Gare and Raite - [2012] FMCAfam 689

FEDERAL MAGISTRATES COURT OF AUSTRALIA

GARE & RAITE

[2012] FMCAfam 689

FAMILY LAW – Property – division of property following an 11 year relationship – significant difference between the parties in relation to what constitutes their pool of assets and what is a just and equitable division of those assets – the parties operated a property development business during their relationship – the wife argues that there is in excess of $200,000.00 of business expenditure unaccounted for by the husband post separation – the husband argues that this amount was expended on proper “operating costs” of the business – whether adjustment should be made for the husband’s greater superannuation entitlements at the commencement of the relationship – whether adjustment should be made pursuant to section 75(2) factors particularly in relation to disparity in parties’ earning capacity and the husband’s inability to properly explain his expenditure of the business assets post separation – determined the Court adopt a global approach to the parties’ non-superannuation and superannuation assets, that there be a five per cent adjustment in the husband’s favour given his greater superannuation entitlements and a five per cent adjustment in the wife’s favour for section 75(2) factors.

Family Law Act 1975, ss.75(2), 79, 79(2), 79(4)

Norbis v Norbis (1986) FLC 91-712
Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143

Applicant:

MS GARE

Respondent:

MR RAITE

File Number:

MLC 4694 of 2011

Judgment of:

Bender FM

Hearing dates:

30 April, 1, 2, 3 & 4 May 2012

Date of Last Submission:

4 May 2012

Delivered at:

Melbourne

Delivered on:

13 July 2012

REPRESENTATION

Counsel for the Applicant:

Mr Dickson

Solicitors for the Applicant:

Pearsons Barrister & Solicitors

Counsel for the Respondent:

Mr Ham

Solicitors for the Respondent:

Westminster Lawyers Pty Ltd

ORDERS

The monies currently held in trust on behalf of the parties from the sale of the property at 1 Property R1, be divided as follows:
(i) firstly, $100,000.00 to the wife;
(ii) secondly, $67,223.00 to the husband; and
(iii)thirdly, any balance remaining be divided equally between the parties.
The husband retain the business (omitted) (“the business”) and indemnify the wife in relation to all liabilities payable in respect of the business including all income tax, GST and any Capital Gains Tax payable in respect to such business.
Paragraphs (4) to (8) of these orders are binding on the trustee of the

(omitted) Superannuation Fund (“the Fund”).
The wife is to be allocated out of the interest held by the husband in the Fund the base amount of $640,775.50.
Pursuant to section 90MT(1) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of the interest of the husband held by the husband or earlier if the trustee consents, the trustee shall pay to the wife or her administrators, executors, beneficiaries, heirs or assigns the entitlement calculated in accordance with Part IV of the Family Law (Superannuation) Regulations 2001 and there be a corresponding reduction in the entitlement the husband would have but for these orders.
Order 5 is to have effect from the operative time.
The operative time for the purposes of these orders is four (4) business days after service of these orders upon the trustee of the Fund.
Until the happening of any of:
(a)the establishing of a separate account in the name of the wife; or
(b)the transfer or rolling over into another superannuation fund of the payment split created by order 5; or
(c)the wife executing a waiver of rights within the meaning of section 90MZA of the Family Law Act 1975 in relation to the payment split created by order 5; or
(d)the wife satisfying a condition of release and being paid the payment split which was created by order 5 hereof;
the husband be and is restrained by himself, his servants or agents from executing a Death Benefit Nomination in favour of any person or doing any other act or thing which would render any part of his interest in the Fund a non-splittable payment within the meaning of Regulations 12 and 13 of the Family Law (Superannuation) Regulations 2001.
The husband shall forthwith do all things necessary to cause the business to transfer to the wife for her own use and benefit the mobile telephone number (omitted).
Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all superannuation and other property (including choses-in-action) owned by or in the possession of such party as at the date of these orders;
(b)insurance policies remain the sole property of the owner named thereon/in;
(c)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(d)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLC 4694 of 2011

MS GARE

Applicant

And

MR RAITE

Respondent

REASONS FOR JUDGMENT

Introduction

The matter relates to the division of the parties’ property after the breakdown of their 11 year relationship in circumstances where there is considerable dispute between them as to what constitutes their pool of assets and what is a just and equitable division of those assets.
During the relationship the parties were involved in property development, primarily operated through the corporate structure of (omitted) (“the business”).
Post separation the husband continued to operate the business such that all the parties’ development properties have now been sold. Some construction work has also been conducted by the business.
The parties also sold the former matrimonial home at Property R1, (“Property R1”).
The sale of the properties owned by the business and the parties and the construction work completed by the business generated the amount of $5,039,000.00.
It is the husband’s evidence that the proceeds of sale and income generated by the business have been expended in the proper conduct of the business, including repayment of mortgages, agents commissions, interest and bank fees, construction costs, GST, reduction of the business overdraft and operating expenses.
The parties agree as to the amounts expended on the discharge of the mortgages, payment of commissions, interest and construction costs and on the reduction of the business overdraft.
However, the wife argues that the amount claimed by the husband as being expended on “operating costs” for the business post separation is not explainable from the business records and argues that there is expenditure in excess of $200,000.00 of business income not properly accounted for.
Settlement of the sale of the final property owned by the business at Property Y (“Property Y”) was due to take place a week after the final hearing. The property was sold for $850,000.00 and is encumbered by way of mortgages of $421,000.00.
It is the husband’s evidence that when the mortgages are discharged, and additional business creditors and operating costs are paid on the sale of Property Y, the net worth of the business is $255,000.00.
The wife argues that the creditors/business expenses payable on the settlement of the sale of Property Y are $17,000.00 commission payable on the sale of Property Y, the repayment to the husband’s private superannuation fund of $28,000.00 and discharge of the business overdrafts of $60,000.00. Accordingly, the wife argues that the net worth of the business is $324,000.00.
The husband is the registered owner of a 50 per cent interest in the property at Property K[1] (“Property K”), which was purchased during the course of the relationship. The parties are in dispute as to its value.
[1] It is noted however that in some documentation filed with the Court this property is described as Property K nonetheless, the property shall hereafter be referred to as Property K.

The husband filed an affidavit of Mr C, property valuer, in which Property K was valued at $660,000.00. The wife filed an affidavit of Mr A, property valuer, in which Property K was valued at $800,000.00. The property is encumbered by way of a mortgage of $298,882.07.
Evidence was heard from Mr C and Mr A as to the value of Property K at the final hearing.
Shortly prior to separation, the parties purchased a property at

Property P, South Australia This property is registered in the husband’s name. The wife filed a sworn valuation in relation to Property P in which it is valued at $335,000.00. The husband did not challenge the wife’s valuation. Property P is encumbered by a mortgage of $289,034.00.
Post separation, the parties sold the former matrimonial home at Property R1. By consent the parties each received $150,000.00 from the net proceeds of the sale of Property R1. The balance of the proceeds of Property R1, being $167,223.00, is currently held on trust for the parties.
It is agreed that the husband has a self-managed superannuation fund and superannuation with (omitted) Superannuation Fund with a combined value of $715,000.00. The wife has superannuation funds with (omitted) and (omitted) Super Retirement with a value of $12,197.00.
The husband has a boat with an estimated value of $35,000.00 and the wife has jewellery with an estimated value $5,000.00.
It is the husband’s proposal that there be a division of the parties’ realisable assets on the basis he receive 60 per cent of same and the wife receive 40 per cent of same. He further proposes there be a splitting order in relation to superannuation such that he retains

70 per cent of the parties’ superannuation entitlements.
It is the husband’s argument that his proposal is just and equitable because of a greater initial contribution made by him at the commencement of cohabitation. In 2002, the husband received $480,000.00 by way of property settlement from his first marriage. This amount included $182,000.00 of superannuation.
The husband seeks an order that he retain the business, his interest in Property K, $67,233.00 from the monies held in trust on behalf of the parties and his boat.
The husband proposes that the wife receive by way of a superannuation splitting order an amount that would equate to a division of the parties’ assets in accordance with his proposed percentage split.
The husband further proposes that Property P be sold and the net proceeds of sale of that property be divided such that he receive 60 per cent and the wife receive 40 per cent. The husband proposes that until Property P is sold, the parties equally pay the outgoings on the property.
The wife is seeking orders that the parties’ assets, including superannuation, be divided on the basis she receive 60 per cent of the realisable assets and the parties’ superannuation.
The wife argues that the parties’ contributions should be considered as equal. She entered the relationship with $330,000.00, being the equity in a property owned by her at the commencement of the relationship. She argues that their contributions during the relationship were equal.
The wife further argues that there should be an adjustment of five per cent in her favour pursuant to section 75(2)(b) of the Family Law Act 1975 (Cth) (“the Act”) arising from the difference in the earning capacity of the parties.
The wife argues that there should be a further adjustment of five per cent in her favour pursuant to section 75(2)(o) of the Act arising from the unexplained expenditure by the husband of $200,000.00 from the business income post separation.
The wife is therefore seeking orders that she retain the monies currently held in trust on the parties’ behalf, her jewellery and superannuation and that there be a splitting order whereby she secures the entirety of the husband’s superannuation.
The wife proposes that the husband retain the business, his interest in the Property K property, the property at Property P and his boat.

Background

The husband was born on (omitted) 1955 and is 56 years of age. He is a self-employed (omitted). It is his evidence that he suffers from a back injury that impacts on his capacity to undertake the physical requirements of work as a (omitted).
The husband was previously married and has two independent adult children. The husband has not re-partnered.
The wife was born on (omitted) 1949 and is 63 years of age.

The wife suffers from poor health as a result of which she has been receiving income protection and disability payments from (omitted) since 2007. These payments will cease upon the wife turning 65 years of age after which, it is her evidence, she will be reliant on social welfare payments.
Prior to her incapacity for employment, the wife was employed as a (omitted) for 27 years.
The wife was previously married and has three independent adult children. The wife has not re-partnered.
It is the wife’s evidence that the parties commenced cohabitation in 2000.
It is the husband’s evidence that the parties commenced their relationship in 2000 but that their relationship was tumultuous with many lengthy periods of separation, especially in their first four years together.
The parties married on (omitted) 2009 and separated on

2 February 2011.
At the commencement of cohabitation, the wife owned the property at Property O, (“Property O”). She purchased Property O in September 1999 for $395,000.00. Settlement of the purchase of Property O required “bridging” finance pending the settlement of sale of the property previously owned by her. Upon settlement of that sale in November 1999, Property O was encumbered by a mortgage of $70,000.00.
At the commencement of cohabitation, the wife also owned a new Mazda (omitted) sedan, savings, furniture, personal belongings including jewellery and superannuation. No value on these items was placed before the Court at the hearing of this matter.
In July 2001, the husband entered into consent orders finalising property matters between himself and his former wife. Pursuant to those orders, he retained realisable assets including the business, a motor vehicle and real estate with the total equity of approximately $300,000.00 and superannuation of $182,000.00.
During their relationship the parties were involved in property development. They purchased, developed and sold a number of properties utilising the husband’s expertise as a (omitted) and the wife’s expertise in (omitted).
Shortly after the parties separated, the wife caused caveats to be placed on the properties then registered in the name of the business in order to protect her interest in such properties.
The husband issued proceedings in the Supreme Court on behalf of the business seeking the removal of those caveats.
On 21 March 2011, orders were made by His Honour Justice Habersberger which resolved the Supreme Court litigation.

His Honour’s orders provided that the wife file a Notice of Withdrawal in relation to the caveats lodged by her by 4:50pm on 23 March 2011 and that the net proceeds of sale from each of the properties be placed in an interest bearing account pending final orders in the proceedings in this Court.
Justice Habersberger’s orders also provided for the business to retain the right to pay from the proceeds of sale, interest and principle mortgage payments as well as the usual running expenses of the business including wages, contractors, insurances, architectural fees, building materials, town planning, office expenses, rent, legal fees and motor vehicle operating expenses.

Justice Habersberger’s orders also provided that the business was to provide the wife with a list of all payments made by the business pursuant to his order within 14 days of the expiration of each month. Such list was to set out the previous month’s payments as well as the balance of the trust fund as at the end of the preceding month.
Justice Habersberger’s orders further provided that the business provide the wife with a statement of assets and liabilities of the business as at 1 March 2011 within 28 days and to thereafter provide the wife with the business balance sheets for the end of each financial year within 28 days of their preparation.
In mid 2009, the business purchased a property at Property B, (“Property B”). This property was to be subdivided and two units constructed thereon. Subsequent to the parties’ separation, a dispute arose between the business and the wife’s son, MR GARE, in relation to this development.
Supreme Court proceedings ensued between the business and

Mr Gare. These proceedings prevented the business from selling Property B until resolution of the Supreme Court proceedings in September 2011 when the proceedings were discontinued with no order as to costs between the parties.
Post separation the parties sold the following real estate owned either by themselves or by the business:

Property I1

$627,000.00

Property I2

$627.000.00

Property I3

$630,000.00

Property B2,

$630,000.00

Property B1,

$530,000.00

Property R1,

$1,105,000.00

Property Y, (to be settled)

$850,000.00

$4,999,000.00

From the proceeds of sale of the above properties, the parties agree that the following payments have been made:

Discharge of Mortgages

$2,709,000.00

Partial Distribution to parties

$300,000.00

Monies held in trust

$167,000.00

Commissions paid

$74,000.00

Interests and bank fees

$132,935.00

Construction costs paid

$357,439.00

Tax paid (inc GST)

$56,000.00

Reduction of overdraft

$93,000.00

$3,889,374.00

Upon settlement of the sale of the Property Y property, the parties agree that the following payments are to be made:

Payment of mortgages and interest

$421,000.00

Payment of agent’s commissions

$17,000.00

$438,000.00

At the present time, the GST payable on the sale of Property Y and the property at Property B1 has not been assessed. The husband’s accountant estimates that the GST payable on these sales to be $58,863.00.
The parties are also in agreement that the business owes the husband’s private superannuation fund $28,000.00.

The Property K property was purchased in the joint names of the husband and Ms F in 2007. It is encumbered by a mortgage to Bendigo Bank and there is $298,892.07 owing on that mortgage.
Ms F conducts a (omitted) business and for some years was the business’ (omitted). Prior to the purchase of Property K, Ms F and the business had jointly rented office space.
Property K is a mixed residential/commercial property. Ms F runs her business from the premises and also lives there. The husband ‘rents’ an office from Ms F. The business operates from that office.
Pursuant to a lease agreement between the husband and Ms F,

Ms F pays rent to the husband of $1,500.00 per month for her use of the Property K premises. By agreement, the business pays rent to Ms F of $358.80 per month for the husband’s office space at Property K.
It is the husband’s evidence that the rent payable to him by Ms F for Property K is paid directly by her to the Bendigo Bank in relation to the mortgage secured on the property. The rent is not received by the husband.
It is the husband’s further evidence that the business pays rent to

Ms F in the sum of $358.80 per month. The business also pays a further $553.13 per month directly to the mortgagee in relation to the balance of the husband’s share of the mortgage on Property K.
The Property P property was purchased by the parties in the husband’s sole name shortly before separation in December 2010 for $402,250.00. The property is encumbered by a mortgage of $289,034.00.

Since separation, the husband has been responsible for servicing the mortgage on Property P.

The notation to the interim consent orders made by me on 6 July 2011 is in the following terms:
A.The Husband intends to sell Property R2, as soon as reasonably practicable and he shall endeavour to service the mortgage thereon and he shall seek an adjustment from the Wife in respect of payments made by him to the mortgage, rates and other outgoings since the separation.
It is the husband’s evidence that subsequent to the orders of

6 July 2011, on the advice of the selling agent, rather than selling Property P he rented it on a 12 month lease in October 2011 at a rental of $240.00 to $250.00 per week. It is the husband’s evidence that the tenant broke the lease at the end of December 2011 when he purchased his own property.
It is the husband’s evidence that he is still trying to find a tenant for Property P and has not listed the property for sale.
The husband filed an affidavit from Mr G, the accountant for the business. Annexed to Mr G’s affidavit was the balance sheet prepared by Mr G in relation to the business as at 29 February 2012. Mr G also gave viva voce evidence at the final hearing.
It is Mr G’s evidence that net assets of the business after the settlement of Property Y and the payment of all outstanding liabilities, including the GST on the sales of Property Y and Property B, the business overdrafts and additional outstanding creditors, is $255,000.00.
The wife does not accept the profit and loss statement prepared by

Mr G. She disputes the figure given as the net assets of the business.
As set out earlier in this judgment, the wife does not accept the husband’s explanation as to running costs of the business since separation. She argues that the husband has not properly accounted for expenditure of in excess of $200,000.00 of the monies generated from the business since separation.
The wife is also seeking orders that the husband return to her boxes of her personal chattels that she alleges he removed from the

Property R1 property shortly after separation.
Whilst the husband concedes that he did take boxes from

Property R1 post separation, it is his evidence that they contained his chattels only and that he does not have in his possession any personal items of the wife. It is the husband’s evidence that he left over 40 boxes in the wife’s possession.
Prior to separation, the wife’s long held mobile telephone was transferred to the business as she was using her phone, in part, for business purposes. After separation, the wife asked the husband to have the number transferred back to her as it is the number on which all her friends and family are able to contact her. Somewhat spitefully, the husband refused to do so.
Accordingly, the wife seeks orders that the husband do all things necessary to cause the business to transfer the mobile telephone number to her. The husband agreed to transfer the number to the wife in the course of giving his evidence.

The issues

The parties’ financial history and the issues that prevent them from resolving matters between themselves has been set out in the detailed background of this judgment.
The issues that I have identified in relation to the division of property between the parties in this matter are summarised as follows:
(a)For how long did the parties cohabit?
(b)What constitutes the property pool and in particular:
(i) What is the value of the business?
(ii) What is the value of Property K?
(iii)Should the husband’s boat and the wife’s jewellery be included in the property pool?
(c)What, if any, adjustment should be made in the husband’s favour for his alleged greater contribution at the commencement of the relationship?
(d)How should the parties’ superannuation be divided, and in particular:
(i)Should it be dealt with separately to the parties’ realisable assets or should the Court take a global approach to the parties’ assets?
(ii)Should the division of the parties assets reflect the husband’s greater superannuation entitlements at the commencement of cohabitation or is that offset by its growth reflecting the joint efforts of the parties during the relationship?
(e)What should be the adjustment for the section 75(2) factors and in particular:
(i)Should there be an adjustment in the wife’s favour for disparity in income earning capacity pursuant to section 75(2)(b) of the Act?
(ii)Should there be an adjustment in the wife’s favour pursuant to section 75(2)(o) of the Act arising from the alleged unaccounted expenditure by the husband of in excess of $200,000.00 of business income post separation?
(f)How should the Property P property be dealt with and in particular:
(i)Should the husband retain it as part of any division of matrimonial assets?
(ii)Should it be sold and the proceeds be divided in accordance with the percentage division of property between the parties and pending sale both parties equally meet its expenses?

The legislation

Section 79 of the Act defines the Court’s powers in determining applications for property settlement. Section 79(2) of the Act provides that:
The Court shall not make an Order under this Section unless it is satisfied that, in all the circumstances, it is just and equitable to make the Order.
Section 79(4) of the Act sets out the matters the Court must take into account when considering what orders should be made for the alteration of the interest of the parties in property. Those matters are:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
The matters to be taken into account under section 75(2) of the Act are as follows:
(a)the age and state of health of each of the parties; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i)     himself or herself; and
(ii)    a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)         any law of the Commonwealth, of a State or Territory or of another country; or
(ii)    any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
(m)if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i)     the property of the parties; or
(ii)    vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)     a party to the marriage; or
(ii)    a person who is a party to a de facto relationship with a party to the marriage; or
(iii)   the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)   vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.

The four-step approach

In Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 at [39], the Full Court of the Family Court described the preferred four-step approach in property matters as follows:
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), ("the other factors") including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case ….

Period of cohabitation

It is the wife’s evidence that the parties commenced cohabitation in 2000, married on (omitted) 2009 and separated on 2 February 2011.
It is the wife’s evidence that, while there were some short periods of separation, particularly in the early period of their relationship, the parties were in a continuous relationship for the entirety of the 11 years of their relationship.
It is the husband’s evidence that whilst the parties commenced their relationship in 2000, there were many lengthy periods of separation in the first four years of their relationship. It is the husband’s evidence that in 2002 and 2003 when his son from his first marriage was completing the last two years of high school, his son lived month-about with he and his former wife. It is the husband’s evidence that when his son was living with him, he and the wife did not cohabit as she and his son were not on good terms.
It is the husband’s evidence that during this period, the wife continued to reside in her premises at Property O whilst he and his son were living in rental premises, first at a property in Property V, and then at a property in Property A,.
It is the wife’s evidence that in 2002 and 2003, she lived with the husband when his son was not in his care and also for a large proportion of the time that his son was in his care. She agreed however that there were periods when the son was living with the husband that she would stay elsewhere.
The wife placed before the Court copies of lease documents that showed that the property at Property O was fully tenanted from January 2003 to August 2004 as support of her evidence that she was not residing in this property during this period.
It is the wife’s evidence that between May and November 2004, she and the husband travelled around Australia together.

The wife’s evidence in relation to the parties’ period of cohabitation was much more cohesive and compelling than that of the husband and

I am satisfied that they were living together from 2000 until their separation in February 2011, albeit that in the early part of their relationship there were some limited periods of separation.

Assets and Liabilities

(omitted)

The husband’s evidence in relation to the manner in which the business was conducted, its current financial status, its day to day running and his own financial arrangements could, at its politest, be described as unreliable.
During the course of his evidence, the Court was left to ponder whether the husband was being deliberately evasive and trying to mislead the Court or whether he was as vague and financially inept as his evidence made him appear to be.
The husband swore two financial statements in these proceedings, the first was sworn and filed 30 June 2011 and the second was sworn and filed 16 April 2012.
When the husband was cross-examined in relation to these documents, it became apparent that they were riddled with error.
In the husband’s financial statement sworn 30 June 2011, he deposes that his share of the mortgage on the Property K property is $200,000.00. In cross-examination he conceded that his share of the mortgage is $150,000.00.
In the husband’s financial statement sworn 16 April 2012, he deposes that the amount of tax payable on his weekly income of $1,017.00 is $1,060.00. He deposes that he has a personal debt to Bendigo Bank in relation to a motor vehicle, which in cross-examination he conceded was not a personal liability but was a liability of the business.

Further in his financial statement sworn 16 April 2012, the husband set out a figure of $105,000.00 being the overdraft payable by the business. In cross-examination the husband conceded that this figure was an estimate and that he took no efforts to establish the accuracy of those figures prior to completing the document.
The husband’s attitude and his approach to the completion of his financial statements were reflective of his evidence generally in relation to his personal financial affairs and the financial affairs of the business.
The husband’s responses to very specific questions in relation to the various issues that were before the Court were generally that he “did not know”, he “could not remember”, he “did not have the original documents before him”, he “would need to look at the cheque butts” or, most often, that the Court would “need to ask his accountant” in relation to those specific enquiries.
When the husband concluded his evidence, I formed the view that the husband had not set out to deliberately mislead the Court. Rather, I formed the view that the husband is a very poor manager and has little understanding or knowledge of the true value of the business or its day to day running from a financial perspective.
The difficulty with the husband’s evidence is that the Court was left none the wiser as to how the business had been conducted by the husband post separation or what was the true “bottom line” for the business upon settlement of the sale of the Property Y property.
As noted earlier in this judgment, the accountant for the business and the husband, Mr G, prepared an affidavit on behalf of the husband that was sworn 13 April 2012 and filed 16 April 2012.

Mr G also gave viva voce evidence at the final hearing of the matter.
Given the husband’s repeated statements during his evidence that all would be revealed by his accountant, Mr G’s presence in the witness box was greeted with great expectations. Sadly those expectations were not met.
To say that Mr G’s evidence was of no assistance to the Court would be an understatement.
In his affidavit sworn 13 April 2012, Mr G annexed the trading profit and loss statement for the business for the period 11 July 2011 to 29 February 2012. Also annexed was the balance sheet for the business as at 29 February 2012.
The balance sheet as prepared by Mr G includes a liability of $305,075.00 as the shareholders loan payable to the husband.

It is Mr G’s evidence that this figure was used by him as a balancing item when preparing the financial documents for the business in order to satisfy the requirements of the Tax Department.
It is Mr G’s somewhat confusing evidence that it is a requirement that there is a balance in the accounts as prepared so that the assets less the liabilities are an accurate reflection of the unappropriated profit. It is his evidence that if there is some issue about the books balancing, he utilises the shareholders loan account to ensure that the accounts for the business were always appropriately balanced.
Mr G concedes that the basis upon which he prepared all the financial statements for the business was from information provided by the husband and that he did not independently check that information. It is Mr G’s evidence that if the husband required double entry accounting, then all financial records would have to be completed by him and that such a process was very expensive. It is his evidence that he was not engaged to undertake this process on behalf of the business when preparing its financial statements or tax returns.
It is Mr G’s evidence that as a result of the proceedings before this Court, he had been required by the husband to look somewhat more closely at the previous financial statements prepared by him in relation to the business. He confirms that errors had been identified in the financial statements prepared by him for the financial year ending 30 June 2011. He made particular reference to an entry that showed the business owed (omitted Bank) approximately $56,000.00.

This debt had been discharged several years earlier.
Mr G gave evidence that the draft financial statements prepared by him for the year ended 30 June 2011 showed outstanding creditors of $164,000.00 based on the documentation given to him by the business book-keeper. It is Mr G’s evidence that when the husband viewed the draft financial statement prepared for the year ending 30 June 2011, he advised Mr G that this figure was incorrect and that there were no outstanding creditors owed money by the business as at 30 June 2011. Mr G thereafter amended the financial statements in accordance with the husband’s instructions. Mr G did not view the original source documents to confirm the figures provided by the business book-keeper or the amendment sought by the husband.

Mr G confirmed that it was quite possible that there are errors in the financial statements prepared in relation to the business for the financial years prior to 30 June 2011. It is his evidence that he would have to undertake a full and complete financial investigation of the business, at considerable expense, to identify any inaccuracies in the previous financial statements prepared by him.
In paragraphs 8 and 9 of Mr G’s affidavit sworn on 13 April 2012, he deposed as follows:
8. Unfortunately, due to the recent sales of the properties developed by the company, the GST liability and debt owed to creditors are yet to be updated.
9. I estimate that the GST liability will be approximately $58,863 and the debt owing to creditors to be approximately $53,000.
The GST to which Mr G makes reference relates to the sale of the Property B1 property and to the Property Y property. It is Mr G’s evidence that the GST payable on these sales is yet to be calculated by the Tax Department.
In relation to the $53,000.00 allegedly payable to outstanding creditors that is not included in the balance and loss statement for

29 February 2012, it is Mr G’s evidence that shortly prior to the preparation of his affidavit, he had met with the husband. It is his evidence that the husband had advised him that there were additional creditors of the business that had not as yet been entered on the MYOB accounting system used by the business’ book-keeper to keep the business’ financial records and utilised by Mr G in the preparation of the business’ financial records. These creditors had therefore not been included in the liabilities of the business when

Mr G had prepared the profit and loss statement.
It is Mr G’s evidence that the husband had prepared a list of these further alleged creditors. Some of these claimed amounts outstanding were supposedly supported by invoices; however Mr G was unable to provide copies of those invoices to support the claim that there are further creditors of the business. Mr G also gave evidence that the $53,000.00 of additional creditors included monies owed to him for accounting work.
The Court notes that the husband did not provide copies of any such interest payable on monies he had lent the business for Property Y to support the claim that the business had additional creditors when giving his evidence.
In the profit and loss statement as to 29 February 2012, the net asset position of the business was shown to be $61,871.00.
It is Mr G’s evidence that the actual net asset position of the business is as follows:

Net assets as at 29 February 2012 from balance sheet:

$61,871.00

Add shareholder loan to Mr Raite:

$305,075.00

Total:

$366,946.00

Less GST on sale of Property B1 and Property Y

- $58,863.00

Less further creditors

- $53,000.00

Balance:

$255,083.00

Accordingly, it is the evidence of Mr G that the assets of the business total $255,000.00.
This is the figure adopted by the husband as reflecting the value of the business.
It is submitted on behalf of the wife that the Court could place no weight on the evidence of the husband in relation to the value of the business given the inadequacies of the evidence of the husband and

Mr G in this regard.
It is further submitted on behalf of the wife that the evidence of

Mr G had to cause the Court considerable concern, especially given his concessions that he adjusted the figures in order to ensure compliance with requirements of the Tax Department.
It is further submitted on behalf of the wife that the claims by the husband and Mr G of further creditors of the business in the amount of $53,000.00 was not supported by any independent evidence before the Court. It was argued in those circumstances that given the lack of independent evidence of the alleged further creditors and the inadequacies of the evidence of the husband and Mr G, the Court could not be satisfied there is an additional $53,000.00 owing by the business.
It is submitted on behalf of the wife that the only known and identifiable asset of the business is the Property Y property which has been sold for $850,000.00.
As the only remaining asset of the business is Property Y, it is submitted on behalf of the wife that the value of the business is determined by deducting the known outstanding liabilities of the property and of the business from the sale price of Property Y.

Accordingly, it is submitted on behalf of the wife that the value of the business is as follows:

Property Y sale proceeds: $850,000.00

Less discharge of mortgage and payment of outstanding interest: -$421,000.00

Less overdraft of the business: -$68,000.00

Less commissions payable on the sale of Property Y: -$17,000.00

Less debt payable by business to husband’s self managed superannuation fund (omitted) Superannuation Fund): -$28,000.00

Net: $324,000.00

It is submitted on behalf of the wife that as the GST payable in relation to the sale of Property B1 and Property Y is yet to be calculated, a separate order should be made by this Court that upon assessment the GST should be payable in the hands of the parties in accordance with the percentage division of property between them.
If the Court accepts the evidence of Mr G in relation to his estimate of the GST payable by the business on the sale of Property B1 and Property Y of $58,863.00 and that figure is subtracted from the net assets of the business as calculated in accordance with the wife’s submissions, then the net asset position of the business based on those calculations is $265,000.00.
As is often the case in matters of this type, after several days of evidence, it has unfolded that the parties are in fact only some $10,000.00 apart in their position as to the value of the business.
I am not persuaded by the wife’s argument that any GST payable by the business for the sale of Property B1 and Property Y should be paid into the hands of the parties. It is a liability of the business and should be paid by the business.
Given these circumstances and despite the inadequacies and inconsistencies of the evidence of the husband and Mr G, I make a finding that the net asset position of the business is $265,000.00.

307 Property K

Both parties in this matter filed affidavits from qualified valuers in relation to the value of the Property K property.
The wife filed an affidavit from Mr A sworn on 26 April 2012 and filed on 27 April 2012, which annexed Mr A’s qualifications and his valuation in relation to Property K of $800,000.00.
The husband filed an affidavit by Mr C sworn and filed on 27 April 2012, which had annexed to it Mr C’s qualifications and his valuation of Property K at $660,000.00.
At the request of the Court, Mr C and Mr A consulted each with the other prior to the hearing of this matter to ascertain whether there was any common ground between them in relation to their views as to the value of the property. At the final hearing of this matter, the Court was handed a letter from the valuers outlining the outcome of their joint conference and setting out the basis upon which their valuations differed. At the final hearing of the matter, both the valuers gave viva voce evidence to the Court.
Both Mr C and Mr A were in agreement as to the details regarding the description of the property including location, type of building and zoning.
Both valuers were in agreement that the lease over Property K between the husband and Ms F was not within commercial parameters and that the net rental of $15,600.00 per annum was well below market value. Both valuers were also of the view that the absence in the rental agreement for any capacity for rental increase for the duration of the lease raised questions as to the lease’s enforceability. Both valuers therefore valued the property on the basis that the lease between Mr F and the husband was unenforceable and that a sale could be proffered on the basis of vacant possession.
The principal area of disagreement between the values provided by

Mr A and Mr C was the methodology used by them in assessing the property’s “highest and best use”.
There was also issue between the valuers in relation to the properties utilised by them on a direct comparison approach.
It was the evidence of Mr A that the most likely purchaser of the property would be an owner-occupier with long term development plans or a developer with short to medium development plans.
Mr C valued the property on the basis of a “capitalisation of income calculation” arguing that the probable purchaser would be someone seeking to utilise the property as it currently exists as a rental property combining commercial and residential usage.
Both valuers utilised a direct comparison approach to support the methodology adopted.
It is Mr A’s evidence as noted that he believes the appropriate “highest and best use” potential for the property is as a development site. Mr A compared Property K with some 16 sales of like or similar properties in the region by way of direct comparison. It is his evidence that this methodology provided a value range for the subject property of between $715,000.00 and $850,000.00.
It is Mr A’s evidence that he was of the view that the predominant component of the value of the property was the land value. It was his evidence that comparable properties that were purchased with some future development potential showed a value rate of around $2,400.00 to $3,300.00 per square metre of land area.
Further, it is Mr A’s evidence that a building area analysis of the most comparable sales showed a value rate of between $3,000.00

per square metre and $4,000.00 per square metre of building area.
It is his evidence that his valuation of $800,000.00 for Property K placed it at the rate of $2,417.00 per square metre of land area and $2,439.00 per square metre of building area.
It is Mr A’s evidence that his valuation of $800,000.00 placed the property at the lower end of both the land area range and the building area range when looking at comparable properties.
Finally, it is Mr A’s evidence that whilst both his valuation and that of Mr C adopted a similar market rental in relation to the property, the capitalisation of income calculation applicable to that rental differed in that his adopted capitalisation rate was 4.5 per cent whilst that of Mr C was 5.5 per cent. It is Mr A’s evidence that the capitalisation rate adopted by him was based on his analysed sales evidence.
It is Mr C’s evidence that his valuation of the Property K property was based on both a direct comparison basis and on a capitalisation approach to the property.
It is Mr C’s evidence that he did not believe that the property was attractive to a developer. It is his evidence that a purchaser would be interested in purchasing the property as is and would be looking for a return on the property on the basis of the current development on the property.
It is Mr C’s evidence that the comparable sales put forward by Mr A were all in superior locations and that, accordingly, they evidenced a higher rate per square metre both in the context of land area and building area.
It is Mr C’s evidence that of the comparable sales utilised in his reports, the three properties at Property C1, Property C2 and Property M were the most relevant. It is Mr C’s evidence that those sales showed a range of $1,997.00 to $3,186.00 per square metre of building area.
It is Mr C’s evidence that the capitalisation rate adopted by him of 5.5 per cent reflected the fringe retail location of the property and argued that the capitalisation rate of 4.5 per cent represented by Mr A was quite low and typically more representative of prime retail locations.
When challenged as to his evidence that the comparable properties in Mr A’s valuation were in a superior location to that of the Property K property, Mr C had to concede that in relation to some of the properties to which Mr A made reference, he was not actually aware of their precise location and had not inspected them either personally or electronically.
Mr A was questioned in relation to the three properties identified by Mr C as being the most comparable sales in relation to Property K.
It is Mr A’s evidence that the property at Property C1 did not have a gross building area of 318 square metres as set out in Mr C’s report, but rather it had a building area of 270 square metres. This was because the garage and balcony which Mr C included in his figure of 318 square metres should not have been included in the calculation of the total building area of the property as it is not industry practice to include these areas when calculation building area. Accordingly, it is Mr A’s evidence that the building area rate is not $1,997.00 per square metre as set out in Mr C’s report but rather $2,352.00 per square metre.
Further, it is Mr A’s evidence that Property C1 is in an area which is much less valuable than the Property K property and has much less commercial appeal than the Property K property.
Further, it is Mr A’s evidence that Property C1 is encumbered by a covenant that excludes the construction of town houses or any form of multi-storey apartment complexes on that land. Property K has no such limitations.
It is Mr A’s evidence that the same covenant applies to the property at Property C2.
It is Mr A’s evidence that these covenants limit the development potential of both these properties.
It is Mr A’s evidence that in relation to Property M the building area for that property is 110 square metres and not 204 square metres as contained in the comparable table as prepared by Mr C. In support of his claim in this regard Mr A produced the brochure provided by the selling agents in relation to that property, which showed the building area to be 110 square metres. It is his evidence that in these circumstances the building area rate of $3,186.00 shown in Mr C’s report, which was based on the property being 204 square metres, would be almost doubled given the building is only 110 square metres.
Given the inaccuracies in the building areas of two of the properties that Mr C relied upon for the comparable sales in his valuation, as well as the restrictive covenants impeding development on two of those properties, I find that the comparable sales utilised by Mr A in his valuation to more accurately reflect the Property K property.
I also found the evidence of Mr A that the highest and best use for Property K is as a development site to be the more compelling.
In the immediate vicinity of the Property K property there has been a recent construction of a three-storey residential development as well as a two-storey office complex directly opposite the property.
In these circumstances I prefer the evidence of Mr A and find the value of the Property K property to be $800,000.00.

The husband’s boat and the wife’s jewellery

In their respective financial statements and their statements of assets and liabilities contained in their outline of case documents, the parties made reference to the husband’s boat, which was purchased during the course of the parties’ relationship, and to the wife’s jewellery.
The husband placed a value on this boat of $35,000.00. No independent evidence is before the Court as to the boat’s value.
The wife valued her jewellery at $5,000.00. No independent evidence is before the Court as to the value of the wife’s jewellery.
Both parties acknowledge that these are assets in their respective possession. I am of the view that the husband’s boat and the wife’s jewellery should be included in the pool of assets and, in the absence of independent evidence, their values be as estimated by the parties.

The matrimonial pool

Accordingly, I find the matrimonial asset pool of the parties to be as follows:
Realisable assets

Proceeds of sale of Property R1, (currently in trust)     $167,223.00

Property P

(less mortgage)

$355,000.00

-$289,034.00

$65,966.00

(omitted) $265,000.00

Property K

(less mortgage)

Husband’s 50% interest in Property K

$800,000.00

-$298,882.00

$501,118.00

$250,559.00

Husband’s boat      $35,000.00

Wife’s jewellery $5,000.00

Total realisable assets $788,748.00
Superannuation

Husband’s superannuation:

(omitted) Superannuation Fund

(omitted) Super Retirement

$680,000.00

$35,000.00

$715,000.00

Wife’s superannuation:

(omitted) Super

(omitted) Super Retirement

$6,817.00

$5,380.00

$12,197.00

Total superannuation $727,197.00

Contributions

As set out earlier in this judgment, the wife had $330,000.00 equity in the property at Property O at the commencement of cohabitation.
Shortly after the commencement of cohabitation, the husband received by way of property settlement from his first marriage realisable assets with a total equity of approximately $300,000.00 and superannuation entitlements of $182,000.00.
It is argued on behalf of the husband that he had made the greater contribution to the parties’ assets at the commencement of cohabitation as he had $480,000.00 of assets as compared to the wife’s assets of $330,000.00. It is therefore argued on his behalf that he should receive a greater proportion of the parties’ now realisable assets such that there be a division that he receive 60 per cent of same and the wife receive 40 per cent of same.
It is argued on behalf of the wife that the parties’ initial contributions, particularly in relation to their realisable assets, were equal.
It is submitted on behalf of the wife that the contributions made by the parties during the course of the relationship should also be considered as equal. This is confirmed by the husband in his evidence to the Court where he stated that he and the wife had been a very good partnership in the manner in which they had been able to develop the various properties during the course of their relationship.
I have some difficulty in understanding how it could be argued by the husband that he had made a greater initial contribution to the parties’ realisable assets at the commencement of cohabitation. The bare numbers show that the parties’ contributions were equal.
Further, I accept the mutual evidence of the parties that their contributions during the relationship were also equal.

In these circumstances, it is difficult to see how there would be any adjustment between the parties in relation to their realisable assets on the basis of contribution factors.
It is argued on behalf of the husband that at the commencement of cohabitation he had far greater superannuation than the wife, being the $182,000.00 of superannuation retained by him from the property settlement of his first marriage. The wife placed no evidence before the Court as to what, if any, superannuation entitlement she had at the commencement of cohabitation. I accept that if such entitlement existed, it was minimal.
It is therefore argued on behalf of the husband that there should be an adjustment of superannuation on the basis that he retain 70 per cent and the wife retain 30 per cent of their superannuation entitlements.
It is submitted on behalf of the wife that whilst the husband had a greater entitlement to superannuation at the commencement of their relationship, the growth in the husband’s self-managed superannuation fund is as a direct result of the parties’ joint efforts in utilising those funds in their property development pursuits.
It is submitted on the wife’s behalf that the joint efforts of both parties over the 11 years of cohabitation is such that the husband’s initial greater superannuation entitlement is matched by the subsequent contribution of both of them to the now value of that superannuation.
It is therefore submitted on behalf of the wife that there should be no adjustment in relation to superannuation entitlements between the parties on the basis of the husband’s greater initial superannuation entitlement.
It is submitted on behalf of the husband that the Court should treat the parties’ realisable assets and superannuation assets separately given the differences in the initial contributions made by them at the commencement of cohabitation.

It is submitted on behalf of the wife that the parties’ realisable assets and superannuation entitlements should not be dealt with separately but rather the Court should take a global approach to the parties’ assets.
It is submitted on behalf of the wife that a global approach is appropriate given the wife’s capacity to immediately access any superannuation she receives because of her age and incapacity for employment.
When determining how property should be divided between parties, the Court can adopt either a global approach whereby the totality of the pool is calculated and a division of that total pool determined, or an asset by asset approach can be adopted which involves the parties’ interests in each separate asset being determined individually and orders made that deal with each such asset accordingly.
That either of these approaches is legitimate and an appropriate exercise of discretion under section 79 of the Act has been confirmed by the High Court in Norbis v Norbis (1986) FLC 91-712.
Given the wife’s capacity to immediately access her superannuation, I am of the view that the parties’ realisable assets and superannuation entitlements should not be dealt with separately and that there be a global approach to the division of the parties’ assets.
Whilst the husband’s self-managed superannuation fund has quadrupled since the commencement of the parties’ cohabitation, the $182,000.00 that was the husband’s initial superannuation was the springboard for that growth.
Accordingly, I am of the view that there should be a five per cent adjustment of the total property pool including superannuation on the basis of contribution in the husband’s favour.

Section 75(2) factors

It is submitted on behalf of the wife that there should be an adjustment in her favour pursuant to section 75(2)(b) of the Act arising from the discrepancy in the parties’ earning capacity.
It is the wife’s evidence that she is totally incapacitated from gainful employment.
The wife provided to the Court correspondence from her treating general practitioner dated 8 March 2012. Her treating doctor indicated that the wife suffers from lumbosacral spine disease, bowel prolapse repair, reflex sympathetic dystrophy of right hand, chronic pain syndrome and bilateral planter fasciitis. The correspondence further provided that the wife has not worked for five years and would be unlikely to resume full time or part time employment as a (omitted).
It is the wife’s evidence that she has been in receipt of income protection pursuant to a policy with (omitted) since 2007 and that such payments will cease when she turns 65 years old. It is the wife’s evidence that when her income protection payments cease in three years time, she will be dependant upon social security payments for her income.
It is the wife’s evidence that she is required to provide detailed medical evidence on a regular basis to (omitted) in order to continue to receive the income protection payments. This medical evidence includes six monthly reports from an independent specialist appointed by (omitted) to confirm her ongoing disability.
It is submitted on behalf of the wife that the husband’s earning capacity is considerably greater than hers. Whilst conceding that he has some restrictions on his capacity to work as a (omitted) arising from a workplace injury suffered by him in 2007, it is the wife’s evidence that during the course of the marriage the husband undertook further studies in order to obtain qualifications in (omitted) which he utilised in the conduct of the business. It is argued on behalf of the wife that the husband has the capacity to generate an ongoing income commensurate with that earned by him during the relationship and accordingly he has a significantly greater earning capacity than she does given her permanent disability.
It is therefore argued on behalf of the wife that there should be an adjustment in her favour as a result of the disparity in income earning capacity of five per cent.
It is argued on behalf of the husband that his earning capacity is compromised. The husband provided a report from his treating doctor dated 19 April 2012. The husband’s treating doctor indicated that the husband suffered a work related injury in 2007 that aggravated a degenerative disk disease such that he is unable to return to his work as a (omitted). The husband’s treating doctor indicated that a vocational assessment of the husband had shown that the options available to him were as a (omitted), (omitted) and (omitted).
It is submitted on behalf of the husband that in these circumstances his capacity to work as a (omitted) is severely restricted. It is also argued that this limits his capacity to develop properties as he is unable to be actively involved in such development.
It is further argued on behalf of the husband that the breakdown of his relationship with the wife has impacted on his ability to attract investors so that the potential for the business to develop properties as it had successfully done during the parties’ relationship is compromised.
It is therefore submitted on behalf of the husband that the parties’ respective income earning capacity should be considered as equal.
I do not accept the husband’s argument in relation to the parties’ respective earning capacities. His work injury was in 2007 and in the five years since he incurred that injury he has worked successfully as a (omitted) within the constraints of that injury. Further, during this period he has undertaken further training to enable him to better enhance his skills in this area.

In these circumstances I assess that there should be an adjustment pursuant to section 75(2)(b) of the Act in the wife’s favour of five per cent.
It is further submitted on behalf of the wife that there should be an adjustment in her favour pursuant to section 75(2)(o) of the Act on the basis of the husband’s unexplained disposal of in excess of $200,000.00 of business assets in the period post separation.
It is submitted on behalf of the wife that the husband’s evidence that these funds had been expended in the running costs of the business was not borne out by any of the objective evidence before the Court. It is argued on behalf of the wife that the business expenses including construction costs, interest payments, mortgage expenses, agent’s commissions and the like, had all properly been accounted for.
It is submitted on behalf of the wife that it is the husband’s own evidence that the running costs of the business were approximately $9,000.00 per month and even when this figure was allowed there still remains unexplained expenditure by him of $200,000.00 of the parties’ assets.
Whilst not submitting that these funds should be added back to the property pool or that they necessarily constituted wastage by the husband, it was argued on behalf of the wife that the husband’s inability to explain how these funds had been expended was a circumstance such that there should be an adjustment in her favour of five per cent pursuant to section 75(2)(o) of the Act.
It is submitted on behalf of the husband that the expenditure of the business income post separation can be and has been fully explained.
It is the husband’s evidence that in addition to the agreed expenditure by the business for the discharge of mortgages and for the payment of commissions, construction costs, GST, interest and overdraft reduction, the balance of funds had been properly expended by him in the day to day running of the business including the payment of wages, rental, accountant’s fees and other properly incurred expenses.

It is the husband’s evidence that in accordance with the orders made in the Supreme Court, the wife has been provided with monthly statements in relation to the business expenditure and at no time has she challenged any of the information provided to her.
It is argued on behalf of the husband that the profit and loss statement for the business as produced by the accountant accurately reflects the proper cash flow of the business. It is argued that all monies have been properly expended by him and appropriately accounted for and that the figure of $255,000.00 as deposed to by Mr G accurately and properly reflects the net position of the business after the sale of all its current assets.
The husband is adamant that he has at no time improperly expended or utilised any of the assets or income of the business. In these circumstances, the husband argues that there should be no adjustment to the wife for any alleged unexplained expenditure of the proceeds of the sale of the business assets.
As set out previously in this judgment, the overwhelming difficulty in this matter is the extraordinarily vague and incomplete evidence given by the husband and his accountant in relation to the conduct of the business affairs.
As noted, the husband’s evidence was contradictory, vague, inaccurate and at times completely nonsensical.
In closing submissions on behalf of the husband, his Counsel argued that the evidence before the Court did explain the net asset position of the business.

The husband’s Counsel summarised the net assets position of the business as follows:

Proceeds of sale of all properties $4,139,000.00

Less discharge of mortgages -$2,652,000.00

Less distribution to parties -$300,000.00

Less monies held in trust -$167,000.00

$1,020,000.00

Add sale price of Property Y $850,000.00

Total proceeds of sale: $1,870,000.00

Less agreed deductions:

Commissions

Construction costs

BAS/GST

Interest payments

Additional mortgage on Property R1

Discharge mortgages Property Y

Interest on Property Y

Monies payable to super fund

Payment of overdrafts

Total of deductions

-$91,000.00

-$357,435.00

-$56,000.00

-$132,935.00

-$57,000.00

-$400,000.00

-$21,000.00

-$28,000.00

-$150,000.00

-$1,293,370.00

Net: $576,630.00

Less not agreed deductions

GST on Property Y (E)

Additional Creditors

Running costs of business

1/1/2011 to 30/6/2011

(at $20,000.00 per month x 6)

1/7/2011 to now

(at $9,000.00 per month x 10)

-$50,000.00

-$53,000.00

-$120,000.00

-$90,000.00

$313,000.00

Remaining funds: $263,630.00

It is submitted on behalf of the husband’s Counsel that this figure clearly accords with Mr G’s figure $255,000.00 representing the net assets of the business.
In relation to the running costs of the business from 1 January 2011 to 30 June 2011 being set at $20,000.00 per month, it is submitted on behalf of the husband that this was reasonable expenditure given the high level of activity of the business during this period.
Counsel referred the Court to the trading profit and loss statement of the business for the year ended 30 June 2011. This statement was placed before the Court by the business accountant Mr G during the course of the giving of his evidence.
The expenditure for the business for the year ended 30 June 2011 less interest payments, depreciation and selling expenses and commissions was $246,000.00. Those expenses over and above interest, commissions and selling agents, properly included land tax, legal expenses, vehicle expenses, permits, plans and licensing fees as well as superannuation, wages and WorkCover expenses. This equates to average monthly expenses for the business of $20,000.00 per month.
As is usual in such documents, the trading profit and loss statement for 30 June 2011 included the figures for the financial year ended

30 June 2010. Counsel for the husband noted that the operating expenses of the business for the year ended 30 June 2010 was approximately $260,000.00, an amount very similar to the figures for the year ending 30 June 2011.
The husband’s Counsel also noted that in the year ended 30 June 2010, the parties were still together and the wife had no issue with the manner in which the business was conducted in this period.
It is therefore submitted on behalf of the husband that the husband has properly conducted the business and there is a proper explanation for the business expenditure post separation.

Whilst the husband’s inability to properly explain the financial affairs of the business was extraordinarily frustrating and made it very difficult to understand how the business operated post separation or to accept as completely accurate the figures provided, I am of the view that the summary provided by the husband’s Counsel in his closing submissions adequately explains the manner in which the income received by the business from the sale of all its assets was expended post separation.
Whilst the husband’s Counsel’s summary of the business expenditure by the husband post separation includes the additional creditors of the business for which there is no independent evidence and that the explanation for the business expenditure does not account for the business expenditure post separation to the “last cent”, I am satisfied that the husband has sufficiently accounted for the business expenditure such that there is not in excess of $200,000.00 of unexplained expenditure post separation. I find that on balance the business income post separation has been expended in the proper conduct of the business.
In these circumstances, I am not satisfied that there should be any adjustment in the wife’s favour pursuant to section 75(2)(o) of the Act for any alleged unexplained expenditure of the business assets by the husband post separation.
Accordingly, in relation to the adjustment between the parties in respect of the section 75(2) factors, I am of the view that there should be an adjustment in the wife’s favour of five per cent of the totality of the parties’ assets based on the differential in the parties’ earning capacity.

The Property P property

It is submitted on behalf of the husband that as neither of the parties wished to retain the Property P property, it should be sold and the net proceeds of same be divided in accordance with the percentage spilt determined by this Court. It is further submitted on behalf of the husband that pending the sale of Property P, the outgoings in relation to that property, including the property, should be shared equally between the parties.
It is submitted on behalf of the wife that the husband gave a clear indication to the Court in June 2011 that it was his intention to sell the property and that she raised no objection to that sale taking place.
It is submitted on behalf of the wife that the husband has unilaterally decided not to sell Property P but has rather chosen to try and rent the property. Subsequent to the tenant breaching the lease on Property P in December 2011, the wife submits that the husband has still not placed Property P on the market for sale but had left it available for rental.
It is therefore submitted on behalf of the wife that the husband has chosen to retain Property P since separation rather than sell it. In so doing, the husband has chosen to continue to incur its outgoings, including mortgage payments.
It is therefore submitted on behalf of the wife that when determining the division of the parties’ assets, the Court should make orders that the husband retain Property P as part of his share of the parties’ assets.
I am of the view that the husband has been in a position to sell the Property P property since the parties separated. In July 2011, the husband gave a clear indication to the Court that it was his intention to so do.
The husband has chosen not to sell the Property P property and has chosen to attempt to rent the property instead.

In these circumstances, I am of the view that having made that decision, the husband should retain that property in any orders made by this Court and be responsible for its outgoings. He can decide into the future whether to retain it or to leave it available for rental.

Just and equitable

It is argued on behalf of the husband that his greater initial contributions to the parties’ realisable assets and superannuation entitlements meant that there should be an adjustment of the parties’ assets such that he receive 60 per cent of the realisable assets and

70 per cent of the superannuation assets.
The husband seeks orders that he retain his interest in Property K, the business, his boat, $67,223.00 from the monies currently held in trust on the parties behalf and that there be a splitting order in relation to superannuation that would achieve the division of assets between the parties in accordance with his proposal for their division.
The husband further proposes that Property P be sold, the proceeds be distributed in accordance with the percentage division as determined between the parties, which is 60 per cent to him and 40 per cent to the wife, and that pending settlement of any sale they both contribute equally to the outgoings of that property including payment of the mortgage.
It is the wife’s submission that a just and equitable division of assets between the parties was such that she receive 60 per cent of all the parties’ assets and the husband receive 40 per cent of their assets including superannuation.
It is the wife’s submission that this was a just and equitable distribution of the parties assets on the basis of their contributions being equal and reflecting a section 75(2) adjustment because of the disparity in their earning capacity and the husband’s inability to properly explain the business expenditure post separation.

The husband had $182,000.00 in superannuation entitlements at the commencement of cohabitation. The wife’s superannuation at the commencement of cohabitation, if any, would appear to have been negligible.
Since the commencement of cohabitation, the husband’s superannuation entitlements have quadrupled. This is in part as a result of the initial contribution of the husband and also because of the joint endeavours of the parties in growing the self managed fund as a result of their joint property development endeavours.
In relation to the parties’ realisable assets, I have determined that their initial contributions were equal as both had assets of approximately $300,000.00 which they brought to the marriage and which had been utilised to their benefit. I have also determined that the contributions made by both of them during the course of the relationship has been equal as they worked together jointly in relation to the property development undertaken by them and by the business.
I have also determined that I will adopt a global approach to the parties’ assets and that the parties’ realisable and superannuation entitlements shall be dealt with together.
In these circumstances and considering all factors, I have formed the view that there should be an adjustment for contributions to the asset pool in the husband’s favour of five per cent given his greater initial superannuation entitlements.
When considering section 75(2) factors, I have determined that there should be an adjustment in the wife’s favour arising from the disparity between the parties’ respective earning capacities.
The wife is aged 63 years and has been in receipt of a disability payment through income insurance since 2007. These payments will continue until she is 65 years of age, after which she will be dependant upon social security for her income.
Given her health difficulties, I am satisfied that she is not able to resume gainful employment into the future.
The husband is aged 57 years and is a qualified (omitted). Due to a work injury he sustained in 2007 he has back problems which limit his capacity to perform the more physical aspects of his profession. He has however been engaged as a (omitted) for many years and has during the course of the relationship undertaken appropriate training to develop further qualifications to pursue this career. I am therefore satisfied that he does have the capacity to continue to work in this area and that in those circumstances he has a greater earning capacity than the wife.
Accordingly, I have determined that there should be an adjustment in the wife’s favour for section 75(2)(b) factors of five per cent.

The wife sought further adjustment in her favour pursuant to section 75(2)(o) of the Act on the basis of alleged discrepancies in the expenditure by the husband of the business assets controlled by him post separation.
Whilst the husband and his accountant’s evidence in relation to the conduct of the business was less than satisfactory, I am satisfied that there is sufficient explanations as to the business expenditure by the husband post separation such that I am satisfied that it has been expended in the proper conduct of the business and accordingly no adjustment for section 75(2)(o) of the Act is warranted.

Conclusion

It can be seen from my findings as to what is a just and equitable distribution of the assets, the parties’ assets will be divided equally between them.
I am also satisfied that the husband has had the management of the Property P property since separation and could have sold that property at any time. He has chosen not to. It is therefore appropriate that Property P be retained by him in the division of assets between the parties.

The total asset pool is $1,515,945.00 consisting of $788,748.00 of realisable assets and $727,197.00 of superannuation. An equal division of the pool shall see each of the parties retain $757,972.50 of these assets.
Having considered the parties’ assets, orders will be made to achieve an equal distribution of assets between them such that the husband shall retain his interest in Property K, the Property P property, the business, his boat, $67,223.00 from the funds currently held in trust on behalf of the parties and retain superannuation to the value of $74,224.50.
The wife will retain $100,000.00 from the monies currently held in trust on behalf of the parties, her jewellery of $5,000.00, her superannuation entitlement of $12,197.00 and there shall be a superannuation splitting order such that she receives from the husband’s self managed fund the amount of $640,775.50.
It did the husband no credit that post separation he spitefully withheld from the wife her mobile telephone number on the pretext that it was required for the purposes of conduct of the business.
It is apparent from his evidence that the phone was not required for business purposes and that his reasons for refusing to sign a transfer of the number back to the wife was in response to her alleged refusal to return requested documents or items to him.
In the event that he has not already done so, an order will be made for the husband to do all things necessary to ensure that the business execute all necessary documents to transfer to the wife her mobile telephone number.
The wife seeks orders that the husband return personal items that she alleges he removed from underneath her home after separation.
It is the husband’s evidence that whilst he did attend the wife’s house after separation, he only took half the boxes that were stored under her home and that those boxes contained nothing but his own personal property.

Sadly, it is not possible for the Court to resolve this issue given the discrepancy in the parties’ evidence. It can only be hoped that if the husband has any knowledge of the whereabouts of the wife’s personal belongings, some of which clearly had very important sentimental value to her, he will affect their return to her as soon as possible. However, in the absence of a positive finding as to the whereabouts of these items, it is not possible for the Court to make orders that will address this issue.

I certify that the preceding two hundred and sixty-one (261) paragraphs are a true copy of the reasons for judgment of Bender FM

Date: 13 July 2012

Property I1	$627,000.00
Property I2	$627.000.00
Property I3	$630,000.00
Property B2,	$630,000.00
Property B1,	$530,000.00
Property R1,	$1,105,000.00
Property Y, (to be settled)	$850,000.00
$4,999,000.00

Discharge of Mortgages	$2,709,000.00
Partial Distribution to parties	$300,000.00
Monies held in trust	$167,000.00
Commissions paid	$74,000.00
Interests and bank fees	$132,935.00
Construction costs paid	$357,439.00
Tax paid (inc GST)	$56,000.00
Reduction of overdraft	$93,000.00
$3,889,374.00

Payment of mortgages and interest	$421,000.00
Payment of agent’s commissions	$17,000.00
$438,000.00

Net assets as at 29 February 2012 from balance sheet:	$61,871.00
Add shareholder loan to Mr Raite:	$305,075.00
Total:	$366,946.00
Less GST on sale of Property B1 and Property Y	- $58,863.00
Less further creditors	- $53,000.00
Balance:	$255,083.00

Property Y sale proceeds:	$850,000.00
Less discharge of mortgage and payment of outstanding interest:	-$421,000.00
Less overdraft of the business:	-$68,000.00
Less commissions payable on the sale of Property Y:	-$17,000.00
Less debt payable by business to husband’s self managed superannuation fund (omitted) Superannuation Fund):	-$28,000.00
Net:	$324,000.00

Proceeds of sale of Property R1, (currently in trust)	$167,223.00
Property P (less mortgage)	$355,000.00 -$289,034.00 $65,966.00
(omitted)	$265,000.00
Property K (less mortgage) Husband’s 50% interest in Property K	$800,000.00 -$298,882.00 $501,118.00 $250,559.00
Husband’s boat	$35,000.00
Wife’s jewellery	$5,000.00
Total realisable assets	$788,748.00

Proceeds of sale of all properties	$4,139,000.00
Less discharge of mortgages	-$2,652,000.00
Less distribution to parties	-$300,000.00
Less monies held in trust	-$167,000.00
$1,020,000.00
Add sale price of Property Y	$850,000.00
*Total proceeds of sale:*	*$1,870,000.00*
Less agreed deductions: Commissions Construction costs BAS/GST Interest payments Additional mortgage on Property R1 Discharge mortgages Property Y Interest on Property Y Monies payable to super fund Payment of overdrafts Total of deductions	-$91,000.00 -$357,435.00 -$56,000.00 -$132,935.00 -$57,000.00 -$400,000.00 -$21,000.00 -$28,000.00 -$150,000.00 -$1,293,370.00
*Net:*	*$576,630.00*
Less not agreed deductions GST on Property Y (E) Additional Creditors Running costs of business 1/1/2011 to 30/6/2011 (at $20,000.00 per month x 6) 1/7/2011 to now (at $9,000.00 per month x 10)	-$50,000.00 -$53,000.00 -$120,000.00 -$90,000.00 $313,000.00
*Remaining funds:*	*$263,630.00*