LANE & OWEN
[2013] FamCA 457
•17 June 2013
FAMILY COURT OF AUSTRALIA
LANE & OWEN [2013] FamCA 457
FAMILY LAW - PROPERTY SETTLEMENT – Assets and liabilities – Treatment of the potential liability of the wife as owner-builder for all building defects and any resulting litigation or claims over the property – Where the owner-builder liability debt is not included in the list of liabilities – Contributions – Where the husband’s behaviour does not fall within the exceptions described in Kowaliw – Where the contributions of the husband were 53 per cent compared to 47 per cent by the wife – Where there is a 5 per cent adjustment to the wife – Where it is just and equitable for an equal division of the net assets of the marriage.
Family Law Act 1975 (Cth) ss 75, 79
Home Building Act 1989 (NSW)
In the Marriage of Omacini (2005) 33 Fam LR 134
Mallett v Mallett (1984) 9 Fam LR 449
In the Marriage of Ferraro (1992) 16 Fam LR 1
In the Marriage of Shewring (1987) l2 Fam LR 139
In the Marriage of Lenehan (1987) 11 Fam LR 615
In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712
In the Marriage of Zyk (1995) 19 Fam LR 797
In the Marriage of Coghlan (2004) 33 Fam LR 414
In the Marriage of Robb (1994)18 Fam LR 489
In the Marriage of Kowaliw (1981) 7 Fam LN N13; (1981) FLC 91-092In the Marriage of Robb (1994)18 Fam LR 489
APPLICANT: Mr Lane
RESPONDENT: Ms Owen
FILE NUMBER: SYC 2485 Of 2010
DATE DELIVERED: 17 June 2013
PLACE DELIVERED: Sydney
JUDGMENT OF: Loughnan J PLACE HEARD: Sydney
HEARING DATE: 12, 13, 14 December 2011, 12 May 2012 & 24 April 2013 REPRESENTATION
COUNSEL FOR THE APPLICANT HUSBAND: Mr P Cook
SOLICITOR FOR THE APPLICANT: Uther Webster & Evans
RESPONDENT WIFE IN PERSON: Ms Owen Orders
1. That the orders of 2 November 2010 be set aside.
2. The parties do all things and sign all documents necessary to place the property at U Road, Suburb C in the State of NSW (“the property”) on the market for sale after 31 May 2018 or on such other date as the parties agree in writing and for the purposes of that sale:
(a)the property shall be listed with an agent or agents as agreed by the Husband and Wife in writing and failing agreement within seven (7) days of the date of due date, with an Agent appointed by the President for the time being of the Real Estate Institute or his or her nominee (“the Agent”);
(b)the property shall be listed and marketed for sale as soon as practicable after 31 May 2018 or such other date as is agreed between the parties in writing;
(c)the property shall be sold by private treaty or by auction, as agreed between the parties or failing agreement in accordance, with the recommendation of the Agent as to the method of sale;
(d)the listing or reserve price of the property shall be as agreed between the parties and if there is no agreement it shall be as recommended by the Agent;
(e)the solicitors instructed to act on the sale of the property shall be appointed by agreement between the parties or failing agreement, by the President for the time being of the Law Society of NSW or his or her nominee (“the Solicitor”);
(f)the parties shall pay equally for all reasonable expenses necessary to prepare the property for sale (including cosmetic repairs and painting), sale costs and, if applicable, auction costs, provided that if either party fails to meet their share of such costs, then the party incurring those costs shall be entitled to recover them from the net proceeds of sale, prior to the disbursement of those proceeds to the parties;
(g)the parties shall execute any contract for sale of the property at or above the listed or reserved price within two days of a request being made of them;
(h)in the event that Contracts for Sale of the property have not exchanged by or before a date two (2) months from the date of first listing, then the parties shall, unless otherwise agreed or recommended by the Agent, make all arrangements and do all such actions and sign all such documents necessary to procure a sale by public auction or further public auction of the property upon the following terms:
i.the auctioneer shall be as agreed by the Husband and Wife in writing and failing agreement as nominated by the Agent;
ii.the auction shall take place within four (4) months of the date of first listing;
iii.the reserve price shall unless agreed upon between the parties be 95 per cent of previous listing or reserve price, as the case may be;
iv.the parties shall equally pay and be responsible for payment of all auction expenses payable before the property is auctioned, provided that if either party fails to pay such costs, then the party incurring those costs shall be entitled to recover them from the net proceeds of sale, prior to the disbursement of those proceeds to the parties; and
v.that in the event that the property does not reach the reserve price at the auction, the parties shall negotiate with the highest bidders or any such interested persons and effect the sale of the property at a selling price as agreed between the parties, or failing agreement the parties shall accept the recommendation of the Agent and/or the Auctioneer as to the selling price of the property and shall sell the property at that price, provided that the selling price is not less than 95 per cent of the reserve price;
vi.That in the event that the property is not sold by auction or by private negotiation within fourteen (14) days after the said auction then the parties shall do all acts and sign all necessary documents and pay all moneys as necessary to procure a second auction within a further five (5) weeks of the date otherwise upon the same terms and conditions as applied to the first auction.
3.That upon completion of the sale of the property, the proceeds of sale be applied as follows:
(a) firstly, to pay all costs, commissions and expenses of the sale and to pay any Council and Water rates outstanding in respect of the property;
(b) secondly, to discharge the mortgage;
(c) thirdly, to pay to Mr T, or to the husband if he paid out the loan, the Mr T loan balance over and above the balance as at 24 April 2013 being $12,370;
(d) fourthly, to reimburse either party for any moneys solely outlaid by that party to prepare the property for sale or for sale costs;
(e) fifthly, to the husband 48 per cent of the remaining proceeds plus $31,500; and
(f) lastly, the remaining balance to the wife.
4.Pending the settlement of the sale of the property in accordance with Order 3 above, the husband shall:
a. be responsible for and do all acts and things to meet the outgoings, including the mortgage in respect of the property;
b. be permitted to have boarders in the property to assist with those outgoings pending settlement of the sale of the property;
c. account to the wife for the disbursement of the income on the property by providing to her each month a summary of the income and expenditure associated with the house for that month; and
d. provide the wife with copies of invoices, receipts or other documents evidencing the income or expenditure, within seven (7) days of being requested by her to do so.
5.The husband shall indemnify the wife in relation to and shall bear any costs of, or associated with, the companies, S Pty Ltd, S (NSW) Pty Ltd, Z Consultants Pty Ltd.
6.As between the parties the husband is responsible for paying $12,370 to Mr T and he shall indemnify the wife and keep her indemnified in relation to any debt owed by the parties to him to that sum.
7.The wife shall do all things to transfer to the husband her share and interest in the company, Z Consultants Pty Ltd, within 14 days of such transfer documents being prepared and sent by the Company Accountant.
8.The wife shall retain the Toyota Land Cruiser motor vehicle registered in her name, registration ‘…’.
9.That unless otherwise specified in these Orders, the wife shall retain and be declared to be the sole legal and beneficial owner of all her right, title and interest in and to:
(a) all cash at bank and other moneys invested by her;
(b) all shares registered in her name;
(c) all personal effects in her possession;
(d) her motor vehicle;
(e) her superannuation entitlements;
(f) all other personal and real property in her possession, custody or control as at the date of these Orders.
10.That unless otherwise specified in these Orders, the husband retain and be declared to be the sole legal and beneficial owner of all his right, title and interest in and to:
(a) all shares registered in his name;
(b) all cash at bank and other moneys invested by him;
(c) his superannuation and work-related entitlements;
(d) his motor vehicle;
(e) all other personal and real property in his possession, custody or control as at the date of these Orders.
11.That in the event that the husband or wife refuses or neglects to comply with any of the provisions of these Orders within seven (7) days of a document being forwarded to either of them for their completion, a Deputy Registrar or a Registrar or other Officer of the Family Court of Australia at Sydney be appointed pursuant to s 106A(1) of the Act, to execute all such deeds and documents in the name of the defaulting party and to do all acts and things necessary to give validity to the said Orders.
12.That the Registrar or Deputy Registrar or other Officer is authorised to execute any such necessary instrument upon being satisfied by Affidavit that refusal, neglect or default, as the case may be, has occurred.
13.The parties are at liberty to restore the proceedings in relation to the wording, but unless the parties agree to the amendment, not the import, of these orders within 28 days of the date of the orders and on seven (7) days notice to the court and each other.
IT IS NOTED that publication of this judgment under the pseudonym Lane & Owen is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
FAMILY COURT OF AUSTRALIA AT SYDNEY FILE NUMBER: SYC 2485 of 2010
Mr Lane Applicant
And
Ms Owen Respondent
REASONS FOR JUDGMENT
Introduction
1.After a marriage that involved about eight years cohabitation, the husband and wife cannot agree on a settlement of their property. A significant controversy in the proceedings surrounds the implications for the sale of the former matrimonial home of the requirements of the NSW home building legislation.
Applications
2.Various sets of orders have been sought over time but when the matter was re-listed in April 2013, fresh orders were sought by each of the parties. The husband sought orders in terms of a Minute of Orders handed up on 24 April 2013 as follows:
1. That within thirty days from the date of Order (“the due date”), the Wife do all acts and things and sign all documents that may be necessary to:-
1.1.Refinance and discharge the Westpac Banking Corporation Mortgage (“the mortgage”) secured over the property at [U Road, Suburb C] (“the property”) to the effect that the Husband’s liabilities thereunder are fully discharged;
1.2.Pay to the Husband the sum of $832,000.00.
2. That in the alternative to Order 1 above, or in the event that the Wife has not complied with Order 1.1 and 1.2 above by the due date, the Husband be forthwith thereafter appointed as Trustee for the Husband and Wife for the purposes of the sale of the property in accordance with the following terms and conditions:
2.1.The property shall be listed with an agent or agents as agreed by the Husband and Wife in writing and failing agreement within 7 days of the date of due date, with an Agent appointed by the Husband as Trustee for the sale of the property and as authorised by these Orders (“the Agent”);
2.2.the property shall be listed and marketed for sale at any time after mid-November 2013;
2.3.the property shall be sold by private treaty or by auction, as agreed between the parties, failing agreement in accordance with the recommendation of the Agent as to the method of sale;
2.4.the listing or reserve price of the property shall be as agreed between the parties and if there is no agreement it shall be $1,750,000;
2.5.the conveyancing solicitors instructed to act on the sale of the property shall be appointed by agreement between the parties, failing agreement the Husband shall appoint the conveyancing solicitors as Trustee for the sale and as authorised by these Orders;
2.6.the parties shall equally pay for all reasonable expenses to prepare the property for sale (including cosmetic repairs and painting), sale costs and, if applicable, auction costs, provided that if either party fails to meet their share of such costs, then 50% of the costs outlaid by the other party to ensure that the auction or sale takes place shall be reimbursed to them from the other party’s share of the net proceeds of sale;
2.7.contracts for the sale of the property must not be exchanged at any time before 10 December 2013;
2.8.provided that the Husband complies with these Orders in relation to the terms of the sale of the property, the Husband is authorised by these Orders to execute any contract for sale of the property in the event that the Wife refuses, within two days of a request being made of her, to execute a contract for sale of the property in accordance with these Orders;
2.9.in the event that Contracts for Sale of the property have not exchanged by or before a date two (2) months from the date of first listing, then the parties shall, unless otherwise agreed or recommended by the Agent, make all arrangements and do all such actions and sign all such documents necessary to procure a sale by public auction of the property upon the following terms:
2.9.1.the auctioneer shall be as agreed by the Husband and Wife in writing and failing agreement as nominated by the Agent;
2.9.2.the auction shall take place within four (4) months of the date of first listing;
2.9.3.the reserve price shall unless agreed upon between the parties be 95% of $1,750,000;
2.9.4.the parties shall equally pay and be responsible for payment of all auction expenses payable before the property is auctioned, provided that if either party fails to pay such costs, then 50% of the costs outlaid by the other party to ensure that the auction takes place shall be reimbursed to them from the other party’s share of the net proceeds of sale; and
2.9.5.that in the event that the property does not reach reserve price at the auction, the parties shall negotiate with the highest bidders or any such interested persons and effect the sale of the property at a selling price as agreed between the parties, or failing agreement the parties shall accept the recommendation of the Agent and/or the Auctioneer as to the selling price of the property and shall sell the property at that price, provided that the selling price is not less than 95% of the reserve price;
2.9.6.That in the event that the property is not sold by auction or by private negotiation within fourteen (14) days after the said auction then the parties shall do all acts and sign all necessary documents and pay all moneys as necessary to procure a second auction within a further five (5) weeks of the date otherwise upon the same terms and conditions as applied to the first auction.
3. That upon completion of the sale of the property, the proceeds of sale be applied as follows:
(a) firstly, to pay all costs, commissions and expenses of the sale and to pay any Council and water rates and maintenance levies outstanding in respect of the property;
(b)secondly, to discharge the mortgage;
(c)thirdly, to pay the [Mr T] loan balance, the balance as at 24 April 2013 being $12,370 and thereafter attracting interest at 8% per annum to the date of settlement of the sale;
(d)fourthly, to pay to the Husband 65% of the balance then remaining;
(e)fifthly, to pay to the Husband the sum of $60,623.00, less (if Order 2.6 or Order 2.94 applies) 50% of any auction or sale costs paid by the Wife in order to sell the property, those costs to be repaid from the Husband’s share to the Wife;
(f)sixthly, to pay to the Wife the balance then remaining, less (if Order 2.6 or Order 2.94 applies) 50% of any auction or sale costs paid by the Husband in order to sell the property, those costs to be repaid from the Wife’s share to the Husband.
4.That in the alternative to Order 3 above, that upon completion of the sale of the property, the net proceeds of sale be distributed as follows:
(a)firstly, to pay all costs, commissions and expenses of the sale and to pay any Council and water rates and maintenance levies outstanding in respect of the property;
(b)secondly, to discharge the mortgage;
(c)thirdly, to pay the [Mr T] loan balance, the balance as at 24 April 2013 being $12,370 and thereafter attracting interest at 8% per annum to the date of settlement of the sale;
(d)fourthly, to pay into a controlled moneys account held on trust for the parties the sum of $340,0000, subject to Order 5 below;
(e)fifthly, to pay to the Husband 65% of the balance then remaining, plus the sum of $60,623.00, less (if Order 2.6 or Order 2.94 applies) 50% of any auction or sale costs paid by the Wife in order to sell the property, those costs to be repaid from the Husband’s share to the Wife;
(f)sixthly, to pay to the Wife the balance then remaining, less (if Order 2.6 or Order 2.94 applies) 50% of any auction or sale costs paid by the Husband in order to sell the property, those costs to be repaid from the Wife’s share to the Husband.
5.That in the event that there is a successful claim by a successor in title to the property as against the Wife as owner-builder (“the claim”), then the parties are to do all acts and things and sign all documents necessary to apply the moneys in the controlled moneys account to satisfaction of that claim and/or necessary rectification works to the property to satisfy the claim.
6.That upon the statutory warranty period relating to the property pursuant to the provisions of the Home Building Act 1989 expiring, or after the payment of the claim pursuant to Order 5 above, the moneys in the controlled moneys account be divided between the parties as to 65% to the Husband and 35% to the Wife.
7.That pending the settlement of the sale of the property in accordance with Order 2 above, the Husband be responsible for and do all acts and things to meet the outgoings, including the mortgage, in respect of the property and the Husband be permitted to have boarders in the property to assist with those outgoings pending settlement of the sale of the property.
8.That unless otherwise specified in these Orders, the Wife retain and be declared to be the sole legal and beneficial owner of all her right, title and interest in and to:-
(a)All cash at bank and other moneys invested by her;
(b)All shares registered in her name;
(c)All personal effects in her possession;
(d)Her motor vehicle;
(e)Her superannuation entitlements;
(f)All other personal and real property in her possession, custody or control as at the date of these Orders.
9.That unless otherwise specified in these Orders, the Husband retain and be declared to be the sole legal and beneficial owner of all his right, title and interest in and to:
(a)All shares registered in his name;
(b)All cash at bank and other moneys invested by him;
(c)His superannuation and work-related entitlements;
(f)His motor vehicle;
(g)All other personal and real property in his possession, custody or control as at the date of these Orders.
10. That in the event that the Husband or Wife refuses or neglects to comply with any of the provisions of these Orders within 7 days of a document being forwarded to either of them for their completion, a Deputy Registrar or a Registrar or other Officer of the Family Court of Australia at Sydney be appointed pursuant to Section 106A(1) of the Act, to execute all such deeds and documents in the name of the defaulting party and to do all acts and things necessary to give validity to the said Orders.
11. That the Registrar or Deputy Registrar or other Officer is authorised to execute any such necessary instrument upon being satisfied by Affidavit that refusal, neglect or default, as the case may be, has occurred.
3.The wife sought orders in terms of a Minute of Orders handed up on 24 April 2013 as follows:
1. That the husband discharge the caveat over the property situate at and known as [U Road, Suburb C], in the State of New South Wales, being the whole of the property contained in Certificate of Title Folio Identifier … (“the [C] property”) within seven (7) days of these Orders.
2. That the husband do all acts and things necessary to ensure that the [C] property is vacant within 60 (sixty) days of these Orders.
3. That the wife retain the property situate at and known as [U Road, Suburb C], in the State of New South Wales, being the whole of the property contained in Certificate of Title Folio Identifier … (“the [C] property”) upon payment to the husband of the sum of $281,686 whereupon the husband is to transfer all of his right and interest in the [C] property. The wife is, at the same time as paying the husband the said sum of $281,686, to discharge the current mortgage on the property.
4. That the wife will indemnify and bear the costs of any and all building defects as owner-builder for the statutory period.
5. That the husband indemnify the wife and bear any costs of, or associated with, the companies, [S] P/L, [S] (NSW) P/L, [Z] Consultants P/L.
5a. That the wife do all things to transfer her share and interest in the company, [Z] Consultants P/L, within 14 days of such transfer documents being prepared and sent by the Company Accountant.
6. That the wife retain the Toyota land cruiser motor vehicle registered in her name, registration ‘…’.
7. That each part be the sole owner, holder of right and title over any other bank accounts, furniture and effects in their respective possession.
8. That the husband pay all costs of and associated with, the expert legal reports and valuation of [K Valuers}, of 17 April 2013.
9. That the husband pay, the loan from [Mr T], and indemnify the wife against any claim from [Mr T].
10. That pursuant to Orders of 7 May 2012 the husband continue to be responsible for the payment of the mortgage (Westpac) and all water rates and utilities, until such time as the mortgage between the parties is discharged.
11. That the husband be responsible for paying his liabilities in relation to the Child Support arrears; and legal fees associated with that debt.
12. That there be no order as to legal costs by the husband.
13. That the husband allow access to the property for the purposes of a rental appraisal or bank valuation.
Documents Read
4.The husband relied on the following documents:
Amended Initiating Application for Final Orders filed 14 July 2010
Affidavit of Husband filed 25 November 2011
Affidavit of Husband filed 23 October 2012
Affidavit of Husband filed 16 November 2012
Affidavit of Husband filed 15 April 2013
Affidavit of Mr T filed 5 December 2010
Husband’s Financial Statement filed 25 November 2011
Husband’s Financial Statement filed 15 April 2013
5.The wife relied on the following documents:
Wife’s Amended Response filed 25 November 2011
Wife’s Affidavit sworn 22 November 2011 and filed 25 November 2011
Wife’s Financial Statement sworn 22 November 2011 and filed 25 November 2011
6.The following expert reports were relied on:
Report of Mr B filed 30 November 2011
Affidavit of Mr B filed 24 April 2013
Affidavit of Mr D filed 14 December 2012
Report of Mr D – Exhibit A
The Hearing
7.The matter was listed for hearing over three days commencing on 12 December 2011. The husband was represented by counsel and the wife appeared on her own account. By leave given with the consent of the husband, the wife had the assistance of her sister at the bar table. The wife was not able to take effective part in the process of objections to the affidavit material and ultimately did not take many objections. The process of cross-examination of the witnesses in the husband’s case was very slow. The wife was at a considerable disadvantage in not having legal representation, particularly in circumstances where the case she wanted to make involved some complexity.
8.In my view the election by the wife not to have legal representation at the trial was very short-sighted. In my view that is likely to have contributed to the impasse between the parties. That said, the wife was courteous and co-operative and conducted herself well during several hearing days. It is appropriate to acknowledge that the smooth passage of the hearing was greatly assisted by the husband’s counsel taking a helpful and practical approach in the face of various problems that arose from the lay presentation of the wife’s case. The husband’s counsel did not take technical points for their own sake, he did not object to every inappropriate question or submission and to my observation, sought to be helpful with procedural matters where he could.
9.On 14 December 2011 and after the parties concluded their evidence (temporarily as it turned out) the wife asked that she be permitted to provide her submissions in writing. I understood that the wife did not feel able to frame her submissions immediately. The husband’s counsel opposed the matter proceeding by way of written submissions on the basis of cost and delay. The husband’s counsel indicated that if the written submissions required about two to three hours work by him, his client could be charged an additional $1,000, approximately. The wife was told and accepted that her preference might result in additional cost to the husband and that those costs might be sought against her. Nevertheless she pressed her application. On that basis I ordered that the wife’s written submissions be provided by email to the husband’s lawyers and my associate by 12 noon on 19 December 2011 and that any submissions in reply on behalf of the husband be provided by email by 4.00 pm on 22 December 2011. Otherwise judgment was reserved and the parties were excused on delivery of judgment.
10.Written submissions were received from the wife on 19 December 2011 and written submissions in reply were received on behalf of the husband on 22 December 2011.
11.Unfortunately, in an addendum to her written submissions, the wife sought to introduce new evidence relating to a demand for payment from the liquidator of S Pty Ltd and thereby sought to re-open her case. In an exchange of correspondence between the parties and my associate, the husband consented to the addendum and its related documents being admitted into evidence.
12.Albeit belatedly, I then understood that the parties’ cases were closed.
13.On 26 April 2012 the wife filed an Application in a Case because the mortgagee had issued a default notice in respect of the mortgage secured by U Road, Suburb C (“the Ch property”). The husband’s Response was filed on 3 May 2012. By arrangement with the parties, the application was listed before me on 7 May 2012. As the matter was coming back before me and because I was concerned that the parties had not properly addressed certain issues in the substantive proceedings by way of evidence and submissions, I caused a letter to be sent to the parties on 7 May 2012 seeking submissions in respect of the following matters:
The potential claim by the liquidator of [S]NSW P/L for about $329,000 in relation to the wife's loan account:
The Court could order that the parties put the liquidator on notice that the Court proposes to deal with the assets of the parties in a way that only preserves a fund that could be the subject of the claim for 6 months after judgment. The Court could make orders that come into effect after 6 months, without regard to the potential claim.
In respect of the [C] property:
If, as the wife contends, the property cannot be sold, how can it be that it has a value of $1,750,000? If the agreed valuation did not take into account the alleged restrictions on selling the property, should the valuation be updated.
The Court could order that the parties obtain advice from a single expert as to the options, if any, available to the parties and/or the Court, in order to effect a sale of the property. The Court could adjourn the matter until that advice is provided and the parties have an opportunity to consider and make submissions about that advice;
If the mortgagee obtains the right to realise its security, the Court could make an order for the division of any net proceeds in anticipation of there being a balance left after a mortgagee sale;
Should the proceedings be adjourned under s 79(5) until 6 years after the date the renovations were completed?
14.On 12 May 2012 the husband, his solicitor and counsel appeared in person and the wife appeared by telephone. After hearing the submissions of the parties and for the reasons given at that time, the following orders were made in respect of the substantive and interlocutory proceedings:
1.That within 14 days from today’s date the solicitor for the husband provide to the wife the text of a draft letter to the liquidators of [S] Pty Ltd (in liquidation) and of [S] New South Wales Pty Ltd (in liquidation), for the purpose of putting the liquidators on notice that unless advice is provided to the wife and/or the husband of a claim arising out of the liquidation of those companies over and above the claim recently received for about $43,000.00 in relation to [S] within 28 days of receipt of the letter, then this Court will be asked to disregard any further liability of either of the parties in respect of those companies for the purpose of property settlement orders.
2.That within 7 days of receipt of that letter the wife provide her comments to the solicitor for the husband AND in the event that there is no agreement between the parties in relation to the wording of the letter the parties have leave to restore the proceedings to the list before Justice Loughnan on a date convenient to the parties and the Court.
3.That the parties forthwith sign all documents and do all things necessary to instruct Pigdon Norgate Solicitors to disburse from their trust account all of the funds owing to the parties including any interest to the mortgage account in respect of the [C] property and to do so as soon as practicable.
4.That not later than 19 May 2012 the husband cause the mortgage on the [C] property to be no longer in arrears.
5.That until further order the husband meet the mortgage payments and all water rates in relation to the [C] property as and when they fall due.
6.That within 48 hours of receipt by her of any future water rates notice for that property the wife forward the notice to the husband.
7.The Court notes no order is made in relation to council rates in respect of the property.
8.That within 7 days from today’s date the solicitor for the husband provide to the wife a list of three lawyers able to give expert evidence in relation to the dispute in respect of the saleability of the [C] property arising out of the circumstances of the wife’s owner builder’s permit and the fact that there is no home warranty insurance in place.
9.That within 7 days from today’s date the solicitor for the husband provide to the wife a draft letter of instructions to any such expert.
10.That within a further 7 days the wife make an election among those experts and provide her comments in relation to the letter of instructions.
11.In the event that there is a dispute between the parties in relation to the terms of the letter of instructions, the parties are at liberty to restore the proceedings before Justice Loughnan on a date convenient to the parties and to the Court.
12.In the event that no election is made by the wife in the time specified as to an expert, the election of the expert is to be a matter for the husband.
11.That in the first instance the husband pay the costs of the expert and the parties ultimately bear the cost in the proportions of the final settlement.
12.That the proceedings be listed on a date convenient to the parties and to the Court being a date not earlier than 14 days after the evidence of the expert and/or evidence of a claim by the liquidator is received.
13.The purpose of that listing will be to permit the parties to re-open their cases to the extent required by the fresh evidence and to allow final submissions to be made.
14.The Court noted that the parties agree that the valuer who expressed the opinion as to the value of the [C] property at $1,750,000.00 and on which the agreement was reached as to the value of the property for the final hearing was not aware that there is no home owners warranty insurance in place for the renovations.
15.The Court noted that unless another value is agreed the expert’s valuation will need to address those matters.
15.An expert report was obtained from an expert in relation to the Home Building Act1989 (NSW) in December 2012. Arrangements were made to complete the hearing on 24 April 2013. On that date there were the same appearances, further written evidence was given by the husband and by experts, the husband was cross-examined and submissions were made. At about 3.00 pm on that date, judgment was again reserved.
The Issues
16.The main issues identified by the parties were:
1.the treatment of the potential liability of the wife as owner-builder, for all building defects and any resulting litigation or claims over the property, for a period of six years from the date of certification for the building works on the property, that is, until 18 May 2017;
2.whether the wife can account for the application of the proceeds of sale of the Town N property;
3.the treatment of a potential claim by the liquidator of S (NSW) Pty Ltd for about $329,000;
4.the proportions in which the parties made their initial contributions and their contributions during the marriage;
5.whether the husband wasted assets by his conduct in the management of failed companies, his dealings with various creditors and or in his dealings with the parties’ property; and
6.whether the C property can and should be sold.
Short History
17.The husband was born in 1967 and, as at the last day of the hearing, he was 45 years of age. The wife was born in 1966 and as at the last date of the hearing, she was 46 years of age. The parties commenced cohabiting in June 2001, were married in early 2005 and separated on 27 July 2009. The parties are not divorced.
Children
18.There are no children of the marriage. The husband has two children from a previous marriage, M who was about 18 years of age when the hearing concluded and J who was about 16 years of age. The wife has three children from a previous marriage, A who was about 26 years of age when the hearing concluded, E who was about 23 years of age and P who was about 16 years of age.
Background Facts
19.The parties met in March 1999.
20.From April 1999 to December 2003, the wife lived on the Gold Coast with her three children. She was employed on a full time basis with the public service and later with a retail chain.
21.In April 1999, the husband resigned as Director of W Pty Ltd. On 3 May 1999 the husband entered a Deed of Agreement with his partner, Mr R, in relation to his share of the business. The husband was to receive $390,757 for his interest in the company. The payment was to be by instalments and was to attract interest on some part of the principal.
22.In August 1999, the husband relocated to the Gold Coast.
23.On 3 July 2000, the husband entered into consent orders in relation to a property settlement with his former wife.
24.In August 2000 the husband resumed employment with W Pty Ltd and remained there until June 2003.
25.In 2001, the husband had a liability with the Australian Taxation Office of $24,556.41.
26.On 12 June 2001 the property at Y Street, Suburb X, Queensland (“X property”) was purchased in the names of the parties for $238,000. Of this, a loan of $158,000 was secured over the property by mortgage and the husband provided $85,327 from his savings.
27.Cohabitation commenced in June 2001 when the parties and the wife’s three children moved into the property.
28.At the commencement of cohabitation the husband had:
·A half interest in X property in respect of which he paid $85,327;
·Savings with the Westpac Bank of $9,060.63;
·A Toyota motor vehicle at $5,000; and
·A right to receive moneys pursuant to a Deed of Agreement between W Pty Ltd as trustee for the W Unit Trust, the husband as trustee for the Lane Family Trust and Mr R as trustee of the R Family Trust. The husband contended that at the commencement of cohabitation $169,000 had been paid to him under the Deed of Agreement and $248,383 was outstanding.
29.The husband owed:
·A personal tax liability of $24,556.41;
·A liability to I Company which crystallised at $50,000 in November 2003;
·A child support liability of $1,235; and
·With the wife, a mortgage liability of $158,000.
30.At the commencement of cohabitation the wife had:
·A half interest in X property (the wife did not pay any funds towards the purchase);
·A motor vehicle; and
·Some furniture.
31.The wife owed:
·With the husband, a mortgage liability of $158,000.
32.In August 2001, the parties purchased a Toyota motor vehicle for $28,000 plus the trade-in allowances for vehicles owned by the husband and wife before cohabitation.
33.From 2001, the wife transferred her weekly wage and family tax benefit payments into his Westpac bank account. The wife was made an additional cardholder on the husband’s credit card account.
34.On 4 June 2002, an investment loan in the amount of $140,000 was taken out in the name of the husband.
35.On 25 June 2002 the husband paid $258,383 towards the Westpac mortgage. He contends that the payment came from funds paid to him under the Deed of Agreement.
36.In August 2002, the husband commuted to work in Sydney for W Pty Ltd and returned to Queensland each alternate weekend.
37.In September 2002, the parties purchased a boat for $28,500.
38.In October 2002, Ms S purchased a property at L Street, Suburb O in Sydney (“the O property”) for $269,000 in the name of the husband.
39.On November 2002, the wife’s daughter E moved into her father’s residence.
40.In December 2002, the parties relocated to Sydney with the wife’s children, A and P.
41.In January 2003, the parties sold the property at Suburb X for $390,000. Of this $39,478 was used to pay out the Westpac mortgage, $185,182 was used toward the purchase of a property at H Street, Town N (“the N property”), $12,731 was used for commissions and agents fees and the balance of $152,609 was paid into the husband’s Westpac account.
42.In January 2003, the parties purchased the N property for $205,500 in the wife’s name. Of this, the parties paid a deposit of $20,550 and about $185,182 was made up from the sale proceeds of the X property.
43.In April 2003, a Westpac loan in the amount of $150,000 was taken out over the O property.
44.In around May 2003, W Pty Ltd went in to liquidation.
45.In June 2003, the wife commenced full time employment with a real estate agency as Accounts Manager.
46.In June 2003, the company known as S Pty Ltd was registered with ASIC. The husband was the sole director and shareholder.
47.In September 2003, the wife said she received $8,000 by way of property settlement with her former husband.
48.In October 2003, the parties purchased a Harley Davison motor cycle on a hire purchase agreement for $30,780.
49.In November 2003, $50,000 was paid to I Pty Ltd due to a claim against the husband prior to the parties’ cohabitation relating to his involvement in W Pty Ltd.
50.On 20 January 2004, the O property was sold for $345,000. Of this, $129,606.52 was used to pay the Westpac loan, amounts of $174,984.82 and $28,778.24 were deposited into the wife’s bank account and $11,630.42 was applied to agents and solicitors fees.
51.Between June 2004 and 2006, the wife said that the husband supplied the wife’s bank account details to F Company, a supplier of S Pty Ltd to deposit monthly rebates into her account.
52.In August 2004, the parties purchased the, C property for $980,000. The parties took out a home loan for $550,000 and the balance was paid from the wife’s bank account.
53.Early in 2005, the parties were married in Sydney.
54.In February 2005, the husband arranged for a line of credit over the N property for $200,000 in the wife’s name.
55.In May 2005, the wife ceased working with the estate agency.
56.Between May 2005 and December 2005, the wife was employed at S Pty Ltd as the husband’s Personal Assistant.
57.The wife said that in May 2005, the husband instructed her to arrange for their solicitors to register a “fixed floating charge” over S Pty Ltd for $230,000.
58.In June 2005, an owner-builder permit was issued to the wife to allow the parties to develop the C property.
59.In October 2005, S (NSW) Pty Ltd was registered with ASIC.
60.On 14 October 2005, the Australian Taxation Office served the husband with documents entitled “Creditor’s Statutory Demand for Payment of Debt” in relation to unpaid PAYG withholding Tax of $17,051.00 in relation to S Pty Ltd.
61.In December 2005, the husband transferred half of his shares in S (NSW) Pty Ltd into the wife’s name.
62.In February 2006, renovations commenced on the C property.
63.In March 2006, US Pty Ltd commenced proceedings in the Supreme Court of NSW against the husband as director of S Pty Ltd seeking damages in the amount of $14,000.
64.In May 2006, S Pty Ltd was placed into liquidation.
65.On 12 May 2006, the ATO commenced proceedings against the husband seeking payment of $119,512.75 for director’s penalty in respect of unpaid PAYG Tax for S Pty Ltd.
66.In October 2006, the District Court of NSW in Sydney ordered that the husband pay $121,449.28 to the ATO.
67.In January 2007, the liquidator for S Pty Ltd wrote to the wife demanding payment in the amount of $329,057.07 for deposits from F Company.
68.As at April 2007, the husband had not paid the judgment debt owed to the ATO and was served with a Bankruptcy Notice. The total amount due at as 24 April 2007 was $127,641.67.
69.In January 2008, the husband was requested by the ATO to lodge his personal tax returns for the financial years ending in 30 June 1999 and 30 June 2007.
70.On 4 February 2008, the husband was served with a Creditors Petition filed by the ATO that was listed for hearing 13 February 2008 in the Federal Magistrates Court.
71.On 8 February 2008, the husband lodged his personal income tax returns for the financial years ending 30 June 1999 and 30 June 2007.
72.On 15 February 2008, the husband received a Statement of Account from the Child Support Agency putting his outstanding Child Support liability at $17,642.59.
73.On 12 March 2008, the husband received Notice of Income Tax Assessments for the financial years ending 30 June 1999 and 30 June 2007. The wife said that the husband recorded the amount he owed in interest and penalties up until the commencement of cohabitation against the wife as share dividends from S (NSW) Pty Ltd.
74.The husband settled his dispute with the ATO, agreeing to pay $144,421.90 by 31 March 2008 and instalments in relation to a further $25,395.87. The wife’s father lent the husband $144,421.00 to prevent bankruptcy proceedings against the husband. The wife said that the husband recorded this amount against the wife as share dividends from S (NSW).
75.The husband repaid the wife’s father on 11 April 2008.
76.In March 2009, the husband was served with a claim filed in the Supreme Court of NSW by the liquidator for S Pty Ltd and joining the Commission of Taxation in the proceedings. The claim was for $73,459.
77.In May 2009, the N property was put on the market.
78.In June 2009, the wife paid out vehicle finance with GE Finance for the Toyota van in the amount of $17,634.76.
79.In June 2009, a meeting was held with the parties, Mr V (the company accountant) and shareholder, Mr G, about winding up S (NSW).
80.On 11 July 2009, the wife travelled to the Gold Coast to care for her father following his cancer surgery.
81.On 15 July 2009, the wife said that the husband contacted her via phone and told her that he intended to apply for unemployment benefits to reduce his child support debt. The wife then told the husband that their marriage was over.
82.On 27 July 2009, the wife returned to the C property and was provided by the husband with a document entitled “[Husband] and Wife Separation – Proposed Financial Settlement Prepared By [The Husband], July 2009”. The wife said that the parties agreed to separate but would remain living in the same residence.
83.In July 2009, the wife said she worked on the house to prepare for its sale in April 2010.
84.The wife said that in July 2009 the husband told her he would be commencing a correspondence course in Occupational Health and Safety and would not be able to secure full time employment until the course had been completed.
85.The wife said that between 27 July 2009 and 10 April 2010 she was responsible for the payment of joint expenses between separation and settlement of the N property totalling $111,145.66 paid from the line of credit account. She said she was also responsible for paying monthly joint direct debits totalling $24,713.83 from her Westpac account.
86.The wife said that as at 30 July 2009 she was owed $10,436.07 by her former husband, Mr MN, for child support.
87.The wife said that on 21 August 2009 she paid $140,000 in company tax for S (NSW) to the ATO.
88.On 7 August 2009, the husband placed a caveat over the C property.
89.On 1 September 2009, the Supreme Court NSW proceedings against the husband for the payment of $74,459.00 to the liquidator for S Pty Ltd were settled. The wife said she paid the sum of $30,000 from the line of credit account being the settlement amount of $28,000 together with $2,000 in legal fees.
90.On 8 October 2009, the wife’s son, P, commenced living with his father in Queensland. In October 2009, the wife was assessed to pay Child Support to her former husband in the amount of $1,208.83 per month. This amount was offset against the child support debt owed to the wife by her former husband.
91.On 12 October 2009, the parties sold the boat for $25,000.
92.On 16 January 2010 the wife left the C property and relocated temporarily to accommodation in Suburb Q.
93.On January 2010 the wife received a Letter of Demand from the Liquidator of S Pty Ltd for payment of $43,057.07 for F Company payments relating to deposits into her account between 2004 and 2006.
94.Between January 2010 and March 2010, the wife collected rent from a boarder, totalling $1,050.00, and deposited these funds into the mortgage account. In total the wife received $1,900 in rent and applied $1,050 to the mortgage and $850 to her living expenses.
95.The wife said that from January 2010 the husband collected rent from boarders and remained living in the property rent free.
96.The wife said that on 5 March 2010, the husband informed her that she was no longer allowed to remove furniture to take to Queensland.
97.On 9 March 2010, the wife transferred $70,000 from the line of credit account to pay for future joint liabilities and to re-establish a home in Queensland for herself and her son P.
98.On 9 April 2010, the N property was sold for $234,000. From those proceeds the line of credit account was paid out in the amount of $199,092.15.
99.As at 10 April 2010, a total of $101,074.64 was held in bank accounts belonging to one or both of the parties. The wife relocated to Queensland at this time.
100.On 23 April 2010, the husband filed an Initiating Application seeking property orders, thereby commencing these proceedings.
101.On 24 April 2010, the wife returned to the C property to collect her personal belongings and her son’s personal belongings.
102.On 29 August 2010, the wife received a PAYG Instalment tax notice from the ATO. She was required to pay $6,854.12 by instalments of $72 per week.
103.By 1 September 2010, the wife’s Child Support credit was extinguished and thereafter she was required to pay $383.83 per month to her former husband.
104.On 3 September 2010, the wife sought orders that the husband vacate the C property and for the property to be professionally leased and managed.
105.On 31 October 2010, the husband vacated the C property. The wife said that the property had been significantly neglected since she left the home.
106.On 2 November 2010 and following a Conciliation Conference, orders were made in terms of the following agreement:
BY CONSENT THE COURT ORDERS PENDING FURTHER ORDER:
1.That the parties forthwith do all acts and things and sign all documents necessary to apply to the Westpac Banking Corporation to increase the mortgage secured over the [C] property by the sum of $35,000.00, the sum of $15,000.00 thereof to be applied to construction and building costs in respect of the [C] property pursuant to Orders 3 and 4 below, and $5,000.00 to be applied, if required, to any shortfall in respect of the mortgage or building works referred to in Order 12 below, and the sum of $15,000.00 or such sum as required in accordance with Order 14 below.
2.That the parties forthwith do all acts and things and sign all documents necessary to appoint [BV] Building (an appropriately licensed builder) to act as project manager subject to his quotation for works and project management not exceeding $15,000.00.
3. That the Wife forthwith do all acts and things and sign all documents necessary to retain [BV] Building (an appropriately licensed builder) to complete the works on the basis of Mr [TT's] Report subject to his quotation for works and project management not exceeding $15,000.00.
3A.In the event the quotation of [BV Building] exceeds $15,000.00, the Husband will do all things to obtain a quotation from [MK] Builder (subject to them being appropriately licensed) and in the event that quote is less than $15,000.00 or equal to [BV] Building's quote then [MK] Builders be appointed to complete the works and replace the reference to [BV] Building in Orders 2 and 3. The Husband will seek such a quote within 48 hours of the receipt of [BV’s] quote. In the event [MK's] quote is higher than [BV's]; [BV] Building be appointed pursuant to Orders 2 and 3.
4.That the parties do all acts and things and sign all documents necessary to apply the $15,000.00 referred to in Order 1 above to the completion works and the costs of the project manager referred to in Orders 2 and 3 above and, further, that both parties be restrained from withdrawing any moneys from the mortgage account for any other purposes, other than with the prior written consent of each party, or other than in accordance with Order 12 below.
5.That the Husband forthwith do all acts and things necessary to accurately record the receipt of funds from boarders currently occupying the property and that he thereafter apply those funds to the payment of the mortgage on a weekly basis.
6.That the Husband provide to the solicitor for the Wife copies each fortnight of documentation evidencing the payments received from the boarders on a weekly basis.
7.That the Husband forthwith provide to the solicitors for the Wife records of all income received from boarders occupying the [C] property since April of 2010, including copies of all Agreements that have been entered into between the boarders and the Husband since April of 2010.
8.That the Wife forthwith provide to the solicitors for the Husband records of all income received from boarders occupying the [C] property prior to April of 2010, including copies of all Agreements that have been entered into between the boarders and Wife prior to April of 2010.
9.That either the Husband or the Wife are at liberty to inspect with and in the presence of the project manager/builder the status of the building works required to complete the property to certification, and either party may make such enquiries as they deem appropriate in relation to such progress.
10. That upon completion of the works, or at such other time as agreed between the Husband and the Wife, the Wife do all, acts and things and sign all documents necessary to forthwith list the [C] property for sale on the following terms and conditions:
(i)Unless otherwise agreed, or as recommended by the Agent, the property shall be listed for auction with an agent or agents as agreed by the Husband and Wife in writing and failing agreement with an Agent as nominated by the President, or his nominee, of the Real Estate Institute of New South Wales (“the Agent”);
(ii)the auctioneer shall be as agreed by the Husband and Wife in writing and failing agreement as nominated by the selling agent;
(iii)the auction shall take place as soon as possible after completion of the works, and on a date agreed between the parties, or failing agreement, a date recommended by the Agent;
(iv)the reserve price (or, in the event of a sale by private treaty, the listing price) shall unless agreed upon between the parties be as proposed by the Agent or shall be $1,800,000.00, whichever is the higher;
(v)the parties shall equally pay and be responsible for payment of all auction expenses payable before the property is auctioned;
(vi)in the event that the property does not reach reserve price at the auction, the parties shall negotiate with the highest bidders or any such interested persons and effect the safe of the property at a selling price as agreed between the parties, or failing agreement the parties shall accept the recommendation of the Agent and/or the Auctioneer as to the selling price of the property and shall sell the property at that price, provided that the selling price is not less than 90% of the reserve price;
(vii)In the event that the property is listed for sale by private treaty, then the parties shall sell the property for the highest price offered for the property, unless otherwise agreed;
(viii)In the event that the property is not sold by auction or by private negotiation within fourteen (14) days after the said auction then the parties shall do all acts and sign all necessary documents and pay all moneys as necessary to procure a second auction within a further five (5) weeks of the date otherwise upon the same terms and conditions as applied to the first auction.
11. That upon completion of the sale of the [C] property, the proceeds of sale be applied as follows:
(a)firstly, to pay all costs, commissions and expenses of the sale and to pay any Council and water rates and maintenance levies outstanding in respect of the property;
(b)secondly, to pay the mortgage balance then outstanding to the Westpac Bank;
(c)thirdly, to pay to the Husband the sum of $110,000.00, with this sum being taken into account as a partial property settlement in favour of the Husband, subject to Order 13 below;
(d)fourthly, to pay to the Wife the sum of $100,000.00, with this sum being taken into account as a partial property settlement in favour of the Wife;
(e)fifthly, the balance thereafter to be deposited into a Controlled Monies Account in trust for the parties.
12.That the parties do all acts and things to ensure that in the event of any shortfall between the income received by the boarders and the monthly mortgage commitment in respect of the [C] property the $5,000.00 referred to in Order 1 above is utilized to meet such shortfall.
13.That the Husband shall be entitled at the time of final hearing to seek an adjustment in respect of the partial property settlement referred to in Order 11(c) above to the extent of $10,000.00 (plus interest at the rate of 8% from 28th August 2010 until the date of the settlement of the sale of the [C] property) on the basis of his view, with which the Wife disagrees, that this sum constitutes a debt of the marriage which he intends to meet from his share of the partial property settlement provided for in Order 11 above.
14.That the parties apply from the funds referred to in Order 1, the sum of up to $15,000.00 to pay Home Building insurance for the [C] property. Such sum is required to be paid prior to the listing of the property for sale.
15.That forthwith upon the completion of the works in accordance with Order 3, the parties appoint, upon the wife providing 2 names to the Husband and he select one of those names within 48 hours of nomination a person or company to attend to do a full bond clean internally and externally at the property in preparation for the sale of the property. The costs of such cleaning be met from the increase in the mortgage provided in Order 1.
16.That forthwith upon completion of the building works the tenants be given 14 days notice to vacate to ensure the property is available for viewing by potential purchasers with vacant possession, and preparation for sale.
17.The Husband do all things necessary to retain a professional/insured gardener/cleaner (excluding the Husband) to maintain the grounds and swimming pool and clean exterior in respect of the [C] property provided that the costs of such person do not exceed $80.00 per week and on the basis that the costs of such person (labour and materials) are met, upon production of a tax invoice by the handy man, from the mortgage account into which the board for the [C] property has been deposited.
18. That the Husband use his best endeavours to ensure the tenants keep the property in a neat and tidy condition in accordance with their tenancy obligations to do so.
107.On 3 November 2010, the wife applied for an increase in the Westpac mortgage secured over the C property.
108.On 9 November 2010, the Toyota van was sold for $12,000. Of this, $10,332 was retained in trust by Pidgon Norgate Family Lawyers who acted for the wife.
109.On 25 November 2010, the husband was informed by Westpac that the increase in mortgage was declined. The wife was not informed of that decision.
110.On 25 January 2011, the ATO issued the husband (as Director of S (NSW) Pty Ltd) with an overdue payment reminder notice of $90,281.32 in relation to a superannuation guarantee charge. It is the husband’s evidence that the charge related to the superannuation payable for the parties and another.
111.In January 2011, the husband entered into an agreement with Mr TR to commence work on the C property with payment to be made by transfer of the Harley Davidson motor cycle. The wife said she was not consulted.
112.On 3 February 2011, the ATO issued the husband with an overdue payment reminder notice of $91,067.45 in relation to a superannuation guarantee charge. The amount had increased as a result of interest and additional charges.
113.The wife said that between February and October 2011, her solicitors sought agreement for the payment of outstanding council and water rates from moneys held in trust but that the husband refused to agree.
114.On 22 March 2011, the husband’s solicitors wrote to the wife’s solicitors demanding payment from the Westpac mortgage increase for the works undertaken under the instruction of the husband.
115.In March 2011, the wife was informed by Westpac at the mortgage increase had been declined in November 2010 and that the husband had been so informed.
116.In March 2011, S Pty Ltd was placed into liquidation.
117.In July 2011, the wife received a letter of demand on behalf of the Shire Council for outstanding rates.
118.In July 2011, the Harley Davidson motor cycle was transferred to Mr TR for $17,380 in lieu of worked completed in January 2011.
119.On 11 October 2011, Johnston J made orders, among others, that the parties prepare a letter of instruction to the single expert as soon as possible for the updating of the expert’s valuation of the property and that the costs of the expert be paid in the first instance from the moneys held in trust by Pigdon Norgate Solicitors.
Credit and Submissions
The evidence of the witnesses
120.The only witnesses called for cross-examination were the parties and Mr T.
121.The husband did not have a clear recollection of some significant events in the financial history of the parties. The evidence he proffered at first in respect of his initial contributions could not be supported by him. The evidence about the benefit to him of payments made under a Deed of Agreement in respect of W Pty Ltd proved to be unreliable. Faced with relevant bank statements he was not able to support some of his claims. For example he was not able to explain the calculation of $169,000 said to have been paid to him under the agreement prior to the parties’ cohabitation. He was forced to concede that his savings with Westpac at the date of cohabitation were of the order of $9,000 and not $110,000 as he had deposed. The husband required certificates under s 128 of the Evidence Act (1995) (Cth) for evidence about his income tax declarations and about the discharge of his duties as a trustee of a trust. Those matters do him no credit.
122.Mr T was briefly cross-examined but he was not challenged as to his testimony and did not resile from that evidence.
123.The wife was not challenged accept in relation to the emphasis or descriptions she placed on events in her affidavit. She professed to have a good recollection of events but she very much sees them from her perspective. She conceded that she simply did not know if the husband dealt inappropriately with the movements of moneys at various times. At one point she gave evidence in relation to financial transactions in a company they both worked in - to the effect “I was his PA and did not challenge a director (the husband) in relation to his dealings”. The interpolation is mine.
124.Neither of the parties is a reliable witness in relation to all relevant events, the husband because his recollection is said to be poor and the wife because she was not directly involved in the first place.
Submissions
125.The wife made extensive oral and written submissions. Time and events have overtaken some of the submissions. The wife’s arguments have, where relevant, been dealt with in the course of these reasons but in summary the wife submitted that:
ØThe husband was experienced in business and she was not. She trusted him and he betrayed her trust. It would require a forensic accountant to properly unravel the movement of funds in and out of company accounts and the wife was not able to afford one.
ØShe and the husband greatly disagree about the balance sheet.
ØThe husband failed make adequate disclosure. He failed “to provide a value of the companies, their assets and bank balances, in addition to a full and proper account of all bank accounts and the balances in his control, or for his use”.
ØWithout the information requested from the husband under the Notices to Produce, for the purpose of the hearing on 12-14 December an accurate value of the assets was impossible.
ØThe husband has unilaterally caused or accrued additional debts that were non-existent at the time of separation. He acted recklessly and negligently with regards to being assessed with liabilities and thus they should not be included as a joint debt of the marriage.
ØA total of $361,718 in add-backs should be applied in the wife’s favour.
ØIt is near impossible for the wife to hazard a guess at the net pool of assets. However, in an effort to provide something she submitted that the net asset pool in its simplest form might be described as:
·C property $1,750,000
·Less mortgage $ 550,000
·Less owner-builder minimum $ 300,000
·Net Pool (simplest form) $ 900,000
ØThe wife’s total initial contribution was $129,000 ($10,000 in personalty and an interest in the X property of $119,000) and the husband’s was $133,060 (a motor vehicle - $5,000; Westpac savings of $9,060, and an interest in the X property of $119,000). Through her guarantee, with the husband the wife owed $158,000 on the X property loan but the husband also owed $189,500 to the tax office, a personal tax liability of $25,243.97 and a Child Support debt of $1,235.
ØThe husband did not bring $248,383 to the marriage from W Pty Ltd.
ØThe wife made significant financial contributions, both directly and indirectly, throughout the marriage/relationship – she caused the profit of $152,000 from the sale of the X property was due to the improvements she undertook and she also caused the profit of $28,500 from the sale of the N property due to her contribution, by way of improvements to the property in addition to the negotiations and work undertaken by her to achieve the strata sub-division and dual-occupancy title, for that property.
ØThe wife contributed directly to the mortgage over the X property by depositing her wages/salary directly to the mortgage (“Rocket account”).
ØThe loan of $144,421.90, from the wife’s father, in March 2008, for the husband’s taxation liability, was a contribution on the wife’s part. The wife submitted that the husband could not have repaid the loan from his earnings from S Pty Ltd as his earnings for the 2008 year were $7,436.
ØThe wife was not a party to an income splitting arrangement with the husband. She submits that she worked for her wages. The fact that her current income is higher than that of the husband demonstrates this point.
ØThe wife’s income earning capacity was restricted at the time of cohabitation with the husband in the early years of their relationship because she had the full-time care and legal responsibility of her son P, who in 2001 was aged just four years old.
ØAs the husband admitted, the wife loaned significant amounts of money (between 2005-2009) to the various companies/business operated by the husband.
ØThe husband did not receive “the [O] unit” by way of a bonus owed to him. It is submitted that Mr R bought the unit, not the husband or W Pty Ltd as the husband variously deposed, and there is no evidence that the proceeds of the unit were ultimately applied to the benefit of the family.
ØThere is no evidence that the husband received a Nissan motor vehicle by way of bonus as he asserted.
ØOverall the wife’s financial contributions far exceeded those of the husband because he brought nearly $300,000 in debt into the marriage and the wife’s direct and indirect contributions exceeded his.
ØThe wife was primarily responsible for the care and welfare of the family (including the husband’s children and family when they visited) and she was not challenged on this subject. The husband’s two children spent half of each school holiday period with the parties between 2001 and 2003; and in addition alternate weekends and half of each school holiday period for four years (2003-2007).
ØThe wife rejects the submission on behalf of the husband that she cared for the inside of the home and the husband for the outside.
126.As to the husband’s written outline of submission asserting that she unilaterally spent $111,145 from the line of credit and $199,113.75 should be added back to the pool as a preliminary advance to her it was submitted that:
·firstly, the wife did not act unilaterally in the expenditure, the majority of expenditure was for the husband’s liabilities (as per his oral evidence 13 Dec) and for the conservation of assets of the marriage;
·secondly, the expenditure of $111,145 for joint expenses only covers the period up until 9 April 2010; and
·thirdly, the document/spreadsheet that counsel for the husband relies on was specifically prepared in accordance with the request by Ms Huntsman, legal representative of the husband – that is, the wife was requested to provide a full reconciliation (including invoices and receipts) for expenditure from both the line of credit (for the period April 09 - April 10) and then on the closure of this account, the Westpac account 514424 (from April 2010 to November 2011), which was used to pay joint expenses following the closure of the line of credit account.
ØThe husband did not give any evidence that he provides financially for my children. The parties knew at the outset of the relationship that I had three children and he had two children. On this issue I submit that we both had a legal responsibility for our children.
ØThe wife contributed to the payment of child support by the husband for his children and she received child support for her children from their father. She assisted with funding for his children and his former wife to travel between Sydney and the Gold Coast every school holidays for two years, and he assisted with the same for her son, P, when the family re-located to Sydney.
ØBy way of negative contributions – if the husband had not mismanaged every company in his control and complied with the relevant laws he would not have been pursued or obliged to pay the penalties applied by the various government agencies that were paid during cohabitation and amounted to $462,072.97.
ØHad the husband not objected to the C property being sold incomplete and without certification the wife would have been able to seek an exemption for Home Warranty Insurance and sell the property. This would have saved approximately $60,293.25 in interest payments.
ØHad the husband agreed to sell the C property up to and including August 2010, according to the evidence of Mr B it would have achieved a sale price of $1,650,000.
ØHad the husband not objected to the C property being professionally leased and managed, income in the vicinity of $120,400 would have been received instead of the paltry sum of $30,000-$40,000, received through his management of renting the property to boarders.
ØHad the husband lodged and completed his income tax returns from 1999 he would not have incurred the taxation and Child Support liabilities currently owed by him and carried through the relationship/marriage and now through to the hearing.
ØIf the husband had paid the Child Support liability as assessed in February 2008 of $17,642.50, and not litigated the matter, then his child support debt would not stand, as it currently does at, $47,493.30, and he would not have incurred the legal fees in excess of $35,000.
ØThe principles of Kowaliw are relevant to this matter and should hold significant weight in applying a just and equitable decision.
ØThere should be an adjustment in favour of the wife for “the s75 factors” because:
ØSince separation the husband has retained two income producing businesses and the assets of each that have enabled him to establish a third business.
ØAdditionally, the husband has since April 2010, benefited from the rental income produced from the [C] property.
ØThe husband has had, and is likely to continue to enjoy, the benefits of additional income and dividend distributions from business activity.
ØThe husband has a much greater earning capacity than me, and will be free of the interest accruing mortgage; and free from any liabilities relating to the statutory owner-builder obligations for the C property.
ØThe wife will be financially limited by the need to retain the C property in order to fulfil her statutory owner-builder obligations until May 2017.
ØThe husband will benefit from income producing businesses while the wife will have a non-liquid interest accruing asset;
ØThe wife has a duty and legal responsibility to support and care for her son, P, until he turns 18. P is currently 15 years old. She wishes to continue in her role as parent and full-time care giver for him.
ØThe husband hindered the wife’s career in the real estate industry. It was disrupted due to relocating, firstly from the Gold Coast with the husband to Sydney in 2003 due to his employment, and secondly by her relocation and re-establishment to the Gold Coast in April 2010, following separation from the husband;
ØThe wife will not be relieved of her statutory warranty obligations, as owner-builder for the C property before 18 May 2017. The wife did not consent in November 2010 to orders requiring her to have the property certified; or to apply for and obtain Home Warranty Insurance. Whereas the wife tried to comply with the orders of 2 November 2010, the husband did everything in his power to “affect the property to be completed and certified”. The husband withheld from the wife the fact that the increase in mortgage was declined by Westpac. Without the knowledge or consent of the wife the husband entered into an agreement with a builder Mr TR (a different builder to that stipulated in the 2 Nov Orders) to undertake works to complete the C property and in lieu of payment gave to him an asset of the marriage (the Harley Davidson motorbike) which he had resisted selling all the way up to the court hearing on 2 November 2010. The wife was advised and she informed the husband and his lawyers that she could apply for an exemption for Home Warranty Insurance provided the property remained uncertified.
ØThe home warranty insurance issue is complex. The wife remains resistant to applying for Home Warranty Insurance for the following reasons:
· she is required to sign a declaration in that application that all information is true and correct;
· she has no evidence to support the material provided by the husband relating to the required material to be included and declared true in that application;
· she knows that the information provided by the husband, for the inclusion in the application for Home warranty insurance is not true or accurate;
· she now knows that the Owner Builder permit issued to her on 09 June 2005 was issued on the basis of false and misleading information having been provided and that this is an offence under the Crimes Act; and
· as such the wife is not able to make or sign the declaration necessary to affect the submission of an application for Home Warranty Insurance unless she provides, and uses, false and misleading information, which she will not do.
127.As a preamble to the final written version of the orders sought by her the wife recorded:
Given the notional liabilities, obligations and responsibilities as the owner-builder of the [C] property until 18 May 2017 ($300,000); the loss of rental income from the [C] property since April 2010 estimated at $73,400 due to the husband’s failure to agree to the professional management and leasing proposed; the unpaid super entitlement due to me from [S (NSW)] ($22,477); the ATO tax debt ($8,322.83) I have incurred for the 2009 year due to dividends distributed to me by the husband but not paid; the child support assessed and paid by me ($12,728.31) since separation again due to dividends distributed to me by the husband but not paid; the legal fees ($44,683.11) that I have incurred as a result of this contemptuous matter brought about by the husband; the minimisation of the asset (the [C] property) due to the husband’s neglect in maintaining the property and grounds; in addition to the financial and non-financial contributions provided by me during this relationship for the benefit of the husband, the loss of income, assets and enjoyment of life that I have incurred as a result of the husband’s negligent, wasteful and reckless actions and behaviours, I humbly seek a division of property as to:
70% to me; and
30% to the husband.
128.Submissions in reply on behalf of the husband are set out below:
1. The Wife’s submissions continue the unfounded allegations made against the Husband during the Court proceedings. There is no evidence to support allegations that:
a.The Husband has failed to disclose any relevant material during the proceedings.
b.The Husband has been engaged in waste.
Response to Wife’s Submissions
A. The Husband’s initial financial contribution of $85,328 to the purchase of the [X] property remains undisturbed by the cross examination. The Wife concedes the Husband owed a motor vehicle ($5000) and had Westpac savings of $9060.
It was the Wife’s evidence that she made no financial contribution to the initial purchase price of the [X] property. The property was put in both parties name and both parties were liable under the mortgage.
B. The Husband was party to a Deed of Agreement with [W] Pty Ltd. (MC-3) Payments of $100,000 on 25 June 2001 and $148,383 on 25 June 2002 (MC-14) were deposited by [W Pty Ltd] into the Husband’s Rocket account (on the Husband’s instructions to Mr [R])
The Husband’s inaccuracy in accounting for all monies received pre-cohabitation is reasonably explained by his not have full access to bank records and MC-4 being created from secondary documents prepared by himself.
There is no valid basis for inferring the monies received relate to anything other than the Deed of Agreement.
The husband gave evidence under the provision of S 128 Evidence Act certificate that these monies had not been declared as part of his income.
C. The Wife’s analysis of the use of $248,383 is flawed. The payout figure on the [X] property was $29,456.54 (Rocket Statement 13 March 2003). Various investment monies had been added to and drawn down from the account. E.g. MC-18,20.
It is the Husband’s oral evidence that the withdrawal of $75,000 was a partial repayment of the Westpac investment loan.
D. On the Wife’s own evidence, she made no contribution to the initial purchase of the [X] property. The figure of $129,000 comprises half the purchase price of [X] ($119,000) plus the motor vehicle and furniture (combined value $10,000)
[15] Kowaliw and Kowaliw (1981) FLC 91-092.
247.In Kowaliw Baker J said at 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of the marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
a.where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets or
b.where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec. 75(2)(o) to applications for settlement of property instituted under the provisions of sec. 79.
248.Justice Baker also said at 76,644-45:
It does seem to me, however, that if a party has either by deliberate act or by economic recklessness reduced the value of assets available for distribution then the economic consequences which flow therefrom including the resultant burden to the other party are directly relevant to a consideration of the respective contributions of the parties contemplated by sec. 79(4).
249.It was submitted for the husband that nothing fell from the evidence that suggested the husband embarked upon a course of conduct to reduce or minimise the matrimonial assets nor is there evidence that the husband acted recklessly, negligently or wantonly.
250.Conduct of the type discussed in Kowaliw is not more probable than not. Something more than suspicions and financial loss is required to establish that conduct. On her own case, the wife is not in a position to establish that the husband misappropriated company funds. In the same case she argues both that the husband was reckless, negligent and wanton in his management of family assets and yet she seeks an adjustment under s 79(4)(e) because he has a greater earning capacity than her. It is not possible to reconcile those arguments. Certainly no effort was made by the wife to do so.
251.Importantly, on the wife’s own case, many problems have arisen because she did not meet her obligations in relation to the owner builder permit issued to her. At all times she was the only person who could have rectified or addressed those problems. While the husband may have made poor financial and business decisions at times, and he may have acted since separation to advantage his position over that of the wife, I am not persuaded that his behaviour falls within the exceptions described in Kowaliw.
Conclusion on Contribution
252.In summary it is argued on behalf of the husband that his contributions represented 65 per cent and the wife’s 35 per cent. Save for asserting that there should be an adjustment in her favour, the wife does not distinguish between contributions and adjustments in her submissions. She argues that she should receive 70 per cent of the net pool compared to 30 per cent to the husband.
253.The parties lived together for eight years and for the purpose of s s 79(4)(c) there were no children of the marriage. As I understand the argument, the submission by learned counsel for the husband was to the effect that in the context of this case, where both parties were in paid employment and the husband earned substantially more than the wife, I was obliged to find that his contributions exceeded those of the wife. With respect I do not agree with that conclusion. My task is to alter property interests in a way that achieves a just and equitable settlement of property. The task is performed by taking into account contributions of various types and other matters. The features of this case include that the parties cohabited for eight years and for the purposes of s 79(4)(c), there are no children of the marriage. Without parenting contributions it follows that the focus is on financial, non financial and homemaker contributions. The husband’s income was significantly greater than that of the wife. As has been recorded on many occasions, it is obviously easier to add up dollars and cents in a way that cannot be readily applied to non financial contributions. The task is identifying a just and equitable settlement of property, not a taking of accounts as might occur on the winding up of a partnership, for example.
254.The parties shared the work of this marriage in different ways. The husband’s financial contributions were greater than those made by and on behalf of the wife. I am satisfied that the husband came to the marriage with assets and rights over and above those of the wife, which ultimately amounted to at least, $200,000. In the context of a pool with a potential value of less than $1.3 million, that is a not insignificant amount. His income was significantly greater than hers. The evidence does not permit a clear finding in relation to non-financial contributions but by virtue of the concessions made, they were either equal or they favour the wife. I have found that they were of a similar order. Albeit stripped of a parenting component, the wife made the greater homemaker contribution. Taken together, in my opinion the facts support a finding that the contributions of the husband were 53 per cent compared to 47 per cent by the wife.
The other matters in Section 79
255.Once contributions have been assessed, the other factors in s 79(4) need to be considered. They are:
Section 79(4) (d)
256.Pursuant to s 79(4)(d) I am required to take into account the effect of any proposed orders on the earning capacities of the husband and wife. There is no relevant effect.
Section 79(4)(e) - Section 75(2) Factors
257.The relevant matters in Section 75(2) would seem to be paragraphs (b), (d), (e), (k), (l), (m) and (o).
(a) the age and state of health of each of the husband and wife;
258.The husband and wife are 45 and 46 years of age respectively. There is no current evidence about their health.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
259.The husband receives $2,360 per week made up of $1,500 per week in wages through his company Z Pty Ltd from the company that contracted for his services; NG Pty Ltd; and $860 per week from the boarders at the C property. The husband lives in the C property with his girlfriend, Ms KF. Ms KF earns an estimated $1,150 per week. According to the husband’s Financial Statement she does not contribute to the husband’s expenses nor does she benefit from any of his expenses. That is an unusual state of affairs.
260.The husband spends $2,284 per week made up as follows:
Expense Amount Income tax $360.00 Superannuation contributions – BT $144.00 Mortgage payments – Westpac Bank $800.00 Other rates and levies $60.00 Term life insurance $28.00 Motor vehicle insurance - AAMI $16.00 Motor vehicle registration Honda … $25.00 Mastercard repayments – Westpac Bank $51.00 Child support – husband’s younger son J $350.00 Other expenses. $450.00 Total $2284.00 261.The husband’s Financial Statement bears a number of notations in relation to outgoings that he is not meeting or not able to meet.
262.It was not put to the husband that he is not exercising his earning capacity.
263.The evidence about his assets and liabilities is addressed above.
264.The wife did not file an updated Financial Statement because she said that her financial circumstances are unchanged from those set out in her 2011 Financial Statement. The wife’s income is $1,606 per week, made up of her salary of $1,384 as a Manager for a business at Surfers Paradise, $167 in Family Assistance, $48 in Rent Assistance and $7 per week in child support for her son P. She lives with P who earns $20 per week.
265.The wife’s expenditure is as follows:
Expense Amount Income tax $315.00 Superannuation to SGC Superannuation $124.00 Rent $350.00 Mortgage payments – for the C property to Westpac Bank $25.00 Home building insurance – C – NRMA Insurance $30.00 Comprehensive motor vehicle insurance Toyota Landcruiser - NRMA Insurance $20.00 Dental top extras health Insurance – Defence Health $12.00 Motor vehicle registration Toyota Landcruiser … $17.00 Loan repayments – Pigdon Norgate Solicitors $50.00 Mastercard payments – Westpac Bank $25.00 Other expenses. $500.00 Total $1468.00 266.Evidence about the wife’s assets and liabilities is set out earlier in these reasons.
267.It was not put to the wife that she is not exercising her earning capacity.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
268.There are no children of the marriage.
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
269.I have set out the evidence in relation to the parties’ expenses.
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
and the rate of any such pension, allowance or benefit being paid to either party;
270.I have referred above to the wife’s Centrelink benefits. Each of the parties has a small superannuation interest.
(g) where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
271.There is scant evidence in relation to the standard of living of the parties during the marriage. For a period the parties owned a power boat. The parties entertained the husband’s overseas relatives. With six bathrooms and a provisional valuation of $1,750,000, the C property sounds like a substantial residence.
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
272.There is no evidence of either of the parties planning further study or intending to set up in a new business.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant;
273.The mortgagee has security for its debt. Mr T has waited for repayment of his loan for some time. Neither of the parties has a fund which could address the debt. There is no indication that either of the parties intends to pay the debt in the short term. Mr T has taken no action to recover on the debt but it carries a healthy interest rate of 8 per cent. On past performance it is likely that Mr T will need to wait until the C property is sold.
274.Otherwise there is no evidence about creditors who are at risk.
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
275.There is no application for maintenance.
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
276.The parties both retained paid employment during the marriage. In respect of this criterion, the wife cites the disruption to her career caused by her initial move to Sydney and the need to return to the Gold Coast after separation.
(l) the need to protect a party who wishes to continue that party’s role as a parent;
277.The wife lives with P. There is no evidence about the impact on her of her role as a parent.
(m) if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
278.The husband has not revealed the financial circumstances relating to his cohabitation with Ms KF. Otherwise the evidence is set out above. I note the wife’s evidence to the effect that P does not benefit from the expenses disclosed by the wife in her Financial Statement. That seems unlikely.
(n) the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;
279.I have set out above the terms of the 2 November 2010 order.
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
280.I have referred to the evidence about child support.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
281.The husband studied for his current career after separation and that prevented him from making contributions to joint expenses.
282.Each of the parties made contributions to the children of the other. For reasons that are set out above, they are properly addressed here.
283.Only the husband’s contributions are relevant to the wife’s children and only the wife’s contributions are relevant to the husband’s children.
284.The wife’s children lived with the parties as follows:
oAll three children – June 2001 to November 2002
oA and P – November 2002 to 2005
oP - 2005 to separation
285.The husband acknowledged that the wife was the primary carer of her children. However, he assisted with homework and school assignments, attended school meetings and functions, assisted the wife when they were sick and shared the transport duties for school and extra curricular activities. From late 2001 to 2003 the husband shared the driving of A to and from casual jobs and social engagements. The husband assisted A to obtain her drivers licence and took P to sports training and games. During 2004 the husband undertook the role of trainer for P’s team.
286.The husband’s children lived with the parties as follows:
·both children half of each school holiday – June 2001 to early 2003;
·both children weekly or alternate weekends and half of each school holiday – early 2003 to August 2007; and
·J only half school holidays – August 2007 to separation.
287.The husband acknowledged that the wife assisted him in caring for his children. She cooked meals for the children when they lived with the parties. She attended to the purchase of Christmas and birthday gifts. When J lived with the parties during the week in about 2006 the wife often collected him from school or dropped back to school. The wife also recorded that the husband’s children lived with the parties for six weeks in 2005 and during that time the wife drove them from the C home, to and from school at Suburb HH each day. When the husband’s children were living with the parties the wife cared for and entertained them. She took them to outings and sporting events, entertainment or parties. The wife cooked, cleaned, washed and ironed for the household.
288.Care is needed not to double count contributions. I have already given the parties credit for their financial contributions by way of capital and income. In my view, those contributions, such as the application of the husband’s income, cannot be counted again. Thus paying for A’s drivers licence and sponsoring P’s football team cannot be counted twice, save to record that in relation to those expenses, and perhaps more significantly, the costs of feeding, clothing and housing the children, were in effect contributions made for the sole benefit of the wife.
289.It is difficult to assess the contributions made to the parties’ respective children. On one hand the wife’s children lived with the parties for a greater period but on the other the parenting aspect of their care is likely to have fallen more to the wife than the husband. The financial support is important but credit has been given above for the contributions in the form of injections of funds and income.
290.In the circumstances, I find that the contributions of the type cited with approval from Robb and Robb were shared.
291.The wife submitted that the owner-builder liability is a relevant s 75(2)(o) factor because the husband will be free from any liability relating to the statutory owner-builder obligations while she will be financially limited by her requirement to retain the property until May 2017 in order to fulfil her statutory warranty obligations. Sadly I feel obliged to address that risk another way. Under the orders I propose there will be no risk to the wife under any home builder’s warranty.
(p) the terms of any financial agreement that is binding on the parties.
292.There was no binding agreement made between the parties.
Section 79(4)(f)
293.Other than the orders referred to above, there are no other relevant orders made under the Act.
Section 79(4)(g)
294.The husband pays child support. The wife neither pays nor receives child support.
Conclusion
295.It was submitted for the husband that no adjustments are warranted under s 75(2). The wife argued that an unspecified adjustment should be made under s 75(2) in her favour.
296.The relevant matters arising from the remaining elements of s 79, which include the s 75(2) factors are:
·The husband has in the past received an income from paid employment that is many times a rate of income to which the wife could aspire and there is no evidence as to why that situation may not occur again;
·The wife still has a child living with her;
·The husband lives with his girlfriend and therefore his living expenses could be shared to some extent; and
·The division based on contribution alone, would leave the husband with a greater share of the property.
297.Those matters generally favour an adjustment to the wife. I will make an adjustment of 5 per cent to the wife.
Just and Equitable
298.The value of the C property is not known. The parties owe the Westpac Bank $550,000 secured by mortgage over that property. Otherwise, the parties have assets valued at $89,588 and a relevant debt of $12,370, making a net position of $77,218. Of the net assets, $40,000 is in the form of superannuation and $37,218 is by way of non superannuation assets.
299.Putting aside the C property and its associated mortgage debt, a division of the assets in the proportions 52 per cent to the wife and 48 per cent to the husband would leave the wife with about $40,153 and the husband with $37,065. In each case $20,000 is in the form of superannuation interests.
300.The wife has had or has the benefit of:
Assets Value Funds in Westpac Bank (W) $1,260 Toyota LandCruiser motor vehicle (W) $33,650 Solicitor’s Trust Account – proceeds of sale of Toyota van (W) $4,556 Jewellery (W)
$5,000
Various small superannuation accounts – wife $20,000 Total $64,466.00 301.The husband has had or has the benefit of:
Assets Value Holden Motor Vehicle … (H) $4,000 Z Consultant Pty Ltd $0 Furniture/tools (S (NSW) Pty Ltd) (H) $1,000 Funds in Westpac Bank Acc …964 & …345 (H) $122 Various small superannuation accounts – husband $20,000 Mr T (H) -$12,370 Total $12,752.00
302.Ignoring the C property and the related mortgage, in order to achieve a 52:48 division the wife would pay the husband $24,313.
Framing the Orders
303.Albeit, on my calculations, $562,684 apart, the parties have both framed orders sought, at least in the alternative, giving the wife the opportunity to retain the C property and buy the husband out. It follows from the above findings that I cannot make a similar provision. Accepting the wife’s argument about the warranty on the C renovations, I do not know how much the property is worth and so cannot identify the amount the wife would need to pay the husband. Obviously, the other mechanism for identifying the value of the property – a sale, is not available here.
304.I have found that I should not order the C property to be sold until after May 2018. The question remains – whether the proceedings should be adjourned until then or orders made now, for then. Given that the parties’ wealth is almost exclusively tied up in the C property and given that they have turned their minds to the disbursement of the proceeds of sale for many years – including agreeing to an order for sale and disbursement of some of the proceeds in November 2010, I propose to make final orders now. The proceedings have been excruciating for the parties and need to come to an end.
305.Neither of the parties has the wherewithal to make a substantial payment. The wife does not have a fund to pay the husband $24,313 and he appears unable to pay Mr T $12,370. I will make orders that leave the parties with what they have and owe and provide for adjusting payments out of the C property sale. As that sale is likely to be five years away some allowance will be needed for late payment – both in respect of the interest on the Mr T loan and the fact that the wife will have $24,313 of the husband’s money for five years. In the latter regard 5 per cent over five years would bring the amount to about $31,500. I will make provision for the husband to receive $31,500 from the wife’s share of the proceeds. In relation to the Mr T debt, any amount over and above $12,370 will be paid directly from the proceeds of sale. That will leave the husband responsible for the debt as it stands today and the parties sharing the cost of not repaying the debt at this time.
306.That leads to the vexed issue of the management of the C property for the next five years. As I understand the parties’ positions in the event that the property is not sold now, the husband would prefer to continue with the current arrangement, whereas the wife would like the property professionally managed.
307.The husband says that his management of the property commenced in April 2010 when the wife relocated to Queensland. In March 2012 he left his rental accommodation and moved into the property. As he makes clear in his affidavit sworn 15 April 2013, it was not the husband’s preference to live in ‘share accommodation’ but he moved in, because it was too hard to manage and maintain the property while living elsewhere. He said he has been concerned to ensure that he and the wife obtain the best sale price possible for the property. It is the husband’s evidence that he has met from his own income the shortfall of expenses (mortgage payments and other outgoings on the property) over income (payments of board from the boarders) in relation to the C property of the order of $21,747 since taking over management of the property. In a schedule attached to his latest affidavit the husband sets out an Income and Expense Summary. Neither the schedule nor the affidavit specify the period covered by the schedule. The document records that the husband paid out $107,171 in mortgage payments over the period in question. At the $800 per week he deposes the mortgage instalments to be, that suggests the period is of the order of 133 weeks. If that is the time frame of the schedule then the husband is meeting the shortfall at the rate of about $163 per week.
308.In addition to managing the boarders and paying outgoings, the husband deposed to performing the following since 25 November 2011:
·cleaning and maintaining the pool;
·weeding, re-planting trimming and maintaining the gardens and some landscaping work;
·measuring, organising and installing blinds in the front room;
·completing the installation of the alarm system;
·repairing the garage door;
·unblocking drains and installing additional drains;
·repairing the ducted vacuum system;
·arranging for the repair of a faulty sensor switch;
·regularly replacing light globes inside and outside the house;
·pricing and arranging for a tiler to re-point the roof capping;
·arranging for a leak from a balcony to be repaired and a deck re-waterproofed by tradesmen;
·arranging for the replacement and installation of broken appliances including a dishwasher and television; and
·obtaining minor furnishings and art works to present the property for sale.
309.The husband identifies four boarders in the property as at 6 April 2013. Three pay $200 per week and one boarder pays $260 per week. There is no reference to Ms KF paying any board or to the husband paying anything towards his accommodation costs.
310.The evidence of the husband invites the speculation that if the C property was professionally managed it would relieve the husband of the work of managing the property; create greater transparency about his living costs and those of Ms KF, while maximising the return on the property.
311.There is no admissible evidence about the best use for the property. The parties seem more intent on frustrating each other than maximising their financial circumstances. The wife made assertions during the trial to the effect that the property could be rented out at $1,500 per week. There is no evidence to that effect and I cannot assess the potential rental value. However, one could imagine that even if there was a net rental return of the order of that currently received from the boarders, given the costs associated with providing sustenance for the boarders and managing that relatively transient population, the parties may well be better off with a formal rental arrangement.
312.I note that almost immediately after seeking orders for the property to be professionally managed in 2010 the wife agreed to orders putting in place the current arrangement.
313.I have no illusions that the parties would necessarily cooperate with a rental agent. Therefore such an arrangement may be unworkable.
314.Because of the lack of evidence to fairly compare the options, I will not disturb the current arrangement. It was established by an agreement between the parties. Although the use of a property is within the scope of the court’s powers, it is not the court’s responsibility to provide investment advice to warring parties and on the basis of the information available, it is not possible to make a decision on the issue.
Conclusion under Section 79
315.This was a marriage involving eight years cohabitation and substantial contributions by each of the parties. They acquired assets and supported each other and their respective children. The parties shared the work of the family in different ways but overall the husband made the greater contribution. An adjustment is required in the wife’s favour by reference to the non-contribution aspects of s 79(4). That justifies an equal division of the net assets of the marriage.
316.The parties’ C property cannot be sold for about five years. In the meantime the current arrangement whereby the husband manages the property and pays the outgoings will continue.
317.The orders are complicated and I will provide the parties with the opportunity to bring the matter back to Court to address the wording, but unless they otherwise agree, not the import of the orders.
I certify that the preceding three hundred and seventeen (317) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan.
Associate:
Date: 17 June 2013
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