Giacobetti & Giacobetti (No 4)
[2024] FedCFamC1F 43
•6 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Giacobetti & Giacobetti (No 4) [2024] FedCFamC1F 43
File number(s): SYC 5998 of 2021 Judgment of: CURRAN J Date of judgment: 6 February 2024 Catchwords: FAMILY LAW – PROPERTY SETTLEMENT – Final hearing – Where the parties were married for 26 years – Where the husband has significantly greater earning capacity – Where the husband has ongoing health issues – Where the husband’s working capacity is reduced – Where the parties share the care of their son equally – Contributions – Whether funds advanced by the wife’s parents are contributions – Where the husband has been paying spouse maintenance to the wife – Where the husband contends he has a contingent liability The value of motor vehicles – The valuation of shares in a company of which the husband is a director – Where no value is able to be determined – Where the justice and equity requires the transfer of the shares – Where a two pools approach is appropriate – Consideration of s 81 of the Act – Where contributions are equal – Where five per cent adjustment to be made in favour of the wife following consideration of s 75(2) factors Legislation: Family Law Act 1975 (Cth) ss 75, 79, 81
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 6.06
Cases cited: Black & Kellner (1992) FLC 92-2872
Briese and Briese (1986) FLC 91-713
Commonwealth v Milledge (1953) 90 CLR 157
Giacobetti & Giacobetti(No 3) [2023] FedCFamC1F 1126
Gibbs & Gibbs [2023] FedCFamC1A 37
Hicks & Trustee of the Bankrupt Estate of Hicks (2021) FLC 94-006
In the Marriage of Hickey (2003) 30 Fam LR 355
In the Marriage of Mallet (1984) 156 CLR 605
Kannis & Kannis [2002] FamCA 1150
Little & Little (1990) FLC 92-147
Norbis & Norbis (1986) 161 CLR 513
Stanford v Stanford (2012) 247 CLR 108
Weir & Weir (1993) FLC 92-338
Y & Y [2004] FamCA 799
Division: Division 1 First Instance Number of paragraphs: 253 Date of hearing: 15, 18-20 December Place: Sydney Counsel for the Applicant: Mr Harper Solicitor for the Applicant: Uther Webster & Evans Counsel for the Respondent: Mr Othen Solicitor for the Respondent: Newnhams Solicitors ORDERS
SYC 5998 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS GIACOBETTI
Applicant
AND: MR GIACOBETTI
Respondent
ORDER MADE BY:
CURRAN J
DATE OF ORDER:
6 FEBRUARY 2024
THE COURT ORDERS THAT:
Ownership of Assets and Liabilities
1.Ms Giacobetti (hereinafter referred to as “the wife”) be declared the sole owner in law and equity in:
(a)All bank accounts in her name;
(b)Motor Vehicle 1;
(c)The proceeds held in the Controlled Monies Account in the name of Newnhams Solicitors and Uther Webster & Evans Solicitors and
(d)Her superannuation interest.
2.Mr Giacobetti (hereinafter referred to as “the husband”) be declared the sole owner in law and equity in:
(a)All bank accounts in his name;
(b)Motor Vehicle 2;
(c)One third share in real property at F Street, Town G NSW;
(d)Motor Vehicle 3;
(e)Motor Vehicle 4;
(f)Motor Vehicle 5;
(g)Motor Vehicle 6; and
(h)His superannuation interest.
3.Except as otherwise provided for by these orders, the husband and the wife:
(a)Be solely, legally, and beneficially entitled to the exclusion of the other party, to all other real and personal property and superannuation of whatsoever nature and kind as is in their respective ownership, possession and/or control as at the date of these orders; and
(b)Be and remain liable for any debts in his or her own name at the date of these orders and in this respect indemnify and hold harmless the other from any liability in relation thereto.
Transfers
4.The wife transfer to the husband 50% of the shares held in N Limited within 14 days.
5.The husband transfer to the wife 40% of the shares held in B Pty Ltd within 14 days.
6.The husband do all acts and things within his power to cause the share transfer pursuant to order 5 to be registered.
Adjusting Payment
7.Within 45 days of the date of these orders, the husband pay to the wife $514,566.20 to give effect to an overall division of 55% to the wife and 45% to the husband of the net value of pool two, as defined in these reasons for judgment as all property excluding the shares in B Pty Ltd and the attached liability to L Holdings.
Section 106A
8.In the event that either party refuses or neglects to do all acts and things and sign any document necessary to give effect to these Orders then pursuant to Section 106A of the Family Law Act 1975 (Cth) a Registry or a Deputy Registrar of the Federal Circuit and Family Court of Australia at Sydney is hereby appointed to execute all Deeds and documents in the name of the wife or the husband and do all acts and things necessary to give validity and operation to the said Orders.
Discharge
9.Order 5 made on 19 September 2023 and Order 2 made on 18 October 2021 be discharged.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Giacobetti & Giocabetti has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CURRAN J:
INTRODUCTION
These are final property proceedings for alteration of property interests under the Family Law Act 1975 (Cth) (“the Act”) following the end of the parties 26 year relationship where each party seeks orders for property adjustment.
The issues between the parties were limited to the inclusion and value of several items on the balance sheet, the contributions assessment, and the weight to be given to the relevant section 79(4) and 75(2) matters.
In respect of the assets of the parties, the most contentious issue is the value of shares in B Pty Ltd, an unlisted public company, held by a discretionary trust controlled by the husband through the Giacobetti Family Trust. The single expert opined that the shares are worth between $34,217 and $10,259,822 and the extent of the liability encumbering the shares is up to $461,667.
The matter was heard for four days commencing on 15 December 2023.
BACKGROUND
The husband was born in 1967 in the United Kingdom and was aged 56 at the time of the hearing. The wife was born in 1969 in Australia and was aged 54 at the time of the hearing. The husband is a health professional. He has suffered health issues which have reduced his capacity to work since about 2018. The wife was not in paid employment from approximately 2000 to early 2018, and currently works in administration earning approximately $59,000 per annum.
The parties commenced cohabitation in late 1994 at the home of the wife’s parents and were married in 1995. There are three children of the marriage. The parties separated on a final basis in or around April or May 2021, the date of separation is not agreed.
In 1995, the parties moved to the United Kingdom and resided there at the home of the husband’s parents for nearly three years, during which time the husband worked as a health professional. In early 1998, the parties returned to Sydney.
In or around early 1998, the husband received an $80,000 inheritance from his grandfather’s estate.
In late 1998, the parties purchased a property situated at P Street, Suburb Q (“the Suburb Q property”) for $400,000 in the name of Giacobetti Services, funded by the husband’s inheritance and a loan from ANZ bank in the sum of $360,000.
In early 1999, the parties were both appointed as directors and shareholders of Giacobetti Services.
In 2000, the parties’ first child Ms T was born.
In 2002, the parties’ second child Mr S was born.
In 2004, the parties invested in a property in Suburb U with a number of others which became a business location. The investment was made through a unit trust and the wife’s evidence is that from 2004-2016 she received annual distributions of $13,700 deposited into the parties’ joint account.
In early 2004, the parties vacated the Suburb Q property and rented it out and then resided in rented accommodation in Suburb V.
In 2006, the husband purchased shares in N Limited for $30,000 using funds from the parties’ joint account, in the name of the wife on advice from their accountant.
In late 2006, the parties purchased a property at Y Street, Suburb Z (“the Suburb Z property”) for $1,300,000 in the sole name of the wife. It was purchased by securing $300,000 over the Suburb Q property as collateral and the balance by way of finance with NAB. This property became the former matrimonial home. From early 2007-September 2010 the parties resided in rental accommodation in Suburb BB whilst the Suburb Z property underwent a rebuild which cost approximately $700,000.
In early 2007, the Suburb Q property was sold for $600,000 to the wife’s sister Ms Fathy.
In 2007, R Services Pty Ltd was deregistered.
In 2007, the parties’ third child X was born.
In late 2010, the parties moved into the Suburb Z property.
In or around 2014, the parties purchased a third of a property situated at F Street, Town G (“the F Street property”) paying a deposit of $50,000 and borrowing $460,000 as an interest free loan from the bank for the one-third share.
In 2014, B Pty Ltd was incorporated, with Giacobetti Investments ATF the Giacobetti Family Trust holding 24.72 per cent of the issued shares. The husband is one of six directors of B Pty Ltd.
In mid-2015, the husband purchased Motor Vehicle 4 using $5,000 cash as a deposit and the balance by way of loan from the bank.
Also in mid-2015, the husband purchased Motor Vehicle 6 at auction comprised of savings and the balance by way of finance from the EE Bank. The husband’s evidence is that the loan was paid out in mid-2019.
In 2016, the unitholding in the U Investment was sold and the parties received the sum of $100,287.54 deposited into the wife’s Commonwealth bank account.
In late 2016, the husband purchased Motor Vehicle 5 for using $5,000 deposit and the purchase was funded by finance borrowed from the EE Bank.
In late 2017 the husband received £43,728.94 from the maturation of his term deposit with FF Financial Services.
In early 2019, the parties sold the Suburb Z property, the net proceeds being $857,807.52 (“the Suburb Z proceeds”). The proceeds were applied to the day to day living expenses for the family. The wife deposes that the balance of the proceeds as at the date of separation was $668,000.
In late 2020, the husband purchased Motor Vehicle 3 for $140,000 using savings.
Also in late 2020, the husband purchased Motor Vehicle 1 in the name of the wife funded from the Suburb Z proceeds. The wife has retained this car for her use post-separation.
Following separation, the wife deposes that the parties had use of a joint credit card which was paid using the Suburb Z proceeds. After the commencement of the proceedings the husband was ordered to pay the wife spousal maintenance. The husband also pays child support to the wife as assessed.
LITIGATION HISTORY
Proceedings were commenced by the wife on 18 August 2021. The matter had a first return date on 20 September 2021 where it was listed for interim hearing in relation to the issues of spouse maintenance and interim costs.
Orders made by a Judicial Registrar on 20 September 2021 were amended on 23 September 2021 to include interim consent orders. The orders made by consent were for the parties to make comprehensive financial disclosure within 21 days.
On 24 September 2021, an Application in a Proceeding was filed by the husband seeking orders for the wife’s sister Ms Fathy to be added as the second respondent.
On 18 October 2021, a Senior Judicial Registrar made orders following an interim hearing for: the wife’s sister Ms Fathy to be added as the Second Respondent; the husband to pay the wife $2,817 per week until the lease expired on her property and thereafter pay to the wife $2,567 per week; and for the husband to pay $30,000 into the wife’s solicitor’s trust account for future legal costs.
On 15 November 2021, a Judicial Registrar made orders by consent for, amongst other things; financial disclosure; the appointment of single expert Ms D to value the parties’ shareholdings; the appointment of an expert witness to value the parties’ vehicles; the appointment of an expert to value the F Street property; the parties to attend mediation; and restraints on the parties dealing with assets.
On 10 March 2022, 20 June 2022 and 4 August 2022 the Judicial Registrar made orders in chambers to adjourn to enable the parties to attend a private mediation.
On 14 September 2022, the Judicial Registrar made filing directions at a case management hearing listing the matter for compliance and readiness hearing to receive a date for final hearing.
On 28 October 2022, Deputy Chief Justice McClelland made trial directions and listed the matter for final hearing for four days commencing on 31 July 2023.
On 22 February 2023, orders were made confirming the final hearing date of 31 July 2023, removing the second respondent Ms Fathy from the proceedings by consent, and for the capital sum held by the second respondent ($600,000) to be deposited into an interest bearing account in the names of both parties’ solicitors pending final hearing.
In June 2023, the parties agreed to release $100,000 to each of them from the controlled monies account in the names of their legal representatives on the basis that these amounts would be added back for the purpose of the final hearing.
On 25 July 2023, the final hearing was adjourned and relisted to commence on 20 September 2023.
On 15 September 2023, directions were made for the filing of an Application in a Proceeding and the matter was listed for interim defended hearing on 19 September 2023.
On 18 September 2023, an Application in a Proceeding was filed by the wife seeking that the hearing dates of 20 to 22 September 2023 be vacated. In response, the husband sought orders that: the wife’s application for adjournment be granted; that orders for the husband to pay spouse maintenance and the wife to access funds from the controlled monies account be varied in amount to $1,283.50 per week from each source; and that there be a fourth day added to the final hearing to determine the value of the Giacobetti Family Trust interest in B Pty Ltd.
On 19 September 2023, following interim hearing, the final hearing date was vacated, and the matter was listed to commence on 15 December 2023. Orders were also made to reduce the husband’s spousal maintenance payments to $1,283.50 per week.
On 10 October 2023, orders were made by consent amending the filing directions for the final hearing.
On 20 October 2023, an Application in a Proceeding was filed by the wife seeking to adduce an adversarial expert’s valuation of the F Street prepared by Mr C of E Real Estate dated 22 August 2023. The husband sought in response that the application be dismissed. The application was dismissed on 7 November 2023.
On 27 October 2023, an Application in a Proceeding was filed by the husband seeking that the wife execute a draft joint letter to Ms D, the valuer appointed to value the shares of B Pty Ltd. This application was stood over to the first day of the final hearing by consent on 31 October 2023 in the event the matter could not be resolved. As it was resolved by the parties in the interim, that application was dismissed.
On 15 December 2023 the final hearing commenced and was heard at the Sydney registry.
AGREED FACTS
By the end of the proceedings a number of items that were initially in dispute on the balance sheet were agreed. The parties agreed in respect of the values and inclusion of the F Street property and the income tax liability, and the exclusions of the engagement and eternity rings
ISSUES IN DISPUTE
The issues in dispute were as follows:
(a)The value of the items on the balance sheet, in particular:
(i)The value of the interest in the B Pty Ltd shares;
(ii)The treatment of the liability encumbering the B Pty Ltd shares pursuant to a Specific Security Deed;
(iii)The value of Motor Vehicle 6 and whether an order for its sale is necessary; and
(iv)The treatment of the W Insurance liability.
(b)The assessment of contributions, in particular:
(i)The extent of any and weight to be given to the initial contributions by the husband;
(ii)The extent of and weight to be given to the contributions by the husband including the family support through accommodation provided for the years the parties lived in the UK, an inheritance of $80,000 used to purchase the property at Suburb Q and other contributions;
(iii)The extent of and weight to be given to any contributions alleged from the wife’s family including family support through accommodation provided for short periods and funds allegedly received by the wife; and
(iv)The treatment of the $668,000 that was transferred by the wife.
(v)The weight to be given to section 79(4) matters, in particular:
(A)Whether the husband, who is a health professional, has a reduced earning capacity arising from medical conditions;
(B)The superior earning capacity of the husband; and
(C)The earning capacity of the wife; and
(vi)The extent and significance of non-disclosure alleged against the husband.
ORDERS SOUGHT BY THE PARTIES
The wife ultimately sought orders to affect a division of the net asset pool which reflected 55 per cent to the wife and 45 per cent to the husband. She sought orders as contained in a minute of order which became Exhibit 21 which sought, in effect, that:
(a)She retain all bank accounts in her own name, Motor Vehicle 1 and the proceeds contained in the Controlled Monies Account in the names of the parties’ solicitors;
(b)The husband retain all bank accounts in his own name, his one-third share in the F Street property, and Motor Vehicle 3, Motor Vehicle 4 and Motor Vehicle 5;
(c)She transfer to the husband 50 per cent of the shares held in N Limited;
(d)Motor Vehicle 6 be sold, and the proceeds divided 55 per cent to the wife and 45 per cent to the husband;
(e)The husband pay the wife a cash amount giving effect to an overall division of the asset pool as 55 per cent to the wife and 45 per cent to the husband;
(f)The husband transfer to the wife 55 per cent of his shares in B Pty Ltd; and
(g)Each party retain their respective superannuation interests.
The orders sought by the husband result in an overall division of property of 50 per cent to the wife and 50 per cent to the husband. The husband sought orders as contained in a minute of order which became Exhibit 14 which sought, in effect:
(a)That he pay to the wife a lump sum of $331,920 less $17,313.30 for the costs of the expert and mediation;
(b)That the balance of the funds held in the Controlled Monies Account be transferred to the wife;
(c)That the wife transfer half her shares in N Limited to the husband;
(d)A superannuation splitting order entitling the wife to the base amount of $147,617;
(e)That the wife transfer the husband any interest she has in the Giacobetti Family Trust and/or Giacobetti Investments;
(f)That each party be the sole owner of all items of personal property in their possession or control;
(g)An order pursuant to 106A; and
(h)Costs.
Applicant Wife
At the hearing the wife relied upon the following documents:
(a)Affidavit of Ms Giacobetti filed 10 July 2023;
(b)Affidavit of Ms Giacobetti filed 24 July 2023; and
(c)Affidavit of Ms Giacobetti filed 1 December 2023.
Respondent Husband
At the hearing the husband relied upon the following documents:
(a)Amended Response filed 15 August 2023;
(b)Affidavit of Mr Giacobetti filed 17 July 2023;
(c)Affidavit Mr Giacobetti filed 24 November 2023;
(d)Proof of evidence that became Exhibit 7;
(e)Affidavit of Dr HH filed 18 July 2023;
(f)Affidavit of Dr GG filed 18 July 2023;
(g)Affidavit of Dr JJ filed 27 July 2023;
(h)Financial Statement of the husband filed 14 December 2023;
(i)Affidavit of Mr H filed 5 December 2023;
(j)Affidavit of Ms D filed 18 December 2023; and
(k)Affidavit of Mr KK filed 18 December 2023.
THE LAW
Property adjustment
The parties’ competing property applications are to be determined in accordance with the provisions of Part VIII of the Act. The High Court considered the approach to be adopted in the determination of proceedings pursuant to s 79 of the Act in the decision of Stanford v Stanford (2012) 247 CLR 108 (“Stanford”). Section 79(2) of the Act provides that a court should not make an order for property settlement unless it is satisfied that it is just and equitable to do so.
No submission was made in relation to the ratio arising from the decision of Stanford, and both parties contended it was just and equitable to alter their financial interests. Orders altering the property interests of the parties may only be made if the court is satisfied it is just and equitable to make such orders pursuant to s 79(2). The parties’ financial interests remain entangled which makes an order altering their interests a necessity.
In determining a property case pursuant to s 79 of the Act, it is necessary to first identify the legal and equitable interests of the husband and wife, consider what (if any) liabilities each of them has and consider any superannuation and financial resources of the husband, the wife, or either of them, at the date of the hearing.
It is necessary to then assess the contributions of the parties and determine a contributions-based entitlement having regard to the matters set out in s 79(4)(a)-(c) of the Act insofar as they are relevant to the facts in this case. The assessment of contributions is usually approached in a holistic fashion.
The third step is for the Court to identify and consider relevant matters under s79(4)(d)-(g) and s75(2) to determine such adjustment as may be necessary to the contributions-based entitlement.
The final step requires the Court to consider the effect of the findings and must then determine whether the orders are just and equitable in all of the circumstances.
Valuation issues
The High Court in Commonwealth v Milledge (1953) 90 CLR 157 at 162, said the correct approach to be applied to the resolution of a valuation dispute should be decided “not by a strict adherence to precise arithmetical calculations, but by a commonsense endeavour, after consideration of all the material before the court, to fix a sum satisfactory to the mind of the court as representing the value”.
In the case of Little & Little (1990) FLC 92-147 (“Little”), there were two competing valuations, and the judge ordered a sale at first instance. The Full Court upheld this decision. The Full Court observed at 78,020 that:
Whilst a trial judge should determine a disputed issue of valuation where the evidence enables him to do so, we do not accept that there is an obligation cast upon him to determine such a disputed issue irrespective of the state of the evidence. It may be such that a determination is not possible. In such a case, as in a case where there is very considerable disparity in the valuation evidence and other evidence indicates that the actual ascertainment of the true value is difficult and complex, the proper solution as between the parties may be to order a sale.
Duty to make full and frank disclosure
Parties have a duty to make full and frank disclosure of their financial circumstances pursuant to rule 6.06 of Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”), which is, per the decision of Briese and Briese (1986) FLC 91-713, “at the very heart of cases concerning property and maintenance.” The consequences of failing to make full and frank disclosure are significant, on account of the significant disadvantage that it places upon both the innocent party and the Court by hindering the achievement of a just and equitable property settlement.
It is well established under the principles that arise from Black & Kellner (1992) FLC 92-2872 (“Black & Kellner”) and Weir & Weir (1993) FLC 92-338 (“Weir”) that in circumstances where there has been non-disclosure “the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.” This statement has long been cited as the salient principle on what follows from the failure of a party to make full and frank disclosure and has been recently cited and applied by the Full Court in Hicks & Trustee of the Bankrupt Estate of Hicks (2021) FLC 94-006.
Upon the establishment that there has been non-disclosure, the Court is empowered to make adverse findings against the party who failed to make adequate disclosure, and such findings include that an asset pool is greater than demonstrated, as set out in Weir at page 9 “The court’s jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her assets.”
This concept is further set out in Kannis & Kannis [2002] FamCA 1150 at [51], cited by the Full Court in Gibbs & Gibbs [2023] FedCFamC1A 37 at [50]:
Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances it may be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour..
Two pools approach to determination of the property of the parties
It is open in the exercise of the discretion conferred by the Act, to divide the assets of the parties into two pools for the purposes of an assessment, otherwise referred to as an “asset by asset basis” as opposed to the “global approach” using one pool of property. This approach has been validated by the High Court in the decision of Norbis & Norbis (1986) 161 CLR 513 at 524, as summarised by the Full Court in the decision of Y & Y [2004] FamCA 799 at [43]: “both approaches are legitimate and choosing one over the other can never in itself amount to an error of law” unless the result is manifestly unjust.
In this case it is appropriate to separate the B Pty Ltd shares into a separate pool, as their quality, value and treatment will differ significantly from the remainder of the property of the parties and due to the difficulty in making a finding on the evidence as to the value of the shares for the purposes of these proceedings.
IDENTIFYING THE PARTIES LEGAL AND EQUITABLE INTERESTS
The parties’ assets and liabilities were captured in a document which became Exhibit 14 in the proceedings. The wife adopted the husband’s values in respect of items 5, 6 and 32.
The agreed balance sheet is as set out below, noting that the items containing differing values are items that remain in dispute:
Ownership Description Wife’s value Husband’s value ASSETS 1. W CBA Account Number Ending …88 $2,503 $2,503 2. W Motor Vehicle 1 $43,000 $43,000 3. W N Limited ([…] “I” class shares) $77,556 $77,556 4. H MM Bank Account Number Ending …15 $2,552 $2,552 5. H Westpac Account Number Ending …47 $2,258 $2,258 6. H Westpac Account Number Ending …99 $6,005 $6,005 7. H LL Bank Account Number Ending …41 (one third) $2,260 $2,260 8. H Telstra Shares $1,290 $1,290 9. H NN Limited $2,857 $2,857 10. H Motor Vehicle 2 $24,000 $24,000 11. H Motor Vehicle 3 $85,000 $85,000 12.. H Motor Vehicle 4 $75,000 $75,000 13. H Motor Vehicle 5 $155,000 $155,000 14. H Motor Vehicle 6 $450,000 $450,000 15. H F Street (one third) $766,666 $766,666 16. H Giacobetti Investments $100 $100 17. H Giacobetti Investments ATF the Giacobetti Family Trust $10,258,822 $45,315 18. H Loan from B Pty Ltd to Giacobetti Investments ATF the Giacobetti Family Trust $131,249 $131,249 19.WEngagement Ring$Nil$15,00020.WEternity Ring$Nil$8,00021. J Funds in Controlled Monies Account $385,086 $385,086 22. H Contents $20,000 $20,000 23. W Contents $10,000 $10,000 Total $12,501,204 $2,287,697 ADDBACKS 24. W Interim distribution to Wife $100,000 $100,000 25. H Interim distribution to Husband $100,000 $100,000 Total $200,000 $200,000 LIABILITIES 25. W CBA Mastercard Number Ending …49 $8,389 $8,389 26. H Home Loan Number Ending …00 (1/3 share of F Street Mortgage) $460,388 $460,388 27. H Liability to L Holdings $Nil $45,315 27. H Income Tax Liability $180,520 29. H Contingent liability to W Insurance $NK 30. H Credit Card liability – CBA card ending …12 $10,288 $10,288 Total $479,065 $704,900 SUPERANNUATION Member Name of Fund Type of Interest Wife’s Value Husband’s value 31. W Superannuation Fund 2 $148,141 $148,141 32. H Superannuation Fund 1 $443,375 $443,375 Total $591,516 $591,516 TOTAL $12,813,654 $2,374,313
As such, the areas of dispute to be determined in relation to the identity and value of existing property and superannuation interests were:
(a)The Value of the shares in B Pty Ltd held by Giacobetti Investments as trustee for the Giacobetti Family Trust;
(b)The treatment of the liability encumbering the B Pty Ltd shares and if so the extent of the liability to L Holdings;
(c)The value of Motor Vehicle 6; and
(d)The treatment of the contingent liability to W Insurance alleged by the husband.
The shares in B Pty Ltd
As referred to above, the shares in B Pty Ltd, an unlisted public company, which are held by a discretionary trust controlled by the Respondent (Giacobetti Family Trust) was the most significant dispute in the matter.
The shares are subject to a Specific Security Deed (SSD) that was entered into by the husband without the knowledge or consent of the wife after separation on 24 July 2021, and was varied by deed in September 2021. The Deed secures $461,667 against the whole of the Trust’s shareholding on behalf of L Holdings.
L Holdings who entered into the Specific Security Deed, the Acknowledgement of Debt and the Deed of Variation, advised that they neither consented to nor opposed orders that part of the shares of the Trust be transferred to the wife.
The company B Pty Ltd was not a party to the proceedings. The company has not consented to the transfer sought by the wife, nor was there any evidence that the company had been asked to consent to the transfer of the shares proposed by the wife.
The husband contended that if an order was made compelling the husband to transfer shares, the company may refuse to register the transfer as it may under the terms of its constitution.
The Valuation of B Pty Ltd held by Giacobetti Investments as trustee for the Giacobetti Family Trust
There is very considerable disparity in the valuation evidence between the first and second reports of the expert Ms D. That disparity together with the limitations of her valuation expressed in her report and in her evidence means the actual ascertainment of the true value of the shares is difficult and complex.
Despite the best endeavours of the valuer and noting the limitation she identified in her report as referred to below, I am unable to embark upon a commonsense endeavour to value the husband’s interest. In circumstances where the question of value is attended by significant uncertainty which does not allow for the application of proper principles, the court has previously ordered the sale of assets. As articulated in Little, in such circumstances to order a sale may be the proper solution.
In this case no party currently seeks an order for the sale of the shares, but the wife seeks the transfer of shares. Whether the sale of an asset, or the transfer of an asset for sale at a future time at the discretion of the party to whom the shares have been transferred, both options are a solution which enables final orders to be made in respect of the competing applications.
The other option proposed by the wife, which was vehemently opposed by the husband, was to adjourn the proceedings. This application made late during the final hearing was refused for the reasons provided during the trial and contained in the reasons Giacobetti & Giacobetti (No 3) [2023] FedCFamC1F 1126.
In all of the circumstances of this case the only solution in my view that can provide a just and equitable outcome in the context of the difficulty and complexity in arriving at a value for the shares is to order the division of the shares for the reasons that follow.
Unless the value of the shares is determined, it is difficult to assess the extent to which it is just and equitable and otherwise appropriate to order an alteration of property interests. It is for that reason that it is appropriate to deal with the determination of the assets and liabilities of the parties on a two pools approach, where the shares held by the trust and the attached liability are dealt with in a second pool.
Two single expert reports were prepared by Ms D, a director and principal of a valuation business.
Ms D, who was appointed as the single expert, is a chartered Accountant, business valuer and specialist.
Ms D prepared an earlier valuation report dated 19 July 2022 in accordance with a letter of instruction dated 22 February 2022 and subsequent letter of 5 April 2022. She was subsequently instructed pursuant to a joint letter of instruction dated 15 August 2023 to provide her expert opinion as to the fair market value of a number of the issued Ordinary shares in B Pty Ltd held by Giacobetti Investments as trustee for the Giacobetti Family Trust as at 30 June 2023. It was agreed the shares represent a 22.7 per cent interest in the company.
On 15 August 2023, the expert was provided with a series of documents in relation to a proposed business combination between B Pty Ltd and R Inc. The transaction had not completed at the time, and the valuation opinion was to be updated to 30 June 2023.
The expert advised the parties that she was not in a position to opine on any uplift in value the husband may receive in the event the proposed transaction did complete, and that as B Pty Ltd did not generate any revenue in FY2023 (other than receiving a government grant), she was not provided with any financial forecasts nor advised of any contracted revenues or contracts in place as at the valuation date. Accordingly, she valued B Pty Ltd on the basis of its net assets as at 30 June 2023.
A second scenario considered by Ms D was if a hypothetical purchaser was prepared to purchase the company at the cost of its historical losses incurred for the development of the company and the product. This was described as “Net Asset valuation plus recoupment of past losses” which she valued at $5,280,439 in total.
Ms D was subsequently provided with a listing of share transfers on 4 December 2023 that had occurred during the period from early 2022 to early 2023. Using these figures, she provided what she described as “alternate valuation calculations” for the Giacobetti Family Trust’s interest in B Pty Ltd adopting an “implied price per share set out in those share transfer documents.”
There was a material difference between the value Ms D determined on a net assets basis in both reports as compared with the implied price value. Ms D identified that there could be a material difference in value following the successful completion of the business combination or following any changes in the development stage of the product. These limitations on the report arising from the potential variants were identified by the expert throughout her report and her oral evidence.
The difference in value between the proposed methodologies is stark. The valuation on the net asset basis as compared with adopting a valuation on the implied price per share value basis is a difference in value of over $10,000,000.
Ms D set out a table in the executive summary of her report of 11 December 2023 where she set out her valuation calculations as set out below:
B Pty Ltd
Valuation CalculationsValue of 100% The Giacobetti Family Trusts’ Interest (undiscounted) Discount The Giacobetti Family Trusts’ Interest (discounted)
LowThe Giacobetti Family Trusts’ Interest (discounted)
HighNet Asset Valuation 151,052 34,217 15% 29,084 29,084 Net Asset Valuation Adjusted for Tax Refund 235,349 53,312 15% 45,315 45,315 Net Asset Valuation plus recoupment of past losses Adjusted for Tax Refund 5,280,439 1,196,134 15% 1,016,714 1,016,714 Implied Valuation at $0.70 per share* 37,300,022 8,449,265 15% to 30% 5,914,486 7,181,876 Implied Valuation at $0.85 per share* 45,292,883 10,259,822 15% to 30% 7,181,876 8,720,849 Implied Valuation at $1.00 per share* 53,285,745 12,070,379 15% to 30% 8,449,265 10,259,822
In her first report of 19 July 2022, Ms D undertook the valuation on a net assets basis and provided two valuation scenarios. Scenario one was based on B Pty Ltd having an adjusted reported net assets of $1,824,253, in this scenario Ms D determined the value of the Giacobetti Family Trust’s discounted interest to be $383,307. Scenario two was based on B Pty Ltd having adjusted reported net assets of $2,111,328, in this scenario Ms D determined the value of the Giacobetti Family Trust’s discounted interest to be $443,625.
In her second report of 11 December 2023 Ms D undertook a net assets valuation as one of three possible methods of valuation.
The second valuation method adopted was using the amount that might be achieved if a prospective purchaser were prepared to pay an amount equal to the historical losses incurred by the company to acquire the product in its current form.
Her conclusions as to the value of the husband’s interest in the company were:
139. As at 30 June 2023 [B Pty Ltd] reported net assets of $151,052 (refer Appendix 5).
140. I have been jointly instructed to adopt the book value for the fixed assets such that the value of 100% of [B Pty Ltd] on a net asset’s basis (before recognition of the tax refund) is $151,052 as at 30 June 2023. The [Giacobetti] Family Trust’s 22.7% interest on an undiscounted basis would then be $34,217 as at 30 June 2023.
141. If I add the value of the tax refund due from the research and development claim, the net asset position would increase to $235,349 as at 30 June 2023. The [Giacobetti] Family Trust’s 22.7% interest on an undiscounted basis would then be $53,312 as at 30 June 2023.
142. If I add the historical losses incurred by [B Pty Ltd] that a hypothetical purchaser might be prepared to pay to acquire the product in its existing form and avoid incurring the costs of development itself, this would result in a value for [B Pty Ltd] of $5,280,439 as at 30 June 2023. The [Giacobetti] Family Trust’s 22.7% interest on an undiscounted basis would then be $1,196,134 as at 30 June 2023.
143. I have also calculated the implied value of [B Pty Ltd] based on the recent share transfers which ranged from $0.70 per share to $1.00 per share which results in a value for the [Giacobetti] Family Trust’s 22.7% interest in [B Pty Ltd] on an undiscounted basis ranging from $8,449,265 to $12,070,379 as at 30 June 2023.
The husband contended that the second basis of valuation should not be accepted because there is no evidence that there is any such hypothetical purchaser waiting to purchase B Pty Ltd.
It was put to the expert that she had no basis at all to believe there was such a purchaser “out there,” she disagreed and stated, “I’m aware that there had been discussions and those were indicated by way of a business combination agreement which had been entered into”. When pressed that there is no evidence that the company has been able to persuade an investor to put in the necessary capital, and therefore the company would not have the kind of value that she indicated at paragraph 142 of her report extracted above, she conceded “potentially not.”
The third valuation method adopted was the implied price per share based on recent share transfers and this formed the limited valuation. The husband contended that the third basis of valuation rationale should not be accepted because there were not many share transfers to use for comparison, it was a very small portion of the companies’ shares, and that the unchallenged evidence is that these share transfers took place to raise urgent funds to prevent the company from becoming insolvent. Counsel for the husband correctly highlighted that the information about who the shares were sold to was not available to the expert.
Ms D conceded that her valuation by implied price per share was limited in the following exchange during cross-examination:
Now, accepting that evidence to be true, so on that assumption, it would be very risky, indeed, would it not, to extrapolate from that transaction that the company is worth – is valued at 70 cents a share?---As I said, I’m not aware of all of the circumstances surrounding those share transfers and how the price per share was determined, noting that it has differed amongst the different transfers of shares. So I’m not really in a position, then, to say without full knowledge of those transfers and understanding them, whether that is, in fact, correct or not.
The limitations of the valuation methodologies
Ms D identified various limitations to her opinion both in the reports and in her oral evidence including:
(a)She had no relevant expertise as an expert in the company’s field, she states at paragraph k:
Noting I am not [an expert in this field], I have left it to the Court to decide the appropriate approach to take in forming a view as to the value which attached to the [Giacobetti] Family Trust’s 22.7% interest in [B Pty Ltd] as at 30 June 2023.
(b)A lack of expertise to value the intellectual property, patents and registrations the company may hold in the future;
(c)Her “reluctance to proceed with the valuation” in the circumstances where there could be a material difference between the value determined on a net assets basis and the value following successful completion of the business combination or any changes in the development stage of the product; and
(d)She was unable to determine details of who the recent share transfers were to because the company had redacted the details of the transferors, preventing her from assessing an accurate implied price per share.
No party called evidence from any other valuation expert as to the impact of the existing patent or applications of same on the value of the shares.
What finding can be made as to the valuation of the shares?
The question for determination is, what is the value of the property of the parties or either of them, and in this case that includes a finding as to the value of the shares, which is dealt with as a second pool of assets.
The husband contended that on the basis of any analysis of both Ms D reports it is possible to identify and find the value of the company based on the net assets of the company as Ms D did in both reports. This, it was contended, is the appropriate and only way to value the shares based on the evidence.
The wife contended that the valuation evidence was uncertain, as to rely on the one methodology would result in an outcome that is not just and equitable particularly when there is such a gulf between the outcomes using different methodologies.
For the reasons that follow I do not accept that the net assets basis of valuation is evidence upon which I can rely to determine the value of the shares. The state of the evidence is such that to do so is too uncertain and risks an outcome that will bring about an injustice.
Firstly, many of the limitations to the information provided to the valuer were either available to the husband or could have been sought by the husband or subpoena issued by either party. It was contended by him that he did not know relevant details, for example, of the other shareholders. I accept that he did not, however I do not accept that he as a majority shareholder and founding member was unable to ascertain the information, or at least some form of agreed information, to identify categories of investors. Counsel for the wife submitted he was wilfully blind. I agree, because from time to time the husband was able to provide Ms D with certain information such as that the other majority shareholder had transferred a large number of shares to a charity to explain the difference in shareholdings. Equally the wife did not issue any subpoena to obtain the information.
Secondly, the husband was uniquely placed as a founding member and expert to call expert evidence in respect of the innovation and its value, particularly after Ms D had identified the limitations of her report. Neither party called such evidence despite being aware of the limitations of the report which has left a lacuna in the evidence as to value of the shares.
In circumstances where a value cannot be ascribed it is clear that the court is not required to apply a valuation and for the reasons that follow, while I accept that a methodology that could be used to value a company is the net assets basis, I am not satisfied that in this case it is appropriate to do so.
There are circumstances when the value of a company’s capital assets is not the only consideration in determining the value of shares as identified in the decision of In the Marriage of Mallet (1984) 156 CLR 605 at 616, Gibbs CJ stated:
In determining the value of shares it is necessary to take into account both the earning power of the company and the value of its capital assets: Commissioner of Succession Duties (S.A) v. Executor Trustee and Agency Co. of South Australia Ltd. (19), and see Gregory v Federal Commissioner of Taxation (20). In many cases the real value of the shares will depend more on the former than on the latter item.
(footnotes omitted)
There is a large divide between the net assets valuation and the possible limited scope valuation of some $10 million. Even accepting that the share sales to raise capital was of only 2.5 per cent of the shares, the expert was not provided with all relevant information for her to fully consider and form an opinion as to the value of the shares. That information for example included the detail of who the shares were sold to as Ms D explained in her oral evidence. This leaves the court in a position where there is a real risk that the net assets value is not a fair and appropriate valuation. It is this risk of injustice and the identified complexity in determining a value that causes me to take a cautious approach.
Thirdly the husband contends that the shares have in effect a nil value (after consideration of the debt secured by the Security Deed). The prejudice to him in circumstances where he contends that the net assets are so minimal is difficult to discern. Indeed, if he is correct and the assets have such a low value there would be little impediment to him making further investment to increase his shareholding.
The prejudice however to the wife in excluding her from any entitlement to the shares which may have a significant value is obvious and in my view, it would not be just and equitable to do so. The fact that there is uncertainty in the value is another reason to proceed with caution and order the transfer of the shares.
Should the shares be transferred?
The husband identifies in his written submissions the basis for opposing the share transfer as follows:
14. On the basis it is at least arguable by the company that under the Constitution, the company can refuse to register the transfer, it is reasonable to forsee that the company would have serious objection and is likely to refuse to register the transfer on solid grounds:
a. The company is controlled by the Respondent jointly with 2 other founding director/shareholders, who have devoted significant time over many years and their own expertise without remuneration to its endeavours;
b. The company is trying to raise a substantial capital sum from external investors and it is highly likely any incoming investor will require restrictions be placed over the capacity of the founding shareholders to sell shares, including an escrow period, to ensure that the founding directors are tied to the fortunes of the enterprise. Any dilution of any founding directors’ holding - not least, in this case, the [adviser to the company] - will be of significant concern to any incoming investor and reduce the attraction of the company to those hoped for investors;
c. The proposed incoming shareholder is a founding director’s former wife, granted shares by court order over the founder’s vehement objection in part on the grounds of how distressed he is by his former wife’s conduct in these proceedings, calling into question the respondent’s commitment to the company in future; noting he is the provider of […] advice to the company which he has done without remuneration since inception and so is of key importance to the company;
d. The incoming shareholder would have substantial voting power (if as many as 65% of the shares are transferred, then more voting power than one of the founders), leaving the other founding directors in an invidious position whereby they are forced to share control of the company with someone who has nothing to offer it, who they would never choose to be in business with, and who will distract and heavily disincentivise one of its founding directors seriously from his role in the company;
e. In terms of prejudice to the incoming shareholder, she would have paid no consideration for the shares, noting the net asset valuation of the shares is very modest, and far below the amount secured against them by the SSD. The shares would have been transferred in the hope that the applicant can share in future company success, to which she will contribute nothing at all, against the strong inclinations of the three founding directors;
f. The company itself has incentivised new directors with expertise to offer the company with share options. These persons ([…]) may choose to take their expertise elsewhere after such a major change in the membership of the company, something the company would strive to avoid and would likely not wish to risk.
The submissions were not supported by any evidence and are speculative. For example the submission that the three founding directors have a strong inclination against or objection to the wife’s proposed share transfer has no basis; the contention that a future shareholder would require restrictions over the founding directors capacity to deal with their shareholding is equally not made out on any evidence before the court and there was no evidence from or involving the new directors as to the circumstances in which they “may choose to take their expertise elsewhere.”
As referred to above I cannot reach a concluded view in respect of the value of the shares based on the evidence. That is in part due to the husband electing not to provide information that he reasonably may have had access to if he requested, as he is one of the three majority shareholders and founding directors, or otherwise could have subpoenaed. The redacted information as to who holds shares could have been sought by him. The wife’s submission is the husband was “wilfully blind’ to the details and I accept that is a conclusion open on the evidence. The husband was able to provide the detail that the other majority shareholder transferred a large number to a charity. He did not however, provide any information requested by the single expert, after his late disclosure of share transfers and shareholding information.
The husband gives no evidence of any discussion he has had with his other two founding directors as to their attitude to the share transfer. The company is represented by M Lawyers who also represent the L Holdings.
There was no evidence from the husband or the company or its founding directors of any objection expressed or of knowledge of the application. The husband speculates as to their likely response however fails to put on any evidence of any attempt to understand their position. While it is true that the wife could have issues a subpoena and did not, the husband was uniquely placed to at least request this evidence due to his role within the company and existing relationship with the other founding directors.
The husband contends that the company is tightly and closely held, and that for the wife to have a shareholding in the company could be, in effect, unwelcome and disruptive. However, that contention holds little persuasive weight. During cross-examination he agreed that there are approximately 50 other shareholders, and that he does not know who they are. The company is anticipated to become publicly listed, and in that event, he will have no control over who becomes his fellow shareholders. There is no evidence that the transfer is against the strong inclinations of the founding members (other than the husband) as contended.
The husband asserts an inability to be a co-shareholder with the wife. He contends the wife’s conduct over the transfer of funds out of the parties’ joint account is the origin of the mistrust between the parties which justifies his unwillingness to be tied to the wife through B Pty Ltd. There is no doubt mistrust between the parties. The wife’s transfer of funds and the husband’s non-disclosed share dealings in breach of restraints, have each contributed to this. The husband’s submissions included, “were relations more amicable, arrangements could in theory be made, with the respondent voluntarily taking on fiduciary duties for the applicant, but to impose them upon him in this particular case would not be appropriate, just or equitable.” I reject that submission. The parties co-parent a 16 year old child in an equal time arrangement. If intelligent and sophisticated parties such as these can co-parent a 16 year old child and all that entails, I infer they have the capacity to be co-shareholders.
The husband wishes the proceedings to come to an end, indeed his medical evidence was that the ongoing nature of the proceedings is part of the cause of his depression and impacts other health matters. Given his contention that the company shares have in effect very little net value I do not accept the contention that there is prejudice to the husband in ordering a share transfer.
As such, I find that the only appropriate order that would allow for justice and equity to be done between the parties is that the husband transfer a portion of his shares in B Pty Ltd to the wife.
The treatment of the liability on the shares
A third party, L Holdings has been funding the business activity of the company B Pty Ltd since its incorporation. Pursuant to a Security Deed dated mid-2021, L Holdings holds security over the husband’s interest in B Pty Ltd of up to $461,667. Prior to the changes in the share structure (to raise capital for the company), Ms D was invited to value the husband’s interest in B Pty Ltd as at 30 June 2021 on two scenarios. Ms D opines that on scenario 1 (the husband’s scenario) the Husband’s interest in B Pty Ltd is $383,307 and on scenario 2 (the wife’s scenario) his interest is $443,625. The different scenarios reflect a disagreement between the parties as to the value of certain fixed assets of the company.
The husband contended that in light of the security held by L Holdings, no matter which scenario is ultimately accepted, there will be a corresponding liability of the same amount such that the net result of the Husband’s interest in B Pty Ltd is a value of nil.
As accepted by the husband Ms D’s report summarises the evidence of previous attempts at capital raising undertaken by the company. It also summarises the activities of the company. At paragraph 101 of her first report, she concluded that: “As [B Pty Ltd] is still in the early stages of development of its products, and noting that no forecasts are available, no sales have been made and some required approvals are still pending, I believe the most appropriate methodology to value the entity is the net asset backing method.”
At paragraph 102 Ms D noted:
I say this because the value of this entity to its shareholders is represented principally by its investment in the development of the products and technology to date and that a hypothetical purchaser would be prepared to pay this amount to acquire the technology to date in its existing form, rather than incur those costs itself.
It is an agreed fact that the husband did not tell the wife prior to the liability being incurred but the husband contended that the arrangement was in discussions prior to the separation of the parties, although he agreed the deed was signed after separation.
The wife sensibly accepted that there has been funding obtained for the necessary research and development and agreed that the debt should be included in pool of assets as the only way to reach a just and equitable division between the parties.
The orders sought by the wife seek that the husband transfer the wife 55 per cent of the shares held in B Pty Ltd. Given the liability may be called in by a third party who is not a party to these proceedings, the orders ensure that the liability is borne by the parties in the same proportions as their ownership.
I find that the first pool is comprised … shares with a value that I am unable to determine that ranges between nil and $10,258,822. I find that there is a liability of up to $461,667.
The treatment of the W Insurance debt
The husband contended that there was a contingent liability of $137,000 arising from income protection payments made and that the debt is likely to be recovered. He provided evidence of the debt only on the day of the trial with no advance notice.
The husband’s attitude toward his duty of full and frank disclosure is discussed in detail below. This is unfortunately an example of the husband failing to provide the wife, in an ongoing and timely way, information that he was required to provide.
The proof of evidence and the letter from W Insurance dated 23 October 2023 became Exhibit 7. The evidence as to the quantum of the debt owed to W Insurance is an estimate, provided by the husband in his proof of evidence, obtained from a financial planner. An email from his financial planner, is attached to the proof of evidence where he referenced his “unofficial calculations.”
I am not satisfied that the evidence provided by the husband, and the timing and the manner of its production, should be able to be used by the husband to establish the existence of a liability. I do not propose to take it into account in the balance sheet but otherwise accept that there is a possibility of a liability. The truth of the liability and capacity to put it before the court and provide it to the wife was entirely within the control of the husband. The letter from W Insurance was dated 23 October 2023. The husband cannot sit on the information until the 11th hour and ambush the wife with the material at final hearing and expect the contingent liability to be included in the pool of asset and liabilities of the parties.
I decline to take it into account in the balance sheet of the parties, however I will take the contingent liability into consideration under s 75(2)(o).
Motor Vehicle 6
The wife contended that the valuation of Mr KK ought not be accepted.
The complaint was that the methodology used was not able to be discerned and although he has expertise of 30 years in the motor industry he had no expertise as a valuer. Particular issue was taken with the fact that it is impossible to discern why the value of Motor Vehicle 6 increased between the first and second report.
The evidence of Mr KK was that he had of over 30 years in the automotive industry and that included valuing cars in his previous roles, and that he used his understanding of the current market as the basis for his valuation. I accept that he has the relevant experience to provide expert opinion in this case, indeed he was appointed as a single expert for precisely this task.
When asked about the value of the parties’ Motor Vehicle 6 and he maintained the valuation contained in his report. He was asked whether a motor vehicle of the same make and colour was sold by his business earlier in the year for double that price and declined to answer. He then gave evidence that the motor vehicle sold by his business was superior to the parties’ Motor Vehicle 6 in various ways.
The wife contends that the only prejudice to the husband if it is listed for sale is that 10 per cent of the sale price may go towards commission on the sale if he wants to re-buy it. This submission has some weight. The joint balance sheet provided on 15 December 2023 adopted Mr KK's November 2023 valuation.
The husband seeks to retain Motor Vehicle 6 and said it has great personal and sentimental value to him. I give little weight to the claimed sentimental value.
Mr KK was a jointly appointed single expert. He had provided an initial and updating report dated May 2023 and November 2023 respectively.
The wife did not utilise the option available under the Rules of asking clarifying questions as and significantly, she did not raise any concerns with either of the reports prepared by Mr KK until the final hearing. The purpose of single expert rules are clear.
I accept the expert’s evidence as to the value and include it in the pool.
SECTION 79(4) CONTRIBUTIONS
Initial contributions
The husband deposed that at cohabitation he had savings of $140,000, a car valued at $10,000, contents of approximately $5,000 and superannuation of $20,000.
The wife deposed that at cohabitation she had no assets or liabilities of any value.
Contributions during the relationship
It was not in dispute that while in the United Kingdom from 1995 until 1998 the parties lived with the husband’s parents. The husband’s evidence is that they paid some rent to his parents during this time. In 1998, the husband received an inheritance from his grandfather of £40,000 which equated to approximately $80,000 which the wife accepts was used as a deposit on the initial property at Suburb Q. I accept these are contributions made by the husband.
The wife contended that the wife’s family provided her with significant sums of money throughout the relationship. Her evidence was that her parents made the following contributions:
(a)$3,000 worth of free accommodation whilst residing with her parents around 1994;
(b)$74,000 expended on the parties’ wedding and bridal shower, a traditional cultural pre‑wedding party;
(c)$40,000 for living expenses and holidays whilst the parties were residing in the UK between early 1995 and early 1998;
(d)An unquantified amount of free accommodation whilst residing with her parents from early until mid-1998;
(e)$3,000 used by the wife to purchase clothing and for the hosting of her 30th birthday party in 1999;
(f)$8,000 used by the wife to purchase clothing and pampering following the birth of Ms T, as well as Ms T’s christening party in 2000;
(g)$7,500 used by the wife to purchase clothing for the purpose of returning to the workforce in 2001;
(h)$5,000 applied to the costs of Mr S’s christening afterparty in 2002;
(i)$8,000 in 2004 following a conversation during which the wife advised her mother that the husband directed her to spend limited amounts on herself;
(j)$12,000 applied to her brother-in-law’s 40th birthday, clothes, and towards the parties’ trip to Europe and the UK in 2005;
(k)$9,000 applied towards maternity clothing and other spending after suffering a miscarriage in 2006;
(l)$12,000 applied towards the husband’s 40th birthday and further maternity clothes in 2007;
(m)$7,500 applied towards X’s christening party in 2008;
(n)$12,000 applied towards the wife’s 40th birthday party, clothing and bags in 2009;
(o)$10,000 applied towards Ms T’s 10th birthday party, a trip to Melbourne and the parties’ 15th wedding anniversary in 2010;
(p)$10,000 applied towards personal and family expenses in 2011; and
(q)$8,500 applied towards the parties’ trip to Europe in 2012.
The wife initially claimed the funds as repayable debts but abandoned that position and instead sought that the matter be dealt with as contributions. The husband did not accept the funds as alleged by the wife were ever received by the wife or were used by the parties. The wife’s evidence was that she did not tell the husband of the financial contributions she received, because she “did not feel comfortable raising this loan at this time as I was afraid that in learning of the total amount that he would wish to end our marriage.”
The evidence about the funds the wife contends were received by her from her family.
The wife contends that it was discussed and agreed between herself, her parents, and the husband that they would pay $250 per week rent during the period they resided with the wife’s family in around 1994. The wife deposed that the husband said words to the effect of “I can pay them back later when I get a good job. $250 a week is very fair when it includes everything.” The husband denied that this conversation occurred or that there was any arrangement to pay rent. The provision of accommodation by the wife’s parents is a contribution on behalf of the wife, although I am not satisfied on the evidence that a debt existed for unpaid rent.
The wife deposed that she and the husband borrowed $74,000 from her parents to fund a bridal shower, pre-wedding celebration and wedding. The wife deposed that there was 150 guests for the bridal shower which was held at her parents’ house with a marquee, tables and chairs, and a live band, and that the wedding was held at a venue in Sydney for 110 guests. The wife asserts she recalls the figure being $74,000 because she and her mother sat down and calculated the amount that had been lent shortly after the wedding. The wife contends that there was a conversation that took place between her and the husband to the following effect:
I said: “You know in our culture it is tradition for there to be a [bridal shower] which is paid for by the bride and groom. It is important for me that occurs .”
He said : “I don ‘t have that kind of money. Look I’ll pay for 12 guests. My parents wont pay for this. They would prefer to hold a party of their own when we go to [the UK]. “
I said : “ It is important and if necessary, my parents can lend us money to pay towards it and also the wedding. “
He said: “ Okay, I would really appreciate that. Of course, we will pay them back. “
The husband denied that this occurred and contends that he paid for the wedding from his savings and income. The husband’s evidence was that the wife’s brother, Mr O, contributed $7,000 towards the wedding as a gift from the family.
The wife deposes that during the course of their residence in the UK, her parents provided $40,000 to the parties and that this was expended on their honeymoon, trips to City RR, City SS, Country OO, Country PP and to Country QQ, and returning to Australia in late 1995 for a friend’s wedding and in 1997 for the wedding of her brother Mr O. The wife says that there was a conversation that occurred with her mother where she said words to the effect of “I’ve been keeping a tally of the funds we have advanced to you while you’ve been away. It comes to $40,000.”
The husband’s evidence was that he paid for the parties’ honeymoon overseas, and that the wife had negotiated a significant discount. He denies the advancement of any cash by the wife’s parents whilst they resided in the UK or any conversation in relation to that topic. In cross‑examination the husband acknowledged that they went on a holiday to Country QQ, but: denied that he had been to City RR, though acknowledged that the wife did travel there for a work trip during the relevant period; denied that he and/or the wife had been to City SS; denied that they went to Country OO whilst they were living in the UK; and denied that they had been to Country PP.
The wife maintained this evidence in cross-examination, where following exchange occurred:
So your parents, who couldn’t afford to lend you $74,000 for the wedding – you’re both making £50,000 per year. You want the court honestly to believe you went to your parents and said, “Please can you advance me some more money so I can go [to Country QQ]?” That’s the evidence you want the court to accept as true?---Yes.
The wife does not particularise any details about the lump sums she contends her parents provided to her after the births of the children comprising part of what the wife refers to in her trial affidavit as “the fifth loan”. The detail contained in her affidavit is that the monies were applied to maternity clothing, new clothing, pampering, and christening parties.
The wife provides other evidence that describes, with particularity, the application of other lump sums forming “the fifth loan” provided by her parents to various things including living expenses, new clothing, birthday parties, and trips interstate and overseas. The husband’s oral evidence was that he did not believe the wife’s claims of monies advanced by her parents during this “fifth” period to be true. His evidence was “There was no reason to need money from anybody else.”
Around the time of the wedding, the wife’s parents had just built a new home and had a large mortgage, that her father had suffered a series of injuries and was unable to work. From 1991 until 2001 the wife’s mother earned an income undertaking work at their home. Her evidence was that in 2012 her mother was diagnosed with an illness and commenced treatment, which was ongoing until her death in 2020.
The husband’s evidence is that he understood from conversations with the wife and her parents that the wife’s father was in receipt of a disability benefit and that her mother was a pensioner from the time that the parties married.
I am not satisfied on the balance of probabilities on the evidence that the funds the wife claims were advanced. The wife produced no evidence of any records of any transfers or payments nor was there any evidence supporting a finding that the parents had the capacity to provide such significant financial support.
There is no evidence the parents had capacity to provide such significant financial support. No corroborative evidence from her siblings was called. While it is likely the wife’s family did provide some supports during significant events such as their wedding and christenings I am not satisfied that there is evidence of substantial sums as claimed or that they were loans. I accept her family contributed to accommodation, the wedding, and likely other special events, in a modest way just as the husband’s parents did by accommodation and providing the use of a vehicle when in the UK.
The wife’s claimed moral obligation to repay the debt she alleged
The parties agree that on 26 April 2021 there was a conversation where the wife told the husband she had transferred the sum of $668,000 from the parties joint account. The recollections of the conversation differ.
The wife engaged a lawyer on 30 April 2021 to write to the husband seeking fulsome financial disclosure in circumstances where the marriage relationship had come to an end.
Whilst the wife no longer characterises the funds advanced as a repayable debt for the purposes of these proceedings, her evidence is that she has a moral obligation to repay the estate of her mother as she made promises to her mother, her father and her siblings. As identified in these reasons above, I am not satisfied as to the existence of the alleged debts. It follows that the wife does not have a moral or legal obligation to repay the sums alleged.
The treatment of the $668,000 transfer
The unilateral transfer of the joint savings by the wife to the executor of her late mother’s estate, the wife’s sister Ms Fathy, occurred in mid-2021. The wife had unilaterally removed $668,000 from the parties’ joint account in early 2021, and without notice to the husband paid the money to her late mother’s estate.
The wife maintained throughout these proceedings that there was an enforceable loan arrangement between herself and her parents, which was enforceable by her late mother’s estate. That claim was rightly abandoned prior to the final hearing.
In mid-2021 the wife transferred $600,000 to her sister, she says in repayment of funds she (and her sister) considered she owed her parents for payment to the estate of her late mother of the wife who had been first diagnosed with illness in 2012 and had deteriorated in 2019 and died in 2020.
On 22 February 2023, orders were made by consent for the $600,000 that was removed from the joint account to be held in a Controlled Monies account. These funds were drawn on by the wife for living expenses and the parties agree that the balance as at final hearing was $385,086.
Discussion of the funds the wife contends were advanced
I am not satisfied on the evidence that the fund contended by the wife to have been advanced were advanced and accordingly do not accept these funds as contributions on behalf of the wife as she contends for the following reasons.
The first is that the loan amount alleged was $465,318.04 as at 2012 with an interest rate of 5 per cent. As submitted in the husband’s case outline, the amounts said to have been advanced in the 18 August 2021 affidavit only added up to $244,000 not $465,318.04. Indeed, the amounts claimed in her 10 July 2023 affidavit only added up to $212,000. The sum of $600,000 was transferred out of the parties joint account for the purported purpose of repayment and has no apparent bearing to the sum she alleged was owed.
The second is that the wife alleges the funds were lent by her parents, yet she did not seek to repay her father, who is still alive, but transferred the funds to the estate of her mother. When asked why she did not repay her father the debt she owed to him she said “because my father is in care, and he’s starting on the verge of dementia and so forth. So we just didn’t – that never crossed my mind to.” There is no written loan agreement and no evidence as to how or when the funds alleged to have been advanced were. There are also no particulars of how and when the funds were spent other than the wife’s general assertions. There was no independent evidence of an agreement to pay interest and no repayments made at any time prior to the current claim of a debt existing and no evidence from the wife’s siblings.
The third is that at the time of the alleged borrowings the husband’s income was not insubstantial. For example, when the wife and husband lived with the wife’s parents between 1994-1995, the husband’s evidence is that he was earning $120,000 per annum. When the parties lived in the UK the husband and wife had no children and he was earning, on the wife’s evidence £35,000 (or approximately $60,000) and on the husband’s evidence £50-60,000 (approximately $120,000). Accepting this evidence, the parties had significant surplus of funds. It is difficult to accept the wife’s contention as to the transfer of funds from her parents where the parties were not on the face of the evidence in need of financial support or assistance. This coupled with the evidence that the wife’s parents were in financially constrained circumstances, on both parties’ evidence does not support such a finding.
The fourth is that the wife alleges that funds advanced by her parents were spent whilst living in the UK on trips to City RR, City SS, Country OO, Country PP and Country QQ. The husband’s evidence was that he had never been to City RR, City SS, or Country PP, that he had been to Country OO but not during the relevant time period. He acknowledged that the parties went together to Country QQ. This is a significant contradiction in the evidence, and neither party called evidence to support their own contentions such as passports or photographs of the travel destinations alleged. The wife called no evidence in support of her contention.
The fifth is that the wife did not ever tell the husband about the alleged borrowings. Her explanation was that she did not feel comfortable raising the loan with the husband, particularly as he “scrutinised all payments made from our accounts.” On the husband’s evidence, if the loans did exist there were funds available to repay them, which he deposed he would have preferred to do as he does not like owing people money. Further, if he scrutinised the accounts as alleged it is reasonable to infer he would have seen the transfers from the parents account in Australia to the relevant account where the funds were received.
The sixth reason is that the wife could have called or relied upon evidence from her sister, who she says pursued the repayment of the alleged loan, but she did not, despite the sister previously being the second respondent in the proceedings and having initially filed affidavit material in support of her claim. Pursuant to Jones v Dunkel (1959) 101 CLR 298, the available inference is that the evidence of her sister would not have assisted her, and I so infer.
It was conceded that even taking the wife’s evidence at its highest, any claim in debt had long since been extinguished by operation of the Limitation Act 1969 (NSW) when the wife’s mother died in 2020. There is no evidence that repayment of the asserted loan was demanded before the mother died or on behalf of her father by his guardian. The transfer occurred shortly after separation and in the circumstances as outlined at [168].
I am not satisfied on the evidence that there was or is a loan that was repayable and do not accept the contention that there remains a moral or legal obligation to repay the estate as claimed. The assistance from time to time provided by the wife’s family in the form of free accommodation and board or contributions to other expenses such as the $7,000 provided by the wife’s family for the wedding is a contribution by her. I am not satisfied on the balance of probabilities that the other amounts alleged to have been paid were lent to the parties for the reasons set out above.
Date of separation and contributions after separation
The wife contends that the parties’ separation occurred on 23 May 2021. The husband contends that it occurred on 25 April 2021. The letter from DD Lawyers which became Exhibit 6 supports a finding that wife instructed her lawyer that the parties had separated at some time before 30 April 2021. The letter sets out that the wife’s lawyers “are instructed by our client that the marriage relationship appears to have come to an end. We advise that our client wishes to resolve all matrimonial matters, including property issues on an amicable basis.”
Nothing, in my view, turns on the question of the date of the separation. The parties had a long marriage of 26 years and had three children, the youngest of whom is 16 years of age and is in the care of the parties on a shared basis.
Following separation and until 1 September 2021 the husband paid rent of $1,650 per week for the Suburb CC property, where the wife resided. The husband continued to pay for NBN at that property, mobile telephone plans for the children, private health insurance for the children as well as Disney, Netflix, and Spotify accounts. The husband paid the wife’s credit cards until August 2021. Pursuant to Orders made by a Senior Judicial Registrar on 18 October 2021, the husband paid to the wife $12,207 on 2 November 2021 and thereafter $11,123 per month by way of spouse maintenance. The amount was varied following interim hearing on 19 September 2023 where orders were made for the husband to pay the wife the sum of $1,283.50 per week and she was able to draw down up to the same amount from the controlled monies account. The wife is also in receipt of child support paid by the husband.
Contributions in respect of the B Pty Ltd shares
The husband submitted that:
While it is a public company it has not been listed on any exchange. The company has a product it has patented but has not yet been able to take to market. The three founder directors have given the company their expertise and time for nil remuneration for some 8 years. One of them is the respondent, who will be bound by the order sought to the applicant, who he distrusts and who he blames in part for his poor mental health, for as long as he remains a member and director of the company. This outcome is one which it is submitted the Court would strive to avoid.
The husband acknowledges in his submissions that he, and the other directors, have devoted significant time over many years and their own expertise without remuneration to its endeavours. The Specific Security Deed executed July 2021 points out at recitals B & C that “The Grantor[the husband] has contributed considerable time and his expertise in developing the reagents and hence in [B Pty Ltd] being granted the patents held in its name” and “The Secured Party has incurred expenses in the total sum of One Million three hundred and eighty five thousand and one dollar (AUD $1,385,001.00) during the development of the reagents and the granting of the patents and intellectual property expenses of [B Pty Ltd] pre incorporation.”
There is no direct evidence from the husband as to his contributions or what role he undertook nor what research or development he undertook but I infer from the recitals referred to above that he has contributed considerable time while the wife was contributing as a homemaker and parent and in other ways. The husband was not permitted to take on any role in the current trial and he has not taken an active role in the financial management of the company. However, I infer the husband in the years of his involvement has made direct contribution to the company and that the wife has made indirect contribution.
The husband did not present any evidence to support a finding other than contributions to this endeavour as with the other contributions, were equal. This is an appropriate finding when considering holistically all of the respective contributions of the parties over this long marriage. If there was a basis to consider the husband had made greater contributions evidence would have been called by him and it was not.
For the wife to retain an interest in the shares of this endeavour which was pursued throughout the relationship in such circumstances is, in my view, a just and equitable outcome in circumstances where the parties made many and varied contributions. If it comes to nought, they share in the loss and if as hoped it becomes a valuable asset, developed over many years during the marriage, then they share in the success of the endeavour.
There is no direct evidence from the husband as to his role in the company since the almost three years since separation. The husband was on notice of this issue prior to filing his last affidavit and did not present any evidence as to his role, responsibility or involvement in the company. As referred to above I infer he continues to make contribution post-separation arising from the recitals in the Specific Security Deed referred to above.
There is no doubt the husband will continue to have a direct role in the company into the future and the wife will have no role and make no ongoing contribution to the company. She will effectively be a mere shareholder. Doing the best I can, on the limited evidence I have, I consider the contributions adjustment to the B Pty Ltd shares pool to be 35 per cent to the wife and 65 per cent to the husband to acknowledge what I infer are his post separation contributions.
For the reasons set out at [235] there should be a 5 per cent s 75(2) adjustment in favour of the wife in respect of the second pool. In circumstances where the value of pool one may be from effectively nil through to $10,000,000 or some figure in between, that is the best that can be done to arrive at a just and equitable outcome overall where the shares will be retained 60 per cent to the husband and 40 per cent to the wife.
If the shares are ultimately worth nil as contended by the husband the effect is of no consequence. If the shares are worth over $10,000,000 as suggested by Ms D the division would be $6 million to the husband and $4 million to the wife. The significant difference retains his superior voting power and will be reflective of the ongoing commitment, effort and contribution on the part of the husband. In all of the circumstances with real questions as to the value and the limitations of the evidence it is the best that can be done to achieve a just and equitable outcome.
Conclusion on contributions of the non-shares pool (pool 2)
The husband submitted that the initial contributions made by the husband, including his inheritance and how it was applied warrants an adjustment in his favour.
The wife submitted that contributions should be assessed as equal.
The initial contributions made by the husband are acknowledged by the wife. However, they are one category of contribution over the course of a long marriage. In the context of a long marriage, weighing up the many and varied contributions of the husband and wife, that were both direct and indirect, financial and non-financial, including as a homemaker and parent, I am not satisfied that there should be any further adjustment to the husband arising from his greater initial contribution at the commencement of and in the first years of their marriage.
The husband has made post-separation contributions, as detailed above, paying expenses for the wife and the children of the parties, and has paid spouse maintenance since October 2021 and has had the capacity to do so by reason of his vastly superior income.
When considering contributions holistically as required, I do not accept that a contributions adjustment is appropriate in this case and assess the contributions of the non-shares pool as equal.
Alleged non-disclosure by the husband
The share transfers
The husband, in breach of an order made on 15 November 2021, made three share transfers from Giacobetti Investments to AA Pty Ltd, without providing the wife 21 days’ notice in writing. The transfers were as follows:
(a)In October 2022, for the sum of $40,314.40;
(b)In September 2022, for the sum of $47,185; and
(c)In November 2022, for the sum of $87,500.
The husband disclosed these transfers in a letter dated 8 August 2023, following the wife’s request for disclosure.
The transfer of the shares was not disclosed by the husband at the time or pursuant to his ongoing obligation for full and frank disclosure. The wife’s evidence is that she became aware of this issue by coming across articles through a Google search of B Pty Ltd which revealed the business combination agreement with R Inc and subsequently undertaking ASIC searches. Subsequently, on 3 August 2023 the wife instructed her lawyers to send a letter to the husband’s lawyers seeking disclosure in relation to the changes in shareholding amongst other things.
The evidence from the husband in cross examination was that his understanding of disclosure was that he would disclose if he was asked. The following exchange occurred in cross-examination:
So your understanding of your duty to disclose was you only had to disclose something if it changes the value of the company?---No, my duty of disclosure was when – if I’m asked to disclose something. So when I was asked, I’ve provided it. Is that – that’s my understanding.
Ms D in oral evidence noted that as the share transfers provided by the husband were redacted she was unable to determine who the shares were transferred from and to, which limited her capacity to accurately consider the value of the shares at a price per share.
The lateness of the information in relation to the potential business combination involving R Inc. and B Pty Ltd, which was not disclosed by the husband, was the basis for the adjournment application in respect of the final hearing dates in August 2023 and for obtaining the updated valuation.
It is fundamental that disclosure occurs in accordance with each parties’ ongoing obligations. The husband’s fundamental misunderstanding of his obligation to disclose, the limited information provided to the valuer, the late disclosure of the contingent liability to W Insurance and his breach of orders by dealing with the shares are matters I have carefully considered. However, in circumstances where the husband ultimately disclosed the relevant share transfers, albeit late in the day, and where the valuation evidence in respect of the same is being dealt with by a transfer of shares, it is not necessary to take any alternate approach to the assessment of the assets and liabilities arising from these matters.
The W Insurance debt
At the commencement of the husband’s evidence, he gave evidence for the first time of a possible recovery by W Insurance of an unknown amount, although it is estimated by the husband’s financial planner to be $137,000.
In October 2023, W Insurance sent a letter to the husband, contained in Exhibit 7, outlining their concerns that the husband made misrepresentations to W Insurance during the application process which may have been fraudulent, giving them give them grounds to terminate the contract.
Given the late disclosure of the information, the wife was prejudiced in that she could not, in the absence of an adjournment, issue subpoena or request disclosure of the material referred to in the W Insurance documents.
I have not included the debt in the balance sheet. I can see no prejudice to the wife arising from the unfortunate late disclosure of this material as it is not being included. As indicated at [136] I will take this possible liability into account under s 75(2)(o).
SECTION 75(2) CONSIDERATIONS
The age and state of health of each of the parties
The husband is 56 years of age and is a health professional. His health issues are addressed below. He has the shared care of the parties’ youngest child who has just completed year 9.
The wife is 54 years of age and is employed in administration at the company of her brother‑in‑law. Her evidence is that she is in good health. She also has the shared care of the parties’ youngest child.
The husband’s health issues
In 2010, the husband was diagnosed with, and continues to suffer from, a medical condition. Dr HH is the husband’s treating specialist and gave evidence in respect of the husband’s health issues. He was a direct, frank and impressive witness and I accept his evidence.
Dr HH continues to treat the husband. Dr HH reported that the husband’s medical condition is currently in remission but requires ongoing monitoring and that given the husband has had the condition for over ten years, he is at increased risk of cancer.
Since 2010, the husband has been trialling several immunosuppressive medications, many of which have had significant side effects and put the husband at greater risk of infection.
Since 2015, the husband has been taking potent “biologic” drugs which require regular injections under the skin or regular infusions intravenously. The treatments take time, limit travel, and limit the intake of certain foods.
In 2018, the husband saw a specialist at a hospital in relation to muscle aches/cold intolerance and relapsing pains in his wrists. He was prescribed steroids and other immunosuppressants. The pain in the husband’s wrists continues to inhibit his ability to work and has gradually worsened over time.
The husband’s evidence is that from early 2020 until late 2020 the husband was removed from his work roster due to concerns and risks to his health due to his medical condition and the need to take regular immunosuppressing drugs. In mid-2020, the husband was taken off the roster at another workplace for similar reasons. The risk of being taken off rosters is ongoing.
The husband’s treating pain management specialist is psychiatrist Dr GG. He gave evidence in respect of the husband’s depression, and the combined impact of the medical condition, and other issues. He was an impressive and frank witness and I accept his evidence and opinion.
He agreed with the proposition that the end of the proceedings might improve the husband’s mood:
I – I couldn’t say for sure, but I imagine that, you know, it is a significant stressor, and that you would hope that if that – if the matter is resolved, that would – his mood would improve.
Dr JJ was also relied on as one of the husband’s treating psychologists. She was not required for cross-examination. Her evidence was that the husband’s therapeutic sessions focused on “stress, anxiety and low mood associated with the legal process, his relationships with his three children, worry about finances in the context of work exacerbating ongoing pain; chronic sleep deprivation; ongoing medical interventions including many unsuccessful trials of medication.” She further opined that:
I have observed the fatigue and distress that [Mr Giacobetti] experiences as he tries to maintain his work schedule. In my view, this level of work is not sustainable – neither physically nor psychologically. I believe [Mr Giacobetti] needs to reduce his work load and may need to cease work earlier than he may have planned.
I accept the evidence in respect of the husband’s health.
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
There is no doubt on the evidence the husband has various health complaints that have impacted his capacity to work now and in the future. The husband frankly accepted in cross examination that with the end of the proceedings would come the end of a significant stressor and he may experience an improvement of his symptoms.
Dr HH, the treating specialist said in respect of the impact of the husband’s medical condition:
Physical symptoms have limited a range of day-to-day activities including domestic work such as lifting boxes, chopping vegetables, filling pans with water. Exercise has been limited to very light and brief activities.
The fatigue and poor sleep quality has caused anxiety about maintaining capacity to remain [able to work]. The physical joint and muscle pain has limited capacity to perform [certain] procedures, with reduced numbers by up to 50%. In recent months, [Mr Giacobetti] has had to cancel […] sessions at the last minute due to severe symptoms.
Unfortunately, despite exploring and exhausting all avenues of pharmacological and non-pharmacological therapies, he has not at any stage achieved sustained deep remission of the musculoskeletal symptoms. In view of this, I do not think [Mr Giacobetti] will ever be able to return to his usual pre 2018 working.
The husband’s 2023 tax return discloses an income of $612,975 at Exhibit 8. His last three quarterly business activity statements ending December 2022, March 2023, and June 2023, marked as Exhibit 12 show his total sales for the quarters of $165,521, $293,176, and $227,095. With his reduced capacity the husband retains a significant earning capacity. I accept it may be further impacted as opined by his treating medical team and will take this into account under s 75(2)(o).
The wife is employed by one her brothers, and her brother-in-law is the official director (the husband of Ms Fathy) as part of his business. On 2 June 2021, the wife’s income was reduced from $90,000 to $59,000 by the wife’s brother-in-law. From January 2018-May 2021 the wife was employed on a full-time basis, which was reduced to part time from June 2021. The wife’s evidence was that her hours, and salary, were reduced due to the intense stress of the parties’ separation. Under cross-examination the wife acknowledged that once the proceedings are finalised, she is likely to return to full-time employment. I accept her evidence in that regard.
It is contended by the husband that the wife’s income-earning capacity is greater than she suggests and she attempting to reduce it to achieve a larger property settlement. I accept and find that the wife has an earning capacity and that it may be as high as $90,000 per annum. I take into account that she has recently earned that sum, that she is now working part time and her acknowledgement that she is likely to return to full time employment at the conclusion of the proceedings.
I accept the evidence that the husband’s earning capacity is reduced on what it would otherwise be if not for his health complications and accept his evidence about ceasing to have operating rights from time to time. However, his income, even vastly reduced, is and will remain far superior to that of the wife.
The fact remains that the husband’s reduced earnings, given his serious and accepted medical conditions, are still many times that of the wife. I find that, after a long marriage where the wife has taken on the majority of the homemaker and parenting duties and supported the husband’s career in that role, and there is such a disparity in income, an adjustment in her favour is appropriate and necessary.
Any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account
The husband’s contingent liability to W Insurance
The husband may incur a liability to W Insurance pending the result of their inquiries. The husband was uniquely in a position to provide evidence in relation to this issue, yet he did not. The late disclosure prejudiced the wife, in that she had no opportunity to respond or make her own inquiries. While it is not in the asset pool as identified at [132]-[136] above, I have considered that the husband may incur this liability in the overall determination of an appropriate further adjustment of property interests.
The husband’s reduced working capacity
I take into account in my overall consideration of the final adjustment the evidence of the husband’s treating practitioners as to the impact of his health on his earning capacity, including that he may need to cease working sooner than expected and also that there is a possibility that his symptoms will improve with the cessation of these proceedings.
ADJUSTMENT PURSUANT TO SECTION 75(2) FACTORS
Counsel for the wife submitted that a five per cent adjustment in all the circumstances of this case is an appropriate adjustment. The submission was that the husband has a far superior earning capacity than the wife, and although the husband has health issues, they do not “go beyond the income-earning capacity factor.” I accept that submission.
The submission was made that, if the husband’s estimate of the pool is correct, a five per cent adjustment would result in a 10 per cent differential of about $240,000, an amount eclipsed by the husband’s earnings demonstrated historically and through his quarterly business activity statements.
It was acknowledged by counsel for the husband that the husband’s earning capacity was more significant than the wife’s, although it was submitted that this may be offset by the husband’s significant health issues and “question marks” about his future earning capacity.
I do not consider that the husband’s reduced earning capacity warrants any adjustment in his favour. This is particularly so in circumstances where his existing earning capacity, albeit not at his 2018 level, is substantial and far superior to that of the wife.
I do not consider that the husband’s contingent liability to W Insurance warrants any adjustment in his favour. He failed to disclose it and if it crystalises he will have capacity to pay through his income or sale of an asset.
I take into account that the husband is only two years older than the wife but has more health issues than the wife.
I take into account that the parties have the shared responsibility for X until he turns 18.
I agree that having considered all of the factors referred to herein that an appropriate adjustment in respect of the relevant s 75(2) factors is 5 per cent adjustment for the wife which as identified by her counsel, would result in a 10 per cent differential which of the second pool (the non‑B Pty Ltd shares pool) is less than $250,000.
SHOULD THERE BE A SUPERANNUATION SPLITTING ORDER MADE?
The husband, in his minute of order submitted on 19 December 2023, marked as Exhibit 14, sought a superannuation splitting order. His proposed order is that the wife receive the base amount of $147,617 from his Superannuation Fund 1 entitlement. This payment would equalise the parties’ superannuation entitlements, both being entitled to $295,516.
The wife did not seek a superannuation splitting order in her minute of orders sought. It was submitted by counsel for the wife that this was because the wife seeks cash funds, her concerns being her ability to re-house herself in circumstances where she has a lower earning capacity.
The husband’s proposed superannuation split would not be just and equitable.
The wife does not want it because she is seeking additional funds to able to re-house herself and a superannuation splitting order would make that even harder for the wife to achieve, particularly with her lower earning capacity and I infer lower borrowing capacity. Not acceding to the husbands proposed superannuation splitting order would not cause him undue prejudice because he will retain his existing superannuation interests and while he will have less cash assets than the wife, he will retain Motor Vehicle 6 and interest in property at F Street which he can elect to realise. The husband also has his far superior income earning capacity to service any debt if he chooses to retain the assets he seeks.
For these reasons the orders that each party retain their respective superannuation as sought by the wife are just and equitable.
SECTION 81 CONSIDERATIONS
It was contended on behalf of the husband that orders which compel the husband to have an ongoing relationship with the wife should be something the court should strive to avoid.
I accept the submission has weight, however there are circumstances, such as in this case where an ongoing financial relationship cannot be avoided in order to achieve a just and equitable outcome.
Section 81 of the Act provides that:
In proceedings under this Part, other than proceedings under section 78 or proceedings with respect to maintenance payable during the subsistence of a marriage, the court shall, as far as practicable, make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them.
(emphasis added)
The husband contended that the chance for finality between the parties under s 81 of the Act and the exercise of the property adjustment power under s 79, that orders should not include a transfer of shares. His submissions were that as the company is controlled by three founder members/directors who hold the majority of the shares, that to include his former spouse as a shareholder would likely lead to further proceedings and create a situation where the husband’s desire not to be entangled with the wife should be respected. The argument is persuasive, however, in my ultimate assessment I am unable to achieve justice and equity between the parties if the husband retains sole and exclusive ownership of the asset that may have such a substantial value.
Although the matters raised by the husband are persuasive and are matters to which I have had regard, I do not accept that they override the necessity to arrive at an outcome that is just and equitable, even when there may be an ongoing financial connection between the parties. The connection will merely be as between shareholders.
ORDERS
Both parties sought that they be declared the sole owners of property in their custody, possession or control and I make those orders as sought.
The husband will retain his share in the F Street property.
Both parties sought that the wife transfer 50 per cent of her share in N Limited to the husband, and I make that order as sought.
The wife agreed in cross-examination that she does not seek any spouse maintenance after the end of this case. For that reason, I discharge all previous orders for the payment of spouse maintenance.
I have provided reasons for not making a superannuation splitting order above at [236]-[240], and for the transfer of 40 per cent of the shares in B Pty Ltd to the wife above at [115]-[123] and [182]-[190].
The overall outcome is as set out herein:
POOL ONE
Item Ownership Description Value ASSETS 1 J Giacobetti Investments ATF the Giacobetti Family Trust NK 2 J Loan from B Pty Ltd to Giacobetti Investments ATF the Giacobetti Family Trust $131,249 Total $131,249 LIABILITIES 3 J Liability to L Holdings ≤$461,667 POOL TWO
Ownership Description Wife to retain Husband to retain ASSETS 1. W CBA Account Number Ending …88 $2,503 2. W Motor Vehicle 1 $43,000 3. J N Limited (… “I” class shares) $38,778 $38,778 4. H MM Bank Account Number Ending …15 $2,552 5. H Westpac Account Number Ending …47 $2,258 6. H Westpac Account Number Ending …99 $6,005 7. H LL Bank Account Number Ending …41 (one third) $2,260 8. H Telstra Shares $1,290 9. H NN Limited $2,857 10. H Motor Vehicle 2 $24,000 11. H Motor Vehicle 3 $85,000 12.. H Motor Vehicle 4 $75,000 13. H Motor Vehicle 5 $155,000 14. H Motor Vehicle 6 $450,000 15. H F Street (one third) $766,666 16. H Giacobetti Investments $100 21. W Funds in Controlled Monies Account $385,086 22. H Contents $20,000 23. W Contents $10,000 Total $479,367 $1,631,766 ADDBACKS 24. W Interim distribution to Wife $100,000 25. H Interim distribution to Husband $100,000 Total $100,000 $100,000 LIABILITIES 25. W CBA Mastercard Number Ending …49 $8,389 26. H Home Loan Number Ending …00 (1/3 share of F Street Mortgage) $460,388 27. H Income Tax Liability $180,520 30. H Credit Card liability – CBA card ending …12 $10,288 Total $8,389 $651,196 SUPERANNUATION Member Name of Fund Type of Interest Wife to retain Husband to retain 31. W Superannuation Fund 2 $148,141 $0 32. H Superannuation Fund 1 $443,375 Total $148,141 $443,375 NET ASSETS $570,978 $1,080,570 NET ASSETS AND SUPERANNUATION $719,119 $1,523,945
The adjusting sum to be paid by the husband to the wife to affect a 55/45 division of the parties’ property in pool two in the wife’s favour is $514,566.20.
In the circumstances of the case, having regard to all the matters set out above, I consider the orders are a just and equitable result between the parties.
I certify that the preceding two hundred and fifty-three (253) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Curran. Associate:
Dated: 6 February 2024
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