Kane and Kane

[2016] FamCA 163

FAMILY COURT OF AUSTRALIA

KANE & KANE [2016] FamCA 163

FAMILY LAW – PROPERTY SETTLEMENT IN RELATION TO MARRIAGE – Where the parties cohabited for approximately 29 years – Where principal asset of the parties is the superannuation fund – Where substantial funds spent by the husband from the superannuation fund after separation and before trial - Where there is adjustment for 75(2) factors to account for the money spent– 7.5 per cent adjustment in favour of the wife

APPLICANT: Ms Kane

RESPONDENT: Mr Kane

FILE NUMBER: SYC 1097 of 2010

DATE DELIVERED: 18 March 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 15, 16, 17 and 18 February 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Kearney SC

SOLICITOR FOR THE APPLICANT: Gayle Meredith & Associates

COUNSEL FOR THE RESPONDENT: Mr Lethbridge SC

SOLICITOR FOR THE RESPONDENT: Stacks the Law Firm

Orders

IT IS ORDERED

1. That the wife be forthwith appointed the Trustee for sale of the property registered in the name of the husband situated and known as M Street, I Town, in the state of New South Wales (“the I Town property”).

2. That within 14 days of these orders the husband vacate the I Town property.

3. That the wife do all acts and execute all documents necessary to cause the sale of the I Town property in accordance with order 1 herein to be conducted on the following basis:

   1.   That within 14 days the wife select a real estate agent to act on the sale and the solicitors to act on the sale;

   2.   That the property be listed for sale by public auction on a date no later than eight weeks following the listing for sale;

   3.   That the reserve price of the auction be $492,500;

   4.   That in the event the property is not sold at the auction or within 24 hours thereafter that the property be listed for sale by private treaty at a list price of $492,500.

4. That on completion of the sale of the I Town property that the husband and the wife do all acts and execute all documents necessary to cause the proceeds to be distributed as follows:

   1.   In payment of all agents commission, auctioneer expenses and legal expenses referrable to the sale;

   2.   In discharge of the mortgage secured on the property;

   3.   The balance to the wife.

5. That the husband forthwith in his capacity as director of K Pty Limited ACN … (“the company”) do all acts and execute all documents necessary to cause the company in its capacity as trustee of R Investments (“the fund”) to sell all shares in listed companies owned by the fund (“the fund’s shares”).

6. That within seven days of the fund’s shares being sold, the husband do all acts and execute all documents in accordance with the Superannuation Industry (Supervision) Act 1993 and clause 24.5 of the Trust Deed establishing the fund to request the payment of a lump sum or pension equal to the net proceeds of sale of the fund’s shares and the balance of all bank accounts of the fund to be paid into a bank account nominated by the wife.

7. That within seven days of receipt by the company of the request referred to in order 6 herein, the husband in his capacity as director of the company shall do all things necessary to accept and comply with the request in accordance with the operating standards under the Superannuation Industry (Supervision) Act 1993 and associated regulations and the Trust Deed governing the fund.

8. That the husband forthwith execute an irrevocable direction and authority in his capacity as director of the company addressed to Mr I and E Pty Limited, directing him and them to pay all sums due and payable to the company and / or R Investments pursuant to the Share Sale and Purchase Agreement between E Pty Limited and the company dated 17 July 2015 and the Deed of Novation between D Pty Limited, the company and E Pty Limited executed July 2014, directly to the wife.

9. That the husband indemnify and keep the wife indemnified against all liability of and in relation to the fund including any debt whether guaranteed by the wife or not and including any taxation liability assessed or herein after assessed against the company in its capacity as trustee of the fund in respect of income derived or deemed to have been derived by the fund inclusive of interest, penalties, costs and fines and from all proceedings, costs, claims or demands in respect thereof.

10. That the husband in his capacity as a director of K Pty Limited and in his own capacity do all acts and execute all documents necessary to cause all proceedings commenced in the District Court of New South Wales or any other court other than the Family Court of Australia by the company and / or the husband against the wife solely or with any other person, to be withdrawn and dismissed and that the husband be restrained by injunction from doing any act to cause any proceedings to be commenced against the wife in any court on his behalf or on behalf of K Pty Limited or any other company or entity in which he has an interest.

11. That from the funds which the wife receives pursuant to these orders she shall be solely entitled to retain the amount of $1.3 million and shall do all acts and things required to pay the balance of any funds to the husband.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Kane & Kane has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1097 of 2010

Ms Kane

Applicant

And

Mr Kane

Respondent

REASONS FOR JUDGMENT

1. Proceedings for property settlement between Ms Kane (“the wife”) and Mr Kane (“the husband”) were remitted by the Full Court for re-hearing after judgment was delivered on 18 December 2013.

2. The parties commenced co-habitation in about September 1980 and separated in June 2009 (according to the wife) or in December 2008 (according to the husband). Nothing turns on this dispute. There were four children of the marriage, all now adult. The wife is now aged 53 years and the husband is aged 66 years. The wife has re-partnered and lives in a de facto relationship with Mr M.

3. Judgment in the first property settlement proceedings (“the first trial”) was delivered on 22 June 2011.

4. Thus, by the time the matter came before me for hearing, the parties had been separated for more than six years. After the orders were made in the first trial, there was a distribution of the property of the parties in accordance with those orders. Thereafter they each dealt with their respective property as they saw fit.

BACKGROUND

1. The financial history of the parties up to the time of the distribution of their property pursuant to the orders made in the first trial is relatively uncontroversial. So much so that, before me, the parties agreed that their contributions up to separation were equal.

2. The husband had a share in a pizza business when the parties commenced to live together. They sold the pizza business in 1993 and incorporated K Pty Limited (“KR”) for the purpose of manufacturing and selling pasta products. That business failed and an electrical business known as G Pty Ltd (G) was commenced, using the vehicle of K.

3. Although the wife was a shareholder in KR, the husband controlled the day to day operations. The wife had access to the on line accounts of K and was a signatory to the cheque account but left the running of the company to the husband.

4. They ultimately purchased a home at I Town (“I Town”) where they lived until separation.

5. In about 1977 the parties acquired units in a unit trust, known as the H Trust (“H”) which managed hospitals, borrowing the purchase money. They transferred their units to K.

6. G was sold.

7. In 2008 H sold its assets and the unit holders received their share of the sale proceeds. K received the funds. The exact amount is the subject of dispute. The husband contends that the amount, after various liabilities were discharged, was approximately $1,675,000. The wife contends that the amount was $1,750,000 of which $1,060,400 was directed to R as is described below. Because there is a dispute about how the funds from H were used, it will be necessary to determine what net amount was received after the payment of liabilities.

8. The parties established a self-managed superannuation fund known as R Investments (“R”). K was the trustee of the fund. The purpose of the establishment of R was to channel the money received from the H investment into superannuation for the husband and the wife as the husband effectively retired on the sale of the H units.

9. In May 2009 the husband changed the passwords and the wife had no online access to the K accounts.

10. The husband thereafter drew money from R as he determined both for living and for other expenses which he incurred.  

11. The wife asserts that the parties separated when she left the home at I Town on 21 June 2009. On 23 June 2009, the wife withdrew $350,000 from K and she retained those funds.

12. The wife commenced a de facto relationship with Mr M about a week after the separation.

13. The husband commenced trading in shares using two accounts with St George Direct Shares. One account was styled “Company-CASH” with a number ending in 206 (“the 206 account”) and the other was styled “Superfund-CASH” with a number ending in 123 (“the 123 account”). It was the husband’s evidence that, whichever account was used to buy or sell shares, the transactions were eventually conducted on behalf of R.

14. On 26 May 2010, the parties entered into consent orders which provided for an interim distribution of their property in the following terms:

    ·    The wife transferred I Town to the husband.

    ·    The wife retained the sum of $350,000 that she had removed from K.

    ·    The wife transferred her K shares to the husband and resigned as a director.

    ·    The wife’s superannuation entitlements were to be rolled into a fund nominated by her.

    ·    That pending further order, each party was restrained from dealing with the husband’s vested superannuation of $1,673,900 as at 24 May 2010 and the wife’s fund of $376,348 as at 24 May 2010.

15. Thus by the commencement of the first trial, the wife had transferred her shares in K and her interest in I Town to the husband. She retained the sum of $350,000 that she had removed from the account of K.

16. The significant issue in the first trial was how the superannuation interests of the parties should be divided.

17. As a consequence of the orders made in the first trial, the wife received her superannuation entitlement which was rolled into another fund and a cash payment of approximately $737,952. The wife lent Mr M $417,000 from her cash component and that loan is recorded in the balance sheet as an asset of the wife.

18. In August 2012 a company, D Pty Ltd, (“D”) was incorporated. The husband was a minor shareholder. The husband became a director and secretary of D. The husband describes D as a start-up IT venture.

19. The husband commenced to invest in D shares and to lend funds to D. Initially he did so through R but, on the advice of his accountant, the money advanced to D was treated as a drawing by the husband from R and then on lent, or invested, by either the husband or K. There is no particular significance in the entity advancing funds to D as K was solely controlled by the husband.

20. In November 2012 a company J Pty Ltd (“J”) was incorporated. The husband was a director. K owned three of the ten issued shares and the party’s son, Mr L, was the other director and shareholder. Money was advanced to J. The characterisation of those funds is in issue.

21. The judgment of the Full Court was handed down on 18 December 2013 and the matter was remitted for re-hearing.

THE WIFE’S ALLEGATIONS OF NON-DISCLOSURE

1. Even before the first trial, questions were raised by the wife as to the accuracy of documents produced for the purpose of the first trial, particularly the financial returns for R for the year ended 30 June 2009 and thereafter. The wife disputed the accuracy of the 2009 statements in so far as they set out the allocations of the fund between the husband and the wife.

2. As early as December 2010, a letter was sent by the then solicitors for the wife to the accountants for R asserting that funds were missing, or unaccounted for, from the R accounts, and that contributions had been wrongly assigned between the funds of the husband and the wife. The accountant did not respond to the request for information except to ask how his fees were to be paid. The information the wife requested was not provided.

3. A further letter was written by the wife’s solicitors to the accountants for R on 10 February 2011 asking for information about the allocations to the respective entitlements in R and pointing out that the 2009 balance sheet for R listed the accrued benefits for each of the husband and the wife differently from the figures appearing in the 2009 members’ statements, prepared by the same accountant. The wife’s solicitors asked for an explanation. The accountant was cross-examined in the first trial but could not provide any explanation for the discrepancy.

4. Thus it was clear to the husband, even before the first trial, and before the commencement of the hearing before me, that there was a real issue as to the accuracy of the R records.

5. The wife contended that the amount attributed to her superannuation interest in the first trial was incorrectly calculated. Before me, she tendered two different sets of figures which were both made available to her by the accountant who audited the fund’s accounts. In a document styled “R Investments Trustees Declaration” for the financial year ended 30 June 2009, the husband’s account balance was stated to be $1,077,323 and the wife’s $395,768.

6. In another, similarly named document, the wife’s entitlement is shown as $638,871 and the husband’s as $834,221. In cross-examination the husband conceded that this latter document accurately represented the balances of the two accounts. The husband told the Court that he had asked the accountant to change the figures so as to distribute the income of the fund to his account and the losses to the wife’s account. He further conceded that he did so in breach of a resolution of K that the net income be proportionally allocated between the members according to their balances. The husband said that the incorrect balances were then carried forward in the subsequent financial years.

7. Thus the husband conceded that the wife’s member statement used for the purpose of the first trial was incorrect. The wife had been asserting concerns about the correctness of the balances in the member statements since 2011 and the husband, although he was aware that the balances were wrong, had done nothing to correct the record or to cause his accountant to do so.

8. The husband knew that when orders were made in the first trial for the wife’s superannuation entitlements to be rolled out to her nominated fund, the wife’s member entitlement was incorrect and that the error was to his benefit. He took no step to correct that error. The error, and the husband’s awareness of it, became apparent only in the course of his cross-examination before me.

9. The husband deliberately withheld information from the wife and from the Court to the effect that her entitlement was diminished and his was increased.

10. From the first time the matter was listed before me for directions, it was also clear that the wife asserted that the husband had not made full disclosure of the share trading activities undertaken by K either in its own right or as trustee of R. Before me, the husband conceded that he had the sole control of K and therefore of R at all relevant times both before and after separation.

11. In cross-examination, the husband asserted on a number of occasions that the trading records of K and R were available and were so transparent that the wife should have been able, by reference to those records, to reconstruct the transaction records and understand the movements of money and shares within those entities.

12. In the course of the cross-examination of the husband, it was made apparent that no such exercise could possibly have been undertaken as the wife did not have access to the necessary documents (all of which could have been provided by the husband who had the documents). It also became clear that the financial statements and ledgers which the husband and his accountant caused to be brought into existence in relation to R and K were, on many occasions, at variance with the source documents such as bank statements.

13. The husband was unable to reconcile the differences. His accountant made no attempt to do so.

14. The husband made no attempt to give proper financial disclosure to assist either the wife or the Court to understand the financial history of the superannuation fund’s trading and other dealings.

PROCEDURAL HISTORY

1. A chronology of the procedural orders made in the proceedings demonstrates the efforts made by the wife to obtain proper disclosure and the extent of the husband’s non-compliance with those orders, directions and undertakings and his obligation to make full disclosure.

2. On 23 January 2014, Registrar George made orders for the exchange of documents referred to in Rule 12.02 and for the husband to provide to the wife, on or before 6 March 2014, copies of any documents in his possession or control relating to his investment in a start-up company.

   The matter came before the Court for the first day of the trial on 13 June 2014. Relevantly it was ordered by consent:

   1.         That within 14 days that the husband provide to the wife through her lawyers:

   1.1.Buy and sell histories from 1 May 2010 to date in relation to the [R] Investments account with the St George Bank Account Number … and with respect to the [K] St George Bank Account Number …;

   1.2.The Australian Stock Exchange off market share transfer documents for shares either from and/or into the St George direct share accounts of [R] Investments and [K] from 1 May 2010 to date;

   1.3.The Constitution of [D Pty Ltd] ABN …;

   1.4.The General Ledger for [D Pty Ltd] from 1 July 2013 to date and the Loan Account Ledger for the same period;

   1.5.In relation to [D] IP Pty Ltd:

   (i)the Constitution;

   (ii)the financial accounts and tax returns;

   (iii)all management accounts including profit and loss accounts and balance sheets;

   (iv)the Business Activity Statements as from 1 July 2013 to date;

   (v)the General Ledger from 1 July 2013 to date;

   (vi)the Loan Account Ledger as at this date.

   1.6.Copies of documents relating to the patents or patents pending owned by [D] Pty Ltd or [D] IP Pty Ltd.

   2.That the wife has leave to seek the issue of a subpoena to produce documents addressed to the St George Bank.

   3.That within 21 days the wife submit to the husband the names of three possible single expert accountants to value [D] Pty Ltd and [D] IP Pty Ltd and that within 14 days thereafter the husband select one of the accountants.

3. On 2 October 2014, orders were made by consent restraining the husband from investing, either through K or R, in shares other than listed shares. A further order required the husband to provide to the wife’s solicitors, on a weekly basis, a copy of the documents relating to any share trading activity during the previous week.

4. On 20 October 2014 the wife caused an Application in a Case to be filed seeking orders restraining the husband from drawing more than $1,010 per week from R, restraining K and R from investing (including lending) in companies other than publicly listed companies and restraining the husband from further borrowings.

5. In her affidavit in support of that application the wife deposed to a significant diminution in the funds available in R since the first trial and detailed large withdrawals by the husband from R. The wife deposed to the husband’s investment in both J and D and the commercial risk of those investments.

1. That application came before me on 3 December 2014 and the following were noted:

   1.That the undertaking of the husband proffered to the Court in the following terms:

   A.That he will not cause a pension or payment to himself from the self-managed superannuation fund except:

   1.1.A weekly pension to him of $2,500; and

   1.2.Payment of legal fees and disbursements in the property settlement proceedings.

   B.That he will not allow or cause the self-managed superannuation fund to invest in shares other than in publicly listed companies.

   C.That he will not allow or cause the self-managed superannuation fund to lend money to any entity.

   D.That he will not extend the limit of the St George overdraft beyond $250,000.

2. On 2 February 2015 orders were made for a single expert valuer to prepare valuations of the corporate entities.

3. The wife brought a further Application in a Case which was returnable on 1 June 2015 to address the husband’s failure to provide documents requested by the single expert and to comply with a Notice to Produce. The following orders were made:

   1.That the husband provide to [F Valuers], accountants, the documents referred to at paragraphs 7 to 10 inclusive of the list of documents forwarded.

   2.That the husband provides to the solicitors for the wife the documents referred to in the Notice to Produce and the documents referred to in the letter from Gale Meredith and Associates dated 27 May 2015.

   3.That all of those documents are to be provided within 14 days.

   4.That the matter be listed for call over on 10 August 2015 at 10am before the Honourable Justice Rees.

   5.That the wife’s costs in relation to appearances today be reserved.

4. On 17 July 2015 the husband, without notice to the wife, entered into a Deed of Novation in relation to the funds lent to D and a further Share Sale and Purchase Agreement in relation to the D shares.

5. The wife’s solicitors were notified of these transactions by letter dated 20 July 2015 (after the event) which did not disclose either the name of the purchaser or the amount of the consideration. The letter did not disclose the fact that the consideration ultimately to be paid was postponed for two years with no provision for interest. It was not until the husband filed an affidavit in response to the wife’s Application in a Case that she became aware of those details.

6. On 30 July 2015 the wife’s Further Application in a Case came before the Court. The husband had still not provided the documents requested by the single expert. That application was heard on 30 July 2015 and judgement was delivered on 7 August 2015.

7. The following orders were made:

   1.That pending further order and save as provided by these Orders, the husband be and hereby is restrained from by himself/herself, his/her servants and/or agents doing and/or causing or permitting to be done, any of the following:

   1.2alienating or further encumbering any of the shares in [K] Pty Limited (“the Company”) and/or [R] Investments (“the Fund”) and/or in which the Company and/or the Fund have any interest or any entitlement;

   1.3issuing any new shares or otherwise altering the shareholding (including any rights and entitlements attaching to or any other incident of the same) or interests of the parties in the Company and/or the Fund;

   1.4removing, replacing or appointing any director or other officeholder of the Company;

   1.5removing, replacing or appointing any appointor, trustee or beneficiary of the Fund;

   2.That pending further order and save as provided by these Orders, the husband be and hereby is restrained from by himself/herself, his/her servants and/or agents doing and/or causing or permitting any and all interest, entitlement and benefit of the husband, the Company and/or the Fund pursuant to:

   2.1Deed of Novation entered between the Company, [D] Pty Limited and [E] Pty Ltd dated 17 July 2015;  and

   2.2Share Sale and Purchase Agreement entered between the Company and [E] Pty Ltd dated 17 July 2015;

   to be paid and/or applied other than to a controlled monies account in the names of the solicitor for the wife and the solicitor for the husband.

   3.      That the husband forthwith:

   3.1comply with paragraph 2 of the Orders of 1 June 2015; and

   3.2do all things, including providing all documents necessary, to permit [F Valuers] to prepare a valuation of the interests of the parties (or either of them) in each entity in respect of which there is issue, including but not limited to each of the Company, the Fund, [D] Pty Limited and [D] IP Pty Limited.”

   5.        That the costs of the proceedings are reserved.

   6.That pending further order the husband be permitted to draw from the Fund not more than $1,200 per week.

   7.That pending further order, and subject to Order 6, the husband be restrained, himself and his servants and/or agents from causing or permitting to be done any of the following:

   (a)transferring, encumbering or dealing in any way with the assets, income or undertakings of the Company both in its own right and as trustee of the Fund; and

   (b)exercising any power of appointment or distributing of capital or income, or any power of revocation, variation or re-settlement in respect of the Company and/or the Fund.

8. On 11 December 2015, a further Application in a Case came before the Court. The wife sought orders which would cause her to become a shareholder and director of K so as to prevent the husband from drawing funds from those entities contrary to the restraints imposed upon him by the orders previously made.

9. In support of that application, the wife deposed that:

   ·    The balance of funds held by [R] had decreased from $2,043,887 in the financial year 2012 to $1,587,364 in the financial year 2014, some $500,000.

   ·    That the husband had withdrawn $160,100 between 1 July 2014 and 19 September 2014.

   ·    That she had been advised by the husband’s solicitor that the [R] share portfolio was now worth $533, 075 (a decrease in value since 30 June 2014 in excess of $1million).

   ·    That the husband had failed to provide the disclosure ordered on 13 June 2014.

   ·    That the husband had failed to provide the weekly reports ordered on 2 October 2014.

   ·    That the husband had failed to comply with a Notice to Produce.

   ·    That the husband had failed to provide notice of his intention to sell the [D] shares and compromise the debt owed by [D].

   ·    That the husband had failed to comply with the undertakings he had given in relation to the limit on drawings from [D].

   ·    That the husband had failed to provide the documents required by the single expert as sought by the expert.

   ·    That the single expert had not been provided with the 2015 financial statements of [K] and [R] or the tax returns.

   ·    That the husband’s accountant and the auditor of the [K] and [R] accounts had failed to produce documents pursuant to a subpoena.

10. The husband relied on an affidavit sworn by him on 22 December 2015 wherein he denied that he had drawn more than those funds to which he was entitled. The husband deposed “I have complied with the Court orders in relation my drawings on the super fund in relation to the capping of the drawings initially at $2,500 and then at $1,200.” The husband also asserted that he had provided documents to the wife’s solicitor as required.

11. The most cursory inspection of the relevant bank accounts revealed that the husband’s statements as to compliance with orders and undertakings limiting his drawings were false. The husband admitted in cross-examination that he believed when he swore the affidavit, that the statement was not accurate. When asked why he had not complied with the orders in relation to weekly reporting his response was to the effect that he is “only human” and he “just didn’t do it”.

12. As a result of that evidence, I am satisfied that the husband was prepared to swear to false evidence in his affidavit so as to influence the outcome of the proceedings and that he would not comply with any order of the Court that he found onerous.

13. The orders sought by the wife on 11 December 2015 were not made in circumstances where the wife’s allegations were contested and the hearing was to commence on 15 February 2016. Counsel for the wife gave notice that the application would be agitated at the conclusion of the trial and, as will be seen, after submissions in the trial, orders were made pending delivery of judgment, substantially in accordance with the wife’s Application in a Case.

14. It was necessary to curb the husband’s access to the remaining funds because he admitted, in cross-examination, that he had drawn funds in excess of those he was permitted to draw for living expenses and that he was aware of that fact when he swore his December 2015 affidavit. His evidence on that affidavit was misleading. The husband further admitted in cross-examination that he had circumvented the undertakings of 3 December 2014 by drawing money from the superannuation fund which was shown as a drawing in the R ledgers and then personally lending those funds to D or to Mr I who was the Chairman and Managing Director of D. In addition the husband conceded in cross-examination that he had failed entirely to comply with the order made 2 October 2014 for weekly reports of his share trading activities.

THE HUSBAND’S FAILURE TO COMPLY WITH ORDERS INCLUDING ORDERS FOR THE PROVISION OF DOCUMENTS

1. From the outset of the proceedings, the husband was aware that, central to the proceedings, was the wife’s allegation that he had not fully disclosed his share trading activities and that the wife disputed the accuracy of the records of R and the respective member entitlements. As the matter progressed, more and more orders were made to force the husband to provide to the wife’s solicitors that material which he had an absolute duty to disclose.

2. The cross-examination of the husband was prolonged because the wife had not had access to relevant information that was peculiarly within the husband’s possession and was forced to rely on that which could be discovered by subpoena.

3. The husband gave evidence that, at all relevant times, there were records kept on KR’s computer system that could provide a running account of its share trading. Those records were never provided to the wife.

4. The husband was extensively cross-examined on such of the share trading records which had been provided by St George and the fact that numerous purchases and sales of shares, which were referred to in the financial statements of R and in the share trading records, could not be substantiated. For example, the share trading records produced by St George showed sales of large numbers of shares but no record of the purchase of the shares.

5. In re-examination, the husband sought to introduce into evidence 16 pages of share trading records which he asserted were the complete record of share trading. These records, which were clearly in the possession of the husband had never been disclosed or made available to the wife, despite repeated requests for them and orders that they be produced. The husband was not permitted to tender the documents.

6. The husband subverted the intention and effect of the orders made 3 December 2014 by causing funds to be withdrawn from R as drawings and then using those funds to lend to K in order to invest in D. He undertook that transaction in that manner because both R and K were restrained from investing in shares in unlisted companies.

WHAT AMOUNT WAS RECEIVED FROM H?

1. The husband estimated that the net amount received from H was $1,650,000, allowing for debts of about $300,000. (In cross-examination, the husband conceded that his figure of $1,650,000 was not accurate). The wife asserted that the gross amount received was $2,050,000 which, allowing for debts of $300,000, gave a net figure of $1,750,000.

2. Neither assertion appears to be supported by the available documents.

3. Exhibited to the wife’s affidavit is a letter from the accountants for H detailing distributions to K of:

   28/4/2008$1,455,997.56

   28/4/2008$   173,819.26

   03/11/2008$   358,399.40

   Total$1,988,206.22

4. The first payment of $1,455,997.56 was deposited into a St George bank account on 2 May 2008. That account had a debit balance of $189,628 and the deposit brought the balance to $1,266,369.56.

5. The second payment was deposited into the St George Portfolio Loan Account ending in 456 (“the 456 account”). That account had a debit balance of $242,712 leaving a debit balance of $68,902.71 after the credited deposit.

6. The third payment was deposited into the same account as the first payment on 3 November 2008.

7. Thus when the three amounts were received the parties had debts of $432,340. The net amount of the H proceeds to 3 November 2008 was therefore $1,555,866.

8. However the husband conceded in cross-examination that the sums referred to above were not the whole amount received from H. He gave evidence that a further payment was received in 2010 or 2011 of about $40,000. He agreed that this payment had never been disclosed to the wife.

9. Thus the net amount received, after the payment of debts then outstanding, was $1,595,866

THE BALANCE SHEET

1. At the conclusion of submissions, the parties tendered an agreed balance sheet which is reproduced below:

Owned		Description	Wife’s value	Husband’s value
ASSETS
1.	H	M Street, I Town	$        492,500	$        492,500
2.	H	St George Bank, Account No:  …	$               315	$               315
3.	H	St George Bank, Account No:  …	$  0	$  0
4.	H	2 K Pty Limited shares	$          96,017	$               368
5.	H	German Car (Redbook)	$          26,000	$          26,000
6.	H	German Sportscar	$          10,000	$          10,000
7.	H	J Pty Ltd (subject to Item 14)	$  4	$  4
8.	H	Household contents	$            5,000	$            5,000
9.	W	Commonwealth Bank … @ 19.01.16	$            2,867	$            2,867
10.	W	50 per cent CBA a/c #062655 (joint with Mr M) @ 19.01.16	$                  27	$                  27
11.	W	3,200 NHF & 1,165 MFG shares @ 03.02.16	$          36,105	$          36,105
12.	W	Household contents	$            1,500	$            1,500
13.	W	Loan to Mr M	$        417,000	$        417,000
14.	H	Loan account with J Pty Ltd and capital contribution paid to Mr L Kane	$        139,900	$                 Nil
15.	H	R Investments (Self-managed in payment phase) (single expert valuation)	$        951,009	$        951,009
16.	H	Loan to K Pty Ltd	$        762,600	$        649,889
17.	H	Loan to N Pty Ltd t/as G Pty Ltd	$          39,957	$          39,957
Sub-total		$      2,980,801	$     2,632,541
OTHER EQUITIES
18.	H	AMP Flexible Lifetime Super a/c … (Accumulation) @ 30.06.14	$  0	$  0
19.	H	Super 2 Superannuation Plan a/c FN…	$  0	$                 Nil
20.	H	Money withdrawn from K from separation until 06.06.13 unaccounted for	$        445,394	$                 Nil
21.	H	Withdrawals from self-managed fund from first hearing in May 2011 until 30.06.15 less amount paid to the wife pursuant to orders of June 2011 and less amount in item 22 on account of the husband’s paid legal fees	$     1,843,592	$        968,564
22.	H	Paid legal fees and disbursements from 2009 to January 2016 – included in	$        452,822	$        452,822
23.	W	Paid legal fees and disbursements	$        474,481	$        474,481
24.	W	Monies held in trust account for counsel’s fees	$          79,260	$          79,260
25.	H	Withdrawals from R contrary to orders	$          96,460	$      E 40,000
26.	H	Funds lost from gambling from November 2010 to September 2014	$        166,269	$                 Nil
Sub-total		$     3,558,278	$     2,015,127
Total		$     6,539,079	$     4,647,668

LIABILITIES
27.	H	St George loan	$        Not incl	$     (231,604)
28.	W	Loan from Mr M	$     (168,000)	$     (168,000)
29.	H	Loan from K	$  0	$  0
30.	H	Debt to Stacks for outstanding costs and disbursements to date and to date of final day of trial ($83,895.29 + $100,000 to the date of the hearing)	$  0	$     (183,895)
Total		$     (168,000)	$     (583,499)

NET ASSETS	$     2,812,801	$     2,049,042
NET ASSETS + EQUITIES	$     6,371,079	$     4,064,169

SUPERANNUATION
Member		Name of Fund	Type of Interest	Wife’s Value	Husband’s Value
31.	W	Wise Owl Investments @ 03.02.16	Self-managed	$        708,965	$        708,965
32.	W	AMP …525 @ 13.01.16	Accumulation	$            9,580	$            9,580
Total		$        718,545	$        718,545

NET ASSETS (including superannuation) $     3,531,346 $     2,767,587

1. The issues in dispute will be dealt with using the numbers from the balance sheet.

Item 3 – 2 K Pty Ltd (K) Shares

1. The husband asserted that the shares should be valued in accordance with the financial statements of K for the year ended 30 June 2015 which were annexed to his affidavit. In those statements a provision is made for “doubtful debts” in the sum of $94,769. No doubtful debts were identified in the financial statements prepared by the husband’s accountants for the period ended 30 June 2014. No doubtful debts were included in the financial statements prepared by the husband’s accountants for the period 31 December 2015. The “doubtful debts” were not identified. No notes to the financial statements were included.

2. Having regard to the numerous discrepancies between source documents and financial statements which were high-lighted in the course of the husband’s cross-examination, and having regard to the existence of the discrepancies between financial statements and members’ statements to which reference has been made earlier in these reasons, the accuracy of the financial statements cannot be accepted where challenged. There is no evidence before the Court to substantiate the claim for “doubtful debts”. They should be disregarded. The value of the shares is $96,017 as asserted by the wife.

Item 14 – Loan and Capital Contribution to J and Mr L Kane

1. The husband asserted that the sums advanced to Mr L and to J should be ignored, presumably on the basis that he did not expect to recover the amounts. In an affidavit sworn 8 February 2016, the husband deposed that he did not consider his “investment” in J or the money lent to Mr L as loans.

2. Annexed to the husband’s trial affidavit is a schedule of the amounts advanced totalling $132,900.

3. The financial statements for J for the year ended 30 June 2015 show a shareholders loan owed to the husband of $33,600. J had accumulated losses. Having regard to the husband’s sworn statement, it is unlikely that he could succeed in any suit to recover the amounts advanced to J or to Mr L, however they are characterised. It is unrealistic to include the advances as an asset of the husband on the balance sheet but they should be considered in the context of the husband’s use of the funds available to him after the first trial and in the context of any adjustment pursuant to s75(2).

Item 16 – Loan to K Pty Ltd (K)

1. This is the money originally advanced by the husband from R to D and re-cast as a loan from the husband to K, or lent by K to D. The sum of $649,889 is the sum recorded in the financial statements of K as the amount owed by K to the husband. However, as has occurred on a number of occasions when the financial statements relied upon by the husband are examined in the light of source documents, that amount is not accurate.

1. In cross-examination the husband said that he agreed to sell the shares owned by K in D and fix the debt owed by D to K in negotiation with Mr I. He did not check any records to ascertain the actual amounts advanced but thought that the amount fixed in the share sale agreement and the Deed of Novation were close enough. The Deed of Novation attaches a schedule which quantifies the debt owed to K as at 11 December 2014 at $713,000. The husband deposed that, after December 2014 and up to June 2015 he had advanced a further sum of $42,000 to Mr I and that he had allowed Mr I to use a credit card for which the husband was liable. The husband repaid $7,000 of expenses incurred by Mr I on that card. Thus the amount advanced to D was $762,000 and the amount of the actual loan will be adopted rather than the inaccurate figure in the financial statements of K.

Item 17 – Loan to N Pty Limited

1. The loan is included as an asset in the husband’s financial statement sworn 8 February 2016. There is no evidence that the loan is not recoverable and it will be included as an asset.

2. Thus I find the assets of the parties at the date of hearing to be:

Description		Value
1.	M Street, I Town	$        492,500
2.	St George Bank, Account No:  …	$               315
3.	2 K Pty Limited shares	$          96,017
4.	German Car (Redbook)	$          26,000
5.	German Sportscar	$          10,000
6.	Household contents	$            5,000
7.	Commonwealth Bank … @ 19.01.16	$            2,867
8.	50 per cent CBA a/c #... (joint with Mr M) @ 19.01.16	$                  27
9.	3,200 NHF & 1,165 MFG shares @ 03.02.16	$          36,105
10.	Household contents	$            1,500
11.	Loan to Mr M	$        417,000
12.	R Investments (Self-managed in payment phase) (single expert valuation)	$        951,009
13.	Loan to K Pty Ltd	$        762,600
14.	Loan to N Pty Ltd t/as G Pty Ltd	$          39,957
TOTAL		$      2,840,897

1. Of this amount, the husband holds assets worth $2,383,398. The wife holds assets worth $457,499. In addition the wife has an interest in her superannuation funds of $718,545. She is currently 53 years of age and is not yet able to have access to the superannuation funds.

THE “OTHER EQUITIES”

1. On behalf of the wife, it was submitted that those items in the balance sheet under the heading “Other Equities” should be added back.

2. Both senior counsel submitted that the paid legal fees could be added back, in which case the liability of the wife to Mr M of $168,000 advanced to pay some of her fees, would be included as a liability. Equally, both senior counsel agreed that legal fees could be omitted from the balance sheet and the liability to Mr M also omitted. Senior counsel for the husband did not submit that the husband’s outstanding costs should be included as a liability but rather that they should be taken into account pursuant to s75(2).

3. The paid legal fees of the parties are in similar amounts. The wife has paid money into trust for counsel’s fees. The husband owes a similar amount. The costs amount to more than one third of the asset pool. Each of the parties was free to incur legal fees and the choices each of them has made should not be visited on the other. I therefore propose to exclude the paid legal fees and the amount owed to Mr M from the balance sheet.

4. The other sums which the wife submits should be added back fall into three broad categories:

   ·    Withdrawals made by the husband from R contrary to orders.

   ·    The husband’s gambling losses. And

   ·    Money spent by the husband from K and R since separation.

WITHDRAWALS FROM R

1. Senior counsel for the husband conceded that, in so far as the husband had breached the orders made 3 December 2014 and 7 August 2015, restraining him from drawing more than a set amount from R,  the excess drawings must be added back. The husband concedes excess drawings of $40,000. The wife contends for a figure of $96,460.

2. In Vass & Vass [2015] FamCAFC 51, the Full Court held at 138 and 139:

   There is no error committed per se in adjusting the parties actual property interests by a calculation involving notionally adding back into the pool sums which have been dissipated by the parties.  We reject any suggestion that the decision of Bevan & Bevan (2013) FLC 93-545 – or, more particularly, the decision of the High Court in Stanford & Stanford (2012) 247 CLR 108 - is authority for any necessary contrary solution. Some statements made by the High Court may lead to the conclusion that references to “notional property” as have been referred to in decisions of this court and at first instance may need to be reconsidered. 

   The decisions referred to seek to remind the Court that, however the exercise of discretion might seek to deal with property that is said to be the subject of “add back”, proper consideration must be given to existing interests in property, and the question posed by s 79(2) as a separate inquiry from any adjustment to property interests by reference to s 79(4) if a consideration of s 79(2) reveals that it is just and equitable to alter existing interests in property.

3. Having regard to the concession made on behalf of the husband I consider it appropriate to deal with the excess drawings as notional property. Even absent the concession, in the circumstances of this case, the husband having disregarded the orders of the court, it would be appropriate to deal with the excess drawings on that basis so as to give them their full value.

4. Annexed to the wife’s affidavit sworn 29 January 2016 are copies of the bank statements for R. Between 3 December 2014 and 7 August 2015, a period of 35 weeks, the husband was entitled to draw $2,500 per week or a total of $87,500. Excluding withdrawals for the payment of legal fees and accountancy fees for the purpose of the proceedings, the husband actually withdrew $129,660. The amount of drawings in excess of that permitted was $42,160 for the period.

5. From 7 August 2015 to the date of trial, the husband was permitted to draw $1,200 per week. The available bank statements cover a period of 20 weeks when the husband was entitled to withdraw $24,000. He withdrew $78,300. The amount of drawings in excess of that permitted in that period was $54,300.

6. Thus, the husband drew from R an amount of $96,460 in excess of that which the orders permitted and that amount should be added back as an asset of the husband.

GAMBLING LOSSES

1. The husband played poker machines at his local RSL Golf Club (“the Club”). Documents produced on subpoena demonstrate that between November 2010 and September 2014 the husband lost $166,269 or an average of about $800 per week. I accept the submission of senior counsel for the wife that it is unlikely that the husband started to gamble in November 2010. On his own evidence he was a regular player of poker machines before that time. He conceded that he incurred losses in that period. The husband conceded that he continued to play after the records ceased, although less frequently and in lesser amounts. The sum of $166,269 is the minimum that the husband has lost but the only amount that can be precisely established.

2. Senior counsel for the husband submitted that the husband’s gambling losses should be treated as an expensive hobby. I accept that submission. However, the expenditure on gambling, absent any similar expenditure by the wife, must be taken into account when considering s75(2).

MONEY WITHDRAWN BY THE HUSBAND FROM K AND R

1. On behalf of the wife it was submitted that the whole of the money, totalling $2,288,986, which was withdrawn from those two sources by the husband, from separation until 30 June 2015 should be added back.

2. Setting aside the dangers inherent in “add backs”, the approach for which senior counsel for the wife advocates is fraught with difficulty. It is only necessary to set out some of those difficulties to illustrate the inequity of the approach.

   ·    Adding back $2,288,986 will not create a fund from which a payment of any portion of that amount can be paid to the parties. A significant portion of the funds are gone.

   ·    It is impossible to ascertain with certainty what money was legitimately used by the husband for living expenses or other unremarkable expenses. That this is partly, or even wholly, due to the failure of the husband to provide relevant documents or to give evidence about his spending does not alleviate the difficulty.

   ·    The approach does not take into account the income that was received by R over the same period. It would be extremely unsafe, in terms of fairness and equity, to add back the husband’s expenditure without taking into account the income.

   ·    Some of the money spent by the husband must, necessarily, have been taken into account already in known spending such as the money advanced to Mr L and to J, the money advanced to D, and the money advanced to the children of the marriage. In his financial statement sworn 8 February 2016, the husband deposed to having given $158,800 to the other two children. Although in cross-examination he conceded that he had no records to substantiate those amounts and that some were no more than estimates, that he gave substantial sums to the children was not the subject of challenge.

   ·    A substantial sum, perhaps as great as $400,000, was spent on renovations to I Town. Although there is no evidence that the value of I Town was thereby increased (its value at trial was agreed to be $492,000) and the sum may represent an overcapitalisation of the property, it has been accounted for, at least, approximately.

   ·    There was a substantial cash payment to the wife, in excess of $740,000 consequent upon the compliance with the orders in the first trial.

   ·    The wife herself has spent significant amounts of money allocated to her from formerly joint funds. She spent the whole of the $350,000 that she withdrew from K immediately prior to separation. She has given significant amounts (albeit less than those given by the husband) to the children.

3. Justice is more likely to be done if these matters are taken into account in the consideration of s75(2).

LIABILITIES

1. The wife’s loan from Mr M and the husband’s outstanding costs have been dealt with earlier in these reasons. 

2. The husband has a loan of $231,604 outstanding to St George Bank. This loan was incurred after separation and without reference to the wife. The husband has been able to lend or give away significant sums of money, far in excess of this liability and has chosen not to repay the loan. It is far from clear what the money was used for.

3. The husband asserted that the loan had, in part, refinanced the overdraft of K with St George Bank. However he produced no documents to substantiate that assertion. In cross-examination he agreed that he had paid out the overdraft in the amount of $18,756 from his own funds in October 2011. Even if those funds came from the loan facility now in place, this does not explain the expenditure of the balance of the money.

4. There is no evidence that the money spent from the loan benefited the parties jointly. There is no evidence about how it was spent. It is not just and equitable to bring the loan to account.

THE NET ASSET POSITION

1. As a consequence of the findings in relation to the monies overdrawn by the husband, it is necessary to add to his assets the sum of $96,460.

2. Thus the assets of the parties are:

   Husband$2,479,860

   Wife$   457,499

   Total$2,937,359

3. In addition, the wife’s superannuation entitlement, not yet available to her, is $718,545.

SECTION 79(2)

1. Both parties ask the Court to make an order adjusting their property interests although they disagree on the appropriate adjustment. They have been separated since 2009. Their formerly jointly owned assets have been separated and the husband retains the greater share. The assets in the hands of both of them have their genesis in the assets they jointly generated during the marriage.

2. It is just and equitable that there be an order pursuant to s79.

CONTRIBUTION

1. Senior counsel for the husband submitted that contributions should be assessed as equal.

2. In his case outline, senior counsel for the wife submitted that the wife should be entitled to one half of an asset pool which included the “Other Equities”.

3. The assets which have been included in the asset pool as I have determined it to be, with the exception of I Town, have their genesis largely in the sale of the H units before separation.

4. Thereafter the funds derived from that joint investment were invested at the discretion of the husband. Some of his investment decisions proved profitable. Others did not.

5. The wife invested her rolled over superannuation and the value of her fund has increased. 

6. The use of the funds available to each of them after the first trial is a matter to be considered pursuant to s75(2).

7. The contributions to the asset pool as I have determined it to be should be considered to be equal.

SECTION 75(2)

1. The husband is 66 years of age and has retired from employment. The wife is 53 years of age and has not been in paid employment for many years. There is no prospect that either of them will engage in paid employment.

2. The husband has not re-partnered. The wife lives in a de facto relationship with Mr M. He is in receipt of net income of $4,720 per week. The majority of his income is derived from income protection insurance. Although in his oral evidence, he deposed to a present interruption in payments, there is no evidence that the insurance payments will not continue in the future. Mr M owns the property in which he and the wife live, subject to a mortgage. He is currently supporting the wife and paying her living expenses. He does not expect to be repaid the amount he has spent.

3. The significant matter to be taken into account pursuant to s75(2) is the expenditure of funds by each of the parties between the time of the distribution pursuant to the judgment in the first trial and this hearing.

4. The wife received $350,000 pursuant to the orders made on 26 May 2010. The husband was ordered to pay her a further amount of $719,723 and her superannuation entitlements were rolled out into another fund. In so far as the wife received further payments, after enforcement proceedings, of money representing sums underpaid, costs and interest, those sums should not be taken into account.

5. The wife provided a schedule showing her use of the funds between 23 June 2009 and 30 June 2014 when $57,959 remained available to her. She gave evidence that that sum has now been spent on living expenses. Although initially objection was taken to the schedule, that objection was withdrawn and no challenge was made to it.

6. The schedule shows an opening balance of $356,188 on 23 June 2009 which includes the $350,000 removed from K. After accounting for the wife’s interest and dividends, the sale of her motor vehicle and her detailed expenditure of $275,106 in the period to 10 May 2011, she was left with a balance of $115,993.

7. Between 10 May 2011 and 14 June 2014, the wife received interest and dividends of $28,405, rent of $13,200, return of bond of $1,250, and the sum ordered to be paid in the first trial of $737,952. Added to the balance of $115,993 available to her at the beginning of that period, she accumulated a total of $896,631. In the same period she detailed expenditure of $838,503.

8. It is not necessary to set out the whole list of her expenditure but it is sufficient to set out the major items. The wife gave a total of $53,625 to the children. She spent $244,540 on legal fees and lent $417,000 to Mr M, a total of $715,165. The balance was spent on reasonable living expenses.

9. No such assistance was provided by the husband.

10. The exercise of assessing what money has been spent by the husband and how those funds have been spent was largely left to the wife, to discover what she could without his assistance. Accordingly the exercise must be imprecise. Had the husband chosen to present the relevant evidence, it could have been as precise as was the evidence of the wife. He did not so choose.

11. The wife attempted to break down the husband’s withdrawals from the H proceeds in defined periods. The first period was from the receipt of the funds until the establishment of R. In his affidavit sworn 23 October 2014, the husband deposed:

    At the time of the final separation, approximately 70 per cent of the proceeds of sale of ([H]) were invested by me into various ASX listed companies on behalf of ([R]). That figure represented approximately $1,100,000 out of $1,650,000.

    I have already determined that a net amount of $1,595,867 was received from H. If $1,100,000 was invested in R, then $495,869 remains to be unaccounted for between receipt of the H funds and the ultimate investment in R.

12. It seems to be common ground that the $350,000 taken by the wife from K came originally from the H proceeds. The balance of $145,867 was used by the husband. In circumstances where the husband does not seek any adjustment against the wife for having spent the whole of the $350,000, the wife cannot maintain any adjustment for his spending the lesser sum.

13. Senior counsel for the wife submitted that the Court should look to the income of R in the financial years 2010 to 2015 inclusive and compare the amounts drawn by the husband to income in those years. The expenses of R in that period were minor, between $2,700 in the 2010 year and $4,183 in the 2015 year.

14. In the year ended 30 June 2010, the income of R from all sources (including the increase in value of increase in market value of investments) was $985,372. In the same year the husband drew $103,790.

15. In the year ended 30 June 2011, the income of R from all sources was $1,236,769. The husband drew $538,754.

16. In the year ended 30 June 2012, the Financial Statements show the income of R from all sources was $2,015,258. The husband drew $1,457,770. However, in that same year the market value of investments decreased by $1,451,330. The Financial Statements do not accord with the husband’s sworn evidence. The husband deposed that in the year ended 30 June 2012, he withdrew $1,003,506.

17. In the year ended 30 June 2013, the Financial Statements show the income of R from all sources was $267,929. The husband drew $176,880. The decrease in market value of investments was $230,493. The husband deposed that he drew $615,239.

18. In the year ended 30 June 2014, the Financial Statements show the income of R from all sources was $292,673. The husband drew $964,454. The decrease in market value of investments was $77,821. The husband deposed that he drew $964,454.

19. Thus in these two financial years (2013 and 2014) the husband deposed to drawings of $1,579,693.

20. In the year ended 30 June 2015, the Financial Statements show the income of R from all sources was $297,615. The husband drew $318,446. The decrease in market value of investments was $343,503. The husband deposed that he drew $318,446.

21. It is impossible to reconcile the husband’s sworn evidence with the Financial Statements. There is no evidence from which it could be concluded that either is accurate.

22. From the 2012 financial year, the value of investments decreased by a total of $2,103,147.

23. The manner in which the husband spent the drawings has been explained in part.

24. He gave evidence of:

    ·    Payments to the wife pursuant to the orders in the first trial. I accept the evidence of the wife that those payments totalled $737,952.

    ·    Money advanced (however categorised) to D which I have found to be in the sum of $762,000.

    ·    Legal fees of $347,924 as set out in his Financial Statement sworn 8 February 2016.

    The payment to the wife was necessary. The advances to D will come back into the balance sheet. Both parties have paid legal fees from capital. Nothing flows from those three transactions.

25. Other transactions fall into a different category. I accept the submissions of senior counsel for the husband that, between the judgment in the first trial and the handing down of the judgment in the appeal, the husband was entitled to spend money that was his as he saw fit and at his absolute discretion. However, the manner in which that money was spent must be examined to determine whether it is necessary, in order to do justice and equity to the wife, to make some adjustment in her favour to take the diminution of available funds into account. The following payments fall into that category:

    ·    Payments to the children (including advances to J) totalling $298,000. The husband conceded that some of those figures included in his Financial Statement sworn 8 February 2016 were no more than estimates, however, the amount is significant compared to the amount given to the children by the wife of $53,625.

    ·    Renovations to I Town estimated to be $400,000. The agreed value of I Town was $492,500. There was no evidence which established that the sum spent on renovations improved the value of the property.

    ·    Spending on poker machines in excess of $166,269.

1. Allowing for an adjustment in the amount given to the children to reflect the amount also given by the wife, the husband has accounted for spending of about $2,666,000. Accepting for the purpose of this exercise the amount of drawings reflected in the Financial Statements, some $901,000 is not accounted for at all and must be attributed to living expenses.

2. In approximately the same period, the wife spent about $540,000 on living expenses (as explained in paragraphs 121 and 122 of these reasons).  

3. The husband’s spending on the children and on living expenses should be adjusted to deduct the amounts that the wife spent on those expenses so that this discretionary spending is dealt with equitable as between them

4. What adjustment, if any, should be made to the wife to reflect the discretionary spending by the husband of about $245,000 to the children (in excess of that which she gave them), $400,000 on I Town, $166,000 on poker machines and some $460,000 on living expenses (in excess of that which she spent), a total of some $1,270,000?

5. This is not a precise mathematical adjustment but the adjustment must recognise the fact that the husband has had the benefit of funds which are not now available to the wife.

6. The appropriate adjustment is 7.5 per cent of the net asset pool in favour of the wife. Such an adjustment would produce a differential of 15 per cent or $440,604 which the wife receives in excess of that which the husband receives. The differential recognises the fact that the wife’s superannuation entitlement is still preserved and the husband’s has been included in the asset pool.

7. This would have the effect that, of the available assets of $2,937,357, the wife would receive 57.5 per cent or $1,688,980. She would retain her superannuation entitlement of $718,545 which is not yet available to her.

8. The husband would receive the remaining assets of $1,248,377.

9. Standing back and looking at the real effect of this distribution, the wife receives assets and superannuation to the value of $2,407,525 of which the superannuation component is not yet available to her. The husband receives assets of $1,248,377 and has already had the benefit of spending $1,270,000, reflecting a total amount spent and retained of $2,518,377.

10. I am acutely aware that this leaves the husband with little in the way of presently available assets. Of the amount to be retained by the husband, the majority is to be found in his investment in D which is not currently available to him. However, he made that investment without consulting the wife and he entered into the arrangement to postpone his return on that investment without notice to her. The investment in D was, from the beginning, undertaken contrary to the intention of the orders of the Court. He cannot now complain if the consequences of his decisions are visited upon him.

CONCLUSION

1. The wife has assets of $457,499. The husband must pay her the sum of $1,304,915. Because many of the amounts used in the calculation are approximations, this sum should be rounded down to $1,300,000.

2. In order to meet that payment, the husband has available the assets remaining in his superannuation fund and I Town. He will retain his investments, including that in D.  

I certify that the preceding one hundred and fifty-three (153) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 18 March 2016.

Associate: 

Date:  18/3/2016