Kruger & Kruger
[2008] FamCA 492
•26 June 2008
FAMILY COURT OF AUSTRALIA
| KRUGER & KRUGER | [2008] FamCA 492 |
| FAMILY LAW – PROPERTY SETTLEMENT – Wife received 52 percent, husband received 48 percent of the parties assets – Global approach to ascertaining entitlements – Norbis v Norbis (1986) 161 CLR 513 cited FAMILY LAW – PROPERTY – CONTRIBUTIONS – Wife’s contribution assessed at 52 percent and the husband’s contribution at 48 percent – Contributions of parties regarded as equal in the post separation period – Mallet v Mallet (1984) CLR 605 cited in support of principle that neither category of contribution, being financial contributions and homemaking and parenting contributions, is inherently entitled to greater recognition than the other FAMILY LAW – SUPERANNUATION – superannuation interests of the parties regarded as part of the pool of assets to be apportioned between the parties – Coghlan v Coghlan (2005) FLC 93-220 cited FAMILY LAW – PROPERTY – SECTION 75(2) FACTORS – No adjustment made to the contribution based entitlements of the parties by reference to s 75(2) of the Act – Not accepted that adjustment should be made in favour of the wife for her alleged responsibility to support adult son, as application could be made for adult child maintenance in accordance with Re AM (Adult Child Maintenance) (2006) FLC 93-262 – Not accepted that adjustment should be made in favour of wife in consideration of the husband’s cohabitation with a new partner, as no evidence was led in regards to the partner’s finances – Acknowledged that an adjustment would need to be made in favour of the party who did not receive a residential facility, in recognition of the income producing nature of that asset and the effect on the respective future earning capacities of the parties – Conclusion based on additional factors that each should receive one of the two facilities in the asset pool – No adjustment for CGT as both parties to retain similar investment property portfolios and have not indicated any intention to sell the residential facilities, thus CGT liabilities and realisation costs disregarded – Brett Hall v Brett Hall (2006) FLC 93-276 cited |
| Coghlan v Coghlan (2005) FLC 93-220) Norbis v Norbis (1986) 161 CLR 513 Mallet v Mallet (1984) 156 CLR 605 Re AM (Adult Child Maintenance) (2006) FLC 93‑262 Brett Hall v Brett Hall (2006) FLC 93-276 |
| APPLICANT: | Ms Krugher |
| RESPONDENT: | Mr Kruger |
| FILE NUMBER: | PAC | 174 | of | 2007 |
| DATE DELIVERED: | 27 June 2008 |
| PLACE DELIVERED: | Parramatta |
| JUDGMENT OF: | COLEMAN J |
| HEARING DATE: | 20, 21 & 22 May 2008 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Shaw |
| SOLICITOR FOR THE APPLICANT: | Marina Voncina Solicitors |
| COUNSEL FOR THE RESPONDENT: | Mr Dubler SC Mr Combe |
| SOLICITOR FOR THE RESPONDENT: | Macquarie Partnership |
Orders
(1)That pursuant to the provisions of s 79 of the Family Law Act the parties shall hold their property and superannuation interests having a net value of $8 927 984 as tenants in common in shares of 52 percent to the wife and 48 percent to the husband.
(2)Note the intention of the Court that the final Orders of the Court will vest title to Residential Facility One in the husband and enable the wife to retain Residential Facility Two.
(3)That there be liberty to apply for further orders implementing Orders 1 and 2 hereof.
(4)That costs be reserved.
IT IS NOTED that publication of this judgment under the pseudonym Kruger & Kruger is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC174 of 2007
| MS KRUGER |
Applicant
And
| MR KRUGER |
Respondent
REASONS FOR JUDGMENT
Introduction
By application filed 12January 2007 Ms Kruger (“the wife”) sought orders for settlement of property pursuant to PartVIII of the Family Law Act 1975 (Cth) (“the Act”). By response filed 22February 2007 Mr Kruger (“the husband”) opposed the granting of relief in the terms sought by the wife and sought alternate orders pursuant to PartVIII of the Act.
At the commencement of the trial, learned counsel for the wife submitted Minutes of the Orders sought by her. Those minutes provided:
(1)Pursuant to s79 of the Family Law Act 1975, the respondent husband, as soon as practicable, do all things and execute all documents necessary to transfer to the applicant wife his right, title and interest in [Property D].
(2)That the applicant wife transfer to the respondent husband, as soon as practicable, her right, title and interest in the following properties:-
2.1[Property A];
2.2[Property B];
2.3[Timeshare One];
2.4[Timeshare Two];
2.5[Timeshare Three];
2.6[Timeshare Four].
and the respondent husband shall indemnify the wife and keep her indemnified against any claim made or proceeding brought against her by reason of there being any outstanding charges or other liabilities attaching to the abovementioned timeshare interests.
(3)That the applicant wife be declared, pursuant to s78 of the Family Law Act 1975, the sole legal and beneficial owner of the following properties:-
3.1[Property Q];
3.2[Property R];
3.3[Property T];
3.4[Property U];
3.5[Property V];
3.6[Property W];
3.7[Property AA]; and
3.8[Property S].
(4)That pursuant to s.78 of the Family Law Act 1975, the respondent husband be declared the sole legal and beneficial owner of the following properties:-
4.1[Property H];
4.2[Property I];
4.3[Property J];
4.4[Property K];
4.5[Property L];
4.6[Property M];
4.7[Property G];
4.8[Property N];
4.9[Property O];
4.10[Property P]; and
4.11 [Property F].
(5)That the applicant wife and respondent husband, in their capacity as Trustees and members of the Superannuation Fund (“the Fund”), being a self managed fund, do all things and execute all documents as may be necessary to transfer to a complying superannuation fund nominated by the respondent husband, all money and property standing to his credit in the said Fund as at 30June 2008 or as at such earlier balance date as requested by the respondent husband and the respondent husband and the applicant wife, in their capacity as trustees, will use their best endeavours to obtain the consent in writing of the third trustee of the Fund, namely [X Kruger], as soon as practicable.
(6)That the respondent husband retain as against the applicant wife, any interest he has in any other superannuation fund.
(7)That within twenty-one (21) days, the respondent husband execute in writing a notice in accordance with s.203A of the Corporations Act 2001 (Cth) resigning as a director and any other office he holds in the following corporations:-
7.1[Company One] Pty Ltd; and
7.2[Company Two] Pty Ltd.
(8)That simultaneously with the due implementation of the preceding order, the respondent husband transfer to the applicant wife his shareholding in [Company One] and [Company Two].
(9)That simultaneously with the implementation of the previous two orders, the respondent husband transfer to the applicant wife his units in [Unit Trust One] and [Unit Trust Two].
(10)That the respondent husband transfer any loan accounts in his favour in the [Kruger] Family Group to the wife simultaneously with the implementation of those Orders.
(11)To better secure the intent of these Orders in resolving financial matters as between the parties pursuant to s.79 of the Act, the respondent husband will, upon receiving the benefits conferred upon him by these Orders and simultaneously therewith execute a Deed to be prepared at the expense of the applicant wife, declaring the husband’s determination to no longer be included as a beneficiary under the terms of the Deed of Settlement made 30 November 2001 between [JM] as settlor and [Company One] Pty Ltd, ACN […] as trustee, by which Deed the [Kruger] Family Trust was constituted and in accordance with Clause 3.3(a)(i) of the said Deed, shall serve a properly executed copy of such Deed on the Trustee, namely [Company One] Pty Ltd, whose address for that purpose is [….]
(12)That as soon as practicable, the applicant wife shall do all things and execute all documents necessary to obtain a release by St George Bank Limited (“the Bank”) of all personal guarantees given to the Bank by the respondent husband in relation to [Kruger] Family Group and in the event that the Bank is not prepared to execute a release of all securities and personal guarantees given by the respondent husband to the Bank, the applicant wife will cause the Bank’s securities over the [Kruger] Family Group to be discharged and will refinance the liabilities of the [Kruger] Family Group to the Bank to the intent that the respondent husband be no longer liable to the Bank or liable in relation to any creditors of the [Kruger] Family Group and the applicant wife will indemnify him in relation to any claims made or proceedings brought against him as a result of his having provided such securities and/or guarantees.
(13)That pursuant to s.106A, in the event of either party failing to execute any document necessary to give effect to the property settlement orders made pursuant to the proceedings hereby instituted within seven (7) days of being requested to do so by the other party or by the other party’s lawyer, then in each and every case of such failure, a Registrar of the Family Court of Australia at Parramatta shall thereupon and without further order be appointed to execute such document on behalf of an in lieu of the party in default and the cost of obtaining due execution shall be borne by the party in default on an indemnity basis and the cost thereof may be deducted from any moneys otherwise payable to the party in default. Evidence of default shall be adequately established by an affidavit produced to the Registrar by the party seeking due execution of such document or documents. (Minute of Orders sought by the applicant wife, Outline of Case document, annexure “A”).
During the course of the trial, learned counsel for the wife confirmed his client’s instructions to seek an additional order to the effect that the wife indemnify the husband in respect of any liability to the beneficiaries of the Kruger Family Trust whether arising by way of breach of fiduciary duty, breach of trust or otherwise.
The orders sought on behalf of the wife were submitted to represent a division of the assets of the parties in shares of 57.5 per cent to the wife and 42.5 per cent to the husband. As will be seen, the minutes of order submitted on behalf of the wife included as assets of the parties the property of third parties, the most significant of which is a discretionary trust in which there are third party beneficiaries.
In opening the case for the husband, his learned senior counsel confirmed that the husband sought an equal division of the assets of the parties. Senior Counsel for the husband adopted in practical terms the approach to third party interests which learned counsel for the wife had adopted.
Learned senior counsel for the husband opened his case on the basis that the husband sought that the equal division of assets be achieved on the basis that the husband receive as part of his entitlement one of the residential facilities, preferably nominated by him but, in the alternative, nominated by the wife. The husband’s ultimate alternate position was that if the Court did not consider that he should receive a residential facility in specie, the husband be paid 50 per cent of the net value of the total assets of the parties, ignoring for that purpose the reality that one of the most substantial assets was owned by a discretionary trust in which there were third party beneficiaries.
Late in the proceedings, learned senior counsel for the husband filed in Court an amended response of the husband to the wife’s application by which orders in the following terms were sought:
(1)That the parties do all things and execute all documents necessary to effect a division of the net pool of assets available for distribution between the parties in the following proportion:
1.1To the applicant wife money or monies worth representing 50% of the net pool.
1.2To the respondent husband money and/or monies worth representing 50% of the net pool.
(2)That at arriving at any division of the net pool between the parties the court make Orders having the following effect:
2.1Transferring the husband’s shares in [Company One] Pty Ltd to the wife;
2.2After making an appropriate further contribution to the Superannuation Fund, transfer the husband’s interest in the Superannuation Fund in specie to the husband’s new Superannuation Fund by transfer of [Property E4];
2.3The wife renounce her position as a discretionary beneficiary and a secondary appointor of the [Kruger] Family Trust with an acknowledgment that the husband will exercise his power of appointment to appoint a new trustee;
2.4The wife transfer her units in [Unit Trust One] and [Unit Trust Two] to the respondent husband;
2.5The wife to transfer her shares in [Company Two] Pty Ltd to the husband.
2.6The wife to forgive her loans to the [Kruger] Family Trust, [Unit Trust One] and [Unit Trust Two].
2.7The husband to forgive his loans to [Company One] Pty Ltd trading as [Residential Facility One].
2.8The parties use their best endeavours to cause the St George Bank to release such securities and personal guarantees so as to result in, after the above transactions, the husband’s properties or guarantee no longer being used as security to support the wife’s properties and interests and vice versa.
2.9The respondent husband transfer his interest in [Property D] to the wife.
2.10The wife transfer her interests in the balance of jointly owned properties to the husband.
2.11The wife transfer to the husband either cash or property in her sole name as may be required to effect the said division of the net pool.
(3)In the alternative at arriving at any division of the net pool between the parties, the court make Orders having the following effect:
3.1Transfer of the wife’s shares in [Company One Pty Ltd] to the husband.
3.2The husband renounce his position as a discretionary beneficiary of the [Kruger] Family Trust and also renounce his power of appointment and nominate the wife as the successor appointor under the [Kruger] Family Trust;
3.3Transfer of the husband’s interests in the Superannuation fund to the husband’s new Superannuation Fund;
3.4The husband transfer his units in [Unit Trust One] and [Unit Trust Two] to the wife;
3.5The husband (sic) to transfer her shares in [Company Two] Pty Ltd to the husband.
3.6The husband to forgive his loans to the [Kruger] Family Trust, [Unit trust One] and [Unit Trust Two].
3.7The wife to forgive her loans to [Company One] Pty Ltd trading as [Residential Facility One].
3.8The parties use their best endeavours to cause the St George Bank to release such securities and personal guarantees so as to result in, after the above transactions, the husband’s properties or guarantee no longer being used as security to support the wife’s properties and interests and vice versa.
3.9The husband transfer his interest in [Property D] to the wife.
3.10The wife transfer her interests in the balance of jointly owned properties to the husband.
3.11The wife transfer to the husband either cash or property in her sole name as may be required to effect the said division of the net pool.
(4)In the alternative at arriving at any division of the net pool between the parties, the Court make Orders having the following effect:
4.1The wife transfers to the husband her interest in the shares in [Company One] Pty Ltd, the shares in [Company Two] Pty Ltd, her units in [Unit Trust One] and [Unit Trust Two];
4.2After making an appropriate further contribution to the Superannuation fund, transfer the husband’s interests in the Superannuation Fund in specie to the husband’s new Superannuation Fund by transfer of [Property E4];
4.3The wife renounce her position as a discretionary beneficiary and a secondary appointor of the [Kruger] Family Trust with an acknowledgment that the husband will exercise his power of appointment to appoint a new trustee;
4.4The wife to forgive her loans to the [Kruger] Family Trust, [Unit Trust one] and [Unit Trust Two] and [Company One] Pty Ltd t/as [Residential Facility One].
4.5The parties use their best endeavours to cause the St George Bank to release such securities and personal guarantees so as to result in, after the above transactions, the wife’s properties or guarantee no longer being used as security to support the husband’s properties and interests.
4.6The husband transfer his interest in the jointly owned properties (including timeshares) to the wife.
4.7The husband transfer to the wife either cash or property in her sole name as may be requires to effect the said division of the net pool.
(5)In the alternative the parties take such steps as are required to sell all of the assets of the [Kruger] Family Group (being that of [Company One] Pty Ltd, [Company Two] Pty Ltd, The [Kruger] Family Trust, [Unit Trust One] and [Unit Trust Two]) and there then be a distribution to the shareholders/beneficiaries being the husband and wife to effect such a division of the net pool followed by the winding up of those entities and any necessary further transfer of the parties’ interests in jointly held properties.
(6)That in event of any party failing to execute any documents required to give effect to the foregoing Orders within seven days of being requested to execute such document by any other party to these proceedings and pursuant to s.106A of the Act the Registrar of the Court is hereby authorised to execute such documents on behalf of lieu of the party in default and the party in default shall pay the costs incurred in obtaining due execution to the requesting party on an indemnity basis.
(7)Costs.
It was ultimately submitted on behalf of the husband that the Court would grant the husband the opportunity “to buy out the [residential facilities]”, or, in the alternative, if the Court was not disposed to make orders in those terms, to make orders providing for the “transfer of [Residential Facility Two] to the husband” or, failing that alternative, to Court make orders for “the sale of both [residential facilities]” or, finally in the alternative, if none of the preceding claims found favour, that the Court make orders for the “husband to receive [Residential Facility One]”. It is thus apparent that, in addition to the dispute as to the beneficial entitlements of the parties to their assets, there is a live issue as to the ultimate fate of the parties’ residential facility businesses.
Material Facts
The husband was born in November 1943 and is accordingly 64 years of age.
The wife was born in December 1948 and is accordingly 59 years of age.
The parties married in March 1967. Neither party had any assets of significance at the date of marriage.
The husband was then employed as a trainee in his profession earning approximately $80 per week.
After the marriage the wife worked in a factory and derived additional income by sewing garments at night.
There were three children of the marriage, X who was born in December 1974, Y who was born in April 1977 and Z who was born in September 1978. X turned 18 years of age at the end of 1992, Y in April of 1995 and Z in late 1996. For the last decade of the parties’ cohabitation there were accordingly no children under 18 years of age.
The parties purchased their first matrimonial home in 1970. The parties acquired their first investment property in about 1971 and their second investment property in the early 1970s, the parties disagreeing as to when that actually occurred. The parties then substantially acquired three real estate properties by providing modest deposits and borrowing substantially.
The husband became qualified in January 1971 and was admitted to membership of the professional body in April of that year. The husband has had employment in that profession from 1971 to the present date.
The parties separated for a time in the early 1970s. Ultimately, 3½ decades later, nothing of significance turns on that event, or what, if any, funds the wife obtained at that time, or what she did with them. The relationship of the parties was re-established in early 1974 and continued for almost another 32 years until the parties separated in January 2006.
The parties lived in Fiji for a period in 1975 during which time the husband had employment in his profession. The wife sold Avon products in Fiji and undertook sewing. The parties returned to Sydney from Fiji in early 1976 at which time the first matrimonial home was sold, as was an apartment which the parties had purchased in the early 1970s. The proceeds of sale of those properties were applied to the purchase of a matrimonial home, Property A.
The husband contends that he provided $30 000 for that purpose from an inheritance that he received from his father. In cross-examination, the wife was unable to deny the husband’s assertions with respect to contribution to the acquisition of Property A of $30 000 inherited by him from his father’s estate.
In 1977 the first investment property which had been acquired in 1971 was sold and two investment properties were purchased, Property B and Property C.
Following the birth of the child Z in 1978, the wife continued selling Avon products and doing some sewing, and thereafter earned income as a day care mother looking after between four and six children in the matrimonial home.
In 1984, when Z commenced attending school, the wife commenced to work as an assistant at a residential facility and enrolled at … College to study in order to gain registration in her profession. The wife completed her course and was awarded her Diploma in 1987.
Subsequent to the parties’ return to Australia the husband continued to be employed in his profession. Until 1984, the evidence leaves little scope for doubt that the husband made a substantially greater financial contribution to the acquisition, conservation and improvement of the parties’ assets and the payment of the expenses of the family than did the wife, although the wife’s financial contributions over that period were by no means insignificant. By virtue of his $30 000 inheritance, the husband also made a greater capital contribution over that period than did the wife.
During the period from the date of marriage until 1984 the wife made the greater contribution as homemaker and parent. To see the parties’ contributions as equal, or slightly favouring the husband by reason of the $30 000 capital injection as at 1984 would be a realistic conclusion having regard to the evidence.
From 1984 until 1993 the wife derived income which increased as she was promoted in 1988 and, in 1989, promoted again. During those years the wife was undertaking study for a graduate Diploma which she ultimately did not complete. Nothing turns on such non-completion.
In 1987 Property C was sold and the balance of the proceeds of sale applied to discharge the mortgage over Property B. Funds were also contributed towards the purchase of vacant land at Property D. A house and swimming pool was subsequently built at Property D. Substantial borrowings were incurred for that purpose.
As in the earlier years of cohabitation, the husband continued to practice his profession during the period form 1984 to 1993. In January 1993 Company One Pty Limited was incorporated. The husband and wife have at all material times been equal shareholders in and directors of Company One.
In 1993 the parties acquired through Company One Pty Limited the Residential Facility One at a cost of $1.1 million. The Advance Bank which funded the acquisition of Residential Facility One took security over the facility premises and over Property D, Property A, and Property B. Personal guarantees were given by both parties and, the evidence establishes, the income being derived by each party was taken into account by the bank for the purpose of the parties application for funds to acquire the residential facility.
After the acquisition of Residential Facility One and at all material times, howsoever styled or titled, the wife has been the “manager” of Residential Facility One. The husband has been involved in the running of Residential Facility One, and has from time to time been paid “consultancy fees” for his efforts.
On 1 June 1995 the Superannuation Fund was created. The wife, the husband and the daughter X are the trustees of the fund. The members of the fund are the husband, the wife and their children Y and Z.
In 1995 the Residential Facility One premises were extended.
In 1996 the wife received $50 000 compensation for work related injuries, $30 000 of which was applied to discharge the mortgage over the matrimonial home at Property D. The balance of $20 000 was applied in unspecified ways for the benefit of the family.
On 30 November 2001 by Deed of Settlement, the Kruger Family Trust was created. The discretionary beneficiaries of the trust are Company One Pty Limited, the husband, the wife and each of their children; X, Y and Z. Company One Pty Limited is the trustee of the Trust.
In December 2001 Company Two Pty Limited was incorporated. The husband and wife hold the issued shares in Company Two equally. Company Two is the trustee for two unit trusts, Unit Trust One and Unit Trust Two, the unit holders in each of which are the husband and wife in equal shares.
In 2002 Residential Facility Two at Property E1 was purchased by Company One Pty Limited as trustee for the Kruger Family Trust. Company Two Pty Ltd acquired, as trustee for Unit Trust Two, three blocks of land in close proximity to the facility (Property E2, E1 and E3). The Superannuation Fund then also acquired land, at E4. Both parties gave personal guarantees for the acquisition of Residential Facility Two and adjoining blocks of ground, almost the whole of the acquisition costs being borrowed on the security of the properties which were acquired, together with securities given over Property D (the matrimonial home) and Property A and Property B together with the parties’ personal guarantees.
Until separation, the wife was paid a wage by Company One Pty Limited, as was the husband, and each party until separation derived directors fees and trust distributions. Since separation in January 2006, the husband has not received pecuniary benefits from Company One Pty Limited.
The wife has had exclusive occupancy of the former matrimonial home (Property D) since January 2006. The husband has lived elsewhere, initially renting accommodation and, subsequent to the acquisition of Property F, living in a home owned by him.
In late 2006 the Kruger Family Group experienced difficulties in serving its obligations to St George Bank (as Advance Bank had by then become). Those difficulties were resolved by the parties and consent orders made in this Court on 22 February 2007 in circumstances which, on the evidence before this Court, do not enable a finding as to the culpability of either party to be suggested with confidence.
The parties’ marriage was dissolved by decree pronounced in the Federal Magistrates Court on 9 September 2007. The husband has remarried but the wife has not re-partnered.
The Kruger Group
The wealth of the Kruger family reposes to a not insignificant extent in a corporate structure known as the “[Kruger] Group”. It is hopefully helpful at this stage, to illustrate diagrammatically how the Kruger Group is constituted. The structures which are revealed by the following diagrams are not controversial. The Court is indebted to learned counsel for the wife and/or his instructing solicitor for the diagrams which are replicated in these reasons for judgment without change or amendment, and reproduced as Appendix “A”. [Appendix A has been removed for publication purposes].
The property of the parties to the marriage
The identity and value of the assets of the parties to the marriage is ultimately not controversial in any significant way. Learned senior counsel for the husband provided the Court with a table of assets and liabilities (Exhibit R2) which reflected the agreement with respect to the value of some assets and the areas of disagreement with respect to other assets. It is convenient to reproduce the substance of that table at this point in the Court’s reasons for judgment (footnotes omitted).
Assets
Item
Property
Ownership
Husband’s Value
Wife’s Value
1
Property H
H
$250 000.00
$350 000.00
2
Property I
H
$280 000.00
$290 000.00
3
Property J
H
$180 000.00
$190 000.00
4
Property K
H
$180 000.00
$190 000.00
5
Property L
H
$148 000.00
$185 000.00
6
Property M
H
$150 000.00
$190 000.00
7
Property G
H
$140 000.00
$172 000.00
8
Property N
H
$215 000.00
$262 000.00
9
Property O
H
$175 000.00
$252 000.00
10
Property P
H
$250 000.00
$300 000.00
11
Property F
H
$420 000.00
$450 000.00
12
Property D
H & W
$810 000.00
$794 000.00
13
Property A
H& W
$550 000.00
$600 000.00
14
Property B
H & W
$280 000.00
$285 000.00
15
Timeshare One
H & W
$25000.00
$1000.00
16
Timeshare Two
H & W
$6000.00
$1000.00
17
Timeshare Three
H & W
$3500.00
$1000.00
18
Timeshare Four
H & W
$7500.00
$1000.00
19
Property Q
W
$335 000.00
$335 000.00
20
Property R
W
$320 000.00
$315 000.00
21
Property S
W
$600 000.00
$550 000.00
22
Property T
W
$340 000.00
$340 000.00
23
Property U
W
$290 000.00
$290 000.00
24
Property V
W
$485 000.00
$470 000.00
25
Property W
W
$460 000.00
$455 000.00
26
Property AA
W
$540 000.00
$530 000.00
27
Residential Facility One
Company One P/L
$2 750 000.00
$2 350 000.00
28
Residential Facility Two
Company Two P/L
$3 500 000.00
$2 900 000.00
29
Property E2
Company Two P/L
$550 000.00
$550 000.00
30
Property E1
Company Two P/L
$650 000.00
$650 000.00
31
Property E3
Company Two P/L
$700 000.00
$700 000.00
Total
$15 547 500.00
$14 979 000.00
Other
H
W
1
Superannuation
$463 492.00
$546 639.00
2
Liabilities
$1 462 476.60
$2 375 000.00
3
Company One P/L; Company Two P/L
$3 854 671.00
It was submitted by learned counsel for the parties in final submissions that the genesis of the disagreement in relation to the value of a number of items of real estate owned by the parties, in their joint names and individually, was the range of estimated values of the properties emerging from the appraisals obtained by the parties for that purpose. Essentially, perusal of the table suggests that the wife’s estimates of the values of properties owned by the husband reflected the upper end of the range of estimated values whilst the lower end of the range tended to be relied upon for properties in the wife’s own name. In general, and unsurprisingly, the husband adopted the reverse approach to the ranges of estimated market values.
In final submissions counsel for the parties expressly or impliedly invited the Court to take the midpoint revealed by the estimated ranges of value for the properties where the parties were in disagreement. Having perused the appraisals, it does appear that the range revealed by the appraisals is not accurately transposed into the table in every instance. The Court has had regard to the appraisals themselves where there is disagreement with respect to the estimated values of the properties. So doing produces figures which are not identical with the figures obtained if the values asserted on behalf of the husband and wife are averaged.
So far as the values of the residential facilities are concerned, it was, sensibly in the Court’s view agreed by learned counsel for the wife after Mr ON, the valuer who prepared very detailed valuations of each of the residential facilities, was briefly cross-examined, that the figures of $2.75 million and $3.5 million for Residential Facility One and Residential Facility Two respectively were the appropriate figures to be taken into account for present purposes.
The superannuation entitlements of the parties are fully funded having regard to the financial accounts of the Superannuation Fund as at 30 June 2007. Satisfying the entitlements of the parties in full out of the assets of the superannuation fund can be achieved without adversely impacting the entitlements in the fund of X Kruger ($32 620) and Y Kruger ($37 737).
Given that the husband could access his superannuation entitlement immediately, and that the wife can, and has given evidence of her intention to access her superannuation interest upon attaining 60 years of age at the end of this year, it is appropriate to regard the superannuation interests of the parties as part of the pool of assets to be apportioned between the parties. (See Coghlan v Coghlan (2005) FLC 93-220).
Sensibly in the circumstances of this case, neither counsel for the parties suggested that other than a global approach (see Norbis v Norbis (1986) 161 CLR 513) should be adopted for the purpose of determining the parties’ entitlements to their property.
In relation to his real estate holdings, the husband has secured liabilities of $1 462 476.60 whilst in relation to her real estate holdings, the wife has secured liabilities of $2 375 000. The parties joint obligations inclusive of obligations through Company One Pty Ltd and Company Two Pty Ltd total $3 854 671.
Reproduced below in tabular form are the assets and liabilities of the parties in the light of the Court’s calculations with respect to the range of appraisals of the value of individual real estate holdings.
Item
Property
Ownership
Value
1
Property H
H
$255 000.00
2
Property I
H
$290 000.00
3
Property J
H
$190 000.00
4
Property K
H
$190 000.00
5
Property L
H
$153 000.00
6
Property M
H
$157 500.00
7
Property G
H
$147 500.00
8
Property N
H
$215 000.00
9
Property O
H
$195 000.00
10
Property P
H
$330 000.00
11
Property F
H
$420 000.00
12
Property D
H & W
$795 000.00
13
Property A
H& W
$525 000.00
14
Property B
H & W
$285 000.00
15
Timeshare One
H & W
$1000.00
16
Timeshare Two
H & W
$1000.00
17
Timeshare Three
H & W
$1000.00
18
Timeshare Four
H & W
$1000.00
19
Property Q
W
$335 000.00
20
Property R
W
$305 000.00
21
Property S
W
$575 000.00
22
Property T
W
$340 000.00
23
Property U
W
$290 000.00
24
Property V
W
$462 500.00
25
Property W
W
$455 000.00
26
Property AA
W
$530 000.00
27
Residential Facility One
Company One P/L
$2 750 000.00
28
Residential Facility Two
Company Two P/L
$3 500 000.00
29
Property E2
Company Two P/L
$550 000.00
30
Property E1
Company Two P/L
$650 000.00
31
Property E3
Company Two P/L
$700 000.00
Total
$15 594 500.00
On 17 June 2008, subsequent to his appearance before the Court when sitting as a Full Court in hearing an appeal from the Federal Magistrates Court, learned Counsel for the wife, with consent of learned Senior Counsel for the husband, tendered to the Court a table of the assets and liabilities of the parties in which, Counsel stated, the averaging exercise described above had been undertaken.
Attached to these Reasons for Judgment as Appendix “B” is the table tendered by learned Counsel. It is apparent that the gross value of the assets of the parties referred to in the document tendered on 17 June 2008 ($15 637 5000) is somewhat different to that in the table set out above. Part of that disparity arises from the husband’s property, Property G (Item 7) which the Court has included at $147 500, whilst Counsel’s schedule includes that property at $155 000. It is apparent from the S & L Valuers appraisal, upon which both the Court and Counsel have relied, suggests a market value of $140 000 - $155 000 giving rise to a mean of $147 500, not the upper limit of the range of $155 000.
The second item in respects of which the figures differ (Item 13) relates to Property A. It is apparent that the Court and Counsel have relied upon the same appraisal of the market value of this property, that prepared by W & H which reveals a range of $500 000 - $550 000, the mean of which is $525 000 rather than its upper limit of $250 000. A further $25 000 of the difference in the figures upon which the parties have relied is thus accounted for.
The Court is satisfied that a similar position applies where there is other, albeit minor disagreement between the tables, $5 000 with respect to Item 14, $10 000 with respect to Item 20, $7 500 with respect to Item 24. To the extent that the figures revealed, seemingly for the first time, in Counsel’s schedule of 17 June 2008 for the parties’ timeshares differ significantly from those the Court was previously invited to adopt (Items 15, 16, 17 and 18), the Court accepts that modifying the table set out above with respect to those figures is appropriate in view of what learned Counsel for the wife has represented as the joint invitation of Counsel for the parties. The effect of so doing is to increase the sum of $15 594 500 by $15 500 to $15 610 000.
Although it is apparent that the parties have loan accounts in a number of their entities, the case has sensibly been conducted on the basis that, save to the extent that the Court needs to make orders for transfer and indemnity with respect to such two loan accounts, the loan accounts themselves do not alter the substantive outcome of the proceedings. That is sensible having regard to the reality that such an approach does not, on the evidence, have the potential to adversely impact upon the rights of third parties (the adult children of the parties) and that, subject to one matter, provided that the party acquiring a residential facility indemnifies the other party in relation to any liabilities that the party may have in or to the entity which holds legal title to the facility, no injustice can result. In the post separation period, movements in loan accounts resulting from the receipt of funds may impact upon the contribution based entitlements of the parties.
It is appropriate to record the course which the proceedings have taken so far as Residential Facility Two is concerned. Whilst there is a convenience in treating Residential Facility Two as if it were the property of the parties to the marriage, it is in fact the property of a trust in which the husband and wife, and their three children are but discretionary beneficiaries with no interest in the asset itself and no more than an entitlement to have the trust duly administered pursuant to the terms of the instrument by which it was created. (See discussion in Jacobs’ Law of Trusts in Australia, 7th Edition, 2006, at paras 314 & 2315).
Without suggesting that the evidence reveals that the children would “gang up” on the husband, the evidence suggests that the children are somewhat more favourably disposed to their mother than to their father. For the husband to receive Residential Facility Two would appear to have the potential for real legal and practical difficulties. Although in theory those difficulties are no less real if the wife is to acquire Residential Facility Two, the evidence suggests that in practice they would be.
As the transcript would confirm, the difficulties potentially arising from the Court purporting to award an asset of the Kruger Family Trust to either party was raised at the outset of the trial with counsel for the wife. It is to be remembered that at that time the husband’s position did not necessarily involve seeking that he be awarded Residential Facility Two.
Learned counsel for the wife having obtained instructions, which he clearly conveyed to the Court, that his client wanted Residential Facility Two notwithstanding the reality that so doing may involve breaches of Trust and of fiduciary duties, the Court is content to proceed on that basis. Whilst that is not of itself reason to award the wife Residential Facility Two, it is in a practical sense a matter which militates against awarding Residential Facility Two to the husband or causing it to be sold unless not doing so would visit an injustice upon the husband.
The net value of the assets of the parties accordingly approximate $8, 927 984.
The evidence of the parties at trial
The reliability of the evidence of the husband and wife assumes significance in this case as, notwithstanding that their cohabitation occupied almost 40 years, the parties have different quite perceptions of a number of significant events which occurred during that time. The reliability and accuracy of the evidence of the husband and wife impacts materially on the evaluation of their respective contributions.
The evidence of other witnesses, to which reference will be made, has also to be considered in relation to the question of contributions, as does circumstantial evidence of how the parties dealt with their assets, and how they styled relevant financial transactions over the course of their relationship.
Neither the husband nor the wife was an entirely satisfactory or reliable witness. During cross-examination, each succumbed at times to the temptation to exaggerate his or her own contributions, and to seek to diminish the significance of the other’s contributions. The evidence of each party was at times internally contradictory. Each party also sought at times to appear reasonable, and thus make appropriate concessions, whilst at other times being unable to resist or create the opportunity to be critical of the other party.
Notwithstanding that throughout her affidavit material the wife tended to refer to property acquisitions in terms of “[the husband] and I”, in cross-examination the wife generally refused to acknowledge the husband’s contributions towards the many properties which the parties acquired over a period of almost four decades, notwithstanding that, on any objective view of the evidence, it is unlikely that the parties could have acquired and accumulated the property which they did in the absence of substantial contributions of various kinds by each party on an ongoing and sustained basis.
At times in cross-examination, particularly with respect to the residential facilities between 1993 and 2006, the wife asserted that as between herself and the husband, she did everything and the husband did nothing, or little of consequence. Whatever view the Court ultimately reaches as to the respective contributions of the parties towards the residential facilities, on no objective view of the evidence, including the affidavit evidence of the wife, could it be successfully contended that the residential facilities were ever anything approximating an “all or nothing” proposition in terms of the parties’ contributions.
During the course of her cross-examination when asked whether the husband had “worked long and hard” the wife unhesitatingly replied “absolutely, we both did”. Whatever the wife intended to convey by that answer, she encapsulated what the evidence suggests to have been the reality for the great bulk of the time the parties were together.
As the transcript would confirm, the Court at one stage intervened during the wife’s cross-examination to warn her of the dangers of making self-promoting speeches in response to questions which could be responsively answered in one or very few words. For a time, the wife maintained far greater balance in her responses to questions asked of her in cross-examination, although the undoubted anticipation that so doing might be helpful to the husband from time-to-time led the wife to resort to criticisms of the husband which were unsustainable in the light of events surrounding the transactions in question.
The wife sought to elevate her contributions to a significantly greater status than those of the husband with respect to the residential facilities, as clearly was her case at all material times. Although maintaining that the husband made little or no worthwhile contribution to those enterprises, the wife conceded that, by way of wages and/or director’s fees and/or distributions and other benefits, she had “done quite well” out of those enterprises. In the post separation period the wife indeed did “quite well” out of the two facilities.
The wife disputed that the acquisition of Residential Facility Two in 2002 had been 100 per cent financed, although she appeared to accept that St George Bank provided 100 per cent of the purchase price and that, with the husband’s agreement, Residential Facility One was provided as security, together with other joint properties and the bank required personal guarantees from both parties. The evidence clearly establishes, although the wife was reluctant to accept it, that, but for the husband’s support, Residential Facility Two would not have been acquired. Giving evidence with respect to financial matters generally in cross-examination, the wife displayed an apparent lack of knowledge which is hard to reconcile with her assertions in relation to her financial management and decision making over the decades during which the parties were acquiring their business and investment assets.
The wife, perhaps inadvertently, during the course of her evidence in relation to the acquisition, suggested that “we decided we would take” the residential facility and that the husband was “intimately involved” in such acquisition. Whilst this evidence, and other evidence given by the wife in cross examination is hard to reconcile with her “official line”, it is probably more indicative of what the wife has come to believe than of mendacity.
The wife’s evidence in relation to her duties as “Director of [Services]” at Residential Facility One and “Executive Director of [Services]” at Residential Facility Two was unclear and, ultimately the Court is less than entirely clear as to what the wife actually did in and about the day-to-day running of those enterprises, particularly in the light of the evidence with respect to events in 2006 and 2007 as a result of the “accreditation” difficulties which then arose.
Despite her assertion that the husband made no real or significant contribution to the running of the facilities, the wife conceded that the husband had, with her, been a co-signatory on all cheques written throughout the time the parties owned the facilities as least until the time of their separation. To the extent that the wife asserted that she had been submissive to the husband’s requests of various kinds during cohabitation, the evidence the wife gave is difficult to reconcile with such alleged submissiveness. So are her actions after the parties’ separation.
The wife’s evidence in relation to the distinction between director’s and consultant’s fees paid to the husband was difficult to understand, although ultimately it might be thought that the reference to such fees as consultant’s fees was intended to reflect in some fashion the husband’s contributions to the running of the residential facilities.
The wife’s assertions that she was solely responsible for managing the residential facilities, save by way of bookkeeping and clerical assistance since the acquisition of Residential Facility Two is difficult to reconcile with the evidence of the structure and manning of the residential facilities and of the husband’s involvement in their day-to-day activities. The stance taken by the wife, as learned senior counsel for the husband skilfully demonstrated during cross-examination, is not without potential complications for the wife.
As is clear, in 2006 the wife experienced difficulties with the Commonwealth Government Department which, in ways which are not entirely clear and which do not matter in any event, influences funding for residential facilities and imposed “sanctions” with respect to Residential Facility Two. The wife explained that when such sanctions were imposed in September 2006 she was required to take on expensive consultants as directed by the Federal Government in order to regain the accreditation necessary to allow for new patients to use Residential Facility Two. The wife conceded that the renewal of the residential facility’s accreditation and removal of sanctions in early 2007 was substantially due to the efforts of the consultants who had been appointed in the latter stages of the previous year.
The question arises as to how, if the wife were solely responsible for the management of the residential facilities as between herself and the husband, and discharged her duties as skilfully as she claimed to have, the difficulties and imposition of sanctions could have arisen. That is not to say that the problems resulted from any absence of skill or diligence on the wife’s part. The evidence does not establish that to have been the case. In fairness to her, the wife did not seek to blame others for the situation which arose in September 2006. Nor did her evidence implicate the husband in such difficulties. It remains a curious coincidence that these problems only arose after the husband ceased to be involved in the running of the residential facility.
As will be seen, rather than depreciating the wife’s undoubtedly substantial contributions to the conservation, acquisition and improvement of the residential facilities by reason of the accreditation issue, the Court has regard to its occurrence essentially on the basis contended for by learned senior counsel for the husband. In essence, the issue raises an obstacle to acceptance of the wife’s “special contributions” claim with respect to the residential facilities. It is difficult to understand how the wife could have been as effective as she asserts yet have these difficulties arise. That contention gains further support from the documentation tendered in relation to both the issues which gave rise to “sanctions”, the measures implemented to address the deficiencies in administration, and the wife’s seemingly minor roles in those measures.
The wife conceded in cross-examination that the management of Residential Facility Two currently rests with Ms AL in consultation with the wife as proprietor, or as she would have her position titled, “the Executive Director of [Services]”. Curiously, the formal documentation which found its way into evidence at trial did not refer to the position of Executive Director of Services although “Proprietor” was from time-to-time used in reference to the wife. The wife conceded that the title of Executive Director of Services was not one which found expression in the relevant legislation. Prior to January 2006 the husband and wife had each at times been the nominee of Company Two Pty Ltd, the proprietor of the residential facilities. Overall, the evidence did little to clarify just what, if any significance attaches to the distinction between “Proprietor” and “Executive Director of [Services]”.
Notwithstanding her repeated insistence that her efforts to the exclusion of any efforts by the husband had resulted in the prosperity of the residential facilities until the parties separated, the wife declined to accept any responsibility for the trading downturns thereafter. In the financial year 2004 Residential Facility One generated a profit of $270 000, $169 000 in 2005 and $118 000 in 2006 compared with a loss in 2007. Residential Facility Two generated a profit of $193 000 in 2004, $354 000 in 2005, $415 000 in 2006 and a loss of $361 000 in 2007. The wife readily claimed responsibility for the profits over those years but denied liability for the losses, the turnaround in which approximated $1 million. Her explanations for so doing were less than compelling.
Accepting that the losses have not been shown to be due to any absence of diligence or skill on the wife’s part, it is difficult to resist the conclusion that the profits in earlier years could not have been solely, or even predominantly referrable to the efforts of the wife. Just as the evidence does not reveal that the wife herself was responsible for successfully overcoming the difficulties which resulted in the sanctions which were imposed on Residential Facility Two in late 2006, the evidence does not reveal any significant change in the structure of management of the residential facilities during the earlier profitable years.
Whatever the reality, the wife’s evidence in relation to the issue was unconvincing. To claim complete responsibility for profitable years and disavow any responsibility for years of loss remains an untenable position to seek to defend. Whilst the imposition of sanctions have not been shown to have been the fault of the wife, it is a curious co-incidence that, during the time that the husband was involved in the management of the residential facilities, no sanctions were imposed. It is hard not to think that with both parties running the facilities, all was well, but when only one was, all was not well.
In cross-examination the wife confirmed her awareness that both directors of Company Two Pty Ltd were required to agree to the payments of director’s fees and or distributions, notwithstanding which in the post separation period, the wife paid herself director’s fees of $50 000 and a trust distribution of $100 000 in 2006, and in 2007 paid herself director’s fees of $143 485, despite the recorded trading results for that year.
The wife’s evidence in relation to her unilateral acts with respect to Company Two Pty Ltd in the post separation period militates against accepting her assertion that she merely submitted to the husband’s requirements in relation to the conduct of the parties business affairs prior to separation.
The wife’s evidence in relation to Company Three Pty Limited revealed less than an acceptable level of candour in relation to that entity, notwithstanding that, had she made a full and frank disclosure of its operation little could have turned upon it. The wife disputed that she had failed to disclose Company Three Pty Ltd. Save to the extent that reference to a finance facility relating to a vehicle which that entity leases was disclosed, there was no disclosure of Company Three Pty Ltd. The Court is left with the distinct impression that the wife preferred not to have the existence of Company Three Pty Limited known to the husband or the Court.
The wife agreed that she had paid $49, 000 to the parties’ adult son in the post separation period without the knowledge or agreement of the husband. So doing is difficult to reconcile with the wife’s assertion at various points in her evidence that she had been submissive to the husband’s wishes during the parties’ cohabitation, but not a matter which impacts significantly on the parties’ contributions.
The nature and extent of the parties’ financial resources and resultant complexity of their operations render it unfair to be critical of the wife in relation to the wife’s inability to give detailed explanations of a number of financial transactions. This is particularly so given that, ultimately, and fairly, there is no suggestion of significant add-backs, either notional or otherwise, or assertions of waste in relation to the wife’s post separation stewardship of the parties’ assets.
Objectively, the wife’s exaggeration in relation to her own contributions and downplaying of the husband’s contributions, particularly to the “all or nothing” extent which the wife maintained, does not sit well with the wife’s actions, the history of the parties’ financial transactions and common sense. The wife’s claims in relation to contributions must thus be regarded with some caution.
The reliability of evidence is very often a relative commodity, and most certainly is in this case. The evidence of the husband could not be accepted without reservation. At times the husband readily made concessions which were appropriate, such as in relation to the wife’s contribution of $30 000 in 1996 from a $50 000 personal injury settlement which she then received to discharge the mortgage over the matrimonial home. The husband’s assertion that he did not know what the wife used the balance of the $50 000 for is difficult to accept given the quantum of the sum and its obvious potential impact on the parties’ finances at about that time. Significantly, and sensibly, there was no sustained suggestion that the wife failed to utilise the $20 000 balance for the benefit of the family, albeit precisely how she did is less than entirely clear.
Given that the wife suggests that she only ever had one graduation ceremony, the husband’s inability to recall that occasion remains curious. In relation to detail of the financing of assets, the evidence of the husband is able to be preferred to that of the wife. The only significance of such preference relates to the probability or otherwise of the parties’ contributions over the latter half of contributions spanning almost four decades being as uneven as the wife asserts them to have been. It is hard to accept that the husband could know the detail he revealed about such matters in the absence of significant involvement in them.
The husband also fairly conceded that it was “better” that the wife was designated Director of Services of the residential facilities from time to time. Regrettably, notwithstanding that the husband had no doubt earlier heard the wife volunteer that both parties had worked very long and hard, and the obvious accuracy of that observation, the husband was unable to bring himself to concede that from 1993 on the wife “had a very busy time” caring for the children and working in the residential facilities. It is to be remembered that all three children were at school in 1993 and, as the evidence reveals, the progress of two of the children was at times somewhat problematic.
Cross-examination of the husband in relation to post separation rental arrangements with respect to a number of investment properties revealed explanations which were less than convincing. The husband’s suggestion that repeated errors in his tax returns, including the description of him as a particular kind of specialist when he is and has at all material times been of a different specialty must have been the fault of the accountant did not reflect well upon the husband. This is particularly so given the husband’s claims in relation to the management and level of expertise he brought to bear on the conduct of the residential facilities.
The husband’s evidence in relation to working after 2000 was somewhat disingenuous. Initially the husband volunteered that after 2000 he was happy to, and did work at a lower pace and intensity in the practice of his profession although he asserted that during the corresponding period he thereby increased his efforts with respect to the residential facilities. The husband’s own affidavit of evidence-in-chief does not identify a quantum shift in terms of his contributions to the residential facilities after 2000. It is difficult not to accept, as was submitted on behalf of the wife, that from 2000 on the husband in fact was content to take life “somewhat easier” than he had in earlier years, at least in relation to the practice of his profession.
Given the husband’s asserted cash flow position in the post separation period, it is difficult to understand why, as he conceded was the case, the husband had not sought more work in his profession. Although there is no clear evidence in this regard, it is difficult to see how, on the sources of income suggested by the husband, he has been able in the post separation period to meet what he claims to have been his regular outgoings.
The husband was cross-examined closely in relation to the realisation of assets existing at the date of separation and acquisition of Property F. The husband’s evidence in relation to the transactions was that he purchased Property F for $445 000. The husband asserted that $320 000 of the purchase price had been generated by the sale of real estate in Queensland, a proposition which is corroborated by the settlement statements which are in evidence. The husband deposed to have borrowed $250 000 in order to complete the purchase of Property F. On his own figures, that was approximately $150 000 more than appeared necessary.
Accepting, as there was no real challenge to his assertion, that the husband paid $50 000 by way of stamp duty to complete the purchase, $100 000 remained unaccounted for. The cross-examination of the husband raises suspicion, but falls short of providing an adequate foundation for accepting that the $100 000 should in some manner be reflected in the contribution based entitlements of the parties.
Ultimately, although unable to be accepted without qualification, the evidence of the husband is generally able to be marginally preferred to that of the wife where the two are in conflict with respect to contributions and there is no independent circumstantial or documentary evidence impacting upon the probabilities. That arises from the husband’s slightly more accurate, or less exaggerated, version of events, and the happy coincidence that the circumstantial evidence points more to essentially equal rather than unequal contributions.
The finding with respect to credibility or reliability of the evidence of the parties is of limited utility however given that the husband has at all material times maintained that the contribution based entitlements of the parties should be seen as equal whilst it is the wife who has asserted that the contribution based entitlements should be seen as significantly unequal in her favour.
Preferring the evidence of the husband to that of the wife where the two are in conflict is by no means conclusive of the contribution issue, but suggests that the contributions were more equal than the wife claims. Whether they are, overall, having regard to the provisions of s 79(4) equal or unequal is another question.
Evidence of other lay witnesses at trial
A number of affidavits were read in each party’s case without the deponents of such affidavits being required for cross-examination after objections to such affidavits were agreed or determined by the Court. Other witnesses were cross-examined.
The daughter of the parties, X Kruger, swore an affidavit on 19 October 2007. X was not required for cross-examination on the parts of her affidavit which the Court considered to be relevant and admissible. Having regard to the issues between the parties as they emerged at trial, only the assertion by X that between 1993 and the date of swearing of her affidavit the husband “did not come on family holidays with any member of my family” may assume significance (paragraph 10). X Kruger deposed to having gone on some holidays with her mother but, inferentially, gone on other holidays with her brothers Y and Z in the absence of the wife or the husband.
To the extent that the husband’s contributions might be diminished by his failure to attend holidays, in the absence of evidence that the husband was not during such periods contributing in other ways, such an inference would not be safe. No other fact or circumstance deposed to by X Kruger can properly impact upon the assessment of the contributions made by her parents.
In a second affidavit filed 27 February 2008, X deposed that “when my parents first purchased [Residential Facility One], my mother worked there for six days and in the evenings as well at that [facility]. I am aware of the amount of time that my mother worked at [Residential Facility One] as I also used to work there and when I wasn’t there, I phoned her there quite often during the evenings” (paragraph 55). In the light of the Court’s rulings with respect to other parts of the affidavit to which objection was taken, no other part of X’s evidence was relevant. The evidence corroborates what is not in serious doubt, namely that the wife worked “long and hard” at Residential Facility One but does not contradict the husband’s claims in relation to the entity.
Ms AL was not required for cross-examination on her affidavit in which she deposed to having worked at Residential Facility One as quality control officer/deputy director of services between 1997 and January 2002. Ms AL deposed to “rarely” seeing the husband during those times.
In January 2007, seemingly after an absence of five years from the employ of the Kruger group, Ms AL became the director of services at Residential Facility Two. Unsurprisingly, having regard to other evidence, Ms AL has not seen the husband at Residential Facility Two since that time.
In relation to the wife’s claims with respect to the management of the residential facilities, given the duration of her employment on a fulltime basis at Residential Facility One from 1997 to 2002, the fact that Ms AL “rarely” saw the husband is of some significance in terms of the relative contributions of the parties to the management of Residential Facility One. This is particularly so given that, in the positions which she occupied over that five year period, it might reasonably be expected that Ms AL would see each of the parties responsible for the management of the residential facility with some regularity. Ms AL’s evidence supports a conclusion that the wife did more work at Residential Facility One than did the husband over that period.
Ms ND swore an affidavit on 9 October 2007. Ms ND deposed to having commenced employment at Residential Facility One in February 2002 and having in the period from that date and the date of swearing her affidavit “seen [the husband] at that [facility] on no more than 10 – 15 occasions”. Ms ND deposed to having seen the husband for “only a few minutes” on the 10 to 15 occasions when she saw him at Residential Facility One. During that time Ms ND had “worked permanent part time shifts on Monday, Tuesday, Saturday and Sunday, including after hours shifts”. No indication of the times or durations of such shifts was provided in Ms ND’s affidavit.
Ms ND deposed to having obtained the position of Deputy Director of Services at Residential Facility One in October 2005 subsequent to which date whilst working in that capacity she saw the husband “on two or three occasions only” each such occasion “consisting of only a few minutes”.
Ms ND also deposed to having observed the wife “working up to very late hours, even on the weekends” although no attempt was made to indicate the frequency of such observations.
The evidence of Ms ND is able to be accepted and suggests that the wife spent more time at Residential Facility One after February 2002 than did the husband. As is obvious, it does not follow that because Ms ND did not see the husband on more occasions than she deposed to, or see him for longer on the occasions to which she deposed, the husband was not at Residential Facility One more often or for longer periods than she was aware of. It is also to be remembered that from 2002 on the parties had a second residential facility. On balance, Ms ND’s evidence, notwithstanding its lack of particularity or specificity, provides some support for the inferring that from 2002 onwards, the wife expended more time and effort at Residential Facility One than did the husband.
The child of the parties, Y Kruger also swore an affidavit on 28 February 2008 in the support of the wife’s case. In the course of the affidavit, Y deposed to his father being “rarely home to make dinner although on the weekend he did, on some occasions”.
Y Kruger further deposed to the husband not helping him with homework “on many occasions and certainly not frequently”, the husband being “rarely home early enough to assist me with my homework”. Y Kruger then deposed to a “recollection” that “my father was at work for most of the time when I was growing up” and that “although Mum worked also, she did look after me and my brother, [Z], and my sister, [X]. Mum also took us to sport and watched us play. Mum used to drop us off at social events and come back to pick us up after they were over”. Y conceded that the husband “sometimes” took him and his brother Z to music school although both children only “went to the music school for a short time”. He further deposed that it was “a very rare occasion indeed” when the husband took him to soccer or came to watch him play soccer.
Despite the lack of particularity or specificity, Y Kruger’s evidence does not ultimately materially advance matters. Y Kruger’s evidence provides corroboration for the wife’s contention that she made the greater contribution as homemaker and parent as between herself and her husband. It is relevant in that context to record that the youngest child of the parties was 15 years of age in 1993 when the first residential facility was acquired after which date the wife made a very substantial contribution to the running of first one then two residential facilities.
On the other hand, Y Kruger’s evidence corroborates the husband’s claims to the extent that they might be thought to require such corroboration having regard to the wife’s concession in cross-examination, that the husband worked long hours throughout the cohabitation.
On the basis that a person can only be in one place at one time, in order to make contributions in any capacity, it can realistically be said that accepting Y Kruger’s evidence does not elevate the contribution based entitlement of either party.
Mr GH, a chartered accountant, swore and affidavit on 4 April 2008. In his affidavit, upon which Mr GH was briefly cross-examined, he deposed to having been the accountant for the Kruger group from April 2002 to 31 January 2006. During that time he prepared financial returns for the 2003, 2004 and 2005 financial years with respect to the relevant entities within the Kruger group.
Mr GH deposed to duties which he undertook on behalf of the Kruger group, none of which impacts upon the contribution based entitlements of the parties. Relevantly for present purposes however, Mr GH deposed to having, during the period of his stewardship of the Kruger group’s financial affairs, had “all dealings in relation to the management, accounting and taxation matters to do with the group” with the wife. Mr GH testified that “generally” he would either “speak with her over the telephone, meet with her or conduct email correspondence” on a weekly basis.
Mr GH deposed to being able to recall only two occasions on which he personally met with the husband, and to having had telephone contact with the husband on “probably less than five occasions” to the best of his recollection. In cross-examination Mr GH conceded that a Ms RM normally dealt with minor issues in relation to the Kruger group whilst he dealt with major issues. Fairly, Mr GH conceded that he could not give evidence in relation to the dealings which Ms RM may have had with the parties or the frequency or duration of such dealings. Mr GH confirmed that in his time there had always been a bookkeeper, other than the wife, employed by the Kruger group.
Mr GH impressed as an objective and reliable witness whose evidence establishes that, on balance, more of the financial dealings on behalf of the Kruger group were attended to by the wife than the husband, and the imbalance in that regard, even allowing for the possibility that the husband had more contact with Mr GH than Mr GH now recalls. This evidence is significant and in the wife’s favour.
Mr GH’s evidence provides support for inferring that after 2002, the wife had a greater involvement in the management of the residential facilities than did the husband, the questions remaining how much greater that was and how that imbalance should be reflected in the overall contribution based entitlements of the parties.
Ms SM swore an affidavit in the proceedings on 5 May 2008. Ms SM was the executive director of the Residential Services Association of Australia between 1993 and 2006. Ms SM deposed to spending “considerable time” with the wife in 1993 and to the wife being the “delegate” of Residential Facility One nominated in accordance with the requirements of the Association. In 2002, following the purchase of Residential Facility Two, the wife was also nominated as the delegate to the association. Ms SM deposed to the wife being a “very involved member” of the association, “attending educational seminars, conferences and members meetings as well as attending the Federal Conferences on a regular and ongoing basis”.
Ms SM deposed to having met the husband but only having seen him “at conferences” he attended in company with the wife. In brief cross-examination, Ms SM conceded that both parties were “equally participating” on the occasions she saw both parties at conferences and seminars. Ms SM reiterated that she saw the wife more frequently than the husband at such conferences and seminars.
Ms SM’s evidence leaves little room for doubt that, as between the parties, the wife had the greater involvement on behalf of the residential facilities with the Residential Services Association of Australia but that the husband’s contributions in that regard were by no means insignificant. In a qualitative sense, Ms SM’s evidence, particularly of the parties’ equal participation at seminars and conferences, militates against acceptance of the wife’s assertions as to the relative contributions of herself and the husband to the management of the facilities.
For reasons given during the course of the trial, the entirety of the affidavit of Ms EK sworn 13 May 2008 was rejected.
The parties’ son, Z Kruger gave evidence and was briefly cross-examined. Although an adult, the parties have differing beliefs as to Z Kruger’s capacity to care for himself. Z Kruger has not had employment other than at the parties’ residential facilities and considers that he obtained his employment through his parents. There is no suggestion that Z Kruger would be unable to care for himself adequately.
Ultimately, there is potential significance in Z’s evidence in relation to the competing claims of the parties to receive a residential facility or facilities in specie as part of the division of his parents’ assets, rather than in relation to the percentages in which such assets should be shared. Other things being equal, it would clearly be desirable that Z, who appears to be aligned more with the wife than the husband, be able to continue his current employment. That however, could not properly in the Court’s view, on the totality of the evidence, impact influentially upon the fate of the residential facilities if matters or otherwise are equal.
The husband relied upon the evidence of Mr IC who swore an affidavit on 16 April 2008. Mr IC revealed himself in cross-examination to be somewhat vague and apparently not adversely disposed to attempting to assist the husband’s cause. The circumstances surrounding the preparation of Mr IC’s affidavit do not arouse suspicion in relation to his veracity or reliability of recall.
Mr IC deposed in his affidavit to having in January 2002 accepted a position as a “handyman” at Residential Facility One. Mr IC deposed to the work which he subsequently completed at Residential Facility One and Residential Facility Tow and to the nature of his employment, which was fulltime from 2002 to 2004 and part time in 2005. Mr IC has not been employed at Residential Facility One or Residential Facility Two since 2006. Mr IC deposed to having worked eight hours a day, five days a week, plus some overtime, including longer hours and seven days per week “leading up to accreditation”.
Mr IC deposed to having observed the husband coming to Residential Facility One “every day at about 3pm” and staying for “varying lengths of time from half an hour to 3 hours”. Mr IC also deposed that the husband “would bring bread, drinks and refill the vending machine” and bring “fruits and vegetables and he would store it in the kitchen at [Residential Facility One]” on Saturdays. Mr IC deposed to observing the husband attending Residential Facility One on Sundays and “after inspecting the [facility], he would water the gardens”. Mr IC deposed to the husband’s attendance at Residential Facility One on “special occasions”.
In cross-examination, it emerged that the husband is Mr IC’s landlord. In cross-examination Mr IC was vague about a number of events about which he revealed no such uncertainty when swearing his affidavit only a month prior to giving his oral evidence. Significantly, Mr IC volunteered of the wife “she’s boss”, confirming that during his employment at the facilities he took instructions from “the boss”, again indicating the wife.
Whilst less than an entirely satisfactory witness, Mr IC’s evidence can be accepted in relation to the essential nature and quality of the husband’s contributions to the running of Residential Facility One. His apparent partisanship does not render the broad thrust of his evidence unacceptable. His assertions are also consistent with other reliable evidence. His evidence that the wife was “the boss” at all material times is significant in relation to his credibility and to the issue of contributions. His evidence does not create any impediment to the inference able to be drawn from other evidence, and the totality of evidence, that, as between himself and the wife, the husband was somewhat less involved in the management of Residential Facility One than was she.
On behalf of the husband, Ms ES swore an affidavit on 8 April 2008. Ms ES was not required for cross-examination on her affidavit. She deposed to having attended Residential Facility One every second day from 1995 to 2004 to visit a cousin who lived there. Ms ES deposed to having seen the husband “during the week when he would come into [Residential Facility One] with bread or with cans of juice”. Ms ES also deposed to the husband taking “some of the residents for social outing to […] or […]”. Ms ES deposed to seeing the husband on the weekends bringing to Residential Facility One vegetables and fruit and on Sundays observing him “mowing the lawn, picking the weeds from the flower garden, watering the garden and sweeping the external area” as well as “carrying out minor repairs and handyman work around the [facility]”.
Ms ES’s evidence can be accepted as supporting a finding that the husband’s involvement at Residential Facility One was far from sporadic or insignificant. Her evidence does not provide any impediment to finding that the wife’s contributions to the management of the residential facilities were however somewhat greater than those of the husband.
Mr RG swore an affidavit on 18 April 2008 upon which the husband also relied. Mr RG was not required for cross-examination on his affidavit in which he deposed to having been a resident at Residential Facility One “for about five years in the 1990s” during which time he observed the husband to come to Residential Facility One “every day around 3pm or a bit later”. Mr RG deposed that the husband would “go around and greet all the residents” on occasions that he was at the residential facility and “would bring bread, drinks and refill the vending machine”. The husband was observed to bring “several boxes of fruit and vegetables” and store them in the kitchen at the facility on Saturdays. Mr RG observed the husband to perform similar duties to those deposed to Ms ES on Sundays and to undertake activities also described in his affidavit evidence by Mr IC on “special occasions”.
Mr RG’s evidence supports the inference that the husband’s involvement in the operation of Residential Facility One was by no means sporadic or insignificant. It raises no obstacle to finding that, as between the husband and wife, the wife’s involvement in the day-to-day management of Residential Facility One was somewhat greater than was that of the husband.
On balance, and accepting that so doing involves the exercise of a discretion which is both broad and necessarily to some extent subjective, the Court concludes that the wife’s contribution should be assessed at 52 percent and the husband’s contributions at 48 percent. So doing produces a disparity of contribution entitlements of 4 percent which translates in monetary terms to approximately $360 000. On balance, the Court concludes such a disparity to be a realistic reflection of the disparity in contributions made by the parties during the course of a relationship of almost four decades.
Section 75(2)
On behalf of the wife three s 75(2) factors were raised, one clearly in support of an adjustment in the wife’s favour, the other two potentially so. It was submitted by reference to the ages of the parties and their relatively similar positions in terms of accessing their superannuation entitlements that “in the event that the wife will need to raise money to satisfy such orders as the Court makes, then she would be seeking to rely on the impact of the parties’ respective ages to give her time to raise those additional funds if unable to do so through the sale of other assets.”
Given the quantum of the assets of the parties, it is difficult to see on what basis either party should be afforded significantly more than what might be considered the usual time within which to raise such funds as the Court orders oblige each party to raise. The submission of learned counsel for the wife does however raise a more fundamental issue, both in terms of the overall justice and equity of the division of the assets of the parties which the Court determines and, within the context of the earning abilities of the parties, the impact of the ultimate fate of the residential facilities.
It was further submitted on behalf of the wife that “she has a responsibility to provide employment for her son [Z] and to support him to the extent that his own earning capacity is insufficient to maintain him by reason of his mental and emotional situation”. Z is an adult. He is not under any legal disability and, in fairness, no submission to the contrary was advanced by learned Counsel for the wife. Z has a history of continuous employment, albeit by an entity owned and controlled by his parents. The evidence in relation to Z’s dependence upon either of his parents is less than compelling. Quite apart from any benefits Z may in the future derive through his family’s assets, directly or indirectly, Z could, if he were otherwise unable to support himself adequately, the capacity to bring an application for maintenance against either or both of his parents (see Re AM (Adult Child Maintenance) (2006) FLC 93‑262).
Other things being equal, whilst not accepting that such dependence as Z may have upon the wife is entitled to legal recognition, it would be desirable for Z to continue his employment at Residential Facility Two. That would be a desirable consequence of the wife being awarded Residential Facility Two if so doing is otherwise just and equitable, but would not be a factor impelling such a decision.
The third potential s 75(2) factor raised by learned counsel for the wife was that the husband was cohabiting with his new wife whose “financial circumstances are not known and have not been disclosed to the Court but they will be relevant if she had independent wealth”. There is no suggestion that the husband’s “new wife” has “independent” or other “wealth”. Whilst the husband revealed little of the detail of his present wife’s finances, nothing emerging from the evidence suggests that they should assume significance, either as financial resource or a financial burden on the part of the husband.
In final submissions, learned counsel for the wife did not advance any other relevant s 75(2) factors.
On behalf of the husband it was submitted that the wife has a greater capacity to earn than does the husband, although such greater capacity was clearly asserted in reliance upon the wife’s post separation enjoyment of the revenue generated by the residential facilities to the exclusion of the husband from such funds. The capacity of each party to earn income in the future will depend substantially upon the fate of the residential facilities. Even, assuming a substantial borrowing or liquidation of real estate was necessary to do so, if either party acquired both facilities, that party would have a substantially greater earning capacity than would the other. That would, given the duration of the parties’ relationship and the Court’s findings with respect to their contributions, suggest an adjustment in favour of the party receiving no residential facility pursuant to s 75(2). To do otherwise would be to ignore the reality that the residential facilities are not only valuable assets, but generate substantial income which is able to be received in a variety of ways as the evidence confirms.
Given the ages of the parties, the greatest potential of either party to earn income is through a residential facility, or facilities. The wife’s income since 1993 has been wholly referrable to first one then two residential facilities. At least since 2000 until separation in 2006 the husband became increasingly dependent upon revenue derived from one and then two residential facilities. The husband’s future earning ability will be enhanced if he is awarded a residential facility but will be diminished if he is not. The same is true of the wife.
Objectively, given the Court’s findings with respect to the parties’ contributions, the expert valuer Mr ON’s evidence that he valued the residential facilities on a “stand alone” basis, and the impact upon the parties’ future earning capacities of the fate of the residential facilities, it is difficult to see why each party ought not in fairness receive one residential facility. So doing would also avert triggering the sale of investment properties on a large scale, and incurring at sale, CGT and other costs.
The Court concludes that such an outcome would be just and equitable and that for one party to receive both residential facilities would be quite unfair to the other party given the nature and quality of the contributions which that party has made to the acquisition, conservation and improvement of the facilities.
As the Court’s discussion of the parties’ history and contributions hopefully confirms, the acquisition of residential facilities did not occur in isolation, and was realistically only possible because of the direct and indirect financial and non-financial contributions made by both parties over the 26 years which preceded the acquisition of Residential Facility One and subsequent contributions to the acquisition and conservation of Residential Facility Two.
Having decided that each party should be awarded a residential facility, determining which party should receive which facility is relatively straight forward. The reality is that the husband has had a more enduring connection with Residential Facility One than with Residential Facility Two.
The acquisition of title by the husband to Residential Facility One is comparatively simpler than would be his acquisition of Residential Facility Two. There is however more to the issue than mere simplicity, given, as noted earlier in these reasons, that Residential Facility Two is owned by the Kruger Family Trust, the beneficiaries of which are more closely aligned with the wife than with the husband.
The wife, no doubt on advice from her learned counsel, has indicated a clear and unequivocal willingness to accept Residential Facility Two with full knowledge of its ownership and the risks which potentially arise from such ownership. As mentioned earlier, although not a reason for so doing, an incidental advantage in the wife retaining Residential Facility Two is that Z Kruger’s ongoing employment there is assured. That is not to say that the husband would terminate Z’s employment were he to own Residential Facility Two, but rather that the wife clearly would not contemplate doing so.
Although not a matter which impacts upon the evaluation of the parties’ contributions, having endured the stormy “sanctions” period at Residential Facility Two, it would be regrettable if the wife were not to receive that facility as part of her entitlement. The Court is comfortably satisfied that awarding the husband Residential Facility One and the wife Residential Facility Two is the fairest available outcome.
To the extent that Capital Gains Tax (CGT) has the potential to assume significance (see Brett Hall v Brett Hall (2006) FLC 93-276), the relevance or otherwise of potential CGT liabilities depends ultimately on the impact of the husband receiving Residential Facility One and the wife receiving the Residential Facility Two. That in turn is complicated by the reality that, the evidence suggests, there is an understandably complex and entwined series of securities and collateral securities in relation to the facilities.
The evidence suggests that the co-operation, or at least acquiescence, of St George Bank would be required in order that the parties could bring about a situation in which the trust, corporate joint and individual assets of the parties could be separated. Ultimately, it is conceivable that the arrangements the parties are able to conclude with St George Bank will determine the extent to which either or both parties may have to liquidate real estate owned by them. In those circumstances, to attempt to bring possible CGT liabilities into play, assuming it to be possible, would be potentially little more than an academic exercise.
The state of the evidence in relation to possible CGT liabilities also gives the Court cause for disquiet. On 17 June 2008, in the circumstances described earlier with respect to the schedule which is Appendix “B” to these Reasons, learned Counsel for the wife, with the stated consent of Senior Counsel for the husband, filed in Court an affidavit of Ms DB in relation to the CGT implications of the sale of a number, but not all of the parties’ real estate. Whether that affidavit is controversial is unclear. On 24 June 2008 Mr PL’s affidavit was filed in relation to the husband’s potential CGT liabilities if he sells real estate owned by him. Whether that evidence is controversial is also unclear.
Whilst it is clear that, save for their respective residences, the parties have very substantial “investment” properties, which no doubt were acquired with a view to ultimate resale for profit, when that might occur, and in what circumstances relative to the parties income from other assessable sources cannot be known. Subject to the matters which have just been discussed, the reality that the parties have, and will retain, roughly similar investment property portfolios reinforces the impression that the fairest course would be to disregard potential CGT liabilities and realisation costs. The fate of the various assets of the parties, as they will shortly be detailed, confirm the essential “fairness” of this approach in the Court’s view.
So far as the residential facilities are concerned, it would make a mockery of the cases advanced by the parties to allow or otherwise adjust for potential CGT liability and realisation costs. Each party has made abundantly clear, for good reason, that the desire to acquire a residential facility is significantly related to the earnings which the residential facilities are likely to generate for the owner of a residential facility in the years ahead.
In the circumstances, the Court does not propose making any adjustment to the contribution based entitlements of the parties by reference to s 75(2) of the Act. It follows that the parties should share the property identified and quantified in these reasons in shares of 52 percent to the wife and 48 percent to the husband.
Conclusion
The Court concludes that the assets of the parties should be apportioned in the shares earlier indicated. The net assets of the parties having been valued at $8 928 484 the wife would be entitled to receive $4 642 136 and the husband would be entitled to receive $4 285 048.
If the wife were to retain the properties registered solely in her name, she would have the following real estate, the total value of which is $3 292 500:-
Property Q
$335 000.00
Property R
$305 000.00
Property S
$575 000.00
Property T
$340 000.00
Property U
$290 000.00
Property V
$462 500.00
Property W
$455 000.00
Property AA
$530 000.00
The wife would have debts secured with respect to those properties of $2 375 000, her equity in properties registered in her sole name accordingly being $917,500.
If the wife were to acquire the matrimonial home (Property D), Property A and Property B she would have real estate worth an additional $1,605,000. The difficulty is knowing to what extent, if any, those properties charged with liabilities of the husband and wife independent of liabilities secured on those properties in favour of the either or both of the residential facilities. Subject to those matters, the wife would retain and/or acquire real estate worth $2 522 500 net.
If the husband were to retain the properties in his sole name he would have the following real estate with a total value of $2,543,000:-
Property H
$255 000.00
Property I
$290 000.00
Property J
$190 000.00
Property K
$190 000.00
Property L
$153 000.00
Property M
$157 500.00
Property G
$147 500.00
Property N
$215 000.00
Property O
$195 000.00
Property P
$330 000.00
Property F
$420 000.00
The husband would have debts secured with respect to those properties of $1 462 476.60, his equity in properties registered in his sole name accordingly being $1,080,523.40.
There have been no particular submissions about the four time share interests which the parties have. Absent any agreement between the parties as to an in specie division of the time share interests, the appropriate order would be that those interests be sold and the proceeds of sale be divided in accordance with the parties’ beneficial entitlements to the totality of their assets. The sum involved ($19 500) represents but a miniscule proportion of the parties’ overall wealth.
It is common ground that the parties should retain their respective superannuation interests ($463 492 in the case of the wife, $546 339 in the case of the husband).
On the foregoing analysis, the wife would receive real estate and superannuation to a total value of $2 985 992 whilst the husband would receive assets of that kind of $1 826 862. To complete her entitlement of $4 642 136, the wife would be entitled to receive a further $1 656 144. To satisfy the husband’s entitlement to $4 285 048, the husband would be entitled to receive a further $2 658 186.
It is apparent that the wife seeks that the husband receive Property A and Property B. By his Amended Response filed during the course of the trial, the husband sought an order that “the wife transfer her interest in the balance of jointly owned properties to the husband”. There thus seems little dispute that the husband should receive Property A and Property B. Although a jointly owned property, there is, sensibly in the Court’s view, no real suggestion on behalf of the husband that the wife should not retain that property.
If the husband were to receive Property A ($525 000) and Property B ($285 000), the husband would have $2 436 862. The wife would then have $2 175 992. The wife would then be entitled to receive, in cash and/or equity, $2 466 144 in satisfaction of her overall entitlement whilst the husband would be entitled to receive a further $1 848 186 in satisfaction of his total entitlement.
Whilst it is clear that the net value of the residential facilities and the E properties real estate is $8 150 000, and that the debts of the entities which hold those assets total $3 854 671, precisely how those debts are secured by St George in terms of the particular assets is less than entirely clear to the Court. As noted earlier, the evidence suggests that there are collateral securities over other properties held by the parties independently of their corporate structure.
Assuming that the wife received, in specie or from the proceeds of their sale, $10 140 with respect to the time share assets, and that the husband receive $9 360 from those sources, the wife would be entitled to receive a further $2 456 004, and the husband would be entitled to receive a further $1 838 826.
If the wife is to receive Residential Facility Two and Properties E1, E2 and E3, subject to bearing her share of the corporate debt, she would have total assets of $7 575 992. If the husband is to receive Residential Facility One, he will, subject to how the corporate debt is to be borne, have total assets of $5 196 222 or $911 174 more than his entitlement.
The wife on the other hand would have $2 933 856 more than her total entitlement. It would be expedient, and possibly even superficially attractive, to suggest that the parties bear the corporate debt in proportion to their excess of entitlements. The husband would thus bear $911 174 of the debt, the wife $2 933 856. It will be immediately apparent however that so doing would in effect thrust more than 75 percent of the corporate debt on the wife in circumstances where she will have only one of the two income generating entities to which the debt relates.
The assumption implicit in such an approach that St George Bank would be compliant with such an arrangement is potentially contestable. As the provisions of s 75(2)(h)(a) and s 79(10) of the Act make clear, quite apart from the potential for St George to refuse to co-operate with such an arrangement, the Court probably has no power to impose such an arrangement on St George in any event.
The scenario which has been described gives rise to the prospect of both parties, but particularly the wife, wishing to make further submissions as to the form of orders appropriate to be made. Prima facie, it is conceivable that the wife would wish to reduce her share of the indebtedness by selling investment properties of hers. Alternatively, although it has never been suggested by either party that such a course be adopted, the wife may seek to transfer investment properties of hers to the husband, thereby increasing the share of corporate debt which the husband should assume.
Realistically, other than in a way that is highly likely to have practical difficulties and very real potential for injustice to either or both parties, for the reasons which have been outlined, it is probably not possible, and would be unfair if it were, for the Court to proceed at this time to make final orders.
Two possible ways of proceeding suggest themselves. The first, and potentially most satisfactory for the parties, is for Counsel for the parties to prepare agreed minutes of order to give effect to the Court’s conclusions with respect to the overall beneficial entitlement of the parties to their assets and to the fate of the residential facilities. The alternative, which is potentially far less satisfactory, as it may see St George drawn into the case, and produce commercial outcomes far less satisfactory to the parties than they could resolve for themselves, is for the Court to invite further submissions. It could not safely be assumed that so doing would preclude the prospect of further evidence given that the Court will not with these Reasons for Judgment be making final orders.
In the circumstances, the only order the Court proposes relates to the beneficial entitlements of the parties to their assets and to the Court’s view as to the ultimate fate of each of the residential facilities. Whilst not making orders finally disposing of the proceedings, the Court perceives that so doing would preclude, at least at first instance, any revisiting of the issues of the parties’ beneficial entitlements to their assets and the fate of the residential facilities.
I certify that the preceding two hundred and seventeen (217) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman.
Associate:
Date: 27 June 2008
Appendix A
[Removed for publication]
Appendix B
KRUGER and KRUGER
FAMILY COURT PROCEEDINGS NO. PAC 174/2007
ASSETS AND LIABILITIES
| Item | Property | Ownership | H’s Value | Wife’s Value | Appraisal |
| 1 | Property H | Husband | $250,000.00[1] | $255,000.00 | $255,000.00 |
| 2 | Property I | Husband | $280,000.00[2] | $290,000.00 | $290,000.00 |
| 3 | Property J | Husband | $180,000.00[3] | $190,000.00 | $190,000.00 |
| 4 | Property K | Husband | $180,000.00[4] | $190,000.00 | $190,000.00 |
| 5 | Property L | Husband | $148,000.00[5] | $153,000.00 | $153,000.00 |
| 6 | Property M | Husband | $150,000.00[6] | $157,500.00 | $157,500.00 |
| 7 | Property G | Husband | $140,000.00[7] | $155,000.00 | $155,000.00 |
| 8 | Property N | Husband | $215,000.00[8] | $215,000.00 | $215,000.00 |
| 9 | Property O | Husband | $195,000.00[9] | $195,000.00 | $195,000.00 |
| 10 | Property P | Husband | $300,000.00[10] | $330,000.00 | $330,000.00 |
| 11 | Property F | Husband | $420,000.00[11] | $420,000.00 | $420,000.00 |
| 12 | Property D | Joint | $810,000.00[12] | $795,000.00 | $795,000.00 |
| 13 | Property A | Joint | $550,000.00[13] | $550,000.00 | $550,000.00 |
| 14 | Property B | Joint | $280,000.00 | $280,000.00 | $280,000.00 |
| 15 | Timeshare One | Joint | $2,500.00 | $2,500.00 | $2,500.00 |
| 16 | Timeshare Two | Joint | $6,000.00 | $6,000.00 | $6,000.00 |
| 17 | Timeshare Three | Joint | $3,500.00 | $3,500.00 | $3,500.00 |
| 18 | Timeshare Four | Joint | $7,500.00 | $7,500.00 | $7,500.00 |
| 19 | Property Q | Wife | $335,000.00 | $335,000.00 | $335,000.00 |
| 20 | Property R | Wife | $320,000.00 | $315,000.00 | $315,000.00 |
| 21 | Property S | Wife | $600,000.00[14] | $575,000.00 | $575,000.00 |
| 22 | Property T | Wife | $340,000.00 | $340,000.00 | $340,000.00 |
| 23 | Property U | Wife | $290,000.00 | $290,000.00 | $290,000.00 |
| 24 | Property V | Wife | $485,000.00 | $470,000.00 | $470,000.00 |
| 25 | Property W | Wife | $460,000.00 | $455,000.00 | $455,000.00 |
| 26 | Property AA | Wife | $540,000.00 | $530,000.00 | $530,000.00 |
| 27 | Residential Facility One | Co. One Pty Ltd | $2,750,000[15] | $[16] | $2,750,000 |
| 28 | Residential Facility Two | Co. Two Pty Ltd | $3,500,000[17] | $[18] | $3,500,000 |
| 29 | Property E2 | Co. Two Pty Ltd | $550,000.00[19] | $[20] | $550,000.00 |
| 30 | Property E1 | Co. Two Pty Ltd | $650,000.00[21] | $[22] | $650,000.00 |
| 31 | Property E3 | Co. Two Pty Ltd | $700,000.00[23] | $[24] | $700,000.00 |
| 32 | Property BB | Husband | $380,000.00 | $380,000.00 | $380,000.00 |
| 33 | Property CC | Husband | $200,000.00 | $200,000.00 | $200,000.00 |
| 34 | Property DD | Husband | $267,000.00 | $267,000.00 | $267,000.00 |
| 35 | Kruger Family Trust and Unit Trust One t/as Residential Facility Two | Joint | $ | $986,081.00[25] | $ |
| 36 | Company One Pty Ltd t/as Residential Facility One | Joint | $ | $1,852,000[26] | $ |
| 37 | Unit Trust Two | Joint | $ | -$602,708.00[27] | $ |
| 38 | Company Two P/L | Joint | $ | $265,068.00[28] | $ |
| 39 | Loans owing to parties from entities[29] | Joint | $ | $930,449.00 | $ |
| 15,637,500.00 | 11,782,890.00 |
[1] Based on appraisal provided by LH Realty dated 3 September 2007
[2] Based on appraisal provided by RJ Realty, dated 30 August 2007.
[3] Based on appraisal provided by W & R dated 11 September 2007.
[4] Based on appraisal provided by W & R dated 11 September 2007.
[5] Based on appraisal provided by RA Real Estate, dated 30 August 2007.
[6] Based on appraisal provided by NS Real Estate, dated 11 September 2007.
[7] Based on appraisal provided by S & L dated 11 August 2007.
[8] Based on appraisal provided by SR Partners, dated 14 September 2007.
[9] Based on appraisal provided by SR Partners, dated 14 September 2007.
[10] Based on appraisal provided by RH, dated 1.09.2007
[11] Based on appraisal provided by LH dated 28 August 2007.
[12] Based on appraisal provided by LC Real Estate, dated 5 September 2007.
[13] Based on appraisal provided by W & H dated 13.12.2006
[14] Based on appraisal provided by LC dated 5 September 2007
[15] Based on valuation report annexed to the affidavit of Mr ON sworn and filed 29.11.2007
[16] See Item 36 below
[17] Based on valuation report annexed to the affidavit of Mr ON sworn and filed 29.11.2007
[18] See Item 35 below
[19] Based on valuation report annexed to the affidavit of Mr ON sworn and filed 29.11.2007
[20] Refer Item 38
[21] Based on valuation report annexed to the affidavit of Mr ON sworn and filed 29.11.2007
[22] Refer Item 38
[23] Based on valuation report annexed to the affidavit of Mr ON sworn and filed 29.11.2007
[24] Refer Item 38
[25] Refer Schedule 1 attached
[26] Refer Schedule 4 attached
[27] Refer Schedule 5 attached
[28] Refer Schedule 6 attached
[29] Refer Schedules 1-6 attached
| Husband | Wife | ||
| 1 | Superannuation | $463,492.00[30] | $546,639.00 |
| 2 | Liabilities | $1,509,805.00 | $2,496,000.00 |
[30] Based on balance sheet as at 30 June 2007 of Superannuation Fund
Net pool of assets and liabilities
Husband $4,588,546.00
Wife $4,198,670.00
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