Haggerty and Parry
[2013] FCCA 615
•27 June 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HAGGERTY & PARRY | [2013] FCCA 615 |
| Catchwords: FAMILY LAW – Property – parties married in 1998 and separated in 2010 – valuation issues – parties have interest in (omitted) and (omitted) practice – parties also have interests in real property – various property interests held by trusts and proprietary companies – parties are shareholders and directors of companies concerned – implication of loans to directors – consideration of practical consequences arising from crystallisation of debt – wife registered proprietor of former matrimonial home – property subject to mortgage securing liabilities of various passive investment entities – implications of capital gains tax – assessment of contributions – husband (occupation omitted) – wife has no professional qualifications but experience of administration – both parties employed in (omitted) practice – husband principal fee earner – husband had greater capital backing at commencement of marriage – husband contracted bladder cancer in 2004 – as a consequence he received a lump sum insurance payment for trauma – sum used to conserve assets – special recognition – husband has been in receipt of income protection insurance payments since 2009 as a consequence of contracting depression – assessment of contributions post separation – wife initially remained in managerial control of (omitted) practice – husband asserts wife utilised income generated by business to advantage herself personally – husband later resumed managerial control – wife asserts husband had advantage himself financially during his period of control – whether process arising under section 79(4) is an accounting exercise simpliciter – husband has paid liabilities arising from the business since separation – living expenses – should monies be notionally added back – husband has purchased valuable collectible items post separation without reference to the wife – duty to make full and frank disclosure – consequences of non disclosure – items in question not formally valued – how should items be treated – add backs – husband asserts he plans to sell (omitted) practice – purported sale challenged by wife – if practice sold would attract capital gains tax – matters to be considered – approach to be taken to legal fees incurred – wife has received inheritance post separation which has been utilised in payment of legal fees – husband has paid legal fees through income generated by (omitted) practice – other valuation issues regarding furniture and jewellery – assessment of section 75(2) factors – wife has returned to work force but has no specialist qualifications – wife suffers from hypothyroidism and depression – husband has extensive experience as (omitted) and (omitted) and is proprietor of viable (omitted) practice – husband has suffered cancer, acute depression, stroke and aneurysm – husband continues to be in receipt of income protection payments – is it just and equitable to make order altering property interests. |
| Legislation: Family Law Act 1975, ss.4(1); 79(1); 79(2); 79(4); 75(2); 81; 90MS Federal Circuit Court Rules, Rule 24.03 |
| Cases cited: Briese & Briese (1986) FLC 91-713 Stanford v Stanford [2012] HCA 52 Erdem & Ozsoy [2012] FMCfam 1323 |
| Applicant: | MS HAGGERTY |
| Respondent: | MR PARRY |
| File Number: | ADC 1129 of 2011 |
| Judgment of: | Judge Brown |
| Hearing dates: | 30 July, 31 July, 30 November 2012, 11 February & 15 March 2013 |
| Date of Last Submission: | 15 March 2013 |
| Delivered at: | Adelaide |
| Delivered on: | 27 June 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Richards |
| Solicitors for the Applicant: | Hume Taylor & Co |
| Counsel for the Respondent: | Mr McGinn |
| Solicitors for the Respondent: | Mellor Olsson |
ORDERS
In full and final settlement of all claims arising in respect of matrimonial property.
That all existing orders in relation to injunctions be discharged.
That the parties do all things and execute all necessary documents to cause the sale of the properties situated at Property S, Property R and the Property A industrial land to be sold on such terms and conditions as are agreed between the parties and in default of any such agreement on terms to be determined by the court.
Upon settlement of the sale of the aforesaid properties specified in order (2) above, the parties do all things necessary and execute all relevant documents arising to pay any sums arising as a consequence of capital gains tax to the Australian Taxation Office in respect of such sales.
Following the sale of the aforesaid real properties specified in order (2) hereof the parties do all things necessary and execute all relevant documents to sell the former matrimonial home situated at Property C,
The net proceeds of the sale of the various properties specified in order (2) hereof and the sale of the former matrimonial home located at Property C be accumulated and after the payment of all applicable selling costs; the amount required to discharge capital gains tax in order (3) hereof; and the payment of all moneys secured against the properties in favour of the (omitted) Bank and any other mortgage holders relating to such properties, the net proceeds be divided as follows:
(a)Fifty percent to the wife, plus the sum of $37,343.50; and
(b)Fifty percent to the husband less the sum of $37,343.50;
Pending the sale of the former matrimonial home situated at Property C, the husband pay all loans in respect of the property, whether secured by mortgage or otherwise together with all rates, taxes and stratus fees with respect to the said property, as they fall due together with home and contents insurance in respect of the property.
Within forty-two days of the making of these orders the parties cause the Parry's Superannuation Fund to role over the present entitlement of the wife in the aforesaid fund to a superannuation fund of the wife’s choosing.
Within forty-two days of the date of these orders the husband cause the entity in the Parry Group, which is the registered owner of the Mercedes motor vehicle in the wife’s possession to transfer the registration of such vehicle to the wife and that thereafter she retain such motor vehicle for her sole use and benefit.
That, subject to these Orders, as to each and every Trust, partnership, legal entity or company in which either the husband or the wife has any shareholding or interest whether at law or in equity including without limitation (omitted) Pty Ltd, (omitted) Ltd, (omitted) Pty Ltd, Parry's loans and (omitted) Pty Ltd, Parry (omitted) Pty Ltd, Parry Pty Ltd, Parry's Services Pty Ltd, (omitted) Trust, The Parry's Services Trust and The Parry's Superannuation Fund (all and any of which shall be referred to hereafter as “the entity”):
(a)the wife forthwith resign from any office that she may hold in the entity;
(b)the wife forthwith transfer and assign all her shares, holdings and entitlements in the entity to the husband or the husband’s nominee;
(c)the husband hereafter pay and indemnify and keep indemnified the wife in relation to any income tax liability of the wife arising hereafter solely out of any distribution to the wife by the entity save in respect of any distribution that is actually paid to and received by the wife;
(d)the wife do release and discharge all claims actions or demands against the husband in relation to the entity or against the entity or any monetary entitlements the wife may have or may have had in the entity including but without limiting the generality of the foregoing any loan accounts of the wife in the entity, wages, dividends or otherwise including the benefit of all debts then owed by the entity to the wife and whether any such debt is owed to the wife solely or jointly with the husband or any such person either in the past, present or in the future;
(e)the husband do hereafter indemnify and keep indemnified the wife against any liability which she now has or which may hereafter arise on the part of the wife to the entity or to any creditor of the entity or to any other person or in any other way whatsoever arising out of or by reason of her having been an office bearer of or a shareholder in the entity and or having guaranteed the obligations of the entity.
Subject to any specific provision of these orders each party be declared solely entitled to the exclusion of the other to all property and to chattels, of whatsoever nature and kind, in the possession of such party as at the date of the making of these orders.
Subject to the provisions of order (6) above the wife’s application for spousal maintenance is dismissed.
All other applications are dismissed.
Liberty to apply in respect of any consequential orders arising.
IT IS NOTED that publication of this judgment under the pseudonym Haggerty & Parry is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 1129 of 2011
| MS HAGGERTY |
Applicant
And
| MR PARRY |
Respondent
REASONS FOR JUDGMENT
Introduction
1.These proceedings relate to the settlement of matrimonial property, following a marriage of approximately twelve years in duration.
2.The applicant in the case is Ms Haggerty (formerly Parry) “the wife”. The respondent is Mr Parry “the husband”.
3.The marriage between the parties produced no children. However, they each have children from prior marriages. These children are now all over the age of eighteen years. They are the wife’s son, X born (omitted) 1985 and the husband’s children Y, born (omitted) 1987 and Z born (omitted) 1990.
4.The wife was born on (omitted) 1957. The husband was born on (omitted) 1958. They met in 1997 and married on (omitted) 1998. They did not live together prior to their marriage.
5.It is common ground between the parties that they finally separated on 2 May 2010, when the husband left the former matrimonial home situated at Property C. He now lives in rented premises in Adelaide.
6.The husband is a (omitted) by profession. He operates an (omitted) practice, in (omitted), under the name of Parry Pty Ltd. He also offers (omitted) through an entity known as (omitted) Pty Ltd.
7.Associated with these two companies are other companies and trusts, some of which own real properties. It is convenient to refer to these various entities, in a collective sense, as “the Parry Group”.
8.Within the Parry Group are a number of entities, which have been described as “passive investment entities” by an accountant, Mr C, who was retained to value the various elements within the group.[1] The relevant entities, within the group, are as follows:
·(omitted) Trust, which owns two pieces of real property situated at Property S (the husband’s business premises) and Property R (a domestic investment property in Property R). These properties have been valued at $680,000.00 and $125,000.00 respectively.[2]
·(omitted) Trust, which holds twenty percent of the issued units in a unit trust known as the (omitted) No.1 Trust. This latter entity owns industrial land at Property A, which has been valued at $1.3m.[3]
[1] See Parry Matrimonial Property Settlement Valuation of Mr C dated 17 October 2011 being annexure SP1 to the affidavit of Ms P filed 27 July 2012 at page 7 (hereinafter referred to as “the Mr C valuation report”.
[2] See Mr C valuation report at page 7
[3] Ibid at page 7
9.The parties agree that the Property R property and the interest in the Property A syndicate should be sold. The husband wishes to retain his business premises. The sale of the Property R and Property A properties will attract capital gains tax, as will the sale of the business premises, if it occurs.
10.The Property C property is registered in the wife’s sole name. However, it is subject to a mortgage to the (omitted) Bank. This mortgage also secures debts owed by the various entities within the Parry Group, including monies advanced by the (omitted) Bank to purchase the property at Property R, the Property A industrial land and the husband’s business premises.
11.It is agreed that the Property C property is valued at $875,000.00. Again, it is the shared position of the parties that neither of them can afford to retain this property, following the resolution of these proceedings.
12.However, if the property is sold prior to the realisation of the other relevant pieces of real property, the (omitted) Bank will likely retain eighty percent of the amount realised by its sale to secure its other interests, arising from the other advances made by the Bank to various entities within the Parry Group.
13.The husband did not agree with certain aspects of Mr C’s valuation of the Parry Group. Accordingly, he commissioned his own expert accountant, Mr P, to undertake a further, albeit limited in its terms, valuation of the Group. After Mr P’s involvement, it was ordered that the two experts concerned should confer and, if possible, agree on a joint opinion in respect of the value of the Parry Group.
14.Following this process, Messrs C and P were able to agree that the various entities in the Parry Group were worth $1,526,384.00. However, after deduction of loans to directors (the husband and wife) of $1,419,267.00, it was agreed that the net value of the Parry Group, including the (omitted) practices, was $107,117.00. The parties agree that this is the value, which should be utilised for the purpose of these proceedings.
15.The wife has employment experience in (omitted). She was the (omitted) of the Parry Group from mid-2000 onwards, until she effectively resigned from this position at the end of the 2011 financial year. Her employer was an entity known as Parry's (omitted) Pty Ltd. This company employed other staff, who also worked for the Parry Group.
16.For readily understandable reasons, it was difficult for the parties to work in the same (omitted) practice, from the date of their separation onwards. On 22 September 2011, the parties agreed that the husband would pay the wife the sum of $20,000.00 by way of interim spousal maintenance.
17.In addition, the husband agreed to continue to pay all outgoings and mortgage payments in respect of Property C and fees related to a motor vehicle utilised by the wife. It was a condition of these various payments that the wife would resign her position with the Parry Group. This agreement was formalised by court order made on 22 September 2011.
18.It is the wife’s position that she was adversely affected by the end of the parties' marriage and its difficult emotional aftermath, in both a psychological and physiological sense. She was diagnosed with Graves disease, a form of hypothyroidism, as well as depression and anxiety. She has only recently found part-time work, with a (omitted) in Adelaide, but hopes to progress to full-time work in future.
19.The husband also has longstanding and serious health issues. In 2002, he was diagnosed with bladder cancer. He had several operations subsequently to remove cancerous tumours. In September 2009, the husband was diagnosed with acute depression and a generalised anxiety disorder. In addition, in late 2011, he suffered a stroke. More recently again, he was diagnosed with an atrial septal aneurysm.
20.It is common ground between the parties that, for some years prior to their marriage, the husband maintained trauma and income protection insurance. Originally he took out the policy concerned with his first wife. As I understand it, trauma insurance is a form of insurance, which pays the premium holder a lump sum in the event that he or she is diagnosed with one of a number of specified illnesses.
21.Following his diagnosis with bladder cancer, it is common ground between the parties that the husband received the sum of $411,811.52, in April 2004, as a result of the trauma insurance policy. Obviously, this represented a significant sum, for the parties, when it was received. A large portion of it was utilised in paying for improvements on one of their former matrimonial homes.
22.The parties disagree as to how the payment is to be characterised for the purpose of these proceedings. From the husband’s perspective, it is a contribution which emanated solely from him and, as such, it should receive special recognition in the court’s deliberations. The wife does not agree, given that premiums for the insurance were paid for from the parties’ joint matrimonial income prior to the husband falling ill.
23.In addition to suffering bladder cancer in September 2009, the husband contracted depression and suffered what he characterises as a “mental breakdown”. As a result, the husband has been claiming income protection payments, due to his ill health and resulting incapacity to work.
24.These payments began in April of 2010. For the first year he received $17,266.00 per month, which reduced thereafter to $12,266.00 per month. The policy is described as a “sickness and accident” policy. Putting aside income from his (omitted) practice, it would seem Mr Parry has a guaranteed income of $147,192.00 per annum, whilst he remains incapacitated for work, from insurance sources.
25.Accordingly, at the present time, Mr Parry deposes that he receives income in an amount of $2,832.00 per week by way of the sickness and accident policy and a further sum of $5,000.00 per week by way of professional fees received from the Parry Group.[4]
[4] See item 11 to the husband’s statement of financial circumstances filed 16 July 2012
26.The wife commenced permanent part-time work on 7 December 2011. She works twenty-eight and a half hours per week, spread over four days. At present her average weekly income, is $637.00, which leaves her $566.00, after tax has been deducted. This equates to a salary of approximately $33,000.00 per annum.
27.The Parry Group, besides the husband, employs two other qualified (omitted); one (omitted); and three support staff. It is the husband’s position that, since his illness in September of 2009, the business has not been as financially viable as it once was. He has grave concerns that he will not be able to return to full-time employment, given his age and health issues.
28.Against this background, the husband has floated the possibility of selling a portion of the (omitted) parts of the Parry Group to one of the Group’s currently employed (occupation omitted), Ms B. The wife is sceptical about this proposal, which apparently envisages Ms B purchasing ten percent of the (omitted) practice. If the sale takes place, it would attract capital gains tax.
29.Whether the sale is bona fide and, if so, when it will take place, are matters of controversy between the parties. The wife categories the sale proposal as calculated and amorphous. The husband asserts that any determination made by the court needs to factor in a liability for capital gains tax, which he would categorise as a joint liability. The wife doubts that any sale is imminent and believes its proposal is designed to reduce the extent of the husband’s payment to her in settlement of her claim for matrimonial property settlement.
30.The husband asserts that he and the wife each drew moneys from various business accounts, related to the Parry Group, during their marriage. These moneys were tabulated to loan accounts, standing in their respective names, at the end of each financial year.
31.It is Mr Parry’s assertion, which is borne out by the joint assessment of Messrs C and P, that the parties’ drawings exceeded the distributable income generated by Parry Pty Ltd and (omitted) (omitted) Pty Ltd – the (omitted) entities respectively – within the Parry Group. This has incrementally led to the increase in the respective loans to directors, noted by the (omitted) experts, in their joint report.[5]
[5] See exhibit L
32.In essence, it is the husband’s position that although the (omitted) practice remain viable and has value in terms of its earnings and goodwill, its most significant assets are represented by moneys advanced to both him and the wife, during the years of their marriage. How these sums are to be recouped, if at all, appears problematic.
33.As a consequence of the husband’s professional background, it would seem to me that the structure of the Parry Group itself is somewhat complicated. However, it is clear that some entities within the overall group have not been financially active for some time. It also seems to be the case, perhaps with some reluctance, that the wife accepts that the parties themselves have extracted significant financial resources from the group over time and this has had consequences for the Parry Group’s bottom line.
34.During the course of their marriage, the parties made further decisions to allow business entities, within the Parry Group, to borrow moneys, so that these entities could acquire real estate. Mr Parry describes the consequences of these transactions as follows:
“The effect was to shift liabilities from our personal names to entities in the group. Interest was then debited to my former wife and me in the loan accounts at the group and our loan accounts increased due to that as well.”[6]
[6] See husband’s affidavit filed 16 July 2012 at paragraph 65
35.Following separation, the parties have each utilised financial resources and income emanating from entities within the Parry Group to fund their day to day living expenses. This is highly controversial, so far as both parties are concerned, particularly whether moneys so expended should be notionally added back into the parties’ pool of assets.
36.It is Mr Parry’s position that, from the date of separation until Ms Haggerty’s retirement from the business, he attended the office on only a few occasions each week. During this period, he asserts that the wife was in effective control of the business and its various accounts.
37.Each party has had a number of credit cards issued to them, which have been utilised to pay personal expenditure, as well as professional expenses related to the business. The court has been provided with statements in respect of these various credit cards. These statements are lengthy and have not been subject to any independent audit or tabulation.
38.In the husband’s case, for the relevant periods, he had five credit cards with four different financial institutions. The statements concerned are contained in five folders and comprise many pages. In the wife’s case, she had three credit cards with three different financial institutions. Her statements are contained in three folders and also comprise many pages.[7]
[7] See exhibit Q
39.The parties have each been apparently heavily reliant on their credit cards. This use has been motivated, at least in part, by the allocation to them of bonus points and perhaps also by liquidity issues arising from time to time.
40.However, it seems also to be a reasonable inference that, given the manner income from the Parry Group was distributed to the parties, it was convenient for each of them to fund their living expenses through credit cards, which would maintain a record of their respective level of expenditure, which could be later documented, as required.
41.Both parties have attempted their own reconciliation in respect of these various credit cards and each has tendered a schedule of their respective tabulations.[8] In each case, there appear to be in excess of 2,000 transactions concerned.
[8] In the husband’s case exhibit Q; in the wife’s case exhibit B
42.Against this background, the husband asserts that, up until she resigned from the business, the wife drew significantly more drawings out of the business than he did. These drawings took the form of the regular payment of her regular credit card debts, which included her regular living expenses and also the payment of a considerable portion of her legal fees.
43.The husband concedes that, in this period, his own living expenses, incurred through credit cards, were also paid by entities within the Parry Group. However, it is his position that the wife’s expenditure, in this period was $196,127.00, whilst his was $160,853.00. As such, he contends that a sum of $35,274.00 – the difference between the two amounts, should be added back into the matrimonial assets and notionally distributed in the wife’s favour.
44.The wife neither accepts the legal basis for this proposed exercise nor its arithmetical rationale. It is her position that the husband’s calculations have included mortgage payments on the Property C, property; wages received by her from the Parry Group; and other joint expenses, related to pets and newspapers. In addition, she queries the allocation to her of insurance policy premiums, which benefitted the husband only.
45.Other significant controversies arose between the parties, during the course of the hearing, in respect of other issues regarding post separation expenditure. It is the wife’s position that, post her departure from the business and after she no longer had remote access to its computerised (omitted) ledgers, the husband embarked on a process of purchasing valuable collectible items, such as rare stamps and (omitted) ceramics, utilising income generated by the Parry Group.
46.The wife asserts that the husband failed to disclose these purchases because he was intent on enriching himself, at her expense, from the business’ resources. The expenditure only came to light when she examined Mr Parry’s credit card statements, which disclosed a pattern of Ebay purchases after 30 June 2011. She complains that the purchases only came to her attention, at this late stage, because she requested access to the husband’s recent credit card history, which he had earlier resisted.
47.The items in question have not been formally valued. The wife asserts that they should be included in the parties’ pool of assets at the price the husband purchased them. This sum totals somewhere in the vicinity of $100,000.00, which the wife says she has calculated by her analysis of the husband’s voluminous credit card statements.
48.The husband refutes any suggestion that he has behaved in a deceptive manner. Rather, he asserts that he applied income to which he was legitimately entitled to make a number of individually unexceptional purchases. In any event, he believes that the wife has erroneously calculated the amount of the purchases.[9]
[9] See exhibit X
49.It seems relatively uncontroversial that, in the period following their separation, the parties found themselves under a significant degree of financial pressure. This pressure was no doubt exacerbated by the husband’s incapacity; his need to find alternative accommodation for himself; the wife’s now increased living expenses; the parties’ mutual level of credit card debt; the home loan on the Property C property; and their significant level of indirect debt, through the relevant entities within the Parry Group.
50.In those circumstances, it was agreed that a property registered in the sole name, but to which both parties were beneficially entitled located at Property G, be sold, in order to repatriate debt. This arrangement also coincided with the wife’s own period of incapacity and her retirement from employment as the (occupation omitted) of Parry's.
51.Settlement of the transaction occurred on 22 July 2011, releasing funds to the value of $595,213.23.[10] Of this sum, $490,425.46 was used to reduce the parties’ home loan; $9,574.54 went to the (omitted) No.2 Trust – to repay a business debt; $320.00 went in fees; and $94,893.23 went to a bank account in the wife’s name.[11]
[10] See exhibit O – vendor’s settlement statement prepared by (omitted) Conveyancing dated 20 July 2011
[11] See exhibit O – email between Mr J, Bank Manager of (omitted) Bank to the husband dated 13 July 2012
52.The husband’s position is that, at 30 June 2011, his various credit card debts stood at $115,245.02, whereas the wife’s credit card debts, at the same time, were $24,409.17. He acknowledges that the sum of $66,361.00 was used to repatriate his credit card debt, leaving him with an ongoing credit card liability of $48,884.00. On the other hand, the wife was left in credit to an amount of $3,927.00.
53.It is the husband’s position that this is unfair to him and should be taken into account in some way by the court. In this regard, he proposes that these sums be included as joint liabilities in the parties’ table of assets and liabilities – he with a credit of $48,884.00, the wife with a debit of $3,927.00.
54.It is the wife’s position that the purported exercise is flawed in law and potentially unfair to her. She points to the fact that these payments were made at a time when the husband’s income, notwithstanding his incapacity for work, was substantially greater than hers. In any event, the respective credit card balances of the parties have changed significantly since this date. The wife submits that the correct approach is to take stock of the parties’ respective liabilities at the time of this hearing.
55.The husband has paid significant sums in tax, since the parties separated. This tax includes amounts levied on moneys advanced to his children Z and Y through the trust structure within the Parry Group for the financial years ending 30 June 2009, 2010 and 2011, as well as other personal taxation liabilities for the husband for those years; GST for the year ending 30 June 2011; and capital PAYG tax for Parry's for the year ending 2011. The amount in question totals $109,061.00.[12]
[12] See exhibit P – this is an itemised account, extrapolated from the Australian Taxation Office, to which Mr Parry had reference in calculating the various sums in question. It does not appear to be the case that the amounts of tax paid are controversial, so far as the wife is concerned. What is controversial is how the moneys should be treated by the court.
56.Again, it is the husband’s position that these are joint liabilities of the parties and should be “added back” into the parties’ liabilities, so that the wife may bear a just and equitable proportion of them in any settlement sum, which she is ultimately calculated to be entitled by the court.
57.The wife does not agree, resisting the proposition of the add back on the basis that as the liabilities are historical and have been subsequently extinguished, they are not relevant to the court’s process, which is predicated on the basis that the appropriate time for determining assets and liabilities is the date of hearing.
58.In this regard, the husband points to the fact that the actual valuation of the Parry Group is of itself historical, which lends artificiality to the situation confronting both the parties and the court itself, which should be rectified by reference being made to subsequent important financial transactions.
59.Controversy also arises regarding the value of items of personal property currently in the husband’s possession. Again this dispute centres on the relevant date to be utilised to calculate what the parties’ marital estate available for division between them is.
60.The issue is complicated by the reason of the date which the two expert accountants utilised to value the Parry Group. I have already alluded to this issue, which colours many controversies between the parties. This date was 30 June 2011, some fourteen months after the parties separated and approximately thirteen months after the trial of the parties’ competing applications commenced.
61.Considerations of expediency dictate that the figure, on which Messrs C & P agreed following their consultation with one another, should be the value utilised by the court in these proceedings.
62.I accept that it is both difficult and likely to have been prohibitively expensive for the parties to have updated this figure. They are to be congratulated for reaching accommodation with one another about this issue, although I concede that neither had much alternative.
63.In this context, the husband has compartmentalised items of personality into categories acquired prior to marriage; during marriage; and after separation. Each category of item has been professionally valued.[13] It is the wife’s position that these distinctions are artificial and the appropriate date to calculate the value of items of personal property is the date of trial.
[13] See exhibit F being valuation of (omitted) Valuers
64.If the husband’s approach is adopted, the value of furniture and effects, in his possession, relevant to these proceedings would be $11,786.00. If the wife’s approach is adopted, the relevant figure would be $28,434.00. In regards to property acquired after separation, it is notable that the valuer concerned has attributed a sum of $8,150.00 in respect of items of (omitted) pottery.
65.No dispute arises in respect of items of personalty in the wife’s possession, other than her jewellery, which she acknowledges is worth approximately $4,000.00. Her position is that the parties agreed that they would each retain personal items of jewellery, which would not be taken into account. The husband does not apparently accept that there was such an agreement.
66.These proceedings have been hard fought and vigorously contested. The parties have been legally represented throughout and each has incurred substantial legal fees. Issues arise as to how the court should approach legal fees, which have been paid by the parties to date and particularly whether those legal fees should be notionally added back into the parties’ pool of assets.
67.The controversy is intensified by the fact that the wife received an inheritance, from the estate of her late mother, in the sum of $54,639.00. It is her evidence that she has utilised the entirety of this sum in payment of her legal fees.
68.As at 30 July 2012, the wife had paid legal fees amounting to $63,123.76. Of this sum, $20,250.52 had been paid prior to 30 June 2011 from sources within the Parry Group. Ms Haggerty had approximately $18,300.00, in outstanding legal fees. No doubt this amount is now considerably more.[14]
[14] See annexure A
69.As at 30 July 2012, Mr Parry had paid legal fees in an amount of $64,775.81. All of this had been paid by the Parry Group. He had outstanding accounts approaching $16,000.00, with significant further liabilities anticipated.[15]
[15] See exhibit K
70.Issues arise between the parties as to alleged inequalities in the payment of legal fees. For example, the husband complains that, prior to 30 June 2011, his former wife had drawn in excess of $20,000.00 from the Parry Group, for legal fees, whilst in the same period, he had withdrawn $10,654.00.[16]
[16] See husband’s affidavit filed 16 July 2012 at paragraph 75
71.On 30 May 2011, it was ordered that the parties each pay one half of the costs of the expert accountancy reports. The fees involved come to $35,000.00. At some stage, orders will have to be made in respect of the reimbursement of these moneys.
72.In addition, it is clear that the wife no longer has her inheritance. It has been spent, primarily on legal fees. In this sense, it can only be described as notional property. Issues arise as to whether it should be added back into the parties’ pool of assets and then be allocated as a benefit to be retained by the wife or whether it should be treated discretely, in some other way.
73.It is clear that the parties, through the various entities in the Parry Group, are considerably in debt. What is not clear is the extent of that debt in global terms. Although the parties acknowledge that they need to realise assets to repatriate their debt, this lack of certainty poses practical difficulties under two main headings.
74.Firstly, the husband carries on his (omitted) practice at Property S. As such, his preference would be not to have to sell the property. However, he believes his financier will give him no choice but to sell.[17]
[17] See husband’s affidavit filed 16 July 2012 at paragraph 125
75.Secondly, the wife has lived in Property C, since the parties separated. Initially, it was her preference to retain the property, if at all possible. She now accepts that financial necessity is likely to dictate that the property must be sold.
76.However, it would be her preference that it be sold last of the parties real properties so that it will be known precisely what net sum has been realised. In addition, she is fearful that, if the husband is able to determine, either directly or indirectly, the order in which properties are sold, he may delay and increase the Parry Group level of indebtedness, to her ultimate detriment.
77.The parties agree, following a joint valuation, that Property C is worth $875,000.00. The property is not specifically included in the calculations of Mr C and therefore is not directly relevant to the agreed joint valuation of the Parry Group prepared by Messrs C & P. However, the property is charged, by the (omitted) Bank, by way of mortgage, to secure the overall liabilities of the Parry Group to the Bank.
78.Property C was purchased on 2 July 2009. The total purchase price, including stamp duty and registration fees, was $905,594.74. This was essentially funded by the sale of the parties’ former matrimonial home at Property B, for the sum of $405,604.74, with the balance of just under $500,000.00 being advanced by the (omitted) Bank.
79.The wife’s evidence is that, if Property C were sold immediately, the (omitted) Bank would require a payment of about eighty percent of the value of the property to discharge the mortgage held by it.[18] On 15 September 2011, the wife was advised by the (omitted) Bank that the relevant pay out figure was $588,683.48.[19]
[18] See transcript of proceedings 30 July 2012 at p-11
[19] See annexure G to the wife’s affidavit filed 2 July 2012
80.The parties each propose that the other should receive a percentage of their net matrimonial assets – in the wife’s case, she proposes a division 55/45 percent in her favour – in the husband’s case, he proposes a division 60/40 percent in his favour.
81.However, the parties have widely diverging views as to how the pool is to be calculated in the first place because of wide ranging controversies between them concerning the adding back of both liabilities, which have been actually discharged and assets which have been either realised or not formally valued.
82.In addition and fundamentally, the extent of their actual indebtedness is amorphous and shifting. A large proportion of their debt is historical in nature and represented by the effective accounting write down of the Parry Group by Messrs C & P because of the parties’ drawings from the business, which have exceeded its income over a significant period. It would seem irrefutable that these moneys have been largely expended in funding their past lifestyle, during their marriage. These sums are gone and cannot be recouped.
83.It is unclear what the properties at Property R and Property A will ultimately realise, if and when they are sold. The evidence indicates difficulties in the sale of Property A, which has been on the market for a significant period of time.
84.The husband formally resists the sale of his business premises at Property S. However, if the property does have to be sold, its sale will have positive implications for the Parry Group’s overall level of indebtedness, which in turn will have implications for the amount which will be required to satisfy the (omitted) Bank mortgage on Property C.
85.The joint valuation of Messrs C & P is now somewhat dated. It was calculated on the assumption that the business was ongoing and was not likely to be subject to immediate liquidation. A significant component of the worth of the Parry Group is represented by Mr Parry’s skills and acumen as an (omitted), as well as the actual bricks and mortar of its business premises.
86.It is uncertain what form the business will take following the conclusion of these proceedings. Where will its premises be? What interest will the husband have in it? Will he return to be an active fee earner in the practice, or will he remain in receipt of benefits under his sickness and accident insurance policy for the indefinite future?
87.The answers to these questions may impact upon the level of debt the husband’s financiers will countenance being borne by the relevant entities within the Parry Group going into the future. This in turn may have consequences for how much the (omitted) Bank will require to discharge the mortgage it holds on Property C. This sum of course being subject to the outcome of the sale or otherwise of the other pieces of real property envisaged by the parties themselves.
The orders sought by each of the parties
88.The intent of these introductory remarks was to indicate the uncertain and conflicted background to these proceedings, which is characterised by the technical issues surrounding the case.
89.The wife proposes the following orders:
“1. That the non-superannuation assets of the parties be distributed as follows:
1.1 As to the sum of $54,639.00 to the wife.
1.2 As to 55% of the balance to the wife.
1.3 As to 45% of the balance to the husband.
2. That in order to give effect to paragraph 1 herein, the wife retain the furniture and motor vehicle presently in her possession at the agreed value of $26,845.00.
3. That the properties described in the proceedings being “Property A”, “Property R”[20], and “(omitted) Business Premises” be sold on terms and conditions agreed between the parties and in default of such agreement on terms determined by the Court.
[20] This is the property, which I have described as Property R
4. That upon settlement of the sale of the said properties the net proceeds of sale, after allowance for or payment of capital gains tax and the consequent adjustment of the value of Parry Group be brought to account for the purpose of determining the entitlements of the parties pursuant to paragraph 1 herein.
5. Upon the parties being in a position to determine the quantum of the net proceeds of sale of the said properties or at such earlier time as the parties may agree, the parties will cause the property at Property C, presently held in the sole name of the wife to be sold upon such terms and conditions as are agreed between the parties or in default of agreement as may be determined by the Court to the intent that the net proceeds of sale shall be brought to account for the purpose of determining the entitlements of the parties pursuant to paragraph 1 herein and to the further intent that the wife shall not be required to execute any contract for the sale of the property as would require her to effect settlement or to give vacant possession of the said property to any purchaser prior to the settlement of the sale of each of the 3 properties detailed in paragraph 3 herein that forthwith upon the making of these orders the parties do cause the Parry's Superannuation Fund to roll over the present entitlement of the husband in the Fund to a superannuation fund of the husband’s choosing.
6. That forthwith upon the making of these orders the husband do cause the entity in Parry Group which is the registered owner of the Mercedes motor vehicle currently in the wife’s possession to transfer the registration of such vehicle to the wife to the intent that she retain such motor vehicle for her sole use and benefit.
7. That forthwith upon the settlement of the sale of the properties detailed in paragraph 3 herein that as to each and every trust, partnership, legal entity or company in which either the husband or the wife has any present shareholding or interest whether at law or in equity (save and except as to Parry's Superannuation Fund) and including without limitation:
(omitted) Pty Ltd
(omitted) Ltd
(omitted) Pty Ltd
Parry's loans and (omitted) Pty Ltd
Parry (omitted) Pty Ltd
Parry Pty Ltd
Parry's Services Pty Ltd
(omitted) Trust.
7.1 The wife will forthwith resign from any office that she may hold in the entity.
7.2 The wife will forthwith transfer and assign all her shares, holdings and entitlements in the entity to the husband or the husband’s nominee.
7.3 The husband will hereafter pay and indemnify and keep forever indemnified the wife in relation to any income tax liability of the wife arising hereafter solely out of any distribution to the wife by the entity save in respect of any distribution that is actually paid to and received by the wife.
7.4 The wife will release and discharge all claims, actions or demands against the husband in relation to the entity or against the entity or any monetary entitlements the wife may have or may have had in the entity, including but without limiting the generality of the foregoing, any debit or credit loan accounts of the wife in the entity, wages, dividends or otherwise including the benefit of all debts then owed by the entity to the wife and whether any such debt is owed to the wife solely or jointly with the husband or any such person either in the past, present or future.
7.5 The husband will hereafter indemnify the wife and keep her forever so indemnified against any liability which she now has or which may hereafter arise on the part of the wife to the entity or to any creditor of the entity or to any other person or in any other way whatsoever arising out of or by reason of her having been an office bearer of or a shareholder in the entity and/or having guaranteed the obligations of the entity.
8. That the wife’s application for spousal maintenance be dismissed.
9. Liberty to either party to apply for consequential orders.”
90.Ostensibly, at least, the procedure advocated by the wife has the appeal of simplicity. She proposes an orderly sale of all the parties’ real estate (either directly held by her or under the aegis of Parry Group entities). The effect of this process would be to ascertain definitively the parties’ level of debt, after the liquidation of their most significant assets, apart from the (omitted) practices themselves.
91.It is conditional on the sale of Property C being left to last, so that she may continue to occupy the property. By necessary implication, the interim order of 29 September 2011, by which the husband is liable to pay all outgoings on the property, including any recurrent sums to satisfy the (omitted) Bank mortgage secured against it, would also continue.
92.How long this situation would prevail, is, of course, highly uncertain. It is also unclear to me what is the likely level of these outgoings.[21] Upon the sale of Property C, the husband would retain the Parry Group, including the (omitted) practice, through which he has earned his income in the past.
[21] The husband’s statement of financial circumstances is silent about this issue. I presume because the moneys in question are paid by entities within the Parry Group
93.The outcome advocated by the wife is predicated on the basis of the agreed value for the Parry Group;[22] the add back of stamps and other collectibles, acquired by the husband post-30 June 2011, which the wife values at $99,631.00; but none of the other add backs proposed by the husband, apart from anticipated capital gains tax on Property A, Property R and the business premises.
[22] This includes the ascertained value of the business premises at Property S; the interest in the industrial land at Property A and the Property R property; together with the liability to the group represented by the parties’ respective loan accounts.
94.In addition, as is clear from order 1, of the orders sought by the wife, she would retain her inheritance, without adjustment and there would be no formal account taken of the parties’ respective legal fees, in these proceedings.
95.The orders sought by the husband are as follows:
1. That all existing orders in relation to injunctions be discharged.
2. That in full and final settlement and satisfaction of all claims that either party may have against the other whether past present or in the future by way of property settlement:-
2.1 The former matrimonial home at Property C be sold forthwith and the husband and the wife promptly do all acts and things and sign all necessary documents to effect a sale of the former matrimonial home and that for the purposes of such sale:
(1) the former matrimonial home be listed for sale with an agent or agents to be agreed between the parties or in the event that the parties are unable to agree by an agent or agents to be appointed by this Honourable Court on the application of either party; and
(2) the price for the former matrimonial home be as agreed between the parties or in the event that they are unable to agree the price be as advised by a valuer nominated by the President of the Real Estate Institute of South Australia on the application of the said agent; and
upon completion of the sale of the former matrimonial home, the proceeds of the sale be applied as follows:
(3) in payment of all costs, commissions and expenses of the sale and any council and water rates and maintenance levies outstanding in respect of the former matrimonial home;
(4) as to the balance then remaining to the husband solicitor’s trust account to abide the payment referred to in paragraph 2.2
2.2 That upon the settlement of the sale of the former matrimonial home, the net proceeds (if any) are to be paid to the husband and contemporaneously the husband do pay to the wife’s solicitor’s trust account for and on behalf of the wife a sum, “W”, calculated by the formula ((-$498,887 + $70,938 + Z) x 40%) - $70,938 = W, where “Z” is the gross sale price of the former matrimonial home less selling costs and expenses, adjustments at settlement, mortgage discharge fees, and conveyancing fees and disbursements and “W” is the amount to be paid to the wife
2.3 That the parties do all things and execute all documents to cause the property at Property R, and Property A to be sold and to cause the net proceeds of such sales to be held pending the calculation referred to in paragraph 2.4.
2.4 That upon the sale of each of the Property R and Property A properties that the parties do al things and execute all documents necessary and pay all monies equally to cause the calculation of the capital gains tax arising from such a sale to be undertaken and then paid from the net proceeds of such sale and to then cause the remaining net proceeds from such a sale to be divided as to 40% to the wife and 60% to the husband
2.5 That within 6 weeks of the making of these orders the parties do cause the Parry's Superannuation Fund to roll over the present entitlement of the Wife in the Fund to a superannuation fund of the wife’s choosing:
2.6 That within 6 weeks of these orders the husband do cause the entity in the Parry Group which is the registered owner of the Mercedes motor vehicle in the wife’s possession to transfer the registration of such vehicle to the wife to the intent that she do retain such motor vehicle for her sole use and benefit
2.7 That, subject to these Orders, as to each and every Trust, partnership, legal entity or company in which either the husband or the wife has any shareholding or interest whether at law or in equity including without limitation (omitted) Pty Ltd, (omitted) Ltd, (omitted) Pty Ltd, Parry's loans and (omitted) Pty Ltd, Parry (omitted) Pty Ltd, Parry Pty Ltd, Parry's Services Pty Ltd, (omitted) Trust, The Parry's Services Trust and The Parry's Superannuation Fund (all and any of which shall be referred to as “the entity”);
(1) the wife forthwith resign from any office that she may hold in the entity;
(2) the wife forthwith transfer and assign all her shares, holdings and entitlements in the entity to the husband or the husband’s nominee;
(3) the husband hereafter pay and indemnify and keep indemnified the wife in relation to any income tax liability of the wife arising hereafter solely out of any distribution to the wife by the entity save in respect of any distribution that is actually paid to and received by the wife;
(4) the wife do release and discharge all claims actions or demands against the husband in relation to the entity or against the entity or any monetary entitlements the wife may have or may have had in the entity including but without limiting the generality of the foregoing any loan accounts of the wife in the entity, wages, dividends or otherwise including the benefit of all debts then owed by the entity to the wife and whether any such debt is owed to the wife solely or jointly with the husband or any such person either in the past, present or in the future;
(5) the husband do hereafter indemnify and keep indemnified the wife against any liability which she now has or which may hereafter arise on the part of the wife to the entity or to any creditor of the entity or to any other person or in any other way whatsoever arising out of or by reason of her having been an office bearer of or a shareholder in the entity and or having guaranteed the obligations of the entity.
(6) That the wife do make available for collection by the husband in good order and repair all documents relating to any entity.
2.8 Subject to any contrary orders contained herein, the following items, namely:-
(1) any motor vehicle in the wife’s possession
(2) the wife’s savings and investments
(3) the wife’s jewellery and items of personal use and adornment in her possession
(4) any superannuation or life insurance in respect of the wife
(5) all other personal property in the possession or control of the wife
(6) vest in the wife absolutely free of any further claim by or on the husband’s behalf and the husband do transfer or cause to be transferred to the wife any estate or interest he or any entity that he controls may have in the same;
2.9 Subject to any contrary orders contained herein, the following items, namely:-
(1) any motor vehicle in the husband’s possession
(2) the husband’s savings and investments
(3) the husband’s jewellery and items of personal use and adornment in his possession
(4) any superannuation or life insurance in respect of the husband
(5) all other personal property in the possession or control of the husband
(6) vest in the husband absolutely free of any further claim by or on the wife’s behalf and the wife do transfer or cause to be transferred to the husband any estate or interest she may have in the same;
2.10 If either party refuses or neglects or omits to comply with the provisions of these orders:-
(1) a Registrar or other Judicial Officer of this Honourable Court upon proof by affidavit of the refusal, neglect or omission, is hereby appointed to execute all deeds and documents in the name of the party in default and do all acts matters and things necessary to give validity and operation to the said order and;
(2) the party in default do pay all reasonable costs (calculated on a solicitor/client basis) incurred by the other party for the purpose of enforcing these orders;
2.11 That the parties do each pay one half of the reasonable costs of (omitted) in relation to the preparation of the reports of Mr C.
3. That the wife’s application for spousal maintenance do otherwise stand dismissed.”
96.It is important to note that, in a formal sense, the husband’s orders do not propose the sale of the business premises. It seems to me to be axiomatic that, if the business premises are not sold, this provides the most seamless mechanism for the continuation of the (omitted) practices or, at the very least, the least disruption to them. It is also implicit from proposed order 2.7 that the husband will retain the various entities, which control the business.
97.It is also important to note that the husband advocates the immediate sale of Property C. Presumably this sale would extinguish the husband’s liability to pay outgoings on the property, arising under the 22 September 2011 order.
98.Otherwise, the husband agrees on the sale of the Property R property and the interest in the Property A industrial properties and the apportionment of their proceeds, after the payment of capital gains tax, 60/40 percent in his favour.
99.However, in my view, the process advocated by the husband cannot be described as being simple. To the contrary, in my view, the mechanism proposed by Mr Parry, in his orders 2.2 and 2.4, is close to impenetrable. The negative number, which is the start of the relevant formula is calculated as follows:
·from the ascribed value of the Parry Group ($107,117.00) is deducted the values included in that valuation to the properties at Property A and Property R ($385,000.00) and the depreciated value of two motor vehicles also included in that valuation (-$41,139.00) resulting in the figure of -$319,022.00;
·the second figure in the proposed formula ($70,938.00) is calculated by reference to the sums Mr Parry has attributed as the monies (including added back notional credits, which no longer exist) which Ms Haggerty should receive, at the end of the division of matrimonial property;
·the major component of this figure is the amount Mr Parry has calculated that Ms Haggerty has purportedly received by way of excess payment from the business prior to 30 June 2011($35,274.00) and what he describes as the overpayment on credit cards received by her ($3926.00). It also includes the value of other specific chattels to be retained by her;
·the value of “Z” is defined in the order. It is the gross sale price of Property C less selling costs. It is to be added to the attributed value of the Parry Group and the monies nominally retained by the wife, according to Mr Parry’s calculations;
·the first portion of the settlement sum to be received by the wife described as “W” in the formula is reached by calculating 40% of this sum, less the monies nominally retained by her ($70,938.00);
·the second portion of the settlement sum to be received by the wife (described in order 2.4) is 40% of the realised value of the interest in the Property A industrial land and the Property R property less capital gains tax.
100.Mr McGinn, counsel for the husband, describes the mechanic of the formula, which he advocates as follows:
“For purposes of illustration, if the bank were to take say $600,000 of the sale proceeds of the home at settlement (see P-11) then on the basis of a sale price of $875,000 then the calculation would be:
(($498,887) + $70,938 + 875,000) x 40%) - $70,938
= ($447,501 x 40%) - $70,938
= $178,820 - $70,938
= $107,882
This would be the amount the wife should retain from the proceeds of sale and the balance of such proceeds would otherwise be retained by the husband.”[23]
[23] See summary of argument on behalf of the husband at page 20
101.With the greatest respect to Mr McGinn, his reference to any amount the bank might take is a distraction. As I understand his submission, any amounts secured by the (omitted) Bank, against Property C, will be borne by the Parry Group, which is to be retained ultimately by the husband.
102.From the wife’s perspective, the pitfall of the proposed formulation is that, when Property C is sold, the figure advocated by the husband may simply not be available to her because the bank has exercised its rights, under its mortgage, regardless of the outcome ostensibly advocated by the husband.
103.It seems to me that the outcome proposed by the husband is stipulated on the basis that the Parry Group can absorb the entirety of the security, which has hitherto included Property C itself. On the basis of the evidence available to me, I am not necessarily assured that this would be the case.
104.The husband’s proposed orders do not make specific reference to taxation liabilities, which have been paid by the Parry Group and which he says should be notionally attributed to him in the table of matrimonial assets and liabilities, which he wishes the court to construct.
105.His proposed orders also envisage him retaining property, in the form of motor vehicles, wine and furniture, which he values at $130,023.00. Needless to say, this calculation does not include moneys attributable to stamps or miscellaneous collectible items purchased after Ms Haggerty resigned from her position with in the Parry Group.
The evidence
106.The parties were the main witnesses,[24] who gave evidence in the proceedings. Both the husband and wife presented as hard done by, as a consequence of what each perceived to be the machinations and deceits of the other. The husband complains that, when the wife was in control of Parry's, she channelled its income to her advantage, paying her legal fees and a disproportionate amount of her living expenses.
[24] Ms B was the only other witness to provide oral evidence, which was brief.
107.On the other hand, the wife complains that the husband has channelled moneys into the acquisition of valuable assets, which he has not disclosed to her. She also complains that the husband has unduly delayed the proceedings and has bogged them down in obscure technicality, derived from his accounting expertise.
108.Although both parties have accounting experience, the husband is clearly in a better position to understand the accounting intricacies of the various entities within the Parry Group. After all, he created its structure and has professional qualifications in (omitted). In my view, he is far better placed to understand the bottom line of the business than is the wife. As such, in my assessment, he held a significant advantage over her in these proceedings.
109.From my perspective, the proceedings were marked by a lack of cooperation between the parties, who intensely mistrust one another. I was provided with voluminous financial records, which had conflicting reconciliations prepared by each of the parties. No attempt was made to resolve those inconsistencies consensually. Few, if any, concessions were made, and little effort was made to simplify the proceedings for me.
110.The danger arising from the positions advocated by each of the parties is that the process envisaged in Part VIII of the Family Law Act, for the division of matrimonial, is not one predicated on (omitted) principles. I am not an (omitted). I am at pains to point out to the parties that the task I must undertake is not a simple accounting or arithmetical task. In the jargon of the times, I cannot “crunch the numbers” to come up with a division of their property, which is not open to challenge or incapable of different interpretation.
111.In my view, the most significant evidentiary aspects of the case, concern the ongoing financial viability of the Parry Group and the parties’ over all level of indebtedness, in actual terms. To my mind, these issues remain shrouded in uncertainty and obfuscation.
112.Each party wishes to add back monies into any pool of assets, which the court may calculate, notwithstanding those assets no longer exist or have not been formally valued. The rationale of these various calculations seems to me to be in order to secure some form of advantage over the other in the ultimate disposal of these proceedings.
113.The danger of such processes, in my view, postulated as they are on property which is notional in nature, is that they are highly artificial and may result in a compromise of the court’s ability to bring about a just and equitable resolution of the parties’ competing applications.
114.This process is not confined to notional assets. In the husband’s case, it also incorporates the proposed inclusion of debts, which have been paid by him, from the income generated by the Group as a whole. These debts are no longer outstanding. However, at the same time, he proposes no process of accounting in respect of other aspects of income, which came into the Group overall, at the same time or afterwards.
115.The parties agreed on the valuation of the Parry Group provided to them, following the conferral of Messrs C & P. As a consequence, Mr C’s report was tendered unexamined into evidence;[25] along with the review of Mr P;[26] and their agreed position.[27] Accordingly, I was not provided with any mechanism to allow for elucidation or clarification of these issues.
[25] See affidavit of Ms P filed 27 July 2012
[26] See affidavit of Mr T filed 25 July 2012
[27] See exhibit L
116.The valuation of the Parry Group includes the agreed value of the business premises; the Property A industrial land; and the property at Property R; together with any moneys borrowed against the security of those pieces of real property. In Mr C’s report are the actual values obtained by the relevant real property valuer. These various values are acceptable to each of the parties concerned.
117.However, I have not been advised, in concrete terms, what is the actual extent of that debt and what are its implications when the properties are sold, either individually or as a group – i.e. what concrete sum would the Parry Group financier actually require to recoup, when and if the sales in question eventuate.
118.The former matrimonial home, at Property C, is not included in the valuation of the Parry Group. Accordingly, it must stand alone in any table of the parties’ assets and liabilities. It is however subject to a mortgage, which must be discharged on its sale.
119.This mortgage, at least in part, secures liabilities of the Parry Group, which as I say are not formally disclosed to me. I have not been provided with an exact payout figure in respect of this mortgage, other than the wife has deposed that, if the property is sold first, the bank would take eighty percent of the sum realised. The underpinning of the wife’s case is that this percentage is likely to reduce, if the other properties are realised first and the Parry Group’s overall liabilities are diminished.
120.At the end of the day, it is potentially confusing to have the Property C property included in any table of assets but without any reference to a directly related mortgage. The confusion is, in my view, intensified by the fact that the husband, ostensibly at least, wishes to retain the premises of his (omitted) practice, in circumstances, where the wife concedes the former matrimonial home must be sold, although it was not her original preference.
121.This level of uncertainty must have complications for how comprehensively or otherwise I can construct the relevant asset pool. To my mind, it also explains the convoluted approach adopted by the husband, as explained above. At the end of the day, I am concerned that the approach each party has adopted, in an attempt to both increase and diminish the asset pool as it suits their respective purposes, is a process of “smoke and mirrors”, deriving from their respective experience of (omitted).
122.In this context, the behaviour of the husband in purchasing stamps and other collectible items is significant, particularly given I am satisfied that he did not disclose the purchases to the wife, prior to the hearing commencing. In these circumstances, I am irresistibly led to the conclusion that this was an attempt, on his part, to solicit concrete assets from the financial morass of the Parry Group, to his ultimate advantage and the disadvantage of the wife.
123.Given my findings about this conduct and given my view about the abstruse nature of the financial circumstances of the parties, which the husband was central in creating, this must have implications for my assessment of Mr Parry’s credibility.
124.I did not find him to be a candid or helpful witness. To the contrary, his evidence was shrouded by obfuscation and a lack of precision in the provision of detail regarding his financial affairs.
125.The parties to property proceedings, brought under the Family Law Act, in this court, are under a duty to make a “full and frank disclosure” of their financial circumstances.[28] This duty has been described as being “fundamental to the whole operation of the Family Law Act in financial cases…”.[29]
[28] See Federal Circuit Court Rules at Rule 24.03
[29] Per Smither J in Briese & Briese (1986) FLC 91-713 cited with approval by the Full Court in Black & Kellner (1992) FLC 92-287 at 79,133
126.In Weir & Weir the Full Court of the Family Court said as follows:
“…the failure to disclose undermines the whole process of adjudication of proceedings for a settlement of property in that the court is unable to identify the property of the parties, to properly assess contributions, or to properly assess section 75(2) factors.”[30]
[30] Weir & Weir (1993) FLC 92-338
127.Accordingly, the duty to make a full and frank disclosure, in financial matters brought under the Family Law Act, does not arise merely by virtue of the rules or practice of the court but rather is a fundamental rule of law, which arises because of the necessity for the court, in each property proceeding arising before it, to consider all aspects of the financial circumstances of the parties concerned.[31]
[31] See Luciano & Luciano (unreported) Family Court (O’Ryan J delivered 8 May 2000) at paragraph 373
128.In appropriate cases, there may be adverse consequences for a party, if it can be shown that he or she has deliberately failed to make a proper disclosure of some material financial fact. Such a non-disclosure may result in the court drawing an adverse inference against the party, who has not made a proper disclosure.
129.In Weir & Weir[32] the Full Court said as follows:
“It seems to us that once it has been established that there has been a deliberate non-disclosure…then the court should not be unduly cautious about making findings in the favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature…We should have thought that the courts 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.”
[32] See Weir & Weir (supra) at 79,593
130.The (omitted) report indicates that the Parry Group, up to 30 June 2011, generated a reasonable, if declining, level of income, which was derived mainly from fees for (omitted) services to clients.
131.In the 2011 financial year, the group’s income was $830,578.00 (minus 7.81% on the previous year). Its consolidated profit, for the same period, was $767,372.00, which represented a net profit of $183,356.00, which was up 6.45% on the previous year. In this context, Mr C estimated the group’s maintainable earnings in the range of $153,475.00 to $228,420.00 per annum.
132.Accordingly, in my view, in spite of its recent travails, the group overall represents a going concern. It continues to employ a number of staff. Although Mr Parry has indicated a desire to sell a portion of the business to Ms B, he does not foresee divesting himself of all of it.
133.Its major difficulties stem from its significant level of indebtedness (arising from the fact that the parties have drawn more from it than it has produced over a number of years) and the prolonged absence of its major fee earner, the husband himself.
134.In these circumstances, I can understand why Mr Parry wishes to avoid the sale of the office premises, if at all possible. As indicated above, this would obviously represent the least disruptive outcome, so far as the continuation of the (omitted) practice is concerned.
135.However, it may be artificial and detrimental to Ms Haggerty, so far as the ultimate outcome of the matter is concerned, to include the value of the premises in the agreed valuation of the Parry Group, as a consequence of it not being sold.
136.In addition, such an outcome is likely to have implication for the overall liquidity of the Group, in terms of what monies will need to be recouped, for its financier, from the sale of Property C.
137.In his trial affidavit, the husband deposes that:
“As far as the Property A business premises are concerned, my preference would be not to sell. However, I believe that the bank will require me to reduce debt by such an amount as will give me no choice but to sell.” [33]
Mr Parry has not specified what is the actual amount of debt owed to “the bank”. As previously indicated, the orders sought by him are predicated on the basis of his retention of the business premises and the immediate sale of Property C.
[33] See husband’s affidavit filed 16 July 2012 at paragraph 127
138.In these circumstances, his statement quoted above has the flavour of “wanting to have his cake and eat it too”. Certainly, in the absence of an alternative proposal, regarding how the office premises are to be dealt with, it seems to be an abrogation of his responsibilities, to some later stage, after the conclusion of these proceedings, when he asserts he will be in a position to know whether he can or cannot retain the property. The wife is not able to grant herself a similar degree of latitude in respect of the Property C property.
139.One of the major difficulties arising in this case is that the Parry Group has been valued as at 30 June 2011. Since that date, Mr Parry’s position is that he has discharged significant liabilities, principally in regards to tax, which now need to be taken into account in his favour to accord a just result.
140.However, after such an exercise, there will be no alteration to the value ascribed to the Group overall. I am concerned about the apparent artificiality of such an approach, which is characterised by the process of adding back these liabilities, which have been previously discharged.
141.After having considered these various matters, it is my overall assessment that the husband has more to gain from complicating the process than the wife. As such, on balance, it seems to me that her evidence is likely to be more reliable than that of the husband.
142.I now turn to a more detailed assessment of the evidence available in the case. This evidence is formed by the respective trial affidavits of the parties themselves; the valuation report of Mr C; the compromised valuation of Messrs C and P; and the copious financial records, which have been tendered into evidence.
143.Importantly, it also includes the oral evidence of each of the parties arising from their respective cross examinations. In these reasons for judgement, findings of fact are made on the balance of probabilities, following my observation of each of the witnesses concerned. In what follows, statement of fact constitute findings of fact, unless otherwise stated.
(a) Chronology
144.Both parties had been previously married when they met. They began to live together in early 1998. The wife’s son X (born (omitted) 1985) came to live with the parties and remained in their household for the next ten years or so.
145.X’s father paid child support of around $150.00 per week and an additional annual amount for educational expensive of $4,000.00 but otherwise he was financially supported by the parties.
146.X left school in 2004 and joined the work force, albeit on a part time basis. The wife concedes that she and the husband continued to support X until he left home in 2009.
147.The husband’s children Y (born (omitted) 1987) and Z (born (omitted) 1990) lived with their mother. The husband paid child support for them in an amount of $1,000.00 per month plus school fees. Once Z turned eighteen, the husband continued to support him financially whilst he attended university.
148.When the parties met, the wife owned a property in (omitted), which she sold shortly after the parties married, realising $22,546.00. She also owned a motor vehicle valued at around $15,000.00. The wife rolled over superannuation in an amount of $10,790.15 into the Parry self managed superannuation fund.
149.At the time of the parties’ marriage, the wife was working in a (omitted) role with the (omitted). She worked on a part time basis on a comparatively modest salary. The husband was also a member of the (omitted). During the marriage, the parties tithed significant sums to the (omitted) and related entities. I accept that these payments were consensual and, as such, are not relevant to these proceedings.
150.The husband has been an (omitted) for many years. At the time the parties began their relationship, he was in partnership with a Mr E, in a firm known as E & Parry. The parties agree that the value of the husband’s interest in this firm, when they married, was just under $270,000.00. The husband also had debts in respect of the business. These debts are difficult to quantify with precision at this time but were in the vicinity of $80,000.00. The husband had accumulated superannuation worth around $20,000.00.
151.The husband asserts that his financial position was significantly superior to that of the wife at the beginning of their marriage. I accept that this was the case. I also accept that he had a significant client base with E & Parry and, as such, was professionally established.
152.One of the firm’s major clients has been the (omitted), for whom E & Parry and more recently Parry's have been performing (omitted) for a number of years. The E and Parry partnership was dissolved on 31 December 1999 and the husband paid Mr E the sum of $38,000.00 to acquire his interest in the firm, which subsequently became Parry's.
153.The wife became a director and shareholder of Parry Services Pty Ltd in mid 2000 and was paid wages. She was the (omitted) of the (omitted) aspects of the Parry Group. At the time of her resignation from the business, she was receiving an amount of $515.00 net by way of income. It is also clear that the wife drew other monies from the business from time to time.
154.The wife recruited some staff for the business; liaised with clients and third parties such as the (omitted); recorded income and expenditure in (omitted) ledgers and saw to banking, including reconciliations; prepared draft profit and loss statements and balance sheets; oversaw maintenance requirements for the business premises; managed IT and purchasing. The husband concedes that the wife was “very proficient” in the (omitted) system.
155.The husband was responsible for supervision of professional staff. He also provided (omitted) advice to clients. Mr Parry is a qualified (omitted). Clearly his professional input was integral to the viability of the business. The wife is without formal professional qualifications. I accept that both made significant contributions to the business during their marriage. They both worked hard, when physically able to do so, and contributed appropriately according to the nature of their particular skills.
Paragraph (a) – The husband was born on (omitted) 1958. The wife was born on (omitted) 1957. Accordingly, both parties are in their mid fifties. As such, they are likely to have more of their working lives behind them than before them. In addition, I accept that neither party currently enjoys robust health.
In the husband’s case, he continues to be subject to a protracted episode of depression and generalised anxiety. More recently again, he has suffered a stroke, which exacerbated his psychological conditions. He has also undergone surgery to repair an aneurysm. I accept that these are all significant conditions. However, I have not been provided with extensive expert medical evidence in respect of them or what is the husband’s likely prognosis.
In his evidence, Mr Parry complained that he had difficulty in concentrating. The implication of his evidence being that it was likely to be problematic for him to resume his practice as a (omitted). My impression of Mr Parry, gained from observing him at close quarters in the witness box, is that he is an intelligent person, who is capable of some degree of intellectual focus.
This is evident from his account of the purchase of the various collectible items, which took up much of the hearing time allocated for the case. His evidence is that he closely researched the individual stamps which he purchased, with a view to buying them at a premium, so that he could, in time, make a profit. He is in the process of acquiring a collection of stamps and ceramics, which will have a greater value as a collection than as individual items. As such, he seemed to me to be canny in his purchases.
In addition, for reasons provided earlier, I am satisfied that he has adopted a highly strategic stance in his conduct of these proceedings. As such, although I accept that his health is currently significantly compromised, in my assessment, he is not bereft of intellectual faculties.
The wife has also suffered depression and anxiety in the context of the end of the marriage between the parties and the difficult and stressful circumstances which followed, particularly in the parties’ initially shared workplace. She also suffers from Grave’s disease, a condition of the thyroid, which seems to be currently stable.
I would anticipate that, with the resolution of these proceedings, the wife’s psychological conditions will also resolve. The evidence indicates that, after a period out of the paid workforce, Ms Haggerty has been able to resume employment. In my assessment, she is likely to have at least ten years of paid employment before her.
Paragraph (b) – This is one of the more significant considerations arising in this matter. As follows from my findings regarding the parties’ direct financial contributions during the marriage, the husband was able to earn a comfortable income, through his practice as a (omitted).
His practice continues to employ a number of (omitted) and has at least one significant (omitted) client in the form of the (omitted). The practice continues to generate a significant stream of income, although its capital value is currently much reduced, due to the parties’ level of drawings from it.
However, the husband’s evidence is that the practice is capable of being sold and, if sold, he believes its sale would attract a significant level of capital gains tax. This suggests that he views the practice as having a significant inherent value. This view can only be based on its potential to generate income, given its client base and work on hand.
Accordingly, as a result of these proceedings, Mr Parry will retain the necessary mechanisms to enable him to earn a comfortable level of income into the future. I do not accept that he is likely to sell the practice in the reasonably foreseeable future. The evidence indicates that, notwithstanding his ill health, he has attended at the practice from time to time and remains interested in it. As such, I find that Parry's remains a going and viable concern.
The husband’s experience, derived over a period well in excess of twenty years, and his qualifications as a (omitted) are valuable resources for him. Unlike an unskilled or unqualified person, these attributes are likely to become more rather than less valuable as he passes through his middle age. It has been said by the Full Court that the most valuable “asset” a party can take out of a marriage is “a substantial, reliable income-earning capacity”.[83]
[83] See Clauson & Clauson (1995) FLC 92-595 at 81,911
In this case, notwithstanding his ill health, I accept that Mr Parry not only has such an “asset” but by virtue of his retention of the Parry Group will also retain the mechanisms through which income can be generated on his behalf. This is a very significant factor in his favour.
Through his and his first wife’s foresight, the husband is the fortunate position of being able to receive income insurance, whilst he remains unwell. He receives a monthly amount of $12,266.00 by way of his insurance payments. As such, he is financially secure in the short to medium term. As his financial statement indicates, it seems to be the case that he is also distributed some income through the Parry Group.
The wife has office and administrative experience, but no formal qualifications. She presented as a competent person. Certainly, the tenor of her evidence was that she capably discharged many diverse tasks, whilst she was the (omitted) at Parry's. As such, she clearly has a significant income earning capacity.
However, in my assessment, her income earning capacity is less than that of the husband and, as such, her future financial position less secure. At present, she is earning $566.00 per week, which equates to an annual salary of under $30,000.00. She concedes that she is likely to be able to earn around $50,000.00 per annum in due course.
Accordingly, the wife is likely to remain a modest salary earner for the remainder of her working life. Whereas the husband will have the benefit of a professional income and the benefits which accrue from self employment. In my view the factors arising under this criterion favour the wife to a marked degree.
Paragraph (c) – There are no children of the marriage under the age of eighteen years.
Paragraph (d) – Neither party currently has a legal obligation to support any other person. In addition, neither party seems to have any exceptional commitments in respect of personal support. The wife’s financial statement[84] indicates a surplus of expenditure over income of around $650.00 per week. Accordingly, I accept that the period following her resignation from Parry's has been one of financial austerity for her.
[84] Filed 2 July 2012
According to the husband’s financial statement,[85] he has a surplus of income over expenditure of around $2,900.00. He calculates his recurrent expenditure at $4,902.00 per week, the major component of this being tax of $3,130.00 and his rent of $365.00. His income is indicated to take the form of $5000.00 per from Parry's and $2,832.00 for his sickness and accident policy.
[85] Filed 16 July 2012
As has been discussed, at some length, the husband’s current financial position has enabled him to collect items of worth. These matters confirm my assessment that the husband is currently financially secure.
Paragraph (e) – This is not a relevant consideration in the present case.
Paragraph (f) – The parties each have an accumulated interest in their self managed superannuation fund, organised under the auspices of the Parry Group. Neither party seeks that any split be made in the fund other than the current level of entitlements of the other spouse be rolled out into an alternate fund. This will leave the husband with an advantage in an amount of around $20,000.00.
In the greater scheme of things, this is not a significant amount. Given their respective ages, neither party can be described as in an advanced state of preparedness for retirement. However the husband is in marginally the better position.
Paragraph (g) – One inevitable consequence of the end of the majority of marriages, is a drop in the standard of living of one or sometimes both the parties concerned. It is trite, but true nonetheless, that two households cannot usually live as comfortably as one. What is important, in respect of this paragraph, is that any drop in living standards should not be borne disproportionately by one party.
During the parties’ marriage they each acknowledge that, although they both worked hard, they enjoyed a comfortable standard of living. This standard of living was financed by drawings from the Parry Group. The husband is likely to be able to continue to enjoy such a standard of living in the future, as his level of discretionary spending in respect of collectible items demonstrates. The wife will not be able to enjoy a similar standard of living.
The wife accepts that she cannot retain the former matrimonial home and so it must be placed on the market. Since the end of her financial relationship, with the Parry Group, she has been a PAYG taxpayer in receipt of a modest wage. She has struggled financially, notwithstanding the award of spousal maintenance in her favour and the payment of outgoings in respect of the Property C property.
In my estimation, her financial vicissitudes will become more severe with the sale of the Property C property. She will have to deal with the pressures – both emotional and financial – of having to find new accommodation for herself. Because of her modest income, age and uncertain level of capital, it may be difficult for her to re-establish herself in the housing market.
The husband is currently living in rented accommodation. He will have access to the financial resources of the Parry Group. His income is likely to remain superior to that of the wife for the indefinite future. His circumstances enable him to have a greater degree of financial resilience. In my view, the matters which fall for consideration under this heading favour the wife.
Paragraphs (h), (ha), (j), (k), (l), (m), (n), (naa), (na), (p) & (q) – These paragraphs are not relevant to the present case.
Paragraph (o) – I have found that the husband engaged in a course of deliberate non disclosure in respect of the sum of approximately $100,000.00 arising from his purchase of valuable stamps and ceramic ware in the period post separation.
Given the uncertain level of capital, which will be released by virtue of the sale of the various pieces of real property concerned, and which remains the only significant form of asset to be divided between the parties, the sum in question can only be regarded as of major importance.
It is likely that the sum raised by the sales in question, after payment of the financiers concerned, will not be massively disproportionate to the amount allocated by the husband to the purchase of the stamps and ceramic ware. Accordingly considerations of justice and equity require that the purchase of the collectibles be taken into account in some way.
As a result of his conduct, the husband has in his exclusive control assets to the value of approximately $100,000.00. The intent of the purchases was to benefit himself alone, particularly so far as his capacity to fund his future retirement is concerned.
In addition, the husband has been able to fund his legal fees from income generated by the Parry Group. The wife had a similar facility, at an earlier stage, but to a much more limited degree. More recently, she has been compelled to utilise her inheritance of around $50,000.00 to fund her legal expenses.
In my view, the significantly more advantageous position the husband has been in, vis-à-vis the payment of his legal fees, is again a matter which considerations of justice and equity require be taken into account.
The wife’s son X lived with the parties for a period of ten years or so. His father paid child support for him but undoubtedly he was regarded as an integral part of the parties’ household and was supported as such. If any accurate tabulation had been made of what his living expenses were, its seems improbable that they would have been met by child support payments, particularly given that the parties themselves enjoyed a comfortable lifestyle and no doubt X did too.
X joined the workforce in 2004 but only on a part-time basis. He remained a drain, too some degree, on the parties’ financial resources thereafter. No doubt he was free to utilise what was in the refrigerator, when he was hungry and have the use of household appliances and the like without any demur from either his mother or Mr Parry.
Y and Z also visited from time to time and were welcome to do so by both parties. In the jargon of the times, there was some blending of their respective families. Ms Haggerty provided some care for the husband’s children, as he did for her son. Y and Z’s school fees and child support payments were funded from the resources generated by the Parry Group, in which the wife had an interest. She was not in any position to object to these payments, either morally or legally. No doubt she was content that Y and Z were properly supported financially.
In my view, ordinary notions of equity do not require the somewhat inchoate amounts allocated in respect of X on the one hand and Y and Z on the other hand to be given a significant degree of weight in these proceedings. However what consideration is accorded will favour the husband more than the wife, given the extent of time X lived in the parties’ household.
Conclusions in respect of section 75(2) factors
After considering the various factors arising under section 75(2) I have come to the conclusion that an adjustment in favour of the wife is warranted. The more difficult task is to assess what that adjustment should be, in percentage terms, given the uncertainty of what concrete sum will be available to be divided between the parties once the various real properties have been sold.
Factors arising under section 75(2) are crucial to the wife’s case, particularly given that I have determined that matters relating to contribution significantly favour the husband. Given that in many cases, issues relating to contribution are relatively easily determined, the Full Court has commented that the centre of gravity, in the determination of property cases, has shifted towards the assessment of section 75(2) factors and, as such, courts such as this one, have been directed to give the provisions concerned “real rather than token weight”.[86]
[86] See Waters & Jurek (1995) FLC 92-635 at 82,376
The wife is a person in her mid fifties with no formal qualifications. She faces an uncertain financial future, after a marriage of around twelve years in duration. The end of the marriage has led to a significant diminution in her standard of living. She is back in the workforce but will only command a modest salary for the remainder of her career.
The husband is a professional person, who is the sole proprietor of an established (omitted) practice. The practice employs a number of other (omitted) and has provided the parties with a comfortable standard of living for many years, albeit that it is probable that they lived beyond their means to some extent. The husband will continue to access the benefits of the practice. Although he does not currently enjoy robust health, he remains financially secure.
Fundamentally, the husband sought to derive an advantage, over the wife, arising from his control of the practice. As a result of his clandestine efforts, he has acquired additional assets, which are analogous to a quasi superannuation fund, to a value of approximately $100,000.00. When compared to the likely net value of the parties’ assets, when realised through the sale which the parties regard as inevitable, it is a significant sum.
In my assessment, these various factors lead to a situation whereby a further allowance of eighteen percent should be made in the wife’s favour in respect of the division of property.
Section 79(4) (f) & (g)
These provisions are not relevant to the court’s determination in this matter.
Conclusion and Form of Orders
Overall, I have determined that the parties’ rights in relevant property should be divided equally. This specifically excludes the husband’s collectible items, but in reaching the percentage calculations, allowance has been made on the basis that the husband will retain these items, which were acquired by him after the parties separated and without prior reference to the wife.
In the context of this case, it is highly artificial to speak in percentage terms, given that it is problematic to ascribe a concrete figure to the actual asset pool available to be divided between the parties. The only mechanism to unlock value from the various entities which comprise the Parry Group is by selling the real properties owned by them, as well as the former matrimonial home.
What sum will be actually released by this exercise is unknown to me, given the uncertainty surrounding the parties’ level of indebtedness to the (omitted) Bank. However, in my view, notwithstanding this uncertainty, it is only viable mechanism for the court to apply. The various properties must be liquidated, so as to crystallise the parties’ level of indebtedness and then a percentage division applied to the net proceeds.
For the reasons provided at some length in these reasons for judgement, I have specifically rejected the process of notionally adding back assets into a pool, to which is applied a complicated arithmetical formula.
In addition, in assessing the ultimate percentage divisions of property, to be made in favour of each of the parties, I have taken into account the various collectibles in the husband’s possession, which have not been formally valued and the wife’s inheritance, which has been liquidated, as financial resources.
For the reasons provided, in my view, it would not be equitable to include these items in the pool of matrimonial property but considerations of probity dictate that they are taken into account in some way.
In my assessment of the evidence, it seem more probable than not that the husband will continue to practice as a (omitted) in some capacity or another. After all, it is stated preference to retain the Property A business premises, if at all possible, although he has not provided any viable mechanism through which this end might be achieved.
The husband will retain the business structure of the Parry Group to enable him to retain the business. In my view, this is an asset of significant value to him. How he will continue to operate the practice in future is a matter for him.
It is regrettable, in my view, that no compromise could be reached between the parties to enable the transfer of the business premises to the husband to enable the seamless continuation of the (omitted) practice. This sad state of affairs is, in my view, a reflection of the tactics the parties brought to these bitterly contested proceedings.
I do not know how readily the various real properties, which will be affected by the court’s order, will sell. In respect of the parties’ interest in the Property A industrial property, the interest concerned is a minority one. However, in my view, in order to achieve an equitable outcome, it is necessary for the court to specify the order in which the properties are to be sold. Given the uncertain level of the charge held by the (omitted) Bank on the Property C property, this property should be the last one to be liquidated.
Pending the sale of the Property C property, it will be necessary to continue the consent order of 22 September 2011, which requires the husband to pay the necessary outgoings, including the mortgage payments, in respect of it.
The parties currently each have assets of significant value in their respective possession. In the husband’s case, in the form of his Mercedes motor vehicle ($53,700), (omitted) motor vehicle ($45,000); wine collection ($19,537) and other effects, excluding his collectibles ($28,434); these items are valued at $146,671.00.
In the wife’s case, in the form of her Mercedes motor vehicle ($19,000); her furniture ($7,845) and jewellery ($4,000); these items are valued at $30,845.00. In total the parties’ non real assets are valued at $177,516. This sum is subject to the written down value of the two motor vehicles ($41,139) leaving a notional sum of $136,377, which needs to be apportioned equally between the parties to give effect to this order.
Given the disparity of asset holdings currently in the husband’s favour, on my calculations, it requires a further distribution being made in the wife’s favour in a sum of $37,343.50 to bring about an equal division. The appropriate time for this distribution is when the parties’ real property interests have been liquidated.
One of the few issues on which the parties agree is that each of them is to retain their respective holdings of superannuation without alteration. To my mind, it makes more sense if the wife’s current level of entitlements are rolled out of the Parry's superannuation fund, to a fund of her choosing, rather than vice versa.
After what I hope has been a careful consideration of the various matters arising under section 79 of the Family Law Act, I have come to the view that the orders I propose represent a just and equitable outcome for each of the parties concerned.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding four hundred and thirty-six (436) paragraphs are a true copy of the reasons for judgment of Judge Brown
Date: 27 June 2013
Key Legal Topics
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Family Law
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Equity & Trusts
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Tax Law
Legal Concepts
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Injunction
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Fiduciary Duty
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