Holt & Foy
[2008] FamCA 483
•27 June 2008
FAMILY COURT OF AUSTRALIA
| HOLT & FOY | [2006] FamCA 483 |
| FAMILY LAW – PROPERTY SETTLEMENT – Wife received 37.62 percent and the husband 62.38 percent of the parties’ net assets. Norbis & Norbis (1986) 161 CLR 513 cited. FMILY LAW – PROPERTY SETTLEMENT – Capital gains tax implications. IABH & HRBH [2006] FamCA 379; Rosati & Rosati FLC 92-804 cited. FAMILY LAW – PROPERTY – CONTRIBUTIONS - Asset by asset approach taken. Norbis & Norbis (1986) 161 CLR 513 cited. FAMILY LAW – PROPERTY – SECTION 75(2) FACTORS – Adjustment of |
| Family Law Act 1975 (Cth) s 75(2) Rosati & Rosati (1998) FLC 92‑804 |
| APPLICANT: | MS HOLT |
| RESPONDENT: | MR FOY |
| FILE NUMBER: | PAF | 2324 | of | 2004 |
| DATE DELIVERED: | 27 June 2008 |
| PLACE DELIVERED: | PARRAMATTA |
| JUDGMENT OF: | COLEMAN J |
| HEARING DATE: | 12, 13 & 14 May 2008 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Peter Campton |
| SOLICITOR FOR THE APPLICANT: | Ms Helen Ede Watts McCray Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Richard Schonell |
| SOLICITOR FOR THE RESPONDENT: | Mr Brendan Manning Aitken Lawyers |
Orders
That the husband forthwith transfer to the wife the whole of his right, title and interest in the property known as and situate at G (“the [G] property”).
That pending compliance with Order 1 hereof, the husband hold his right, title and interest in the G property upon trust for the wife.
That pending compliance with Order 1 hereof, the wife be entitled to sole and exclusive use and occupation of the G property.
That the wife indemnify the husband and forever keep him indemnified with respect to any liabilities or outgoings with respect to the G property.
That the wife transfer or assign to the husband the whole of her interest or entitlement in, against or with respect to the following entities:
(a) J Foy Family Trust (JFFT).
(b) The wife’s loan account in JFFT.
That the husband indemnify the wife and forever keep her indemnified with respect to any liability of the wife to JFFT or in respect of any involvement in or dealings with JFFT.
That the wife assign to the husband the whole of her right, title and interest in motor vehicles, motor bikes, horses, furniture, household effects (including backhoe, trak shak, camper trailer and tools) in the husband’s possession or control.
That the husband assign to the wife the whole of his right, title and interest in furniture and effects in the wife’s possession.
That each party retain their current superannuation interests.
That within 30 days the husband and wife do all acts and things, execute all documents and give all instructions necessary to cause the controlled monies account with a current balance of approximately $2 653 978 to be paid as to the sum of $1 059 249 to the wife and as to the sum of $1 594 729 to the husband provided that the husband indemnify the wife and forever keep her indemnified with respect to any liability of the wife for the payment of income tax on interest earned by such fund.
That save as provided for by these orders, all outstanding applications and cross applications, save with respect to costs be and hereby dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Holt & Foy is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAF 2324 OF 2004
| MS HOLT |
Applicant
And
| MR FOY |
Respondent
REASONS FOR JUDGMENT
The proceedings before the Court relate to settlement of property. Ms Holt (“the wife”), as confirmed by the Amended Minute of Proposed Orders provided by her learned counsel late in the trial of the proceedings, sought relief in the following terms:
(1)That an Order by way of alteration of property interests pursuant to s79 of the Family Law Act 1975 (Cth) be made in terms of paragraphs 2 to 6 of this document.
(2)That forthwith each party shall do all things necessary to cause the transfer of the property situated at and known as [G] in the State of New South Wales (being the whole of the land contained in folio identifier […]) (hereinafter referred to as “the [G] property”) to the sole name of the Wife at the Wife’s cost, such that the Husband shall sign all documents presented to him by the Wife and the Wife shall do all other things necessary for such transfer AND the Wife shall indemnify and keep indemnified the Husband in respect of all liabilities in relation to the [G] property whenever and however arising.
(3)Pending transfer of the [G] property provided for in Order 2 the Wife shall be responsible for all statutory rates and charges, other utilities, insurances, outgoings and expenses in relation to the [G] property incurred prior to the date of transfer and shall make all such payments as and when they fall due and hereby indemnifies the other party in respect of all other liabilities incurred prior to the date of transfer.
(4)That within fourteen days of the making of these orders each party shall do all things necessary to authorise and direct distribution of all of the funds remaining in trust for the parties by Watts McCray Lawyers (being funds from sale of the Husband’s shares in [R] Pty Ltd) to the Wife, and the Wife shall be solely responsible for payment of all tax arising on interest earned on those funds and shall indemnify the husband in respect such tax liability.
(5)That for the purposes of the following orders the following definitions apply:-
5.1“the entities” are the [R] Unit Trust, the [J Foy] Family Trust, the [Foy] Family Trust, [Foy] Pty Ltd ACN […], [E] Pty Ltd ACN […];
5.2“the companies” are [Foy] Pty Ltd ACN […], [E] Pty Ltd ACN […].
5.3“the trusts” are [R] Unit Trust, the [J Foy] Family Trust, the [Foy] Family Trust.
(6)That within 1 calendar month of the date of these orders, the Wife shall sign all documents presented to her and provide all necessary consents, directions and authorities required and presented to her by the Husband and the Husband shall do all other things necessary to cause the following simultaneously and at Husband’s sole costs in relation to the entities:-
6.1Transfer by the Wife of all the Wife’s shares and interest in the companies to the Husband or his nominee and resign all offices, positions and employment in relation to the companies; and
6.2Transfer by the Wife of all her interest and units in trusts to the Husband or his nominee and resign and remove herself, if applicable, from all positions as appointor and trustee in relation to the trusts in favour of the Husband or his nominee; and
6.3Assigning by the Wife to the Husband and/or his nominee all credit loan accounts standing in the Wife’s name and the parties’ names jointly in the entities; and
6.4Assumption by the Husband from the Wife all debit loan accounts standing in the Wife’s name and the parties’ names jointly in the entities; and
6.5The Husband hereby indemnifies and shall keep indemnified the Wife in respect of all liabilities in relation to the entities, whenever and however arising, including but not limited to all taxation liabilities of the companies or either party personally arising in connection with any interest, loan account, office or employment in relation to the entities.
6.6That, as between the parties, the Husband shall then be solely entitled to all interest in relation to the entities.
(7)That as between the parties, the Husband is hereby declared to be solely entitled to the Ford motor vehicle registration number […] and the Husband shall indemnify and keep indemnified the Wife in relation to all liabilities in respect of this motor vehicle whenever and however arising.
(8)Within seven days of the date of these Orders the Husband, in his capacity as shareholder and director of [Foy] Pty Ltd ACN […] as the trustee of the [J Foy] Family Trust (“the JFFT”), shall do all acts and things and sign all documents necessary to cause the JFFT to pay to the Wife the sum of $29,000, being the distribution by the JFFT to her in the financial year ending 30 June 2007.
(9)In the default of payment by the JFFT within the time specified in Order 7 the husband in his personal capacity shall otherwise be responsible for and shall pay such moneys to the Wife, forthwith upon such default.
(10)That the wife be restrained from exercising her power of appointment of a new trustee of the [J Foy] Family Trust except as requested in writing by the Husband to do so, and the husband forthwith do all such things as are necessary in his own capacity and in his capacity as a director of the trustee of the trust so as to cause the wife to be removed as a beneficiary and/or potential beneficiary of the trust and otherwise be so restrained from doing any act or thing so as to cause the trust to distribute any income or capital to the wife at any time after 1st July 2007 and subsequent to these orders.
(11)That, as between the Husband and Wife, and subject to the above Orders the Husband and Wife shall each respectively retain all interest in and entitlement to:-
11.1All personal property now in his/her respective possession or control.
11.2All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his/her sole name respectively.
11.3All interest in life insurance policies and superannuation funds standing in his/her sole name respectively.
(12)Pursuant to Section 81 of the Family Law Act the parties intend these orders to finally determine all financial relations and issues between them and avoid further proceedings between them.
(13)That each party shall do all things necessary including providing all consents to give effect to these orders in the time periods prescribed in these orders.
(14)That in the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these orders, then the Registrar of the Court shall be appointed pursuant to Section 106A of the Family Law Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
(15)That the Husband pay the Wife’s costs in relation to these proceedings.
(16)That the parties are granted leave on seven days notice to the Court and to the other party to relist the matter for further Orders or Directions to implement these Orders. (Wife’s Amended Minute of Proposed Orders).
Mr Foy (“the husband”) opposed the relief sought by the wife and, in lieu thereof, as the Minute of Order provided by his learned Counsel at the commencement of the trial reveals, sought relief in the following terms:
(1)That the Wife within 28 days of the date of these Orders transfer to the Husband all her right, title and interest in the property known as and situated at [G] in the State of New South Wales, Folio Identifier […] on an unencumbered basis and shall cause there to be removed any caveat registered on the title.
(2)That within 28 days of the date hereof the Wife do all acts and things and sign all documents necessary to cause the balance of proceeds of the Husband’s shares in [R] Pty Ltd held by Watts McCray Solicitors be paid to the Husband.
(3)That the Wife within 28 days transfer and or assign to the Husband all her right, title and interest in any loan account in the [J Foy] Family Trust.
(4)That upon the Wife’s compliance with Orders 1, 2 and 3, the Husband pays to the Wife the sum of $555,459.00.
(5)That the Wife make available the jarrah dining table and coffee machine for the Husband’s collection within 28 days of the date hereof.
(6)That otherwise the Husband and Wife shall be solely to the exclusion of each other to all other chattels of whatsoever nature or kind in their possession as at the date of these Orders and for this purpose bank accounts are deemed to be in the possession of the person whose names appear on the bank record thereof, insurance policies (if any) are deemed to be in the possession of the beneficiary thereof, any interest in any motor vehicle and/or shares in any company in the name of the parties.
(7)That in the event that either party refuses or neglects to execute a Deed and/or Instrument in compliance with the provision of these Orders, the Registrar of the Family Court of Australia is hereby appointed pursuant to Section 106A of the Family Law Act, 1975 to execute all Deeds and/or Instruments in the name of the defaulting party and do all acts or things necessary to give validity and operation to the Deed and/or Instruments.
(8)That the Wife pay the Husband’s costs of these proceedings. (Proposed Minute of Orders Sought by Husband, Outline of Case Document, Annexure C).
At the commencement of the trial, a number of valuation issues remained unresolved. All of these were, sensibly in the Court’s view, resolved by the conclusion of the trial although whether or not a number of other matters, the quantum of which was not then in contest, should be taken into account remained live issues. Also controversial were a number of “add-backs”, the quantum of which was ultimately not significantly in contest, although the appropriateness of adding back, or reflecting in the evaluation of contributions those sums remained a live issue. The Court’s assessment of the contribution based entitlements of the parties has been the major and abiding issue involving controversy.
It was ultimately submitted on behalf of the wife that her contribution based entitlement should be determined at 42.5 per cent of the total property of the parties and that such sum should be increased by 2.5 per cent pursuant to s 75(2) of the Family Law Act 1975 (Cth) (“the Act”). In broad terms, the net assets of the parties approximate $7 000 000. A 2.5 per cent adjustment in the wife’s favour would accordingly produce a differential by reference to s 75(2) of approximately $350 000. The wife’s overall entitlement was thus asserted to approximate $3 150 000.
On behalf of the husband it was submitted that the wife’s entitlement to the total net property of the parties should be determined at 25 – 28 per cent, $350 000 of which arose by way of a s 75(2) adjustment in her favour. The wife’s entitlement was thus asserted to approximate $1 855 000. It is thus apparent that, in quantitative terms, the parties may not be at odds so far as s 75(2) is concerned. It would however be unrealistic to regard the husband as inviting a s 75(2) adjustment of $350 000 if contributions were not found to favour him to the extent he asserts that they should. The Court will therefore traverse the relevant s 75(2) factors. So doing may result in the Court concluding that the adjustment which the parties appear to agree to be appropriate is in fact appropriate.
The major focus of interest is accordingly, at least in practical terms, the contribution based entitlements of the parties. The ambit of that dispute approximates $950 000.
Although formally controversial, the ultimate fate of the former matrimonial home of the parties is, on the evidence, readily able to be determined. The wife, who has occupied the former matrimonial home in the period of almost four years since the parties finally separated, should retain the property as part of her entitlement, as she seeks. To the extent that the husband opposed that course, no part of that opposition involved any stated intention on the part of the husband to re-occupy the home. The husband has relocated, together with the children of the marriage, to the Hunter region and does not seriously suggest that he wishes to or will cease to live in that region. The husband’s stated desire to retain the former matrimonial home as part of an investment property portfolio could not be elevated to primacy over the wife’s desire to retain the property as her residence.
Credit
The issue of credit assumes some significance in the proceedings. As learned counsel for the husband submitted, the evidence of each party must be regarded with some scepticism.
For her part, the wife was obliged in cross-examination to concede that she had, in her affidavit evidence, exaggerated the scope of her own contributions and unreasonably sought to minimise the scope of the contributions of the husband. In fairness, the wife fairly readily conceded each of those defects in her affidavit evidence during the course of cross-examination.
The cross-examination of the wife revealed her to have been less than entirely frank in her dealings with the Child Support Agency. In all other material respects, the cross-examination of the wife did not reveal her to be other than an essentially honest and reliable recounter of fact. To her credit, the wife resisted the opportunity during cross-examination to seek to demean the contributions of the husband, particularly with respect to the business assets of the parties, or to seek to promote her own cause in that regard.
As will be seen, the husband’s evidence with respect to a number of topics was less than convincing. Cross-examination of the husband revealed him to have been less than frank, and at times even misleading, in his affidavits, and in his dealings with entities such as the Child Support Agency. His evidence in relation to a “proposal” received by him earlier this year was incredible.
On the other hand, a number of findings of fact favourable to the wife derive from the evidence of the husband in cross-examination. Contrary to the general import of the husband’s affidavit evidence, in cross-examination the husband readily conceded the nature and quality of the wife’s contributions in a number of relevant respects. To his credit, the husband did not in cross-examination seek to impugn the wife’s contributions, or to promote his own.
Ultimately, there is really no significant issue of fact which falls to be determined by reference to any general conclusion with respect to credibility. To the extent that the parties’ versions of the facts are divergent, and there is no documentary or other circumstantial evidence impacting upon the probabilities, the evidence of the wife is generally able to be preferred to the evidence of the husband. That conclusion relies significantly upon the husband’s unsatisfactory evidence in relation to a “proposal” about which more will later be said.
Ultimately, save to the extent that there is controversy about the periodic contributions of the parties during their cohabitation, of which there is ultimately little real controversy, and the impact of the husband’s evidence about the “proposal”, the general credit finding is of comparatively minor significance.
Material Facts
It is appropriate by way of background to the Court’s consideration of the issues requiring determination to record a number of material facts. It is also convenient in the course of doing so to record the Court’s conclusions with respect to any material facts which are controversial. In reality there is probably only one topic of that kind which ultimately assumes significance.
The husband was born in May 1960 and the wife was born in June 1965. The wife is accordingly 43 years of age and the husband is 48 years of age.
The parties commenced cohabitation in the second half of 1992. The parties disagree as to precisely when their cohabitation commenced. The evidence does not enable the Court to conclude with confidence when in the second half of 1992 cohabitation did commence, and nothing turns on it in any event.
The parties married in March 1993.
When the parties married the wife had an interest in a property at D which she later realised in circumstances which will shortly be detailed. The husband at the date of marriage had an interest in a property at S which he subsequently realised in circumstances which will also be detailed.
The husband also owned 25 per cent of the issued share capital of a corporation, R Pty Ltd. That shareholding had been acquired well prior to the commencement of the cohabitation of the parties, whenever the latter event occurred. The other shareholders in R Pty Ltd were the parents and brother of the husband, apparently each holding 25 per cent of the issued capital in the corporation.
The husband had a credit loan account of approximately $100 000 in R Pty Ltd at the date of cohabitation. There is no suggestion that R Pty Ltd was unable to repay its debt to the husband. To the extent that either party sought to enhance his or her initial capital contributions by reference to furniture and personal effects, there is no reliable evidence of value of such personalty and accordingly no regard can safely be had to them for present purposes.
At the date of commencement of cohabitation, and until at least 2003, the husband was employed by R Pty Ltd. The wife was a registered nurse at the date of the commencement of cohabitation. Such employment as the wife had, or continues to have, subsequent to the commencement of cohabitation has been in the nursing profession.
In March 1993 K, the first child of the parties was born. K is accordingly aged 15 years.
In October 1994 the wife sold her D property and applied the net proceeds of $177 986 to the purchase of the former matrimonial home at G (“the G property”) approximately one month later. Although purchased in the sole name of the wife, the acquisition was a joint purchase, the husband having contributed $143 990, being the proceeds of sale of his S property which he disposed of in November 1994.
In cross-examination the wife conceded that she was unable to deny the husband’s contention that approximately $100 000 used to complete the purchase of the G property came from the husband’s loan account in R Pty Ltd. Given that there is no evidence that any monies which might have been advanced for that purpose, have ever been repaid to the husband’s parents, and thus able to be seen as a contribution by or on his behalf of that sum, it matters little whether the $100 000 used to complete the purchase thus arose or, as the husband contends, was derived from his credit loan account in R Pty Ltd. To the extent that the balance of the husband’s credit loan in R Pty Ltd may have been reduced by expenditure on his S property, the evidence is not sufficiently clear to incline the Court to make a finding in those terms.
In the absence of any documentation impacting upon the probabilities, the Court concludes that the husband contributed approximately $100 000 from pre-marriage assets towards the completion of the acquisition of the G property.
Ultimately, as submissions of both Counsel recognise, the issue for this Court is the extent to which the undoubtedly greater initial contributions of the husband should now be reflected in the contribution based entitlements of the parties.
In October 1994 R Pty Ltd was incorporated. Initially the corporation acted as the trustee of family trusts which included the J Foy Family Trust. Each of the husband and his brother are directors in the company and the husband holds one “A class” share in it.
In November 1994 the R Unit Trust was established. The Foy Family Trust holds 50 per cent of the units, the J Foy Family Trust holds 25 per cent, and the remaining 25 per cent is held by the D Foy Family Trust. In March of the following year, the unit trust acquired property in W.
The J Foy Family Trust (“JFFT”), a discretionary trust, was established in November 1994. The husband was the appointer of the trust and had the power to appoint and remove trustees.
In April 1995 M, the second child of the parties was born. M is accordingly aged 13. The third child, T, was born in September 1997. T is 10 years old.
In June 2001 the wife incorporated TN Pty Ltd with the wife and husband as shareholders and directors of the entity which was engaged in the production of gaming equipment at G.
From September 2003 the husband received his annual and long service leave entitlements from R Pty Ltd. His employment with this entity ceased on 27 July 2004 and he was removed as a director in October that year.
In June 2004 the parties separated under one roof and ceased cohabitation on 13 August 2004.
Foy Pty Ltd was incorporated in October 2004 with the husband as the sole shareholder and director.
In December 2004 R Pty Ltd commenced proceedings in the Federal Court against the husband relating to the transfer of patents. These proceedings were settled on 15 August 2005 and the husband paid costs of $65 000 to R Pty Ltd.
The husband relocated to the Hunter Valley region in July 2005. The following month he accessed $100 000 of his non-preserved superannuation entitlements.
H Pty Ltd was incorporated in October 2005 with the husband’s parents and brother as the shareholders and directors.
On 31 October 2005 the husband caused Foy Pty Ltd to be appointed the trustee of JFFT.
In November 2005 the husband commenced residing with his de facto partner. In April 2006 and December 2006 the children M and K respectively, relocated to the Hunter Valley region with the husband. In July 2006 T also relocated to the Hunter Valley.
The wife registered a gaming equipment business IN Pty Ltd in July 2006 and TN Pty Ltd was deregistered in November 2006.
The husband sold his shareholding in R Pty Ltd for $4 500 000 on 16 July 2007 and deposited the proceeds into a controlled monies interest account.
The property of the parties to the marriage
At the conclusion of the trial, counsel for the parties presented a helpful table headed “Joint Schedule of Property, Liabilities, Superannuation and Financial Resources” in which areas of agreement and disagreement were identified.
In a series of helpful footnotes, learned counsel for the wife outlined the basis upon which he contended that the figures advanced on behalf of the wife should be preferred to those advanced on behalf of the husband. In oral submissions learned counsel for the husband responded to each of those matters. It is helpful to reproduce the table at this point in the Court’s reasons for judgment (footnotes omitted):
Property Description
Joint H/W
Husband’s Value
Wife’s Value
1
[G property]
J
920 000
920 000
2
Interim property distribution
H
1 500 000
1 500 000
3
Interim property distribution
W
500 000
500 000
4
Balance of controlled monies account
J
2 653 978
2 653 978
5
[J Foy] Family Trust
H
618 000
618 000
6
Loan account [J Foy] Family Trust
H
203 428
203 428
7
Loan account [J Foy] Family Trust
W
213 044
213 044
8
Husband’s motor vehicle and motor bikes
H
41 450
41 450
9
Four horses
H
2140
2140
10
Furniture and effects (including backhoe, trak shak camper trailer and tools)
H
20 605
20 605
11
Furniture and effects in wife’s possession
W
17 342
17 342
12
Add back husband’s superannuation withdrawals
H
0
60 189
13
Add back husband’s payment of [R Pty Ltd] costs – Federal Court
H
0
65 000
14
Husband’s paid legal fees not met from interim property distribution – Family Court
H
-
107 349
15
Husband’s legal fees in [R Pty Ltd] Federal Court proceedings
H
-
81 374
16
Wife’s legal fees not paid from interim property distribution
W
31 000
22 000
17
Money owed by wife’s mother
W
24 000
24 000
6 744 987
7 049 899
Superannuation
18
SAS State Super
W
28 301
28 301
19
First State Super
W
31 242
31 242
20
AXA
H
152 016
152 016
211 559
211 559
Total Property & Superannuation
6 956 546
7 261 458
Liabilities
21
Interest earned on controlled monies
J
71 600
71 600
22
CGT on disposal of units in [R Unit Trust]
H
94 000
0
165 600
71 600
Net Assets & Superannuation
6 790 946
7 189 858
The first controversial item revealed by the table is the sum of $60 189 which the wife sought to be added back on the basis that the husband had withdrawn $40 000 against his superannuation interest in November 2005 and approximately $50 000 in early 2007, a total of $90 000 of which $30 000 was conceded to have been included in the husband’s paid legal fees. It was submitted that the husband had not adequately explained how he had utilised the balance of the superannuation withdrawals of $60 000.
On behalf of the husband it was submitted that no part of the $60 189 should be added back as it arose from post separation contributions and was drawn down at a time when the husband was not otherwise deriving income from employment, was not occupying the former matrimonial home and, at least from July 2007 had all the children of the marriage living with him. It was fairly conceded by counsel for the husband that, if the Court did not add back the $60 189, or any part of it, the fact that the husband had obtained those funds in the post separation period would be relevant to the determination of the contribution based entitlements of the parties.
The husband’s evidence-in-chief in relation to the two withdrawals is found at paragraph 132 of his January 2008 affidavit which read:-
132.I accessed $100,000.00 of the non-preserved portion of my superannuation entitlements … as I had no income. There is no further unpreserved portion of my superannuation fund available. My accountant [Ms …], is presently reviewing the tax I paid on the superannuation. I do not have that information as at the date of swearing my affidavit. Document 10 is a copy of my letter to [S] Financial Services dated 22 August 2005 requesting to draw my unrestricted non-preserved funds and a letter from [A] Financial Planning dated 25 August 2005 stating that I will pay 21.5% tax will be deducted. (Affidavit of husband, filed 17 January 2008).
The husband was extensively cross-examined with respect to legal fees which he had paid or was liable to pay, with respect to litigation in this Court, the Federal Court and perhaps the Local Court. The husband’s evidence was less than entirely clear as to what was paid from where. For that the Court would not criticise the husband having regard to the number and scope of the legal proceedings in which he has been involved since separation and the sources of funds which he has utilised for that purpose.
So far as the drawdown of the $90 000 was concerned, the husband suggested that part of that money was paid to the Australian Taxation Office, that approximately $30 000 was paid for legal fees, and that the balance of $20 000 was money which the husband had lived on.
So far as the husband’s claim that he lived on that money is concerned, it is to be remembered that in July 2004 the husband’s evidence was that he received $79 000 on the termination of his employment by R Pty Ltd, his bank account having a credit balance in it of $84 000 at separation as a result, and that the husband had received for the 2005/2006 financial year a dividend from R Pty Ltd of approximately $100 000, $45 000 of which was paid to the wife by way of arrears of child support for the children who up to that time had all been living with the wife, and in the case of two of the children, continued to live with the wife.
It is also relevant that, on the husband’s own evidence, in June 2005 he commenced to earn approximately $1000 per week working in the Newcastle area, shortly thereafter terminating that employment in circumstances which the Court concludes, having regard to the husband’s evidence in cross-examination, to have been more related to a desire to avoid periodic payments of child support than to any inability to continue such employment.
Thereafter, the husband’s employment has been inconsistent. The “casual employment [in Newcastle]”, in 2005 generated earnings of $26 032 gross in the 2004/2005 financial year. Also in that financial year the husband received $100 000 in the form of dividends from R Pty Ltd. In 2007, the husband received sums from the Foy Family Trust and part of the proceeds of the sale of shares in R Pty Ltd. However he did not disclose any employment nor income from it. (Affidavit of husband, filed 17 January 2008, pars 166 – 179). The husband’s most recent financial statement discloses income of $790 per week derived from interest from a bank account styled “[J Foy] bank account”. (Financial Statement of Husband, filed 17 January 2008).
The Court does not propose adding back the $60 189 with respect to superannuation, although the husband has not adequately explained the fate of those monies. Rather than do so, the Court will, in the evaluation of post separation contributions, have regard to the matters to which reference has been made and, in addition, to the dividend which the husband caused the JFFT to declare in the wife’s favour of approximately $27 000 by way of distribution from JFFT in the post separation period which sum the wife has not received. That sum should strictly be credited to the wife’s account in JFFT.
It is common ground that the husband will retain JFFT and that, whether or not she be removed as a discretionary beneficiary, the wife will not in future receive distributions from the Trust, or recover the credit in her loan account in JFFT.
The next controversial item relates to the husband’s costs of unsuccessfully defending proceedings in the Federal Court in the sum of $65 000. The husband’s affidavit evidence in relation to this topic is to be found at paragraph 190 and following in his January 2008 affidavit which read:
190.In or about December 2004, [R Pty Ltd] commenced proceedings against me in the Federal Court of Australia (Sydney Registry), seeking orders to the [sic] transfer various patents held in my name to [R Pty Ltd]. The proceedings were defended as a result of an allegation made by the directors of [R Pty Ltd] that I had fraudulently registered the patents in my name rather than the name of [R Pty Ltd]. I always maintained that the patents were the property of [R Pty Ltd] and should be transferred to [R Pty Ltd]. The legal proceedings in the Federal Court were commenced without giving me sufficient opportunity to settle the dispute or transfer the patent. The letter and documents enclosing the Deeds of Assignment of the Patents from my lawyers was sent to [the G property address]. … These documents were discovered by [the wife] in her List of Documents that was served on me on or about 4 May 2005.
191.The Federal Court proceedings were settled [in] August 2005 by way of Settlement Agreement. I had no defence to the court proceedings. The agreement required I pay [R Pty Ltd’s] legal costs in the amount of $65,000.00. The payment of $65,000.00 was to be paid by way of a dividend from [R Pty Ltd] to me and in addition $27,857.00 franking credit. I did not receive the $65,000.00 as it was set off against the costs order pursuant to the said agreement. The dividend of $65,000.00 has been declared and used to pay the said costs. The total amount for income assessment was $92,857.00.
In cross-examination in relation to this topic, the husband reiterated that he knew at all material times that he had no defence to the claim by R Pty Ltd in the Federal Court. When that evidence emerged, the Court indicated that, absent evidence from counsel or senior counsel who represented the husband in the Federal Court proceedings, to the effect that persisting with the defence of the proceedings was not unreasonable, the Court would be likely to conclude that the husband had recklessly incurred the $65 000 costs liability in the Federal Court proceedings. Learned counsel for the husband frankly conceded that there was no evidence before this Court which could exculpate the husband from the consequences of his conceded defence of proceedings in which he knew he would fail.
Ultimately, the only matter which this Court needs to scrutinise is whether or not the $65 000 has in fact been paid and, if it has, from what source it has been paid. Whilst the matter is not necessarily entirely without uncertainty, the husband did not suggest in evidence that the sum had not been paid.
Not surprisingly, Exhibit R2 which detailed the husband’s paid and outstanding legal costs and disbursements to his own attorneys from time to time did not refer to any monies paid out to third parties. Nor did the husband in his evidence suggest that the sum of $65 000 payable by way of legal fees to R Pty Ltd had been paid from the funds received by him by way of interim property distribution in the sum of $1 500 000. Objectively, where the husband could have obtained $65 000, other than from the sources to which reference has been made is difficult to suggest.
Counsel for the wife submitted, sensibly in this Court’s view, that it was for the husband to demonstrate the source of the funds and that he had unreasonably failed to do so. Objectively, if the husband paid those monies from the $1 500 000, or indeed any other funds which have been included in the asset pool, the question of waste is academic as the husband would be visited with the loss. If however the payment came from other funds not included in the pool of property, failing to add back that sum would reduce the net asset pool to the potential detriment of the wife.
Whilst the Court is satisfied beyond reasonable doubt that the husband incurred a liability of $65 000 to R Pty Ltd which he would not have had he acted reasonably, there is sufficient, and understandable uncertainty as to the payment of those fees to disincline the Court to add back that sum. On balance, it is more than likely that, if it has been paid, the $65 000 is effectively “added back” via the source of funds from which it was paid.
So far as the next disputed item, the husband’s paid legal fees not met from his interim property distribution in the Family Court of $107 349, is concerned, counsel for the wife relied upon the husband’s evidence at paragraph 67 of his affidavit of 31 October 2005 in which it was stated:
67.With regard to the Family Law, the Federal Court, Criminal Law proceedings and commercial advice with regard to [R Pty Ltd], I have incurred legal costs totalling approximately $161,933.00. I have paid $77,349.00. The outstanding amount as at the date of swearing this, my Affidavit is approximately $92,129.00.
a. Advice in relation to Commercial matters and Federal Court proceedings regarding [R Pty Ltd]
i.total fees billed $81,374.03
ii.total fees paid $38,659.39
iii.outstanding $42,714.64
b. With regard to the Family Law proceedings:
i.total fees billed $60,196.00
ii.total fees paid $28,020.26
iii.outstanding $32,176.00
c. With regard to the Criminal Law proceedings, including appeal:
i.total fees billed $9,025.74
ii.total fees paid $3,125.31
iii.outstanding $5,900.43
d. Counsel’s fees in relation to the above matters in the amount of:
$43,935.00
(Exhibit A9, page 8, par 67).
The balance of $30 000 was submitted, accurately in the Court’s view, to have emerged during the cross-examination of the husband with respect to the fate of the husband’s withdrawals of monies from the superannuation fund of having been net from that source.
On behalf of the husband it was in essence submitted that at least the payment referred to in the 2005 affidavit must have come from post separation funds given the evidence as to the funds available to the husband at the date of separation. Save to the extent identified earlier in these reasons however, the only capital funds which the husband acquired subsequent to separation and to the end of 2005 arose directly or indirectly from his employment by R Pty Ltd and/or the termination of that employment. Given that such employment had coincided with the cohabitation of the parties over the preceding decade or more, those funds could properly be regarded as matrimonial property.
On balance, the Court is persuaded that the origin of the funds paid by way of legal fees totalling $107 349 bore sufficient nexus to the marital relationship, and to the contributions of the parties to the date of separation, as to justify their being notionally added back. Had the funds to have paid these costs been obtained from the sale of R Pty Ltd shares, the husband could have proved that. This he did not do.
Disputed Item 15 related to the husband’s legal fees in the Federal Court proceedings. The quantum of this disputed item is not in doubt, the issue ultimately whether or not the husband has actually paid the sum or simply remains liable for doing so.
Exhibit R2, a document which appears to have come into existence during the course of the trial of the proceedings in this Court, is equivocal in relation to this item. Under the heading “Commercial Company Shares and Trusts” there appears as “Outstanding” legal fees and barristers fees of $92 725. It is reasonable to think that those items are identical to the expenses totalling $81 374 upon which counsel for the wife relies. Counsel for the wife relied in support of this asserted add-back on the husband’s evidence in paragraph 67(a)(i) of his affidavit of 31 October 2005, Exhibit A9 in which the husband deposed to having been billed $81 374.03 in relation to the R Pty Ltd proceedings (as reproduced above).
The Court considers this topic to be sufficiently shrouded in uncertainty as not to justify adding back this sum. This is particularly so, given that the husband will gain no benefit from incurring the sum and, on any view of the evidence, should, and no doubt will, satisfy it out of the $1 500 000 he received by way of interim property settlement pursuant to consent orders made after the realisation of his interest in R Pty Ltd. In the circumstances, not adding back this sum and not having regard to it in the context of contributions would not be unfair to the wife, and would involve no unfair advantage accruing to the husband.
The contentious item of the wife’s legal fees not paid from her interim property distribution can simply be resolved. The wife was provided with $9000 by the wife’s parents which sum she applied for legal fees and, from her interim property distribution, repaid. In essence, the submission on behalf of the husband is that the wife having no legal obligation to repay the $9000 to the husband’s parents such sum should be added back as, albeit the repayment reduced the net assets of the parties. Quite apart from the de minimus aspect of this dispute, the plain fact is that the wife, pursuant to an understandable moral obligation, repaid the $9000 to the husband’s parents. Unless so doing can be regarded as reckless, which the Court does not consider it reasonably can be, the sum should not be added back, and will not be.
The superannuation interests of the parties are not controversial. Both parties invite the Court to include their superannuation interests in the “property” of the parties. This the Court will do. It might be noted that the husband’s superannuation interest at the date of commencement of cohabitation approximated $8456. That sum forms part of the current balance of the husband’s AXA superannuation interest. On any view of the evidence, the husband’s initial superannuation entitlement could not have a significant impact on the evaluation of the contribution based entitlements of the parties and neither counsel, sensibly in the Court’s view, seriously suggested otherwise.
The liabilities of the parties are not substantially in dispute. The one liability which is in dispute, the capital gains taxation (“CGT”) on disposal of units in the R Unit Trust of $94 000 is but a part of a number of issues in relation to JFFT’s holding in the R Unit Trust. It is convenient at this point to deal with the broader issues relating to that interest and the particular issue raised by the liability asserted on behalf of the husband for CGT on the disposal of units in the R Unit Trust.
The parties’ expert accountants ultimately agreed (as their memorandum “X”1 confirms), that the parties have credit loan accounts in JFFT of $213 044 in the case of the wife and $203 428 in the case of the husband. The experts agree that the value of JFFT’s holding in the R Unit Trust is $618 000. The value of JFFT’s interest in the unit trust assumes an element of mystery however in the light of the evidence which this Court has heard.
Exhibit A1 is a letter from the solicitors for the other members of the husband’s family who hold units in the R Unit Trust. The letter was written on 30 January 2008 to the husband’s solicitors. The letter states:
Dear Sir,
PROPOSAL BY [FOY] FAMILY
We have been instructed to inform you of a proposal put forward by the [Foy] family to the benefit of [the husband]. The proposal is that for his lifetime he will receive the net income, after any tax, Trustee and other expenses are deducted, from a Trust with capital of $3 million. The Trust will be controlled by an independent, professional, corporate Trustee.
It is further proposed that the Trust would vest upon his reaching the age of 65 at which time all capital and undistributed income would be distributed to him.
Should he die before attaining the age of 65 the Trust would vest on his death and the Trust proceeds would be distributed among his surviving children and the surviving children of any of his children who may have predeceased him, in appropriate shares.
Our client would welcome [the husband’s] response to this proposal through you to Campion Legal.
Yours faithfully
[…] (Exhibit A1).
Although it could reasonably be assumed that the “proposal” conveyed by the letter of 30 January 2008 was predicated upon the transfer to other members of the husband’s family of JFFT’s interest in the R Unit Trust, the letter does not say that. Nor, on a balanced reading, does the letter imply that. It is to be remembered that the husband had, prior to this letter being written already completed the sale of his shareholding in R Pty Ltd. The evidence does not suggest that the husband had any interests which his family might be interested in acquiring other than JFFT’s interest in the R Unit Trust. The evidence renders it improbable that the “proposal” was put forward as an act of familial generosity to the husband.
In reliance upon the cross-examination of the husband, the suggestion emerged on behalf of the wife that, unknown to the husband, dealings between R Pty Ltd and another corporation, OA Pty Ltd, might, had they been known to the husband, have led him to hold out for a significantly greater price either for his shareholding in R Pty Ltd, or for the future sale of JFFT’s interest in the R Unit Trust. Although not so expressed, the implication of the submissions of counsel for the wife was that the offer of 30 January 2008 was in the nature of a sweetener or inducement for the husband not to revisit the sale of his interest in R Pty Ltd. The husband’s own evidence in cross-examination, though vague, did not in any way lay to rest the possibility that the husband will be further exploring his options in relation to the sale of his interest in R Pty Ltd. Understandably, having regard to the manner in which this topic emerged, 14 April 2008 apparently being when the wife could first have known of the offer of 30 January 2008, the wife was placed in a difficult position in terms of investigating this issue.
Sensibly, learned counsel for the wife did not submit that the husband should be seen as having a notional asset worth $3 000 000 or the figure calculated by Ms DB in Exhibit A12 of $3 051 000. On the other hand, with abundant justification having regard to the evidence, learned counsel for the wife asserted, on any of a number of bases, that the offer conveyed on 30 January 2008 should enure to the wife’s benefit.
It is common ground that there was no response to the proposal conveyed on 30 January 2008. On 8 May 2008 the solicitors for the Foy family wrote to the solicitors for the husband in the following terms:
Dear Sir
PROPOSAL BY [FOY] FAMILY
We refer to our letter of 30 January 2008 and note that no response was received thereto.
We are instructed that the offer contained in that letter is withdrawn.
Yours faithfully
[…]. (Exhibit A2).
The husband knew of the proposal of 30 January 2008 shortly after it was conveyed by its makers. As Exhibit A11 reveals, the husband communicated the offer to his adversarial accountant on or about 14 February 2008. The issue arose first in this Court during cross-examination of the husband. During the course of cross-examination, the husband was vague with respect to the “proposal” of 30 January 2008. During the course of his evidence, to the extent that he sought to explain his admitted failure to respond to the offer at all, the husband gave conflicting and unconvincing explanations.
It is to be remembered that, prior to the proposal of 30 January 2008, the husband had, on his own case, successfully negotiated the sale of his shares in R Pty Ltd to other members of his family for the sum of $4 500 000. The husband’s contention is that the negotiations which resulted in agreement at that figure commenced with an offer of $1 800 000, a claim the Court finds not established, which figure was increased to $4 500 000 as a result of his negotiating skills and persistence.
In the Court’s view of the evidence, the first offer of settlement was $3 000 000. The husband can thus assert with some justification that, although a minority shareholder, he succeeded in negotiating the sale of his shares for $1 500 000 more than was initially offered. Whether or not the husband in so doing achieved a price better or worse than might reasonably have been obtained is not relevant for present purposes. What is relevant is that the husband on his own evidence demonstrated a capacity to “take care of himself” in negotiations with family members with whom he suggests he is at odds.
The husband’s own evidence that “some time down the track” he wanted to “get out from under the control” of his family, or words to that effect, is difficult to reconcile with his complete failure to even respond to the proposal of 30 January 2008. The husband’s asserted inability to understand the proposal or its suggested motivation was, in the context of his claims with respect to his involvement in the family business and his history of negotiating the sale of his shares in R Pty Ltd, disingenuous. The husband’s dismissal of the proposal, as he described it, was unreasonable in the circumstances.
On balance the Court is satisfied that the husband was not inclined to disclose the proposal of 30 January 2008. Given the clear obligation to do so, and the fact that the husband’s solicitor was aware of the offer, it can only be concluded that the husband gave instructions to his solicitor not to disclose the proposal. A competent solicitor, as the husband’s solicitor presumable is, would have made clear to the husband his obligation to disclose the proposal, and the husband’s obligation in the circumstances of this litigation to respond to the proposal.
To what extent the proposal was, despite the absence of any terms in it indicating such intention, aimed at acquiring JFFT’s interest in the R Unit Trust is unclear. Whatever the proposal meant, or was intended to achieve, there is no evidence that it has not been withdrawn. The fact remains however that, just as the husband wishes to at some time extract JFFT from the R Unit Trust, his family could reasonably, on the evidence, be presumed to have a similar intention. Absent a family reconciliation, which is not suggested to be likely, sooner or later the question of JFFT exiting the R Unit Trust will again arise.
Ultimately, the only approach which the Court considers reasonably open to it with respect to this topic is to conclude that the husband unreasonably failed to pursue an opportunity which may have resulted in an accretion of the property of the parties to the marriage. To the extent that so doing might have been via the realisation of JFFT’s interest in the R Unit Trust, in excess of the figures agreed by the expert accountants, that would undoubtedly have been a benefit which bore a nexus to the marital relationship. On the other hand, if the proposal had materialised in accordance with its apparent terms, that could only, in a contribution sense, be regarded as referrable to efforts by or on behalf of the husband, albeit it would be a financial resource, and potentially relevant pursuant to s 75(2) of the Act.
As noted earlier in these reasons, the husband’s understandable refusal to reject the possibility of future legal proceedings by reason of dealings between other members of his family and OA Pty Ltd raises the spectre of the husband and his family having further dealings with respect to the realisation of his interest in R Pty Ltd and/or JFFT’s interest in the R Unit Trust.
In the absence of any apparent reason for doing so, and against a background of the history of the negotiations and litigation with respect to the realisation of the husband’s interest in R Pty Ltd, the proposal of 30 January 2008 remains mysterious. Ultimately, the outcome of that mystery may well result in proceedings pursuant to s 79A of the Act. On the evidence before this Court however, the most which can probably be ventured is, albeit in a way that is impossible to reliably quantify, in the context of evaluation of contributions, or s 75(2)(o), the Court should have regard to the fact that, on his own evidence, the husband unreasonably abandoned an opportunity which may have produced substantial financial benefit for him.
So far as the $94 000 CGT on the disposal of units in the R Unit Trust is concerned, the rival contentions are not in serious doubt. On behalf of the wife it was submitted that the husband having given no indication of an intention to realise the interest in the unit trust, he as the controller of JFFT having that capacity, and there being no other evidence suggesting the likelihood of that occurring, no basis for allowing CGT was enlivened.
Counsel for the wife relied upon the “principles” enunciated by the Full Court in Rosati & Rosati (1998) FLC 92‑804 (at 85 043):-
6.36 It appears to us that although there is a degree of confusion, and possibly conflict, in the reported cases as to the proper approach to be adopted by a court in proceedings under s 79 of the Act in relation to the effect of potential capital gains tax, which would be payable upon the sale of an asset, the following general principles may be said to emerge from those cases:-
(1) Whether the incidence of capital gains tax should be taken into account in valuing a particular asset varies according to the circumstances of the case, including the method of valuation applied to the particular asset, the likelihood or otherwise of that asset being realised in the foreseeable future, the circumstances of its acquisition and the evidence of the parties as to their intentions in relation to that asset.
(2) If the Court orders the sale of an asset, or is satisfied that a sale of it is inevitable, or would probably occur in the near future, or if the asset is one which was acquired solely as an investment and with a view to its ultimate sale for profit, then, generally, allowance should be made for any capital gains tax payable upon such a sale in determining the value of that asset for the purpose of the proceedings.
(3) If none of the circumstances referred to in (2) applies to a particular asset, but the Court is satisfied that there is a significant risk that the asset will have to be sold in the short to mid term, then the Court, whilst not making allowance for the capital gains tax payable on such a sale in determining the value of the asset, may take that risk into account as a relevant s 75(2) factor, the weight to be attributed to that factor varying according to the degree of the risk and the length of the period within which the sale may occur.
(4) There may be special circumstances in a particular case which, despite the absence of any certainty or even likelihood of a sale of an asset in the foreseeable future, make it appropriate to take the incidence of capital gains tax into account in valuing that asset. In such a case, it may be appropriate to take the capital gains tax into account at its full rate, or at some discounted rate, having regard to the degree of risk of a sale occurring and/or the length of time which is likely to elapse before that occurs.
Reliance was also placed upon the decision of the Full Court in IABH & HRBH [2006] FamCA 379. The Full Court said (at pars 76-78):
76. In our view, the Full Court in G and G [[2001] FamCA 1453] did not “widen” the ambit of what had been said in Rosati [supra], but rather made clear that expenses referrable to notional realisation of assets in the nature of “trading stock” could appropriately be taken into consideration in cases of that kind. That proposition is neither novel nor surprising.
On behalf of the husband, it was submitted that, unless and until a realisation of the interest in the Unit Trust occurred, the husband was in no position to benefit from it. Even then, for the husband to personally obtain the benefit, he would have to cause JFFT to distribute the estimated $618 000 value of the units to the husband in ways which might attract an obligation on the part of the husband to pay Income Tax.
The expert evidence in relation to this topic is less than entirely clear, and the Court cannot make a positive finding that the realisation of JFFT’s interest in the R Unit Trust would, when paid to the husband, result in further tax liability.
The reality however is that, only by a realisation of JFFT’s interest in the R Unit Trust can the value of the interest become potentially available to the husband. The interest is in contrast to the other property of the parties which is able to be accessed and utilised without adverse revenue implications.
On balance, the Court concludes that the fairest approach is to allow the CGT on the basis indicated. The Court makes no assumption that so doing would result in the husband incurring a tax liability in the event of JFFT, presumably by way of capital distribution, settling the value of the interest upon him once it had been realised by JFFT.
To the extent that it could be said that allowing notional CGT is unfair to the wife having regard to the Court’s findings with respect to the husband’s recent inaction in relation to the “proposal”, that issue will be addressed later in these reasons.
Although in a written submission learned Counsel for the husband urged the Court to have regard to a “possible CGT” liability of the husband in relation to the sale of his shares in R Pty Ltd in the sum of $128 500, the document set out earlier in these reasons (paragraph 44) did not refer to this sum, or assert any liability of the husband for CGT in relation to the sale of his shares in R Pty Ltd. It could thus be concluded that this potential liability was not being asserted by the end of the trial. The joint memoranda of the parties’ experts do not record agreement in relation to the issue, or advance informed discussion of it. That absence is significant in the light of the experts’ agreement in relation to CGT in the event of JFFT realising its interest in the R Unit Trust for the value upon which the experts have agreed. The husband bears the onus of establishing that the realisation of his shares in R Unit Trust will generate a CGT liability. The evidence falls short of establishing that such is the case.
It follows that the net assets of the parties total $6 889 115. Adding to that sum the $27 000 distribution to the wife which she has yet to receive, the sum becomes $6 916 115.
Contributions
The parties are in less than total agreement as to the approach the Court should adopt to the evaluation of the parties’ contribution entitlements. On behalf of the wife it was submitted that the Court would adopt a global approach whilst on behalf of the husband it was submitted that the Court would adopt an asset-by-asset approach to the assessment of contribution based entitlements.
In Norbis & Norbis (1986) 161 CLR 513 Mason & Deane JJ said (at 523):
Although it is natural to assess financial contributions under s. 79(4)(a) by reference to individual assets, it is also natural to assess the contribution of a spouse as homemaker and parent either by reference to the whole of the parties' property or to some part of that property. For ease of comparison and calculation it will be convenient in assessing the overall contributions of the parties at some stage to place the two types of contribution on the same basis, i.e. on a global or, alternatively, on an “asset-by-asset” basis. Which of the two approaches is the more convenient will depend on the circumstances of the particular case. However, there is much to be said for the view that in most cases the global approach is the more convenient. It follows that the Full Court is quite entitled to prescribe that approach as a guideline in order to promote uniformity of approach within the Court. In saying this we are not to be understood as denying the legitimacy of the trial judge's ascertainment in the first instance of the financial contributions of the parties by reference to particular assets. It is difficult to conceive how the trial judge in many cases could otherwise take account of such contributions as he is required to by s.79(4)(a) of the Act. In this respect we agree with the comment of Nygh J. in G and G that, although mathematical precision is certainly not required, there is ordinarily a need to know the circumstances in which assets were acquired and the general extent of each party's contribution to them.
Brennan J agreed with the majority and said (at 541):
The present case, however, does not involve the Family Court's authority to prescribe either a legal rule controlling or a guideline affecting the exercise of a discretion. The global approach which the Full Court of the Family Court regarded as appropriate in the present case is not a guideline affecting the order which should be made. The global approach is no more than a procedure for determining the exercise of the discretion. It is a procedure which tends to shorten the hearing so as to avoid sapping the finances of the parties and engendering further ill-feeling between them. The primary judge's adoption of the asset by asset approach in lieu of the global approach was not an error affecting the validity of the order which he made. There is no logical foundation for concluding that one approach should produce, at the end of the day, an order different from, or preferable to, the order which the other approach would produce. Either approach is capable of producing a just and equitable order. To intervene merely on the ground that the primary judge did not adopt the global approach would be to require primary judges to follow a single procedure when more than one procedure is consistent with the provisions of the Act.
In the circumstances of this case, the Court concludes that an asset-by-asset approach to the evaluation of the contribution based entitlements of the parties is more likely to produce a just and equitable outcome than would a global approach. As is obvious, neither approach is guaranteed to produce a just and equitable outcome any more than any other approach will necessarily fail to produce such an outcome. Even if, as the Court proposes, an asset-by-asset approach is adopted, the outcome of that analysis is an overall or global determination of the parties’ entitlements. To fail, having adopted an asset-by-asset approach to evaluation of contributions, to reach an overall conclusion would render compliance with the provisions of s 79(2) difficult if not impossible.
As noted at the outset of these reasons, howsoever viewed, the initial disparity of capital contributions requires careful consideration in the determination of the contribution based entitlements of the parties. For reasons which have earlier been touched on, the post separation period also requires careful consideration in this case.
Subject to one or two complicating factors, the period of the parties’ cohabitation does not give rise to serious difficulty in terms of evaluating the contribution based entitlements of the parties. As the oral evidence of the parties makes clear, during the time the parties were together, in the various ways revealed by the evidence, each gave of his or her best in circumstances where neither party can sustain significant criticism of the other. To regard the contributions of the parties during the period of cohabitation as other than equal would not reflect the evidence before this Court.
Little more needs or can productively be said about the parties’ personal efforts during cohabitation. To the extent that it remained part of his case, which it probably ultimately did not, the husband’s assertion that he should be credited for work done at the G property is not sustainable on his own evidence. The expert evidence sought to be relied upon by the husband was ultimately abandoned. In his own evidence, the husband conceded that he had exaggerated what he had said in his affidavit on the topic. The husband further conceded that he had undertaken the work at times when he was not working. Having regard to Mr B’s evidence with respect to the value of the G property, with respect to the husband, a significant part of what the husband expended on the property could almost be regarded as having been wasteful, although, in fairness, the wife does not make that assertion.
No supposed “special contributions” or “negative contributions” have been established with respect to the parties’ cohabitation. The one matter which requires some consideration with respect to the parties’ cohabitation, albeit that is most appropriately undertaken in the context of the interest in R Pty Ltd, relates to loan accounts. If, as the husband contends, his loan account in R Pty Ltd when cohabitation commenced was substantially, if not entirely, exhausted in completing the acquisition of the G property, the balance if his loan account in R Pty Ltd and/or the R Unit Trust can be seen as having arisen during the course of the cohabitation of the parties. The wife’s loan account in JFFT, and that of the husband in that entity, accrued entirely during that period. The loan accounts of the parties in these entities are thus a creature of the cohabitation and, to the extent that the wife, and indeed the husband, did not actually receive and utilise funds credited to them via loan accounts for the benefit of the family, each contributed to the credits accruing in those accounts.
So far as the post separation period is concerned, as noted earlier, the husband utilised substantial capital in circumstances which have not been entirely adequately explained, but have not been added back. As against that, the husband, albeit of his own choosing, did not have employment for significant parts of the post separation period. The wife has had employment earning a modest income and juggling the need to support herself and care for children for the bulk of the post separation period. As against that, the husband has had to house himself elsewhere whilst the wife has had the use and enjoyment of the former matrimonial home. Adding back the whole of the $1.5million received by the husband from R Pty Ltd also operates, albeit to a minor degree, in the husband’s favour in this context. On balance, the evidence is sufficiently unclear as to render elevating the contribution based entitlements of either party by reference to the post separation period unjustifiable.
Before determining the contribution based entitlements of the parties, it is appropriate to identify the asset-by-asset approach which the Court proposes undertaking. Learned counsel for the husband identified the pools or classes of asset as follows:
Pool A H/W/J $ Former matrimonial home J 920 000 Partial property settlement H 1 500 000 Paid legal fees - AMT H 35 406 Contents H 18 055 Motor vehicles/cycles H 41 450 Horses and gear H 2140 Husband's bank account H 1 Superannuation - AXA H 150 906 Partial property settlement W 500 000 Paid legal fees W Unknown Bendigo Bank account W 1581 Motor vehicle W 5000 Goods and chattels at matrimonial home W 17 342 NAB account W 3124 Money owed by wife's mother W 55 000 Superannuation - Hesta W 500 Superannuation – […] W 16 481 Superannuation - State Super – […] W 28 301 Superannuation - First State Super – […] W 31 242 3 326 529 Liabilities AMT - Legal fees - commercial (shares/trust) 92 725 3 233 804 Pool B Balance of proceeds of sale of [R Pty Ltd] shares 2 500 000 Plus interest earnt on proceeds of sale E100 000 2 600 000 Liabilities Possible CGT (mid-point of [Mr Y’s] report 6-5-08) 128 500 Income tax on interest earnt on balance E50 000 241 500 Pool C JFFT 540 194 Loan account H 169 345 Loan account W 202 391 911 930 Liabilities CGT on disposal (mid-point of [Mr Y’s] report 6-5-08) 94 000 817 930 Total Net Assets 6473234 (Outline of Case Document of Husband, Annexure “B”).
There is substantial logic in approaching the issues that way, notwithstanding that there is some unreality given that the sum of $2 000 000 referrable to the realisation of the husband’s shareholding in R Pty Ltd is dealt with separately from that entity. The Court considers a more useful broad division of the property to be between, on the one hand, the husband’s interest in R Pty Ltd and JFFT’s interest in the R Unit Trust, and the G property and lesser assets including superannuation interests on the other.
As noted earlier, the periodic contributions of the parties during cohabitation and in the post separation period do not require extensive analysis. It is useful however to record from their very helpful and comprehensive written outlines of argument, the submissions of learned counsel for each of the parties in relation to contributions.
On behalf of the wife it was submitted:
…
Section 79(4)(a) …
· At the commencement of cohabitation, the wife contributed:
i. Her equity in a property at [D]. In October 1994 the wife disposed of this property and realised a sum of $177,986.02. These monies were applied to acquire the matrimonial home.
ii. Superannuation entitlements of $1,000.
iii.A Toyota Corona station wagon.
iv. Savings of $3,000.
· At the commencement of cohabitation, the husband contributed his interest in a property at [S]. This property was the subject of substantial improvements by the financial and non financial efforts of both of the parties from the date of cohabitation until its disposal. In November 1994 the husband affected a sale of this property and received the sum of $143,990.08. The husband applied these monies towards the acquisition of the [G] home.
· At the commencement of cohabitation, the husband contributed his 25% shareholding in [R] Pty Ltd having an agreed value of $536,000 and a loan account payable by that entity having an agreed value of $103,476.
· Throughout the period of cohabitation, the wife was engaged in full time, part time or casual employment as a nurse. The wife supplemented her income through other minor business ventures. The wife applied all her income and savings for the benefit of the marriage.
· Throughout the period of cohabitation the husband was engaged in full time employment. The wife contends that the husband was engaged in employment for very long and extended hours, and was required to undertake a significant period of travel within Australia and outside Australia.
…
· After the separation the husband retained the benefit of most of the income and property of the parties. The wife remained in the home with the children. The husband paid little meaningful periodic support for the wife and the children. Such submission will be illustrated by way of comparison of the income and liquidated assets/property retained by the husband during tis [sic] period, the income of the wife, and quantum of child support paid. The financial burden cast upon the wife was substantial and oppressive. The contributions of the wife over this period should attract real and meaningful weight.
…
· The husband purports to give extensive evidence in his affidavit as to his role in accumulating the value of the [R Pty Ltd] entity and group by way of his skills in his employment. On any view, the husband would not have the benefit of a capacity to engage in such employment with [R Pty Ltd] except in circumstances where the wife was primarily available to adopt the role of homemaker and parent for the infant children during the marriage. The wife’s indirect contribution to the growth and expansion of the [R] Group and to the husband’s interests in that group were real and substantial.
· The husband seeks that the Court make a subjective assessment to the effect that his contributions during the marriage by way of [R Pty Ltd] were “outstanding”. It is contended that the husband, while having some skills, had the good fortune of being in the right place at the right time. The husband makes a case that is somewhat invidious when he requires the Court to provide weight to his contributions as special and those of the wife, as “not”. It is not a case in which the husband engaged in any particular action or management or accepted any opportunity other than those which were made available to him by others.
· Rhetorically, why [should] the wife’s contributions using her best endeavours as a homemaker and parent coupled with her financial contributions during the marriage … be seen as being of any less in worth than those of the husband.
…
· By way of letter dated 11th March 2008 the husband in his capacity of controller of the [J Foy] Family Trust provided advice to the wife of a distribution … to the wife of $27,000 in the 2007 tax year. Such distribution was made without [the] wife’s knowledge until she received the letter in mid April 2008. The wife has not received the trust distribution. Such distribution is likely to be taxable in the hands of the wife, impacts on the value of her loan account with the trust, and will impact … administrative child support assessments payable by her in the 2008 and 209 [sic] tax years. The solicitors for the husband, on instructions, by way of letter dated 7th May 2008 advise they “are not instructed” in relation to the matter and referred the wife to the corporate trustee wholly controlled by their client, the husband!
Section 79(4)(b) …
· The wife applied her own physical efforts and labours towards improvements to the [G] property.
· The wife puts into issue the nature of and contended value of improvements occasioned by the husband to the [G] property late in the marriage. The wife further puts into issue the impact of such improvements on the valuation of the real estate.
Section 79(4)(c) …
· During the period of cohabitation, the wife was the person who was primarily responsible for meeting the needs of the children on a day to day basis. The wife puts into issue that the husband made a significant contribution in this regard and was very much limited by his extended hours of employment.
· Subsequent to the separation between the parties, the wife was the person solely responsible for meeting the needs of the children until each sequentially moved to live with the husband;
· During the period of cohabitation, the wife was the person who was primarily responsible for the domestic tasks in and around the home.
· The children of the marriage presently reside with the husband.
· The wife does not concede that the children will continue to reside with the husband until they become self supporting.
· The husband paints a picture in his affidavit evidence of a demanding role, both within Australia and overseas during the marriage with [R] Pty Ltd. The expert accounting evidence indicates that the expansion of that entity occurred with gusto during the 1990’s. The husband undoubtedly approached his task with [R Pty Ltd] with energy and enthusiasm, doing so at a time when he had a legal and moral responsibility with the wife to care, nurture and supervise the infant children of the marriage. His opportunity to pursue [R Pty Ltd] and improve the value of the parties’ interest in that entity was both enhanced and contributed to by the wife in fulfilling the day to day responsibilities and caring for the children and relieving the husband of that burden. (footnotes omitted). (Applicant Wife’s Case Summary Document, pages 8 – 12).
On behalf of the husband it was submitted that:
In determining the contribution entitlements of the parties, one would have regard to the matters referred to earlier in identifying each of the respective contributions of the parties. This is a relationship of only 12 years. In assessing the contribution to Pool A, there is no matter arising out of each party’s respective contributions in the period to the date of separation by virtue of the mother’s role as a homemaker and parent and part time financial contributor and the husband’s role as primary financial contributor and part time homemaker and parent that differentiates one from the other. In relation to the initial contributions of the parties depending on how the court determines the evidence there is either a slight adjustment in the husband’s favour by virtue of a loan received from his parents or a more significant adjustment in the husband’s favour by virtue of the introduction of the husband’s loan account balance.
In the period post separation the party’s contributions have been different in the circumstances surrounding where each of the children otherwise resided in the respective party’s care. Following the separation in August 2004 and until April 2006 all of the children resided primarily with the mother and spent time with the father. In May 2006 [the child M] moved to live with her father and in December 2006 [the child K] moved to live primarily with her father, in May 2007 orders were made that provided for [the child T] to reside primarily with his father. All three children continue to reside primarily with their father. [Notwithstanding] these changes in the living arrangements with the children, it is the husband’s submission that the court would assess the contribution based entitlements of the parties as changing little between the date of separation and the date of trial. This pool does however contain part of the proceeds of sale of the shares in [R Pty Ltd]. The husband made a significant post separation contribution in negotiating the sale of [R Pty Ltd] albeit he was thwarted somewhat by the actions of the wife.
The husband submits that the court would in weighing up each of the contributions of the parties assess the contributions to Pool A as being in the husband’s favour as to 75% and in the wife’s favour as to 25%. In relation to Pool B the court would assess the contributions as 100% to the husband and 0% to the wife and in relation to Pool C 100% to the husband and 0% to the wife. Any special contribution of the husband is clearly recognised in [the above]. (Outline of Case Document of Husband, pages 5 – 6).
To the extent that the income received by JFFT was distributed to the parties, whilst the husband could be seen as likely to have made a greater contribution to the derivation of such income, the manner in which the income was distributed and paid (or distributed and retained) combined with the wife’s indirect contributions in other areas, the nature and quality of which are not seriously in contest, renders the extent to which the husband should now be seen as having made a greater contribution to JFFT and the units in the R Unit Trust more problematic.
The value of JFFT is agreed at $618 000. That figure is reached after allowing for the credit loan accounts of the husband and wife in JFFT. Those credit loan accounts are not greatly unequal (husband $203 428, the wife $213 044) and reflect the reality that, by leaving the funds in their credit loan accounts in the trust, the parties have both made available less money to the family than might otherwise have been the case. Sensibly, neither party complains about that. In the circumstances, given the evidence with respect to JFFT and the R Unit Trust, and the manner in which distributions of income from R Unit Trust have been treated, the Court does not propose regarding the parties as other than equally entitled to the loan accounts revealed by the evidence. Although the husband had an interest in the tenant of the R Unit Trust’s premises, and assuming that a commercial rental was paid by R Pty Ltd to the R Unit Trust, there is little to distinguish the situation from any other commercial property holding by an investor. Although there is no clear evidence in that respect, it could reasonably be inferred that trust distributions to the wife lessened the income tax which would have been payable had the husband alone received the distributions from the R Unit Trust, particularly in the years in which the wife was not otherwise deriving significant income.
In reality, as the Court perceives it, the contribution debate thus relates to the $618 000 agreed value of JFFT. On balance, the Court concludes, largely on the basis that half of the assets which underpin the R Unit Trust had been acquired by interests on the husband’s side of the marriage prior to the commencement of cohabitation, that the contribution based entitlements of the parties thereafter to the acquisition and conservation of the units in the R Unit Trust should be seen as favouring the husband by 70 percent to 30 percent.
It is convenient at this point to note the evidence in relation to the “proposal” made by members of the husband’s family to which reference has been earlier made. As noted earlier, the husband unreasonably failed to respond to the “proposal” whatever it might have been intended to convey, and whatever the basis upon which it sought to do so. As learned counsel for the wife sensibly conceded, the Court could not safely make a finding either that the husband could realise JFFT’s interest in the R Unit Trust for $3 million, or any of the other figures calculated by Ms DB, or that the husband independently of JFFT had an asset or resource of that magnitude. It thus remains to consider within the context of s 75(2)(o) how the husband’s failure to engage with a “proposal” which has now been withdrawn should be seen. The Court concludes that the safest, and perhaps only basis upon which it can regard that topic, is pursuant to s 75(2)(o).
As with the consideration received by the husband for his shareholding in R Pty Ltd, the issue may, subsequent to these proceedings, give rise to further litigation, particularly if the husband subsequently acquires benefits of the kind and magnitude referred to in the “proposal” and/or as a result of dealing with R Pty Ltd and OA Pty Ltd, receives significant further sums by way of consideration for the sale of his shareholding in R Pty Ltd. However, these are matters about which the Court cannot speculate.
In summary, the Court’s conclusions with respect to the contribution based entitlements of the parties on an asset-by-asset basis results in the following: -
| Asset(s) | |
| The G property | 920,000 |
| Husband's motor vehicle & motorbikes | 41,450 |
| Husband's horses | 2,140 |
| Husband's furniture, effects, etc | 20,605 |
| Wife's furniture, effects etc | 17,342 |
| Husband's paid legal fees | 107,349 |
| Wife's legal fees | 22,000 |
| Wife's mother's debt to wife | 24,000 |
| Total | $1,154,886 |
| Husband's 53% = | 612,090 |
| Wife's 47% = | 542,796 |
| Asset(s) | |
| Husband's superannuation interests | 152,016 |
| Wife's superannuation interests | 59,543 |
| Total | $211,559 |
| Husband's 50% = | 105,779.5 |
| Wife's 50% = | 105,779.5 |
| Asset(s) | |
| Proceeds of Sale of R Pty Ltd shares | 4,653,978 |
| (inclusive of interest earned) | |
| Less Tax on interest earned | 71,600 |
| Net | $4,582,378 |
| Husband's 70% = | 3,207,665 |
| Wife's 30% = | 1,374,713 |
| Asset(s) | |
| R Unit Trust | 618,000 |
| Less Notional CGT | 94,000 |
| Total | $524,000 |
| Husband's 70% = | 366,800 |
| Wife's 30% = | 157,200 |
| Asset(s) | |
| Husband's loan account in JFFT | 203,428 |
| Wife's loan account in JFFT | 240,044 |
| Total | $443,472 |
| Husband's 50% = | 221,646 |
| Wifes 50% = | 221,646 |
| Summary of asset by asset entitlements | |
| Husband | 4,513,981 |
| Wife | 2,402,134 |
| Total | $6,916,115 |
| Husband's overall entitlement = 65.27% | |
| Wife's overall entitlement = 34.73% |
Both counsel, correctly in the Court’s view, submitted that it is appropriate, if not also necessary, having undertaken that exercise, to consider globally the effect of the Court’s conclusions. If not at this stage in the Court’s deliberations, then pursuant to either s 79(2) such an exercise is indicated. The effect of the Court’s conclusions with respect to contributions on an asset-by-asset basis is that in total the wife would be entitled to receive $2 402 134 and the husband would be entitled to receive $4 513 981. These entitlements translate by reference to the total net asset pool of $6 916 115 as 65.27 percent and 34.73 percent to the wife.
Section 75(2)
As noted earlier, in both his written case outline document and oral submissions, learned counsel for the husband submitted that the Court should allow not more than $350 000 by way of a s 75(2) adjustment in favour of the wife. The basis upon which a s 75(2) adjustment in the wife’s favour was suggested was outlined in summary form towards the conclusion of learned counsel for the husband’s outline of case document. It was submitted:
But for the finding in relation to contribution referred to above there would be no matter that would call for an adjustment in the wife’s favour save and except in relation to the finding as to contribution. In all of the circumstances it is appropriate to make an adjustment in the wife’s favour solely given the disparate findings in relation to contribution and it is the husband’s submission that the court would assess that disparity by making a monetary adjustment in the wife’s favour of an amount not exceeding $350,000 assuming the above findings as to contribution. (Outline of Case Document of Husband, page 6).
On behalf of the wife it was submitted that a number of factors should enliven a significant s 75(2) adjustment in the wife’s favour. To the extent that it was submitted on behalf of the wife that the husband’s capacity to earn was greater than that of the wife, the evidence does not ultimately enable the Court to accept that contention. The evidence reveals that the wife practises her profession in return for a modest income (approximately $62 000 per annum), and does so not without significant personal inconvenience in order to maximise the time available to her to spend with the children.
The husband’s evidence was less than entirely satisfactory as to his endeavours to obtain employment. To the extent that the husband gave details of post 2003 efforts to secure employment, those efforts appear, through no apparent fault of the husband, to have not resulted in any significant returns. On the other hand, the husband’s evidence falls short of establishing that he has applied himself diligently in the pursuit of appropriate gainful employment. Indeed, the evidence supports an inference that the husband gave up appropriate employment in the Newcastle area in 2005 to avoid having to disgorge part of the remuneration he would thereby receive to the Child Support Agency. The Court ultimately concludes that the husband’s earning capacity is no less than that of the wife.
It was submitted on behalf of the wife that “the imbalance of contributions if obtained by the husband must result in the greater adjustment to the wife by reference to s 75(2)(b)”. (Applicant Wife’s Case Summary Document, page 13). There is superficial force in that submission although the Court does not accept in the circumstances of this case that the potential to adjust the entitlements of the parties on this basis is by any means open ended. There is something of a logical obstacle in a case such as this to re-adjusting an entitlement which has been concluded to be just and equitable in reliance upon contributions in the exercise of a “balancing up” discretion. Although s 75(2) may have the effect of “balancing up” disparate entitlements, the Court doubts that it can be invoked for that purpose or on that basis. The disparity of capital of the parties is most relevant in the Court’s view in this case on the basis of what the disparity arising from contributions is realistically likely to mean.
If one regarded the liquid funds received by the husband over and above the contribution based entitlement of the wife as being available for passive investment, the husband’s capacity from that source would be likely to generate a substantially greater income than would the liquid funds which the wife may receive. It ought not be forgotten that the wife has, and will retain, a home, the husband will have to buy one. The wife will also have a capacity to invest funds and derive income from such investment. A modest adjustment in the wife’s favour would thus be reasonable on that basis.
The children currently primarily reside with the husband although they do spend substantial and significant time with the mother, not without some cost to her. The reality is however that the ages of the children and the reality that they primarily reside with the husband must impact not insignificantly in favour of the husband when the magnitude of a s 75(2) adjustment in the wife’s favour is being considered. The offsetting impact of that primary obligation to house and care for the children must be significant. Relevant in this context is the question of child support.
No adjustment pursuant to s 75(2)(n)(a) is appropriate given that, wherever the children are living, reasonable and appropriate child support will be paid by the parent liable to do so.
It was submitted on behalf of the wife in context of s 75(2)(k) that “[t]he duration of the marriage itself is not applicable, however the birth and care of the children reduced the wife’s capacity to progress her employment, and her skills and qualifications. The husband did not encounter this handicap.” To the extent that this was submitted, the evidence does not establish that the wife’s earning capacity has been adversely impacted by the cohabitation. Nor does it establish that the husband’s earning capacity has been enhanced by the duration of the cohabitation. Accordingly, no adjustment for this factor is appropriate. (Applicant Wife’s Case Summary Document, page 15).
To the extent that it was submitted on behalf of the wife that s 75(2)(m) “[t]he husband cohabits with his partner and obtains certain financial advantages from that circumstance”, the evidence does not establish either that the husband obtains relevant “financial advantages” from that cohabitation, or that such cohabitation ought adversely impact upon the s 75(2) adjustment to which the wife is otherwise entitled. (Applicant Wife’s Case Summary Document, page 15).
It remains to consider the matters raised on behalf of the wife pursuant to s 75(2)(o). It was submitted in that context:
· The wife repeats her contributions as set out above as to the notional adding back of property pre-distributed by the husband which would ordinarily have formed part of the pool and her contributions as to waste.
· The wife may contend that, subject to the evidence, the husband has failed to engage in a full and frank disclosure of his financial circumstances.
· The wife contends that the husband has failed to disclose negotiations entered into between both he and members of his extended family so as to make extensive provision by way of income and capital for the husband in the future. This circumstance may relate to the husband’s control of 25% of the [R Unit Trust] by way of the [J Foy] Family Trust [JFFT]. Subject to the evidence, the wife may contend that the value of such negotiated agreement to the husband would be substantially greater than the range of values opined by the forensic accounting experts to the value of the [JFFT] and its interests in the [R Unit Trust].
· In the alternative, and without concession, neither party seeks relief whereby the units in the [R Unit Trust] are to be disposed of or sold. The prospect of any disposal of such unitholding in the future is remote at best.
· The approach taken by the husband is to contend that because of the present value that the [R Pty Ltd] shareholding casts against the pool, the contributions by the wife during the marriage are not as valuable as the husband’s. The wife contends that the parenting contribution made by the wife also is subject to an assessment as part of s 75(2). The language and structure of the Act suggests this falls into an independent area of recognizing the wife’s contributions to the present pool available for distribution between the parties. This is not because the wife is evoking some idiosyncratic notion of social justice, but because the wife has indirectly contributed in a valuable way to the financial circumstances of the family and to the pool of property presently available for distribution. Such an approach gives due recognition to the fact that the wife’s parenting contribution continued not only during the marriage, but for a substantial period after separation. Its direct consequence was to allow the husband to participate freely in the economic opportunities for the family. The economic benefits enjoyed by the husband now arising from the wife’s role cannot be under estimated. (Applicant Wife’s Case Summary Document, page 16).
Putting to one side the portions of this submission which address matters of contribution, which the Court has earlier considered, the Court is less than satisfied that the husband has made a full and frank disclosure of a potentially relevant aspect of his financial affairs, that being the true position in relation the “proposal” made by members of his family, and the position of JFFT’s holding in the R Unit Trust.
It may well be that there will be no further developments in relation to the consideration received by the husband for his shareholding in R Pty Ltd, and in fairness to the husband, his evidence suggests suspicions on his part rather than reliance upon which he could seek to pursue further monies for his shareholding.
Similar observations apply to JFFT’s holding in the R Unit Trust. As noted earlier, although the husband unreasonably failed to engage with the “proposal” it cannot be found that so doing would necessarily have resulted in any funds not currently available becoming available. Other than to have regard in a modest and non specific way to these matters, the Court is not satisfied on the evidence that a complete absence of undue caution is warranted. Quite simply, if learned counsel for the wife’s worst fears are confirmed, then the husband may well in future have to contend with a claim by the wife pursuant to s 79A of the Act.
Albeit predicated on the wife’s contribution based entitlement being held to be significantly less than the Court has considered appropriate, having regard to the components of the $350 000 adjustment conceded on behalf of the husband, the essential foundation for a substantial adjustment remains. $350 000 represents approximately 5 percent of the asset pool. The disparity resulting from an adjustment of $350 000 in the wife’s favour, $700 000, obviously represents 10 percent of the total asset pool. In the Court’s view, such a disparity could not be justified by reference to the facts of the case.
In the Court’s view, and particularly having regard to the husband’s failure to make a full and frank disclosure with respect to JFFT’s holding in the R Unit Trust, and the less than satisfactory evidence given by him with respect to his earning capacity and the slightly greater capacity of the husband to derive investment income from his overall entitlement to settlement of property, the Court concludes that an adjustment in the wife’s favour of $200 000 would be appropriate.
The effect of so concluding is that the wife should receive 37.62 percent of the assets of the parties and the husband should receive 62.38 percent of the parties’ net assets. In dollar terms, the husband will receive $4 313 981 and the wife will receive $2 602 134.
It is necessary to consider whether, in all the circumstances, the proposed division of the assets of the parties is just and equitable. Instructive for that purpose is a consideration of the nature and effect of the division proposed. Most obviously, is the disparity between the entitlements of the parties, the husband’s exceeding that of the wife by $1 711 847.
It must however be recognised that the husband’s entitlement does not include a residence whilst the wife’s does. If the husband were to acquire a residence of equal value to G property, which would not be unreasonable, the husband would receive in cash almost $800 000 more than the wife. To the extent that the husband might complain that a significant proportion of his entitlement (in excess of 10 percent) is represented by JFFT’s holding in the R Unit Trust, such complaints would fall on deaf ears given the husband’s evidence with respect to that topic generally and to the “proposal” specifically.
It also relevant to recall that the husband’s superannuation interests exceed those of the wife’s by approximately $100 000. In circumstances where neither party can access his or her superannuation interests, that is not an irrelevant consideration. To the extent that the husband may complain that the proposed division does not have regard to legal expenses which he either has paid out of an interim distribution of the parties’ property, or will have to pay from that source, the obscurity of the evidence adduced on his behalf denies him the entitlement to successfully complain about that.
Recognising, as Brennan J’s judgment in Norbis (supra) clearly does, that other minds may well come to different conclusions in a case of this kind, the Court is satisfied on balance that the proposed division of the property of the parties is just and equitable.
Conclusion
On the basis that the wife receives G property ($920 000), her furniture and effects ($17 342), her paid legal fees ($22 000), her entitlement to the repayment of a debt owed by her mother ($24 000), the $500 000 previously received by her from the proceeds of sale of the husband’s shares in R Pty Ltd and her superannuation interest ($59 543), the wife will have received $1 542 885. She will accordingly, in order to satisfy her overall entitlement of $2 602 134 be entitled to receive $1 059 249 from the balance of the proceeds of sale of the husband’s R Pty Ltd shares.
On the basis that the husband retains his motor vehicles ($41 450), his horses ($2 140), his furniture ($20 605), his paid legal fees ($107 349), his superannuation interest ($152 016), the $1 500 000 which he has previously received from the proceeds of sale of his R Pty Ltd shares, the value of the R Unit Trust (after notional CGT) of $524 000, the loan accounts of both parties in JFFT (total $443 292, the husband will have received the sum of $2 790 852 of his overall entitlement to $4 313 981.
If the husband receives, albeit subject to the impost of tax agreed at $7 600, the balance of the controlled monies account in the sum of $1 594 729, the husband’s entitlement will have been satisfied.
I certify that the preceding one hundred and sixty nine (169) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman
Associate:
Date: 27 June 2008
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Constructive Trust
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Costs
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Damages
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Fiduciary Duty
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Remedies
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Restitution
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