Joss and Gorlay
[2018] FCCA 758
•29 March 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| JOSS & GORLAY | [2018] FCCA 758 |
| Catchwords: FAMILY LAW – Property settlement – marital relationship – dispute about initial contributions – dispute about financial contributions throughout relationship – dispute about post-separation contributions – credibility of husband in question – dispute about value of wife’s business – asset by asset or joint approach to dividing matrimonial pool. |
| Legislation: Family Law Act 1975, ss.72(1), 75(2), 79(2), 79(4) |
| Cases cited: Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116 Black and Kellner (1992) 15 Fam LR Chang & Su (2002) 170 FLR 244; (2002) 29 Fam LR 406; (2002) FLC 93-117; [2002] FamCA 156 DJM & JLM (1998) 23 Fam LR 396 Zyk & Zyk (1995) FamCA 135 |
| Applicant: | MR JOSS |
| Respondent: | MS GORLAY |
| File Number: | MLC 4307 of 2016 |
| Judgment of: | Judge Mercuri |
| Hearing dates: | 1, 2 & 3 November 2017 |
| Date of Last Submission: | 3 November 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 29 March 2018 |
REPRESENTATION
| Counsel for the Applicant: | Ms B Tulloch |
| Solicitors for the Applicant: | Cantwell Family Lawyers |
| Counsel for the Respondent: | Mr D Sweeney |
| Solicitors for the Respondent: | Lopes Family Law |
ORDERS
The husband pay to the wife the sum of $80,000 (“the payment”) on or before 20 April 2018 (“the date”).
Contemporaneously with the payment:
(a)the wife do all such acts and things and sign all such documents as may be required to transfer to the husband, at the expense of the husband, all her right, title and interest in the real property situate at and known as Property A (“the Property A property”) and the real property situate at and known as Property B (“the Property B property”);
(b)the husband indemnify the wife against all payments and liabilities pursuant to the mortgage registered number (omitted) and (omitted) and all apportionable rates, taxes and outgoings of or with respect to the Property A property and the Property B property of whatsoever nature and kind;
(c)the husband do all such acts and things and sign all such documents as may be required to transfer to the wife, at the expense of the wife, all his right, title and interest in the real property situate at and known as Property C (“the Property C property”); and
(d)the wife indemnify the husband against all payments and liabilities pursuant to the mortgage registered number (omitted) and all apportionable rates, taxes and outgoings of or with respect to the Property C property of whatsoever nature and kind.
In the event that the whole of the payment has not been made by the date, the Property A property be forthwith sold altogether out of court (“the sale”) and upon completion of the sale, the proceeds of the sale be applied:
(a)firstly, to pay all costs, commissions and expenses of the sale;
(b)secondly, to discharge the mortgage and any other encumbrance affecting the Property A property;
(c)thirdly, so much of the payment as is then outstanding together with interest thereon as prescribed by the Family Law Rules adjusted monthly from the date to the wife;
(d)fourthly, the balance then remaining to the husband.
Pending the payment or completion of the sale:
(a)the husband have the sole right to occupy the Property A property and the Property B property and during such right of occupation, the husband pay all instalments pursuant to the mortgage and all rates, taxes and like apportionable outgoings of the Property A property and the Property B property as they fall due;
(b)the wife have the sole right to occupy the Property C property and during such right of occupation, the wife pay all instalments pursuant to the mortgage and all rates, taxes and like apportionable outgoings of the Property C property as they fall due;
(c)the parties hold their respective interests in the Property A property, the Property B property and the Property C property upon trust pursuant to these orders; and
(d)neither party may encumber the Property A property, the Property B property or Property C property without the consent in writing of the other party.
The husband otherwise retain, to the exclusion of the wife, all other items of property (both real and personal and including choses-in-action and financial resources) in his name, possession and/or control, including but not limited to:
(a)his interest in:
(i)(omitted business);
(ii)The (omitted) Business Trust; and
(iii)(omitted business);
(b)his bank accounts and savings; and
(c)his personal belongings and effects.
The husband be solely liable for and indemnify the wife against any liability in his name or encumbering any item of property which he is to retain pursuant to these orders, including any liability associated with his businesses, including but not limited to (omitted) Business Trust and (omitted business).
The wife otherwise retain, to the exclusion of the husband, all other items of property (both real and personal and including choses-in-action and financial resources) in her name, possession and/or control, including but not limited to:
(a)her interest in:
(i)The (omitted business);
(ii)The (omitted) Unit Trust;
(iii)(omitted business); and
(iv)The (omitted) Trust;
(b)her Mazda motor vehicle;
(c)her bank accounts and savings; and
(d)her personal belongings and effects including, without limitation, the engagement ring.
The wife be solely liable for and indemnify the husband against any liability in her name or encumbering any item of property which she is to retain pursuant to these orders, including any liability associated with her business The (omitted business) and (omitted business).
Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all superannuation and other property (including choses-in-action) owned by or in the possession of such party as at the date of these orders;
(b)insurance policies remain the sole property of the owner named thereon;
(c)each party be solely liable for the payment of any outstanding credit card debt accrued in their respective names as at the date of these orders; and
(d)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
In default of the parties or either of them doing all acts and things and executing all such documents as may be necessary to give effect to these orders within the timeframes set out in these orders, a Registrar of the Family Court of Australia be appointed pursuant to section 106A of the Family Law Act 1975 (Cth) to execute all documents and to do all acts and things necessary to give validity and operation to these orders.
(omitted) self-managed superannuation fund
In accordance with section 90MT(1)(b) of the Family Law Act 1975 (Cth):
(a)the wife is entitled to 100% of each splittable payment made out of the husband’s interest in the self-managed superannuation fund known as the (omitted) self-managed superannuation fund (“the fund”); and
(b)the husband’s entitlement in the fund is correspondingly reduced.
Order (11) has effect from the operative time, as defined in order (13).
The operative time as referred to in order (12) is the date of transfer of the transferable benefits.
The husband and the wife, as the trustees of the fund (“the trustee”) do all such acts and things and sign all such documents as may be required to:
(a)calculate the entitlement created in order (11) in accordance with the requirements of the Family Law Act 1975 (Cth); and
(b)pay the entitlements whenever a splittable payment becomes payable.
Following the implementation of orders (11) to (14) inclusive, the trustees of the fund do all acts and things, call all necessary meetings of the fund and pass all such resolutions as may be requested by the accountants of the fund to enable the husband to relinquish all of his right, title and interest in the fund (and he do so relinquish), and the husband forthwith upon receiving a written request from the accountant of the fund, provide all original signed documents in his possession, power or control relating to the fund.
The accountant of the fund is to be nominated by the wife to the trustees in writing within 7 days from the date of these orders.
As and from the implementation of order (15) herein, the wife be solely responsible for and forever indemnify the husband in relation to all liability of whatsoever nature and kind relating to the fund, including any liability of whatsoever nature and kind of the husband personally arising out of his involvement in the fund.
Both parties in their capacities as trustees of the fund agree to these orders.
In the event that the wife has any role in or is a beneficiary of either of the (omitted) Unit Trust or the (omitted) Business Trust and she elects to take steps to relinquish any such interest/s, both parties do all acts and things and sign all documents as may be directed by the wife’s accountant to effect same.
Each party and the trustee of the fund have liberty to apply in relation to the implementation of orders (11) to (19) inclusive.
The (employer omitted) Superannuation and Benefits Scheme
The base amount to be allocated to the wife out of the interest of the husband in the (employer omitted) Superannuation and Benefits Scheme (“the (omitted) fund”), pursuant to section 90MT(4) of the Family Law Act 1975 (Cth) is $114,377.
In accordance with section 90MT(1)(a) of the Family Law Act 1975 (Cth), whenever a splittable payment becomes payable in respect of the interest of the husband in the (employer omitted) fund, the trustee of the (omitted) fund shall:
(a)pay to the wife or her legal representative the amount which is calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using a base amount of $114,377; and
(b)make a corresponding reduction in the entitlement that the husband would have had but for these orders.
Order (22) has effect from the operative time as defined by order (24).
The operative time as referred to in order (22) is the fourth business day after the date on which a sealed copy of these orders is served on the trustee of the (employer omitted) fund.
The wife serve a copy of these orders on the trustee of the (employer omitted) fund within 7 days from the date of these orders.
Until the happening of:
(a)the establishment of a separate account in the name of the wife in the (employer omitted) fund;
(b)the transfer of rolling over into another superannuation fund of the payment split created by order (22);
(c)the wife satisfying a condition of release and being paid the payment split created by this order; or
(d)the wife executing a waiver of rights within the meaning of section 90MZA of the Family Law Act 1975 (Cth) in relation to the payment split created by this order;
the husband be and is hereby restrained by himself, his servants or agents from doing any act or thing which would render any part of his interest in the (employer omitted) fund a non-splittable payment within the meaning of regulation 12 or 13 of the Family Law (Superannuation) Regulations 2001 or otherwise effecting or dealing in any way whatsoever with his interest or entitlements in the (employer omitted) fund, save as provided for in these orders, including but not limited to receiving any funds from the (employer omitted) fund, directing any payments from the (employer omitted) fund, directing any transfers of any entitlements from the (employer omitted) fund or making any claims on the (employer omitted) fund.
Each party and the trustee of the (employer omitted) fund have liberty to apply in relation to the implementation of orders (21) to (26) inclusive.
AND THE COURT NOTES THAT:
Section 121 of the Family Law Act 1975 (Cth) provides that it is an offence punishable by imprisonment for up to one year to publish or disseminate to the public any account of family law proceedings which identifies the parties, witnesses or other people concerned with the proceedings, unless specifically authorised by the court.
IT IS NOTED that publication of this judgment under the pseudonym Joss & Gorlay is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 4307 of 2016
| MR JOSS |
Applicant
And
| MS GORLAY |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for orders altering the property interests of the parties under section 79 of the Family Law Act 1975 (Cth) (“the Act”).
The husband was born on (omitted) 1964. He is a (occupation omitted) employed through a business conducted by the (omitted) Business Trust, a trust which he established and controls.
The wife was born on (omitted) 1966. She is also self-employed. She conducts a business through the (omitted) Business Trust.
The parties commenced cohabitation in or around (omitted) 2005 and married on (omitted) 2006. There was some dispute between the parties as to whether there were periods during their relationship when they were separated, including whether there was a period of separation in or around October 2014, although it is common ground that the final separation occurred in May 2015 and that the parties divorced on
24 September 2016.
There are no children of the relationship. The husband has two adult daughters from a previous relationship, Ms A born (omitted) 1993 and Ms B born (omitted) 1998, neither of whom live with him. The wife has an adult daughter from a previous marriage, Ms C born (omitted) 1998. The wife’s case is that although her daughter is over the age of 18 years, she is still financially dependent upon her.[1]
[1] Paragraph 7 of the wife’s affidavit filed 27 October 2017.
Issues in dispute
The key issues in dispute in these proceedings relate to competing claims as to:
a)each party’s contribution (both financial and non-financial), in particular what they each brought into the relationship at the commencement of cohabitation; and
b)the extent to which section 75(2) factors impact on the court’s consideration of what, if any, orders ought to be made in this case.
In determining these issues the court was asked to determine the following matters:
a)the value of real estate which each party owned at the commencement of cohabitation;
b)the value of the husband’s business and the wife’s business;
c)how liabilities said to have been incurred by each of the parties after 1 July 2017 ought to be treated;[2] and
d)the value of the husband’s entitlements with the (employer omitted) Superannuation and Benefits Scheme and how that ought to be dealt with in these proceedings.
[2] The husband claims that he has a business overdraft in the sum of $63,238 and a tax liability of $110,766 which should be taken into account. The wife claims she has a loan of $31,000 which she used for business expenses.
Documents relied upon by the parties
The husband relied upon the following documents:
a)amended initiating application filed 23 October 2017;
b)the husband’s affidavit filed 24 October 2017;
c)financial statement of the husband filed 23 October 2017;
d)affidavit of Mr B filed 20 October 2017; and
e)outline of case document dated 31 October 2017.
The wife relied upon the following documents:
a)amended response filed 27 October 2017;
b)the wife’s affidavit filed 27 October 2017;
c)financial statement of the wife filed 27 October 2017;
d)affidavit of Ms G filed 14 March 2017;
e)affidavit of Mr T filed 27 October 2017;
f)affidavit of Ms T filed 27 October 2017;
g)affidavit of Ms S filed 27 October 2017;
h)affidavit of Mr R filed 30 October 2017;
i)affidavit of (omitted) Car Valuers filed 27 October 2017;
j)affidavit of Mr C filed 27 October 2017; and
k)outline of case document filed 31 October 2017.
Evidence of the parties
Before turning to deal with the substantive issues in this matter, I make the following comments about the parties’ evidence in this matter.
In addition to having regard to the affidavit material and financial statements filed by each of the parties, I had the benefit of observing each of them during their evidence and during fairly extensive cross-examination.
I formed the view that the husband was less than truthful in his evidence. In my assessment, the husband was prepared to adopt and maintain a position which would enhance and further his claims, until such time as it became apparent from documentary evidence that his position was simply untenable. In the course of giving his evidence, the husband did not make reasonable concessions available to him which did not reflect well on his credit.
The husband’s disclosure (or lack thereof) of his assets throughout these proceedings also did not reflect well on his credit. Not only did he fail to disclose his purchase of the Property B property in 2016 in a timely manner, having settled on that property in August 2016, he did not make any reference to it in his affidavit filed on 3 February 2017.
Moreover, when this failure was put to him in the witness box, he initially gave evidence that he had in fact disclosed his purchase of this property to his solicitor. At the commencement of day three of the proceedings, the husband’s counsel made the following statement:
…my client, when he was cross-examined by Mr Sweeney, advised the court that he had told my instructor about the fact that he had purchased the property at Property B before he swore the February affidavit…
…My instructor has told me that is not correct and has told my client…
My client has now thought about that, and instructs me that he agrees that my instructor is correct, and that he did not, in fact, tell her about that purchase of that particular property, and he tells me that he was in error when he made that statement to the court.[3]
[3] Transcript page 171 at lines 5 to 19.
The evidence which the husband gave in relation to this matter bears some detailed consideration. It was put to him in cross-examination that, although he had settled the purchase of the Property B property in August 2016, he did not disclose that purchase to his wife at that time. The wife’s counsel called for any correspondence or any affidavit in which the husband disclosed the purchase of the Property B property prior to December 2016.[4] In response to that call, no documents were produced, rather at the hearing in response to that call the husband’s response was ‘I regret not disclosing it’.[5]
[4] Transcript page 44 at lines 36 to 38.
[5] Transcript page 44 at line 38.
The following exchange then occurred between counsel for the wife and the husband:
Yes. Well, thank you. You see, not only that, Mr Joss, at all relevant times you knew that when you were attending conferences with the court negotiating with your wife to try and resolve these proceedings, at no stage were you prepared to disclose the existence of this asset. Correct. You might regret it, but that’s the reality. You didn’t do it, did you? --- I disclosed it to my counsel.
Did you? Who was – who? – – – We – we talked about – – –
To who? --- To my lawyer.
Who? Who did you disclose it to prior to December? – – – To Ms M.
Did you? Well, we will expect Ms Cantwell to get in the witness box and give some evidence on that point. Do you understand that?… You’re making a very serious allegation here, Mr Joss, and I want you to understand what the ramifications are. You are saying prior to December you disclosed to Ms Cantwell that you had this ownership of this interest in Property B. That’s what you’re alleging? – – – I – I recall discussing I needed to find somewhere to live. I had been evicted from my house. I needed to find somewhere to live, and that I was considering buying a house…[6]
[6] Transcript page 44 line 40 to page 45 at line 12.
The wife’s counsel then took the husband to his affidavit sworn on
3 February 2017 and put the following questions to him:
…this affidavit is sworn some two months after you’ve said you’ve probably told Ms Cantwell about the existence of this asset. Do you understand that? – – – Yes.[7]
…what you say in paragraph 66 and 67 is you refer to under a heading Actions Post Separation. Do you understand that? – –Mmhmm…[8]
…Now, take your time on that, Mr Joss, because I want you to just to carefully go through it. That has the list of assets. That’s the assets that you were representing to the court that you want a share in. Right. You understand? – – – Yes. Have I missed it or is Property B not there? --- And my response to that is… It says:
I say the current matrimonial assets are as follows –
[7] Transcript page 45 lines 42 to 44.
[8] Transcript page 45 at lines 18 to 19.
and no Property B is not there.[9]
[9] Transcript page 46 at line 42 to page 47 at line 6.
The husband gave further evidence that he ‘incorrectly saw it as a post separation asset’[10] and ‘it was an asset that came – that came post separation that I had not contributed any of the joint assets to and I – if I’ve made an error then, yes, I’ve – I have not put it in there.’ [11]
[10] Transcript page 47 at line 32.
[11] Transcript page 47 at line 46 to page 48 at line 2.
The wife’s counsel then squarely put to Mr Joss:
But not only an error. I put to you you just deliberately lied in your – on oath in this court. What do you say? – – – I – I acted as – as I was instructed.
Did you? Again, your instructions come from your lawyer, don’t they? – – – Yes.
Are you saying that Ms Cantwell here acting for you gave you instructions not to put that in; is that what you’re saying? – – – No, I’m not. I – I filled it out to the best of my knowledge and ability (emphasis added).[12]
[12] Transcript page 48 at lines 4 to 11.
I found the husband’s evidence in relation to this and other disclosures about his assets, income and his contributions generally to be at best, disingenuous and at worst, intentionally misleading.
The husband, in the course of giving evidence both on affidavit and in the witness box, sought to minimise the wife’s contributions, both at the commencement of cohabitation and during the relationship and sought to overstate his contributions.
Moreover, as is evidenced by his failure to disclose the Property B property, I am satisfied that he has not been forthcoming about assets of the relationship until such time as he had no option but to do so. I acknowledge that the husband ultimately conceded, through his counsel that in fact he had not told his lawyer about the purchase of the Property B property, but that the husband was initially prepared to shift blame for this failure onto his solicitor reflects poorly on his credit.
The husband also significantly understated his income in his financial statement filed 23 October 2017 where he states that his income was $2,000 per week. This figure is clearly not consistent with his income tax returns for the last two years which show a net income (after deductions) of over $350,000 per annum.
In contrast, the wife gave her evidence in a forthright and honest manner. She made concessions where they were reasonably open to be made against her interests. For example, she conceded that the husband continued to meet the payments of her mobile phone and private health insurance after separation even though he had no obligation to do so and acknowledged that this was a generous act on his part.
As a result of these findings of credit, where the court is asked to accept the husband’s evidence over that of another witness in these proceedings, I prefer the evidence of the other witness, particularly where there is a dispute between the husband’s evidence and that of the wife.
Contributions
Initial contributions
It is common ground that the husband was, prior to his relationship with the wife, a member of the (employer omitted) (“(omitted)”) for many years and that he left the (omitted) in 2003. It is also not in dispute that shortly after he left the (omitted), he established a (omitted) business in which he was principally employed from that time on. The husband has also given evidence that from time to time he has earned income from other endeavours.
It is also not in dispute that until shortly before the commencement of cohabitation, the parties had previously been married and each had separated from their respective spouses. They each brought to the relationship the proceeds of their respective family law property settlements.
In the wife’s case, this consisted of:
a)a cash payment of $250,514;
b)shares to the value of $23,283;
c)a property at Property D, (“Property D property”); and
d)superannuation entitlements of approximately $121,357.
It is also not in dispute that in late 2006, some 18 months after cohabitation, the wife was given notice of her redundancy from (employer omitted) and received a payment of $58,233. The wife asserts that as this largely related to her employment prior to cohabitation, it (or at least the bulk of it) ought to be treated as a contribution on her part to the relationship.
It is also not disputed that in the husband’s property settlement with his first wife, consent orders were made on 28 January 2005 which resulted in the husband:
a)retaining ownership of the property at Property A (“Property A property”);
b)paying his first wife the sum of $55,000;
c)having a liability for a (omitted) Loan of approximately $110,000; and
d)retaining the entirety of his superannuation entitlements with the (employer omitted) Superannuation and Benefits Scheme (less a splitting order for $20,000 for the benefit of his first wife).
At the time of cohabitation, each of the Property D property and the Property A property was subject to a mortgage.
Whilst the husband acknowledged his liabilities as set out in paragraph 30(b) and 30(c) above, he asserted that his income at the commencement of cohabitation was significant and that he was in a position to meet most, if not all, of these liabilities to his first wife prior to or shortly after cohabitation. In response to this assertion, counsel for the wife called for the production of any documents which might support this assertion, including his income tax returns for the financial years ended 2005, 2006 and 2007, but no documents were produced in response to this call.[13]
[13] Transcript page 67 at lines 1 to 2 and page 69 at lines 26 to 35.
Although the assets each party brought to the relationship at the commencement of cohabitation were not in dispute, there was a significant dispute as to the value of both the Property D property and the Property A property at cohabitation, the equity which each party had in their respective properties at the commencement of cohabitation and the contribution, if any, which each made to the property of the other.
In addition to the husband’s liabilities set out above, the wife asserted that at the commencement of cohabitation, the husband also:
a)had outstanding legal fees of approximately $35,500, which he paid for from joint matrimonial assets; and
b)incurred further legal fees of over $111,000 arising from his legal dispute with his former wife which he paid for out of joint matrimonial assets during cohabitation.[14]
[14] Transcript page 99 at lines 36 to 42.
The husband disputes the liabilities referred to in paragraph 34.
Property A property
The husband gave evidence that throughout the relationship, he had been entirely responsible for ‘all expenditure and mortgage repayments associated with this property’ and that ‘the wife has never contributed financially to the Property A property, although she has received a substantial benefit from the borrowings I secured over the property, during the marriage’.[15]
[15] Paragraphs 52 and 53 of the husband’s affidavit filed 24 October 2017.
Although the husband sought to characterise it in a different light (i.e. as simply ‘parking funds’ in the Property A mortgage account[16]), the evidence clearly shows and I find that at the commencement of cohabitation, the wife deposited the sum of $199,000 of her property settlement in the Property A mortgage account, thereby creating significant equity in that property at that time. This money represented a significant proportion of the wife’s property settlement from her first husband.
[16] Paragraph 34 of the husband’s affidavit filed 24 October 2017.
Property D property
The parties agree that at the commencement of cohabitation, the property at Property D (“the Property D property”) had a mortgage of $285,000. This was reduced following a payment to this mortgage of some $42,000 by the wife from her property settlement she received following her separation from her first husband.
As to the value of the Property D property at the commencement of cohabitation, the wife filed an affidavit by Mr T sworn 24 October 2017 in which the Property D property was retrospectively valued at $300,000 as at 31 May 2005.[17] Mr T did not give evidence and was not cross examined. No reason was provided for his absence or unavailability. I note that this valuation is only $5,000 more than the agreed valuation for this property contained in the wife’s financial statement filed in her previous proceedings in this court.[18]
[17] Page 9 of the affidavit of Mr T filed 27 October 2017.
[18] Annexure J-7 of the husband’s affidavit filed 24 October 2017.
Mr T’s valuation is provided under oath where he has sworn to understand his obligations under the Federal Circuit Court of Australia practice direction guidelines for expert witnesses. In these circumstances, I accept the retrospective valuation provided by Mr T and have had regard to it for the purpose of these proceedings.
The husband maintains that had it not been for him, the wife would not have been able to retain the Property D property as he was responsible for ‘all mortgage payments for this property’.[19] The wife conversely alleges that the property was ‘running at a neutral position once (she) settled with her former husband.’ The wife also states that she did pay some of the maintenance and that to the extent that ‘there was some top up, that we each contributed… by pooling our resources’. [20]
[19] Paragraph 60 of the husband’s affidavit filed 24 October 2017.
[20] Paragraph 34 of the wife’s affidavit filed 27 October 2017.
The parties also agreed that the Property D property was rented from the commencement of cohabitation to 2008 to the wife’s former mother-in-law. The husband alleges that it was rented at a ‘peppercorn rate’[21] but did not lead any evidence as to the actual amount of the rent charged. The wife conceded that it was rented to her former mother-in-law at a reduced rate but nonetheless for $200 per week. The husband’s use of the term ‘peppercorn’ suggests that the rent charged was negligible. I prefer the wife’s evidence regarding the rent received.
[21] Paragraph 61 of the husband’s affidavit filed 24 October 2017.
The husband produced bank statements evidencing that the mortgage repayments for both the Property D property and the Property A property were paid for from his bank account.[22] The wife gave evidence that over the course of the parties’ relationship, she would:
…use (her) wages to pay groceries, household expenses and some bills in the home, the children’s school fees (mostly Ms C’s), children’s clothing and Ms C and Ms B’s personal expenses amongst other expenses. The husband agreed to broadly cover the cost of mortgages…[23]
[22] Annexure J-13 of the husband’s affidavit filed 24 October 2017.
[23] Paragraph 28 of the wife’s affidavit filed 27 October 2017.
The wife also gave evidence that the parties pooled their resources during the relationship and that in the early days of the relationship, her salary was deposited into the joint account which was also used to make some of the mortgage repayments.[24]
[24] Paragraph 28 of the wife’s affidavit filed 27 October 2017.
Property E property
It is not in dispute that in October 2005, the parties purchased a property jointly at Property E (“the Property E property”) for $510,000 and that the deposit of $51,000 for this property was paid for by a draw down on the Property A mortgage.
The wife alleges that the balance of the purchase price of the Property E property was met by a combination of:
a)a further draw down against the mortgage of the Property D property of $42,000;
b)a further draw down on the mortgage of the Property A property of $256,000 with the wife as guarantor of the Property A property; and
c)a joint loan for the balance of $190,000.[25]
[25] Paragraph 40 of the wife’s affidavit filed 27 October 2017.
The husband agreed that the purchase was funded by a joint loan of $190,000 and further draw down on the Property A property of $256,000, however alleges that he contributed approximately $42,000 ‘from his own personal contributions.’[26]
[26] Paragraph 39 of the husband’s affidavit filed 24 October 2017.
I accept the wife’s evidence on this point and find that the additional $42,000 applied towards the purchase of the Property E property came from funds drawn down by the wife against the Property D property.
Periods of separation
It is not disputed that the parties separated for a period in late 2008 when the wife moved into the Property D property. The length of the separation period remains in dispute. I prefer the wife’s evidence and find that the separation period was not significant.
The parties reconciled shortly thereafter and it is common ground that in or around 2009 or 2010, they increased their debt, sold the Property D property and used the combined funds to renovate the Property E property.
Wife’s health
It is common ground that in late 2006, the wife was diagnosed with endometrial cancer and underwent treatment. The husband stated that he financially supported her during this time, for a period of approximately six months.[27]
[27] Paragraph 41 of the husband’s affidavit filed 24 October 2017.
The wife gave evidence that she was diagnosed on (omitted) 2006 and shortly thereafter applied for a redundancy with (employer omitted) effective 31 December 2006. This was granted and she continued receiving paid sick leave until 31 December 2006 and on 1 January 2007, she received a severance payment including a redundancy and superannuation payment in the sum of $58,233.[28] This contribution was conceded by the husband.[29]
[28] Paragraphs 41 to 43 and 46 of the wife’s affidavit filed 27 October 2017.
[29] Paragraph 42 of the husband’s affidavit filed 24 October 2017.
The wife’s redundancy payment was applied towards reducing the mortgage on the Property E property. The wife states that she recommenced work on a part-time basis in March 2007.[30]
[30] Paragraph 47 of the wife’s affidavit filed 27 October 2017.
Wife’s business
It is common ground that in October 2013, the wife established her own business, The (omitted business), in partnership with Ms K.
Property C property
In 2014, the parties sold the Property E property and purchased the property at Property C (“the Property C property”). This property was purchased mortgage free although the parties obtained finance to pay for stamp duty. At this time, the parties established a (omitted) Bank account in the wife’s name with the (omitted) Bank.
The husband’s evidence in relation to the (omitted) Bank account is summarised as follows:
a)it was initially established to pay out the stamp duty on the Property C property;
b)he repaid his half of the stamp duty; and
c)other than her half of the stamp duty, the current debt associated with the (omitted) Bank account is the wife’s sole responsibility.[31]
[31] Paragraphs 70 to 72 of the husband’s affidavit filed 24 October 2017.
The wife’s evidence regarding the (omitted) Bank account is that the parties attempted to consolidate their loans and obtained a $100,000 line of credit ‘to pay out the husband’s business debt. Both loans were to be in the husband’s name and secured by Property A. However the husband could not get the loans…’[32]
[32] Paragraph 71 of the wife’s affidavit filed 27 October 2017.
The wife gave further evidence, including attaching relevant correspondence and account statements in respect of the (omitted) account, demonstrating that the husband used some of these funds to pay tax relating to his business and from the sale of the Property D property as well as the balance of the stamp duty on the Property C property.[33]
[33] Paragraphs 71 to 73 and annexures G-11 to G-13 of the wife’s affidavit filed 27 October 2017.
I accept the wife’s evidence as to the manner in which the (omitted) account was established and the purposes for which it was applied. I do not accept the husband’s allegations that the wife used these funds to incur personal debts.[34]
[34] Paragraphs 71 to 72 of the husband’s affidavit filed 24 October 2017.
In July 2015, the (omitted) Bank account was switched to a fixed rate loan and guaranteed by the husband. The husband alleges that this was done unilaterally by the wife without his agreement. The wife asserts that this was done with the husband’s consent and in order to limit the amount of interest that was being paid.[35] The documents supplied by the wife in relation to this appear to have the husband’s signature. The husband did not lead any independent evidence to challenge that this was his signature. I accept the wife’s evidence that the husband agreed to the conversion of the (omitted) Bank account to a fixed loan.
[35] Annexure G-14 of the wife’s affidavit filed 27 October 2017.
(omitted) self-managed superannuation fund
In about September 2014, the parties established the (omitted) self-managed superannuation fund (“(omitted business) SMSF”) through the wife’s contribution of approximately $200,000 being her superannuation entitlements and the husband’s contribution of approximately $33,000 from (omitted) Super.[36]
[36] I acknowledge that the wife states that the husband only contributed about $25,000 from (omitted) Super, see paragraph 74 of the wife’s affidavit filed 27 October 2017.
The parties purchased the Property C property through the (omitted business) SMSF.
The parties finally separated in May 2015. The husband alleged that he moved into the Property A property in or around October 2014 and the parties finally separated in May 2015. I do not accept the husband’s evidence on this point and find that the parties separated on a final basis in May 2015.
As stated above, in May 2016, the husband purchased the Property B property, with settlement occurring in August 2016. Although he initially said that he purchased this property from his own resources, he conceded in cross examination that he used funds from the joint account secured over the Property A property for the deposit.[37]
Proposed orders
[37] Transcript page 48 at line 45 to page 50 at line 21.
The husband’s proposal
The orders sought by the husband at the commencement of the proceedings were set out in his outline of case document dated
31 October 2017. In summary, the husband proposed that:
a)he retain the Property A property and the Property B property and sole liability for the mortgages over these properties;
b)the wife retain the Property C property and its respective mortgage, subject to the wife paying him 50% of the gross value of that property;
c)each party retain bank accounts in their own names;
d)the husband retain his interest in the (omitted) Business Trust and be responsible for all liabilities attached thereto;
e)the wife retain her interest in the (omitted business) and the (omitted) Trust and be responsible for all liabilities attached thereto;
f)the husband retain his superannuation with the (employer omitted) Superannuation and Benefits Scheme;
g)the wife retain the (omitted business) SMSF, subject to 15% of the net value of the Property C property being rolled over into an industry fund of the husband’s choosing; and
h)the wife return to the husband the engagement ring in good condition.
In closing submissions at the end of the hearing, the husband’s position had moved significantly. The husband’s counsel summarised the changed proposal as follows:
What my client instructs me to ask your Honour to do in relation to this case is to make orders to this effect, which are: that he would retain his interest in Property A; he would retain his interest in Property B; the wife would retain the property at Property C; with each of them retaining the attached liabilities. They would each retain their businesses and liabilities. And they would each retain their superannuation interests, save that where the husband has a 15% interest in the self-managed super fund, that should go to the wife. So those orders would involve, apart from a transfer of my client’s superannuation in the self-managed fund, no money changing hands between them. But they would each have to refinance the joint loans and take the sole responsibility for those.[38]
[38] Transcript page 205 at lines 29 to 39.
In the summary of the husband’s closing submissions which was provided by the husband’s counsel, it was put that this arrangement would see the husband retaining 38.45% of the non-superannuation pool and the wife retaining 61.55% of the non-superannuation pool.[39]
[39] Page 3 of the husband’s closing submissions dated 3 November 2017.
In relation to superannuation, the husband proposed that he relinquish to the wife his interest in the (omitted business) SMSF and that he retain his interest in the (employer omitted) Superannuation and Benefits Scheme.[40]
[40] Page 3 of the husband’s closing submissions dated 3 November 2017.
The husband also asked that if the court were minded to ‘make an order splitting part of the husband’s (employer omitted) super for the benefit of the wife, (he be) given the option to pay out the wife in cash to avoid such an order being made.’[41]
[41] Page 3 of the husband’s closing submission dated 3 November 2017.
The wife’s proposal
The wife sought orders adjusting the property interests in the following proportions:
a)60% of the non-superannuation pool to the wife; and
b)40% of the non-superannuation pool to the husband
and superannuation being equally divided between the parties.[42]
[42] Paragraphs 50 and 51 of the wife’s final written submissions.
It was submitted on behalf of the wife that to give effect to this entitlement, the husband should retain the Property A and Property B properties and his interest in his business and make a payment to the wife in the sum of $101,565. The wife would retain the Property C property, her business and there would be a split of $168,347 from the husband’s superannuation with the (employer omitted) Superannuation and Benefits Scheme to achieve equality in their respective superannuation balances.[43]
[43] Paragraph 53 of the wife’s final written submissions.
The legislation
Section 79(1) of the Act provides that the court may make such orders as it considers appropriate, altering the interests of the parties in property of the parties to a marriage or either of them.
Subsection 79(2) of the Act relevantly provides that:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Where the court is satisfied that it is just and equitable to make an order altering the property interests of parties, section 79(4) of the Act sets out the matters the court must take into account when considering what orders, if any, should be made for the alteration of the parties’ interests. I do not propose to set out section 79(4) of the Act in full. Having said that, section 79(4)(e) provides that the court shall take into account the matters referred to in section 75(2) insofar as they are relevant.
The following matters in section 75(2) which may be relevant include:
(a)the age and state of health of each of the parties; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
…
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
…
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
…
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i)the property of the parties; or
…
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; …
The approach to applications under section 79
It is well settled since Stanford v Stanford (2012) 247 CLR 108 (“Stanford”) that the proper approach to an application under section 79 of the Act is as follows:
It will be recalled that section 79(2) provides that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under this section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under section 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.[44]
[44] Stanford v Stanford (2012) 247 CLR 108 at [35].
The court went on to say at paragraphs 41 and 42:
The fundamental propositions that have been identified require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to a marriage and whatever may have been their stated or unstated assumptions about property interests during the continuance of marriage.
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4) (emphases added) (footnotes omitted).[45]
[45] Stanford v Stanford (2012) 247 CLR 108 at [41]-[42].
In this case, the parties cohabitated for approximately ten years and have been separated for over 12 months. They are each seeking orders altering their respective property interests. I am satisfied that in all of the circumstances, it is just and equitable to make orders adjusting property matters between them.
Having come to this view, I turn to the approach that the court takes in considering what orders are appropriate under section 79 of the Act. In this context, regard can be had to the following comments of the High Court in Norbis v Norbis (1986) 161 CLR 513 in which Justices Mason and Dean said:
Here the order is discretionary because it depends upon the application of a very general standard – what is ‘just and equitable’ – which calls for an overall assessment in the light of the factors mentioned in s.79(4), each of which in turn calls for an assessment of circumstances…[46]
[46] Norbis v Norbis (1986) 161 CLR 513 at [4]; see also Mallet v Mallet (1984) 156 CLR 605 at [609].
The approach that the court generally takes in considering what orders are appropriate under section 79 of the Act, are aptly summarised in In the Marriage of Hickey [2003] FamCA 395. Essentially this requires the court to:
a)identify the assets and the value of the assets in the property pool;
b)determine the contributions made by each of the parties to those assets, both directly and indirectly and in financial and non-financial terms;
c)determine whether any adjustment is required for section 75(2) factors; and
d)in light of those findings, determine what orders for the division of property is just and equitable.
In Bevan v Bevan (2013) 279 FLR 1; (2013) 49 Fam LR 387; [2013] FamCAFC 116 (“Bevan”), the court acknowledged that prior to Stanford, the four stage process was the manner in which section 79 proceedings were commonly dealt with.[47] At paragraph 61 however, Bryant CJ and Thackray J stated:
Although, the four step process has been regularly applied, the Full Court has stressed it is no more than a means to an end, since the statutory obligation is to alter existing interests only if it is just and equitable to do so. Thus in Norman v Norman [2010] FamCAFC 66 at [60], the Full Court (Finn, May and Murphy JJ) said:
It is the mandatory legislative imperative (to reach a conclusion that is just and equitable) that drives the ultimate result. For all its usefulness and merit as a ‘disciplined approach’ or a ‘structured process of reasoning…the
‘three-step’ or ‘four-step’ approach merely illuminates the path to the ultimate result.[48]
[47] Bevan & Bevan (2013) 279 FLR 1; (2013) 49 Fam LR 387; [2013] FamCAFC 116 at [59]-[60].
[48] Bevan & Bevan (2013) 279 FLR 1; (2013) 49 Fam LR 387; [2013] FamCAFC 116 at [61].
At paragraph 72, Bryant CJ and Thackray J went on to say:
It follows that judges would be well advised to avoid what we consider to be arid discussion of the ‘stage in the process’ at which ‘adjustments’ are permissible. Such discussion tends to elevate the four step process to the status of a statutory edict, when in fact it is no more than a shorthand distillation of the words of a statute which has but one ultimate requirement, namely not to make an order unless it is just and equitable to do so.[49]
[49] Bevan & Bevan (2013) 279 FLR 1; (2013) 49 Fam LR 387; [2013] FamCAFC 116 at [72].
Asset by asset or global approach?
The husband’s counsel urged the court to apply an asset by asset assessment in this case. In this regard, the court was referred to the decision in Coghlan & Coghlan [2005] FamCA 429; (2005) 33 Fam LR 414 (“Coghlan”). It was put on behalf of the husband that Coghlan was authority for the proposition that the court could separate superannuation from the non-superannuation pool if appropriate in all the circumstances.
In essence, counsel for the husband submitted that in this case the preferable approach in assessing contributions and what, if any orders might be just and equitable, was to treat the superannuation and non-superannuation assets differently. During closing submissions, counsel for the husband stated that this would produce a fairer way of assessing contributions in this case.
It was further submitted on behalf the husband that the special nature and characteristics of the husband’s superannuation is another factor that may guide the court in determining whether to apply an asset by asset or global approach to this matter. Counsel for the husband referred the court to the decisions in Semperton v Semperton [2012] FamCAFC 132 and Craig & Rowlands [2013] FamCAFC 45.[50]
[50] Transcript pages 209 to 213.
These cases are of limited relevance to the issues presently before this court. They relate to the treatment of (omitted) Super which were in the payment phase. In each case, the valuation was effectively a capitalised value although the person receiving the pension under the scheme could not receive a lump sum amount because it was in the payment phase. Notably in this case, the husband’s superannuation in still in the growth phase.
It was further said in support of the husband’s case that the (employer omitted) Superannuation and Benefits Scheme was ‘kept completely separate throughout the duration of the relationship’ [51] and ‘no contributions have been made to it during the course of the parties’ relationship’ [52]
[51] Transcript page 207 at lines 1 to 2.
[52] Transcript page 207 at lines 3 to 4.
On this issue, counsel for the wife submitted that it is a matter for the court to determine whether or not it adopts an approach of looking at contributions made by each party to each asset or considers the overall contributions based on a global overall assessment. In respect of the asset by asset versus global approach, the court was referred by the wife’s counsel to the following passages of the decision of the Full Court of the Family Court in Zyk & Zyk (1995) FamCA 135 (“Zyk”) which relevantly states:
Either approach is permissible, depending on the circumstances, but generally the global approach is to be preferred…
The global approach enables the court to assess the contributions aspect of the section 79 exercise in an overall way by considering the parties’ contributions to their property as a whole although factoring into that exercise the circumstance, if it be so, that they may have made varying contributions to the total property at trial or which formed part of the history of their property during the marriage. It is the generally preferred and the generally adopted approach. It enables a broad approach to be taken to the varying contributions of the parties over the years of their marriage and in particular it usually has the advantage of more easily dealing with and giving proper recognition to paras. (b) and (c) contributions.
In Zyk, the Full Court went on to say:
The asset by asset approach enable the court to assess separately the parties’ contributions to particular assets or groups of assets. It is the less preferred approach largely because it can at times be an artificial exercise and also because it can create difficulties in the proper evaluations of paras (b) and (c) contributions. But there are a number of circumstances where it may be appropriate for example an inheritance received post separation, or where the financial relationship of the parties during the marriage was such that they treated some property as exclusively the property of one party to which the other party made no, at least no para (a), contributions to it. It may be convenient in cases like that to treat that property separately rather than assess the overall contributions of the parties to the totality of their property.
However, the trial judge has a discretion as to which course to adopt and does so having regard to what appears more suitable to the circumstances of the particular case. (emphasis added)[53]
[53] Zyk & Zyk (1995) FamCA 135 at [24]-[25].
In his evidence, the husband suggests that both the Property A property and his superannuation with the (employer omitted) Superannuation and Benefits Scheme were treated by the parties throughout their relationship as his assets. He maintained throughout the proceedings that he was solely responsible for the mortgage repayments in relation to the Property A property and that as he had left the (employer omitted) prior to the commencement of his relationship, his superannuation entitlements simply existed for the duration of the relationship.
Leaving aside non-financial and indirect contributions, for the reasons set out in more detail below, I find that the wife in fact did contribute financially to the Property A property. In relation to the husband’s superannuation, notwithstanding that neither party made any contribution to the (employer omitted) Superannuation and Benefits Scheme, I am not satisfied that this factor alone is sufficient to warrant the application of an asset by asset approach in respect of it, particularly in the context of considering the parties’ respective contributions at the commencement of cohabitation.
Having regard to the length of the relationship between the parties and the various contributions that they have each made, both financial and non-financial towards the acquisition, conservation and improvement of the asset pool over the course of the relationship, and to the welfare of the family more generally, I find that the global approach is more appropriate in these circumstances.
Agreed assets and liabilities
Although there was initially some suggestion by the husband that his superannuation and the Property B property ought to be excluded from the asset pool, the parties agreed to the following asset pool at the time of this hearing:
Assets
Ownership
Value
Property C
Joint
$800,000
Property A
Husband
$600,000
Property B
Husband
$1,200,000
Mazda motor vehicle
Wife
NIL
Liabilities
Ownership
Value
Property C mortgage
Joint
($94,163)
Property A mortgage ((omitted) Bank)
Husband
(wife as guarantor)($422,500)
Property B mortgage ((omitted) Bank)
Husband
($882,000)
(omitted) Loan
Wife
($8,500)
Total (agreed)
$1,192,837
Disputed assets and liabilities
There were a number of assets and liabilities in respect of which there was no agreement between the parties. Those assets and the respective values contended for by each party are set out in the table below:
| Assets | Wife’s value | Husband’s Value |
| The (omitted business) | ($35,774) | NIL |
| (omitted business) ATF (omitted business) t/a (omitted) | $118,316 | $91,316 |
| Husband’s credit card | ($4,500) | ($1,077) |
| Wife’s credit card | ($1,500) | ($4,111) |
| Total | $76,542 | $86,128 |
Wife’s business
The wife’s business, The (omitted business) was valued by both Mr R and Mr B (“the experts”), both of whom gave evidence and were cross examined. The experts also provided a ‘Joint Minute of Experts’ dated 31 October 2017 (“the minute”) which sets out areas of continued disagreement and agreement in relation to the valuation of the business.[54]
[54] Exhibit H dated 31 October 2017.
The minute notes that the experts:
…have disagreed on the amount of any excess of liabilities over assets of Ms Gorlay’s interest …
Mr B considers any excess of liabilities over assets can be eroded by future profits of the business.
Mr R is of the view that future profitability is yet to be demonstrated.
However they both agree that there is no current material value of Ms Gorlay’s interest. (emphasis added)[55]
[55] Exhibit H dated 31 October 2017.
In his report, Mr B sets out at paragraph 5 his approach and method of valuation. He relevantly states that:
…the value of an entity’s core business is assessed on the basis of earnings that could be reasonably expected to flow to a purchaser as profit.
Such earnings are termed earnings before interest and taxation (EBIT). EBIT is capitalised at a rate representing risk that EBIT will continue in the medium to long term. Generally a starting point for capitalisation is three times EBIT. (emphasis added) [56]
[56] Page 9 of the affidavit of Mr B filed 20 October 2017.
During cross-examination, Mr B conceded that he did not explain in his report the basis on which he concluded that a capitalisation rate of three times EBIT was appropriate.
Mr R does address the particular capitalisation rate to be applied in valuing a business such as the wife’s business and indicates that a capitalisation rate of between 2.5 to 3 should be applied. He then asserts that the appropriate capitalisation rate for a business such as this would be the midpoint of 2.75.[57]
[57] Pages 37 and 38 at paragraphs 8.4 and 8.5 of the affidavit of Mr R filed 30 October 2017.
It was submitted on behalf of the wife that ultimately, Mr R ‘accepted that there was no future maintainable earnings to ‘capitalise’.[58] It was further submitted that Mr R essentially concluded that the wife had a liability which either properly sat as a liability of the business or in the wife’s personal name. That liability is either half of the ($71,548), being Mr R’s valuation of the wife’s business on a net asset basis (i.e.: $35,774) or a personal liability of $31,000 in the wife’s name, with the wife’s submission being that the difference is de minimus.
[58] Paragraph 17 of the wife’s supplementary final submissions.
Mr B’s valuation was challenged on the following bases:
a)his failure to make independent inquiries of an appropriate proprietor’s salary;
b)his failure to properly account for the fact that the company cannot pay its debts on the basis of the balance sheet but rather assumes the shareholders’ continued support;
c)his failure to properly set out his reasoning for determining that a capitalisation rate of 3 was appropriate in all the circumstances.
It was suggested that these deficiencies, particularly those identified at paragraph 101(a) and 101(b) above, would impact on the value of any goodwill in the business.
On the questions of proprietor’s salary, although Mr B stated at paragraph 2 of his report that he had made ‘all enquiries (he) believe(d) are necessary and appropriate’,[59] he conceded in cross-examination that he had not made any independent inquiries as to what an appropriate proprietor’s salary might be.[60]
[59] Paragraph 2 of the affidavit of Mr B filed 20 October 2017.
[60] Transcript page 115 at lines 44 to 47.
At page 7 of his report, Mr B ‘adopt(ed) the assumption that the near $73,000 package to Ms Gorlay is reasonable.’[61] Mr B confirmed this assumption during cross-examination.
[61] Page 11 of the affidavit of Mr B filed 20 October 2017.
In explaining his approach, Mr B stated in cross-examination, that he ‘considered the more important factor for the hypothetical purchaser to consider was the growth path of the business’.[62]
[62] Transcript page 116 at lines 29 to 30.
The following further exchange occurred between the wife’s counsel and Mr B:
You see, had you assumed that $80,000 was an appropriate proprietor’s salary, if you look at page 6 of your report, had you assumed that… say $85,000 was an appropriate package to pay to a person to operate this business, you would have no profit, would you? --- That’s correct. You would have a loss.[63]
[63] Transcript page 116 at lines 43 to 47.
Mr B ultimately conceded that on the balance sheet there was a debt of $15,000 owing to the wife which she could not be repaid in full.[64]
[64] Transcript page 122 lines 35 to 37.
Mr B also conceded that in conducting his valuation of the wife’s business, he did not conduct any averaging exercise to ensure that the results in the previous two years were also factored into the valuation, but rather, he focused on 2017. Indeed, he stated that he ‘regarded that 2017 was the critical year’.[65]
[65] Transcript page 118 at line 26.
At paragraphs 8.5 to 8.13 of his report, Mr R sets out the basis for and his conclusion as to the valuation of the wife’s business and concludes that it has either has a nil value of a negative value of ($71,548). [66]
[66] Pages 38 to 39 of the affidavit of Mr R filed 30 October 2017.
Mr R then goes on to calculate the value of the wife’s interest in the business at paragraphs 8.14 to 8.17.[67]
[67] Pages 39 to 40 of the affidavit of Mr R filed 30 October 2017.
Having regard to the evidence of both Mr B and Mr R, I prefer the evidence of Mr R and find that the wife’s business has nil value.
I also accept that the wife’s debt which relates to the business needs to be taken into account in determining a just and equitable adjustment in this case. I find that the asset pool ought to include a debt in the wife’s name in the sum of $31,000 which relates to the personal loan which she took out to effect the separation of the business in September 2017.
Husband’s business
Mr R also conducted a valuation of the husband’s business. Although objection was taken to this, I allowed the valuation to be admitted into evidence. The valuation conducted by Mr R of the husband’s business was conducted on a net tangible assets basis.
The key difference between the valuation of the husband’s business put forward on behalf of the husband and that put forward on behalf of the wife comes down to the difference in the valuation of the two motor vehicles (a (omitted) and a (omitted)) owned by the husband’s business (“vehicles”).
Mr R concluded that the value of the husband’s business is $118,316. In undertaking his valuation of the husband’s business, he took the mid-point of the valuations of the vehicles conducted by Mr S in these proceedings.[68] On this basis, he attributed a value of $85,000 to the (vehicle omitted) and a value of $15,000 to the (vehicle omitted).
[68] Affidavit of Mr S filed 27 October 2017.
In his affidavit filed 24 October 2017, the husband deposes that the (vehicle omitted) is worth $65,000 and the (vehicle omitted) is worth $8,000.[69] He states:
Since separation I have purchased a (omitted) motor vehicle and have my old (omitted) still. I am intending to sell this vehicle to reduce the company debt. I have obtained a market appraisal for both cars. [70]
[69] Paragraph 160 of the husband’s affidavit filed 24 October 2017.
[70] Paragraph 154 of the husband’s affidavit filed 24 October 2017.
The husband then attaches the said appraisals.[71]These appraisals indicate that the (omitted) is worth $8,000 and the (omitted) is worth $65,000. On the basis of these two appraisals, the husband’s valuation of his business is $91,316.
[71] Annexure J-30 of the husband’s affidavit filed 24 October 2017.
Neither the person giving the appraisals at J-30 nor Mr S were called to give evidence. Mr S’s valuation however, is in affidavit form and Mr S asserts in that affidavit that he understands his obligations to the court in undertaking a valuation.[72]
[72] Paragraph 6 of the affidavit of Mr S filed 27 October 2017.
I therefore rely on the affidavit of Mr S and find that the (vehicle omitted) owned by the husband has a value of $85,000 and I find that the (vehicle omitted) owned by the husband has a value of $15,000.
In coming to this view, I have also had regard to the financial statements for (omitted business) for the year ended 30 June 2017 which list the value of the vehicles at $111,795.[73] If I am wrong insofar as I have had regard to the valuations of Mr S, then I would be entitled to have regard to this figure deposed to by the husband in his trial material, which would result in a higher valuation of his business in any event.
[73] Annexure J-31 of the husband’s affidavit filed 24 October 2017.
Husband’s other liabilities
The husband also asserts that the court should have regard to the following liabilities, either in valuing the husband’s business or by including them as liabilities in the property pool available for division:
a)his (omitted) Bank overdraft in the sum of $63,238 (“overdraft”); and
b)his tax liabilities in the sum of $110,766 (“tax liability”).
Overdraft
In the husband’s affidavit, the only reference to the (omitted) Bank overdraft is in his table of liabilities, under the heading business liabilities as follows[74]:
[74] Paragraph 160 of the husband’s affidavit filed 24 October 2017.
(omitted) Business Credit Card
$1,192
As at 17/10/17
(omitted) Business Overdraft ((omitted))
$63,238
$81,969
As at 20/10/17
At separation
There is no primary documentation which the husband has submitted which supports the existence of this overdraft.
I note that the husband has submitted his overdraft bank statements from May 2015 but has not included any such statements from October 2017. Moreover, the financial statements for the (omitted) Business Trust which the husband has annexed to his trial affidavit contains the following entry under the heading Financial Liabilities:
Current
Bank Overdraft $6,913[75]
[75] Annexure J-31 of the husband’s affidavit filed 24 October 2017.
Notwithstanding that the husband deposed that this overdraft had increased to $63,238,[76] as stated, he did not attach any documentary evidence of such an increase.
[76] Page 8 of the husband’s outline of case document dated 31 October 2017.
In those circumstances, and having regard to:
a)the adverse findings I have made as to his credit;
b)the fact that the documents which could establish the level of the overdraft at the time of swearing the affidavit were within the husband’s power or control; and
c)that no explanation was given as to why no such evidence was led;
I find that the husband has not established that the overdraft was at that level at the time of trial.
Having come to this conclusion, it is not necessary for me to deal with how any such overdraft, had it been proven, might need to be dealt with in the asset pool. However, as some time was spent on this issue in evidence and submissions, I will address this issue.
The question of the impact of the overdraft on the valuation of the husband’s business was raised by his counsel when cross-examining Mr R. It was put to Mr R that the husband says ‘as at 20 October 2017, I have an (omitted) Bank business overdraft of $63,238.’[77]
[77] Transcript page 178 at line 33.
The husband’s counsel then put to Mr R:
…When you were asked to look at the value of this business on 30 June 2017, when you looked at...money that was owed to third parties, such as the bank, the only…amount that you’ve put into this restated balance sheet, on the last page, is $6,913? --- As per the accounts…
And so what I put to you is that, just as in the case of Ms Gorlay’s business, her Honour…does have to consider the real personal liabilities that she has in the family law balance sheet if it’s going to be extracted from and not dealt with as a business liability… One way of looking at is she has got nil equity and because of the business she owes $31,000, which is a debt she has got to pay, and similarly, what I’m putting to you is that this balance sheet assumes that my client’s liabilities for his business are $6,913 and that the extent of what you’ve taken into account, because that’s what you were asked to do on 30 June 2017? --- You can only value something in a point in time with all the information. If some other asset or liability moves post – so will other assets and liabilities. It could be for a host of reasons. He could have bought an asset. He could have – he may have made a loss, but I don’t know if he has.[78]
[78] Transcript page 179 at lines 14 to 35.
The following exchange then occurred:
And that’s… similarly, in relation to Ms Gorlay’s business you were asked to look at her particular position as at 30 June 2017? --- Yes, but it’s a different scenario. There they’ve split the business, they’ve split the entity, whereas, here it’s the same entity. Unless he has lost a lot of money you can’t really factor it in.
…and in the other case, it’s a question of breaking up the business and how it was agreed to be done.[79]
[79] Transcript page 180 at lines 7 to 13.
In closing submissions, counsel for the husband stated that in considering the value of the husband’s business, the court should also have regard to the debts that the husband deposed to which post-date the valuation by Mr R. Counsel stated:
My client deposes to, in his affidavit, having two present debts in the name of his business: the credit card and the business overdraft. He wasn’t challenged in relation to the existence of those debts or asked questions about them…the debts, in my submission, have been proved as owed by him by his business.[80]
[80] Transcript page 214 at lines 13 to 17.
Notwithstanding this primary submission, counsel for the husband conceded the difficulty in simply having regard to a debt without any evidence as to what that money was used for in adjusting the valuation of the business:
The reality is that 30 June is the best evidence we’ve got in relation to the business valuation, and that’s how it has been done…
…even if your Honour made a determination that these present liabilities as at today should not be included… in that case on either part, husband or wife – they still represent on both parties’ accounts a liability that each of the parties would have to meet when these assets are being divided…[81]
[81] Transcript page 215 at line 41 to page 216 at line 6.
In the absence of any independent evidence as to this debt, I am not satisfied that it ought to be included in the asset pool.
In relation to the husband’s tax liability, the husband deposes that he has a tax liability for the 2017 financial year of $138,232.60 and that he has been assessed by the Australian Taxation Office (“ATO”) for PAYG quarterly instalments of $39,181.[82] He annexes what he describes as a true copy of his personal taxation return for the financial year ending 2017 and the ATO PAYG instalment letter dated 3 May 2017.[83]
[82] Paragraph 157 of the husband’s affidavit filed 24 October 2017.
[83] Annexure J-32 of the husband’s affidavit filed 24 October 2017.
What is annexed is in fact a taxation estimate which appears on the face of it to have been prepared on 10 October 2017. Whilst the tax on the taxable income disclosed on this form amounts to $138,232.60, the amount referred to in the husband’s affidavit; that is, the actual estimate of the amount payable on the assessment is $110,766.30, which is the amount ultimately claimed in the husband’s closing submissions.
In any event, it was conceded by the husband that this assessment was not due to be filed by him until March or April 2018.
In response to the husband’s assertions, the wife relied upon a printout of the husband’s ATO portal dated 17 October 2017[84] which shows that as at that date, the husband had a zero balance.
[84] Exhibit E dated 17 October 2017.
During cross-examination, the husband produced a notice of assessment issued by the ATO on 24 October 2017 showing a liability to pay tax in the sum of $110,766.30.[85]
[85] Exhibit G dated 24 October 2017.
It was submitted on behalf of the husband that this tax liability should be included in the asset pool available for division.
The wife submitted that the tax liability ought not to be included for the following reasons:
a)it relates to income earned wholly after separation and in respect of which the husband has had the sole benefit;
b)it has been issued after the husband filed his tax return in circumstances where the tax return was filed months before it was due;
c)it is not due to be paid until March 2018 and therefore could and should be paid by the husband from his future income;
d)the husband could seek a variation of the assessment after these proceedings (and an adverse finding should be made given other concerns about the husband’s credit in this case); and
e)importantly, it is not consistent with the husband’s case outline document in which he stated that he had a tax liability of $213,315.[86]
[86] Page 8 of the husband’s outline of case document dated 31 October 2017.
The wife also submitted that the husband did not submit the original documents on which this assessment has been based and given the issues of credit raised against him in this case, little weight ought to be given to this assessment in the absence of those primary documents.
In addition, the wife submitted that the tax liability ought not form part of the asset pool as it is apparent that the husband has paid his legal fees in these proceedings and has given priority to those fees at the expense of meeting any tax debt which he has.
The court was referred to the Full Court decision in DJM and JLM (1998) 23 Fam LR 396 where the court referred to section 117 of the Act and relevantly said:
Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of section 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought to be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally to be spelt out.[87]
[87] DJM and JLM (1998) 23 Fam LR 396 at [11.6].
Whilst that may be so, the difficulty in this case is that there is no evidence about the parties’ legal fees before the court.
Counsel for the wife further submitted that in circumstances where the husband has been selective about the documents that he has placed before the court, the court would be justified in concluding that:
a)the claimed tax liability will not be payable by the husband;
b)the husband may have made provision for its payment from other funds which he has not disclosed; and/or
c)it is a personal liability accruing as a result of him giving priority to other discretionary payments.
In support of this submission, the court was referred to the decision of the Full Court in Chang and Su (2002) 170 FLR 244; (2002) 29 Fam LR 406; (2002) FLC 93-117; [2002] FamCA 156, in which the court upheld the Full Court’s decision in In the Marriage of Weir (1992)
16 FamLR 154; (1993) FLC 92-338 that ‘where there is clear evidence of non-disclosure, the court should not be unduly cautious about making findings in favour of the innocent party.’[88]
[88] Chang and Su (2002) 170 FLR 244; (2002) 29 Fam LR 406; (2002) FLC 93-117; [2002] FamCA 156 at [50]; In theMarriage of Weir (1992) 110 FLR 403; (1993) FLC 92; (1992) 16 Fam LR 154 at [154].
As stated above, I have made adverse findings about the husband’s credit. In addition, there are numerous examples where the husband has not been entirely open about his financial position. I do not propose to go through each of those examples; however, one which is indicative is that in his financial statement sworn 20 October 2017, the husband deposes that his income is $2,000 per week. However, his own tax return for 2017 financial year which is dated 10 October 2017, i.e. before his financial statement was completed, states that his income for that financial year was $367,114. This amount is well and truly more than $2,000 per week ($104,000 per annum) deposed to in his financial statement.[89]
[89] Exhibit D dated 10 October 2017. See also Exhibit C which states that the husband’s taxable income for the 2016 financial year totalled $352,948.
In those circumstances, and having regard to the fact that the tax liability which he since claimed of $110,766 is not actually due and payable until March 2018 and may be subject to amendment, I am not satisfied that the husband has proved this amount as a debt which ought to be included in the asset pool available for division. I have also had regard to the fact that this tax liability relates to income earned post-separation and which the husband has had the benefit of.
Engagement ring
The husband also seeks the return of the engagement ring that he gave the wife on the basis that it was ‘derived from (his) grandmother’s ring and has special sentimental value to him.’ He further deposed that he would like to pass it on to his daughter one day.[90]
[90] Paragraph 115 of the husband’s affidavit filed 24 October 2017.
The husband further deposes to the fact that the ring was valued in June 2005 at $11,825.[91]
[91] Paragraph 117 and annexure J-27 of the husband’s affidavit filed 24 October 2017.
The wife deposes that in about April 2017, she noticed a change in the colour of the centre stone and when she looked closely at the ring, she noticed a crack through the middle. She sought advice and was told that the ring was cracked and that once removed the diamond will crumble and that it has no value.[92]
[92] Paragraph 12 of the wife’s affidavit filed 27 October 2017.
In cross-examination, the wife maintained that she had been told by a jeweller that the centre stone has no value.[93] Insofar as the husband asserts that the ring is derived from his grandmother’s ring, the wife’s evidence in cross-examination was ‘I have never, in the 12 years I’ve had that ring, ever heard that it was a family heirloom, ever, and my girlfriend made the ring…’[94]
[93] Transcript page 104 at lines 45 to 46.
[94] Transcript page 105 at lines 25 to 26. See also annexure J-26 of the husband’s affidavit filed 24 October 2017.
The wife also gave evidence that she would like to use the other two stones in the ring to make earrings and therefore does not wish to return the ring.[95]
[95] Transcript page 107 at lines 10 to 31. The wife deposes that the ring has three diamonds, the centre one being claimed by the husband.
When it was directly put to the wife that in fact the ring was not damaged, she categorically denied that allegation. Having had the benefit of observing her in the witness box, I accept her as a witness of truth and accept her evidence on this issue.
In these circumstances, I do not propose to include the ring in the asset pool. Nor do I propose to make any order for its return as I am not satisfied on the evidence that it would be just and equitable to do so.
Proceeds of sale of the wife’s (vehicle omitted)
It is not in dispute that the wife traded in her (omitted) motor vehicle in about 2007 and purchased her current Mazda motor vehicle. As the Mazda is subject to finance, the wife has no equity in that car.
The husband asserts that the wife’s proceeds of sale of her (omitted vehicle) in the sum of $6,500 ought to be included in the asset pool. The wife gave evidence that the (omitted vehicle) had been in a collision and the cost of repairs together with the repair of other mechanical problems was going to be in the vicinity of four or five thousand dollars. This together with savings on fuel from the new car meant that she would effectively save that amount.[96]
[96] Transcript page 131 at line 45 to page 132 at line 14.
I accept the wife’s evidence in this regard and on this basis I do not propose to include the proceeds of the (omitted) motor vehicle in the asset pool.
Credit card debt
There is a dispute between the parties as to the amount of credit card debt which ought to be included in the asset pool.
For reasons set out above, where I am asked to decide between the husband’s evidence and the wife’s evidence, I prefer the wife’s evidence. On this basis, I have adopted the wife’s figures in relation to the credit card debt of each party in the asset pool.
Superannuation
In terms of superannuation entitlements, the parties agreed on the following superannuation interests but there was a difference of opinion as to the value of the husband’s superannuation entitlements with the (employer omitted) Superannuation and Benefits Scheme. The parties’ respective positions in relation to superannuation are set out in the following table:
Superannuation Fund
Wife’s valuation
Husband’s valuation
(omitted business) SMSF
$351,677 –
wife’s member balance$53,970 –
husband’s member balance$351,677 –
wife’s member balance$53,970 –
husband’s member balance(employer omitted) Superannuation and Benefits Scheme
$634,401
$533,116
Total
$1,040,048
$938,763
To the extent that the value of his interest in the (employer omitted) Superannuation and Benefits Scheme is $533,116, the husband points to his (employer omitted) Superannuation Member Statement for the period 1 July 2016 to 30 June 2017.[97]No other evidence is put forward by the husband as to the value of his superannuation.
[97] Annexure J-6 of the husband’s affidavit filed 24 October 2017.
The wife relied upon the evidence of Ms T who swore an affidavit on 26 October 2017 attesting to the fact that she has conducted a valuation of the (employer omitted) Superannuation and Benefits Scheme in accordance with the Family Law (Superannuation) Regulations 2001. Ms T was cross examined about her valuation.
I accept the evidence given by Ms T and find that as at the date that Ms T undertook the valuation, the husband’s superannuation has a value of $634,401.81.[98]
[98] Page 9 of the affidavit of Ms T filed 27 October 2017.
Findings as to asset pool
On the basis of the findings above, the net available asset pool for distribution between the parties comprises the following:
Non Superannuation Assets
Ownership
Value
Property C
Joint
$800,000
Property A
Husband
$600,000
Property B
Husband
$1,200,000
The (omitted business)
Wife
NIL
(omitted business) ATF (omitted business) t/a (omitted)
Husband
$118,316
Mazda motor vehicle
Wife
NIL
Total Assets
$2,718,316
Liabilities
Ownership
Value
Property C mortgage ((omitted Bank))
Wife
($94,163)
Property A mortgage ((omitted Bank))
Joint
($422,500)
Property B mortgage ((omitted Bank))
Husband
($882,000)
(omitted) Bank Loan
Wife
($8,500)
Wife’s loan relating to her business
Wife
($31,000)
Wife’s credit card
Wife
($4,500)
Husband’s credit card
Husband
($1,500)
Total Liabilities
($1,444,163)
Net non-superannuation pool
$1,274,153
Superannuation
Ownership
Value
(omitted business) SMSF
Joint
$405,647
(employer omitted) Superannuation and Benefits Scheme
Husband
$634,401
Total Superannuation
$1,040,048
Section 79(4) factors
Section 79(4) (a) to (c) contributions
The husband’s case is that his superannuation with the (employer omitted) Superannuation and Benefits Scheme was acquired before cohabitation and was not contributed to by either party during the relationship. In addition, it appears that initially at least, the husband sought to put his case on the basis that the Property B property was a post-relationship asset and ought not to be included in the property pool available for division between the parties.
It was submitted on behalf of the wife that this approach is both factually incorrect insofar as it relates to the (employer omitted) superannuation and legally incorrect insofar as it relates to both the (employer omitted) superannuation and the Property B property.
Section 79 of the Act requires the court to consider ‘the property of the parties to the marriage or either of them’.[99] It is well settled that property is not to be excluded from the pool simply because it was acquired prior to cohabitation or indeed acquired after separation. Of course ultimately, any order of the court to alter the property interests once identified must be just and equitable.[100]
[99] Section 79(1)(a) of the Family Law Act 1975 (Cth).
[100] Paragraph 35 of the wife’s final submissions, also see Bonnici (1992) FLC 92-272; Calvin v McTier [2017] Fam CAFC 125.
Contributions
It is common ground between the parties that at the commencement of the relationship, the husband owned the Property A property. He also had his superannuation with the (employer omitted) Superannuation and Benefits Scheme.
It is also common ground that upon the consent orders being entered into between the husband and his former wife following their separation, the husband had a loan of $55,000 in respect of the payment that he was required to make to his former wife and he took over the Equity Access Loan in the sum of approximately $110,000.[101]
[101] Paragraph 25 of the husband’s affidavit filed 24 October 2017.
There is a dispute between the parties about the value of the Property A property at the commencement of cohabitation. The husband deposed that the property was worth in excess of $450,000 in May 2005.[102] He also deposed that at that time, the mortgage secured over the Property A property was $282,000. On that basis he calculates his contribution of equity in the Property A property to have been in excess of $168,000.[103]
[102] Paragraph 26 of the husband’s affidavit filed 24 October 2017.
[103] Paragraph 26 of the husband’s affidavit filed 24 October 2017.
The husband attached a copy of a “valuation” of the property at Property A dated 4 October 2004.[104] This valuation was objected to by counsel for the wife on the basis that it had not been put before this court in a proper form and that the person who purported to give the valuation had not sworn to the accuracy of the valuation.
[104] Annexure J-2 of the husband’s affidavit filed 24 October 2017.
I also note, in any event, that the valuation is not an unconditional one but rather states that the figure of $450,000 would be achievable ‘if maintenance works were completed’ and if the sale took place during a peak sale period. Counsel for the husband conceded that the valuation was not properly before the court and did not seek to rely upon it as evidence of the value of the property.
For her part, the wife sought and obtained a retrospective valuation of the Property A property by Ms G.
Ms G swore an affidavit on 14 March 2017 in which she provided both a current valuation of the Property A property and a retrospective valuation of that property as at May 2005. Ms G assessed the value of the Property A property at May 2005 to have been $370,000.[105]
[105] Page 9 of the affidavit of Ms G filed 14 March 2017.
Ms G was not called to give evidence at trial as she was overseas at the time of the hearing. Counsel for the wife indicated that no notice had been given by the husband’s representatives that Ms G would be required.
In his closing submissions however, counsel for the wife stated that given the husband’s concession that the 2004 valuation was not being relied upon as to value, there was no need to call Ms G.
Questions of contribution are not a mathematical exercise.
On the basis of the evidence before me, I find that the parties brought the following assets (and liabilities) at the commencement of cohabitation:
a)the wife owned or had an interest in the following property totalling $410,154:
i)$250,514 as part of her former property settlement;
ii)the Property D property, which I find on the basis of the retrospective valuation by Mr T to have had equity of $15,000 at the commencement of cohabitation;
iii)shares to the value of $23,283; and
iv)superannuation entitlements to the value of $121,357;
b)the husband owned or had an interest in the following property totalling $535,000:
i)the Property A property which has been retrospectively valued at $370,000 and was subject a mortgage of $169,000 at the relevant time (i.e. equity of $201,000); and
ii)superannuation entitlements with the (employer omitted) Superannuation and Benefits Scheme valued at $334,000 at the relevant time; and
c)the husband had the following additional liabilities at the commencement of cohabitation totalling $200,447:
i)an Equity Access loan in the sum of $109,942;
ii)outstanding legal fees of $35,505; and
iii)a payment to his first wife as part of their property settlement of $55,000.
The wife also claims that in addition, the husband brought into the relationship ongoing legal fees relating to the acrimonious legal proceedings arising from the separation from his first wife and that in the first two or three years after cohabitation, he paid over $111,000 in legal costs from the parties’ joint resources to clear this liability.[106]
[106] Annexure G-2 of the wife’s affidavit filed 27 October 2017.
Even without having regard to the legal fees paid in the early years of their relationship which could arguably be characterised as a liability on the part of the husband, the other liabilities referred to above equalise the equity which the husband deposes to having in the Property A property, with the effect that the husband’s net contribution at the commencement of cohabitation was the balance of his superannuation of $334,000.
Again even without having regard to the legal fees of $111,000 referred to above, it is evident that the wife’s contribution at the commencement of cohabitation was greater than that of the husband and that this must be recognised in the ultimate orders of the court.
Although they did not have children together, they each had children from their previous marriages and they each contributed to the care of those children during their relationship.[107]
[107] Paragraphs 83 to 86 of the husband’s affidavit filed 24 October 2017 and paragraphs 32 to 33 of the wife’s affidavit filed 27 October 2017.
It was conceded by the wife that during the marriage, the parties’ contributions were equal.
The husband did not make a similar concession. On the face of his affidavit material and his outline of case document, his case appeared to be premised on an assertion that his contribution was significantly greater than the wife’s.
To the extent that this issue is not conceded, I find on the basis of the evidence before me and having regard to the terms of section 79(4) that the parties’ contribution during the relationship was equal. I accept the wife’s evidence that she had the primary responsibility for the homemaker role.[108] In addition, I find that each party worked throughout the relationship and contributed financially for the duration of their relationship.
[108] Paragraph 30 of the wife’s affidavit filed 24 October 2017.
In coming to this conclusion, I have had particular regard to the requirements of section 79(a) to (c) which require that consideration be given not only to financial and non-financial contributions to the acquisition, conservation and improvement of any property, but also to contributions for the benefit and welfare of the family including in the role of homemaker.
The husband gave evidence that he made significant post-separation contributions by paying the Property A mortgage and meeting the wife’s costs of private health insurance and mobile phone costs until February 2016,[109] and the wife has therefore had the benefit of living in the Property C property which is effectively mortgage free.
[109] Paragraphs 122 and 123 of the husband’s affidavit filed 24 October 2017.
The wife has given evidence that she has continued to meet the costs of the loan associated with the Property C property.[110]
[110] Paragraph 83 of the wife’s affidavit filed 27 October 2017.
The husband also asserted that by purchasing the Property B property which has increased in value by $150,000, he has also contributed to the available asset pool. I accept this is the case and have had regard to this in determining what is just and equitable in all the circumstances.
Other section 79(4) factors
Section 79(4)(d) requires that the court give consideration to the impact of any proposed orders on the earning capacity of either party to the marriage. Each party will, under the proposed orders retain their own business from which they have the potential to generate income.
The court is satisfied that there is no evidence that the proposed orders will impact on either party’s ability to continue to operate their respective business and generate an income.
The considerations in section 79(4)(f) and (g) do not apply in this case.
Section 79(4)(e) requires that consideration be given to section 75(2) factors to the extent that they are relevant. The relevant factors in this instance arising from section 75(2) are:
(a)the age and state of health of each of the parties;
Both parties are of a similar age. The wife gave evidence which was unchallenged, that in 2006 she with diagnosed with endometrial cancer for which she received treatment. The wife gave evidence that at the time of trial she had been in remission for some 10 years and that she was currently in good health.[111]
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
[111] Paragraphs 41 to 45 of the wife’s affidavit filed 27 October 2017.
This is the key relevant section 75(2) consideration in this particular case. Both parties have the capacity for gainful employment.
It is clear on the evidence that the husband’s earning capacity is significantly greater than that of the wife’s. In the last two financial years, the husband’s income has exceeded $350,000 per annum. This figure is after deducting the loss on the Property A property. As stated above, the husband swore to an income significantly less than this in his financial statement, however, did not take issue with the above figures as his current earnings during the trial.
By contrast, the wife’s earnings from her business are modest. Her taxable income in the 2016/2017 financial year was $44,000. Whilst it appears that that amount has increased throughout 2017, the evidence before this court clearly shows that the husband’s income is still significantly more than the wife’s.
(e)the responsibilities of either party to support any other person;
Both parties have children from their first relationship, all of whom are over 18 years old.
The wife gave evidence that her 19 year old daughter lives with her, is currently on a gap year from her studies but intends to resume her studies in 2018 and that although she currently works part time, is primarily financially reliant upon her. The husband does not contradict this evidence.[112]
[112] Paragraph 7 of the wife’s affidavit filed 27 October 2017.
The husband’s evidence is that his eldest daughter, who is 24 years of age, lives independently interstate and works as a (occupation omitted). His younger daughter who is 19 years old is currently living overseas but ‘receives some financial support from both her parents’.[113]
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
[113] Paragraphs 13 to 15 of the husband’s affidavit filed 24 October 2017.
The orders will result in each of the parties having a principal home with a mortgage. In the case of the husband, he will have two properties, but will also have higher levels of indebtedness. I am satisfied that the orders I propose to make will provide both parties with a reasonable standard of living in all the circumstances.
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
There are no other facts or circumstance which the justice of the case requires to be taken into account.
Having regard to each of these matters, I assess that it would be just and equitable to give the wife a further adjustment in recognition of the section 75(2) factors discussed above, in particular section 75(2)(c).
Whether it is just and equitable to alter the parties’ property interests
I have dealt with this consideration at paragraphs 76 to 78 above.
What order is just and equitable?
It is well accepted that the exercise of the court under section 79 is not a strict mathematical one. Rather, the considerations outlined above are simply a tool to assist the court to come to a principled decision on what would amount to a just and equitable division of assets between the parties.
Having regard to all of the circumstances discussed above, I am satisfied that just and equitable orders would see:
a)the wife retain or receive 58% and the husband retain or receive 42% of the non-superannuation assets; and
b)an equalisation of the parties’ superannuation entitlements.
To give effect to this order, I propose making orders providing for:
a)the wife to retain the Property C property (and associated mortgages and liabilities);
b)the husband to retain the Property A property and the Property B property (and associated mortgages and liabilities);
c)each party to retain their respective businesses (and associated assets and liabilities);
d)the wife to retain her car;
e)each party to retain any cash in all bank accounts in their respective names;
f)each party to remain liable for any outstanding credit card debt in their name;
g)the husband to make a payment to the wife in the sum of $80,000; and
h)in relation to superannuation:
i)the husband transfer his interest in the (omitted business) SMSF to the wife; and
ii)a splitting order be made from the husband’s (employer omitted) Superannuation and Benefits Scheme to the wife in the sum of $114,377.
I find that orders giving effect to these reasons are just and equitable and I therefore make the orders set out at the beginning of these reasons.
I certify that the preceding two hundred and nine (209) paragraphs are a true copy of the reasons for judgment of Judge Mercuri
Date: 29 March 2018
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