HOUTOS and MADIGAN
[2015] FCWA 53
•20 JULY 2015
JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA
ACT: FAMILY LAW ACT 1975
LOCATION: PERTH
CITATION: HOUTOS and MADIGAN [2015] FCWA 53
CORAM: WALTERS J
HEARD: 3, 4 & 5 JUNE 2015
DELIVERED : 20 JULY 2015
FILE NO/S: PTW 4694 of 2010
BETWEEN: MR HOUTOS
Applicant
AND
MS MADIGAN
Respondent
Catchwords:
FAMILY LAW – PROPERTY – DE FACTO RELATIONSHIP – alteration of property interests under the Family Court Act (1977) (WA) – consideration of the parties’ respective contributions – consideration of s 205ZD(3) – where the mother’s financial contributions significantly outweighed those of the father – where the mother’s business has subsequently gone into voluntary administration – where there is a significant debt to the Australia Taxation Office – where the mother has agreed to indemnify the father in relation to the debt to the Australian Taxation Office – where the father alleged that the mother had used income from a business operated by her in a reckless or wanton manner, and that she had wasted money instead of using it to pay taxation liabilities – where the Court was not satisfied that the mother had behaved in such a manner.
Legislation:
Family Law Act 1975 (Cth)
Category: Not Reportable
Representation:
Counsel:
Applicant: Mrs T. Farmer
Respondent: Self Represented Litigant
Solicitors:
Applicant: Perth Family Lawyers
Respondent: Self-Represented Litigant
Case(s) referred to in judgment(s):
Allied Pastoral Holdings Proprietary Limited v the Commissioner for Taxation (1983) 1 NSW LR 1
Bevan & Bevan [2013] FamCAFC 116
Bevan & Bevan [2014] FamCAFC 19
Bolger & Headon [2014] FamCAFC 27
Bremner& Bremner (1995) FLC 92-560
Browne & Green (1999) FLC 92-873
Browne v Dunn (1893) 6 R 67
Chapman & Chapman [2014] FamCAFC 91
Chorn & Hopkins (2004) FLC 93-204
Clauson & Clauson (1995) FLC 92-595
Dekker & Dekker [2014] FCWA 61
Dickons & Dickons [2012] FamCAFC 154
Fullgrabe & Fullgrabe [2015] FCWA 9
G & G [2004] FamCA 1179
Keenan & Keenan [2015] FamCAFC 122
Kowaliw & Kowaliw (1981) FLC 91-092
LC & TC [1998] FamCA 47
Logan & Logan [2013] FamCAFC 151
Money & Money (1994) FLC 92-485
Pierce & Pierce (1998) 24 Fam LR 377
Rimmington & Healy [2014] FamCAFC 140
Saxena & Saxena (2006) FLC 93-268
Stanford v Stanford (2012) 247 CLR 108
Steinbrenner & Steinbrenner [2008] FamCAFC 193
Townsend & Townsend [1995] FLC 92-569
Waters & Jurek (1995) FLC 92-635
Way & Way (1996) FLC 92-702
Williams & Williams (2007) FamCA 313
WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL
JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN
CHANGED
Preamble
1Before the court are the parties' competing applications for property settlement. It is not in dispute that they were in a de facto or marriage-like relationship between at least July 2004 and October 2009. They have one child, [A], who is now eight years of age. The father has not repartnered since the parties' relationship ended. The mother has formed a new relationship with [Mr S], and she and Mr S have a son who is now two years of age.
2Applications concerning the property of former de facto partners in Western Australia are dealt with in Pt 5A of the Family Court Act 1997 (WA) – which I shall call the FCA. Parts VIII and VIIIAB of the Family Law Act 1975 (Cth) – which I shall call the FLA – contain the comparable Commonwealth provisions dealing with financial matters relating to parties who have been married and parties to de facto relationships respectively.
3The jurisdiction of this Court to make orders altering the property interests of de facto partners is only enlivened if certain conditions are met – including, for example, that the de facto relationship ended after 1 December 2002 and was connected with the state of Western Australia in specified ways. Similarly, the Court may only make property orders if it is satisfied that the de facto relationship subsisted for at least two years, there is a child of the relationship under the age of 18 (and failure to make the property orders would result in serious injustice to the child's primary caregiver) or the applicant for the property orders has made substantial contributions and failure to make relevant orders would result in serious injustice to him or her: see FCA s 205Z.
4It is accepted that all necessary preconditions have been met and that FCA Pt 5A applies in the circumstances of the present case. The only dispute between the parties relates to the manner in which their property interests are to be dealt with.
5The father was represented at trial by Ms T Farmer of counsel. The mother was unrepresented.
The mother was unrepresented
6Given that the mother was unrepresented, I was very conscious of the obligation upon the Court to provide a fair trial – for both parties. I am aware of the guidelines regarding the manner in which a judicial officer should deal with unrepresented litigants, and the associated discussion contained in Re: F – Litigants in Person Guidelines (2001) FLC 93-072 at [209] to [253]. I applied those guidelines during the course of the proceedings, and am comfortable that the trial was fair. In summary:
a)procedural fairness was afforded to both parties;
b)the "mechanics" of the trial, and the right of the mother to cross-examine witnesses, were explained to the mother;
c)other relevant procedures were explained to the mother as they arose;
d)I explained to the mother that she had the right to object to inadmissible evidence, and explained to her – in very broad terms – the types of evidence that might be considered inadmissible;
e)where appropriate, I attempted to clarify the substance of the mother's submissions; and
f)where appropriate, I took other steps as authorised by the Full Court in Re: F – Litigants in Person Guidelines at [253]: see Guideline #9 in that paragraph.
7In Saxena & Saxena (2006) FLC 93-268, Coleman J emphasised that the type of guidelines set out in the previous paragraph are "no more than the name implies" and that they "derive from the broader considerations of natural justice, implicit in which is the recognition that for a litigant in person to be afforded natural justice and procedural fairness, that litigant must have some appreciation of just what is going on". His Honour added that the Court must be concerned with "the spirit rather than the strict letter of the guidelines".
8In the present case, the mother participated in the process fully. I have no doubt that she fully understood "what was going on" at all times.
Documents relied upon
9The father relied upon his trial affidavit (sworn 25 May 2015) and his affidavit sworn 8 July 2014. He also relied upon his financial statement sworn 22 May 2015 and the affidavits of his father and sister (sworn 8 and 9 July 2014 respectively).
10The father's papers for the judge were filed on 29 May 2015.
11The mother relied on her affidavits sworn 13 August 2012 and 16 September 2014. She also relied on her financial statement sworn 2 June 2015 and the affidavits of her father and mother (both sworn on 15 September 2014).
12The mother did not provide papers for the judge.
13The mother and her parents were all cross-examined by Ms Farmer.
The mother's cross-examination (or lack thereof) of the father and his witnesses
14Although the process, purpose and effect of cross-examination were explained to the mother, including the need to test or challenge the evidence of the other party and his witnesses where it contradicts her evidence or is otherwise of significance, her cross-examination of the father was extremely brief (comprising one or two questions only), and she elected not to cross-examine the father's father and sister.
15The allusion to testing or challenging an opponent's witnesses in cross-examination where their evidence contradicts a party's case is, of course, a reference to the rule of practice known as the rule in Browne v Dunn (1893) 6 R 67. The rule was considered by Hunt J in Allied Pastoral Holdings Proprietary Limited v the Commissioner for Taxation (1983) 1 NSW LR 1 at 16, where his Honour said:
It has in my experience always been a rule of professional practice that, unless notice has already clearly been given of a cross‑examiner's intention to rely upon such matters, it is necessary to put to an opponent's witness in cross‑examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, particularly where that case relies upon inferences to be drawn from other evidence in the proceedings. Such a rule of practice is necessary both to give the witness the opportunity to deal with that other evidence, or the inferences to be drawn from it, and to allow the other party the opportunity to call evidence either to corroborate that explanation or to contradict the inference sought to be drawn. …
16In LC & TC [1998] FamCA 47, however, the Full Court said at [38]:
… [The] rule in Browne v Dunn does not apply where the witness is on notice that the witness's version of events is in contest. That notice may come from the pleadings or the other side's evidence or the other side's opening; it may even come from the general manner in which the case is conducted. In general, however, this exception to the rule should only operate where the issue is a fairly clear and obvious one….
17The rule was further qualified in Rimmington & Healy [2014] FamCAFC 140 and Logan & Logan [2013] FamCAFC 151, where, after referring to the above passage from LC & TC (supra), the respective Full Courts described the Family Court as "an affidavit court where allegations are put and responded to in affidavit form prior to the hearing" and observed that the absence of cross-examination by or on behalf of one party does not mean that the other party's evidence must be accepted.
18It bears repeating that the rule in Browne v Dunn is a rule of practice only, and is not a substantive rule of law. In Cross on Evidence (LexisNexis – Australian looseleaf edition), various exceptions to the rule are described at [17445] – [17455]. They include:
a)where the witness is on notice that his or her version of events is contested;
b)where counsel elects not to cross-examine "for reasons of convenience, for example to save time, or where several witnesses are called on the same point"; and
c)where a witness's evidence is so incredible or improbable, or so obviously a fabrication, that cross-examination is unnecessary.
19Cross on Evidence deals with the consequences of a non-compliance with the rule at [17460]. These include –
a)if counsel does not cross-examine a witness on a particular point, he or she may be taken to accept it and runs the risk of the court not allowing the point to be challenged (although whether a court is minded to accept unchallenged evidence is a matter for it); and
b)if a witness has not been cross-examined on a particular matter, the court may regard that as a good reason for accepting the witness's evidence in relation to it (and this is especially the case if the witness's evidence is not contradicted by other evidence) – although, again, there is no requirement that the court must accept evidence in relation to which there has been no cross-examination.
20I have borne in mind the nature and consequences of, and exceptions to, the rule in Browne v Dunn while considering my decision in this matter. I have taken into account the fact that the mother was self-represented and, like many self-represented litigants, disoriented and confounded to the point of paralysis when placed in the position of having to ask questions of the other side. I have also taken into account the explanations provided to her during the course of the trial and the fact that she was reminded of the advisability of challenging or otherwise testing the other side's evidence where it conflicted with important aspects of her own evidence.
Background and relevant financial history
21In these Reasons, and unless otherwise indicated:
a)all statements of fact comprise findings of fact;
b)I have referred to the parties as the father and the mother (and I mean them no disrespect by doing so) – because it is less confusing than referring to them as the applicant and the respondent;
c)I have not drawn a distinction between proceedings or events before a family law magistrate and proceedings or events in the Family Court of Western Australia;
d)I have referred to all affidavits filed by or on behalf of the parties as being "sworn", even if they were affirmed by their deponents (and I note that, in a slightly different context, s 5 of the Interpretation Act 1984 (WA) provides, among other things, that "to swear" includes "to affirm");
e)references to legislation are references to the to the Family Court Act 1997 (WA) – although, when necessary, I have referred to this enactment as "the Act" or the "FCA";
f)I have referred to the Family Law Act 1975 (Cth) as the "FLA".
Brief chronological outline
22The father was born in April 1976 and the mother in December 1983. It follows that they are now 39 and 31 respectively. They met and commenced a relationship in late December 2001/early January 2002. They commenced cohabitation sometime later, although the precise date upon which they did so is less than clear. They never married, although they became "engaged" in July 2006.
23There is one child of the parties' relationship – A, who was born [in] January 2007. He is now eight years of age.
24The parties separated on 31 October 2009. The mother left the parties' home with A. The father remained living in the home. He has continued to live in the home since that time.
25The father has not repartnered.
26The mother is in a de facto relationship with Mr S. The relationship commenced at some time prior to August 2012. The couple have a son, who was born in May 2013 and is now two years of age.
27The mother and Mr S live in rental accommodation. The mother has lived in rented premises since she separated from the father.
28The mother remains A's primary caregiver. He spends nine nights per fortnight with her and five nights per fortnight with the father. During school holidays, A spends approximately equal time with each party. According to the mother, the father "has had about 30% to 40% care of [A]" since separation: see mother's trial affidavit at [100]. The mother also said, and I accept, that from the date of separation the father has never paid any child support for A. According to the father, the parties agreed that no formal child support arrangement would be necessary.
29The father said that he "had [A] for four days of the week and (the mother) had him three days per week" from separation in October 2009 until A commenced school at the beginning of 2012: see father's affidavit sworn 8 July 2014 at [108]-[109].
Commencement of cohabitation
30The parties commenced their relationship when the father was 25 or 26 and the mother was 18. They were each living with their parents. The mother described the relationship as "a full-time relationship", with the parties seeing each other every night and spending overnight (at either's home) once per week. According to the father, the parties commenced living together at his parents' home in April 2002: see father's affidavit sworn 8 July 2014 at [16].
31The father was employed as a [labourer] on a very modest wage. The mother was either completing her [beautician] apprenticeship or employed as a beautician at [Company S] in [Suburb M Shopping Centre]. I am satisfied that the mother's income was less than that of the father until she completed her apprenticeship, but that thereafter it was greater than that of the father.
32The father owned a Holden motor vehicle. According to the father, he also had $30,000 "in cash savings": see father's affidavit sworn 8 July 2014 at [11]. The mother disputed that the father had $30,000 in savings and said that she cannot remember such an amount being utilised by the father at the time. When the mother obtained a driver’s licence, which was shortly after the parties commenced their relationship (but before they commenced living together), her father bought her a 1999 Hyundai motor vehicle.
33In early 2003 or thereabouts, the parties opened a joint savings account into which they each deposited moneys. Their intention was to use the savings to contribute towards the purchase of a home.
34By the time the parties purchased [Property A] in or about July 2004, they had saved approximately $15,000: see exhibit A7.
35According to the mother, the parties did not commence living together until after the purchase of Property A. In other words, cohabitation did not commence until mid-2004. The mother's parents both confirmed that the parties did not commence cohabitation until they began living in Property A. According to the father, the parties commenced cohabitation at least two years earlier. It is his position that the mother moved in to his parents’ home and resided there with the father, his parents and the father’s sister. The father’s witnesses corroborated his evidence in this regard.
Property A
36As indicated above, the parties purchased Property A in or about July 2004. The purchase price was $230,000. It would appear that they received a First Home Buyers' Grant of $7000. The remainder of the purchase price was borrowed from BankWest and secured by a mortgage over Property A.
37The parties' savings of approximately $15,000 were used to improve the appearance of Property A and to acquire furniture and other items for the home.
38Renovations to the interior of Property A took approximately one or two months. Both parties did work associated with the renovations. Their parents also assisted (particularly their fathers). According to the mother, she stayed at the father's family home "on a nightly basis" while Property A was being renovated: see mother's trial affidavit at [36]. The parties commenced living in Property A when the renovations were complete.
39According to the father, further renovations were done to Property A after the acquisition of the Salon. He was heavily involved with these renovations, on which the parties spent some $40,000-$60,000.
2004 to 2009
40After the acquisition of Property A, the parties combined their incomes and shared their expenses. The father, who appears to be unskilled, continued to work in low paid employment. The mother continued to work as a beautician at the Salon. Her income was greater than the father's income.
41The parties received financial assistance from their parents in various forms.
42The parties became engaged in mid-2006. An engagement ring was purchased for the mother. According to the mother, the cost of the ring was $3500. The father paid $2500 towards the ring; the remainder was paid from the parties' joint account. According to the father, the ring was purchased for $4500.
43It would appear that the parties had a liking for powerful motor vehicles. In early 2006, they each sold the vehicles they owned and purchased a [Holden SV6] motor vehicle. The father sold his previous vehicle for approximately $7000; the mother sold hers for approximately $3000. The purchase price for the SV6 was approximately $32,000, the vast majority of which was paid for by increasing their home loan by $30,000. According to the mother, the funds received from selling the parties' previous vehicles were used to purchase a shed for Property A. At or around the same time, the father purchased a motor scooter for approximately $2100. It was paid for from the parties’ joint savings.
44The father changed jobs from time to time between 2004 and 2007, although he remained employed for the vast majority of the time. It would appear that he was only unemployed for approximately one month. His jobs were low paid positions.
45The mother continued to work at the Salon and her income continued to be greater than that of the father. She became pregnant in or about April 2006, but remained in her employment until approximately 3 weeks before A's birth in January 2007.
46The parties' parents assisted them by purchasing furniture and other items for the baby.
47The parties began to experience financial difficulties shortly after A's birth. As a result, the mother returned to work at the Salon when he was approximately 8 weeks old. She worked on a casual basis, for four days each week. The father, his parents and the mother's parents all assisted with the care of A when the mother was working.
48In or about September 2007, the owner of the Salon inquired of the mother whether she wished to purchase the business. The parties discussed the subject between themselves and concluded that it would be in their best interests to proceed with the purchase. There can be no doubt, however, that the mother was the driving force behind the purchase of the Salon. She saw it as a very attractive opportunity for the parties, given that the father had no trade or qualification and was likely to find it difficult to obtain and maintain well paid employment.
49I have dealt with the acquisition and eventual closure of the Salon later in these Reasons. Suffice it to say, at this stage, that the mother managed and worked in the Salon for the vast majority of the time from its acquisition in September 2007 until it was closed in or about September 2013 – although she was unable to work there for about five months from August 2012 due to complications with her pregnancy with her second child.
50In March or April 2008, the parties purchased a [HSV] motor vehicle for approximately $80,000. I have discussed the acquisition and fate of the HSV below. A few months later (in June 2008), the father purchased a 1971 [GTS Monaro] replica motor vehicle for approximately $30,000. The SV6 vehicle was used as a trade-in, and the balance was paid from the parties' savings.
Separation
51As I have indicated, the parties separated in October 2009. The father continued to live in Property A. The mother moved initially to her mother's home, and then to rented accommodation. She took A with her.
52On 18 November 2009, the mother withdrew $8000 from an account established by the parties in A's name. Both parties had contributed to the account. The mother used the moneys to help establish herself in rental accommodation. The mother said she withdrew the money after asking the father for some of the furniture in Property A and being refused.
53In March and April 2010, the mother withdrew a total of $26,000 from the redraw facility on the home loan to enable her to meet expenses associated with the Salon. The father then withdrew the remaining balance in the redraw facility, being $8449.
54Part of the $26,000 withdrawn by the mother was used to pay for stock for the Salon. According to the mother, these were stored at Property A but the father would not permit her to collect the items after she left the property. As a result, the items have passed their "use by" date and have little or no commercial value. The mother estimated the value of the stock would have been approximately $13,000: see mother's trial affidavit at [105]. The father denied having retained any stock. Neither party was cross-examined in relation to the subject.
55The mother paid the utilities for Property A for approximately six months after separation. She also paid the land and water rates for Property A for 2010 and 2011. In addition, she continued to pay half of the home loan repayments from the date of separation until October 2011. At the same time, she was required to pay rent in respect of her own accommodation.
56The father did not pay child support for A. Indeed, he has not paid child support at any time since separation. It follows that the mother has met the vast bulk of the expenses associated with A's care, schooling and activities.
The Salon
57In late 2007, and at the mother's urging, the parties agreed to purchase the Salon for $114,000. The purchase price comprised goodwill, stock and furniture. The parties borrowed the entirety of the purchase price from BankWest, on the security of the mortgage already encumbering Property A. They referred to the original borrowing (for the acquisition of the home) as "the home loan" and the additional borrowing (for the acquisition of the Salon) as "the shop loan". The shop loan was an interest only loan.
58According to the father, the parties were also required to pay a further amount of $30,000 in respect of the purchase of the Salon. This sum was payable over 12 months.
59From the acquisition of the Salon to 2012 or 2013, the payments in respect of the shop loan were met from the Salon's income.
60After receiving advice, the parties established a family trust. The name of the trust is the [Houtos Family Trust] ("the Trust"). Initially, the father and the mother were the trustees of the Trust. At a later stage, however, a corporate trustee was appointed. The name of the company was [Houtos Nominees Pty Ltd] ("the Company"). The Salon was initially conducted by the parties as trustees of the Trust. Thereafter, it was conducted by the Company as trustee of the Trust.
61The Company was incorporated on 2 October 2007. The mother was the sole director of the Company. She was also the company secretary. The Company had two issued shares. Each of the parties held one share.
62In spite of the formal structure through which the Salon was operated, the mother was wholly responsible for the conduct of the business. The father did little to nothing to assist with the running of the enterprise. He took little interest in its progress.
63On 22 October 2013, orders were made in the Federal Court of Australia to the effect that the Company be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth). The firm of Pitcher Partners (or, more specifically, Bryan Hughes of that firm) was appointed as liquidator of the affairs of the Company. I shall refer to Pitcher Partners as "the Liquidators".
64Clearly, the mother's powers as a director of the Company ceased on the appointment of the Liquidators.
65According to a document prepared by the Liquidators and dated 13 November 2014 – which document is entitled "Presentation of accounts and statement" – the Company (in Liquidation) owed a total of $186,866 to the Australian Taxation Office ("ATO"): see exhibit A11. There were no other creditors. Of the total of $186,866, $107,681 was expressed to be owing to the ATO in its capacity as a "priority creditor" and $79,185 was expressed to be owing to the ATO in its capacity as an unsecured creditor.
66From the date of its incorporation in October 2007 to March 2009, the Company's registered office was care of an accounting firm in East Fremantle. Thereafter, and until its liquidation, the Company's registered office was care of a different accounting firm: Denning & Associates in Booragoon ("the Accountants").
67The father and the mother and, after separation, the mother, relied heavily on others for business and accounting advice. Relevantly, the mother placed her trust in and relied upon her bookkeeper, [Ms S], and the Accountants for such advice and for ensuring that all financial records and tax returns were kept or prepared competently, accurately and in accordance with legal requirements. I am satisfied that both the father and the mother were commercially inexperienced and had little business acumen when they acquired the Salon and that the mother, in particular, was naive and guileless in matters associated with the conduct of the Salon as a business or commercial enterprise. Regrettably, the trust the mother reposed in her bookkeeper (and, arguably, the Accountants) was misplaced.
68Almost all of the formal books and records of the Company were in the possession of the Accountants at the time of the liquidation. Other information, such as the wages book and employee records and payment summaries, were in the possession of the bookkeeper. The bookkeeper also used the MYOB program (installed on her personal computer) to maintain the Salon's financial records.
69The mother never established a separate bank account for the Company, the Trust or the Salon. She said, and I accept, that she was never advised to do so. Instead, she used her personal bank account – into which she deposited the Salon's takings and from which she paid its expenses: see exhibit A3. It was left to the bookkeeper (and, ultimately, the Accountants) to identify and categorise the various deposits and payments, although the mother willingly assisted them with these tasks.
70The mother said, and I accept, that she lost contact with her bookkeeper in or about December 2012. She has made efforts to locate her, but has been unsuccessful in that regard. Ms S had been a customer at the Salon, and had agreed to handle its bookkeeping at the mother's request. Until the mother lost contact with her, they liaised regularly – and often on a daily basis – regarding the Salon's bookkeeping requirements. Relevantly, the mother kept her informed of the Salon's takings (both in cash and via credit card) and the various day to day transactions associated with the conduct of the business. Regrettably, the bookkeeper seems to have retained all the documents and records that were in her possession. The mother has been denied access to those documents and records since the bookkeeper effectively disappeared.
71The Company's assets were minimal at the time of liquidation. They comprised some stock and the Salon's furniture and equipment.
72The Salon began to experience serious financial difficulties in or about August 2012, when the mother became pregnant with her second child. The mother experienced difficulties with the pregnancy and remained bedridden for a significant part of the first two trimesters. She was unable to work in the Salon from August 2012 to early 2013 and left the management of the business to employees. At the same time, competition from other hairdressing salons in the shopping centre increased. When the parties first acquired the Salon, it was one of three or four hairdressing salons in the shopping centre. By 2013, there were a total of eight or nine hairdressing salons. A better run business could, perhaps, have survived – but the Salon was not well run, although I am satisfied that the mother tried her best to keep it afloat and to maintain profitability.
73At the same time, the management of the shopping centre indicated its intention to embark upon a substantial redevelopment and extension. The Salon's lease was due to expire in mid-2013, and it was likely that it would have had to move premises within the centre and/or contribute to fit out costs as the redevelopment progressed. Because of the proposed redevelopment and extension of the centre, the uncertainty regarding the lease (or, alternatively, the short period remaining until its expiry), the increased competition from other hairdressing businesses and, it is fair to assume, the Salon's lack of profitability, the mother found herself unable to sell the business.
74The mother met with the father in a cafe in Osborne Park in February 2012 to discuss the future of the Salon, among other things. The mother advised the father that she was considering whether or not she should renew the lease for the Salon. She was concerned that it would not be viable to continue to operate the business. Because the father and the mother were co-signatories on the Salon's lease, she could not opt out of the lease and any unexercised option without the father's approval. He declined to give it. As a result, the mother considered she had no alternative but to remain in the Salon and continue to conduct the business until the current lease and its automatic option to renew had expired.
75In or about 2012, the mother entered into an arrangement with the ATO pursuant to which she agreed to pay $1000 per week in respect of "tax" and employees' superannuation. The arrangement did little to prevent the business falling further into debt with the ATO.
76It appears that, with very few exceptions, all the other expenses of the Salon were met as and when they fell due. The lease payments were made, stock was paid for and, to a very large extent, employees' wages and entitlements were met. The debt to the ATO, however, continued to accumulate to the level referred to above.
77Although the mother's tax returns for the years 2008, 2009, 2010 and 2011 were tendered (see Exhibit A5), they are difficult to follow and the mother could shed little light on the figures contained in them. She said, and I accept, that she left it to the bookkeeper and the Accountants to prepare the returns. She did not check them; nor, it would appear, did she understand them. The same can be said for the income tax returns for and financial statements of the Trust for the same period: see exhibit A8.
78The Trust's 2008 tax return and financial statements reveal that the Salon's gross profit from trading for that year was approximately $190,650 (after allowing for $50,873 in respect of "cost of sales"). Its total expenses were approximately $222,890 – including director's fees of just under $10,000, printing and stationery costs of approximately $14,000, motor vehicle expenses totalling approximately $12,000, rent of approximately $25,000 and wages of approximately $100,000. The Salon's loss before income tax was $32,236. After "expense reconciliation adjustments", the net loss recorded in the tax return was $26,570.
79The figures for the subsequent years were as follows:
Year
Gross profit from trading (after deducting cost of sales and any Government industry payment)
Total expenses
Profit/loss before income tax
Profit/loss (income tax return)
2009
$248,276
($276,690)
($19,414)
($19,414)
2010
$237,822
($281,336)
($40,014)
($40,014)
2011
$244,631
($246,187)
($1556)
NK
80In the same years, the expenses for director's fees, motor vehicle expenses (excluding lease payments), rent and wages were as follows:
Year
Director's fees
Motor vehicle expenses (excluding lease payments)
Rent
Wages
2009
Nil
$10,755
$41,250
$129,536
2010
Nil
$14,103
$46,209
$155,252
2011
Nil
$8804
$54,124
$119,672
81The Salon closed in September or October 2013. The Trust's financial statements and income tax returns for 2012, 2013 and 2014 were unavailable, notwithstanding the production of the Liquidators' complete file.
82In his affidavit of 8 July 2014, the father expressed doubts regarding the financial position of the Salon and even suggested that the mother may have failed to declare the Salon's full income "to reduce the value of the business overall for the purposes of this Court matter": see the affidavit at [57]. By the time of the trial, however, it had become clear that the Salon, the Company and the Trust had no value and that the business had failed for the reasons and in the circumstances I have explained above.
83Notwithstanding the above, it is clear from the father's affidavit of 8 July 2014 that the father would have pressed for any value the business may have had to be included in the property available for distribution between the parties – which, of course, is not an unreasonable approach. For example, he spoke of the Salon being "an asset of the relationship" at [119] and referred to his contributions to the business at [59] and [60]. Importantly, he deposed at [58], [66] and [75]:
•Certainly it was the case that during our relationship the business was profitable and [the mother] and I were able to enjoy a good lifestyle after purchasing the business.
•After the business was purchased we generally used my income to pay the mortgage repayments and otherwise our lifestyle was paid for by the business including all our living expenses, such as groceries, entertainment and bills including utilities, insurance, phone and so on.
•Prior to separation, [the mother] and I enjoyed a good lifestyle. We had saved an additional $35,000 against our home mortgage and renovated our home extensively. We also went on numerous holidays, would regularly dine out (often every night), enjoyed ourselves going to concerts and always had cash at hand.
84In the same affidavit at [63], the father deposed to the mother being able to access significant funds each week from the business – ranging from $1000-$3000 to occasional amounts of $10,000-$15,000. These figures were not admitted by the mother, but the father was not cross-examined on them; nor, indeed, was the father's sister, who deposed to seeing "wads of cash money lying around the home", which the mother said were sourced in the Salon and "used to fund living expenses". The mother said in evidence, and I accept, that she told the bookkeeper and the Accountants about cash she took from the business and that the entirety of its income was reflected in the financial statements of the Trust – whether that income was generated by credit card payments or received in cash. Clearly, the presence or absence of cash in the parties' home says nothing about the profitability of the business or the accuracy of its books and records. Similarly, it says nothing about the extent of the mother's expenditure on luxuries or other unnecessary items. Suffice it to say that the evidence suggests that the father received a significant benefit from the Salon's income, in whatever form that income may have been received. Indeed, that was the substance of the father’s evidence in respect of the business.
85I have not ignored the evidence of the father's sister to the effect that the mother would remove cash from the Salon's till and take it home and that, on one occasion, the mother told her that cash was to be taken from the cash register to pay an employee. I am aware, as well, that the father's sister was of the opinion that the mother spent too much money on clothes and other purchases. At the end of the day, however, much of the material contained in the affidavit of the father's sister comprised inadmissible opinion, comment and conclusions. The mother was cross-examined about the removal of cash from the business and was adamant that the entirety of the Salon's income was reported to the bookkeeper and reflected in the financial statements of the Trust. The mother was an impressive witness and, as indicated above, I accept her evidence regarding her use of cash moneys. I also accept that the mother's lifestyle was not "lavish", whether before or after separation from the father.
86While the father sought initially that any value of the business be regarded as property available for distribution, his approach leading up to trial seemed to involve a suggestion that the mother, and the mother alone, should be seen as responsible for the failure of the business, and for the debts associated with it. As discussed elsewhere in these Reasons, I am satisfied that such an approach is misconceived and unjust.
87The father suggested that he would have continued to operate the Salon if the mother had given him the opportunity to do so: see father's affidavit sworn 8 July 2014 at [134]. I am satisfied, however, that he would have been no more successful in conducting the business than the mother had been. His involvement in the running of the business had been minimal since its acquisition, and even less after separation. He has no business or marketing skills (indeed, he has no trade or employment skills of any sort) and no direct knowledge of the hairdressing industry. Like the mother, he would have had to confront problems associated with increased competition and the redevelopment of the shopping centre. He would also have inherited the Company's substantial tax liabilities. To put it bluntly, any suggestion that he could have continued to operate the Salon at some time in 2013 or thereabouts is, to use a colloquialism, pie in the sky and I reject it.
88After the closure of the Salon and the appointment of the Liquidators, BankWest pressed the parties for the payment of arrears due under the shop loan. The mother, who was caring for her two children and not working in paid employment, was unable to pay the arrears. She suggested to the father that Property A be sold (thereby causing both the home loan and the shop loan to be paid out), but he rejected the suggestion. The father then borrowed approximately $8000 from his parents to discharge the arrears. Since that time, he has met the (interest only) payments due in respect of the shop loan. He has done so with the assistance of his parents.
The mother faces a potential claim from the ATO
89The parties agreed that the Company's debt to the ATO (totalling approximately $187,000: see exhibit A11) should be excluded from the property schedule on the basis that the mother will assume full responsibility for it – or, more accurately, on the basis that she will assume full responsibility for any potential claim the Liquidators may have against her as the sole director of the Company. In their letter of 6 October 2014 to the father's solicitors (see annexure G to the father's trial affidavit), the Liquidators noted that the ATO had submitted a formal claim in the liquidation, seeking payment of $186,826 in respect of outstanding GST and PAYG instalments, unpaid superannuation and interest and charges. They then wrote:
I consider the Company has a claim against [the mother] of at least $133,483 (being the total of the unpaid GST, PAYG and superannuation).
… [The mother] received the Company's funds from trading into her personal bank account (which based on the bank statements appear to have exceeded expenses) but did not pay all of the corresponding debts of the Company incurred from these funds.
In retaining these funds [the mother] has received what I consider to be akin to a loan from the Company and accordingly I am seeking to recover that debt from her and in this regard consider the Company has an interest in [Property A]].
90It seems likely that the Liquidators will pursue the mother for the amount referred to in the passages quoted above. The fact of the matter is, however, that the mother has no ability to pay the amount claimed. Her only assets comprise superannuation entitlements of $7364 and a notional allowance for the $34,000 (in total) she received after separation by withdrawing funds from A's account and drawing down on the home loan. The $34,000 no longer exists in realisable form.
91The effect of the orders sought by the father is, of course, to put the mother's (current) legal interest in Property A beyond the reach of the Liquidators. The likely effect of the orders sought by the mother is that the Liquidators will seek to recover moneys from her in full or partial satisfaction of their asserted claim against her.
92The Liquidators have been given the opportunity to intervene in these proceedings, but have elected not to do so. That, of course, is a matter for them. Their claim against the mother in her personal capacity remains moot. So far, they have not taken action against her in any form. Clearly, that could change if the mother's financial position were to improve as a result of any orders this Court may be minded to make.
93FLA s 75(2)(ha) requires the court to take into account, as one of the s 75(2) factors, "the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant". Similarly, FLA s 79(10) provides that a creditor of a party to the proceedings is entitled to become a party to property settlement proceedings if the creditor may not be able to recover the relevant debt. Similar FLA provisions adhere in the case of de facto relationships: see FLA s 90SF(3)(i) and 90SM(10). Corresponding provisions were drafted for insertion in the FCA and included in Pt 4 of the Family Legislation Amendment Act 2006 (WA) – which, although enacted, has never been proclaimed. It follows that FCA s 205ZD(3), which is the equivalent of FLA s 75(2), does not currently direct the court to take into account the effect of the orders proposed by the father on the ability of the ATO to recover the moneys potentially owed by the mother. I am satisfied, however, that public policy requires me to take such a consideration into account, if necessary under s 205ZD(3)(o).
HSV94 As noted above, in March or April 2008, the parties purchased the HSV. The purchase price was $79,485: see the Trust's financial statements in exhibit A8. According to the father, the purchase price was $86,000 (which included various optional extras). The HSV was an asset of the Trust, but was registered in the father's name (because the mother was not yet 25 years of age and the insurance premiums would have been prohibitive had it been in her name). It was used by the mother, however, at all times from its purchase until it was repossessed by the finance company or its agent in May 2014.
95The HSV was an extravagance the parties could not afford and the Salon could not support. Like a great many people who commence a business, however, the parties believed it would be successful (indeed, the father's evidence was that the Salon was very successful prior to separation), and were likely mesmerised by the prospect of being able to offset some of their personal expenses against business income. Thus, and until the final period of its operation, the loan payments relating to the HSV, and its running expenses, were met by the Salon.
96The mother had had the HSV for approximately 18 months when the parties separated in October 2009. She retained the vehicle after separation and continued to use it until it was repossessed. As at 27 July 2012, the amount owing to the credit provider (St George Finance Ltd) in respect of the HSV was just over $41,000: see annexure E to the mother's affidavit sworn 13 August 2012.
97It would appear that there was a balloon payment at the end of the lease period. By that stage, the Company was in liquidation and the Salon had been closed. Neither the mother nor Mr S had the financial capacity to meet the balloon payment. As a result, and as indicated above, the HSV was repossessed in May 2014. At or around that time the parties' debt to the original credit provider was acquired by a different finance company, NCO Finance (Australia) Pty Ltd. It then appears to have become the subject of a factoring arrangement, pursuant to which the debt was acquired by Australian Receivables Ltd ("ARL").
98The total amount owed by the parties to ARL after the repossession of the HSV is unclear. It appears to have been in excess of $37,000. The father, who was concerned to protect his credit rating, then commenced negotiations with ARL to discharge his liability for what he perceived was his share of the debt. Extraordinarily, he seems to have entered into an arrangement with ARL whereby his parents paid $15,000 to ARL for and on behalf of the father and ARL then credited that amount against the father's share of the liability owed by the parties jointly. Indeed, ARL accepted the $15,000 in full and final satisfaction of the father's liability in respect of the original debt – leaving the HSV in the father's name and the mother solely responsible for the balance then outstanding (which amounted to $26,174 at the date of trial): see exhibit A9.
99The father described the arrangement in his affidavit sworn 8 July 2014 at [147]-[148]. He said that he liaised with ARL after they had repossessed the HSV and that it agreed to accept $15,000 "in full and final settlement". These moneys were borrowed from his parents. The father then "secured the return of the vehicle in (his) possession following the payment being made". In the same affidavit at [149], the father confirmed that the HSV is in his possession but that he needs "to either transfer it to (his) parents or sell it to repay them the $15,000 (he) paid to ARL". The implication is that the HSV remains registered in the father's name.
100The father entered into this arrangement without the mother's knowledge or consent. The HSV has remained in his possession since that time. The net effect of his actions is that he now has the HSV (which is either in his name or nominally belongs to his parents), he owes his parents $15,000, his share of the debt to ARL has been discharged and the mother is left with a debt of $26,174 to ARL.
101It became clear during the trial that ARL was prepared to enter into a similar arrangement with the mother: in other words, to accept $15,000 in full and final satisfaction of her liability to it. Exhibit A2 comprises a letter dated 4 June 2015 from a senior account manager with ARL to the father's solicitor. It includes the following:
… I would like to briefly explain that as an Acquisitions department, we obviously acquired debts from particular creditors we choose to do business with. In this case we purchased this debt from St George [regarding the [HSV]. We] now take into consideration that both parties at the time were separated, so we are well within our rights being the owners of the debt to offer both debtors separate settlements amounts rather than paying the debt in full, considering the circumstances they are under.
In this case [the father] had made an agreement with myself to finalise his side of the debt of $15,000 which he paid and has his listing at the credit bureau updated and sent a paid in full letter – this being the case believes [the mother] the balance to repay, but in saying this I have also made an agreement with [the mother] to reduce her balance and to look into settling which she is happy to look into and are currently in discussions.
I have tried to be as reasonable as possible for both parties to settle at a lesser amount and move on with things which I believe both parties are happy to accept or have accepted.
102In my opinion, the father's dealings with ARL carried the seeds of unfairness because the HSV was never "his" vehicle in any real sense, notwithstanding that it was registered in his name. The mother had used it exclusively as her vehicle since it was acquired in 2008, including for over four years since separation. She had also paid or accepted responsibility for all lease payments in respect of the HSV since the parties separated (save, of course, for the final "balloon" payment which she could not afford).
103The bottom line is that the HSV has been included in the schedule of property available for distribution between the parties, as has the father's debt of $15,000 to his parents. In other words, the parties have agreed that the HSV is or is to be treated as the father's property for the purposes of these proceedings. The mother's debt to ARL has been quantified at $15,000.
Orders sought
104The orders sought by the father are contained on pages 31 to 34 of his papers for the judge. In broad terms, he seeks to retain Property A as his sole property and to take over and indemnify the mother against liability in respect of the mortgage securing the home loan and the shop loan. He also seeks to retain all other property currently in his possession (including the HSV). He proposes that the mother retain the property presently in her possession and indemnify him against any liability relating to the loan associated with the HSV and all debts associated with the Salon and the failed business generally (save for the shop loan).
105For her part, the mother seeks orders for the sale of Property A and the discharge of the mortgage from the proceeds of sale. She proposes that the parties' property (save for her personal liability to the ATO, for which she will accept full responsibility) should be divided equally between them. She is not inflexible in relation to the sale of Property A and is content for orders to be made allowing the father to retain the property, provided that he pays her such sum as will achieve an equal division of the parties’ property between them.
Property settlement – the law as it relates to de facto relationships in Western Australia
106FCA s 205ZG is headed Alteration of property interests. It is similar, although not identical, to FLA s 79.
107The relevant provisions of s 205ZG are as follows:
1)In proceedings with respect to the property of de facto partners, or either of them, the court may make such order as it considers appropriate altering the interests of the parties in the property, including an order for a settlement of property in substitution for any interest in the property and including an order requiring either or both of the partners to make, for the benefit of either or both of the partners or a child of the de facto relationship, such settlement or transfer of property as the court determines.
2)…
3)The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
4)In considering what order (if any) should be made under this section in proceedings with respect to any property of de facto partners, or either of them, the court must take into account —
a)the financial contribution made directly or indirectly by or on behalf of a de facto partner to the de facto relationship or a child of the de facto relationship to the acquisition, conservation or improvement of any of the property of the de facto partners, or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the de facto partners or either of them; and
b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a de facto partner or a child of the de facto relationship to the acquisition, conservation or improvement of any of the property of the de facto partners or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the de facto partners or either of them; and
c)the contribution made by a de facto partner to the welfare of the family constituted by the de facto partners and any children of the de facto partners, including any contribution made in the capacity of homemaker or parent; and
d)the effect of any proposed order upon the earning capacity of either de facto partner; and
e)the matters referred to in s 205ZD(3) so far as they are relevant; and
f)any other order made under this Act affecting a de facto partner or a child of the de facto relationship; and
g)any child support under the Child Support (Assessment) Act that a de facto partner has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
108FCA s 205ZD is headed Maintenance orders. It is similar, although not identical, to FLA s 75.
109Section 205ZD(3) – which is referred to in s 205ZG(4)(e) – is as follows:
3)The matters to be taken into account are —
a)the age and state of health of each of the de facto partners; and
b)the income, property and financial resources of each of the de facto partners and the physical and mental capacity of each of them for appropriate gainful employment; and
c)whether either de facto partner has the care or control of a child of the de facto relationship who has not attained the age of 18 years; and
d)commitments of each of the de facto partners that are necessary to enable the partner to support —
i) himself or herself; and
ii) a child or another person that the party has a duty to maintain; and
e)the responsibilities of either party to support any other person; and
f)subject to subsection (4), the eligibility of either party for a pension, allowance or benefit under —
i) any law of the Commonwealth, of a State or Territory or of another country; or
ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
and the rate of any such pension, allowance or benefit being paid to either party; and
g)a standard of living that in all the circumstances is reasonable; and
h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
i)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
j)the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
k)the need to protect a party who wishes to continue that party's role as a parent; and
l)if either party is cohabiting with another person, the financial circumstances relating to the cohabitation; and
m)the terms of any order made or proposed to be made under section 205ZG in relation to the property of the parties; and
n)any child support under the Child Support (Assessment) Act that a de facto partner has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship; and
o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
p)the terms of any financial agreement or former financial agreement that is binding on the parties.
110Section 205ZD(4) – which is referred to in s 205ZD(3) – is as follows:
4)In exercising its jurisdiction under this section, a court must disregard any entitlement of the de facto partner whose maintenance is under consideration to an income tested pension, allowance or benefit.
111I discussed the law relating to property settlement (albeit as it relates to analogous FLA provisions) in my decisions in Dekker & Dekker [2014] FCWA 61 and Fullgrabe & Fullgrabe [2015] FCWA 9 – although I acknowledge Thackray CJ's references to the former decision in Fielding & Nichol [2014] FCWA 77.
112Relevantly, I referred to the effect of the High Court's decision in Stanford v Stanford (2012) 247 CLR 108 (“Stanford”) and the Full Court's decisions in Bevan & Bevan [2013] FamCAFC 116, Bevan & Bevan [2014] FamCAFC 19 and Chapman & Chapman [2014] FamCAFC 91 and acknowledged that the Full Court has ruled that:
a)it would be a "fundamental misunderstanding" to read Stanford as suggesting that the matters referred to in FLA s 79(4) (FCA s 205ZG(4)) must be ignored in determining whether it is just and equitable to make an order altering property interests;
b)on the other hand, a consideration of the FLA s 79(4) (FCA s 205ZG(4)) matters is not mandatory in answering the FLA s 79(2) (FCA s 205ZG(3)) question;
c)the just and equitable requirement is not "a threshold issue, but rather one permeating the entire process"; and
d)while the FLA s 79(4) (FCA s 205ZG(4)) and FLA s 79(2) (FCA s 205ZG(3)) issues must not be conflated, "they are intertwined because the text of the [FLA] links them" (and the same can be said, of course, regarding the text of the FCA).
113For the reasons given in the decisions to which I have referred, and assuming a "step" or "stage" based approach to the determination of an application brought pursuant to the provisions of s 205ZG (which I shall call "the property settlement exercise") is still appropriate, it is arguable that an acceptable approach to the determination of such an application is as follows:
a)The first step in the property settlement exercise is to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in their property.
b)The second step involves ascertaining whether it is just and equitable – within the meaning and contemplation of s 205ZG(3) – to make an order altering the interests of the parties in their property. In most cases (relevantly, where the parties have separated and are no longer living in a marital or de facto marital relationship) the underlying assumptions that the parties had to the effect that the existing property ownership arrangements were functional (or perhaps irrelevant) and could be varied by agreement between them, no longer apply. That fact alone should ordinarily persuade the Court that it is just and equitable to make orders altering the parties' interests in their property. It is only after the Court has concluded that it is just and equitable to make such orders that it should proceed to take what might be regarded as the third and fourth steps.
c)In the course of ascertaining whether it is just and equitable to make an order altering the interests of the parties in their property (in other words, during the second step described above) it is legitimate to consider the contributions of the parties in all their various guises, but consideration of those matters at this stage of the property settlement exercise is not obligatory; still less is that consideration conclusive in determining whether "the 'just and equitable' test" has been met.
d)In the third step, the Court should identify and assess the contributions of the parties within the meaning of ss 205ZG(4)(a), (b) and (c), and determine their contribution-based entitlements.
e)In the fourth step, the court should identify and assess the relevant matters referred to in ss 205ZG(4)(d), (e), (f) and (g) – including, because of s 205ZG(4)(e), the matters referred to in s 205ZD(3) so far as they are relevant – and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established as a consequence of the previous step.
f)Finally, the Court should consider the effect of the various findings and assessments it has made and make such orders as it considers are just and equitable in all the circumstances. As I have discussed in the cases to which I have referred, my view is that this process does not amount to an opportunity to make a further substantive "adjustment"; it is an opportunity for the Court to determine finally how, in reality, just and equitable orders might be achieved having regard to all the circumstances of the case (although I note that the Full Court appears to have taken a somewhat different approach in Keenan & Keenan [2015] FamCAFC 122 at [84] and [118] – [119]).
g)Throughout the process described above, the Court must bear in mind that the prohibition against making an order under s 205ZG unless the Court is satisfied that, in all the circumstances, it is just and equitable to make the order – see s 205ZG(3) – is neither "a threshold issue" nor some sort of "factor" to be considered wholly within one or more of the steps or stages referred to. Instead, it pervades and informs the entire process.
Property and liabilities at the date of trial
114The first step in the property settlement exercise relates to the identification and valuation of the property of the parties at trial. It includes the identification, according to ordinary common law and equitable principles, of the existing legal and equitable interests of the parties in their property.
115Subject to comments to be made later in these Reasons, I find that the parties' property and liabilities (as at the date of trial) are as set out and identified in the following schedule, which I shall call "the property schedule".
Property Schedule | ||||||||||||||
| Assets, Liabilities and Superannuation | Ownership | |||||||||||||
| Joint property | ||||||||||||||
| 1 | [Property A] | Joint | $525,000 | |||||||||||
| Less: BankWest mortgage #1 (Home Loan) | Joint | ($222,197) | ||||||||||||
| Less: BankWest mortgage #2 (Shop Loan) | Joint | ($108,440) | $194,363 | |||||||||||
| 2 | Household Furniture | Joint | $0 | |||||||||||
| 3 | Debt re [HSV] | Joint | ($15,000) | $179,363 | ||||||||||
| Applicant’s property | ||||||||||||||
| 4 | [HSV] | Applicant | $15,000 | |||||||||||
| 5 | Scooter | Applicant | $0 | |||||||||||
| 6 | 1971 [GTS Monaro] | Applicant | $10,000 | |||||||||||
| 7 | Cash removed from mortgage | Applicant | $8,449 | |||||||||||
| 8 | Engagement ring | Applicant | $800 | |||||||||||
| 9 | BankWest Easy account | Applicant | $0 | $34,249 | ||||||||||
| 10 | Credit card debt | Applicant | ($5,071) | |||||||||||
| 11 | Mobile phone account | Applicant | ($2,000) | |||||||||||
| 12 | Electrician account | Applicant | ($1,000) | |||||||||||
| 13 | Moneys owed to applicant’s parents | Applicant | ($23,000) | ($31,071) | ||||||||||
| Respondent’s property | ||||||||||||||
| 14 | [Beautician] Salon business (defunct) | Respondent | $0 | |||||||||||
| 15 | Cash removed from son’s account | Respondent | $8,000 | |||||||||||
| 16 | Cash removed from mortgage | Respondent | $26,000 | $34,000 | ||||||||||
| Superannuation | ||||||||||||||
| 17 | Applicant’s superannuation entitlements | Applicant | $77,165 | |||||||||||
| 18 | Respondent’s superannuation entitlements | Respondent | $7,364 | $84,529 | ||||||||||
| Total: | $301,070 | |||||||||||||
116It can be seen from the property schedule that the total net value of the parties' property is $301,070 – of which $77,165 comprises the value of the father's superannuation entitlements at trial. The value of the mother's superannuation entitlements at trial was $7364.
117It was not in dispute that the parties' respective superannuation entitlements should be included in the overall "pool" of property available for distribution between them. Further, there was no suggestion that the parties' contributions to their superannuation interests should be treated or assessed any differently to their contributions to other items of property. In other words, a "global" approach was adopted. It was accepted, however, that – unlike proceedings for alteration of property interests under the FLA – the Court does not have power in proceedings for alteration of property interests under the FCA to order what is commonly referred to as a superannuation split. In other words, the Court does not have power to alter the parties' interests in their superannuation entitlements. It follows that, irrespective of the outcome of the proceedings, each party will retain his/her superannuation entitlements.
Composition of the property schedule
118By the conclusion of the trial, all the items contained in the property schedule were agreed. As I have indicated, it was also agreed that the Company's debt to the ATO should be excluded from the property schedule on the basis that the mother would assume full responsibility for it – or, more accurately, on the basis that she would assume full responsibility for any potential claim the Liquidators may have against her as the sole director of the Company.
119By excluding the mother's potential liability to the ATO for the purpose of identifying and valuing the property of the parties at trial, I am not suggesting that the mother does not have such a liability. The reality is, however, that the evidence before me does not enable me to make any clear findings as to the amount of the liability or the probability of the Liquidators or the ATO taking steps to recover it from her. In those circumstances, I am entitled to take the potential liability into account as a relevant factor under s 205ZD(3)(b) and/or (o).
Preliminary considerations
120Before proceeding further with what might be perceived as the next relevant step in the property settlement exercise, it is pertinent to record that I do not propose to proceed with that exercise by applying a general assumption to the effect that the parties' rights to or interests in their property should be different from those that now exist. I reject that assumption. In other words, I recognise that the core issue for determination in these proceedings is whether the parties' rights to and interests in the property contained in the property schedule should be altered: see the High Court's decision in Stanford.
121It is also pertinent to record that consideration of the various factors in s 205ZG(4) – including the parties' contributions in all their various guises – does not automatically give rise to a right on the part of either of the parties to have the property contained in the property schedule divided between them by reference to those factors. The "just and equitable" requirement in s 205ZG(3) must be (separately) considered and applied. I am conscious of the need not to conflate the requirements or considerations contained in s 205ZG(3) on the one hand, and s 205ZG(4) on the other.
122As explained above, however, the parties in this case separated years before the commencement of property settlement proceedings. It is readily apparent that the express and implicit assumptions underpinning the property arrangements they had made during their cohabitation have been brought to an end by the "severance of the mutuality of the marital relationship" – or, in this case, the severance of the mutuality of the marriage-like relationship. Further, any assumption the parties may have had to the effect that they could change or adjust their property arrangements consensually (as each may need or desire) no longer applies. It follows that it can be considered just and equitable that the Court should make a property settlement order (which order is to be determined by applying s 205ZG(4), including the s 205ZD(3) factors): see, again, the High Court's decision in Stanford. Indeed, I find that, in the circumstances of the case now before me, it is just and equitable within the meaning of s 205ZG(3) to alter the existing interests held by the parties in their property.
123I would add that both parties want the Court to make orders altering their property interests now that their relationship has ended.
Contributions
124Having identified the pool of property available for distribution between the parties, I now turn to consider the next "step" in the property settlement exercise – namely, the identification and assessment of the parties' contributions in all their various guises.
125In Dickons & Dickons [2012] FamCAFC 154, the Full Court said at [24]-[25]:
There can be little doubt that the classification of contributions by reference to terms such as "initial contributions", "contributions during the relationship", and "post-separation contributions", can be helpful as a convenient means of giving coherent expression to the evidence in a s 79 case and to giving coherence to the nature, form and extent of the parties' respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
Doing so is also consistent with the demands of authority that the ultimate assessment of contributions should be made without "…giving over-zealous attention to the ascertainment of the parties' contributions…" (Norbis v Norbis (1986) 161 CLR 513 at 524) and the well-established recognition in the authorities ... that the process required of the Court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise.
126Further, it is not always possible to balance "like with like", in that the parties' various contributions can have very different characteristics and may carry very different weight. Similarly, the timing of the forms of contribution can be telling. In a very broad sense, the exercise is what might be considered an imprecise, macrocosmic one – as opposed to a detailed, microcosmic analysis of the source and destination of each dollar passing through the parties' hands and their every action, inaction or reaction (however small or insignificant).
127Notwithstanding that the father and his witnesses were not cross-examined regarding the date upon which cohabitation commenced, the mother and her parents were challenged on their version of events. In my opinion, they were balanced and credible witnesses. I accept their evidence to the effect that the parties did not commence cohabitation until after the purchase of Property A in July 2004. I also accept, however, that the mother spent a great deal of time with the father between the commencement of the relationship and cohabitation beginning. Little turns on when cohabitation actually commenced, because the parties comprised a "couple" in every relevant sense – even if the mother returned to her own home to sleep on most occasions. On her own case, she spent almost every evening at the home of the father and his parents.
128Although the mother did not concede that the father had approximately $30,000 at the commencement of the relationship, I am prepared to accept that he had these funds. The father also had a motor vehicle. He had little else of value.
129The mother had no property of any significance at the commencement of the parties' relationship.
130Shortly after the mother obtained her driver's licence (in or about 2003), her father purchased a motor vehicle for her.
131During the first two years of their relationship (or thereabouts), the parties spent a great deal of time at the home of the father's parents. I accept the father’s parents helped the parties by meeting various expenses on behalf of the father, some of which may have been attributed to the mother. At the same time, the mother lived with her mother without having to pay board.
132The father's income has always been modest. He has no skills or qualifications. Until the mother completed her apprenticeship, he is likely to have earned more than her. After she completed her apprenticeship, however, the mother's income was greater than the father's income. I do not accept that the father ever earned more than the mother after she completed her apprenticeship.
133I accept that the father's parents gave the parties a refrigerator when they commenced living together and provided the parties with modest amounts of money from time to time during the cohabitation. The amount involved totalled approximately $5000.
134Both parties' families also purchased items for A when he was born. Nothing turns on whether one family was marginally more generous than the other in this regard.
135According to the father, the mother received an inheritance of $10,000: see the father's papers for the judge at p 14.
136I accept that both parties, and members of their families (in particular, their fathers), contributed time and effort towards the renovations and improvements to Property A. I am not satisfied that one family's contributions in this regard were of greater weight than the other family's contributions. Clearly, the father spent more time working on Property A than did the mother – but that was largely because the mother was required to work in the Salon.
137I am satisfied that the parties agreed that the acquisition of the Salon was a sound and sensible decision. The father deposed to the business being profitable during the relationship, and to the parties enjoying a good lifestyle after its purchase. Income from the Salon was used to meet a significant proportion of the parties' living and entertainment expenses. It was also used to assist with the cost of renovations to Property A and for holidays for the parties. In this regard, I am satisfied that the mother's financial contributions to the acquisition, conservation and improvement of the parties' property – during the period from the commencement of cohabitation to the date of separation – were significantly greater than those of the father (even taking into account his initial financial contribution of $30,000; his other early financial contributions were modest). I find that the father had minimal involvement in the running of the Salon and made no significant contribution to its profitability, save that he cared for A at times when the mother was obliged to work in the business.
138I accept that both parties withdrew funds from the mortgage facility or their savings at or around the time of separation. It has been agreed, however, that the relevant amounts should be included in the property schedule. It is unnecessary, therefore, for me to take these figures into account in some other way.
139Until October 2011, each party was paying 50% of the home loan (notwithstanding that the father was living in Property A and the mother had been obliged to obtain rental accommodation elsewhere), and the mother was paying the (interest only) instalments in respect of the shop loan. In the circumstances discussed elsewhere in these Reasons, the mother found herself unable to continue contributing to the home loan. She continued to service the shop loan until late 2013. Since that time, the Salon has ceased to operate and father has serviced both loans.
140I have discussed the acquisition of the HSV and the manner in which it was dealt with after the mother found herself unable to meet the final "balloon" payment. As already noted, the effect of the arrangements put in place by the father appears to be that he now owns the vehicle, but owes his parents $15,000 – which is equivalent to its current value. To use a colloquialism, the mother has been left "holding the baby": she owes the finance company $15,000, but no longer has possession of the car she used as her own from its acquisition in 2008 until its repossession in May 2014, and in respect of which she (through the Salon) met all lease repayments and other running costs until the final default.
141I accept that the parties shared the household duties while they lived together, with the mother doing somewhat more than the father inside the house and the father doing somewhat more than the mother in the garden and outdoors. I am satisfied, however, that the mother has been A's primary caregiver since his birth. Her contributions in this regard, which were greater than those of the father while the parties lived together, became much more significant after separation. That is not to say that the father and his family did not assist with A's care; they did, but I am satisfied that the mother's contributions in this regard have greatly outweighed those of the father and his family from the date of A's birth to the present time.
142In spite of the father's attempts to construe the loss of the Salon business as being some form of "negative contribution" on the mother’s part, I am not satisfied that I should deal with the subject in that way (to the extent that the concept of "negative contribution" may exist).
143In Kowaliw & Kowaliw (1981) FLC 91-092 (“Kowaliw”), Baker J said at 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
167The father is employed by [Company H] as a sales representative. According to his financial statement, he has worked there for approximately three years. His total wages (before tax) are just over $55,000 per annum. As explained elsewhere in these Reasons, he has no qualifications or employment skills.
168The mother is primarily responsible for the care and supervision of A. She also cares for her son from her relationship with Mr S.
169I accept that the mother is unable to exercise her earning capacity at the present time, due to her responsibilities associated with the care and supervision of her children. I am satisfied, however, that the mother will be able to return to work as a beautician within the next few years, when her younger son starts formal education. In the past, and even prior to the acquisition of the Salon, the mother's income from beautician work was greater than the father's income from paid employment. I find, therefore, that although the father's earning capacity and income are likely to be greater than that of the mother for the next three or four years, their earning capacity after that time is likely to be similar.
Children under 18
170The mother is primarily responsible for the care and control of A, although he spends substantial and significant time with the father.
Financial commitments
171There is no evidence to suggest that this is a relevant factor. It did not feature in the documents or submissions of either party.
172I note, however, that the mother and Mr S have a legal obligation to support their son.
Responsibilities to support any other person
173There is no evidence to suggest that the father has the responsibility to support anyone other than himself and A. Similarly, there is no evidence to suggest that the mother has the responsibility to support anyone other than herself and her two sons.
Eligibility for pension, allowance or benefit
174I have referred to the parties' superannuation entitlements elsewhere in these Reasons. The Court does not have power to split those entitlements in any relevant way.
175The father receives Government benefits amounting to some $35 per week, being Family Tax Benefit A and B. The mother receives Government benefits totalling approximately $460 per week, in the form of parenting/family benefits.
Reasonable standard of living
176It is not in dispute that both parties are entitled to a reasonable standard of living. The father hopes to retain Property A, which provides adequate, although relatively modest, accommodation for himself and A when he is with him.
177The mother and Mr S live in rented accommodation. Their standard of living is modest. If the mother is eventually required to contribute towards the Company's debt to the ATO, then it is likely that she will become insolvent. The mother's intention is to contribute any moneys she receives from the current proceedings towards the reduction of the Company's debt to the ATO. She hopes to thereby stave off the possibility of bankruptcy.
Maintenance in the context of education or retraining
178This is not a relevant consideration, and neither party suggested it should be taken into account.
Duration of the relationship and its effect on earning capacity
179I have discussed the financial history of the parties' relationship elsewhere in these Reasons. The length of the relationship, in itself, has not affected each party's earning capacity.
Need to protect party's role as a parent
180As I have explained, the mother wishes to continue in her role as primary caregiver for A and her younger son. Beyond that observation, this does not appear to be relevant consideration. Neither party placed emphasis on it.
Cohabitation with another person
181The father is not cohabiting with anyone.
182The mother is in a de facto relationship with Mr S. She has lived with him for approximately 3 ½ years. He works in "[home improvement]". Although he has been unemployed in the past, he now works for a home improvement firm and earns approximately $73,000 per annum although, with favourable overtime arrangements, he could earn in excess of that amount.
183Mr S is 38 and appears to have no significant assets. He and the mother contribute towards their joint expenses from his income and the mother's Government benefits. As indicated above, Mr S and the mother live in rented accommodation – with their child and A (when he is with them).
Child support
184The parties have not put in place a formal arrangement dealing with child support. Neither has sought a relevant assessment under the child support legislation. Each party meets the expenses associated with A's care while he is with them. The parties also meet other costs for A on an equal basis by agreement.
185There is a possibility that, following these proceedings, the mother will apply for a formal assessment from the Child Support Agency. At the end of the day, however, it seems clear that this does not appear to be a relevant consideration – and neither party suggested that it is.
Any other fact or circumstance
186As I have explained elsewhere in these Reasons, FCA s 205ZD(3) does not currently direct the court to take into account the effect of any proposed order on the ability of a creditor to recover the creditor's debt; nor do the provisions of the FCA provide specifically that a creditor of a party to the proceedings is entitled to become a party to property settlement proceedings if the creditor may not be able to recover a relevant debt. In other words, the FCA does not currently direct the court to take into account the effect of the orders proposed by the father on the ability of the ATO to recover the moneys owed by the Company and potentially owed by the mother. As I have also explained, however, I am satisfied that public policy requires me to take such a consideration into account under s 205ZD(3)(o).
187The evidence reveals that the ATO may be minded to seek to recover something in the order of $133,000 from the mother. The Company itself owes approximately $186,000 in respect of outstanding taxes, with penalties and interest.
188If the Court were to make the orders sought by the father, the mother's interest in Property A would become the father's property. Thereafter, the chances of the ATO recovering moneys from the mother would be negligible.
189The mother has agreed to assume full liability for the Company's debt to the ATO and does not expect the father to contribute to it. On the other hand, she seeks to receive her just and equitable entitlements by way of property settlement, so that she can meet (in whole or in part) what she regards as her liability to the ATO. She appears to anticipate that she will be able to avoid bankruptcy by making a payment offer to the ATO.
Conclusion in relation to the s 205ZD(3) factors
190In my opinion, the most significant of the s 205ZD(3) factors are the current imbalance in the parties' respective earning capacities and the fact that the mother is A's primary caregiver. I also bear in mind that the mother is cohabiting with Mr S whose current income appears to be greater than that of the father. Additionally, the father is in a much stronger financial position than that in which the mother finds herself – which is relevant to the parties' respective standards of living.
191The potential liability for some $133,000 confronted by the mother is, arguably, a very significant factor bearing directly on the mother's financial position. Having regard to the manner in which the parties conducted their cases, however, I have not taken the liability into account. To do so, it seems to me, would be to defeat the agreement reached between the parties to the effect that the wife would bear sole responsibility for the potential debt to the ATO. That agreement was based on an understanding that the father should not be held responsible for the non-payment of the relevant taxes (which occurred on the mother's watch, as it were). I am conscious, however, that ignoring the potential liability risks a form of imbalance in the property settlement exercise. After all, the parties benefited from the income derived from the business, which was used to pay, among other things, half of the home loan instalments for a period of time, the whole of the shop loan instalments until the Salon was closed and the instalments due in respect of the HSV. The funds available to the parties would have been significantly less – in the last few years of the business, at least – if tax had been paid as and when it fell due.
192Having regard to the above matters and all the other matters discussed under the general heading of the s 205ZD(3) factors (although ignoring the mother's potential liability to the ATO), I conclude that an appropriate adjustment of the parties' entitlements on the basis of contribution alone is to increase the mother's entitlement by 5% – so that the overall distribution of the parties' property between them should be on the basis of 50% to each. To fail to make such an adjustment in the circumstances of this case would be to run the risk of making orders which are neither just nor equitable.
193As I have indicated, it is arguable that the appropriate adjustment to take account of the s 205ZD(3) factors would be considerably greater than 5% if the mother's potential liability to the ATO were to be taken into account. The fact of the matter is, however, that the mother did not seek more than 50% of the property reflected in the property schedule. Her view was that an equal division of the property reflected in the property schedule (with her to assume sole liability for the ATO debt) would amount to a just and equitable result.
194I have already referred to the Full Court's observations in G & G (supra) and Coleman J's comment in Steinbrenner & Steinbrenner (supra). In this case, as in many others, the "balancing exercise" that the Court must perform is neither easy nor non-contentious. I am satisfied, however, that my discretion has been exercised in such a manner as to avoid a result that is something other than just and equitable.
Just and equitable?
195As indicated above, the High Court in Stanford explained that the consideration of the various factors in s 205ZG – which includes reference to the s 205ZD(3) factors – does not automatically give rise to a right on the part of one or other of the parties to have the property divided between them by reference to those factors. The requirement contained in s 205ZG(3) must be considered and applied.
196In this case, and as discussed above, the parties separated well before the commencement of property settlement proceedings. It is arguable, therefore, that the express and implicit assumptions that underpinned the property arrangements that they had made during their cohabitation had been "brought to an end by the voluntary severance of the mutuality of the [marriage-like] relationship". It follows that it is just and equitable for the Court to make a property settlement order. That order is to be determined by applying s 205ZG(4), although, clearly, the form of the order must also be just and equitable.
197In any event, I propose to (metaphorically) step back and consider whether the outcome achieved by my consideration of the parties' contributions and the s 205ZD(3) factors has brought about a just and equitable result.
198Before turning to mathematics and the relevant calculations necessary to breathe life into the conclusions I have reached, it is necessary to define a "starting point", as it were. In other words, I will record that – as I understand the orders sought by the parties – the father will be retaining all the items under the heading Joint property and Applicant's property, together with his superannuation entitlements. In other words, he will be retaining items #12 to #13 (inclusive) and #17. I am aware that items #2, #5 and #9 comprise items with a nil balance. The mother will be retaining the items under the heading Respondent’s property, together with her superannuation – being items #14 to #16 (inclusive) and #18. Once again, I am aware that item #14 (being the Salon business) has a nil value.
199It follows from the above that the total net value of the property currently in the father's possession or under his control is $259,706. It also follows that the total net value of the property currently in the mother's possession or under her control is $41,364.
200If each party is entitled to 50% of the total net value of the property available for distribution between them (including, of course, the parties' superannuation entitlements), then they are each entitled to property to the value of $150,535 (being 50% of $301,070). As indicated above, the total net value of the property currently in the mother's possession or under her control is $41,364. It follows that if the mother is to retain the property currently in her possession, then the father must pay her $109,171 (being the shortfall between her entitlement of $150,535 and the value of the property presently available to her, being $41,364).
201I am aware that –
a)the vast majority of the property available to the father comprises the parties' net interest in Property A and his superannuation entitlements;
b)item #7 comprises a "notional" asset (being moneys of which the father has had the benefit but which are no longer in existence);
c)the majority of the property available to the mother comprises "notional" assets (being moneys of which the mother has had the benefit but which are no longer in existence: see items #15 and #16); and
d)the only other property available to the mother comprises her very modest superannuation entitlements.
202It is unfortunate that the Court lacks the power to split the parties' superannuation entitlements between them (which power is available to it under the FLA). In reality, this means that the options available to the father to meet the payment to the mother that I have deemed appropriate are limited. To that extent, I record that I am mindful of the fact that there may be little alternative but to sell Property A. At the same time, I recognise and accept that the father's desire is to retain Property A if it is possible for him to do so. The mother does not begrudge the father that opportunity, and it is fitting that orders should be crafted in such a way as to provide it.
203Finally, I am very conscious that justice and equity must be done to both parties. I am satisfied that the split I have proposed achieves that result. In other words, I am satisfied that the orders I propose to make are just and equitable.
Form of orders
204I propose to give the father an opportunity to retain Property A if he is able to do so.
205If the father wishes to retain Property A, then he will be obliged to pay the mother $109,171. The father will also be obliged to refinance the property, so that the mother is no longer liable under the mortgage securing the two loans.
206There is a possibility that the parties will agree that the father should transfer the HSV to the mother at its agreed value of $15,000, thereby reducing the cash amount he is required to pay the mother to $94,171. This is a matter that should be discussed between them.
207I accept that the father may not wish to retain Property A because he may be unwilling or unable to accept responsibility for the amount currently owing in respect of the mortgage, together with a further borrowing to enable the payment to the mother. Alternatively, the father may not be able to borrow the additional funds necessary to meet the relevant payment to the mother. In those circumstances, the father may have no option but to sell Property A.
208Given that the Court was provided with no evidence of the likely costs associated with the sale of Property A, it seems to me that – if it must be sold – the fairest approach is to define the amount payable to the mother pursuant to these Reasons as a percentage of the anticipated net proceeds of sale (as reflected in the property schedule). In other words, if the parties agree to the HSV being transferred to the mother at its agreed value of $15,000, the father will be obliged to pay the mother $94,171 – which equates to 48.45% of the net value of Property A as it appears in the property schedule (being 48.45% of $194,363). If the parties do not agree to the transfer of the HSV to the mother, then the father will be obliged to pay the mother $109,171 – which equates to 56.16% of the net value of Property A.
Orders
209Subject to the parties' submissions, and on the assumption that the parties are agreeable to the transfer of the HSV to the mother, I propose to make the following orders:
(1) In these orders –
(a)"the Payment" means the sum of $94,171 payable by the father to the mother pursuant to paragraph 2 below;
(b)"[Property A]" means the property situated at and known as [A Road, Suburb H] in the State of Western Australia (which property is more particularly described as Lot XXX on Diagram XXXXX and being the whole of the property described in Certificate of Title Volume XXXX Folio XXX).
(2)The father must pay the Payment to the mother within 90 days of the date of these orders.
(3)In the event of the father failing or refusing to pay the Payment to the mother strictly in accordance with paragraph (2) above –
(a)The parties must forthwith do all such acts and things and sign all such deeds, contracts, authorities, transfers and other documents as may be required to effect a sale of Property A for the best price reasonably available.
(b)The parties be appointed trustees for the sale of Property A, and upon completion of the sale of Property A in accordance with these orders, the net proceeds of sale be disbursed as follows:
(i)firstly, to pay all costs, commissions and expenses of the sale;
(ii)secondly, to discharge the mortgage presently encumbering Property A (being the mortgage securing what the parties have referred to as the home loan and the shop loan);
(iii)thirdly, to adjust and pay all outstanding municipal and water and sewerage rates relating to Property A; and
(iv)finally, to pay the balance to the parties in the following proportions:
(A)51.55% to the father; and
(B)48.45% to the mother ("the mother's sale proceeds").
(c)The parties must do all acts and things reasonably required to facilitate the listing of Property A for sale, and to facilitate access to Property A as and when reasonably required by any agent or auctioneer appointed by the parties or by any prospective purchaser.
(d)Each party have liberty to apply for procedural or mechanical orders for the purpose of implementing the sale of Property A and the disbursement of the net proceeds of sale in accordance with the provisions of these orders.
(4)Pending the payment of the Payment to the mother (in the event of (2) above being strictly complied with) or the mother receiving the mother's sale proceeds (in the event of Property A being sold pursuant to (3) above) –
(a)the parties hold their respective interests in Property A upon trust pursuant to these orders;
(b)the father have the sole use and occupation of Property A, and during that right of occupation the father must pay as and when they shall fall due, be solely liable for and indemnify the mother against the following outgoings relating to Property A:
(i)all mortgage payments and all payments due under or in accordance with all encumbrances registered against Property A;
(ii)all municipal and water and sewerage rates;
(iii)the premiums for the continuation of current insurance policies on the house, and on the contents located in Property A; and
(iv)utility expenses including, but not limited to, gas, electricity and telephone usage; and
(c)both parties, their servants and agents be restrained by injunction from:
(i)disposing of, transferring, assigning, adversely dealing with, charging, encumbering, further encumbering or otherwise dealing in any way whatsoever with Property A (save for the sole purpose of enabling the father to borrow sufficient funds to enable the Payment to be made);
(ii)removing any fixtures or fittings from Property A; and
(iii)doing, causing, authorising or facilitating any act or thing which has or may have the effect of diminishing the utility or aesthetic appeal of Property A (or any part thereof) in any way whatsoever and/or diminishing the value of Property A (or any part thereof)
(5)Upon the mother receiving the Payment (in the event of (2) above being strictly complied with) or receiving the mother's sale proceeds (in the event of Property A being sold pursuant to (3) above) –
(a)the mother must –
(i)unless Property A has been sold pursuant to (3) above, transfer and assign to the father, at the father's expense, all her right, title, share and interest (if any) in Property A; and
(ii)indemnify the father and keep him indemnified from all debts, liabilities and obligations of the father relating to or arising out of the Salon, the Company and/or the Trust, and from all actions, proceedings, costs, claims and expenses in respect thereof;
(b)the father must –
(i)unless Property A has been sold pursuant to (3) above, indemnify the mother and keep her indemnified from all debts, liabilities and obligations of the mother relating to or arising out of the mortgage presently encumbering Property A (being the mortgage securing what the parties have referred to as the home loan and the shop loan), and from all actions, proceedings, costs, claims and expenses in respect thereof;
(ii)transfer and assign to the mother all his share and interest (if any) in the Salon, the Company and the Trust;
(iii)transfer to the mother, or to her nominee, his shareholding (if any) in the Company;
(iv)resign any office he may hold in the Company and/or the Trust (including, but not limited to, the office of director of the Company); and
(v)transfer and assign to the mother the whole of his share and interest in any loan account or indebtedness due or owing by him to the Company or the Trust or due or owing to him by the Company or the Trust.
(6)The father must forthwith transfer and assign to the mother all his share and interest (if any) in the following:
(a)the HSV;
(b)the furniture, chattels and effects presently in the mother's possession;
(c)all moneys standing to the mother's credit in any account in any bank, building society or other financial institution; and
(d)the mother's superannuation entitlements.
(7)The mother must forthwith transfer and assign to the father all her share and interest (if any) in the following:
(a)the father's scooter;
(b)the 1971 GTS Monaro;
(c)the engagement ring presently in the father's possession;
(d)all moneys standing to the father's credit in any account in any bank, building society or other financial institution; and
(e)the father's superannuation entitlements.
(8)The mother must indemnify the father and keep him indemnified from any liability of the father regarding the St George HSV loan relating to the HSV, and from all actions, proceedings, costs, claims and expenses in respect thereof – and, for the sake of clarity, the said indemnity specifically excludes the father's liability to his parents in respect of the amount (expressed in the property schedule to be $15,000) he borrowed from them in order to discharge his liability for moneys then owing on the HSV.
(9)Except as otherwise provided for in these orders:
(a)the father retain the property in his possession and the mother have no legal or beneficial interest in the said property;
(b)the mother retain the property in her possession and the father have no legal or beneficial interest in the said property;
(c)the parties each be solely responsible for any liabilities in their respective names and indemnify the other party and keep that party indemnified in relation to such liabilities;
(d)the father indemnify and keep indemnified the mother from all debts, liabilities and obligations of the mother relating to or arising out of the property to be retained by the father pursuant to these orders, and from all actions, proceedings, costs, claims and expenses in respect thereof; and
(e)the mother indemnify and keep indemnified the father from all debts, liabilities and obligations of the father relating to or arising out of the property to be retained by the mother pursuant to these orders, and from all actions, proceedings, costs, claims and expenses in respect thereof.
(10)All extant applications and/or responses relating to property settlement otherwise be dismissed.
(11)In the event that either party proposes to seek costs from the other party, the party seeking costs must, within 28 days, file and serve a minute of orders sought as to costs and any written submissions that party wishes to make ("the costs application documents").
(12)In the event that a costs application is made, the party from whom costs are sought must, within 28 days of service upon him/her of the costs application documents, file and serve a minute of orders sought as to costs and written submissions in response ("the costs response documents").
(13)In the event that any party wishes to make oral submissions with respect to costs, that party must, within 14 days of service of the costs response documents upon the party seeking costs, write to the Court requesting that the matter be listed for a special appointment and setting out:
(a)the available dates for the parties to appear; and
(b)the likely length of the special appointment.
(14)Prior to writing to the Court in accordance with the preceding paragraph, the parties must confer with respect to their availability and the likely length of the special appointment.
(15)In the event that neither party seeks to make oral submissions as envisaged in paragraph (13) above, any costs application be determined on the papers.
I certify that the preceding [209] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court
Associate
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