outgoings pursuant to orders made by the Court on 27 January 2010. Those contributions have included mortgage payments on various properties together with maintenance and like payments to and on behalf of the wife. During her final address, counsel for the husband sought the discharge of those orders forthwith. I refused that application, indicating that it was not appropriate to make such an order at that point other than in urgent circumstances. I said that I would consider that matter as part of the final orders which I make in these applications.
100.The second factor relating to post-separation contributions concerns the wife's share of the inherited property valued in the sum of $625,000. I have included it in the list of assets at its full value as I have found to be in accordance with the law. While it is a relevant asset, it was acquired after the parties' separation and it cannot be said that the husband has made any significant contribution to it. (Bonnici and Bonnici, (1992 FLC 92-272)).
101.Ultimately, while the wife's contribution of the inherited property is significantly greater than the husband's post-separation contributions, in light of the orders which I will make particularly for the interim continuation of the husband's payments pursuant to the orders referred to above, in the circumstances the two contributions sufficiently balance each other out. Accordingly, I find that on all aspects of contribution the parties have contributed equally.
Future factors
Age and state of health of parties
102.Both parties are aged 59 years. There is no evidence or submission to suggest that the health of either of them is relevant to my consideration.
103.The husband swore that he did not expect to be able to work in his profession at the present rate indefinitely. I accept that submission. It is reasonable to assume that at some time in at least the medium term, he will cut back the hours that he works, thereby reducing his income. The evidence does not permit me to make any more detailed finding.
Income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment
104.There is a very large disparity between the parties with respect to their income. The husband swore that the progression of his income had been as follows:
2003 $1,288,445
2004 $1,514,633
2005 $1,765,245
2006 $2,258,229
2007 $2,505,937
2008 $2,901,771
2009 $3,033,827
2010 (estimated) $2,263,470
The husband swore that his income was being adversely affected by a reduction in the government support for his industry. While his income for the year ending June 2009 “was largely due to an inordinate amount of work on my behalf”, his estimated income for the year ending June 2010 appears to corroborate such a reduction.
105.By contrast, the wife is trained in a medical field occupation and holds a relevant certificate. She works on average 20 hours per week in the medical field and is paid $26.13 per hour. She swore that her fortnightly net pay was approximately $888. She occasionally works on a Saturday morning to supplement her income.
106.Just as the husband may be expected to at least cut back on his hours of work and therefore his income at some time in the future, so may the wife be expected to do the same thing. Each of the parties has the physical and mental capacity for appropriate gainful employment. The difference between them is that the husband's gainful employment yields a vastly greater income than does that of the wife. The disparity in the income earning capacity is the most important single factor in my consideration of the future factors as they are relevant to these applications.
Care of child under 18 years
107.Neither party has the care of a child under 18 years as contemplated by this factor. I will consider the husband's obligations towards the two children of his relationship with Ms L below.
Commitments enabling support of each of the parties and any child who the party has a duty to maintain
108.Both parties have obligations in this regard. As I have previously found, at the time of the trial the wife expected the parties' two sons to return to live with her in the matrimonial home. She particularly sought the retention of the property for that reason. She swore that both children had limited financial means and one of them has been diagnosed with clinical depression. The wife described that child as being “in a fragile state”. Prior to the wife's leaving her employment in the husband's professional practice, that child was employed by the practice on administrative duties earning $400 per week. That came to an end upon the wife's cessation of employment.
109.While none of the parties' children is under the age of 18 years, I accept the wife's assertion of a duty to look after those two children, particularly the son who suffers from depression. While the husband makes some contribution to the children, the wife has a significantly greater burden than does the husband. I regard that as an important factor.
110.The husband also has financial responsibilities for his two very young children from his relationship with Ms L. Ms L is not in paid employment and accordingly that burden rests on the husband alone. While it is also a significant burden, his income enables him to undertake it much more easily than the corresponding burden on the wife.
Standard of living
111.I am required to have regard to each of the parties being able to enjoy a standard of living “… that in all the circumstances is reasonable.” Prior to the parties' separation, the husband's hours of work appear to have limited their opportunities to enjoy some aspects of a high standard of living. Accordingly, it is difficult to determine what might be a reasonable standard of living for the parties in the future. The husband appears to have made preliminary arrangements to travel with Ms L and presumably their two children. The parties do not appear to have enjoyed much travel during their marriage.
112.The husband will be better able to enjoy a reasonable standard of living than will the wife, at least in so far as financing such a standard is concerned. That arises out of his much higher income. Accordingly, the wife has a significant requirement of sufficient income to enable her to go close to approximating that of which the husband is capable. She will only be able to derive such income from her employment referred to above together with any funds derived from investments which she might make as a result of the orders which I will make.
Other future factors
113.No submission was made with respect to the relevance of any other future factor.
Summary of future factors
114.The vast disparity of income between the parties is the single most important future factor in these proceedings. It directly affects the respective capacities of the parties to live their lives. It impacts upon their being able to enjoy a reasonable standard of living, meeting of their legal and moral obligations towards their families and particularly their children and their opportunities to redress any financial effect of the orders which I will make.
115.Despite the apparent drop in his income, the husband remains amongst the highest levels of income in the Australian community. Accordingly, his ability to make up any shortfall arising out of my determination of these applications is vastly greater than that of the wife. While his age may limit his opportunity and desire to continue to work the long hours which he has been doing for many years, the evidence does not suggest that he intends any such limitation in the immediate future. He only requires several years more of earnings at his present rate to enable him to redress any such shortfall.
116.The wife is in a far inferior position to that of the husband in those regards. Her only opportunity to improve her financial circumstances rests in the result of these proceedings. At her age and with her qualifications, she has no other realistic prospect of such improvement.
117.Accordingly, subject to my consideration of the final step of justice and equity, I have determined that it is appropriate to make a further adjustment of the parties' interests in the property in favour of the wife in the proportion of 10%.
Justice and equity
118.The final step in my determination of these applications is to ensure that ultimately the result is just and equitable to both parties. In that regard, there are other factors which must be considered. The first of those is the manner in which the various assets and liabilities are currently divided between the parties and their proposals for any alteration in that division. I note that in the lists in the following paragraphs I have included the properties at Melbourne Suburb 4 and Melbourne Suburb 3 as being in possession of the husband. At the time of the trial those properties were registered in the name of the wife and pursuant to the consent orders made on 13 August 2010 had either been sold or were in the process of being sold. The wife does not seek to retain any of those assets which, in the circumstances, is a reasonable proposal. Accordingly, I have deemed those properties to be in possession of the husband for the purpose of my consideration of the division of the asset pool. As a result, the estimated CGT for those properties will be included as a liability of the husband.
119.The assets which are presently, or have been, in the possession of the wife are as follows:
Assets in possession of the wife
Property 1 at C Street (tennis court) $1,550,000.00 Property 2 at C Street (FMH) $2,750,000.00 Property at S Street $720,000.00 Mercedes (T Pty Ltd) $31,050.00 Shares $105,435.00 Household contents wife $25,510.00 Add back – Barro Order wife $50,000.00 Wife’s jewellery $173,205.00 Property 3 at Melbourne suburb 1 (Wife’s inheritance from her mother) $625,000.00 Wife’s savings $154,543.00 Porsche $25,400 Add-back – Funds appropriated by wife $256,121 TOTAL assets
$6,466,264
Wife’s superannuation $543,289 TOTAL (including superannuation)
$7,009,553
Liabilities of the wife Mercedes lease $55,600 Selling costs – C Street $107,000 TOTAL liabilities
$162,600
Total net assets of the wife
$6,846,953
120.The assets which are presently, or are to be, in the possession of the husband are as follows:
Assets in possession of the husband
Property at D Street $2,200,000 Porsche $119,950.00 Mercedes (driven by Ms L) $59,200 Mercedes (driven by Ms L) $9,000 Household contents husband $17,300.00 Professional equipment $41,845 Savings $6,000 Property at Melbourne Suburb 6 $950,000 Property 2 at Melbourne Suburb 2 $800,000 Property 3 at Melbourne Suburb 2 $1,200,000 Property 4 at Melbourne Suburb 2 $580,000 Property 5 at Melbourne Suburb 2 $570,000 Unit 1 at V Street $468,000.00 Unit 2 at V Street $513,000.00 Unit at T Street $604,000.00 TOTAL assets
$8,138,295
Husband’s superannuation $1,171,371 Superannuation - General reserves $80,243 TOTAL (including superannuation)
$9,389,909
Mercedes lease $131,985 Mercedes lease (driven by Ms L) $83,830 G Accountants outstanding fees $35,000 Husband’s outstanding tax liability $479,539 Westpac mortgage $1,820,000 NAB mortgage $4,152,011 Selling costs – Property at Melbourne Suburb 6 E$23,750 CGT – Property at Melbourne Suburb 6 E$46,202 Selling costs – Property 5 at Melbourne Suburb 2 E$15,550 CGT – Property 5 at Melbourne Suburb 2 Minimal Selling costs – Property 4 at Melbourne Suburb 2 E$15,700 CGT – Property 4 at Melbourne Suburb 2 Minimal CGT – Unit 1 at V Street E$40,614 CGT – Unit 2 at V Street E$27,385 CGT – Unit at T Street E$39,255 TOTAL liabilities
$6,910,821 Total net assets of the husband $2,479,088
121.I have already found that the total net assets available for distribution in these proceedings amounted to $9,326,041. In order for the wife to receive 60% of those assets, she would need to retain assets with a total net value of $5,595,624 thereby requiring her to pay the husband the sum of $1,251,328. In my view, she will not be able to pay that amount without realising some of her assets. One way of achieving that would be to realise her share of the inherited property and the S Street property. However, if she sells those two properties she will have no investment property to provide her with income. Also, nearly all of her assets will be tied up in what will be her home, the matrimonial home. Ultimately therefore, in my view she will find it impossible to survive on her present income without income from investment properties and accordingly, it is highly probable that she will need to sell the matrimonial home and include some of those proceeds in income producing assets. Accordingly, she will need to incur the cost of selling that property which is the basis on which I have included it in the liabilities above.
122.In my view, it will take some time before the wife is able to make the necessary financial arrangements to give effect to the orders which I will make. She will need to seek financial advice and put such advice into action which would almost certainly involve selling property, probably the matrimonial home.
123.During the trial the wife appeared to come to the realisation that it was very unlikely that she would be able to retain the matrimonial home and that she would need to sell it. She was concerned about the consequences to the parties' two younger children who she anticipated would move back to live with her in that property. It was suggested that she be given a period of 12 months within which to sell that property.
124.I have decided that a delay of six months would be just and equitable to both parties. During that time the wife will have the opportunity to obtain financial advice and put any decision arising out of that advice into effect. The husband will be required to continue paying the monies in accordance with the orders made on 27 January 2010. At the conclusion of the six-month period, the payments will cease and the orders which I will make will be executed in full.
125.I have already found that the wife's contribution of her inherited property is in excess of the husband's post-separation contributions. His continuing payments in accordance with the interim orders referred to in the previous paragraph will further balance up their respective contributions in those regards.
The orders
126.I will order that the wife pay the husband the sum of $1,251,328 no later than 21 October 2010. Contemporaneously with the payment, each party will forego any claim and transfer any interest in any asset which is to vest in the other party at the expense of the party taking that asset. The division of the assets will be in accordance with the tables in paragraphs 119 and 120 above. There will be the usual indemnities in respect of any liability against those assets. With the exception of the husband causing the relevant company to transfer the wife's car to her, the wife will resign any position which she holds in any company relevant to these proceedings and forego any claim thereto.
127.As I have also found, for the period until the date on which the wife is required to make the payment, the husband will be required to continue to pay the interim amounts in accordance with the orders referred to above.
128.I will also make orders for any application for costs or any other order arising out of my orders to be made in writing on a specified timetable in the event that either party seeks to make any such application.
I certify that the preceding one hundred and twenty-eight (128) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Mushin
Associate:
Date: 21 April 2011
0
3
1