Harle & Harle
[2008] FamCA 825
•19 September 2008
FAMILY COURT OF AUSTRALIA
| HARLE & HARLE | [2008] FamCA 825 |
| FAMILY LAW – PROPERTY SETTLEMENT – VALUE OF PROPERTY – EXPERT EVIDENCE – not established that retrospective valuation of land was inaccurate, despite the nature of the investment and the substantial increase in value after investment FAMILY LAW – PROPERTY SETTLEMENT – VALUE OF BUSINESS – Outcome of husband’s development projects so uncertain that evidence not able to support a finding that the activities represent either a probable asset or a probable liability FAMILY LAW – PROPERTY SETTLEMENT – CONTRIBUTIONS – Contributions assessed by reference to the pre separation and post separation periods - Husband found to have made greater initial capital contributions - Not established that husband failed to exercise reasonable skill and diligence in the management of the parties’ investment assets in the post separation period - Not established that the husband’s post separation account of funds was unsatisfactory - Capital contribution warranted minimal adjustment in favour of wife for contributions during the post separation period, in view of the disparity of financial resources, the husband’s enjoyment of the matrimonial property, and the wife’s primary care for the child of the marriage - Overall contribution based entitlements found to favour the husband by 60 per cent to the wife’s 40 per cent FAMILY LAW – PROPERTY SETTLEMENT – SECTION 75(2) MATTERS – 10% adjustment in favour of the wife in view of the husband’s significantly greater earning capacity and wife’s greater responsibility to care for and accommodate the parties’ young child - No adjustment for contingent outcome of husband’s development projects, as evidence falls short of providing a basis for a s 75(2) adjustment |
| Family Law Act 1975 (Cth) s 75(2) Pierce v Pierce (1999) FLC 92-844 |
| APPLICANT: | Ms Harle |
| RESPONDENT: | Mr Harle |
| FILE NUMBER: | PAC | 3329 | of | 2007 |
| DATE DELIVERED: | 19 September 2008 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Coleman J |
| HEARING DATE: | 26 August 2008 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Mark Twigg |
| SOLICITOR FOR THE APPLICANT: | Adrian Twigg & Co |
| COUNSEL FOR THE RESPONDENT: | Mr Andrew Givney |
| SOLICITOR FOR THE RESPONDENT: | Doolan Wagner & Callaghan |
Orders
That the wife be declared sole and beneficial owner of:
(a) Proceeds of sale released to her $138 223.
(b) Furniture and effects in her possession
(c) Jewellery in her possession.
(d) The wife’s legal fees paid.
(e) The wife’s superannuation interest in Harle Superannuation.
(f) The wife’s ANZ term deposit.
(g) The wife’s Holden Astra motor vehicle.
(h) The wife’s ANZ account.
That the wife shall indemnify the husband in respect of her debt to her grandmother in the sum of $4 000.
That the wife indemnify the husband with respect to a debt to Professor D in the sum of $3 167.
That the husband shall within 90 days of the date of these orders pay to the wife the sum of $161 332.50.
That upon the husband paying to the wife the said sum of $161 332.50 the wife do all acts and things and execute all documents necessary to transfer to the husband the whole of her right title and interest in the property at R.
That in the event the husband fails to pay such sum then the husband shall do all acts and things necessary to sell the property at S and/or the property at R, at his election.
That upon the sale of S property the husband cause to be paid to the wife 48.16% of the gross proceeds of sale, or, if the R property be sold 79.34% of the gross proceeds of sale of the said property after payment out of agents commission and legal expenses of sale and be entitled to retain the balance of the proceeds of sale of the said property.
That the husband shall indemnify and keep indemnified the wife in respect to the following liabilities:
(a) Loan to IMB
(b) The husband’s parents in the sum of $100,000.00.
That save to the extent referred to in these orders the parties retain absolutely and beneficially all other property possessed by either of them.
That costs be reserved.
IT IS NOTED that publication of this judgment under the pseudonym Harle & Harle is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC3329 OF 2007
| MS HARLE |
Applicant
And
| MR HARLE |
Respondent
REASONS FOR JUDGMENT
The proceedings before the Court relate to settlement of property.
The proceedings were commenced by the filing of an Application for Final Orders by the wife on 1 December 2005. That application was amended on 28 July 2008.
The husband filed a Response to the wife’s Application for Final Orders on 14 February 2006.
On 14 February 2006 the parties entered into Consent Orders with respect to the parties’ child. These orders provide that the child lives with the wife and spends time with the father on each alternate weekend and other block periods.
The proceedings were heard before Waddy J on 10, 11 and 12 July 2007, with written submissions invited and judgment reserved.
On 28 April 2008 a Certificate was issued with respect to the incomplete proceedings before Waddy J pursuant to the Federal Proceedings (Costs) Act 1981 and a new trial ordered. Both the husband and wife have since filed updating Financial Statements and affidavits, and the wife additionally filed an Amended Application for Final Orders.
The wife, in her Amended Application for Final Orders filed 28 July 2008, sought the following orders:
1. That the Husband by way of further property settlement pay to the Wife the sum of $486,261 within 2 months of the date of these orders.
2. That upon the Husbands paying the sums in (1) and (2) to the Wife, the Wife transfer to the Husband all of her right title and interest in the property situate at and known as [R property], Queensland, subject to any existing encumbrance thereon.
3. That the Husband indemnify the Wife and save her harmless in relation to any mortgages, claims suits or demands in relation to the said [R] property, including, without limiting the generality thereof, any claims by [the Husband’s parents].
4. That in the event the Husband fails to pay the sum due in order 2 hereof on or before the due date:
4.1Interest run on any outstanding balance in accordance with the rate prescribed in the Rules to the Family Law Act; and
4.2 The husband do all acts and things necessary to sell the properties respectively situate at and known as [S property], Queensland and [R property], Queensland, and cause the proceeds of sale of the parties’ share, to be distributed as follows:
4.2.1In payment out of agents’ fees, legal fees on the sale, and other proper selling charges;
4.2.2In payment out of any mortgages secured on the properties;
4.2.3In payment of any balance then remaining to the Wife so as to satisfy Order 2 hereof, including interest;
4.2.4In payment of any balance then remaining to the Husband or as he directs.
4.3That the sales in Order 5(b) take place in the following manner:
4.3.1Each party take all necessary steps and execute all necessary documents to cause the property to be sold by private treaty at the earliest possible date at a price to be agreed on between the parties and failing such agreement to be determined by the President of the Real Estate Institute of Queensland or his nominee
4.3.2That for the purposes of the sale in Order 5b hereof, the Husband and the Wife agree upon the appointment of a solicitor or conveyancer to act on the sale, within 7 days of the date Order 5b becomes operative, and in the event that the parties are unable to agree, then the parties accept the nomination of the President of the Law Society of Queensland to act on the sale.
4.3.3That for the purposes of the sale in Order 5b hereof, the Husband and the Wife agree upon the appointment of a real estate agent to act on the sale, within 7 days of the date Order 5b becomes operative, and in the event that the parties are unable to agree, then the parties accept the nomination of the President of the Real Estate Institute of Queensland to act as agent on the sale.
5. That the Husband be restrained from encumbering or further encumbering his interest (or that of any trust or company which he controls) in the following property pending his compliance with Orders 1 and 2 hereof (save for the exclusive purpose of paying the Wife monies in compliance or partial compliance with Order 2 hereof):
5.1 [S property], Queensland;
5.2 [R property], Queensland;
5.3 Shareholding and loan account with [X] Pty Limited;
5.4 Shareholding and loan account with [P] Pty Limited;
5.5 Shareholding and loan account with [C] Trust;
5.6 Loan with [M] Investment Trust.
6. That for a period of 2 years from the date of these orders, the Husband pay to the Wife by way of maintenance for herself, the sum of $350.00 per week, the first payment being due within 7 days of this order, and weekly thereafter.
7. That the Applicant Wife shall have sole parental responsibility for the child, […] (dob: […]/01/2003).
8. That the existing orders in relation to [the child], made 14 February 2006 be varied by:
8.1Deleting Order 2;
8.2Deleting Order 4(c) and substituting therefor [sic] “During school term, each Sunday from 9am to 4pm, provided however, if [Mr T] is not to be present, that the Husband’s contact not more frequently than once per month will include overnight contact and he will be permitted to collect [the child] from 4pm on Friday afternoon and spend time with [the child] until 4pm on Sunday when the Wife shall collect her”;
8.3Deleting Order 4(d) and substituting therefor [sic], “For 7 consecutive days during each school holiday period, from 9am to 4pm each day, with the Husband to collect and deliver [the child] from and to the Mother, provided however, if [Mr T] is not to be present, that the Husband’s contact will include overnight contact and he will not be required to return [the child] at 4pm until the conclusion of the 7 day period”;
8.4Amending Order by substituting for “Wife’s Mother” the words “Wife” and substituting for “at [W]” the words “at [E]”.
9. That the Husband pay the Wife’s costs of and incidental to the application and response.
The husband, in his Response to an Application for Final Orders filed 14 February 2006, sought the following orders:
1. The wife be declared sole and beneficial owner of:
1.1Proceeds of sale released to her $ 138,223.00
1.2Furniture and effects in her possession
1.3Jewellery in her possession.
1.4Her legal fees paid.
2. The wife shall indemnify the husband in respect of her debt to her grandmother in the sum of $4,000.00.
3. The husband shall within 42 days of the date of these orders pay to the wife $48,614.00.
4. In the event the husband fails to pay such sum then the husband shall do all acts and things necessary to sell the property at [S].
5. Upon the sale the husband shall pay to the wife the whole of the proceeds of sale and otherwise pay to the wife such sum that would entitle her to the sum of $48,614.00.
6. Upon the husband paying to the wife $48,614.00 the wife shall transfer to the husband her right title and interest in the property at [R].
7. The husband shall indemnify and keep indemnified the wife in respect to the following liabilities:
7.1Loan to IMB
7.2[The husband’s parents] in the sum of $100,000.00.
It will be readily apparent that the parties’ claims are widely divergent: the wife seeking that the husband pay her $486 261, the husband that he pay the wife $48 614.
Credit
To the extent that credit assumes significance, it does so to only a minor extent. Each of the parties was cross-examined before this Court. Each party impressed as an honest and reliable recounter of fact. Refreshingly, neither party sought to denigrate the efforts of the other, or promote his or her own contributions.
Nothing emerging from the transcript of the proceedings before Waddy J, during which the parties were rather more extensively cross-examined than during the present trial, provides a rational basis for qualifying the above assessment of the credibility of the parties.
To the extent that anything turns upon it, and very little ultimately does, on balance, the wife’s version of when cohabitation commenced can be preferred to that of the husband. So doing involves no adverse inference with respect to the integrity of the evidence of the husband. On the contrary, the husband’s frank concession that he was uncertain about an event which impacted upon the probabilities with respect to the commencement of cohabitation is influential in finding that cohabitation commenced in about March 2000.
The husband was cross-examined extensively before Waddy J, and probingly, albeit for a shorter time, before this Court in relation to the post separation period, particularly with respect to the husband’s involvement with property development in that period. The husband’s evidence in relation to these topics was particularly impressive. Concessions were made where they appeared to be called for. The husband was able to explain matters in a fashion which did not excite Counsel for the wife to have recourse to prior inconsistent statements or to documentation likely to cast doubt on the reliability of his answers.
It is not without significance that Counsel for the wife has had more than a year since cross-examining the husband with respect to these matters to prepare for further cross-examination and/or secure documentation with a view to challenging the husband’s version of events. Cross-examination of the husband during the present trial implies that no “skeletons” have emerged from the husband’s financial closet in that period.
The Court accepts the husband’s evidence with respect to his financial activities in the post separation period. In so doing, the Court rejects any suggestion that the husband has acted negligently, recklessly or deliberately to reduce the net assets of the parties or to create the impression that such assets have been reduced.
The husband’s evidence with respect to his expectations for the future was impressive and able to be accepted, particularly having regard to the concessions which the husband made in circumstances where, but for such concessions, the likelihood of positive outcomes with respect to his involvement in Queensland property development may not have emerged.
The Court accepts, having regard to the husband’s evidence in cross-examination, that he may emerge from the difficulties which surround property developments in which he is involved in Queensland with not insignificant profits. The evidence also establishes the possibility that he may emerge from such litigation with nothing from the Queensland developments and a significant liability to attempt to satisfy out of such other assets as he may possess. It is reasonably clear that the husband’s financial fate by virtue of the outcome of the Queensland developments will not emerge for some time, possibly years in the event of attempts to resolve a number of complex and competing claims requiring judicial determination.
Accepting the husband’s evidence, the Court will conclude with respect to financial resources that the husband may eventually receive not insignificant funds via the Queensland developments or may emerge from those developments with a substantial liability, neither the husband nor the Court being in a position to suggest which outcome is more possible with any confidence.
Material facts
The husband was born in June 1972. He is accordingly 36 years of age. The wife was born in August 1974. She is accordingly 34 years of age.
The parties commenced cohabitation in March 2000, the wife’s evidence in relation to this topic being preferred to the husband’s for reasons explained above.
Prior to the commencement of cohabitation, in May 1999 the husband purchased vacant land at G for $95 000, with settlement occurring in December 2000. Construction of a home on the property commenced in January 2001 and the parties commenced residence in the home in September 2001.
On 27 October 2001 the parties married.
At the commencement of cohabitation, the husband was employed by L Company in financial services. The husband later resigned from L Company in order to take up a full time role in his development projects, employed by P Company.
At the commencement of cohabitation, the wife was a Nurse, continuing in that employment until shortly before the birth of the parties’ child, who was born in January 2003.
The parties initially lived in the husband’s parents’ home in B, paying board of $100 per week to the husband’s parents.
In February 2002 the parties purchased property at W with Mr and Mrs V who were registered as purchasers.
On 19 August 2002 the parties obtained a line of credit facility from the Bank of Queensland.
On 8 November 2002 the husband purchased property at N for $189 900. This was financed by a mortgage to the Commonwealth Bank of $141 920 and a Westpac Line of Credit of $46 000.87.
On 24 February 2003 the husband sold the wife’s motor vehicle for $9 000. On 24 February 2004 the husband purchased a Toyota Land Cruiser for $30 000, financed by the Westpac Line of Credit.
In June 2003 the husband purchased property at S2 for $258 900. This was financed by a mortgage to the Commonwealth Bank of $207 000 and either $52 000 or $60 146.50 by the Westpac Line of Credit.
In July 2003 the husband attended a course at a cost of $15 000.
On October 29 2003 the parties obtained a Westpac Line of Credit to pay out the Bank of Queensland in the sum of $361 500.48.
On 31 October 2003 the husband purchased property at S for $365 000. This was financed by a mortgage to the Commonwealth Bank of $280 000 and $85 000 or $96 006.50 by the Westpac Line of Credit.
On 4 March 2004 the Harle Family Superannuation Fund was established, the husband opening accounts with Macquarie Cash Management Fund for the parties’ superannuation entitlements.
In 2004 the property at W, was sold, the parties realising $110 000 from the sale, which they deposited to their joint Westpac account.
On 5 April 2004 the parties purchased a one third share in property R, for $208 500. According to the husband, this was financed by a $115 047.78 loan from his father and the balance from the proceeds of sale of the house at W. $110 000 was repaid to the husband’s father shortly thereafter on 22 May 2004.
In June 2004 the parties’ second child was born. He died the day after his birth.
On 29 September 2004 the husband’s father lent him a further $5 000, which was deposited to the Westpac Line of Credit Account.
In November 2004 the husband along with Mr Y took over the company then known as Z Investment Pty Limited, each receiving one ordinary share, and the husband being appointed as a director. The company name was changed to X Pty Limited (“X Pty Ltd”) on 7 December 2004.
On 7 December 2004 X Pty Ltd entered an option to purchase land for proposed development at K1 and K2, the option purchase price being $29 000, which was financed by a further loan from the husband’s father. The proposed development was to comprise 61 residential units and 5 shops.
On 25 January 2005 the parties separated.
On 6 April 2005 the husband borrowed a further $5 000 from his father, which was deposited into the Westpac Line of Credit account.
On 15 June 2005 the husband exercised the land option for the K1 and K2 properties, acquiring the property for approximately $3 657 000. According to the husband, fifty per cent of these funds came from an investor, Mr F.
On 6 July 2005 the husband sold the property at N for $260 000, the husband receiving $95 469.55 of that price which was banked to the parties’ Westpac Classic Account. From the Westpac Classic Account $69 787.33 was then withdrawn and paid to his father’s bank account as to the sum of $47 792 and to Mr and Mrs V in the sum of $13 158.92 being the parties’ share of capital gains tax. A further $5 300 was used to pay the balance of a spa purchased prior to separation and $3 307.48 to the husband’s father’s bank account to repay the costs of materials for the decking and pergola. Miscellaneous costs of $228.83 were also deposited to the husband’s fathers account.
On 15 July 2005 the husband paid $780 for tyres on the wife’s car.
On 17 August 2005 the husband transferred $49 932.68 from the Westpac Classic Account to the Westpac Line of Credit.
On 8 November 2005 the company, A Pty Limited (“A Pty Ltd”) was established to act as trustee for A Trust. The husband and Mr Y are equal beneficiaries of that trust.
According to the wife, on 4 January 2006 the husband purchased an interest in a boat. The husband denied that allegation.
On 20 January 2006 the company C Pty Limited (“C Pty Ltd”) was established as trustee for the C Trust (“C Trust”). The husband and Mr Z are equal shareholders.
At the beginning of March 2006 C Pty Ltd purchased land at K3 for $1.5 million which was financed in its entirety by mortgage.
On 8 March 2006 C Pty Ltd completed the purchase of K4 property for $1 200 000, financed as to $940 000 borrowed from a financier and $260 000 from investors and equity holders. Land was purchased for proposed development.
In August 2006 the husband sold S2 property for $370 000, realising $114 356.87 which the husband deposited into the Westpac savings account. From that account the husband then paid $60 000 to the Westpac Line of Credit and loaned $50 000 to the Investment Group, M Investment Trust. The husband used the balance of the monies received from sale to pay monthly loan repayments.
In October 2006 the husband and Mr Y abandoned their entitlements in A Pty Ltd, transferring them to Mr F in return for his taking over the liabilities and risk.
On 5 October 2006 M Investment Group paid the husband $19 478, reducing that group’s debts to the husband by $30 552. The husband deposited the sum to the Westpac Line of Credit.
In February 2007 the husband commenced living with Ms H. In the same month the wife and the child commenced living at the wife’s mother’s house.
On 7 May 2007 contracts were exchanged on the sale of the home at G, with a sale price of $575 000. Settlement was due on 17 July 2007. Subsequent to the proceedings, net proceeds of sale of $135 233 resulted from the sale and were received by the wife. The wife paid $42 903.72 to her lawyers and the remaining $95,319.71 was retained by the wife, $50 000 of which was deposited into a term deposit with ANZ. A further $2 000 was deposited into the child’s bank account, $4 000 repaid to the wife’s grandmother (borrowed for legal fees) and $3 000 repaid to the wife’s partner (borrowed for the child’s bedroom suite), with the remaining going to expenses specified by the wife in her affidavit.
On 14 January 2008 the wife purchased a Holden Astra for $20 000.
In February 2008 the wife commenced a training course at a cost of $10 000, expected to be completed over an 18 month period ending mid 2009.
In February 2008 the financier to the X Pty Ltd, U Financier, had its shares frozen on the Sydney Stock Exchange. X Pty Ltd then was unable to proceed with its building project as progress payments were not made. Subsequently, demands have been made by Mr F on the husband and Mr Y in relation to the formers invested monies in the project. At the time of these proceedings legal proceedings had been commenced by the husband and Mr Y against U Financier in the Brisbane Supreme Court in relation to the alleged breach of contract by U Financier in relation to the X project. The husband and Mr Y have personally guaranteed $10 million in respect of the debt that is due to U Financier on the C project.
The wife is currently in a relationship with Mr E. The wife currently resides with the child in a property owned by her partner’s father. The wife pays her partner’s father $200 per week rent.
The property of the parties to the marriage
The property of the parties to the marriage is uncontroversial to a large extent. In a helpful spreadsheet, Counsel for the wife listed what appeared to be the figures suggested by both parties.
In his updated Outline of Case document, Counsel for the husband listed what he contended the relevant assets and liabilities to be.
It is common ground that since the trial of the proceedings before Waddy J, the sale of the parties’ jointly owned property at G has been completed, net proceeds of sale of $135 233 resulting. In his list of assets and liabilities, Counsel for the husband included that sum.
In his list of assets and liabilities, Counsel for the wife listed instead what had become of that sum. That resulted in a number of entries in the asset column which do not appear in the list submitted on behalf of the husband, and the elimination of some debts which previously appeared in the liabilities column.
Broadly speaking, and to the extent that the approaches adopted by Counsel do not ultimately entirely balance, the difference between the two is minimal, and probably explained by the difference between the estimate of the value of the car the wife purchased from the proceeds of sale of the G property ($15 000) compared with the purchase price of that vehicle ($20 000).
Given that the husband’s motor vehicle has been included at its current value, and that motor vehicles notoriously depreciate rapidly, it seems unrealistic to bring in the $20 000 which the wife paid for her car in preference to the current estimated value which is not challenged as being other than reasonably reliable. So doing is also more consistent with the sensible approach adopted by Counsel for both parties of having regard to what is or rather than what was or what might have been.
Whilst not uncontroversial, the husband’s shares in P Company of $55 000, previously determined in that sum by a forensic accountant, should be included. So too should the values of other corporate interests previously agreed, or apparently agreed.
There is a difference between the figures asserted on behalf of the husband ($25 643) and the wife ($30 522) with respect to the husband’s loan to the M Trust. The husband’s figure represents the current balance, the difference between the two figures having been repaid to him, apparently subsequent to the hearing before Waddy J. As Counsel for the wife asserted, to include the lower sum for the loan account would require notional adding of the difference given the timing of the transaction. It is more convenient, and not unfair to the husband in those circumstances to include the $30 522.
The husband’s evidence was that he has paid legal fees of $71 000. It is common ground that such sum should be notionally added back, as should the $55 429 of legal fees paid by the wife.
On behalf of the wife, an unquantified entry “claim against [Q Financier] etc” was included in the list of assets. Q Financier was the lead lender on the K projects, the earlier of which has undoubtedly encountered severe difficulties which may ultimately impact to the husband’s very considerable financial detriment.
The wife’s earlier written submissions discussed the expected success of the K projects, however adverse events have occurred since then and the matter has, sensibly in the Court’s view, not been vigorously agitated.
There is such uncertainty with respect to the outcome of what can broadly be described as the husband’s K developments, of which Q Financier is an integral part, in both a positive and negative sense, as to render any finding either that these activities represent a probable asset or a probable liability unsupportable on the evidence.
The parties do not disagree as to the quantum of their superannuation entitlements. Both parties invite the Court to include their superannuation interests in the same “pool” as their other more tangible assets. Nor do they disagree as to the liabilities which are relevant to be taken into account for present purposes. The parties accordingly have assets worth $589 389 net.
The wife asserted in her earlier submissions that there was a “real possibility that [the husband’s parents] will not call on the monies due to them” [Applicant wife’s submissions, page 29]. The wife also asserted that “the husband’s evidence of the debt to his father is inconsistent with his affidavit” [Wife’s submissions in reply, page 1, para 2.14]. To the extent that these remained live issues at trial in 2008, the evidence does not support going behind or rejecting the existence of these debts. Even if the Court did not find that the husband owed his parents $100 000, giving him credit for the contributions thus made on his behalf would produce a substantially similar outcome.
Set out below in graphic form are the parties’ assets and liabilities and quantum thereof:
ASSETS OWNER VALUE Property S Husband $ 335,000 Property R Joint $ 203,333 Westpac Account Husband $ 2,849 Honda CRX Husband $ 5,000 Furniture in Home Husband $ 10,000 Furniture in Home Wife $ 2,000 X Trust Husband $ 23,316 Loan C Trust Husband $ 7,218 Loan P Company Husband $ 19,312 Shares P Company Husband $ 55,000 Loan - M Investment Trust Husband $ 30,522 Jewellery Wife $ 1,500 Legal fees (Paid) Wife $ 55,429 Legal fees (Paid) Husband $ 71,000 ANZ Term Deposit Wife $ 50,000 Claim against Q etc Husband NK Motor vehicle Wife $ 15,000 ANZ Account Wife $ 2,600 Total $ 889,079 SUPERANNUATION Harle Superannuation Husband $ 42,739 MLC Super Husband $ 31,347 Harle Superannuation Wife $10,000 Total: $ 84,086 TOTAL ASSETS (incl super): $ 973,165 LIABILITIES Loan IMB Joint $ approx 277 500 The husband’s parents Joint $ 100,000 Westpac Mastercard Husband $ 2,060 Amex Husband $ 1,049 Guarantee Husband NK Professor D Wife $ 3,167 Total: $ 383,776 Net assets $ 589,389
Counsel for the husband reminded the Court that:
The husband’s recent Affidavit indicates a parlous financial position where it is clear that at the present time the husband has no equity in the projects with which he is involved. The projects were valued by Mr I for the previous hearing. The husband has not sought to update the value because of current circumstances. Notwithstanding this though the husband still includes in the pool assets that are relevant to the projects but at the present time it must be questionable that such loans would be repaid. [Husband’s outline of case document, page 16, para 7.1].
The Court need not, and cannot productively speculate about these matters. They are included by express or implied agreement of the figures indicated above. The Court will not go behind those figures.
The valuation of G at the date of commencement of cohabitation
On behalf of the husband, Mr J, an experienced and eminently qualified valuer, prepared a “retrospective” valuation of G property as vacant land in July 2000. In so doing, Mr J considered the property to be worth $250 000. The valuation of the land in 2000 assumes significance when the parties’ contributions are evaluated.
It is common ground that the husband paid $95 000 for the property prior to the registration of the plan of subdivision of the land of which the block ultimately formed part.
It is common ground that the wife made no direct contribution to the property, or to the funds used to acquire it, at any time prior to the date of Mr J’s retrospective valuation of the property (July 2000).
Much was made by Counsel for the wife of the valuation of the property. It was submitted on behalf of the wife that:
The husband described his interest in what became [G property] not as an interest in a particular piece of property but as a “$95,000.00 cash injection into [sic] development company with no security provided and no definite entitlement to a set block of land. [Wife’s submissions in reply, page 1, para 2.1].
and that:
There is no evidence of value of that time of whatever the interest or claim was in relation to [G property] on [sic] indeed if the Husband had a claim or interest other than the repayment of the $95,000.00 he had contributed. [Wife’s submissions in reply, page 2, para 4.1.1.1].
It was thus contended on behalf of the wife that:
If the Court is against the proposition that all the husband really had was a right to recover his $95 000 but not an enforceable contract to purchase a particular piece of land, then it is submitted that the best indication of the price at the commencement [sic] cohabitation, was the purchase price itself only eight or nine months before cohabitation commenced. [Applicant wife’s submissions, page 9, para 19].
Counsel for the wife further submitted that:
We agree that the state of the land as it was in July 2000 is not a relevant consideration given that cohabitation commenced in March 2000. Mr [J]’s evidence was that in March 2000 the sub division had not being completed and the progress of the subdivisions would have been in a very raw state. He did not consider the value as at March 2000. It is clear from his evidence however that the value (even if the husband had an interest in land), must have been much less.
The issue is not that the husband was buying “off the plan” in a known property as part of a known subdivision. As the husband’s evidence indicates when he exchanged contracts and provided $95, 000.00, it was a “$95,000.00 cash injection into his development company with no security provided and no definite entitlement to a set block of land”….
With the greatest of respect, in the circumstances where Mr [J] did not rely upon his research as to “downturn in the market” and could not point to any comparables which evidence this, means that Mr [J]’s assertions are without foundation. It is Mr [J] who is making a proposition outside his area of expertise. It is not an answer to say that the wife should have produced evidence…. [Wife’s submissions in reply, pages 3-4, paras 11.2.4-11.2.11].
It was further contended on behalf of the wife that:
It is irrelevant that no expert evidence was brought to “counter Mr [J]’s views” or that somehow this lends credence to Mr [J]’s valuation or means that Mr [J]’s valuation is more likely to be correct. It is a non-sequitur. [Wife’s submissions in reply, page 3, paras 11.2.7].
Mr J was extensively cross-examined before Waddy J. That process revealed a number of issues, as did Mr J’s further brief cross-examination before this Court. With respect to Counsel for the wife, who was in the invidious position of not having a competing valuation to rely upon, or to base cross-examination upon, whilst aspects of Mr J’s valuation, and explanation for it, were less than compelling, there is no rational basis for rejecting his opinion as to the value of the property in July 2000. The lowest figure suggested as the possible value of the property at that time was inferentially $185 000, or perhaps $210 000.
Given that the Court is ultimately exercising a broad discretion with respect to the impact of the husband’s initial contribution of what became the vacant land at G, it is ultimately not of crucial importance to know what the property was worth in March 2000. On any view of it, even if the figure of $185 000 was regarded as the likely approximate value of the property as at the commencement of cohabitation, that represented a very substantial initial contribution of capital unmatched by any contribution then, or subsequently, able to be made by the wife.
The value of G property at the commencement of cohabitation was not adversely impacted by the curious, and perhaps risky way in which the husband acquired the land. In short, he paid $95 000 and got land worth very much more. How that came about is ultimately not hard to imagine, or necessary to determine. The husband can be seen on Mr J’s evidence as having brought to the cohabitation an asset worth not less than $185 000 and worth possibly as much as $250 000.
During the parties’ cohabitation, the unencumbered block of land provided by the husband become the land upon which the parties’ matrimonial home was constructed.
Contributions
It is convenient to evaluate the parties’ contributions by reference to two periods, they being from the commencement of cohabitation until separation and from separation to the date of hearing.
Counsel for the wife submitted that the wife made initial contributions of $500 savings, a Ford Motor vehicle subject to a $10 000 debt which was subsequently sold, superannuation and furniture. Counsel for the wife submitted that the wife contributed income totalling approximately $66 000 obtained from the sum of paid employment earned up until shortly before the birth of the child and two months paid maternity leave thereafter. [Applicant wife’s submissions, pages 21-22].
Counsel for the wife also submitted that:
By being a co-borrower on the home loan, and the Line of Credit, [sic] Wife has been an indirect financial contribution in that the Husband has been able to utilize these funds for other acquisitions. [Applicant wife’s submissions, page 22].
It was submitted on behalf of the wife that she “physically did work on the home when it was being built”, “made virtually the entire contribution to the care of [the child]”, and “undertook the inside domestic tasks” with the husband doing “some outside work, such as cleaning cars.” [Applicant wife’s submissions, page 22]. Counsel also highlighted that the husband “had the exclusive use of the home since separation (later with the Husband’s partner and her child).”
Counsel for the wife submitted that there was no challenge to the wife’s contribution as homemaker and parent. The husband conceded that whilst he “also made a significant contribution as a homemaker and parent”, “the wife’s contribution in this regard was superior to that of the husband’s due to his work commitments.” [Husband’s Outline of Case Document, page 15].
On behalf of the wife it was submitted further that:
There was no challenge to the contributions of the wife made physically to the property in terms of work done including cleaning up after the builders each day, cleaning bricks, creating the garden, and so on.
Counsel for the husband submitted that his assets at cohabitation included the property at G (valued by Mr J in July 2000 at somewhere between $240 000 and $260 000), shares, motor vehicle, superannuation entitlements, savings and furniture. The husband contributed income throughout the course of his marriage from his employment as an Accountant. [Husband’s Outline of Case Document, page 14].
Counsel for the wife submitted that:
There is no evidence of the value of any assets [other than the land at [G]] that the husband held at the commencement of cohabitation. In circumstances where as Counsel for the husband notes the wife in 2.9 the wife [sic] disputed the value of the property that was held, the husband ought to have proven his assertions. We are left with mere assertions without evidence. Counsel for the husband did not read any of the figures asserted by the husband as to the value of either assets or balances of accounts or superannuation. [Applicant wife’s submissions in reply, page 1, par 2.7].
Unlike Counsel’s submissions with respect to the value of G property in 2000, there is force in that submission.
Counsel for the husband referred to the “significant ongoing capital works” carried out by the husband and his father on the G property and the W property in 2001. [Husband’s Outline of Case Document, page 14].
It was submitted on behalf of the husband that:
The husband’s contributions are assess at 70 per centum to the wife’s 30 per centum taking into account the shortness of the parties’ relationship and the overwhelming contribution made by the husband of a financial nature as well as the contribution of the vacant block of land, and his contributions referred to above. [Husband’s Outline of Case Document, page 15, para 3.1].
It was submitted on behalf of the wife, in reply, that:
There is no evidence of increase of any value due to the capital works. The Wife also made a direct and indirect contribution to these works as described in the initial submissions. [Wife’s submissions in reply, page 2, para 4.1.1.6].
Counsel for the wife contended that:
Of course the husband would not have been able to earn the income that he did since the birth of [the child] had the wife not been there to care for [the child] full-time. Thus the wife has made a significant indirect contribution to the husband’s earnings. This indirect contribution was significant during cohabitation but even more significant after separation. In those circumstances the husband ought to have accounted for his income to much more significant extent than he has done so. [Applicant wife’s submissions, page 14, para 46].
Counsel for the wife also submitted that:
Given that the husband’s initial financial contribution was we submit little more than a speculative investment which may have proved to have been worthless, and in which in any event, had been all but consumed by other debt shortly after the commencement of cohabitation, there is no relevant initial financial contribution that should weigh in the husband’s favour. [Applicant wife’s submissions, page 18, para 50].
Counsel for the wife submitted that:
The wife made a more significant contribution to the welfare of the family including to [the child] than did the husband. [Applicant wife’s submissions, page 18, para 51].
Objectively, the matter of greatest significance in the evaluation of the parties’ contributions from the commencement of cohabitation until their separation almost five years later relates to the husband’s initial contribution of what became the land at G. That contribution can be quantified with some confidence having regard to the Court’s general acceptance of Mr J’s valuation. Its significance however also included the reality that it provided the land upon which the parties were able to build what became their matrimonial home. The impact of the husband’s initial contribution is not diminished by the curious aspects of the transactions the husband entered into to acquire it. To the extent that risk or good judgment was involved, the husband’s decision to pay over his $95 000 proved a profitable one. The wife played no part in that process.
The parties’ contributions otherwise, financial and non-financial, direct and indirect could in the Court’s view be seen as approximately equal. The issue then becomes how the husband’s greater initial capital contribution is to be evaluated as at the date of separation. So doing involves the exercise of a broad discretion, notwithstanding what has at times been referred to as “the erosion principle” (see Pierce v Pierce (1989) FLC 92-844, Kardos v Sarbutt (2006) 34 Fam LR 550; [2006] NSWCA 11).
Some regard must be had in this process to the initial value of the property relative to its ultimate 2007 sale, albeit the sale price was no doubt very significantly impacted by the reality that a home then stood upon the land.
The Court is unable to find with confidence the net asset position of the parties at separation. That is not said critically of the parties or their legal advisors. Broadly speaking, to reflect the contribution entitlements of the parties to the date of separation as 62.5 per cent on the part of the husband and 37.5 per cent on the part of the wife would, in the Court’s view, broadly reflect the disparity of contribution based entitlements by virtue of the husband’s contribution of an unencumbered parcel of real estate upon which the parties’ matrimonial home was constructed. Although that it a necessarily subjective assessment, it is not made arbitrarily. The essential reasons leading to the assessment are set out briefly below.
To the extent that it might be suggested that the husband’s initial contribution of in the order of more than $200 000 in equity as an imbalance of $150 000 by reference to current figures represents undue “erosion” of the contribution, the Court does not accept that such is necessarily the case. As the authorities make clear, the extent of “erosion” is influenced by other contributions, and assessed by reference to the totality of the parties’ contributions.
Whilst the cohabitation was not of great length, that of itself is of no particular significance. During cohabitation, the wife at times worked. She was the primary homemaker and parent for the one surviving child of the marriage. Whatever her reservations, the wife permitted the assets of the parties to be potentially put at risk in the commercial ventures which the husband pursued, and thereby made indirect contributions.
The husband’s contributions of income from employment significantly exceeded those of the wife. The husband’s evidence was that he was earning $105 000 per annum at L Company, which reduced to $72 000 per annum whilst he worked for the development projects, employed by P Company.
The wife’s contributions as homemaker and parent between the commencement of cohabitation and the parties’ separation are entitled, as the High Court recognised in Mallett v Mallett (1984) 156 CLR 605, to more than token recognition.
The Court acknowledges, as it must, that, in the exercise of the broad discretion involved, others may well come to different views with respect to the contribution based entitlements of the parties.
It is then necessary to evaluate the post separation period.
The evidence in relation to the post separation period is less than entirely clear so far as the husband’s activities in that period are concerned. That is not said in any critical way. What is clear is that the wife in the post separation period had the greater obligation to provide care and support for the parties’ young child, in circumstances where her ability to earn income was minimal. The wife did not have the benefit of the use and occupancy of the former matrimonial home for the period of two and a half years between separation and completion of its sale. The wife has been in a relationship, not involving cohabitation or financial support, since May of 2006.
In the post separation period, the husband has had the use and occupation of the former matrimonial home, albeit he has paid the outgoings with respect to it. He has however had a far greater income than has the wife, even after paying the substantial child support assessed to be payable by him. The husband currently pays child support payments of $817 per month.
From February 2007 until the completion of the sale of the matrimonial home eight months later, the husband’s current partner lived in the property. The husband’s current partner has a significant earning capacity.
In the post separation period the husband had control of the investment assets of the parties. With that control came the responsibility of managing the assets.
In the trial before Waddy J a great deal was made by Counsel for the wife of the husband’s failed investments and the possible loss of a large pool of funds.
It was then submitted on behalf of the wife that:
What was clear both from the evidence of [sic] husband in his affidavit and of the wife’s various responses to questions about her knowledge of the financial dealings between the parties was that the husband was the one who made financial decisions (although he claims to have discussed them with the wife but it is quite clear that even if that were so, it was really after the event and in circumstances where it was unlikely that the wife would have understood anyway). [Applicant wife’s submissions, page 11, para 27].
Counsel for the wife also submitted that the husband was a “wheeler and dealer”, referring to the husband’s “regular pattern” whereby he “owned beneficially properties in respect of which his name was not on title.” Questioning “whether the husband was entitled to receive [the wife’s] trust”, Counsel for the wife set out several investments and transactions of concern to the wife.
It was further submitted that:
It is also quite clear that the husband if he had any benefit from the original property at [G], had by shortly into the cohabitation, dissipated those funds or alternately that they simply were no longer there. Thus his initial contribution made no difference.
On behalf of the husband in reply it was submitted that the husband contributed “the management of the husband of the parties’ finances and investments during the course of the marriage.” [Husband’s Outline of Case Document, page 14]. Counsel noted on that point that:
The wife was to say the least hostile towards the accumulation of debt and investment and as such left the whole of that process to the husband. The husband did not commit waste. The husband properly managed the parties’ affairs with a view to accumulating significant asset pool for the purpose of the parties’ future. [Husband’s Outline of Case Document, page 14].
In submissions in reply, it was submitted on behalf of the wife that:
The husband’s “management’ of the parties’ finances post separation disclose that the husband’s mismanagement has in fact cost the parties money rather than increased their nett worth. His investment in such things as the [M] Investment Trust, the self-managed superannuation fund which has not increased in value, and the Queensland development projects such as [X project] and [C project] on the husband’s evidence were disastrous investments, pandering it would seem to the Husband’s desire to become a property developer. [Wife’s submissions in reply, page 2, para 4.1.1.7].
Counsel for the wife thus submitted that:
Although the husband’s Counsel asserts “the wife should take the good with the bad” it is quite clear that the husband’s post separation investments, if the husband is to be accepted, have all been “bad with the bad” not the “good with the bad”. [Wife’s submissions in reply].
The evidence does not establish that the husband failed to exercise reasonable skill and diligence in the management of the parties’ investment assets in the post separation period. Nor does it establish more than that level of skill with respect to such contributions. Whether or not the husband’s involvement in the K projects proves to be a financial benefit or drain remains to be seen.
Another primary issue put before the Court on behalf of the wife in earlier submissions was the assertion that the husband’s post separation account of funds was unsatisfactory. Counsel submitted that:
Any contributions that the husband may be found to have made by way of his initial contribution is more that [sic] counterbalanced by his post separation dissipation of assets as described in the original submissions. [Wife’s submissions in reply, page 3, para 6.1].
Further it was submitted that:
The unsatisfactory nature of the Husband’s accounting of his use of funds, including his very late attempt to re-write very significantly his explanation of where the funds has [sic] gone, do not yield to easy analysis. [Applicant wife’s submissions, pages 13, para 41].
Counsel for the Wife directed the Court to his attempt to undertake such an analysis in a spreadsheet, provided to the Court to supplement her submissions. How that document was ultimately relied upon is less than clear.
On behalf of the wife it was also submitted that:
The Husband’s various attempts to demonstrate where the money has gone, overlooks one very obvious matter. It does not take into account the fact that the husband was earning about $2000 per week from his employment [in financial services]. Where all of that money has gone, even assuming the expenses as disclosed by the husband in his financial statement under part N. are correct, means that the husband has not accounted for about $150,000 from his income. [Applicant wife’s submissions, page 13, para 42].
Counsel for the wife further submitted that:
The Husband’s analysis assumes that most expenses – including interest expenses on the Line of Credit itself (in Exhibit F the figure for this is $39,605), strata levies, rates, insurances and a variety of other expenses for the investment properties – are all paid out of the Line of Credit itself, when in reality, these are not capital items, and should really be paid out of income. [Applicant wife’s submissions, page 14, para 43].
and further that:
The summary demonstrates that when one writes back in the Husband’s income (and it uses taxable income, which means deductible expenses such as the interest on the Line of Credit, on the [husband’s parents] loan, the strata levies, rates and insurances on the investment properties, have already come out; so taking them out of the line of credit in fact means the amounts deducted should be written back to the Husband’s notional income) it is most appropriate to simply use his income from his salary, rather than the taxable income, to avoid this double counting. [Applicant wife’s submissions, page 14, para 45].
Counsel for the wife asserted that:
The spreadsheet shows that the Line of Credit, if the Husband’s income were brought into account, should be of the orders of $46,512 instead of $236,370. The difference ($189,857) represents the Husband’s spending during the period of separation from 31 May 2007. In the circumstances, is the Husband’s spending reasonable? Should the Wife in effect be asked to contribute to the Husband’s post separation lifestyle, even though she had the care of [the child], had no income apart from Child Support and government means-tested income, was for the latter period paying rent, while the Husband was living in the home? [Applicant wife’s submissions, pages 14-15, para 47].
and that:
Contrary to the husband’s alleged contribution in maintaining assets post separation, it is quite clear that not only did the husband make little contribution to the parties’ child, but the husband used the joint loan for his own use and in effect diminished the parties net assets by pouring money into his lifestyle and other ventures which ultimately did not produce any value. There is no evidence that the contributions to the capital works enhanced or increased the value of the subject property at all. No doubt it increased the husband’s ability to enjoy the property which of course he resided in post separation in effect to the exclusion of the wife and the parties’ child. [Wife’s submissions in reply, page 2, para 2.17].
It was thus contended on behalf of the wife that the husband has certain assets “which are not included in the balance sheet but which should be”. In particular, Counsel for the wife referred to three categories of “Current Assets and Write-backs”, being:
a.Loan Account with [X] of approximately $30,000. This figure derives from exhibit “F” and is a simple calculation based on the items described as “loan to [X] Trust” post separation less the repayment by the trusts on the eleventh of January 2006;
b.$48,000 being the monies paid to [the husband’s father] post separation from the [N] proceeds. Even of [sic] the court were to find [the husband’s father] was owed some money, for various loans post separation to the husband, these are not loans for which the wife should be responsible and which should not form part of the matrimonial pool. Further, [the husband’s father] appears the have been paid twice the amount of $29,000 once it is said from [N] and the other time from [X] itself.
c.As to any other assets, given the confusing and contradictory way the Husband presented his evidence, it is impossible to know where other assets might be represented (or what other monies have been spent but not properly accounted for). This lends support to a submission based on such cases as Black v Kellner (1992) FLC 92-287, Weir & Weir (1993) FLC 92-338 and Foda & Foda (1997) FLC 92-753 eg at 84156 to 84,157, to the effect that where the Court cannot be satisfied as to the pool of assets, there should be a greater adjustment under s75(2)(o) in favour of the innocent party from the known pool. [Applicant wife’s submissions, pages 15-16, para 48].
In the wife’s submissions in reply, Counsel submitted that:
In reality all that the husband accounts for from the $114,000.00 is the loan to the [M] Investment Trust, a loan which obviously bore no fruit despite the husband’s qualifications and alleged skills [in financial services]. What is represented in the balance sheet of the $144,356.00 is only $30,522.00. One should take an overview and look at what the asset position is and where the monies have gone, not be swayed by some double shuffle and smoke and mirror exercise thrust upon the Court by the husband late in the piece. [Wife’s submission in reply, page 7, para 13.3].
Counsel for the wife also submitted that:
In so far as the husband has failed to account for the movements in the line of credit account post separation, the husband should also be assumed to have had the benefit of these funds in effect as a partial property settlement and they should be brought back into account. [Applicant wife’s submissions, page 18, para 49].
Counsel for the wife further submitted that:
The wife’s post separation contributions we submit clearly outweigh those of the husband in circumstances where:
a. the husband has not only had the benefit of the residence of the former matrimonial home from January 2005 to date, but also has had his de facto partner and her child living there;
b. the husband has it seems dissipated assets that were invested in what the husband now argues are apparently worthless assets in the [X] venture, [C] venture, and the now abandoned [A] venture. [Applicant wife’s submissions, page 19, para 52].
In conclusion, it was submitted on behalf of the wife that “the Court should assess contributions at separation as equal, but contributions to the present date to favour the wife 60/40. [Applicant wife’s submissions, page 19, para 53].
Accepting, as it does, that the husband’s evidence in relation to post separation financial dealings, any alteration of contribution based entitlements subsequent to separation ought not result from either the diminution of the assets of the parties, or the probability that the husband has other undisclosed assets referrable to that period. Acceptance of the husband’s evidence in relation to post separation financial dealings precludes making the findings of fact necessary to reach such conclusions.
On the other hand, in the ways which have been briefly indicated earlier, to fail to reflect the differences in the circumstances of the parties in the post separation period identified earlier in an adjustment to the wife’s contribution based entitlement would in the Court’s view be unfair to her.
In the post separation period, the disparity of financial resources and enjoyment of the major tangible asset of the parties, combined with the disparate burdens of caring for and providing for the parties’ child, necessitate the wife’s contribution based entitlement being increased in the Court’s opinion.
On balance, and accepting that so concluding involves a significant subjective element, the Court considers that the contribution based entitlements of the parties to the date of separation should be adjusted by 2.5 per cent in the wife’s favour by reason of the post separation period. The resultant adjustment of interests (5% or $30 000) is a tangible reflection of those matters. Overall, the Court thus concludes the contribution based entitlements of the parties to favour the husband by 60 per cent to the wife’s 40 per cent.
Section 75(2)
In relation to s75(2) it was submitted on behalf of the wife that “these clearly favour the wife very heavily for the following reasons”:
a. the wife has the care of [the child] who is aged four and she will continue to have that care for many years to come
b. the pool is quite small and in those circumstances one must make an appropriate adjustment for section 75(2) factors having regard to the real numbers involved are not to be blinded simply by percentages (see Clauson v Clauson (1995) FLC 92-595 at p 81,911);
c. the wife has modest income earning ability whereas the husband has significant income earning ability;
d. the husband potentially has a very significant future asset which should be regarded as a resource in his favour representing the various Queensland substantial developments;
e. the parties lifestyle appeared to have been quite good during the marriage, and the husband has appeared to have maintained that lifestyle (e.g. his use of the corporate boat);
f. the husband has not made full and frank disclosure of his financial position despite requests. At the very least, his affidavit material was not only misleading, but in very substantial respects, on his own evidence, simply wrong. This is a very relevant matter for greater award for section 75(2) factors on the authority of such cases as Weir and Foda, supra. [Applicant wife’s submissions, page 19, para 54].
Counsel for the wife thus submitted that the s 75(2) adjustment should favour the wife 30%. [Applicant wife’s submissions, page 20, para 55].
Accepting, as it does, that the husband’s financial disclosures have been adequate and accurate, no component of any s 75(2) adjustment in favour of the wife will be referable to the matters asserted on behalf of the wife in the foregoing submissions in that regard.
Given the Court’s acceptance of the husband’s evidence in relation to financial matters it is necessary only to record that the alleged lack of disclosure referred to in the wife’s submissions has not been established.
Counsel for the husband referred to two relevant factors in regard to any s 75(2) adjustment, they being the husband’s payment of a significant amount by way of child support, current payments being $817 per month, and the wife being the major carer of the parties’ child, who is almost 5 years of age. The husband thus submitted that the s 75(2) factors favour the wife by 7.5 per cent. Overall, the husband’s proposal would result in the wife receiving 37.5 per cent of the asset pool. [Husband’s Outline of Case Document, page 14].
There are two s 75(2) factors which, it is common ground, undoubtedly favour the wife, the only issue being to what extent they should be seen as doing so.
The husband has a significantly greater capacity to earn income than does the wife. To her credit, the wife has undertaken a course of retraining which she has yet to complete.
The wife’s affidavit evidence in relation to this topic revealed that:
I have commenced a […] course at a cost of $10,000. The course is 18 months at [sic] and the end I would be qualified to work in [relevant employment]. I would anticipate when I complete my course I would be able to earn $400 to $500 per week were I to work full time. Currently, I am about 33% through completion of the course, having started in February, and expect to finish in mid 2009. [Wife’s Affidavit sworn 22 July 2008, page 3, para 11].
Assuming, as is reasonable, that the wife completes her course and obtains employment which is compatible with the needs of the child for whom she has primary responsibility, the evidence suggests that the husband will continue to enjoy a significantly greater income than the wife can anticipate. An adjustment in the wife’s favour for that factor is clearly called for and Counsel for the husband sensibly acknowledged that reality.
Whilst the husband is cohabiting with another person, and the wife may in the future, the Court does not consider this factor should operate to enhance the entitlement of either party having regard to the duration of the parties’ cohabitation, their young ages and the time they have been separated.
The other uncontroversial s 75(2) factor relates to the wife’s primary obligation to care for and accommodate the parties’ young child. This too is a subjective matter but, on any view of it, the reality is that the wife’s greater responsibility calls for an adjustment in her favour.
The husband pays, and will continue to pay, substantial child support, being the sums assessed from time to time to be payable by him. Whilst the Court commends the husband for doing so, unless one assumes, which the Court does not, that child support represents some financial benefit over and above the real cost of caring for a child, that is not a factor which should operate in his favour. Whilst it is perhaps an over-simplification to say that paying real and appropriate child support offsets any adjustment to which the wife might otherwise be entitled, that is not an entirely erroneous way of considering the payment of child support.
On behalf of the wife it was submitted that the evidence before the Court reveals that the husband may ultimately receive as much as $300 000 on the wash-up of the K projects. The evidence supports concluding that there is a possibility that the husband indeed may be so advantaged, although when and how cannot with any confidence be suggested. In litigation determined by reference to the balance of probabilities, the evidence falls short of providing a basis for a s 75(2) adjustment.
The evidence of the husband, which does not seem to now be disputed, but can be accepted in any event, that the liabilities attaching to the potentially doomed, and currently problematic X project cross-collateralised over the somewhat more optimistic C development suggest that the husband may well, through X, lose everything which he might otherwise gain through C.
Each party has made unsupported assertions in relation to the issues surrounding the K property developments. Unless the husband’s evidence should not be accepted, the facts could not be found to support the inferences asserted by the wife. There is no basis for rejecting the husband’s evidence about the K projects, and some corroboration of his allegations about them.
As the evidence makes clear, there is a tangled web of commercial interests involved in X, the nexus with C being the lead lender’s cross-collateralised security over C and the husband’s personal guarantee, albeit with others, for a sum which exceeds by more than ten times the net assets of the parties. The evidence is too vague to enable an adjustment to be made in the wife’s favour by reference to the K projects. Objectively, other than by pure and unsubstantiated guesswork, the evidence does not support adjusting pursuant to s 75(2) by reason of the K projects.
The question remains as to the appropriate s 75(2) adjustment. The Court concludes 10 per cent to be appropriate in the circumstances. Such an adjustment represents a 20% alteration of the parties’ entitlements, or almost $120 000. That is a very tangible reflection of the factors which impel the adjustment.
Conclusion
Provided that it is just and equitable to do so, the Court accordingly concludes that the parties should share the net tangible assets earlier found and quantified in these reasons in equal shares.
The Court is satisfied that such a division of assets would be just and equitable. Broadly speaking, as these reasons hopefully demonstrate, the contributions of the husband significantly outweigh those of the wife after adjusting in the wife’s favour by reference to the post separation period, whilst s 75(2) factors significantly favour the wife. On balance, and acknowledging that others may well reach different conclusions, the Court considers an equal division of the assets to represent a just and equitable exercise of an undoubtedly broad discretion.
Implementation of the Court’s conclusion
On the basis that the wife retains her furniture ($2 000), jewellery ($1 500), paid legal fees ($55 429), ANZ term deposit ($50 000), motor vehicle ($15 000), ANZ account ($2 600) and her superannuation entitlement of $10 000, and is responsible for Professor D’s debt of $3 167, the wife will have retained property worth $133 362 net. Her entitlement to fifty percent of the net asset pool as determined by the Court totals $294 694.50. She is accordingly entitled to receive from the husband a further $161 332.50. When the wife is paid such sum she should transfer to the husband her right title and interest in the jointly owned property at R. The Court will allow the husband ninety days in which to pay to the wife her entitlement. Should the husband fail to do so within that time, the wife may require the husband to liquidate S property and/or R property, at his election, provided that, if the husband elects to liquidate R property, the wife be paid 79.34% of the gross proceeds of sale of such property, or, if the husband elects to sell the S property then the wife be paid 48.16% of the gross proceeds of sale of that property.
I certify that the preceding one hundred and sixty (160) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman.
Associate: …
Date: 19 September 2008
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Expert Evidence
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Remedies
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