Hofman & McBride
[2022] FedCFamC1F 242
•8 April 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Hofman & McBride [2022] FedCFamC1F 242
File number(s): SYC 1339 of 2018 Judgment of: CAMPTON J Date of judgment: 8 April 2022 Catchwords: FAMILY LAW – PROPERTY – Adjustment of property interests pursuant to s 79 of the Family Law Act 1975 (Cth).
SPOUSE MAINTENANCE – Husband’s application for spouse maintenance dismissed – Where husband fails to establish evidentiary thresholds.
Legislation: Evidence Act 1995 (Cth) ss, 50, 136
Family Law Act 1975 ss 72, 75, 79
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 52
Federal Circuit and Family Court of Australia Rules 2021 rr 7.01, 7.10
Cases cited: Acton v Burton [2015] FamCA 469
Bevan & Bevan (2013) FLC 93-545
Bevan and Bevan (1995) FLC 92-600
Briese & Briese (1986) FLC 91-713
Campbell v Kuskey (1998) 22 FamLR 674
Cirillo & Cirillo (No 4) [2022] FedCFamC1F 208
DJM & JLM (1998) FLC 92-816
Edgehill & Edgehill [2007] FamCA 1102
Fields & Smith (2015) FLC 93-638
Franklin & Ennis [2019] FamCAFC 91
Gollings & Scott (2007) FLC 93-319
Hall & Hall (2016) 257 CLR 490
Horrigan & Horrigan [2020] FamCAFC 25
Kowaliw and Kowaliw (1981) FLC 91-092
Livesey v. Jenkins (1985) 1 All E.R. 106
Mayne & Mayne (2011) FLC 93-479
Omacini & Omacini [2005] FLC 93-218
Oriolo & Oriolo (1985) FLC 91-653
Pierce & Pierce (1999) FLC 92-844
Prince and Prince (1984) FLC 91-501
Singerson & Joans [2014] Fam CAFC 238
Stanford & Stanford (2012) 247 CLR 108
Trevi & Trevi [2018] FamCAFC 173
Weir & Weir (1993) FLC 92-338
Division: Division 1 First Instance Number of paragraphs: 237 Date of hearing: 28-30 March & 1 April 2022 Place: Sydney Counsel for the Applicant: Ms Beck Solicitor for the Applicant: Lawyers Central Counsel for the Respondent: Mr Wong Solicitor for the Respondent: Slaw Family Lawyers
Table of Corrections 22 April 2022 In paragraph 217, a reference to “55 per cent” has been corrected to read “45 per cent”. 22 April 2022 The MNC has been updated from “Hofman & McBride [2022] FedCFamC1F 234” to “Hofman & McBride [2022] FedCFamC1F 242”. ORDERS
SYC 1339 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS HOFMAN
Applicant
AND: MR MCBRIDE
Respondent
ORDER MADE BY:
CAMPTON J
DATE OF ORDER:
8 APRIL 2022
THE COURT NOTES
A.These orders have been amended pursuant to rule 10.13 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
THE COURT ORDERS THAT:
1.Pursuant to s 79 of the Family Law Act 1975 (Cth) the wife pay to the husband the sum of $502,855 within 21 days of the date of these orders.
2.Within three months of the date of these orders the wife do all such things as are necessary to discharge the mortgage secured upon the property at C Street, Suburb F.3.In the event the wife fails or neglects to comply with Orders 1
and/or Order 2above, the parties shall forthwith upon such default do all such things and sign all such documents that may be necessary to list for sale and sell for the best price reasonably obtainable, the property at C Street, Suburb F and upon completion of the said sale the balance of proceeds of the sale shall be applied in the following priority:(a)In payment of any agents’ commission and legal costs and disbursements occurred in relation to the said sale;
(b)In payment of an amount required to discharge the mortgage secured upon the said property;
(c)To pay the husband
ofany amount or part thereof that remains unpaid pursuant to Order 1 hereof, together with interest thereon calculated at the rate prescribed by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) on that outstanding sum from a date 21 days after the date of these orders until the date of receipt of the outstanding unpaid sum due to the husband pursuant to Order 1;(d)In payment of the balance to the wife.
4.Forthwith upon receipt by the husband of the monies pursuant to Order 1 hereof, or on completion of the sale of the Suburb F Property, whichever is the earlier, the husband shall pay to the wife one half of the costs of single experts that have been paid for by the wife in the first instance.
5.Within 21 days of the date of these orders the husband shall do all such things and sign all such documents as prepared by the wife at her expense to resign his power of appointment of the K Trust and to appoint the wife as the appointer of the said trust, and to resign as a beneficiary of the said trust.
6.Save and except as provided for in these orders the wife shall retain to the exclusion of the husband all her rights entitlements and interest in:
(a)The property at C Street Suburb F;
(b)Her interest in any trust or corporation;
(c)Her cash bank;
(d)All items of furniture, personalty and motor vehicles in her possession;
(e)Any share holdings in her possession or control; and
(f)Her superannuation entitlements.
7.Save and except as provided for in these orders the husband retain to the exclusion of the wife all his right entitlements and interests in:
(a)All cash banking invested by him;
(b)All items of furniture and personalty in his possession;
(c)His superannuation entitlements.
8.In the event either party fails or neglects to execute any document within a period of seven (7) days as been required to do so by way of these orders, then a registrar at the Sydney Registry of the Federal Circuit and Family Court of Australia is appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute such document on behalf of the party in default so as to give validity and effect to these orders. The Registrar is to be satisfied of such failure or neglect by way of affidavit evidence, and the party in default shall pay the costs of the non-defaulting party of the Registrar executing the document pursuant to this order.
9.The husband’s application for spouse maintenance be dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Hofman & McBride has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Amended pursuant to r 10.14(b) of the Federal Circuit and Family Court of Australia (Division 1) Rules 2021 (Cth) on 27 April 2022.CAMPTON J:
INTRODUCTION
These are proceedings as to property adjustment pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”). The applicant is Ms Hofman, who was born in 1976 and is now 46 years old (“the wife”). The respondent is Mr McBride, who was born in 1972 and is now 49 years old (“the husband”).
The date of the parties’ cohabitation and separation is disputed. The wife contends that they began living together in January 2006 and separated in December 2014. The husband contends they began living together in 2004 and separated on 30 November 2017.
They married in 2007.
On either account, the parties remained living in the home at C Street Suburb F, (“the Suburb F Property”) until June 2019 when the husband vacated the property pursuant to orders made on 6 May 2019.
An Order for divorce was made on 3 February 2019 and became absolute on 4 March 2019.
There are no children of the marriage.
THE EVIDENCE
The wife relied upon the following documents:
(a)Amended Initiating Application, filed on 1 April 2021;
(b)Financial Statement of the Wife, filed on 22 March 2022;
(c)Affidavit of the wife, filed on 22 March 2022 (“the wife’s affidavit”);
(d)Case Outline, filed on 27 March 2022 and marked as Exhibit W1.
The husband relied upon the following documents:
(a)Amended Response to an Initiating Application, filed on 25 March 2022;
(b)Financial Statement of the husband, filed on 18 March 2022;
(c)Affidavit of the husband, filed on 23 March 2022 (“the husband’s trial affidavit”);
(d)Affidavit of the husband, sworn on 24 March 2022 and filed on 28 March 2022 (“the husband’s supplementary affidavit”);
(e)Case Outline, filed on 25 March 2022 and marked as Exhibit H1.
(f)Final Minute of Order sought and marked Exhibit H16.
The husband sought to rely upon an affidavit of his treating doctor, Dr L filed 21 March 2022. Objection was successfully taken by the wife to the husband relying upon that affidavit as being expert evidence that did not comply with r 7.01 of Federal Circuit and Family Court of Australia Rules 2021 (Cth) (“the Rules”). The expert opinions expressed therein from a treating medical practitioner were outside that prescribed by the rule. The order made on 20 May 2020 as to this treating medical practitioner specifically directed the contents of any report to the subject matters recorded in what was r 15.01 of the prior rules of Court and is now r 7.01 of the Rules. The single expert doctor had the benefit of Dr L clinical notes and other diagnostic reports obtained from the treating physician for the purposes of his updated third report. No application was made by the husband to rely on the evidence of Dr L pursuant to r 7.10 of the Rules. Objections were taken to the parts of the remaining affidavits and determined at the commencement of the hearing.
A direction was made at the commencement of the trial pursuant to s 136 of the Evidence Act (Cth) such that no documents in the tender bundles of each party or exhibits to any affidavit would constitute evidence of any fact adverse to the case of the other, unless that document and the proposition of fact to be proved or inferred from the document had been put to the other party or relevant witness in cross-examination.
BACKGROUND
The wife was a finance professional at cohabitation. She remains a finance professional. The wife became a senior manager at M Company in 2013.
The husband completed his university degree in 1999 and worked as a professional in both City Y and then Sydney. In late 2001 he commenced working as a public servant in City Y. By 2003 he was a senior manager in the public service. He started his own business in 2006, working as a consultant. During his early years as a consultant he taught at the GG University and considered undertaking a "part time PHD". His affidavit evidence records a busy consultancy especially between the 2012 and 2014 calendar years.
The husband gives evidence of experiencing poor health from late 2015 into early 2016. The single rheumatology expert Dr O diagnosed the husband with a medical condition in 2016 and 2017. The contagion presented as dull ache with occasions of acute pain associated with a number of other medical issues and symptoms. The wife gave evidence of, and put into issue, the husband’s presentation during 2016 and 2017.
The husband stopped working "altogether" in early or mid-2017. He has not been registered to work as a professional since 1 July 2018.
The husband worked in a casual role for the public service in late 2018. He had agreed to work on three, eight-hour days each week for a period of seven months. In 2019 he worked for N Company and other similar companies. He was paid $29 per hour, working two full days a week for about seven hours each day. In early 2019, he successfully applied for a position at Q University. His rate of pay for this casual position was in the range of $43 to $133 per hour. The husband did not progress the employment opportunity. He said he “had a five day long pain spike and could not continue with [this role]”. He did not undertake any paid work in 2020 or 2021. In 2020 he commenced a process of reactivating his professional registration. He intended to return to consulting in 2021 and gave evidence of this proposal being "derailed by a major flare-up" that started in late January 2021 and ran until May 2021. He "shelved" his plans to return to consulting until his health stabilised.
The husband lived with Ms R from June 2019 to November 2020 in his current rental premises at Suburb T. Until the husband vacated the Suburb F Property in June 2019, the attendances of Ms R at the home contrary to the wishes of the wife generated significant stress to the wife and feelings of degradation. She recorded her affidavit the following unchallenged evidence that I accept:
93.I said to [Mr McBride] “please do not have [Ms R] enter my house anymore” but he responded with words to the effect “I don’t understand why you are jealous. This divorce was all your idea. I’m entitled to have my girlfriend in my house”.
Ms R worked as a professional. For a period during their relationship including when the husband remained in the Suburb T premises, she paid for meals and cab fares for she and the husband and he reimbursed her. The husband’s evidence was that when he moved into the Suburb T property, Ms R paid him “rent” of $300 per week until she became unemployed in December 2019.
The husband commenced a relationship with his present partner Ms P in June 2021. They describe their cohabitation as being on a "part time basis", spending five out of each seven nights a week together. Ms P is a full time student at the HH University who expects to finish her studies in 2022. She has completed an undergraduate degree and commenced further studies in early 2022. Until the Friday before the commencement of the trial she was employed as a professional working on a part time basis three days a week. She additionally works on a casual basis. Prior to the loss of her part time employment her income was in the range of $1,900 per week.
The husband is presently unemployed. His Financial Statement records that he currently has no source of income. He has not at any time applied for Centrelink benefits.
The wife has not re partnered.
Procedural history
The wife filed an Initiating Application in the Family Court (as it was then) on 5 March 2018. The husband filed a Response to an Initiating Application on 18 July 2018.
In May 2018, the wife paid to the husband $12,000. After that payment was concluded, the parties agreed the wife would have exclusive use of the Motor Vehicle 2. The husband used these monies to pay his legal fees.
On 1 December 2018, the wife paid to the husband a further sum of $25,000. She contended that this payment was also by way of partial property settlement. The husband used these monies to pay his legal fees.
On 7 December 2018 the parties attended a conciliation conference. They were unable to resolve their dispute on that date.
On 6 May 2019 the parties entered into interim consent orders providing for inter alia:
(a)The wife to pay to the husband $550,000 to be characterised at the trial event;
(b)The husband to vacate the Suburb F Property and for the wife thereafter to have exclusive occupation of the property;
(c)The husband to resign as director from K Pty Ltd (“the Family Company”) and transfer to the wife all his shares and interest in the Family Company; and
(d)Other orders as to the care of the parties’ cat.
(e)The husband to do all things to ensure that until he vacated the Suburb F Property, Ms R not be present at those premises except for two occasions a week for no more than four hours at a time.
A notation was made that the husband would obtain alternate rental accommodation not exceeding $1,000 per week.
Further Interim Orders were made by consent on 23 July 2019, providing for:
(a)The husband engage accountants to prepare his outstanding tax returns within four weeks, being by 20 August 2019 and lodge them with the Australian Taxation Office (“ATO”) by 15 October 2019 and provide copies lodged returns to wife; and
(b)A process of engaging a single expert medical professional to opine on the husband’s health status and the impact of his health on his employment.
On 2 December 2019, time was extended for the husband to prepare his tax returns to 6 December 2019.
On 10 March 2020, orders were made that the husband on or by 15 April 2020 provide to the wife his tax returns for years ending 30 June 2013, 2014, 2015, 2016, 2017.
On 5 May 2020 this Order was made:
1.The husband’s accountant provide to the solicitors of the wife any correspondence between him and the ATO in relation to the husband’s tax returns for financial years 2012, 2013, 2014, 2015 and 2016.
On 30 June 2020 the Court noted:
(a)By 2 September 2020 the Court anticipates the husband will have filed his 2014, 2015 and 2016 tax returns and have had a meeting with the ATO and his accountant such that his tax debt will be crystallized.
(b)The Court accepts the wife’s position is that even if the husband’s tax debt has not crystallized on the next occasion, the matter should be set down for a final hearing.
On 17 February 2021 orders were made in the absence of the husband listing the matter for an undefended hearing on 13 May 2021. The date for the undefended hearing was later vacated and relisted on 20 May 2021. As recorded later in these reasons the husband filed affidavits on 1 May and 11 May 2021 in anticipation of the undefended hearing listing.
On 20 May 2021 the husband appeared before the Court and orders were made discharging the undefended hearing. Further order were made as follows:
Expert Evidence
5.That within 28 days the respondent shall serve a report from [Dr L], treating [doctor] as to his current diagnosis, treatment and prognosis to the applicant.
6.That within 7 days of service of the said report the parties shall jointly instruct the single joint expert [Dr O] to prepare an updated report and in this regard the parties shall brief him with a copy of [Dr L’s] report and shall authorise [Dr O] to communicate with [Dr L] and to arrange an appointment to interview the respondent at the discretion of the expert.
7.That within 42 days the respondent shall serve a report from from treating psychiatrist [Dr U], treating psychologist [Dr V] of the [B Hospital Clinic] and treating psychologist [Ms W] upon the applicant.
8.That within 14 days the applicant shall provide the respondent with a list of three psychiatrists she proposes may be appointed as single joint expert psychiatrist to report into the respondent’s mental health and psychiatric functioning, together with copies of their resumes and fee estimates.
9.That within 7 days thereafter the respondent shall nominate one of the three psychiatrists proposed.
10.If the respondent fails to comply with order 9 then the applicant shall nominate one of the names on the list.
11.Within 7 days of the date of appointment of the single joint expert psychiatrist pursuant to these orders 9 or 10, the parties shall agree upon and send a joint letter of instruction to the single joint expert to prepare said report.
12.The treating practitioners’ reports referred to in order 7 and [Dr O’s] original report shall be provided to the single joint expert psychiatrist when to hand.
13.The respondent shall attend upon the single joint expert witnesses at any reasonable time on the request of such experts for interview.
14.In the first instance, the applicant shall pay the whole of the costs of the single joint experts referred to herein, on the basis that the respondent shall pay or cause to be paid to the applicant half of the amount she paid from the property adjustment order made in his favour, whether by way of offset or otherwise.
On 11 August 2021 orders were made appointing Mr Z as case guardian for the husband.
On 2 March 2022 Orders were made by consent as follows:
3.That the wife pay or cause to be paid to the husband as part property settlement the sum of $100,000 to be deposited into the husband’s lawyers trust account within 10 days from the date of making these orders and that payment may be allocated for the purposes of:
(a)litigation funding; and
(b)any balance may be paid by husband’s lawyer to the husband for his own use.
PRELIMINARY ISSUES
Before determining the dispute between the parties, it is necessary that I satisfy myself that I have jurisdiction to make such a determination because these proceedings were instituted in the Family Court of Australia, as it then was, before 1 September 2021. I am satisfied that I have such jurisdiction.
Each of the parties were afforded the opportunity to make submissions as to whether I have jurisdiction to consider and determine the competing applications for relief prosecuted by the parties.
I have had the advantage of reading the decision of Aldridge J in Cirillo & Cirillo (No 4) [2022] FedCFamC1F 208 where his Honour stated:
It is plain that the legislature did not intend to deprive the Court of jurisdiction in matters already filed in it that had not been the subject of transfer from [the Federal Circuit and Family Court of Australia (Division 2)]. This is because the Family Court of Australia continued in operation, albeit under a new name, with the clear intention that it would continue to operate as a superior Court of record. There is no provision in any of the legislation which provides for matters filed in the Family Court of Australia to be transferred to any other Court. They remain in the Family Court of Australia with the obvious legislative intent that they be heard and determined by it in the exercise of the jurisdiction provided by s 31 of the [Family Law Act 1975 (Cth)].
In short, the legislature intended that the jurisdiction of the Family Court of Australia, by whichever name it is called, continue in respect of proceedings filed in it.
Further, his Honour stated:
It seems therefore, that to the extent necessary, words should be implied into s 25 of the [Federal Circuit and Family Court of Australia Act 2021 (Cth)] so as to make it clear that Division 1 acquired the jurisdiction in respect of matters filed in it prior to 1 September 2021, as was previously conferred by s 31 of the Family Law Act. The same result could be achieved by reading Sch 1, Item 36 of the [Federal Circuit and Family Court of Australia (Consequential Amendments and Transitional Provisions) Act 2021 (Cth)], which repealed s 31 of the [Family Law Act 1975 (Cth)], as being read subject to the words, that the repeal did not apply to matters currently before the Court.
Such an approach clearly gives effect to the intention of the legislature that the jurisdiction of the Family Court of Australia was to be maintained. See the similar approach adopted by the Full Court in Wallace & Stelzer and Anor (2013) FLC 93-566 and Duarte and Anor & Morse (2019) FLC 93-902. It is worth noting that in both these matters, the High Court of Australia refused to grant special leave to appeal against the Full Court decisions.
Having satisfied myself that, for the reasons set out above, I have jurisdiction to consider the application before me, it is not necessary to consider the efficacy or validity of the use of s 52 of the Federal Circuit and Family Court of Australia Act 2021 (Cth).
On the morning of the first day of the trial, an Order was made by consent discharging the Order appointing a case guardian for the husband.
After lunch on the first day of the trial the husband, by way of his counsel, gave notice as to his intention to adduce by way of further evidence, an additional taxation liability that had only come to his attention on that day. After the lunch adjournment on the second day of the trial, the husband sought leave to make an oral application to adduce further evidence as to this additional contended taxation liability. He conceded that the fact and quantum of the liability had not been disclosed to the wife prior to this time. Evidence as to that liability was contained within Exhibit H4, being an ATO activity statement debt of $202,168.12. He relied upon a proof of evidence, incorrectly dated 29 April 2022, which became Exhibit H6. He adopted that document in his oral evidence in chief.
It was his evidence that he only became aware of the debt “yesterday” being the first day of trial, “when [he] was at Court, from a document my lawyer showed me on her mobile phone.” He said that he could not remember having discussions with his accountant, Mr AA, about the activity statement debt. He conceded that he had met with his accountant on at least two occasions since December 2019 and had numerous telephone conversations with him since that time. Exhibit W9 records that he has paid his accountant fees for work done in 2019, 2020 and 2021.
The husband’s contention as to this further ATO debt disassembled over the course of a number of simple and straightforward questions during the balance of his oral evidence. A plain reading of Exhibit H4 established that on 27 May 2016 the ATO determined that the full value of the husband’s outstanding BAS activity taxation liability of $3,429 was uneconomical and would not be pursued. It recorded the husband’s BAS activity liability to the ATO on that date on that date as nil.
He agreed that the BAS activity statement debt had accumulated from 4 September 2016 because he had failed to lodge activity statements. The husband accepted that he was not required to lodge any BAS statement since he stopped working as a consultant in 2017. He agreed that he could have notified the ATO that he had ceased trading as a consultant and de-registered for GST. He could not explain why he had not done so. Exhibit H4 recorded that the last payment the husband made by way of his BAS taxation liability was 11 July 2017 in the sum of $9,349. The husband conceded that by now making applications for variations and submissions to the ATO, any primary liability together with any penalties and interest arising thereafter could be reduced to nil.
The oral application to adduce further evidence on this subject matter, the progression of that course and thereafter its exploration by way of the documentary and oral evidence was a misconceived waste of time and expense.
THE COMPETING RELIEF OF THE PARTIES
The wife by way of her Amended Initiating Application filed on 22 March 2022 seeks orders that she pay to the husband pursuant to s 79 of the Act the sum of $220,000 within 21 days, that each party retain all items of furniture and personalty in their respective possession or control, and an order that the husband execute all documents necessary to be removed as the appointer and beneficiary of the K Trust.
The husband by way of Exhibit H16 seeks orders that the wife pay to him an adjusting sum of $1.958 million dollars within 90 days and in default of such payment that the Suburb F Property be sold and after payment of an amount sufficiently discharge the mortgage secured against the said property the husband receive 67.5 per cent of the proceeds of sale. The husband agrees upon receipt of any property adjustment sum he will reimburse he wife of one half of the costs of the single experts that have been paid by her in the first instance. He further agrees to resign as the appointer of the K Trust and for each party otherwise retain or property in their respective possession or control at the date of the orders. The husband seeks a further order for periodic spouse maintenance in the sum of $1,714 per week for a period of two years.
THE ISSUES
The issues to be determined are as follows:
(a)The date of cohabitation and separation;
(b)The identity and value of some of the assets and liabilities forming the balance sheet of the property of the parties, including as to notional add-backs of lump sums provided by the wife to the husband after the date of separation and a number of taxation liabilities of each party. The initial version of the working joint balance sheet was Court Exhibit 1. The final version was Court Exhibit 5. Agreed adjustments were made to the later in submissions. The final agreed version of this document is reproduced later in these reasons;
(c)The fact and extent of each party’s direct financial, non-financial and homemaker contributions at the commencement of cohabitation, during their relationship and subsequent to their separation. This includes the quantum of income received by the husband during the relationship and his use and application of same, the husband’s use and application of the proceeds of sale of his office space, and the fact, origin and circumstances of significant debts incurred by the husband in the shadow of him vacating the home discharged with funds paid to him by the wife;
(d)The historic and current health of the husband, and his prognosis;
(e)The historic, current and future income earning capacity of the husband;
(f)The financial resources of the husband by way of his partner;
(g)Whether the husband had complied with his obligations as to a full and frank disclosure of all of his relevant financial circumstances, and the consequential impact if established that he had not.
(h)The evidence establishing the threshold finding to ground an order for periodic spouse maintenance pursuant to s 72 of the Act, and if such evidence exists, the extent to which the husband is unable to support himself including a finding as to the value of the husband’s reasonable periodic needs. In the event the evidence permits findings as to these matters, the capacity of the wife to meet the order sought, in circumstances where her Financial Statement records her weekly income of $15,197 and expenses of $9,190 (a surplus of $6,007), that fact not appearing to be controversial.
THE ORAL EVIDENCE
The wife
The wife’s affidavit evidence was supported by a raft of appropriate documentary evidence verifying the date and value of almost all of her direct financial contributions. Appropriately, this evidence was not put into issue by the husband. Her oral evidence in cross-examination was reasonably consistent with her affidavit evidence. In my view, she did her best to respond appropriately and directly to questions asked of her in cross examination. She was a straightforward and credible witness.
The husband
The husband worked as a professional from 2001 until 2017. He was anxious to ensure that his affidavit and oral evidence were accurate. He accepted that he had “issues with his memory” and on occasions was apologetic for inaccuracies in the contents of earlier affidavits he had filed in the proceedings.
I had the opportunity to closely observe him during his cross-examination. He exhibited a capacity to focus upon and evaluate the questions put to him but on many occasions he elected to preface his response by recording or repeating his narrative. On other occasions, in direct contrast, he was directly responsive, candid and concessional.
He conceded that on occasions when he identified himself as “bedridden” in his prior affidavits, he did not quite mean that he could not get out of bed. He said that what he sought to convey was that could not always be able to leave the house. In his affidavit filed on 1 May 2000, being exhibit W15, he agreed that he had painted a picture that he could “barely function” and was extremely impaired by his medical condition. He conceded that he could at that time attend hospital to visit his partner and spent time with his partner away from the home.
In his affidavit filed on 11 May 2021, being exhibit W14, he agreed that he gave evidence as to his own physical and mental health that began to deteriorate in October 2020 causing him to be incapacitated. He agreed that this was not the case and that it was the conduct of his then partner Ms R who attacked him that caused his difficulties. The May 2021 affidavit recorded that he had been in increasing pain since Christmas 2020. He said this was “not made up” in circumstances. His clear and precise oral evidence was that a “flare-up” of his condition occurred on either 20 or 21 January 2021, on which date the pain “came like a thunderbolt”. His explanation for the inaccurate evidence in his May 2021 affidavit as to his presentation was “truth through a distorted lens”.
The husband’s concessions made it clear that parts of his prior affidavit filed in the proceedings were misleading and other parts simply erroneous.
The husband encountered difficulties in reconciling expenditure identified in his bank statements recording his attendances at cafés, hotels and acquiring alcohol at times when he had not or failed to attend at Court in these proceedings, or during periods that he had recorded in his affidavits of “flare-ups” of his condition. He later said that he had provided his bank withdrawal card linked to his account to another person who had started to use his bank account from February 2021. He had not disclosed this fact during the litigation.
The husband’s contended spreadsheet as to his household expenses (s 50 Evidence Act 1995 (Cth) schedule for 2020 and 2021) became Exhibit H9. He relied on the schedule for the purposes of his accounting for his use and application of the $550,000 he received from the wife. He relied on the schedule and his Financial Statement filed 18 March 2022 to ground his spouse maintenance relief. It was the husband’s evidence that he, with the assistance of his partner, had ensured accuracy in both documents and specifically the spreadsheet being Exhibit H9. The husband conceded during the course of his cross-examination that the items of expenditure in the spread sheet were not his own personal expenses but were all of the expenses for the household, comprising he and Ms R, and for the later period he and Ms P. He conceded that his Financial Statement filed 18 March 2022 was inaccurate in that;
(a)He had failed to record that he was receiving $200 rent per week from his current partner, Ms P, such payments commencing in either December 2021 or February 2022; and
(b)His partner paid for all of the food, groceries, eating out and Uber expenses in the household, and hence a number of these entries as recorded in part N of the husband’s Financial Statement were inaccurate in that they were not expenses he incurred; and.
(c)That from early 2022 the value of items paid by the partner increased from $300 per week to $500 per week.
The husband did not explain how these inaccuracies in his Financial Statement transpired.
The husband’s disclosure failures
A party to property proceedings is required to make a full and frank disclosure of their financial position (see Oriolo & Oriolo (1985) FLC 91-653; Weir & Weir (1993) FLC 92-338 (“Weir & Weir”)). That case law is reinforced in Chapter 6.1 of the Rules. The duty of disclosure is absolute. It is a continuing onus throughout the litigation process. It is critical to the function of the jurisdiction and fundamental to achieving justice and equity. The fact that the obligation of disclosure exists as a duty to the Court, as well as the other party, is significant. It is also significant that the obligation is in respect to the disclosure of “information relevant to the dispute”, not simply one that attaches to the production of documents, and importantly in this case, to all relevant and material facts.
In Briese & Briese (1986) FLC 91-713 at 75,181, Smithers J applied the House of Lords’ decision in Livesey v. Jenkins (1985) 1 All E.R. 106 in determining that:
(a)… in financial proceedings between spouses each party must make a full and frank disclosure of all material facts and frank disclosure was required as a matter of principle in the light of the fact that it was the duty of the Court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of a discretion.
(b)There is an obligation on each party to act so as to provide a basis upon which the two of them are in a position to resolve the case by agreement, or proceed to a hearing, as expeditiously as may reasonably be done.
(c)A person in the position of the husband in the present case has a positive obligation to set out at an early stage his financial position in a clear and comprehensive manner.
For the reasons set out herein, the husband has not complied with that positive obligation to disclose material facts and documents to provide a clear and comprehensive understanding of his financial conduct.
In Weir & Weir, the Full Court stated at 79,593 that:
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
That said, it is important to engage in the particular facts of the non-disclosure and the inferences that should be drawn from them. There are those cases where a finding of non-disclosure is no more than one which complicates the fact finding process (see Franklin & Ennis [2019] FamCAFC 91 at [9]). There are other cases where the nature and extent of the non-disclosure make the approach described in Weir & Weir thoroughly permissible.
The husband’s undertaking as to disclosure is exhibit H3. He has been a professional for many years. I find that he is well aware of the nature of the undertaking he provided with the benefit of advice. This is relevant in considerations as specific disclosure failures of the husband when dealing with various items on the balance sheet and impacts on findings made as to contribution and adjustments thereto.
As to subject matters recorded later in these reasons where I have identified disclosure failures on the part of the husband, I need not be unduly cautious in making findings on those topics in favour of the wife.
Ms P – the husband’s partner
Ms P presented as an open, responsive and truthful witness. She said that she had been living at the Suburb T property for the past nine months, on five out of seven days each week.
She said that her observations of the husband at the Suburb T property in her affidavit were made during the day over the COVID lockdown period in mid-2021. She was primarily at the Suburb T property during the day for two days each week, and had limited opportunities to observe the husband.
Since August 2021 she had been paying for all the groceries, all the meal deliveries and all of the household items valued at about $300 per week. By early 2022 that increased to about $500 per week.
Ms P said she had commenced to pay rent of $400 per fortnight in February 2022 and that she and the husband had been able to take a trip to City Y in January 2022.
She said that she had discussed with the husband his plans for the future. They were to “get better” and that he had decided to either undertake a PhD if he could obtain funding, find casual work or return to consulting.
Dr O
Dr O was the husband’s treating doctor from 7 December 2016. He remained the husband’s treating doctor until 20 January 2020. At that time he recommended that the husband obtain a second rheumatological opinion. The husband’s current doctor is Dr L.
Dr O was engaged as a single expert witness in the proceedings pursuant to orders made on 23 July 2019. The expert provided three reports as to his expert opinion dated 12 August 2020, 16 December 2020 and 10 March 2022, collectively being Court Exhibit 2.
The expert has been a medical professional since 1990 and has specialised related expertise. For the purposes of his treatment of the husband and in grounding his expert opinion Dr O had regard to a broad range of clinical records and notes, pathology findings and imagining reports spanning the period from 30 July 2016 until 24 January 2022 sourced a large number of the husband’s treating practitioners in addition to attending on the husband from 7 December 2016 until 20 January 2020.
Dr O opined that the husband had a medical condition in 2016 and 2017. The expert said that the distinction between the husband’s medical conditions is “not of great importance”. Both disorders fluctuate in activity over months or years. He said that the diagnosis in 2016 and 2017 was evidenced by a biopsy and raised inflammatory markers.
Dr O opined in his report dated 12 August 2020 that:
In recent years however there has not been objective evidence of disease activity. Nevertheless, it is possible for [this disease] … to cause localised inflammation without abnormality of ESR and CRP. In that circumstance, symptoms are generally mild to moderate, and focal.
The expert in the August 2020 report recorded:
[The husband] reports ongoing major problems with impaired concentration (brain fog) and severe fatigue. He also has pain in the left shoulder region. The MRI recommended by [Dr L] (but not yet performed) is appropriate. My expectation is that the MRI will show abnormality but unless much more impressive than I expect, would not change the conclusions provided below.
His current, reportedly severe, symptoms are not explicable on the basis of [his medical condition] or other physical disease. I should emphasize that lack of a physical disease explanation does not mean that the symptoms are not real. As a [medical professional], my expertise is in physical disorders. I am not an expert in assessment or treatment of psychological or cognitive disorders, and I cannot measure severity of symptoms or dysfunction when the symptoms or dysfunction are not due to physical musculoskeletal or peripheral neurological disease.
The expert concluded at August 2020 that:
With respect to his ability to perform work as a [professional], there is no rheumatological problem that would prevent him from doing so. Determination of his psychological capacity to perform those duties should be determined by a psychiatrist or clinical psychologist.
From the physical point of view, his prognosis is good. His overall prognosis depends on non-physical factors including his psychological makeup and stressors.
In his report dated 10 March 2022, after having the benefit of imaging studies and other tests obtained since April 2020, together with the material from the husband’s treating doctor Dr L for the period up to 24 January 2022, the expert concluded his opinion in the following terms:
Although [Mr McBride] has continued to receive … medication at a moderate to high dose … the markers of inflammation have been either entirely normal (ESR on five occasions between April 2020 and November 2021) or essentially normal (CRP on five occasions over the same date range with values being normal on three occasions and minimally elevated on two occasions). Imaging studies demonstrated no significant abnormality. Bone scan is exquisitely sensitive and in October 2020, his bone scan detected uptake in many areas but no uptake in the areas of his symptoms. The … changes reported on bone scan are found commonly in normal people. The lack of uptake … argues against inflammatory disease at those sites.
[Mr McBride] had [a] disease … in 2016 and 2017. Despite ongoing symptoms, there has not been objective evidence of [this] disease in recent years. No single test has perfect sensitivity but the lack of clinically documented [disease markers] … indicate that his symptoms are not mediated …
Notwithstanding a rigorous cross-examination of Dr O by counsel for the husband, the expert remained unshaken in his evidence. The expert said “I cannot measure the severity of symptoms or dysfunction when the symptoms or dysfunction are not due to physical musculoskeletal or peripheral neurological disease.”
The expert in his oral evidence described the disease as “the immune system misbehaving” or there being “dysregulation of the immune system. He said that these diseases often fluctuate over time and there was no perfect measure of or single test levels in the diagnosis and management of these diseases. He identified that a psychiatrist is the best person who can provide an expert opinion as to an individual’s perception of pain.
In oral evidence Dr O confirmed and emphasised that:
(a)The husband’s reportedly severe symptoms of pain, impaired concentration (identified by the husband as brain fog) and severe fatigue “are not explicitly on the basis of [his medical condition] or other physical disease”; and
(b)His expertise as a medical professional is in physical disorders; and
(c)A lack of physical disease explanation does not mean that the symptoms are not real.
The expert made it clear that the husband could genuinely experience this pain even though there was not a physical abnormality and that he did not have the expertise to validate or not validate the husband’s pain or to say whether the husband was exaggerating his symptoms or pain.
I accept the evidence of Dr O and so find.
Dr BB
Dr BB is the single psychiatric expert. He attended upon the husband by way of a telehealth engagement on 21 October 2021. In his oral evidence Dr BB confirmed he had received and read all of Dr O’s reports. He recorded that he had the benefit of reports from the husband’s treating psychologist Ms W, the husband’s treating Psychiatrist, Dr U, the husband’s treating doctor Dr L and Dr V, the Psychologist at the B Hospital Clinic attended by the husband.
Dr BB opined that the husband did not appear to be depressed or anxious. He said there was no evidence of any cognitive impairment presented by the husband and that the husband was fully orientated with no evidence of organic or psychotic psychopathology. Dr BB said that the husband described no symptoms of depression and in his opinion did not currently suffer from a primary major depressive disorder or ongoing anxiety disorder.
Dr BB recorded that the husband had undergone “significant investigation” as to his disease and that the “pain associated with his condition” gives rise to a depressive disorder which is largely secondary to that pain.
He opined that the husband suffers from a disorder with prominent pain that has been intermittent although persistent for five years, and that the pain is present during flare‑ups of his physical condition. The expert said that the disorder diagnosis is grounded on the husband’s self-report, this it is not dependent on the husband’s physical disorder, but rather the fact of he claiming pain. He said that the disorder is based on some physical problem that gives rise to psychological distress.
Dr BB further opined that the husband suffers from an adjustment disorder with depressed mood secondary to that pain. He said that this condition is not present during periods when he is without pain.
Dr BB was cross examined by counsel for both the husband and the wife. The expert’s opinion was not materially shaken by either cross examination. Dr BB opined and I accept that the husband’s psychiatric prognosis is entirely dependent on his physical prognosis.
I find consistent with Dr BB’s evidence that the husband’s physical symptoms are intermittent, are varying in duration and that when he suffers these symptoms it is accompanied by some depression. I accept the evidence of Dr BB that the husband requires ongoing treatment from a pain management centre which should include psychological consultations directed at pain management and he should continue with regular psychiatric review.
I accept the evidence of Dr BB and find that:
(a)The husband’s current recommended treatment and medication regime will not impair his ability to return to work. To the contrary, they should eventually make it possible for him to do so; and
(b)That while the husband advised the expert that he had plans for a graduated return to work in 2022, the expert was not confident that the predicted return would occur; and
(c)The husband is highly educated and skilled. He has been on occasions a person with a driven personality; and
(d)It is possible for the husband to learn to manage his condition with a combination of medication and psychological counselling so he should be able to return to “some consulting work” in the next two years. The expert agreed with counsel for the husband that the husband would not be able to work a 10 to 15 hour day, five days a week as a full-time professional. It would be necessary for the husband to take some breaks. It would be a matter for the husband to regulate his diary and his work. A preferred return to work pathway would be by way of casual work or studying for the transition back to consulting. He was unable to say when the transition could occur; and
(e)That it is likely that he will return to work at 75 per cent of his capacity provided that the husband paces his activity within his physical limits.
An important caveat to Dr BB’s opinion, which I also accept, was that the husband’s future psychological condition will vary dependent on the intermittent nature of any underlying physical condition that he may suffer and that each are closely connected. The expert made it clear that his prognosis is “not an exact science”.
The husband impressed me in the witness box as having capacity to both:
(a)access and continue to implement a pain management program; and
(b)pace himself.
FINDINGS
The wife acquired her pre-relationship property at D Street, Suburb JJ (“the Suburb JJ property”) in 2004 for $507,000. It is not contested that the wife entered into a loan agreement with her parents in 2004 for the sum of $250,000 used to complete the acquisition of the Suburb JJ property. The loan was repayable in full on 60 days’ notice or at the time of the settlement of the sale of the Suburb JJ property. In the event of the death of either of the wife’s parents during the currency of the loan, it was repayable within 60 days of any notice from the executors of the wife’s parent’s estate. Interest was not to be charged on the loan.
Between April 2004 and January 2006, the wife was living in Sydney. The husband’s evidence was:
4.…We commenced living together in 2004 in [the wife’s] [Suburb JJ] townhouse. I was then working in both [City Y] and Sydney and when in Sydney (which I calculate was 40% of the time) I lived with [the wife]. In October 2005 I moved into the [Suburb JJ] town house full time.
In the husband’s oral evidence he conceded that he ceased his employment in City Y in about January of 2006. He said it was at that time that he relocated to Sydney.
The wife was unshaken in her cross-examination as to the date of commencement of cohabitation being January 2006. She said that until that time the husband would “work in City Y during the week” and that from 2004 they would spend three out of four weekends together either in Sydney or in City Y.
Having observed each of the parties give their evidence and having regard to the husband’s concession as to when he commenced to live in the Suburb JJ property I find that the parties commenced their cohabitation in January 2006.
On 1 May 2008 the wife exchanged a contract to sell the Suburb JJ property for $545,000. The sale was completed on 10 July 2008.
On or about 8 July 2008 the wife’s mother advanced to the wife a further sum of $60,000 to assist the wife in completing the Suburb F acquisition on the same terms and conditions “as the original $250,000 for [the wife]”.
On 10 July 2008 the wife completed her acquisition of the Suburb F Property for $1.6 million. She obtained a loan secured by way of mortgage for $630,000 from KK Bank to assist in completion of the acquisition. The balance of funds used to acquire the property was sourced from the sale of the Suburb JJ property, the $60,000 advance from the wife’s mother and the disposal by the wife of her pre relationship shareholding.
It was uncontroversial that:
(a)the husband made no contribution to the acquisition of the Suburb F Property and that the wife made all the repayments in respect of the KK Bank mortgage from her income; and that
(b)notwithstanding the terms of the loan agreement entered into between the wife and her parents on 4 October 2004, the $250,000 advance from the wife’s parents to assist in the acquisition of the Suburb JJ property was not repaid.
The wife’s affidavit conceded that as at the date of the trial her mother had not called for the repayment of either the $250,000 or $60,000 loan.
It is the wife’s evidence that in late 2008 the husband purchased office space in the LL Building, Sydney for approximately $90,000 and that he paid for this space by way of a $110,000 business loan obtained from KK Bank, guaranteed by the wife. Her evidence was verified with the husband’s application for KK Bank was dated 12 December 2008.
The husband’s affidavit contended that the purchase of office space in the LL Building was in October 2009 for $120,000. It was his evidence that he and the wife both borrowed from KK Bank to fund the purchase and the loan was secured upon the Suburb F Property.
I prefer the wife’s evidence as to the date, value and source of funding of the office space and as to the husband being the borrower and not the parties being joint borrowers. Her version was supported by documents verifying her evidence. I so find.
Both parties agree that in August 2010 the wife refinanced the KK Bank mortgage facilities secured on the Suburb F Property with the ANZ Bank. As part of the refinancing the wife obtained a further line of credit for $240,000. The wife identified this facility as “[Mr McBride's] ANZ loan”. It was the wife’s evidence that the parties agreed that the husband would meet all payments in respect of the ANZ line of credit. The husband gave evidence that “[he] made repayments on the business loan from time to time as and when [he] was paid”. The wife said that on occasions he did not make the interest payments and that it was necessary for her to meet those payments. The wife said:
[The husband] did not make any repayments either towards [the husband’s] ANZ Loan or to [the husband’s] [CC Bank Loan] nor did he pay the interest on [the husband’s] [CC Bank Loan] and this were funded from my savings in the mortgage offset account with [CC Bank].
I find that the parties did agree that the husband would pay and be responsible for the interest due on the ANZ loan, and that the husband on occasion paid the interest accruing from time to time as did the wife. I find that the principal due on the loan facility was not reduced or repaid prior to it being refinanced.
The wife gave evidence that was not materially challenged that:
(a)from 2006 until 2010, other than husband’s ANZ Loan, she had no direct knowledge of the husband’s income, savings, expenditure or liabilities; and
(b)during the period of cohabitation the parties maintained separate financial identities. She said that the parties agreed at cohabitation to “keep our finances separate”; and
(c)apart from the joint loan agreements entered by the parties either by way of the third refinance of the Suburb F mortgage or the KK Bank business loan, ANZ line of credit or CC Bank interest only loan the parties did not have any “co-mingled accounts” and the wife had “no visibility regarding [the husband’s] Financial Statements or documents.
I accept this evidence and so find.
Upon the wife being offered a senior position at M Company in May 2013 she refinanced the Suburb F mortgage and line of credit facilities with CC Bank. Both the husband and wife were recorded as borrowers by way of the loan and the wife the mortgagee. The ANZ line of credit facility for $240,000 was replaced with a CC Bank interest only loan. The value of the ANZ line of credit facility discharged in mid-2013 was $120,000.
The husband agreed that any payments he didn’t make in respect of the “line of credit” were “added to the debit balance of the loan.” The husband was uncertain as to whether post 2013 he made any contributions to the loan. I find in the circumstances he did not. I accept and find that the wife from time to time periodically made payments to transfer sufficient funds to meet interest due on the CC Bank interest only loan.
The husband gave evidence as to selling his office space in the LL Building in 2012 or 2013 “at a loss”. He did not disclose the quantum of the sale or the use and application of the sale proceeds in the course of the proceedings or in his affidavit. He did not apply the sale proceeds to discharge the KK Bank line of credit.
The wife’s evidence was that the husband sold his office space in the LL Building in early 2014. She said that the husband told her that he “sold [the office] for slightly less than the purchase price”.
I accept the wife’s evidence on this topic. The CC Bank refinance occurred before the disposal of the office space by the husband. This accords with the wife’s evidence as to the disposal being in 2014, and chronologically fits with the husband’s occupation of an office at DD Building in 2014. The husband agreed in cross-examination that he sold his office in LL Building in 2014 at a sale price of either $95,000 or $90,000 or $85,000.
The wife gave evidence as between 2008 and 2010 conducting improvements at her sole cost to the Suburb F Property funded by way of her saving including installing air conditioning, surround sound and renovating the laundry.
The wife’s annual gross income was as follows:
2006: $186,000
2007: $229,000
2008: $307,000 (high due to the crystallisation of capital gains when shares were sold to buy [C Street Suburb F])
2009: $230,000
2010: $240,000
2011: $308,000
2012: $336,000
2013: $333,000
2014: $364,000 (including $114,000 distributed to the husband)
2015: $350,000 (including $130,000 distributed to the husband)
2016: $448,000 (including $152,000 distributed to the husband)
2017: $522,806
2018: $539,140
2019: $640,664
2020: $669,999
2021: $790,260
The husband did not put into evidence his annual income for the financial years 2006 to 2016. Exhibits H4 and H7 record that the last tax return filed by the husband during the period he was consulting was on 17 May 2013 for the financial year ending 30 June 2011.
The ATO have not recorded the receipt of any income tax return for the husband for the financial years ended 30 June 2012 and 30 June 2013. The husband’s income tax returns for the years ended 30 June 2014, 30 June 2015 and 30 June 2016 are “ATO initiated returns”. The husband referred to them in his affidavit as “default assessments”. The only income recorded in these ATO initiated returns is the distributions from the trusts established in 2013 as recorded later in these reasons. The husband has incurred significant penalties and general interest charges arising from his failures to lodge income tax returns for these periods.
During his cross-examination, notwithstanding his annual contact with his accountant from 2019 until 2021 and payment of his accountant’s fees with funds provided to him by the wife (Exhibit W9), the husband could not confirm that he had lodged his income tax returns for the years ended 30 June 2012 and 30 June 2013. He conceded that they could “still be outstanding” and that they had not been disclosed to the wife. He conceded that as a consultant for the tax years 2012 through to 2016 he was aware of his obligations to prepare, file and lodge tax returns.
The husband gave evidence that on the 4 October 2018 the ATO issues a “notice of legal action” seeking to recover from him $363,978.29.
These reasons record the four sets of orders directing the husband to file his historic tax returns and providing them to the wife. The husband could not give an adequate explanation as to the reason his taxation returns from 2014 to 2016 had not been completed, lodged and disclosed especially in the shadow of the four distinct orders. The husband’s oral evidence was that he would lodge his 2015 and 2016 tax returns “as soon as [he] can”. He could not explain why he had not done so for what is now close to the three years since the first order was made on 23 July 2019. He said “it depends on the pain.” I do not accept that explanation. He said he had the necessary documents in storage to prepare the returns but that his laptop crashes every 20 minutes. He has engaged his accountant annually since 2019. He was working in 2019 as set out earlier in these reasons. He had progressed his return to consulting mid-2020. He also said “[he] could have lodged them except [he] was unwell” and “[he hopes] to focus on events with [his] partner”. I do not accept these explanations as to approaching three years of failure to comply with the said orders.
In March and April 2020 the husband lodged his taxation returns for the financial years ended 30 June 2017, 30 June 2018 and 30 June 2019. They recorded his income as follows:
2017: $9,307
2018: $18,081
2019: $10,317
Exhibit H4 records that upon the lodgement of those tax returns the value of the husband’s ATO liability had reduced to $137,929.42. The husband said he understood the reduction of the total amount of tax he owes was as a result of tax returns he had lodged. The husband confirmed that he is yet to lodge his taxation returns for the years ending 30 June 2020 and 30 June 2021. He did not have any explanation as to his failure to lodge returns for those years.
His absence of explanation as to his failure to lodge and disclose his 2012 to 2016 and 2020 to 2021 taxation returns juxtaposes the terms of his undertaking as to disclosure (Exhibit H3).
I find that the husband has the onus to disclose and establish by credible and reliable evidence:
(a)the quantum and application for his income throughout the period of cohabitation and subsequent thereto; and
(b)the value of the funds he received on the sale of his office in LL Building and the use and application of those funds.
I find that he has failed in his disclosure obligations as to his financial circumstances on these subject matters
As an adjunct to the wife’s senior position with M Company the parties established two discretionary trusts, the J Trust and the K Trusts, both established by deeds dated 15 August 2013. The husband is the appointer of the K Trust and the wife the appointer of the J Trust. A single corporate entity S Pty Ltd is the trustee of each trust. The husband was a director of S Pty Ltd. The wife is the sole shareholder and director of the trustee subsequent to the orders made in May 2019
The wife gives evidence in June 2014 of the husband renting an office in the DD Building and electing to purchase it. She says that she agreed to pay $16,000 for the deposit for the office and that the husband funded a further $14,000 by drawing on the CC Bank interest only facility. The wife said that the husband did not repay her the $16,000 nor did he repay the $14,000 to the CC Bank loan facility.
The husband contends that his office in the DD Building was purchased on 30 June 2015 for $62,000, financed by way of a large payment he received on the conclusion of a project. He denies drawing on any loan to meet any of the acquisition cost of the office but said in his affidavit that as to the wife providing funds by way of loan for the initial deposit that he did “not remember this. It is possible…” He then said that he was “fairly sure” that he paid the deposit from a distribution from the K Trust.
Having regard to the overall reliability of the wife’s evidence when compared with that of the husband, and the disclosure failures identified by the husband above, and the husband’s failure to place into evidence any documents to support his version as to the financing of the office in the DD Building, I accept and find that the acquisition and funding of the office was in the terms identified by the wife in her evidence.
$114,000 was distributed to the husband “for tax purposes” for the 2014 year from one of the trusts established on the wife’s promotion in M Company. The husband executed the minutes of the trustee authorising the distribution. The evidence was uncontested that the wife paid $54,400 into the husband’s personal Commonwealth Bank of Australia (“CBA”) account. It is uncontroversial the husband transferred $30,000 back to the wife’s mortgage offset account. It is the wife’s contention that the remaining $24,400 was intended to pay the taxation impost related 2014 distribution. The husband did not remit this $24,000 to the ATO. He did not disclose his use of these funds.
The wife contends that the arrangement with the husband was that the income distributed would be “immediately gifted back to me for my use”. The wife said that she would pay the husband the difference between the tax amount assessed on the distributions and the tax amount he would have owed if he had not received the distributions and that the husband agreed to this proposition. The husband did not give evidence on this topic in his affidavit. I accept the wife’s evidence.
The wife contends that in late 2014 she had an argument with the husband and the husband punched his fists through a wall in the spare bedroom at Suburb F. The husband concedes making a hole in the wall at or about that time but that the wife was “two rooms away”.
The wife’s father died in December 2014. It is her evidence that she advised the husband of their separation on that day. She contends the parties remained separated under the one roof from that day on. The husband puts this into issue. The wife contends that the husband thereafter did not sleep in the matrimonial bedroom apart from a few instances when she was not in Sydney and the parties did not have intimate relations since that time. The husband puts both of those propositions into issue. The Husband said that from December 2014 he primarily “slept in a different bed due to his asthma and pain”.
The wife contends as at December 2014 she had $485,000 in an offset account, shares of $150,000, other assets, superannuation valued at about $300,000 and cash savings of $20,000. Her evidence was that at that time the CC Bank loan had a debit value of about $190,000.
In mid-2015 the wife received by a bequest from her late father’s estate the sum of $200,000. These monies were held in a “testamentary trust” and were used to acquire shares within that trust. That trust remains in specie identified in item 23 in the joint balance sheet. The wife gave evidence that she has the capacity to access the monies in this trust at her election.
On 30 June 2015 the wife caused the trust to distribute $129,525 to the husband. No monies were physically transferred to the husband’s account. On 30 June 2016 the wife caused the trust to distribute $152,020 to the husband. Once again no monies were physically transferred to the husband.
In mid-2015 the husband and the wife went on holiday with the wife’s family.
The husband gave evidence about feeling unwell in 2015 and experiencing an increase in frequency in his asthma attacks. He said in the second half of 2015 he began to experience an increased frequency in migraine headaches between one and three each week. He experienced increasing pain in 2016. He described his diagnosis as being a “rare autoimmune disease…” He described a chronic disorder where he experiences excruciating pain. The severity of the pain fluctuates and sometimes can last for days. He said when he gets “flare-ups” it makes it difficult for him to walk and change his position from lying to sitting to standing. He said that he has difficulties concentrating and loses his train of thought. He described it as “brain fog”. He estimated that his experience of pain had a significant variation with some months being free of serious pain and others when he is in pain for more than half the days a month. His worst period of “flare-ups” was in early 2021. He gave evidence as to the different medications that he takes and the identity of the medical practitioners who prescribed them.
The husband commenced attending the pain management clinic at B Hospital in July 2020 and continues to attend at the clinic. He attends upon a psychiatrist, a clinical psychologist, and physiotherapist and an occupational therapist. He has found his visits to the pain clinic very helpful. He gave evidence that the pain clinic is assisting him developing and applying his skills so he is able to do more when he is in pain.
The wife gave evidence as to her observations of the husband’s presentation during 2016 when he contended that he was unwell. She said that he at all times was able to have conversations which were coherent and reasoned, that he played computer games, that he stayed abreast of current affairs and had detailed political discussions. She said that subsequent to him commencing a relationship with Ms R, she would observe them going out at least one night per week, Ms R visiting Suburb F and the husband leaving to attend upon mutual friends or other functions outside the home. It was the wife’s case that the husband’s health issues did not materially impact on his capacity to work or his amenity of life.
It is uncontroversial the wife did not accompany the husband to any medical appointments or speak to any treating physicians. It was the wife’s evidence that she spent a considerable period of 2016 staying outside Australia.
At 30 June 2016 the wife gave evidence as to her offset account being valued at $435,000, her publicly listed shares at $200,000, having other assets and superannuation valued at $375,000. At that time she gave uncontested evidence as to the Mr McBride CC Bank loan having a debit value of $240,000.
The husband and wife went on another holiday organised by the wife’s mother in late 2016.
At or about late 2016 the husband had accumulated a number of credit card debts. The husband conceded that he had not disclosed in the course of the proceedings the credit card statements. He agreed that these statements, if disclosed, would provide evidence of and verification as to the origins of the transactions creating the credit card debts, would illustrate the period that the debts had accumulated, and record if cash was withdrawn by way of the credit cards. During his cross-examination the husband conceded that a portion of the credit card debts would have been created by way of his expenses and the operation of his consulting business. He did not give evidence that the credit card debt had any nexus to household expenses or any direct benefit to the wife.
The husband’s concessions in his oral evidence are in conflict with the terms of his undertaking as to disclosure (Exhibit H3). I find that he has failed in his disclosure obligations of his financial conduct and circumstances as to his credit card debts.
In 2016 and 2017 the wife paid approximately $50,000 for further improvements to the Suburb F Property including replacing the fences, landscaping the backyard and installing an awning and replacing the lights throughout the house. The wife met the costs of these improvements.
In late 2017 the husband was evicted from DD Building due to failure to pay outstanding fees. The husband gave no evidence as to any attempts or efforts on his part to effect a sale of his office in the DD Building or to achieve any mitigation of the loss being incurred as a result of his illness.
The wife made complaints as to the husband sleeping in her bed while she was away and this causing her distress.
The husband contends that the parties affected a separation under the same roof at Suburb F on 30 November 2017.
I find that the terms of the interactions and dynamic between the parties changed in December 2014 in that they commenced to spend less time together but did not separate at that date. I find that their separation occurred on or about 30 November 2017 as contended by the husband. The clear separation of the financial identities of the parties that existed prior to December 2014 continued after that date. I am unable to make any finding as to any continuation of their intimate relationship post December 2014. Notwithstanding a souring of their interactions after December 2014, the fact of the distributions of income for taxation purposes for the next two years, the part funding by the wife and from the line of credit to purchase the DD Building office and the parties attending for the family holidays in 2015 and 2016 support this finding.
On 3 April 2018 the wife filed an Initiating Application for property adjustment.
In October 2018 the wife refinanced all of the CC Bank loans including paying out the interest only facility used by the husband. That facility at the time was valued at $240,000. It is uncontroversial that the husband in addition to retaining the proceeds of sale of the LL Building office also retained the benefit of the application of the $240,000 paid out by the wife. The value of the wife’s refinance by way of CC Bank facilities with the CBA was $390,283.
On 27 July 2019 the DD Building issued a statement of claim in the Local Court seeking to recover from the husband the sum of $90,267.53 including filing fees, solicitors fees and interest arising from the husband’s failure to pay property fees. Judgment was entered against the husband and on 18 March 2020 LL Building managers issued a bankruptcy notice seeking a payment of $92,408.75.
On 4 May 2020 the husband applied from the $550,000 paid by the wife pursuant to the orders made 8 May 2019:
(a)$80,000 by way of compromise to settle his dispute with the DD Building managers; and
(b)$70,000 to EE Finance to compromise his credit card debts that had accumulated to $110,637.
When the husband vacated the Suburb F Property in June 2019 he commenced to live in rented accommodation at Suburb T, paying $900 per week rent. The husband paid a lump sum year in advance payment of rent from the $550,000 received from the wife. Between June 2019 and February 2020, the wife conducted further renovations at the Suburb F Property at her cost of $200,000 including replacing the deck, renovating the bathrooms, renovating the kitchen and painting the house.
The husband conceded that he did not make any direct payments for the Suburb F mortgage or as to the costs of any of the Suburb F renovations. He said that his contribution toward renovations while he lived there was researching and obtaining quotes from tradesmen, supervising the tradesmen when they did repairs and renovations. The wife contended that the husband merely “lets the tradesmen in” while he was working at home.
THE LAW
In determining claims for alteration of property interests pursuant to s 79 of the Act I am required to:
(a)Make findings as to the identity and value of the property, liabilities, and financial resources of the parties, or either of them, at the time of the final hearing, and determine the legal and equitable interests of the parties in such property. The superannuation interests of each party will be included in a single pool of property, notwithstanding that the interest is of the wife and the husband are of significant value when compared to the value of the non-superannuation pool of property. Neither party sought a superannuation splitting order. I enquired in submissions in these circumstances and where both parties would not access their superannuation entitlements for many years whether either party sought that superannuation not be included in a single pool of property and be considered in the adjustments to the contribution findings pursuant to s 75(2)(f). The husband opposed that course seeking that superannuation being included in a single pool of property. The wife sought that there be a “two pool approach” to contribution. In submissions she contended a single finding as to contribution. In the circumstances I will include the superannuation interests of the parties in a single pool of property.
(b)Consider, identify and assess the contributions by the parties to the acquisition, conservation and/or improvement of their property, including financial and non-financial contributions and any contributions to the welfare of the family before, during and after the marriage came to an end; and
(c)After consideration of altering the interests in the property pool on the basis of contributions, to consider whether there should be any further adjustment to either of the parties on account of the matters set out in s 79(4)(e-g) of the Act, including any relevant considerations under s 75(2).
(d)Consider the overall justice and equity of the proposed division of property
THE BALANCE SHEET
By the time of the conclusion of the submissions the joint balance sheet that became Court Exhibit 5 was agreed except as to the following items that were not agreed appearing in bold as determined by me in the following table.
Ownership Description Wife's Value Husband's Value Determination Value ($) ASSETS 1 Wife C Street, Suburb F 3,290,000 3,290,000 Agreed 3,290,000 2 Wife CBA & CommSec funds 331,520 331,520 Agreed 331,520 3 Wife H Company Shares (1,441) 135,411 135,411 Agreed 135,411 4 Wife E Company Shares (532) 48,609 48,609 Agreed 48,609 5 Wife FF Company Shares (616) 184,874 184,874 Agreed 184,874 6 Wife Motor Vehicle 1 40,450 40,450 Agreed 40,450 7 Husband CBA Savings - 3,067 Determined 3,067 8 Wife Wine in cellar 24,263 24,263 Agreed 24,263 9 Wife Household contents 10,000 10,000 Agreed 10,000 10 Husband Household contents 5,000 5,000 Agreed 5,000 11 Husband Trust monies - 86,569 Determined 86,569 Total 4,070,127 4,159,763 4,159,763 Ownership Description Wife's Value Husband's Value Determination Value ($) ADDBACKS 12 Husband Payments already made to Husband (see note) 687,000 155,400 Determined 155,400 13 Husband Husband's Share of Joint Medical Reports and House Valuation - - Removed by agreement Total 687,000 155,400 155,400 Ownership Description Wife's Value Husband's Value Determination Value ($) LIABILITIES 14 Wife Loan from parents - - Removed by agreement - 15 Wife CBA Mastercard 11,262 11,262 Agreed 11,262 16 Wife Mortgage on Suburb F Property 340,898 340,898 Agreed 340,898 17 Wife Loan M Company - - Removed by agreement - 18 Wife CGT on unrealised capital gains 35,700 - Determined 19 Wife Income tax due 4 May 2022 110,275 - Determined - 20 Husband Husband tax outstanding 1 July 2022 - 118,876 Determined 21 Wife Tax on distributions to husband - - Removed by agreement - Total 498,135 471,036 352,160 Ownership Description Wife's Value Husband's Value Determination Value ($) FINANCIAL RESOURCES 22 Wife M Company Trust & G Trust 24,371 24,371 Agreed 24,371 23 Wife Testamentary Trust (see note) 320,393 320,393 Agreed 320,393 Total 344,764 344,764 344,764
Member Name of Fund Wife's Value Husband's Value Determination Value ($) SUPERANNUATION 24 Wife Super Fund 2 as at 17 March 2022 718,088 718,088 Agreed 718,088 25 Husband Super Fund 2 as at 15 March 2022 (formally Super Fund 1) 64,556 64,556 Agreed 64,556 26 Husband Super Fund 3 as at 15 March 2022 15,808 15,808 Agreed 15,808 Total 798,452 798,452 798,452 Total assets, add backs and superannuation $5,113,615
Total Liabilities $352,160
Net property available for adjustment $4,761,455Item 7 – husband’s savings
The wife contends that this item is funded from her lump sum payments made to the husband, and hence would be double counted if a finding is made as she contends in item 12. Arising from the findings as to item 12 below I will include the value of the husband’s current savings
Item 11 – husband’s trust monies; Item 12 – payments made by wife to husband
These items are related. It is uncontroversial that the wife paid to the husband after separation from her funds:
(a)$12,000 in May 2018 by way of partial property – those funds being used to pay legal fees and incorporated into husband’s item 12;
(b)$25,000 on 1 December 2018 by the husband to pay legal fees and incorporated into item 12;
(c)$550,000 pursuant to the orders made on 6 May 2019;
(d)$100,000 pursuant to the order made for partial property on 2 March 2022
The total paid by the wife to the husband post separation is $687,000. Of that sum, the husband includes in the balance sheet by way of an agreed add back of item 12 (to the quantum of his paid legal fees) and item 11 (the monies held in his solicitors trust account) totalling $241,969.
The additional sum the wife seeks to add back is $445,031.
The husband’s Costs Notice filed on 25 March 2022 records that as at the commencement of the trial the husband had incurred legal fees in the sum of $186,558, of which $155,400 had been paid. It recorded that the husband’s solicitors held $86,569 in trust. All of the paid costs and trust monies had been sourced from the post separation funds paid by the wife.
The wife’s Costs Notice filed on 27 March 2022 records that as at the commencement of the trial, she had incurred legal fees in the sum of $163,360, of which $122,533 had been paid. The Costs Notice recorded that the wife’s fees paid to date have been “self-funded”. In this matter husband agrees and neither party seeks to add back the wife’s paid legal fees met her from her post separation income
The rationale for “add backs” was described by the Full Court in Mayne & Mayne (2011) FLC 93-479 in the following terms:
72.Parties to proceedings about the division of property before the Family Court … frequently urge the Court to add-back assets or funds that have been applied by one party or another for allegedly his or her own purposes after separation. The rationale is that one party should not benefit from a premature distribution of the assets. An obvious example is withdrawing and using money from a bank account either joint or owned by one of the parties. …
73.The application of the funds removed … may have been for a personal purpose (for example, to pay legal fees) or it may have been applied in the sustenance of a party or the children of the parties.
74.If the former is the case this has generally been found to be a pre-emptive unilateral division of property. If the latter is the case then the principles enunciated in Marker v Marker [[1998] FamCA 42] and Chorn & Hopkins [(2004) FLC 93-204] apply. If the money was, or part of the money, was used to meet reasonable living expenses then that money, or that part of the money, is not “added-back” or regarded as a pre-emptive distribution.
In Omacini & Omacini [2005] FLC 93-218 the Full Court identified three categories where it may be appropriate to notionally add back an item of expenditure, as follows:
(a)Where the parties have expended money on legal fees: DJM & JLM (1998) FLC 92-816 at 85,262;
(b)Where there has been a premature distribution of matrimonial assets: Townsend & Townsend (1995) FLC 92-569 at 81,654; and
(c)In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 (“Kowaliw”) at 76,644, including: “where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets”; or “where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value”.
The “concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule” (Townsend at [46], confirmed in Chorn & Hopkins). Parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with them getting on with their lives (Gollings & Scott (2007) FLC 93-319 at [69]). The Full Court has indicated in circumstances where a party has provided some account of post-separation expenditure it is not incumbent or realistic to expect that they should provide a precise audit as to every item of post-separation expenditure (Edgehill & Edgehill [2007] FamCA 1102 at [60]).
The Full Court in Bevan & Bevan (2013) FLC 93-545 (“Bevan & Bevan”) analysed the concepts of notionally adding back property to a pool of assets when it no longer existed. It is important to carefully consider the evidence surrounding the disposal of property, and its importance to the property adjustment enquiry, so to ensure a just and equitable outcome.
This was reinforced in Trevi & Trevi [2018] FamCAFC 173 (“Trevi & Trevi”) at [28] – [29] where the Full Court noted that it has been confirmed by earlier decisions of the Full Court that adding back … does not necessarily occur whenever “a party has expended money realised from the disposition of assets that existed as at the date of separation”, the Full Court describing such a proposition as “unduly simplistic”. An important parallel proposition is that the parties do not “go into a state of suspended economic animation” after separation. Thus, reasonably incurred expenditure does not usually come within accepted categories of addback.
In Trevi & Trevi the Full Court confirmed that “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity require it. In cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing interests in property.
The Order made as to the payment of the $550,000 on 6 May 2019 was with the consent of the wife to be categorised at trial. It was uncontroversial that the husband required funds at that time to meet the costs of vacating the Suburb F Property and to supplement his reasonable living expenses. The wife had the option to require any order for paying funds to the husband to be grounded from an exercise of an interim or partial property discretion. I do not accept the wife’s submission that the categorisation of these funds is by way of “partial property settlement”.
In undertaking an assessment of the conduct of the husband in dealing with the balance of $445,031 provided in reality from the $550,000 lump sum and not used for legal fees, I find that he carries an onus of proof to establish by way of reliable and credible evidentiary foundation, the use and application of the balance of the funds in dispute.
The husband’s evidence establishes that he has applied:
(a)$127,229 by way of rent payments;
(b)$19,948 in payments to his accountants;
(c)$80,000 in settlement of the DD Building litigation; and
(d)$70,000 to EE Finance to pay out the credit card debts.
The balance is reflected either in item 7 being his cash at bank or has been expended in his general living expenses. His living expenses included him subsidising the residence and living costs of his partners, Ms P and Ms R, during the period of their respective relationships. In the exercise of my discretion in this matter I have determined that it would not be just and equitable to add back monies expended by the husband on rent and day-to-day living expenses even if those funds were expended from monies he received by way of a partial property distribution.
The conduct of the husband in failing to pay his periodic property fees and in not attempting to sell his office at DD Building, or mitigate the loss by continuing to hold that office, resinates waste in the terms identified by the Full Court in Kowaliw and Kowaliw. On the face of it, it would appear unjust and inequitable not to require the husband to account for the value of this loss or for the husband not to account for the value required to discharge his credit cards debts cast against his disclosure failures as identified earlier in these reasons.
I am mindful of the dicta of the Full Court in Bevan & Bevan and in circumstances where it appears that the disputed funds cannot be safely identified or no longer exist, I will exclude this item from the balance sheet identifying the property of the parties and will take it into account in the adjustment to the contribution findings.
Item 14 – loan from wife’s parents
The wife pressed the inclusion of this liability at the commencement of the trial. At the conclusion of the evidence she conceded that the contended liability ought to be removed from the balance sheet in circumstances where her mother had not called upon her to repay the debt for approaching 14 years.
Item 17 – loan M Company
The wife prosecuted this liability at the commencement of the trial. She conceded during the trial that it was offset by the value of a capital account held by the wife in M Company. The wife agreed to remove the item.
Item 18 – CGT on unrealised capital gains
It was the wife’s evidence that she proposes to liquidate her shareholdings in order to pay any adjusting sum to the husband. The wife was the author of the opinion in her affidavit as to the value of the contended unrealised capital gain taxation impost to crystallise on the disposal of her shares. I do not accept that the wife has the necessary expertise by way of qualifications and experience as to opine as to the value of this future liability. It will be excluded from the balance sheet.
Item 19 – wife’s anticipated income tax as at 1 July 2022
The wife was the author of the opinion in her affidavit as to the value of her anticipated income tax liability for the financial year ended 30 June 2022. I do not accept that the wife has the requisite expertise by way of qualifications and experience to opine as to this liability. It will be excluded from the balance sheet.
Item 20 – husband’s tax liability as at 1 July 2022
The starting point on this item is what the Full Court said in Campbell v Kuskey (1998) 22 FamLR 674, at 683, being that if a taxation liability relevant to income that had a reasonable connection to the marriage relationship had been incurred “the Court should take it into account when calculating the net amount available for distribution between the parties.”
In this case there is no question that a taxation liability set out in item 20 has been incurred by way of the 2014 to 2016 trust distributions.
The issue becomes, when cast against the husband’s multiple and continuing failures to lodge his 2012 to 2016 taxation returns pursuant to orders made by the Court, if, when he does lodge those tax returns, will the value of the liability assessed on a default basis by the ATO for the 2014 to 2016 income tax years vary in circumstances not dissimilar to the value of his income tax liability substantially reducing when he filed his 2017, 2018 and 2019 taxation returns? The value of the prior income tax liability for 2014 to 2016 may further vary and be affected by the lodgement of his 2020 and 2021 taxation returns.
The dicta of Evatt CJ in Prince and Prince (1984) FLC 91-501 is apposite to the circumstances of this case;
The assessment of debts and liabilities is not necessarily arrived at by a strictly mathematical or accountancy approach in all cases. While some liabilities are charges upon the property which can be accurately assessed at a certain date, others are at large, or have not been precisely determined, eg tax liabilities. … In some cases the amount of the liability can only be estimated generally. … The Court can make an allowance for a particular liability if appropriate to do so. In some cases there are sufficient uncertainties as to the alleged liability to lead the Court to disregard it entirely or partly eg a loan from a parent of the party not likely to be enforced. … In other cases the Court may take the view that because of the circumstances surrounding the incurring of the liability it ought in justice and equity to be wholly or partly disregarded in determining the appropriate order to make under s 79 as between the parties to the marriage.
I am unable to make a reliable safe finding as to the fact of the contended taxation liability of the husband, or as to its value, or if and when the husband may pay it.
The husband in submissions conceded that there is an “evidentiary lacuna” as to any certainty of the value of this contended liability. There is no evidence as to the ATO pursuing the husband for unpaid taxation for now approaching four years since 2018. The wife submitted and I find that the husband’s failure to comply with his revenue obligations, orders of the Court, and his disclosure obligations are the evidentiary key that the husband refused to provide to allow a safe finding as to the fact and value of this contended liability.
I find it would be unjust and inequitable in the circumstances of the husband’s disclosure failures and failure to comply with the multiple orders to file his tax returns to include this item as a liability. The item will be excluded.
Is it just and equitable to adjust property?
In Stanford & Stanford (2012) 247 CLR 108 the High Court observed that it is necessary for me to be satisfied that justice and equity will be achieved as part of the adjustment process pursuant to s 79 of the Act. The requirements identified in the High Court are satisfied in this matter, having regard to:
(a)The period of the relationship of the parties and the contributions made over that period; and
(b)The party’s marriage having broken down and them now living apart; and
(c)The concession of the parties as to property being adjusted to the wife by way of the husband’s power of appointment and the wife conceding in her final relief a further payment of $220,000 to the husband; and
(d)When consideration is given to the contribution and other factors identified below.
CONTRIBUTIONS
The task is to evaluate, in each case, the actual contributions made by the parties during the course of their relationship. In that respect, in Fields & Smith (2015) FLC 93-638, the Full Court said:
… the words of s 79 do not provide endorsement for any category of contribution related to any class of property (for example, high wealth) being, by virtue of that category or class, more valuable or important that another.
In each case the contributions made by the parties must be evaluated in the context of the facts particular to that case.
I find that the wife made direct financial contributions to the relationship by way of:
(a)A townhouse at Suburb JJ that produced $545,000 when it was sold on 10 July 2008.
(b)Shares valued at $400,0000
(c)A wine collection
(d)Savings of $75,000
(e)Superannuation of $80,000
(f)A motor vehicle
Total in the range of not less than $1,100,000
I find that the husband contributed at the commencement of cohabitation a motor vehicle, together with savings and superannuation of an unspecified value.
I find that the wife’s initial direct financial contributions dwarfed those of the husband especially when regard is had to the use made of those initial financial contributions (Pierce & Pierce (1999) FLC 92-844). The wife’s Suburb JJ property and her shareholdings seeded and enabled the acquisition of the Suburb F Property. This direct initial contribution of the wife attracts significant weight.
I place further weight upon the circumstances of the parties maintaining separate financial identities throughout the period of their cohabitation. I find that the wife applied her efforts to produce substantial income in the sum identified earlier in these reasons that enabled the maintenance, conservation and improvement of the property of the parties and accumulated the parties’ wealth over the period of cohabitation. The husband’s disclosure failures as to the income he earned over the period of cohabitation and the application of that income save as to purchasing with the wife groceries and household items and meeting the cost of a cleaner each fortnight restricts the weight to be given to the husband’s application of whatever his income was during cohabitation
I find that the wife met all of the costs for the renovations occasioned to the Suburb F Property from her savings and income and that the husband’s role in those renovations were insubstantial in comparison.
The husband made indirect financial contributions by being a joint borrower on a third refinance of the mortgage and line of credit facilities on the Suburb F Property with CC Bank. He made a further indirect financial contribution by way of the trust distributions recorded as his income for 2014, 2015 and 2016. Both these contributions attract some weight in his favour.
I find that the wife made further direct financial contributions by ultimately post separation refinancing and assuming the sole responsibility for the line of credit and interest only loans used by the husband to initially acquire the LL Building office and the deposit for the DD Building office. I find that the husband retained the benefit of the sale of the LL Building office valued in the range of $90,000 to the exclusion of the wife and that he has provided no evidence as to how he applied those proceeds. These facts weigh further in favour of the wife
The husband gave evidence as to “sharing household expenses” such as buying groceries, household items and meeting the costs of running a motor vehicle during the periods the parties lived in the same home. The wife conceded that from the time the parties occupied the Suburb F Property in 2008 until 2016 the parties “roughly split” household expenses and household chores. The evidence of each is not inconsistent and I so find. I find that the husband maintained the pool and yard.
The wife retains by way of an agreed financial resource her testamentary trust interests gifted in the sum of $200,000 received by way of her father’s estate in 2015. The husband made no direct or indirect contribution to this financial resource. The resource remains in specie.
The wife made further direct financial contributions post separation by way of the $200,000 costs of improvements to the Suburb F Property funded from her income and savings between June 2019 and February 2021 further improving that property. This direct financial contribution also attracts weight.
The wife made significant contributions attracting weight by way of the provision of lump sums paid to the husband post separation applied to meet his rent and general living expenses.
The wife’s post separation income, combined with the underlying corpus of the value of her superannuation, increased the value of that superannuation interest post separation. It was valued at $375,000 18 months prior to separation at 30 June 2016 and is now valued at $718,088.
I am mindful of what the Full Court said in Singerson & Joans [2014] Fam CAFC 238 at [66] that for the purposes of s 79 of the Act there is nothing to suggest that any category of contribution needs to be quarantined and applied solely to particular assets. In my view the authorities required evaluation of all contributions to the property of the parties, notwithstanding they may be different to categories of that property.
The Full Court as recently as Horrigan & Horrigan [2020] FamCAFC 25 emphasised and reinforced that the proper approach to the assessment of contributions is:
35.…well established that an assessment of contributions is not a mathematical exercise, but rather involves the identification and assessment of all of the parties respective contributions, in a holistic way across the course of the relationship and in the post-separation period to the point of assessment
At the conclusion of the trial the wife contended that a contribution finding in the ratio of 90 per cent in her favour and 10 per cent to the husband ought to be made. This would result in the wife receiving $4,285,310 of the available property and superannuation for adjustment and the husband receiving $476,145.
The husband contended a contribution finding in favour of the wife as to 70 per cent and 30 per cent in his favour. This would result in the wife achieving property and superannuation on the contribution finding of $3,333,018 and the husband receiving $1,428,437.
Taking into account all of the matters as to contributions identified in this judgment made by the parties at the commencement of the relationship, during the relationship and post separation, I conclude that contributions ought be assessed favouring the wife as to 87.5 per cent and the husband as to 12.5 per cent. This will be a disparity of 75 per cent between the parties. In dollar terms this equates to $4,166,273 to the wife and $595,182 to the husband – a difference of $3,571,091.
ADJUSTMENT TO THE CONTRIBUTION FINDINGS
Section 79(4)(d to g)
The wife is aged 45. She is in good health.
Her income from M Company is $776,000 annually. She additionally receives income from two other sources, being return on investments of about $166 per week and distributions from a testamentary trust of $144 per week.
The husband is aged 49.
The husband is currently not employed. He has qualifications and experience as a professional including working as a consultant. Historically he worked as a consultant and as an educator. Since ceasing his work as a consultant he has worked in administration. He had secured casual work as an educator but he did not progress that work.
The wife submits that a finding ought to be made that the husband is being untruthful in his evidence as to his health and presentation, or in the alternative that he is exaggerating his current symptoms. She contends he currently has a capacity for full time employment. I do not accept the submission of the wife that the husband has manufactured, exaggerated or embellished his historic health challenges. I reject her submission that robust findings are available as to the husband’s current employment capacity arising from his disclosure failures. I accept the husband gives no evidence as to seeking employment since his last “flare-up” subsided in June 2021,that is for the past nine months.
I find that the husband is not currently, by way of his physical presentation, incapacitated from work. I cannot find that the husband will not encounter any intermittent physical symptoms of his illnesses in the future.
I find that that the husband lives with a disorder and that his future psychological condition will vary dependent on the intermittent nature of any underlying physical condition. I accept the expert evidence that pain cannot be objectively seen or measured. It is experienced. The evidence does not permit a finding that the husband does not experience pain or that it is not real to him. I find that:
(a)The husband will require ongoing treatment from the pain management centre which should include psychological consultations and that he should continue with regular psychiatric reviews. That treatment regime and his current medication regime will not impair his ability to return to work; and
(b)The husband has the capacity, if he is so motivated, to manage his condition with a combination of medication and psychological counselling so he should be able to currently return to work. This may be by way of work with a view to transition back to his prior consulting role to achieve working at 75 percent of his prior capacity within two years provided he paces his activity within his physical limits. An alternative would be a current return to consulting undertaking less stressful work. By that pathway he will have a capacity to take some breaks and to regulate his diary and his workloads; and
(c)That the husband’s return to work will be a graduated process over the next two years.
I am unable to make a reliable or safe finding as to the husband’s likely future income in the circumstances of his disclosure failures as to his taxation returns when he was last working full time from 2012 to 2016. In the circumstances of those disclosure failures I take a robust assessment of his future income earning capacity. Notwithstanding same, I find that the wife will likely have at all material times in the future a significantly superior income to the husband. This factor heavily weighs in favour of the husband.
The wife by way of the contribution findings will receive a substantially greater portion of the property of the parties than the husband. The wife also has the benefit of her financial resources identified in the balance sheet. This factor also weighs in favour of the husband.
The husband may have some taxation liabilities arising from the 2014 and 2016 trust distributions. In the circumstances of his disclosure failures I do not give this liability considerable weight.
The wife will have some taxation liability for her income in the 2022 year and by way of capital gains taxation impost should she liquidate shares to pay a capital sum to the husband.
I take into account and give significant weight to the monies sourced from the wife’s $550,000 and paid to the husband to meet the DD Building debt in the sum of $80,000 and the husband’s credit card debt of $70,000 as identified earlier in these reasons. The nature and quantum of this disclosure failure is a factor weighs in favour of the wife.
The husband has the benefit of the terms of his financial relationship and support from his current partner, Ms P.
The superannuation interests of the parties are included in a single pool of property.
The wife submitted that no adjustment ought to be made from the contribution findings. This would result in the wife receiving the benefit of 90 per cent of the property and superannuation of the parties (on her case). The husband sought an adjustment from the contribution findings in his favour of 15 per cent. In dollar terms the differential value of the husband’s contended adjustment is $1,428,436. This would result in the husband receiving the benefit of 45 per cent of the property and superannuation of the parties.
After consideration of the matters contained in s 79(4) (e to g) of the Act, I find a consideration holistically of these factors warrants an adjustment from the contribution findings in favour of the husband of five per cent.
By way of cross-check the value of this adjustment in money terms is $238,072, a differential of $476,145.
CONCLUSION – JUSTICE AND EQUITY
Accordingly the husband has an overall entitlement of 17.5 per cent percent of the pool of property and superannuation identified in the balance sheet. This equates to $833,255.
He currently has in his possession the following:
7 Husband CBA Savings 3,067 10 Husband Household contents 5,000 11 Husband Trust monies 86,569 12 Husband Payments already made to Husband (see note) 155,400 25 Husband Super Fund 2 (formerly Super Fund 1) 64,556 26 Husband Super Fund 3 15,808 Total 330,400
The adjusting amount the wife is required to pay to him is $502,855 so as to achieve $833,255.
Standing back I find the distribution of property of the parties in these terms identified above is appropriate and otherwise just and equitable. I will order accordingly.
SPOUSE MAINTENANCE
The husband relief for periodic spouse maintenance is for a closed two year period being consistent with the expert evidence as to his health and income earning capacity.
In the Hall & Hall (2016) 257 CLR 490, the High Court set out the appropriate approach in considering an application for spousal maintenance as follows:
3. … The gateway to the operation of Pt VIII in relation to spousal maintenance is in s 72(1). That sub-section provides that "[a] party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately … having regard to any relevant matter referred to in [s] 75(2)".
4. The liability of a party to a marriage to maintain the other party that is imposed by s 72(1) is crystallised by the making of an order under s 74(1). That sub-section provides that, "[i]n proceedings with respect to the maintenance of a party to a marriage, the Court may make such order as it considers proper for the provision of maintenance in accordance with this Part".
5. A Court exercising the power conferred by s 74(1) is obliged by s 75(1) to take into account the matters referred to in s 75(2) and only those matters. Those matters are presented as a comprehensive checklist. They include what s 75(2)(b) refers to as "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". They also include, by virtue of s 75(2)(o), "any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account".
For the purposes of what was an interim spouse maintenance under consideration by the High Court in that matter it said:
8.…No doubt, on an application for an interim order "[t]he evidence need not be so extensive and the findings not so precise" as on an application for a final order. But there is nothing to displace the applicability to an exercise of the power conferred by s 74(1) of the ordinary standard of proof in a civil proceeding now set out in s 140 of the Evidence Act 1995 (Cth).
The same principles as to the onus of proof resting with the husband apply to his relief for a final spouse maintenance order.
I cannot make a final spouse maintenance order without finding, on the balance of probabilities on the evidence, that the threshold requirement in s 72(1) of the Act is met having regard to any relevant matter referred to in s 75(2). In Bevan and Bevan (1995) FLC 92-600, the Full Court confirmed that an award of spousal maintenance requires:
(a)no fettering principle that a pre-separation standard of living must automatically be awarded where the respondent's means permit; and
(b) that discretion being exercised in accordance with the provisions of section 74 with "reasonableness in the circumstances" as the guiding principle; and
(c)that “adequately” imports relativity.
In this matter the husband contends that he has established the s 72 threshold finding by way his current health presenting a two year period of physical and mental incapacity for appropriate gainful employment, and that the historical provision of lump sums of capital by the wife support his historical incapacities.
The husband has the benefit of the value of the adjusted property in his favour and the valuable financial resource of his partner
I have made findings as to the husband currently having some current capacity for employment. He gives no evidence as to any reason for not seeking employment of any nature for the past nine months since his last “flare-up” subsided in mid-2021. His presentation by way of concentration and precision in the witness box impressed me. His capacity for employment will improve over the next two year period such that he can achieve 75 per cent of his prior capacity.
The husband is not relieved "from the obligation of establishing the necessary prerequisites for the grant of relief sought." He must still prove to the requisite standard those matters fundamental to the successful prosecution of his claim (see Acton v Burton [2015] FamCA 469 at [29]).
The husband’s disclosure failures as identified in these reasons prevent an assessment as to the value that could be ascribed to a percentage of the current full time income earning capacity of the husband as a consultant. His income earning capacity as a permanent educator is unknown. I am unable to make a safe or reliable finding balance of probabilities current income earning capacity should he elect to exercise same from his disclosure and evidentiary failures.
The husband carries the evidentiary burden of establishing the quantum of his reasonable periodic expenses.
I have made earlier findings in these reasons as to the husband’s disclosure failures in his Financial Statement as to the funds he receives from his partner, as to an absence of integrity as to costs of periodic needs in that Financial Statement and as to the deficiencies in Exhibit H9.
I find that the husband has not discharged the onus of establishing on balance of probabilities the quantum of his reasonable periodic expenses. It is the husband who has deprived the Court from any full or reliable understanding of this quantum.
In the circumstances I am not satisfied that the husband has discharged the onus so as to establish on the evidence threshold requirement identified in s 72(1) of the Act. His application for periodic spouse maintenance will be dismissed.
I certify that the preceding two hundred and thirty-seven (237) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Campton. Associate:
Dated: 22 April 2022
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