KNIGHTSBRIDGE & KNIGHTSBRIDGE

[2010] FamCA 659

FAMILY COURT OF AUSTRALIA

KNIGHTSBRIDGE & KNIGHTSBRIDGE [2010] FamCA 659

FAMILY LAW – PROPERTY – Just & equitable – Add-backs – Spousal maintenance

Family Law Act 1975 (Cth) ss 72(1), 74(1), 75(1), 75(2), 79(1), 79(4)

Babrow & Rackley [2010] FamCA 508
Baldachino & Hanas [2010] FamCA 234
Hickey & Hickey & Attorney-General for the Commonwealth (2003) FLC 92-144
Knightsbridge & Knightsbridge [2009] FamCA 694
NHC & RCH (aka Chorn & Hopkins) [2004] FamCA 633
Pastern & Pastern [2007] FamCAFC 620
Pittman & Pittman [2010] FamCAFC 30
Robb & Robb (1995) FLC 92-555
Steinbrenner & Steinbrenner [2008] FamCAFC 193
Townsend and Townsend (1995) FLC 92-569

APPLICANT: Ms Knightsbridge

RESPONDENT: Mr Knightsbridge

FILE NUMBER: CAC 1925 of 2007

DATE DELIVERED: 3 August 2010
Orders amended pursuant to the Slip Rule on 17 August 2010

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Faulks ACJ

HEARING DATE: 7 & 8 December 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms A. Tonkin

SOLICITOR FOR THE APPLICANT: Evans Yeend Family Lawyers

COUNSEL FOR THE RESPONDENT: Mr T. Hodgson

SOLICITOR FOR THE RESPONDENT: Nicholl & Co Lawyers

Orders

IT IS ORDERED THAT:

1. The wife, Ms Knightsbridge, be declared the owner both at law and in equity of the following:

   a)The property known and situate at V, ACT;

   b)All superannuation in the wife’s name; and

   c)The Camry motor vehicle.  

2. That within seven days of the date of these orders the husband, Mr Knightsbridge, sign all documents to effect a transfer of the registration of the Camry motor vehicle to the wife, such cost to be borne by the husband.

3. Within 28 days of the date of these orders the husband pay to the wife the sum of $175,500 by way of property settlement.

4. Pursuant to s 77A(1) of the Family Law Act 1975 (Cth), within 28 days of the date of these orders the husband pay to the wife the sum of $25,000 by way of spousal maintenance.

5. The husband be declared the owner both at law and in equity of the following:

   d)The property known and situate at W, NSW;

   e)The property known and situate at B, NSW (Folio Identifier …);

   f)All superannuation in the husband’s name;

   g)The Landcruiser motor vehicle; and

   h)The commercial entities known as the Knightsbridge Group.

6. Within 21 days of the date of these orders, the wife do all such things and sign all such documents necessary to transfer to the husband all her right, title and interest in B property, NSW, provided that the husband shall hereinafter, indemnify and keep the wife indemnified in respect of all claims, calls and liabilities and all government rates, taxes and outgoings with respect to the said real property.

7. Within 28 days of the date of these orders the wife will do all acts and things and sign all documents necessary to effect her resignation as director, and any other position held, in the group of companies and trusts known as the Knightsbridge Group, but will first if called upon to do so, vote at any meetings of members and directors thereof in favour of such resolutions as the husband may direct consistent with her duty as a director.

8. Simultaneously with the preceding order, the wife will do all acts and things and will prepare and execute in favour of the husband a transfer of the whole of her right, title and interest in her shares in the Knightsbridge Group and shall do all acts and things necessary to give effect thereto.

9. Within seven days of receipt of the wife’s resignation of director and transfer of shareholding of the wife in the Knightsbridge Group, the husband will register the resignation of the directorship and transfer of shareholding of the wife with the Australian Securities Investment Commission and table a meeting of directors and shareholders in respect of the same.

10. Simultaneously with the preceding order, the wife will do all acts and things and execute all necessary documents to assign to the husband the whole of the wife’s right, title and interest in any loan account with the Knightsbridge Group and the husband thereafter discharge and release the wife from any liability howsoever arising in relation to the loan account, and indemnify and keep indemnified the wife against any and all manner of actions, suits, causes of actions, arbitrations, debts, dues, costs, interests and demands whatsoever both at law and in equity which the husband and the Knightsbridge Group now has or may have at any time hereafter.

11. The husband will indemnify the wife and keep her indemnified in respect of all liabilities which the husband may have whether now or in the future and whether alone, jointly or severally with the wife and/or any other person or company to any creditor of the Knightsbridge Group pursuant to any guarantee or indemnity or in any other matter howsoever arising in respect of any liability of the Knightsbridge Group.

12. The husband will be solely responsible for and indemnify the wife in respect of any liability to pay tax including income tax, Goods and Services tax, Capital Gains tax, penalty tax and interest which may arise in the future in respect of any tax return lodged on behalf of the wife in relation to the Knightsbridge Group or in respect of any transaction of the Knightsbridge Group pursuant to these orders.

13. Out of abundance of caution, the husband will indemnify and keep indemnified the wife in respect of any outgoings on the W, NSW property as and from the date of these orders.

14. If the husband fails to pay the sums of $175,500 and $25,000 as ordered, within 28 days of the date of these orders both parties do all acts and things to effect the sale the property known as and situate at B, NSW in accordance with the immediately following order, and upon sale, the proceeds to be applied as follows:

    a)To the discharge of sales costs, agents commission and legal fees with respect to the conveyance;

    b)To pay any rates and usual outgoings on the property;

    c)An amount of $50,000 to be invested in the joint names of the parties in accordance with these orders on account of CGT payable for the sale of the property;

    d)The balance of the proceeds to be distributed to the parties, such that the wife receives 52 per cent of the total net assets of the parties and the husband receives 48 per cent of the net assets of the parties calculated by substituting the sale price of the B, NSW property (less the costs stipulated in 13(a) & (b) & (c)) for the figure there for in the property pool referred to in [41] of my Judgment.

15. To effect the sale of the B, NSW property in accordance with the preceding order, both parties will do as follows:

    a)Within seven days of the date of these orders, execute an agency agreement with a real estate agent as agreed in writing by the parties and failing agreement an agent as nominated by the wife;

    b)Within seven days of the wife selecting the listing agent both parties will do all acts and things, and sign all necessary documents to retain the said agent as the listing agent, and will authorise that agent to commence the listing of the B, NSW property for private treaty sale;

    c)The parties will agree in writing as to the listing price of the B, NSW property and failing agreement, the wife will nominate the listing price;

    d)In the event that the B, NSW property does not reach the listing price during the sale period, both parties will accept any sale price offered on the property not more than $15,000 below the nominated listing price, or such other price as agreed between the parties in writing;

    e)Both parties will retain a solicitor to conduct the sale of the B, NSW property not otherwise acting on behalf of the parties in relation to the current proceedings, as agreed between the parties in writing, and failing agreement, the wife will nominate a solicitor and the parties direct and authorise those solicitors to distribute the proceeds of the sale of the B, NSW property in accordance with these orders;

    f)The parties will ensure that the nominated listing agent is supplied a set of keys to the B, NSW property and that the property is made available to the listing agent for all open for inspection times and such other reasonable times as requested by the agent;

    g)Both parties will comply with all reasonable directions of the listing agent as to the sale of the B, NSW property including the agent’s instructions to clean the property in readiness for sale and during the sale period, and to keep all gardens, lawns and outdoors areas in presentable and saleable condition.

16. All parties are restrained from encumbering the B, NSW property pending the completion of the sale.

17. The $50,000 from the sale of the B, NSW property allocated for CGT pursuant to these orders will be deposited into joint interest bearing account in the name of the husband and the wife and will not be released unless as agreed between the parties in writing or to be paid to the Commissioner of Taxation to be applied to the discharge of any CGT liability arising from the sale of the B, NSW property.

18. If the funds held on account of CGT in accordance with these orders are in excess of the CGT liability, the balance of those said funds will be released to as to 52 per cent to the wife and 48 per cent to the husband, as will any interest accumulated on the account in the same proportions, and in the event at the funds are deficient to discharge the CGT liability, the husband and the wife will be responsible for the payment of the remaining liability to the Commissioner of Taxation in the proportions of 52 per cent to the wife and 48 per cent to the husband.

19. If the husband or the wife should fail within seven days after the periods nominated in these orders above (on the certification in writing by either party or their respective solicitors that either party has so failed) to execute (or sign) any document or to perform any action required in relation to such sale, then pursuant to s 106A(1) of the Family Law Act 1975 (Cth) a Registrar of the Family Court of Australia in Canberra is appointed to sign such documents or perform such action in place of either party.

20. Otherwise, each of the parties be and is hereby declared to be the owner both at law and in equity of all the property in his or her possession or control.

21. Any material produced subpoena which became an exhibit will be returned by the Court at the expiration of the appeal period to the person producing it.  Any material produced by a party which became the subject of an exhibit will be returned by the Court to the party at the expiration of the appeal period.

22. All material produced subpoena which did not become the subject of exhibits will be returned by the Court to the persons producing it as soon as practicable.

23. All extant applications, save as to any fresh application on the question of costs, are discharged.

24. The matter is removed from the Pending Cases Inventory. 

IT IS NOTED that publication of this judgment under the pseudonym Knightsbridge & Knightsbridge is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA  AT CANBERRA

FILE NUMBER: CAC 1925 of 2007

MS KNIGHTSBRIDGE

Applicant

And

MR KNIGHTSBRIDGE

Respondent

REASONS FOR JUDGMENT

Introduction    

1. These were proceedings brought for the division of the property of the parties, Ms Knightsbridge, the applicant wife, and Mr Knightsbridge, the respondent husband, pursuant to s 79(1) of the Family Law Act 1975 (Cth).

2. By way of initiating application filed 16 October 2008, the wife sought the final orders that appear at Endnote 1.Endnote 1 By way of response to an initiating application filed 24 November 2008, the husband sought the final orders that appear at Endnote 2.Endnote 2

3. On 7 December 2009, both the wife and the husband handed up in Court updated Minutes of Orders sought, which appear respectively at Endnotes 3Endnote 3 and 4.Endnote 4

Background

1. The wife was born in 1963 and is presently aged 47 years.  The husband was born in 1960 and is presently aged 50 years.

2. The parties commenced cohabitation sometime in 1987 and were married in 1988.  The parties separated in January 2006 and were divorced on 22 December 2007.  Accordingly, the duration of the relationship was approximately 19 years.

3. There are three children of the relationship: the first born in September 1989 (presently aged 20 years), the second in October 1991 (presently aged 18 years) and the third born in February 1994 (presently aged 16 years).  The wife has a son born in October 1984 from a previous relationship. 

4. The history of the parties was not contentious.  To that end, I rely partly upon the chronology prepared by counsel for the husband. 

5. In 1988, the husband sold a property at H, ACT which was registered in his name for approximately $45,000.  A loan of $20,000, secured by mortgage, was obtained for the balance of the purchase monies.  Thereafter, the parties built a house on this land.

6. The wife was employed as a nurse from 1988 to 2002, and had time off to care for the three children of the marriage during that time. 

7. From 1988, the husband was a director of a company known as D Pty. Ltd. trading as M Company with a business partner, Mr N.  The shares in the company were held by two family trusts.  The parties were the beneficiaries of the Knightsbridge Family Trust and Mr N and his wife were the beneficiaries of the N Family Trust, which owned the other shares in the company.

8. In 1990, M Pty. Ltd. was incorporated with four issued shares.  The husband and Mr N were the directors.  D Pty. Ltd. ceased trade at this time and the business traded under the name M Pty. Ltd.

9. Some time between 1999 and 2000, the Knightsbridge Family Trust acquired the shares in M Pty. Ltd. held by the N Family Trust.  At approximately the same time, the parties purchased land in B, NSW for approximately $33,000.  The purchase money was provided by M Pty. Ltd.  A house was erected on the land although it has not been completed.  The property is used as a holiday home.

10. In 2004, the wife commenced studies in Naturopathy. 

11. In 2006, the parties purchased a property at V, ACT in the wife’s name for her to live in with the children.  The totality of the purchase price was borrowed and secured by way of a mortgage on the O, NSW property.  The husband was responsible for paying the instalments due on the loan of $3,800 per month until the O, NSW property was sold.  The stamp duty in respect of the purchase of the V, ACT property was $23,087.50.  The husband carried out improvements to the O, NSW property prior to its sale.

12. In 2006, M Pty. Ltd. purchased a commercial property in K, ACT.

13. In 2007, the O, NSW property was sold for $590,000.  The husband purchased a property at S, ACT for $450,000.  The residual funds from the sale of the O, NSW property of $20,000 were used to fund the purchase of the S, ACT property together with a loan secured by way of mortgage over the S, ACT property of $427,000.  The S, ACT property was rented for 12 months and then sold for $505,000. 

14. The parties currently have interests in the following assets:

    h)M Pty. Ltd.; 

    i)P Pty. Ltd.; 

    j)C Pty. Ltd.; 

    k)The Knightsbridge Family Trust; and

    l)The Knightsbridge Trust.

15. From separation until 17 October 2007, the husband paid the wife $1,000 per week in spousal maintenance.  Thereafter, this amount was reduced to $500 per week. 

Procedural history

1. The wife initiated proceedings in the Federal Magistrates Court of Australia in October 2008.  The proceedings were transferred to the Family Court of Australia in April 2009.

2. On 15 July 2009, I made orders by consent as interim terms of settlement.  The intention of those orders was for the husband to pay the wife the sum of $750 per week in spousal maintenance. 

3. On 17 July 2009, I delivered an interlocutory Judgment in relation to a disputed issue about the valuation of the Knightsbridge Family companies and trusts (“the Knightsbridge Group”).  I concluded in my Judgment that the valuation of the Knightsbridge Group was $304,115.[1] 

   [1] Knightsbridge & Knightsbridge [2009] FamCA 694 [16].

4. The matter was brought on for final hearing before me on 7 December 2009. 

5. On 1 July 2010, the solicitors for the wife wrote to the Court seeking an amendment pursuant to the Slip Rule in relation to the consent orders, as the words “per week” were not included in the order for interim spousal maintenance.  There was a suggestion by the wife that the husband had not complied with the terms of the order as a consequence.  On 22 July 2010, I indicated through my Senior Legal Associate that I declined to make that order as I intended to deliver Judgment shortly.

Relevant Law

1. The law in relation to alteration of property interests is relatively well‑settled, and the following (so-called) four‑stepped approach is preferred:

   a)Identify and value the property, assets, financial resources and liabilities of the parties as at the date of the hearing (“the property pool”);

   b)Identify the relevant contributions of the parties and assess them within the meaning of s 79(4)(a) to s 79(4)(c) of the Family Law Act 1975 (Cth) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties (“contributions”);

   c)Consider relevant matters referred to in s 79(4)(d) to s 79(4)(g) of the Family Law Act 1975 (Cth) (“the s 75(2) factors”); and

   d)Ensure that the orders and the nature of the orders adjusting the property, assets and liabilities of the parties are just and equitable.[2]

   [2]Hickey & Hickey & Attorney-General for the Commonwealth (2003) FLC 92-144, 78,386 (Nicholson CJ, Ellis & O’Ryan JJ) (‘Hickey’).

The law with respect to “add-backs”

1. As I have indicated previously,[3] it is reasonably clear that the value of the contributions to the property of the parties, as well as the value of property itself, are ordinarily taken as at the time of the hearing.[4]   There is also now a substantial line of authority that property that has been pre‑emptively taken by a party in diminution of the property pool might properly be the subject of an “add‑back” on the basis that what has already been received by a party constitutes, in effect, a premature or pre-emptive distribution in favour of that party (to the detriment of the other party).  A number of exceptions to this have been made.  In NHC & RCH,[5] the Full Court of the Family Court stated:

   [24]     We will refer again later in these reasons to the decision in Townsend,[6] but we would in the present context draw attention to the following observations by later Full Courts:

   2.11 There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge. (Marker [1998] FamCA 42, 1 May 1998, per Baker, Kay and Chisholm JJ.)

   46. Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives. (Cerini [1998] FamCA 143, 8 October 1998, per Nicholson CJ, Ellis, Kay JJ.) (Footnotes of the Full Court.)

   [3] See, for example, Baldachino & Hanas [2010] FamCA 234 at [39] and Babrow & Rackley [2010] FamCA 508 at [40].

   [4] See Hickey above and the obiter dicta comments of the Full Court of the Family Court in Pittman & Pittman [2010] FamCAFC 30 (Bryant CJ, Finn and Thackray JJ) at [52]: “Having regard to the provisions of ss 79(4) and 75(2), contributions (whether they be to property or to the welfare of the family) are usually only considered up to the time of trial.” 

   [5] NHC & RCH (aka Chorn & Hopkins) [2004] FamCA 633 (Finn, Kay and May JJ).

   [6] Townsend and Townsend (1995) FLC 92-569 (Nicholson CJ, Fogarty and Jordan JJ).

1. To the extent that money which exists at the time of separation is expended by the parties on reasonable living expenses for a party, even if the other party did not have access to the funds, that money ought not necessarily be the subject of a notional add‑back.

The property, assets, financial resources and liabilities of the parties

1. On 8 December 2009, the parties each submitted a schedule of assets & liabilities.  The information contained in each of those documents, which was qualified and amended in submissions from counsel for each of the parties on 8 December 2009, is reproduced in the below table:

Asset	Value	Comments	Ownership
V, ACT	$600,000	Agreed	Wife
B, NSW	$370,000	Agreed	Joint
W, NSW	$457,500	Agreed	Husband
Knightsbridge Group	$304,115	Agreed	Joint/Husband
Boats	$13,000	Agreed	Husband
Landcruiser motor vehicle	$35,000	Agreed	Husband
Camry motor vehicle	$6,000	Agreed	Husband
ANZ Bank Account	$500	Husband’s	Husband
ANZ Bank Account Joint	$10	Husband’s	Joint
IAG Shares	$7,356.93	Wife asserts it should be an add-back.	Husband
Shares TAB & Telstra	$4,800	Wife asserts it should be an add-back.	Husband
Proceeds of sale – R, ACT	$64,925.79	Wife asserts it should be an add-back.	Husband
Proceeds of sale – S, ACT	$54,000	Wife asserts it should be an add-back.	Husband
Legal Fees	$30,000	Wife asserts it should be an add-back.	Husband
Balance of the deposit received by the husband from the sale of the O, NSW property and the R, ACT property	$42,000	Wife asserts it should be an add-back.	Husband
Husband’s superannuation	$30,212	Agreed[7]	Husband
Wife’s superannuation	$11,512.28	Agreed[8]	Wife
Conceded debts
Cost of stamp duty for V, ACT property	($23,087.50)	Conceded[9]
Discharge of mortgage on B, NSW property and associated legal costs	($37,617)	Conceded[10]
Liabilities	Value	Comments	Ownership
Mortgage – W, NSW property	$365,000	Wife asserts that $365,000 is an admission against interests.  Husband asserts that the figure is $369,600 (Financial Statement of the husband filed 9 December 2008.)	Husband
CGT Liability and sale costs of B, NSW property	≈$50,000	Agreed	Joint

[7] Ibid, 35.

[8] Ibid.

[9] Transcript of proceedings, 8 December 2009, 34, 63.

[10] Ibid.

1. Counsel for the wife initially submitted that there should be recognition of the fact that the husband had made a premature distribution of certain items of property.  As a consequence, counsel for the wife then submitted that there should be add-backs in respect of the following items: the proceeds of sale of a property located at O, NSW purchased over the course of the relationship ($37,990.70); a Jayco Camper Trailer ($15,500); a Back Hoe ($6,000); and a superannuation draw-down ($10,000).  During the course of submissions on 8 December 2009, these items were not pursued by the wife.[11] 

   [11] Ibid, 19 – 23, 33 – 34.

2. Counsel for the husband initially submitted that a liability of approximately $75,000 owed to the Knightsbridge Family Trust should be included in the property pool. During the course of submissions and exchanges with me, counsel for the husband (reluctantly) conceded that that liability ought properly be a factor taken into account under the relevant considerations pursuant to s 75(2) of the Family Law Act 1975 (Cth).[12]

   [12] Ibid, 36 – 39.

3. Neither party sought to press the issue of including the other party’s household contents in the property pool.[13]

   [13] Ibid, 35.

Contentious add-backs

1. In the course of dialogue between counsel and me, certain claimed add‑backs were adjusted in different ways.  So far as I am able to determine, none of the items which I have refused to add-back remained contentious at the end of submissions.

2. To the extent that it might be suggested by counsel for the wife that, ultimately, the items were not conceded, then I rely upon the reasons I gave to counsel during the course of the dialogue as supporting my determination that these items should not be added-back.

Items claimed to be added-back

1. The application of funds in existence at the time of separation might, in conformity with the authorities previously referred to, be expended reasonably: on the joint enterprises of the parties; on the reasonable living expenses of the spending party; or may constitute, otherwise, a premature distribution giving rise to a notional add‑back to the property pool for the purposes of calculating what is to be divided between the parties.  In this case, it is not for the wife to identify how the husband actually spent the money in question.  The evidentiary onus in this regard falls on the husband to identify what he did with the money. 

2. The following items should be add‑backs:

3. IAG Shares ($7,356.93).  No evidence was forthcoming from the husband about the application of these funds and hence they should be regarded as being in the third category set out above.

4. Shares TAB/Telstra ($4,800).  There had been some suggestion this sum was $8,000, but in the course of submissions, it was agreed that this sum was $4,800.  The reason for the add-back is as set out in the preceding paragraph.

5. Proceeds of sale – R, ACT ($64,925.79).  The sequence of funds through the various items of real estate owned by the parties or either of them during the course of the marriage and/or separation was extremely convoluted from an evidentiary perspective.  In the end, there seemed to be agreement that this amount fell within the third category set out above.  The retention of the proceeds was not otherwise explained. 

6. Proceeds of sale – S, ACT ($54,000).  I repeat the comment I made in relation to the proceeds of sale of various pieces of real estate.  This property was the last to be sold in this context.  There was no evidence that the proceeds from the sale of this property were applied either for reasonable living expenses or for joint purposes of the parties. 

7. Balance of the deposit received by the husband from the sale of the O, NSW property and the R, ACT property ($42,000).  For the same reasons outlined in the two preceding paragraphs, this item falls within the third category. 

Contentious liabilities 

1. The mortgage on the W, NSW property.  Although there was argument about whether this should be $365,000 (the wife’s case) or $369,600 (the husband’s case), on balance, I accept the submissions of counsel for the wife and allow the figure of $365,000.  I consider this to be an admission by the husband made against interest. 

2. Accordingly, for the reasons I have outlined above, the revised schedule of assets and liabilities is as follows:

Asset	Value	Ownership
V, ACT	$600,000	Wife
B, NSW	$370,000	Joint
W, NSW	$457,500	Husband
Knightsbridge Group	$304,115	Husband
Boats	$13,000	Husband
Landcruiser motor vehicle	$35,000	Husband
Camry motor vehicle	$6,000	Husband
ANZ Bank Account	$500	Husband
ANZ Bank Account Joint	$10	Joint
IAG Shares	$7,356.93	Husband
Shares TAB & Telstra	$4,800	Husband
Proceeds of sale – R, ACT	$64,925.79	Husband
Proceeds of sale – S, ACT	$54,000	Husband
Balance of the deposit received by the husband from the sale of the O, NSW property and the R, ACT property	$42,000	Husband
Husband’s superannuation	$30,212	Husband
Wife’s superannuation	$11,512.28	Wife
Total assets	$2,000,932
Conceded debts
Cost of stamp duty for V, ACT property	($23,087.50)
Discharge of mortgage on B, NSW property and associated legal costs	($37,617)
Total conceded debts	($60,704.50)
Liabilities	Value
Mortgage – W, NSW property	$365,000	Husband
CGT Liability and sale costs of B, NSW property	$50,000	Joint
Total liabilities	$415,000
TOTAL NET ASSETS	$1,525,227.50

1. I find the total net assets of the parties (rounded down) to be $1,525,000.

Contributions of the parties

1. Counsel for the wife submitted that the contributions of the parties should be considered overall as equal.

2. Counsel for the wife submitted that the wife had contributed $12,000 at the commencement of the relationship in 1987.  Counsel for the wife also submitted that the husband had contributed $24,000 at the commencement of the relationship, as well as a motor vehicle.

3. After extensive submissions and exchanges with me, counsel for the husband submitted that the contributions of the parties should be considered overall as to 53 per cent to the husband and 47 per cent to the wife.

4. Counsel for the husband submitted that the husband had owned a property in H, ACT prior to cohabitation, which was sold and the proceeds of sale were put towards the purchase of the property at O, NSW.  It was also submitted by the husband that he earned a significant income throughout the relationship, which was used for the benefit of the household and for the acquisition, conservation and improvement of the property of the parties.

5. Counsel for the husband submitted that the husband had contributed to the welfare of the family in carrying out household tasks and domestic duties.

6. Counsel for the husband submitted that the husband had contributed to the financial support and welfare of the of the wife’s child from her prior relationship.  This was, in effect, a Robb & Robb[14] submission, but this was not qualified and not pressed.

   [14] Robb & Robb (1995) FLC 92-555.

7. Counsel for the husband submitted that the husband had carried out improvements and renovations to the property of the parties and, since separation, had managed the parties’ business and investment interests.

8. Counsel for the husband submitted that the husband had made loan repayments of approximately $3,800 per month between the purchase of the property at V, ACT until the sale of the O, NSW property.  It was also submitted that the husband had expended approximately $20,000 on improvements to the S, ACT property prior to its sale.

9. Each of the parties equivocated about the percentages for division based on what the property pool might be.  I do not necessarily agree with either of the parties as to the positions set out in the paragraphs above.  Nevertheless, the estimates of the parties about contributions indicated the fact that the difference between them on this issue was relatively small. 

10. It is unnecessary for me to reiterate the authorities which have established that it is inappropriate for the Court to regard equality as the starting point.  It is also unnecessary for me to set out the proposition that the informal “agreement” or “partnership” between a husband and wife may vary significantly from one marriage to another.  The parties may be content with one party being the only financial contributor or they may be content with differential financial contributions and differential home‑making and parenting contributions.  It has often been remarked that it is difficult to compare the quality of contributions of such a sort.  Moreover, it is inappropriate to do so.

11. It was not suggested in this matter that the parties were in disagreement about the arrangements or that either protested at the lack of contribution of the other.  It is equally clear that the parties each contributed during the course of what was a long marriage.  Moreover, the wife continued after separation to make a contribution as homemaker and parent in respect of the youngest child of the parties.  Equally, as I have set out above, the husband made contributions post-separation of a financial nature.  During the course of the marriage, the husband was unquestionably the primary “breadwinner” and contributor of money.  

12. Ultimately, the evaluation of different contributions and other factors must necessarily involve an “intuitive synthesis.”[15] His Honour Coleman J also observed in Steinbrenner & Steinbrenner that “there will inevitably be a ‘leap’ from words to figures.”[16]  In this connexion, my leap is towards the position articulated on behalf of the husband – that is that his contributions should be regarded as 53 per cent to the wife’s 47 per cent.

    [15] See, for example, in the context of s 75(2) of the Family Law Act 1975 (Cth), Pastern & Pastern [2007] FamCAFC 620, [99].

    [16] Steinbrenner & Steinbrenner [2008] FamCAFC 193, [234].

13. This difference acknowledges, in part, the initial superior contributions of the husband which did, in large measure, form the basis of a continuing progression of property assets for the parties.  It also acknowledges that each of the parties contributed to each of the relevant aspects to be considered under s 79(4). 

14. In coming to that conclusion, I am giving credit to the husband for his contributions of a non-financial sort to the welfare of the family as well as the other matters.  In this regard, I accept his evidence over that of the wife as to the extent of his involvement. 

Section 75(2) of the Family Law Act 1975 (Cth)

1. Counsel for the wife submitted that there should be an adjustment made in favour of the wife pursuant to s 75(2) of the Family Law Act 1975 (Cth) in the order of 10 per cent.

2. Counsel for the wife stated that the wife is 47 years of age and had not worked since 2002.  Counsel for the wife stated that there was some doubt as to her continuing in her profession as a nurse.  The wife had studied to become a Naturopath but counsel for the wife rhetorically asked “what the future will hold for her once… she’s 47 and she completes her course and then tries to offer herself in an open market as a naturopath”.[17]  Counsel for the wife submitted that the wife had “put home duties above any career” and there was a “vast disparity” of income earning capacity between the parties, with the wife earning “zero” and the husband earning a salary of approximately $175,809 in the 2008–09 Financial Year.[18] Counsel for the wife also urged me to take into consideration the fact that the wife pays approximately $58 a week for ongoing pharmaceutical requirements and that the youngest child of the parties’ relationship is still in her care.

   [17] Ibid, 27.

   [18] Ibid.

3. Counsel for the wife concluded that the wife’s commitment to being a full‑time mother, in combination with her poor health (although there was not much admissible evidence to support this factor) had precluded the wife from being able to earn the sort of income she might otherwise have earned.

4. Counsel for the husband submitted that the highest adjustment that could be made for the wife pursuant to s 75(2) of the Family Law Act 1975 (Cth) would be “five per cent max”.[19] 

   [19] Transcript of proceedings, 8 December 2009, 77.

5. There were a number of other matters which fall to be considered under s 75(2) because of determinations I have made otherwise in relation to the property pool and to the proposed add‑backs.

6. First and foremost among those is the money due from the husband to the company.  As was debated at great length during submissions and the course of the trial, the assets in the books of the company of the loan owed by the husband was taken into account in the calculation of the value.  At the same time, the husband’s debt owed to the company should be recognised as being one of his liabilities which, in due course, will be required to be repaid.  Circumstances in which that might occur and the terms on which it could occur are matters which leave it as a broader factor to be taken into account than simply its allocation as a debt.  

7. In addition, the husband’s tax liability as it existed at the time of the trial is not properly an item for the property pool calculation.  Again, as was set out during the course of the trial, money that was earned as a PAYE taxpayer during the course of the marriage by either party would not be treated as an asset.  Neither would the tax that was paid by that party, it having been deducted at source.

8. In these circumstances, it would be unreasonable to treat as a liability of the parties the husband’s tax liability without adding back his income as an asset.  It is properly, however, a matter to be taken into account as a liability which he will have to pay.

9. In the category of debts which will need to be paid by a party, is the ANZ Credit Card debt owed by the wife of $16,887.47.[20] This is a reasonable post‑separation debt and should be treated a factor affecting the wife, to be taken into account under s 75(2) of the Family Law Act 1975 (Cth).

   [20] Counsel for the wife conceded this should be considered pursuant to s 75(2) of the Family Law Act 1975 (Cth) and should not be treated as a liability: Transcript of proceedings, 8 December 2009, 26, 34.

10. Both parties have legal fees whether borrowed or paid post-separation or owing.  I make no adjustment in favour of either party.  In essence, these fees may be taken to offset each other.

11. Taking all these factors into account before turning to the “fourth stage” of the consideration of what property each of the parties might receive, the most significant factors requiring adjustment may be the comparative inability of the wife to earn an income anywhere near that which could be earned by the husband and the debts that the husband will necessarily incur as a result of my determinations set out above.  I also take account, as counsel for the husband urged on me to do so, the fact that a number of the items which will devolve to the husband will fall as add‑backs or money that he was already received.  This means that his net position at the end of the division of property will be less favourable than will be that of the wife. 

12. The suggestion by the husband that there might be an adjustment in favour of the wife (and both parties were agreed on this point) should be at a maximum of five per cent, in my opinion, accurately records these matters. Although five per cent is at the high end of the scale, the discrepancy between the earning capacity of the parties is such that five per cent represents a fair adjustment pursuant to s 75(2) of the Family Law Act 1975 (Cth).

Wife’s claim for spouse maintenance

1. The wife sought a lump sum payment of spouse maintenance pursuant to s 72(1) of the Family Law Act 1975 (Cth). Section 72(1) of the Family Law Act 1975 (Cth) relevantly provides:

   72Right of spouse to maintenance

   (1)A party to a marriage is liable to maintain the other party, to the extent that the first‑mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:

   (a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;

   (b)by reason of age or physical or mental incapacity for appropriate gainful employment; or

   (c)for any other adequate reason;

   having regard to any relevant matter referred to in subsection 75(2).

1. The Court is empowered to make such order as it considers proper for the provision of maintenance.[21] If the Court exercises jurisdiction pursuant to s 74 of the Family Law Act 1975 (Cth), it may only take into account the matters referred to in s 75(2) of the Family Law Act 1975 (Cth).[22]   

   [21] Family Law Act 1975 (Cth) s 74(1).

   [22] Family Law Act 1975 (Cth) s 75(1).

2. By the time the matter came on for hearing, the wife’s claim had been “closed” and reduced to a lump sum figure of $25,000.  This sum represented, in effect (although not specified as such), the money required for her support during a period of skills retraining.  The need of the wife was adequately demonstrated during the trial.  In the end, this could not be, (within that context), gainsaid. 

3. The capacity of the husband to pay was a more contentious issue.  This issue melted away somewhat when the wife sought a lump sum of relatively modest proportions.  There is no doubt that within the assets of the husband, (to which I am entitled to have regard, as well as to his income), it would be within the husband’s capacity to pay the $25,000 sought. There will be an order accordingly.

1. I will make that order conscious of the fact that it is not open to a party in these proceedings to seek to get a higher capital sum indirectly and without reference to factors under s 75(2) of the Family Law Act 1975 (Cth) by making a claim for lump sum maintenance.

2. In this case, the unusual combination of the proved need, the demonstrated capacity and the comparative smallness of the amount claimed all combine to make it appropriate to make an order which in other circumstances might be inappropriate.  

Just and equitable: the so-called “fourth step”

1. The “fourth stage” of proceedings is to consider if the division of property occasioned by the determinations pursuant to contributions and the s 75(2) factors, would be in all the circumstances, just and equitable. This is properly a consideration of whether the form of the orders would leave one party with a share which was, when viewed objectively and overall, inequitable. A common example of this is where one party receives superannuation which will not fall in for some time and the other party receives tangible assets which can be liquidated immediately.

2. In this case, the division of property between the parties in accordance with the orders sought and my determination would be as follows.

3. The total net assets of the parties are $1,525,000.  If, in consequence of my determinations above, the property is divided as to 52 per cent to the wife and 48 per cent to the husband, this would mean that the parties are notionally entitled to $793,000 as to the wife and $732,000 as to the husband.

4. In practical terms, if the wife retains the V, ACT property unencumbered ($600,000), her superannuation ($11,512) and the Camry motor vehicle ($6,000), this would lead to a notional total of approximately $617,512.  The husband would need to make an adjusting payment to the wife of $175,500 ($793,000 – $617,500 = $175,500).  I will make an order for the sale of the B, NSW property such that the proceeds of sale will satisfy the terms of my orders if the husband is unable to raise the sum for payment. 

5. Taking account of the nature of the property received by the husband as part of his share and, in particular, the fact that a number of items the husband received have already been received by him and, moreover, the husband’s superannuation was some three times that of the wife at the time of trial, if there were a need to make any adjustment to do justice and equity between the parties it would be to make a minor adjustment in favour of the husband. 

6. However, bearing in mind the relatively small differential between the parties and, overall, the relatively small property pool and bearing in mind also the narrowness of the margins nominated by the party themselves, in my opinion, the orders giving effect to my Judgment will be do justice and equity between the parties and I will make those orders accordingly. 

Conclusion

1. I make orders in accordance with my Judgment.  The matter is removed from the Pending Cases Inventory. 

I certify that the preceding eighty-one (81) paragraphs are a true copy of the reasons for judgment of the Honourable Acting Chief Justice Faulks.  

Senior Legal Associate:

Date:  3 August 2010

Endnote 1

Initiating application of the wife filed 16 October 2008

Final orders sought:

NB: Reproduced without correction.

1.That the wife retain to the exclusion of the husband the following assets:-

a.the property known and situate at [V], ACT;

b.all superannuation entitlements currently in her name;

c.all shares, savings and items of personalty currently in her name, possession and control.

2.That within 28 days of the date of these Orders that the wife will transfer her right, title and interest in the property known in situate at [B], NSW 2550 to the husband and the husband will indemnify the wife and keep her indemnified with respect to all rates and insurances, outgoings and liabilities attached to the said property.

3.Simultaneously with Order 3 the husband will pay the wife the sum of $400,000.

4.That within 28 days of the date of these Orders that the wife sign all deeds, documents, instruments and writings necessary to effect her resignation from the company [P] Pty Ltd.

5.That within 28 days of the date of these Orders the wife will wife sign all deeds, documents, instruments and writings necessary to effect the transfer of her shares in the company [M] Pty Ltd to the husband and simultaneously with that transfer the husband pay to the wife the sum of $200,000.

6.That the husband retain all other items of property currently in his name, possession or control to the exclusion of the wife including but not limited to:-

a.the property known and situate at [W];

b.the commercial property known and situate at [K];

c.the Company [P] Pty Ltd;

d.the Company [M] Pty Ltd;

e.the Company [C] Pty Ltd;

f.The [Knightsbridge] Trust;

g.the [Knightsbridge] Family Trust;

h.any motor vehicle registered in the name of the husband;

i.all superannuation entitlements in the name of the husband;

j.all shares, savings and items of personalty in the husband’s name, possession or control;

k.

Endnote 2

Response to initiating application of the husband filed 24 November 2008

Final orders sought:

NB: Reproduced without correction.

1.That within 42 days of the date of these orders the Wife do all such things and all such documents necessary to transfer to the Husband all her right title and interest in [B property] in the State of New South Wales PROVIDED THAT the Husband shall hereinafter, indemnify and keep indemnified Wife in respect of all claims, calls and liabilities and all government rates, taxes and outgoings with respect to the said real property.

2.That within 28 days of the date of these Orders the Wife sign any documents necessary to resign as director of [P] Pty Ltd

3.That within 28 days of the date of these Orders the Wife sign any documents necessary to transfer her shares in [M] Pty Ltd to the Husband.

4.That the Wife shall hereinafter waive any claim or interest as a beneficiary in respect of the [Kinghtsbridge] Family Trust.

5.That with 28 days the Husband shall do all things necessary to transfer the Camry motor vehicle in the Wife’s possession into the Wife’s name PROVIDED THAT the Wife shall do all things necessary to cause the loan secured over the said motor vehicle to be refinanced into her sole name.

6.That unless otherwise specified in these orders and except for the purposes of enforcing the payment of any money due under these or any subsequent orders:

a.each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at this date.

b.each party hereby foregoes any claim they may have to any superannuation benefits belonging to or earned by the other.

c.all insurance policies to become the sole property of the beneficiary named therein.

d.each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;

e.any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

Endnote 3

Short Minutes of orders sought by the wife – filed in Court 7 December 2009

NB: Reproduced without correction.

1.The wife be declared sole and absolute owner of the following assets to the exclusion of the husband:

a.Property known and situate at [V], ACT;

b.All superannuation in the wife’s name;

c.The wife’s contents and items of personalty;

d.Any monies standing to the credit of the wife in any savings or other account;

e.The Camry motor vehicle.

2.That within 7 days of the date of these orders the husband sign all documents to the effect a transfer of the registration of the Camry motor vehicle to the wife, such cost to be borne by the husband.

3.Within 28 days of the date of these Orders the husband pay to the wife the sum of $50,000.

4.The husband be declared sole and absolute owned of the following assets to the exclusion of the wife;

a.The property known and situate at [W], NSW;

b.All superannuation in the husband’s name;

c.The husband contents and items of personalty;

d.Any monies standing to the credit of the husband in any savings or other account;

e.The [Knightsbridge] Group.

5.Within 28 days of the date of these Orders that the wife will do all acts and things and sign all documents necessary to effect her resignation as director, and any other position held, in the group of companies and trusts known as the [Knightsbridge] Group (the “[Knightsbridge] Group”), but will first if called upon to do so, vote at any meetings of members and directors thereof in favour of such resolutions as the husband may direct.

6.Simultaneously with Order 5, that the wife will do all acts and things and will prepare and execute in favour of the husband a transfer of the whole of her right, title and interest in her shares in the “The [Knightsbridge] Group” and shall do all acts and things necessary to give effect thereto.

7.Within seven (7) days of receipt of the wife’s resignation of director and transfer of shareholding of the wife in the “The [Knightsbridge] Group”, the husband will do all acts and things and register the resignation of the directorship and transfer of shareholding of the wife with the Australian Securities Investment Commission and table a meeting of directors and shareholders in respect of the same.

8.Simultaneously with Order 5 that the wife will do all acts and things and execute all necessary documents to assign to the husband the whole of the wife’s right, title and interest in any loan account with the “[Knightsbridge] Group” and the husband thereafter discharge and release the wife from any liability howsoever arising in relation to the loan account, and indemnify the wife against any and all manner of actions, suits, causes of actions, arbitrations, debts, dues, costs, interests and demands whatsoever both at law and in equity which the husband and the “[Knightsbridge] Group” now has or may have at any time hereafter.

9.The husband will indemnify the wife and keep her indemnified in respect of all liabilities which the husband may have whether now or in the future and whether alone, jointly or severally with the wife and/or any other person or company to any creditor of the “[Knightsbridge] Group” pursuant to any guarantee or indemnity or in any other matter howsoever arising in respect of any liability of the “[Knightsbridge] Group”.

10.The husband will be solely responsible for and indemnify the wife in respect of any liability to pay tax including income tax, goods and services tax, capital gains, penalty tax and interest which may arise in the future in respect of any tax return lodged on behalf of the wife in relation to the [Knightsbridge] Group or in respect of any transaction of the [Knightsbridge] Group pursuant to these Orders.

11.Within 28 days of the date of these Orders both parties do all acts and things to effect the sale of the [B] property in accordance with Order 12 and upon sale, the proceeds to be applied as follows:

a.To the discharge of sales costs, agents commission and legal fees with respect to the conveyance;

b.To the discharge of any rates and usual outgoings on the property;

c.An amount of $50,000 to be invested in the joint names of the parties in accordance with thee Orders on account of CGT payable for the sale of the property;

d.The balance of the proceeds to the wife.

12.To effect the sale of the [B] property in accordance with Order 11 both parties will do as follows:

a.Within 7 days of the date of these Orders, execute an agency agreement with a real estate agent as agreed in writing by the parties and failing agreement an agent as nominated by the wife;

b.Within 7 days of the wife selecting the listing agent both parties will do all acts and things, and sign all necessary documents to retain the said agent as the listing agent, and will authorise that agent to commence the listing of the [B] property for private treaty sale;

c.The parties will agree in writing as to the listing price of the [B] property and failing agreement, the wife will nominate the listing price;

d.In the event that the [B] property does not reach the listing price during the sale period, both parties will accept any sale price offered on the property not more than $15,000 below the nominated listing price, or such other price as agreed between the parties in writing;

e.Both parties will retain a solicitor to conduct the sale of the [B] property not otherwise acting on behalf of the parties in relation to the current proceedings, as agreed between the parties in writing, and failing agreement, the wife will nominate a solicitor and the parties direct and authorise those solicitors to distribute the proceeds of the sale of the [B] property in accordance with these Orders;

f.The parties will ensure that the nominated listing agent is supplied a set of keys to the [B] property and that the property is made available to the listing agent for all open for inspection times and such other reasonable times as requested by the agent;

g.Both parties will comply with all reasonable directions of the listing agent as to the sale of the [B] property including the agent’s instructions to clean the property in readiness for sale and during the sale period, and to keep all gardens, lawns and outdoors areas in presentable and saleable condition.

13.All parties are restrained from encumbering the [B] property pending the completion of the sale.

14.The proceeds of sale pursuant to Order 11(c) will be deposited into joint interest bearing account in the name of the husband and the wife and will not be released unless as agreed between the parties in writing or to be paid to the Commissioner of Taxation to be applied to the discharge of any CGT liability arising from the sale of the [B] property.

15.Within 14 days of the exchange of contracts for sale of the [B] property both the husband and wife will do all acts and things to open a bank account with a financial institution as agreed between the husband and wife in writing, and failing agreement an account as nominated by the wife.

16.In the event that the funds held in accordance with Order 11(c) are in excess of the CGT liability, the balance of those said funds will be released to wife as will any interest accumulated on the account, and in the event at the funds are deficient to discharge the CGT liability, the husband will be responsible for the payment of the remaining liability to the Commissioner of Taxation.

17.In respect of Order 3 hereof, the amount of $25,000 is an amount attributable for the payment of maintenance to the wife pursuant to section 77A of the Family Law Act.

18.In default of the parties or either of them doing all acts and things and executing all such documents as is necessary to give effect to these Orders, that pursuant to section 106A of the Family Law Act that a Registrar of the Family Court of Australia be appointed to execute all such documents in the name of the party in default and to do all acts and things necessary to give validity and operation to the said Orders.

19.These Orders are binding upon all parties heirs, executors and assigns.

20.Each party have liberty to relist this matter in respect of the enforcement and implementation of these Orders.

Endnote 4

Minutes of orders sought by the Husband – filed in Court 7 December 2009

NB: Reproduced without correction.

1.That both parties take all necessary steps and execute all necessary documents to cause their property situated at [B] in the State of New South Wales to be sold by auction at the earliest possible date at a reserve price to be agreed on between the parties and failing such agreement to be determined by the proper office of the Real Estate Institute or his nominee and that the proceeds of the said sale be disbursed as follows:

a.Payment of agent’s commission and advertising expenses and legal expenses of the sale.

b.Payment of any Capital Gains Tax to be assessed against [the wife] or [the husband].

c.The net balance to be divided between the parties as follows:

i.40% to [the wife]

ii.60% to [the husband]

2.That within 28 days of the date of these Orders the wife sign any documents necessary to resign as director of [P] Pty Ltd.

3.That within 28 days of the date of these Orders the wife sign any documents necessary to transfer her shares in [M] Pty Ltd to the husband.

4.That the wife shall hereinafter waive any claim or interest as a beneficiary in respect of the [Knightsbridge] Family Trust.

5.That within 28 days the husband shall do all things necessary to transfer the Camry motor vehicle in the wife’s possession into the wife’s name.

6.That within 28 days the wife shall do all things necessary to transfer the Landcruiser motor vehicle in the husband’s possession into the husband’s name.

7.That the wife’s application for Spousal maintenance be withdrawn and dismissed and the wife sign a Binding Financial agreement extinguishing any future claims.

8.That unless otherwise specified in these Orders and except for the purposes of enforcing the payment of any money due under these or any subsequent Orders:

a.Each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at this date;

b.Each party hereby foregoes any claim they may have to any superannuation benefits belonging to or earner by the other;

c.All insurance policies to become the sole property of the beneficiary named therein;

d.Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and

e.Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.