Keadle & Holcombe
[2024] FedCFamC2F 808
•26 June 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Keadle & Holcombe [2024] FedCFamC2F 808
File number(s): ADC 1734 of 2020 Judgment of: JUDGE PARKER Date of judgment: 26 June 2024 Catchwords: FAMILY LAW – PROPERTY – Where it is alleged that the Husband improperly removed funds from the parties’ self-managed superannuation fund – where there is a consequential dispute as to finalisation of the accounts of the fund Legislation: Evidence Act 1995 (Cth) s 140
Family Law Act 1975 (Cth) ss 75, 79, 81
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 8.15(3)(e)
Cases cited: BAR & JMR (No 2) [2005] FamCA 386; (2005) FLC ¶93-231
Best & Best (1993) FLC ¶92-418
Bishop & Bishop [2013] FamCAFC 138; (2013) FLC ¶93-553
Browne & Green [1999] FamCA 1483; (1999) FLC ¶92-873
C & C [1998] FamCA 143
Chang & Su [2002] FamCA 156; (2002) FLC ¶93-117
NHC & RCH [2004] FamCA 633; (2004) FLC ¶93-204
Clauson & Clauson [1995] FamCA 10; (1995) FLC ¶92-595
Clowes & Konig [2022] FedCFamC1F 565
C & C [2005] FamCA 429; (2005) FLC ¶93-220
DJM & JLM (1998) FLC 92-816
D & D [2006] FamCA 199 (2006) FLC ¶93-256
Franklin & Ennis [2019] FamCAFC 91
Fu & Tiao [2023] FedCFamC1F 393
Gabel & Yardley [2008] FamCAFC 162; (2008) FLC ¶93-386
Gould & Gould [1995] FamCA 142; (1996) FLC ¶92-657
Grier & Malphas [2016] FamCAFC 8418
Kowaliw & Kowaliw (1981) FLC ¶91-092
L & L (2006) FLC ¶93-254
Mayne & Mayne (No 2) [2012] FamCAFC 90; (2012) FLC ¶93-510
AJO & GRO (2005) FLC ¶93-218
Palumbo & Mandel [2019] FamCAFC 228; (2019) FLC ¶93-929
Paul & Paul [2012] FamCAFC 64; (2012) FLC ¶93-505
Stanford & Stanford [2012] HCA 52; (2012) 247 CLR 108
Townsend & Townsend (1995) FLC ¶92-569
Trevi & Trevi [2018] FamCAFC 173; (2018) FLC ¶93-858
Trustee of the Property of Lemnos (A Bankrupt) & Lemnos & Anor [2009] FamCAFC 20; (2009) FLC ¶93-394
Weir & Weir [1992] FamCA 69; (1993) FLC ¶92-338
Whitehead & Whitehead [1979] FamCA 41; (1979) FLC ¶90-673
Division: Division 2 Family Law Number of paragraphs: 155 Date of hearing: 7-9 May 2024 Place: Adelaide Counsel for the Applicant: Mr Dillon Solicitor for the Applicant: Thompson Smyth Barristers & Solicitors Counsel for the Respondent: Mr Richards Solicitor for the Respondent: AK Family Law ORDERS
ADC 1734 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS KEADLE
Applicant
AND: MR HOLCOMBE
Respondent
ORDER MADE BY:
JUDGE PARKER
DATE OF ORDER:
26 JUNE 2024
THE COURT ORDERS THAT:
1.The parties forthwith do all acts and things required to:
(a)obtain advice from B Company or such other advisors as may be agreed between them as to the most effective strategy for finalising the accounts of the Super Fund 1 (‘the SMSF’) in a manner consistent with the findings of this judgment having regard to the need to minimise any taxation or other financial consequences to the SMSF and/or the parties;
(b)implement such strategy; and
(c)ascertain the value of each of the parties’ member entitlements in the SMSF.
2.The parties each be at liberty to provide a copy of these reasons for judgment to the advisor referred to at order 1 hereof and any other professional or organisation for the purpose of obtaining advice with respect to or implementing these orders.
3.The parties each have liberty to apply with respect to the implementation of order 1 hereof.
4.The matter be listed for mention on 11 September 2024 at 9.30am for further case management.
5.The parties be at liberty to seek to vary the mention date provided for herein by way of joint communication to the chambers of Judge Parker.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE PARKER:
INTRODUCTION
The applications before the Court relate to property settlement proceedings between the Applicant Wife, MS KEADLE (‘the Wife’) and the Respondent Husband, MR HOLCOMBE (‘the Husband’) (collectively ‘the parties’). Each of the parties sought orders dividing their property between them pursuant to section 79 of the Family Law Act 1975 (Cth) (‘the Act’).
SCOPE OF THESE REASONS
A barrier to the final resolution of this matter has been the parties’ competing contentions with respect to their interests in a self-managed superannuation fund known as Super Fund 1 (‘the SMSF’ or ‘the fund’). The Trustee of the SMSF is a deregistered company known as C Pty Ltd, of which the parties are both directors and shareholders. The parties are the members of the SMSF.
The Wife alleged that the Husband had entered into a number of improper transactions with respect to the funds held by the SMSF, some of which were for the purpose of defeating or reducing her claim in these proceedings. This was denied by the Husband.
The Husband asserted that the financial accounts for the fund for the financial years ending 30 June 2017 to 30 June 2020 have been properly prepared and the Wife has unreasonably refused to sign them, causing the parties to fail to comply with their obligations to the Australian Taxation Office as directors of the trustee of the SMSF.
The Wife’s position was that the prepared accounts were not accurate and did not properly reflect the Husband’s true dealings with the assets of the fund, the Husband having provided incorrect information to the fund’s accountants. As such, the Wife’s position was that she was not in a position to sign them, particularly as to do so would require her to sign a declaration confirming that the operation of the SMSF has been carried out in accordance with its trust deed and in compliance with the applicable legislation and regulations, and that the financial statements fairly represent the financial position of the fund, an assertion the Wife did not consider to be true.
This impasse between the parties has had the consequence that the accounts of the fund have not been finalised, and any consequences such as interest or penalties which may arise from the conduct alleged by the Wife and/or from the fact that the accounts have not been finalised are not known. As such, the parties’ precise member balances cannot presently be determined.
This, in turn, has had the consequence that, at least on the Wife’s case, the assets and liabilities of the parties and their values have not properly been able to be ascertained for the purpose of these proceedings, and the Wife has been unable to formulate other aspects of her case which she says will flow from the ultimate status of the SMSF and any losses incurred by the parties in relation thereto, including potential adjustments to be sought with respect to contributions and/or factors pursuant to section 75(2) of the Act and the need to ensure that she is not left with what would be, on her case, an undeserved liability to the Commissioner of Taxation arising from conduct of the Husband with respect to the SMSF.
As a result of these difficulties with finalisation of the matter, particularly on the Wife’s case, it was determined that the following approach would be taken:
(a)if the findings of the Court with respect to the Husband’s dealings in relation to the SMSF were to be as sought by him, the Court would proceed to finalise the matter by way of final orders made contemporaneously with this judgment (including an order requiring the parties to finalise the accounts for the SMSF such that their member entitlements could be calculated); but
(b)if some or all of the findings sought by the Wife with respect to the Husband’s dealings with the SMSF were to be made, this judgment would address the factual matters to be determined on the evidence but would not determine the percentage-based distribution of the parties’ assets and liabilities or the final orders to be made until such time as the ultimate status of the SMSF was known.
For reasons which are detailed later in this judgment, a number of the findings sought by the Wife will be made and as a consequence, the latter approach has been adopted.
It is intended that once the accounts of the SMSF have properly been finalised and any consequences arising from the conduct alleged by the Wife are known, the parties will be in a position to:
(a)Reach agreement in relation to, or ask the Court to determine, the total net value of their assets and liabilities;
(b)Make any application that may be required with respect to reopening or calling further evidence; and
(c)Reach agreement as to, or proceed to final judicial determination of, the percentage-based adjustment to be made and the precise terms of the orders to be made to finalise the proceeding.
In accordance with section 140(1) of the Evidence Act 1995 (Cth) (‘the Evidence Act’), all findings of fact in this judgment are made on the balance of probabilities. Some of the findings in these reasons relate to conduct of a serious nature, the potential ramifications of which could include financial or other penalties. I have had regard to the matters outlined in section 140(2) of the Evidence Act, particularly the gravity of the matters alleged, when making such findings.
BACKGROUND
The Wife was born in 1971 and is aged 52. The Husband was born in 1970 and is aged 54.
The parties commenced cohabitation in 2004 and were married in 2006. There are three children of the marriage, X, born in 2008 and aged 16, Y, born in 2009 and aged 14, and Z, born in 2012 and aged 12. The children live with the Wife.
The Husband’s evidence was that the parties separated under one roof on 10 September 2018 and physically separated on 22 April 2019. The Wife’s evidence was that they separated on 22 April 2019. Nothing turns on this difference. A divorce order was made and became final in mid-2020.
MATERIAL RELIED ON
The Wife relied on the following documents:
(a)Amended Initiating Application filed on 19 September 2023;
(b)Trial affidavit filed on 29 August 2023;
(c)Affidavit in Reply filed on 25 September 2023;
(d)Financial Statement filed on 19 September 2023; and
(e)Case Outline filed on 7 May 2024.
The Husband relied on the following documents:
(a)Amended Response to Initiating Application filed on 13 September 2023;
(b)Trial Affidavit filed on 13 September 2023;
(c)Financial Statement filed on 13 September 2023; and
(d)Case Outline filed on 2 May 2024.
The parties filed a joint schedule of assets and liabilities on 7 May 2024, the contents of which were refined during the course of the trial. Counsel for the Husband also made use of an aide memoire which clarified the Husband’s position.
The operation of rule 8.15(3)(e) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (‘the Rules’) was dispensed with and the annexures to the affidavits filed by each of the parties were admitted into evidence. Each of the parties also tendered documents throughout the course of the trial. Although each and every aspect of the evidence relied upon by the parties has not been referred to in these reasons, I have had regard to the totality of the evidence before the Court and the submissions of each of the parties.
PROPOSALS
The Wife sought, in summary, that she retain 75% of the known superannuation and non‑superannuation assets and liabilities of the parties and that the assets of the SMSF be sold to the extent necessary to implement such an outcome.
The Wife’s position was that the contributions of the parties should be assessed as equal and there should be a 25% adjustment in her favour with respect to the matters enumerated in section 75(2) of the Act.
Although her formal application sought a declaration with respect to a property at D Street, Suburb E, South Australia (‘the Suburb E property’) of which the Husband’s partner, Ms F, is the sole registered proprietor, this was not ultimately pressed.
The Husband sought, in summary, that the superannuation and non-superannuation assets of the parties be divided between them in proportions of 67.25% to him and 32.75% to the Wife, with the result that they each retain 50% of the net value of the assets of the SMSF, the Wife retain the sum of $50,000 she is to be paid by Ms F (as discussed later in these reasons), the Husband pay to the Wife the sum of $10,000, and the parties each otherwise retain the assets and liabilities in their respective possession.
THE PARTIES AND THEIR EVIDENCE
Each of the parties gave evidence and was cross-examined. Ms F gave evidence and was cross‑examined at an earlier hearing on 5 October 2022. It was agreed that the evidence Ms F given that day would form part of the evidence relied upon for purposes of the trial.
The Wife gave her evidence in a calm and straightforward manner and gave the impression of endeavouring the give honest responses to the questions asked of her. She impressed as an honest witness.
The Husband likewise gave his evidence in a calm manner and answered the questions asked of him. However, there were aspects of the Husband’s evidence which were inherently implausible and which strained credulity. These issues are considered in detail later in these reasons. As a result of many serious deficits with the Husband’s evidence which are discussed below, I accept the submission of Counsel for the Wife that the Husband’s evidence was ‘entirely unsatisfactory.’
Like the Husband, Ms F gave evidence that was implausible and at times nonsensical. She also contradicted herself. She gave the impression that she was attempting to relay a pre-planned story rather than providing a genuine recollection of events which had actually occurred. The reliability of Ms F’s evidence was further undermined by her admission that she had improperly spoken to her solicitor about it during a break while she was under cross-examination.
For these reasons, where the evidence of the parties conflicts, in the absence of reliable independent corroborative evidence, I prefer the evidence of the Wife over that of the Husband and Ms F.
THE SUPERANNUATION FUND AND THE HUSBAND’S ALLEGED CONDUCT
The SMSF was established by deed in late 2013. Although the Husband deposed that the Wife had had some involvement, it is apparent from the evidence of both parties that the fund was primarily managed by the Husband throughout the parties’ relationship.
At the time of its establishment, the Husband transferred the majority of his then-existing superannuation entitlements into the SMSF. Given that the Husband had not become qualified or commenced earning a significant salary until after the commencement of the parties’ relationship, I infer that the majority of the superannuation transferred by the Husband into the fund had been accumulated during the relationship. The Wife similarly contributed all of her superannuation entitlements into the SMSF at the time of its establishment. The Husband’s unchallenged evidence was that all of his employer superannuation contributions from the time of the establishment of the fund until late 2020 were paid into the SMSF. The Wife has not made any contributions to the SMSF since her contribution at the time of its inception.
It is agreed between the parties that the assets of the SMSF presently include:
(a)A storage facility at Suburb B in South Australia which was purchased by the fund in 2013 or 2014 for approximately $125,000. Ownership of the facility is accompanied by ownership of shares in H Pty Ltd. The facility has yet to be valued but it was agreed that would be done; and
(b)Other assets with a total value of $195,584, including:
(i)Vehicle 1;
(ii)Vehicle 2;
(iii)Vehicle 3;
(iv)Vehicle 4;
(v)Vehicle 5; and
(vi)Vehicle parts.
The Husband is one of eight directors of H Pty Ltd. His evidence was that if the facility were to be sold, the shares in that company must be sold with it, and any such sale must be approved by the board.
The Wife alleged that funds had been removed by the Husband from the SMSF in a series of transactions undertaken by the Husband in order to put them beyond her reach. The Husband denied this allegation and asserted that the transactions in question had been legitimate and bona fide transactions.
The transactions which the Wife alleged were improper and/or designed to reduce her claim in these proceedings were as follows:
(a)Transfers totalling $47,750 from a J Bank account held by the SMSF to a Westpac account held by Ms F in February 2020; and
(b)Transfers totalling $44,420 from the SMSF into the Husband’s K Bank account number ending #...79 (directly or indirectly) between September 2019 and February 2020.
The SMSF was deregistered in late 2020. Its Trustee was subsequently deregistered in mid‑2023.
It is common ground that the Wife refused to sign off on the accounts for the SMSF for the financial years ending 30 June 2017 to 30 June 2020, which had been prepared on the Husband’s instructions by the fund’s longstanding accountants, B Company, and had been signed by the Husband.[1] As a consequence, the value of the parties’ member balances has not been finally ascertained.
[1][1] Exhibit H2.
The Husband’s position was that the accounts of the SMSF had been properly prepared by the accountants engaged by both parties and had been audited and as such, should have been finalised and lodged. It was submitted on his behalf that the Wife had adduced no evidence, including no expert evidence, of any deficiencies in the accounts or any proposed rectification. The Husband asserted that it was up to the Wife to provide ‘correct’ information to the Australian Taxation Office and the Australian Securities and Investments Commission if she asserted that the information provided by the Husband was inaccurate.
The Wife acknowledged under cross-examination that she had not contacted B Company to discuss the ramifications of signing the accounts in the form in which they were presented to her, though her solicitors had done so on her behalf. She also acknowledged that she had not proposed that they be amended in any particular way or sought advice from any other accountant with respect to the form or content or the documents, and that she had not been made aware of any reservations held by B Company with respect to their contents. Her position was that until the disputed factual issues as to the Husband’s conduct had been determined by the Court, the accounts could not properly be finalised.
Each of the parties attributed responsibility to the other for the deregistration of the fund and its Trustee. The Husband complained that this occurred because the Wife refused to sign off on the financial accounts. This is something the Wife said she could not do as the draft accounts provided to her contained false information pertaining to the circumstances of the disputed transactions.
Transfers to Ms F
The transfers totalling $47,750 from the J Bank Cash Management account held by the SMSF to Ms F in February 2020 relied upon by the Wife were as follows:
(a)$20,000 on 25 February 2020;
(b)$8,500 on 26 February 2020;
(c)$9,750 on 26 February 2020; and
(d)$9,500 on 26 February 2020.[2]
[2] Wife’s trial affidavit, paragraph [47]; annexure MK 7.
The Husband’s evidence with respect to these transfers was that the funds had been transferred out of the SMSF for the legitimate purpose of the purchase of vehicles from Ms F for the benefit of the fund. He deposed that the sum of $47,750 was transferred to Ms F in February 2020 for the purpose of purchasing the following three vehicles from her:
(a)Vehicle 2;
(b)Vehicle 3; and
(c)Vehicle 4.
His evidence was that Ms F had acquired the vehicles from her own resources and he had then used the resources of the SMSF to purchase them from Ms F at market value.
The Husband relied upon three invoices which he asserted had been issued by Ms F to the Trustee of the SMSF as evidence of the purchase of the vehicles by the fund from Ms F.[3] The Wife’s evidence was that these invoices were in the Husband’s handwriting. This was ultimately confirmed by Ms F. As noted by the Wife, the invoice numbers did not match the order in which the transfers had taken place, and in one instance, the transfer preceded the date shown on the invoice. The Husband sought to explain these apparent discrepancies by saying that the invoices had been ‘drafted’ after the event ‘for the benefit of the accountant’ for ‘accounting reasons.’ He admitted that the invoices had been created by him. He dismissively labelled the discrepancy with the invoice numbers as ‘irrelevant’ and ‘an accounting error.’ The Husband’s admitted willingness to manufacture and backdate invoices was a cause for concern.
[3] Wife’s trial affidavit, annexure MK 7.
The Wife’s evidence was that the vehicles in question had been owned by the Husband prior to the transfers and that the purported transactions with Ms F constituted a ruse. The Wife alleged, and the Husband did not deny, that the vehicles in question had been located in the facility owned by the SMSF well prior to the transactions in question and during the parties’ relationship.
The Husband denied having purchased or owned any vehicles in his own name, including any of the vehicles now recorded in the proposed accounts of the SMSF, throughout the relationship. He gave evidence that the vehicles had been owned by unrelated third parties and each had been stored in the facility by their previous owners for an extended time before being sold to Ms F and then to the fund.
The Husband asserted that and Ms F had decided that she would purchase the vehicles using her savings and that Ms F would then ‘roll’ them into the SMSF as her contribution to the fund at a later date when the property settlement between the Husband and the Wife had been finalised, the Wife had been removed as a member of the fund, and Ms F had become a member. How it came to pass that Ms F purportedly sold the vehicles to the fund rather than waiting to become a member of the fund and contributing them as planned was not adequately explained.
The Husband’s evidence given under cross-examination with respect to Vehicle 2 was that this vehicle had been in the facility for a period of time which he could not recall but he confirmed that it had been in there by 2017. He could not recall who had owned it, but it had been ‘a gentleman’ who had been renting a facility nearby. One day, the gentleman, whom the Husband had not previously met, had approached the Husband and asked if he could store his vehicles in the facility. The Husband had obtained the gentleman’s phone number but he no longer had it. He did not have occasion to speak to the gentleman again until around the time that Ms F had become interested in joining the SMSF, after the vehicles had sat in the facility for years without any contact from its owner. He had never approached the gentleman to pay rent for storage of the vehicles and could not recall whether there had been any agreement for rent. When the Husband had contacted the gentleman, he had said he was interested in selling the vehicles. The Husband did not recall the specifics of the discussions about costs and payment and did not recall the agreed price. The Husband paid him in cash belonging to Ms F, which she had taken from a container kept in her wardrobe and given to him.
With respect to Vehicle 3, the Husband could not recall when this vehicle had come into the facility but gave evidence that it had been in the facility in 2017. The circumstances of this vehicle coming into the facility were that ‘a lady’ had approached the Husband at the facility and suggested to him that he might be interested in her vehicles, and he had gone and met the lady and her husband a week or two later. He could not remember their names other than that the woman’s husband’s first name had been Mr L or Mr M. Mr L or Mr M had been suffering from a medical condition, and the woman told the Husband that she was preparing for his passing and wondered if the Husband could sell the vehicles. They asked about the facility age and the Husband told them to ‘add a small amount on’ when it was sold. The Husband had been given the woman’s phone number, which he had put in the vehicles along with photographs to give to anyone who was interested. Despite his evidence that the woman had asked him to sell it, the Husband was unable to say whether the vehicles had been advertised for sale and agreed that he had simply stored it for an indefinite period. He said that when Ms F had decided to purchase some vehicles, they realised the Husband had the vehicles in question in his possession and they decided to ‘start here.’ He then spoke with the couple’s son, whose name he could not recall, and agreed on a price, which he also could not recall, but which he thought had been in the vicinity of $5,000 or $8,000. This had occurred after the Husband had offered ‘a random amount’ after doing some research. He had then met the son in a place which might have been a shopping centre, but he could not recall. The Husband had made no effort to confirm that the son owned the vehicles or had the right to sell it and ‘just assumed.’ He made no effort to acquire it at no cost in return for having stored it for years without charge. Once again, the Husband paid in cash provided to him by Ms F from the container in the wardrobe.
The circumstances of acquisition of Vehicle 4 were unexplained.
The Wife deposed that she had requested evidence of Ms F’s ownership of the three vehicles prior to their alleged sale to the fund and no such evidence had been provided. No such evidence was provided to the Court. The Husband’s evidence was that he had simply agreed on the prices with the respective owners of the vehicles and completed the purchases with cash provided to him by Ms F, and that no invoices had been obtained or requested by Ms F at the time of her purchase of the vehicles because ‘there was no need for it.’ He denied having retained any evidence of the transfer of ownership or having required any evidence to satisfy himself that the persons selling the vehicles had the right to do so, having instead simply ‘assumed.’ The suggestion that such significant purchases would be made without obtaining any evidence of the transactions in question or ownership of the assets strained credibility.
Similarly implausible was the Husband’s evidence that he had been unable to produce the contact details of any of the third parties in question because they had been on an index card which had ‘blown off and flown away’ and that he had no phone or email records of any communications with any of them. He acknowledged that he had not a single record of having spent $47,000 of Ms F’s cash.
The Husband was asked whether he and Ms F had disclosed to the bank the fact that Ms F had approximately $50,000 in a container in her wardrobe when they applied for finance for the purchase of the property at N Street, Suburb O (‘the Suburb O property’) in early 2020, which is considered later in these reasons. His response was that they had been advised by their finance broker not to do so because the bank would have wanted to know where the money had come from. It is difficult to see why such a requirement would have presented a problem if the funds had been Ms F’s savings as the Husband claimed. In any event, this evidence contradicted Ms F’s evidence that she had purchased the vehicles (and thereby expended the funds in question) some time prior to the purchase of the Suburb O property.
The Wife adduced email correspondence demonstrating that the Husband had told the fund’s accountants that the vehicles he asserts were purchased by the SMSF from Ms F had been purchased by an unrelated party.[4] The Husband sought to explain this by saying that Ms F had not been a person related to him at the time of the transactions in question. That assertion is difficult to reconcile with the Husband’s evidence that Ms F’s purpose in entering into the transactions was to replace the Wife as a member of the SMSF.
[4] Wife’s trial affidavit, annexure MK 2.
Ms F gave evidence that:
(a)She had owned three vehicles in 2020. She was unable to say what those vehicles were and was not able to recognise them from photographs.
(b)She understood from the Husband that the vehicles had been stored in the facility prior to the commencement of her relationship with the Husband.
(c)She thought she had paid about $45,000 or $46,000 for the three vehicles. She had not undertaken any independent enquiries as to the values of the vehicles or obtained any valuations and had simply relied on the Husband for ‘advisement’ as to the purchase prices.
(d)She had paid for each of the vehicles in cash.
(e)She did not remember the dates of the transactions in question.
(f)She agreed that she had sold the vehicles to the SMSF in February 2020 ‘if that’s the date.’
(g)She had not met the people with whom she had entered into the transactions to purchase the vehicles, as the Husband had undertaken all the transactions for her and she had simply provided him with the cash for that purpose.
(h)She had not been provided with receipts for the purchases or even the names of the persons with whom she had entered into the transactions.
(i)There had been no written contract or other documentary evidence demonstrating the transfer of ownership of the vehicles to her at the time she acquired them. She had relied upon a ‘handshake’ and a ‘gentlemanly agreement’ with these people whom she had never met or spoken to.
(j)She had never driven any of the vehicles. She had purchased them variously as ‘an investment,’ as ‘something we could do together,’ because she hoped to obtain her transport licence and eventually drive them, so that she and the Husband could ‘do them up and sell them’ and because she had hoped that her father, who resides in the UK, could be involved.
(k)These transactions were the only times in her life she had bought or sold vehicles.
(l)The cash used to purchase the vehicles had been kept by her as cash at home and stored, not in a safe, but in a container in her wardrobe.
(m)The cash had been derived from ‘working,’ ‘selling and buying’ and from having sold her car, for which ‘someone came and gave [her] cash,’ although she also said that the proceeds of sale of the car had been deposited into a bank account and had not been retained as cash.
(n)She had decided to sell the vehicles to the superannuation fund because ‘you obviously need two trustees,’ the ‘initial discussion’ was that after the super fund between the Husband and the Wife was going to be ‘split,’ she would ‘invest in the fund with the vehicles,’ but then when it ‘turned nasty,’ she decided to ‘take the money out or not invest,’ ‘which was when we invested into the self-managed super fund with the vehicles.’ This explanation was nonsensical.
(o)She did not remember why she had written receipts for the purported sale of the vehicles, and did not remember where the receipt book had come from. She assumed she had written the receipts herself but could not remember. Upon being shown the receipts, she confirmed that they were written in the Husband’s handwriting. She did not remember whether she had seen the receipts when they were created.
(p)She had signed a contract for the purchase of the Suburb O property in early 2020 and had needed to raise approximately $48,000 to pay the deposit, but it was merely a coincidence that she had purportedly sold the vehicles to the superannuation fund for an amount close to that amount earlier that year, and she had raised the deposit not from the sales of the vehicles but by way of a refinance of the Suburb E property. Upon being presented with bank statements, she revised her evidence and admitted that the funds that had gone to the conveyancer had been funds she had received for the purported sale of the vehicles to the SMSF and that the funds from the refinance had stayed in her account and been used ‘to purchase things.’
(q)Despite acknowledging that they must have been people known to the Husband, as on her version of events, they had stored their vehicles in the facility, and despite claiming to have asked him, she denied any knowledge of the identities of any of the persons from whom the vehicles had purportedly been purchased. She described them as ‘past people who had, you know, stored things.’
Under cross-examination, the Husband directly contradicted Ms F’s evidence that the funds she received from the SMSF had been used for the purchase of the Suburb O property.
The Husband acknowledged under cross-examination that the plan for Ms F to ‘roll’ funds or assets into the superannuation fund had not required her to invest in vehicles.
As detailed later in these reasons, agreement was reached prior to trial that Ms F would pay the sum of $50,000 to the Wife. The Husband’s position taken at trial was that the sum of $50,000 to be paid by Ms F was by way of reimbursement of the funds paid to her from the SMSF. That position does not sit well with the evidence of the Husband or Ms F with respect to the nature of the transactions in question.
In summary, the Husband’s evidence was that in at least two separate instances, separate strangers had approached him and then left the vehicles in his possession for years with no or minimal contact and without paying any storage costs, and had later agreed to sell the vehicles to Ms F at or around the same time as each other without any documentary evidence, following which the Husband had become unable to contact any of them. The Husband acknowledged that his evidence was that the vehicles in question had all been sitting in the facility for years until they had all suddenly been sold to Ms F at around the time that he and Ms F had required funds to purchase the Suburb O property but denied that he had removed funds from the SMSF for the purpose of assisting with that purchase. The Husband’s evidence in this regard was entirely implausible and lacking in credibility. I reject it. I am satisfied that, as alleged by the Wife, the vehicles in question were owned by the Husband prior the transactions involving Ms F and that the purported purchases from Ms F were concocted for the purpose of accessing funds from the SMSF.
Transfers to Husband’s K Bank account
The direct or indirect transfers totalling $44,420 from the SMSF to the Husband’s K Bank account with which the Wife took issue were as follows:
(a)A payment of $8,750 on 18 September 2019 from the J Bank account held by the SMSF to ‘P Company,’ which was followed by deposits of $3,750 and $5,000 from P Company into the Husband’s K Bank account on 27 September 2019;
(b)A payment of $4,920 from the J Bank account held by the SMSF on 7 November 2019 with the description ‘P Company,’ which was accompanied by a payment on the same day in the same amount into the Husband’s K Bank account with the descriptor ‘payment from P Company;’
(c)Payments of $20,000 on 31 December 2019 and $2,500 on 2 January 2020 from the SMSF to the Husband’s K Bank account; and
(d)A transfer in the sum of $8,250 out of the account held by the SMSF on 5 February 2020, and a corresponding transfer of the same amount into the Husband’s K Bank account on the same day.
With respect to the transactions involving P Company, the Husband simply agreed with the Wife’s evidence that the transactions in question had occurred.[5] Counsel for the Wife submitted that in circumstances in which the Husband said nothing in response to the Wife’s allegations other than to confirm that the transactions had occurred as alleged, the only available inference is that he accessed those funds from the SMSF for his own purposes. I accept that submission.
[5] Husband’s trial affidavit, paragraph [116.1].
The Husband’s evidence was that the payments totalling $22,500 in December 2019 and January 2020 were for the purpose of payment to a Mr Q for the purchase of Vehicle 5 purchased by the SMSF from Mr Q. The Husband produced an invoice purportedly from Mr Q dated 5 January 2020[6] as evidence of the sale. The Wife alleged that Vehicle 5 was in fact owned by the Husband and not by any Mr Q. She deposed that prior to the transactions in question, the Husband had expended funds on the vehicle in question, including by having it fitted with custom designed parts.
[6] Wife’s trial affidavit paragraph [50.3].
Under cross-examination, the Husband asserted that the son of the owner of this vehicle had approached him about lessons after being given his name by a training centre, and upon being informed that the Husband was not a teacher, asked if the Husband was interested in purchasing the vehicle. The Husband said no, but contacted the son later and said he might be interested in using it in a ‘learning environment.’ After seeing the vehicle, the Husband determined that it was in no state to be used but offered to help rebuild it, and the son brought it to the facility for that purpose. The Husband said that the arrangement was that he would keep the invoices associated with restoring the vehicle and would be repaid at a later date. He did not charge for his labour and did not charge a storage fee. After the Husband had finished the work and expended around $22,000 so doing, the man had moved ‘somewhere past [Town R]’ (the Husband could not remember where), and no longer wanted the vehicle, so he told the Husband simply to keep it. The Husband was not otherwise reimbursed for his expenditure on the vehicle. The Husband said he then sold the vehicle to the SMSF for the amount he had spent on it. His evidence in this regard directly contradicted the evidence in his trial affidavit[7] that certain vehicles (including the Vehicle 5) had not been owned by him.
[7] At [106].
This was, in effect, evidence that a third stranger had simply left a vehicle belonging to them in the Husband’s possession for an extended period of time before an opportunity coincidentally arose for the Husband to acquire the vehicle at a time after the parties’ separation and proximate to the purchase of the Suburb O property. This evidence lacked credibility on its own but was particularly difficult to accept in conjunction with the Husband’s evidence with respect to the vehicle purportedly purchased by Ms F, as discussed earlier in these reasons.
Although the Husband gave evidence that he had retained the relevant receipts and maintained a spreadsheet itemising the costs incurred in relation to the vehicle for the purpose of seeking reimbursement, no such documents were disclosed. He sought to explain this by saying that he did not know which computer the spreadsheet was on. The Husband denied having received a receipt or any other evidence of ownership of the vehicle.
The Husband acknowledged having made posts in an online forum in 2016 in which he said ‘I have just taken ownership of a [vehicle]…’; ‘I have just purchased a lovely [vehicle]…’; and in early 2016 in which he referred to the vehicle as ‘mine’ and ‘the one I have now.’[8] He sought to explain having told the forum he had purchased the vehicle in 2016 as having made a ‘generic post’ which was ‘not meant to be factual.’ When asked whether it had been a lie, he inexplicably said that it had been a ‘generalisation.’
[8] Wife’s trial affidavit, annexure MK 9.
When it was put to the Husband that the only reason he would have done the work on the vehicle free of charge was that it belonged to him, he denied that and said that he loved doing it. Counsel for the Wife submitted that it was inherently unlikely that the Husband would have dedicated the time he had to restoring the vehicle if it had been owned by a third party. I accept that submission, particularly in light of the Husband’s evidence that the third party in question was a stranger.
Despite the legitimacy of the purported transactions with Mr Q being a significant issue in dispute in the proceedings, when asked who Mr Q was, the Husband answered that he had ‘heard the name’ but did not know. When a copy of the invoice purportedly issued for the purchase of Vehicle 5 was put to him, he then said ‘he would be the guy I purchased it from.’ He was unable to explain why there was an invoice from Mr Q to the SMSF when the funds had been transferred from the SMSF to the Husband’s personal bank account and not to Mr Q. He accepted that the invoice purportedly created by Mr Q contained a clear error in Mr Q’s own address. He denied having manufactured the invoice. That denial was not convincing.
When asked why the vehicle had not been returned to its owner in 2018 or 2019, being the time from which the Husband asserted that it had been in good condition, the Husband responded ‘maybe I couldn’t get in contact with him, he was quite aloof.’ He denied having had a contact phone number for Mr Q or having emailed him. He later contradicted this evidence and said that he had emailed the spreadsheet of expenses and associated receipts to Mr Q. This assertion also undermined his claim to have been unable to find the spreadsheet for lack of knowledge of which computer it was saved on.
The Husband accepted that around the time of this transfer, he had needed to clear his credit card debt for the purpose of his finance application with respect to the purchase of the Suburb O property. He also accepted that of the funds transferred from the SMSF into his personal account, he had transferred $18,000 onto credit cards.
The Husband’s evidence with respect to the $8,250 transferred on 5 February 2020 was that the funds had been applied to the purchase of spare parts from the same Mr Q for the purpose of use with Vehicle 5 and a vehicle owned by the Husband personally. Despite having deposed in his trial affidavit to having purchased the parts from Mr Q, having produced an invoice to that effect, and having corresponded with the Wife’s solicitor with respect to that purported purchase,[9] in the witness box, the Husband denied knowledge of who had owned the parts prior to his purchase of them and said he could not recall whether it had been from the same person as Vehicle 5. He later revised this evidence as having been that he could not recall who had dropped them off to him.
[9] Wife’s trial affidavit, annexure MK 10.
The Wife deposed that the Husband had owned and used the parts during their relationship. The Husband volunteered that he had a video of the parties’ youngest daughter sitting on them when she was about 3 or 4 years of age, meaning that he had had them in his possession in approximately 2015 or 2016 despite the invoice he had produced demonstrating their purchase having been dated early 2020.[10] He denied having owned them or treated them as his own despite having had them modified for use with his own vehicles and insisted that they had been owned by a third party.
[10] Wife’s trial affidavit, annexure MK 5.
Despite only having been able to ‘presume’ that Mr Q was a real person when cross-examined with respect to the purchase of Vehicle 5, the Husband confidently asserted in the context of the parts that both he and the Wife had met Mr Q. He was not able to recall any conversation he had had with Mr Q in relation to the purchase of the parts and could only ‘presume’ there had been one. He denied having created the invoice. He asserted that the transfer of the funds from the SMSF had been for the purchase of the parts and said that he himself had sold them to the fund. When asked why the fund had paid him when his evidence was that the parts had not been owned by him, he responded that it ‘went back into the funds for the work on the vehicles’ and had been to reimburse him (and the Wife) for the funds spent on Vehicle 5. This evidence made little sense in light of the separate invoice purportedly issued by Mr Q with respect to that vehicle, or at all. When reminded that his evidence had been that he had spent approximately $20,000 on the work on Vehicle 5, he retreated from that evidence, indicating it had merely been a ‘guestimate.’ The Husband’s story that work on Vehicle 5 had somehow come to be represented in an invoice relating to parts was entirely unexplained.
The Husband had no satisfactory explanation for why he had presented an invoice to the accountants for the SMSF suggesting that $8,250 had been paid to Mr Q if that had not been the case. Despite his earlier claim of lack of recollection of interactions with Mr Q, the Husband gave evidence that he had requested an invoice from him. The Husband denied having manufactured the Mr Q invoices to hide the removal of $30,000 from the SMSF. This denial was not credible.
Counsel for the Wife emphasised that the Husband had admitted that the funds with respect to the transactions allegedly involving Mr Q had been paid to him and had not been paid in accordance with the invoices. He submitted that the Husband’s evidence with respect to those transactions should be rejected. I agree.
Conclusions regarding transfers from SMSF
Counsel for the Wife submitted that the evidence as a whole led to the conclusion that the Husband had embarked on a course of conduct designed to reduce the liquid assets of the fund and replace them on paper with assets he already owned. A comparison of the financial accounts prepared by the accountants on the Husband’s instructions[11] and the valuation of the assets of the fund prepared for the purposes of these proceedings[12] demonstrates a reduction in the total value of the cash and shares held by the fund between the financial year ending 30 June 2018 and the date of trial, particularly in relation to managed investments and shares in listed companies.[13] Counsel emphasised that each of the assets which the Wife alleged were owned by the Husband during the relationship were admitted by the Husband to have been located in the facility at all material times. Counsel for the Wife also emphasised the coincidence of the transactions in question and the Husband’s need to clear his credit card debt in order to undertake the purchase of the Suburb O property.
[11] Exhibit H2.
[12] Affidavit of Wife filed 25 September 2023, annexure MK 1.
[13] As outlined in affidavit of Wife filed 25 September 2023, paragraph [4].
I accept the submissions of Counsel for the Wife and find that the Husband:
(a)Owned the vehicles purportedly purchased from Ms F prior to the transactions in question and concocted those transactions in order to remove funds from the SMSF;
(b)Owned the assets purportedly purchased from Mr Q prior to the transactions in question and concocted those transactions in order to remove funds from the SMSF; and
(c)Improperly transferred a total sum of $92,170 from the SMSF to himself and Ms F.
Other conduct with respect to the SMSF
In addition to the transactions outlined above, the Wife points to evidence of improper use of the facility by the Husband and a failure by him to operate the ownership thereof in a manner consistent with his obligations with respect to the SMSF which include refraining from personal use of the assets of the fund and using the fund for the purpose of implementing an investment strategy.
It is apparent from the evidence of both parties that the Husband has used the facility for personal use, including storage of the vehicles that are owned personally and not by the SMSF, together with storage of Vehicle 6, camping equipment and other recreational equipment. His evidence (albeit that this evidence has not been accepted by the Court) was that he had also allowed multiple third parties to store vehicles there over extended periods of time, both before and after separation, without paying rent to the SMSF. The Husband alleged that the Wife had likewise used the facility for personal use. In the absence of supporting evidence, I do not accept this assertion.
In addition to those third parties in relation to whom the Husband’s evidence has been rejected, the Husband admitted (and the Wife accepted) that a vehicle owned by a Mr S had been stored in the facility and that not only had Mr S not been invoiced for or paid rent, but the Husband had in fact performed repair work on the vehicle free of charge. Although the Husband was evasive when questioned about the period for which this had occurred, the vehicle was in the facility in 2017 and would appear to have been stored there for at least 5 years. The Husband asserted under cross-examination that Mr S would pay rent when the time spent by his vehicle in the facility came to an end at some unknown time in the future. He said that there was no agreement as to the quantum of the rent to be paid, just that ‘an amount would be paid.’ This evidence was implausible but even if true, indicated conduct inconsistent with the Husband’s obligations with respect to the fund. Furthermore, as submitted by Counsel for the Wife, if this evidence was true, the failure on the part of the Husband to disclose the expected future income constitutes an unsatisfactory failure on the part of the Husband to comply with his disclosure obligations.
Notwithstanding his evidence of storage of vehicles belonging to numerous third parties, the Husband admitted under cross-examination that the only rental income that had been received by the fund for use of the facility for storage had been approximately $2,000 received over ‘a few years’ from a Mr T for storage of a vehicle. Counsel for the Husband submitted that the Wife had made no complaint about this over the years. Counsel for the Wife submitted that this is of no moment in circumstances in which it is common ground that it was the Husband who managed the SMSF and its finances during the parties’ relationship. I accept that submission.
The Husband gave evidence that he had been ‘advertising’ for a tenant for the facility, with a dream of leasing it to a business which would operate a training centre, but that the advertising had involved ‘word of mouth’ and not any actual advertisements, and he subsequently admitted that it had never been advertised. No tenant was found. The Husband admitted that the cost of ownership of the facility, being a regular storage maintenance fee which included insurance and other expenses, ‘most likely’ exceeded the income generated by it.
The Husband’s evidence with respect to the training centre proposal was confused and contradictory. He indicated both that he had a ‘dream’ of running a training centre and had been doing research and talking to people with similar businesses; and that his intention was simply to rent the facility and associated vehicles to a third party tenant who would pay him rent and operate their own training business.
The Husband also gave evidence that he had hoped to lease out Vehicle 7 owned by the fund for day trips, but that plan, too, had failed to eventuate. He admitted that he had not advertised the vehicle as being available to be leased and that he had spent approximately $73,000 of the funds of the SMSF on the purchase of and improvements to that vehicle without having generated any income from it.
I accept the submission of Counsel for the Wife that in using the assets of the SMSF in the way that he has and in failing to operate the fund in accordance with an investment strategy, the Husband has not only exposed the Wife to risk of financial consequences but has deprived her of the opportunity to share in the benefit of proper growth in the fund.
I note that even if the Husband’s evidence as to the various transactions between the SMSF and Ms F, between the SMSF and himself and between the SMSF and various other third parties had been accepted, this would have been evidence of conduct which, on the face of it, was contrary to his obligations with respect to the operation of the SMSF. Furthermore, it is evident that the Husband did not provide full disclosure to the fund’s accountants with respect to his dealings with the SMSF, even on his own version of events. For example:
(a)as referred to above, the Husband falsely told the fund’s accountants that the transactions involving Ms F had been with an unrelated party;
(b)he acknowledged under cross-examination that he had not told the accountants of his claim to have spent $20,000 of his own funds restoring vehicles and then reimbursed himself from the fund; and
(c)it was apparent from the evidence given by the Husband that he had merely presented the Mr Q invoices to the accountants without providing them with any information about his own dealings with the funds in question. In particular, he had not told the accountants that the funds had been transferred out of the SMSF to his own account and not to Mr Q as the invoices suggested. Nor had he told them of his story that the assets he claimed to have purchased from Mr Q had been owned by the Husband himself immediately prior to their purported acquisition by the fund.
As a result, the mere fact that the accountants, who had been misled by the Husband, believed the accounts to have been properly prepared can provide no comfort to the Wife or to the Court.
The evidence as a whole, including the evidence of the Husband, leads to the conclusion that the Husband has engaged in improper conduct with respect to the SMSF and that the contents of the accounts prepared by the accountants on his instructions are inaccurate, through no apparent fault of the accountants. In such circumstances, the Wife’s refusal to sign the accounts was entirely reasonable. The Husband suggested that the Wife should have done ‘something to rectify it’ if she held concerns. However, in light of the position taken by the Husband, I am unable to accept that any option was realistically available to the Wife to achieve that end other than the one she pursued, namely seeking findings from the Court with respect to the Husband’s conduct.
THE SUBURB O PROPERTY
In early 2020, following the parties’ separation, the Husband and Ms F signed a contract for the purchase of the Suburb O property land for the sum of $320,000. Settlement of the sale took place in mid-2020. The property was and remains registered in the names of the Husband and Ms F as joint tenants. The purchase was funded by way of a deposit in the sum of $2,500 paid from an account held by Ms F in early 2020 and was otherwise funded by way of transfers of $46,115.82 from Ms F’s bank account in mid-2020[14] and a U Bank mortgage loan jointly taken by the Husband and Ms F. The funds borrowed by way of mortgage were also applied to the subsequent construction of a house on the land. A further $40,000 was drawn on the U Bank mortgage in late 2022 for the purpose of finalising the build.
[14] Wife’s trial affidavit, annexure MK 15.
The Wife’s unchallenged evidence, which I accept, was that the Husband had falsely advised her, via their respective solicitors, that it was Ms F who had purchased the property and that his name was not registered on title. Not only is the Husband a registered proprietor, but he admitted by way of his Financial Statement that he makes mortgage payments with respect to this property and asserted by way of his case outline that he has applied his post-separation earnings towards the purchase of the land and subsequent development of a home on that land together with Ms F. The Husband plainly has an interest in the Suburb O property. It was ultimately agreed that this interest would be included at 50% of the equity in the property.
The Husband deposed that Ms F had provided the entire deposit from her savings and from refinancing the Suburb E property. Ms F gave evidence that the deposit had been paid from a refinance of the Suburb E property before admitting, when confronted with irrefutable documentary evidence, that the deposit for the purchase of the Suburb O property had in fact been funded by the funds she received from the SMSF, as had been alleged by the Wife.
The Husband asserted that the Wife had made no direct or indirect contribution to the purchase of the Suburb O property. In light of the evidence that the funds applied to the purchase were derived from the SMSF and my finding that this was enabled by illegitimate transactions, that position is not sustainable.
MS F’S INVOLVEMENT IN THE PROCEEDINGS
Ms F was joined to the proceedings by an order made by consent on 19 December 2023. At that time, the Wife’s application sought a declaration that the whole of the equity in the Suburb O property was held by the Husband and the Wife.
The parties and Ms F subsequently agreed that a payment was to be made by Ms F to the Wife in the sum of $50,000, such payment to be in full and final satisfaction of any claim the Wife may have with respect to Ms F’s 50% share of the equity in the Suburb O property. The Wife’s claim with respect to the Suburb O property was thereafter limited to the Husband’s 50% of the equity in that property. The parties’ agreement included the payment from Ms F to the Wife being made contemporaneously with the settlement provided for by the final orders ultimately made.
This agreement was reflected in interim consent orders made on 3 May 2024. Those orders also provided for Ms F’s removal as a party to the proceedings and she did not participate in the trial. It was agreed at trial that although the orders of 3 May 2024 purported to characterise the payment to be made from Ms F to the Wife as an interim property payment pursuant to section 79 of the Act, this characterisation was not properly described, and it was agreed that the order for the payment in question is to be discharged and remade as part of the final orders which will ultimately be made.
THE LEGAL FRAMEWORK
Orders under section 79 of the Act altering the property interests of parties may only be made if the Court is first satisfied, pursuant to section 79(2), that it is just and equitable to make such orders.[15] If the Court determines that it is just and equitable for the property interests of the parties to be altered, section 79(4) sets out the matters the Court must take into account in considering what order, if any, should be made. The Court must identify and assess the parties' contributions within the meaning of sections 79(4)(a)-(c) and then take account of the relevant matters referred to in sections 79(4)(d)-(g) and 75(2).
[15] Stanford & Stanford [2012] HCA 52; (2012) 247 CLR 108.
Whether it is just and equitable that orders be made
The parties agree that it is just and equitable that orders be made altering their interests in their property. However, that alone is insufficient. The Court must be satisfied that it is just and equitable that an order be made.
In Stanford & Stanford (‘Stanford’)[16], the High Court of Australia made it clear that the Court must not conflate its determination pursuant to section 79(2) of the Act with its determination pursuant to section 79(4) of the Act. These are separate enquiries, and the Court must not start with an assumption that one party or the other has the right to have their property divided between them.
[16] [2012] HCA 52; (2012) 247 CLR 108.
The parties no longer live together and are no longer in a relationship but their finances remain intertwined. Consistently with section 81 of the Act, each has a legitimate desire to end their financial relationship. If there were no adjustment to the legal ownership of their property interests, there would be no justice and equity to the parties. This is clearly one of the ‘vast majority of cases’ referred to by the plurality in Stanford, in which the requirements of section 79(2) of the Act are readily satisfied. It is plainly just and equitable to make an order pursuant to section 79(4) of the Act in these proceedings for a division of property between the parties.
One pool or two?
I was urged by counsel for the Wife to adopt a ‘single pool’ approach, such that the parties’ superannuation and non-superannuation interests were treated collectively. Counsel for the Husband expressed a preference for the more usual ‘two pools’ approach, with superannuation treated separately from non-superannuation assets.
It is well-established that the manner in which superannuation is to be treated, including whether it is to be split, and if so, the proportions of such a split, is a matter for the Court’s discretion.[17] The ‘two pools’ approach adopted in C & C[18] and other authorities is not mandatory.[19] Relevant considerations identified in the authorities include the value of the property of the parties and the proportion of their assets which are comprised of superannuation, and the nature, form and characteristics of the superannuation held by the parties. The different nature of superannuation compared with non-superannuation assets must be taken into account.[20] The overriding consideration is justice and equity.
[17] BAR & JMR (No 2) [2005] FamCA 386; (2005) FLC ¶93-231; D & D [2006] FamCA 199 (2006) FLC ¶93-256; L & L (2006) FLC ¶93-254; Mayne & Mayne (No 2) [2012] FamCAFC 90; (2012) FLC ¶93-510; Paul & Paul [2012] FamCAFC 64; (2012) FLC ¶93-505; Bishop & Bishop [2013] FamCAFC 138; (2013) FLC ¶93-553.
[18] C & C[2005] FamCA 429; (2005) FLC ¶93-220.
[19] Palumbo & Mandel [2019] FamCAFC 228; (2019) FLC ¶93-929; Paul & Paul [2012] FamCAFC 64; (2012) FLC ¶93-505.
[20] Trevi & Trevi [2018] FamCAFC 173; (2018) FLC ¶93-858 at [98].
In the present case, as submitted by Counsel for the Wife and as outlined in these reasons, there has been significant intermingling by the Husband between the superannuation and non‑superannuation assets of the parties. The manner in which the Husband has accessed and used the resources of the SMSF has had the effect that the SMSF has not retained the usual investment quality of superannuation.
Furthermore, while it is common ground between the parties that at the time of their separation, their only assets of significance were the assets now held by the SMSF and the Husband’s interest in Super Fund 2, and the now-available non-superannuation assets are predominantly assets which were acquired by the Husband following separation, it is of significance that:
(a)I have found that many of the assets now held by the SMSF were owned by the Husband personally during the parties’ relationship and have been converted from non‑superannuation to superannuation assets by the unilateral actions of the Husband; and
(b)the Husband has been assisted in acquiring non-superannuation assets in his name by his improper dealings with the assets of the SMSF.
It is also noted that notwithstanding his preference for a two-pool approach, the aide memoire relied upon by Counsel for the Husband at the conclusion of the trial and his submissions with respect to contributions and 75(2) factors in fact reflected a single pool approach.
Ultimately, however, it is not necessary to determine this issue until it comes time to determine the percentage-based entitlements of each of the parties and the final orders to be made.
ASSETS AND LIABILITIES
Issues to be determined
By the conclusion of the trial, the vast majority of the assets and liabilities of the parties and their values had been agreed between the parties. The items in relation to which there was no agreement are considered in the following paragraphs.
Motor Vehicle 1
The Husband owned or owns Motor Vehicle 1. The Husband asserted that he had sold the vehicle to Ms F for $5,000, being the best price he was able to obtain for it. The Wife asserted that the market value of the vehicle was $7,775. This was based on a Redbook assessment, being the most reliable evidence of value available to the Wife and therefore the Court in circumstances in which the Husband had unilaterally disposed of the vehicle. Given the unsatisfactory nature of many of the transactions entered into between the Husband (or entities under his control) and Ms F and their evidence in relation thereto, as discussed earlier in these reasons, the Court can have no confidence that the sale took place as asserted, that the sale price was as asserted by the Husband, or that there was any reasonable basis for the assessment of the sale price. I accept the submission of Counsel for the Wife that the Husband’s unilateral dealing does not constitute evidence of value and the only evidence of value before the Court is that relied upon by the Wife. The value of Motor Vehicle 1 shall therefore be included at $7,775.
Husband’s K Bank account
A further area of dispute between the parties related to the balance of the Husband’s K Bank Account, account number ending #...79. It was common ground between the parties that the account had held a balance of $14,505 at 31 March 2024 (less than two months prior to trial), which had been reduced to $84 at the time of trial.
The Husband gave evidence that he had applied the funds to repayment of Ms F’s credit card, which had been used to pay for expenses of H Pty Ltd relating to an airshow. When asked why H Pty Ltd had not simply paid the expenses itself, the Husband responded that two signatures were required to process payments from the company and the expenses had needed to be paid more quickly than that requirement allowed. Although Counsel for the Wife disputed the legitimacy of some of the asserted reimbursements, it was not ultimately necessary to determine this issue because the reality was that the funds in question either had been or were to be returned to the Husband by way of reimbursement from H Pty Ltd and they therefore remained funds to which the Husband was entitled and had not in fact been dispersed, other than temporarily. As such, the balance of this account is to be included at $14,505.
Addback sought by Wife
The Wife sought a notional addback in the sum of $92,170, representing the sums of $47,750 transferred to Ms F and $44,420 transferred to the Husband from the SMSF, as outlined earlier in these reasons.
As the Full Court of the Family Court of Australia (‘the Full Court’) held in AJO & GRO,[21] there are three clear categories of case in which addbacks may be considered: where funds that would otherwise have been available for distribution have been expended on legal fees,[22] where there has been a premature distribution of assets,[23] and in circumstances of wastage.[24] It is well established that addbacks are the exception rather than the rule[25] and that reasonable expenditure will not generally be added back.[26] Consideration of expenditure by one of the parties is, in some cases, more appropriately undertaken pursuant to section 75(2)(o) of the Act.[27]
[21] (2005) FLC ¶93-218.
[22] DJM & JLM (1998) FLC 92-816; NHC & RCH [2004] FamCA 633; (2004) FLC ¶93-204.
[23] Such as in Townsend & Townsend (1995) FLC ¶92-569.
[24] As in Kowaliw & Kowaliw (1981) FLC ¶91-092.
[25] C & C [1998] FamCA 143; Trevi & Trevi [2018] FamCAFC 173; (2018) FLC ¶93-858.
[26] NHC & RCH [2004] FamCA 633; (2004) FLC ¶93-204; AJO & GRO (2005) FLC ¶93-218; Trevi & Trevi [2018] FamCAFC 173; (2018) FLC ¶93-858.
[27] C & C [1998] FamCA 143; AJO & GRO (2005) FLC ¶93-218; Browne & Green [1999] FamCA 1483; (1999) FLC ¶92-873.
As referred to earlier in these reasons, the Husband’s position was that the sum of $47,750 was to be reimbursed by way of the agreed payment of $50,000 to be made by Ms F to the Wife. The Wife’s position in this regard was that the payment from Ms F represented recognition of the fact that Ms F had had the benefit of the use of funds of the parties’ marriage, which had provided her with a ‘stepping stone’ in relation to her financial circumstances, and that it remained open to the Court to add back the funds removed from the SMSF and paid to Ms F notwithstanding the order requiring the payment of $50,000 from Ms F to the Wife. He emphasised that the payment from Ms F was to be made to the Wife directly and not as a reimbursement to the SMSF.
There is no express statement to the effect that the payment from Ms F was designed to be a reimbursement of the transfers of $47,750 in the notations to the orders made on 3 May 2024, which recorded the terms of the agreement between the parties and Ms F, and the Court is not in a position to look behind those notations and infer such an intention on the part of any or all of the parties to that agreement. I note, however, that this characterisation of the payment from Ms F sits uneasily with the Husband’s denial of wrongdoing with respect to the SMSF and with his evidence and the evidence of Ms F as to the nature of the transactions between Ms F and the SMSF. The Husband’s position in this regard bolsters the findings made earlier in these reasons with respect to the Husband’s dealings with the fund.
Nonetheless, the fact that $50,000 is to be paid by Ms F to the Wife cannot be ignored when consideration is given to the treatment of the transfers made to Ms F, and in my view, to add the $47,750 back in circumstances where the payment is to be made by Ms F would be to double count. As such, the sum of $47,750 will not be notionally added back.
In my view, the sum of $44,420 transferred from the account held by the SMSF to the Husband’s K Bank account, which were acknowledged but not explained by the Husband, plainly represent a premature distribution to the Husband consistent with the principles enunciated in Townsend & Townsend (‘Townsend’).[28] The Husband adduced no evidence to suggest that the funds had been expended on reasonable or necessary living expenses such as would warrant caution with respect to an addback[29] and gave no legitimate explanation for the funds having been removed from the SMSF. There is no evidence to suggest anything other than that this is a circumstance, like that in Townsend, in which the Husband distributed to himself an asset in which the Wife had a legitimate interest. Like in Townsend, particularly when considered in light of the Husband’s conduct in relation to the parties’ assets more generally, I consider that it would be unjust not to notionally include that asset as part of the assets available for distribution between the parties of which the Husband has already had the benefit.
[28] (1995) FLC ¶92-569. See also AJO & GRO (2005) FLC ¶93-218.
[29] Browne & Green [1999] FamCA 1483; (1999) FLC ¶92-873; Gabel & Yardley [2008] FamCAFC 162; (2008) FLC ¶93-386; Grier & Malphas [2016] FamCAFC 84.
I have turned my mind to the risk that such an addback might, to some extent, represent double counting of the contents of the Husband’s K Bank account, which is to be included separately. However, I note that:
(a)a period of over four years has passed since the last of the transactions the subject of the addback;
(b)the Husband’s evidence was that $18,000 of the funds to be added back had been transferred by him onto his credit card ahead of the purchase of the Suburb O property;
(c)the Husband, had the opportunity to adduce evidence as to what became of the balance of the funds transferred into his K Bank account and did not do so; and
(d)the Husband, who was on notice that the inclusion of both sums was sought by the Wife, did not assert that to include both sums would be to double count.
As such, I am satisfied that these funds should be notionally added back and included in the list of assets and liabilities available for distribution between the parties.
Items to be sold
During the course of the trial, the parties agreed that the following items are to be sold:
(a)Motor Vehicle 2;
(b)Equipment box, household appliances and camping equipment associated with Motor Vehicle 2; and
(c)Motor Vehicle 3.
Conclusion as to assets and liabilities
As a result of the findings outlined above and having regard to the values agreed between the parties, I find that the assets and liabilities of the parties are as follows:
Assets Ownership Value Husband’s share of N Street, Suburb O Husband $587,500 Motor Vehicle 2 Joint To be sold Equipment box, household appliances and camping equipment associated with Motor Vehicle 2 Joint To be sold Vehicle 6 Joint $5,000 Camping and equipment Joint $950 Vehicle 8 Husband $2,500 Vehicle 9 Joint $2,000 Motor Vehicle 4 Wife $4,825 Motor Vehicle 1 Husband $7,775 V Bank account ending #...44 Wife $14,416 K Bank account ending #...79 Husband $14,505 K Bank account ending #...17 Husband NIL U Bank mortgage offset account ending #...75 (Husband’s share) Husband $3,923 U Bank account ending #...83 (Husband’s share) Husband $25 ANZ account ending #...97 Husband $164 Tools Husband $3,700 Camping and equipment Husband $2,000 Motor Vehicle 5 Husband $11,391 Motor Vehicle 3 Joint To be sold Payment from Ms F Wife $50,000 Addback: funds transferred from SMSF Husband $42,400 Total Assets $TBD Liabilities Ownership Value Husband’s share of U Bank mortgage over Suburb O property (account ending #...5) Husband $424,615 Vehicle loan (for Motor Vehicle 5) Husband $9,500 Total Liabilities $434,115 Net total of non-superannuation assets $TBD Superannuation Ownership Value Super Fund 1 Joint $TBD Super Fund 2 (updated figure to be provided) Husband $TBD Total superannuation $TBD Net total including superannuation $TBD CONTRIBUTIONS
Contributions at commencement of relationship
At the commencement of the parties’ relationship, the Husband owned Vehicle 8. He did not adduce any evidence of its value at that time. The parties otherwise had minimal assets of significance. It was agreed that there should be no adjustment based on initial contributions.
Contributions during the relationship
Both parties were engaged in full-time employment at the beginning of their relationship. The Wife’s evidence was that in the early years, she primarily supported the Husband while he undertook training to become a professional, which ultimately led to a significant increase in his income and earning capacity. Under cross-examination, the Husband acknowledged that at the time the parties commenced cohabitation, prior to qualifying, he had been earning approximately $29,000 per annum. He also acknowledged that the Wife’s severance payment, which she had received upon leaving her employment in Western Australia, to move to Melbourne where the Husband had moved for his career, had been applied to the parties’ support. He did not accept that the Wife had supported him and deposed that the Wife had ‘always contributed a lesser amount financially.’ As a result of my impressions as to the parties’ respective evidence generally, I prefer the evidence of the Wife.
The Husband continued to work full-time throughout the parties’ relationship. The Wife performed the role of full-time homemaker and carer for the parties’ three children from 2007 until approximately 2013 or 2014, at which time she established a business as a self-employed tradesperson. The Husband’s evidence was that he had provided financial assistance to the Wife to establish her business in late 2013. The Wife’s evidence was that from the time of the commencement of her business, she had applied her income towards family expenses such as the groceries and school fees.
Although the Husband deposed that the Wife had contributed little to the household as a result of alcohol and mental health concerns and that he had been required to undertake homemaker and parenting responsibilities as a result, he conceded that the Wife had undertaken the majority of the homemaker and parenting contributions during the relationship, though he asserted that he had been involved.
The Wife’s parents contributed to the cost of the parties’ relocation from Queensland to South Australia in 2008.
The parties agreed that the contributions they had each made up until the time of their separation had been equal. I agree that this assessment is appropriate.
Post-separation contributions
Initially, upon separation, the parties’ three children resided in an equal time arrangement. The Wife has undertaken the full-time care of X since June 2023, and of Y and Z since August 2023.
The Wife gave evidence of having paid the children’s school fees and expenses relating to their extra-curricular activities following separation. The Husband’s evidence with respect to school fees was contradictory and confusing. He deposed both that he had paid for the school fees in accordance with an agreement reached between the parties in May 2019 which provided for equal payment of school fees, and that had ‘paid school fees from time to time.’ He also relied upon a commitment made by the Wife to take sole financial responsibility for the school fees, which tended to suggest that the Wife’s evidence was accurate. The Husband also deposed to paying expenses for extra-curricular activities. The Husband adduced no independent evidence of payment by him of school fees or other expenses. I accept the evidence of the Wife.
The Husband’s evidence was that he had taken and subsequently repaid a ‘debt consolidation loan’ in the sum of $25,000 following separation for the purpose of consolidating debts of the relationship, including finance loans with respect to Motor Vehicle 2, Vehicle 6 and Motor Vehicle 1 and a credit card debt, and that he had applied his post-separation earnings to repayment of matrimonial debts. The Wife alleged that the Husband had provided no disclosure with respect to this asserted debt consolidation loan. In light of the considerable difficulties with the Husband’s evidence with respect to his financial affairs, in the absence of documentary evidence verifying this assertion, I do not accept the Husband’s evidence.
The Husband deposed, and the Wife did not dispute, that all but approximately $6,000 of the balance of his superannuation held with Super Fund 2 had been accumulated by way of post‑separation superannuation contributions.
Counsel for the Husband submitted that the Husband’s post-separation contributions ought to be assessed as having been $307,985, being his half-share of the equity in the Suburb O property, together with the balance of his Super Fund 2 interest, less the sum of $6,000 held by him in that account at the time of separation. I accept the reasoning behind this submission but note that an updated figure for the Husband’s Super Fund 2 interest is to be provided, so the calculation in this regard is not final.
The Husband further claimed to have made a contribution of $50,000 into the SMSF from his post-separation income. The Wife disputed this, alleging that the $50,000 in question had come from the sale of shares and not from the Husband’s income. The Husband adduced no independent evidence demonstrating the source of the funds. As a result of the difficulties with the Husband’s evidence and conduct with respect to the SMSF generally, I do not accept his evidence in this regard.
SECTION 75(2) FACTORS
Prospective considerations
The parties are of similar ages. There is no evidence that either of them suffers any physical health difficulties. The Husband’s evidence was of mental health difficulties including depression suffered by the Wife, which the Wife deposed were well managed. Although there is no expert evidence before the Court with respect to this issue, I accept the Husband’s concession in this regard, though I am not in a position to find that these issues are likely to have a significant impact on the Wife’s financial circumstances into the future.
The Wife is self-employed and operates a business as a sole trader. She works an average of 30 hours per week and earns approximately $25,000 per annum. The Husband alleged that she voluntarily worked part-time and her earning capacity was thus underutilised. The Husband also alleged that the Wife was in receipt of undisclosed and unreported cash income. There was no evidence of these allegations beyond the vague assertions of a witness whose evidence has been found to be unreliable. The Husband did not establish these allegations. The Wife is otherwise in receipt of Centrelink Family Assistance benefit.
The Husband is employed as a professional. According to his Financial Statement, he earns a gross income of approximately $206,000 per annum. He has the benefit of salary sacrificing arrangements which reduce his taxation liability. The fact that the Husband has been in a position to accumulate the significant increase in his superannuation entitlements referred to earlier in these reasons following the parties’ separation is demonstrative of his very significant earning capacity compared to that of the Wife. As submitted by Counsel for the Wife, unlike the Husband, her opportunities to accumulate superannuation into the future will be limited. The differential between the parties’ respective earning capacities is a matter of significance. As the Full Court said in Clauson & Clauson,[30] it has long been recognised that in most cases the most valuable ‘asset’ which a party can take out of the marriage is a substantial, reliable, income-earning capacity.
[30] [1995] FamCA 10; (1995) FLC ¶92-595. See also Best & Best (1993) FLC ¶92-418.
Although it was not disclosed in his Financial Statement, the Husband holds accrued long service leave entitlements of 152.9 days full time and 18.1 days part time.[31] He adduced email correspondence between himself and his employer in which the employer indicated that the entitlement could not be ‘cashed out’ during the currency of his employment.[32] This is a financial resource available to him and shall be taken into account pursuant to section 75(2).[33]
[31] Exhibit H3.
[32] Exhibit H1.
[33] Consistently with authorities including Gould & Gould [1995] FamCA 142; (1996) FLC ¶92-657 and Whitehead & Whitehead [1979] FamCA 41; (1979) FLC ¶90-673.
The Wife contended that the Husband holds a further financial resource in the form of an entitlement to rental income from the Suburb E property, estimated to be $24,500 per annum. Ms F is the sole registered proprietor of this property, which was owned by her prior to the commencement of her relationship with the Husband. The Husband has borrowed against it, ostensibly for the purpose of payment of legal fees relating to these proceedings, and as a result, is liable for repayments towards a mortgage encumbering that property.
Counsel for the Wife submitted that the mortgage repayments made by the Husband constituted evidence of contributions made by him towards it, which could establish an interest in it held by him, thus founding the submission that he held an entitlement to receipt of a share of the rental income. I do not accept that this is the case in circumstances where the mortgage liability in question relates not to the acquisition or improvement of the property but to funds borrowed by the Husband for the separate purpose of payment of legal fees. In my view, rather than a separate financial resource in the hands of the Husband, this income is more appropriately considered as part of a broader consideration of the circumstances relating to the Husband’s cohabitation with Ms F.[34]
[34] Relevant pursuant to s 75(2)(m).
Ms F is employed as a health care worker. According to the Husband’s Financial Statement, she earns $93,600 per annum. She has the care of her teenage son. As outlined above, the Husband and Ms F reside in their jointly owned home and each contributes to the mortgage repayments. The Husband’s Financial Statement confirms that they share various other expenses.
The Wife has the full-time care of the parties’ three children. As discussed above, she pays the children’s school fees and expenses related to their extra-curricular activities. The Husband pays child support to the Wife. Although the parties’ evidence differed slightly as to the precise amount paid, it is in the vicinity of $22,000 or $23,000 per annum. The Husband also pays private health insurance for the children in the sum of $5,142 per annum.
I accept the submission of Counsel for the Wife that the reality of the life lived by the Wife is vastly different from the lifestyle enjoyed by the Husband. I also accept the submission that it is not evident that the Wife will be able to afford to purchase a home for herself and the children, while the Husband has already been able to embark on the purchase of land and build a house with Ms F. I have regard also to the fact that this has been enabled, as I have found, as a consequence of improper conduct on the part of the Husband and Ms F at the expense of the Wife.
Although the Husband initially alleged that the Wife held pension entitlements in the United Kingdom, this assertion was not ultimately pressed at trial.
Other considerations - section 75(2)(o)
The Wife alleged that the Husband had conducted himself throughout the proceedings in a difficult and obfuscatory manner, including failing or refusing to provide disclosure in accordance with his obligations and obstructing her efforts to ascertain the parties’ assets and liabilities and obtain valuations thereof. The Husband admitted that he had chosen not to contribute to the cost of valuations, despite his income being vastly superior to that of the Wife. He provided the entirely unsatisfactory explanation that this had been ‘a choice [he] made at the time.’
The Wife’s evidence was that the Husband’s conduct had included the following:
(a)Retaining and unilaterally selling household goods following separation and failing to account for the proceeds;
(b)Unilaterally changing the bank accounts operated for the purpose of the SMSF, with the result that the Wife was unable to access the accounts or their statements either directly or via the fund’s accountants; and
(c)Failing or refusing to comply properly with his disclosure obligations.
These allegations were denied by the Husband. As a result of my observations of the parties’ evidence generally, I accept the Wife’s evidence with respect to these issues. I note that as one example only, it emerged during the Husband’s cross-examination that he expects to receive rental income from Mr S, which he had not disclosed.
As I have found above, the Husband’s poor conduct in the context of the proceedings also involved:
(a)concocting false transactions with respect to the assets of the SMSF;
(b)fabricating invoices;
(c)giving false evidence; and
(d)colluding with Ms F in order to deprive the Wife of her entitlements in these proceedings.
The Wife sought that there be an adjustment in her favour pursuant to section 75(2)(o) of the Act in accordance with the principle laid out in the line of authorities including Weir & Weir (‘Weir’)[35] and Gould & Gould.[36] In Weir, the Full Court held that:
once it has been established that there has been a deliberate non disclosure … then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.[37]
[35] [1992] FamCA 69; (1993) FLC ¶92-338.
[36] [1995] FamCA 142; (1996) FLC ¶92-657. See also Chang & Su [2002] FamCA 156; (2002) FLC ¶93-117.
[37] At [33].
I accept that the Husband’s compliance with his obligation of full and frank disclosure was inadequate and that he acted in ways which were improper and were designed to frustrate the Wife’s efforts to ascertain the assets and liabilities of the parties. It is plainly as a result of the diligence of the Wife and her representatives that the Court was able to ascertain the assets and liabilities of the parties to the extent which has occurred.
However, the evidence does not support an inference that there remain any additional or hidden assets or resources in the possession or control of the Husband beyond those which were ultimately revealed to the Court. Rather, I consider this is one of a recognised category of cases in which ‘the effect of the non-disclosure was no more than to complicate the fact finding process.’[38] As such, I consider the issues with the Husband’s conduct of the litigation are best considered in the context of any subsequent applications as to costs rather than as an adjustment pursuant to section 75(2) of the Act.
[38] See Franklin & Ennis [2019] FamCAFC 91; Clowes & Konig [2022] FedCFamC1F 565; Fu & Tiao [2023] FedCFamC1F 393.
I have regard to the modest quantum of the assets and liabilities available for distribution between the parties. This factor weighs in favour of a greater adjustment in favour of the Wife than might otherwise have been warranted.[39]
[39] Best & Best (1993) FLC ¶92-418.
OTHER MATTERS
The Wife paid the full cost of the valuations of the assets of the parties, in the total sum of $5,160. She seeks that the Husband’s share of that valuation cost be reimbursed to her as part of the final orders to be made. This was sensibly not opposed by Counsel for the Husband. It is appropriate that this occur.
THE TERMS OF THE ORDERS TO BE MADE
Although final orders are not being made at this stage, there are a number of aspects of the precise terms of the orders sought by the parties which warrant consideration as part of these reasons, particularly as it may be the case that doing so can assist the parties in reaching agreement as to the final orders to be made and avoiding the expense of further contested hearings.
The Wife sought that the final orders ultimately made include:
(a)a payment of $47,750 to be made by the Husband into a superannuation account on her behalf; and
(b)the sum of $44,420 be reimbursed by the Husband into the SMSF.
The first such sum was sought in the form of a payment into superannuation in the hope or expectation that such sum could be characterised as a roll out from the SMSF into another fund held by the Wife and thereby minimise the Wife’s exposure to any penalties arising from the conduct of the Husband and Ms F in the transfer of $47,750 from the SMSF to Ms F. I have regard to the Husband’s position that the sum of $50,000 to be paid by Ms F is effectively designed reimburse the $47,750 removed from the fund, but note that even if accepted, that would have the effect of restoring those funds to the parties’ asset pool but would not address the Wife’s concern with respect to penalties arising from a wrongful early withdrawal of superannuation. Acceptance of the Husband’s position in this regard would not preclude an order of the sort sought by the Wife with respect to restoration to the SMSF.
The second payment was likewise directed to minimising the risk of penalties arising from the Husband’s conduct, by way of restoration of the funds transferred to his K Bank account from the account of the SMSF.
The parties have yet to undertake the process of obtaining advice with respect to the manner in which the identified issues with respect to the SMSF arising from the conduct described in these reasons should be rectified. As such, determination of the precise orders to be made is premature. However, I consider it just and equitable that the orders ultimately made shield the Wife from any negative consequences arising from the Husband’s conduct to the greatest extent possible. This is not a case in which the parties have both benefited from the conduct in question.[40] To the contrary, the Husband’s improper conduct with respect to the fund has been undertaken at the expense of the Wife and with a view to minimisation of her entitlements.
[40] As in Trustee of the Property of Lemnos (A Bankrupt) & Lemnos & Anor [2009] FamCAFC 20; (2009) FLC ¶93-394 and Browne & Green [1999] FamCA 1483; (1999) FLC ¶92-873.
The Husband seeks to retain the facility and the associated shareholding in H Pty Ltd as part of his interest in the SMSF. It is the Wife’s case that these assets will need to be sold in order to effect a just and equitable settlement as between the parties. Counsel for the Husband proposed that the Husband could ‘top up’ any funds necessary to effect a distribution to the Wife of her entitlements in the SMSF by way of a superannuation split from his Super Fund 2 interest. If a just and equitable property settlement can be effected without the need to sell assets which the Husband seeks to retain, this will be done. However, if the sale of the assets held by the SMSF is the only way to ensure a just and equitable outcome for the Wife, such a sale will be inevitable.
CONCLUSION
For all of the reasons outlined above, I make the orders as set out at the commencement of these reasons.
I certify that the preceding one hundred and fifty-five (155) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Parker. Associate:
Dated: 26 June 2024
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