Hasard & Hasard

[2008] FamCA 339

FAMILY COURT OF AUSTRALIA

HASARD & HASARD [2008] FamCA 339

FAMILY LAW  -  PROPERTY  -  failure to make full and frank disclosure  -  impossible to value corporate entities  -  consequences  -  treatment of post-separation payments  -  notional additions to asset pool  -  contributions  -  unknown taxation liabilities

Family Law Act 1975 (Cth), ss 79(4)(a) – (g), 75(2), 90MT(4), 90MT(1)(a), 90MZA, 106A
Family Law Rules 2004, Parts 13.1, 13.2, 12.2, 13.15, Rules 13.01, 13.04, Chapters 15 and 16, Division 13.1.2
Family Law (Superannuation) Regulations 2001, Part 6, Reg.12 and 13, Rule 14F
Superannuation Industry (Supervision) Regulations 1994, Rule 7A.06(1), 7A.12

Weir & Weir (1993) FLC 92-338
Black & Kellner (1992) FLC 92-287
Chang & Su (2002) FLC 93-117
Chorn & Hopkins (2004) FLC 93-204
M & M [1998] FamCA 42
C & C [1998] FamCA 143
Biltoft & Biltoft (1995) FLC 92-614
Prince and Prince;  General Credits Australia Limited (Intervenor);  A-G for the State of Queensland (Intervening);  A-G for the Commonwealth of Australia (Intervening) (1984) FLC 91-501

HUSBAND: MR HASARD

WIFE: MRS HASARD

FILE NUMBER: MLF 1162 of 2006

DATE DELIVERED: 19 May, 2008

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: BROWN J

HEARING DATE: 17, 18, 19, 20 December, 2007

REPRESENTATION

THE HUSBAND: In person

COUNSEL FOR THE WIFE: Mr. Grant

SOLICITOR FOR THE WIFE: Macpherson & Kelley

Orders

1. That each of the parties by themselves, their servants and agents, and in their personal capacity and as trustees of the R Superannuation Fund, be and are hereby restrained from dealing with the assets of the R Superannuation Fund save pursuant to these orders and hold such assets upon trust pursuant to these orders. 

1. That forthwith after 30 June, 2008 the parties appoint L & Co. or such other accountant as they agree (and in default of agreement by 7 July, 2008, an accountant nominated by the President of Certified Public Accountants, Australia) to prepare financial statements and taxation returns for the R Superannuation Fund for the year ending 30 June, 2008 and for such of the 2005, 2006 and 2007 financial years in which such financial statements have not been prepared and/or taxation returns not lodged by the R Superannuation Fund, and lodge all such taxation returns as soon as practicable.

1. That upon receipt of an assessment or assessments from the Australian Taxation Office advising of tax due and payable by the R Superannuation Fund in respect of income earned to 30 June, 2008, and any penalties and interest due, the whole of the sum due to the Australian Taxation Office be paid forthwith by the R Superannuation Fund. 

1. That upon receipt by the R Superannuation Fund and by each of the husband and the wife of :

   (a)copy invoices rendered by L & Co. to the R Superannuation Fund to date;  and

   (b)a detailed invoice from L & Co. or such other accountant as is appointed pursuant to paragraph (2) hereof in respect of work undertaken to comply with the provisions of paragraph (2) hereof;

such invoices be paid forthwith by the R Superannuation Fund.

1. That from the assets of the R Superannuation Fund remaining after the making of the payments required by paragraphs (3) and (4) hereof (“the superannuation balance”) the court allocate, as required by s.90MT(4) of the Family Law Act 1975 as a base amount to the wife, out of the husband’s interest in the Fund, that sum which, added to the wife’s interest in the Fund, then constitutes 70% of the superannuation balance.

1. That pursuant to s.90MT(1)(a) of the Family Law Act 1975 whenever the trustees of the Fund (“the trustees”) make a splittable payment out of the husband’s interest in the Fund, the trustees shall :

   (a)pay to the wife or her administrators, executives, beneficiaries, heirs or assignees her entitlement calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and

   (b)make a corresponding reduction in the entitlement the husband would have had in the Fund but for these orders.

1. That paragraph (5) hereof have effect from the operative date, which is four days after the day on which the last of the payments required to be made pursuant to paragraphs (3) and (4) hereof is made. 

1. That the trustees of the Fund do all such acts and things and sign all such documents as may be necessary so that in accordance with the obligations set out under the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the trustees can calculate the entitlement of and make payment to the wife in accordance with paragraph (5) hereof.

1. That the wife do all such acts and things necessary, including but not limited to exercising her request pursuant to Rule 7A.06(1) of the Superannuation Industry (Supervision) Regulations 1994 for the rollover or transfer of the transferable benefits out of the husband’s interest in the Fund to a fund of the wife’s choosing in accordance with Rule 7A.12 of the Superannuation Industry (Supervision) Regulations 1994.

1. That pursuant to Rule 14F of the Family Law (Superannuation) Regulations 2001, any payments from the husband’s superannuation interest made after the trustees have rolled over or transferred the transferable benefits to a fund of the wife’s choosing, are not splittable payments.

1. That having been accorded procedural fairness in relation to the making of these orders, these orders shall bind the trustees of the Fund. 

1. That until the happening of any of :

   (a)the establishment of a separate account in the name of the wife in the Fund;

   (b)the transfer or rolling over into another superannuation fund of the payment split created by paragraph (5) hereof;

   (c)the wife satisfying a condition of release in being paid the payment split created by paragraph (5) hereof;

   (d)the wife executing a waiver of rights within the meaning of s.90MZA of the Family Law Act 1975 in relation to the payment split created by paragraph (5) hereof;

   the husband be and is hereby restrained by himself, his servants or agents from executing a death benefit nomination in favour of any person or doing any other act or thing which would render any part of his interests in the Fund a “not splittable payment” within the meaning of Regulation 12 or 13 of the Family Law (Superannuation) Regulations 2001 and the trustees of the Fund shall give effect to this order.

1. That from the funds standing in trust in the names of the parties with Taylor Splatt & Partners :

   (a)the sum of $2,312 be paid to Westpac forthwith, in respect of account no. … relating to the Toyota Grande Prado Wagon, …;  and

   (b)the sum of $4,895 be paid to S Chartered Accountants forthwith, in respect of fees outstanding for preparation for and appearance at the trial. 

1. That the husband forthwith, and at his expense, do all things necessary to obtain from the Australian Taxation Office and provide to the wife assessments showing the tax assessed as due and outstanding by the following entities in respect of income earned to 30 June, 2004 :

   (a)H Pty. Ltd.;

   (b)RM Pty. Ltd.;

   (c)The Hasard Family Trust;  and

   (d)The R Trust.

1. That within fourteen days of receipt of assessments pursuant to the preceding paragraph, the tax assessed as due and outstanding in respect of income earned to 30 June, 2004 by the entities named in that paragraph (excluding any sum claimed by the Australian Taxation Office by way of penalty or interest accrued after the due date for payment of tax in respect of income earned to 30 June, 2004) be paid to the Australian Taxation Office from the funds standing in trust in the names of the parties with Taylor Splatt & Partners.

1. That after payments pursuant to paragraphs (13) and (15) hereof, the balance then remaining in trust with Taylor Splatt & Partners be disbursed as follows :

   (a)to the wife, a sum which is equivalent to 70% of the balance held in trust plus $90,000, less $90,000;

   [70%X  (balance + $90,000) - $90,000]

   and :

   (b)the balance to the husband.

1. That the wife forthwith do all acts and things and sign all such documents as may be required to :

   (a)transfer to the husband her entire shareholding (if any) in :

   (i)H Pty. Ltd.;

   (ii)RM Pty. Ltd.;

   (iii)R Pty. Ltd.;

   collectively called “the companies”;’

   (b)if she is still recorded as a director of any of the companies, resign as a director of such company;  and

   (c)transfer to the husband any interest in her loan accounts (if any) in the companies. 

1. That save where these orders expressly provide to the contrary, and as and from this date, the husband shall indemnify the wife and forever thereafter keep her indemnified in respect of all or any liabilities of the wife in respect of the companies and the loan accounts, including any liability of the wife to the Commissioner of Taxation, howsoever such liability arises. 

1. That at the request of the husband, the wife shall sign all necessary documents to resign and disclaim her interest as a beneficiary in the Hasard Family Trust and shall release the trust from any past, present or future claim she may have against it and shall forgive and surrender any moneys owed by the trust to her and the costs of any necessary documentation to give force and effect to this order shall be borne by the husband.

1. That if the wife remains a trustee of the Hasard Family Trust, she shall forthwith sign all necessary documents to resign as a trustee and the costs of any necessary documentation to effect that resignation be borne by the wife and the husband shall, as and from this date, indemnify and keep her indemnified in respect of all or any liabilities of the wife as trustee. 

1. That the husband is declared to have sole right, title and interest in the interest standing in his name with CareSuper. 

1. That unless otherwise specified in these orders :

   (a)each party be solely entitled to the exclusion of the other to all property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and for that purpose bank accounts are deemed to be in the possession of the person whose name appears on the bank’s record thereof;  insurance policies are deemed to be in the possession of the beneficiary thereof;  and superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for the payment out of such entitlements; 

   (b)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.

1. That the parties do all acts and things and execute all documents and deeds reasonably necessary to give effect to these orders and should either party fail to execute any document within seven days of being requested in writing to do so, a registrar of the Melbourne registry of the Family Court of Australia be and is hereby appointed and authorised pursuant to s.106A of the Family Law Act 1975 to sign such documents on behalf of such party and :

   (a)the party in default is ordered to pay any and all foreseeable damages to the other party caused by his or her default;  and

   (b)the party in default is ordered to pay all reasonable costs incurred by the other party for the purpose of enforcing this order and proving his or her damages.

1. That a party be at liberty to make an application for costs of and incidental to these proceedings (including reserved costs) by filing written submissions within 28 days hereof;  and

   (a)the other party have a further 28 days in which to file and serve any written submissions in answer to any submissions filed by the other party;  and

   (b)the party applying for costs have a further 28 days in which to make any written submissions in reply.

1. That each submission filed pursuant to paragraph (24) hereof have endorsed on the cover sheet the date on which a copy of that submission was served on the other party. 

1. That within 24 hours of the filing of any submissions pursuant to paragraph (24) hereof, the party filing it fax a copy of it to the associate to the Honourable Justice Brown on facsimile number ….

1. That :

   (a)all documents produced pursuant to subpoena;  and

   (b)all exhibits;

   be returned to (respectively) the person or entity producing them, or the party tendering them, at the expiration of one month hereof or, in the event a notice of appeal is filed, on determination of the appeal. 

1. That all extant applications be otherwise dismissed.

1. That these proceedings be removed from the List of matters awaiting finalisation.

1. That pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel.

AND THE COURT NOTES
That publication of this judgment under the pseudonym  HASARD & HASARD is approved pursuant to s.121(9)(g) of the Family Law Act 1975.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF  1162 of 2006

MR HASARD

Husband

And

MRS HASARD

Wife

REASONS FOR JUDGMENT

APPLICATIONS

1. The litigation which the court is asked to determine commenced when the wife filed an application seeking final property orders and spousal maintenance on 11 April, 2006, some two years after the parties separated.  The trial commenced on 17 December, 2007, more than four and a half years after separation.  The passage of time appears to have done little to reduce the antagonism and distrust between the parties, attitudes which marked their written and oral evidence, and submissions.  The court is asked to make sense of accounts suffused with passion and contested historic narratives.  It is probable each of the parties sought from the legal process something it is not designed to deliver, being vindication through retribution. 

BACKGROUND

1. The husband is 45, the wife 44.  They married in November 1985 and separated some eighteen and a half years later, on 16 April, 2004.  Until separation the family enjoyed a very comfortable standard of living.  They have three children:  J is 15, G is 13 and M is 10.  Final parenting orders were made, by consent, on 2 October, 2007, confirming a shared residence arrangement.  Some few weeks prior to the trial commencing, G moved to live on a fulltime basis with her mother. 

1. The husband is employed as a company manager;  his taxable income for the year ending 30 June, 2006 (his 2007 return had not been prepared) was $184,000.  He lives in a comfortable four-bedroom home at S, for which he pays $346 per week rent.  His “life partner”, P, lives in P but stays with him in S during the winter, and at other times. 

1. After separation the wife undertook further study and qualified as a trainer.  Her taxable income for the year ending 30 June, 2006 was $19,006;  for the year ending 30 June, 2007 it was $14,851.  She lives in a small, two-bedroom rented unit in D, for which she pays $206 per week.

EVIDENCE

1. Findings are made on the balance of probabilities having regard to the evidence and my observations of the demeanour of witnesses. In what follows, statements of fact constitute findings of fact.

1. The wife relied on an affidavit and financial statement sworn by her on 15 August, 2007, and an earlier financial statement sworn on 24 March, 2006.  She also relied on an affidavit sworn by her solicitor, Frances Fox, on 9 August, 2007.

1. The husband relied on an amended response filed on 8 June and what he called an amended further affidavit sworn and filed on 1 October, 2007 which, he said, superseded an earlier affidavit sworn and filed on 25 July, 2007.  He relied on a financial statement sworn on 25 July, 2007. 

1. In evidence was a report of a single expert, Mr L, dated 10 August, 2007, which was annexed to an affidavit affirmed by Mr. L on 15 August, 2007. 

1. The wife, husband and Mr. L were cross-examined. 

1. The wife presented as stressed by the proceedings and distressed at the significant change in her personal and financial circumstances since separation.  Her evidence about financial matters was confused and partial;  I do not doubt that she endeavoured to tell the truth as she recalls it, but her understanding of corporate structures was slim and her recall fragmented and, on occasions, inconsistent.  At one point she said she was “a fifty percent director in the trust”, a statement that encapsulated her comprehension (or lack of it) of the business structures.

1. The solicitors on the record for the wife in the trial were her fourth set of solicitors.  The first had to withdraw after a conflict of interest was alleged.  A second ceased practising family law.  A third ceased practising in the context of proceedings brought by the regulatory authorities.  It is likely this chain of events resulted in her legal costs being more extensive than would otherwise have been the case.  Through the diligence of her current solicitors, a deal of financial evidence was before the court. 

1. The husband, too, consulted three sets of solicitors, although not all went onto the record.  A solicitor filed a notice of ceasing to act on 29 August, 2006 and he was not legally represented after that.  He maintained that he provided full financial disclosure, a proposition I cannot find to be well based.  By his own admission he underestimated the complexity of the case he sought to make and only late in the trial was he able to formulate the specific orders he sought, rather than advancing a form of balance sheet of alleged financial contributions, positive and negative. The specific orders he sought were contained in a document marked as exhibit H-13.  The effect of those orders was described in a table prepared by the husband, marked as exhibit H-16.  Both are annexed to this judgment. 

1. It was difficult for the husband to move his focus from an audit approach but in final submissions he did his best to grapple with the structured approach required by the legislation. 

1. The husband annexed numerous documents to the affidavit filed on 1 October, 2007.  Many are self-serving letters or lists prepared by him.  He relied on assertion, rather than evidence;  source documents were rare.  In a number of areas he failed to adduce any evidence (as opposed to assertion) of financial transactions, in circumstances where he carried the onus of proving a particular fact in issue.  He said it never occurred to him that he needed to substantiate individual debts, although he challenged the wife’s evidence of funds received and payments made by and to her.  He impressed me as an intelligent man but some of his responses could only be described as disingenuous. 

1. Mr. L was appointed pursuant to an order made by a registrar on 11 May, 2007.  The husband made it clear then, and clear in the trial, that he saw no useful role for an expert in the case, as it was his case that the businesses he conducted during the marriage were no longer operating in 2007 and he did not wish to waste matrimonial funds on evidence he saw as irrelevant.  He reiterated, when cross-examined, that a valuation was unnecessary.  He said the superannuation assets could be calculated by adding together two bank statements.  They did not “own” R Pty Ltd.  The three businesses (H Pty Ltd, the family trust and RM Pty Ltd) weren’t trading and “she could have them”, so there wasn’t an issue of their value.  It is interesting that in that analysis he said nothing of a significant debt owed to H Pty Ltd, or debts of any other entity. 

1. The husband maintained a view that Mr. L was not entitled to undertake a “forensic examination”;  he was to provide a valuation.  This distinction, which clearly loomed large for the husband, is arbitrary and not useful.  To value the various entities Mr. L needed to have access to relevant source documents and analyse them.  He was then entitled (indeed, required) to seek further information to explain anomalies and omissions.

1. The order of 11 May, 2007 required the parties to co-operate and do all things necessary to facilitate the appointment of Mr. L to value five named entities “at the date of separation and at present”.  The entities were R Pty. Ltd., R Superannuation Fund, The Hasard Family Trust, H Pty. Ltd. and RM Pty. Ltd.  The husband’s concern about expense was taken into account in that the cost of the report was to be paid from moneys held in trust for the parties by Taylor Splatt & Partners, but in the event the single expert indicated that his professional costs would exceed $7,500, the parties had leave to make further application to the court in respect of the costs.

1. On 10 July, 2007 the wife’s solicitors received an account and tax invoice for $7,500 plus GST (a total of $8,250) from S Chartered Accountants, of which Mr. L is a director.  The wife’s solicitor requested a more detailed account, which was received on 26 July;  at that time, Mr. L advised that his original estimate of $15,000 was still appropriate.  The husband would not agree to the provision of further funds.  The wife’s solicitors advised they would issue an application for the release of further funds to pay the single expert’s fees.  The affidavit sworn by Ms. Fox and relied on by the wife in these proceedings was prepared in support of that application.

1. On 17 August, 2007 another order was made by a registrar, in the course of a defaulters’ hearing, providing that the additional cost of Mr. L’s report of $4,371.76 be met from the monies held on trust by Taylor Splatt & Partners, save that the husband have leave to seek an order from the trial judge that his share of such additional payment be reimbursed to him as part of any property orders.  The wife’s costs of the application she filed on 10 August, 2007 were reserved to the trial judge.

1. The tone of emails the husband sent to the wife’s solicitor in 2007 made his attitude to Mr. L clear.  In person he was courteous to Mr. L and replied to questions Mr. L asked.  However, his obligation to make full disclosure went a long way further than that.  I will refer to Mr. L’s evidence later but the dearth of financial information provided by the husband, and by those directly involved with the husband in business activities, and the time at which some information was provided, made it impossible for Mr. L to complete his task.  To the extent the husband was critical of Mr. L (as to methodology, documents requested and process) I find the criticism unwarranted.  Mr. L presented as a detached and unbiased witness, and I place weight on his evidence. 

LAW

1. I propose to adopt the now well established approach to the exercise of the discretion under s.79.  It is appropriate for the judge to identify the assets to be divided between the parties, identify the liabilities to be taken into consideration and then to determine the manner in which the assets ought to be divided having regard to s.79(4)(a), (b) and (c) considerations.  Then having considered (d) to (g) of s.79(4) the court should determine what further adjustments should be made having regard to s.75(2) considerations, and consider whether the outcome is just and equitable.

CHRONOLOGY

1. The parties bought a unit in M in 1984, which was the year before their marriage.  The wife contributed $14,000 of the $64,000 price.  The husband lived in that unit until they married, when the wife joined him.  The husband was employed at a chartered accounting firm;  the wife was employed in the hospitality industry.

1. In about 1986 they moved to Sydney where the husband took up a position with N Consulting.  The wife managed a shop.  In 1987 the parties returned to Melbourne. The husband remained with N Consulting, working in both Melbourne and Sydney. 

1. In about 1988 or 1989 the parties bought a house in M in which they lived.  They retained the unit at M as an investment property until about 1992, when it was sold. 

1. In 1990 the husband left N Consulting and established R Pty. Ltd., through which he conducted a technology business.

1. The wife continued to work full time in the hospitality industry until shortly before J was born in March, 1993.  After his birth the wife began running training classes.  In 1995 the family moved, again, to Sydney.  G was born in January, 1995 and M in August, 1997, and in 1998 the parties returned to Melbourne.  The husband maintained businesses in Sydney and in Melbourne;  his evidence was of the Sydney business failing and closing in 2000.  After G’s birth, the wife was not in paid employment.

1. The parties then purchased a luxurious home at P, for $425,000, after selling the M house for $240,000.  The home came with a mooring at which their sports cruiser boat was kept. 

1. In 2001 the husband entered an agreement with an accounting firm, B Company.  In a merger of the accounting practice with his technology company, he became a director of B Company and acquired a one-sixth interest in the accountancy practice conducted through the B Practice Trust.  B Company acquired a five-sixths interest in the R Practice Trust.  Mr. L’s evidence was that this merger would have been valued at the market value of both businesses.  He was not provided with any documentation relating to the merger.  Nor was the court.  Mr. L was not provided with any information that acknowledged the value of the merger.  Nor was the court. 

1. The husband’s evidence was that at this time he created H Pty. Ltd., which was the trustee of the Hasard Family Trust, which held the interests in the R Practice Trust and the B Practice Trust.  Information provided by B Company to Mr. L confirms that income due to the husband from the merged entities was channelled through the Hasard Family Trust.  In 2004 on a tax basis the trust received $245,000;  the figure on an accounting basis was $239,320.  In addition, a licensing fee of $10,000 per month was paid to H Pty. Ltd. (the trustee) for a piece of software licensed to R Practice Trust, taking gross earnings to $365,000 or $359,320.  The wife’s evidence, which I accept, was that prior to separation the husband told her the business was “going global”.  Their lifestyle was lavish. 

1. According to Mr. L’s analysis, H Pty. Ltd. owned the software developed by RM Pty. Ltd.  The $10,000 per month licence fee paid by the B Practice Trust to R Pty. Ltd. was then paid to H Pty. Ltd., which paid a management fee to RM Pty. Ltd. 

1. The husband’s evidence was that he received a wage from R Pty. Ltd. (the trustee of the R Practice Trust) and that the wife received a wage from RM Pty. Ltd., a company established in 1998.  He referred to intercompany loans between H Pty. Ltd., RM Pty. Ltd. and the Hasard Family Trust, personal loans from H Pty. Ltd. and taxable dividends from H Pty Ltd and the Hasard Family Trust.

1. The parties separated on 16 April, 2004.  The husband stayed in the former matrimonial home;  the wife initially rented another property in P for $310 per week.  They argued about the children and money but, fairly soon, a shared residence arrangement was operating.

1. The wife, who had not been in paid work, obtained casual work as a waitress and sales assistant from about June 2004 until November in that year. 

1. Soon after separation, the husband “demerged”, to use his expression.  He transferred his one-sixth interest in the B Practice Trust back to B Company.  However, he did not receive back the five-sixth interest in the R Practice Trust.  According to him, he received less than $1,000 nett for the shares and intellectual property owned by R Practice Trust.

1. Mr. M of B Company advised Mr. L that consideration due to the husband for the transfer of various shares equated to approximately $3,700 but that this amount was offset against debts due by the husband to the B Practice Trust.  Mr. L’s evidence was that the explanation was “very unorthodox”.  He said the income was increasing, not diminishing, and he could think of no plausible reason why the husband would give up the substantial earning capacity for $3,700.

1. Documents produced pursuant to subpoena served by the wife, and Mr. L’s communications with B Company, suggest that B Company waived some $144,000 in liabilities, together with another $18,000 said to be owing by the husband or his group, when the husband “demerged”.  On one construction, the figure could be higher.  In the absence of a plausible explanation, this does nothing to allay the suspicion that the husband has had access to undisclosed assets or income.  I cannot say in what entity or entities the waived liabilities lie, or if the waiver is included in post-demerger financial statements of such entity or entities.

1. Mr. L was told that the R Practice Trust business continued to trade from the B Company premises for twelve to eighteen months, conducted by two “technical employees”, then moved to a private residence.  It ceased trading approximately twelve months later.  According to the husband, the employees took on the business in lieu of outstanding employee entitlements.

1. The evidence was of the husband actually finishing at B Company in about August 2004 and receiving three months salary (some $39,000) and three months licensing fees (some $30,000), which would take him through to about November 2004.  The Deed of Finalisation referred to an “in principle” resignation date of 31 July, 2004, and a departure date, which was the earlier of three months from the resignation date or the date on which the husband obtained alternative employment.  The redemption date (in terms of units and shares, etc.) was 30 June, 2004.  On this evidence it is clear that the husband continued to receive income from the B Group well into the 2005 financial year.  It is not possible to say if it were channelled through the trust and RM Pty. Ltd., as it had been before.

1. The husband’s evidence was then of obtaining employment in which he earned about $44,000, prior to commencing with T Pty. Ltd. in September 2005.

1. In July 2004 the wife sold the P property for $830,000.  The husband remained there until settlement in October.  The sum available to the parties from the deposit, of $64,735, was paid to the wife on 8 October, 2004.  The balance was paid to Taylor Splatt & Partners and stood at $331,965.23 at 12 December, 2007.

1. In November 2004 the wife commenced employment at F Company as an instructor. She remained there until August 2006 when she obtained employment as an instructor with …, on a sub-contracting basis.  In March 2007 she obtained employment with …, on the same basis.  She also has a few private clients. 

1. Once the P property sale was settled, the boat could not be kept on its mooring.  The husband organised for it to be left at a neighbour’s mooring but in due course that property, too, was sold.  The boat, registered in the wife’s name, lay idle and the husband paid nothing for its registration, insurance or repairs.  The wife moved it to the S Marina and, in December 2005, sold it for $30,000.

1. In about September 2005, the husband took up employment as CEO with T Company, a position he retains.  His taxable income of $184,000 that year represented only nine months work with that business.  He produced no contract of employment or other information relating to that position.  All evidence referable to it was gleaned from material produced pursuant to subpoena served by the wife.

1. After separation the husband withdrew a sum (said to be $84,000) from the family trust and the wife maintained a complaint in relation to that until trial.  Cross-examined about it she responded “I don’t know” and it was not submitted it should be notionally added back to the pool or taken into account.  I proceed on the basis that the withdrawal was for proper purposes.  He also withdrew a sum from the parties’ superannuation account;  I accept it was withdrawn to pay A.T.O. liabilities.

1. As the husband put his case, there was some confusion between notional add-backs or deductions (to be taken into account in establishing an asset pool) and a weighting of contributions (positive and negative) based on the same evidence.  I will consider a number of his submissions and, in due course, determine whether a finding is relevant to the asset pool or might appropriately be considered in assessing contributions.  Prior to doing that I will set out the broad effect of the orders sought by each party and consider the submissions referable to financial disclosure.

EFFECT OF ORDERS SOUGHT

1. Although the husband spoke in terms of the non-superannuation asset pool being divided equally, the orders he sought would result in the wife paying him money.  On his analysis she would be entitled to only $118,000.53 of non superannuation assets.  She has already received assets valued at $148,735, so owes him $30,682.  She would be entitled to $252,000 of superannuation assets (excluding his post separation fund) but unless she could fulfil a condition for early release, could not access those funds for many years as she is only 44.  The parties would retain unspecified liabilities and be liable for unspecified expenses on the winding up of all corporate entities which would include, but might not be limited to, taxation liabilities, accounting fees and ASIC charges.

1. The parties would otherwise retain the benefit of assets received by them to date, and assets in their possession, save that the wife would return a sideboard and chairs to the husband.

1. The effect of the orders sought by the wife would be that she would receive 70% of the funds held in trust and be entitled to 70% of the superannuation assets (excluding the husband’s post-separation fund).  The husband would be liable for obligations of the corporate entities, including taxation liabilities, accounting fees and ASIC charges.  The parties would otherwise retain the benefit of assets received, and assets presently in their possession and she agreed to return the sideboard and chairs to the husband. 

FINANCIAL DISCLOSURE

1. The husband agreed that he signed an undertaking as to disclosure and filed it on 25 July, 2007. He was aware that it required confirmation that he had read Parts 13.1 and 13.2 of the Family Law Rules 2004. Given the competing arguments advanced in respect of disclosure, it is useful to summarise the relevant obligations.

1. Rule 13.01 contains the general obligation to give full and frank disclosure of all information relevant to the case, in a timely manner.

1. Division 13.1.2 relates to the duty of disclosure in financial cases.  Rule 13.04(1) contains a comprehensive list of matters which must be disclosed.  Rule 13.04(1)(g) requires disclosure about any disposal of property made by the party, a legal entity (as defined in paragraph (c)), a corporation or a trust (as defined in paragraph (f)) that may affect, defeat or deplete a claim in the twelve months immediately before the separation of the parties or since the final separation of the parties.  Rule 13.04(1)(h) requires advice of liabilities and contingent liabilities which must include liabilities to the Australian Taxation Office.

1. Part 13.2 provides for the disclosure of documents in all cases. The duty of disclosure applies to each document that is or has been in the possession, or under the control, of the party disclosing the document and is relevant to an issue in the case. A note to the rule contains a cross-reference to rules relevant to the documents which must be disclosed at a conference in a property case (Part 12.2) and at a trial (Chapters 15 and 16).

1. Rule 13.15(2) provides that a party commits an offence if he or she makes a statement or signs an undertaking which the party knows, or should reasonably have known, is false or misleading in the material particular.

1. Rule 12.02 provides that at least two days before the first court date in a property case, each party, must as far as practicable, exchange with each other party a copy of a number of specified documents.  These include a copy of the party’s three most recent taxation returns and assessments and documents relevant to superannuation interests, including, if a member of a self-managed superannuation fund, a copy of the Trust Deed and the three most recent financial statements for the fund.

1. Further, the rule requires the provision of documents relating to any corporation or trust in relation to which a party has a duty of disclosure under Rule 13.04, including financial statements for the three most recent financial years.

1. Thus, when the matter was first before the court in May 2006 there was an obligation to provide tax returns for the previous three years for each of the corporations, trusts and superannuation fund.

1. Rule 12.05 then sets out the documents which must be exchanged before a conciliation conference.  The list includes, if they have not already been exchanged, a copy of all the documents mentioned in Rule 12.02 as well as the documents specified in Rule 12.05(2)(c).  Thus, the rules provide a blueprint for production of documents, and a person who acts for him or herself can be left in no doubt of what is required. 

1. A conciliation conference was scheduled for 5 July, 2006.  These documents should have been provided for that conference.

1. The husband relied on the fact that he authorised his accountant and those at B Company to co-operate with the wife’s solicitors and provide documentation.  His evidence was of being disconcerted to learn that neither source had been as forthcoming as he imagined they would be, although he did concede that his own relationship with his accountant had been adversely affected by his failure to pay outstanding fees.

1. While there will be circumstances where it is appropriate to provide an authority to a third party to produce documents requested by another party, this is not a means by which one can abdicate from one’s own responsibility to make full financial disclosure.  Further, what the husband did was to put the costs of seeking documents which he was required to produce on to the wife;  it was her solicitors who had to chase up the documents from his accountant, or at least attempt to do so.  It was they who had to contact him when documents were not forthcoming.  It was they who had to resort to preparing and serving subpoenas.

1. The evidence on which the husband relied made it very clear that he had numerous documents which he did not produce, and which were relevant to the proceedings.  For example, he relied on a letter to him from his accountants, L & Co., dated 20 September, 2007, which is annexure F to his affidavit.  In that letter Mr. E referred to numerous attachments, including the following :

   ·H Pty. Ltd. financial accounts prepared to 30 June, 2005;

   ·H Pty. Ltd. income tax account from the ATO as at 20 September, 2007;

   ·H Pty. Ltd. integrated client account from the ATO;

   ·Schedule from L & Co. relating to outstanding fees;

   ·Hasard Family Trust preliminary accounts prepared to 30 June, 2005;

   ·Schedule showing outstanding accountancy fees re Hasard Family Trust;

   ·RM Pty. Ltd. financial accounts prepared to 30 June, 2005;

   ·RM Pty. Ltd. income tax account as at 20 September, 2007;

   ·RM Pty. Ltd. integrated client account from the ATO;

   ·Schedule for L & Co. re outstanding fees re RM Pty. Ltd.;

   ·R Superannuation Fund financial accounts prepared to 30 June, 2006 (with a note that the husband held the 30 June, 2006 financial accounts and tax returns);

   ·Schedule of fees due to L & Co. by R Superannuation Fund;

   ·R Superannuation Fund, ATO income tax account, integrated client account and superannuation account.

1. Although the husband and wife were both shareholders (and directors until at least December 2004, when the wife says she resigned) of H Pty. Ltd. and RM Pty. Ltd., the evidence made it clear that the husband was the person who made the business decisions.  He did not suggest that he consulted the wife prior to “demerging”.

1. The inadequacy of the documents the husband provided to the court and to Mr. L can be gauged by comparing the list of documents Mr. E sent to the husband on 20 September, 2007 and the list of documents available to Mr. L when he finalised his report in August that year.  Of the documents listed in paragraph 61 of this judgment, only invoices from Mr. E could fall within paragraph 6 of Mr. L’s report, being (potentially) part of those described in paragraph 6.25 of that report.  While a few documents certainly came into existence between 10 August, 2007 and 20 September, 2007, many must have been prepared earlier, and none was produced after acquisition by the husband.

1. Mr. L received no documents from the husband;  the two and a half pages of documents Mr. L listed in his report were provided by the wife’s solicitors.  He met with Mr. M to discuss the husband’s involvement with B Company and, in particular, the arrangements surrounding the husband joining, and then departing from, B Company.  After that meeting he wrote to Mr. M, on 26 June, 2007 seeking further information.  No reply had been received when he completed his report on 10 August, 2007.

1. Mr. L’s evidence was that he would have expected a number of documents to have come into existence at the time of the merger.  He spoke of a sales agreement, a transfer agreement and schedules identifying the value of the two businesses.  Mr. M told him that no valuation of the husband’s business was undertaken at that time, but they were reasonably happy to say it was worth one-sixth of B Company.  Exhibit W-7 was a letter from Mr. M to the subpoena clerk at this court, dated 19 October, 2007, sent in response to a subpoena served by the wife.  At that time Mr. M produced copies of a number of documents relating to the husband’s exit from the practice, including a Deed of Finalisation, a Deed of Indemnity, a share sale agreement, a Deed of Surrender and Redemption, Heads of Agreement for the husband’s exit, the contract of sale (to the two employees), B Company EBIT valuation incorporating R Pty Ltd assessment and value and BW capital, a letter sent to Mr. L on 5 October, 2007 and B Company transaction documents.  The plethora of documents evidencing the husband’s exit points up the improbability of no documentation evidencing his entry.

1. In relation to the merger Mr. M advised that “there are no formal documents in relation to the introduction of the [Hasard] Family Trust other than the issue of units”.  He continued :

   The agreed valuation methodology, based on capitalised earnings, is long-standing but unwritten.  The calculations are performed at the end of each financial year and reported to the Board. 
   The valuation performed for the purpose of the [Hasard] Exit was prepared in line from the calculation for Mr. [B] as at 31 March of 2004, some three months earlier.  This was an arms length transaction providing for the exit of Mr. [B] from all practice entities.

1. Mr B was the founding partner of B Company, who left the practice some three months prior to the husband.  Mr. B negotiated his departure in close proximity to the husband.  I accept as sound Mr. L’s opinion that what Mr. B was paid for his interest was relevant given the advice that the calculation methodology was consistent with that used in respect of the husband’s departure.  He sought further information but in a letter dated 12 November, 2007 Mr. M advised that the information would not be provided unless compelled by a court to do so.

1. Mr. L was never shown any documents that reflected the statement that calculations were made at the end of each year and reported to the board;  for example, minutes of board meetings.

1. Mr. L explained that the documents provided by Mr. M, after he had completed his report, witnessed the mechanical transfer of equity.  They provided no substantial material which could be used to value the businesses.

1. That letter (from B Company to Mr. L) was in evidence, as exhibit W-8.  It commenced with an apology for the delay.  Mr. L learnt from the letter of 5 October, 2007 that the husband had failed to meet key performance indicators.  He was understandably intrigued by this assertion, having been provided with no written documents whatsoever which related to the terms of the merger.  In that letter dated 5 October, 2007, Mr. M also advised that :

   “Our initial agreement with [the husband’s] investment entity contained mechanisms whereby we could initiate a demerger if certain working capital requirements were not met.  The demerger clause which applied for a three year period from 1 October, 2001 could be triggered in the event of a working capital deficiency greater than $50,000.

   Please note that working capital was deficient at the time of [the husband’s] departure and this was also the case regularly during his equity participation in the Group.

   The demerger clause provided for each party to surrender equity in the other for no value in that any deficiency would be met in proportion to ownership.

1. This was the first time that Mr. L was given any indication of the KPIs.  He had never previously been told of a demerger clause and nothing provided to him to date showed the business was heavily reliant on the husband’s activities, as asserted in the letter of 5 October, 2007. 

1. The statements suggesting the husband’s departure from B Company was referable to problems with the husband’s performance, participation and capital sit uneasily with the thrust of the husband’s evidence in his affidavit.  There he deposed to “exiting” the business in the best interests of the children.  He said the “career change” involved “considerable personal and financial sacrifice”, a sacrifice he made because the children (for whom he was by then solely responsible for half the time) were able to have more time with him. 

1. It was only when pressed in cross-examination that the husband spoke of “informal documents” that came into existence at the time of the merger.  Asked why he did not provide these documents to Mr. L, he said that Mr. L did not ask for them and he did not think them relevant, a risible response.  They were not tendered by him during the trial.  An exchange between counsel for the wife and the husband revealed that the husband produced a “marked up proposal” (being one of the “informal documents”) to counsel on the second day of the trial but then refused to leave it with him overnight, advising he wanted to “refresh” his memory and that counsel could have it on the third day of the trial.  This cat-and-mouse behaviour of the husband is illustrative of his attitude to the obligation to make full and frank disclosure.

1. I note that a letter from Centrelink to the wife, dated 21 February, 2005 (further referred to in paragraph 137 of this judgment) refers to investments of the Hasard Family Trust to which Centrelink had not yet calculated a value, being 90 units in R Practice Trust at cost of $90 and 89,965 units in the B Practice Trust at $35,000.

1. Mr. L did his best to obtain financial statements for all relevant entities to 30 June, 2006.  That was reasonable, given that nothing suggested anything had been done in respect of accounts to 30 June, 2007.  He was not given accounts for H Pty. Ltd. to 30 June, 2005 and was criticised for not asking for them, a criticism I am satisfied was unwarranted.  First, as earlier noted, the obligation to produce the relevant financial statements and taxation returns rested with the husband.  Second, the figures to 30 June, 2005 could be expected to be included, as comparators, in the financial statements to 30 June, 2006.  Even in the trial the husband failed to produce the financial statements for H Pty. Ltd. to 30 June, 2005, and sought to rely only on two pages of notes to those financial statements which, on their face, state they are to be read in conjunction with the attached compilation report.  The pages are numbered 6 and 7.  He did not show these pages to Mr. L.

1. In October 2007, out of the blue, the solicitors for the wife received the management accounts for the Hasard Family Trust for the year ending 30 June, 2005 from the husband’s accountant, attached to a letter dated 17 October, 2007.  Preliminary accounts for the period for the trust had been sent to the husband on 20 September, 2007.  The evidence satisfies me that, on the husband’s instructions, his accountant did not send a copy of the management accounts to Mr. L.

1. In Weir  &  Weir (1993) FLC 92-338 the court pointed out (at 79,593) a line of cases leading up to the decision of the Full Court in Black  & Kellner (1992) FLC 92-287 in which the court discussed the duty of a party involved in property proceedings in this jurisdiction to make full disclosure of their financial affairs. The Full Court found that once it was established that there has been a deliberate non-disclosure, then the court should not be duly cautious about making findings in favour of the innocent party, pointing out that “to do otherwise, might be thought to provide a charter for fraud in proceedings of this nature”.

1. In Chang  &  Su (2002) FLC 93-117 the Full Court upheld the approach of the trial judge in that case who, the Full Court determined, did the best she could with limited material. At 89,196-7 Kay and Dawe JJ. (with whom Finn J. agreed) found that due to the findings of non-disclosure by the husband, the only imperative the trial judge could fall back upon was that the order be just and equitable. The Full Court quoted with approval the passage from Weir  and Weir referred to above. 

1. Since that time, the obligation to make full financial disclosure has been spelt out even more clearly in the Family Law Rules 2004.

1. Full financial disclosure is not only important in cases where it is alleged that a party has dealt improperly with assets or hidden significant assets.  It can be particularly important when parties have structured their business dealings through intermeshing companies and trusts, as in this case.  It is important to know the real status of asserted debtors and creditors and, for example, whether certain debts may be forgiven or not pressed.  It is important to know where liability would lie in a liquidation or winding up.  It is important to know the origins of taxation obligations, and to ascertain who had the benefit of funds to which they relate and whether funds which might have been available to meet them, have been used in other ways.  It is important to know the nature of all relevant assets, and income earned.  Until the very end of the trial the husband sought to introduce fresh documents to support claims he then sought to make, but he made no attempt to produce documents which, the court had made clear, were essential.  Basic examples are full financial statements for H Pty. Ltd. for 2005 and 2006.  But there were also large gaps in the material relating to the other corporate and superannuation entities.

1. The dearth of core ATO material is also of concern, the husband relying, effectively, on a letter of demand which provides no detail of specific assessments, dates or payments. 

1. Overall, I find force in the wife’s submissions about the husband’s failure to make full and frank financial disclosure.  The husband elected not to be legally represented.  He earns a high salary (he complained that it put him in the highest child support category) and holds a position of corporate responsibility.  He is entitled to act for himself but is not entitled to use that as a shield to deflect obligations cast on litigants.  It is reasonable to find that his failure to make full financial disclosure stemmed from a reluctance to lay his past and current financial affairs, and those of relevant entities, open for inspection and analysis.

ASSETS
Funds in trust

1. At 12 December, 2007 some $331,965 stood in the Taylor Splatt & Partners trust account in the name of the parties.  The sum will now be a little higher;  counsel for the wife suggested a figure of about $333,000.  In January 2005 it was agreed that $15,563.34 be paid to discharge the Mastercard debt in the husband’s name, $14,697.10 paid to the accountants, L & Co., and $13,358.40 to the Australian Taxation Office.  The parties reserved the right to argue ultimate responsibility for these amounts.  Neither did that in the trial.

Deposit for P Property

1. The wife received $64,735 on 8 October, 2004.  Her evidence about the investment of this sum, its disbursement, and its relevance to an amount in her bank account at trial was convoluted and not very satisfactory.

1. In her affidavit the wife said she invested this sum “to cover my legal expenses, rent and expenses of the children”.

1. Her oral evidence was that $55,000 of the original sum went into a progress saver account in October 2004;  the balance went to her everyday ANZ account, on which she drew for living expenses.  She then said she took $55,000 out of the account and transferred it into a term deposit.  There was reference to at least $40,000 going into a term deposit and, later, to a $60,000 term deposit with Esanda.  When documents showed that she withdrew $73,907 from the account into which the $64,735 was originally paid, on 14 October, 2004, she said that sum was “reinvested, for sure”.  Documents record that on the same day $55,000 was transferred to an ANZ progress saver account.  Asked what happened to the balance of the deposit moneys she said “I’d say $10,000 went into a term deposit”.

1. A good deal of cross-examination went to the difference between the $73,907 withdrawn on 14 October, 2004 (which included the $64,735 deposit) and the $55,000 transferred to the ANZ progress saver account.  Records showed that on 14 October, 2004, $18,900 was paid into the R Superannuation Fund.

2. To put that in context one has to look at dealings with that fund.  It was common ground that on 16 September, 2004 the wife withdrew $18,900 from the R Superannuation Fund.  She said she saw her financial predicament as desperate, consistent with a letter her then solicitors wrote to the husband’s then solicitors on 13 August, 2004, advising of an intention to make an application for interim spousal maintenance and a Barro order.  It is probable she subsequently learned one cannot access superannuation funds in that way, and returned $18,900 to the superannuation fund on 14 October, 2004.  Part of the initial $18,900 withdrawn from the superannuation was probably still in the wife’s account when the $64,735 was paid into it.

1. The wife’s case was opened on the basis that she had $19,500 in a bank account.  Evidence adduced on the following day showed her to have $32,901 in that bank account, down from $45,728 on 6 November, 2007.  Her evidence was that funds received from the deposit and from the sale of the boat (to which I will refer later) went into this account, as did Centrelink payments and her earnings.  It is probable that the $19,500 of which counsel spoke in his opening had been arbitrarily attributed by her as that part of the total sum then in the account referable to the deposit and boat money.  No documentary evidence supported that arbitrary allocation. 

1. The husband sought that the whole of the $64,735 be notionally returned to the pool.

Boat

1. I am satisfied the wife sold the boat in December 2005.  She agreed that the figure on the boat insurance in June 2005 was $65,000.  Her evidence was of the boat needing very considerable work on it and of the husband, effectively, leaving it to sink.  I accept her evidence of having work done on that boat to effect the sale, costing some $3,000.  I also accept as true her evidence that she sold the boat for $30,000 to … of …, to whom she was introduced by … at S Marina.  It is true that the documentation is scant, however I do not find the husband’s characterisation of this as fraudulent or deceptive behaviour to be sound. 

1. The husband’s evidence was that he was not told of the boat’s sale until he was at a conciliation conference in May 2006, when the wife’s solicitor advised him of it.  That is probably true.  The wife may well have asked her solicitor to tell him soon after the sale but there is no evidence that occurred, and the husband’s account is consistent with his sudden cessation of payments to the wife in May 2006.

1. The wife agreed that on 19 May, 2005 she wrote to the husband about the boat, expressing her view that the sooner it was sold the better.  The husband complained that she reneged on a promise to give him 40% of the proceeds, but that does need to be seen in the context of the note, which he tendered, in which she said :

   If you wish to spend money on it OK with me but not through the house funds.  Otherwise sell as is and 60% of sale to me in my account 40% of sale to you in your account.  I don’t want it to go into trust where the lawyers will just make more money and it will sit in an account.  Hopefully we can move forward on this matter soon.

1. In that letter, on which the husband relied, the wife made clear that she wanted the boat sold and spoke about dividing the proceeds between them.  It is clear that nothing was done about the sale of the boat until she took matters into her own hands at the end of that year. 

1. From the $30,000 received for the boat, the wife had to deduct the $3,000 spent on repairs, $500 for insurance and a small sum for registration.  She thus received a nett of around $26,000.

1. The husband sought that the whole of the $30,000 be notionally included in the pool.

Funds provided by husband to support wife and children after separation

1. The wife agreed that the husband paid the rental bond of $2,000 for the property into which she moved at separation, and the first month’s rent of $1,343.  She received $7,000 (in two tranches) to set herself up;  whether she took $4,000 and was given another $3,000, or was given the whole $7,000, matters not.  His evidence was of paying her between $1,500 and $3,000 per month for the first three months, when she was not in paid work, although I accept her evidence of starting work as a waitress in June 2004.  He said he then reduced the figure to $1,000 a month until he got a new job (which in this context he dated at November 2005) when he increased it to $1,500 per month.  When he discovered that she had sold the boat, in May 2006, he checked with the Child Support Agency.  At that point he told her that he was obliged to pay only $592 per month by way of child support, and she would get $600 per month;  his evidence was of telling her “you have cost me about $15,000”, which I took to be an estimate of the sum he saw himself as having paid over and above child support.  He paid her $600 a month for some three months, at which point an assessment issued from the Child Support Agency.  From then he paid child support of $1,216.95 per month.  He spoke of being given a credit of $504 per month arising from the payment of school fees, and that his monthly obligation was really $1,720.

1. It is trite to say that child support is not spousal maintenance.

1. It was hard to make sense of the wife’s evidence about these payments.  She did concede payments from 1 December, 2004 until her solicitor told him the boat was sold in May 2006, and that they were paid into her access advantage account.  She said the figures differed but it is probable they averaged between $1,000 and $1,500 per month for that period. 

1. These figures need to be considered in the light of the child support likely to have been assessed at that time.  It is probable the husband’s own estimate of $600 per month was inaccurate;  his evidence was of an assessment of $1,216.95 per month in about August 2006.  Given a taxable income of $184,000 to 30 June, 2006, the sums paid by the husband towards the support of the children, prior to assessment, could not be seen as excessive. 

1. In his final submission the husband sought that the $2,000 bond (which was returned to the wife when she vacated the first property into which she moved) be notionally included in the pool.

Notional add backs

1. The three sums claimed by the husband (the deposit, the boat proceeds and the rental bond) total $96,735.  If one includes the nett, rather than gross, figure for the boat, they total $92,735. 

1. The husband’s case was that the whole of the deposit, the whole of the sale proceeds (which he disputed) and the whole of the $2,000 bond be notionally added back to the pool.  The wife’s submission was that $32,901 be added back to the pool, being the amount in her account at the time of trial. 

1. In final submissions, the wife’s case was put like this.  She received $64,735 in October 2004 and around $26,000 (nett) in about January 2006.  These total $90,735.  She expended some $46,000 on legal costs.  She has $32,901 left.  The sum of $11,834 is not accounted for.  Given her reasonable expenses exceed her income by some $300 per week, this figure should not be brought back into the pool, but should be viewed as reasonably expended by her.  In this analysis there was no reference to the additional $2,000.

1. In her financial statement sworn on 15 August, 2007 the wife deposed to having paid $28,702 in legal fees and to approximately $17,000 being outstanding for legal fees at that time.  Together these amount to $45,702.  In opening, counsel for the wife said that the wife’s legal costs incurred since his instructor took over were around $46,000 and that figure was referred to, again, in his final submission.  In examination in chief the wife confirmed the statement made by him in opening.  It was her evidence that there was then about $5,800 outstanding, plus a bill of $1,647 from 2005, relating to meetings with her former solicitor, Mr. Splatt, and a forensic accountant. 

1. In Chorn  &  Hopkins (2004) FLC 93-204 the Full Court, at 79,322-3, summarised earlier Full Court authorities on the issue of notional inclusions in the asset pool, including the inclusion of sums expended by a party on legal costs. The Full Court noted that the treatment of funds used to pay legal costs remains ultimately a matter for the trial judge but regard should be had to the source of the funds. If the funds used existed at separation, and are such that both parties can be seen as having an interest in them, then such funds should be added back as a notional asset of the party who has had the benefit of them.

1. There is no doubt the funds applied by the wife to pay her legal expenses came from the sale of assets which were in existence at the time the parties separated, and were matrimonial property.  I note the wife’s submission that the husband’s refusal to make full financial disclosure increased her costs.  That may be relevant to an application for costs, but is not relevant to the question of the notional inclusion.  In the circumstances of this case, the matrimonial funds expended by the wife on legal fees should be added back.  It is difficult to specify the sum with certainty, but I find it reasonable to fix it at $46,000. 

1. In Chorn  &  Hopkins the Full Court considered other circumstances in which a party seeks to notionally add funds back to the pool.  The Full Court approved a statement made by the Full Court in M & M [1998] FamCA 42 (Baker, Kay and Chisholm JJ.) as follows :

   There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses.  Neither the Family Law Act nor the case law requires that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements.  Parties are entitled to continue to provide for their own support.

1. The Full Court in Chorn &  Hopkins also approved statements of another Full Court (Nicholson CJ., Chris and Kay JJ.) in C & C [1998] FamCA 143 where they said :

   Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding moneys reasonably disposed of back into the pool ought to be the exception rather than the rule.  The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives.

1. It is impossible to know what part of the $32,901 now in the wife’s account could be traced to capital received.  Earnings, child support and Centrelink payments go into the account.  On the wife’s analysis, it is improbable she could be accumulating savings (save, briefly, as cash flow waxes and wanes), as her reasonable expenses exceed her income.  In these circumstances, I include $30,000 of the current figure in the pool.  This brings to $76,000 the notional inclusion.

1. Given her financial position at that time, I do not find it appropriate to notionally return the balance of the funds (some $16,735) to the pool.  The husband tended to equate child support with support for the wife.  Her financial position was parlous, particularly when compared with her pre-separation standard of living.  His financial statement shows an excess of income over expenditure.  The sum in question would represent very modest spousal maintenance to trial.

Car in wife’s possession

1. Since July 2004 the wife has had possession of a Honda CRV, which the husband valued at its purchase price of $27,000.  It is a 2000 model and the wife attributed a value of $14,000 to it in her financial statement.  There was no expert evidence of valuation. 

1. The husband sought that the Honda be included in the pool at its acquisition cost, rather than its current value, a submission I do not find to be well-founded.  The car will be included at $14,000.  I take into account that matrimonial funds were used to acquire it.  The husband retained the $5,350 received as a trade-in when the Honda was bought;  rather than include that in the pool (as he did) I offset that against additional matrimonial funds which went into the Honda. 

Cars in husband’s possession

1. At the time the parties separated, they had a Toyota Prado motor vehicle.  The husband spent some time complaining about the wife’s desire for this car and his reluctance to acquire it during the marriage.  The reality is that it was acquired and, until their separation, monthly payments were made in respect of it.  It was almost certainly run as a company vehicle and the wife probably guaranteed the debt. 

1. The husband drove the Prado after separation.  He sought credit of $30,294 for the 34 monthly Prado payments prior to surrendering the car. 

1. The wife’s evidence was of the husband failing to make necessary payments;  she alleged he did this so she would be sued for the residual figure.  His evidence was of making 34 monthly payments of $891 on behalf of H Pty. Ltd. (as at 20 July, 2007);  he complained in an email of that date that the $30,294 came from after-tax income as the company was no longer trading and advised he was discontinuing the repayments and (unless the wife took over the payments) it would be surrendered to Westpac the following week.  He attached to his affidavit a letter of demand from Westpac, dated 5 September, 2007, claiming a shortfall of $2,312.13.  This was not shown as a liability in his financial statement.  If the wife guaranteed the contract (an inference from her account) she would be vulnerable to a claim for this figure and she referred to contact with a debt collector.  It was not referred to in her counsel’s submissions.

1. The husband’s evidence was that after divesting himself of the Prado he bought a 2000 Holden Berlina wagon for $7,000, in July 2007.  He included this car in his financial statement, at the figure of $7,000.  There was no evidence pre-separation funds went into this vehicle and the wife did not seek its inclusion in the asset pool.

1. When the husband was challenged about his very significant expenditure on taxis in the six months prior to trial, he deposed that he was still $100 per month ahead, relative to the Prado payments;  that is, he was only spending around $790 per month on taxis.  It then transpired that he had given the Holden wagon to his partner, P.  He said that as she lives in P, and visits him and the children often, she does an enormous amount of travel and it was cheaper for her to use that car, and for him to take taxis.  He agreed that she lived at his home for “maybe four months” over the winter. 

1. Initially, the husband said that P could not afford her own car.  He then said that she has her own car, but it is not one which he thinks is reliable for long travel.  Asked why, in these circumstances, he did not use her car for transport in Melbourne, he said “it’s a manual – I’m a goose – I cannot drive a manual”. 

1. I will consider the claim for Prado payments when assessing liabilities.

Chattels

1. The husband deposed that the wife took chattels from the former matrimonial home of $25,000, leaving him with chattels of $10,000.  His evidence was of her thus obtaining “an advantage through deception of approximately $15,000”, and he sought this be taken into account.  On his own account of the things he alleged she took (much of which she denied) the figure is improbable and no valuation evidence was before the court.  She agreed that she took a sideboard that belonged to his mother and I accept her evidence that she personally told his mother soon after that she should have it back.  There was also an issue about chairs, which she agreed he could have back.  Her counsel made this clear in the course of submissions, and I accept her evidence that she had offered to return these items well before trial.

1. It is unlikely the wife took more than her fair share from the former matrimonial home.  When she first moved to rented accommodation she was sleeping on the floor.  In the absence of relevant evidence, I do not take chattels into account on either side of the equation.

Business entities

1. When he prepared his valuation Mr. L had access to the documents he listed in paragraph 6 of his report.  They included :

   ·    financial statements to the R Practice Trust for the 2001 to 2005 financial years,

   ·    trust returns for that practice for the 2002 to 2006 financial years,

   ·    financial statements for the B Practice Trust for the 2002 to 2004 financial years,

   ·    trust tax returns for that trust for the 2004 financial year,

   ·    tax returns for the R Superannuation Fund for the 2001 to 2004 financial years and the financial statements for the superannuation fund for 2002 to 2004 financial years,

   ·    company tax returns for RM Pty. Ltd. for the 2001 to 2005 financial years,

   ·    trust tax returns for the Hasard Family Trust for the 2003 and 2004 financial years and financial accounts for that trust for the 2002 to 2004 financial years,

   ·    financial accounts for H Pty. Ltd. for 2000 to 2004 financial years and the tax returns for that company for 2001 to 2004 financial years,

   ·    personal tax returns for the wife for the financial years 2003 and 2005, and

   ·    personal tax return for the husband for the financial years 2001 and 2005.

1. Mr. L’s evidence was that if the husband and B Company had co-operated with his request for information, he would have been in a position to value the sale on transfer of one-sixth interest in B Company at the market value, as opposed to a transactional value.

1. Mr. L sought 2006 financial statements from Mr. E on 4 June, 2007 plus 2007 management accounts for all entities in which the husband had an interest.  He received none.

1. Mr. L’s evidence as to valuation of relevant entities could be summarised in this way :

   R Pty. Ltd. as trustee for the R Practice Trust

2. The transactional value, based on the documentation prepared for the demerger, at 30 June, 2004 was $1,000.  The failure to provide relevant information meant Mr. L could not value the interest at market value.  At 30 June, 2006 its value was zero.  Mr. L reported that it appeared from the ASIC company extract that the company was placed into members’ voluntary liquidation on 11 December, 2006.

1. In the Deed of Finalisation (relating to the “demerger”) one party was “ACN […] Pty. Ltd.”, formerly known as R Pty. Ltd.

R Superannuation Fund

1. Its value at 30 June, 2004 was $365,329.74.  At 30 June, 2006 its value was $400,416.31.  The husband valued it at trial at $420,000.

The Hasard Family Trust

1. The balance sheet revealed nett assets of $10 in the most recent financial accounts available to Mr. L, being accounts for the financial year ended 30 June, 2004.  He was not able to attribute a value to the trust at 30 June, 2006.  Mr. E advised him there had not been any activity since 30 June, 2005, that there was no bank account and that he was then in the process of completing financial accounts and trust income tax returns for the financial year ended 30 June, 2006.  As a consequence, Mr. L was unable to determine the value of the assets owned by the trust as at 30 June, 2006.

1. The Deed of Surrender and Redemption and the Deed of Finalisation prepared for the “demerger” both describe N Hasard, of North Sydney, as the trustee of the Hasard Family Trust.  Prior to separation the husband and wife were, apparently, the trustees.  This was one matter taken up by the wife’s solicitor with B Company and in a letter dated 12 November, 2007, they advised :

   We do note that the Deed of Surrender and redemption documents we provided were not executed by the [Hasard] Family entity.

   We enclose herewith a counterpart executed by [the husband].  We understand that the documents were prepared in error for [N Hasard] to sign.  This was amended by hand and executed by [the husband].

   [ . . . ]

   We do not have any information or documentation in relation to the [Hasard] Family Trust and there have been no transactions between us and [N Hasard] in any capacity.

1. The second set of documents provided were signed by the husband, apparently as trustee of the Hasard Family Trust.  I note that in the summary of argument of the wife, dated 23 October, 2007, there is reference to the wife resigning as a trustee of this trust.  If she were a trustee when the Deed of Surrender was executed, I am satisfied she had no knowledge of it and did not consent to the transaction.

H Pty. Ltd.

1. The most recent financial accounts in Mr. L’s possession were for the financial year ended 30 June, 2004.  The balance sheet revealed a deficiency of nett assets as at 30 June, 2004 of $29,816.20.  Again, Mr. E advised there had been no activity since 30 June, 2005, there was no bank account and that he was in the process of completing financial accounts and company income tax returns for the financial year ended 30 June, 2006.  As a consequence, Mr. L was unable to determine the value of the assets owned by the company as at 30 June, 2006.  He was aware that the intellectual property previously owned by H Pty. Ltd. remained the property of the B Practice Trust in accordance with the Deed of Finalisation.

1. Neither the husband nor Mr. E said anything to Mr. L of a specific debt of $206,174 allegedly owed by the parties to H Pty. Ltd.

RM Pty. Ltd.

1. The balance sheet prepared as at 30 June, 2004 revealed nett assets of $22,974.60.  Financial accounts for the year ended 30 June, 2005 were with Mr. L and the balance sheet revealed surplus nett assets of $21,125.33.  The main asset was an unsecured loan due by H Pty. Ltd.

1. Yet again, Mr. E advised there had been no activity since 30 June, 2005, there was no bank account and that he was in the process of completing financial accounts and company income tax returns for the financial year ended 30 June, 2006.  As a consequence Mr. L was unable to determine the value of the assets owned by the company as at 30 June, 2006.  Relying on Mr. E’s comments that no activity had occurred since 30 June, 2005, he said it would appear that the nett assets as at 30 June, 2006 would equate to at least $21,125.33. 

1. A letter from Centrelink to the wife, dated 21 February, 2005, noted that, based on the 2003 company tax return and financial statements, H Pty. Ltd. had assets of $566,262, including intellectual property valued at $400,000.  Centrelink ignored the alleged debt to the husband’s father (then at $40,000) and another debt of $2,822 to the R Superannuation Fund, because no written loan agreements were provided.  Other liabilities totalled $114,125, made up of hire purchase $62,813, trade creditors $5,303, tax $3,000, Visa card $67 and monies owed to RM Pty. Ltd. of $42,940.

1. Centrelink wrote similar letters to the wife based on 2003 financial statements of the Hasard Family Trust and RM Pty. Ltd.  RM Pty. Ltd.’s assets included the $49,240 owed by H Pty Ltd (probably a mistyping of the $42,940 shown when discussing H Pty Ltd’s liabilities), liabilities of $17,680 owed to the Hasard Family trust and $15,278 tax. 

1. In relation to the Hasard Family Trust, Centrelink referred to trust assets of $85,025, including money owed by the parties and their children totalling $31,679, the $17,680 owed by RM Pty Ltd and $20,207 owed by H Pty Ltd.  Liabilities included $20,202 owed to the husband.  Centrelink did not recognise an alleged liability of $101,607 owed to the R Practice Trust, as no documentation supported it. 

1. It is probable Centrelink based these assessments on 2003 financial statements for the various entities, which were probably provided by the husband to the first solicitor acting for the wife.  Although the wife was receiving no benefits through the entities, Centrelink took them into account when assessing her entitlements, with adverse effect. 

1. I am not satisfied the evidence allows the court to attribute any value to H Pty Ltd, RM Pty Ltd, R Pty Ltd, or the Hasard Family Trust.  On a winding up, they may have positive or negative value.  Responsibility for the fact that the court cannot determine which, lies with the husband, not the wife.

Superannuation

1. The husband deposed to making six payments of $275.23 (a total of $1,651.38) to the parties’ “joint [R] Superannuation Fund account with NAB” between April and September 2004.  The fund was self-managed and was presumably divided into separate accounts for each of the parties.  Although not spelt out in her application, the wife sought a splitting order in respect of this fund, with 70% allocated to her and 30% to the husband.  The husband, too, sought its division as to 60% to the wife and 40% to him.

1. Mr. L was advised by the husband (in June 2007) that the superannuation fund continued to operate.  A review of the balance sheet as at 30 June, 2004 showed nett assets equating to $365,329.74.  No financial statements for years after 2004 were provided.  Information given by the husband’s accountant satisfied Mr. L that at 19 June, 2006 the superannuation fund had an interest bearing term deposit of $393,552.15, and a cash management account of $6,864.16.  On that basis he found cash assets of $400,416.31 as at 30 June, 2006. 

1. In his financial statement sworn 25 July, 2007 the husband deposed to an interest of $204,508 in the R Superannuation Fund and $31,050 in CareSuper.  In the financial statement he swore on 23 May, 2006, his interest in CareSuper was shown as $17,295.  The husband agreed that the reasonably rapid rise in the value of that interest was commensurate with his earnings, and that the figure as at the date of the trial could be $37,000 or $38,000.  He produced no current information.  His CareSuper entitlements have accrued since separation and will not be included in the pool. 

1. In the financial statement sworn on 15 August, 2007, the wife included superannuation interests of $222,797 in the R Superannuation Fund, of which $212,026 was in a NAB term deposit and $10,771 in an NAB Cash Management Fund.  Her evidence was of F Company making two payments into the R Superannuation Fund after separation, totalling $766.17.

1. In paragraph 105 of his affidavit the husband deposed that the cash assets of the fund can be used “to meet all of its debts associated with post-separation costs as set out in annexure G”.  Annexure G is the 2005 Notes for H Pty Ltd.  The only reference to the R Superannuation Fund in those notes is to a loan (unsecured) of $2,213.15.

1. References to taxation liabilities are scattered through the husband’s material.  No assessments support the various assertions.  The assertions include :

·H Pty Ltd Company tax o/s at 29/9/07  72,689.50

plus interest and penalties  26,650.05
  109,339.05
This figure is in excess of the $100,640.95 referred
     to in the ATO letter of demand dated 26/10/07

·H Pty Ltd BAS payments o/s to ATO  at 20/9/07      791.34

This is the figure shown for the integrated client
     account in the letter of demand of 26/10/07

·RM Pty Ltd company tax at 20/9/07   464.84

plus interest and penalties       549.96
     1,014.80

·RM Pty Ltd BAS payments owed to ATO       3,809.69

·R Superannuation Fund tax for year ending 30/6/06   3,006.90

1. Using the letter of demand figure of $100,640.95 (rather than the figure of $109,339.05) these total $109,263.68.

1. On proper proof, superannuation taxation liabilities can be paid out of the superannuation fund.  That leaves $106,256.78.

1. The wife’s submission was that these alleged liabilities should be ignored.  The entities have not traded (according to the husband) since 30 June, 2004, soon after separation.  The evidence supports a finding that the wife has not been a director or trustee for years.  If that is wrong, the husband’s dealings have been cavalier and, potentially, illegal.  There is no evidence of probative value confirming the alleged liabilities.

1. Given the findings the court has made about financial disclosure, it is tempting to follow the course advanced by the wife.  But the court’s role is to do justice between the parties and if legitimate taxation liabilities are outstanding from their time together, they should be jointly borne.  In circumstances of non-disclosure, and failure to put financial statements and tax assessments before the court, and where the wife has neither been involved in corporate administration nor directly received dividends or distributions, she should not be responsible for tax liabilities accrued after the 2004 year. 

1. Orders can provide for the husband, at his expense, to provide the wife’s solicitors with proof (in the form of A.T.O. documentation) of the taxation liabilities of H Pty. Ltd., RM Pty. Ltd. and the Hasard Family Trust in respect of income received to 30 June, 2004.  The wife will not be responsible for penalties or interest.  If proper documents had been provided, the sums due could have been paid from the funds in trust.  In the absence of proper documentation (a continuing absence) it was reasonable for the wife not to consent to funds being used for this purpose.

1. For the purpose of rough calculation I will use a figure of $80,000 for these potential tax liabilities.

Mr. L’s fee

1. Mr. L rendered an account for $4,895 for his preparation for the hearing and attendance.  The husband’s reluctant submission was that this would have to be paid from joint funds;  the wife’s submission was that the husband should be responsible for the whole of it. I am satisfied it should be paid from joint funds. 

1. The asset pool is thus as follows :

Non-superannuation assets
Funds in trust  -  say  $ 333,000
Honda  -  wife   14,000
Wife’s legal fees – notional   46,000
Funds in wife’s account   30,000
Corporate entities – not known  
  $ 423,000

Superannuation assets
R fund (without provision for tax)     420,000

Total assets  $ 843,000

Liabilities
Debt to Westpac (Prado)  2,312
Mr. L’s fees      4,895
Estimated A.T.O. liabilities         80,000
           Total liabilities  $    87,207

Nett non-superannuation assets   335,793
Plus superannuation assets     420,000
           Nett total assets  $ 755,793

SECTION 79(4)(a) to (c)

1. I turn to the second of the steps in the exercise under s.79, namely an assessment of the parties contributions within the context of s.79(4)(a) to (c).  These provisions are as follows :

   79(4)  In considering what order (if any) should be made under this section in proceedings with respect to any property of the parties to a marriage or either of them, the court shall take into account –

   (a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;

   (b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of the, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;

   (c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent;

2. The wife’s submission was that contributions to superannuation assets (excluding the husband’s post-separation fund) and non-superannuation assets should be assessed as equal, throughout the marriage and since separation.  The husband did not oppose an equal assessment for the period prior to separation, but submitted that he made substantial contributions after separation.  The way he initially framed his case involved many of these being credited in cash back to him, or notionally added to the pool of assets, a submission I have not found warranted in a number of areas. 

1. I do take account of his post separation financial contributions, to which I have referred.  A number of these could be characterised as being in lieu of reasonable spousal maintenance.  These include the payment of a month’s rent for the wife and the $7,000 she received to assist in setting up a new home, as well as the part of the capital sums received by her and not notionally returned to the asset pool.

1. Both parties have contributed as parents since separation and I take account of their respective financial and non-financial contributions in these respects.  I also take into account the wife’s initial contribution of $14,000 to the first property bought by the parties.

1. On balance, I find that the parties have contributed equally to both superannuation and non-superannuation assets in the pool.  These do not include the husband’s interest in CareSuper.

SECTION 79(4)(d) to (g)

1. I turn to the matters referred to in s.79(4)(d) to (g).

(d)the effect of any proposed order upon the earning capacity of either party to the marriage;

1. It is unlikely orders will affect the earning capacity of either of the parties.  The husband maintains a strong earning capacity, evidenced by his present employment.  Issues relating to the wife’s earning capacity will be considered in the context of relevant s.75 factors.

(e)the matters referred to in sub-section 75(2) so far as they are relevant;

1. I will consider each of the relevant paragraphs :

(a)      the age and state of health of each of the parties;

1. The husband is 45, the wife is 44.  Neither adduced any medical evidence and I proceed on the basis each is in reasonable health.

   (b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;

1. The wife’s income as an instructor is very modest and is likely to remain so.  Her taxable income in 2006 was $19,006;  her taxable income in 2007 was $14,851.  She was assessed to pay $727 tax in March 2008.  In her financial statement she deposed to receiving an average of $323 per week from the organisation at which she works on a part-time basis.  Her evidence was of receiving between $250 and $500 gross per week.  She is paid “per client” at $15 per half hour session.  She has a few private clients, through her own business.  These clients can pay $25 for an individual half hour session, or $15 for half an hour if more than one are being trained at the same time.  At the time of trial she was working, all up, between 15 and 20 hours per week.  To maintain her personal business she must pay insurance and registration, and keep current first aid qualifications. 

1. Although the wife spoke of an “absolute maximum” of 40 hours work a week (when looking at the potential of her own business) it is highly improbable that would be achievable. She does not have her own premises and training sessions are dependant on the vagaries of the weather, client’s enthusiasm, holidays (clients only pay for sessions they take) and on injuries (clients’ and her own).  Her evidence was that 30 hours training per week would be a more realistic maximum and that could not be sustained over 52 weeks of the year.  G now lives with her.  As a sub-contractor, she has no superannuation, Workcover or leave entitlements.

1. The wife was cross-examined about other potential employment but seemed committed to the instruction business despite (from an objective perception) its financial and personal uncertainties.  Alternative employment, such as that undertaken in 2004, is unlikely to be lucrative.

1. The husband’s taxable income was $184,000 in 2006.  He had not completed a tax return for 2007.  His evidence was of his earning capacity being adversely affected by the circumstances surrounding the parties’ separation, but since September 2005 he has been the CEO of T Company.

1. The wife’s solicitors subpoenaed T Company and a director of that company, Mr. N, had some correspondence with the subpoena clerk.  A letter from him to the subpoena clerk, dated 13 December, 2007, was in evidence. 

1. The evidence was that the husband was eligible for a performance bonus, payment of life premiums, rental for a home office, a share option plan (and that 45,000 shares were granted in June 2007), five weeks annual leave plus one more week “in lieu of financial bonus”. 

1. In his financial statement sworn 25 July, 2007 the husband deposed to a weekly salary of $3,210, equating to an annual figure of just under $167,000.  The evidence of bonuses available to him was difficult to follow.  In the letter dated 13 December, 2007 Mr. N confirmed that as noted in earlier documents provided, the husband may receive a bonus, depending on performance.  He advised that earlier information provided in this respect was inaccurate.  In that earlier response, T company advised of a bonus of $23,500 for the year ending 30 June, 2006.  In the letter dated 13 December, 2007, Mr. N said the bonus was accrued but not paid for the twelve months ending 31 August, 2006.  He said the only other bonus accrued to 31 November, 2007 was $3,855.  He then provided a summary of gross payments before tax paid to the husband under the bonus provisions of his employment contract as follows :

   Financial year ending 30 June, 2006          bonus paid  -  nil
   Financial year ending 30 June, 2007          bonus paid  -  $10,000
   Financial year ending 30 June,
   2008 to 31 November, 2007    bonus paid $15,500.

1. In his affidavit the husband submitted that there was no reason the wife could not work fulltime “rather than rely on handouts from me”.  The “handouts” he referred to was the child support she receives pursuant to the current assessment.  He complained that his income was above the maximum child support threshold and he was therefore “paying the highest child support amount than anyone can ever be assessed for three kids in a 50/50 residency arrangement”, whereas her income was “for some reason” below the minimum child support threshold.

1. When the parties separated the wife had been out of paid employment for some time.  Since G returned to her care she bears a larger share of the burden of child care.  Were the wife to obtain more hours of work per week (whether as an employee or in her own business) her income would never equate to that of the husband.  She has no provision for holiday pay or sick pay as she works on a casual basis and those benefits would not be available through her own business, if she were to increase the hours she works in that business.  There is no potential for bonuses or generous superannuation contributions. 

1. There is no doubt the husband is in a far stronger financial position than the wife. 

1. The husband presently pays the school fees for the children at C School in C.  The wife expressed concern at the costs of the children’s travel, by train or bus and taxi, from her home to school.  The husband also pays health insurance and other expenses for the children.

(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;

1. As previously found, the shared care arrangement broke down shortly prior to the trial and the probabilities support a finding that G will remain living fulltime with the wife.  The boys remain in a shared residence arrangement. 

(d)commitments of each of the parties that are necessary to enable the party to support :

(i)himself or herself;  and

(ii)a child or another person that the party has a duty to           maintain;

1. Each of the parties has the usual commitments to support him or herself and their children.  The husband does not have a legal duty to maintain his partner, P.  He is under no obligation to provide her with a car and the significant sums he spends on taxis is an indulgence which, if his financial situation were as parlous as he alleged, he could not afford.  It is probable his preparedness to take this course (which is tantamount to giving P a car) and his asserted incapacity to learn to drive a manual car are indicative of relatively easy access to funds. 

(e)the responsibilities of either party to support any other person;

1. I reiterate that the husband has no responsibility to support his partner, P.

(f)subject to subsection (3) the eligibility of either party for a pension, allowance or benefit under -

(i)any law of the Commonwealth, of a State or Territory or of            another country;  or

(ii)any superannuation fund or scheme, whether the fund or     scheme was established, or operates, within or outside      Australia;

and the rate of any such pension, allowance or benefit being paid to either party;

1. I have earlier referred to the parties’ superannuation entitlements.

(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;

1. This is an important consideration.  It is not uncommon for parties’ standard of living to drop after separation but it is important the drop not be borne disproportionately by one party, as has occurred in this case.  I have no doubt that the husband presently enjoys a higher standard of living than the wife.  The difference in their accommodation is reflected in the rents paid by each.  The wife and G live in a very modest two bedroom unit and, when the other children are with them, the four of them crowd into that accommodation.  She shares a room with G, and the two boys share a room.  The husband’s home at S is larger and more comfortable, containing four bedrooms.  He has the capacity to find recreational expenditure and to provide support to his partner.

(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;

1. The wife has undertaken further training to qualify as a trainer since separation, but there was no evidence that she planned further study.

(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant;  and

1. No creditor intervened in the proceedings.  As found, the husband said nothing specific to Mr. L about the alleged debts of H Pty Ltd or other entities.  He adduced no evidence from his father. The documents he relied on as supporting a debt to the Australian Taxation Office were minimal and of little evidentiary value; no assessments were in evidence and the court cannot know what liabilities arose when, and in respect of which specific entities and people. 

1. The lack of documentation is also relevant to assertions about inter-company loans and personal loan accounts, as without full financial statements it is not possible to know the bottom line were all the entities to be wound up and whether some of the debts are more notional than real, and could simply be forgiven. 

(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;

1. During the marriage the husband played the more significant financial role.  The wife was in paid employment for some years but, by agreement, she took on the primary homemaking and parenting role in the last years of the marriage, whilst the husband retained the breadwinning role.  Even allowing for the stress of the courtroom, the wife did not present in the witness box as someone likely to succeed financially at more than a modest level.  The work she took after separation is indicative of the sort of jobs which would be available to her if she moved from the training area because, for example, she was injured or for other reasons was unable to continue with it.  On the other hand, the husband was able to maximise his earning capacity throughout the marriage.  He has taken that earning capacity from the marriage, which is a valuable asset.

(l)the need to protect a party who wishes to continue that party’s role as a parent;

1. I take into account both parents’ parenting responsibilities and that each wants to support the children, emotionally and financially.  There was little point in going into the evidence relevant to G’s recent move.  I note the evidence in the parties’ affidavits (prepared at a time that the applications for final parenting orders had not resolved) and can say that G may be a troubled child, and may require significant support.

(m)if either party is cohabiting with another person - the financial circumstances relating to the cohabitation;

1. The wife has not repartnered.  The husband has.  He provided no details about his partner’s financial circumstances and included no expenses paid by him for her in Part H of his financial statement.  The car he has provided for her use cost him $7,000.  If she is unable to acquire a car of that value, the court may wonder at what contribution, if any, she makes to the household’s finances when she is living there, which, on the husband’s evidence, was for the whole of the winter and at other times.  If the husband is supporting her, that is a choice made by him, not the fulfilment of any legal obligation.

(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, or is to provide, or might be liable to provide in the future, for a child of the marriage; and

1. I have referred to the child support paid by the husband, described in his affidavit.  It is probable he will continue to be assessed at a similar level.  It is unlikely he will receive any, or any significant, child support from the wife. 

(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;  and

1. The lack of clarity relating to the various corporate entities and the obligations of the parties through those entities is troubling.  The consequences of findings flowing from the husband’s non-disclosure may include personal liability for debts which cannot be quantified.

1. There are no other orders made under the Family Law Act 1975 which affect a party or a child which need to be taken into account pursuant to s.79(4)(f), save for the parenting orders to which I have referred. Similarly, the provisions of s.79(4)(g) have been considered in relation to s.75(2)(na).

1. Taking all of these matters into account it is my view that a just and equitable result requires the wife to receive by way of adjustment an additional 20% of the asset pool, taking her entitlement to 70%.  The most significant factor is the disparity in their earning capacities, a disparity likely to be maintained.  The rapid rise in the husband’s post-separation superannuation and the employment obtained since separation illustrate the value of the earning capacity he took from the marriage.  The wife has additional parenting responsibilities and is entitled to a standard of living which, while it may not exactly approximate his, is better than that now available to her. 

1. A splitting order will be made allocating 70% of the superannuation fund (nett of any A.T.O. liability) to the wife.  The husband will retain the balance.

1. Calculations in relation to non-superannuation assets are necessarily provisional as relevant A.T.O. liabilities must be established.  Assuming nett assets of $335,793, the wife would be entitled to $235,055.  She has assets (including $46,000 in notional assets) of $90,000, leaving a balance of $145,055.  The husband would receive 30% of the nett assets, or $100,738.

1. The husband will retain his post-separation superannuation entitlements.  He will also retain the real assets, or real liabilities, of the corporate entities, save for tax levied on income earned to 30 June, 2004.

1. Having regard to the evidence before the court, I am satisfied that orders in these terms are just and equitable.

1. Orders will provide for the filing of written submissions for costs, including reserved costs.

I certify that the preceding
231 paragraphs
are a true copy of the reasons for
judgment herein of the
Honourable Justice Brown AM.

Dated the           day of            2008.

…………………………………………
Associate.