JONES & JONES
[2015] FCCA 2121
•7 August 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| JONES & JONES | [2015] FCCA 2121 |
| Catchwords: FAMILY LAW – Property – long marriage – long period of separation – add backs – liabilities – contributions. |
| Legislation: Family Law Act 1975 (Cth), ss.75, 79, 80, 90SF |
| Stanford & Stanford (2012) 247 CLR 108 NHC & RCH (2004) FLC 93-204 C & C [1998] FamCA 143 Gollings & Scott [2007] FLC 93-319 Bevan & Bevan (2013) FLC 93-545 Vass & Vass [2015] FamCAFC 51 Eldred & Eldred [2015] FamCA 61 Watson & Ling [2013] FLC 93-527 Bangi & Belov [2014] FamCA 8 Bateman & Bowe [2013] FamCA 253 Todd & Todd [2014] FamCA 101 Kowaliw & Kowaliw (1981) FLC 91-092 Biltoft & Biltoft (1995) FLC 92-614 Norbis & Norbis (1986) 161 CLR 513 Z & Z (2005) FLC 93-241 Bolger & Headon (2014) FLC 93-575 Dickons & Dickons [2012] FamCAFC 154 Pierce & Pierce [1999] FLC 92-844 Clives & Clives [2008] FLC 93-385 Waters & Jurek (1995) FLC 92-635 Clauson and Clauson (1995) FLC 92-595 Lippman & Lippman (2010) FLC 93-349 Antmann & Antmann (1980) FLC 90-908 Merritt & Merritt [2009] FamCAFC 154 Williams & Williams [2007] FamCA 313 |
| Applicant: | MS JONES |
| Respondent: | MR JONES |
| File Number: | HBC 1097 of 2007 |
| Judgment of: | Judge Baker |
| Hearing dates: | 11, 12, 13 and 14 March 2014 and 23 and 24 April 2015 and 16 June 2015 |
| Date of Last Submission: | 16 June 2015 |
| Delivered at: | Hobart |
| Delivered on: | 7 August 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr Foster |
| Solicitors for the Applicant: | Murdoch Clarke |
| Counsel for the Respondent: | Mr Ayliffe, SC |
| Solicitors for the Respondent: | Munro & Associates |
| Counsel for the Independent Children's Lawyer: | Mr P Fitzgerald |
| Solicitors for the Independent Children's Lawyer: | Legal Aid Commission of Tasmania |
ORDERS
The husband relinquish any right title or interest he may have in the following property to the intent that the wife shall be the sole and absolute owner thereof:
(a)The Property G property at Property G;
(b)Property L property at Property L comprised in Certificate of Title number Volume (omitted) Folio (omitted);
(c)Any rental monies accrued on the Property L property;
(d)The Nissan Pathfinder motor vehicle;
(e)The furniture and effects in the wife’s current possession;
(f)The gold holdings in her possession;
(g)The wife’s savings of $4,000.
Within 60 days the husband remove the caveat over the Property L property at his own cost.
Within 60 days the wife transfer to the husband all her right title and interest in the Property B property namely Property B comprised in Certificates of Title Volume (omitted) Folio (omitted); Volume (omitted) Folio (omitted) and Volume (omitted) Folio (omitted).
The wife relinquish any right title or interest she may have in the following property to the intent that the husband shall be the sole and absolute owner thereof:
(a)The plant and equipment in the husband’s possession;
(b)The Mitsubishi and the Toyota motor vehicles in the husband’s possession;
(c)The shares in the husband’s name;
(d)The gold holdings at the (omitted);
(e)The gold held in the Melbourne safety deposit box.
Within 60 days the husband pay the wife a cash payment of $369,111.
Each party shall be responsible to pay their own liabilities including any taxation liabilities.
Each party shall otherwise retain any funds he or she may have in any bank accounts and be liable for any debts or outgoings on the properties that they retain.
IT IS NOTED that publication of this judgment under the pseudonym Jones & Jones is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT HOBART |
HBC 1097 of 2007
| MS JONES |
Applicant
And
| MR JONES |
Respondent
REASONS FOR JUDGMENT
Introduction
These are property proceedings. The parenting issues settled on the fourth day of the hearing. Consent orders were made to the effect that the two children X born (omitted) 1999 and Y born (omitted) 2001 live with the wife and spend time with and communicate with the husband as agreed with the children.
The parties commenced living together in 1983. They married in 1987 and separated on 27 June 2007 (a relationship of 24 years). The husband is 77 years old. The wife is 55 years old.
There are six children of the marriage, three of whom are still under the age of 18 years, Z born (omitted) 1998 (17 years old), X born (omitted) 1999 (15 years old) and Y born (omitted) 2001 (13 years old). These three children live with the wife at Property G. The husband lives at Property H. The other children are now aged 26, 23 and 19 years old.
An application for property settlement was made by the wife on 26 April 2010 in the Family Court. Since that time, there have been numerous applications for various issues, including contravention applications.
On 6 December 2010, the Family Court ordered that the parties cause 35 per cent of the net value of the parties’ gold reserves to be paid to the wife. She received 299 ounces of gold bullion on 13 December 2010.
This hearing commenced on 11 March 2014 and was part-heard, and then adjourned to 28 August 2014. Due to illness of Counsel, the hearing date was changed. It did not resume until 23 April 2015, as a result of the unavailability of Counsel.
Issues
The main issue was the extent of the parties’ contributions during the marriage and during the long period post-separation and the consequent division of property.
The extent of the property and liabilities was in issue. Central to this was whether the funds, which the wife received by pursuant to the court order in 2010, should be “added back.” Also in issue was whether the husband should share the wife’s liabilities.
Proposals
The husband proposed that, based upon his initial financial contributions, and further contributions attributed to his business acumen and physical improvements to the property, the division of the property pool should be 80/20 per cent in his favour.
During closing address, the husband amended this proposal to a division of the property on the basis of 62.5/37.5 per cent in his favour. He proposed that the wife retain the Property G and Property L properties and receive a cash payment of $38,500.
The wife proposed that the property be divided 70/30 per cent in her favour. She sought a cash payment of $1,021,095.
Evidence
The wife relied on the following documents:
· Her affidavit filed 5 March 2014;
· Her Financial Statement filed 11 March 2014.
The husband relied on the following documents:
· His affidavits filed 3 March 2014 and 21 April 2015;
· His Financial Statement filed 11 March 2014;
· Case Information Sheet filed 22 May 2015;
· Affidavits of Mr R filed 4 March 2014 and 7 March 2014;
· Provisional Case Summary filed on 7 March 2014;
· Application in a Case filed by the wife on 19 November 2010;
· Response to Application in a Case filed on 6 December 2010;
· Property Order of the Family Court of Australia dated 6 December 2010;
· Family Court Order dated 15 November 2011;
· Family Court Orders and Reasons for Judgment of Benjamin J dated 4 April 2011;
· Orders of Federal Magistrate Roberts dated 5 August 2009.
The husband made numerous objections to the wife’s trial affidavit. Most of the matters were agreed and significant deletions were made. I marked the deletions and have excluded them from my evaluation of the evidence.
Credit of the Parties
The wife was an unimpressive witness. She was unresponsive. On numerous occasions there were long pauses before she answered questions. She frequently said that she could not recall, in answer to questions which may show her in an unfavourable light.
One example of her unsatisfactory evidence was her evidence in her affidavit and financial statement about having an existing debt to Centrelink. During cross-examination, she acknowledged that she had not received a demand from Centrelink. She conceded that the debt was an “expected debt” and would only be incurred “if she is honest and declares it” (the correct cost base for the gold, which she sold in 2011). She has not declared it.
Another example was her evidence that she has not disclosed to the Australian Tax Office the correct cost base for the gold. She has not amended her 2011 return and has continued to claim a loss rather than a large gain, thus reducing her income tax liability. I discuss this further in these Reasons.
The wife’s affidavit evidence about the lifestyle of the parties gave the impression that she was subjected by the husband to a harsh way of life. She said that the husband required her “to live as though they had a very low income…Mr Jones insisted on home schooling…Mr Jones avoided doctors and hospitals to save money…not permitted to spend money on clothes…”
The husband produced letters, which the mother had sent her family, in which she described her lifestyle as a willing participant. She wrote that she loved it. She described how fit she was and how she was in awe of her husband’s physical capabilities in respect of their lifestyle. I agree with the submission of Counsel for the husband, that her affidavit evidence contradicted the descriptions to her family, as a joint, enthusiastic participant. She conceded during cross-examination that she was committed to an alternative lifestyle.
The husband was an impressive witness and made concessions willingly. He conceded that he can be emotional, anxious and forgetful. I consider that he was truthful when he said he could not recall matters in answer to questions.
I prefer the husband’s evidence whenever the parties’ evidence conflicts, unless I otherwise indicate.
Relevant Law
Section 79 of the Family Law Act 1975 (“the Act”) provides that the Court may make orders in property settlement proceedings to alter the interests of the parties to the marriage to the property.
Section 79(2) of the Act requires that any such order must be “just and equitable”. Section 79(4) provides the matters which are to be taken into account when considering what order should be made. This sub-section provides as follows:
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage
In light of the decision of the High Court in Stanford & Stanford,[1] the Court must satisfy the requirement of s.79(2) before it examines what order should be made pursuant to s.79(4).
[1] (2012) 247 CLR 108.
Consequently, in order to determine whether it is just and equitable to make an order, the existing legal and equitable interests of the parties in the property must be identified. Having determined that it is just and equitable to make an order, a consideration will then be made about what order should be made assessing the factors in s.79(4).
The Parties’ Interests in Property
The parties provided a list of agreed and disputed assets and liabilities., which included the following:[2]
[2] Exhibit 1.
·Gold bullion worth $559,331 (H)
·Shares worth $42,864 (H);
·Savings $4,000(H) ;
·Property H worth $1,000,000 (W and H);
·Property L worth $525,000 (W);
·Property G worth $205,000 (W);
·Farm Machinery worth $48,000 (H);
·Mitsubishi worth $2,000 (H);
·Toyota worth $7,000 (H);
·Savings $4,000 (W);
·Gold bullion worth $4,500 (W);
·Nissan worth $8,500 (W)
As a result of the wife’s receipt of 299 ounces of gold bullion in 2010 and sale of gold in 2011, she claimed that this generated a substantial Centrelink and income tax liability. There were disputes about the extent of the property and liabilities, which were to be determined by the Court.
Evidence of Mr R
Mr R is the husband’s accountant. He has been a chartered accountant since 1978 and is the managing partner in (omitted) Chartered Accountants. He is experienced in auditing and financial advice. He is a registered company auditor. He has had extensive experience in the evaluation of private businesses. He prepared a financial report relating to the husband’s financial affairs and the property at July 2007 and at 14 March 2013. He also prepared a report dated 7 March 2014, which included revised figures.
Mr R indicated that the husband’s financial circumstances were relatively straight-forward. He said the husband’s consolidated investment portfolio at 5 July 2007 consisted of gold, shares held in his name, a term deposit and shares in the family trust of $1,285,273.
At 14 March 2013, it consisted of gold (bullion and unallocated gold shares issued by (omitted)), shares in his name and shares in the family trust.
At 7 March 2014 it consisted of gold, shares in his name, and shares allocated by the family trust (which had been closed down in 2013).
Mr R said that his reports were conditional upon the information provided by the husband and verified by the various sales and purchase receipts and brokerage reports. He said that the share transactions were readily traceable. However, any gold bullion sales were only traced through the receipts from the Adelaide gold Exchange. He conceded that, unless otherwise informed by the husband, he would be unaware of any gold sales made through another Exchange.
Mr R had not physically verified the quantum of gold bullion in 2007. His understanding was that in 2007, all of the bullion was located in the Melbourne strong-box, apart from 15.6oz that was in another secure location. He said he was not aware of any further storage locations, or whether the husband may have held gold personally. He said that the 15oz given to the wife in 2007 did not come from the Melbourne strong-box. There is no transaction for this transfer, as it was physically handed to the wife.
The 299oz of gold bullion transferred to the wife on 13 December 2010, pursuant to the order made 6 December 2010, was a direct transfer.
Mr R said that the figure for 2007 provided in his 2013 report was achieved by working backwards from the information provided by the husband in March 2013. At that time, the husband was unable to state how much gold he held in 2007.
In Mr R’s report of 7 March 2014, he revised the earlier figures. The husband had informed him that he had over-stated the amount of gold bullion which he possessed in 2013. This resulted in a reduction of the 2007 figure of approximately $110,000, and the 2013 figure by approximately $220,000, based upon the gold price at those respective times.
The value of the gold at March 2014 has reduced by $340,000, due to the movement in price and due to the husband having withdrawn 64oz from the gold at (omitted) for living expenses.
Mr R said that the figure for the amount of gold in 2014 was less reliant on the husband’s information, as sales since 2013 could be traced through the Adelaide Exchange.
He said that the revised report of March 2014 included a re-assessment of the husband’s share portfolio, which remained the same, except for the shares transferred from the family trust into the husband’s name. He said that the value of the shares reduced since 2013 by approximately $12,000 due to the significant devaluation in share price.
Mr R said that any sales of gold bullion or share transactions were cross-reconciled to the husband’s bank statements. He said that the accuracy of the report is dependent upon the figures supplied by husband, however he provided no ledger recording either gold sales, other than Adelaide Exchange receipts, or share transactions, other than receipts. He said that the husband had approved the 2013 report at the time.
There was no evidence to persuade me that the husband’s updated report to Mr R was not correct. I am satisfied that the husband made a genuine mistake about the information he first gave Mr R.
In the closing address of Counsel for the wife, it was indicated that the wife did not dispute the current value of the gold and therefore the value attributed to it was $559,331.
Add-Backs
The parties disputed whether the sum of $430,000, being the amount asserted by the husband that the wife received from the receipt of gold in 2010, pursuant to an order made by Benjamin J, should be “added back”. The husband contended that it should be added back. The wife opposed that and contended that only the Property G property, worth $205,000, which was bought by the wife with the property received, should be included in the property pool.
In 2010, the wife had filed an application in a case for partial property settlement. She sought an order that she receive the sum of $375,000 from the sale of gold, gold bullion or shares and that the payment be treated as part of her property settlement entitlement in the proceedings.
After hearing the application, the order made by Benjamin J was not characterised and expressed as an interim order, or a partial property settlement order. It reads:
The parties do all acts and sign all documents to cause thirty five (35) per cent of the net value of the gold reserves (the net value not being less than $1,200,000) to be paid to the wife within seven days (7) from today’s date.
Machinery orders were made in respect of the transfer of gold and further orders were made in respect of the parenting proceedings and contravention proceedings before the Court.
An interim order or a partial order can be made pursuant to s.79 and s.80(1) (h) or s.80(1)(k) “if it is necessary to do justice.”
The order did not finally dispose of or determine the property settlement dispute between the parties. Further orders needed to be made to conclude the proceedings, which had commenced in April 2010. In the decision of Lippman & Lippman,[3] the Full Court held that any distinction between “partial” and “interim” orders for settlement of property is probably more apparent than real and to the extent that orders do not finally determine proceedings, they are, at least to some extent, “interim.” The Full Court noted at paragraph 46:
In the light of the decision in Gabel & Yardley (supra), any distinction between “partial” and “interim” orders for settlement of property is probably more apparent than real. However, the distinction between orders which finally determine proceedings, and orders which do not remain potentially significant, as this case clearly illustrates. To the extent that orders do not finally determine proceedings, they are, at least to some extent, “interim”. We also note, without commenting further on its significance in this case, that the provisions of s79(2) requires the court to make final orders that are just and equitable.
[3] (2010) FLC 93-349.
At paragraph 47 the Full Court continued:
On any view of the case, a number of significant issues potentially remain for judicial adjudication if they prove controversial. Whether controversial or not, further orders need to be made in order to finally and completely determine the proceedings between the parties.
The Full Court made it clear that there is no real distinction between an interim order (susceptible to variation in the final property order) and a partial property order, (intended to alter the interests of the parties in some property once and for all, leaving the allocation of the parties’ interests in the rest of the property to await the final property order). A partial property order can be varied as can an interim property order at the time the final property order is made.[4]
[4] Anthony Dickey, Family Law (Thomson Reuters, 6th ed, 2014) [40.240].
The principle that monies reasonably disposed of by the parties in the conduct of their lives post-separation should not usually be added back was established in decisions such as NHC & RCH[5], C & C[6] and Gollings & Scott[7].
[5] (2004) FLC 93-204.
[6] [1998] FamCA 143.
[7] [2007] FLC 93-319.
The Full Court said in C & C:
In a case involving the magnitude of the assets in this case, in our view it is unreasonable to conduct a microscopic examination of each of the parties’ items of post separation expenditure with a view to determining whether or not it is appropriate that they be brought into account in dividing up the asset pool between them. The cases which deal with notional add-backs are generally examples of circumstances in which it would be clearly unjust and inequitable not to take those matters into account. (see Kowaliw (1981) 7 Fam LR 13; [1981] FLC 91-092, esp at FLC 76,645; Townsend (1994) 18 Fam LR 505; [1995] FLC 92-569; Farnell, (1995) 20 Fam LR 513 (expenditure on legal costs notionally added back because of s.117).
Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives. Providing modest support for their adult children or taking not inappropriate holidays for themselves seems to fit comfortably within that description. [8]
[8] [1998] FamCA 143 at paras.45, 46.
Since the decision of Stanford & Stanford,[9] the courts have been more cautious about adding back property which no longer exists.
[9] (2012) 247 CLR 108.
In Bevan & Bevan[10] the Full Court discussed the practice of courts making “notional add-backs” to property to account for the unilateral disposal of assets. At paragraph 79 Bryant CJ and Thackeray J stated:
we observe that “notional property” which is sometimes added back to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them” and thus is not amenable to alteration under s.79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage-and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that s.79(4) and in particular s.75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.
[10] (2013) FLC 93-545.
At paragraph 160 Finn J stated that it may well be that the current practice in respect of the treatment of property which no longer exists but which one party has had the use of (the so called “add-backs”) and perhaps also the unsecured liabilities should more strictly be considered in making findings under s.79(4)(e) (i.e s.75(2)).
Counsel for the wife relied on the decision of Eldred & Eldred[11] in which Bennett J discussed distributions to the parties, which were referred to as “monies received as part property settlement” or “by way of interim property.” Justice Bennett disagreed with the wife’s case that monies which no longer exist can be treated as notional property or property for the purpose of s.79 of the Act. Justice Bennett said:
the reasoning in Bevan indicates that interim payments which no longer exist ought to be taken into account pursuant to s75(2)(o) rather than notionally added back into the property to be divided between the parties…[12]
[11] [2015] FamCA 61.
[12] Ibid, at para.308.
Counsel for the wife relied on other single instance decisions of the Family Court, in which the Court considered that the preferred mechanism for dealing with add-backs is under s.90SF(r) or s.75(2)(o) in respect of married parties.[13]
[13] See Watson & Ling [2013] FLC 93-527 and Bangi & Belov [2014] FamCA 8.
In Bateman & Bowe[14] Murphy J noted that add-backs are “the exception rather than the rule”[15] and existing legal and equitable interests in property should be valued at the date of trial save in “exceptional circumstances.”[16]
[14] [2013] FamCA 253.
[15] Ibid, at para.50.
[16] Ibid, at para.35.
In Todd & Todd[17] after considering the various authorities about add-backs, Berman J said at paragraph 92:
Following Stanford, I consider that whilst it is still open to a Court to consider that the appropriate way forward is to add property back to the interest of each of the parties, such an outcome would be rarer and may well be restricted to those circumstances where there is a realistic possibility that the property might be retrieved. That is not the case here.
[17] [2014] FamCA 101.
In the recent decision of Vass & Vass[18] the trial judge added back the sum of $25,000 withdrawn by the husband from the parties’ bank accounts post separation. The Full Court noted at paragraph 138 as follows :
There is no error committed per se in adjusting the parties’ actual property interests by a calculation involving notionally adding back into the pool sums which have been dissipated by the parties. We reject any suggestion that the decision of Bevan & Bevan (2013) FLC 93-545; 247 CLR 108 is authority for any necessary contrary solution. Some statements made by the High Court may lead to the conclusion that references to “notional property” as have been referred to in decisions of this court and at first instance may need to be reconsidered.
The decisions referred to seek to remind the Court that, however the exercise of discretion might seek to deal with property that is said to be the subject of “add back”, proper consideration must be given to existing interests in property, and the question posed by s.79(2) as a separate enquiry 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.
[18] [2015] FamCAFC 51.
Following the approach of the Full Court, proper consideration must be given to existing interests in property when exercising the discretion to “add-back” property.
The wife expended the gold sale proceeds. She has purchased Property G for $247,038, including stamp duty. She spent $115,000 on legal costs. She has undertaken repairs and improvements at Property G worth $14,203 and inside repairs of $11,800. She purchased a Nissan motor vehicle for the sum of $15,250. She has been required to spend further funds on maintenance to the property. I do not consider that her expenditure was unreasonable.
Whilst the wife has expended funds on legal costs, so has the husband. He spent $104,814 on legal costs by December 2012. He did not give updated evidence of his expended legal costs. It was not contended by the wife that the husband’s legal costs be added back.
I do not intend to add back the funds, which have been expended. I do not consider that there are exceptional circumstances which require that property which no longer exists be added back.
The husband has also expended funds post-separation. Mr R indicated that the husband’s drawings at $466,767 between 5 July 2007 and March 2013. He indicated that the wife’s drawings were $430,010 being the worth of the gold provided to her on two occasions.
The husband itemised a list of his expenditure since separation. This included $104,814 legal costs; travel and holiday expenses with the children $74,973; machinery, car and other purchases, expenses such as rates, insurance, maintenance at $136,923; and dental costs.[19]
[19] Affidavit of husband (filed 3 March 2014), Annexure Z.
The husband was criticised for his expenditure on dental costs. The husband said that prior to separation, he had been suffering from loss of teeth, top and bottom and was having problems with his dentures. He said that the physical distress from the problems became too much. Over six years since separation, he spent around $85,000 on implants and dentures. He has had no further need of dental work over the last 18 months. I am not persuaded that such expenditure was unreasonable. It was not contended by the wife that his expenditure should be added back, but should be taken into account pursuant to s.75(2)(o). I do not intend to do so, as I am not persuaded that the expenditure was unreasonable.
In respect of the sale of matrimonial property by the husband since separation, the parties had reached agreement to “add back” the sum of $28,250. There was no evidence or submissions made about the existence or otherwise of the proceeds. The husband has purchased property since separation. In these circumstances, I infer from the parties’ consent that the property exists and I will include the amount in accordance with the parties’ agreement.
Wife’s Liabilities
The parties disputed whether the wife’s liabilities should be included in the pool.
Not only is it necessary in property proceedings to establish the existence of a particular liability, it is necessary to establish that it should be taken into account in determining the value of the property to be divided between the parties.[20]
[20] Antmann & Antmann (1980) FLC 90-908.
Whether or not an unsecured liability is taken into account is at the discretion of the trial judge. An unsecured liability may be disregarded or discounted for example, where the liability has been unreasonably incurred, or if it was incurred by deliberate or reckless disregard for the other party’s potential property entitlement, or where the liability is too vague or uncertain to be taken into account, or where it has no connection with the marriage.[21]
[21] See: Kowaliw & Kowaliw (1981) FLC 91-092, Biltoft & Biltoft (1995) FLC 92-614, NHC & RCH [2004] FLC 93-204.
$40,000 Centrelink debt and Capital Gains Tax of $45,098
The wife gave evidence in her affidavit, “I have a debt to Centrelink of approximately $40,000 arising from the retrospective calculation of my Centrelink entitlement after the sale of gold and taking into account deemed capital gain.” She included the sum of $40,000 as a liability in her financial statement sworn 4 March 2014.
During cross-examination the wife conceded that she has not received a demand for payment of $40,000 from Centrelink. When she was asked when she received the demand from Centrelink, she said, “I don’t have the demand yet.” She then agreed that she was incorrect to say in her affidavit that she currently has that debt. She agreed that it is an expected debt. She believes that she has a debt and said, “if I am honest and I declare it, that debt is there.”
The wife received gold on 13 December 2010 by way of partial property settlement. She said that she disclosed to Centrelink that she had received the gold just after she received it. She agreed that most of the gold was sold around three years ago. However, she has still not disclosed to Centrelink that she has sold the gold to a value of around $380,000.
The wife conceded that she has continued to receive benefits from Centrelink since she received the gold in December 2010. The fortnightly benefits have not altered to any extent. She was asked whether she knew that she was required to complete forms for Centrelink to outline her financial circumstances from year to year. She answered, “I suppose I would…but the benefit is based on my tax return. That’s what they base it on and that is always low.”
She said that “she told the Australian Tax Office (“ATO”) that she sold the gold through her income tax return.” When she lodged her 2011 income tax return, she said that she was not aware of the cost base of the gold when it was purchased. She assumed it was the price when she received the gold on 13 December 2010. She “unknowingly” underpaid her income tax in relation to the 2011 financial year. Her income tax return showed a loss of around $13,061, rather than a gain of around $50,000.
She said that her 2011 return needs to be rectified. Her accountant, Ms D, has advised her that she will have to pay $45,000 and penalties and costs. She said that she needs to “go back to the Tax Office” and correct the mistake.
The wife agreed that Ms D has urged her to “make disclosure” and pay the amount due, so that she might avoid a penalty. Ms D gave evidence that she urged the wife to “make disclosure” in September 2013. I accept Ms D’s evidence, which I discuss below, that she gave the wife this advice in September 2013.
Ms D said that in February 2014, the wife lodged her 2013 income tax return. The wife claimed the loss of $13,061 to reduce her capital gain for that year. She did this after she had been given advice by Ms D that there had been a substantial gain, rather than a loss and after having been urged by her to make disclosure.
Evidence of Ms D
Ms D gave evidence on behalf of the wife. She filed an affidavit sworn on 11 March 2014. Annexed to her affidavit was a copy of a letter from her to the wife dated 7 March 2013. Ms D gave evidence that the letter was dated incorrectly and should have read 7 March 2014.
Ms D gave evidence that the capital gain on the sale of gold was first calculated by her in September 2013, at the request of the wife. The contents of the letter were sent to her via email. She was unsure whether she had had discussions with the wife regarding this calculation prior to that date.
Ms D advised her of a “new estimated additional tax payable due to capital gains tax on the sale of gold” of $45,098.77. She advised her “if you make disclosure and pay the amount due you may avoid a penalty”.
Ms D stated that she was unable to calculate any Centrelink overpayment and advised her to contact Centrelink directly, stating “it would appear that you may face a substantial overpayment”.
Ms D said that her new calculation of capital gain was accurate to the best of her knowledge. She said she “suspected” the 2011 calculation was erroneous, but that she did not have the records to check. She said the accounting firm, (omitted) Accountants and Advisors (“(omitted) Accountants”), was responsible for the original calculation made in 2011, which resulted in a capital loss.
She was not aware of the instruction given by the wife to (omitted) Accountants in 2011 for the calculation. She was not able to say whether she personally took instructions from her for her 2011 tax return when she was working at (omitted) Accountants. She no longer works there and does not have access to the relevant records.
Ms D used the 1997 price of gold, being $442 per ounce, in her new calculation contained in the letter dated 7 March.
However, she agreed during cross-examination that she has no record of when the gold was purchased. She gave evidence that the tax payable would be likely to change (minus holding/selling costs), given the increase in gold value. The higher the value of the gold then the less the capital gain.
Ms D indicated that the net capital loss of $13,061 which was shown as a capital gain in the wife’s 2013 income tax return originated in the 2011 financial year. It had been carried forward until applied in 2013. By applying this loss in 2013, Ms D was able to reduce the wife’s capital gain of $15,896 to a net capital gain of $1,417, after the deduction of associated costs.
Ms D was unable to give the date of when she was advised of the error in relation to CGT, but stated that “it would have been in discussions around preparing the 2012 return”. She said the wife was late in lodging her tax return that year.
She agreed that she has known that there has been a substantial gain rather than a capital loss since at least July 2013.
The 2013 income tax return was lodged in around early February 2014. She knew about the error before the 2013 return was lodged. She conceded that the tax loss of $13,061 was used to reduce the wife’s income tax for that year, notwithstanding that the loss calculation was incorrect, and that there was actually a gain.
Ms D conceded that no revised tax returns have been lodged since this error came to light. She said that she cannot do the return without the records from 2011. She said the 2011, 2012 and the 2013 returns need to be amended.
Ms D asserted that to be accurate, she would need to go back to (omitted) Accountants and ascertain the original calculation which produced the understatement. She does not have the records of when the gold was purchased. She said “for all I know, it might relate to something completely different”.
She agreed that the wife has made no disclosure to the ATO or to Centrelink. She agreed that she urged her to make such disclosure in her September 2013 email.
At the end of her cross-examination, Ms D concluded that she was “not really in a position to say whether any capital gains tax will be owed or won’t be owed”, as she was working only on assumed facts.
Ms D was therefore not able to say whether the wife has a liability.
Having regard to this evidence and the evidence of the wife, there is sufficient uncertainty about the extent, if any of the liabilities to lead me to the conclusion that they should not be taken into account in the property division. I am not persuaded that the husband should be required to contribute to them when they are speculative.
Wife’s Mastercard Liability of $14,680 and other liabilities
The Court ordered that updated financial statements be filed 14 days prior to the trial date of 11 March. At the commencement of the hearing on 11 March, the wife relied on a “provisional” case summary document filed on 7 March 2014, in which she indicated that she relied on her financial statement filed in 2010. In that financial statement, the wife did not have any liabilities.
However, the wife referred to her liabilities in her trial affidavit filed 5 March 2014. She said that her Mastercard debt was about $14,588 and she had other liabilities totalling approximately $31,100.
Her Counsel tendered an updated financial statement at the commencement of the hearing, in which her liabilities were also included. She said that her Mastercard debt was $14,680 and her miscellaneous liabilities amounted to $19,522.
In the Joint Asset List the Mastercard debt was listed at $14,680 and her “other debts” at $21,522. The wife did not give any oral evidence about the Mastercard liability or about the “other debts.”
These liabilities were not challenged during cross-examination by the husband’s Counsel. There was no evidence that the husband sought details of the debts or required production of any documents or receipts prior to or during the trial.
Counsel for the husband in his closing submissions conceded that the existence of the liabilities was not challenged. However, it was submitted that they should not be included for division, because the wife has not detailed the liabilities and proved that they were incurred reasonably by her.
Counsel for the wife submitted that there was no cross-examination to challenge that the expenditure was for anything other than family and household expenses. It was submitted that the financial circumstances of the wife, by having the main financial burden of the children and having a shortfall of income against expenditure, were to be expected.
I refer to the decision of the Full Court in Merritt & Merritt.[22] The Full Court accepted the submission of Counsel that if a party to property settlement proceedings swears or affirms in his or her financial statement that a particular liability exists, and is not challenged in cross-examination regarding that liability, then the Court must accept that the liability exists. The Full Court said :
We accept as a general rule that this is so, but there are some exceptions to it. If, for example, the liability is only claimed in a very recent document and had not been claimed in earlier documents prepared at a time when the liability may well have existed, as was so in this case, or if some other evidence which casts doubt on the nature of the liability itself is available to the Court, again as there was in the present case (being the husband’s evidence given in re-examination that the liability in question may have also been used for other purposes), the Court is entitled to reach its own conclusion regarding the existence of the liability and its purpose or nature.[23]
[22] [2009] FamCAFC 154.
[23] Ibid, at para.25.
In this matter the liabilities were not referred to by the wife in her 2010 financial statement. I consider that the liabilities could have easily been incurred by her over a four-year period. There was no evidence which casted doubt that these liabilities exist or that they were incurred other than for reasonable household expenditure.
I intend to include the liabilities of the wife at $14,680 for the Mastercard and at $19,522, being the amounts disclosed by the wife in her financial statement at the trial, the most recent evidence.
I find that the parties have the following property and liabilities:
Assets
Property H (H & W) $1,000,000
Property G (W) $ 205,000
Property L (W) $ 525,000
Gold Bullion (H) $ 559,331
Shares (H)$ 42,864
Gold Bullion (W) $ 4,500
2004 Nissan x-trail (W) $ 8,500
Farm Machinery (H) $ 48,000
Mitsubishi (H) $ 2,000
Toyota (H)$ 7,000
Savings (H)$ 4,000
Savings (W)$ 4,000
Agreed adjustment
(H sale of Ford- $11,250)
(H sale of Mercedes-$13,000)
(H sale of cattle-$4,000)
$ 28,250
TOTAL$2,438,445
Less Liabilities
Wife’s Mastercard Debt $ 14,680
Wife’s other debts $ 19,522
$34,202
Total$2,404,243
Is it just and equitable to make a property order?
The parties ended their relationship over seven years ago. They agreed that their existing interests in property should be altered pursuant to s.79. Their financial connection cannot be severed unless there is a property alteration.
The parties are the joint legal owners of the Property H property in which they lived during their relationship. The husband now lives there and sought a transfer of the wife’s interest in it to him. The wife cannot use that property. She agrees that a transfer should be made.
I consider that it is just and equitable to make a property adjustment order.
Approach to be taken
The usual approach in property proceedings is for the court to consider the property of the parties as an overall pool; however it is open to the court to undertake the asset-by-asset approach. In Norbis & Norbis[24] the High Court held that both the global and asset-by-asset approaches are legitimate.[25]
[24] (1986) 161 CLR 513.
[25] Ibid at pp.523–524, 533 and 540–541.
Although there was a long period between separation and the date of trial of seven years, both parties adopted a global approach.
During the marriage the property was treated as that of the parties collectively, not exclusively that of the wife or husband.
Having regard to the value of the current property, I consider that there have not been substantial new assets built up or substantial liabilities incurred.[26] Both parties have expended funds post-separation.
[26] See: Z & Z (2005) FLC 93-241, at 79,978.
I am satisfied that a global approach is appropriate in the circumstances of these parties.
Contributions
The parties cohabited for several years prior to their marriage of 20 years. There are six children now aged 13, 15, 17, 19, 23 and 26 years old.
The husband had been previously married, with a settlement of property resulting from that marriage occurring in 1983. A deed dated (omitted) 1983 was drawn up and signed. [27] The husband provided the values of the properties specified in the deed.
[27] Affidavit of husband (filed 3 March 2014), Annexure C.
From the settlement, the husband retained the matrimonial home at (omitted), which was extensively renovated, worth $295,000; a freehold house and shop at (omitted), worth $38,000; a shop with residence above in (omitted) worth $138,000; and a substantial share portfolio worth $331,000. The value of these properties totalled $802,000.
It was agreed that his first wife would repay the mortgage secured on the (omitted) property. There were a number of assets which were divided which were not included in the deed. The husband retained two motor vehicles, a large quantity of gold bullion, coins and jewellery and some leasehold shops which were operating under the name “(omitted)”.
The husband said that he and his first wife had been converting spare cash to gold jewellery, gold coins and unprocessed gold bullion ((omitted)) for many years prior to their separation. There was no record of the exact amount they had. The bulk of the gold assets was lent to his first wife’s business and was returned to the husband in (omitted) 1986. He said that “ $250,000 … is the amount that (omitted) and (omitted)…(omitted)’s partner) paid to buy the gold to return to me…I estimate that at that time…the total value of gold held by me in (omitted) 1986 was around $350,000”.
During cross-examination, he conceded that the value of gold in 1983 was not $600 per ounce and he could not be sure about the exact amount of gold he had at cohabitation.
The (omitted) property was sold on (omitted) 1983 for the sum of $215,000. The (omitted) property was sold in 1987 for the sum of $457,000. The shares were worth more than $445,000 in 1987. The husband sold a (vehicle omitted) soon after the relationship commenced for $25,000. He said during cross-examination that he owned a Toyota motor vehicle at cohabitation, which he sold for $11,000. A Nissan motor vehicle was leased by the business and “was bequeathed to me and I got the full proceeds of $25,000 while we were up in Queensland.”
These initial contributions of the husband therefore increased the wealth of the parties within several years of their cohabitation. The (omitted) property was sold some years after cohabitation in 2001 for the sum of $150,337.
Between 1982 and 1983 the wife earned an income when she worked for the husband’s family business for about 18 months. Then the husband set up a (omitted) business for her and she sold (omitted) from the shops at (omitted) and (omitted). She did this for about 18 months.
At the commencement of cohabitation, the wife had $20,000 savings. She had $5,000 in shares which ended up worthless. In 1985 until 1986 she worked with her parents in a (omitted) business.
In 1985 the parties purchased a property at Property C, of five acres and a derelict house. The wife contributed $20,000. She said that she took out a personal loan of $50,000 from the (omitted) Bank to pay for the property. She said she paid most of this loan by working for her parents as a (occupation omitted) between 1985 and 1986 and paid the balance when the property was sold. She said that the income which she earned with her parents enabled her to repay most of the loan of $50,000.
The husband’s evidence was that he contributed the balance of the purchase price and subsequently contributed $100,000 for renovations to the house. He could not recall there being a loan in respect of the property.
The wife disputed that the husband contributed $100,000 and said “my recollection is that the property was renovated only to the point where it was just lettable, then it was rented to some of Mr Jones’ friends as soon as it was renovated enough.”
I am not persuaded that a loan for $50,000 was obtained by the wife. It is improbable she could have paid off most of a personal loan of $50,000 during 1985 and 1986.
I prefer the husband’s evidence that he contributed the balance purchase price of the property and $100,000 towards the renovation of the property. The property was sold only four years later in 1989 for $511,000, a substantial increase in value.
The wife agreed that at cohabitation, the (omitted) property was worth $295,000, the property at (omitted) was worth $38,000, and the (omitted) property was worth $138,000. She agreed that the husband had gold and shares, the value of which she was unaware. She said he had a Toyota motor vehicle and an old Toyota, funds in a bank account in (country omitted) and a small business which sold (omitted).
In 1985 the husband purchased 350 acres of land in (omitted) (Qld) in for an undisclosed price. He purchased a further 150 acres adjacent to the land later in 1985 to get access to the first lot. He subdivided the properties.
Around the same time he purchased six blocks in (omitted) for around $85,000 and a 14 residential block land development at (omitted) in Victoria for around $33,000. This was brought to the husband’s attention by his first wife’s partner. The husband resurveyed, fenced, cleared and sold the blocks later as single allotments for substantial profit.
The wife agreed that the husband found the (omitted) properties and organised everything in respect of them. She did not know until she read his affidavit that he subdivided the properties in Queensland.
The husband said that his property dealings and his share trading activities were complex and numerous. He did a lot of research. I accept his evidence that the wife was not involved in these activities.
The parties moved to live in Queensland until 1988. They lived in a caravan when they first moved. The husband cleared an area for a home paddock of about 40 acres. He arranged for a large shed to be built next to the intended house site, he prepared roads and plans for the house and shed. The wife worked on the property clearing land until the parties’ first child was born. She put in a vegetable garden and helped the husband. The husband purchased heavy equipment to assist in the clearing and for use for drainage and irrigation.
In 1988 the parties decided to move to Tasmania to raise their children because the local council in Queensland decided to spray sewage effluent on properties in the (omitted), including their property. The husband placed the properties on the market for sale and sold off all the heavy equipment except for the tractor and tip truck. He sold lot 1 in 1988 for $100,000. Lots 2 and 3 sold in (omitted) 1994 for $300,000 in total. In 1992 the balance of land was sold for $475,000, a total of $875,000 for all the lots.
In Tasmania the husband purchased a property in Property H of 4 acres. He built a shed and then subdivided the whole property into six lots after putting in sewerage, water and driveways.
He later sold the new lots and made a substantial profit. The husband said that his real estate work was always profitable and a major source of income for the family. The parties’ other income was received from the husband’s (omitted) business trading and other investments.
In 1989 the husband purchased land at (omitted) for $34,250. In 1994 he purchased a 17 acre allotment next door for $2,500. He did a boundary adjustment and sold two new 90 acre blocks, which he created, for a substantial profit. The husband organised the sales and did the paperwork.
In 1990 the husband bought 50 acres on Property B north of Property H. He had to clear and provide access to this land. He prepared plans for a house with input from the wife, had them re-drafted professionally and when they were passed by the council, he sourced building materials and tradesmen and began to build the home.
In 1990 he purchased a large block of 131 hectares adjoining their property for $175,000. The husband cleared the bush and made an entry road.
In 1995 the husband purchased a house in (omitted) for $106,000. He sold that property in 2003 for $313,000.
In 1999 the husband found and purchased the Property L property for $190,000 for the family to stay in when they came to Hobart.
The husband registered as an owner builder in order to build a permanent home on the Property H block. He had subdivided the original 50 acres into two, selling off one block and retaining the 25 acres on which he had built the first house for the family. He recovered the original purchase price from the subdivision.
The building project was done by the husband sourcing all the materials, engaging and supervising subcontractors and working out the technical aspects of a self-sufficient house of large proportions. He sold most of the original gold to fund the construction, but the family ended up with a large house with heated indoor pool and extensive outbuildings, at a cost of around $500,000.
The husband bought more machinery such as a bobcat, forklift and trenches. He laid cables and irrigation and put in solar and wind power generation. The family became fully self-sufficient in water and energy as well as in food.
In 2006 the wife inherited the sum of $18,000 from the husband’s father and which she contributed to the parties’ household needs.
The wife agreed that the husband had total control of the assets and she was never aware of their financial position. He conducted the purchase and sales of property and prepared all the tax and other financial documents. He was in control of the gold and share portfolio.
The wife agreed that the husband worked and earned income, at least until 2003. She conceded that he brought home significant income throughout the marriage and was the main breadwinner. She agreed that he was an astute buyer of real estate. She said that he was a clever businessman and was able to make money.
The husband was the (occupation omitted) for (business omitted) Pty Ltd for several years. He received half the profits from that business, which were substantial. He conducted a consultancy for a (omitted) chain of stores involved in (omitted businesses) and he run the (omitted) chain of eight stores. When the husband travelled to Melbourne for two to three days per fortnight until 2003, he took with him one or more of the children on these trips.
The parties lived a self-sufficient lifestyle. The wife agreed that they were both mutually committed to an alternative lifestyle and it was their mutual decision to base their married life around self-sufficiency and they were both passionate about this.
The children were born at home and they were home educated. The family was self-sufficient in respect of food, power, heating and water. The wife worked hard caring for the family, caring for the livestock and working on the property to provide food for the family and maintaining the home. She undertook such tasks as cutting the children’s hair, baking bread, sewing, cooking, making cheese and growing vegetables. She home schooled the children, although the husband was also involved in their home schooling. He set up two school rooms for them with furniture and shelving. He was also very involved in parenting and homemaking.[28]
[28] Affidavit of husband (filed 3 March 2014), at paras.98-104.
The parties had a very busy and rich home life as described by the wife’s letters sent to the husband’s father.[29] The children helped around the home with the vegetable gardening and watering. The whole family was involved with the farm and in creating a self-sufficient lifestyle.
[29] Affidavit of husband (filed 3 March 2014), annexure H.
After the husband stopped going to Melbourne, the wife wrote “he’s always flat out here. Between the children, garden, animals and improving the property he doesn’t have much time over.”
Contributions post-separation
At separation the parties owned gold, shares, term deposit and shares held by the family trust of around $1,176,000. The parties also owned the Property B property and the Property L property. The properties were worth $1,285,000 and $570,000 respectively in 2010 (there was no valuation of them in 2007). These two properties have reduced in value to $1,000,000 and $525,000 respectively. The parties still have total property to a value of $2,404,243.
When the parties separated in 2007, the wife left the matrimonial home with the children. They were aged 18, 15, 11, 9, 7 and 5 years old. She cared for the children and there was much conflict between the parties about their time with the husband.
Final parenting orders were made in August 2009. The orders provided that the children live with the wife and for V, X and Y to spend time with the husband each alternate weekend and extensive holiday time. W was to spend time with the father as agreed between them and it was noted that the parties encourage Z to increase her time to coincide with V, X and Y.
The wife purchased Property G and a motor vehicle with the proceeds of sale of the gold. She had the control and use of the Property L property from which she received rental income. She was responsible for maintaining it and for maintaining the Property G property.
The husband maintained the former matrimonial home at Property H by slashing grass and pasture, looking after the orchard, servicing and maintaining heavy equipment and maintaining the electrical systems and cleaning and firing the boiler. He has paid the insurance and rates.
The husband continued to trade shares with mixed success. He continued to buy and sell gold. He withdrew $500,000 from a fixed deposit account to buy gold at around $800 per ounce. He has traded gold over 30 years. He did not purchase or sell any real estate after separation.
The husband purchased a Mitsubishi station wagon for $3,500 in (omitted) 2010. He purchased a Toyota Hilux for $9,900 in late 2011.
The husband continued to spend time with the children since separation. He was prevented from spending eight weeks of holiday time with the children in 2009-2010. In 2010 the wife was found to have contravened the orders on at least ten occasions without reasonable excuse.[30]
[30] Affidavit of husband (filed 3 March 2014), paragraph 179.
The wife had the main financial burden of supporting the children. She said the husband has paid only $8,278 towards the support of the children. She said he did not pay any child support after September 2012 until January 2014. This was not disputed by the husband. He said he currently pays $300 per month for their support.
Conclusion about contributions
I asked Counsel to make submissions about contributions during the relationship and post-separation to assist me to understand why there was such a large difference in the parties’ cases.
Counsel for the wife submitted that the contributions during the marriage were equal. Counsel for the husband submitted that the contributions made during the marriage favoured the husband 78.5/22.5 per cent on the basis of his initial contributions, his contributions to the purchase of and subdivision of properties, the improvements which he made to the properties and his homemaking and parenting contributions.
Counsel for the wife submitted that the wife’s contributions in the period post-separation should be assessed at 15 per cent. Counsel for the husband submitted that the wife’s contribution should be assessed at 5 per cent.
In the decision of Bolger & Headon,[31] the Full quoted from the decision of Dickons & Dickons[32] at paragraphs 23 and 24 as follows:
… There is in our view little to be gained, and much to be said against, approaching the task of assessing contributions by attaching percentages to components of it. (The same, it might be said, applies to attributing a percentage to each of the relevant s75(2) factors).
There can be little doubt that the classification of contributions by reference to terms such as “initial contributions”, and “post separation contributions”, can be helpful as a convenient means of giving coherent expression to the evidence in a s79 case and to give coherence to the nature, form and extent of the parties respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances in the particular evidence of this particular relationship. So much is clear from the terms of s79 itself and, in particular, s79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
[31] (2014) FLC 93-575.
[32] [2012] FamCAFC 154.
In accordance with the principles established in Bolger & Headon[33] and Dickons & Dickons,[34] I have assessed contributions in accordance with a holistic approach across the whole of the relationship and post-separation. It is not possible to ascribe a mathematical value with any precision to the comparable weight of the parties’ different contributions.
[33] (2014) FLC 93-575.
[34] [2012] FamCAFC 154.
Counsel submitted that very little weight should be given to the husband’s initial contributions because of the wife’s subsequent homemaking and parenting contributions and because she made a contribution to the conservation of the property by joining with the husband to perform tasks, which meant that the expenditure to maintain the family was minimal. Counsel also submitted that the husband could not state with any certainty what his initial contributions were. The wife’s position was that they had made equal contributions during the marriage.
This submission was made notwithstanding that the wife’s evidence was that she agreed that the (omitted) property was worth $295,000, the property at (omitted) was worth $38,000, and the (omitted) property was worth $138,000. She agreed that the husband had gold and shares, the value of which she was unaware. She said he had a Toyota motor vehicle, an old Toyota van and funds in a bank account in (country omitted) and a small business which sold (omitted).
The wife made financial contributions at the commencement of the marriage with her initial contribution and her income. She contributed her inheritance of $18,000.
The way the assets brought into a marriage by the parties are to be treated was considered in the decision of the Full Court in Pierce & Pierce.[35]
In our opinion, it is not so much an erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to use made by the parties of that contribution. In the present case that use was a substantial contribution of the purchase of the matrimonial home.[36]
[35] [1999] FLC 92-844.
[36] Pierce & Pierce [1999] FLC 92-844, at para.28.
In Williams & Williams[37] the Full Court stated:
We think that there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution towards the parties. Thus, where the pool of assets available for distribution between the parties consists of say an investment portfolio of a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing or the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in doing so, it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.[38]
[37] [2007] FamCA 313
[38] para.26
The weight to be attributed to initial contributions and other contributions is not required to be a mathematical or a counting exercise.[39]
[39] Clives & Clives [2008] FLC 93-385.
The husband’s initial contribution was assets worth over $1,000,000 and the wife’s initial contribution was $25,000.
The husband’s initial contribution enabled the parties to maintain an alternative lifestyle, which they had set out from the beginning of the relationship and to maintain and to increase their wealth. The husband’s initial contribution gave the parties equity in real estate, shares and gold bullion. It provided the family with a source of income and capital.
I agree with the submission of Counsel for the husband that he provided the springboard for the acquisition of further properties. I attach weight to this contribution.
The husband made direct financial contributions from his income and from the business (omitted) Pty Ltd and from his consulting work with the (omitted) chain of stores and running the (omitted) chain. He made income from share trading and gold trading and from the sale of real estate.
Counsel for the wife submitted that little weight should be given to the husband’s contribution of income as there was no evidence of his income earned during the marriage. I do not accept this submission. The wife conceded that the husband brought home significant income throughout the marriage. The husband was the breadwinner for the family. The principal source of income for the family was from the husband’s share and gold trading and from profits from sale of real estate property.
The husband made extensive non-financial contributions by finding properties, arranging the subdivision of properties and improving the properties. The wife also made non-financial contributions by assisting the husband when she could.
The wife worked very hard, being primarily responsible for the care of the children and for homemaking. She was a willing participant in the lifestyle choice the parties had made together to live frugally and to be self-sufficient.
The husband also made contributions to the welfare of the family. He was involved in much of the children’s care. The children had home births, were home educated and the family was self-sufficient. He was also involved in homemaking as well as farming of the property. He went to Melbourne two-three days per fortnight until about 2003 on business. He took one or more of the children, depending on their age, on these trips.
There was a long period of separation of around seven years. Since separation the wife has made a greater contribution to the welfare of the family as the homemaker and parent of the children. She has had the main financial burden of supporting them, with minimal child support.
Both parties expended capital post-separation.
The wife made financial contributions by maintaining Property G and Property L. She lived in Property G and had the sole use of Property L and the benefit of rental income from it. The husband had the benefit of living in the former matrimonial home.
The husband made financial contributions by maintaining the farming property at Property H and he has purchased farm equipment.
The husband expended money on the children for travel and holidays. He purchased motor bikes for them. He paid child support to the wife, which was minimal.
The assets brought by the husband into the cohabitation and marriage were significant and resulted in the acquisition of subsequent assets. There were “a myriad” of other contributions made by each party over the long period of cohabitation and the long period of separation. I consider that their contribution based entitlement should be assessed as favouring the husband by 62.5 per cent to the wife’s 37.5 per cent.
Section 79(4)(d)
Neither party is employed. I do not consider that there will be any effect of any proposed order on the earning capacity of the parties.
Section 79(4)(e )
Section 75(2) Factors
Counsel for the wife submitted that the wife should be awarded 15 per cent for s.75(2) factors so her total entitlement equates to 75 per cent, even though she sought 70 per cent.
Counsel for the husband submitted that the wife should be awarded 10 per cent for these factors on the basis that she receives a total entitlement amounting to 37.5 per cent.
The wife is 55 years old and is in good health. The husband is 77 years old and is in good health. Neither party earns income from employment.
The wife receives rental income from the Property L property of $671 per week. She receives government benefits of $495 per week. She has estimated weekly commitments of $1,508. She has not earned an income from employment since early in the marriage apart from some (work omitted). She does not have any formal qualifications. I am not persuaded that she has a capacity to earn an income from employment, other than a minimal income from (work omitted).
The husband receives a minimal income from his investments of $272 per week. He has weekly commitments of $1,101 per week. He gave oral evidence that he could earn an income by commencing to buy and sell property again. However, he said in his affidavit that since separation, the stresses of the ongoing litigation and his ageing years, meant that he has not purchased or sold any real estate. I am not persuaded that he will have the capacity to do so in the future.
Neither party has superannuation. Each party has real estate and the other property detailed. The effect of the findings as to contributions is that the wife will receive assets to a value of $901,591 and the husband will receive assets to a value of $1,502,652. There is a large disparity of property between the parties of $601,061.
The three children under the age of 18 live with the wife. They are 17, 15 and 13 years old. The youngest child will therefore attain the age of 18 in five years. The husband pays child support to the wife of $300 per month, however the wife has the main financial burden of supporting the children.
Having regard to these factors, I consider that there should be an adjustment of 7.5 per cent or $180,318 in favour of the wife. There will be a difference between the parties’ respective entitlements of $240,425.
The wife will retain the following property:
Property L $525,000
Property G $205,000
Gold $ 4,500
Savings $ 4,000
Nissan $ 8,500
Cash payment $369,111
Total $1,116,111
Less liabilities $34,202
Total $1,081,909
The husband will receive the following property:
Property H $1,000,000
Gold bullion $ 559,331
Farm machinery $ 48,000
Shares $ 42,864
Mitsubishi $ 2,000
Toyota $ 7,000
Savings $ 4,000
Agreed adjustment $28,250
Total $1,691,445
Less cash payment $369,111
Total $1, 322,334
In respect of the cash payment to be made by the husband to the wife, the husband may need to obtain finance or sell property, or sell gold, which may have tax implications for him. I will give the husband 60 days to do so. The husband proposed in orders sought by him, filed on 22 May 2015, that each party pay their respective liabilities including any taxation liabilities. In the circumstances of these parties, I will make that order.
I am satisfied that the effect of the orders, which I intend to make, results in a just and equitable settlement.
I certify that the preceding two hundred and three (203) paragraphs are a true copy of the reasons for judgment of Judge Baker
Associate:
Date: 7 August 2015
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