Kirk and Kane

FAMILY COURT OF AUSTRALIA

KIRK & KANE

[2012] FamCA 115

FAMILY LAW - PROPERTY – settlement in relation to marriage – where the husband had significant assets at the commencement of cohabitation – where the wife worked in the husband’s property market business – where there is one child of the marriage – where the wife had three children from a previous relationship – where the husband had one child from a previous relationship – historical valuations of properties held at commencement of cohabitation – valuations of companies owned by the husband

Family Law Act 1975 (Cth)

APPLICANT:

Ms Kirk

RESPONDENT:

Mr Kane

FILE NUMBER:

SYC

409

2009

DATE DELIVERED:

13 March 2012

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Fowler J

HEARING DATE:

28-29 February 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Givney

SOLICITORS FOR THE APPLICANT:

Macpherson & Kelley Lawyers

RESPONDENT:

Mr Kane

Orders

The husband shall within 90 days do all such acts and things necessary to transfer to the wife all his right title and interest in the property presently occupied by her and known as W Street, Suburb E (“W Street”).
The husband shall within 90 days do all such acts and things as may be necessary to discharge any mortgage or charge upon W Street.
Within 90 days the husband is to pay to the wife the sum of $1,218,812.
The husband be declared the sole and beneficial owner of:
(a)       Greater Union Building Society Account No. … 90
(b)       Nissan motor vehicle
(c)       Mazda motor vehicle
(d)       household contents in his possession and control
(e)       motorboat
(f)       John Deere tractor
(g)       livestock in his possession and control
(h)       Commonwealth Bank Account No. … 13
(i)        property at F Street, Town R (“F Street”)
(j)        property at X Street, Town Y (“X Street”)
(k)       property at B Street, Suburb M (“B Street”)
(l)        shares in K Pty Limited and
(m)      shares in S Pty Limited.
The wife be declared the sole and beneficial owner of:
(a)Greater Union Building Society Account Nos. … 47, … 76 and … 00
(b)       shares in Westfarmers Pty Limited
(c)       Toyota … motor vehicle
(d)       jewellery and personalty in her possession and control
(e)       household contents in her possession and control and
(f)       wife’s interim property settlement
The Court noted that:
(a)the husband retains superannuation payment and superannuation entitlements in the K Superannuation Fund
(b)the wife retains her entitlement with Z Superannuation Fund.
In the event the husband fails to comply with all or either of Orders 1, 2 or 3 then the husband shall do all acts and things necessary to sell the property situate at and known as B Street and in respect of such sale the following shall apply:
(a)the husband shall place the property in the hands of a licensed auctioneer to sell the property within two calendar months of the expiration of 21 days from the date of these Orders
(b)if the parties cannot agree at a reserve price at auction then the parties shall appoint the President for the time being of the Australian Institute of Valuers to assess the reserve price at auction and the parties shall be bound by such assessment and the husband shall bear the costs of such assessment
(c) upon sale the then proceeds shall be paid as follows:
(i)in payment of agents commission and legal fees occasioned by the sale
(ii)in payment of goods and services tax if applicable
(iii)in payment to discharge the W Street mortgage
(iv)in payment to the wife of $1,218,812 and interest and
(v)in payment to the husband of the balance if any.
In the event that upon the sale of the property at B Street the husband does not meet the whole of the monies then outstanding to the wife, together with the discharge of the W Street mortgage then the husband shall do all acts and things necessary to sell the property situate at and known as F Street and in respect of such sale the same Orders shall provide as applied to the sale of the B Street property subject to that the property will be placed in the hands of a licensed auctioneer for sale by public auction within two months of the settlement of the sale of the B Street property.
The husband shall indemnify and keep the wife indemnified in respect of the following:
(a)all and any liabilities encumbering assets which he is entitled to retain pursuant to the Orders herein
(b)all and any taxation liabilities howsoever and whensoever arising in respect of the assets which the husband is due to retain pursuant to the Orders herein, including all real estate and business interests including K Pty Limited and S Pty Limited
(c)       the mortgage encumbering the F Street property
(d)       the personal loan from K Pty Limited
(e)       the husband’s American Express credit card
(f)       the husband’s Citibank Visa credit card
(g)       the husband’s Virgin MasterCard
(h)       the husband’s Coles Myer MasterCard
(i)the anticipated capital gains tax upon sale of the B Street property and
(j)        all and any other credit cards in the husband’s sole names.
Save as otherwise provided for in the Orders herein:
(a)each party be and is solely entitled to the exclusion of the other to all and any assets, property and financial resources including home contents, furniture, money, motor vehicles, shares, bank accounts, insurances, equities, superannuation entitlements and personal effects including choses in action in their respective possession, name and control of such party as at the date of these Orders and
(b)each party is to forgo any claim they may have to any superannuation entitlements belonging to or earned by the other party subject to each party’s compliance with the Orders herein.
Within seven (7) days from the date of these Orders herein, the wife do all things necessary and sign all such documents as may be necessary to resign from all offices held in K Pty Limited and S Pty Limited.
The husband shall indemnify and keep the wife indemnified in relation to all and any actions, suits, claims and liabilities including any accrued taxation liabilities as may arise, if any, which may arise as a consequence of the wife’s interest in K Pty Limited and in S Pty Limited.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 409 of 2009

Ms Kirk

Applicant

And

Mr Kane

Respondent

REASONS FOR JUDGMENT

Introduction

The proceedings before the court are proceedings for the alteration of property interests of parties who were married and whose marriage is dissolved.
The parties commenced cohabitation on 4 October 1991, having met in July of that year. The parties finally separated in June 2006.
The significant conflict between the parties was the value of the husband’s initial contribution and how that value should be reflected in the alteration of property interests. The parties were also at issue to some extent as to the value of their several contributions, other than financially, to the acquisition, conservation and improvement of the parties’ property including the husband’s business and to the welfare of the family, however there was much on which they agreed.
Nevertheless, the question remained as to how their several contributions in that regard might be appropriately reflected in a just and equitable distribution of their property.
The husband sought a division of the property which they possessed in the proportions of 70% thereof to the husband and 30% thereof to the wife. The wife sought a division in favour of the husband in the proportions of 60% to the husband and 40% to the wife but said if the Court was against her on that, it could not be less than 37.5% to her and 63.5% to the husband which she said should be adjusted on the basis of s 75(2) of the Act by an amount argued at 2.5% or thereabouts. Although both parties were retired, it was pointed out that with the available property the husband would be in a significantly better financial position.
In arguing the value of the initial contribution, the validity and appropriateness of retrospective valuations of property presently conducted were the subject of discussion and disagreement. The wife called an expert valuer and the husband relied on his own experience in the property market in the area in which the properties were located.
As to the form of the order sought, each of the parties sought an order that the former matrimonial home be transferred to them. In addition, the wife sought an order for the payment of money.
What for these parties is a just and equitable redistribution of their property is the question which the Court has to determine.

Background Facts

Where in this judgment I make statements of fact they are, unless otherwise specified, my findings of fact.
The husband was born in 1945 and is now aged 67 years.
The wife was born in 1951 and is now aged 61 years.
The parties commenced cohabitation on 4 October 1991 at the husband’s property at W Street.
The parties married in March 1992.
The parties separated finally on 10 January 2006 although there had been prior separations.
Of the marriage there was one child namely C born in June 1992 and now aged 19 years. He has resided with the wife since separation up until February 2011 when he temporarily relocated to country New South Wales.
The wife had four children not of this marriage at the time of the commencement of cohabitation namely:
a)T born in November 1970 [then aged 20 years]
b)Q born in April 1973 [then aged 18 years]
c)D born in February 1975 [then aged 16 years]
d)N born in March 1980 [then aged 11 years].
The husband had one child not of this marriage at the date of cohabitation namely V born in August 1981 [then aged 10 years].
V lived with his mother.
After he finished Year 12, V lived for 12 months with the parties at their home at W Street.
The wife cared for V when he lived with the parties or stayed with them.
T and Q were both in full-time employment and paid board during their residence at W Street, save that T did not pay board for six months between 1998 and 1999.
D was in Year 11 and completed Year 12 in 1992. D, it is said, provided for her own necessities from part-time jobs.
During the period the parties lived at W Street.
The children of the wife’s prior marriage lived with the parties as follows:
a)T lived with the parties until early 1992
b)Q lived with parties until early 1993
c)D lived with the parties until November1992
d)N lived at the property until January1994.
The wife received child support of $25 per week for D and N.
The husband had twice previously been married and was, at the time of the commencement of this cohabitation, working in the property market in his business conducted by a company K Pty Limited of which he was a director and shareholder. The husband’s evidence is that by 1998 he was the sole shareholder of that company. He had personally and through that corporation and a company S Pty Limited, which was beneficially owned by K Pty Limited, substantial property holdings.
The husband and S Pty Limited owned properties described as follows:
a)W Street
b)Property 1, G Street, Suburb O
c)Property 2, G Street, Suburb O
d)P Street, Suburb A, of which is held in the name of the husband in trust for K Pty Limited
e)B Street
f)U Street, Suburb I, Western Australia and
g)P Street, Suburb O
h), of which S Pty Limited was the registered proprietor.
The wife at the date of cohabitation was employed in the finance industry at Company H. Her salary was in the order of $60,000. Her entitlements included superannuation, company car, a share portfolio and a life and disability insurance policy. She assisted the husband in the operation of the company K Pty Limited and S Pty Limited.
The parties are at issue as to the value of the husband’s property as at the date of the commencement of cohabitation.
It is agreed between the parties that during the course of the marriage there were changes to the amounts owed and secured against the properties referred to and refinancing was involved with respect to some liabilities.

The Orders Sought By Each Party

The substantial effect of the orders sought by the wife is that:
(1)The husband transfer to the wife the property at W Street and discharge the mortgage secured over that property.
(2)The husband pay to the wife $1,220,074.
(3)The husband be declared as the sole legal and beneficial owner as to all other assets in his ownership, possession and/or control.
(4)The wife be declared as the sole owner in law and equity to all assets and interests in her ownership, possession and/or control.
(5)In the event the husband fails to pay the wife $1,220,074 and transfer the W Street property to the wife, the husband shall cause the property at B Street to be sold by public auction.
(6)In the event that upon the sale of the B Street property the husband does not meet the whole of the monies outstanding to the wife, then the husband shall cause the property at F Street to be sold by public auction.
(7)The husband is to indemnify and keep the wife indemnified with respect to any liabilities and tax liabilities he has.
(8)The wife resign from all offices held in K Pty Limited and S Pty Limited.
(9)The husband is to indemnify and keep the wife indemnified with respect to any liabilities which may arise as a consequence of the wife’s interest in K Pty Limited and S Pty Limited.
The substantial effect of the orders sought by the husband is that:
(1)The husband pay the wife a cash adjustment to achieve an overall division of the asset pool available for division 70:30 in favour of the husband within four months of these orders.
(2)The wife move out of the property at W Street within four months of these Orders.
(3)Costs.

The Balance Sheet

The first step I must undertake is to identify the property of the parties or either of them available for division between them.
The Court at the commencement of the hearing was provided with the balance sheet set out hereunder for its consideration:

Description	Wife’s Value ($)	Husband’s Value ($)
Assets
[W Street] NSW (h)	1,300,000	1,300,000
[F Street] NSW (h)	637,500	637,500
[X Street] NSW (h)	167,500	167,500
[B Street] NSW (h)	2,000,000	2,000,000
K Pty Limited Pty Limited (h)	2,084,650	1,691,869
S Pty Limited Pty Limited (h)	Nil	Nil
Funds in Greater Building Society (Acc […47]) (as at 09.06.11) (w)	158	158
Funds in Greater Building Society (Acc […89]) (as at 09.06.11) (w)	2,218	2,218
Funds in Greater Building Society (Acc […76]) (as at 28.5.11) (w)	1,724	1,724
Funds in [Z] Credit Union (Acc […55]) - account no longer exists (w)	Nil	Nil
Funds in Greater Building Society (Acc […80]) (as at 03.06.11) previously known as Acc […90] (h)	2,553	2,553
Funds in Commonwealth Bank of Australia (Acc […13]) (Security Deposit) (as at 17.3.11) (h)	310,465	310,465
Westfarmers Limited Shares (168) @ $31.07 each (as at 09.06.2011) (w)	5,287	5,287
Toyota […] motor vehicle (2006) ([…]) (w)	7,500	8,900
Nissan […] motor vehicle (2003) ([…]) (h)	4,000	4,000
Mazda […] motor vehicle (1999) ([…]) (h)	55,000	55,000
Jewellery and personalty (w)	3,000	3,000
Household contents (w)	3,000	3,000
Household contents (h)	1,000	1,000
Motor boat (h)	1,500	1,500
John Deere tractor (h)	2,000	2,000
Livestock (7 cows, 7 calves) (h)	7,000	7,000
Total	$6,596,055	$6,204,674

Addbacks
Interim property settlement from husband pursuant to Orders made 29 April 2009 (w)	50,000	50,000
Further interim property settlement from husband pursuant to Orders made 29 March 2011 (w)	50,000	50,000
Legal Fees- Paid: $84,220 Counsel’s fees – Paid: $8,140 Unbilled to 24.6.11: $20,000 (h)	92,360	92,360
Legal Fees - Paid $55,529.81 Unbilled to 27.6.11 $4,590 Outstanding as at 27.6.11 Nil (w)	60,119.81	42,732
Total	$252,479.81	$252,479.81
Liabilities
Mortgage to Perpetual Trustee Victoria Ltd – [W Street] (Loan Acc […02]) (as at 3.6.11 (h)	96,500	97,252
Mortgage to Secure Funding Pty Ltd – [F Street] (Loan Acc […14]) (h)	57,172	57,172
American Express credit card (h)	Nil	Nil
Citibank Visa credit card (h)	638	638
Virgin Mastercard (h)	Nil	Nil
Coles Myer Mastercard (h)	Nil	Nil
David Jones Credit Card […] (w)	Nil	Nil
Division 7A Income Tax liability 2010/2011 (h)	25,950	25,950
Total	$180,260	$181,012
Superannuation
[Z Superannuation Fund] (Acc […85]) (w)	2,103	2,103
Total	$2,103	$2,103

The first valuation issue is the value of the company K Pty Limited. It was valued by Mr PB, an independent expert, from MM Accountants, on the basis that it was to be liquidated.
In his evidence, the husband said it was not his intention to liquidate it and such an order is not one primarily sought by the wife.
In the light of the evidence, the wife asserts that it is appropriate to add to the valuation of the company shares the costs assessed by Mr PB that would be attached to a liquidation.
The Court agrees with that submission and accordingly finds the value of K Pty Limited to be in the sum of $2,084,650.
A valuation was prepared by Mr PB for S Pty Limited also, which was valued at Nil. The property at P Street, Suburb O was included as an asset of the company in the valuation.
The second matter raised was the contention that the unpaid legal fees of the husband and the wife ought not to be added back.
The Court will add back the paid legal fees for the husband. The Court accepts that each party will have, following the conclusion of the matter, a liability for legal costs and takes that into account in its decision.
The Court will not add back the paid legal fees of the wife since the Court is told and accepts that the interim property settlement which is added back was the source of the funds to pay the wife’s legal fees and it would not be appropriate to add the same sum back twice.
Accordingly, in summary, the Court finds the assets and liabilities of the parties as follows:

Assets	($)
· W Street (h)	1,300,000
· F Street NSW (h)	637,500
· X Street NSW (h)	167,500
· B Street NSW (h)	2,000,000
· K Pty Limited (h)	2,084,650
· Funds in Greater Building Society (Acc …47) (w)	158
· Funds in Greater Building Society (Acc …89) (w)	2,218
· Funds in Greater Building Society (Acc …76) (w)	1,724
· Funds in Greater Building Society (Acc …80) (h)	2,553
· Funds in Commonwealth Bank of Australia (Acc …13) (Security Deposit) (h)	310,465
· Westfarmers Limited Shares (168 @ $31.07 each) (w)	5,287
· Toyota motor vehicle (2006) (…) (w)	7,500
· Nissan motor vehicle (2003) (…) (h)	4,000
· Mazda motor vehicle (1999) (…) (h)	55,000
· Jewellery and personalty (w)	3,000
· Household contents (w)	3,000
· Household contents (h)	1,000
· Motor boat (h)	1,500
· John Deere Tractor (h)	2,000
· Livestock (7 cows, 7 calves) (h)	7,000
· Superannuation: Z Superannuation Fund (w)	2,103
Total Assets	$6,598,158

Addbacks
· Interim property settlement from husband pursuant to orders made 29 April 2009 and 29 March 2011 (w)	100,000
· Legal fees paid (h)	92,360
Total Addbacks	$192,360
Liabilities
· Mortgage to Perpetual Trustee Victoria Ltd – W Street (h)	97,252
· Mortgage to Secure Funding Pty Ltd – F Street (h)	57,172
· Division 7A Income Tax Liability 2010/2011 (h)	25,950
· Citibank Visa credit card (h)	638
Total Liabilities	$181,012
Nett Asset Pool (inclusive of Superannuation)	$6,609,506

Machinery orders are also sought by the wife. The quantum and form of the orders sought by the wife are opposed by the husband and the husband seeks orders giving effect to the division of property in the proportions of 70:30 in favour of the husband, and that as part of that division the husband receive the former matrimonial home.

Section 79(4) contributions

Initial Contributions

The following table sets out the parties’ assertions in relation to the property portfolio as at the date of cohabitation:

Property	Wife’s Value ($)	Husband’s Value ($)
· W Street	455,000	750,000
· Property 1, G Street, Suburb O	189,900	189,900
· Property 2, G Street, Suburb O	235,000	235,000
· P Street, Suburb A	1,000,000	1,000,000
· B Street	530,000	530,000
· U Street, Suburb I, WA	59,500	59,500
· P Street, Suburb O	760,000	1,200,000
Total	$3,229,400	$3,964,400

The parties disagree as to the level of debt owed by the husband and S Pty Limited at the commencement of cohabitation. It is asserted by the husband that he had liabilities to the extent of $2,737,000 and that to the best of his memory the loan balance secured upon the property P Street, Suburb A was $430,000. If that were so he would have had a net equity on his valuations in property of some $797,400. If the wife’s values are accepted then the net value of those assets, accepting for the moment the husband’s assertions as to his liabilities, would be about $62,400.
At the commencement of cohabitation the wife had little or no assets. The value of some of those assets comprised in the husband’s property portfolio at that time was in issue.
The wife had procured a report from a qualified and experienced valuer, a

Mr OG, who had been asked particularly to value the properties at W Street and P Street, Suburb O as at the date of commencement of cohabitation.
It was this evidence which seemingly most troubled the husband. The husband asserted in the case of each of those properties a higher value than that attributed by Mr OG in his detailed report.
Mr OG’s methodology in relation to the property at W Street was an adjusted direct comparison method.
He provided a report and having described the property as at present he also described it as at the relevant retrospective date of the valuation, namely

4 October 1991, and set out the subsequent improvements to the property which he had ignored. He also set out work requiring to be done as at the retrospective date.
Mr OG describes his consideration of a number of sales within a nominated radius of the property. He comments on each of the properties considered and notes their sales and compares them to the subject property. He comes to the conclusion that there are no direct comparable sales but there are properties which give, it seems, some indication of unimproved value.
The valuer takes into account the financial climate at the time of the valuation. He describes the post 1987 share market crash and loss of confidence and the direction of funds into real property as an alternative investment.
His evidence is that the boom which followed in real estate ended by March 1989.
His evidence is that in the 1990’s real estate markets were falling or stagnant until about 1995 when the boom, which ended in 2007, commenced.

He notes that at the time the Australian economy was characterised by high inflation and interest rate rises and entered into a recession in the early 1990’s. He further says that the real estate market was adversely affected by the lack of confidence by prospective purchasers in 1991.
In the absence of comparable sales evidence the valuer has, he says, considered the available market evidence in conjunction with the state of the prevailing residential real estate market. He calculates a value of the land, to which is added the value of the improvements calculated by reference to the square metres which comprised them multiplied by a rate per square metre, and to which is added an assessment of the value of the pool and surrounds and which totals in all the sum of $454,500 which he adopts as $455,000 and certifies as the current market value of the property at 4 October 1991.
The valuation was attacked by Mr Kane on the basis that the property was capable of subdivision or dual occupancy in 1991 as now.
In response to this proposal Mr OG asserted that taking into account the difficulties with the site (its topography, an evident water course and rocky outcrops) and the corresponding effect of the reduction in the value of the existing improvements and the cost of giving effect to a subdivision or dual occupancy of the property, his total valuation would be approximately the same as that asserted by him.
It was contended by the husband that the subdivision or creation of a dual occupancy would do nothing to the value of the existing dwelling and that that had been his experience. The husband gave some evidence subsequently in relation to these matters but did not produce concrete examples to demonstrate his broader assertions. Mr OG did not agree with the husband’s view.
The husband did not have available evidence of particular sales or examples of properties which would have demonstrated the accuracy of his suggestion, nor did he have available to the Court evidence of the capacity to so subdivide the land or of the cost of building two dwellings on it.
He readily and properly conceded that they were matters which would need to be taken into account in determining the value of the property on the basis sought.
Mr Kane additionally sought to launch an attack of Mr OG’s impartiality or lack of independence and sought to make comment on the fact that he had executed a number of valuations for the wife’s solicitors.
The Court does not accept such an attack was justified or that the commercial relationships between Mr OG and those representing the wife were such as to render his evidence partial. The Court has confidence in his professionalism.
Mr Kane, in any event, had been aware of the valuation for some time and took no steps to procure other properly supported evidence of a valuer or an order that an independent expert be appointed by the Court. He did not bring to the Court detailed evidence which might support his argument other than a broad statement of his own opinion.
In the circumstances, the Court accepted the evidence of value of Mr OG in relation to the W Street property.
In relation to the property at P Street, Suburb O, Mr OG produced a valuation of that property as at the date of commencement of cohabitation.
The contention of the husband was that the valuation was flawed by reason of the fact that it ignored the expenditure of some $250,000 by the husband on the refurbishment of the property and that the capitalisation rate which was applied to the income was inappropriately high (that being a rate of 12%).
Mr OG in his valuation analysed evidence of other sales and nominated one as best fitting the description of most comparable.
However, he comments that the scarcity of available sales evidence in the early 1990’s, particularly of investment properties, in a climate of high interest rates, renders retrospective valuations subjective. Consequently, an historical perspective and relevant experience during the applicable real estate market is essential when undertaking such valuations.
Mr OG canvasses evidence of acceptable investment yields during the relevant period. He draws attention to premium commercial sites with premium tenants of properties used as banks on sale and leaseback arrangements from between 5.5% to 8.9%.
He considers mixed residential and commercial properties. He then proceeds with the observation, “net yields for commercial and industrial investment properties in the early 1990’s were in the order of 10-15 %”.
He gives examples of 17 properties falling into this category in well established commercial centres. The yields on those properties varied from a low of 10.58% to a high of 14.75%.
He observes that the number of comparable properties were scarce but having regard to the location of the subject property, its zoning and permitted uses, exposure and vehicular access and egress, he refers to a further three properties with yields between a low of 11.83% to a high of 12.79%.
Mr OG proceeds to describe the valuation as determined having regard to the net rental method of valuation, utilising the lettable areas provided and provides calculations.
Having produced a calculation of the income and deducted estimated outgoings he arrives at a net annual rental of $99,489 which he capitalises at 12% and adopts the result as $830,000. From that he deducts Leasing Costs, Loss of Rental for six months, and Agents commission at 12% and produces a net valuation of $760,000. He did not concede in his cross-examination that the improvements described by the husband would have made a significant difference to the valuation arrived at.
The capitalisation rate used by Mr OG was the subject of cross-examination but the Court does not find that that cross-examination undermined the use by the valuer of his selected capitalisation rate.
The husband did not adduce evidence which supported an assertion that the capitalisation rate should be lower than that ascribed by Mr OG. He did not provide a detailed rationale to support his contention.
Accordingly, the Court accepts the valuation of Mr OG of that property.
Having said that, the Court accepts the wife’s contention that gross valuation for the property brought in is about $3,229,400.
The liabilities of the husband secured against the property were not the subject of agreement. The Court finds however that the evidence, including the evidence of the husband of his recollection of one liability, and given the extent of the then liabilities as asserted by the husband, that the net assets in real estate probably came close to a value of $62,400 net.
At the date of the commencement of cohabitation the husband was the Principal of K Pty Limited of which company he gained full ownership by 1998.
The wife was employed in the finance industry at Company H and her entitlements included superannuation, company car, a share portfolio and a life and disability insurance policy. She had no other assets of commercial significance.

Contributions to date of separation

During the marriage the wife assisted the husband in the business of K Pty Limited and in the company S Pty Limited.
The assertions of the wife as to the work she undertook during the cohabitation were largely conceded by the husband.
Those contributions included assisting in the preparation of buffet luncheon for the staff of the company on Melbourne Cup day and procuring and preparing Christmas presents for presentation to the staff in the years 1991 and 1992 and for Melbourne Cup day in 1993.
The wife withdrew money from her credit union account to pay wages on one or two occasions. She obtained a personal loan for $10,000 which was paid into the company overdraft facility.
In June 1992, the wife accompanied the husband to the meeting of a tribunal or board of the organisation that was responsible for the funding of the husband. He sought relief in the then current circumstances from obligations he had to that body imposed by its mortgages.
The tribunal or board granted the relief sought on condition that when the mother had delivered her baby she was to return to work; perhaps not a condition which would be imposed unremarked today. The wife not only accepted the condition but returned to work three weeks after the child’s birth to honour her promise.
In 1993, the husband requested the wife to leave her employment and work for the company K Pty Limited, which she did assuming the role of a manager. The wife provided details of her work. Tendered to the Court are copies of her diaries. The wife was organised and kept schedules of matters to be attended to each day and marked the completed tasks off as they were done. The husband fairly said that her organisational capacity was valued.
In 1994, the husband was obliged to sell properties then owned by him in order to reduce debt. It was in that year that the wife became aware that the company had an overdraft facility. The husband expressed concern about finances and the wife says she observed the husband avoiding the Westpac Bank.
The wife’s evidence is that the husband in 1994 said to her that he was concerned that he had paid too much for the property at P Street, Suburb O and that the property had a mortgage of $1,000,000 secured against it.
In February of that year the wife received an inheritance from her father’s estate of some $41,732 and contributed it to the business expenses of K Pty Limited.
At this time the wife became involved in the selling of property as well as undertaking her role as a manager.
The husband concedes that the wife introduced to the management of the company at his request a system running such a business. At this time the wife says that the husband left the business for hours at a time without advising where he was. The opening hours of the business were extended in 1994 to seven days per week closing at 7.00 pm each day.
The parties engaged a housekeeper who worked one day per week until 1999.
In 1997, the husband purchased a property at F Street for a purchase price of $250,000. Over a period of two years the rent roll of the business was decreased. The husband says that he sold the rent roll of his business for $190,000 in 1999. He asserts that of that amount an amount of $60,000 was paid towards the purchase of the F Street property and the acquisition of his motor home for $86,500. The husband also dealt with other investment properties during the period of cohabitation.
The husband had held a mortgage on a property owned by his former wife on the NSW north coast which she had made available to him to secure borrowings and in August 1997 that mortgage was discharged.
In 1998, the husband acquired all the shares in the company K Pty Limited.
In November 1999, the business of K Pty Limited ceased.
The husband did not in his case cross-examine the wife on her affidavit.
The wife together with the husband carried out improvements to the property at W Street including work on the garden which the wife says was a project which led to the award of a local area Garden of the Year. Certainly the photographs attached to the valuation show a landscape which does the parties credit.
During the course of cohabitation and indeed after it ceased, the value of properties purchased by the husband grew with inflation and rising markets. True it is that neither he nor the wife contributed to the external winds of economic advantage which allowed the value of his property to rise. However he was the one who brought those properties into the marriage and the existence of those properties, although of not great net value, meant importantly that there was something to which those favourable economic winds could give flight. The husband during the marriage was actively involved in their management, their financing, their letting, their maintenance and so on but so was the wife, more particularly in the post separation period.
The income derived from the properties has been a significant contributor to the parties’ abilities to reduce debt.
Until the business of K Pty Limited ceased it would probably have not existed but for the husband, albeit that he was sustained in his commercial activities, and but for the not inconsiderable contribution of the wife.
There have been sales in assets which do not seem to be the subject of debate.
During the course of the marriage the wife’s children were housed from time to time by the parties, although it seems that it was for varying periods of time and it is noted that they had varying degrees of dependency.
The wife was primarily responsible for the supervision of the household and the management of it. She did have some small domestic assistance but was primarily responsible for the homemaker and parenting role. The husband was not without effort in this regard, but the contribution of the wife is found to be greater.
His evidence is that he applied funds derived from his mother’s estate in part to defray the ongoing costs of property and in part to provide security for accommodation provided by banks. He also used portions of it he says to the purchase of property.

Contributions post separation

Since the separation of the parties, the wife has contributed to the maintenance of the home and the asset pool.
The wife had an additional burden imposed upon her since the husband has had no part in the parenting of the parties’ child since separation. Since that time it has solely been the responsibility of the wife to provide emotional and physical support for that child.
The husband in his affidavit material, much of which was not the subject of great conflict, gave evidence that he purchased a motor home in 1999 and that it was used for a holiday trip. He asserts that following the separation he has resided largely in the motor home either at his property at F Street or at Suburb J in Sydney or otherwise on the move to various parts of Australia. He has led, it seems, a somewhat peripatetic life.
The husband notes that from around June 2007 until around October 2008 he paid the wife approximately $1,000 per month. He further alleges that he paid the wife’s credit card debts. He notes that from March 2007 until October 2008 the wife withdrew $300 per week from a joint bank account into which the rent from the property at B Street used to be paid. He notes that although the drawings took place, they did so without his consent and her ability to do so was terminated by him in April 2008. He claims other payments by way of support to the wife.
Since October 2008, the husband has stopped making payments to the wife’s credit card debts and has instead been paying to her $4,000 per month.
The husband asserts that the time leading up to the parties’ separation was emotionally traumatic for him and that emotional trauma continued for some time thereafter. During this period, the wife asserts that she took over significantly a number of the aspects of the management of the parties’ property. The husband says that he was assisted in part by that but also by his accountants and his former wife in managing his affairs.
The husband arranged for the purchase of a motor vehicle for himself and one for his wife from funds derived from the sale of a property

Conclusion based on contribution

There is no doubt, whilst the wife gave in full measure in her contributions to the property of the parties and the welfare of the family, that taking all the contributions into account both financial and non-financial, the contributions of the husband have to be treated as greater than those of the wife and deserving of recognition in the ultimate division of the parties’ property. All in all I assess the contributions of the parties to the acquisition, conservation and improvement of the property of the parties to the marriage or either of them, including such property which is no longer the property of the parties to the marriage or either of them and to the welfare of the family, to be in the order of 63% to the husband and 37% to the wife to the date of their separation.

Section 75(2) considerations

The husband has at some length spoken of his enterprise and ability in “never buying a dud property”. He has been successfully involved in the property market. Although “retired” and of greater age than the wife, those skills will remain with him. Although the wife, who is also retired, has had income which has not been insignificant, the husband’s income-earning capacity as an investor and utilising the other skills that he presents with are assessed as greater than the wife. Given the alteration of property interests proposed in these proceedings, it is clear that the wife will have less capital and less ability to earn from such capital as she has. There needs to be an adjustment to take into account these factors. In all the circumstances, it seems to me that an appropriate adjustment is 3%.

Conclusion as to division

For all the reasons referred to above and in the circumstances, I determine that the property of the parties or either of them should be divided between them in the ratio of 60% to the husband and 40% to the wife.
As to the form of the division, it was argued by the husband that the property used as the matrimonial home was his prior to marriage and that it would be appropriately awarded to him as part of his entitlement.
The wife argues that she has lived in the former matrimonial home since separation, which was given up by the husband as his dwelling at that time. The husband has not resided in a fixed residence since, other than in his travelling home. He asks simply that he be able to return to it.
The maintenance of that home has been the wife’s responsibility since separation and she is in large measure responsible for its improvement in the creation of the surrounding garden. It is the finding of the Court that in the circumstances of this case it is just and equitable that she should receive that home.

Just and equitable

The Court determines, taking into account all the evidence, that it is just and equitable that the property of the parties or either of them should be divided between them in the proportions of 60% to the husband and 40% to the wife.

Orders which should be made

The Court proposes to make the orders set out above. The husband will be left with the majority of the assets which is appropriate in the circumstances and the wife will have the capacity to house herself and maintain herself to a standard of living which is in all the circumstances reasonable. The husband will have an ongoing income stream and significant capital and will be able to house and support himself appropriately.
The wife will receive:

Assets	($)
· W Street	1,300,000
· Funds in Greater Building Society (Acc …47)	158
· Funds in Greater Building Society (Acc …89)	2,218
· Funds in Greater Building Society (Acc …76)	1,724
· Westfarmers Limited Shares (168 @ $31.07 each)	5,287
· Toyota motor vehicle (2006) (…)	7,500
· Jewellery and personalty	3,000
· Household contents	3,000
· Superannuation: Z Superannuation Fund	2,103
· Addback: Interim property settlement	100,000
Total Assets	$1,424,990
Payment due by the husband to the wife	$1,218,812
Total to be received by the wife - 40%	$2,643,802

The husband will receive:

Assets	($)
· F Street, NSW	637,500
· X Street, NSW	167,500
· B Street, NSW	2,000,000
· K Pty Limited Pty Ltd	2,084,650
· Funds in Greater Building Society (Acc …80)	2,553
· Funds in Commonwealth Bank of Australia (Acc …13) (Security Deposit)	310,465
· Nissan motor vehicle (2003) (…)	4,000
· Mazda motor vehicle (1999) (…)	55,000
· Household contents	1,000
· Motor boat	1,500
· John Deere Tractor	2,000
· Livestock (7 cows, 7 calves)	7,000
· Addback: Paid Legal Fees	92,360
Total Assets	$5,365,528
Liabilities
· Mortgage to Perpetual Trustee Victoria Ltd – W Street (h)	97,252
· Mortgage to Secure Funding Pty Ltd – F Street (h)	57,172
· Division 7A Income Tax Liability 2010/2011 (h)	25,950
· Citibank Visa credit card (h)	638
Total Liabilities	$181,012
Nett Assets	$5,184,516
Payment by the husband to the wife	$1,218,812
Total to be received by the husband - 60%	$3,965,704

I certify that the preceding one-hundred and twenty-six (126) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler delivered on 13 March 2012.

Associate:

Date: 13 March 2012

[2012] FamCA 115

13 March 2012

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Remedies

Fiduciary Duty

Costs

Injunction