Halstron & Halstron

Case [2021] FamCA 437

FAMILY COURT OF AUSTRALIA

Halstron & Halstron [2021] FamCA 437

File number(s): SYC 2788 of 2016
Judgment of: MCEVOY J
Date of judgment: 24 June 2021
Catchwords: FAMILY LAW – PROPERTY SETTLEMENT– where it is just and equitable for property interests to be adjusted –parties in dispute in relation to addbacks, certain assets and the quantum of certain liabilities in the asset pool – where husband asserts a loan owing to his brother – loan to be included on the joint balance sheet – application to lead further evidence in relation to former matrimonial home and fall in the value of shares by reason of COVID-19 – where husband established the parties’ superannuation fund and made all financial contributions to the parties’ respective member entitlements in the fund, and where the parties since separation have separately acquired, conserved and/or improved their own self-managed funds – where wife seeks payment to her of a sum certain from the non-superannuation pool and husband seeks that the wife receive her proportionate share by distribution or transfer in specie – where wife to receive a proportion of the shares in specie – where parties disagree as to when their relationship constituted a de facto relationship – discussion of s4AA of the Family Law Act 1975 (Cth) – where husband made significant initial financial contributions and during the marriage – where parties found to have a made greater parenting contributions at different periods in time – small s 75(2) adjustment in the wife’s favour – multiple considerations taken into account pursuant to s 75(2)(o) –final total property division of 65 per cent in favour of the husband found to be just and equitable
Legislation:

Family Law Act 1975 (Cth) ss 4AA, s 75, s 79

Limitation Act 1969 (NSW)

Family Law Rules 2004 rr 13.01(2) and 13.04(g)

Cases cited:

Bevan & Bevan (2013) 279 FLR 1

Biltoft v Biltoft (1995) 92-615

Bonnici v Bonnici (1992) FLC 92-272

Border & Border (No.3) [2008] FamCA 830

Bulleen v Bulleen [2010] FamCA 187

Calvin & McTier [2017] FamCAFC 125

Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588

Davey v Lee (1990) 13 Fam LR 688

EB v CT (No.2) [2008] QSC 306

Ferraro & Ferraro (1993) FLC 92-335

Fields & Smith (2015) FLC 93-638

Gabel & Yardley (2008) FLC 93-386

Garrett v Garrett (1984) FLC 91,539

Gould v Gould (2007) FLC 93-333

Gelley & Gelley (1992) FLC 92-290

Holland & Holland [2017] FamCAFC 166

Hurst & Hurst [2018] FamCAFC 146

In the Marriage of Black and Kellner (1992) FLC 92-287

In the Marriage of Mitchell (1995) 120 FLR 292

In the Marriage of Nutting [1978] FLC 77,094 at 77,094

In the Marriage of Weir and Weir (1993) FLC 92-338

Jarrott & Jarrott (No. 2) [2012] FamCAFC 72

Jabour & Jabour (2019) FLC 93-898

Jonah & White (2012) FLC 93-522

Kouper & Kouper (No 3) [2009] FamCA 1080

Kowaliw v Kowaliw (1981) FLC 91-092, 76,644;

Lynam v Director-General of Social Security (1983) 52 ALR 128

Mallet v Mallet

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AGLC
Halstron & Halstron [2021] FamCA 437
Case
[2021] FamCA 437
Decision Date

CaseChat Overview and Summary

This case concerned a property settlement dispute between Ms Halstron (the applicant wife) and Mr Halstron (the respondent husband) before McEvoy J of the Family Court of Australia. The parties disagreed on various aspects of the asset pool, including the treatment of alleged loans, the valuation of certain assets such as shares, and the quantum of liabilities. The wife sought a specific sum from the non-superannuation pool, while the husband proposed that she receive her proportionate share through distributions or in specie transfers. A key point of contention was the commencement date of the parties' de facto relationship, although the court noted this distinction was not ultimately critical to the final determination.

The court was required to determine the just and equitable division of the parties' property interests. This involved resolving disputes regarding the inclusion of a loan to the husband's brother in the asset pool, considering applications to lead further evidence concerning the former matrimonial home and the fall in share values due to COVID-19, and assessing the contributions of each party to the relationship, including financial contributions by the husband and parenting contributions by both parties at different times. The court also had to consider adjustments under section 75(2) of the *Family Law Act 1975* (Cth), particularly in light of the duration of the marriage and the wife's period out of the workforce affecting her earning capacity.

McEvoy J reasoned that a final property division of 65% in favour of the husband and 35% in favour of the wife was just and equitable, taking into account all relevant considerations under section 75(2) of the *Family Law Act 1975* (Cth). The court acknowledged the husband's significant initial financial contributions and the parties' differing parenting contributions over time. A small adjustment of 2.5% was made in the wife's favour, primarily due to the duration of the marriage and its likely impact on her earning capacity, as well as other section 75(2)(o) factors that favoured the husband. The court also ordered the wife to receive a proportion of the shares in specie.

The court ordered a property division of 65% to the husband and 35% to the wife. This included specific orders for the payment of sums of money, the transfer of shares in specie, the sale and distribution of US properties, and the division of superannuation entitlements. The husband was to retain certain assets, including the former matrimonial home and the parties' respective trusts, while the wife was to retain other assets and funds. The husband was also ordered to indemnify the wife against various liabilities, including loans to his brother.

Orders

Orders of the court

SYC 2788 of 2016

BETWEEN:

MS HALSTRON

Applicant

AND:

MR HALSTRON

Respondent

ORDER MADE BY:

MCEVOY J

DATE OF ORDER:

24 JUNE 2021

THE COURT ORDERS THAT:

(1) Definitions

For the purposes of these orders:

"the F Trust" means the F Investments Pty Ltd ATF the Halstron Family Trust.

“the Trust” means Halstron Investments Pty Ltd ATF the G Investment Trust.

“the Trusts” mean both the Halstron Family Trust and the G Investment Trust.

"the Suburb J property" means the property situated at H Street, Suburb J in the State of New South Wales registered in the Husband's sole name.

“the US Properties” means the properties situate at K Street, City K in the L State, USA; M Street, Suburb N in the L State, USA; O Street, Suburb P L State, USA; Q Street, City R L State, USA and S Street, City T L State USA.

"The Mr Halstron Superannuation Fund" means the Mr Halstron Superannuation Fund No.2 of which U Pty Ltd is the Trustee, the Husband being the sole director of the Trustee and the only member of the fund.

"The Ms Halstron Superannuation Fund" means the Ms Halstron Superannuation Fund of which V Pty Ltd is the Trustee, the Wife being the sole director of the Trustee and the only member of the fund.

POOL A – Division of personal Assets Excluding Listed Shares held in the parties’ personal names

(2) Within 60 days the husband pay or cause to be paid to the wife the sum of $561,972, so that the wife retains 35% of the net assets in Pool A.

(3) Within 28 days, the husband make available for collection by the wife from the Suburb J Property the wife’s Grandmother’s silverware and crystal items and trio crockery sets (located in the dining room cupboard).

(4) The husband retain the following assets for his own use and benefit absolutely, to the exclusion of the wife:

(a) the Suburb J property;

(b) his motor vehicle 1;

(c) his motor vehicle 2;

(d) funds standing to his credit in any bank account in his personal name;

(e) the Mr Halstron Superannuation Fund, subject to the adjustment in orders 18 and 19 below;

(f) the Trust; and

(g) the F Trust.

(5) The wife retain the following assets for her own use and benefit absolutely, to the exclusion of the husband:

(a) the payment of $275,000 made to her pursuant to the orders of 6 June 2016, with the uncharacterised sum of $75,000 to also be categorised as a part property settlement;

(b) the funds withdrawn by the wife from the parties' joint Canadian W Bank account in the sum of $80,000;

(c) the proceeds of sale of X Street, Town Y in the State of New South Wales in the agreed sum of $850,000;

(d) the proceeds of sale of Z Street, Suburb AA, BB Province Canada in the sum of $221,000;

(e) her CBA CommSec share portfolio;

(f) her jewellery;

(g) her motor vehicle 3;

(h) the loan owning from CC Pty Ltd;

(i) funds standing to her credit in any bank account, including any travel cards in her name; and

(j) her interest in the Ms Halstron Superannuation Fund.

(6) The husband be liable for and indemnify the wife and keep the wife indemnified against all payments and liabilities in his sole name, including but not limited to the Viridian Line of Credit (account ending #...67), Viridian Line of Credit (account ending #...75), Westpac overdraft, CBA overdraft, Mastercard credit card (ending #..87), Mastercard credit card (ending #..38), all and any loans owing to his brother, Mr A Halstron, and any outstanding accountancy fees and legal fees.

(7) The wife be liable for and indemnify the husband and keep the husband indemnified against all payments and liabilities in her sole name, including but not limited to any credit cards in her name, the loan owing to CC Pty Ltd and legal fees.

POOL B – Division of publicly listed shares held in the parties’ personal names

(8) Within 30 days the husband and the wife do all acts and things and sign all documents necessary to transfer or cause to be transferred to the wife 35% of all publicly listed shares held in the husband's name as at the date of trial AND FOR CLARITY IT IS NOTED that the intent of this order is that the wife is to receive 35% of each separate shareholding of the husband, such that if the husband holds shares (for example) in companies A, B and C, the wife shall receive:

(a) 35% of the company A shares;

(b) 35% of the company B shares;

(c) 35% of the company C shares -

AND in the event that the shares in any given company have different cost-bases, the wife receive 35% of each tranche of shares in that company held by the husband at each separate cost base.

POOL C – Alteration of the parties’ interests in the Trust and the F Trust

US Properties

(9) Within 7 days of these orders the husband and the wife sign all documents and do all acts and things required to list the US Properties for sale on such terms as may be agreed in writing and failing agreement as follows:

(a) the property manager for the US Properties be appointed as the selling agent (“the Selling Agent”);

(b) the reserve price for the sale of each of the US Properties be the values ascribed in the valuations obtained by the parties as part of these proceedings;

(c) the mode and other terms of sale be as recommended by the Selling Agent.

(10) Upon settlement of the sale of each of the US Properties, the parties do all acts and sign all documents necessary to distribute the proceeds of sale in the following manner and priority:

(a) first, to pay all costs and commissions of the sale;

(b) secondly, to pay all outstanding council and water rates in respect of the property sold;

(c) thirdly, to pay or make provision for payment of any taxation imposed upon or arising from the sales of the US Properties, together with the accounting and winding-up costs of the company Halstron US Inc pursuant to order 11 below, in the following manner:

(i) the parties obtain an estimate of all taxation payable (if any), accounting and winding-up costs for Halstron US Inc from the Trust’s accountant, Mr PP of PP Accountants; and

(ii) the parties set aside a portion of the proceeds of sale(s) sufficient to meet the estimated costs in 10(c)(i) in an interest bearing account in the name of the Trust, with those funds to be used to meet such taxation and accounting and winding-up costs as and when same fall due and any remaining balance be divided in the proportions of 65% to the Husband and 35% to the Wife;

(d) fourthly, to repay any costs incurred in preparing the property for sale, including the cost of the valuation of the property for the purpose of these proceedings;

(e) finally, the remaining balance be distributed in the proportions of 35% to the wife and 65% to the husband.

(11) No later than 21 days after the settlement of the sale of the last of the US Properties, the parties do all such acts and things and sign all documents necessary to wind up Halstron US Inc, with the costs of the winding up to be paid from the funds set aside pursuant to paragraph 10(c)(ii) above.

Cash and Shares of the Trusts

(12) Within 30 days the husband and the wife in their capacities as directors of the Trust do all acts and things and sign all documents necessary to transfer or cause to be transferred to the wife by way of capital distribution, 35% of all publicly listed shares held by the Trust as at the date of trial; AND FOR CLARITY IT IS NOTED that the intent of this order is that the wife is to receive 35% of each separate shareholding of the Trust, such that if the Trust holds shares (for example) in companies A, B and C the wife shall receive:

(a) 35% of the company A shares;

(b) 35% of the company B shares;

(c) 35% of the company C shares -

AND in the event that the shares in any given company have different cost-bases, the wife receive 35% of each tranche of shares in that company held by the Trust at each separate cost base.

(13) Within 30 days of these orders the husband and the wife in their capacities as directors of the Trust do all acts and things and sign all documents necessary to pay or cause to be paid to the wife the sum of $42,082.

(14) Within 7 days of the parties’ compliance with orders 9, 10, 11, 12 and 13 (whichever occurs last), the husband and the wife do all things necessary and sign all such documents, at the husband's expense:

(a) for the wife to be forthwith released from any and all director’s and/or personal guarantees given to any financial institution in favour of the husband, the Trust and the F Trust;

(b) for the wife to resign any and all offices she holds in the Trust and the F Trust and relinquish any and all right and title in the Trust and the F Trust and assign to the husband any interest, shareholding and any other entitlement she may have in the Trust and the F Trust inclusive of but not limited to transferring to the husband any and all shareholdings and assigning to the husband all credit and debit loan accounts;

(c) for the husband to be liable for and pay and indemnify the wife and keep her indemnified against any and all unpaid liability howsoever arising from the date of these orders by reason of any office-holding, position and/or distributions and/or beneficial entitlement (if any) that she may have or previously have had in the aforesaid entities, including but not limited to taxation and all interest, penalties, fines and charges assessed or hereinafter assessed against the aforesaid entities (or any one of them) and/or her personally and from all proceedings, costs, claims and demands howsoever arising from or in respect thereof, save as otherwise provided in these orders; and

(d) for the husband to release or procure the release of the wife and pay and indemnify the wife and keep her indemnified from any and all liabilities (loans, guarantees, mortgages) of or secured against the assets of the Trust and the F Trust, save as provided for in order 15.

(15) In the event that there are any unforeseen taxation or accounting liabilities incurred by the Trust arising from the implementation of these orders, such liability be paid as to 65% by the husband and 35% by the wife.

Pool D – Superannuation

(16) The husband in his personal capacity and in his capacity as director of the Trustee of the Mr Halstron Superannuation Fund hereby acknowledges procedural fairness in respect of the superannuation split contained in these orders.

(17) Paragraphs 18 to 20 have effect from the operative time.

(18) The operative time for the purpose of paragraph 19 is 30 days from the date of these orders (“the Date”).

(19) In accordance with section 90XT(1)(a) of the Family Law Act 1975 (Cth) on the Date:

(a) whenever a splittable payment becomes payable to the wife from the Mr Halstron Superannuation Fund, the wife is entitled to be paid the amount of Y, where Y is calculated as follows:

(i) Y is 35% of X, less Z;

(A) X is the total combined value of the Mr Halstron Superannuation Fund and the Ms Halstron Superannuation Fund as at the Date including but not limited to:

(B) the value of the shares in the Ms Halstron Superannuation Fund as at the Date;

(C) cash in the Ms Halstron Superannuation Fund as at the Date;

(D) other assets of the Ms Halstron Superannuation Fund including loans owed to the fund, managed investments and derivate investments;

(E) the value of the shares in the Mr Halstron Superannuation Fund as at the Date;

(F) cash in the Mr Halstron Superannuation Fund as at the Date plus an additional $200,000;

(ii) Z is the total value of the Ms Halstron Superannuation Fund as at the Date which includes:

(A) the value of the shares in the Ms Halstron Superannuation Fund as at the Date;

(B) cash in the Ms Halstron Superannuation Fund as at the Date –

(C) all other assets of the Ms Halstron Superannuation Fund, including but not limited to loans owed to the fund, managed investments and derivative investments -

and there is a corresponding reduction in the entitlement that the husband would have in the Mr Halstron Superannuation Fund; and

(b) the husband in his capacity as director of the Trustee of the Mr Halstron Superannuation Fund, do all acts and things necessary and sign all documents required to roll over the superannuation split in order 19(a) to the Ms Halstron Superannuation Fund.

(20) For the purposes of order 19, the rollover of the wife’s superannuation split to the Ms Halstron Superannuation Fund is to be effected by way of cash transfer, with:

(a) the husband to be at liberty to sell such shares as required to give effect to the cash transfer; and

(b) the amount of the cash transfer to be reduced by 35 per cent of the realisation costs reasonably arising from the sale(s) in the preceding sub-paragraph.

(21) Pending compliance with order 19 above and save as provided for in order 20, the husband and the wife be and are hereby restrained from transferring, disposing of or dealing with the assets of their respective self-managed superannuation funds or otherwise reducing the value of their self-managed superannuation funds without the prior written consent of the party.

Other Orders

(22) Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:

(a) monies standing to the credit of the parties in any bank account are to become the property of the party in whose name the account is registered;

(b) monies standing to the credit of the parties in any joint bank accounts are to become the property of the husband;

(c) each party retain for their sole use and benefit any superannuation benefits accrued in their sole name;

(d) insurance policies remain the sole property of the owner named therein;

(e) each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and

(f) each party be solely responsible for any liability of whatsoever nature and kind in their respective names, including but not limited to any credit card liability.

(23) Save as otherwise provided in these orders, all previous orders of this Honourable Court be and are hereby discharged, including but not limited to all and any injunction issued against the husband in respect to the Trust on 12 June 2018.

(24) Liberty to apply be reserved to the parties in relation to the implementation of these orders and the outstanding issue concerning the shares which are not publicly listed to which the wife claims an entitlement.

(25) All extant applications are otherwise dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

Background

Background to the litigation

However before embarking on the odyssey which the parties’ disagreements present, it must be observed that this is a matter which should have been compromised long ago. The parties have no doubt paid a high price for their inability to do so. BACKGROUND The wife was born in 1964 and is 56 years old. She currently works part-time in client service.[1] The wife admits to commencing a relationship with another person in about March 2017 after separation, but she denies that she is cohabiting with him or that they share finances. Her position is that the relationship is “somewhat casual”.[2] The husband says that the true extent of the wife’s relationship is unknown and suggests that the wife’s attempts to minimise the relationship during cross-examination leave open the inference that she is not being truthful about her relationship and that she could in fact be cohabiting with this person.[3] It will be necessary to return to this issue. [1] Wife’s Financial Statement, sworn 3 February 2020 at Part C (“Wife’s Financial Statement”).[2] Affidavit of Ms Halstron, filed 17 May 2019, paragraphs 170-172 and 212 (“Wife’s trial affidavit”); Transcript 18 February 2020, p.196-198; Wife’s closing submissions, received on 19 May 2020, paragraphs 138.30-138.31 (“Wife’s closing submissions”). [3] Husband’s closing submissions, filed 6 April 2020, paragraphs 137-141 (“Husband’s closing submissions”). The husband was born in 1956 and is 64 years old. He earns an income as a company director and from share trading.[4] The husband provides no evidence of having re-partnered. [4] Husband’s Financial Statement, filed 5 February 2020 at Part D (“Husband’s Financial Statement”). There is some dispute as to when the relationship commenced, with the wife suggesting that the parties commenced a de-facto relationship in mid-1993 shortly after she and her son from a previous marriage moved into the husband’s home in March 1993.[5] The husband, by contrast, submits that the parties’ de-facto relationship only commenced after the wife and her son relocated to join him in City HH in April 1994.[6] It will be necessary to return to this issue also, however it may be noted from the outset that ultimately I am not convinced that much turns on whether the relationship is found to have commenced in mid-1993 or in early 1994. [5] Wife’s closing submissions, paragraph 122. [6] Husband’s closing submissions, paragraph 30. The parties married on 18 October 1994, and they separated on a final basis on 22 April 2016 when the wife left the former matrimonial home.[7] As such, even if it is accepted that the parties commenced their relationship in April 1994, it is clear that there has been a relationship of significant duration, spanning at least 22 years. [7] Affidavit of Mr Halstron, sworn 17 May 2019, paragraphs 22 and 39 (“Husband’s trial affidavit”); Husband’s closing submissions, paragraph 44; Wife’s trial affidavit, paragraphs 15 and 89.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Taking all of the s 75(2) considerations into account, despite conduct for which the wife can fairly be criticised and the fact that some matters tilt more in favour of the husband than the wife, in my assessment it would be just and equitable to make a small adjustment of 2.5 per cent to the wife, particularly having regard to s 75(2)(k) of the Act and the fact that the duration of the marriage and her period out of the workforce likely affected the wife’s earning capacity. I observe that were it not for the s 75(2)(o) factors which so favour the husband that are the subject of analysis above, a higher adjustment in favour of the wife may have been appropriate. FINAL CONSIDERATIONS The parties’ asset pool, inclusive of superannuation, is at least $16,157,790. This is a substantial figure. As has been mentioned, it is the husband’s position that were there to be any adjustment pursuant to ss 79(4)(e) and 75(2) of the Act, it should be in his favour given his age, his limited future employment prospects, the fact that he has the sole care of and responsibility for the two younger children of the marriage, his care of the wife’s son from her earlier relationship, and by reason of the wife’s conduct in these proceedings.[364] He has maintained that in all the circumstances a division of the parties’ net non-superannuation assets, as well as their superannuation entitlements, on a 70/30 per cent basis in his favour, would be appropriate and just and equitable. This division is based on a 70/30 per cent assessment on contributions. However, it has also been the husband’s position that if, contrary to these submissions, the Court were to assess the wife’s contributions as being greater than 30 per cent, there should be a s 75(2) adjustment in favour of him so that the ultimate result is one of 70/30 per cent in his favour. [364] Husband’s closing submissions, paragraph 167. The wife has maintained that an imbalance in the assessment of the parties’ contributions as to not more than 60 per cent in favour of the husband and not less than 40 per cent in favour of her would give proper and appropriate recognition to the contributions made by the husband over and above those made by her.[365] The wife assesses such a division, on the basis of her balance sheet, as producing a disparity between the parties of $2,944,912.[366] However on the basis of a net asset pool of at least $16,157,790, the disparity would be at least $3,231,558. The wife submits that an assessment of contributions as to 70 per cent in favour of the husband and 30 per cent in favour of her amounts to a disparity on her asserted balance sheet of $5,889,824 (on the basis of a net asset pool of $16,157,790, the disparity would be $6,463,116), which she says would be “grossly outside” the ambit of the Court’s discretion in all the circumstances.[367] The husband submits that in the face of his significantly greater contributions, including his initial contributions and the distributions and inheritances from his parents, it would be manifestly inadequate for him to receive only 20 per cent more than her by way of contribution-based entitlement.[368] [365] Wife’s closing submissions, paragraphs 133.[366] Wife’s closing submissions, paragraphs 134.[367] Wife’s closing submissions, paragraphs 135.[368] Husband’s reply submissions, paragraph 71.