Ibbott and Ibbott and Anor

[2008] FMCAfam 38

FEDERAL MAGISTRATES COURT OF AUSTRALIA

IBBOTT & IBBOTT & ANOR [2008] FMCAfam 38

FAMILY LAW – Property – marriage in excess of 20 years – modest asset pool – husband operated small business through proprietary company – both parties shareholders in company – wife director of company at times during marriage – monies withdrawn from company’s account and attributed as joint shareholders’ loans against names of the parties – company failed to make proper provision for payment of its debts particularly tax and workers compensation – company placed in liquidation – company seeks to intervene in proceedings – whether proceedings should be finalised in absence of husband – wife alleges husband wasted matrimonial property through excessive gambling – company seeks repayment of debts owed by parties to it – wife alleges debts largely responsibility of husband – company alleges monies withdrawn jointly utilised by parties for largely matrimonial purposes – wife seeks that the husband’s name be substituted for hers as debtor to the company – application of Part VIIIAA of Family Law Act – wife seeks order pursuant to section 90AE binding third party – just and equitable – whether foreseeable such order will result in payment of debt in full – assessment of contributions – negative contributions – s.75(2) factors.

Family Law Act 1975: ss.75(2); 79; 80; 90AA; 90AD; 90AE; 90AK; 92
Acts Interpretation Act 1901 (Cwlth): s15AB

Taylor v Taylor (1979) 143 CLR 1
Barro & Barro (1983) FLC 91-300
RLD & CBD & Ors (2006) FMCAfam 226
Lee Steere v Lee Steere (1998) FLC 91-626
Ferraro v Ferraro (1993) FLC 92-335;
Clauson v Clauson (1995) FLC 92-595
Wardman & Hudson (1978) FLC 90-466
Biltoft & Biltoft (1995) FLC 92-614
In the marriage of Spiteri 33 Fam LR 109
Russell v Russell (1999) FamCA 187
Waters & Jurek (1995) FLC 92-635
D & D [2003] FamCA 473
In the marriage of Kowaliw (1981) FLC 91-092

Applicant: MS IBBOTT

First Respondent: MR IBBOTT

Second Respondent: S PTY LTD.. (IN LIQUIDATION)

File number: ADC 1372 of 2007

Judgment of: Brown FM

Hearing dates: 30 November & 4 December 2007

Date of last submission: 19 December 2007

Delivered at: Adelaide

Delivered on: 11 February 2008

REPRESENTATION

Counsel for the Applicant: Mr Cameron

Solicitors for the Applicant: Townsends

Counsel for the 1^st Respondent: No appearance

Counsel for the 2^nd Respondent: Mr Berman

Solicitors for the 2^nd Respondent: Piper Alderman

ORDERS

1. The parties do all things necessary and execute all necessary documents to release the sum of one hundred and ninety-one thousand thirty-three dollars ($191,033.00) from the proceeds of sale of the former matrimonial home situated at Property G which proceeds are currently held on trust on their behalf to the Liquidator of S Pty Ltd.

2. In the event that either party fails to comply with order 1 hereof within 21 days of the date of these orders pursuant to section 106A of the Family Law Act the Registrar is authorised to execute all necessary documents to give effect to order (1) hereof.

3. The wife retain the balance of the proceeds of sale of the parties former matrimonial home.

4. Unless otherwise specified in these orders and except for the purpose of enforcing any payment of money due under these or any subsequent orders, each party be solely entitled to the exclusion of the other to all property (including choses in action) in the possession of each party and superannuation standing in the name of each party as at this date.

5. A copy of the reasons for judgment herein and the orders made today be served on the respondent husband by pre-paid post at his last known address.

6. The proceedings be otherwise dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Ibbott & Ibbott & S Pty Ltd is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
ADELAIDE

ADC 1372 of 2007

MS IBBOTT

Applicant

And

MR IBBOTT

First Respondent

S PTY LTD. LTD. (IN LIQUIDATION)

Second Respondent

REASONS FOR JUDGMENT

Introduction

1. Ms Ibbott and Mr Ibbott were married for nearly twenty two years.  During most of the marriage Mr Ibbott operated a trade business.  The business was operated through a proprietary company – S Pty Ltd. .

2. The business is now in liquidation and has many debts, the most significant of which are to the Australian Taxation Office and Workcover.  The business owes slightly in excess of $173,000.00.

3. For Ms Ibbott, it is a significant sum.  She is a person of modest means, who was engaged in household duties for much of the marriage.  She raised the parties’ two children now aged twenty and sixteen.  Currently she works as a sales assistant in a retail store.  She earns around $33,000.00 per annum.

4. Mr Ibbott may have been a good tradesman but he was not a very good business man nor astute in financial affairs.  At the end of the long marriage between the parties there are few assets available to be divided between them.  The most significant asset by far is the proceeds of sale of the parties’ former family home situated at Property G.  The sum is around $245,000.00.

5. It is Ms Ibbott’s position that consideration of justice and equity should ensure that she should receive the lion’s share of this sum, if not all of it.  The liquidators of S Pty Ltd. Ltd. have a different view, believing the sum should be utilised to pay the company’s debts.

6. During the marriage both Mr and Ms Ibbott were directors of the company from time to time.  They were the only shareholders, holding one share each.  The profits made by the company were distributed between them to minimise their liability for tax.  Obviously the company was small and the trade business was not a large concern.  Colloquially, S Pty Ltd was what is known as a “mum and dad company”.

7. More importantly, in the company’s financial records, both parties are recorded as having drawn considerable monies from its account.  In accounting parlance, these drawings are known as shareholders’ loan accounts.  The amount recorded in the accounts of the company as being Mr and Ms Ibbott’s shareholder loan accounts amounts to $191,033.00.  During the period these loans were recorded, the company was not paying its debts as they fell due, particularly to the Australian Taxation Office and to Workcover.

8. It is Ms Ibbott’s position that she was a director of the company and shared in its profits in name only and in reality knew little if anything about its affairs, which were managed by her husband and his accountant, Mr R.  She says she signed what she was asked to sign by her husband and Mr R and received little if any monies directly from the company, which was a creature of her husband’s.  Essentially she says she did not know what was going on and it would be both unfair and inaccurate to regard her as being indebted to the company, certainly not in an amount of $95,000.00 or more.

9. She further characterises the husband as a violent and wasteful person.  She asserts that Mr Ibbott has lost the majority of the profits made by

   
   

   S Pty Ltd in gambling on poker machines and horse racing. Activities which took place independently of her and in which she was powerless to prevent Mr Ibbott’s involvement.  As such, it is her position that the debts to the company should be regarded as being the responsibility of Mr Ibbott alone.  It being the case that he took and wasted the profits and failed to apply them where they should have been applied.

10. Although well aware of these proceedings, Mr Ibbott has not chosen to contest them.  No doubt he realises that whatever funds he may recoup from them are destined to be taken by the liquidators of the company and applied to its debts.  Accordingly he can see no point in defending the wife’s claim against the property of the marriage.

11. The liquidators of S Pty Ltd. have sought the court’s leave to intervene in the proceedings.[1]  It is their position that they have an interest in the proceedings, particularly how the proceeds of the sale of the G property are distributed. 

    [1] See Family Law Act at section 92

12. They argue that Mr and Ms Ibbott’s drawings from the company should be treated as a joint matrimonial debt and taken into account when the net pool of the parties’ assets, available for distribution between them, is calculated. 

13. They are disinterested as to how the court quantifies the parties’ respective contributions towards the acquisition of this net amount or how it is distributed afterwards, provided the company’s interests are protected at this first stage of proceedings and the debt is accounted for. 

14. In essence they argue that the parties’ debts to the company should be taken into account at the first step of the well known process by which courts, such as this one, divide property between spouses at the conclusion of marital relationships.

15. Failing the court taking this step, the liquidators seek an order by way of injunction preventing the distribution of the funds from the

    
    

    G property to either Mr or Ms Ibbott, pending them (the liquidators) taking other proceedings against Mr and Ms Ibbott to claw back the monies owed to company, which now should be properly allocated towards the payment of its debts.

16. Ms Ibbott argues that whatever monies the company is owed should be regarded as being the responsibility of her husband and accounted against his name alone, leaving the proceeds of sale of the G property to be distributed between her and Mr Ibbott, as the court deems appropriate according to the provisions of section 79 of the Family Law Act.. 

17. In essence she argues that the court should substitute Mr Ibbott’s name for hers, wherever it appears in the accounts of S Pty Ltd and after the court has concluded the necessary exercise under section 79 of the Family Law Act, the liquidators should pursue Mr Ibbott alone for the monies owed to the company, which now need to be applied to its creditors.

18. Accordingly this is a case concerned with the provisions of Part VIIIAA of the Family Law Act, which is entitled Orders and Injunctions Binding Third Parties.  Part VIIIAA was inserted into the Act in 2004.  Its provisions are fairly new and its application has not been subject to extensive judicial analysis. 

19. The balancing of the claims of one spouse on matrimonial property with those of any third party creditors which arise from a business operated largely by the other spouse during the period of the marriage concerned is a source of both complexity and controversy.  This is one such case.

20. Cases involving proprietary companies, operated nominally by spouses to divide profits arising from small family operated concerns are particularly problematic.  This is not a case were issues of personal insolvency arise and where the court is authorised to make distributions of property as between one of the parties to a marriage and the trustee in bankruptcy of the other spouse to it.[2]

    [2] See Family Law Act at section 31 and 79(1) and the definition of matrimonial cause in section 4.

21. Pursuant to section 90AE of the Family Law Act, the court is authorised to make orders under section 79 which bind third parties. In particular the court is authorised to substitute one party for both parties in relation to a debt owed to a creditor [section 90AE(1)(a)] and to alter the rights and property interests of a third party in relation to a marriage [section 90AE(2)(b)].

22. However, these powers are circumscribed.  In particular, it must be both reasonably necessary and appropriate for such orders to made and the third party concerned must be accorded procedural fairness before any such order is made.  Of particular importance in a case such as the present one, the court must not foresee, at the time of making an order effecting the rights of a third party, that the order will result in the debt concerned not being paid in full.  Above all, it must be just and equitable for such an order to be made [section 90AE(3)].

23. These proceedings are designed to resolve these various issues between the parties concerned.

Preliminary Issues

(a)   The absence of the husband from the proceedings

1. Ms Ibbott (the wife) commenced these proceedings on 14 March 2007 in the Family Court of Australia at Adelaide.  Mr Ibbott (the husband) was named as the sole respondent to her application. 

2. At that stage she sought orders that would have seen the sale of the

   
   

   G property and her receiving the net proceeds of its sale.  She also sought that the husband retain the S Pty Ltd business and its assets and be responsible for all its taxation debts.

3. On an interim basis, the wife also sought orders for the immediate sale of the G property and that the proceeds of sale be paid into an interest bearing account until the determination of the parties’ final applications.  She also sought an injunction restraining the husband from entering the G property and from harassing or assaulting her.

4. The husband responded to these applications on 10 May 2007.  He was represented by solicitors.  He sought that the net assets of the parties be divided equally between them.  He opposed a number of the interim orders sought by the wife but not the sale of the G property.  At this stage it seems that the mortgages on the property were in arrears and there were threats of foreclosure.  The husband sought that at least part of the proceeds of sale should be utilised for payment of some of the company’s liabilities.

5. On 23 March 2007 Burr J made orders requiring the parties to deposit the proceeds of sale of the G property into a jointly held interest bearing account until the finalisation of these proceedings.  By this stage an auction of the property had been organised. 

6. Burr J also ordered that the husband instruct Mr R to prepare the 2005/2006 and 2006/2007 financial statements and taxation returns for S Pty Ltd, so that the wife could be informed of the extent of the company’s taxation liabilities and her own position in regards to them.  The parties were referred to a conciliation conference.

7. On 13 July 2007 the proceedings were transferred to the Federal Magistrates’ Court.  At this stage both parties were legally represented.  The husband’s interim application, in respect of the possible utilisation of the proceeds of sale of the G property to pay some of the debts of the company, was struck out.

8. The matter first came before me on 1 August 2007.  Again both parties were represented by counsel.  I fixed the matter for final hearing before myself on 29 and 30 November 2007 and made consequential orders regarding the filing of affidavit material.  I am satisfied that the husband was aware both that the case had been fixed for trial and the dates on which it had been fixed.

9. The wife filed her various trial affidavits between 31 October and 9 November 2007.  The husband failed to comply with the orders requiring him to file answering material.

10. On 22 November 2007 the husband’s then solicitors filed a notice of ceasing to act.  The notice advised of Mr Ibbott’s postal address and informed Mr Ibbott that the matter had been listed before the court on 29 November 2007 for trial.  On 26 November Mr Ibbott filed a notice of address for service, giving as his address for service the postal address referred to in the notice of ceasing to act and providing a mobile telephone number.

11. My associate contacted Mr Ibbott on this mobile telephone number prior to 29 November to inquire of him what were his intentions in regards to the proceedings.  He informed her that he intended to work at a trade job at V on the days in question and would not be attending court.

12. Mr Ibbott did not appear at court on 29 November 2007, when the trial was first called on.  Due to another matter proceeding, the case was adjourned until the following day.  Again Mr Ibbott did not appear.

13. The court has an obligation to ensure that the parties to proceedings before it have an opportunity to participate in the proceedings.  Before a person can be adversely affected by judicial order, he or she must be afforded an adequate opportunity to be heard.[3]  In this case, I am satisfied that the husband is aware of these proceedings but, for reasons about which I can only speculate, has chosen not to take part in them. 

    [3]  See Taylor v Taylor (1979) 143 CLR 1

14. In all these circumstance, I am satisfied that the wife’s application should be dealt with in the absence of the husband and should not be adjourned in the vain hope that he will chose to take part in them in the future.  On balance I am satisfied that the husband is well aware of the proceedings and has been given an adequate opportunity to take part in them, which he has chosen not to take up.

15. The proceedings also concern another party – the liquidators of

    
    

    S Pty Ltd. (the company).  I am also satisfied that the husband is aware of the interest of the liquidators in the current proceedings. 

16. How could it be otherwise, given the nature of his interim application in the proceedings and the fact that on 15 August 2007 he completed a statement about S Pty Ltd’s financial circumstances for the Australian Securities and Investment Commission and what has happened subsequently.[4]

    [4] See Annexure “GD5” to the affidavit of Mr D filed 20 November 2007

(b)   The application by the liquidator to intervene

1. After the proceedings had been fixed for final hearing, S Pty Ltd (In Liquidation) filed a notice of intervention.  This notice was filed on

   
   14 September 2007

   .  It was supported by an affidavit of Mr D filed on the same day.

2. Mr D deposed that he had been appointed an administrator of

   
   

   S Pty Ltd. Ltd on 9 August 2007 with Mr H.  This appointment had come about as a result of the resolution of the company’s then sole director, Mr Ibbott.  No doubt this led to the completion of the company’s statement of financial circumstances, referred to above, by Mr Ibbott.

3. On 5 September 2007, the company’s creditors had resolved to place the company into liquidation and again he and Mr H had been appointed the company’s liquidators.  Mr D further deposed as to his understanding of the company’s unsecured loan payments to Mr and Ms Ibbott.

4. In his affidavit, Mr D deposed that he had written to both Mr Ibbott and Ms Ibbott, on 15 August 2007, requesting the repayment to the company of the sum of $191,033.00, being the monies he calculated were outstanding in respect of shareholder loan accounts standing in the parties’ names.  The letter to Mr Ibbott was sent to him care of

   
   

   Mr R’s office, which is the company’s registered office.  I have no reason to believe anything other than that Mr Ibbott received it.

5. The company filed a response to the wife’s application on 20 November 2007, supported by a further affidavit of Mr D.  The company was represented by Mr Berman of counsel on 29 and 30 November and 4 December 2007.  Mr Cameron of counsel appeared for the wife.

6. Mr Cameron did not oppose the company’s application to intervene in the proceedings.  The attitude of Mr Ibbott to the intervention is unknown to me, as he did not appear at court to express it and has not filed any material in answer to the company’s response filed on 20 November 2007.  However, it does not seem to be an unreasonable hypothesis that, aware as he is of the company’s financial situation, he can see no point in either appearing in court or opposing any application the company’s liquidators may bring.

7. Intervention is dealt with by section 92 of the Family Law Act. Any person is entitled to intervene in proceedings pursuant to the Act other than divorce or validity of marriage proceedings.  The court is empowered to make an intervention order upon such conditions as it considers appropriate and once such an order is made the intervenor is to be regarded as a party to the proceedings with all the rights, duties and liabilities that this entails.

8. The discretion involved has been described as a wide one to be exercised pragmatically in the circumstances of each individual case so that on the one hand the interests of third parties may be protected and on the other the rights of the parties to a marriage may also be respected.  Any order in respect of an application for intervention must do justice to the circumstances which prevail in each individual case.[5]

   [5] See Barro & Barro (1983) FLC 91-300 at 78,057

1. In all the circumstances of this case, I am satisfied that it is appropriate that S Pty Ltd. Ltd. (In Liquidation) be allowed to intervene in these proceedings and become a party to them.

The applications of the parties

1. The wife’s position is clear.  She wishes to retain the proceeds of sale of the G property as well as a motor vehicle ($25,000.00) which is subject to a loan of around $20,000.00 and some household goods ($6,000.00) currently in her possession.  She also wishes to retain a modest amount of superannuation ($2,546.49) which she has accumulated up to this stage.  Her position is predicated on the basis that any liabilities the parties have to the company be either excluded from the pool of matrimonial assets or that the debts be regarded as being the husband’s responsibility alone.

2. The company seeks the following orders:

   ·a declaration that the sum of $191,033.00 is a debt owed by both the husband and wife to it;

   ·an order that the husband and wife pay this sum from the proceeds of sale of the G property;

   ·in the alternative that the proceeds of sale of the property be preserved in the interest bearing account until it brings any further proceedings necessary (presumably in a court other than this one) to determine and identify its entitlements against the husband and wife either jointly or severally.

3. The company’s position, as enunciated by its liquidators, is obviously predicated on the basis that the loan accounts standing in the names of each of the parties, in the company’s accounts, should be paid forthwith and the only obvious means of this being achieved is if the proceeds of sale of the G property are diverted to this end.  Other than this, the company has no interest in what occurs to any remaining matrimonial property.

4. Although the company recognises that it is likely to be both cost effective and sensible for the respective entitlements of each party to be determined in one court and in one set of proceedings, it does not rule out the possibility that it will commence other proceedings to preserve its rights.  This is the basis of the injunction it seeks in the alternative to its principle position.[6]

   [6] See RLD & CBD & Ors (2006) FMCAfam 226 at paragraph 49 per Lapthorn FM

5. The position of the husband is impossible to discern.  His response has been overtaken by events.  By reasonable implication, his absence from the proceedings would appear to suggest that he sees it as unlikely that he personally will recoup any of the matrimonial assets potentially available to be distributed between the various parties to the proceedings, including the company.

6. The wife’s position is predicated on the basis that considerations of justice and equity should dictate that she should be able to retrieve as much of the matrimonial assets as possible from a financial catastrophe which is not of her making and for which she cannot be held personally responsible. 

7. The husband is not in a position to refute the allegations of financial incompetence and waste which have been levelled against him. Due to his absence from the proceedings, it is difficult for the court to make any contemporary assessment of his financial circumstances and likely capacity to pay any of his debts to the company. That is of course apart from his current interest in the proceeds of sale of the G property. These are important considerations for the purposes of section 90AE(3)(b).

Documents relied upon

1. The wife relies upon the following documents:

   ·two affidavits of herself filed on 14 March and 9 November 2007 respectively;

   ·a statement of her financial circumstances filed on 27 November 2007;

   ·an affidavit of Ms M filed on 31 October 2007;

   ·and an affidavit of an accountant, Mr S filed on 7 November 2007;

   Ms Ibbott, Ms M and Mr S each gave additional oral evidence in the proceedings and each was cross-examined by counsel for the Intervenor, Mr Berman.

2. The intervenor relies upon the following document:

   ·an affidavit of Mr D filed on 20 November 2007.

   The wife did not seek to cross-examine Mr D.

The evidence

1. Given the absence of Mr Ibbott from the proceedings, there were not many disputes of fact between the wife and the intervenor.  The intervenor is essentially disinterested in assuming any position in respect of the respective contributions of the husband and the wife during their marriage.  What controversies there were concerned the knowledge the wife had of the business affairs of S Pty Ltd and what role she played in its administration, particularly in regards to her dealings with its accountant, Mr R.

2. Ms Ibbott was a pleasant and sincere witness.  I do not doubt her integrity and honesty.  I have no reason to disbelieve her evidence that Mr Ibbott was the dominant financial force in the parties’ marriage and what he said went so far as money was concerned. 

3. I find that the trade business was Mr Ibbott’s domain.  He obtained its contracts and undertook the work required.  Ms Ibbott had nothing to do with the technical aspects of the company’s business.  This form of trade is hard, physical work and this was undertaken by the husband independently of the wife, who played no part in it.

4. Although the wife was subservient to the husband in financial matters, she clearly had some knowledge of the company’s affairs, particularly that all was not as it should be in regards to the company’s payment of its debts.  However, it is my overall finding that she was powerless to do anything about this state of affairs and certainly to curb the husband’s cavalier and reckless attitude towards the company’s finances.

5. It is unreasonable to expect Ms Ibbott to have an encyclopaedic recollection of the family’s finances over the twenty year period of the parties’ marriage, particularly who of them paid which accounts and when. 

6. Ms Ibbott does acknowledge that she had access to an ATM account, from which she was able to withdraw money, which she would utilise for joint matrimonial purposes.  She deposed that she had access to this account for a period of around about five years, which concluded most probably around 2002, although she is not precisely sure.

7. However, overall it is her position that Mr Ibbott controlled the family’s finances and decided which bills would be paid and when.  As such, she had little access to the monies Mr Ibbott earned through the trade business and meagre knowledge of what funds were available in the bank.  I accept her evidence in this regard.

8. In these reasons for judgement, findings of fact are made on the balance of probabilities following my observations of the witnesses concerned.  In what follows, statements of fact constitute findings of fact.

(a)   Chronology

1. Ms Ibbott was born in England in 1960.  She migrated to this country, with her parents, when she was twelve.  Mr Ibbott was born in Adelaide in 1959.

2. I accept the wife’s evidence that Mr Ibbott comes from a strongly traditional Italian family.  Without wishing to be stereotypical, this reinforces my view that Mr Ibbott saw himself as the head of his household, particularly so far as financial matters were concerned.

3. The parties married in 1985.  They did not live together prior to their marriage.  Ms Ibbott did not proceed to a high level at secondary school.  She completed third form at high school.  I accept her evidence that she was not regarded as academically strong at school and struggled with mathematics and figures. 

4. Certainly she has no formal background in either accountancy or bookkeeping.  Overall it is my finding that, although she is no fool,

   
   

   Ms Ibbott cannot be described as a financial sophisticate.  She is likely to be highly reliant on the advice of others, particularly accountants, in regards to financial matters.

5. At the time of the parties’ marriage, Ms Ibbott was working as a sales assistant.  She has a long standing interest in sewing and craft.  Unfortunately, around the time of the parties’ marriage, she was involved in a serious car accident, which precluded her from paid employment for the first fifteen years or so of the marriage.  The wife received around $15,000.00 by way of compensation for the injuries she sustained in the accident.

6. In these circumstances, there can be little doubt that the husband was the major financial contributor during the parties’ marriage.  The wife concedes that, like herself, Mr Ibbott does not have a strong academic background, having left school earlier than her.  He does however have a strong background in trade, which is the same trade pursued by several members of his family.

7. At the time the parties married, the husband was in business for himself as a tradesman.  There is no dispute that S Pty Ltd. Ltd. was incorporated on 7 September 1988.  Mr Ibbott has been the company’s secretary and one of its directors since the date of its incorporation.

8. Ms Ibbott has been a director of the company on two occasions.  Firstly between 7 September 1988 and 2 February 1990 and secondly between 9 July 1993 and 2 July 2002.  The only other director of the company has been the husband’s brother, Mr J, who was a director between

   
   2 February 1990

   and 9 July 1993.[7]

   [7] See ASIC Historical Extract which is Annexure GD3 to the affidavit of Mr D.

9. The company’s registered office has been at Mr R’s office for many years.  Notwithstanding the absence of evidence from both the husband and Mr R, it seems to me to be likely that Mr R has been highly influential in shaping decisions regarding the structure and finances of the company, certainly more so than the wife.

10. In these circumstances, it seems to me likely that the wife was nominated as a director of the company for the initial period as a matter of form and convenience only.  Certainly, I accept the wife’s evidence that she had no knowledge of or involvement in the company’s affairs for the period between 1988 and 1993.  She has deposed that she was a director of the company because her husband told her that she had to be one.

11. The marriage produced two children, born in 1987 and 1991.  It is the wife’s evidence, which I accept that she was primarily responsible for parenting the two children and also did essentially all of the domestic tasks required around the parties’ home.

12. Initially the parties lived with the husband’s parents, whilst they looked for a home of their own to purchase.  They purchased their first home, Property S for around $67,000.00 of which around $50,000.00 was borrowed.  The husband sold a block of land which he had owned prior to the parties’ marriage and the wife contributed her savings in order to finance the purchase.  I do not think it can be said at this juncture that there was a massive disparity in the parties’ initial financial contributions at the outset of their marriage.

13. The parties lived at Property S for around about ten years.  During which time they divided their family responsibilities along traditional lines.  The wife was the homemaker and the husband the family’s breadwinner.  The wife describes the income the husband brought in as “adequate”. [8]

    [8] See wife’s affidavit of 9 November at paragraph 9.

14. In her oral evidence, Ms Ibbott qualified this by saying that the family and she herself had access to clothes, food, shelter and all the basic necessities of life but no luxuries.  I accept that this was so and that

    
    

    Ms Ibbott never had access to any large sums of money which the business produced.  Any surplus funds which became available were exclusively utilised by Mr Ibbott as he saw fit.

15. In 1993, the husband’s older brother Mr J became active in the trade business.  This period coincided with the wife’s withdrawal as a director of the company and Mr J’s replacement of her.  I accept the wife’s evidence that this was a financial disaster for the family, as the business was unable to sustain the additional wages drawn from it.

16. At the husband’s instigation, monies were borrowed against the security of the Property S property to keep the business solvent.  The wife signing the necessary documents concerned at the husband’s direction but against her better judgement.  I accept her evidence that she felt powerless to oppose her husband’s will in financial matters.

17. It is Ms Ibbott’s evidence that she felt frightened to ask Mr Ibbott for money during the marriage but rather relied upon him to provide her with enough for the bare necessities of life.  This assertion is coupled with her allegation that Mr Ibbott was regularly violent and aggressive towards her during the marriage. 

18. She complains that she was beaten on at least one occasion so badly that she was forced to spend a week in bed to recover from the injuries inflicted upon her.  Ms Ibbott has provided photographs of injuries inflicted upon her by Mr Ibbott around two years ago.[9]  Ms M has also deposed to the fact that the wife sustained significant bruising at the husband’s hand.[10]

    [9] See annexure SAI1 to the wife’s affidavit of 14 March 2007.

    [10] See Ms M’s affidavit at paragraph 12.

19. More recently in January of 2007, immediately prior to the parties’ final separation, Ms Ibbott alleges that the husband hit her in the face causing bleeding and bruising.  This assault was the subject of a complaint to police.  Again photographs were taken of the injuries inflicted upon the wife.

20. Mr Ibbott has not presented himself at court to refute these serious allegations.  Allegations of family violence are easy to make and difficult to refute, as such violence invariably occurs within the confines of family homes, away from independent sources of verifications.  In addition, the circumstances in which such violence occurs may make its reporting to sources of authority problematic.

21. In this case there is independent evidence to support at least some of the allegations of violence made by the wife, although that support is not comprehensive.  However, in all the circumstances of this case, I do not doubt the wife’s evidence that she was subject to serious and protracted violence, at the husband’s hand, during the marriage.

22. In my view, this violence was symptomatic of a gross power imbalance in the parties’ relationship.  The husband was both willing and able to impose his will upon the wife by means of force.  As such, I can both understand and accept why she was unwilling to ask the husband for money during the marriage.  In this sense the marriage between the parties cannot be described as one of equals.  The power imbalance between the parties was also characterised by an inequality in the wife’s access to the financial resources of the marriage.

23. Clearly the wife did receive some of the benefits produced by the company.  How could it be otherwise, given that the income the husband derived from the business was the family’s sole source of financial support for the vast majority of the marriage.  But I accept the wife’s evidence that this support was far from lavish and can at best be described as adequate.  I suspect that at times it was far from adequate.  Certainly, given the way the husband chose to manage his finances, it did not allow the parties to accumulate significant amounts of wealth during their marriage.

24. As previously indicated, Mr J ceased being a director of the company in 1993.  Borrowings were made against the parties’ Property S home during the period of Mr Ibbott’s directorship, which were unable to be repaid.  The Taxation Office was pressing for payment.  Ultimately Property S was sold at some time in 1995 to repatriate the company’s debts.  The parties were only able to recoup around about a $1,000.00 for themselves from this exercise.

25. For around five years, up until some time in 2002, the wife had access to funds deposited in the husband’s name at Bank SA.  She utilised these funds through ATM machines.  I accept that she used these funds for household purposes.  I also accept that she was very careful and frugal in her withdrawals, as she had no wish to incur the husband’s anger.  Otherwise the husband maintained his control on the family’s finances.

26. The wife’s almost total financial dependence on the husband and her fear of him were the major factors in her decision to seek paid employment as soon as the children were old enough.  Initially she obtained some part time cleaning work in the G area.  About five years ago, she obtained her current position as a sales assistant in a retail store in G. 

27. I accept Ms Ibbott’s evidence that she utilised her earnings to support the family.  Other than a portion of her wage was used to service a loan that she had taken out to purchase a car.  I accept that she needed a car to get to and from her work.

28. The commencement of her employment seems to have coincided with the withdrawal of her access to the husband’s bank account and the cessation of her second period of directorship with the company.  Again these are factors which persuade me that the husband was the motivating intelligence of the company.

29. After the sale of Property S in 1995, the family moved into rented accommodation in G, whilst they saved to purchase another home.  Ultimately the parties purchased a block of land at G, on which the former matrimonial home was built. 

30. No evidence has been provides as to the purchase price of this property or as to how much was borrowed against it. I do not think there is any artifice in the wife’s failure to provide specific financial details of the purchase, rather it is symptomatic of her lack of knowledge of the parties’ finances.

31. The parties’ two children were left a bequest from the estate of their paternal grandparents.  The bequest amounted to around $20,000.00 and due to their minority, the husband was appointed the children’s trustee.  I accept the wife’s evidence that the husband converted this bequest to his own use.

32. In the absence of evidence from the husband and Mr R, it is difficult to assess the overall financial success of the husband’s trade business during the entire period of the marriage.  It is the wife’s evidence, which I accept, that she had no real idea how much money the business produced other than it went into an account operated by her husband.

33. Trading, profit and loss statements for the company have been provided for the financial years ending 30 June 2003 to 30 June 2007.  These statements have been prepared by Mr R.  They are the source of the Intervenor’s claim that the husband and wife each owe significant sums to the company.

34. In addition, I have been provided with individual tax returns for the wife for the taxation years ending between 30 June 2001 and 30 June 2005.  For each of those years, the returns have been prepared by Mr R.  I have been provided with more limited taxation records in respect of the husband and the company itself, although Mr Ibbott’s income is noted in Ms Ibbott’s returns. 

35. In her tax returns commencing for the year ending 30 June 2001, the wife records herself as being a bookkeeper in the employ of the company at a salary of $25,000.00 per annum, which is apparently her only source of income for the year in question and the one following. 

36. This situation changes for the year ending 30 June 2003, when her taxable income increases to $49,423.00 coinciding with the commencement of her employment in the retail store.  Thereafter for the financial years ending 30 June 2004 and 2005, the wife records an income of $50,867.00 and $69,999.00 respectively, which again includes a component of income and dividends from the company.

37. For the same periods the husband’s income is recorded as being as follows:

Year Ending	Husband’s Taxable Income
30 June 2002	$32,000.00
30 June 2003	$41,950.00
30 June 2004	$50,475.00
30 June 2005	$61,809.00[11]

[11] Mr S, in his report, indicates that he has had access to the drafts of Mr Ibbott’s income tax returns for the years ending 30 June 2006 & 2007.  These indicate an income of $66,275 and $68,630 per annum respectively.  In this regard see annexure MS 1 to the affidavit of Mr S.

These figures tend to suggest to me that the business is to be regarded as having produced a reasonable level of income for the husband.

1. The wife acknowledges that she must have signed her tax returns, which indicate that she received income from the company.  The taxation returns also indicate that she was claiming a depreciation allowance in respect of a sewing machine which she had purchased.

2. The wife also conceded in cross examination from Mr Berman that she “guessed [she] was aware” she was a director of the company.  In Mr Berman’s submission these factor tend to suggest that the wife was not the financial ingénuee she would have the court believe she was.

3. It is the wife’s evidence that she felt rushed when she visited Mr R to have her tax returns done, after she had surrendered her group certificate from the retail store to the husband, who in turn forwarded it on to Mr R.  Once at Mr R’s office, the wife deposes that she signed whatever she was asked to sign without reading it.

4. The wife can perhaps be criticised for not scrutinising her tax returns more thoroughly but I have no reason to disbelieve her evidence that her only direct source of income for the periods in question was from her own personal employment at the retail store and that the amount attributed as being received by her in her taxation returns were received in name only.  I do not disbelieve her when she says she signed what she was told to sign at Mr R’s office.  Ms Ibbott does not strike me as the sort of person who would challenge either the husband or Mr R in the management of financial matters.

5. The trading statements for the company indicate that it had a turnover of $152,887.00 in the year ending 30 June 2007; a turnover of $209,994 in the year ending 30 June 2006; a turnover in the year ending 30 June 2005 of $192,191.00; a turnover in the year ending 30 June 2004 of $210,702.00; a turnover for the year ending 30 June 2003 of $629,218;[12] and a turnover for the year ending 30 June 2002 of $210,190.00.

   [12] Given the absence of evidence from Mr Ibbott I am not able to discern why this was such an aberrant year for the company.

6. Although raw turnover figures are apt to be misleading, to my mind they are indicative that the company, primarily through the efforts of Mr Ibbott, was producing a not unreasonable income.  It is my finding that Mr Ibbott primarily received the benefit of this income.

7. Given that it is clear that the company was not paying its debts regularly as they fell due, particularly in the latter stages of its operation and given my finding that the wife was receiving no direct benefit from the company in the form of income and the husband was not contributing lavish amounts toward the upkeep of the household, it seems irrefutable that there is considerable truth in the wife’s assertion that the husband largely converted the monies made by the company to his own use and this conversion has not resulted in the acquisition of any assets of significant value.

8. It is the wife’s position that the husband has essentially wasted the monies made by the company through his own profligacy and gambling.  The only trade evidence of monies removed from the company’s account is in the form of its bank statements for the period from 1 July 2005 until 28 February 2007 – the period which coincides with the final eighteen months or so of the marriage between the parties.  Again, in the absence of Mr Ibbott, it is difficult to assign a purpose to each of the many withdrawals from the account.

9. However there are numerous cash withdrawals from ATM’s at licensed premises recorded in the statements.[13]  In such circumstances, I have no reason to disbelieve the wife’s evidence that the husband had a significant gambling addiction throughout the marriage which consumed a considerable portion of the income generated by the business.  However it is impossible to quantify accurately the amount of money which was wasted.

   [13] Some of these withdrawals are summarised in Mr S’s report to which reference has already been made.  The total amount is $57,800.00 over the last eighteen months or so of the marriage.

10. It should also be pointed out that the statements show regular payments towards loan accounts, presumably those relating to the mortgages on the G property.  Accordingly, it cannot be said that the wife received no financial benefits from the husband’s operation of the business.  The wife also concedes that the husband paid for the utilities consumed by the family in respect of the former family home.

11. Whilst she had access to the ATM card, the wife deposes she utilised the monies withdrawn from the company’s account largely to pay for groceries.  Later when she was working herself, she used her wages for food and clothing for herself and the children.  However, prior to her employment, she conceded that, in a general sense, the household functioned and the business provided the funds to enable this to occur.

12. It is the wife’s evidence that the husband failed to operate the company’s business account in such away that monies were regularly earmarked for essential periodic payments such as tax; workcover; and to pay contractors.  Rather he would utilise whatever monies were available from the company’s account for his own use.  Essentially he was incapable of differentiating between himself and the company, regarding each as interchangeable.

13. I do not think it can be said that the wife was unaware of these issues during the marriage.  She had herself experienced the consequences of the husband’s financial irresponsibility when Property S had to be sold.  However it is her position that, although worried about the situation, she was powerless to alter the husband’s conduct or to disengage herself from her formal role as a director of the company or later as a nominal recipient of distributions of income from it. 

14. It is also her evidence that, although nominally designated a bookkeeper in her taxation returns, she lacked the expertise to perform this role and certainly any authority over the husband to get him to curb his reckless spending.  At best she asserts she was the husband’s amanuensis in writing cheques at his direction.  In this context the evidence of Ms M and Mr S is central.

15. However, I accept the wife’s evidence that she signed the company’s accounts, when she was required to do so, without reading them in detail or understanding their import.  I also accept that she did not understand that she was designated in the company’s accounts as either one of its employees or as a debtor to it.  Certainly I accept her evidence that she was never in receipt of an actual wage from the company.

(b)   Ms M's Evidence

1. I accept the wife’s evidence that she was frequently deeply worried about how the husband was managing the financial affairs of the company and was reluctant to personally sign any further loan agreements secured against the former matrimonial home.  In this sense the wife cannot be said to be ignorant of what was going on in the business.  She knew that all was not as it should be.

2. It was in this context she approached Ms M, who, unlike her, has considerable experience as a bookkeeper in small business.  Ms M was involved in doing the books for S Pty Ltd.  for the years 2003 to 2004.  At that stage the wife was aware that the husband was being pressed for payment by Workcover. 

3. It is Ms M’s evidence, which I accept, that the accounting records for the company were in an extremely poor state of affairs, when she became involved with them and, in spite of her best efforts were not in much better shape when she quit her role in frustration.

4. It is Ms M’s evidence that the husband stubbornly refused to operate separate bank accounts for himself and the company.  In addition, he rejected her suggestion that he arrange for the company to pay him a regular wage.  Ms M was also concerned at the level of indebtedness of the company, particularly in regards to tax.

5. She deposes that she would draw cheques to pay the tax debts but

   
   

   Mr Ibbott would not post the cheques and they would have to be cancelled.  At the same time she observed that the husband was withdrawing considerable sums of money from the company’s account via ATM’s in hotels. 

6. The amounts ranged from $5,000.00 to $12,000.00 per month.  In order to regularise these withdrawals for accounting purposes, she would debit them against the husband’s loan account with the company, which is what she would do with other non-company related payments made by the husband, such as mortgage payments on the family home.

7. It is Ms M’s evidence that the husband would give the various accounts relating to the loan account to Mr R to sort out.  Ms M also commented on the reluctance of the husband to pay his trade creditors, other than when absolutely necessary and his parsimony so far as the wife and children were concerned.  Overall, the effect of Ms M’s evidence is that the husband regarded the monies standing in the company’s account as his to do with as he pleased.

8. Ms M also deposed that the parties’ level of indebtedness in respect of the mortgages on the former family home was considerably extended during the period she was involved with the company’s book.  When she commenced, the level of mortgage debt was around $100,000.00, which was increased by subsequent borrowings of around $170,000.00.

9. It was Ms M’s evidence that these sums were borrowed to pay the company’s taxation debts.  Some of the monies were used for this purpose but not all.  The implication of Ms M’s evidence is that the balance was utilised by the husband for his own purposes.

10. I have no reason to disbelieve any of Ms M’s evidence which tallies with the evidence of the wife and what there is of the company’s financial records.  She confirmed that her observations of the wife, with whom she is close and the children was that they lived a basis and frugal lifestyle.  It is the clear import of her evidence that this is not her view so far as the husband was concerned.

(c)   Mr S’s evidence

1. Mr S is a very experienced accountant, particularly in the realm of small business.  He is a business associate of Ms M’s husband and became involved in this matter because of Mr and Ms M’s desire to help the wife in her current financial predicament, which they believe is not of her making.

2. Mr S was asked to make a report in respect of the operations of S Pty Ltd..  He had access to the financial reports of the company, as well as the parties’ individual tax returns and the limited bank statements of the company, to which reference has already been made.

3. In his report Mr S indicates the amounts credited to both the husband and wife as income received by them from the company both by way of income and dividend.  The dividends nominally received by each are equal in amount.  The amount of wages roughly similar, although the level of remuneration attributed to the wife is less in the period after which she had begun employment at the retail store.

4. Mr S provides evidence as to the operation of many small family companies within Australia.  He notes such companies usually only have the spouses concerned as employees.  Funds are withdrawn from the company’s bank account and in accounting terms debited either to a joint loan account or personal loan accounts in the individual names of the spouses concerned.

5. He goes on to indicate that at the end of each financial year, the company’s accountant determines the level of salary it is appropriate to be paid given the level of expenditure involved.  Invariably these salaries are approximately equal, regardless of the level of effort of the spouses concerned.  Very often the salary payable is less than the funds withdrawn and thus a debt is created to the company concerned.

6. At the same time, it is usual for the directors of the company concerned to resolve to pay its shareholders a dividend for any net profit.  Invariably the sole shareholders are the spouses concerned.  The dividend created is nominally credited to the spouses’ respective loan accounts, reducing the level of individual debt to the company and ensuring compliance with the provisions of the income tax legislation.

7. I accept that S Pty Ltd. was administered along these lines by Mr R and the husband.  That is the dividends attributed as being paid to Mr and Ms Ibbott were not in fact paid and were accounting entries only.

8. Mr S also reports that the crediting of salary in this way creates an obligation to pay PAYG tax on the company concerned.  He also points out that the company also incurs obligations in respect of the Superannuation Guarantee Charge and Workcover, which is a statutory obligation a company has to cover its employees in respect of possible work related injury.  Mr S was unable to find any cheques drawn to these ends in the company’s accounts.

9. It is Mr S’s understanding that the company has been remiss in respect of these obligations in regards to the period prior to 31 March 2007.  This is undoubtedly the case given that the company is now in liquidation.  It is also Mr S’s view that, as the company’s sole director since 2 July 2002 and the only operator of its bank account, Mr Ibbott must be regarded as responsible for the company’s actions.

10. Mr S had access to the company’s general ledger history of transactions in regards to the husband and wife’s joint loan account with the company.  However the ledger does not indicate specifically who of them received the benefit of specific payments and for what it was received, as Mr and Ms Ibbott did not have separate loan accounts for accounting purposes.

11. However, I think it fair to say that Mr S was suspicious regarding the significant sums withdrawn from the company’s account between July of 2006 and February of 2007 from ATM’s at various licensed premises in the Adelaide area.  The amount withdrawn being $57,800.00.

12. In cross-examination from Mr Berman, Mr S conceded that he had only looked for unusual expenditure in the company’s bank statements for the period in question.  He conceded that he had not attempted to tabulate more expected expenses such as those related to fuel and grocery expenses, which would be usually acceptable as being attributed to a joint loan account in a family company situation.

(d)   Mr D’ evidence

1. Mr D is also an accountant, who has examined many of the same records as Mr S.  In that examination he has taken a different perspective to that of Mr S.  Given his role as the company’s liquidator, this is to be expected.  However the effect of his evidence is not greatly in contention in this case.  The wife conceding that she and the husband are ostensibly jointly responsible in the company’s records, for significant loans from it.

2. Mr D has examined the balance sheets for the company, as at 30 June 2007.  These reveal the following joint shareholders’ loans from the company in the parties’ joint names:

Year	Amount of Joint Shareholder Loan
Pre 4 December 1997	$55,512.00
30 June 2001	$9,207.00
30 June 2002	$15,880.00
30 June 2003	$42,453.00
30 June 2004	$41,734.00
30 June 2005	$42,606.00
Total	$207,392.00

1. For obvious reasons, Mr D saw no need to go behind these accounting entries and determine who out of the parties actually received the benefit of these sums, other than that the husband had reported to him that the loan account had arisen as a result of monies being withdrawn from the company’s account to pay for household expenses, home mortgage payments and general spending money for the husband and wife and their children.[14] 

   [14] See Mr D’ affidavit at paragraph 16.

2. Mr Ibbott is not available to provide corroboration of this assertion.  For reasons already provided, I am satisfied that it provides a somewhat simplistic explanation for the use of the company’s bank account.  However undoubtedly some of the sums concerned were used for these purposes.  But at this juncture it is impossible to quantify what the exact amount was.

3. Mr D also reported the company’s accounts indicated an unsecured loan from its shareholders of $16,359.00 leaving a net debt owed to the company of $191,033.00.  This was also the balance of the loan account as at 30 June 2007, the amount of the debt having fluctuated in the years from 30 June 2002 onwards, no doubt as a result of contributions made by way of wages earned by either the husband and wife.

4. Mr D also confirms that the husband, as the sole director of the company, has certified that the company’s only significant remaining asset is its shareholder’s loan account in this sum of $191,033.00.

5. In his role as the company’s liquidator, Mr D has established five proven unsecured creditors of the company as follows:

Creditor’s Name	Proven Amount
Deputy Commissioner of Taxation	$144,538.43
H	$1,010.90
B	$15,420.00
R & Co	$4,950.00
Workcover	$7,972.00
Total	$173,892.00

1. Mr D has examined a number of the company’s bank statements.  He notes that many payments have been made from the company’s account for non-company purposes, including mortgage repayments; insurance; and supermarket expenditure.  During the same period funds have been injected into the company account from the refinancing of the former family home.

2. Mr D is satisfied that the amount of $191,033.00 represents personal drawings “made by the Husband and/or the Wife form the Company’s bank accounts in excess of contributions, wages and dividend entitlements of the Husband and Wife.”[15]

   [15] Ibid at paragraph 21.

3. As the company’s liquidator, Mr D is statutorily bound to realise the company’s assets for the benefit of its creditors.  Accordingly he seeks orders from this court that the parties repay the sum of $191,033.00 to the company so that the company may pay its debts.  From his point of view, the only way this outcome can be achieved is if the proceeds of sale of the former family home are utilised for this purpose.  He can identify no other asset of either the husband and the wife of sufficient magnitude to achieve this end.

4. The wife does not demur from this position.  By implication, the absence of the husband from these proceedings and his actions to date, suggest that he holds a similar view.  Certainly, at this point, there is no evidence before me to suggest anything other than that the company’s considerable debts can only be paid from the proceeds of sale of the former family home.

The legal principles to be applied and the issues in the case

1. The process to be followed for the division of the parties’ property is well established by law.[16] The relevant legal principles are primarily contained in sections 79 and 75(2) of the Family Law Act 1975. I am required to follow a number of specific steps.

   [16] See Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335;

2. Firstly, I must ascertain what are the parties’ assets and liabilities as at the date of trial.[17] This is the most contentious aspect of the case, particularly how the debt to the company of around $190,000.00 is to be dealt with and the interaction of Part VIIIAA of the Family Law Act with this exercise.

   [17] See Wardman & Hudson (1978) FLC 90-466; and Biltoft & Biltoft (1995) FLC 92-614

3. Secondly, I must ascertain the contributions which the husband and wife have made towards those assets.  Contributions fall into two broad categories.  The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.  

4. The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of home maker or parent.” 

5. It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.

1. It is implicit in the wife’s case that she sees much of the husband’s contributions as having a negative quality, as they have resulted in the diminution of the parties’ property rather than its accumulation.[18]  Accordingly, she is entitled to a greater proportion of the matrimonial assets than the husband, if not all of them.

   [18] See In the marriage of Spiteri 33 Fam LR 109 at 119

2. The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act 1975. Pursuant to section 75(2) (o), the Court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”. 

3. In the main, section 75(2) deals with the prospective needs of the parties. No doubt it is the wife’s position that her needs are significantly greater than the husband’s are likely to be, particularly as he has a reliable trade, whereas she is a largely unskilled shop assistant.

4. Finally in determining what order the court should make under section 79, the court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the court must consider.[19] 

   [19] See Russell v Russell (1999) FamCA 187

5. Considerations of justice and equity also apply to the application of Part VIIIAA.  Third party creditors are entitled to procedural fairness and the court is not entitled to disregard there right to be repaid.

6. The “overriding requirement” of section 79 is that considerations of justice and equity should inform each step of the process. The exercise I must undertake is not a “process of social engineering”[20] or of the equalisation of assets or financial resources between parties.

   [20] See Waters & Jurek (1995) FLC 92-635 at 82,375

7. Marriage is by and large a joint enterprise.  How much buffer spouses must give one another, when financial set backs occur must depend on the degree of consultation and acquiescence in their relationship.[21]

   [21] See D & D [2003] FamCA 473 at paragraph 49

8. The task, set out for me in this case, requires me to balance and compare contributions which are by their nature different, within the framework of a marriage.  Many contributions in a marriage, such as being a homemaker do not result in the direct acquisition of assets.  They are also difficult to value.  The discretion I have is a wide one.  The exercise I must follow cannot be regarded as a simple arithmetic or accounting one.

Step one – the pool of assets available for division

1. The intervenor contends that it is entitled to be paid its debt from the husband and wife’s joint matrimonial assets, regardless of whether the conduct of one of the parties can be criticised as being irresponsible and the conduct of the other as being blameless in regards to the acquisition of that debt.  Essentially the debt is a joint debt and how it was incurred is immaterial so far as the creditor is concerned.  What is important to such a creditor is repayment.

2. As such the intervenor contends that the debt owed to the company, in the form of joint shareholder loans, should be factored into the court’s deliberations at the first step and be recognised as their joint liability.  If this occurs, it is disinterested in what the court does in the subsequent steps in dividing the remaining property between the husband and wife, so long as the debt to it is repaid.

3. The company is an unsecured creditor.  As outlined above, the normal practice for the court in determining the value of the assets of the parties to a marriage is to deduct from the gross value of those assets the parties’ total liabilities, including unsecured liabilities.

4. This normal procedure in relation to unsecured liabilities is neither absolute nor prescribed by statute.  In some circumstances, the court may properly decide not to take into account an unsecured liability.  The circumstances include, but are not limited to liabilities which are vague and uncertain; unlikely to be enforced; or unreasonably incurred.[22]

   [22] See Biltoft (supra) at 82,127

5. In addition, there is no requirement that the rights of an unsecured creditor or a claim by a third party must be considered and dealt with prior to any order made by the court pursuant to section 79 of the Act. However the court cannot ignore the rights of such a creditor or third party. Rather they must be recognised and balanced against the rights of the spouses concerned.[23]

   [23] ibid at 82,128

6. In my view the claims of the intervenor are neither vague nor uncertain, appearing as they do in the company’s records and largely corresponding with the debts the company owes to amongst others the Australian Taxation Office.

7. Given the vehemence of the Intervenor’s pursuit of these proceedings, I do not think it would be reasonable for me to conclude that the debt is unlikely to be enforced.  To the contrary, the Intervenor’s alternative position is that I should ensure that there is no distribution of assets until such time as it has been able to pursue other remedies it may have elsewhere.

8. From the point of view of the wife, the vast majority of her purported liability to the company has been unreasonably incurred as she did not receive the same degree of benefit from it as the husband did.  Essentially she is critical of the husband for failing to ensure that there were separate loan accounts drawn up in the company’s accounts in her and the husband’s names so that household expenses which were legitimately paid for by the company and in which she acquiesced could be distinguished from the husband’s profligate expenditure, which she renounces.

9. At this juncture it is impossible to accurately quantify either what were the husband’s profligate expenditure from the company’s account or the amounts which were utilised for the family’s benefit and which later came to be memorialised in the shareholder’s loan account with the company.  I accept that the former amount is likely to be considerable but so is the latter, particularly as for the vast majority of the parties’ marriage the company was the parties’ sole source of financial support.  Undoubtedly, although the loan account is not differentiated, the wife received some level of benefit from it.

10. I am satisfied that the irresponsible management of the company, particularly its failure to make provision for the payments of its debt is wholly the responsibility of the husband, who was the company’s guiding intelligence throughout its life to date.  However, regardless of fault, the fact remains that due to the husband’s financial irresponsibility over many years, the parties were living beyond their means.  The fact that this responsibility lies mainly with the husband should not result in the abrogation of the rights of any third party creditor.

11. Rather I must balance the rights of third parties with those of the wife. Mr Berman reminds me that, pursuant to section 79(10) of the Family Law Act, his client is entitled to become a party to the proceedings if orders are otherwise made pursuant to the section 79 which result in it not being repaid the debt owed to it.

12. Ms Ibbott does not challenge the fact that she is a joint debtor to the company.  It is implicit in her position that she accepts that the resources of the company have been misapplied so that its proper debts have not been paid as they have fallen due.  In this regard she did not seek to challenge the evidence of Mr D.

13. For these reasons, I have reached the conclusion that the debt which the parties jointly owe to S Pty Ltd. Ltd. should be included in the parties’ pool of assets and deducted from their gross value.  Accordingly I find that the parties’ pool of assets and liabilities available to be divided between them is as follows:

Asset	Value
Proceed of sale of Property G	245,000.00
Wife’s superannuation	2,546.49
Wife’s motor vehicle	25,000.00
Wife’s household contents	6,000.00
Total	278,546.49
Liabilities
Joint debt to S Pty Ltd	191,033.00
Wife’s debt in respect of her motor vehicle	20,000.00
Net Assets	67,513.49

1. It is likely that the husband has in his possession assets which potentially could be added to this pool.  What those assets are is unknown to me and not disclosed by the wife.  In his statement of financial circumstances earlier filed these proceedings the husband alluded to superannuation of a modest value.  He also seeks to be listed as an unsecured creditor of the company in respect of unpaid leave.  The liquidator has not proven this claim and it is unlikely to ever be realised.

The application of Part VIIIAA to these circumstances

1. Mr Cameron points out that Part VIIIAA came into effect in December of 2004.  This is so.  Accordingly its operation post dates the case of Biltoft.  Mr Cameron asserts that the Part has no other purpose other than to expand the jurisdiction of the Family Court (and this court) beyond the traditional boundaries of matrimonial causes, so that the applicable courts have a wide power outside the tenets of general commercial law and equity to determine the rights of third parties dealing with a party to a marriage.

2. In support of his submission, he relies on the objects of the Part as set out in section 90AA of the Family Law Act. The object of the Part is to enable the court to make an order in relation to the property of a party to a marriage, under either section 79 or 114 (the injunction power) of the Act, which is directed to or alters the rights, liabilities or property interests of third parties.

3. Pursuant to section 90AD, the definition of property is extended so that it includes a debt owed by a party to a marriage.

4. The machinery section of Part VIIIAA, so far as orders made by the court under section 79 which bind third parties, is section 90AE. Specific powers are set out in subsection (1), more general powers in subsection (2). The section authorizes the court to make any of the following orders:

   ·an order directing a creditor of the parties to a marriage to substitute one party for both in respect of that debt [section 90AE (1)(a)];

   ·an order directing a creditor to one party of a marriage to substitute the other party in respect of that debt [section 90AE(1)(b)];

   ·an order directing a creditor of the parties to a marriage to alter the proportion of liability each party has in respect of that debt [section 90AE(1)(c)];

   ·an order directed to a director of a company or a company itself requiring the transfer of shares between the parties to a marriage [section 90AE(1)(d)];

   ·generally direct a third party to do anything in respect of the property to a marriage (which includes a debt) [section 90AE(2)(a)];

   ·generally alter the rights, liabilities or property interests of third parties in relation to a marriage.

5. The court’s authority to make any order altering or affecting the rights of a third party is subject to the satisfaction of a number of conditions which are set out in subsection (3).  Each such condition must be separately satisfied.  They are as follows:

   ·the making of the order must either reasonably necessary or appropriate and adapted to effect a division of the marital partners concerned [3(a)];

   ·further, if the order concerns a debt of one of the parties or both of them, it is not foreseeable, at the time that the order is made, that it will result in the debt not being paid in full [3(b)];

   ·the third party affected has been accorded procedural fairness [3(c)];

   ·the court is satisfied that it is just and equitable to make the order concerned [3(d)];

   ·a number of other matters which are set out in subsection (4) and which relate to other expenses which may result to others arising from such a third party order.  These matters include the taxation and social security implications of the order and the administration costs of the creditor concerned by the order [section 90AE(4)(a)(b)(c) & (d)];

   ·importantly, in the context of this case, if the order concern a debt of one of the parties, the court must consider the capacity of that party to repay the debt in the period after the order is made [section 90AE(4)(e)].

6. In respect of the injunction power under section 114, the machinery section is section 90AF. The court is authorised to restrain a third party from repossessing property or commencing legal proceedings against a party to a marriage. Thus, in the present proceedings, it is theoretically open to the court to make an order restraining the intervenor from commencing proceedings, against one or other of the parties, in another court, to recover the debt owed by it.

7. However, as with the power under section 90AE, the power is subject to the satisfaction of an analogous list of conditions.

8. Accordingly, the powers available to the court under Part VIIIAA, so far as they affect the rights of third parties, are subject to a number of strict preconditions for their use, which can be summarised as follows.

9. Firstly their use is subject to an objective standard of reasonableness.  Secondly it is just and equitable to make the order concerned.  Thirdly it cannot be foreseen that the making of the order will result in any debt affected not being paid in full.  Fourthly the third party debtor affected is given a right to be heard about the consequences of the order sought which concerns its rights.  Finally regard must be had to financial consequences for others, including government instrumentalities, of the making of the order.

10. Essentially, the powers available to the court under Part VIIIAA are closely circumscribed and their use should not result in the loss of any substantive rights by a third party, who is extraneous to the matrimonial relationship before the court.

11. The principle mechanism by which a statute is to be interpreted is of course the wording of the statute itself.  However in order to confirm the meaning of any particular piece of legislation or to resolve obscurities or ambiguities in respect of it, it is permissible for the court to have regard to certain specified pieces of extrinsic material.[24] 

    [24] See Acts Interpretation Act 1901 (Cwlth) at section 15AB

12. Two such extrinsic sources are any explanatory memorandum, which related to the legislation when it was in bill form; and the second reading speech made by the relevant minister to the legislature.  The examination of such extrinsic material is often a useful exercise for the court to follow, particularly in respect of novel pieces of legislation.

13. In the case of the Family Law Amendment Bill 2003 the then Attorney-General, Mr Williams said as follows in the bill’s second reading speech:

    “Of major significance are the provisions in schedule 6 of the bill that will allow the court to make orders binding third parties to give effect to property settlement proceedings under the act.  These provisions will apply to all creditors of the parties to the marriage, whether they are family, friends or financial institutions.  In limited circumstances, where it is considered necessary, the court will be able to alter the terms of a contract between the parties to a marriage and a creditor.  For example, the court could adjust the proportion of debt that each party of a marriage owes a creditor or order that the liability for a debts belongs to just one of the parties.  The changes do not affect the underlying substantive rights of creditors and provide creditors with procedural rights.

14. The relevant passage of the explanatory memorandum reads as follows:

    “Schedule 6 of the Bill provides for the Family Court to be given power to bind third parties in order to give effect to property settlements.  This will apply for any creditor of a party to a marriage irrespective of whether the creditor is a friend, relative or financial institution.  Procedural rights will be given to third parties to ensure that the changes do affect the underlaying substantive property rights of the creditor.”

15. These sources confirm that the court is not to utilise the provisions of Part VIIIAA of the Act in such a way that affects the “underlying substantive property rights” of any creditor.

16. In addition, the court is directed to construe each piece of legislation, which it is empowered to apply, subject to the powers contained in the Constitution.[25] Specifically, pursuant to section 90AK of the Family Law Act, the court is prohibited from making any order pursuant to Part VIIIAA which would result in the acquisition of property from some other person other than on just terms. Reference is made to the provisions of paragraph 51 (xxxi) of the Constitution.

    [25] ibid at section 15A

17. I regard a debt owed to a creditor as being a species of property to which the provisions of section 90AK apply. Accordingly, in applying the provisions of Part VIIIAA, the court is not entitled to act in such a way that the substantive property rights of any third party are affected.

18. Ms Ibbott seeks an order pursuant to section 90AE(1)(a) that Mr Ibbott be substituted for her and him as the sole debtor to S Pty Ltd. in respect of the loan account. It is also open to me to make an order pursuant to subsection (1)(c) altering the proportion of debt that owes in respect of the loan account.

19. At first blush this latter course is attractive.  I do not doubt the effect of Mr S’s and Ms M’s evidence that the creation of the loan account was essentially an accounting exercise and that Ms Ibbott did not get the same level of financial benefit from the company as did Mr Ibbott, who was at most material times effectively in control of the company, particularly its bank account.

20. However, Ms Ibbott did receive material benefits from the company over many years, whilst at the same time the company was not paying its proper debts as they fell due and Mr Ibbott himself was plundering it of its resources.  The company, in its pre-insolvency incarnation, was a major contributor to the lifestyle enjoyed by the family, albeit that lifestyle was not a lavish one, certainly so far as the wife and children were concerned.

21. Accordingly, the power under section 90AE(1)(c) may afford a mechanism whereby there is some apportionment between the rights of a spouse, who may have made many contributions during a marriage, say as a homemaker and parent, which of themselves have not resulted in the acquisition of material assets with the rights of an unsecured creditor. At the same time account may be had to benefits received by that spouse in the period prior to issues of insolvency arising. Essentially regard be had to the “for better or worse” principle and both spouses share, in whatever proportion is deemed appropriate, in the downside of any particular matrimonial venture.

22. The difficulty, in this particular case, is determining what that proportion should be and how the other provisions of section 90AE, particularly subsections 3(b) and (4), may be honoured. In the absence of any detailed forensic examination of the accounts of the company it is difficult to determine which benefits Mr Ibbott took from the company alone and which flowed on to benefit both parties.

23. In this regard Ms Ibbott has not formally challenged Mr D’ evidence that at least some of the cash and ATM withdrawals from the company’s account were used for the parties’ home loan repayments; household insurance; and the purchase of supermarket item.

24. Similarly it is difficult to challenge Mr S’s analysis, albeit in respect of a limited period in the company’s history, that Mr Ibbott expropriated considerable benefits from it for his own exclusive benefit.

25. In any event, bearing in mind the other provisions of section 90AE, I have come to the conclusion that it would be a fruitless exercise. As previously indicated, the powers provided by the section are carefully circumscribed.

1. No matter how derelict and reprehensible Mr Ibbott’s actions may have been and no matter how innocent of misdoing Ms Ibbott may have been, I am not in a position to ignore effectively the substantive rights of the company nor indirectly those of its creditors, most of whom are representatives of the public purse, most particularly the Australian Taxation Office. 

2. Nor do I have authority to balance the rights and entitlements of

   
   

   Ms Ibbott on the one hand, with those of S Pty Ltd on the other.  Essentially, I cannot “rob Peter to pay Paul” or perhaps more accurately and less figuratively, I cannot put into place measures that will see each of them receiving a proportion of what is due to them.  The company’s right is to be paid in full.

3. Rather my responsibility is to make some sort of assessment of the consequences of the third party order, which is sought by the wife, being made, particularly whether such order will result in the substantive rights of that third party being either negated or eroded.  In particular I am required to assess whether “it is not foreseeable” that such an order “would result in the debt [concerned] not being paid in full [section 90AE(3)(b)].

4. The standard required is a high one. It must not be foreseeable by the court that the order sought will result in anything other than the total repayment of the debt in question.  In this sense the absence of evidence from Mr Ibbott is something of a double edged sword for the wife. 

5. Necessarily, Ms Ibbott proposes that she herself pay nothing of the debt.  Rather it is her position that Mr Ibbott is a competent and skilled tradesman who has the capacity and skills to repay the debt concerned.  I accept that Mr Ibbott has a significant earning capacity as a tradesman.  But whether he will choose to exercise that capacity diligently in future and more particularly put it towards the service of the debt owed by him to the company is unclear to me.

6. In fact, it is the wife’s case that Mr Ibbott is a financial wastrel, who in the past has improperly applied his resources and capacities to the detriment of both his family and his creditors.  I accept her evidence in this regard.  In such circumstances it must become highly conjectural that any attempts will be made by Mr Ibbott to repay the debt in question and certainly repayment in full appears to me to be highly doubtful at this juncture, which is the point at which I must consider the consequences of the order in question.

7. Apart from the husband’s capacity to earn an income, the wife can point to no other resources which would be available to Mr Ibbott to pay the debt in question.  It being her case that she should retain all the other remaining matrimonial property.  By implication, it seems to be her position that Mr Ibbott and the liquidator could reach some accommodation to pay the debt off over time.  Certainly there is no indication that, even if he was willing, Mr Ibbott has the resources to pay the debt in the foreseeable future.

8. There is no evidence from Mr Ibbott that he has any such proposal. In addition, I do not think that to place the burden on the liquidator of the company to have to pursue Mr Ibbott for the debt would be a just and equitable outcome in all the circumstances of this case. Pursuant to section 90AE(4)(e) I am required to consider the capacity of the parties to a marriage to repay the debt, after the order is made.

9. The husband has some capacity to repay the debt but the extent of that capacity is unclear to me.  In assessing the extent of that capacity I believe I must make some assessment of the willing of the husband to utilise that capacity to repay the debt within some reasonably foreseeable timeframe.

10. In the past Mr Ibbott has shown a cavalier disregard for his responsibilities towards many of his creditors.  In the absence of any specific evidence or proposals from him, I doubt that he has had a change of heart in respect of the future payment of his debts.  Certainly it would not be just and equitable, from the perspective of the company, for me to act on the assumption that he has had such a change of heart.

11. Accordingly, I have reached the conclusion that the essential preconditions required by section 90AE(3) for the making of the order sought by the wife have not been established. It is not foreseeable at this juncture that the debt to S Pty Ltd will be paid in full.

12. In addition, I am not persuaded that these considerations, regarding the foreseeability of the debt owed to the company being repaid in full, would be altered, if different proportions of the debt were attributed to the husband and the wife.  For example if 50% of it was attributed to the wife to be paid from her share of the proceeds of sale of the former family home with the balance to be attributed to the husband to be paid by him in some other way.  The benefit of such an attribution in these proportions or some other for the wife being that she would be able to have access to more of the parties’ immediately realisable capital.

13. The essential precondition is foreseeability of the payment of the debt owed to the third party in full.  Anything short of this will result in the diminution of the substantive rights of such a third party.  I do not think attributing, in effect part of the debt owed, for payment from the proceeds of sale of the former family home, is likely to result in it becoming foreseeable that the whole debt will be paid in full, unless the remainder required is a negligible amount.

14. The substantial difficulties regarding the likelihood of Mr Ibbott either being willing or able to make such a payment would remain.  Such a result would amount to the company and Ms Ibbott receiving a proportion of what is due to them, which in my view is not an outcome sanctified by the operation of Part VIIIAA of the Act.

15. Pursuant to section 90AE(4)(b), I am required to consider the taxation effect, if any, on a third party effected by an order made under this part of the Act. At present, the company’s most significant debt is its debt to the Australian Taxation Office, amounting to somewhere in excess of 80% of its total debts.

16. In my view, it is irrefutably the case that, if the order sought by the wife is made, the effect will be that the company will not pay its taxation debt in full.  I do not think that such an outcome would be either just and equitable, certainly not so far as the public purse is concerned or within the intention of the applicable legislation.

Step two – assessment of contributions

1. Section 79(4) requires that the court look at the entirety of the contributions, both financial and non-financial, to the welfare of the family, as well as to the acquisition, conservation and improvement of those assets. Contributions are not required to be tied to the acquisition, conservation and improvement of any particular asset and maybe taken into account generally as contributions in a total sense.

2. The task required of me pursuant to section 79(4) of the Family Law Act thus is to weigh and assess the disparate contributions of the parties to arrive at an outcome, which is both appropriate and just and equitable in all the circumstances. Contributions, which are different in quality and nature, must be compared. The exercise is not purely an arithmetical or accounting one.

3. The wife’s contributions, over the course of the long marriage between the parties, have in my view been considerable.  She has been the family’s principle homemaker and has provided the vast majority of the parenting for the parties’ two children.  When she was able, she returned to the paid workforce and contributed her modest income to family purposes.

4. Mr Ibbott has also made considerable financial contributions towards the family and the acquisition of the matrimonial property which remains available to be divided between the parties.  He was the family’s main breadwinner.  The income he earned as a tradesman was the main source of financial support for Ms Ibbott and the children and in large part enabled the purchase of the former family home.

5. Where it not for the question of the funds wasted by Mr Ibbott, I would have little difficulty in reaching the conclusion that the parties’ various contributions, although different in nature, should be regarded as being essentially equal.

6. However, Mr Ibbott’s profligate financial behaviour during the marriage takes this case out of the ordinary run of cases.  In my view, many of Mr Ibbott’s contributions, particularly the manner in which he chose to operate S Pty Ltd and his gambling of the money he drew from it, should be regarded as negative contributions, which consideration of justice and equity require should be taken into account at this stage of the proceedings.[26]

   [26] See In the marriage of Spiteri (2005) 33 Fam LR 109 at 119

7. This aspect of the case requires that there should be a considerable discount in the assessment of the husband’s contributions.  His irresponsible behaviour has resulted in the pool of matrimonial assets being reduced to such extent that it will not provide for the future needs of either party.  The wife will be unable to purchase accommodation for herself in the foreseeable future, which future for her is one likely to be marked by penury and financial struggle.

8. The way in which Mr Ibbott chose to operate S Pty Ltd has resulted in the company having significant tax and workers’ compensation insurance debts.  I do not think that it can be fairly said that Ms Ibbott has either passively or actively acquiesced in this conduct.  In my view she was largely powerless to prevent the husband operating the company in any way other than as he saw fit, which included the right to treat its bank account as if it was his own.

9. I regard Mr Ibbott as having embarked upon a course of conduct, which has been reckless, negligent and wanton and the overall effect of which has been to significantly reduce the value of the parties’ matrimonial property.  His actions have been severely prejudicial to the wife in economic terms.  As such they are outside any consideration that the losses which have resulted should be treated as joint ones.  They are not losses which are to be treated as arising “for better or worse” out of the normal course of a marriage.

10. Mr Ibbott’s conduct, occurring as it did independently of the wife and without consideration by him of the financial consequences his conduct held for her, is a matter which I can take into account in the section 79(4) exercise pursuant to section 75(2)(o) of the Act.[27]  Considerations of justice require that the husband’s cavalier and irresponsible behaviour be taken into account, to his detriment, at this stage of the proceedings.

    [27] See In the marriage of Kowaliw (1981) FLC 91-092 at 76,644

11. As I have calculated them, the net assets of the parties, available to be divided between them, amounts to a sum of less $70,000.00.  In this day and age it is a modest sum for the court to be considering after a marriage in excess of twenty years.  In my view the amount is dwarfed by the negative contributions of the husband, whose action have resulted in the loss of a sum much in excess of this amount.

12. In all these circumstances the overall contributions of the wife must be regarded as greatly superior to those of the husband during the entirety of the marriage between the parties.

Step three – section 75(2) and the prospective needs of the parties

1. In my view, a consideration of the applicable section 75(2) factors favours the wife, particularly discrepancies in the parties’ respective capacities to earn an income [section 75(2)(b)].

2. The wife works as a shop assistant.  Her income is $33,000.00 per annum.  It is a modest sum.  She left school at an early age and has no formal qualifications.  In future, she is likely to be limited to employment in unskilled and poorly paid positions.

3. The husband has well established skills as a tradesman.  He also has business connections within this aspect of the building industry.  I accept that he has not always fully utilised his income earning capacity in this field and his exact income earning potential is currently difficult to glean, particularly given his non participation in these proceedings.  However I accept that his income earning potential is significantly greater than that of the wife.

4. It is axiomatic that the most reliable source of on-going financial security for a party to a marriage, following marital breakdown, is an assured and substantial income or at the least the capacity to earn one.[28]  In my assessment the husband has such a capacity, whilst the wife’s capacity is far more limited.  In my view this consideration necessitates some further distribution of marital assets in the wife’s favour.

   [28] See Clauson & Clauson (1995) FLC 92-595 at 81,911

Conclusions

1. I have reached the conclusion that a proper consideration of the respective contributions of the parties under step two, outlined above, when combined with an assessment of the applicable section 75(2) factors, should result in the wife receiving the entirety of the parties’ net assets which remain after the payment of the parties’ various debts, particularly the debt owed to S Pty Ltd..

2. The final step in determining property proceedings is for the court to stand back and consider whether its proposed result represents a just and equitable outcome.

3. Mr Ibbott’s conduct during the marriage has resulted in financial impoverishment both for himself and the wife.  For the reasons I have provided, it is not open to me to recalibrate the debts owed by the parties to the company concerned. 

4. However the fact remains that it has largely been as a result of

   
   

   Mr Ibbott’s actions that the company has not paid its debts as they have fallen due and the benefits received by Ms Ibbott from the company and the business it has operated have been modest. 

5. Rather, one of the major consequences of the parties’ marriage has been the transmission of debt from Mr Ibbott to Ms Ibbott.  She has not sought this debt and has received few of the benefits which have arisen from it.  In addition, I am satisfied that Mr Ibbott has wasted a substantial proportion of the assets produced by the business and this wastage has occurred without any actual or tacit acquiescence from

   
   

   Ms Ibbott.

6. It is a significant and unusual thing to determine that one party should receive all the available assets of a long marriage, particularly one not involving considerations relating to the ongoing responsibility to care for children.  However in this case the net pool of assets is small.  Whereas the wife’s current and future needs are great.  In addition

   
   

   Mr Ibbott’s contributions to the marriage must be regarded as having resulted in the erosion of assets rather than their production. 

7. Given the findings I have made, I have come to the conclusion that I should make an order that will see the company being paid the sum of $191,033.00 from the proceeds of sale of the former matrimonial home, in order that the parties may discharge their joint debt to the company.

8. I am satisfied that I have the authority to make such an order pursuant to the provisions of section 80(1)(k) of the Family Law Act 1975.  I am satisfied that it is necessary for me to make such an order in order to do justice to the company, which is a party to the proceedings.

9. In all the circumstances of this case, I am satisfied that the outcome I propose represents a just and equitable outcome of the proceedings, not only as far as the parties to the marriage are concerned by also so far as S Pty Ltd. is concerned.

10. For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgement.

I certify that the preceding two hundred and forty-four (244) paragraphs are a true copy of the reasons for judgment of Brown FM

Associate:      P Smith

Date:              11 February 2008

and Clauson v Clauson (1995) FLC 92-595