Jamieson & Jamieson (No 2)
[2024] FedCFamC1F 18
•30 January 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Jamieson & Jamieson (No 2) [2024] FedCFamC1F 18
File number(s): SYC 6996 of 2017 Judgment of: CURRAN J Date of judgment: 30 January 2024 Catchwords: FAMILY LAW – PROPERTY SETTLEMENT – Where the parties were married for 24 years – Addbacks – Where both parties sought various addbacks – Legal fees – Interim property – Outstanding and unrealised tax liabilities – Whether the wife’s tax liability should be included as a liability of the parties – Where the liability was incurred after separation – Whether unrealised capital gains tax liability should be included as a liability in the balance sheet – Concealment and non-disclosure of financial position – Consideration of principles of addbacks and notional property – Finding some items be added back with the balance to be considered under s 75(2)(o) – Contributions – Where the husband had superior initial contributions – Where the contributions during the relationship were equal – Adjustment in favour of the husband – Future needs – Where both parties were in receipt of income protection payments – Where the husband’s income protection payments have ceased – Where neither party has capacity to work – Where both parties have health issues – Where the wife has an ongoing entitlement to income protection payments – Orders made for the husband to pay the wife a lump sum by way of final property settlement Legislation: Family Law Act 1975 (Cth) ss 75, 79
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 6.06
Cases cited: AJO and GRO (2005) FLC 93-218; [2005] FamCA 195
Black and Kellner (1992) FLC 92-287; [1992] FamCA 2
Briese and Briese (1986) FLC 91-713; [1985] FamCA 23
Candle & Falkner (2021) FLC 94-069; [2021] FedCFamC1A 102
Cirillo & Cirillo (No 7) [2023] FedCFamC1F 163
Falcken & Weule [2019] FamCAFC 140
Hickey and Hickey and A-G for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395
Hicks & Trustee of the Bankrupt Estate of Hicks (2021) FLC 94-006; [2021] FamCAFC 19
Kannis & Kannis [2002] FamCA 1150
Kowaliw and Kowaliw (1981) FLC 91-092
LAM & RAM [2005] FamCA 868
M & M [1998] FamCA 42
Murray & Murray (2020) FLC 94-000; [2020] FamCAFC 293
NHC and RCH (2004) FLC 93-204; [2004] FamCA 633
Prince and Prince (1984) FLC 91-501; [1984] FamCA 7
Rosati v Rosati (1998) FLC 92-804; [1998] FamCA 38
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Townsend and Townsend (1995) FLC 92-569; [1994] FamCA 144
Vass v Vass (2015) 53 Fam LR 373; [2015] FamCAFC 51
Weir and Weir (1993) FLC 92-338; [1992] FamCA 69
Division: Division 1 First Instance Number of paragraphs: 370 Date of hearing: 5-8 June 2023 and 7-8 August 2023 Place: Sydney Counsel for the Applicant: Mr Wong Solicitor for the Applicant: Eakin McCaffery Cox Counsel for the Respondent: Mr Batey with Ms Carter Solicitor for the Respondent: Mills Oakley Lawyers ORDERS
SYC 6996 of 2017 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS JAMIESON
Applicant
AND: MR JAMIESON
Respondent
ORDER MADE BY:
CURRAN J
DATE OF ORDER:
30 JANUARY 2024
THE COURT ORDERS THAT:
Settlement sum
1.Within 60 days, the husband is to pay the sum of $933,911.50 (“the settlement sum”) to the wife to reflect a division of the property pool of 47 per cent to the wife and 53 per cent to the husband.
The Suburb B property
2.The property situated at J Street, Suburb B NSW and known as Folio Identifier … (“the Suburb B property”) of which the husband is sole proprietor be deemed to remain the property of the husband.
3.Upon the payment of the settlement sum pursuant to Order 1 above, the wife shall sign all documents and pay all monies necessary to discharge the NAB mortgage registered on the Suburb B property subject to the husband signing, dating and returning a request for discharge of mortgage form within 7 days of the wife serving the form on the husband’s solicitors on the record in these proceedings (or upon the husband in the absence of solicitors on the record).
4.In the event that the husband fails to comply with his obligations under Order 1 above within 14 days of the time prescribed under Order 1, the husband is to sign all documents and do all things necessary forthwith to sell the Suburb B property for the best price obtainable in accordance with the orders below and by way of consequential arrangements that shall be made for the purpose of effecting the sale:
(a)The husband is to sign all documents and do all things necessary to list the Suburb B property for sale forthwith by private treaty or public auction with a local real estate agent to be agreed between the parties within 7 days of Order 4 coming in to effect and in default of agreement either party may make a written request to the President of the Real Estate Institute of New South Wales (or the President's nominee) to appoint an agent from the local area to market and sell the property and the costs of and incidental to such appointment shall be paid by the parties in equal shares. Further, the husband shall sign all documents and do all things necessary to sign the standard agency agreement of the agent that is agreed between the parties or otherwise appointed under this order within 7 days of the date that the parties agree in writing upon the agent to be appointed or within 7 days of the President or her nominee appointing the agent under the above default provision, respectively.
(b)The sale price at which the Suburb B property shall be listed under a private treaty sale (if applicable) shall be such price as may be mutually agreed upon by the parties based upon an intended sale price of not less than $4,400,000 and the initial sale price shall be the sum of $4,400,000 failing agreement between the parties as aforesaid.
(c)In the event that the Suburb B property is not sold within 4 weeks of the initial listing by private treaty or alternatively if the agent appointed under Order 4(a) above recommends a sale by public auction in the first instance, the husband shall forthwith list the property for sale by auction with the agent in the following manner and sign all documents and do all things necessary for these purposes:
(i)The property shall be auctioned on the fourth Saturday following the listing of the home for sale by auction or such other day proximate to that fourth Saturday as may be required by the agent for the purpose of the agent's schedule of auctions at the relevant time;
(ii)The parties shall fix a reserve price by agreement immediately prior to the auction time, and failing agreement the reserve price shall be the sum of $4,400,000 (“the default reserve price”) and the parties or either of them may communicate the default reserve price to the agent and auctioneer pursuant to this order;
(iii)The parties (or their agents) shall attend at the auction sale and the husband shall negotiate with the highest bidder in the event that the reserve price is not reached, and in the event that the property is passed in the husband must accept any offer to purchase the Suburb B property from a prospective purchaser within the period of 10 days following the auction date on the basis that the offer:
A.Has a sale and purchase price not less than $4,000,000; and
B.Has a settlement date that is not longer than 60 days from the contract date unless the husband and the wife are willing to agree to a longer settlement date; and
C.Includes the payment of a 10 per cent deposit on the exchange of contracts unless the husband and the wife agree in writing to accept a lesser deposit of not less than 5 per cent of the purchase price.
(d)In the event that the Suburb B property is not sold at auction on the first occasion, the husband shall forthwith re-list the home for sale by private treaty for a period of 3 weeks with the same agent at a list price equal to the reserve price or such other price as agreed between the parties following consultation with the agent;
(i)In the event that the Suburb B property is not sold by auction or by private treaty within 3 months of its first listing, the parties will negotiate with the agent as to the best method of selling the property at the best possible price and the parties are to agree on a sale price and method of sale;
(e)The parties are to sign all documents and do all things necessary forthwith to appoint a law firm to act on the sale of the Suburb B property.
(i)Failing agreement as to the appointment of a law firm to act on the sale of the Suburb B Property, within 7 days of the property being listed for sale the wife shall forward to the husband a list of three law firms; and
(ii)Within a further 7 days upon receipt of the list referred to in Order 4(e)(i) herein, the husband shall select one from the list; and
(iii)Within a further 7 days the parties shall jointly appoint the law firm selected by the husband to be the firm with respect to the sale of the Suburb B property; and
(iv)In the event that the husband does not comply with Order 4(e)(iii), the wife shall select one law firm from the list and notify the husband and within a further 7 days the parties shall jointly appoint the agent selected by the wife to be the law firm with respect of the sale.
(f)The husband shall co-operate in every way with the agent including (without limiting the generality of the foregoing):
(i)Making the Suburb B property available to the agent;
(ii)Allowing inspections of the property at all reasonable times requested by the agent;
(iii)Doing or saying anything or nothing to hinder or prevent a sale being effected;
(iv)Signing all documents requested by the agent in relation to the listing for sale; and
(v)Approving a budget of $15,000 to style the property for the duration of the selling campaign if styling is recommended by the agent to obtain the best price reasonably obtainable upon the sale of the property whether by private treaty or by public auction provided that the cost of the styling if it is required to be paid in advance is to be paid by the parties in equal shares as a pre-paid sale cost and be reimbursed under Order 5(a) below.
5.Upon the sale of the Suburb B property pursuant to these orders the husband shall sign all documents and do all acts and things necessary to cause the proceeds of the sale to be paid and distributed in the following manner and priority:
(a)In payment of legal costs of the conveyancing, real estate agent's commission and expenses (including advertising expenses and if applicable auctioneer's fees) in relation to the sale;
(b)In reimbursement to either party of any sale costs paid in advance by that party with the prior agreement in writing of the other party;
(c)In adjustment of rates and other outgoings as between vendor and purchaser;
(d)In discharge of the registered mortgage in favour of NAB;
(e)In payment of the sum of $2,380,000 (“the settlement sum”) to the wife subject to any adjustment to the sum payable to the wife under Orders 5(e)(i) and 5(e)(ii) below:
(i)In the event that the sale of the Suburb B property is greater than a sale price of $4,400,000 the wife is to receive in addition to the base sum, the further sum calculated by the following formula (“the rise provision”):
A.Sale price - $4,400,000 x 47/100 = the further sum (to be added to the base amount to arrive at the amount payable to the wife);
(ii)In the event that the sale of the Suburb B property is less than a sale price of $4,400,000 the wife is to receive an amount less than the base amount calculated by the following formula (“the fall provision”):
A.$4,400,000-sale price x 53/100 the amount less (to be deducted from the base amount to arrive at the amount payable to the wife);
(f)Payment of the balance then remaining to the husband.
6.Pending the implementation of Order 1 above or the sale of the Suburb B property under these orders each of the husband and the wife is restrained from further encumbering the Suburb B property.
7.This order operates as an irrevocable authority provided by the husband to the appointed law firm and the real estate agent managing the sale of the Suburb B property in respect of the following:
(a)To provide any and all information in relation to the sale of the Suburb B property to the wife upon request by the wife or her solicitor;
(b)To include the wife and her solicitors on the record with copies of all emails and other correspondence sent by them to the husband as if they were acting for the parties jointly if each of them was registered as an owner on title; and
(c)The costs and disbursements of the solicitor’s observance and the real estate agent's observance of this order is covered by their tax invoices that are rendered and paid under Order 5(a) above.
8.From the date of these orders until the implementation of Order 1 above or the completion of the sale of the Suburb B property under these orders:
(a)The wife is to pay or cause to pay all mortgage instalments to NAB as and when they fall due;
(b)The husband shall pay all water rates, utility rates, council rates and property damage insurance premiums on the Suburb B property as and when they fall due. In the event that the husband defaults on his obligations under this order and the default sale orders under these orders operate, any overdue or unpaid payments shall be paid on settlement of the sale of the Suburb B property from the husband's share of the net proceeds of sale pursuant to Order 5(f) above.
Indemnities
9.Except as specifically provided for by any paragraph comprising these orders to the contrary:
(a)The wife hereby indemnifies the husband from and in respect of all liabilities, actions, claims, suits and demands as may be made against the husband in relation to all liabilities in the name of the wife, including but not limited to:
(i)Any credit card liabilities;
(ii)All personal income tax liabilities of the wife which are unpaid at the time of the making of these orders;
(iii)All and any future taxation liabilities of the wife;
(iv)All liabilities of, and in relation to, the wife personally arising in connection with and/or as a result of the husband being, and/or having been, a director, secretary and/or shareholder of any entity whenever and however arising, including but not limited to all taxation liabilities of those entities or either party personally arising in connection with any interest, loan account, office or employment in relation to that entity; and
(v)Any and all other liabilities in the wife's sole name or jointly with any other person.
(b)The husband hereby indemnifies the wife from and in respect of all liabilities, actions, claims, suits and demands as may be made against the wife in relation to all liabilities in the name of the husband, including but not limited to:
(i)Any credit card liabilities;
(ii)All personal income tax liabilities of the husband which are unpaid at the time of the making of these orders;
(iii)All and any future taxation liabilities of the husband;
(iv)All liabilities of, and in relation to, the husband personally arising in connection with and/or as a result of the husband being, and/or having been, a director, secretary and/or shareholder of any entity whenever and however arising, including but not limited to all taxation liabilities of those entities or either party personally arising in connection with any interest, loan account, office or employment in relation to that entity; and
(v)Any and all other liabilities in the husband’s sole name or jointly with any other person.
G Pty Ltd and the G Trusts
10.That within 6 weeks of the date of these orders the husband and the wife shall sign all documents and do all things necessary to transfer the husband’s shareholding in G Pty Ltd to the wife.
11.That within 6 weeks of the date of these orders the husband shall sign all documents and do all things necessary to resign as a director of G Pty Ltd.
12.That within 6 weeks of the date of these orders the husband and the wife shall sign all documents necessary for the husband to relinquish all his rights to units, capital, income and any credit loan accounts in the G1 Trust and the G2 Trust (“the Trusts”) and for the husband to relinquish any and all roles as trustee, beneficiary and/or appointor of the Trusts.
13.That within 6 weeks of the date of these orders the husband is to sign all documents and do all things necessary to assign any and all debit balances in the Trusts, or either of them, to the wife and the wife shall sign all documents and do all things necessary to accept the assignment of such liabilities.
14.That before the implementation of Orders 10, 11, 12 and 13 above each of the husband and the wife in their capacities as directors of G Pty Ltd are to sign any and all documents and do all things necessary to:
(a)Submit tax returns for the Trusts for the financial years ending 30 June 2020, 2021, 2022 and 2023;
(b)Pay the unpaid invoices (being invoice numbers … dated 30 June 2021, … dated 30 November 2021 and … dated 29 June 2023) owed to K Financial Services in the total sum of $14,421 from that entity’s NAB account, BSB … account number …09;
(c)Pay the unpaid invoices (being invoice numbers … dated 30 June 2021, … dated 30 November 2021 and … dated 29 June 2023) owed to K Financial Services in the total sum of $12,437.70 from that entity’s NAB account, BSB … account number …85; and
(d)Amend the Trust Deed of G1 Trust and the Trust Deed of G2 Trust in such manner as may be proposed by the wife in all capacities with any such documentation to be prepared by the wife and the wife’s costs of preparation of such documentation to be paid or to be caused to be paid by the wife without contribution from the husband.
Retention of property
15.Pursuant to section 79(1) of the Family Law Act 1975 (Cth) and except as otherwise provided in these orders, the husband is to retain all real and personal property in his possession or control including:
(a)Savings in his sole name;
(b)Shares in his sole name;
(c)Shares and any loan account in the company known as V Pty Ltd;
(d)Insurance policies to which they are the life insured;
(e)Any motor vehicle in his name and/or in his possession or control;
(f)Interest in any superannuation; and
(g)Any and all other personal property in the possession or control of the husband.
16.Pursuant to section 79(1) of the Family Law Act 1975 (Cth) and except as otherwise provided in these orders, the wife is to retain all real and personal property in her possession or control including:
(a)Savings in her sole name;
(b)Shares in her sole name;
(c)Monies held in the Eakin McCaffery Cox Trust Account;
(d)Shares and any loan account in the company known as M Pty Limited and G Pty Ltd;
(e)Insurance policies to which they are the life insured;
(f)Any motor vehicle registered in her name and in her possession or control;
(g)Interest in any superannuation; and
(h)Any and all other personal property in the possession or control of the wife.
Superannuation Fund 2 Insurance claim
17.In the event that the wife’s pending insurance claim to the trustee and insurer under her Superannuation Fund 2 policy is approved, the wife is to within 28 days of payment of the claim moneys is to pay the husband 50 per cent of that sum (net of tax if any) by way of final property settlement.
18.The wife is to inform the husband of the progress and outcome of the claim pursuant to Order 17 above at intervals of not less than every 3 months from the date of these orders and within 7 days of receiving updating information.
Enforcement
19.The parties shall do all acts and things and sign all documents necessary to give effect to these orders.
20.In the event that either party refuses or neglects to sign any deed or instrument or do any act necessary to give effect to the terms of these orders, a Judicial Registrar of this Honourable Court is appointed pursuant to section 106A of the Family Law Act 1975 (Cth) to execute such deeds or instruments on behalf of the defaulting party and the party in default may be ordered to pay all reasonable costs incurred by the non-defaulting party.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Jamieson & Jamieson has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CURRAN J:
INTRODUCTION
These are final proceedings for alteration of property interests under the Family Law Act 1975 (Cth) ("Act") following the end of the parties' 24-year relationship and each party seeks orders for property adjustment.
The parties commenced cohabitation in or around early 1992 and married in 1994. The parties separated on a final basis on 11 or 12 July 2016, when the wife moved out of the matrimonial home at J Street, Suburb B ("the Suburb B property").
Since separation, the husband has continued to live in the Suburb B property. The wife moved into rental accommodation and presently resides in Town N, Queensland.
The wife is currently 59 years of age. The husband is currently 65 years of age. There are no children of the relationship. Each party is unemployed. It is an agreed fact that each of the parties have no prospect of returning to paid employment.
The matter was heard for four days commencing on 5 June 2023 and continued part-heard for two further days completing on 8 August 2023.
BACKGROUND
The husband was born in 1958 and was almost 65 years of age at the time of hearing. The husband was diagnosed with an illness in 2008 and he received income protection payments from O Insurance for around 12 months. He also made a claim for trauma insurance, which was approved, and he received $650,000 not subject to tax from P Insurance. In 2011 he was diagnosed with post-traumatic stress disorder ("PTSD") and re-applied to O Insurance for income protection, which was initially rejected, but after litigation, past benefits, and interest were paid. His income protection payments ceased in early 2023. The husband was receiving no income at the time of the hearing, and it was an agreed fact that he had no earning capacity by reason of his mental and physical capacity, age, time out of the full-time paid workforce, and mental health diagnoses.
The wife was born in 1964 and was 59 years of age at the time of hearing. She was not in paid employment, and it was an agreed fact that she also is unable to earn income by reason of her mental and physical capacity, age, time out of the full-time paid workforce, and mental health diagnoses. However, the wife is in receipt of monthly payments by way of income protection from Q Insurance of $13,577 and from R Limited of $14,779.67, totalling payment by way of income of over $340,000 per annum. As with the husband, the income protection entitlements arose from premiums paid by the parties during their relationship.
In or around early 1992, the parties commenced living together at the husband's property at S Street, Suburb T ("the S Street property"). At the commencement of the relationship, the wife contends she had savings of $20,000, superannuation of $30,000, and furniture and chattels, which were contributed to the S Street property. The husband contends that he had purchased the S Street property in late 1990 with equity of around $100,000, cash of $133,000, and superannuation of $14,000. The S Street property was sold in 1994 with net sale proceeds of $161,250, which were applied to the purchase of the Suburb B property in the name of the husband.
There was disagreement in relation to the income of the wife in the early years of the relationship. The wife asserted it was around $60,000 per annum, the husband said it was around $22,000 per annum.
The wife complained that the records that would support her contentions as to her early earnings were in the Suburb B property and despite multiple requests for disclosure, the husband failed to provide those records. His evidence was that records had been subject to water damage after he moved them downstairs.
Whatever the truth is about the wife's income in the early years, it is not in contest that the husband earned significantly more than the wife at that time. It was also not in dispute that the parties combined their earnings into joint savings, and both worked full-time.
From 1992, the parties purchased managed funds by taking out investment loans with the NAB, which were used as security for margin loans, which were secured by the Suburb B property. The wife's evidence was that the parties' finances were merged in or around 1993 or 1994.
In 1993, the wife commenced tertiary study and commenced employment with U Company, the parties acquired V Pty Ltd, and the husband moved into consulting on a self-employed basis.
In early 1994, the parties married. Around that time there was some discussion and steps taken to draft a binding financial agreement. It was never signed. The wife signed a statutory declaration in early 1994 annexing a copy of schedules of assets held by each of the parties at the commencement of 1994.
In 1996, the parties' self-managed superannuation fund, the Jamieson Superannuation Fund was set up, and each party rolled their respective superannuation interests into the Jamieson Superannuation Fund.
In early 2000, the wife commenced employment at W Limited as an advisor.
The premiums for the parties' various insurance policies, including for income protection, were paid from their joint bank accounts and superannuation during cohabitation.
In 2003, the parties set up a family trust to protect assets. In 2003, the husband received an inheritance from his mother's estate of $157,571.94, which was deposited into the parties NAB offset account …54 and applied to expenses of the parties. There is no dispute that this was a financial contribution made by the husband during the marriage.
In 2004, the parties established a hybrid trust structure, with the settling of the G1 Trust and the G2 Trust (collectively "the Trusts"), with G Pty Ltd as the corporate trustee. The Trusts remain in existence and the parties continue to be the joint directors and shareholders of G Pty Ltd. The Trusts are the subject of a jointly-appointed single expert valuation report by Mr H. It was agreed that the wife would retain the Trusts.
The Trusts owned various assets, including R Investment accounts and an investment property at X Street, Town Y ("the Town Y property"). The Town Y property was purchased in 2005 for $650,000, funded by an NAB loan in the wife's name, secured against the Suburb B property. The R Investment account accounts were funded by an investment loan with the NAB secured by registered mortgage over the Suburb B property of $1,000,000, to build an investment portfolio.
In 2005, the husband undertook study.
In 2008, the husband was diagnosed with an illness. In late 2008, he received $650,000 of insurance following the illness diagnosis from P Insurance. The wife says that $650,000 was used as follows: $200,000 to reduce debt; $300,000 was gifted to the No 2 Trust; and the balance of $150,000 went into "our cash reserves", which funded out-of-pocket medical and recovery expenses amongst other things. The husband's evidence was that he used this money to fund his litigation against O Insurance. The wife denies the mortgage on the Town Y property was paid out from the O Insurance settlement monies received in 2015. Her evidence is that there were two payments to pay down the mortgage on the Town Y property; $150,000 in 2012 and $200,000 in 2016. The husband's evidence is that $672,000 from the O Insurance settlement monies were used to payout the mortgage on the Town Y property.
The husband also made a claim with O Insurance for income protection in 2008 following his illness diagnosis, which was rejected. In 2011, the husband was diagnosed with PTSD and he again applied for income protection, which was refused. He commenced proceedings against O Insurance in respect of his income protection claim. In late 2015, he received $1,686,400.87. After legal costs the sum was $1,376,400 and after tax, the net amount was $672,000. After the 2008 diagnosis, the husband received a further $20,000 each month for 10 months in income protection insurance until he was considered fit to return to work in 2009.
The husband made further contributions by way of renovations to the Suburb B property, and by being the property manager and undertaking general maintenance of the Town Y property. The husband had been tradesperson. The wife agreed that he was a good handyman. The wife contended that she made contributions by way of investment decisions and networking, managing margin calls and caring for the husband when he was unwell and recovering from surgery. The husband did not accept the extent of the wife's care after his illness; however this is not a significant matter. I accept both parties made contributions during the marriage.
From around 2013, the parties accessed the husband's superannuation entitlements in the Jamieson Superannuation Fund through a transition to retirement pension.
It is the husband's evidence that in 2015, the mortgage over the Town Y property to the NAB was paid off from funds the husband received from an income protection insurance payout from O Insurance. The property was sold in early 2017 for $840,000 with the parties receiving $838,433, and the funds being deposited into the G2 Trust's NAB account …85 in mid-2017. Of these funds, $750,000 were invested in a NAB term deposit …36 in mid-2017 and the balance of $83,924.10 was credited to the G2 Trust's NAB account …85 in mid-2017.
The husband's evidence is that around 2015, the wife received leave entitlements and an exit payment from her employer of $64,000. The payment of her leave entitlements was not finalised until after separation and she did not receive any exit bonus or redundancy.
In mid-2015, the wife sold a number of investments in the R Investment accounts in the name of the G2 Trust, and the proceeds were paid into the G2 Trust's R Limited cash account.
A short time later, $250,000 was paid out of the G2 Trust by way of redemption of 200,000 redeemable units and deposited into the NAB joint personal account …92, and $199,389.15 was paid into …67 to clear a NAB investment loan. The redemption of units from the G2 Trust gave rise to a capital gain of $50,000 which was included in the wife's tax return for the 2016 financial year.
POST-SEPARATION INCOME, USE AND DISTRIBUTION OF FUNDS
The parties separated on 11 July 2016 when the wife left the Suburb B property. The husband has remained living in that property since that time. The wife has lived in various rental properties since that time in Sydney, and in Queensland from early 2021.
In August 2016, the wife caused $50,797 to be paid to the husband from the NAB account of the G2 Trust.
In late 2016, the wife began to receive income protection insurance for the condition of depression and anxiety from Q Insurance in the sum of $11,862.04 per month.
In mid-2016, the wife received an inheritance from her mother’s estate of $155,000, which she deposed to having spent on her living expenses post-separation.
In February 2017, the wife distributed $14,267 from the G2 Trust to herself and distributed $83,925 from the G2 Trust to herself in August 2017. It was agreed these transfers were made without notifying the husband or obtaining his consent.
In February 2017, the husband withdrew $110,542 from the Jamieson Superannuation Fund as “Transition to retirement pension payment” and paid it into his NAB account …83. The wife’s evidence was that this transfer was without her prior knowledge or consent, that the transaction was titled “protection of cash”, and the withdrawal left a “nil balance in the Fund’s bank account such that there were no funds available to pay accounting and ASIC fees”.
In August 2017, the wife made a distribution to herself from the G2 Trust of $83,924.10 without the husband’s knowledge or consent. He was advised of the distribution by letter from the wife’s lawyer on 31 August 2017.
In September 2017, the husband transferred $103,000 from the G2 Trust to his NAB account …83 referred to as “protection of cash”. The wife’s evidence was the husband transferred this sum without her knowledge or consent.
A short time later, the husband transferred $50,000 from the Jamieson Superannuation Fund to his NAB account …83 and referred to this transfer as his “transition to retirement pension payment”. The wife’s evidence was that this was without her prior knowledge or consent.
In September 2017, the NAB made an internal error and released $357,000 of the $750,000 term deposit into the G2 Trust’s NAB account …85 prior to its maturity date in October 2017. The wife froze both the Trusts’ NAB accounts …09 and …85 without consulting the husband.
In September 2018, the husband withdrew $20,534.92 from the Jamieson Superannuation Fund as a transition to retirement pension payment defined by him as for “protection of distribution”.
In December 2018, the husband withdrew $19,264.39 from the Jamieson Superannuation Fund as a transition to retirement pension payment. The description he used on the transaction was “protect super”. The husband’s evidence was that he had to withdraw a minimum of five per cent of the member balance per financial year to stay compliant and these sums reflected that necessity.
In 2018, the husband purchased shares using the O Insurance payment being: … Z Shares; … BB shares; … CC shares; and … DD shares, which was delisted in 2022 and the funds deposited into the husband’s Westpac account …35.
The husband’s evidence was that in late 2018, he began gambling and estimated that he spent thousands of dollars. He says around the same time he also took out a loan from an online broker of $500,000 to invest in cryptocurrency. The bank records show that in August 2019, he withdrew $500,000 from his EE Financial Services account …69 and transferred to his Westpac account …35. The husband deposed at paragraph 90 of his trial affidavit that:
My recollection is vague. I have no records of the crypto currency exchange or other documents evidencing the investment or the funds that were invested and then lost. I had taken a loss on my crypto investment. I do not have receipts to prove the loss therefore I cannot claim the loss on my personal tax return.
He further deposed that “Up until November 2022 I had not given the cryptocurrency debt that I had discharged in December 2021 much further thought”. For reasons below at [305]–[315], I do not accept the evidence of the husband as to the alleged failed cryptocurrency investment.
In early 2019, the wife began receiving an additional $14,779.67 per month from R Insurance by way of income protection, making the total monthly payments at that time $26,641.71.
In June 2019, the husband transferred $250,000 from his EE Financial Services …69 account into a 12-month term account within his EE Financial Services account, and in September 2019, he transferred $246,250 back from the EE Financial Services term account to his EE Financial Services account …69.
In August 2019, the husband withdrew $500,000 from his Westpac account …35 by drawing a bank cheque in his name.
In September 2019, the husband “redeemed” $50,000 from his EE Financial Services account …69 to his Westpac account …35.
On 22 October 2019, the day prior to the interim hearing seeking to restrain money being withdrawn from EE Financial Services, the husband paid $46,000 in legal fees to his lawyers, which both parties accepted that he failed to disclose to the wife and the Court.
On 23 October 2019, orders were made by consent for the transfer of $100,000 from the husband to the wife for the purpose of paying her tax liability, $50,000 from the husband to the wife to pay for her legal fees, and for the husband to withdraw $50,000 for the purpose of paying his own legal fees. An injunction was made preventing the parties from drawing on any funds on any loan account secured against the Suburb B property. Between the making of the orders and 22 December 2020, the husband had withdrawn $70,000 from his EE Financial Services account …69. The wife’s lawyers wrote to the husband’s lawyers seeking an explanation, and his lawyers responded acknowledging that it was an inadvertent breach of the orders spent on legal fees, accounting fees and improvements to the Suburb B property, and proposed that the sum of $70,000 be included as an addback.
Some days later, the husband “redeemed” $150,000 from his EE Financial Services account …69 to his Westpac account …35.
In November 2019, the husband drew a cheque of $28,000 from his Westpac account …35, which he did not deposit until November 2020 into his FF Bank account …12.
In December 2019, the husband drew a cheque of $60,000 from his Westpac account …35, which he did not deposit until November 2020 into his FF Bank account …12.
In January 2020, in compliance with the consent orders made on 23 October 2019, the wife paid out the balance of the NAB loan …70 by paying $48,432 from the G1 Trust’s account …09 and allocated 50 per cent as a drawing by her and 50 per cent as a drawing by the husband.
The husband’s evidence is that in February 2020, he deposited $250,000 into his FF Bank account …12. He deposes that the $250,000 were funds redeemed from his EE Financial Services account …69, being $50,000 in September 2019, $150,000 in October 2019, and $50,000 in December 2019.
The husband deposed that in February 2020, he transferred $243,989.30 out of his FF Bank account …12 into a NAB account …51 in the name of F Pty Ltd. The husband deposed that “these funds were my investment in [a business venture]”. He decided not to proceed with the investment and told Mr GG of F Pty Ltd that he wanted the funds to be refunded into an interim investment of a financial resource.
In February 2020, F Pty Ltd deposited $243,989.30 into a CBA account in the name of HH Company and a financial resource was purchased in the husband’s name.
The husband deposed that “in [early] 2020” he collected the financial resource and sold it privately for cash. He deposed that he “took a loss on the investment, although I cannot recall with precision the amount of the loss” and that “the balance of the funds were applied to the [Suburb B] property for repairs and maintenance and my living expenses”.
In August 2020, the $500,000 withdrawn from the husband’s Westpac account …35 was deposited by cheque into his FF Bank account …12.
In November 2020, the husband deposited $88,000 by two cheques ($28,000 and $60,000 respectively, which he had withdrawn from his Westpac account …35 in November 2019 and December 2019) into his FF Bank account …12.
In December 2020, the husband withdrew the balance of funds in the FF Bank account …12 of $592,437.70. He deposed that he “cannot provide any further information as to where these funds were held in the period between December 2020 and November 2021”.
As identified in the report of Mr H at paragraph 234, the income distributed from the Trusts favoured the wife and the same amounts should have been distributed to the husband. The wife explains this by reference to her mistaken understanding that redeemable units permitted the direction of all of the income from the underlying investment to the holder of those units.
In mid-2021, the wife received a payout from Q Insurance of $497,911.40 plus a premium refund of $39,817.
In mid-2021, the wife entered into a Deed of Loan facility with Mr D in the sum of $55,000.
In November 2021, the husband closed his FF Bank account …12 and opened an account with E Bank account …71, and in November 2021 deposited the $592,537.70 from the FF Bank account …12 into the E Bank account …71 by way of bank cheque.
In December 2021, the husband deposited a cheque for $32,000 into the E Bank account …71 which, the wife asserts, was transferred from the husband’s Westpac account …63 in May 2021.
In December 2021, the husband withdrew the $631,866.02 from his E Bank account …71 by bank cheque and closed the account. His evidence is that the cheque was made out to himself, but the cheque had not been presented. It was submitted on his behalf that he had been advised by the bank that the cheque had become “stale” and the sum was deposited into his account. There was no evidence from the bank or any witness about this issue but on the final day of hearing Exhibit 59, which is an undated screenshot of an account …22 with a balance of $631,866.02, was tendered into evidence.
In January 2023, the income protection from O Insurance of $23,000 per month to the husband was reduced to $10,000 per month for February and March 2023, which said payments then ceased in March 2023.
On 12 April 2023, orders were made for partial property settlement allowing distribution from the husband’s superannuation entitlement with Superannuation Fund 1 of $246,303.50 to the husband’s lawyer’s trust account and $230,000 to the wife’s lawyer’s trust account.
In May 2023, the wife entered into a revised loan agreement with Mr D confirming that the total amount he will owe her is $249,198, comprised of the principal sum of $148,975 and interest of $100,224.
AGREED FACTS
The parties were in agreement in relation to the following factual findings dated 4 August 2023, as contained in Exhibit 4, which I make:
1.The Husband and the Wife commenced cohabitation in [early] 1992 at the Husband’s property known as [S Street], [Suburb T] (“the [Suburb T] property”).
2.The parties married [in] 1994 [in] Sydney, Australia.
3.[V Pty Ltd] was registered as an Australian Proprietary Company limited by shares [in] 1993.
4.The Wife was an executive officer of [V Pty Ltd] from her appointment [in] 1993 until the cessation of her appointment [in] 1995.
5.The Wife was a secretary of [V Pty Ltd] from her appointment [in] 1993 until the cessation of her appointment [in] 2009.
6.[In early] 1993 the Husband and the Wife were appointed directors of [V Pty Ltd].
7.[In early] 1993, the Husband and the Wife were allotted one ordinary share each in [V Pty Ltd].
8. The Wife’s directorship of [V Pty Ltd] ceased [in] 2009.
9.[M Pty Limited] was registered as an Australian Proprietary Company limited by shares [in] 2016.
10.The Wife was appointed the sole director and secretary and allotted 10 ordinary shares as the sole shareholder of [M Pty Limited] [in mid] 2016.
11.[G Pty Ltd] was registered as an Australian Proprietary Company limited by shares [in early] 2004.
12.The [G1Trust] and the [G2 Trust] were each settled [in early] 2004, with [G Pty Ltd] being the trustee of each trust.
13.In early 1993, the Wife commenced [tertiary study] at […] University, which [study] she completed in late 1995.
14.[In early] 1998, the Wife was awarded Certification.
15. In [mid] 2008 the Husband was diagnosed with [an illness] .
16.[In late] 2008, the Husband underwent surgery […] for the [illness].
17.The Wife took 3 weeks off work on carers leave from [late] 2008 in response to the Husband’s [illness] diagnosis and surgery.
18.In late 2008, the Husband made a claim for […] insurance and received $650,000 tax free in respect of his diagnosis of [an illness].
19.In 2011, the Husband made an application for income protection payments from his insurer concerning the Husband’s diagnosis of Post-Traumatic Stress Disorder (“PTSD”). The Husband’s claim was unsuccessful.
20.In 2011, the Husband commenced legal proceedings against his insurer, [O Insurance], in respect of his unsuccessful income protection claim. The husband retained [KK Lawyers] to represent him.
21.The Husband’s insurance claim litigation concluded in [late] 2015, and the Husband received funds of approximately $1,686,400 plus a costs order in his favour of $320,000. The former was subject to a tax liability of approximately $672,000.
22.The total costs paid to [KK Lawyers] and any direct third party payments payable in respect of his County Court of Victoria proceedings against [O Insurance], in relation to back payment of income protection payments, was the sum of $603,017.49.
23.The total amount received by the Husband net of tax after the payment of his legal fees to [KK Lawyers] and after receiving the costs order of $320,000 in his favour was approximately $731,383.
24.The parties agree that contributions to the acquisition and servicing of the parties' [insurance] and income insurance protection policies were equal.
25.[In mid] 2016, the Wife moved out of [J Street], [Suburb B] and took possession of rental premises at [LL Street], [Suburb MM], at a rental cost of $1,135 per week.
26.A divorce Order in relation to the dissolution of the Husband’s and Wife’s marriage took effect [in] 2019.
27. The Wife commenced receiving income protection insurance payments from [mid] 2017 in the sum of $11,151.95 (gross) per month from [a date in late] 2016, increased [in early] 2017 to $11,207.71 (gross) per month, and increased [in mid] 2017 to $11,263.75 (gross) per month from the insurer, [Q Insurance].
28.The Wife commenced receiving income protection payments from the insurer, [R Insurance] from […] April 2019 in the sum of $14,590 (gross) per month, plus a no claim bonus amount of $3,647 for the first 12 months of the claim.
29.The Wife is now receiving $13,577 per month from [Q Insurance] for income protection insurance and $15,633 per month from [R Insurance]. The two policies would come to an end when the Wife attains the age of 65 years of age and the wife is “still on claim”.
30.[In mid] 2021, the Wife received $497,911.40 from [Q Insurance] in respect of the approval by [Q Insurance] of a [insurance] claim lodged by the Wife. This payment was not subject to income tax.
31.[In mid] 2021, the Wife received $39,816.33 from [Q Insurance] in respect of the refund of premiums paid by the Wife in relation to the [Q Insurance] policy.
…
33.The Husband received income protection payments from 2015 to March 2023 of approximately $23,000 per month. Between February and March 2023, this amount was reduced to $10,000 per month.
34. The Husband is no longer in receipt of income protection payments.
35. The husband:
35.1. Is a former […] consultant;
35.2.No longer has the physical or mental capacity for appropriate gainful employment having regard to his highest level of education, prior occupation, age, time out of the full-time paid workforce and mental health diagnoses.
36. The wife:
36.1. Is a former [advisor and manager];
36.2.No longer has the physical or mental capacity for appropriate gainful employment having regard to her highest level of education, prior occupation, age, time out of the full-time paid workforce and mental health diagnoses.
LITIGATION HISTORY
The wife commenced proceedings in the Family Court of Australia (as it was then known) by filing an Initiating Application on 24 October 2017.
On 29 March 2018, the husband filed an Application in a Case seeking a declaration that the parties’ entered into a financial agreement in 1993 prior to their marriage and that the Family Court of Australia would be precluded from making orders pursuant to s 79 of the Act. This application was discontinued on 11 April 2018.
On 24 July 2019, the wife filed an Application in a Case seeking that the husband pay her $404,498 to allow her to satisfy her legal costs, tax liabilities, credit card liabilities and the balance as spousal maintenance, and an interim property settlement for the purchase of a car. Some of the other orders sought were that the husband pay the wife’s tax liability for the 2019 financial year, he pay $48,291 to the NAB line of credit …70, the parties wind up the Jamieson Superannuation Fund, the R Limited investment distributions once distributed to the Trusts be paid to the wife, and the husband resign from his position in G Pty Ltd.
On 23 October 2019, orders were made by consent that:
(a)The parties cause G Pty Ltd as trustee of the G1 Trust to acquire specific investments and reduce the balance on the NAB loan …70 to $0;
(b)The wife pay her tax liability of $106,153.11 for the 2018 financial year;
(c)The husband pay $100,000 to the wife from his EE Financial Services account for the payment of her tax bill and a further $50,000 for the payment of her legal fees;
(d)The husband may withdraw $50,000 from his EE Financial Services account to pay for the payment of his legal fees;
(e)The wife pay all instalments on the NAB loan …68 as and when they fall due;
(f)The husband is restrained from dealing with the Suburb B property;
(g)The parties instruct accountants for the G1 Trust for advice on the most tax effective way for complying with the orders;
(h)The parties instruct K Financial Services to prepare tax returns for the Jamieson Superannuation Fund for the 2019 and 2020 financial years and lodge once finalised; and
(i)The parties wind up the Jamieson Superannuation Fund by paying out all liabilities and creditors, and rolling out 100 per cent of the parties’ entitlements.
On 30 April 2020, orders were made for the parties to provide specific disclosure and for a joint letter of instructions to be provided to Mr C to provide an updated valuation for the Suburb B property.
On 11 August 2021, consent orders were made that the parties were restrained from dealing with the R Limited Investment Account accounts …75 and …68 or changing the usernames or passwords for those accounts, that the wife was to provide the usernames and passwords to the husband’s lawyers, that each party was to provide comprehensive disclosure, and that each party was to liaise with Mr AM for the purpose of arranging mediation through the Family Law Settlement Service.
On 8 December 2021, consent orders were made that the husband was to provide disclosure in relation to his accounts with Superannuation Fund 1, EE Financial Services, V Pty Ltd, and all other accounts held by the husband from 1 January 2021 to date.
On 7 February 2022, consent orders were made that the husband was to provide disclosure as to his interest with Superannuation Fund 1, that the husband provide a copy of his lawyer’s current trust account statement, and for a joint letter of instructions to be provided to Mr C to prepare an updated valuation of the Suburb B property. Other directions for filing were made by consent in the orders on this date.
On 5 May 2022, orders were made that, inter alia, restrained the wife from contacting the husband’s superannuation providers, required updated disclosure from the parties, and created a mechanism for the agreement to and appointment of a single expert forensic accountant.
On 22 June 2022, consent orders were made that the husband was to transfer the balance of his EE Financial Services account …69 to his lawyers’ trust account to be applied to counsel fees and thereafter the account was to be closed. The orders note that the balance of the EE Financial Services account …69 on 31 December 2021 was $30,000.
On 27 July 2022, orders were made appointing Mr H as the single expert forensic accountant.
On 4 November 2022, orders were made for the husband to disclose all documents in relation to the FF Bank account …12 from January 2022 to December 2022, all emails, written agreements or other documents relation to financial transactions or dealings with F Pty Ltd, as well as any and all bank statements in the husband’s name from 1 January 2016 to date. The husband was also ordered to provide written particulars of specific transactions in respect of his FF Bank account …12 within seven days, and he was restrained from drawing upon, changing or encumbering his superannuation entitlements with Superannuation Fund 1.
On 8 November 2022, the wife filed an Application in a Proceeding seeking that the husband pay $837,900 to the trust account of the wife’s lawyers to be held in a controlled monies account, for specific disclosure in relation to transactions on the husband’s FF Bank account …12, and for the parties’ lawyers to attend a conference with Mr H.
On 15 November 2022, orders were made for the parties’ lawyers and Mr H to attend a joint conference and produce a written memorandum of the meeting, which was made by consent, and for the husband to pay $837,900 into the trust account of the wife’s lawyers which is to be held in a controlled monies account.
On 9 December 2022, the matter was listed for final hearing for four days commencing 5 June 2023.
On 27 February 2023, orders were made that the husband was to provide particulars in relation to maintenance and repairs on the Suburb B property. The mother’s evidence is that no further particulars or documents had been received in relation to that order.
On 16 March 2023, the husband filed an Application in a Proceeding seeking a partial property settlement to allow him to withdraw $494,000 from his Superannuation Fund 1 superannuation entitlements. The wife filed a Response to Application in a Proceeding on 27 March 2023, seeking that the husband be permitted to withdraw $460,000 from his Superannuation Fund 1 superannuation entitlements and deposit $230,000 each into the husband’s and the wife’s lawyers’ respective trust accounts. She also sought orders for the appointment of Mr C, real estate valuer.
On 12 April 2023, orders were made that the husband withdraw $476,303.50 from his Superannuation Fund 1 superannuation entitlements and pay $246,303.50 into his lawyers’ trust account and $230,000 into the wife’s lawyers’ trust account, that Mr C was to be sent a joint letter of instruction to provide an updated valuation of the Suburb B property, that the wife is to make full disclosure in relation to the loan to Mr D, and that the husband is to make full disclosure in relation to several specific transactions.
The hearing commenced on 5 June 2023 and ran for four days but went part-heard to 7 August 2023 for an additional two days.
On 7 July 2023, in the intervening period between the first and second tranches of the hearing, the husband filed an Application in a Proceeding seeking to withdraw $250,000 from the G2 Trust NAB account …85 by way of partial property settlement. The wife filed a Response to Application in a Proceeding on 11 July 2023 seeking that the husband receive $250,000 from the G1 Trust NAB account …09 by way of partial property settlement and that she receive $372,700 from the G2 Trust NAB account …85 by way of partial property settlement.
On 19 July 2023, consent orders were made for the husband to receive $250,000 from the G1 Trust NAB account …09 by way of partial property settlement and the wife to receive $372,700 from the G2 Trust NAB account …85 by way of partial property settlement.
The final hearing recommenced on 7 August 2023 and concluded on 8 August 2023, and judgment was reserved.
ORDERS SOUGHT
Each party sought orders adjusting their property interests. The parties were in agreement that the husband retain the Suburb B property and the wife retain the Trusts, and that each retain other personal property in their name and their own superannuation. The wife sought an adjustment to her that resulted in an overall 53 per cent adjustment in her favour, while the husband’s counsel contended that the overall adjustment in accordance with the orders he sought was 59.62 per cent in favour of the husband.
MATERIAL REPLIED UPON
At the hearing, the wife relied upon the following documents:
(a)Further Amended Initiating Application filed 13 March 2023;
(b)Affidavit of Ms Jamieson filed 22 May 2023;
(c)Affidavit of Ms Jamieson filed 4 August 2023;
(d)Affidavit of Mr NN filed 17 May 2023;
(e)Affidavit of Mr OO filed 22 May 2023;
(f)Affidavit of Ms PP filed 17 May 2023;
(g)Affidavit of Mr QQ filed 19 August 2019;
(h)Financial Statement filed 22 May 2023; and
(i)Case Outline Document filed on 2 June 2023.
At the hearing, the husband relied upon the following documents:
(j)Further Amended Response to Initiating Application filed 22 March 2023;
(k)Affidavit of Mr Jamieson filed 22 May 2023;
(l)Affidavit of Mr RR filed 22 May 2023;
(m)Financial Statement filed 22 May 2023; and
(n)Case Outline Document filed on 2 June 2023.
Each party sought to rely on the following single expert valuations:
(a)Affidavit annexing single expert report of Mr H filed 24 May 2023; and
(b)Affidavit annexing single expert report of Mr C filed 29 May 2023.
A joint statement prepared by Mr H and Mr C was tendered into evidence by consent as Exhibit 44.
THE LAW
Property adjustment
No submission was made in relation to the ratio arising from the decision of Stanford v Stanford (2012) 247 CLR 108 (“Stanford”), and each party sought orders adjusting their property interests.
I find it is just and equitable to make an order adjusting the property interests of the parties. They were in a long relationship of 24 years. They separated in 2016. There is no longer common use of their matrimonial property. It is appropriate for orders to be made to adjust the property of the parties (Hickey and Hickey and A-G for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at [39]).
The approach to be adopted in a financial adjustment case pursuant to s 79 of the Act is to follow the four-step process.
It is necessary to first identify the legal and equitable interests of the husband and the wife, consider what (if any) liabilities each of them has, and consider any superannuation and financial resources in the names of the husband, the wife, or either of them, at the date of the hearing.
It is necessary to then assess the contributions of the parties and determine a contributions-based entitlement having regard to the matters set out in s 79(4) of the Act insofar as they are relevant to the facts in this case. The assessment of contributions is usually approached in a holistic fashion.
The third step is to identify and consider relevant matters under s 75(2) of the Act to determine such adjustment as is necessary to the contributions-based entitlement.
The final step requires the Court to consider the effect of the findings and determine whether the orders are just and equitable in all of the circumstances.
The treatment of notional property
In this case it is necessary to have regard to the guiding principles which emerge from the decisions in NHC and RCH (2004) FLC 93-204 , AJO and GRO (2005) FLC 93-218 , Vass v Vass (2015) 53 Fam LR 373 (“Vass”), Trevi & Trevi (2018) FLC 93-858 (“Trevi”), and Candle & Falkner (2021) FLC 94-069 (“Candle & Falkner”) about the treatment of notional property including the exceptionality of “adding back”.
The Full Court in Trevi has set out the guidelines for addbacks in relation to property and expenditure other than on legal fees as follows at [27]–[30]:
The Full Court held in [AJO and GRO] that addbacks fall into “three clear categories”: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and “waste” or wanton, negligent, or reckless dissipation of assets.
However, the Full Court also made it clear that an addback does not necessarily occur whenever “a party has expended money realised from the disposition of assets that existed as at the date of separation”, the Full Court describing such a proposition as “unduly simplistic”. An earlier Full Court made the same point, saying that adding back is “the exception rather than the rule”.
The fundamental precept that addbacks are exceptional, reflected in the decisions just referred to, also mirrors what has been said in earlier decisions of the Full Court that, for example, “the Family Court must take the property of a party to the marriage as it finds it" at trial. An important parallel proposition is that the parties do not "go into a state of suspended economic animation" after separation. Thus, reasonably incurred expenditure does not usually come within accepted categories of addback.
Two fundamental premises emerge from [AJO & GRO] and the authorities preceding it. First, "adding back" is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not "exceptional" justice and equity can be achieved, not by adding back, but by the exercise of a different discretion - usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is "a course which is, perhaps, technically more correct" than adding back to the list of existing interests in property.
Their Honours in Trevi at [29] also quoted the decision of M & M [1998] FamCA 42 (“M & M”) at [2.11] in relation to the concept of suspended economic animation:
There seems to be no appropriate basis for notionally adding back moneys that existed at separation, but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge.
In this case it is also necessary to have regard to the guiding principles which emerge from the decisions of AJO & GRO, Kowaliw and Kowaliw (1981) FLC 91-092 (“Kowaliw”), and Townsend and Townsend (1995) FLC 92-569 about the three “clear” categories of addbacks where, exceptionally, the justice and equity of the case requires it. Namely, these are: where the parties have expended money on legal fees, where there has been a premature distribution of matrimonial assets, and where there has been “waste”. It is appropriate in cases that fall outside the exceptional that justice and equity is achieved in relation to notional assets by taking them into consideration under s 75(2), as opined by the Full Court in Trevi at [30].
In the decision of Stanford, the High Court held that the jurisdiction conferred on the Court to make orders pursuant to s 79(2) is contingent on the question of whether it is just and equitable to make a property settlement order having regard to the existing legal and equitable interests of the parties.
The Full Court in Vass at [138] makes it clear that "there is no error committed per se in adjusting the parties' actual property interests by a calculation involving notionally adding back in the pool sums which have been dissipated by the parties”. Further, that however the exercise of discretion might seek to deal with property that is said to be subject of "add back", proper consideration must be given to the existing interests in property, and the question posed by s 79(2) as a separate inquiry from any adjustment to property interests by reference to s 79(4) if a consideration of s 79(2) reveals that it is just and equitable to alter existing interests in property.
Duty to make full and frank disclosure
Parties have a duty to make full and frank disclosure of their financial circumstances pursuant to r 6.06 of Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“Rules”), which is, per the decision of Briese and Briese (1986) FLC 91-713 at 75,180, “at the very heart of cases concerning property and maintenance”. The consequences of failing to make full and frank disclosure are significant, on account of the significant disadvantage that it places upon both the innocent party and the Court by hindering the achievement of a just and equitable property settlement.
It is well established under the principles that arise from Black and Kellner (1992) FLC 92-287 and Weir and Weir (1993) FLC 92-338 (“Weir”) that in circumstances where there has been non-disclosure “the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature” (Weir at 79,593). This statement has long been cited as the salient principle on what follows from the failure of a party to make full and frank disclosure and has been recently cited and applied by the Full Court in Hicks & Trustee of the Bankrupt Estate of Hicks (2021) FLC 94-006 at [87]–[88].
Upon the establishment that there has been non-disclosure, the Court is empowered to make adverse findings against the party who failed to make adequate disclosure, and such findings include that an asset pool is greater than demonstrated, as set out in Weir at 79,593:
The court’s jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her assets.
Further, in Kannis & Kannis [2002] FamCA 1150, the Full Court said at [51]:
Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances it may be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour.
THE PROPERTY POOL
The parties’ assets and liabilities were captured in a document which became Exhibit 62 in the proceedings. By the time of submissions on 8 August 2023 the pool was as set out below (noting areas of disagreement are identified where the value amounts differ). These areas of dispute as between the parties required determination by the Court to arrive at a balance sheet of assets, notional assets, liabilities, superannuation, and financial resources. The below balance sheet has most items removed which it was agreed had zero or “nil” value, including the wife’s CBA account #2263, which the dispute was whether the amount of zero or $1 and will not impact upon my determination.
Item Owner Description Wife’s Value Husband’s Value ASSETS 1 H J Street, Suburb B $4,400,000 $4,400,000 2 J G Pty Ltd as trustee for G1 Trust and G2 Trust Refer to Items 3–13 3 J G1 Trust – NAB account …09 $55,257 $55,257 4 J G2 Trust – NAB account …85 $347,091 $347,091 5 J R Limited Investment Account account …68 (at 24/07/23) $1,233,651 $1,233,651 6 J R Limited Investment Account account …75 (at 24/07/23) $541,611 $541,611 7 J SS Limited ([…]) $15,882 $15,882 8 J TT Financial Services (… at 0.0281) $1,368 $1,368 9 J UU Ltd shares (… at 0.79) $7,305 $7,305 10 J Mr Jamieson beneficiary account $223,485 $223,485 11 J Ms Jamieson beneficiary account ($22,999) ($22,999) 12 J K Financial Services overdue invoices for 2020FY and 2021FY ($26,858) $0 13 J G Trust ATO tax for lodgement of 2020FY, 2021FY and 2022FY ($24,810) $0 14 H V Pty Ltd: NAB account …86 $17,715 $17,715 15 H NAB account …75 $639 $639 16 H NAB account …83 $228 $228 17 H NAB account …92 $296 $296 18 H Westpac account …35 $59,975 $16,413 19 H Westpac account …63 $11,565 $11,565 20 H Westpac account …32 $2,365 $2,365 21 H E Bank account $631,866 $631,866 22 H WW Pty Ltd account (credit) $4,676 $864 23 H VV credit card $NK 24 H Cash on hand $500 $0 25 W M Pty Limited: NAB account …82 $39 $39 26 W NAB account …37 $2,689 $2,689 27 W NAB account …49 $4 $4 28 W CBA account …61 $861 $861 29 H Z shares (…) $2,849 $2,849 30 H BB shares (…) $43,353 $43,353 31 H CC shares (…) $27,302 $27,302 32 W Loan to G2 Trust $22,999 $22,999 33 W Loan to Mr D $355,306 $355,306 34 W UU Ltd shares $1,304 $1,304 35 H Motor Vehicle 1 E$11,000 E$11,000 36 W Motor Vehicle 2 E$38,000 E$56,000 37 W Rental bond held by XX Organisation E$3,800 E$3,800 38 W YY and ZZ rewards points E$100 E$100 GROSS ASSETS $7,990,414 $8,012,208 ADDBACKS 39 H Withdrawal from FF Bank account on 26/02/20 and paid to F Pty Ltd and then paid to HH Company $243,989 $NIL 40 H Withdrawal from EE Financial Services account $70,000 $NIL 41 H Withdrawal from EE Financial Services account $30,000 $NIL 42 H Withdrawal prior to interim application for funds $46,250 $NIL 43 H Withdrawals made as per cross-examination (7–8/06/23) $377,790 $NIL 44 H Payment of legal fees (Order 3.2 of orders made 23/10/19) $50,000 $50,000 45 H Interim property distribution (12/04/23) $246,303 $246,303 46 H Interim property distribution (19/07/23) $250,000 $250,000 47 W Disparity of distribution from G1 Trust and G2 Trusts trust monies from 2016 to date $NIL $35,399 48 W Payment of legal fees (Order 3.2 of orders made 23/10/19) $50,000 $50,000 49 W Payment by husband to wife (Orders 2 and 3.1 of orders made 23/10/19) $NIL $100,000 50 W Interim property distribution (12/04/23) $202,441 $230,000 51 W Interim property distribution (19/07/23) $324,006 $372,700 NET ADDBACKS $1,890,779 $1,334,402 GROSS ASSETS AND ADDBACKS $9,881,193 $9,346,610 LIABILITIES 52 H Loan from G Trust (offset against Item 2) $223,485 $223,485 53 W NAB loan …68 $293,608 $293,608 54 W Car finance $53,441 $53,441 55 W AG Financial Services $28,265 $28,265 56 W Tax payable on interest received from Deed of Loan to Mr D $60,104 $0 57 W ATO income tax assessment for 2021 $130,330 $0 58 W ATO income tax assessment in previous financial years $282,250 $0 59 W CGT (contingent/unrealised) for R Trust portfolios …75 and …68 $91,623 $0 NET LIABILITIES $1,163,106 $598,799 NET ASSETS (EXCL. SUPERANNUATION) $8,718,087 $8,747,811 SUPERANNUATION 60 H Superannuation Fund 1 (Accumulation TRIS phase) $1,052,568 $1,052,568 61 W Super Fund 2 (Accumulation phase) $1,178,856 $1,178,856 62 W Insurance policy (phase unknown) $NIL $0 NET SUPERANNUATION $2,231,424 $2,231,424 NET ASSETS (INCL. SUPERANNUATION) $10,949,511 $10,979,235 FINANCIAL RESOURCES 63 W AB Points $400 $400 NET FINANCIAL RESOURCES $400 $400 Treatment of assets and liabilities in dispute
As is apparent from the balance sheet above, determination is required in respect of assets and liabilities as set out below:
(a)Item 12: should the overdue K Financial Services invoices be treated as a liability, or as contended by the husband, should the debt be retained by the wife because she assumes the Trusts with all debits and credits?
(b)Item 13: should the G Trust ATO tax on lodgement for the 2020, 2021 and 2022 financial years be treated as a liability on the balance sheet?
(c)Item 18: what is the balance of the husband’s Westpac account …35?
(d)Item 22: what is the value of the husband’s WW Pty Ltd account?
(e)Item 23: what is the value of the husband’s VV credit card?
(f)Item 24: what cash on hand does the husband hold?
(g)Item 36: what is the value of the wife’s motor vehicle?
(h)Item 56: should the tax payable on the income received under the Deed of Loan to Mr D be included as a liability?
(i)Item 57: should the wife’s unpaid tax for 2021 be included as a liability?
(j)Item 58: should the wife’s unpaid tax from previous years be included as a liability?
(k)Item 59: should the contingent/unrealised CGT liability for the R Trust portfolios …75 and …68 be included as a liability?
(a) Item 12: should the K Financial Services invoice be treated as a liability?
For the reasons that follow, the K Financial Services invoices are a liability of the parties and is to be included in the balance sheet.
As evidenced from the annexures to the wife’s affidavit filed 4 August 2023, each of the Trusts have outstanding invoices due to K Financial Services, which itemise works that they have undertaken for preparation of usual accounts including annual returns, advices, and the like.
It was submitted on the husband’s behalf that his position in relation to the Trusts is that the wife can have it “but you take it warts and all” and that this position also applied to the invoices that have not been paid:
Because she’s the one who has managed it for the many, many years … She’s the one that hasn’t paid the accountants.
…
We have invoices, but given that she says the husband has had nothing to do with the running of this trust, why should we be liable for work that she has ordered and which doesn’t seem, we say, to have benefited the trust at all.
(Transcript 8 August 2023, page 157)
Annexure A to the wife’s affidavit filed 4 August 2023 contains the unpaid invoices due to K Financial Services. The work includes the preparation of the Trusts’ financial accounts and trust tax returns for the 2020, 2021 and 2022 financial years, and the Jamieson Superannuation Fund tax returns and financial accounts for the 2021 financial year. This bundle includes an invoice which contains a line item for “Email correspondence with [Mr Jamieson] [the husband] and [Mr RR] regarding queries raised” and “Preparation of reply in relation to historical distributions”. Mr RR is the accountant for the husband. There are references to Mr RR and to the husband in invoices dated both 2021 and 2023. I note both parties’ email addresses are listed at the top of each invoice, bar one pertaining to the Jamieson Superannuation Fund, which is addressed solely to the husband, and that these invoices were sent in an email addressed to both parties.
I accept the expenses were incurred and that they were incurred by each of the parties. It does not follow, as the husband submits, that the wife alone should wear them. I accept that they are a debt that was incurred and is outstanding. The relevant period is from the date of separation until the date of hearing. That the parties have been separated since 2016 and this matter is being heard in 2023, makes the period post-separation significant, but as stated in Trevi, from the Full Court in M & M at [2.11], the parties cannot be in “a state of suspended economic animation”.
I find that the outstanding amount owed to K Financial Services is $26,858 and that it is a liability to be included in the balance sheet of the parties that is outstanding and is to be paid from the parties’ assets.
(b) Item 13: treatment of the G Trust ATO tax liability for the 2020, 2021 and 2022 financial years
The wife contended that the G Trust ATO tax liability for the 2020, 2021 and 2022 financial years amounting to $24,810 should be treated as a joint liability. For the reasons that follow, I find that the joint liability is $15,291 and such sum will be included as a joint liability on the balance sheet.
The wife provided financial accounts to Mr H for the preparation of his report, which recorded that there will be tax payable on lodgement of the Trusts’ tax returns of: $7,422 for the 2020 financial year and $7,869 for the 2021 financial year. If the outstanding liability is, as she contends, $24,810, the balance due would be $9,519. I have no evidence of the tax liability for the 2022 financial year. The report of Mr H recorded that the financial accounts for the Trusts demonstrated that the income tax expense was $7,422 for the 2020 financial year, but he arrived at a different figure of $7,042 for the 2021 financial year. Mr H cites these figures and notes: “I understand that the difference in amounts arises from the taxable income of the Trust differing from the net income for accounting purposes. I have not undertaken a specific review of the income tax calculations for the [G Trusts]”. I accept the figure provided by the wife for the 2021 financial year. The evidence supports a liability of $15,291, being the sum of $7,422 for the 2020 financial year, and $7,869 for the 2021 financial year.
The evidence of the wife in cross-examination was that although work had been done by K Financial Services to prepare the last three tax returns for the Trusts, those returns had not been lodged and the liability had not yet crystallised.
There was no evidence to support the figure of $9,519 as the tax estimate for the 2022 financial year. In submissions, counsel for the wife accepted there was no evidence, saying “I can’t say that I’ve got a figure for you for the ’22. So it at minimum would be those two figures put together which your Honour can take a punt at that one at 15,200 and something”.
The husband contended that there were no tax returns lodged and therefore no ATO assessment, and that the amounts will likely change when the final returns are submitted. The submission made on the husband’s behalf was that the wife is the person who has managed the Trusts, who has failed to pay tax and has failed to pay the accountants invoices, and as such the husband should not be liable for those costs incurred.
The husband did not have access or benefit of the Trusts during the relevant financial years according to Mr H’s report in respect of actual income distributed and it is not in dispute that the wife froze the Trusts NAB accounts …09 and …85 in 2017.
Despite the fact that the wife managed the Trusts, the husband derived a benefit from the asset during the relationship, post-separation, and most recently in July 2023 when he received a partial property settlement of $250,000 from the G1 Trust NAB account …09 to pay for legal costs. The Trusts are and were, joint assets of the parties, and the liabilities of the Trusts of which evidence has been provided will be included on the balance sheet as a joint liability of the parties.
Appropriately, and inevitably, the husband has conceded this figure as an addback.
The husband’s evidence was that he obtained the loan for the currency investment through an online broker. I do not accept the husband’s evidence. I find it implausible that a cheque presented to settle a currency debt of over half a million dollars, presumably to someone from the online brokerage firm to whom the debt was owed, would not be presented.
The sum which the wife contends should be added back is $377,000. The husband has not made fulsome disclosure of his expenditure nor provided particulars as to his claimed expenditure and maintenance of Suburb B, even when ordered to do so.
As against this, the wife has had use of distributions from the Trusts, the lump sum received from Q Insurance, and her inheritance received post-separation.
Both parties are entitled to use funds to make purchases and attend to ordinary day-to-day expenses. I also note the long period since the parties’ separation and re-iterate that the parties are not to be in a state of suspended economic animation. I also note the difficulty of retrospective speculation as to reasonable expenditure by each party so many years after separation, which creates the potential for suspicion and distrust to overshadow what may indeed be simply reasonable living expenditure.
Doing the best I can with the available evidence, I find that both parties have had access to the various lump sums of funds as referred to in these reasons. In respect of each of the parties, it is appropriate to take each of the premature distributions that I have identified in the body of the reasons, into account pursuant to s 75(2)(o), which I will do later in these reasons.
Privacy breach of the husband’s Superannuation Fund 1 account
The husband had rolled over his member balance from the Jamieson Superannuation Fund into Superannuation Fund 1, following consent orders made for the winding up of the Jamieson Superannuation Fund in October 2019. The husband did not provide disclosure documents in relation to his interest in Superannuation Fund 1 other than a screenshot of his superannuation balance and a letter. The wife agreed that she made contact with Superannuation Fund 1 through an online chat function. This allowed her to be emailed a copy of the husband’s superannuation statement.
At the next Court event, an order was made by consent restraining the wife from contacting Superannuation Fund 1 other than with the husband’s consent or by order of the Court. The husband then made a new account with Superannuation Fund 1 which he did not disclose due to the privacy breach. The wife acknowledges that she “foolishly” brought about this privacy breach, but it has had no consequence on the asset pool or on any factor relevant to the determination of the competing applications.
Loan to Mr D
The wife’s evidence in her affidavit filed 22 May 2023 was that she lent Mr D, a “business friend”, $55,000 as agreed under a Deed of Loan facility dated mid-2021. She then says that under the revised loan agreement as at mid-2023, which was the original date of repayment, “[Mr D] will owe me $249,198 comprised of $148,975 (being the principal amount lent and additional amounts lent) plus interest of $100,224”.
In her affidavit filed 4 August 2023, the wife’s evidence was that in early 2022, she signed a loan contract with AG Financial Services to borrow $50,000 and that these monies were advanced to Mr D a short time later. The updated amount owing to the wife by Mr D is $352,305.44, as the wife says:
As at 31 July 2023 under the Deed of Loan Facility, [Mr D] owes me $302,305.44 (made up of $177,424.87 as to the principal and $124,880.57 in accrued interest.) He also owed me the further advance of $50,000. In total, as at 31 July 2023, Mr D owes me $352,305.44.
The full extent of the wife’s loan to Mr D was not clear until she filed a further affidavit on 4 August 2023, wherein the figure increased by almost $100,000 from the previous evidence provided in May 2023 that the total amount was “$249,198”. On 22 May 2023, the wife would have known that in early 2022, she advanced a further $50,000 to Mr D as she had been making repayments of $385 per week to AG Financial Services and should have been able to give this evidence in her original trial affidavit.
How these facts were omitted from her affidavit is unclear. The only finding available to me is that the wife intentionally or carelessly concealed the true amount she had loaned to Mr D. The wife admits that she was dishonest in her loan application submitted to AG Financial Services by recording the reasons for the loan as furniture, renovations, dental work, etcetera, rather than its true purpose.
I note that the wife had significant outstanding tax liabilities, yet she continued to loan Mr D funds and took out loans in order to advance further funds to him. When asked in cross-examination whether she told Mr D that she had a tax bill to pay at the time he asked for a loan, her evidence was that her tax bill was up to date as at July 2021. The tax portal statement demonstrates that she did have outstanding tax liabilities at the time.
That the wife did not disclose the extent of her loan to Mr D and that she had the financial capacity to loan money to Mr D and chose, for whatever reason, not to discharge her tax liabilities, will be taken into consideration. The husband submits that he should not have to share post-separation liabilities that the wife incurred on her earnings post-separation. It was further submitted that we do not yet know if Mr D is going to pay her back with any interest. Pursuant to these orders, the wife is to bear the burden of the identified post-separation liabilities she has incurred and accordingly it does not need to be further taken into account in adjustment between the parties.
SECTION 75(2) FACTORS
The age and state of health of each of the parties
The wife is 58 years of age. The wife gave significant evidence with respect of her various health conditions which were not in contest. I accept the wife’s evidence about her health issues, both as to her physical and mental health. These issues include requiring treatment and medications prescribed by her general practitioner, psychologist, psychiatrist, and other health providers.
The wife relied upon the affidavit of her current treating psychologist Ms PP. Ms PP’s affidavit contained a report which opined that the wife “meets the criteria for [a mental health condition] with mixed features and anxious distress”. Ms PP also opined that the wife’s symptoms cause “clinically significant distress or impairment in social, occupational, or other important areas of functioning”.
The wife’s Medicare claims history for the period of 6 February 2020 to 6 February 2023 is marked as “Annexure N” to her trial affidavit. This demonstrates that she has, in the past three years, had many attendances on specialists and general practitioners for a variety of issues and procedures, with the payments being met by either private health, bulk billed or paid by “EFTPOS” or “EFT to claimant”.
The wife continues to receive income protection payments, which are contingent on regular medical assessments.
The husband is 65 years of age. In 2008, he was diagnosed with an illness. In 2011, he was diagnosed with PTSD. In 2018, he suffered a medical episode. The husband deposes to being prescribed various medications to manage his symptoms, including for insomnia, an anti‑depressant, as well as a list of painkillers and medication for sleep. The husband did not rely on any further evidence in relation to his health.
Each of the parties has faced health challenges and continue to do so. It is an agreed fact that neither has capacity for employment and neither of them is engaged in the paid workforce.
Accordingly, the health issues of both parties establish that they each have no ongoing earning capacity. The relevance, having regard to the operation of s 75(2) of the Act, could only be as regards the financial consequences arising from expenses they might incur outside their usual living expenses having regard to their health.
I take into account the evidence in respect of the health issues and ages of both parties. Both have similar heath issues such that no adjustment is warranted in favour of one over the other. The husband is seven years older than the wife and I take that age differential into account in considering the overall adjustment.
The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment
Neither party has the capacity for gainful employment.
The wife is in a significantly stronger position in respect of income through the payments she currently receives from income protection, and will likely continue to receive until she is 65 years of age, of approximately $30,000 per month. This is a valuable income stream that arises from the wife’s ongoing Q Insurance and R Limited entitlements for income protection payments.
The wife’s entitlement is reviewed annually. However, given the evidence of her treating psychologist and other evidence as to her medical conditions, it will, on the balance of probabilities, continue until she reaches 65. I take this ongoing valuable income stream available to the wife into consideration.
The husband was in receipt of income protection from O Insurance of approximately $23,000 per month until January 2023, and then of $10,000 per month for February and March 2023, after which they ceased. He no longer receives any income protection payments.
I also take into account the respective superannuation interests of both parties, with the husband having a balance of $1,052,568 with Superannuation Fund 1, and the wife having a balance of $1,178,856 with Superannuation Fund 2.
Any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account
The wife’s outstanding tax liabilities, interest and penalties (Items 57–58)
As discussed at [161]–[194] above, I have determined that the wife’s outstanding tax liability and the prospective CGT that will be realised upon the sale of the Trusts’ assets will rest with the wife and are not included on the balance sheet.
In relation to the wife’s tax liabilities, I note that the wife has had the benefit of her full income during the 2021 financial year. As a result, she has outstanding tax liabilities against which payments have not been made and interest continues to accrue. I find that she had the ability to meet those obligations, or at least part of them as they fell due, or at some earlier point, considering the following:
(a)Her income received through income protection;
(b)The application she made to the Court to obtain funds to satisfy her tax debt in 2019; and
(c)Her tendency to prioritise other financial decisions, such as the funds she lent to Mr D and, without criticism, the payment of her legal fees. I take this into consideration.
In relation to the unrealised CGT, I accept that the wife may incur a liability of $91,623 if she chooses to sell the underlying assets of the Trusts and I take that into consideration, but note it is her choice on financial advice as to when and if the CGT event will happen and there is no evidence it will happen in the short to medium term. The liability has not yet been incurred and it may not be incurred. For that reason, I do not consider it just and equitable to include the possible future liability in the asset pool for the reasons identified earlier at [167] above.
$46,250 withdrawal by the husband prior to the interim hearing (Item 42)
As discussed at [225]–[230] above, I have accepted that there is no evidence before me to indicate how these funds were expended by the husband. However, it is significant that the day prior to the interim hearing where orders were made by consent for him to pay $150,000 to the wife, for him to withdraw up to $50,000 for his legal fees and preventing any further withdrawals from the EE Financial Services account …69 pending further orders, he withdrew the amount of $46,250, which reduced the balance of the account to $300,000. The husband did not disclose this withdrawal at the interim hearing. That he did not do so is another example of the husband’s non-disclosure where, in the absence of evidence as to how the funds were applied, there is an inference available and I find that he attempted to conceal these funds.
The $377,790 unaccounted for withdrawals made by the husband (Item 43) and premature distributions of funds
As discussed at [231]–[235] above, I have considered the access by the husband to the cash withdrawal amounts and the lack of evidence in respect of the claimed expenditure on the maintenance of the Suburb B property from separation and have considered this in the overall determination of an appropriate further adjustment of property interests.
I have also found that funds were prematurely distributed by the husband, namely the $243,989 spent to purchase a financial resource, as set out in detail above at [305]–[319]. Other funds were prematurely expended but have been sensibly conceded as an addback.
For my final determination of any adjustments to the parties’ interests, I take into consideration the husband’s premature expenditure of these funds and his lack of disclosure thereto, as well as the funds similarly accessed and expended by the wife, such as the funds loaned to Mr D, which would otherwise be available to the parties.
$35,399 disparity in distributions from the trusts in favour of the wife (Item 47)
As discussed at [235]–[237] above, I have refused to add back the $35,399 which has erroneously been over-distributed to the wife from the Trusts over many years pre- and post-separation. The wife had the benefit of a higher income by virtue of these overpayments primarily during the post-separation period, which I also take into account in my overall consideration of the matter.
ADJUSTMENT PURSUANT TO S 75(2) FACTORS
Having determined that the contribution-based entitlements of the parties were to be adjusted for the husband by 1.5 per cent, it is necessary, having regard to the various factors in s 75(2) of the Act and findings as set out herein, to weigh whether a further adjustment is appropriate.
In the circumstances of this case, I find that a further adjustment of 1.5 per cent to the husband is appropriate in this case because after weighing all of the relevant factors, including the wife’s younger age and longer life expectancy, the husband’s conduct and other facts referred to in these reasons, I consider that the ongoing income stream of the wife from her policies in payment phase are so significant that on balance a further adjustment is warranted. It is not in dispute that the income stream is substantial and amounts to $30,000 per month until the wife reaches 65 years of age, nor is it in dispute that the policies were taken out by the parties during the relationship to which they both contributed.
The husband does not have an income stream due to his age, the cessation of his entitlement and that he is unable to work. The wife’s income is $30,000 per month from both policies, some $360,000 per annum gross which, on the balance of probabilities, will continue for the next seven years. This sum will be in excess of $2 million dollars as a gross figure. This is a substantial sum when considered in the context of the asset pool of the parties.
Although I have made adverse findings made about the husband’s credit and his attempts to retain and conceal funds, many of these funds were conceded as addbacks or otherwise discovered and ultimately included in the pool of assets. If they had not this factor would have weighed against the husband to a higher degree. Despite my findings as to the conduct of the husband, the wife’s income stream until she is 65 years of age is so significant that an adjustment is appropriate in order for the overall outcome to be just and equitable.
The result is that the pool of assets will be divided as to 53 per cent to the husband and 47 per cent to the wife. I have considered that overall adjustment in a pool of assets of approximately $11,000,000 and note the actual monetary differential arising from this adjustment. I find that the outcome is one that is just and equitable in all of the circumstances of the case.
I note that the parties agree that the following assets and financial resource will remain with the wife:
(a)G Pty Ltd;
(b)The G1 Trust NAB account …08;
(c)The G2 Trust NAB account …85;
(d)R Limited Investment Account …68;
(e)R Limited Investment Account …75;
(f)Mr Jamieson beneficiary account;
(g)Ms Jamieson beneficiary account;
(h)All other assets owned by the Trusts, namely;
(i)Shares in SS Limited (…);
(ii)Shares in TT Financial Services (…); and
(iii)Shares in UU Ltd (…);
(i)All other real and personal property in the possession and control of the wife; and
(j)Any interest in superannuation.
I note that the parties agree that the following assets will remain with the husband:
(a)The Suburb B property;
(b)All other real and personal property in the possession and control of husband; and
(c)Any interest in superannuation.
The respective positions of the parties are reflected in the table below:
Item Owner Description Applicant Wife Respondent Husband ASSETS 1 H J Street, Suburb B $4,400,000 2 J G Pty Ltd as trustee for G1 Trust and G2 Trust Refer to Items 3–13 3 J Trust 1 Trust – NAB account …09 $55,257 4 J Trust 2 Trust – NAB account #2285 $347,091 5 J R Limited Investment Account …68 (at 24/07/23) $1,233,651 6 J R Limited Investment Account …75 (at 24/07/23) $541,611 7 J SS Limited (…) $15,882 8 J TT Financial Services (… at 0.0281) $1,368 9 J UU Ltd shares (… at 0.79) $7,305 10 J Mr Jamieson beneficiary account $223,485 11 J Ms Jamieson beneficiary account ($22,999) 14 H V Pty Ltd: NAB account …86 $17,715 15 H NAB account …75 $639 16 H NAB account …83 $228 17 H NAB account …92 $296 18 H Westpac account …35 $59,975 19 H Westpac account …63 $11,565 20 H Westpac account …32 $2,365 21 H E Bank account $631,866 22 H WW Pty Ltd account (credit) $4,676 24 H Cash on hand $500 25 W M Pty Limited: NAB account …82 $39 26 W NAB account …37 $2,689 27 W NAB account …49 $4 28 W CBA account …61 $861 29 H Z shares (…) $2,849 30 H CBA shares (…) $43,353 31 H CC shares (…) $27,302 32 W Loan to G2 Trust $22,999 33 W Loan to Mr D $355,306 34 W UU Ltd shares $1,304 35 H Motor Vehicle 1 $11,000 36 W Motor Vehicle 2 $43,050 37 W Rental bond held by XX Organisation $3,800 38 W YY and ZZ rewards points $100 GROSS ASSETS $2,832,803 $5,214,329 39 H Withdrawal from FF Bank account on 26/02/20 and paid to F Pty Ltd and then paid to HH Company $243,989 40 H Withdrawal from EE Financial Services account $70,000 41 H Withdrawal from EE Financial Services account $30,000 44 H Payment of legal fees (Order 3.2 of orders made 23/10/19) $50,000 45 H Interim property distribution (12/04/23) $246,303 46 H Interim property distribution (19/07/23) $250,000 48 W Payment of legal fees (Order 3.2 of orders made 23/10/19) $50,000 49 W Payment by husband to wife (Orders 2 and 3.1 of orders made 23/10/19) $100,000 50 W Interim property distribution (12/04/23) $230,000 51 W Interim property distribution (19/07/23) $372,700 NET ADDBACKS $752,700 $890,292 GROSS ASSETS AND ADDBACKS $3,585,503 $6,104,621 LIABILITIES 12 J K Financial Services overdue invoices for 2020FY and 2021FY $13,429 $13,429 13 J G Trust ATO tax for lodgement of 2020FY, 2021FY and 2022FY $7,645.50 $7,645.50 52 H Loan from G Trust (offset against Item 2) $223,485 53 W NAB loan …68 $293,608 54 W Car finance $53,441 55 W AG Financial Services $28,265 NET LIABILITIES $396,389 $244,560 NET ASSETS (EXCL. SUPERANNUATION) $3,189,114 $5,860,061 SUPERANNUATION 60 H Superannuation Fund 1 (Accumulation TRIS phase) $1,052,568 61 W Super Fund 2 (Accumulation phase) $1,178,856 NET SUPERANNUATION $1,178,856 $1,052,568 NET ASSETS (INCL. SUPERANNUATION) $4,367,970 $6,912,629 FINANCIAL RESOURCES 63 W AB Points points $400 NET FINANCIAL RESOURCES $400 $0
The total of the net assets and superannuation is $11,280,600.
My determination that the net pool should be divided 47 per cent to the wife and 53 per cent to the husband. The wife is to receive $5,301,882, and the husband $5,978,718.
Therefore, in order to effect this division, the husband is to pay the wife the sum of $933,911.50.
ORDERS
I order that the husband pay the wife the amount $933,911.50.
Both parties seek that the husband retain the Suburb B property. Both parties seek that wife discharge the NAB mortgage secured against the Suburb B property. I make those orders.
Both parties seek that each party shall retain all real and personal property in their possession, as well as their own superannuation. I adopt the orders proposed by the wife.
Both parties seek orders that in the event that the husband is required to pay a settlement sum to the wife, the Suburb B property be sold. I prefer the orders proposed by the wife due to their detail, though I note the wife’s orders propose a sale price of $4,900,000. There is no evidence before me that the property is valued at $4,900,00. Rather, each party accepted the valuation completed in May 2023 by Mr C in the sum of $4,400,000.
Both parties seek identical orders in relation to the Trusts, namely that the husband’s shareholdings in G Pty Ltd be transferred to the wife, the husband resign as director, relinquish all rights to any roles and to any capital of the trust, and that the debit balances be assigned to the wife. I make this order by consent.
Both parties seek an order that the wife keep the husband informed of the progress of her pending Insurance claim, and I make the order that she do so at intervals of no less than three months, and within seven days of receiving information as to the progress of the claim. In relation to the treatment of the policy if successful, the parties agree that the wife should pay the husband a portion. As stated above, I order that the wife pay to the husband 50 per cent of any payment received as a result of her pending Insurance claim in accordance with the overall division of property.
Both parties seek an order pursuant to s 106A. I make that order.
I decline to make an order sought by the wife in relation to the sale of the R Limited investments. I find it is appropriate to order that prior to the transfer of the husband’s interest in the Trusts, the unpaid invoices owed to K Financial Services in relation to the Trusts be paid, and that the tax returns prepared by them for the 2020, 2021, 2022, and 2023 financial years, be lodged.
I order that each party indemnifies the other from all liabilities, actions, claims, suits, and demands as may be made, as sought by the husband.
I order that until the husband pays the settlement sum of $933,911.50 to the wife, the husband shall pay all rates and outgoings on the Suburb B property, and the wife shall pay all mortgage instalments to the NAB, as proposed by the wife.
COSTS
In these proceedings each party sought that the opposing party pay their costs of and incidental to these proceedings. The parties can make an application for costs in accordance with the Rules.
I certify that the preceding three hundred and seventy (370) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Curran. Associate:
Dated: 30 January 2024
0
2
2