HIBBERT & HIBBERT

FAMILY COURT OF AUSTRALIA

HIBBERT & HIBBERT

[2012] FamCA 831

FAMILY LAW - PROPERTY - DEBT - Where the husband lent sums of money to his child and the wife's child for a business venture - Where the loans were repayable on demand - Loans repayable on demand create a cause of action immediately upon the loan being made - Per s 14(1) of the Limitation Act 1969 (NSW), loans not recoverable as they were advanced over six years ago.

FAMILY LAW - PROPERTY SETTLEMENT - WASTE - Where the husband seeks an addback for moneys advanced by the wife to her son for living expenses following his injury - Where the advances were made by the wife with the knowledge of the husband on the understanding that the son would repay the funds from the proceeds of his common law claim – Moneys not added back - Where the husband sought an addback for the wife's gambling on poker machines and the wife sought an addback for the husband's betting on horse races and funds expended on his horse racing enterprise - Inappropriate to deal with issue by way of addback where amounts cannot be quantified - No adjustment to be made pursuant to s 75(2)(o) of the Family Law Act 1975 (Cth) as the court is not in a position to compare the parties' relative spending.

Limitation Act 1969 (NSW)
Family Law Act 1975 (Cth) ss 72, 75(2)(o)

Young v Queensland Trustees Ltd (1956) 99 CLR 560
Ogilvie v Adams [1981] VR 1041
Gleeson v Gleeson [2002] NSW SC 418 (29 May 2002)

APPLICANT:

Mr Hibbert

RESPONDENT:

Ms Hibbert

FILE NUMBER:

SYC

5508

2010

DATE DELIVERED:

28 September 2012

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Rees J

HEARING DATE:

10, 11, 12, 13, & 14 September 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Schonell SC

SOLICITOR FOR THE APPLICANT:

Diamond Conway Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Lethbridge SC, Ms Sproston

SOLICITOR FOR THE RESPONDENT:

Gonzalez & Co

ORDERS
IT IS ORDERED

That within three months, the husband pay to the wife’s solicitors the sum of $1,408,473, or in the event that the former matrimonial home at Suburb B (“the former matrimonial home”) is sold, the amount be adjusted in accordance with Orders 6 to 8 hereof.
That upon payment to the wife of the amount of $1,408,473 as referred to in Order 1, she shall transfer to the husband her whole right, title and interest in the former matrimonial home, subject to all encumbrances and the husband simultaneously shall indemnify the wife in respect of any liability for those encumbrances and discharge the wife from any liability for them.
That the husband do all acts and things required to transfer to the wife his right to recover against MM (“the wife’s older son) and NM (“the wife’s younger son”) all monies paid to the National Australia Bank (“NAB”) in satisfaction of guarantees given by the parties to the NAB to support loans made by the NAB to the wife’s sons.
That the wife do all acts and things required to transfer to the husband her right to recover against BH (“the husband’s son”) all monies paid to the NAB in satisfaction of guarantees given by the parties to the NAB to support loans made by the NAB to the husband’s son.
That in the event that the husband does not, within three months, pay the sum referred to in Order 1 to the wife, and the parties do not do the things required in Order 2, then the husband and the wife shall immediately do all acts required to sell the former matrimonial home by public auction and unless otherwise agreed the reserve price shall be $1,650,000.
That upon completion of the sale, the parties shall cause to be paid to the wife the sum of $1,582,390 less the amount actually paid to the NAB to satisfy the guarantees for loans to the wife’s sons, and any remaining balance from the proceeds of the sale of the former matrimonial home go to the husband after deduction of selling costs including agent’s costs and legal costs of sale, and payment of all money owed to the NAB.
If the former matrimonial home sells for a price in excess of $1,650,000, the parties shall cause to be paid to the wife the amount of $1,582,390, less the amount actually paid to the NAB to satisfy the guarantees for loans to the wife’s sons, plus 45% of the sum by which the sale price exceeds $1,650,000, and any remaining balance from the proceeds of the sale of the former matrimonial home go to the husband after deduction of selling costs including agent’s costs and legal costs of sale, and payment of all money owed to the NAB.
That if the former matrimonial home sells for a price less than $1,650,000, the parties shall cause to be paid to the wife the sum of $1,582,390 less the amount actually paid to the NAB to satisfy the guarantees for loans to the wife’s sons, less 45% of the amount by which the sale price is less than $1,650,000, and any remaining balance from the proceeds of the sale of the former matrimonial home go to the husband after deduction of selling costs including agent’s costs and legal costs of sale, and payment of all money owed to the NAB.
That the wife do all acts and things to transfer to the husband her right, title and interest in C Pty Limited and T Pty Limited and the husband indemnify the wife in relation to any and all liabilities of those corporations to any third party whether present or arising in the future.
That the wife do all acts and things required to transfer to the husband any interest held by her in any jointly owned horse.
That the husband continue to pay to the wife the sum of $1,400 per week by way of spousal maintenance until the wife has received the whole of the amount she is to receive by way of property settlement in accordance with these Orders.
That except as provided in these Orders, each party is entitled to the exclusion of the other, to any property in his or her possession.
(a) That the husband do all things required to transfer to the husband’s son, the shares held by him in J Investments Pty Limited together with any further entitlement to dividends or distribution funds arising upon a liquidation of the said company.
(b)That the husband provide a direction and irrevocable authority to the Board of the said company and sign all documents necessary to give effect to these Orders.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hibbert & Hibbert has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 5508 of 2010

Mr Hibbert

Applicant

And

Ms Hibbert

Respondent

REASONS FOR JUDGMENT

Introduction

Before the Court are applications for property settlement and spousal maintenance between Mr Hibbert (“the husband”) and Ms Hibbert (“the wife”) arising out of their marriage in 1992. They commenced co-habitation at the time of their marriage and separated in January or February 2010, although they lived separately in the home until about December 2010 or January 2011.
The relationship was a second marriage for both of them.
The husband who is now 64 years of age was previously married. His first wife, A, died in 1989. The husband and his first wife had two children, GH who died in 1997 and BH who was 17 when the parties married and is now aged 37 years.
The wife had three children of her first marriage; MM who was 27 when the parties married and is now aged 47; DM who was 22 when the parties married and is now aged 42 and NM who was 19 when the parties married and is now aged 39 years.
At the time of the marriage there was a significant disparity in the assets of the parties. The wife was working part-time and had modest savings. The husband owned a business, C Pty Limited. The business had initially been established jointly with his former wife and the husband’s sister and brother-in-law but, by the time the parties married, was owned solely by the husband. The husband had real estate including the home, in which he and his late wife had lived, and the premises from which the business was operated. The husband also had inherited the estate of his former wife.
At the commencement of the hearing there was a dispute as to whether or not a portion of the inheritance was to be held on trust by the husband for his sons GH and BH. The husband asserted that, after his first wife’s death, he had agreed to hold her shares in a company controlled by her father, J Pty Limited, in trust for her children. That issue was resolved by agreement and the parties agreed to orders that will cause the J Pty Limited shares to be transferred to BH. Their statement of “Agreed Facts” which comprised part of Exhibit 4 in the proceedings, is set out below:
1.That the husband will consent to an order that the shares held in [J] Investments Pty Limited together with any further entitlement to dividends or distribution funds arising upon a liquidation of the said company are the property of [BH].
2.That the husband will provide a direction and irrevocable authority to the Board of the said company and sign all documents necessary to give effect to same.
3.As a consequence of paragraphs 1 and 2 herein, the parties agree that those orders, to the satisfaction of both parties, determine the issue of whether or not the shares in [J] Investments Pty Limited represent for the purposes of the hearing an asset of the husband or a financial resource of the husband.
Accordingly, the husband’s legal ownership of the J Pty Limited shares at the time of the marriage will be disregarded.
The husband also had an interest in thoroughbred horses and racing and at the time the parties married he owned an interest in a number of horses, at least one of which earned significant prize money. The extent to which the husband’s horse racing activities were a drain on the parties’ finances during the marriage is an issue.
Shortly before the marriage, the parties purchased the present home at Suburb B (“the former matrimonial home”), as joint tenants, although the purchase money was provided from the husband’s pre-marriage funds and some borrowings.
It is agreed that, at the time of the marriage, the husband had the following assets:
(a)He was the sole owner of C Pty Limited and that business continued to be the source of the income of the husband, and later also of the wife, throughout the marriage. There is no evidence of the value of the business at the time of the marriage but there is no dispute that the business provided a significant income.
(b)He owned the property at Suburb R from which C Pty Limited conducted its business, with an equity of $320,000. The mortgage on Suburb R was paid out during the marriage from the earnings of the business and that property is unencumbered.
(c)He contributed the proceeds of sale of a former matrimonial home of about $310,000 to the purchase of the Suburb B property.
(d)He had a 25 per cent interest in a racehorse named “Horse 1” which was valued at $15,000.
(e)He had cash of $20,000 and a Holden vehicle worth $20,000.
(f)He had established the Hibbert Family Trust in 1981. Whilst it was not specifically argued, both parties conducted the proceedings on the basis that the trust was the alter ego of the husband, it being the entity that held the shares in C Pty Limited.
The wife was working and had modest savings. There is a dispute as to whether she had $20,000 or $40,000, but, having regard to the disparity in the parties’ assets, nothing turns on that dispute.
The wife continued to work part time until 2000. The husband gave her money for housekeeping, initially $300 per week then $350. In addition to her earned income, she received a distribution from the Hibbert Family Trust of $1,260 per month or about $290 per week. After she stopped her employment, the husband caused her to be paid a Director’s Fee from C Pty Limited of $550 per week in addition to the trust distributions and housekeeping. Excluding housekeeping money, the wife had $840 per week for her own expenses.
In 2000, the husband and his business partner, Mr L, were advised that they should conduct their racing activities through a company and T Pty Limited was incorporated. The husband and the wife held one share each, totalling 25 per cent of all the shares. At the time of incorporation of the company, the husband and Mr L owned 12 horses. At trial, horses had been sold and others bred. The value of the husband’s interest in horses at trial was agreed to be $334,000. The husband gave evidence that the wife was not involved in the management or administration of T Pty Limited. On behalf of the wife, it was asserted that the husband had not accounted for his share of the sale price of a horse named “Horse 15”. His unchallenged evidence was that his share of $100,000 was paid into T Pty Limited.
Each party made assertions that the other had wasted assets by gambling. The husband asserted that the wife had gambled on poker machines, losing, between 12 January 2007 and 9 July 2010, the sum of $121,070. The wife admitted losses from gambling on poker machines, although she did not admit the quantum asserted by the husband. The wife asserted that the husband too had gambled although his choice of gambling was on horse racing. In the course of the trial there was an examination of the amounts of money spent by each of them on gambling. The wife also asserted that the money which had been spent on the husband’s horse racing venture over the years, which exceeded his prize money, should be treated in the same way as her poker machine losses.
During the marriage, monies were advanced by the husband and the wife, either jointly or solely, to their respective children. At the commencement of the hearing it was clear that the nature of those advances and the assignment of debts alleged to be owed, particularly by the wife’s older son, to the husband and to the wife, was a significant issue in the proceedings. As it eventuated, some of the advances which had taken place many years ago were subject to the provisions of s14 of the Limitation Act 1969 (NSW) and at the commencement of the hearing I ruled that those debts were statute barred. Reasons for that ruling will be included in these reasons.
In April 2000 the wife’s younger son wanted to purchase a property at Suburb N (“the N unit”) for $349,000. The wife’s younger son couldn’t afford to purchase the property alone and the wife and her son each borrowed $120,000 from the National Australia Bank. The husband contributed $120,000 from his own funds. The husband and the wife guaranteed the son’s loan of $120,000 which was subsequently increased to $180,000. In 2002 the husband sold his one third share of the Cronulla property to the wife’s younger son for $137,000, whereupon the son and the wife were the sole registered proprietors. In 2006 the wife’s younger son sold the N property but did not discharge the mortgage to the National Australia Bank. The husband and the wife jointly guaranteed the amount of $112,000 which was still owing by the son and that debt was secured against the matrimonial home. At trial the balance of the wife’s younger son’s loan was approximately $121,000.00 and the husband’s assertion was that the wife should assume responsibility for that loan.
Similarly, the parties guaranteed loans for the husband’s son and for the wife’s older son. The husband asserted that the wife should assume responsibility for the loan to her older son and the wife asserted that the husband should bear responsibility for the guarantee for his son.
That issue was also resolved by agreement and the parties’ agreement will be reflected in the final orders. In essence, each party will take as an asset the right of indemnity against his or her child for the guarantee. The husband will bear the liabilities because they are secured against the home he wishes to keep and the division of assets will be adjusted accordingly.
So that the parties’ agreement is clear, the statement of “Agreed Facts’ which was part of Exhibit 4 in the proceedings, is set out in full:
1.That NAB loans guaranteed by the parties for the benefit of [MM], [NM] and [BH] be included in the Balance Sheet, as assets of the wife as to [MM] and [NM] and as assets of the husband as to [BH].
2.That the NAB loans guaranteed by the parties be correspondingly included in the Balance Sheet, as a liability of the wife as to [MM] and [NM] and as a liability of the husband as to [BH].
3.That as at the date of these agreed facts the amounts required to discharge (excluding discharge costs) [MM’s] liability to the NAB is $50,556.51, [NM’s] liability is $123,361.47 and the amount of the loan guaranteed by the parties for [BH] is $94,500.
4.It is noted that upon the making of final orders that an adjustment will be made for the amount required to satisfy the loans guaranteed by the parties.
Also during the marriage monies were advanced by the wife for the support of her older son MM. In 2003 the wife’s older son had been injured in an accident and was unable to work for some period of time. The husband asserts that the wife advanced to her older son a total of $397,988 over the course of the marriage. Because, as is later explained, there is no possibility that the wife’s older son will repay the amount, the issue became whether or not the wife’s advances to her son should be treated as waste.
After separation, the wife withdrew $100,000 from the …53 account and she sold her motor vehicle for $24,000.
On 13 December 2010, by consent, the court ordered that the husband pay to the wife the sum of $133,000, to be categorized by the trial judge.
There were four subsequent payments pursuant to consent orders, $25,000 on 7 July 2011; $10,000 on 12 June 2012; $20,000 on 6 July 2012 and $130,000 on 13 August 2012. Each of these payments was expressed to be by way of interim property settlement.
The husband sought to add back all of those capital sums.
In addition, in July 2011, an order was made, by consent, that the husband pay spousal maintenance of $1,400 per week.
It was the wife’s case at trial that she should receive 50 per cent of the matrimonial assets in which case, she conceded, she could not agitate a claim for spousal maintenance.
It was the husband’s case that the wife should receive 25 per cent of the net property of the marriage and that no order should be made for spousal maintenance.

THE LIMITATION ACT

In September 2002 the wife’s older son and the husband’s son approached the husband for a loan to establish a business importing products from South America. The company which they established was ultimately called V Pty Limited and the husband and his son were the registered share holders and directors. The husband asserted that he held his shares in V Pty Limited on behalf of the wife’s older son. The wife’s son denied that assertion but ultimately nothing turned on it. It was in April 2003, after the establishment of V Pty Limited, that the wife’s older son had his accident. Later in 2003 the husband lent a further sum of $100,000, either to the wife’s older son and the husband’s son to fund V Pty Limited, or directly to V Pty Limited. In September 2004 the husband arranged a $50,000 overdraft facility in the name of V Pty Limited secured over the property owned by him at Suburb R which was the property in which C Pty Limited operated its business. In 2004 the overdraft facility was increased to $150,000 and in 2005 the overdraft was increased to $180,000.
In August 2005 the overdraft was increased to $350,000. There is no dispute that all of those funds were provided by the husband. The dispute ultimately was whether the funds were provided by the husband to the company or to the wife’s older son and the husband’s son individually.
There is also no dispute that the loans were undocumented and repayable on demand.

On 30 June 2006 V Pty Limited was sold and the husband calculates his net loss at $231,886.
Section 14(1) of the Limitation Act 1969 (NSW) provides, relevantly, that:
An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims:
(a)a cause of action founded on contract (including quasi contract) not being a cause of action founded on a deed.
There is a settled line of authority in relation to the operation of limitation periods on advances payable on demand. In Young v Queensland Trustees Ltd (1956) 99 CLR 560, the High Court (Dixon CJ, McTiernan and Taylor JJ) said “A loan of money payable on request creates an immediate debt”.
Fullagher J in Ogilvie v Adams [1981] VR 1041, considering a similar provision in the Victorian legislation said “There is a long settled rule of construction that, where there is a present debt between parties to a contract to repay money, and the only terms as to repayment of the debt are to be spelled out of a promise to repay on demand, or of a statement that the money is to be repaid on demand (or request), an instantaneous cause of action, upon the very creation of the contract, arises in the lender.”
In Gleeson vGleeson [2002] NSW SC 418 (29 May 2002) Bryson J considered the law relating to the repayment of loans payable on demand, including those authorities to which reference has been made above, and said, “it is settled law that a loan which is simply described as being recoverable on demand or on request or at call creates a cause of action in the lender enabling him to recover the money instantaneously upon the loan being made, and without any demand being made at all”.
In relation to the loans made by the husband to V Pty Limited, or to his son and the wife’s older son for the purpose of that venture, which ever may be the case, the first time that a demand could have been made is on the day of the advance and therefore the limitation period runs from the date of the advance. It is common ground that the various advances were made more than six years ago. They are therefore not recoverable.
There was no argument advanced on behalf of the wife that the provision of funds for the business should be regarded as waste on the part of the husband. The wife also advanced money for the business. That the business failed is regrettable but it was a joint expectation that the business would succeed.

the balance sheet

At the conclusion of the trial, the parties prepared a balance sheet with the propositions for which they each contended. Despite having been directed to do so, they were unable to produce an agreed balance sheet, setting out in one document the matters for which they each contend. The balance sheet that appears below is a compilation of the balance sheets each provided. Where there are matters in contention, they will be dealt with in the order they appear in the balance sheet.

ASSETS
Ownership			Description		Wife’s value	Husband’s value
1	Joint		Suburb B property (50% Husband; 50% Wife) (single expert value)		1,650,000	1,650,000
2	Husband		Suburb R property (100% Husband) (single expert value)		1,500,000	1,500,000
3	Husband		Mercedes motor vehicle		16,000	16,000
4	Wife		BMW motor vehicle acquired without notice to husband		14,000	NIL
5	Husband		Household furniture		5,000	5,000
6	Wife		Household furniture and jewellery		14,000	14,000
7	Husband		FC Pty Limited		0	0
8	Husband		Hibbert Family Trust (single expert value)		785,073	785,073
9	Joint		T Pty Ltd		0	0
10	Joint		Interest in Racehorses (single expert value):
- Horse 1 (1991) Not in foal		25,000	25,000
- Horse 2 (1996) Not in foal		50,000	50,000
- Horse 3 - Not in foal		750	750
- Horse 4 (2004)		81,250	81,250
- Horse 5 (2007)		75,000	75,000
(a) Horse 6 (2001) (Husband 25% & Wife 25%)		750	750
(b) Horse 7 (unnamed filly) (2008) (12.5% Husband and 12.5% Wife)		20,000	20,000
(c) Horse 8 (2008) (12.5% Husband and 12.5% Wife)		15,000	15,000
(d) Horse 9 (2007) (Husband 25%)		125	125
(e) Horse 10 2003 Gelding (65% Husband & 10% Wife)		1,125	1,125
(f) Filly Horse 11 (Husband 25%)		15,000	15,000
(g) 2011 Colt Horse 12 (Husband 25%)		25,000	25,000
(h) 2011 Colt Horse 13 (Husband 25%)		25,000	25,000
(i) Filly Horse 14 (Husband 25%)		10,000	10,000
11	Joint		Husband and Wife’s BSB Loans to: (a) MM (b) BH (c) NM		50,566 94,500 123,361	50,566 94,500 123,361
12	Wife		Disposition by Wife of proceeds of N property and Superannuation		Nil	360,594
12a	Husband		Proceeds from thoroughbreds post separation (Horse 15 and foal)		$100,000+	Nil
12c	Husband		BH’s income from C Pty Limited (as per his tax returns)		Nil	Nil
Total			$4,696,500	$4,943,094
ADDBACKS
Ownership			Description		Wife’s value	Husband’s value
13	Wife		Wife withdrew $100,000 from Wife’s …853 Account and transferred to the Wife’s …362 Account		Nil	100,000
14	Wife		Sale of motor vehicle (red book value as at 2011)		Nil	24,000
15	Wife		Part property settlement
(a) Court Order 13/12/2010		Nil	133,000
(b) Court Order 27/7/2011		Nil	25,000
(c) Court Order 12/6/2012 (two payments)		Nil	10,000
(c) Court Order 6/7/2012		Nil	20,000
(d) Court Order 13/8/2012		Nil	130,000
(e) Drawdown from Husband’s superannuation fund to NAB account …053		Nil	Nil
16	Wife		Monies paid by Husband on account of valuation fees:
(a) Mr D re valuations for Suburb B property and Suburb R property ($6,050)		3,025	3,025
(b) Forsythes ($28,665.42)		14,333	14,333
(c) Inglis re valuations of bloodstock ($880)		440	440
17	Husband		Paid legal fees		133,141	133,141
18	Wife		Paid legal fees		178,995.70	Nil
Total			$329,934.70	$592,939
LIABILITIES
Ownership			Description		Wife’s value	Husband’s value
19	Husband		Flexiplus Mortgage NAB Account …820		50,000	50,000
20	Husband		Flexiplus Mortgage NAB Account …053		129,587	129,587
21	Joint		Flexiplus Mortgage NAB Account …442 (Joint Husband and Wife's Account)		78,574	78,574
22	Wife		Flexiplus Mortgage NAB Account …853		257,080	257,080
23	Wife		Home Loan NAB Account …411 (MM’s Account)		50,566	49,895
24	Wife		Citibank Ready Credit (Husband's account transferred from Wife's credit card)		11,523	11,523
25	Husband		Visa Card - Husband (Account …050)		1,768	1,768
26	Wife		Visa Card – Wife		7,157	7,157
27	Wife		NAB Flexi Plus Mortgage Account …185 (NM's Account)		123,361	123,361
28	Husband		BH’s NAB guarantee		94,500	94,500
29	Joint		T Pty Ltd		Nil	197,043
30	Husband		C Pty Ltd		22,884	22,884
31	Wife		BMW Car Lease		22,000	Nil
32	Wife		GE Finance		3,000	Nil
Total			$852,000	$1,023,372
SUPERANNUATION
Member			Name of Fund	Type of Interest	Wife’s value	Husband’s value
32	Husband		Wrap Advantage No. …01	Accumulation	67,470.94	67,470.94
33	Husband		Wrap Advantage Pension Plan …58	Pension	537,571.64	537,571.64
34	Wife		Add back to Wife's superannuation following transfer to Wife's …853 account	Accumulation	Nil	N/K
Total			$605,042.58	$605,042.58
FINANCIAL RESOURCES
Ownership			Description		Wife’s value	Husband’s value
35		Husband	Husband's annual leave ($24,928), long service ($80,247) and carer leave ($90,710) less tax/nett 47.5% and Medicare levy		195,885	195,885
Total			$195,885	$195,885

Item 4 – the Wife’s car
The wife sought to bring her car into the pool at a value of $14,000 and also to deduct the outstanding loan of $22,000. The husband argued that the car was bought after separation and that neither the asset nor the liability should be included in the balance sheet. I accept that argument and both will be excluded.
Item 11 – the loans to children
This item should more properly be characterised as loans guaranteed by the parties for their respective children. As a result of the agreement reached between the parties, and reduced to writing as set out above, these will be included in the balance sheet on the basis that the loans to the wife’s children will be included as an asset in her name and the loan to the husband’s child will be included as an asset in his name.
Item 12 – disposition by the wife of the proceeds of sale of N property and Superannuation
The amount of $360,594, which the husband sought to be added to the asset pool relates to money advanced to the wife’s older son and also to money asserted to have been lost by the wife on poker machines. It is also necessary to consider, in the context of this issue, the wife’s assertion that the husband lost money betting on horseracing and conducting his racing and breeding of racehorses. It is her case that the court would treat her gambling losses, and the husband’s overall losses, in the same way.
ADVANCES TO THE WIFE’S OLDER SON
It is common ground that from about 2003 and throughout the marriage the wife advanced money to her older son for day-to-day living expenses. It was the wife’s evidence that it was always her intention that any money which was advanced to her son would be repaid by her son from the proceeds of his common law claim arising out of his head injury. The common law claim was referred to in the family as MM’s “head case”.
Although the husband initially denied any knowledge of advances to the wife’s older son, ultimately, in his cross-examination he conceded that prior to 2008 there had been discussions between himself and the wife about the assistance which she was giving to her son. He denied that there had been difficulties in the marriage caused by the amount of money the wife had given to her older son. The husband gave evidence that after the wife’s son’s accident in 2003 he was anxious to assist the wife’s son. He said he knew the wife’s son had a compensation claim and that there were discussions between himself and the wife about the process and progress of the claim.
Although the husband said that he thought the proceeds of the claim would be considerable, he said that he had never recalled a figure being mentioned or an estimate of the amount being given. However, the husband was clear in his cross-examination that he knew the wife was helping her son financially and that he had discussions with the wife to the effect that the wife’s son would be able to repay the monies advanced from the proceeds of his common law claim.
The husband agreed in cross-examination that the only time that repayment of the monies advanced to the wife’s older son became an issue was when the marriage was in difficulties in 2008.
That this must have been the case is clear from the events surrounding the extension of the loan from which the money was paid. The loan facility, which was referred to by the parties as the “…853 account”, was an account in the name of the wife secured against the Suburb B property, the matrimonial home which was jointly owned. The account was managed by the wife and the draw down limit was $120,000.00. (Originally, the account had been established to supply funds to the wife to purchase her share of the Suburb N unit).
The husband was a signatory to the loan because the security was property jointly owned by the husband and the wife. When the initial limit of $120,000.00 was reached the parties discussed increasing the limit, and, by agreement, the limit was increased, firstly in June 2004 when the husband agreed to guarantee the loan up to an amount of $320,000.00. The husband conceded that he had independent legal advice before he entered into that guarantee.
The loan was again extended in 2006 to a limit of $325,000.00. Again the husband must have had independent legal advice.
The husband was aware that the loan was being extended and indeed it was extended with his agreement and he was aware that monies were being given to the wife’s older son in the expectation that the son would repay the money from the proceeds of his common law claim. In those circumstances the husband’s assertion that the payment of monies to the wife’s older son constitute waste on the part of the wife cannot be maintained.
The advances were made by the wife with the knowledge of the husband on the understanding that the wife’s son would repay them from the proceeds of his common law claim. The loss was not expected and the money was advanced in the expectation of repayment.
In 2008 the wife’s older son received $300,000 gross in compensation for his injury. He was required to refund money paid to him by Centrelink and after payment of his legal fees he received about $35,000.
The wife’s older son did not repay the parties and there is no likelihood that he will do so. He is currently in receipt of a Social Security benefit of $400 per week and lives in the wife’s unit. He makes a small contribution towards rent and living expenses. He has no assets.
It is not clear from the evidence how much money was in fact advanced. That issue is relevant because the husband maintains that a substantial amount of the …853 account was used by the wife for gambling on poker machines.
The evidence in relation to the advances to the wife’s older son is largely contained in a series of documents annexed to the husband’s affidavit. The wife herself, in a spirax notebook, prepared a schedule of the monies which had been advanced between 2003 and September 2006. According to her schedule the total amounts advanced were $217,195.00 although that amount included an advance to V Pty Limited of $50,000.00 which was subsequently repaid. Therefore on the face of the wife’s schedule the advances totalled $167,195.00 to which must be added “all the times I forgot to write it down”.
In cross examination, the wife agreed that the spirax notebook was in her own handwriting and had been written by her. She maintained that the schedule in the spirax notebook was not kept as a running record between 2003 and 2006 as, on its face, it appears. Rather, she asserted, in 2008 the husband asked her how much money had been advanced to her older son. She says she then sat down and created the schedule in the spirax notebook from memory. She says that she had no documents with her when she prepared the notebook. She said the husband “stood over her” or at least “walked around the room”. She said that she inflated the amounts said to have been paid to her son to conceal from the husband the extent of her gambling. I do not accept that evidence. The entries in the notebook have precise dates and precise amounts. In a number of places the schedule refers to diary entries although the wife denied that a diary existed. I do not accept that the wife could, in 2008, from memory, create a document of eight pages, specific in most entries as to date and amount and in many cases as to the nature of the advance, (for example “printer”, “computer”, “mobile phone”). Her evidence, as she gave it, was inherently unbelievable.
The husband’s version of the events was more logical. He said that there was a conversation between them where he said “How do you know what he owes you” and she replied “I can easily work it out. I know what I have given him”. The wife agreed that conversation took place. The husband said that a few days later the wife showed him the spirax notebook and said “This is what [MM] owes me and it’s the tip of the iceberg. I’ve only put in those moneys that I can recall. There are plenty of others that I can’t recall and which I don’t expect to receive payment”. The wife agreed she said those things but that she said them as she was writing out the document.
I accept the husband’s version of that event.
In addition to the amounts set out in the schedule the wife purchased a BMW motor vehicle for her older son for $55,000.00, borrowing the entire amount. She made the repayments on the loan. She entered into a lease in relation to that vehicle which purports to be with V Pty Limited but is signed by her son. The lease provides for a monthly payment to the wife of $1,000.00. There is no evidence that those payments were in fact made and on 26 June 2008 the wife requested from her son the return of the BMW on the basis that he had not complied with the terms of the lease.
The vehicle was returned to the wife and sold for $20,000. The balance owed on the vehicle of $36,253 was paid out from the …853 account.
If $36,253 is added to the sum of $167,195 calculated above, the identifiable advances rise to $203,448. That figure does not include the payments made by the wife of the loan for her son’s car. It is not possible, on the evidence, to say with certainty how accurate that figure is, and it is likely, based on the wife’s own document, that the real amount is higher. Further amounts were advanced by the wife’s allowing her older son the use of her credit card for which the husband paid. How much higher the amount really is, is impossible to know. The records produced by the wife end in September 2006 and it is common ground that funds continued to be advanced until at least mid-2008.
In her oral evidence on the first day of her cross-examination, the wife estimated that she had advanced about $150,000.00 to her older son. In her oral evidence on the following day her estimate of the funds advanced to her son was $90,000. She could not explain the discrepancy.
In his oral evidence the wife’s older son said that he owed his mother “maybe $20,000”.
On 29 October 2008 an email was sent to the wife’s older son purporting to be from the wife. In cross-examination she denied either having written or sent the email and asserted that the husband had both written and sent the email. That proposition was not put to the husband in cross-examination although the wife conceded that she had read the documents annexed to the husband’s affidavit. The email read:
Subject: Your Head Case
Date: Tue, 28 Oct 2008 12:32:12 +0930
[M]
1.Now that I understand you have receive (sic) your settlement, I need you to repay me the 456,000,00 I lent you between 2001 and 2008.
2.I appreciate from what you have told me that you may not be able to pay the full amount immediately.
3.If that is the case please let me know how much you can pay now.
4.Also when you intend to pay the balance
5.Please also tell how you have calculated these amounts.
6.I would be grateful if you could get back to me by the end of the week.
7.Because of the sadness and distress this has caused me, I won’t discuss it on the phone or in person. Please send me an email.
love Mum.
On 24 November 2008 a further email was sent to the wife’s older son. The wife acknowledged that she was the author of that email. The tone of the second email is quite different from the first. They may have been drafted by different people. In that email she asks for the repayment of “the monies you owe me $350,000 and the Car which you have not paid a penny of”.
The wife denied that she had advanced $350,000.00 to her son and in her oral evidence she said that she lied to her son about the amount which had been advanced because she was covering for the amount she had spent on gambling. In the email the wife says to her son, inter alia,
You have walked away from me [MM] (like you have everybody else) 7 years we talked about the head monies and how great it will be when you are back on your feet, and now not a word and I’m the one knocked of (sic) her feet you have also left me to face everyone you said you would respond by email to those figures I gave to you, I’m here all alone my family don’t talk to me, I defended you always and you had your chance to prove me right but you chose to leave me, how could you, you have no idea the sadness I feel I was just like everyone else to you, the one person and true friend is [Mr Hibbert] after all this I know no other man who would still love and support his wife, that’s what being a man is all about [MM].

Senior Counsel for the husband, in his submissions, accepted that the wife had probably lied about the amount advanced to her son to cover the extent of her gambling and did not submit that the figure of $350,000 should be adopted as accurate.
The whole of the chain of emails is not annexed to the husband’s affidavit or otherwise in evidence. Doing the best I can the amount of money which was advanced by the wife to her older son would appear to be somewhere in excess of $205,000.
Whilst I accept that it was the expectation of both the wife and the husband that the monies would be repaid from the proceeds of the wife’s older son’s common law claim, the claim ultimately came to very little and there is no likelihood that, whatever the amount is found to be, it will be repaid.

THE WIFE’S GAMBLING ON POKER MACHINES

The assertion of the husband is that, insofar as the monies spent from the ..853 account were not given to the wife’s older son, they were spent on gambling.
The …853 account commenced with a drawdown of $120,000.00 which was used by the wife to pay for her share of the Suburb N unit bought in partnership with the husband and the wife’s younger son. Where reference is made to the balance of the …853 account, in every instance that is a debit balance.
When the parties separated in January 2010 the balance of the …853 account was approximately $113,000.00. The balance is now $129,587 because no interest has been paid since separation. The amount is secured against the former matrimonial home.
In 2008 the wife, concerned that the amount owed on the …853 account was no longer manageable, retired as a Director of C Pty Limited and thereafter her superannuation entitlements were paid into the …853 account to reduce the debt.
The husband contends that between July 2006 when the N unit was sold, and separation, the court would accept that $360,594 had been paid, in lump sums, into the …853 account, being the money received by the wife from the sale of the N unit and the proceeds of her superannuation with C Pty Limited. The amount is conceded to be correct. The dispute between the parties is as to the treatment of the transactions.
In addition to the lump sums, the husband caused to be paid into the account by way of directors fees $568.85 per week, or approximately $29,500.00 per annum.
The wife rightly pointed out, and the husband conceded, that many of the withdrawals on the …853 account were for household expenses but it was also the case that on numerous occasions there were successive withdrawals in one day from gambling venues, and the wife conceded that on many weeks she withdrew for gambling purposes money which was greater than her weekly income by way of directors fees.
The wife also conceded that, where there were multiple withdrawals from gambling venues on any one day, all but the last withdrawal would have been lost. The last withdrawal, she said, would have been money to take home.
The husband seeks to add back against the wife, the total of $360,594. He contends that those moneys were either paid to the wife’s older son or lost by the wife on poker machines.
In so far as the money was advanced to the wife’s older son, for the reasons already set out, they should not be added back.
The balance of the amount cannot be quantified. If the money advanced to the wife’s older son was no more than $205,000 (and this is unlikely), then the amount to be added back on the husband’s case is $155,594. That amounts to an expenditure by the wife over a period of less than four years of something in the region of $68,000 per annum, taking into account her Director’s Fees. However, it must be remembered that from that sum, she paid for the housekeeping, her own clothing, and entertainment.
In cross-examination the Wife estimated that she lost about $32,500 from the …853 account on gambling but maintained that that did not take into account any winnings, money for lunches, or money taken home.
It is not possible to quantify the amount of the wife’s gambling losses but they must be, on any analysis, significantly less than the husband contends in the period up to the separation.

HUSBAND’S GAMBLING ON RACEHORSES AND RACING ENTERPRISE

The husband conceded that throughout the marriage he had gambled on racehorses. At paragraph 155 of his trial affidavit he said “my betting during this period ranges from between $10 to a maximum of $1000.00 per race.” His bets of $1000 were confined to horses which he owned or in relation to which he had received information from the trainer as to the horse’s prospects of winning. Significantly at paragraph 156 of his trial affidavit the husband said “during the period of marriage to [the wife] and to the date of this affidavit, I have spent an estimate of $30,000 on bets on horses. There were occasions when my bets were successful while on other occasions they were not.”
At paragraph 157 the husband says:
I do not have betting records from the date of the marriage until 2007. However I estimate that during this period, it is likely that I lost more than I won. From 2007 to 2010 I am able to estimate from my betting records that I am approximately $200 in front on winning to losing bets. From January 2011 to the date of this affidavit, I estimate from my betting records that I have lost $1500 between losing to winning bets.
Confronted with records produced, the husband conceded that that evidence was inaccurate. Between 27 March 2004 and 29 August 2012 the records produced by Sportsbet indicate that the total which was staked by the husband was $514,362.53 and the total returns were $489,856.02 thus between that period, on Sportsbet, the husband’s losses were $24,500 approximately.
The husband conceded that Sportsbet was not his only gambling avenue and that he also bet at the track with bookmakers and online with Sportingbet and online with the TAB. Documents produced by TAB showed losses of $10,628 for the period 1 May 1998 to 19 February 2005. In cross-examination the husband estimated that he wagered between $10,000 and $15,000 through his Sportingbet account. Documents provided by Sportingbet indicated that between November 2008 and August 2010 the husband had losses of $1,968 and winnings of $2,068.
There was no real effort by the husband to establish the extent of his gambling losses in relation to racehorses, however, over the period of the marriage, they were not enormous.
The wife argued that not only should the husband’s gambling losses be taken into account but, in addition, the court should have regard to the significant expenditure over the marriage on horseracing where, on the husband’s evidence, the cost of the enterprise had exceeded the winnings for all but the last three years. The analysis produced by Ms Y, the single expert, showed that T Pty Limited first made a trading profit in the financial year ended 30 June 2009. I infer, from the husband’s evidence, that in the years from the marriage in 1992 until 2008, the enterprise, firstly run as a partnership, then from 2000, as T Pty Limited, traded at a loss. The extent of that loss is not apparent, even from the financial statements of the 2008 tax year as the accounting practices adopted for the company were somewhat unusual. No attempt was made on behalf of the husband to bring before the court any evidence that established how much of the parties’ money was spent on the racing enterprise but the court is left with the husband’s evidence that, for all but the last three years, the enterprise ran at a loss.
When the husband was cross-examined about his interest in T Pty Limited and the existence of a loan account in his name whereby he owed the company $197,043.00, the husband said that it was his understanding that that amount represented the difference between the cost of maintaining the racehorses and the amount of the prize money. An examination of the relevant bank statements showed that money had been drawn against his loan account for other purposes including legal costs. Nevertheless, some of the balance of the loan account must represent, on his own evidence, losses from the racing enterprise. It should also be remembered that the loan account had been reduced recently by the $100,000 that the husband received from the sale of Horse 15.
Whilst the wife enjoyed attending the races, it was not contended by the husband that she took any part in the management of T Pty Limited or in the decisions about what money was spent or how prize money was applied.
After separation, when horses won and prize money was received, the husband paid the prize money into T Pty Limited and the wife did not receive any share.
It is not possible, on the evidence, to find that the wife’s losses from poker machine gambling were either more or less than the amount which the husband used for his own betting, horse racing and the maintenance of his racehorses.
I do not therefore propose to make any adjustment for either expenditure. Each of these parties indulged in an expensive recreation. During the marriage, neither complained about the other’s spending.
It would be inappropriate to deal with the issue by way of addback as both counsel contended. This is particularly so where the amounts cannot be quantified. The authorities are clear that, if an adjustment is to be made for waste, then the appropriate adjustment is pursuant to section 75(2)(o) of the Family Law Act 1975 (Cth).
However, when the court is not in a position to compare their relative spending, it is inappropriate to make any adjustment.
Item 12a – Proceeds from thoroughbreds post separation (Z and foal)
The husband gave evidence that his share of the proceeds of sale of Z in the sum of $100,000 net was paid into the T Pty Limited account. Accordingly, this sum has already been taken into account in the value of T Pty Limited and in the reduction of the husband’s loan account with T Pty Limited. It has also been taken into account in the assessment of the costs of the husband’s horseracing activities. There was no evidence as to the sale price of any foal after separation (hence the indication that the amount sought to be included was “$100,000 plus”). Accordingly this amount will not be included as an asset.
$97,000 held in the wife’s solicitors’ trust account
It was agreed in submissions that the amount of $97,000 which is held in the wife’s solicitors’ trust account on account of legal fees should be included as an asset in the balance sheet. It does not appear in the document produced by either party. This agreement will be re-visited in the discussion of legal fees and the asserted addback of the amounts received by the wife by way of interim property settlement. Because I intend to add back the whole of the wife’s paid legal fees (including the amount in trust), it will not be added to the balance sheet here.
Items 13 and 14 – the withdrawal of $100,000 and the sale of the motor vehicle
The husband contends that both these items should be added back. The wife withdrew the sum of $100,000 from the …853 account in March 2010. In October 2010, she sold her motor vehicle for $24,000. The parties had separated around January 2010 but were still living at the former matrimonial home. The husband was giving the wife $350 per week for housekeeping and $300 per week for her own expenses but was otherwise paying the expenses associated with the home. He stopped making those payments in about September or October 2010. Her evidence about what was done with the money is scant. She deposited $50,000 into an account she opened jointly with her daughter, DM. She gave her younger son $25,000 as a wedding gift. She paid the expenses of her travel to the United States for her younger son’s wedding and for travel to New Zealand to stay with her daughter. Otherwise, she said, the money was spent on her living expenses.
If the wife sought to assert that the whole sum of $124,000 was spent on her reasonable living expenses, then the onus was upon her to provide the evidence on which that finding could be based. She did not. The court is thus left in a position of having to make estimates which will not be as accurate as a calculation made upon the basis of evidence which was within her control.
Between January 2010 and December 2010, a period of eleven months, the wife spent $11,272 per month, in addition to the $300 per week which the husband gave her. That equates to approximately $2,900 per week in circumstances where she was living at the former matrimonial home or with her daughter and had no rental expenses.
During the period the parties were together, the husband arranged for the wife to be paid approximately $840 per week, excluding housekeeping of $350 per week. In addition, she had access to the …853 account. That was the arrangement he then considered appropriate. He cannot now contend that the wife did not have reasonable expenses after separation. I propose to attribute $1,200 per week or $52,800 to the wife’s proper expenses to maintain herself and the balance of $71,200 will be added back as an asset in her hands.
Item 15(a) – the payment of $133,000
In January 2011, pursuant to consent orders dated 13 December 2010, the husband paid to the wife the sum of $133,000, the manner in which the payment was to be brought into account being left to the discretion of the trial judge. By this time the wife had spent the money she withdrew from the …853 account and the proceeds of sale of the motor vehicle. She had moved out of the former matrimonial home and rented on the Central Coast, sharing an apartment with her older son.
In her affidavit she said that, from the $133,000, she paid legal fees of $25,000; prepaid one month’s rent and bond of $4,800 and spent $10,000 on whitegoods for her apartment, a total of $39,800. Those are proper expenses and, with the exception of legal fees, could not be added back. She leased a BMW vehicle and paid lease payments and she paid $300 per month for storage of such of her goods as could not be used for the apartment.
Again, if the wife asserted that the whole of these funds were spent on reasonable and necessary living expenses, the onus was upon her to provide the evidence to base a finding. She did not and, again, the court is left in a position where estimates and assumptions have to be made.
The wife swore a financial statement on 5 September 2012. It was not challenged. She there estimated her reasonable living expenses to be $2019 per week. Those expenses included $111 per week for the lease repayments for her BMW vehicle, $45 per week for her older son’s benefit and $200 per week for entertainment, which she conceded was spent on poker machines. How she chooses to entertain herself is a matter for her and I do not propose, as was submitted on behalf of the husband, to deduct that sum from her reasonable expenses. I will, however, deduct the amount she pays for her son’s benefit. I find that the wife’s reasonable living expenses are $1,974 per week. The expenses would have been much the same in the period from January 2011 to July 2011 aside from the rent, which was $600 per week as opposed to $415 per week. I therefore find that the wife’s reasonable living expenses between January 2011 and July 2011 were $2,159 per week.
Between January 2011 and July 2011, she needed approximately $63,000 for her own expenses. That sum will be categorised as maintenance. Furthermore, the $10,000 the wife paid on whitegoods for her apartment, the $4,200 rental bond, and $2,100 for the storage of her goods will be categorised as maintenance. As to the balance of $53,700, after deducting the legal fees of $25,000 which will be treated separately, the sum of $28,700 will be categorised as interim property settlement.
Items 15(b) to (d) – advances to wife by way of interim property settlement
It is agreed that between 27 July 2011 and 13 August 2012, sums totalling $185,000 were paid to the wife by way of interim property settlement. In the same period, the husband paid spousal maintenance in an agreed sum of $1,400 per week.
It was contended on behalf of the husband that the whole of the interim property settlement should be, as a matter of principle, added back. It was also contended that the whole of the wife’s paid legal costs, including the amount held in her solicitors’ trust account should be added back. There were only two sources from which the wife could have paid her legal fees. As to the sum of $25,000 paid to her former solicitors in early 2010, the source was the payment of $133,000 which has been categorized as partly spousal maintenance and partly interim property settlement. According to the Costs Notice which was Exhibit 14 in the proceedings, the wife has paid $81,996 and the solicitors hold $97,000 in trust. Thus the total paid by her from her interim property settlement is $178,996.
The wife has paid her legal fees from her own funds, albeit funds received by way of interim property settlement.
To add back both the legal fees and the interim distributions would be to double count.
Therefore I propose to add back the wife’s paid legal fees but not, in addition, her funds specifically received by orders as interim property settlement.
Item 16 – Valuation fees paid by husband
The husband has paid the whole of the valuation fees to joint experts, none of whom has been required for cross-examination. He argues that he should be re-imbursed for one half of those fees from any sums paid to the wife. She did not oppose that application. The parties should meet those costs equally. The joint experts’ reports benefitted them equally in the pursuit of their applications.
Items 17 and 18 – Paid legal fees
The husband has paid $133,141 in legal fees. The source of those payments was not clear. Some of the money came from his loan account with T Pty Limited. Some was borrowed and is accounted for in his NAB loans, some came from his superannuation. The safest course to take is the same course as was taken in relation to the wife. The husband paid his legal fees from his own funds. They will be added back. To the extent that money was borrowed, either to pay the interim property distribution to the wife or to pay the husband’s legal fees, that liability will be recognised.
As discussed earlier in these reasons, the wife’s paid legal fees of $178,996 will be added back.
Item 23 – MM’s home loan account
The amount adopted is the figure in the statement of Agreed Facts ($50,556).
Item 29 – Husband’s debit loan account to T Pty Limited
There is no doubt that the husband owes T Pty Limited the sum of $197,043. That was not in dispute. On behalf of the wife it was contended that the sum represented gambling losses and should not be included as a liability. The evidence is that the sum is a combination of losses on the racing enterprise (the difference between the costs of the horses and their winnings or sale price) and some drawing down to meet costs or interim orders. In circumstances where the value of the horses is to be included as an asset, the loan account will be allowed as a liability.
Item 31 – the wife’s car lease
For reasons already explained, this liability is not allowed.
Item 32 – GE Finance
This represents the balance of a loan taken out by the wife to buy a car for her older son after separation. The car was stolen and burnt out. It was not insured. It is not a liability related to the marriage and will be disregarded.
Item 34 – Wife’s superannuation
The wife’s superannuation entitlements were paid out in 2008 and applied to the reduction of the …853 account. They have already been accounted for and will not be added back.
It was not suggested that superannuation should be treated as a separate pool and, given the ages of the parties, it will be added to the asset pool.
Item 35 – the husband’s accrued benefits
The parties have agreed that this should be treated as a financial resource.

the adjusted balance sheet

Consequent upon the findings set out above, I find the assets, liabilities and financial resources of the parties to be as set out below:

ASSETS
Ownership		Description	Value
1	Joint	Suburb B property (50% Husband; 50% Wife) (single expert value)	1,650,000
2	Husband	Suburb R property (100% Husband) (single expert value)	1,500,000
3	Husband	Mercedes motor vehicle	16,000
4	Husband	Household furniture	5,000
5	Wife	Household furniture and jewellery	14,000
6	Husband	FC Pty Limited	0
7	Husband	Hibbert Family Trust (single expert value)	785,073
8	Joint	T Pty Ltd	0
9	Joint	Interest in Racehorses (single expert value):
- Horse 1 (1991) Not in foal	25,000
- Horse 2 (1996) Not in foal	50,000
- Horse 3 - Not in foal	750
- Horse 4 (2004)	81,250
- Horse 5 (2007)	75,000
(a) Horse 6 (2001) (Husband 25% & Wife 25%)	750
(b) Horse 7 (unnamed filly) (2008) (12.5% Husband and 12.5% Wife)	20,000
(c) Horse 8 (unnamed colt) (2008) (12.5% Husband and 12.5% Wife)	15,000
(d) Horse 9 (2007) (Husband 25%)	125
(e) Horse 10 2003 Gelding (65% Husband & 10% Wife)	1,125
(f) Filly Horse 11 (Husband 25%)	15,000
(g) 2011 Colt Horse 12 (Husband 25%)	25,000
(h) 2011 Colt Horse 13 (Husband 25%)	25,000
(i) Filly Horse 14 (Husband 25%)	10,000
10	Wife	Right of indemnity against loan guaranteed on behalf of the wife’s sons	173,917
11	Husband	Right of indemnity against loan guaranteed on behalf of the husband’s son	94,500
12	Wife	Wife withdrew $100,000 from Wife’s …853 Account and transferred to the Wife’s …362 Account and sale of motor vehicle (portion added back)	71,200
13	Wife	Payment of $133,000 on 13 December (portion added back)	28,700
14	Husband	Paid legal fees	133,141
15	Wife	Paid legal fees	178,995.70
17	Husband	Superannuation - Wrap Advantage No. …01 (Accumulation)	67,470.94
18	Husband	Superannuation - Wrap Advantage Pension Plan …58 (Pension)	537,571.64
TOTAL ASSETS	5,617,367
LIABILITIES
Ownership		Description	Value
19	Husband	Flexiplus Mortgage NAB Account …820	50,000
20	Husband	Flexiplus Mortgage NAB Account …053	129,587
21	Joint	Flexiplus Mortgage NAB Account …442 (Joint Husband and Wife's Account)	78,574
22	Wife	Flexiplus Mortgage NAB Account …853	257,080
23	Wife	Home Loan NAB Account …411 (MM's Account)	50,556
24	Wife	NAB Flexi Plus Mortgage Account …185 (NM’s Account)	123,361
25	Wife	Citibank Ready Credit (Husband's account transferred from Wife's credit card)	11,523
26	Husband	Visa Card - Husband (Account …50)	1,768
27	Wife	Visa Card – Wife	7,157
28	Husband	BH’s NAB guarantee	94,500
29	Joint	T Pty Ltd	197,043
30	Husband	C Pty Ltd	22,884
TOTAL LIABILITIES	1,024,033
NET MARITAL ASSETS	4,593,334
FINANCIAL RESOURCES
Ownership		Description	Value
31	Husband	Husband's annual leave ($24,928), long service ($80,247) and carer leave ($90,710) less tax/nett 47.5% and Medicare levy	195,885
Total		$195,885

contributions

The imbalance in the parties’ contributions at the commencement of their marriage was, as has been earlier set out, significant. In real terms, the assets that the husband had then are the assets that the parties have now – the business of C Pty Limited which continues to be operated by the Trust, the factory property at Suburb R, the racehorses and the former matrimonial home.
Although the Suburb R property was subject to a mortgage at the time of the marriage, that mortgage was paid out using funds generated by the business.
Other than the home, those assets have produced income for the parties. The income produced by the business has been substantial. The prize money won by Horse 1 alone was $150,000 by 1995 when the parties were discussing renovations to former matrimonial home.
Those initial contributions have to be considered against the whole of the contributions of the parties over the 18 years of their marriage, but in this instance, because of the nature of the assets introduced by the husband and their generation of income, I consider that the adjustment for initial contributions should be 65 per cent in favour of the husband. In coming to that figure, I have given weight to the use that was made by the parties of the initial assets of the husband and the fact that they remain, in substance, the assets of the parties now.
During the co-habitation of the parties, the husband continued to operate the business and, until 2000, the wife earned a modest amount working part time. When she ceased to work in 2000 the husband ensured that her income was replaced by diverting to her income that was otherwise available to him.
After 2000, the agreement of the parties was that the wife would be the home maker and the husband would be the income earner and each of them fulfilled their respective roles to the satisfaction of the other.
There were no children of the marriage. The husband’s son was in boarding school when the parties married. The other children of the parties were adults. Insofar as BH, NM and MM, from time to time, lived with the parties, those periods were not substantial. No doubt the wife provided support for all of them but the husband provided financial support.
Contributions during the marriage were equal.
The adjustment for contributions will therefore be 65 per cent to the husband and 35 per cent to the wife.

SECTION 75(2)

The husband contends that, if there is to be an adjustment for section 75(2) factors in favour of the wife, then it should be by a defined lump sum. The wife argues for a percentage adjustment. Either approach is available.
The husband will have a much greater income than the wife. His current income is $276,000 per annum from the business. There is no suggestion that the income will cease. The wife will derive an income from such of her funds as she will invest but her income will never approach that of the husband. It was not suggested that she is likely to have paid employment.
The husband can, if he so elects, have the benefit of the accrued entitlements which are agreed by the parties to be a financial resource.
It is appropriate that there be an adjustment in favour of the wife. Having regard to the net asset pool, an adjustment of 10 per cent would represent a payment of approximately $459,000 which is the equivalent of less than two years of the husband’s current income.
Overall, the wife should receive 45 per cent of the asset pool, taking into account that, as part of the assets she will receive, she will take the money added back and the rights of indemnity against the wife’s sons. As agreed between the parties, the balances of the wife’s sons’ guaranteed loans ($173,917) will be deducted from the wife’s portion of the assets as the husband will have to meet those liabilities. Also deducted, will be one half of the valuation fees which have all been paid by the husband ($17,798).
The assets which the wife has are (adopting the numbering in the adjusted balance sheet):
5.        Household furniture and jewellery  $14,000
10.      Right of indemnity against loans to MM and NM                     $173,917
12.      Interim property settlement added back  $71,200
13.      Interim property settlement added back  $28,700
15.      Paid legal fees  $178,995
These amounts total $466,812.
In order for her to receive 45 per cent of the net assets, the husband must pay to the wife a further amount of $1,600,188 from which he is entitled (in accordance with their agreement) to deduct $191,715 being the liabilities for loans guaranteed for the wife’s sons and the wife’s share of the valuation costs. Thus the husband will pay to the wife the sum of $1,408,473.
The husband wishes to retain the former matrimonial home and this is not opposed by the wife. He should be given an opportunity to do so and will be allowed three months to raise the sum due to the wife.
At the commencement of submissions, Senior Counsel for the wife handed up a Minute of Orders which provided a mechanism to put into effect the property settlement, on the basis that the husband retained the former matrimonial home and, in the alternate, on the basis that the former matrimonial home is sold. Senior Counsel for the husband agreed that the mechanism proposed was appropriate and represented the agreement of the parties in relation to the guaranteed loans to their respective children. The machinery form of orders will be adopted in the order which provides for the husband to retain the former matrimonial home.
If the former matrimonial home is sold, then the amount which the wife will receive is calculated on the basis that she will receive 45 per cent of the net asset pool and from that amount will be deducted the actual amount required to satisfy the guarantees of the loans to the wife’s sons.

spousal maintenance

If the wife receives the sum ordered to be paid by way of property settlement, she cannot satisfy the threshold test in section 72(1), that is, that she cannot reasonably support herself. On that basis, there will be no order for spousal maintenance once the property settlement has been effected. However the existing order for spousal maintenance will continue until the wife receives the whole of the money to be paid to her by way of property settlement.

I certify that the preceding one hundred and forty-one (141) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 28 September 2012.

Associate:

Date: 28 September 2012

[2012] FamCA 831

28 September 2012

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