JAMISON & HALLIDAY

[2009] FamCA 890

FAMILY COURT OF AUSTRALIA

JAMISON & HALLIDAY [2009] FamCA 890

FAMILY LAW – PROPERTY – Alteration of property interests between the parties – Just and equitable – Whether husband is legal and beneficial owner of a corporate entity – Waste – Gambling

FAMILY LAW – CHILD SUPPORT – Departure Order

Child Support (Assessment) Act 1989 (Cth): ss 116(1), 117(1), 117(2), 117(4), 117(6), 117(7), 117(7A), 117(7B), 117(8), 123(1), 124(1), 124(2), 124(3), 124(3A), 124(4), 124(5), 125(1)
Family Law Act 1975 (Cth) ss 75(2), 79(4)

Black & Kellner (1992) FLC 92-287
K & K [2002] FamCA 1150
Gyselman & Gyselman (1992) FLC 92-279
Makita(Australia) Pty Ltd vSprowles [2001] NSWCA 305
Weir & Weir (1993) FLC 92-338

APPLICANT: Ms Jamison

RESPONDENT: Mr Halliday

FILE NUMBER: SYF 4505 of 2005

DATE DELIVERED: 17 September 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 3 – 5 February 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Schonell

SOLICITOR FOR THE APPLICANT: Paul & Paul Lawyers

COUNSEL FOR THE RESPONDENT: Mr Brown

SOLICITOR FOR THE RESPONDENT: Browns the Family Lawyers

Orders

Property adjustment

1. An order is made pursuant to s 79 Family Law Act 1975 (Cth) in accordance with paragraphs 2 and 3 below.

2. Within two (2) months, the husband pay to the wife the sum of $100,000. 

3. Except as otherwise provided in these orders the husband and wife are entitled to the sole legal and beneficial owners of all items of property including money, motor vehicles, insurances, equity, superannuation entitlements and personal effects currently in their possession or control subject to these orders with each of them respectively.

4. In the event the payment referred to in order 2 is not made within a period of two months then by way of enforcement or partial enforcement, both parties do all things and sign all necessary documents to appoint the wife as trustee for the sale of the property situated at and known as W property in the State of New South Wales by public auction at a price to be agreed between the parties and, failing agreement, at a reserve price of $425,000 and that the proceeds be distributed as follows:-

   4.1.Payment of the costs of sale including agent’s and legal fees;

   4.2.Discharge of the mortgage on the W property;  

   4.3.An amount up to the amount referred to in paragraph 2 plus any interest accumulated in accordance with the Family Law Rules2004 (Cth); and

   4.4.The balance, if any, to the husband.

5. If either party refuses or neglects to sign (within fourteen (14) days of a written request to do so) any documents necessary to effect the terms of these Orders, the Registrar of the Sydney Registry of the Family Court of Australia is hereby appointed pursuant to the provisions of s 106A of the Family Law Act1975 (Cth) to execute such documents on behalf of such party.

Child support

1. From the date of this judgment, the husband pay to the wife by way of child support for each of the children of the marriage a sum of $270 per week for each child (“the rate”) until each child attains the age of 18 years or completes secondary education in the year that child reaches the age of 18, whichever is the later.  The rate is to be adjusted on 1 April 2010 and on 1 April in each subsequent year in accordance with any change in the consumer price index for Sydney for the preceding calendar year. 

2. The matter is removed from the pending cases list.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 4505 of 2005

MS JAMISON

Applicant

And

MR HALLIDAY

Respondent

REASONS FOR JUDGMENT

INTRODUCTION  

1. This case is about what alteration should be made in the interests the husband and wife have in property and what change, if any, should be made to the child support payable by the husband. 

PARENTING ORDERS

1. Orders were made by consent on the first day of the final hearing concerning the children and the allocation of parental responsibility, their primary residence and the time that the children would spend with each parent.  

PROPERTY APPLICATIONS

Orders sought by the wife

1. The wife sought the payment by the husband of $100,000 within 28 days of orders being made, or failing that, that the sum of $100,000 be paid from the proceeds of sale of the husband’s W, NSW property (“the W property”) with interest in accordance with the Family Law Rules 2004 (Cth). The balance of the proceeds of sale was to be retained by the husband. In addition to orders about the retention of personal property in each parties’ own name (including their superannuation interests), the wife sought to be declared the sole legal and beneficial owner of the business L Pty Ltd (“L Company”).

2. The wife also sought in her written application that there be a departure from the Administrative Assessment made by the Child Support Agency (CSA) on 17 August 2005, and that the husband pay child support for each of the children of $300 per week ($900 per week in total) to be backdated from August 2005, until the last child attained 18 years. The wife also sought that the amount payable per month be reviewed on the anniversary of the date of the Court’s orders and be subject to indexation. In addition, the wife also sought in her written application payment from the husband for half of the children’s private school fee tuition as well as his meeting the expenses for the children’s private health care. Counsel for the wife sought an order for the discharge of any current arrears and sought any non payment of what the husband might have otherwise been paying by way of child support if it had been properly assessed since 2005 to be taken into account when considering the contributions that both parties had made to the date of hearing. Counsel for the wife sought a periodic order until each of the children reached the age of 18, such order to include an allowance for private school fees. Counsel for the wife indicated in final submissions that no application was being pressed pursuant to s 124 of the Child Support (Assessment) Act1989 (Cth) because those claims had been included into the prospective claim for periodic payments.

3. The wife also sought the costs of and incidental to the proceedings. 

4. The wife acknowledges that an order for $100,000 is more than the known assets (excluding the superannuation) on the balance sheet and there may well be problems in enforcing such an order. 

Basis for the wife’s application

1. The wife submitted in her Case Outline and final submissions that the husband had wasted substantial funds on his own personal activities and that she was forced to make a greater homemaker contribution as he was frequently away for extended periods of time.  She conceded that the husband had made a contribution towards their first home in 1992, but this was a distant contribution outweighed by her own contributions since that time.  The wife submitted that the husband made limited non-financial contributions regarding the acquisition and improvement of the property during the marriage, and that she was the substantial income earner during the marriage.  The wife conceded in her Case Outline that she “expended a not insignificant amount on gambling activities”, but that these losses could be substantially offset by her superior financial contributions, gambling winnings and a gift from her mother.

2. The wife also submitted that she was the major carer of the children since separation and the husband had contributed minimally both personally and financially.  The wife asserts that the husband paid no maintenance for her benefit, and that she made significant financial contributions towards the children’s schooling and extra-curricular activities.

3. The s 75(2) of the Family Law Act 1975 factors (“the s 75(2) factors”) the wife asked the Court to take into account were: the husband’s greater income earning capacity, his superannuation entitlement, the fact that no periodic child support had been paid by him since August 2002 (albeit there had been a lump sum payment of $140,295.45 – see Chronology below) and that only one term of school fees had been paid by him in relation to children’s schooling.  The wife argued that she was unable to engage in additional employment to obtain more income to meet her expenses for the care of the children as she has to work long hours with the L Company business.  The wife also submits that she had to draw down on a loan account with L Company and that she is unsure how she will be able to repay it.  The wife also requested the Court to consider the fact that she is the primary carer for a child from a subsequent relationship.

4. Based on the above submissions, the wife assessed the parties’ contribution as being equal at the date of separation; that this increase to 60 per cent in her favour based upon contributions since separation and that an additional adjustment of 10 to 15 per cent based on the s 75(2) factors in her favour was justified.

HUSBAND’S RESPONSE

Orders sought by the husband

1. At the end of the proceedings, the husband stated that his proposed Orders 2 and 3 of his minute of orders sought were abandoned.  He continued to seek an order that he be declared the sole legal and beneficial ownership of the W property.

2. The husband asserts in his case outline document (and it does not seem to be a matter of controversy), that he sought a departure order varying a CSA assessment of 13 December 2006, such that the husband would then pay $385 per month per child (noting that there 106 months, 121 months and 137 months worth of child support payable in relation to each child since that assessment.) The husband then sought the amount of child support payable be capitalized in the sum of $140,295.45, being the amount paid by the husband to the wife in 2004 pursuant to an agreement made between them.

3. In addition to the usual orders about the retention of personal property in each parties’ own name (including superannuation interests), the husband sought the costs of and incidental to the proceedings.

4. So, the husband wants orders which would effectively end any further responsibility to pay any money to the wife, whether by alteration of property settlement or in respect to payment of child support.

Basis for the husband’s response

1. The husband submitted that there had been written agreements signed by the parties in April 2004 (for child support) and June 2004 (for property settlement.)  That settlement required the husband to pay $175,295.45 to the wife for child support. The husband states, and the wife agrees, that two cheques were given to the wife on 9 July 2004, totalling $140,295.45.  It can be inferred by the husband’s final submissions to the Court that the sum of $175,295.45 was never paid to the wife, rather the figure of $140,295.45 was the only amount paid.

2. Counsel for the husband relied upon paragraph [7.4] of the husband’s Affidavit in support of his proposition that the $140,295.75 paid to the wife in 2004 “was part of a settlement that included both property settlement and child support between the parties” (emphasis added.) Paragraphs [7.3] and [7.4] of the husband’s Affidavit are as follows: 

   7.3 On 9 July 2004 I handed the Wife two cheques totalling $140,295.45.  The Wife signed a document acknowledging receipt of this money…

   7.4At the time of settlement, [D] was aged 9 years (needing child support for 9 years), [C] was 7 years old (needing child support for 11 years) and [G] was 5 years (needing child support for 13 years).  The average length of time for all three children to require child support was 11 years.  Annexed hereto and marked “Q” is a spreadsheet I have prepared explaining the property settlement between myself and the Wife.  The amount allocated for Child Support, being $175,295.45 represents the total sum of $225,295.45 minus the sum of $50,000.00 to the Wife.  I have therefore calculated the total annual child support at $15,935.95 per annum or $1328.00 per month.  I intended this Child Support payment to be a one-off lump sum payment by agreement with the Wife in lieu of future periodic child support payments (original emphasis). 

3. Counsel for the wife submitted that the $140,295.45 payment should be considered a contribution made by the husband during the post-separation period.  Counsel for the husband submitted it should be treated as either an add‑back or a contribution. 

4. The husband also states that the wife gambled significant sums of money both before and after separation and that the sum of $56,320 is unaccounted for.  The total amount that the husband states the wife has withdrawn for gambling is $180,240.   In total, the husband assesses that the wife has had the benefit of $320,000, including moneys taken from the parties’ joint accounts and the $140,295.45 paid to her in 2004.  

5. The husband submits that he was the primary financial provider during the relationship, earning $217,834.10 during the marriage; he asserts the wife, earned $138,477.04 in the same period. 

6. The husband submits that in relation to L Company, the wife has failed to fully disclose all relevant records and has incorrectly claimed a number of personal expenses, leading to what he asserts as an undervaluation by Ms B.  (I note that Ms B was not cross-examined by counsel for the husband and so this proposition was never put to her.)  Further, he also contends that he has no interest in the business F Pty Ltd (F Business) of which he is a managing director, and that there is no evidence the company had any value and that it is not profitable.  He also submits that the wife made no contribution to F Business and that it was established after separation.

7. The husband contends that $12,000 of his savings was used to renovate the wife’s mother’s property to accommodate their eldest child during 1995. 

8. At the end of the proceedings, counsel for the husband submitted that there were equal contributions between the parties but that there should be a 15 per cent adjustment to the wife for the s 75(2) factors, but that “the main dispute is what is in the asset pool.”

DOCUMENTS READ BY THE PARTIES 

1. The documents read by each of the parties are set out hereunder.

Wife’s Documents

1. The wife sought to read the following documents:

   24.1.Her Financial Statement filed in Court 3 February 2009;

   24.2.Her Affidavit filed 2 March 2007;

   24.3.Her Affidavit filed 2 May 2008;

   24.4.Her Affidavit filed 9 May 2008;

   24.5.Affidavit of the wife’s sister filed 2 March 2007;

   24.6.Affidavit of the wife’s mother filed 2 March 2007;

   24.7.Affidavit of Mr O filed 2 March 2007;

   24.8.Affidavit of Ms Y filed 16 March 2007; and

   24.9.Affidavit of Ms B (the single expert witness) filed 31 January 2008. 

Husband’s Documents

1. The husband sought to read the following documents:

   25.1.His Financial Statement filed in Court on 3 February 2009;

   25.2.His Affidavit filed 10 November 2006;

   25.3.His Affidavit filed 12 August 2008;

   25.4.Affidavit of the husband’s mother filed 1 November 2006;

   25.5.Affidavit of Mr H filed 9 November 2005;

   25.6.Affidavit of Mr S filed 9 November 2005;

   25.7.Affidavit of Mr A filed 9 November 2005;

   25.8.Affidavit of Mr V filed 8 March 2006;

   25.9.Affidavit of Mr E filed 8 March 2006;

   25.10.Affidavit of Ms I filed 8 March 2006;

   25.11.Affidavit of Mr J sworn 18 September 2007; and

   25.12.Affidavit of Mr J sworn 6 December 2007.

Expert evidence

1. Expert evidence was provided as follows:

   26.1.Affidavit of Ms B sworn 17 July 2006 and filed 1 May 2008; 

   26.2.Valuation of Ms B sworn 17 July 2006 and filed 1 May 2008;

   26.3.Valuation of Ms B dated 9 May 2007;

   26.4.Valuation of Ms B sworn 29 January 2008;

   26.5.Valuation of Mr N sworn 5 April 2007 and filed 12 April 2007; and

   26.6.Updated valuation of Mr N dated 2 February 2009.  

SHORT HISTORY

1. The wife was born in 1963 and is presently 45 years old.  The husband was born in 1968 and is presently 40 years old.  The parties commenced to cohabit together in September 1990, were married in August 1997 and had three children D born in 1995 (aged 13 and in year 8), C born in 1997 (aged 11 and in year 6), and G born in 1999 (aged 10 and in year 4) respectively.  The parties separated in October 2001 and were divorced in 2005.  The husband remarried in November 2006.  The wife has a child of a subsequent relationship born in June 2005.  The husband has a child with his new wife, Ms K Halliday, born in January 2008.

Credit

The evidence of the wife

1. Generally, I found that the wife gave forthright answers to the questions she was asked in cross-examination.  There were, however, some components of her oral evidence that were not favourable to her case that should be recorded.

2. The wife conceded that she had incorrectly included a smaller amount in her Affidavit material than the $7,300 that the husband had actually paid in total since separation for the children’s school fees.  She also conceded that she had forgotten to include in her financial statement an amount of $9,313.68 which she said she owed her sister for a loan for speech therapy sessions for the eldest son.

3. The wife conceded that she alone had access to the $110,000 re-draw facility through RAMS Financial Group Pty Ltd (RAMS), but she drew a distinction saying that the $57,220 that she withdrew from that account for gambling purposes “came from [her] wages” and not from the redraw facility.  The wife explained that she had transferred the contents of the RAMS re-draw account in to the main RAMS account, which was the mortgage account over the W property.  The wife conceded that the mortgage increased by $84,000 during January 2002 and some time in July 2004.  She said that this increase was used for living expenses.  Counsel for the husband, correctly in my view, put to the wife that her demarcation between her gambling being covered by her wages and her living expenses being covered by the increase in the mortgage was actually “an artificial distinction.”

4. The wife suggested in her Affidavit material of 2 March 2007 that the husband had gambled an estimated $12,040 during the period between August 1999 and December 2002.  When questioned on this by counsel for the husband, the wife stated that it was based on previous spending by the husband prior to this period.  However, she was unable to recall what previous spending she was referring to support this estimate.  On this component of her evidence, I found that her recollection was likely to be unreliable.

5. Finally, on the wife’s credit, the wife gave evidence that the estimate of the amount of money withdrawn by her husband might not be accurate but stated “we could double it.”  I found her response to be flippant.

6. Overall, noting these defects in her evidence and having had the benefit of seeing her responses to the questions asked in the witness box over the first and second day of the final hearing, I found the wife to be a credible and reliable witness.

The evidence of the wife’s witnesses in her case

1. In her Affidavit material of 2 March 2007, the wife included a schedule of her gambling wins that were deposited into her bank accounts.  The schedule was prepared by Ms Y, a qualified accountant and friend to the wife.  The wife conceded that the information that she provided to Ms Y was incorrect in a few discrete instances (counsel for the husband identified three or four) in recording cheques from the husband’s former employer as gambling wins. Nonetheless, I infer from the wife’s responses that she considered Ms Y’s schedule to be a fairly reliable record of her gambling wins.  Having the benefit of hearing Ms Y’s testimony, I found her to be a forthright and honest witness and believe that she conscientiously prepared the schedule based on the details in the original records.  

1. The evidence of Mr O, the wife’s sister’s de facto partner, suggested that the husband was “a bit of a playboy” and that he “was out drinking all the time with his maters….living a single [life] in a marriage shell.”  This testimony tends to corroborate the evidence of the wife regarding the husband’s contributions prior to separation.  I considered that Mr O was clear, persuasive and considered in giving this evidence and found him to be a credible witness for the wife’s case.

2. The wife’s mother stated that during the period when D was born and during the period that the parties’ resided with her she would have to provide additional care as the husband would on occasion drink and not be at his “best ability” to look after the children.  I accept the evidence given by the wife’s mother. 

3. The wife’s sister, the internal accounts manager for L Company gave evidence on behalf of the wife about L Company’s financial circumstances and her observations of the parties’ relationship.  The wife’s sister gave evidence that the moneys withdrawn from the local Leagues Club were computed in the bookkeeping records as part of the wife’s drawings on the L Company account (recorded in the director’s loan account), rather than as dividends or drawings or salary to the wife. The wife’s sister did not accept the submission from counsel for the husband that he was the primary carer for the children when the wife worked on the weekends, as the parties’ employed nannies over the weekend or would frequently ask other people to watch the children. The wife’s sister recalled that she “didn’t think it was right” that the parties’ frequently had the children watched on the weekends.  I accept the wife’s sister’s evidence about that.

4. The wife’s sister also stated that she understood that the wife had spent part of the $140,295.45 payment from the husband to the wife on a substantial taxation bill (approximately $70,000) but that she could not recall precisely what was paid and what was owed.  Absent more cogent evidence, I am unable to place any weight on that evidence.    

Evidence of the husband

1. There were many inconsistencies in the husband’s evidence when compared with documentary evidence.  Most importantly, I am unable to accept his evidence about his relationship with F Business. 

2. The husband gave evidence that he only received a minimal director’s allowance, the provision of a motor vehicle, the payment of a mobile phone and an amount for rent on his eastern suburbs property. He also stated that he had a verbal agreement with the four shareholders of the holding company, B Holdings, that they would provide financial backing in the event of a “disaster.” He also explained that in his capacity as managing director of F Business had signed guarantees of approximately $300,000 in relation to a mortgage over the eastern suburbs property as well as for approximately $200,000 or $300,000 for vehicle leases.  When pressed by counsel for the wife, the husband stated that he understood that the bank would pursue him personally as the guarantor.  The evidence by the husband about his level of remuneration by F Business is inherently unlikely. 

3. The husband stated that he had provided financial information directly to financial brokers in order to obtain the loan for the eastern suburbs property as well as the vehicle leases.  The husband stated that he was entirely truthful in stating his shareholding and financial position regarding F Business to these financial institutions.  This turned out not to be the truth. 

4. Counsel for the wife put several propositions to the husband about his real position at F Business.  The husband reluctantly agreed that he had omitted to inform the bank of a $50,000 unregistered mortgage he says he owes his parents, nor an amount of $46,418 he states he owes Mr J as part of his legal fees. 

5. The husband conceded that he had earned approximately $80,000 prior to his work with F Business. He explained that he had wanted to start up a company, and that he hoped in the long run to obtain some form of profit and shareholding in the company. In the financial years ending 30 June 2006 and 30 June 2007, the husband claimed that he had received only a minimal amount.  Indeed, he claimed he received next to nothing, in the financial year ending 30 June 2006 as a director’s allowance, in addition to the amount he received to cover the rent on the eastern suburbs property.  In contrast, the husband’s new wife earned approximately $900 per week, for fewer hours than what he worked.  He later stated in his evidence that Ms Halliday was paid nearly $65,000 per year.

6. Ms K Halliday also received $163,000 in reimbursements in the 2008 calendar year, which counsel for the wife pointed out were totalled by round figure amounts of several hundred or several thousand dollars.  While acknowledging that it was his role to check these reimbursements, the husband was unable to recall what these reimbursements to Ms Halliday were for, but that Ms Halliday did use her money for “all sorts of stuff” relating to F Business.  This evidence was vague and evasive.

7. Counsel for the wife tendered a bundle of documents from Macquarie Bank (Exhibit “K”), which the husband had produced prior to the proceedings.  This bundle of documents was a loan application made by the husband.  After the husband asserted that he had been truthful in setting out his financial position to Macquarie Bank, counsel for the wife pointed out that there was no reference to the loans the husband claims he owes his mother and Mr J.  The husband explained that he did not think he had to tell Macquarie Bank about these loans.  Either the husband was not truthful when he asserted he had been truthful to the bank or he was not truthful when asserting the existence of these loans.  

8. Counsel for the wife then presented another bundle of documents produced under subpoena from Macquarie Bank, which contained a single page not included in Exhibit K (Exhibit “L”).  This page outlined that the value of F Business in October 2008 was approximately $750,000.  The document also contained the words “Statement of financial position in relation to [the husband]” and listed the eastern suburbs property as an asset of the husband.  The husband stated that this was incorrect and that the property belonged to F Business.  Despite the fact that he conceded that he was the only person who would have provided this information to the financial broker, the husband implied that because he had not signed the documentation, it should not be accepted as a true and accurate position of the husband’s view about his financial circumstances at that time.  The husband’s evidence was disingenuous. 

9. The husband further explained that he had not provided all of the information (the single page) to the Court was because it was incorrect.  He then gave an account of a conversation he had had with an employee with Macquarie Leasing about how the employee had processed the information he gave incorrectly, and had listed him as the owner of F Business, rather than as the managing director.  I then asked the husband about what he did with a copy of this document from Macquarie Leasing.  He stated that he printed it out and destroyed it, but he retained an electronic version of it in his records.  The fact that the husband sought to keep this evidence secret, when it was in his control and possession, reflects poorly on his credit. 

10. The husband conceded that he did not include in the Terms of Settlement that he had nearly $60,000 in his bank account at the time of the agreement.  He states this was borrowed from his parents to pay the settlement. 

11. The husband originally pressed in his Affidavit material filed 10 November 2006 and his oral evidence that he had actually paid the sum of $175,295.45, rather than the sum of $140,295.45.  Counsel for the wife put to the husband that he had artificially constructed after the settlement a calculation which explained how this $175,295.45 payment was made.  The husband denied this and stated that that amount had actually been paid.  I find that the husband had artificially constructed the calculation.  At the end of the final hearing, counsel for the husband submitted that the husband no longer sought that an amount of $175,295.45 be capitalised as a lump sum child support payment, rather “the sum that was actually paid” being $140,295.45.  

12. Counsel for the wife presented the income tax returns for F Business which showed a loss of $27,023 for the financial year ending 30 June 2006 and a loss of $164 for the financial year ending 30 June 2007 (“Exhibit O.”)  The husband stated that he had filled out this tax return and that it was a true and correct record of F Business’s position at that time.  Counsel for the wife then presented a Colonial/Commonwealth Bank Decision Sheet from October 2006 which listed F Business’s financial details and that there had been net profit before tax of $130,000 for 2005 and $125,000 for 2004 (Exhibit “M.”)  That document also detailed that the husband as a guarantor had earned $130,000 in 2005, and that he had an average net profit before tax of $125,000.   The husband accepted on the last day the final hearing that he could choose to pay himself up to $125,000 a year “subject to how the company is performing.”

13. Exhibit “M” detailed that F Business had been offered for security for the loan at a value of $700,000, and that the husband as guarantor had $500,000 worth of real estate as an asset, as well as a $390,000 mortgage.  Exhibit “M” is not consistent with the husband’s evidence. 

14. Counsel for the wife presented a Colonial/Commonwealth Bank Loan Documentation Declaration which the husband had signed (Exhibit “P”) which stated that the average gross taxable income for F Business was $125,000.  That document also detailed total assets of $1,087,000 and Total liabilities of $629,832. When asked if the husband had ever represented to the Commonwealth Bank that he was self-employed, the husband denied that he had.  I do not accept that as a truthful answer.  Exhibit “P” shows that the husband did, in fact, state that he had been self‑employed for a period of 2 years and 10 months.

15. The husband initially tried to explain that the difference between the tax return documentation and the loan documentation was based on the fact that the profit was recorded on an accrual basis.  I find that explanation implausible.  Ultimately, he stated he did not know how to reconcile the differences between those documents. 

16. The husband was asked about what benefit F Business received from owning 45 per cent of the eastern suburbs property (the other 55 per cent being owned by Ms Halliday.)  The husband stated that it was partly used for business and some storage, and that his wife who works for F Business worked there. 

17. The husband also stated that Ms Halliday is reimbursed by F Business for the mortgage payment that she pays for the W property, which is currently rented out.  However, the husband conceded that there was no lease arrangement in place between F Business and the tenant. 

18. The husband asserted that he had not included three motorcycles or trail bikes in his financial statement as they were owned by F Business.  I asked him what purpose the bikes were used for and he agreed that they were partly used for public relations with customers, but also for work purposes, as there were some employees in F Business who were licensed to ride.  The husband also conceded when pressed by counsel for the wife that F Business had paid for him and his new wife to take several trips or weekends away, but he insisted that these were primarily for work purposes.

19. The husband stated when pressed by counsel for the wife that he made a mistake in F Business’s tax return for the year ending 30 June 2007 (Exhibit “O”) where he indicated that he had not had any transactions or dealings with international related parties. I note that the husband responded negatively to the same question on F Business’s tax return for the year ending 30 June 2006 (Exhibit “O.”)

20. I deal in more detail below with admissions, concessions and explanations by the husband about the husband’s financial relationship with F Business and his interest in assets held in F Business’s name.  I find the husband had not been truthful about that financial relationship and those assets.  There are very clear inconsistencies between the evidence he presented to this Court on Oath about his and F Business’s financial position and the information he says he provided to the various financial institutions and the Australian Taxation Office on the same subject matter. 

21. I find it inherently unbelievable and, indeed, improbable that the husband would have given up nearly $80,000 worth of income from U Pty Ltd at the end of 2005 to work for next to no benefit in terms of the minimal director’s fees he claims he received from F Business.  I also find it incredulous that the husband as a managing director for F Business would receive nearly 75 per cent less than his wife in salary when she works less hours in a lower level position.  The only plausible explanation for this would be if the husband had some undisclosed understanding with the owners of F Business, a claim he emphatically denies.

22. I find it unbelievable that the husband would risk financial ruin for himself and his family by being a guarantor for such significant sums as were borrowed when he claims he received such small income and with only a verbal arrangement between him and B Holdings to assist if he could not meet these guarantees. 

23. The husband was coy, evasive or conveniently forgetful in relation to the evidence he gave about the nature of the benefits that his new wife received, particularly in his responses as to what necessitated the reimbursements by F Business to Ms Halliday which totalled nearly $163,000. 

24. Overall, based on the series of instances I have recorded above, I find the husband to be an unreliable and not a credible witness.   

Evidence of the witnesses in the husband’s case

Mr J

1. Mr J appeared by telephone on the final day of the hearing from Dubai. Mr J stated that the husband was an employee of F Business and that there were four different shareholders of B Holdings which owned F Business.  Mr J stated that he thought he had had a discussion with the husband prior to F Business’s formation about the amount of money the husband should be paid as his salary and that he could not recall what amount was agreed, but it would be a very small amount. 

2. When I asked Mr J if he would be surprised that there was evidence that Ms Halliday had received $65,000 in salary, he indicated that he was surprised, but later stated that she “may have been received a marginally higher amount than [the husband] at the beginning of the whole thing.”  Mr J also stated that he “was not conversant with…the actual ins and outs of the cash flow recently” and was unable to say whether at any stage a salary of $40,000 to the husband would be warranted.

3. Mr J initially agreed with counsel for the wife that approximately $370,000 had been injected into F Business from B Holdings and that amount was owed by F Business.  

4. Mr J was unable to recall precisely how much had been put into F Business in the present financial year, but guessed that it might be about $166,000.  Mr J gave differing reasons for why the money had been injected, initially suggesting it was for purposes of growing the company, but later stated it was to assist F Business with bad debts (the debtors in question he could not identify.)  Mr J ultimately was unable to say why the money had been provided without looking at the documentation, but asserted that capital was sent to F Business as required and that cash flow was monitored. 

5. Neither counsel for the parties asked whether Mr J had lent the husband money for legal fees.

6. The evidence of Mr J was somewhat unusual.  Mr J, on behalf of the husband, filed an Affidavit on 11 December 2007 as well as a “Joint” Affidavit signed by the three other shareholders (filed 17 December 2007).  The Affidavit of 11 December 2007 contained several annexed documents, including an extract from an Australian Securities & Investment Commission Form identifying B Holdings as the shareholder of F Business;  a Declaration that the husband is not a legal or beneficial owner of B Holdings; various Share Certificates for B Holdings from the Cyprus Ministry of Commerce, Industry and Tourism; and various Declarations of Trust between a company purporting to be the nominee and trustee for B Holdings on behalf of the other three shareholders.  Mr J denied that the husband had any pecuniary interest other than his salary or any shareholding in F Business.

7. The other three shareholders that submitted the Joint Affidavit also denied that the husband had any legal or beneficial ownership of F Business.

8. At the end of Mr J’s oral evidence, I was left with the impression that he was extremely vague and showed almost a complete lack of knowledge for a person who purported to be an owner of a business.  Mr J did assert that F Business was a small component of his corporate dealings. Nonetheless, Mr J knew why he was giving evidence and his inability to recall what the husband earned as a director, or what money had been lent to the company from B Holdings and for what purpose gave some credence to my view that the husband has not disclosed his true interest in F Business.

9. On the basis that I have insufficient evidence before me, I am therefore unable to find, on the balance of probabilities, positively or negatively that the husband is the legal or beneficial owner of F Business.  I do conclude, however, for the reasons I set out below in my judgment, that the husband has access to significant financial benefits from F Business that he has not disclosed.

The husband’s mother

1. The evidence of the husband’s mother was that she and her husband had lent the sum of approximately $64,548.70 to the husband in order for him to meet his financial commitments following on from settlement with the wife in 2004. The husband’s mother stated that approximately $10,000 had been paid back by the husband and $54,500 remained to be paid back. The husband’s mother also stated that a mortgage was prepared by solicitors in Wales in 2004 and signed by both her and her husband. 

2. Counsel for the wife then asked whether the documentation annexed to the husband’s mother’s Affidavit (which was said to be a copy of the mortgage documentation) was the actual mortgage document given that it did not have her or her husband’s signature upon it. When counsel for the wife put to her that she knew nothing about how the unsigned document came to be completed, the husband’s mother denied this but stated that the original would probably be with the solicitors in Wales.  The husband’s mother could not, however, recall how the unsigned document came to be in existence.  This part of the husband’s mother’s evidence was unsatisfactory.  The husband’s mother also stated that she expected the money to be paid back at some point in the future, but that she had not had a discussion with the husband about this.  I found the evidence that any money advanced had to be paid back as unconvincing.

Ms K Halliday (the husband’s new wife)

1. In contrast to the husband’s evidence that she earned $65,000 per year, Ms Halliday stated that she has net income of approximately $1,400 per fortnight and that she has two mortgages, one for the eastern suburbs property and another for an investment property.  Ms Halliday conceded that she has a mortgage costs for both properties totalling $1,893 per fortnight, with $450 coming in from rent on the investment property.  The wife conceded that things were “pretty tight” but that she does “have a husband” to assist with providing for the family.

2. Ms Halliday was questioned about the salaries of some of the other employees of F Business.  Ms Halliday admitted that some of the other employees who had less experience than the husband were being paid approximately $80,000 as well as other benefits such as cars. Ms Halliday begrudgingly conceded that it is annoying having staff members earning more than her and her husband.

1. Ms Halliday also denied that F Business ever paid for holidays and weekends away, but admitted to attending a weekend in Wollongong with the husband and that she had not done any work on that trip.

2. I found Ms Halliday’s evidence difficult to believe.  This was particularly so in relation to the evidence she gave about the various junior employees of F Business earning more than either her or the husband.  It is unbelievable that the husband would pay (and indeed that Ms Halliday would tolerate) significantly higher salaries (double) to his junior staff than what he pays himself and his wife.  The only reasonable alternative that might justify such behaviour is if the husband has not disclosed his actual financial relationship with F Business.  Overall, having the benefit of observing her in the witness box and seeing the way she responded to the questions asked of her, I did not find Ms Halliday to be a credible witness.        

CHRONOLOGY

Commencement of the relationship

1. The parties lived together in May 1990 as flatmates and became a couple in September 1990.  The parties had no significant financial resources or assets, albeit the wife claims she had a full household of furniture and appliances.  At the commencement of the relationship, the wife claims the parties earned approximately $45,000 per annum each.

2. The parties moved to Wales in July 1991 and stayed in rented accommodation paid for by the husband until October 1991, when the parties moved into a house owned by the husband’s father.  The husband states that he paid the majority of expenses during this period as the wife did not work until August 1992.  The wife states that all expenses apart from the rent were met by her, partly by savings and later by her earnings.  I accept the wife’s version. 

3. A house was purchased in Wales in April 1992 in the husband’s name for the sum of ₤27,500. A gift was made by the husband’s parents of approximately ₤2,500 to assist in the purchase. The wife states, and I accept, that from this time they each earned approximately the same amount of money. 

4. The parties moved back to Australia in December 1993 (the wife) and April 1994 (the husband.)  Nothing turns on that difference.  At this time, the wife commenced employment as a Financial Manager at a business in Sydney’s suburbs.  The husband obtained employment as a service technician, and later as a project manager, with a company, M Services, and remained there from June 1994 to June 2000. 

5. The wife moved in to her mother’s home in 1994, with the husband later joining her.  The property in Wales was rented out following the husband’s return to Australia.  The rent met the mortgage payments for that property.  The wife states that she paid $200 per week for both parties’ board and most of the household expenses and utilities; the husband states that he met this payment.  I accept the wife’s version. 

6. In 1995, the wife’s mother’s house was renovated and extended to accommodate the parties’ first child.  The cost of the extension was $12,000.  The husband states he paid for this from his own savings; the wife states, and I accept, the payment was made from joint savings, albeit from two separate accounts in each party’s name.

7. The wife states that between October 1995 and September 1997, the wife’s mother was paid $200 per week to assist in looking after the parties’ two children. A live-in nanny was employed between September 1997 and September 1998, at a cost of $200 per week. 

The period of marriage

1. In around mid-1997, the parties purchased the W property for $184,000 with a joint mortgage over the property of $160,000.    The husband states that the wife contributed $12,000 from her savings.  According to the wife, she contributed $33,000 to the purchase of the W property, being $10,000 returned to her from her mother for the extensions to her home and a further payment of $23,000.  I accept the wife’s version.  The wife states that she repaid $4,000 to her mother of this $33,000 total, but was advised to stop by the husband because her mother had informed the husband that she did not want the money repaid as it was a gift. 

2. The parties were married in August 1997.

3. Between September 1998 and September 1999, the parties’ employed a live-in nanny, Ms I, at a cost (the husband states) of $200 per week. 

4. The husband states that the parties each earned approximately $60,000 per annum in 1999.

Establishment of L Company Pty Ltd

1. The parties refinanced with RAMS in late 1999 in order to establish L Company, a financial services company, and to repay joint debts.  In essence, L Company provided business and financial management support to businesses 7 days a week during opening hours.

2. L Company was registered in September 1999, and commenced trading in November 1999.  Both parties were equal shareholders of L Company, however, the wife was the managing director and had effective control of the company. The husband continued employment with M Services at a salary of $65,000 per annum, later working for NS Company as a sales engineer at a salary of $55,000 per annum.  He also states that he was the sole financial provider of the family while the wife started up L Company in its initial phase (for a period of 7 months).

3. The husband states that the wife worked 7 days a week from September 1999 to August 2002 (after the parties separated in October 2001.) The wife acknowledges that she was contractually obliged to work long hours and did work practically 7 days a week from September 1999 to January 2002, with limited time off.  The parties hired another live-in nanny from September 1999 to January 2004.

4. The wife states, and I accept, that the husband was away up to 5 nights a week and that she looked after the children, assisted them with their homework and cleaned the house in the evenings with little assistance from the husband, and that the husband frequently spent weekends away partying or motorbike riding. The husband states that he spent every weekend between September 1999 and August 2002 with the children, but I find that was not so.

Gambling

1. During the period August 1997 and October 2001, the husband stated that the wife withdrew the sum of $57,460 from the parties’ joint St. George Bank account, the sum of $8,860 from the parties’ RAMS mortgage account, as well as $27,770 withdrawn from L Company.  During the period October 2001 and December 2002, the husband claimed the wife withdrew the sum of $22,720 from the joint St George Bank account, the sum of $47,460 from the parties’ RAMS redraw account as well as $16,000.  The husband states all of these withdrawals were primarily withdrawn from the Leagues Club in order to gamble.  The total amount the husband claims the wife withdrew for this purpose was $180,240.

2. The wife concedes that there were gambling losses, but that there were also gambling wins.  The wife states, after taking into account her winnings, that she lost no more than $9,052.74 between 1 July 1997 and 24 December 2002; but between 29 January 2001 and 23 January 2004, she lost the sums of $57,220 (from the RAMS mortgage account), as well as $20,000 from the L Company account.  The wife also claimed that she had spent approximately $23,000 on household expenses during this period. She also claimed that the husband had withdrawn $8,400 between July 1997 and July 1999, as well as an estimated $12,040 during the period August 1999 to December 2002.  The wife states that she has not gambled since July 2003.  I find that the wife has accurately given evidence about the matters referred to in this paragraph. 

Post-separation

1. The parties separated in October 2001.

2. In May 2002, the husband states that he sold the Wales property for ₤28,500 and that the balance of the sale proceeds was ₤2,500.  The wife acknowledges that the husband informed her of that the property had sold, but not of the price or the profit.

3. The husband moved to rented accommodation in December 2002 and remained there until March 2004 when he returned to the W property.  The wife and the children moved to a property near Dural, NSW, in October or November 2003.

4. In early 2002, the parties’ applied for an additional re-draw line of credit on the RAMS mortgage of approximately $110,000 for the purposes of purchasing a larger house to accommodate the children.  The husband states that he had a conversation with the wife that there would be a settlement after the purchase of the new property.  Ultimately, the parties were gazumped on the purchase of the new property, and the husband states that he “did not think anything more about the redraw approval.”  The wife states that the re-draw amount was used for private school fees, medical fees, mortgage repayments and furniture for the children.  The husband states that it was used by the wife for gambling.  I accept the wife’s version. 

5. In January 2003, the husband commenced employment as a Sales Estimator and Project Manager with U Pty Ltd and remained there until December 2005. 

6. The wife states that she earned $66,599 in 2004, $42,617 in 2005 and $42,068 in 2006.  The wife also states that after separation she has been living on a loan account of L Company in order to meet her everyday living expenses.  The wife also states that the husband paid no money for child support after August 2002, but that he did pay $7,400 for two terms of school fees in January 2004.  I accept the wife’s evidence about those matters. 

7. The husband has a new wife, a Ms K Halliday, whom he married in November 2006. 

8. The wife states that between 2001 and the May 2008, she had paid a total of $75,725 for the children’s private school fees tuition. She states that she had access to a total of $339,103 in available funds during the period October 2001 to June 2004, including $115,453.75 in wages, $98,703 available funds from a loan account with L Company, $15,000 from the husband for a small amount of child support and an amount for school fees for the children, $25,947 in gambling wins and $84,000 from a draw down on the RAMS re-draw account. She also states that she paid a total of $339,103 for household expenditure between October 2001 and June 2004 (which included an amount of $28,000 for the children’s tuition during that period). The wife also claims that between March 2007 and May 2008 there have been additional expenses for the children of approximately $17,910.  I accept the wife’s evidence as recorded in this paragraph. 

9. Following an application by the wife, the CSA issued an assessment on 17 August 2005. That assessment required the husband to pay $206.42 per month. Two revised assessments were then issued: the assessment of 19 August 2005 which required the husband to pay $244.67; and the assessment of 23 August 2005 which required the husband to pay $1,738.50 per month.  On 10 December 2005, the CSA refused the application of the husband to change the assessment of 23 August 2005. 

10. In September 2005, the husband applied to the Federal Magistrates Court of Australia to stay the Child Support Assessment and that stay is currently in place.  The proceedings were subsequently transferred to the Family Court of Australia.  The CSA then issued a further assessment of 15 February 2006 which required the husband to pay $21.67 per month.

F Business Pty Ltd

1. From February 2006, the husband states that he was employed as the managing director of F Business but is only paid a minimal amount as a director’s fee and is provided with rent for a property.  It is the wife’s case that the husband is actually the owner of F Business. The husband denies legal or beneficial ownership of F Business. The husband states that F Business is the legally and beneficially owned by B Holdings, a company comprised of 4 shareholders, of which Mr J, a witness in the husband’s case, is one of them. 

2. The husband states that Mr J authorised him to purchase a property for future development by F Business, and that F Business purchased 45 per cent of a property in the eastern suburbs property at which he now resides.  The husband stated that the other 55 per cent of the property was purchased by the husband’s new partner, Ms K Halliday. 

3. The husband states that his present income is approximately $40,000 per annum, but that between the start of 2006 to July 2008, he was on minimal income. 

4. I deal in more detail below with issues relating to the wife’s connection with F Business. 

The 2004 “agreement”

1. The parties signed settlement terms in June 2004.  That agreement provided that the husband would pay to the wife the sum of $140,295.45, that the husband transfer his share in L Company to the wife and resign as a director of L Company and waive any entitlement he may have had as a director or shareholder from L Company. The husband states that it was a consensual agreement and that the total property transferred to the wife was $225,295.45.  The wife states that she entered this agreement under duress.  Given that the agreement does not conclude the outcome of these proceedings and that the transactions flowing from the agreement are not in dispute, I did not allow evidence about the negotiations leading up to or the circumstances surrounding “the making of the agreement.”

FOUR STEPPED APPROACH

1. In this matter, my task is to:

   110.1.Identify and value the property, assets, financial resources and liabilities of the parties;

   110.2.Identify relevant contributions and assess them;

   110.3.Consider relevant matters referred to in s 79(4)(d) to s 79(4)(g) of the Family Law Act 1975 (Cth) (“the s 79(4)(d) – (g) matters”); and

   110.4.Ensure my order adjusting the property, assets and liabilities of the parties is just and equitable.

PROPERTY, ASSETS, FINANCIAL RESOURCES AND LIABILITIES OF THE PARTIES

1. I will now briefly give reasons for which items of property are to be included in the total list of assets and liabilities of the parties.

2. The agreed items of property to be included in the total list were: the W property (the value is discussed below);  the parties’ respective household contents; and the husband’s home mortgage.  At the end of the proceedings, the husband’s mortgage of $382,000 (Exhibit “U”) over the W property was not disputed by the wife.  Further, as agreed by the parties, the payment of $140,295.45 made by the husband to the wife in 2004 will be considered in my assessment of the parties’ respective contributions rather than an add-back.  The parties agreed at the outset of the hearing that their respective superannuation entitlements (being approximately equal: $43,089 for the wife; $50,466.88 for the husband) should be retained by each of them.  Neither party made a submission as to whether or not the respective superannuation entitlements should be included on the balance sheet as an asset.  I conclude it is appropriate to included these items as assets on the balance sheet.

3. Counsel for the wife submitted that the Court should exercise its discretion and decline to include either party’s legal fees as an add-back in the balance sheet, nor should the parties’ respective bank accounts or credit card liabilities be included. Counsel for the husband did not object to this suggestion. Accordingly, those items do not compromise property for the purpose of my final determination. While I have also not included the credit card liabilities and small savings accounts of the parties in the total list, I will take these items into account in my assessment of the s 79(4)(d) - (g) matters below.

ASSETS AND LIABILITIES

1. The disputed items of property that require determination for inclusion or exclusion from the balance sheet are: the value of the W property; the value of L Company and the wife’s director’s loan account with L Company; the value of F Business; the wife’s debt to her sister for the payment of speech therapy bills for the children; the husband’s mortgage to his parents; and the husband’s debt owed to Mr J.

The W Property

1. Counsel for the husband submitted an updated valuation of Mr N, a valuation expert.  Mr N had previously provided a valuation to the Court that the W property had a market value of $450,000.  Mr N’s revised valuation as at 2 February 2009 had the market value of the W property as $425,000 (first Exhibit “D.”)    

2. Counsel for the wife objected to the admission of the updated valuation into evidence on the basis that it did not accord with the standard for an expert’s opinion (as outlined by Heydon JA in Makita(Australia) Pty Ltd vSprowles [2001] NSWCA 305, [85]) by not including a proper explanation as to how the updated valuation was reached. I overruled this objection as there had been a comparison with three subject properties and it was based on other market evidence identified by Mr N. I gave counsel for the wife the opportunity to cross-examine Mr N but this opportunity was not taken up (despite an indication from counsel for the wife that it would be.)

3. Accordingly, based on the updated valuation, I find that the value of the W property to be $425,000.

The value of L Company

1. Ms B submitted in her Affidavit filed 31 January 2008 that the value of L Company was $84,000 and that this figure was wholly attributable to the wife as the sole shareholder.  However, the major asset of L Company is a debt owed to it by the wife.  Ms B recorded that there was a loan owed by the wife of $128,012.  Accordingly, Ms B assessed the net value of the equity and the loans as $44,012 deficit. 

2. The wife submitted that since Ms B’s last valuation was undertaken, she had accumulated borrowings of approximately $164,947.69 from the loan account with L Company.  The wife was not cross-examined about how this increase came about.  Counsel for the husband did cross-examine the wife on the information that had been provided to Ms B, but ultimately conceded both the value of the business ($84,000) and the amount of the loan liability ($164,947.69).

3. Accordingly, based on Ms B’s valuation and the updated information provided by the wife, I find that the value of L Company is $84,000 and the loan account owed by the wife to L Company is $164,947.69.  The wife has included the amount of this debt on her financial statement. 

4. The question is should this asset and liability be placed on the balance sheet or should L Company be placed on the balance sheet at nil value?  I do not have a detailed analysis of how the wife has incurred a debt to L Company which is now $164,947.  I find the appropriate course is to record the value of L Company as nil and disregard the debt owed by the wife as a liability on the balance sheet. 

The value of F Business and the benefit the husband receives from it as a financial resource

1. There was no consistent evidence before me about the value of F Business.  At the time of the hearing, the husband provided Profit and Loss Statements to the Court for F Business.  This was despite the fact that he had a duty to disclose a copy of the three most recent financial year statement two days before the first Court date (in 2008). 

2. I am left with competing values submitted by the husband in cross-examination as to the actual amount F Business was worth, including his initial $750,000 valuation (which counsel for the husband submitted was an “off the cuff” remark by the husband as managing director.) 

3. The husband was questioned about the value of F Business based on the $750,000 in Exhibit “L.”   I asked the husband how he came to this value, and he stated it was a gross figure and a “notional sum” and that was his estimate, with approximately $370,000 being put into the company from B Holdings. 

4. I pointed out to the husband that the balance sheet as at January 2009 (Exhibit “N”) gave a value of $172,490.85 for F Business.  The husband stated there would be some goodwill on top of that sum, and that the $172,490.85 takes into account the $370,000 in funds provided by B Holdings.  Counsel for the wife prepared and tendered a schedule (Exhibit “R”) which showed that between 13 March 2006 and 20 December 2008 there were deposits marked as coming from B Holdings totalling $370,447.72.  The husband ultimately conceded that the “magic figure” that F Business was actually worth is probably between $472,000 and $572,000, as there had been “a couple of loss‑making months of late, credit crunch.”  This is the best information I have about the value of F Business.  The husband choose not to seek leave to lead expert evidence of what F Business was worth, asserting that this company was not his. 

1. Counsel for the wife put to the husband that at the time that the eastern suburbs property was purchased in 2006, there was no Foreign Investment Review Board approval obtained for the purchase of the property.  After initially stating that he did not think such approval was required, the husband stated that he did not understand the nature of the question.  I find the fact that neither the husband nor any adviser of the husband turned their mind to the question, is corroborative of F Business not being wholly owned by foreign interests.

2. As I have already said, I find that I have not been told about the real interest the husband has in F Business and as a result, I do not have to be careful about assuming that F Business is a significant financial resource for the husband. 

3. The question remains as to the value that the husband receives from F Business as a financial resource.  This is discussed below in my judgment.

The debt owed by the husband to Mr J

1. The husband claimed that he owed Mr J approximately $46,418.71.  Mr J did not provide any evidence in his Affidavit material about the existence of this debt.  I note that neither counsel asked Mr J about this matter during cross-examination.  The husband also did not declare this amount of money as a debt he owed when he approached several financial institutions in order to borrow money.  Consequently, I am left solely with the husband’s claim that he owes the money to Mr J.   Based on my findings about the husband’s credit, particularly the fact that he did not disclose this debt to any of the financial institutions when he sought to borrow money, I am unable to conclude that there is a debt owing to Mr J.  Accordingly, I do not include this amount in the balance sheet.

The debt owed by the wife to her sister

1. The wife stated that she had borrowed the sum of $9,313.68 from her sister in order to pay for speech therapy sessions for the three children. I assess that this constitutes reasonable expenditure that benefits the children rather than the wife, and there is no evidence to suggest that the wife will not have to pay this amount money back to Ms J.  Accordingly, I include this amount as a liability in the balance sheet

The husband’s mortgage to his parents

1. The evidence about the existence of this item is less than clear.  The husband stated that he owed either $60,000 or $64,000 for the loan to his parents which he borrowed for settlement purposes in 2004, but he ultimately concluded it was $64,000 that he owed (with $10,000 already having been repaid.)  I asked the husband why he amended his initial assessment of the money owed to his parents from $60,000 to $64,000.  He stated that he had re‑read the mortgage documentation, which he states was signed by his parents in Wales. He also conceded that his mother had not pressed him to repay the money in question.

2. The husband’s mother gave evidence that the amount of $54,500 was outstanding and would need to be paid back by the husband.  However, the loan documentation attached to the husband’s mother’s Affidavit was not the same document that she claimed she signed in Wales executing the mortgage and she had no recollection as to how the unsigned document came into existence.  The husband also failed to include any amount for such a mortgage in his representations to the various financial institutions.  If the husband has received the funds from his mother, I find that the husband’s will actually not press for its recovery in the future.  Accordingly, I will exclude any asserted debt to the husband’s mother from the balance sheet.

Gambling loses

1. The husband invited me to either add back the wife’s gambling loses or to deal with any issue arising out of them when looking at contributions.  I consider the latter approach more appropriate in this case.   

BALANCE SHEET

1. The balance sheet of assets and liabilities is set out hereunder:

Asset		Value	Held by
1.	W Property	$425,000	Husband
2.	L Company Pty Ltd	Nil	Wife
3.	Wife’s household contents	$8,000	Wife
4.	Wife’s Total Superannuation interests	$43,089
5.	Husband’s Total Superannuation interests	$50,466.88	Husband
6.	Husband’s household contents	$3,500	Husband
Total assets		$530,055.88
Liabilities
7.	Mortgage on W Property	$382,000	Husband
8.	Wife’s debt to her sister	$9,313.68	Wife
Total liabilities		$391,313.68

1. Accordingly, the net property of the parties is $138,742.20.

Contributions

1. There was substantial agreement between the parties as to the contributions made by each of them prior to separation; both stating that they had made equal contributions.  The only real dispute between the parties was on the wife’s side: that the husband’s “playboy” lifestyle meant that she had to take on the added burden of looking after the three children while working long hours and that he had substantially not paid child support since August 2002; and on the husband’s side: that he was always there for the children because the wife worked long hours and that the wife’s gambling was a substantial drain on the assets of the parties.

2. I make the following findings with respect to the parties’ respective contributions.

Commencement of the relationship

1. I find that the husband made a slightly larger contribution when the parties first cohabited.  The wife paid board and household expenses and utilities during the period that the parties resided at the wife’s mother’s home.  The husband purchased the home in Wales with a small financial gift from his parents.  He also renovated the wife’s mother’s home with the $12,000 he states he saved from working.  The parties earned approximately equal amounts from their respective employment, and the wife took some time off to look after the first born child.  

The period of the marriage

1. I find that the both the wife and the husband made equal direct and indirect financial and non-financial contributions for the benefit of the family.  The parties purchased the W property jointly and paid the mortgage.  Both parties were working during this period and earning substantially similar amounts.  Whilst the parties did have live‑in nannies, I find that the mother did provide a higher parental contribution in that she did look after the children when the husband was away during the evenings with his study or other social activities.  The husband had a steady income during this period. 

2. The wife had sought to establish L Company during this period and balanced this with her homemaker and parental obligations.  I accept the wife’s evidence, the evidence of Mr O and the evidence of the wife’s mother that the husband did at times put his social life ahead of the needs of his family.  This likely meant that the wife was left to “pick up the slack” during the evenings of most week days in looking after the children and needed to engage live-in nannies more frequently than would otherwise have been the case if the husband had been present.  

Post‑separation

1. I find that the wife has made a substantially larger contribution than the husband during this period, particularly in relation to carrying the bulk of the children’s living expenses, school fees and extra-curricular activities and providing for the care, welfare and development of the children generally.  The wife paid for the mortgage on the W property for a short period after she relocated to the Dural area and the husband moved back in to the property.  The wife also increased the mortgage over the property with a combination of reasonable living expenses and probable gambling losses.  The husband has met the mortgage over the W property since its transfer to him in 2004 after the settlement agreement was executed.  There is still a substantial mortgage over the property.  The husband conceded that the wife has made a substantial contribution towards looking after the eldest child’s needs following on from his diagnosis which suggests that he has a disorder on the Autism spectrum. 

2. I accept that the payment of $140,295.45 was paid by the husband to the wife and that this would have been of considerable benefit to her and the children.  The husband and his mother say that part of these funds came from his parents (an amount of $64,500.00 on Mrs Halliday’s version).  I am unconvinced about that and I have already commented that I found part of Mrs Halliday’s evidence unsatisfactory.  There is no banking records provided by the husband evidencing how monies came into Australia from overseas.  In the end I do not have to make any finding one way or the other.For the purposes of weighing contributions, there is no distinction between the husband making the payment himself and the payment being partly made on his behalf by his mother.  I have found above that no amount needs to be added to the balance sheet as a liability to the husband’s parents. I also accept the evidence of the wife that child support has substantially not been paid by the husband since August 2002 and that there are significant ongoing costs associated with the children that the husband has not really contributed towards.  I will discuss the issue of child support separately in my assessment of what is just and equitable in the circumstances (below.)

The wife’s gambling

1. The wife admitted that she had gambled during the period August 1997 through to mid 2003.  The precise extent of her gambling losses is incapable of being assessed by the Court.  While she did admit to losses, I believe the wife when she states that she had substantial gambling wins and that she reduced the RAMS re-draw account down for reasonable living expenses for the children (rather than solely for gambling purposes as the husband claims).  I assess that the negative contribution made by the wife’s gambling is not as significant as the husband claims and is more than offset by the financial and non-financial contributions she has made for the benefit of the children prior to and post separation.

Conclusion

1. I have assessed the contributions of the parties in the proportions of 55 per cent in favour of the wife and 45 per cent in favour of the husband, due to the weight that I have given to the wife’s homemaker and parental contributions of a financial and non-financial nature since the parties separated in October 2001.  In making this assessment, I have specifically taken into account that the wife had made some gambling losses (the extent to which is not capable of being assessed) and have only made a 5 per cent adjustment in her favour as a result. 

RELEVANT MATTERS UNDER s 79(4)(d) TO s 79(4)(g) OF THE FAMILY LAW ACT 1975 (CTH)

1. I take into account the following matters pursuant to s 79(4)(d) - (g).

2. The most significant matter is the financial resource in the husband’s hands represented by F Business.  I am unable to assess what that is due to lack of full and frank disclosure by the husband. 

3. Given the fact that the husband has made different representations to the Court, the Australian Taxation Office and several financial institutions, I am unable to say definitively how much the husband is currently earning as a salary from F Business.   However, I infer from the evidence that he is paid significantly more than what he states to the Court he is currently being paid.  I infer as such because:

   147.1.it is inherently improbable that the husband would have ceased working for $80,000 at U Pty Ltd in 2005 for such a significantly lower amount that he claims he has received since 2006;

   147.2.the husband conceded in cross-examination that he could pay himself $125,000 subject to F Business’s profitability;

   147.3.the husband represented to Colonial/Commonwealth Bank that he had earned on average $125,00 net profit before taxation;

   147.4.as managing director of F Business, it is inherently unlikely, unless the husband has not disclosed his actual financial relationship with F Business, that he would be paid significantly less than his wife or his staff; and

   147.5.Mr J was unable to recall at all what amount was paid to the husband or Ms Halliday as salary, which indicates that the husband has a significant degree of autonomy over the amount that he pays himself.

4. For these reasons, I conclude that the husband would be earning somewhere between $80,000 to $125,000. 

5. The wife and the husband are aged 45 years and 40 years respectively and appear to be in good health.

6. The wife earns approximately $40,000 per year.  I have inferred in my reasons above that the husband has an earning capacity in the range of $80,000 to $125,000 per year.  Both the wife and husband have capacity for appropriate gainful employment and have skills in the business and engineering fields respectively.

7. The wife has substantial care for each of the three children.

8. The wife has a number of commitments arising from the care of the three children.  Counsel for the wife submitted, and I note that counsel for the husband did not contest, that the cost of raising the three children was approximately $1,216.50 per week (exclusive of school fees.)  I note that the eldest child is presently in year 8, and the youngest child is in year 5, meaning that there will continue to be a significant amount for school fees payable during the remaining years of each child’s schooling.  I have already mentioned the wife has also met the substantial costs of the children’s education expenses since 2001 (approximately $84,620.47 paid for school fees for the three children in 2001 to 2008 and $7,812.95 outstanding at the time of the hearing in 2009), as well as the amounts she has paid for the children’s speech therapy and their extra‑curricular activities.  I also note that the wife will have a continuing commitment providing both financial and emotional support in particular for the eldest child because of his suspected Autism. 

9. I note that both parties have credit card liabilities: the wife owing $13,900; the husband owing $1485.20.  Both parties have modest savings: the wife has approximately $1,100; the husband has approximately $8,980.

10. Both the wife and the husband have another child from another relationship to care for.

11. The superannuation of each of the parties is approximately equal and neither party has sought a superannuation splitting order.  I have already included the parties’ respective superannuation interests on the balance sheet as an asset.

12. I have no evidence before me that the standard of living of either party is anything other than reasonable.

13. The marriage was of short duration, but the total relationship which commenced in 1990 was approximately 11 years.

14. The husband has remarried and is presently cohabiting with his new wife.  Ms K Halliday has a steady income from her work with F Business, and she would likely receive substantial financial and non-financial benefits from her work with F Business.

15. I find that despite the perception the husband wishes to create in this case, the financial circumstances of he and Ms Halliday are tightly intermingled. 

16. The husband paid $140,295.45 to the wife in 2004 following the settlement agreement.  It is unclear both on the face of the settlement agreement document and on the evidence of the husband whether that amount was intended for both child support and for a property settlement.  Notwithstanding this, I note that it is the husband’s position that he has provided this sum at least partly for child support and that he is liable under the Child Support (Assessment) Act 1989 (Cth) to provide child support in the future.

17. Although I give the finding in this paragraph little weight, given the other findings I have made against the husband, and notwithstanding the continuing order for child support I will make against the husband, I find it is likely that the wife will struggle to enforce payment of child support into the future.  The husband will likely attempt to use F Business and Ms Halliday as a shield against payment of child support. 

18. The orders I propose to make take in to account the larger earning capacity of the husband and the smaller earning capacity of the wife; her position being further compounded by her having substantial care for the three children.

Conclusion on s 79(4)(d) - (g) matters

1. The most significant s 79(4)(d) - (g) matter is the financial resource that F Business represents to the husband. The husband stated that the value of $750,000 for F Business (which was identified in Exhibit “L”) was a gross value. There is evidence to support the proposition that there had been an amount of about $370,000 deposited from overseas (Exhibits “N” and “R.”) Based on this information, that gives a figure of $380,000 as a net value of F Business. The husband, however, ultimately conceded in cross‑examination that he would place somewhere between $472,000 and $572,000 on F Business as a current figure for its value (it was unclear to me as to whether or not that was a net or gross figure but I assume it is a net figure.) The evidence about F Business is entirely unsatisfactory.I find that I have not been given sufficient information nor has there been sufficient disclosure by the husband for me to make findings about what that financial resource is worth to him.  Given that that is so, it is not particularly meaningful to assess a percentage of the assets on the balance sheet (given my conclusion, the husband’s financial relationship with F Business is not represented on the balance sheet.)

2. The legal authorities in respect of the issue of a party’s non disclosure say that I do not have to be particularly careful in making an assessment in respect of adjustment of property in circumstances where one party has not fully disclosed their financial circumstance (see Black & Kellner (1992) FLC ¶92-287, 79,133-4 (per Nicholson CJ); Weir & Weir (1993) ¶FLC 92-338, 79,593-4 (per the Full Court.))  The Court is also entitled to “err on the side of generosity to the party who might be otherwise seen to be disadvantaged by the lack of complete candour [of the other party]” (K & K [2002] FamCA 1150, [51] (per the Full Court.)) Rather than making a percentage adjustment for the s 79(4)(d) ‑ (g) matters, I intend to look at what is just and equitable in the circumstances of this case in respect of an overall adjustment.

WHAT IS JUST & EQUITABLE IN THE CIRCUMSTANCES?

1. As I have indicated, given the size of the pool, a lump sum order is appropriate in favour of the wife rather than a percentage split of the assets which have been placed upon the balance sheet. 

2. The wife has sought an order that she be paid by the husband an amount of $100,000.  I find that it is just and equitable to make that order taking into account all the matters that I have referred to in these reasons for judgment.  The wife acknowledges the enforceability problems associated with making an order in the sum of $100,000.

3. I acknowledge that that amount is more than the current equity in the W property. I have found above that the value that the husband placed on F Business is obscure.

CHILD SUPPORT & SCHOOL FEES

1. There remains the issue of ongoing child support, the payment of the children’s school fees and the cost of ongoing private health insurance for the three children. 

2. The Court may make an order for child support departure from an administrative assessment in the special circumstances of the case if the liable parent or carer entitled to child support is a party to an application pending in the Court and the Court is satisfied that it would be in the interest of the liable parent and the carer entitled to child support for the Court to consider whether orders should be made in relation to the child based on the special circumstances of the case (Child Support (Assessment) Act 1989 (Cth) s 116(1)(b)).

3. As indicated above, counsel for the wife sought an order for an indexed periodic amount for each child until they were 18.   

1. In Gyselman & Gyselman ((1992) ¶FLC 92-279, 79,060 (per the Full Court)) the Full Court identified that a trial judge must follow the clearly established three‑step process outlined in s 117 of the Child Support (Assessment) Act 1989 (Cth) – that is, assess whether in the special circumstances of the case a ground of departure has been established; assess whether it is “just and equitable” to make the proposed order; and assess whether it is “otherwise proper” to make the order. The Full Court also considered what constituted “special circumstances”, stating:[1]

   Whilst it is not possible to define with precision the meaning of [special circumstances], as a generality it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary.

   [1] Gyselman & Gyselman (1992) ¶FLC 92-279, 79,065.

2. The grounds of departure are outlined in s 117(2) of the Child Support (Assessment) Act 1989 (Cth). In the circumstances of this case, the relevant ground is found at s 117(2)(c)(ia) of the Child Support (Assessment) Act 1989 (Cth).

3. I find in this case that the special circumstances that would allow me to find that the administrative assessment is unjust and inequitable arise from findings I have otherwise made in these Reasons about the financial resources that the husband has available to him as a result of his connection with F Business. 

4. When considering whether a particular order is just and equitable, those matters set out in s 117(4), (6), (7), (7A), (7B) and (8) of the Child Support (Assessment) Act1989 (Cth) must be taken into account. Section 124(3A) of that Act provides that when looking at s 117(4)(da) the Court may determine that the parent’s earning capacity is greater than what is reflected in his or her income only if the Court is satisfied of the matters set out in s 117(7B) of the Act.

5. I have otherwise found in these Reasons that the husband has constructed a working pattern that has not properly recognised his earning capacity.  He is currently not being remunerated by F Business on the basis of what he is actually worth. 

6. On the final hearing day, I indicated to counsel for each of the parties that it would be useful if the parties could provide a calculation based on the present child support formula as to how much the husband would pay in child support if he earned approximately $80,000.   The parties submitted in an email to my Associate on 6 February 2009 a calculation which identified that the husband would be liable to pay $10,928.16 per year in child support, or $210.16 per week for all three children based on the current CSA formula.  On the evidence, this amount is quite inadequate.

7. The wife’s says the costs in relation to the three children are $1,216.50 per week.  I accept that calculation as undisputed evidence.  It is based on Part N of the wife’s financial statement sworn 2 February 2009.  In that part, the wife totals the expenses for children at $1,354.68.  She has four children (one of them is not the subject of the child support application.)  The figure of $1,354.68 ¸ 4 x 3 is approximately $1,015.50.  The wife’s rent is in the sum of $410 per week and has been calculated by counsel for the wife at $246 per week ($410 ¸ 5 x 3.)  The total in the wife’s financial statement includes a figure for education, including fees and levies of $215.38 per week ($11,200 per annum).  It is not just and equitable that the wife has to meet the “lion’s share” of these costs.  This is particularly so (and I find this is so) where the husband has made false representations to the Court about his income earning capacity in circumstances where the only reasonable explanation is that he has sought to avoid the payment of child support for such a considerable period of time. 

8. I generally take into account matters previously referred to in the Reasons.  I acknowledge that both the wife and the husband have a child from a subsequent relationship which they will need to maintain.  The husband has acknowledged that D will continue to require special attention because of his suspected Autism.  Counsel for the wife stated, and I accept, that the majority of the “financial, emotional and physical burden” of looking after the three children falls into the mother’s lap.

9. I am unable to conclude with certainty based on the evidence presented what remuneration Ms K Halliday is receiving from F Business at the present time.  The significant amount of “rounded up reimbursement expenses” to Ms K Halliday was never properly explained.  I find that it is likely that she has received more than what she has claimed as a salary (being approximately $40,000) and that this is a factor which should be taken into account in determining the financial resources available to the husband, which is a financial benefit to his new family unit.

10. I have found above that the husband’s earning capacity is at least double that of the wife’s. Pursuant to s 117(1) of the Child Support (Assessment) Act 1989 (Cth), I find that it is just and equitable that the husband pay approximately two‑thirds of the present costs of maintaining the children, that is $270 per week per child per week ($1,216.50 ¸ 3 x 2 ¸ 3) until each child attains the age of 18 years.

11. Taking into account the nature of the duty of a parent to maintain a child and the general effect of making an order on entitlements to income tested pensions, I find that an order in the terms proposed would be otherwise proper.

12. Accordingly, I will make a departure order that the husband pay an amount of $270 per week per child.

13. Counsel for the wife has submitted, and I accept, that it would be inappropriate to “hoist” this family back on the CSA.  I agree that it would be only to invite more litigation in the future at the end of any period that I would choose.  Accordingly, the orders that I make will be indexed and will be made until the children reach the age of 18 or otherwise complete their secondary education in the year that they turn 18.  

I certify that the preceding one hundred and eighty-three (183) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts.

Associate: 

Date:  17.9.2009