Grist & Grist

[2007] FamCA 1248

FAMILY COURT OF AUSTRALIA

GRIST & GRIST [2007] FamCA 1248

FAMILY LAW – PROPERTY SETTLEMENT – CONTRIBUTIONS – Contributions of the parties during cohabitation and in post separation period found to warrant 10 per cent adjustment in favour of wife by virtue of wife’s comparatively active management of parties’ assets.

FAMILY LAW – PROPERTY SETTLEMENT - SECTION 75(2) – No adjustment found to be necessary in relation to section 75(2) factors.

FAMILY LAW – PROPERTY SETTLEMENT - SECTION 79(2) – Division of property as held by the Court satisfies requirements of justice and equity.

FAMILY LAW – PROPERTY SETTLEMENT - IMPLEMENTATION – Complex structure of parties’ assets in unit trust and superannuation fund and the involvement of third parties required unique implementation of division of property.

Family Law Act 1975 (Cth) Part VIII; Section 75(2); Section 79(2)

C & C (2005) FLC 93-220
Crampton & Crampton (2006) FLC 93-269
Kowaliw & Kowaliw (1981) FLC 91-092

APPLICANT: MR GRIST

RESPONDENT: MRS GRIST

INDEPENDENT CHILDREN’S LAWYER:

FILE NUMBER: PAC 337 of 2007

DATE DELIVERED: 19 October 2007

PLACE DELIVERED: Parramatta

JUDGMENT OF: Coleman J

HEARING DATE: 25 & 26 September 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Andrew Givney

SOLICITOR FOR THE APPLICANT: Kirstie Wulf
Lamrocks

ADVOCATE FOR THE RESPONDENT: Self Represented

Orders

1. That the husband and wife be entitled to the property and superannuation interests of the parties to the marriage as found by the Court in the sum $536 034.18 in shares of 60 per cent to the wife and 40 per cent to the husband.

2. That, to give effect to Order 1:

   (a)The husband and wife cause P Holdings Pty Limited as trustee of the W Unit Trust to transfer to the husband the property known as, and situate at, K.

   (b)       In consideration of the said transfer,

   (i)the husband pay to P Holdings Pty Limited as trustee of the W Unit Trust in its capacity as trustee of the W Superannuation Fund the sum of $75 586.33.

   (ii)the husband execute a deed of release in a form acceptable to P Holdings Pty Limited as trustee of the W Unit Trust, in its capacity as trustee of the W Superannuation Fund with respect to his interest in the said superannuation fund, having a current balance of $114 393.

   (iii)the husband do all acts and things and execute all documents necessary to transfer and assign to the wife the whole of his beneficial interest in a loan from the husband and wife to the W Unit Trust in the sum of $363 223.18.

   (iv)the wife thereupon release the W Unit Trust from the obligation to repay to her the sum of $100 020.67 of the sum of $363 223.18 owed to her by the said unit trust.

3. That the husband resign any directorships in P Holdings Pty Limited, AG Pty Ltd and/or GT Pty Limited.

4. That the husband transfer to the wife any shares held by him or on his behalf in P Holdings Pty Limited, AG Pty Ltd and/or GT Pty Limited.

5. That, subject to these orders, the wife indemnify the husband with respect to any liability of the husband with respect to P Holdings Pty Limited, AG Pty Ltd and/or GT Pty Limited.

6. That costs be reserved.

7. That there be liberty to apply on seven (7) days notice in relation to the implementation of these orders.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Coleman delivered this day will for all publication and reporting purposes be referred to as Grist and Grist.

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 337 of 2007

MR GRIST

Applicant

And

MRS GRIST

Respondent

REASONS FOR JUDGMENT

1. By Application filed 15 December 2006 Mr Grist (“the husband”) applied to the Court for orders for settlement of property pursuant to Part VIII Family Law Act 1975 (Cth) (“the Act”). By Response filed 20 August 2007 Mrs Grist (“the wife”) opposed the granting of relief in the terms sought by the husband and sought, in lieu thereof, orders for settlement of property in the terms set out in such Response.

2. Each party filed an Outline of Case document. Unsurprisingly, as it was prepared by learned Counsel of vast experience and competence, the husband’s Outline of Case document provided a comprehensive and helpful overview of both the husband’s case and the issues raised by the competing applications and affidavits filed in support of those competing applications.

3. The wife, who has at all material times represented herself, filed a very lengthy “Summary of Argument” document which, notwithstanding the wife’s obviously considerable labours and best endeavours, does not reveal with great clarity the broad effect of the relief the wife has sought throughout the proceedings.

4. In a Proposed Minute of Order submitted by his learned Counsel at the conclusion of the trial, the orders ultimately sought by the husband were clarified. Broadly speaking, the orders sought by the husband, if granted, would have the effect of removing the husband from the parties’ corporate financial structure, and superannuation fund, leaving those essentially entities vested in or controlled by the wife.

5. The husband sought the transfer to him of a property held by a unit trust, the beneficial interest in which is held on behalf a superannuation fund, the members of which are the husband, the wife and an adult child of the husband and the wife. The husband also sought that the sum of $52 000 held in trust on behalf of the unit trust be paid to him.

6. To facilitate the property transfers sought by the husband, Counsel for the husband proposed that orders be made transferring to the wife the husband’s interests in the corporate structure of the parties, together with orders altering, seemingly by way of splitting order, his interest in the superannuation fund to reflect his receipt of the real property belonging to the unit trust to which reference has been made. A variety of indemnity and ancillary orders were also sought.

7. It is apparent from the wife’s Summary of Argument document (page 6) that the relief sought by the wife differs greatly from that sought by the husband. The wife signified her opposition to the real estate of the unit trust which the husband sought to have transferred to him being transferred to him, seeking that the property in fact be sold.

8. During the course of the trial, in fairness to her, the wife appeared to become less insistent on the sale of a property which the husband sought and she did not seek to retain it in the unit trust, albeit, understandably, the granting of any option to the husband to acquire that property was sought to be on terms no less favourable than the wife’s case suggested the husband’s entitlement ought to dictate. The wife’s position thus appeared to become that, if the husband was to acquire the real property which he sought, he pay full market value to the unit trust for that opportunity. It seems reasonably clear that the wife’s broader position was that the husband receive nothing from the assets of the parties or their superannuation interests, save with respect to a modest shareholding in an entity described as IAG and some Telstra shares, the transfer to her of which she sought.

9. The orders sought by the wife included:

   6.The applicant pay the respondent an amount of money corresponding to 80% of the applicant’s total withdrawal benefit in the [W] Superannuation Fund either on his withdrawal from the fund or upon the fund being wound-up if so determined by the Court.

   6a.Upon compliance with clause 6 the [W] Superannuation Fund will pay the respondent 80% of the applicant’s total withdrawal benefit and will pay the applicant 20% of the applicant’s total withdrawal benefit.

10. The Court is not entirely clear what the effect of those orders actually is, and in those circumstances refrains from what essentially would be little more than an intuitive attempt at interpretation.

11. The Court approaches the matter on the basis that the husband has sought what his Counsel has clearly signified that he has sought, and that the wife has sought that the husband receive nothing which he has not already received and that, to the extent that he has an interest in any asset of the parties or in their superannuation fund, the husband be divested of such interests. It ought not be thought that in so construing the thrust of the wife’s case the Court is in any way criticising the wife. Quite simply, given the difficulty of determining just what in practical terms the wife has sought, the Court prefers to err on the side of overstating her claim rather than running the risk of proceeding on the basis that the wife has conceded something that she either has not or, to the extent that she has or might be seen as having, has unintentionally conceded.

Credit

1. Credit does not assume significance in the determination of the proceedings. The wife’s financial circumstances in the post separation period, have really, and sensibly, been the focus of attention throughout the trial. By comparison, the husband’s financial position has been something of an open book. Nothing emerging from the wife’s cross-examination of the husband, or any evidence which has otherwise emerged, causes the Court disquiet as to the essential veracity and accuracy of the husband’s financial disclosures. For good reason, the wife’s finances in the post separation period have been subjected to close scrutiny at trial. Nothing emerging from that process causes the Court to have reservations about the credibility of the wife.

2. As will be seen, the determination of this case does not turn on credit issues, but rather on the extent to which the wife, an essentially honest witness, has provided an explanation of post separation financial transactions which, in all the circumstances, is reasonable or adequate. As will also been seen, ultimately the respects in which the wife’s post separation stewardship of matrimonial funds can be seen to have been less than was reasonable or adequate in all the circumstances, turn upon findings of fact which derive largely from the wife’s own evidence.

3. It is regrettable that the wife, an intelligent, articulate and commercially experienced litigant, chose not to be represented in these proceedings. With great respect to her, had she been, the outcome may well have been somewhat different. The Court has endeavoured to balance on the one hand the reality that the wife is an earnest but legally untrained litigant against the entitlement of the husband, through his Counsel, to benefit from forensic advantages which properly flow from having paid for and obtained capable representation at trial. Ultimately, not without some misgivings about the price which the wife might be paying for having chosen to represent herself in proceedings in which she was regrettably out of her depth, the Court is not persuaded that any avoidable injustice has flowed to the wife.

Material Facts

1. Some material facts provide background to the dispute. The pre separation history of the parties was, sensibly, the subject of little forensic endeavour throughout the trial. Save to the extent to which reference will be made when contributions are considered, the history of cohabitation to the date of separation was unexceptional, and would suggest an equality of entitlement. The post separation period assumes rather greater complexity.

2. The parties commenced cohabitation in about 1972, married in 1976 and separated on 20 July 2004. Their cohabitation thus exceeded three decades. There is one child of the marriage, M, who was born during 1978 and is now 29 years of age. Significantly, for reasons which will emerge, M was aged about 26 when the parties separated.

3. The husband was born in 1947 and is now aged 60 years. The wife was born in 1950 and is now aged 57 years. There is no medical evidence before this Court to suggest that either party is in other than reasonable health. The husband can access his superannuation interests, having regard to his age and the relevant legislative provisions. The evidence does not suggest that the wife yet has that ability.

4. When the parties commenced cohabitation, they did not have assets of significant value. Both parties worked in the early years of their cohabitation.

5. In 1978 the parties purchased a property in T for about $28 000. Although the details of how it occurred are not entirely clear, and do not need to be, it is common ground that the wife caused about 25 per cent of the purchase price of the property owned by the parties at T to be contributed from funds inherited by her.

6. In about 1980 the first matrimonial home at T was sold and another home purchased at M. At about that time the husband commenced selling fixtures for buildings. That employment, in one form or another, continued throughout the parties’ time together.

7. In 1982 the parties sold the M property and purchased another property in S. In 1989 the husband and another man (Mr F) caused a corporation, P Holdings Pty Limited (“[P Holdings]”) to be incorporated. P Holdings is currently the trustee of the W Unit Trust and of the W Superannuation Fund which is the beneficial owner of the assets of the unit trust.

8. In 1994 the husband received an inheritance of $80 000 which the wife conceded to have been used for the benefit of the family.

9. In about 1994 the husband became self employed, operating under the business name “AGS”.

10. The W Superannuation Fund was created in 1996.

11. In 1997 the husband and Mr F went their separate ways. The husband operated a business under the name “GT”. The husband and wife at that time, Mr F apparently having ceased to be a shareholder in or director of P Holdings, caused P Holdings to purchase property at B Street, S (“B Street”), which property continues to this day to be owned by P Holdings.

12. In 1999 the wife was appointed a director of GT Pty Limited (“[GT]”). When that entity was incorporated is not entirely clear, and of no moment in any event. In the same year, and subsequent to the wife’s appointment as a director of GT, the parties caused AG Pty Ltd (“[AG]”) to be incorporated. The parties were the shareholders in and directors of that entity. It appears that by the end of 1999 the parties were the shareholders in and directors of GT and AG. That state of affairs continues to this date.

13. In 2000 the parties sold the S property and purchased a property at L (“[L property]”) for approximately $445 000. The L property became the last matrimonial home of the parties. The fate of the net proceeds of its later sale assumes considerable significance in the present dispute. The acquisition of L property was completed by a borrowing from the Commonwealth Bank of Australia (“CBA”) of $300 000. The balance of proceeds of sale appear to have derived from the sale of the S property.

14. P Holdings, as trustee of the W Unit Trust, which by that time had been created, purchased property at K (“[K property]”) in 2000. P Holdings borrowed $300 000 for the purpose of that acquisition. Those moneys were apparently secured over L property and K property.

15. The parties then obtained an overdraft facility in the sum of $200 000 from Macquarie Bank in the name of P Holdings for the purpose of constructing a duplex on the K property. That occurred, some of the work being undertaken by the husband and the son M.

16. In July 2004 the work at K property was substantially but not entirely completed. By October that year the local Council, the certifying authority, had apparently issued certificates of completion on the work.

17. From October 2004 until her acquisition of other property some time later the wife occupied the part of the duplex which became known as K property. M occupied the part which became Ka property for approximately 22 months. Neither the wife nor M has ever paid rental on K property.

18. It is evident that no significant work has been done at K property since October 2004. There is no clear objective evidence as to what, if any, work was done on the property subsequent to July 2004.

19. Since separation in July 2004 the husband has essentially had nothing to do with any of the business or other interests of the parties. Indeed, for a substantial part of the post separation period the husband was living out of Australia.

20. At the date of the parties’ separation, the parties owned L property which was encumbered to the CBA for approximately $310 000. P Holdings owned B Street which was encumbered for approximately $34 000. The duplex at K property was encumbered in the sum of $500 000. The parties at separation had significant other business liabilities and contingent liabilities, particularly with respect to unexpired lease or hire purchase agreements with respect to motor vehicles. The parties then also had not insignificant credit card debts totalling in excess of $50 000.

21. It is common ground that since separation the wife has been solely responsible for the management of assets and interests of the parties and P Holdings. To state the position loosely, how the wife has managed those assets, and proceeds of sale of certain of them, in the post separation period is what the case before this Court has been all about.

22. In October 2004 the parties sold L property for $910 000. It seems uncontroversial, but to the extent that it is, the probabilities suggest that the proceeds of sale were applied as to $283 006 to discharge the CBA mortgage referrable to the acquisition of the property some years earlier, $22 857 by way of real estate agent’s commission, $3256 by way of solicitor’s costs, $300 000 to the CBA in discharge of the mortgage held by CBA over CP and $75 021 with respect to an overdraft of the CBA. Those disbursements total $684 140 leaving a balance of $225 860 in the hands of and under the control of the wife.

23. To the extent that the husband’s case was initially that the increase in the CBA overdraft from $29 128 at separation to $75 021 when the sale of L property was completed should be visited upon the wife, that was ultimately not the husband’s position.

24. The wife asserted that she disbursed the $225 860 as to $6564 to MBF for the joint health cover of the parties, $15 000 to the husband (agreed), $20 440 to herself (agreed), $45 661 to AG, $40 897 to the ATO with respect to FBT, $2782 to GT, $47 832 to P Holdings, $4616 to ANZ Visa Card, $18 068 to National Australia Bank (“NAB”) MasterCard and $24 000 to CBA MasterCard. Those claims, if substantially correct, would account for all of the net proceeds of sale of L property after payment of the disbursements identified above.

25. The wife at all times maintained that she had provided an adequate explanation of the fate of the totality of the $225 860. The husband conceded approximately $100 000 of the disbursements asserted by the wife, his case being that approximately $125 000 was not adequately accounted for and should thus be “added back” or, if not added back, reflected in the Court’s assessment of the contribution entitlements of the parties.

26. The wife contended that in late 2004 she lent M and his wife approximately $65 794. The wife asserted that in May 2005 she was repaid $78 061.75 by M and his wife together with a further $41 721 in June of 2005.

27. From June 2005, the husband commenced to and continued to receive $1000 per month from the W Superannuation Fund.

28. In August 2005 the wife alleged that she received $56 227 from M and his wife, $491 and $29 812.12 of which she repaid to them shortly thereafter. The wife claimed she then received a further $35 000 from M and his wife. It is convenient to note at this point that M did not give evidence in relation to any of these transactions, that the wife produced no source or accounting records in relation to the transactions, and that the general tenor of the wife’s evidence in relation to M’s finances in the post July 2004 period does not render inherently probable M’s capacity, other than out of monies previously given to him by his mother, to make payments of the magnitude the wife alleges.

1. In February 2006 the wife received $131 562.23 from the estate of her late mother. It is common ground that the wife alienated the whole of that sum in favour of M.

2. In July 2006 the wife exchanged contracts for the purchase of a property G (“[G property]”) in her sole name. The whole of the purchase price of G property was funded with borrowings. There being no suggestion that the wife has equity in the property, little more need be said about its acquisition or subsequent retention by the wife.

3. In August 2006 the wife caused the husband to be removed as a director of P Holdings and of GT and caused M to be appointed as directors of those corporations.

4. Earlier this year Ka property was sold. After payment out of various expenses which do not appear to excite controversy, a sum which now stands at $52 000 remained and was held on trust pending the outcome of the current proceedings.

The property of the parties

1. One of the most significant areas of the case in which the wife’s election to represent herself has the potential to prove detrimental to her, and significantly so, is in relation to the identification of the asset pool.

2. As the spreadsheet document headed “Effect of orders sought on the financial position of each party” attached to the wife’s Summary of Argument document confirms, the approach taken by her to the net value of the assets of the parties is neither clear nor consistent with the approach the Court takes to that exercise, notwithstanding that the wife is an experienced and intelligent business woman and litigant in person.

3. In relation to the identification of the asset pool, absent the Court giving the wife legal advice and advice on evidence, the difficulties under which the wife has laboured could not have been readily cured by the Court.

4. The best starting point for determining the assets and liabilities of the parties is a document so styled provided by Counsel for the husband late in the trial, by which time the evidence had concluded. By that document, Counsel for the husband suggested the assets of the parties comprised interests in the W Superannuation Fund totalling $114 393 on the part of the husband and $58 418 on the part of the wife. Those figures derive from the updated valuation report of Moore Stephens dated 25 September 2007. The figures were never attacked during the course of the trial. As is apparent from Mr P’s updating report, those entitlements are funded, as is the entitlement of a third party fund member, M who is the son of the parties to these proceedings.

5. Given the ages of the parties, the nature of the superannuation interests, the fact that such interests are funded, the reality that recognising the interests of the parties at the unchallenged values determined in that regard by Mr P does not in any way impact or potentially impact upon the entitlements of the third party, the Court proposes regarding the superannuation interests of the parties as “property” in the sense discussed in C & C (2005) FLC 93-220.

6. The second asset asserted on behalf of the husband is a joint loan to the W Unit Trust in the sum of $363 223.18. For the reasons which follow, that sum should be included as an asset of the parties, essentially because so doing reflects the legal and practical realities of life.

7. Reference has been made to the W Superannuation Fund. The net assets of W Superannuation Fund as at 30 June 2007 have been valued by Mr P at $213 597.84.

8. The assets of the W Superannuation Fund include units in the W Unit Trust valued after adjustment at $122 469.85. Also included as an asset of the superannuation fund is the sum of $37 058 with respect to the “Unit Trust Current Account”. Also included as an asset of the superannuation fund is a “Loan [W] Unit Trust” in the sum of $47 992. Mr P has treated these assets of the superannuation fund as being recoverable. Indeed, they represent all but a little under $9000 of the total assets of the superannuation fund.

9. When regard is had to the adjusted balance sheet of the W Unit Trust, a copy of which is attached to Mr P’s updated report, it is apparent that the net assets of the W Unit Trust, after adjustments, total $122 469.85. That is the sum reflected in the adjusted balance sheet of the superannuation fund provided by Mr P.

10. Included as liabilities of the WUnit Trust are the “Beneficiary A/c [W] S.F.” $37 058. There is little scope for doubting that such liability is identical with the unit trust current account shown as an asset in the W Superannuation Fund balance sheet at $37 058. Also included as a liability of the unit trust is $47 992 described as “Loan [W] S.F.”. That liability translates as the asset in the superannuation fund to which reference has been made.

11. It is then necessary to consider the liability of the unit trust to “[… & … Grist]” in the sum of $363 223.18. That sum is owed to the husband and wife, it seems jointly and severally. It is important to note that Mr P has treated that sum as being repayable for the purpose of calculating the net assets of the W Unit Trust.

12. The W Unit Trust’s tangible assets, as detailed by Mr P under the headings “Current Assets” and “Non Current Assets”, the values of which are not in dispute, provide sufficient assets in the unit trust to repay all of the liabilities referred to by Mr P in the adjusted balance sheet, including the debt to the parties of $363 223.18. The balance of $122 469.85 which is reflected in the assets of the superannuation fund remains after so doing.

13. It is clear that the members of the superannuation fund, which fund beneficially holds all interests in the W Unit Trust, include a third party. It is clear beyond doubt that the debt to the parties to the marriage of $363 223.18 has been treated as an “arm’s length” liability of the unit trust. Continuing to do so has the considerable attraction of avoiding the interests of the parties and those of the third party becoming blurred.

14. The fact that this debt can be repaid has historically been treated as such, and is thus reflected in the adjustment balance sheet. There are cogent reasons for including as an asset of the parties the sum of $363 223.18. So doing also preserves the legal status of the loan and avoids complexities which arise if the artificial approach of writing back into the assets of the unit trust a debt owed by it to the parties to the marriage were to be adopted. How the sum of $363 223.18 would be reflected if it were to be written back is unclear given the identity of the members of the superannuation fund on whose behalf the equity in the unit trust is held. The Court is accordingly persuaded that the assets of the parties include their joint loan to the W Unit Trust in the sum of $363 223.18.

15. It is not suggested, or at least to the extent that the wife makes such claims, not established, that there are other tangible assets to which reference should be had. Excluded for present purposes are the wife’s post separation acquired property at G, in which she appears to have no equity in any event. Also excluded is the wife’s post separation acquired inheritance of $131 562, the totality of which funds the wife could best be described as having been “alienated”.

16. To add back the inheritance sum, as Counsel for the husband fairly conceded, having not been contributed to by the husband in any relevant sense, having been acquired post separation, and not having been shown to still exist, would not be realistic. As will be seen, when contributions are considered however, the receipt of the sum and more importantly its fate, do not thereby cease to assume relevance simply because no part of that fund is notionally added back into the asset pool of the parties. Approaching this difficult issue by reference to what has happened, rather than to what might have happened, is more conducive to achieving a just and equitable outcome.

17. For reasons which will be given, the Court does not propose adding back $125 000 or any part thereof from the proceeds of sale of the former matrimonial home of the parties in L or any part of that sum. That however does not mean that the fate of those monies will not assume significance within the context of an assessment of the contribution entitlements of the parties. It is not suggested that those funds continue to exist and accordingly the Court considers the approach which accords more closely with reality to be more conducive to achieving a just and equitable determination of the entitlements of the parties.

18. There is no reliable evidence in relation to other assets. The asset pool is accordingly worth $536 034.18.

19. On behalf of the husband no liabilities were asserted to be relevant.

20. The wife’s practice direction statement revealed her contention that, by reason of her retaining GT Pty Limited (“[GT]”) and AG Pty Limited (“[AG]”) she would have liabilities of various kinds totalling $189 278. That submission has not been supported by source documentation to which the wife referred, and could really be said to have only have become prominent in the course of the wife’s submissions to the Court after the evidence had closed.

21. Reference to the transcript of the trial would reveal the Court on a number of occasions using the expression “snapshot” of the parties’ finances at various times, and particularly at the present time. Unfortunately, despite the prolific creation of spreadsheets, generally unaccompanied by identification of the source documents upon which they are asserted to have been based, the wife has been unable to present a substantiated “snapshot” of her finances in the post separation period.

22. Without suggesting any fraudulent or other culpable intentions on her part, the wife has adopted something analogous to a “scattergun” approach to the presentation of her financial position in the post separation period. The wife appears to assert actual or contingent liabilities based on current figures totalling $189 278 but has failed to present reliable accounting or other source documentary evidence to support her claims for acceptance of those liabilities.

23. The liabilities in question asserted by the wife appear to be an overdraft facility of approximately $115 000, hire purchase commitments on motor vehicles of $9569, business creditors of $49 781 and company employees’ entitlements of $14 928. It is apparent from the wife’s submissions that these liabilities are asserted to relate to GT and/or AG.

24. Attached to the wife’s Summary of Argument, and received without apparent objection by Counsel for the husband were two statements dated 16 August 2007 from Mr L, the accountant for the parties, one headed “Re: Valuation of [AG]” and the other “Re: Valuation of [GT] Pty Limited”. Each letter followed substantially the same form.

25. It is instructive to set out the entirety of the letter with respect to AG. That letter stated:

    I have been the accountant for the above business for several years. I have also received from the previous accountants, the trading records for a further number of years prior to my appointment.

    In expressing an opinion regarding a valuation of the above business, I must state that I am not a registered valuer.

    However, from the accounts, it can be seen that due to the history of unprofitable trading and the net deficiency of assets in the business, this business would be unsaleable. Also, in the unlikely event that the assets & liabilities of company were to be disposed of, and actually realized at their book value, there would be no possibility of a dividend to the shareholders.

    In conclusion, the company is, in my opinion, worthless.

26. The letter with respect to GT was in identical terms but contained the following additional paragraph:

    Further, due to the large deficiency in assets, upon any liquidation of the company, it must be noted that the CBA overdraft (currently $95,000 but at times up to $115,000) will be claimed against the security, I have been informed that the security is the [B] Street property, indirectly owned by [W] Superannuation Fund.

27. As is apparent, the letter purported to speak from the date of its authorship, 16 August 2007. At no time however has the wife presented accounts with respect to either of these corporate entities as at 30 June 2007. There was ultimately tendered, in response to the Court’s repeated urgings, earlier accounts for GT and AG. The wife has not persuaded the Court that it should include as actual or contingent liabilities of hers, the sum of $189 278, or any portion of such sum. Whilst it is not the Court’s function to explore documentation to which it has not been expressly referred by a party in order to see whether there might therein lie material which supports a party’s assertions, in fairness to the wife, as a litigant in person who has, with respect to her, been clearly out of her depth, the Court has closely examined the financial accounts which have been produced for GT and AG.

28. As at 30 June 2004, shortly before the parties separated, GT had a surplus of current assets over liabilities of $139 288.25 and total non current assets, inclusive of goodwill of $30 000, of $158 680.70. The total assets of the corporation thus total $297 968.95. The current liabilities totalled $238 070.97 whilst non current liabilities totalled $124 128.48. The total liabilities of the corporation totalled $362 199.45. The corporation thus had an overall deficit of $64 234.50. Given that the $30 000 goodwill figure included in the accounts appeared to be unjustified, the corporation had negative worth at that time.

29. As at 30 June 2005 the position of the corporation had declined, the deficit as at that date being $94 942.82. As at 30 June 2006 the position of the corporation had further deteriorated, there being a deficit of assets over liabilities of $216 145.36, a decline of approximately $120 000 over the previous year. The balance sheet for 30 June 2006 does not reveal major declines in assets although depreciation of plant and equipment and reduction of trade debtors accounted for approximately $50 000 of the increased deficit of assets over liabilities. Significantly, between 1 July 2005 and 30 June 2006 the unsecured liabilities of the corporation rose by virtue of expenses unpaid by AG by way of rent of $25 582.64, monies loaned by the wife of $73 145.49.

30. Conversely, directors’ loans which stood at $65 368.79 were said to have been reduced to $13 000 in the 2005/2006 financial year. How that occurred is unclear. The parties were separated at the time. There is no reliable evidence that the husband benefited in any direct sense from whatever reduction of the joint loan accounts that the parties may have occurred in that year.

31. The liabilities of the corporation with respect to motor vehicle leases reduced by $23 000 in the 2005/2006 year. A long-term employee of the corporation became entitled to long service in the 2005/2006 financial year, provision (unfunded) of $11 178.20 appearing in the accounts for that year.

32. As noted earlier, the wife has not produced any draft accounts or financial statements for GT for the year ended 30 June 2007. Significantly, notwithstanding the financial woes of which the wife complains, she continues to trade in and through GT and has not given evidence of any intention to cease to trade or liquidate the corporation. It can reasonably be inferred that the wife proposes to continue to trade through GT’s future. The income of the corporation provides approximately $90 000 annually in wages, and finances the operation of a number of motor vehicles.

33. The position in relation to GT is quite simply that the wife has not proved with reliable evidence that her actual or contingent liabilities in relation to the corporation exceed what tangible and other assets the corporation may currently have.

34. The Court suggested to the wife that GT and AG may be trading whilst insolvent. These suggestions the wife rejected. The Court has not been referred to other documentation which might enhance the wife’s claim to have actual or contingent liabilities with respect to GT taken into account for the purposes of quantifying the net asset pool of the parties. The Court has found no evidence for itself which would achieve the wife’s objective in that regard.

35. So far as AG is concerned, the balance sheet as at 30 June 2004 reveals total assets of $21 940 and total liabilities of $22 512, producing a modest deficit of assets over liabilities of $572. The profit and loss statement for that year reveals wages of $85 177 to have been paid. The parties were at the time cohabiting. The great bulk of the wages in that year were paid to the son of the parties. The son’s wages, which have approximated $75 000 per annum, appear generous having regard to the total income of the corporation, and the experience and qualifications of the son as they were detailed by the wife.

36. By 30 June 2005, the net asset position of AG had declined modestly to a deficit of $3700.82. That occurred notwithstanding an increase in trade debtors of approximately $30 000 and of cash at bank of approximately $10 000. As against that, trade creditors increased by $16 000 and a loan from shareholders of $17 000 appeared.

37. As at 30 June 2006 AG had a net deficit of assets over liabilities of $5270.19. In that period a liability by way of loan from GT with respect to “expenses/rent” of $25 582.64 appeared, whilst trade debtors receivable declined by $16 000 and cash at the bank declined by approximately $8000. In the 2005/2006 year AG borrowed $29 504.75 from the wife. It also repaid a shareholder’s loan of $17 014.41.

38. As with GT, no financial accounts in final or draft form for the year ended 30 June 2007 have been produced with respect to AG.

39. The most generous approach the Court could take in relation to the wife’s claims with respect to AG and GT would, on such evidence as the wife has presented, be to have regard to the deficit of assets over liabilities in GT of $64 230.50 as at 30 June 2004, the income tax year which concluded shortly prior to the parties’ separation, and a deficit in AG of $572.00. On the face of the material to which the Court has been referred or has located for itself, these figures do not involve any sums or adjustments, either by way of credit or debit, with respect to the W Unit Trust. The Court does not propose however adopting this approach, largely by reason of the antiquity of those figures, of events subsequent to that time, and the reality that the wife has had sole and unfettered control of the finances of the parties and the distribution of not inconsiderable sums of capital. The liabilities which the wife discharged or managed in the post separation period probably include some of those liabilities in any event. To simply have regard to the reported deficit of approximately $65 000 in June 2004 may not do justice to the wife’s post-separation contributions.

40. No other liabilities have been shown to be relevant for the purposes of determining the net asset pool of the parties.

41. The question of “add-backs” needs to be considered. The most convenient way of approaching that question is to commence with the sale of the former matrimonial home of the parties at L in about October 2004 for a price of $910 000.

42. It is not controversial that after payment of legal costs of the sale of $3256, agents fees of $22 857, CBA mortgage of $282 201 and discharge of Viridian Account with the CBA of $75 021, a balance of $526 665 remained. From that sum the wife paid, it is accepted, a further $300 000 to the CBA with respect to a mortgage cross collateralised over L property and relating to the K property of the W Unit Trust. A balance then remained of $225 860. The CBA overdraft balance discharged by the payment of $75 021 stood at approximately $29 128 at the date of separation, an increase of approximately $46 000 in a period of approximately three months. Whilst the husband complains about the wife’s stewardship of the various assets in the post separation period, the evidence before this Court does not provide a rational basis for adding back any money with respect to the CBA overdraft.

1. The critical issue which was agitated at trial concerned what the wife did with the $225 860 which, on her own evidence, the wife had in her possession and control as at October 2004 when the sale of L property was completed and the disbursements which have been outlined above were made.

2. The wife’s case is essentially that she utilised the whole of the monies for legitimate family purposes. The husband’s contention is that, at best, the wife should be considered to have deployed approximately $100 000 for family purposes, the balance of $125 000 having been not adequately accounted for and thus liable to be added back.

3. The husband’s case, whether viewed in terms of add-backs or, if not by add-backs, via contributions, derives some strength from the wife’s clear and unequivocal evidence that she gambled, inferentially largely unsuccessfully, $53 000 within a short time in the post separation period, and her evidence that the parties’ son was paid at an unsustainably high level ($75 000 per annum) for the bulk of the post separation period.

4. The evidence in relation to the former topic is not controversial. As for the latter topic, the circumstantial evidence leaves little room for doubt that the wife was providing the parties’ son with a level of remuneration which could only be achieved by drawing upon the capital of the parties. Quantifying the overpayment which the son received, and its impact on the parties’ capital is difficult. Although arbitrary, a sum of $25 000 per annum could be considered indicative of the extent to which the evidence suggests that the wife over remunerated the parties’ adult son in the post separation period.

5. The husband conceded that the wife had expended $6564 with respect to the MBF Health Fund membership of the parties, that she had paid the husband $15 000 cash, and that she had retained $20 440 in cash. The husband further conceded credit card payments of $4616 (ANZ), $18 068 (NAB), and $24 000 (CBA).

6. The wife claimed to have expended $40 897 by way of FBT payment. The evidence fails to establish that such was the case. Documents tendered clearly establish that, apparently with the benefit of shrewd accounting advice, the parties saved substantial amounts of tax by a strategy devised and implemented by their accountant and the wife. Nothing approaching the magnitude of $40 000 has been shown to have expended pursuant to the strategy.

7. The balance of the $225 860 was sought to be explained by the wife on the basis that it went into AG or GT or P Holdings as trustee of the W Unit Trust. To the extent that any monies were paid into, and recorded as having been paid into P Holdings, they should be reflected in the accounts of the W Unit Trust. The accounting records to which the Court has been referred do not cover the year ended 30 June 2005. The evidence fails to establish what monies were exchanged by and between the relevant entities and the parties, or how any such transactions were reflected in source documents and/or accounting records.

8. So far as the payment of $45 661 asserted to have been made to AG is concerned, the evidence fails to establish that such was the case. Similar observations apply to the $2782 allegedly paid into GT.

9. The impression the Court is left with is that, in the post separation period, GT and AG traded unprofitably and that the wife applied funds from whatever source were from time to time available to keep those entities afloat. To an unknown extent, over remunerating the parties’ son contributed to that state of affairs. The proceeds of sale of L property represent an apparent source of funds available for that purpose. The wife’s inheritance represents another potential source. Quantifying the amounts, save to the extent that they are reflected in the accounts of those corporations is not possible on the evidence the wife has presented. As noted earlier, the accounts for GT and AG are silent after 30 June 2006.

10. What is clear, as noted earlier, is that the wife expended very considerable sums gambling. There is no medical evidence of the kind to which the Full Court referred in Crampton & Crampton (2006) FLC 93-269. No rational basis for treating those losses as other than referrable to the wife and of the kind discussed in Kowaliw & Kowaliw (1981) FLC 91-092 can really be suggested. Those funds not now existing, or likely to again exist, adding them back is a less attractive approach than considering their loss in the context of contributions.

11. As noted earlier, not inconsiderable sums, unjustifiably on the evidence, of capital, including funds from the wife’s inheritance, have been expended in providing the adult son of the parties with an unjustifiably high level of remuneration in the post separation period. Those funds have gone and there is no rational basis for suggesting that will change. Adding them back is thus less attractive than approaching their alienation via contributions.

12. Perhaps coincidentally, the monies which the wife can be seen as having wasted approximate the sum of the inheritance which she received and alienated in ways which are not entirely clear. There is an absence of evidence to suggest that the wife, save via her gambling activities, alienated the parties’ funds deliberately, recklessly or in some other inappropriate fashion.

13. Whilst the wife’s attempts to account for the movement of monies and particularly the movement of monies between herself, the corporations and the adult son of the parties have been confusing and unconvincing, there is no rational basis for concluding that the wife has hidden funds, or that the parties’ son holds funds for or on her behalf. Nor, except in the two areas to which reference has been made, does the evidence establish the probability that the wife has wasted or otherwise unreasonably alienated matrimonial funds in the post separation period. In the circumstances, whilst the wife ought not profit from her failure to provide a clear accounting for the monies which have passed through her hands, notionally adding back those monies would not appear justified. The preferred practical approach is to reflect these transactions in an assessment of the contribution entitlements of the parties.

Contributions

1. As noted earlier, save in two respects, assessment of the contribution entitlements of the parties to the date of separation is not a difficult exercise. Albeit earlier in the cohabitation, the wife made a substantial contribution towards the equity of the first matrimonial home of the parties.

2. The evidence does not enable the Court to speculate as to the impact of that contribution upon the subsequent course of the parties’ finances. Commonsense demands however that recognition be given to its probable impact at the time it was made. The difficulty today, given the years and contributions which have intervened, is knowing how to fairly reflect that contribution.

3. In 1994 the husband made what, necessarily to some extent by virtue of inflation, was a much greater contribution in monetary terms than the wife’s earlier capital contribution. The evidence does not enable the Court to speculate as to the actual impact of that injection of capital on the finances of the parties. Commonsense would suggest that, relative to what circumstances the parties at that time appear to have been in broad terms, the impact must have been significant. To fail to have regard to that contribution in assessing the entitlements of the parties to the date of separation would be unfair to the husband.

4. Obviously, in a broad sense, to the extent that the husband’s contribution entitlements at the date of separation should be seen as increased beyond 50 per cent by virtue of his 1994 contribution, any such increase should be reduced by virtue of the wife’s much earlier contribution of the purchase price of the parties’ first matrimonial home. Obviously that process involves more art than science.

5. The task is made more difficult when it is realised that, although the Court’s orders will relate to the current asset position of the parties, what, on the balance of probabilities, the parties might have been worth in 2004 cannot be reliably determined by the Court.

6. Beyond suggesting that the husband’s entitlement on a contribution basis at the date of separation modestly exceeded that of the wife, the Court can productively say no more about contributions to that time. To regard “modest” as being in the order of a couple of per cent would reflect the spirit of the Court’s conclusions with respect to the previous 32 years of the parties’ cohabitation. Implicit in that suggestion is that the net assets of the parties at that time would not have approached a six figure sum.

Contributions in the post separation period

1. Evaluating contributions in the post separation period is in one sense simple, in another quite complex.

2. So far as the husband’s position in the post separation period is concerned, save to the extent that he may not have benefited from the assets generated by the relationship over the 32 years prior to separation, no contributions of a direct or indirect nature have been, or could be, asserted on behalf of the husband. Save to the extent that the husband remained interested in receiving a settlement of property after July 2004, it could realistically be said that the husband “washed his hands” of all financial responsibilities, leaving the wife literally “holding the bag”.

3. The husband has received $1000 per month from the superannuation fund in the post separation period. Whilst that was his legal entitlement, for the purpose of assessing contributions, the fact remains that the husband has had to contribute nothing by way of effort since he commenced receiving his superannuation benefits.

4. The husband’s position is to be contrasted with that of the wife who has undertaken the management of all the entities which the parties had at the time of separation. Fairly, the wife’s competence in managing the parties’ assets in the post separation period has not been challenged in these proceedings.

5. With his usual fairness, Counsel for the husband made clear at the outset that the inquiry was what became of funds totalling approximately $225 000 over which the wife undoubtedly had sole effective control, rather than any suggestion that those funds should have been greater, either by the wife taking reasonable steps to increase them, or failing to take reasonable steps to preserve them. Other than by also relying upon the evidence which emerged at trial in relation to the wife’s gambling losses, and her inadequate explanations of the disbursement of capital under her control, Counsel for the husband did not deviate from the course which he thus clearly and unequivocally indicated at the commencement of the trial.

6. In fairness to the wife, some brief observations with respect to the financial position of the parties at the date of separation is appropriate. The Court has earlier referred to the assets which the parties held in their own right and through their corporate structure.

7. In summary, all of those assets were substantially encumbered. Although the evidence is unclear as to when the duplex development was completed, the concession of Counsel for the husband that it was “80% completed and landscaping 90% completed” makes clear that there was work to be done, or arranged, and funded in the post separation period. The wife undertook all of those functions, without assistance of any kind from the husband.

8. As the balance sheets for GT and AG make clear, the parties had actual and contingent liabilities with respect to those trading entities. It is clear that those entitles derive income from the personal exertion of the wife and not more than two other employees. At no time has any relevant entity of the parties derived significant income from passive investment in the post separation period.

9. The wife alleges that there were joint debts of $1 219 174 at the time of separation. Whilst that figure has not been substantiated on the balance of probabilities, the Court is satisfied to the requisite standard that the parties had very substantial financial commitments which, had they not been reasonably well managed, could have resulted in the parties today having nothing. The extent of commercial borrowings confirms that impression. The absence of income, other than from entitles on whose behalf the wife devoted her time and energy, further re-enforces that impression. It would not be an exaggeration to suggest that, had the wife in the post separation period adopted the husband’s stance, this case would probably not have resulted, as the parties may well have had nothing to fight over.

10. The question is how the husband’s inertia and the wife’s activity in the post separation period should be reflected in their respective contribution entitlements.

11. So far as the wife’s post separation contributions are concerned, the evidence fails to establish any absence of diligence or skill in terms of the day-to-day management of the parties’ assets and/or enterprises, save in the respects identified earlier in these reasons. The contrast between her efforts the husband’s absence of effort remain stark.

12. Conversely, to the extent that the wife asserts, which she might not, anything in the nature of a “special contribution” in the post separation period, with respect to her, the evidence does not support such a claim. Put simply, the evidence suggests that the wife has done no more and no less than apply reasonable skill and diligence to the conservation of the parties’ assets in the post separation period. However, the contrast with the husband’s absence of effort remains stark.

13. It is necessary to have regard to the benefits which the wife derived in the course of or as a consequence of her stewardship of the parties’ assets in the post separation period. As noted earlier, the wife derived rent free accommodation at K property for a substantial period in the post separation period (approximately 2 years). That should be seen as an offsetting benefit.

14. The wife has had the benefit of salary from the corporate entities in the sum of $925 per week. The evidence does not establish that to have been either inadequate or excessive remuneration for the duties which the wife has undertaken. The fact that Ms P, an ‘arms length’ employee, is paid a similar salary to that received by the wife suggests that the wife’s remuneration is not unreasonable. What the wife received, and still receives for her endeavours ought not be seen as offsetting any contribution entitlement to which the wife would otherwise be entitled, she was reasonably remunerated for what she was doing, no element of unpaid effort should be recognised on the part of the wife.

15. The wife has had the use of a motor vehicle but again there is nothing to suggest that this was a benefit of a nature or on terms which should be seen as an offsetting benefit.

16. As noted earlier, the wife, on her own admission, gambled approximately $53 000 in the post separation period. There is no evidence as to the extent to which the outlay of $53 000 was recouped. The impression the wife’s evidence left the Court with is that losses in the order of $53 000 were sustained.

17. With respect to the wife, in the absence of any medical or other evidence of the kind the Full Court discussed in Crampton & Crampton (supra), to view that loss as other than an unreasonable wastage of matrimonial assets would be unjustified. For reasons which the Court earlier gave, that sum was not notionally added back to the asset pool. It must however impact upon the recognition of contributions to which the wife is otherwise entitled by virtue of the post separation period. Whilst those gambling losses must have a substantial impact, the Court is not persuaded, although some attempt at quantitative analysis is appropriate, that a strictly mathematical approach is ultimately realistic or appropriate. This is largely because the other factors relevant to the exercise remain qualitative, and defy quantitative analysis.

18. As earlier identified, no doubt through the best of motives, the wife has generously caused or permitted M to be over remunerated in the post separation period relative to what he appears to have been producing and the financial position of the entitles through which he has been paid would suggest to have been justifiable or sustainable.

19. The wife, rightly, pointed on a number of occasions to the absence of complaint, or even concern, on the part of the husband in relation to M’s remuneration and to the husband’s consent to M being somewhat generously remunerated prior to separation. Those realities complicate the issue. The wife asserts that at separation the financial position of the parties was delicately balanced, and that only by her subsequent endeavours do the assets which exist today remain. To simply dismiss from consideration an unjustifiably generous approach to M’s remuneration in the post separation period does not sit well with accepting that the wife’s post separation contributions are entitled to substantial recognition by comparison with those of the husband during that period.

20. Quantifying the extent to which M was over remunerated is not simple. Whilst arbitrary, if a figure in the order of $25 000 per annum was regarded as the extent of M’s overpayment, that would give some indication of the magnitude of the leakage of funds which the wife thus, understandably, but unreasonably in the circumstances, caused or permitted to occur. M was paid approximately $25 000 per annum more than either the wife or the other employee of the entities. Why he was has not been convincingly explained.

21. The foregoing depletions of matrimonial funds limits the extent to which the wife’s contributions should be considered to have been by virtue of the post separation period. It should be remembered in this context that it was always open to the wife and M to give evidence in relation to what M was doing in the post separation period, both in terms of the movement of monies and the undertaking of actual work for or on behalf of the interests of the husband and wife. There was no evidence of that kind.

22. By virtue of the evidence which the wife has failed to present, the Court is left with the impression, perhaps unfairly to the wife, that funding M’s life at a level acceptable to him was a priority, the consequences of which were that the net asset position of the parties fluctuated in accordance with M’s endeavours on his property development activities on his own behalf.

23. It is not in contention that the wife alienated the totality of the post separation inheritance of $131 562. The husband made no contribution of any kind to the acquisition of those funds. Caution must be exercised in considering the significance of both the receipt and dissipation of those funds. Had those funds been preserved, whether in a clearly identified way, or by being applied for the benefit of the assets of the parties, the wife would have been entitled to recognition, probably almost to the extent of the funds involved, for having so utilised those funds. On one view, the wife’s alienation of her inheritance could be seen as no more and no less than an act which denied her the opportunity to have applied those funds in ways which would have enhanced her contribution based entitlement.

24. Alternatively, as was the case advanced by Counsel for the husband, having alienated those funds, the wife has less than she might otherwise have by way of financial resources. The otherwise modest assets of the parties, it was submitted by Counsel for the husband, would support a modest adjustment in the husband’s favour pursuant to s 75(2) by reference to the wife’s inheritance (30 per cent of the inheritance being suggested by Counsel for the husband).

25. The Court struggles in the circumstances of this case to accept, had the wife retained her inheritance, or the bulk of it, that such retention should operate in any way to the husband’s advantage. This is particularly so given the sensibly and fairly made concession that the husband had no contribution based entitlement to that inheritance. Thus, in the circumstances of this case, to reflect any part of the inheritance in the husband’s favour pursuant to s 75(2) would be little more than an application of what is sometimes colloquially described as the “Robin Hood principle”.

1. Another approach, albeit not that urged by either of the parties, is that the wife’s dissipation of $131 562 be seen in the context of the offsetting factors to which the Court has just referred. Although somewhat simplistic, the Court perceives there to be an essential fairness in approaching the dissipation of an inherited fund of $131 562, which the evidence does not establish that the wife still has, or could have, against losses of similar magnitude by way gambling and overpayment of M. Coincidentally, the amounts involved are not dissimilar, although the inheritance clearly did not disappear in those two directions, or in those proportions.

2. Without suggesting that this is the only approach, for a number of approaches might be considered reasonable in the exercise of discretion, the Court considers the fairest approach in this case to be to consider the wife as having “made good” from a fund which she derived entirely without contribution by the husband, losses which she unreasonably caused the parties to sustain in the post separation period. The impact of the wife’s contributions in the post separation period on the overall entitlements of the parties remains to be considered.

3. Having regard to the matters to which the Court has referred, the wife’s contribution entitlements in the post separation period are not overwhelming. It would however be to ignore the evidence, and common sense, not to fail to very substantially recognise the wife’s efforts in the post separation period in the assessment of the parties’ contributions. The question remains to what extent should the contribution entitlements at separation be thus impacted.

4. In Norbis v Norbis (1985-1986) 161 CLR 513 Brennan J said at 539:

   The nature of the discretion (exercised by the Family Court) is such that, if guidelines can be expressed, they will be expressed in very general terms. Detailed guidelines are unsuitable for application to circumstances which are quite diverse. Moreover, any guideline must allow for a permissible difference in the standards and values accepted as reasonable by the community. Should any weight be given to conduct which has caused or contributed to the breakdown of the marriage? Does a financial obligation to a previous spouse rank above an obligation assumed by the respondent to another partner whom he or she does not marry? What appears just and equitable to the eyes of some appears unjust and inequitable to the eyes of others. Guidelines necessarily express standards and values: not legal standards and values, but standards and values derived from sources which the court thinks appropriate: see J. Raz “Legal Principles and the Limits of Law”, Yale Law Journal, vol 81(1972), p. 823, esp. at pp. 844-851. Typically a court draws on the standards and values of the community when it supervises the exercise of a discretion and develops guidelines affecting its exercise, but the Family Court is faced with a problem of peculiar difficulty: whence to derive the standards and values by reference to which the just and equitable result in a particular case or in a class of cases can be determined. However desirable the development of guidelines may be, any attempt to structure the discretion by judicial decision is likely to fail if these difficulties are understated or, worse, ignored. If there is a problem of unevenness in the exercise of the property jurisdiction of the Family Court, it arises because the Act confers a jurisdiction governed by discretion, not by legal rules, and because the relevant standards and values of the community are not uniform.

5. In all the circumstances, although necessarily somewhat arbitrary, to regard the contribution entitlements of the parties at present as 40 per cent to the husband and 60 per cent to the wife would, in the Court’s view, be a fair reflection of the contribution entitlements of the parties. It should be remembered in this context that the husband, save to the extent that he made indirect contributions, by not having access to assets other than in the form of benefits from the superannuation fund, made no contributions of any kind in the post separation period. Albeit, relative to the duration of cohabitation, the post separation period is not lengthy, three years is a significant period having regard to the activities which have occurred in that time and the nature and extent of the liabilities of the parties, both actual and contingent.

6. The effect of a 60/40 contribution apportionment is that the wife would be entitled to $107 206.84 more than the husband. The Court considers this, in all the circumstances, to be a reasonable reflection of their respective contributions.

Section 75(2)

1. Each party contends that a s 75(2) adjustment would be appropriate for somewhat different reasons and in quite different sums. The Court does not consider that any adjustment pursuant to s 75(2) would in the circumstances be warranted.

2. The ages of the parties, the comparative earning abilities, and apparent states of health do not render any adjustment appropriate. The Court has previously given its reasons for not accepting the submission on behalf of the husband in relation to the wife’s post separation inheritance.

3. The superannuation interests of the parties having been included as property in accordance with C & C (supra), there is no scope for further adjustment under s 75(2) of the Act.

4. To the extent that the wife seeks to have taken into account the circumstances of the husband’s present cohabitation, the evidence does not establish matters which this Court considers should, in the exercise of discretion, enhance the wife’s contribution based entitlement. There is no evidence that the husband derives any tangible benefits from his current cohabitation which he could not otherwise acquire, nor does his lifestyle, as revealed by the evidence suggest that an adjustment is appropriate.

5. To the extent that the wife asserts that the retention by her of the corporate structure would leave her exposed to liabilities or contingent liabilities, as the Court has earlier noted, the wife has failed to adduce evidence which establishes those realities.

6. The corporations no doubt have liabilities both actual and contingent. They continue to trade, and there is no suggestion by the wife that they will cease to trade. The wife, and Ms P, derive between themselves wages of approximately $90 000 per annum. Motor vehicles are maintained and lease payments met. The current net position of the entities is not known. Whilst their trading positions appear to have deteriorated, that appears on the evidence before this Court to be to some extent at least referrable to the wife’s willingness to provide financial assistance to M on a basis which has not been adequately demonstrated.

7. To the extent that the wife would seek, either in the asset pool or pursuant to s 75(2), to have the Court make an adjustment in her favour, the evidence does not support so doing. It may be that, had the wife been competently represented, a different conclusion would be reached in relation to that topic. The Court cannot however rectify deficiencies in the evidence, unfortunate for the wife though that maybe.

8. Realistically, at their ages, and in their respective financial positions, to alter the contribution based entitlements of the parties by virtue of s 75(2) would not in this Court’s view be warranted.

Section 79(2)

1. It remains to consider whether the proposed division of the property of the parties satisfies the requirements of justice and equity as provided for by s 79(2) of the Act. As noted earlier the effect of the Court’s conclusions is that the wife should receive approximately $107 000 more than the husband out of the fund of $536 034.18. The Court is satisfied that the proposed division of property is not inconsistent with the provision of s 79(2).

2. It is also relevant in this context that the major part of the wife's entitlement consists of a loan to the W Unit Trust, the realisation of which would significantly impact the continued existence of the unit trust, and, by virtue of the enmeshed loans referred to earlier these reasons, the continued existence of the corporations through which the wife derives her income. Whatever their true financial status might be, these entities have significant liabilities and contingent liabilities. There would be selling costs associated with the realisation of real estate which would have to be liquidated to meet the wife's debt from the unit trust. There may also be capital gains taxation liabilities. To fail to be mindful of the risks which the wife assumes, and from which the husband is released, and to remember the risk free nature of the benefits the husband will receive would be to adopt a simplistic and unfair approach to the justice and equity of the proposed division of the parties' property.

3. As the foregoing Reasons for Judgment hopefully demonstrate, determining the interests of the parties in this case has not been easy. Others may well have reached different conclusions. As the Reasons for Judgment reveal, determining the entitlements of the parties involves balancing largely equal contributions over three decades with a post separation period in which the contributions were very unequal, even allowing for the alienation of funds, albeit funds which could be seen as solely hers, on the part of the wife in the course of making what otherwise were by far the greater contributions of the parties.

Implementation of the Proposed Division of Property

1. It remains to consider how the proposed division of the property of the parties might be achieved. As noted earlier, it ultimately became uncontroversial that the husband should have the opportunity of acquiring the K property, the agreed value of which is $290 000. The husband, however, is only entitled to property worth in total $214 413.67. Superficially, it is tempting to think that all that is needed to implement the substantive division of the assets of the parties is thus for the husband to tender payment to the unit trust in the sum of $75 586.33 upon the transfer of the K property to him.

2. Such payment would become an asset of the unit trust and thereby become an asset of the superannuation fund. Some or all of that amount may eventually be reflected in the wife’s interest in the superannuation fund. That would not necessarily happen although it is, on the evidence, the most likely scenario. Not insignificantly, even if the whole of that sum were to find its way into the wife’s interest in the superannuation fund, that sum may not be available to the wife for potentially almost three years.

3. It is reasonably apparent that, if the husband received the K property, and paid $75 586.33 into the unit trust as trustee of the superannuation fund, and, as would necessarily be the case, had his interest in the fund of $114 393 extinguished in the records of the trust, the assets of the trust would have effectively been reduced in the process by approximately $100 000. Doing so may adversely impact upon the superannuation fund’s ability to meet the entitlements of the remaining members, the wife and M who is a third party.

4. It is apparent that, although ordering that the K property be transferred to the husband upon his paying $75 586.33 to the unit trust enables the husband to receive his entitlement, and extinguish his interest in the superannuation fund, a further adjustment needs to be made in the unit trust in order that the net asset position of the trust is not reduced, or the net asset position of the superannuation fund otherwise adversely impacted, by the transfer to the husband of the K property.

5. It is clear, and not contested by the husband, that upon receipt of K property (on whatever terms that may occur) the husband would assign to the wife his interest in the parties’ joint loan to the unit trust. Effectively, by transferring an asset worth $290 000 to the husband in consideration of extinguishment of an interest worth $114 393 and a cash payment of $75 586.33, the superannuation fund assets have effectively been reduced by $100 020.67.

6. It is to be remembered that the unit trust would be transferring an asset of the superannuation fund to the husband by way of adjustment of the interests of the husband and the wife. That is, the fund’s assets would be meeting a liability of the wife. Quite apart from the impact on the net asset position of the superannuation fund, if the wife were to retain the parties’ joint loan to the unit trust of $363 223.18 and her superannuation entitlement of $58 418, the wife would be receiving property worth $421 641.18. In fact, the wife’s entitlement to a settlement of property is in the sum of $321 620.51 {60% of $536 034.18 = $321 620.51}.

7. The superannuation fund having paid out of its assets what is, in reality, an obligation of the wife in the sum of $100 020.67, the superannuation fund would be entitled to offset that sum against the parties’ joint loan to the unit trust. So doing would result in the wife retaining a loan to the unit trust $263 202.51 and her superannuation entitlement of $58 418, a total of $321 620.51 which equates with her entitlement to a settlement of property.

8. An obvious attraction with this approach is that the rights of the third party, which must be considered having regard to s 75(2)(ha) of the Act, are not potentially adversely impacted. Furthermore, the wife is not thereby required to receive more of her entitlement by way of superannuation interest which she may not be able to access for almost three years.

9. The Court is satisfied that this approach is the most fair and appropriate way of implementing its orders. The Court will accordingly so order. Costs are to be reserved.

I certify that the preceding one hundred and fifty-eight (158) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman

Associate: 

Date:  19 October 2007