HOOPER & HOOPER
[2017] FCCA 124
•1 March 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HOOPER & HOOPER | [2017] FCCA 124 |
| Catchwords: PARENTING – Dispute about whether the husband should be allowed to sometimes have the child collected or dropped off by a nominee at the commencement and end of time and should be permitted to make reasonable arrangements for the child to be supervised by others if he is unable to personally supervise her. |
| Legislation: Family Law Act 1975, ss.60CC, 75,79 Cases Cited: |
| Applicant: | MR HOOPER |
| Respondent: | MS HOOPER |
| File Number: | NCC 3022 of 2011 |
| Judgment of: | Judge Terry |
| Hearing dates: | 9, 10 & 11 December 2015, 9 February 2016 & 29 April 2016 |
| Date of Last Submission: | 29 April 2016 |
| Delivered at: | Newcastle |
| Delivered on: | 1 March 2017 |
REPRESENTATION
| The Applicant: | In person |
| Counsel for the Respondent: | Mr Rugendyke (property) and Ms Flintoff (parenting) |
| Solicitors for the Respondent: | Flintoff Lawyers |
ORDERS
Parenting
In addition to the orders made by consent on 10 December 2015 the court makes the following orders:
The child spending time with the father pursuant to these orders shall be implemented by the father or a nominee of the father who is known to the child collecting the child from and returning her to school where changeover coincides with the start or end of a school day but otherwise the father or a nominee of the father who is known to the child shall collect the child from the mother or a nominee of the mother who is known to the child at the commencement of time and deliver the child to the mother or a nominee of the mother who is known to the child at the conclusion of the time in the (omitted) Shopping Centre Car Park.
For the avoidance of doubt Order 6 of the Orders made on 10 December 2015 is not to be taken to prevent the father making arrangements for the child to be cared for by another adult if the father reasonably decides that this is necessary and appropriate during a period when the child is spending time with him.
Property
The husband shall within 60 days of the date hereof pay the wife the sum of $362,477.47.
Contemporaneously with the husband complying with Order (3) the wife shall sign all documents and do all acts and things required to remove at the wife’s expense the caveat lodged over the Property N being (omitted) in Deposited Plan (omitted) (“Property N”).
If the husband fails to pay the wife the amount required by Order (3) the husband shall promptly sign all documents and do all and acts things required to sell the Property N property and for that purpose:
(a)the property shall be listed for sale with a real estate agent agreed between the parties;
(b)in the event that the parties cannot agree on the nomination of such agent they shall jointly approach the President of the Real Estate Institute of New South Wales and accept his or her nomination of a real estate agent to sell the property;
(c)in the event the parties are unable to agree on a listing price, the time of listing, the method of sale and conditions of such sale in respect of the property they shall accept the recommendations of the real estate agent appointed pursuant to these orders for the sale of the property in respect of each such matter; and
(d)these orders are authorisation for the real estate agent to provide the wife with all information she may request about the sale from time to time.
Upon completion of the sale the proceeds of sale shall be applied as follows:
(a)in payment of the costs and expenses of sale including agent's commission and conveyancing costs;
(b)in payment of adjustments, if any;
(c)the balance as to 42.5% less $28,473.71 the husband and 57.5% plus $28,473.71 to the wife.
Orders 1A and 2 of the Orders of 18 September 2013 are discharged.
As between the parties the husband is solely responsible for any liability (including penalty) owing to the ATO arising out of (business omitted) and/or (business omitted) and/or the husband’s compliance with Division 7A of Part III of the Income Tax Assessment Act 1936 (ITAA 1936) and holds the wife indemnified against any liability.
The husband shall indemnify the wife and keep her indemnified from any liability to (business omitted) arising out of the company’s accounting entries.
The husband shall forthwith give the trustee of the Hooper Super Fund notice that the court proposes to make the following base amount splitting order:
(a)The base amount allocated to the wife out of the interest of the husband in the Hooper Super Fund is $58,947.45 (“the base amount”).
(b)Pursuant to s.90MT(1)(a) of the Family Law Act 1975 whenever a splittable payment becomes payable in respect of the interest of the husband in the fund the wife is entitled to be paid an amount calculated in accordance with Part VI of the Family Law (Superannuation) Regulations 2001 using a base amount and there be a corresponding reduction in the entitlement of the husband.
(c)These orders have effect from the operative time and the operative time is the beginning of the day upon which these Orders are made.
(d)Within 14 days of becoming entitled to receive a superannuation benefit from the fund the husband shall give the trustees of the fund:
(i)All such forms as necessary to enable it to determine the nature and quantum of the wife’s superannuation entitlement; and
(ii)Any other related information it may reasonable require.
(e)Until such time as the superannuation split to the wife pursuant to these Orders can be rolled over into a separate account of the wife’s:
(i)The husband shall give to the wife written notice not less than 28 days before such time as he elects to retire from and/or take voluntary retirement and/or for any reason accept or become entitled to access in whole or in part his entitlement in the fund;
(ii)The husband shall direct and authorise the trustee of the fund to communicate with the wife and/or any person authorised by her in writing;
(iii)To answer any reasonable enquires as may be made by them or on their behalf from time to time regarding her entitlement in the fund;
(iv)To give to the wife and/or her authorised representative a copy of any notice of any application or request by the husband which seeks the release of entitlements in the fund insofar as that release may affect the husband’s entitlement in the fund pursuant to these Orders; and
(v)The husband, his servants and/or agents be and are hereby restrained from doing any act or thing which would prevent the wife, her heirs, executors, administrators or nominees from receiving the benefits in the fund to which she is entitled pursuant to these Orders.
(f)In the event that the superannuation split to the wife pursuant to these Orders can be rolled into a separate account each of the parties shall each do all such acts and things and execute all such documents as may be necessary to facilitate and to implement that rollover.
The husband and the wife shall do all acts and things and give all consents and execute all documents and writings necessary to give effect to the Orders made herein.
Except as provided for in these Orders, as between the husband and the wife the ownership and property in all motor vehicles, chattels, items of personal property, shares, stock, bank or other accounts, superannuation policies or entitlements, chose in actions and other assets of financial resources presently in the possession or name of either the husband or the wife respectively forthwith vest absolutely in that party.
In the event that either party refuses or neglects or is unable to execute any instrument or document being an instrument or document the execution of which is provided for in these Orders or is necessary to put into effect the provisions of these Orders then at the request of the other party the Registrar of the Federal Circuit Court of Australia is appointed pursuant to Section 106A to execute any such instrument or document in the name of the party refusing or neglecting or being unable to so execute the instrument or document.
IT IS NOTED that publication of this judgment under the pseudonym Hooper & Hooper is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT NEWCASTLE |
NCC 3022 of 2011
| MR HOOPER |
Applicant
And
| MS HOOPER |
Respondent
REASONS FOR JUDGMENT
Introduction
These are primarily property proceedings arising out of a 3½ year relationship.
It is a difficult property case. There are numerous disagreements about the composition of the pool and about the value of items in the pool, there is disagreement about the validity of a company valuation carried out several years ago and there is disagreement about whether the husband committed waste and is guilty of non-disclosure.
Not unsurprisingly in light of this the parties propose vastly different outcomes.
The husband’s proposal is that the wife retain $114,000.00 which she received by way of partial property settlements during the course of the proceedings, her superannuation worth about $3,000.00, a house and car worth $480,000.00 which are registered in her mother’s name but which he asserts are really hers, and the assets of (business omitted) in (omitted) worth about $3,000.00.
It is unclear what the husband intends should happen to a debt of $63,000.00 which the wife owes to (omitted) Building Society in respect of (business omitted) in (omitted) but I infer that he intends that she remain responsible for it.[1]
[1] See paragraph 59 of the husband’s affidavit in which his proposal is fleshed out.
The money from the partial property settlements is long gone and the wife vehemently denies ownership of the house and car in her mother’s name. From her perspective the husband’s proposal would result in her receiving superannuation worth $3,000.00 and the belatedly revealed remaining assets of (business omitted) in (omitted) worth about $3,000.00 and remaining responsible for a $63,000.00 debt.
The wife’s proposal is that she receive assets to the value of nearly $1.4m and remain responsible for the (business omitted) in (omitted) debt of $63,000.00 and that the husband retain his (omitted) superannuation worth $21,000.00 and his Toyota (omitted) with little net value and be responsible for debts of over $0.6 million.
In more specific terms the husband’s proposal was that he should retain or receive:
i)An unencumbered property in Property N.
ii)An encumbered property in Property B.
iii)The assets of (business omitted) ((omitted)) and (business omitted) ((omitted)) and that he be responsible for the tax liabilities arising as a result of Division 7A of the Income Tax Assessment Act and the costs of liquidating the companies.
iv)The entire value of the Hooper Super Fund.
v)His Toyota (omitted) and associated debt.
vi)His (omitted) superannuation.
He proposed that the wife retain:
i)Property F which he alleged she owned.
ii)A Toyota (omitted) which he alleged she owned.
iii)Her Super (omitted) superannuation.
iv)The remaining (business omitted) in (omitted) stock and that she be responsible for the (business omitted) in (omitted) debt.
v)The $114,000.00 net she received by way of partial property settlement.
The husband did not clearly articulate why he believed that this outcome was just and equitable except to say that on his calculation it represented a 50/50 division of the pool.
The wife proposed that she retain or receive:
i)The unencumbered property in Property N.
ii)The property in Property B with the husband to pay out the mortgage.
iii)The assets of (business omitted) and (business omitted), with the husband to be responsible for all taxation liabilities and for the cost of liquidating the companies.
iv)The entire value of the Hooper Super Fund.
v)Her (omitted) superannuation.
vi)The remaining (business omitted) in (omitted) stock and that she remain liable for the (omitted) Building Society debt.
She proposed that the husband retain:
i)His (omitted) superannuation.
ii)His Toyota (omitted) with associated debt.
It was the wife’s case that this outcome was justified by the husband’s post-separation conduct which included:
·Committing waste in the form of destroying the goodwill of (business omitted) by ceasing to operate the business.
·Spending extravagantly between separation and 2014 which stripped large amounts of money from (business omitted).
·Paying his legal fees from business money.
·Failing to keep proper accounts and disguising personal expenditure as business expenditure thus masking the true value of (business omitted) from the accountant who valued the company.
·Failing to make full and frank disclosure.
The wife said that transferring the entire pool to her could also be at least partially justified by her future primary care of the parties child X and the disparity in the parties income earning capacities.
There is also a small parenting issue in dispute.
Consent parenting orders were made about the parties child X on 14 June 2013. When the hearing began the husband was agitating for a number of changes to the orders. The wife initially opposed any changes but during the hearing the parties reached agreement about most of the matters in dispute and fresh consent orders were made on 10 December 2015.
The issue which remained in dispute was whether the husband could at his discretion arrange for X to be collected or returned by a nominee at the commencement or end of her time with him if he was unable to personally collect her due to a last minute change in work requirements or an emergency and whether he could on occasions leave her in the care of others rather than be required to be personally present every minute that she was with him.
The evidence
The husband relied on his amended initiating application filed on 13 November 2015 and his affidavit and financial statement filed on 4 November 2015.
The wife relied on her second further amended response filed on 14 October 2014, her financial statement filed on 19 November 2015, her affidavits filed on 17 November 2015 and 18 February 2016, the affidavit of her mother Ms J filed on 17 November 2015 and the affidavit of Mr A filed on 11 November 2015.
Ms D, a chartered accountant, prepared two valuations. One was of the husband’s interest in (business omitted) and the wife’s interest in (business omitted) in (omitted) as at 30 June 2012 and is contained in an affidavit filed on 1 July 2013. The other was of the husband’s interest in (business omitted) and (business omitted) as at 30 June 2014 and is contained in an affidavit filed on 2 June 2015.
Pursuant to an order made on 9 February 2016 the wife’s solicitor and the husband forwarded a letter to my chambers on 22 February 2016 confirming the parties’ member balances in the Hooper Super Fund as at 30 June 2015. [2]
[2] Exhibit BB
The husband, wife, Ms D and Mr A were cross-examined. Ms J was not required.
The wife’s counsel submitted that the husband was not a witness of credit but I do not accept this as a general proposition. I will need to carefully assess his conduct and alleged motivation surrounding the operation and closing of two companies post-separation but I did not consider him generally untruthful and in some respects (for example admitting that he breached court orders concerning the sale of certain items) he was remarkably honest.
The husband made no attempt to justify his conduct in respect of the flyer he posted around (omitted) in early 2012. He displayed no antipathy toward the wife and made a real effort to provide fair and balanced evidence which is unusual in a property matter where often each party talks at length about their contributions and is silent about or dismissive of the contributions of the other. He said as follows in his affidavit for example:
During our marriage Ms Hooper was very supportive of me with my business commitments and looked after and loved X very much and at times when I was busy due to work looked after my then teenage son A in my absence. From a young age X did spend 3 days a week at a day care facility to allow Ms Hooper to still manage her business.[3]
Overall we had a good marriage with little conflict, we went on nice family holidays and when we could Ms Hooper and I would spend time alone.[4]
Our marriage broke down on 30th April 2010 from a combination of time apart, neglect and third parties.[5]
[3] Husband’s affidavit paragraph 15
[4] Paragaph 18 of the husband’s affidavit.
[5] Paragaph 19 of the husband’s affidavit.
It would have been helpful if the husband’s evidence had been more extensive but he was a self-represented litigant and I did not get the impression he was trying to hide things by omission.
There were numerous problems with the way the wife presented her case and with her evidence.
In the case outline document prepared by her counsel it was asserted that the wife owed her mother $384,277.30 for legal fees paid on her behalf. In her financial statement the wife said that she owed her mother this amount for legal fees and payment of living expenses. Her mother said that the wife owed her money for rent, the purchase of a motor vehicle, payment of the wife’s legal fees and payment of her electricity bills and general living expenses but did not put a figure on the amount she was allegedly owed.
There are numerous examples in the wife’s affidavit of incomplete and potential misleading evidence. She said for example that she used the money from the sale of a Toyota (omitted) owned by (business omitted) to pay for mediation, but only $4,000.00 was used for this purpose; the balance of $14,000.00 was retained by the wife. Another example is that the wife referred in two separate paragraphs on different pages to the husband paying himself a $30,000.00 bonus in 2010.
The wife complained throughout the proceedings about alleged non-disclosure by the husband but the obvious non-disclosure which emerged at the trial was that the wife failed to refer in her financial statement to the fact that items in her possession previously owned by (business omitted) in (omitted) had a value, a concerning omission when the wife was asking that the debt associated with the business be treated as a liability in which the husband had to share. The wife was ordered to provide further evidence about this and she did so in an affidavit filed on 18 February 2016.
The wife complained that the husband ceased operating (business omitted) without consultation with her but she did exactly the same with (business omitted) in (omitted), commenting that she was a sole trader[6]. She complained in her affidavit that the loan repayments the husband was making in respect of the loans secured over Property B were only very slowly reducing the total debt but failed to mention that she had kept the (business omitted) in (omitted) Building Society debt at its pre-separation level for 5 ½ years and had not reduced it at all.
[6] Paragraph 61 of the wife’s affidavit filed on 18 November 2015.
I accept the husband’s complaint that the wife failed to produce almost twelve months of bank statements for (business omitted) in (omitted).
The wife’s carelessness with presentation of evidence is illustrated by the contents of her 18 February 2016 affidavit. She said in separate paragraphs that she sold shop fittings for $4,000.00 and stock for $6,452.00 and that she deposited these amounts into the (business omitted) in (omitted) Building Society account. The spreadsheet she attached to her affidavit showed that she sold shop fittings for $4,000.00 and stock for $2,452.00 and the bank statement showed that she deposited $4,000.00 and a total of $2,432.00 into the (omitted) Building Society account.
This was not the only carelessness with figures. The wife’s income was declared in her financial statement to total $1,122.00 but the items on the page in fact total $1,271.00.
These are only small things but this was a case where the wife was highly critical of the way the husband kept the (business omitted) accounts but did not call a forensic accountant to give evidence about this issue and instead asked me to rely on lists and spreadsheets she prepared in support of her arguments. I cannot check every single figure and addition in the wife’s documents and this type of carelessness is a reason to be cautious about how much reliance I place on secondary documents prepared by the wife.
One addition I did check as a result of this concern and which showed up an error which was not a small thing was the total in Exhibit O to the wife’s affidavit.
In paragraph 114 of her affidavit the wife said as follows:
I have reviewed the (business omitted) commercial overdraft statements for the period 1 December 2012 to 28 August 2013 Mr S accessed $1,214,650.04 of funds from (business omitted) for his own personal expenditure. A list of the transactions is annexed marked “O”
Exhibit O contains a list of transactions selected by the wife with subtotals for each month. When the subtotals are added together they total $614,472.08, not $1,214,650.04.
Another concern about Exhibit O, which harks back to the issue of the fairness of presentation of evidence, is that one of the items in the list is the deposit of $56,000.00 for Property N, a property which is in the pool.
I tend to the husband’s view that the wife hates him[7] and I will need to carefully check assertions she makes about the meaning of certain evidence to be sure that she has not selected the meaning most damaging to the husband when other meanings are equally open.
[7] See for example emails gratuitously referring to brothels and the wife’s long silence when the husband directly put this proposition to her in cross-examination.
Background
The parties commenced a relationship in (omitted) 2006 and commenced cohabitation in (omitted) 2006 when they were both 33. They married on (omitted) 2007 and separated on 30 April 2010. The relationship was 3½ years in length.
The wife said that the parties attempted reconciliation between separation and September 2010 and that they had a sexual relationship for a few months in 2011 but wherever the truth lies about that the husband formed a new relationship in October 2010, the wife engaged solicitors and sought a child support assessment in the latter half of 2010 and the parties never resumed cohabitation after the husband left the home on 30 April 2010.
The parties have one child, X, born on (omitted) 2008. X has lived with the wife and spent time with the husband since separation.
The wife has three older children, B born on (omitted) 1994, C born on (omitted) 1998 and D born on (omitted) 2002. These children lived with the parties during their relation and C and D were still living with the wife when the trial commenced.
The husband has a son A born on (omitted) 1996. A lived with his mother in Sydney during the parties’ relationship and spent regular time with the husband. He is now an adult and a university student.
Throughout their relationship the parties lived at Property F which is registered in the name of the wife’s mother Ms J. The husband is firmly of the view that the wife is the true owner of this property and I will return to this issue later in the judgment.
The husband was an employed (occupation omitted) when cohabitation commenced.
On 15 October 2007 the husband incorporated (business omitted) ((business omitted)), a sole director sole shareholder company which operated a (omitted) business in the (omitted) sector and thereafter operated that business throughout the relationship.
The wife was employed doing (omitted) work at the commencement of cohabitation and subsequently worked in a (employer omitted) in (omitted). She purchased (business omitted) in (omitted) in March 2007 and she continued to operate it throughout the relationship.
The husband said and I accept that he assisted the wife with renovations and improvements to the business premises and assisted her by caring for her children when she had to go to Sydney or Melbourne for purposes associated with her business.
The wife was the primary carer of X following her birth and she carried out some tasks for (business omitted) and became an employee of (business omitted) prior to separation.
From November 2008 until the beginning of April 2010 the husband spent substantial periods away from home; he worked in Queensland, Western Australia and the (omitted)/(omitted) area. At the beginning of April he obtained work which allowed him to live at home again but on 30 April 2010 the parties separated. The husband moved out of Property F and the wife remained there with C, D and X who was then aged 2.
By the end of 2010 the wife had consulted a lawyer and there was subsequently negotiation between the parties in relation to parenting and property matters. The husband saw X by agreement between the parties.
In early 2012 there was a regrettable incident where the husband posted scurrilous notices about the wife in public places in (omitted). The wife commenced defamation proceedings which were later settled on the basis that the husband pay the wife’s costs fixed at $46,000.00.
On 22 February 2012 the husband filed an application seeking parenting orders. He said at trial that he did so because the wife had prevented him spending time with X for five months. On 28 June 2012 he amended his application to also seek property orders and the wife in due course filed a response to both applications.
A family report was prepared in the parenting matter and soon after its release final parenting orders were made by consent which provided for the parties to have equal shared parental responsibility for some issues and the wife to have sole parental responsibility for others and for X to live with the wife and spend time with the husband on weekends and during school holidays.
The property matter became bogged down in a bitter dispute about the value of (business omitted) and about disclosure.
The husband ceased operating (business omitted) in late 2012 or early 2013. In March 2013 he started another company, (business omitted) ((business omitted)). He is the sole director of that company and his two sisters are the beneficial owners of the shares. (business omitted) undertook some contract work but ceased operations in 2014 and since 5 May 2014 the husband has been employed by (employer omitted).
The property matter was eventually listed for trial in December 2015. Most of the evidence was completed in the three days allocated but the hearing could not be completed, partly because the parties’ accountant had not finalised financial statements for the self-managed Hooper Super Fund and partly because it emerged that the wife had items in her possession from (business omitted) in (omitted) which needed to be sold so that their value could be fixed.
The hearing finally concluded on 29 April 2016 after the wife’s case was re-opened so that she could give evidence and be cross-examined about the sale of items from (business omitted) in (omitted). She also gave updating evidence about her employment.
I have not completed this decision as quickly as I would have wished due to pressure of work in my docket and the need to prioritise some children’s matters and I apologise to the parties for the delay in the delivery of the decision.
The assets, liabilities and superannuation
The assets are as follows:
Description Ownership Value Husband’s interest in (business omitted) Husband ($286,529.00) Husband’s interest in (business omitted) Husband $13,000.00 Property B Husband $340,000.00 Property N Husband $560,000.00 Remaining stock from (business omitted) in (omitted) Wife $3,207.00 Total $629,678.00
(business omitted) ((business omitted)) and (business omitted) ((business omitted))
The most recent valuation of the husband’s interest in (business omitted) and (business omitted) is that prepared by Ms D as at 30 June 2014. She valued each company on a net asset backing basis.
The husband and wife provided Ms D with different valuations of the plant and equipment owned by (business omitted).
The husband relied on a valuation by Mr H of (omitted) Valuers which valued the plant and equipment at $167,764.00.
The wife relied on a valuation prepared by Mr A of (omitted) Valuers which valued the plant and equipment at $138,305.00. However this valuation did not include a Toyota (omitted) or a (omitted) Mazda which were included in the IVA valuation at $40,000.00 and $1,000.00 respectively, both of which the husband had sold notwithstanding a court order restraining him from doing so.
Ms D prepared two alternative valuations using on the one hand the (omitted) valuation of $167,764.00 and on the other the (omitted) valuation to which she added $41,000.00 which brought the total to $179,305.00.
I have used the result Ms D arrived at using the (omitted) valuation in preference to using the result arrived at using the husband’s valuation. It is convenient to do so because the husband referred during the hearing to the fact that his Toyota (omitted) was included as an asset in the (omitted) valuation and in truth it makes little difference which valuation is used because the difference between the outcomes is minor.
Based on the adjusted (omitted) valuation, Ms D valued the husband’s interest in (business omitted) at ($183,000.00) and in (business omitted) at $13,000.00.
She said that the figure of ($183,000.00) for (business omitted) comprised:
Value of husband’s interest based on
an adjusted balance sheet $269,000.00
Less tax payable – repayment of loans ($346,224.00)
Less tax payable – winding up of the company ($105,432.00)Value of husband’s interest after tax rounded ($183,000.00)
The tax liability arises out of the fact that between 1 July 2012 and 30 June 2014 the husband used company money to purchase a real property at Property N, make improvements to the real property at Property B, pay some of his legal costs, pay distributions of $150,000.00 to the wife and himself by way of partial property settlement and pay some personal expenses and these amounts were debited to his loan accounts. As at 30 June 2014 there were directors loans of $925,182.00 and shareholder loans of $350,514.00.
Ms D said that she had sighted documents which appeared to comply with Division 7A of the Income Tax (Assessment) Act in respect of the director’s loans and assumed that the husband would declare a dividend to repay the loans upon the orderly winding up of the company.
Ms D set out in detail how she calculated the tax which would be payable on the receipt by the husband of two dividends from the company, the first being made to allow repayment of his loans and the second being to distribute the net value of the company on winding up assuming that the dividends would not be paid until the 2015 income tax year and that the husband was on the highest marginal tax rate. She was not challenged about the accuracy of these calculations.
The company was not wound up in 2015 as Ms D envisaged but the husband remains in the top tax bracket and will do so for the foreseeable future and therefore Ms D’s calculation of his liability remains valid.
Notwithstanding Ms D’s evidence about the tax which would be payable on repayment of the loans and distribution of the assets upon the winding up of the company the wife’s counsel asked me to include the husband’s interest in (business omitted) at a value of $269,000.00.
The wife’s counsel did not challenge Ms D’s evidence about the tax which would be payable in respect of the loan accounts but submitted the husband was the one who had created the situation and he should solely be responsible for any resulting tax.
The first problem with this submission is that it overlooks Order 10 of orders made by consent on 18 September 2013. Order 10 provides as follows:
The husband cause within 21 days the sum of $100,000.00 to be withdrawn from the aforesaid Commercial Overdraft account with (omitted) Bank and for $50,000.00 to be paid to the wife by way of partial property settlement noting that on final settlement the tax liability to be assessed or otherwise assessed by the Australian Taxation Office will be a liability to be included in the overall determination of the pool available for property distribution between the parties.
The second problem is that $832,141.60 of the money in the loan accounts is attributable to the purchase and improvement of Property N and the improvement of Property B.[8] I do not accept that it would be just and equitable for the wife to benefit from the acquisition and improvement of these assets but be absolved from liability for the cost of obtaining the money to purchase and improve one property and improve the other.
[8] Annexure K of the husband’s affidavit.
There is a complication, namely that on the husband’s own admission about $300,000.00 of the amount in the loan accounts relates to discretionary spending which benefitted only him. There might be merit in an argument that he should be liable for the tax payable on this amount but the appropriate place to consider that is when assessing s.75(2)(o) matters. At this stage I intend to take the tax liability which will arise on repayment of the loans into account.
The wife’s counsel did not explain why the tax which will be payable on distribution of assets upon winding up of the company then should be ignored. It has always been the husband’s case that he wished to wind (business omitted) up and he has only not done so to date because the wife sought and obtained an injunction to prevent it. Ms D said that she had been informed that the husband intended to wind the company up and the wife’s counsel did not suggest to the husband or in submissions that the husband might in fact choose to retain the company.
There are three issues with the Ms D’s finding about the value of assets however which means I cannot simply use the figure of ($183,000.00) for the husband’s interest in (business omitted).
First, the (omitted) valuation includes a Toyota (omitted) at a value of $18,000.00 which was still owned by (business omitted) when Ms D’s report was prepared but was sold pursuant to a consent order in June 2015. $4,000.00 of the proceeds was used to pay for the costs of mediation and the wife retained $14,000.00 as a further partial property settlement.
The gross figure of $269,000.00 for the assets of (business omitted) must therefore be reduced by $18,000.00 to $251,000.00.
Second, Ms D included as an asset of (business omitted) an amount of $35,828.00 shown in the company accounts as a loan by the company to (business omitted) in (omitted). She said that the wife would need to declare this as a liability for family law purposes.
The wife’s counsel strenuously denied that the wife owed (business omitted) any money and submitted in the alternative that if a loan had been made it was at best a loan repayable on demand and was now statute barred. He vigorously opposed this amount being included as a liability of the wife’s.
However if the wife’s counsel is correct and this amount is not a debt recoverable from the wife then it must be removed as an asset of the company which reduces the value of the assets from $251,000.00 to $215,172.00. [9]
[9] Ms D’s 25 March 2015 report paragraph 2.15
Third, the wife also received a payment by way of partial property settlement in December 2012 and there are two entries in the (business omitted) accounts under the heading “Current assets” which total $50,045.10 referrable to this as follows:
Adv legal costs wife 19/12/12 $40,035.00
Adv legal costs wife 8/1/13 $10,010.00[10]
[10] In paragraph 63 of her affidavit the wife confuses this payment with the payment made on 18 September 2013.
These amounts will also not be recoverable by (business omitted).
If these amounts are removed the value of the assets reduces to $165,127.00. If the liabilities are deducted from this the value of the husband’s interest in (business omitted) becomes ($286,529.00).
If the book debt in respect of (business omitted) in (omitted) is shown to be legitimate but unrecoverable as seems likely this should make no difference to the husband’s tax position. However if he is obliged to account for an additional $50,000.00 by way of declaration of a franked dividend his tax liability will increase and his interest in the company will decrease in value even further.
This issue was not addressed by either party or by Ms D and I do not consider that I can safely grapple with it and make a calculation of what it might mean in monetary terms.
Adjusting the assets in this way leads to a further problem however. Ms D calculated the tax which would be payable on the winding up of (business omitted) using the figure she arrived at for the value of the assets of the company. If the assets are worth less then the tax will be less.
I cannot confidently adjust the figure for the tax payable and it could be a matter of swings and roundabouts if as mentioned above the husband needs to declare a greater dividend because $50,000.00 has to be added to his loan account.
I cannot be absolutely confident that the net value of the husband’s interest in (business omitted) is ($289,529.00) but it is the best figure I can come up with based on the evidence before me.
The only alternative to fixing on a figure would be to make an order that the (business omitted) assets be sold and the company wound up and the tax paid and that the ultimate outcome for the parties be calculated once this occurred. Given the history of this case it is highly likely that this would lead to prolonged dispute and further substantial legal costs and on balance I consider that justice and equity requires that I fix a figure as best I can.
I will include the husband’s interest in (business omitted) in the pool at a net value of ($286,529.00).
Property N and Property B
These properties were valued and have been included at the valuation figures.
(business omitted) in (omitted)
In her report dated 17 June 2013 Ms D valued (business omitted) in (omitted) on a net asset backing basis at ($23,000.00).
The wife closed the business on 30 June 2013 and this valuation is of no current relevance and no party sought to rely on it.
In her trial affidavit the wife said that when she closed (business omitted) in (omitted) she put the furniture, fittings and stock into storage. She did not refer to these items in her financial statement and in the case outline document prepared by her counsel it was asserted that the closing stock of (business omitted) in (omitted) had a nil value.
During the cross-examination the wife admitted that these items were still in storage and the trial was adjourned among other things so that the wife could sell them or have them valued.
On 29 January 2016, the wife advertised on her facebook page and sold stock to the value of $2,452.00. She also sold fittings for $4,000.00.
$6,432.00 was deposited into the (omitted) Building Society loan account reducing that debt to $63,480.43 as at 18 February 2016.
The wife still has some of the stock and on an unidentified date it was valued by (omitted) Auctions at $3,207.69.
I have no means of properly assessing the validity of this valuation but it is all the evidence I have and I have included the remaining stock in the list of assets at $3,207.00. Unlike the wife, who almost always included cents and amended one item in her financial statement from $115.00 to $115.38, I prefer to deal with rounded figures. It makes calculation of percentages easier and in a pool of this size makes no material difference for the parties.
Furniture and household contents
In their financial statements both parties stated that they had furniture and household contents worth $10,000.00. In the wife’s case outline document it was asserted that the wife had furniture worth $5,000.00 and the husband had furniture worth $50,000.00.
There was no evidence to support any assertions about the value of furniture and no evidence directed to when and how furniture was acquired. I do not intend to include the furniture in the possession of either party in the pool.
(omitted) Invention
The (omitted) Invention is an invention of the husband’s which was patented during the relationship. In her case outline document the wife included the “(omitted) Invention” as an asset with an unknown value. She devoted several paragraphs of her affidavit to the invention and asked the court to make an order that the rights to the invention be transferred to her.
In the (business omitted) accounts for 2012 an amount of $27,460.00 is included as a non-current asset and marked “patent – (omitted) project.” Presumably this was with a view to the amount being repaid to (business omitted) if the invention went anywhere. It did not go anywhere and Ms D did not take this amount into account in assessing the value of (business omitted) as at 30 June 2014.
There is no evidence that the invention has a value and the wife’s counsel did not ask me to treat it as having a value and I have not included it in the list of assets.
The partial property settlements
Since proceedings commenced the wife has received $114,000.00 by way of partial property settlement and the husband $50,000.00.
The husband proposed that the money the wife had received be treated as part of her entitlement. In effect he sought to have this amount added back to the pool, although of course if this was done the amount he received would also have to be added back.
Adding money to the pool as a notional asset and applying the percentages arrived at in assessing contributions and s.75(2) matters to the resulting pool is still a legitimate way of proceeding, but whether this is done or whether in the alternative the court deals with money which no longer exists as a s.75(2) matter is a matter of discretion.
All of the money received by both parties by way of partial property settlement is long gone and in my view it is preferable to consider the receipt of these monies as a s.75(2) matter. The fact that the wife received $74,000.00 more than the husband can conveniently be taken into account when considering the wife’s complaints about the husband’s post separation spending.
Toyota (omitted)
The wife drives a Toyota (omitted) which Ms J purchased for $87,000.00 on 31 July 2012. At the time of trial it had an agreed value of $50,000.00.
The wife has always driven the vehicle but it is registered in Ms J’s name and the wife said that it belonged to Ms J. It was the wife’s case that the vehicle should not be included in the pool.
In her affidavit Ms J said that she bought the vehicle for the wife and that she expected the wife to repay her once the proceedings were finished. She maintained that the wife said to her at the time the vehicle was purchased:
I will repay you when the property settlement is finalised.
Why the wife would promise to repay her mother for something which she does not own or on her evidence expect to own I do not know but I do not intend to include the Toyota in the list of assets given the wife’s denial that it belongs to her.
Toyota (omitted)
The husband drives a Toyota (omitted) registration number (omitted). The wife said that it should be included in the pool at a value of $57,000.00 but made no reference to the loan relevant to the vehicle.
The husband said that the vehicle should not be included as a separate asset because it was taken into account by Ms D when calculating the value of (business omitted) as it was one of the assets included in the (omitted) valuation. However he said that he personally owed $46,000.00 in respect of the vehicle and this should be included as a relevant liability.
The husband is correct about the Toyota (omitted) being included in the (omitted) valuation where it is valued at $60,000.00 [11] and it therefore cannot be separately included in the pool.
[11] Item 99, (omitted) report dated 22 January 2015 attached to the affidavit of Mr A
The husband gave evidence that he was personally liable for the loan in respect of the vehicle and was paying $1,118.00 per month to (omitted) Bank Finance. The wife did not dispute this and as the vehicle is included as an asset through the (omitted) valuation the debt for which the husband is personally liable will be treated as a relevant liability.
Property F
Property F was valued at $430,000.00 for the purposes of the proceedings. It was purchased by Ms J in her name in 2004 and wife has occupied it ever since. The husband moved into the property at the commencement of cohabitation and he said that the wife told him and others that the property was really hers and that Ms J told him the same thing.
At or around the time of X’s birth the parties paid for work to be done at Property F. The husband said that it involved adding a bedroom and renovating a bathroom and that it cost $30,000.00 to $40,000.00 which was paid for using money from (business omitted).
It was effectively the husband’s case was that he would never have done this if he had not been led to believe that the home was in truth the wife’s.
The husband said and the wife admitted that Ms J had given a real property to the wife’s sister. It was the husband’s case that this bolstered his claim that Ms J had in all but name given Property F to the wife.
The wife denied that she had ever told the husband the house was hers and pointed out that after moving into the house in 2004 she paid her mother rent through a real estate agent and that rent was paid to Ms J during the relationship, mainly by the husband.
Ms J confirmed this and said that after cohabitation commenced the husband began paying rent of $220.00 per week to (omitted) Real Estate and that this increased to $250.00 per week after the parties wedding on (omitted) 2007.
The wife agreed that the parties organised for extensive work to be done to the property. She said that it involved constructing a new bedroom, concreting around pool and doing fencing but said that the parties agreed to pay for the work because the rent they were paying was $150.00 per week below market rental. Ms J alleged that it was more like $200.00 to $300.00 per week below the market rental.
Ms J said that she had never told her daughter that Property F was hers and never had any intention of gifting the property to her daughter and the husband.
After being warned of the consequences of not challenging this evidence the husband chose not to cross-examine Ms J.
I have some sympathy for the husband and am satisfied that he genuinely believes that the house is the wife’s in all but name; I do not consider it likely that he would have invested such a large capital sum in the property otherwise. However I cannot rule out the possibility that the wife innocently or deliberately misled him and Ms J’s evidence suggests this possibility. She said as follows in her affidavit:
In March of 2010 Ms Hooper came to me with an advertisement for a house for sale. She said to me “The business is growing, can we sell Property F and buy a bigger house?” I said to Ms Hooper “I do not want to sell Property F and it is not yours to sell.[12]
[12] Paragraph 10 affidavit of Ms J
Property F is registered in Ms J’s name. Her evidence about ownership of the house was not challenged by the husband in cross-examination and it is not open to me on the state of the evidence to find that it belongs to the wife.
However the fact that the wife has lived there for 13 years, the last 6 of them rent free, is a relevant s. 75(2) matter to which I will return to it later in the judgment.
The liabilities
The liabilities are as follows:
Description Ownership Value Loan – (omitted) Building Society ((business omitted) in (omitted)) Wife $63,480.00 (omitted) Bank Home Loan
Acct – (omitted)
(Property B)
Husband $99,313.00 (omitted) Bank Home Loan
Acct – (omitted)
Property B
Husband $85,188.00 Toyota (omitted)
(omitted) Finance
Husband $48,000.00 Total $295,981.00
For reasons made clear earlier, I have not included as a liability of the wife the book debts totalling $85,873.00 which appear in the (business omitted) accounts.
The (business omitted) in (omitted) loan stood at $70,000.00 when the relationship ended and still stood at $70,000.00 when the hearing commenced 5½ years later but the issue of whether the wife should have reduced the debt is a matter relevant to the assessment of contributions. At present the debt must go in at $63,480.00, being $70,000.00 less the amount received from the sale of stock and fittings in January 2016.
At the date of trial the husband still owed $17,263.04 in respect of the defamations costs order. I will refer to this when considering s.75(2) matters but it is clearly not a liability which should be included when determining the pool.
The wife alleged in her financial statement that she owed Ms J $384,277.30 and in cross-examination came up with a much higher figure. Ms J maintained that the wife owed her money but she did not put a figure on it. During the wife’s cross examination her counsel effectively conceded that the issue of whether the wife owed money to her mother was a s.75(2) matter and I will consider it further there.
The superannuation
The parties have the following superannuation:
Description Ownership Value (omitted) Super Husband $21,000.00 (omitted) Super Wife $2,974.00 Hooper Super Fund Husband $137,281.00 Hooper Super Fund Wife $72,471.00 Total $233,726.00
The Hooper Super Fund owns an unencumbered real property in (omitted). Between the end of the evidence in December 2015 and submissions on 9 February 2016 an accountant prepared accounts for the fund for the year ended 30 June 2015 and the parties account balances as at that date were as set out above.[13]
[13] Exhibit BB
The parties have non-superannuation assets worth $333,697.00 and superannuation worth $233,726.00, a total of $567,423.00.
The applicable law
S.79 (1) of the Family Law Act1975 empowers the court to make such orders as it considers appropriate altering the parties’ interests in property.
S.79 (2) provides that the court shall not make an order under this section unless it considers that it would be just and equitable to do so.
In Stanford & Stanford the High Court stressed that when an application for a property settlement was made the court must first identify the parties’ interests in property and then consider whether it was just and equitable to make an order altering those interests. It stressed that this question could not be answered simply by considering whether a party had made contributions as set out in s.79(4) of the Family Law Act.[14]
[14] Stanford & Stanford [2012] HCA 52
The parties had a short relationship and they largely kept their assets separate. The husband was the sole director and sole shareholder of (business omitted) and the wife the sole owner of (business omitted) in (omitted). The parties never acquired any joint property or had any joint bank accounts. However they had a child and both had some input into (business omitted) and they both contributed to the Hooper Super Fund. Almost all assets in the pool derive from (business omitted) and almost all are in the husband’s name.
The husband has already agreed to the wife receiving some money from (business omitted) by way of partial property settlement. The parties are separated and cannot continue to jointly use the assets and I am satisfied that it is just and equitable to consider making property settlement orders.
I intend to take the usual steps to resolve the particular alteration of interests which would be just and equitable and those steps are:
i)to assess the contributions of the parties under s79(4)(a), (b) and (c) and to express those contributions as a percentage;
ii)to consider the matters in s.79(4)(d), (e), (f) and (g), which includes the matters in s.75(2) so far as they are relevant, and determine whether any adjustment should be made to the contribution based entitlements;
iii)to consider the effect of those findings and resolve what orders are just and equitable in all the circumstances of the case.
Contributions
Initial contributions
At the commencement of cohabitation the wife owned a Toyota (omitted) of unknown value subject to finance together with furniture furnishing and whitegoods.
She also had superannuation with (omitted) Super. Documents show that it was worth $50,400.40 as at 1 July 2006 and $75,224.76 as at 30 June 2007. On a pro rata basis the wife had about $62,000.00 of superannuation when the relationship commenced although consistently with the way she presented her evidence generally she failed to do this calculation and referred only to the figure of $75,224.76.
In her trial affidavit the wife said that she also had money invested with (omitted) when the relationship commenced and she included this investment as one of her assets in the financial statement she filed for the trial. However it did not appear in the list of assets and liabilities prepared by her counsel and when the wife was asked about it in cross-examination she maintained that it did not belong to her but was money from her mother held in trust for her children. I have not included it as a relevant asset and it is therefore not a relevant initial contribution.
The husband had a Holden Commodore subject to finance, tools, savings and superannuation with (omitted) Super and (omitted) Super. The wife alleged that he had credit card debt and a debt to the ATO. No evidence emerged at the hearing to clarify the value of any of the husband’s assets.
Contributions and acquisition of property during the relationship
When the parties commenced cohabitation the wife was employed with (omitted) doing administrative work. At some point that ceased and she commenced working part time at (business omitted) in (omitted).
(business omitted) in (omitted)
In March 2007 the wife purchased (business omitted) in (omitted) for $70,000.00. She said that she borrowed $100,000.00 from (omitted) Building Society guaranteed by her mother to finance the purchase.
The husband said that the wife borrowed money from her mother to buy the business and there are entries in the (business omitted) in (omitted) financial accounts which state that the business owed Ms J $125,839.00 in 2012 and $193,791.00 in 2013. In her trial affidavit the wife did not refer to owing her mother any money in respect of (business omitted) in (omitted) and notwithstanding some answers given in cross-examination what these entries mean remains a mystery to me. There is however indisputably a loan owing to the (omitted) Building Society.
The wife worked in (business omitted) in (omitted) until X’s birth in (omitted) 2008. At some point thereafter she cut back her hours and began employing others in the business. She said that between somewhere around the time of X’s birth and April 2009 she worked two days a week at (business omitted) in (omitted).
The husband said and I accept that he helped the wife with renovations to the business premises and looked after the children after school when the wife was working in the business and when she went to Sydney or Melbourne to purchase stock or attend trade events. He did not attempt to quantify the amount of assistance he provided.
The (business omitted) accounts show that (business omitted) in (omitted) borrowed $35,828.47 from (business omitted) which was never repaid. Presumably this relates to the work done at the shop. The wife denied that there was a loan and it is possible that it was a book entry created by (business omitted)’s accountant but I am satisfied that the work was done and this provides a yardstick for its value.
The wife made a number of general assertions in her trial affidavit that her income from (business omitted) in (omitted) helped support the family and pay expenses. However it made a loss in 2011 and 2012[15] and the wife agreed in cross-examination that the business had always made a loss.
[15] Ms D’s 2013 report and Exhibit CC
Financial statements do not always reflect what is available to a business owner but it is impossible for me to assess whether the wife in fact received any money from (business omitted) in (omitted) which contributed significantly to the support of the family and if so how much.
(business omitted) ((business omitted))
For the first year of cohabitation the husband worked as a (occupation omitted) and contributed income to the family. He did not provide evidence about his income during this period but he paid the rent for Property F and gave the wife $600.00 per week for living expenses.
In October 2007 the husband incorporated (business omitted) as a sole director sole shareholder company and began contracting to (omitted). He used (omitted) Finance to provide working capital.
The husband claimed that the wife was not involved in the establishment of (business omitted). The wife claimed that she suggested the idea of setting up the business, designed stationery, placed purchase orders for vehicles and collected and posted mail. Elsewhere in his evidence the husband agreed that the wife was supportive of him in the business and the parties were living happily together when (business omitted) commenced. I incline to the view that the wife may have done the tasks she claimed but on any view it was not extensive work.
In February 2008 Ms J offered to assist by providing funds when the husband had a cash flow problem and I am satisfied that this was at the behest of the wife. Between February 2008 and August 2009 Ms J allowed the husband to use her overdraft and the husband repaid any amounts he used with interest.
It seemed to be generally accepted that this was advantageous to the husband but I cannot translate this into a dollar amount. I was not informed by either the husband or Ms J about the interest rate which applied or the interest rate charged by the previous financier.
The husband said that the wife was not involved in (business omitted) because she was busy running her own business and in her role as a mother. The wife said that she carried out administrative functions including running errands when required, picking up equipment and delivering it to various mine sites and collecting and sorting mail.
The husband worked away for weeks at a time and I consider it likely that the wife provided some assistance in respect of business when issues arose in (omitted) but the assistance was more likely than not at the minor end of the scale.
The wife was paid a wage of $466.00 by (business omitted) from 1 July 2008 to 12 October 2009 and $600.00 per week from 13 October 2009. Interestingly the wife’s counsel did not ask me to infer from this that the wife had an important day to day role in the business. The wife also had the use of a company vehicle and a fuel card and this continued until September 2010, about four months after separation.
The husband agreed that the wife was supportive of him in running the business and he clearly valued that support.
The husband’s evidence (unchallenged by the wife) was that between October 2007 and February 2008 the business made a healthy profit. Records show that it made a profit in the 2009/10 financial year but a loss in the 2010/2011 financial year.
Cash flowed to the parties from (business omitted) including money which went into (business omitted) in (omitted) and into improvements to Property F which the parties enjoyed the use of. The husband paid the rent for Property F from either January or March 2007 and he contributed $400.00 from soon after the relationship commenced and paid other expenses for the family. The wife made no complaint about the husband’s financial contribution to the family during the relationship and she benefited financially from (business omitted) during the relationship.
The Hooper Super Fund
In July 2009 the parties established the Hooper Super Fund and the wife transferred her (omitted) superannuation then worth $62,990.00 to the fund.
To the best of my knowledge the remaining financial contributions to the fund were made by (business omitted).
In January 2010 the fund purchased (omitted) Industrial Estate. The wife said that she was instrumental in selecting the property, negotiating to purchase it and liaising with banks and solicitors. The husband did not contradict this evidence.
To the best of my knowledge the real property is the principal asset of the fund.
Property D
In March 2009 the husband purchased Property D in his name with a deposit of $29,000.00 derived from (business omitted) and loan of $261,111.63. (business omitted) also bought furniture for the property. (business omitted) was working in the (omitted) area and the property was occupied either by the husband or employees of (business omitted).
The wife said that she was involved in the selection of the property and arranged for the conveyancing and the husband did not contradict this evidence.
Motor vehicles
In September 2007 the parties purchased a Toyota (omitted) for $36,000.00. The wife traded her Toyota (omitted) to assist with the purchase of the vehicle and alleged that she made repayments on the loan, she said from income from (business omitted) in (omitted).
In June 2008 the husband commenced using the Toyota in his business and paid the wife $466.00 per month which covered the loan repayments.
At the same time the husband purchased a Toyota (omitted) for the wife’s use and she continued to use it until long after separation although it was registered in the name of (business omitted).
Homemaker and parenting contributions
The wife was the primary homemaker during the relationship and she was the primary carer of X from her birth in (omitted) 2008 until the parties separated nearly two years later. It was an important role because from November 2008 until the beginning of April 2010 the husband worked away for weeks at a time and was then home for a week.
The husband said that he assisted with cooking and looking after the wife’s children if she was occupied in her business and I am satisfied that the husband did some homemaking and parenting tasks when he was at home although he was frequently away and his contributions were likely minor.
Assets when marriage ended
When the marriage ended on 30 April 2010 the parties’ assets were the following:
i)(business omitted) in (omitted).
ii)(business omitted).
iii)Property D (encumbered).
iv)Toyota (omitted) (owned by (business omitted) but used by the wife).
v)The parties’ respective interests in the Hooper Super Fund.
vi)The husband’s (omitted) superannuation.
No valuation of (business omitted) either at separation or as at 30 June 2010 was ever prepared.
Post-separation matters
The parties have been separated for more than six years and the pool has changed considerably.
In or about August 2010 the husband purchased Property B from his father for $225,000.00. He borrowed $230,000.00 from (omitted) Bank using the Property D property as security.
Property B still exists and the husband has been solely responsible for paying the mortgage and outgoings on the property since its purchase. The wife’s counsel conceded that any shortfall between the mortgage and outgoings and the rent received had been met by the husband.
The husband used $191,000.00 from (business omitted) to do up Property B which is now worth $340,000.00. The wife’s counsel submitted that the husband had committed waste by overcapitalising the property and I will return to this issue when considering s. 75(2) matters.
Property D was sold on 8 September 2011. The loan on the property was paid out and $115,000.00 of the net proceeds was used to reduce the loan taken out to purchase Property B. $19,405.00 went into (business omitted).
The wife closed (business omitted) in (omitted) on 30 June 2013 and put the remaining stock and fittings into storage.
In her affidavit the wife claimed that she felt extremely embarrassed after the husband put up the poster in 2012 and that her revenue from (business omitted) in (omitted) began to decline. However during cross-examination the wife agreed that (business omitted) in (omitted) had always made a loss and said that she and the husband had discussed closing the business just prior to separation. Her counsel then informed the court that:
…it [was] not part of the wife’s case that the husband’s behaviour led to the failure of her business.
The wife was left with a debt to (omitted) Building Society which stood at $70,377.00 on 30 June 2013.[16] It stood at $70,380.54 on 31 December 2015.[17]
[16] Exhibit CC
[17] Annexure C wife’s affidavit filed 18 February 2016
The bank statement attached to the wife’s 18 February 2016 affidavit shows that the wife made interest only payments on the loan between August 2015 and January 2016 and it is reasonable to infer this has been the case throughout. The wife did not provide any explanation for why she had not made any capital payments in respect of this debt since separation and she made no effort to sell the fittings and stock in her possession in order to reduce the debt until required to do so by the court.
Such details as are available about the wife’s circumstances between separation and 30 June 2013 or between 30 June 2013 and the present do not justify her failure to make any capital repayments and the wife did not explain why none of the money she received by way of partial property settlement was used to reduce this debt. It has the appearance of the wife wanting to keep the indebtedness high for her own purposes.
The husband complained that throughout the course of the litigation the wife did not respond to his requests for bank statements for the business and complained at trial that the wife had not provided the bank statements for the last 12 months of operation of the business and I accept his evidence although as things have played themselves out I do not consider that this makes any material difference in the case.
At trial financial statements for the 2013 financial year, which included information about the 2012 financial year, were tendered.
In her affidavit filed on 18 February 2016 the wife said that she was using the (business omitted) in (omitted) ABN to conduct a business providing (omitted) services.
The husband continued to operate (business omitted) after the relationship ended and he worked extremely hard in the business. His accountant informed Ms D in 2013 that the husband worked 60-80 and sometimes 100 hours per week and this was not challenged.
The wife continued to receive $600.00 per week and have the use of a fuel card until June 2010, three months after separation.
The business made a net profit of $1,156,588.00 in 2010, a loss of $356,712.00 in 2011 and a profit of $791,389.00 in 2012. The husband gave evidence in his affidavit of fluctuating work opportunities during this period. He was not challenged about this with any evidence that suggested that the (omitted) industry was booming throughout this period or that work opportunities which he had previously availed himself of were available to him and he failed to take advantage of them and I accept his evidence.
From separation the husband received a salary and allowances from (business omitted) and also had use of the cash which was surplus of the operational requirements of the company.
The husband paid the wife $50,000.00 by way of partial property settlement from (business omitted) in September 2012. The wife used $10,000.00 to pay legal fees and said that she used the balance for general living expenses.
In late 2012 or early 2013 (business omitted) effectively ceased to operate as a working business.
In March 2013 the husband established (business omitted) ((business omitted)). None of the assets of (business omitted) were transferred to (business omitted).
On 16 May 2013, the husband purchased Property N for $560,000.00 using money from (business omitted) and did some renovations also using money from (business omitted). He pays the outgoings and lives in the Property N property when he is not working on site.
In December 2013 there was a further partial property settlement; each party received $50,000.00 from (business omitted).
On 5 May 2014 the husband took a job on wages with (employer omitted). He has not acquired any further property of significance since purchasing the Property N property.
The wife had the use of the Toyota (omitted) after separation. She said that she ceased using it in June 2013 because it became unregistered and the husband would not pay the registration. The husband challenged her during cross-examination about why she did not pay the registration herself which would have been a considerably cheaper option than purchasing a Toyota (omitted) for $87,000.00. She said that it was because the husband would not hand over the registration papers. I cannot make a finding on the state of the evidence about where the truth lies about re-registration of the Toyota (omitted).
The Toyota (omitted) was sold on 20 March 2015. It emerged during the hearing that the wife received $18,000.00 and used $4,000.00 to pay for a joint mediation session and retained the balance.
The wife had the primary care of X after separation. The husband was always been keen to spend time with her and has spent time with her but he has only ever been able to do so on weekends and during holidays because he is also committed to maintaining his income.
The husband has been assessed to pay child support for X since October 2010 and the current assessment is $313.00 per week. The husband has always paid his child support. The wife gave evidence in her affidavit of some issues with the husband’s reporting of income in the period after (business omitted) ceased operating but this was sorted out in her favour and she did not complain of any issues after the husband commenced working for (omitted).
An assessment of contributions
The majority of the assets in the pool derive from (business omitted). The only assets which do not are the husband’s (omitted) superannuation, the small amount of stock from (business omitted) in (omitted) still owned by the wife and some of the value of the Hooper Super Fund which derives from the wife’s (omitted) Superannuation.
The parties had a short marriage. The wife brought in more superannuation than the husband and she also brought in a Toyota (omitted) motor vehicle the value of which I cannot fix. The wife asserted that the husband had debts as well as vehicles and chattels at the commencement of the relationship. Without figures I cannot make a finding about whether this was so or not but the husband did not present any evidence to suggest that he had significant net assets at the commencement of cohabitation.
The wife’s initial contributions exceeded the husband’s in light of the superannuation she had at the commencement of cohabitation.
Both parties worked hard during the relationship in their respective spheres. The wife worked in (business omitted) in (omitted), carried out homemaking tasks and parented X and provided some limited services for (business omitted) which commenced one year into the relationship. The husband worked hard as a (occupation omitted) and later business owner and was the primary financial provider during the relationship. He did some limited parenting and homemaking tasks.
The wife’s mother provided some assistance to the husband by allowing him to use her overdraft facility instead of a finance company to help with cash flow for (business omitted). I cannot put a dollar figure on what this was worth to the husband but he valued it and it must be deemed a contribution by the wife.[18]
[18] Gosper & Gosper [1987] FLC 91-818
The wife and Ms J claimed that the parties paid less than market rent during the relationship for occupation of Property F which was an advantage to them but this was more than offset by the capital contribution made by (business omitted) to Ms J’s property.
Neither party made any capital contribution to (business omitted).
After the end of the relationship the husband continued to operate (business omitted) for over 2 ½ years and acquired the two real properties which are in the pool using money from (business omitted).
I accept that the wife made a valuable contribution during the parties’ relationship. For two out of the 3½ years the parties were together she parented X and the husband was free to remain away from home extensively for work. The husband’s own evidence was that he valued this contribution.
I am satisfied that contributions to the pool acquired by the parties during the relationship should be assessed as equal save that Ms J’s contribution in the form of use of her overdraft has to be given some weight.
After separation the husband kept (business omitted) going and worked very long hours in the business. The wife continued to care for X and she operated (business omitted) in (omitted) until 30 June 2013 but the husband paid a high level of child support and his personal exertions generated the profits which allowed two real properties to be purchased and improved or provided the parties with partial property settlements of $50,000.00 and $100,000.00 respectively.
The wife’s counsel submitted that contributions overall should be assessed as equal. He did not rely on the wife’s initial contribution of superannuation, rather he submitted that contributions during the relationship should be assessed as equal because of the parties input into (business omitted) and parenting of X and that this equality of contributions continued after separation because the parties continued the same roles they had adopted during the relationship; the wife continued to primarily parent X and the husband continued to work hard in the business.
In support of this argument the wife’s counsel relied on Marsh & Marsh.[19] The parties in that case had a 21 year marriage and were separated for 10 years before the hearing of their property matter. During those 10 years the husband earned a high income and acquired significant additional assets.
[19] Marsh & Marsh [2014] FLC 93-576
The trial judge assessed contributions as 70/30 in the husband’s favour because of his post separation financial contribution. The wife appealed and the Full Court held that the trial judge had failed to accord proper weight to the wife’s post-separation contributions as homemaker and parent and the ongoing effect of her contributions during the marriage to the husband’s income earning capacity. Ainslie-Wallace J said as follows:
While his Honour makes reference to the contributions of both parties “throughout the entirety of their relationship” his Honour describes it as “noteworthy” that “...the asset pool increased significantly in the post-separation period.” His Honour underscores, it seems, the importance of the husband’s financial contributions and, it appears, attributes some form of causal connection, between those “financial contributions” and the increase in the assets and the value of them during the post-separation period. Yet, the foundation for the property transactions which occurred subsequent to separation was the property acquired during the marriage and the husband’s income acquired through advancement in his employment. The wife contributed significantly to each.
The Full Court did not however re-exercise the discretion and did not express a view about the appropriate assessment of contributions.
The case before me involves a 3½ year marriage. It is not a case where the wife supported the husband while he studied and acquired skills or where she moved from place to place with him to help him advance his career or went without to ensure that cash was available to sustain or develop a business. The parties did not go without during their relationship. They employed a cleaner and went on nice holidays and the wife received assistance with the care of the three children from a previous relationship.
This is not a case where the wife was ever a part owner of the business. Her counsel submitted that she made a post-separation contribution by not asking for a property settlement after separation but there was no evidence that (business omitted) would have collapsed had the wife sought a settlement earlier and its value at separation is unknown.
Although the parties continued in their pre-separation roles to an extent after separation, with the husband working and the wife caring for X, their roles also changed. The wife ceased providing a home for the husband and each parties’ contribution to the welfare of the other on a day to day basis ceased.
I must make a holistic assessment of contributions taking into account initial contributions, contributions during the relationship and post-separation contributions.
The parties worked hard during the relationship and subject to taking into account the contribution by the wife’s mother they made equal but different contributions during the relationship.
I am not persuaded that the contributions of the parties overall as a result of their efforts should be assessed as equal post-separation simply because after separation the husband continued to work in the company and the wife continued to care for X. The situation which existed prior to separation of the wife supporting the husband and maintaining a home for him as well as X ceased to exist, and this was a short marriage and the company was always a sole director/sole shareholder company.
However the pool is modest and in that context the wife’s initial contribution of superannuation worth $50,000.00 is significant. The wife’s mother also provided some help during the relationship and in all the circumstances I am satisfied that contributions to the pool which now exists should be assessed as equal.
The result is that the wife is entitled to $166,848.50 of non-superannuation pool and $116,863.00 of the superannuation and husband to $166,848.50 of the non-superannuation pool and $116,863.00 of the superannuation.
s. 79(4) (d) (e) (f) and (g) matters
I am next required to consider the matters in s. 79(4) (d) (e) (f) and (g) of the Family Law Act.
No proposed orders will affect the income earning capacity of either party (d), I have or will refer to relevant orders as required (f), I have had regard to the past payment of child support when considering contributions and future payment of child support is referred to in s. 75(2) (na) (g). The only relevant subsection therefore is (e) which requires the court to have regard to the matters in s. 75(2) of the Act.
S. 75(2) matters
The wife is 43.
In the case outline document prepared by her counsel it was submitted that the wife “currently did not work” and when the wife was asked her occupation after she went into the witness box she said “student and mother” but even then that was not entirely accurate. The wife disclosed in her financial statement and in her affidavit filed on 19 November 2015 that she was working 15 hours per week as a (occupation omitted) for (employer omitted) and was earning $165.00 per week which equates to a rate of pay of $11.00 per hour.
(business omitted) ceased doing work in either late 2012 or early 2013 and in March 2013 the husband set up (business omitted) and his evidence was that (business omitted) was intended to operate in a different arena. (business omitted) did not take over any (business omitted) assets and the husband asserted that whereas (business omitted) contracted out (business omitted), hired out the husband’s services as a supervisor and did some back office functions.
There is evidence to suggest that (business omitted) was set up in a way designed to prevent the wife continuing to benefit from the husband’s activities. The shareholding structure involved a trust with his sisters as trustee and his children as beneficiaries.
It does not follow however that the husband’s evidence about his decision to change course in the work he contracted for should be disbelieved and I do not consider that it is open to me on the evidence to find that during 2013 and early 2014 the husband deliberately failed to avail himself of work for either (business omitted) or (business omitted) to disadvantage the wife. His evidence that work was not available is credible and was not subject to a successful attack by the wife either in the form of extracting admissions from him in cross-examination or calling evidence about the state of the (omitted) industry or the availability of work in the (omitted) industry during this period.
There was no evidence that the husband set out to destroy goodwill by ceasing to operate (business omitted) because he was disgruntled with the valuation prepared by Ms D. Her report was not released until June 2013 and it was not suggested that the husband had any advance knowledge of her opinion about the value of the goodwill.
On 5 May 2014 the husband took a job on wages and the possibility that he might do so was flagged well before the release of Ms D’s report. In an email from the husband’s solicitors to the wife’s solicitors dated 18 February 2013 which was tendered by the wife for another purpose the following appears:
We note that when this matter came before the Court on 18 December 2012 our client was intending to take up work with a (omitted) Company and should that have occurred he would have been working under a roster. Our client has been unable to take this position due to time constraints relating to ongoing legal matters in dispute between the parties including proceedings commenced by your client in Sydney which have and will involve our client in taking time off work in particular to attend his Sydney Solicitors in that matter.
Our client is therefore pursuing his usual contract work for (business omitted). He is also taking some holiday time.[25]
[25] See Exhibit “V”.
I do not accept that the husband was not entitled to make a choice, more than 2 ½ years after separation, about how he earned an income. He had done well most years’ operating (business omitted) but operating the company required him to put his credit on the line, hunt for work and work very long hours. The wife had no “skin in the game” and if the husband chose to cease to operate the business or a business like it and take a job on wages then that was a matter for him.
If the husband had acquired assets after he started (business omitted) or after he commenced work on wages the wife’s counsel relying on Marsh & Marsh[26] would no doubt have submitted that the wife had a claim on these assets but the husband did not acquired any further assets and the pool is as it is.
[26] Marsh & Marsh (supra)
It is interesting to note that the wife behaved in exactly the same way with (business omitted) in (omitted) as the husband did with (business omitted). She ceased to operate it as of 30 June 2013 without any consultation with the husband and put the stock and fittings into storage. The economic effect of her actions was different to the effect of the husband’s actions because of the difference in value of the businesses but it is somewhat perverse for the wife to complain about the husband’s conduct when she behaved in the same way herself.
The second aspect of this matter is whether the figure of $731,000.00 was valid in the first place. It has always been the husband’s case that it was not.
Ms D arrived at this figure by deciding that goodwill should be treated as transferrable commercial goodwill and not personal goodwill and that a capitalisation rate of 2.5% should be applied
Ms D said as follows in her report:
Consideration must be made as to whether the assessed goodwill value is transferable commercial goodwill of the business enterprise or personal (not transferable) goodwill of the Husband. In view of the nature of the work undertaken, the size of the business and use of employed labour and contractors, I have assumed that the goodwill is commercial goodwill of the enterprise. I have also considered the profitability of the business, and consider that in the event the Husband was motivated to sell the business he would achieve an amount for goodwill. This may require the Husband to continue working in the business for a defined period to facilitate the transition of client relationships to the purchaser.
At point 17 of her notes to Appendix D of her report Ms D set out her reasons for deciding on a capitalisation rate of 2.5% and some of the matters she said that she took into account included:
·The outlook for the (omitted) industry, with demand for these types of services continuing to grow;
·The current slowing of (omitted) in the (omitted) Region but with expected growth in the medium term.
Ms D referred to several articles in support of her optimistic view of (omitted) in the (omitted) industry including an article by the ABC headed “(omitted) industry going gangbusters.”
The husband was adamant that (business omitted) did not have transferrable commercial goodwill. He said that it had no contracts and that whether it obtained work was solely dependent on his contacts and his work in the business and that without him the business was worth no more than the value of its assets.
The wife’s counsel submitted that because Ms D’s evidence was the only evidence about the value of (business omitted) in 2012 the court was bound to accept it but that is not correct. In Makita (Australia) Pty Limited v Sprowles[27] Heydon JA repeatedly made it clear that the court did not have to accept the evidence of an expert about an issue simply because there was no other expert evidence about it.
[27] Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305
Heydon JA repeatedly made it clear that the expert must provide sufficient information to allow the court to form a view about the validity of the opinion. One quote he referred to with approval was:
Unless the process of inference by which an opinion is reached is expressed in a manner which permits the conclusions to be scrutinised and a judgment made as to its reliability, the opinion can carry no weight.
In my view Ms D did not provide sufficient information to allow the court to scrutinise the reliability of her opinion that the husband was likely to achieve something over and above the value of (business omitted)’s assets if he was motivated to sell the business. She did not provide any information about sales of similar businesses. When cross-examined she said that she was aware of some sales which might be comparable but she was not able to provide any concrete details on the spot.
Nowhere in his case outline document or in cross-examination of the husband did the wife’s counsel suggest that the husband was obliged to attempt to sell (business omitted) in order to realise value. The wife’s case was that the husband had no right to cease to operate it.
If the wife wished to establish that the husband could have realised something for the business by selling it, it was incumbent on her to provide evidence about sales of comparable businesses and she did not do so.
I cannot place weight on Ms D’s opinion that as at 30 June 2012 (business omitted) had transferrable commercial goodwill worth $731,000.00 and I therefore cannot find that in ceasing to operate (business omitted) the husband committed waste to the tune of $731,000.00.
If the value of the goodwill is not included in Ms D’s summation the decline in value in (business omitted) between 30 June 2012 and 30 June 2014 is $927,000.00. The wife’s counsel conceded that the purchase of Property N and the payment of the partial property settlement had to be factored in and if $750,000.00 is deducted from this (to use the wife’s figure for the moment) then the difference is $177,000.00. However it would be dangerous to place weight on that figure without a detailed forensic enquiry into the difference between the figures for 2012 and the figures for 2014. Ms D set out how the difference between the two figures could be broadly explained but even a cursory examination reveals actual differences. For example the (omitted) Invention was included as an asset worth $27,460.00 in the 2012 accounts but had disappeared by 2014.
I cannot in the end create a table or make findings about the precise reason why the assets of (business omitted) are now worth $262,000.00 or $269,000.00 but if the goodwill figure is removed then the amount allegedly in question is about $1.383m. Property N and the amounts accounted for by the husband in Exhibit K total $1.292m and I simply cannot be satisfied that the wife has demonstrated that the husband has removed any cash or assets and concealed them somewhere or that he should be brought to account because the precise reason for the current situation cannot now be demonstrated. I am not satisfied that the husband has failed to make full and frank disclosure.
Another limb of the wife’s case for why there should be a significant adjustment in her favour for s.75(2)(o) matters was that the husband had unfettered use of the income from (business omitted) after separation and took money out of the company to pay legal fees, for lifestyle purchases and holidays and to benefit his new partner which vastly exceeded his wages and that if money had not been spent in that way but was still sitting in (business omitted) the wife would be entitled to a share of it.
In support of this allegation the wife relied on spreadsheets she had prepared setting out what she said was unwarranted spending.
The husband did not agree with all of the wife’s assertions and there are problems with the way the wife presented her evidence which means that I cannot simply rely on her totals as evidence of how much the husband spent over and above his wages. For example I was never told whether the husband drew a regular wage and there are occasions when drawings or even entries in accounts are tidied up at the end of the year. I cannot assume that because during a particular period there were withdrawals from the (business omitted) bank account of regular sums of $1,000.00 that this represents additional spending by the husband and not wages.
I cannot rely on the wife’s spreadsheets but the husband admitted that he drew money from the company in addition to his wages and a safer place to start is with the husband’s evidence about the money sitting in his directors loan account. In annexure K of his affidavit he broke down the amount of $961,092.55 which represents spending between 1 July 2012 and 30 June 2014 into the following categories:
Costs/renovations to Property B
$191,620.60
Deposit/renovations to Property N
$80,521.00
Legal costs family law and defamation cases
$150,328.84
ATO payments for Mr Hooper
$34,073.45
Purchase Mazda (Son), GST on 2 Toyotas
$16,772.72
Partial property settlement payments to Ms Hooper
$100,000.00
Partial property settlement payments to Mr S
$50,000.00
Money transferred to home loan offset account
$205,000.00
Holidays, cash, medical, general expenses
$132,720.94
Total Debits
$961,092.55
Less money paid back in credit
($229,009.71)
Balance at end of period
$732,082.84
I am satisfied on the balance of probabilities that the husband did his best to account for the money which he used from (business omitted) which appears in his directors’ loan account.
The wife’s counsel strongly attacked the husband in respect of the expenditure on Property B. $191,620.60 was spent but the property has increased in value since purchase by only $115,000.00.
The husband said that Property B was a 110 year old property which he bought from his father and that he bought it “with his heart not his head” and that it turned out upon inspection that it had far more significant problems than were apparent prior to purchase.
I found the husband a credible witness on the issue of the expenditure on Property B and I am not prepared to conclude that simply because the property was purchased for $225,000.00 and is now worth $340,000.00 the husband should be brought to account for over capitalising the property.
The wife did not call any expert evidence in support of a case that the husband had paid too much for Property B and if so how much or that proper inspection would have revealed the extent of work which would be required to make it habitable. She also did not call any expert evidence to establish that the husband had wilfully or carelessly overspent on renovation and there was not a shred of evidence that he spent up big on Property B to deprive the wife of her entitlement to a property settlement.
One item in this list which requires further consideration is the money under the heading “Holidays, Cash, Medical, General Expenses”. However I am not satisfied that the husband should be required to account for this expenditure.
From 2012 to 2014 the husband received wages from either (business omitted) or (business omitted) of $77,507.00, $94,607.00 and $74,010.00 respectively. His wages in 2010 and 2011 were $72,800.00 in each year. He also received allowances in most years but the highest amount he received in any of those years was a total of $137,558.00 for wages and allowances.
The husband’s accountant advised Ms D in 2013 that the husband habitually worked 60-80 hours per week in the business and sometimes worked 100 hours and Ms D was of the view that an appropriate commercial salary package for the husband was $180,000.00 in 2010, $190,000.00 in 2011 and $200,000.00 in 2012.
I do not accept that the husband should be required to account for the $132,720.94 which he frankly said was used for “holidays, cash, medical, general expenses” in this two year period when his total wages and allowance in that same two year period were $137,558.00 and $74,010.00 respectively.
The husband also used money to pay for a car for his son, and paid money to the ATO but the wife also had the use of (business omitted) money by way of receipt of partial property settlements and she received $50,000.00 more than the husband.
The matter which does need to be taken into account pursuant to s.75 (2) (o) is the (business omitted) money which the husband spent on legal fees. The expenditure on living expenses and other items such as ATO payments and a vehicle for his son more or less takes up the slack between the husband’s salary and allowances and the amount which might be considered reasonable remuneration and removing an additional $150,328.84 in the period July 2012 to July 2014 has an impact on the wife’s entitlement. If it is not taken into account the effect is that the wife is obliged to pay part of the husband’s legal costs.
The issue then is whether just the $150,328.84 should be taken into account or whether a higher amount should be taken into account.
The husband paid legal fees both prior to and after the 2013-14 financial years and his evidence was that overall he had paid $300,000.00 in legal fees and valuation costs during the course of the litigation although this appears to include the costs of the defamation action. He said that his legal bills were paid predominantly by (business omitted) and taken in the form of directors loans and then as income at the end of each financial year and this creates another complication because if the husband used income to pay his legal fees it is not necessarily appropriate to add anything back.
It would appear that the husband used $41,000.00 from the sale of two motor vehicles to pay legal fees but that amount was added to the (omitted) valuation by Ms D and it would be double counting to take it into account as paid legal fees.
The wife’s counsel asked me to have regard to an admission in an affidavit filed by the husband on 15 June 2015 that his paid legal fees then were $230,100.00 and to use that figure but to the best of my recollection that affidavit is not before me.
Both the husband and the wife could have clarified this situation with greater rigour in providing documents and drilling into the matter in cross-examination and in a difficult situation I consider that the appropriate course is to treat the husband as being accountable for paid legal fees of $150,328.84 ($150,329.00 rounded) disclosed in Annexure “K”.
Although the wife’s counsel asked in his case outline that the husband’s paid legal fees to be dealt with as a s. 75(2) (o) matter he also proposed that the identified amount be added back, in other words that the wife receive a complete arithmetical adjustment for the amount spent on legal fees rather than be compensated by an adjustment of percentages which might well not deliver the same result.[28]
[28] Townsend & Townsend [1994] FamCA 144
This is a permissible way to proceed and in the exercise of my discretion I intend to add the amount of $150,329.00 back. The effect of doing so is that the pool is as follows:
Assets, non-superannuation assets and superannuation as per paragraph 141: $567,423.00
Husband’s paid legal fees $150,329.00
Total $717,752.00
It is then appropriate to add back a notional amount for the tax which will be payable as a result of the amount of $150,329.00 being in the loan account. It represents about 12% of the money in the loan accounts and doing the best I can in difficult circumstances I intend to include 12% of $346,224.00 or $41,547.00 as an additional notional asset. I do not intend to add anything else back because of the tax liability created by the existence of the loan accounts when I am not prepared to characterise any other spending as unreasonable.
The pool is then worth $759,299.00.
If each party is entitled to 50% of this pool they are entitled to $379,649.50 which breaks down into $116,863.00 of superannuation and $262,786.50 non-superannuation assets.
The wife used $10,000.00 of the amount she received by way of partial property settlement in December 2012 to pay legal fees but I do not intend to take this into account by way of add back or otherwise. I have taken the amount the wife received by way of partial property settlements into account in assessing whether the husband should be brought to account for his use of (business omitted) funds between 30 June 2012 and 30 June 2014 and it would be double counting to add it back as paid legal fees.
Whether there should be an adjustment in the wife’s favour for s.75(2) matters
The wife’s case was that because of issues to do with the husband’s use or abuse of (business omitted) she should receive just about everything and her counsel did not make a submission about an appropriate percentage adjustment in the wife’s favour if her arguments about (business omitted) were unsuccessful. He submitted that her care of X and the difference in the party’s income earning capacities warranted an adjustment but did not take it further.
I am conscious of the fact that the wife has the care of X but she is receiving $313.00 per week child support and this is likely to continue in the future. In addition the husband is not an absent parent; he spends time with X on alternate weekends and for some of the school holidays.
The parties’ relationship was short and there was no evidence that the wife’s income earning capacity had been impacted on by the relationship or the care of X. This is not a case where the wife was out of the work force for twenty or more years and at the end of the marriage lacked skills and experience.
The wife is in good health and is able to earn an income which supplemented by child support is adequate to support herself and X although not in luxury. The wife did not give any evidence about desiring a more luxurious lifestyle or that she was now deprived of luxuries she enjoyed during the relationship.
The wife has no pressing need to rehouse herself or obtain one of the real properties. Her mother has no legal obligation to support her but she has provided the wife with accommodation for the last 13 years and when she asked the wife for rent prior to 2006 it was at a reduced rate. The wife did not give evidence that she had any need or desire to purchase a property of her own or of any need or wish to leave (omitted).
In her further amended response the wife sought to retain both Property N and Property B but this was in circumstances where she said that she should get nearly everything. She has no attachment to either property and is living in neither location and I intend to proceed on the basis that the appropriate outcome is for the husband to retain these properties subject to making a cash payment to the wife.
The husband is a high income earner but this is not a case where the parties had a long marriage and where the wife supported the husband over a lengthy period in study or career so that he left the relationship with a strong income earning capacity whereas the wife’s career took a back seat and she left the relationship considerably behind.
The court is under no obligations to equalise the positions of the parties especially after a short marriage and I also need to factor in that the wife failed to sell the (business omitted) stock and fittings in a timely fashion and that if she had done so the debt now outstanding for (business omitted) in (omitted) would be less. She also inexplicably failed to take any steps to reduce the debt and if this had occurred the pool would be some worth some thousands of dollars more than it is at the moment.
The care of X does have implications for the wife. She will be the one whose capacity to earn income will be impacted on if X is unable to attend school because she is sick or on holidays or because the school declares a pupil free day. The care of X does not impact on the husband’s capacity to earn an income and in my view this warrants an adjustment in the wife’s favour.
If the wife retains the remaining (business omitted) in (omitted) stock and the (business omitted) in (omitted) debt she has non-superannuation assets worth ($60,273.00). She would be entitled to $323,059.50 from the husband if he retained the remaining assets. If she paid the (business omitted) in (omitted) debt she would have $262,786.50 remaining.
The wife would also be entitled to $116,863.00 superannuation which she could receive by way of a superannuation splitting order in respect of the Hooper Super Fund.
An adjustment of 7.5% will result in the wife receiving an additional $19,708.98 non-superannuation assets and $8,764.72 superannuation and create a difference of double this between the parties’ entitlements. In circumstances where the marriage was short, the wife has an income earning capacity and the husband is capable of paying and does pay a high rate of child support this is in my view an appropriate s. 75(2) adjustment.
The wife will receive $436,596.92 made up of:
Description
Value
(business omitted) in (omitted) Stock & Fittings
$3,207.00
(business omitted) Loan
($63,480.00)
Interest in Hooper Superannuation Fund
$131,418.45
Interest in (omitted) Super
$2,974.00
Payment from the husband
$362,477.47
Total
$436.596.92
The husband will be entitled to $322,702.08 and will receive.
Description
Value
(business omitted)
($286,529.00)
(business omitted)
$13,000.00
Property N
$560,000.00
Property B (Net Value)
$155,499.00
Less Debt for Toyota
($48,000.00)
Interest in Hooper Super Fund
$78,333.55
Interest in (omitted) Super
$21,000.00
Less payment to the wife incl. s.75(2) adjustment
($362,477.47)
Paid legal fees (notional asset)
$150,329.00
Allowance for top-up tax
$41,547.00
Total
$322,702.08
The orders
The husband asked that if I did not accept his argument that each party should effectively retain what they had and considered that something should be transferred to the wife that I order that the wife retain all of the money in the Hooper Super Fund as part of her entitlement. However given the parties ages it would not be fair to require the wife to take a disproportionate amount of her share of the pool as superannuation.
I intend to make a base amount splitting order altering the parties member balances in the fund which is all that I can do. If one or both of the parties wish to end their involvement with the Hooper Superannuation Fund they will have to take steps to do so outside of this court system.
I cannot make the order until I receive evidence that procedural fairness has been given to the trustee of the fund. I intend to order that the husband shall forthwith give the trustee notice of the splitting order the court intends to make as set out in the orders at the beginning of this judgment. If I do not hear from the parties or the trustee of the fund within 28 days I will make orders in those terms.
Other than that I will order that the husband pay the wife a cash sum within 60 days and that the Property N be sold if he fails to do so.
At the commencement of the hearing the wife’s counsel said that the wife continued to seek the orders in her second amended response and one of the orders she sought was that the husband transfer his right title and interest in (omitted) invention to the wife and provide to her all documents in his possession and control concerning the invention.
I do not intend to make this order. The item is of no value, it was not the wife’s invention so she has no personal connection with it and given the history of this matter there is an unacceptable risk that if I make such an order it will be followed by enforcement or contravention applications concerning signing or provision of documents and the last things these parties need is more litigation and more expense.
This is a complex and difficult matter. I have had to make numerous findings about issues each of which could have resulted in the outcome being vastly different.
The husband is a high income earner but that does not mean that an outcome whereby he is stripped of everything and left with half a million dollars’ worth of debt is remotely just and equitable. Even high income earners are entitled to return for their effort; they cannot simply be told at the end of every relationship that it is all right if they get nothing because they will acquire assets again in the future, and especially so when the relationship was short and a significant amount of child support is being paid.
It is regrettable that so much has been spent on legal fees, and regrettable that considerable cost will be incurred making things right with the ATO in respect of money withdrawn from the company. The 2013 valuation of (business omitted) threw the parties a curve ball which they were unable to deal with causing the resolution of the matter to be long delayed (although I acknowledge my role in that delay in terms of delivery of the decision).
The wife will emerge from this relationship with considerably more than she brought in and I am satisfied that the outcome is just and equitable.
Parenting
In this section of the judgment I intend to use the words “mother” and “father” rather than “wife” and “husband” because it matches the wording of the parenting orders both originally made and made on 10 December 2015.
A number of parenting issues were in dispute when the trial commenced but on 10 December 2015 the parties agreed on new consent orders.
Many of the new orders are the same as the 2013 orders.
Both sets of orders provide for X to live with the mother and both provide for the parties to share parental responsibility for decisions concerning her medical treatment and education but for the mother to otherwise have sole parental responsibility and numerous ancillary orders are the same.
There are some material changes however to the orders concerning the father spending time with X.
The 14 June 2013 orders which set out the time the father was to spend with X were prefaced by the words “provided that the father is available to supervise the child” and order 4.1 provided that the father’s time with X during school terms would only occur if he had accommodation within 30 kilometres of Singleton Court House.
The 10 December 2015 orders about his time are not prefaced by the words “provided that the father is available to supervise the child” and the father is only required to have accommodation within the (omitted) region.
The dispute between the parties after the orders were made on 10 December 2015 came down to a dispute over the extent of the father’s obligation to personally collect and return the child and be personally present from the beginning to the end of the spend time with periods.
The father sought the following order:
The father may nominate a responsible person known to the child to assist in picking up, dropping off and caring for her when she is with him.
The mother sought the following order:
The child’s spending time with the father is to be implemented by the father collecting and returning the child from and to school where changeover coincides with the start or end of a school day, but otherwise the father is to collect the child from the mother at the commencement and deliver the child to the mother at conclusion of spending time periods to the (omitted) Shopping Centre car park.[29]
[29] See Exhibit “K”.
The father’s case
It has always been the father’s position that he should not be required to personally supervise X every minute of the day and that in appropriate circumstances he should be able to delegate her care to others. He said that he did not intend to do this often but it was not unreasonable for him to be permitted to do so. The mother did this with her older children when she and the father were together; sometimes the father supervised them if the mother had to be occasionally absent and sometimes the maternal grandmother did so.
The father said that there were only a handful of occasions to date when he had been unable to collect X but he wanted an order in place which would give some flexibility. He has a home in Property N but he works on remote sites and he said that there might be occasions when he was held up and simply could not get to (omitted) to collect X at the appointed time.
If a nominee was able to collect X and care for her for a short period his time with her could commence as soon as he got back to Property N.
The father said that he would ensure that the person who collected X was a family member or a person well known to her.
The mother’s case
The mother’s counsel submitted that X might be exposed to conflict between the parents if someone such as Ms T, a former partner of the father’s, collected or returned her from or to the mother. She also submitted that it would cause the mother “an extreme amount of angst” if the father was allowed to have a nominee collect X and that this was an important consideration for the court.
The mother’s counsel submitted that any problems with the father being held up or being unavailable to personally return X could be met by an order that time could start or end at a different time as agreed between the parties. She said that the parties would be able to manage such an order and gave an example of the mother agreeing to a change in drop off arrangements and said that the mother would not unreasonably refuse to agree to a variation.
The mother’s counsel submitted that it was the mother’s view that X should be spending time with the father, not some third party and she said in her affidavit that she wanted to attend handovers and see father collect X so that she could be satisfied that X would not be with someone else for the whole weekend.
Discussion
I am required to make the order which is in X’s best interests and to determine her best interests I must have regard to the matters in s.60CC(2) and (3) of the Family Law Act.
Given the narrow issue in dispute I do not intend to slavishly make findings about each s. 60CC matter rather my findings about the relevant s. 60CC findings will be inherent in my reasons for preferring one outcome over the other.
The outcome which I consider to be in X’s best interests is the outcome proposed by the father.
The father is a hardworking man whose income benefits his daughter; he pays $313.00 per week child support. His work has always taken him to remote work sites. At present it takes him to country New South Wales.
The father is a competent parent who loves his daughter and values spending time with her. He can and should be trusted to make appropriate decisions for her. He does not use drugs, abuse alcohol or have mental health issues. He is not a careless or neglectful father. There was nothing to suggest that he would make a poor or neglectful choice of someone to collect X or that he would routinely prioritise his work over spending time with X and leave her with others for extended periods.
The overarching intention of both sets of orders to which the mother and father consented, is that the father will make himself available to spend time with X during designated periods and will not take her and then simply leave her with others for the whole or most of the spend time with period. This is reinforced by Order 6 of the 10 December 2015 orders which provides as follows:
In the event the father is unavailable to spend time with the child pursuant to these orders due to work commitments, he is to notify the mother as soon as practicable and shall give the mother first option to care for the child.
Order 6 prevents the father from leaving X in the care of someone else for the whole weekend while he works. All the father is asking for is the right to make arrangements to have others assist him if he cannot be personally present with X every minute of his time with her. The mother makes such decisions on a day to day basis when X is with her and makes them appropriately and I consider the father should be trusted to do the same.
There was no evidence that any person the father was likely to nominate to collect X was likely to come into conflict with the mother. The mother is set against Ms T which Ms T may well reciprocate but the father’s relationship with Ms T has been over for a long time.
The father said in his affidavit that this relationship with the mother had improved in recent times but there is nothing to suggest that the mother would be likely to agree if the father contacted her at short notice asking if someone else could pick up X. The parties have been involved in litigation for nearly five years. It will be detrimental to X if they are unable to reach agreement and there is a risk that this could lead to further court proceedings. A precise order is to be preferred in this case to an order that requires the parties’ agreement. I do not accept that leaving the matter to agreement between the parties is a satisfactory solution.
I certify that the preceding three hundred and ninety five (395) paragraphs are a true copy of the reasons for judgment of Judge Terry
Date: 1 March 2017
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