Leslie and Leslie
[2004] FMCAfam 357
•24 August 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LESLIE & LESLIE | [2004] FMCAfam 357 |
| FAMILY LAW – Property – husband asserts that available assets are insufficient to meet parties' debts – wife asserts that alleged liabilities should be ignored – identification and valuation of assets and liabilities – husband fails to provide evidence of his financial position – husband “defiantly abandons” his financial responsibilities after separation – payment of child support arrears from moneys held in trust for both parties – whether such moneys should be “added back” – treatment of unsecured liabilities – whether sufficient uncertainties in relation to alleged liabilities to lead the court to disregard them entirely or partly – whether alleged liabilities are vague, uncertain, unlikely to be enforced or unreasonably incurred – whether husband incurred alleged liabilities in deliberate or reckless disregard of other party’s potential entitlement – whether unfair or unjust to compel wife to share in the financial consequences of husband’s reckless, negligent and irresponsible financial behaviour. |
Family Law Act1975
Child Support (Registration and Collection) Act1988
Pastrikos (1980) FLC 91-987
Lee-Steere (1985) FLC 91-626
Ferraro (1993) FLC 92-335
Clauson (1995) FLC 92-595
Whitely (1996) FLC 92-684
Norbis (1986) FLC 91-712
McMahon (1995) FLC 92-606
Russell (1999) FLC 92-877
Hickey (2003) FamCA 395
Phillips (2002) FLC 93-104
JEL & DDF (2001) FLC 93-075
Townsend (1995) FLC 92-569
Marker (1998) FAMCA 42
Cerini (1998) FAMCA 143
Chorn v Hopkins (2004) FAMCA 633
Campbell v Kuskey (1998) FLC 92-795
Biltoft (1995) FLC 92-614
Kowaliw (1981) FLC 91-092
Browne v Green (1999) FLC 92-873
DJM v JLM (1998) FLC 92-186
Kennon (1997) 22 FamLR 1
Waters & Jurek (1995) FLC 92-635
| Applicant: | JULIE EILEEN LESLIE |
| Respondent: | PETER LESLIE |
| File No: | DGM 2143 of 2002 |
| Delivered on: | 24 August 2004 |
| Delivered at: | Melbourne |
| Hearing Dates: | 23 & 24 June 2004 in Dandenong 1 July 2004 in Melbourne |
| Judgment of: | Walters FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Combes |
| Solicitors for the Applicant: | Ryan Carlisle Thomas |
| Counsel for the Respondent: | Mr Herbert |
| Solicitors for the Respondent: | Rigoli & Associates |
ORDERS
Subject to paragraphs 2 and 3 below, the funds held in trust with the wife’s solicitors in the names of the parties be distributed as follows:
(a)the sum of $36,634.00 to the husband; and
(b)the balance to the wife.
Both parties do forthwith sign and execute all such documents and do all such acts and things as shall be necessary to:
(a)pay out the moneys presently owing to GE Auto Finance in respect of the husband’s Statesman motor vehicle (“the Statesman”) – such payment to be made from the sum of $36,634.00 to be received by the husband pursuant to paragraph 1(a) above;
(b)sell the Statesman as soon as is practicable; and
(c)pay the net proceeds of sale of the Statesman (after deduction of all reasonable costs of sale) to the husband.
In this paragraph, “the Shortfall” means the difference between the net sale price of the Statesman (as described in paragraph 2(c) above) and the payout figure referred to in paragraph 2(a) above:
(a)In the event that the Shortfall exceeds $5,000.00, the wife do forthwith pay to the husband 30% of the amount by which the Shortfall exceeds $5,000.00.
(b)In the event that the Shortfall is less than $5,000.00, the husband do forthwith pay to the wife 70% of the amount by which the sum of $5,000.00 exceeds the Shortfall.
(c)in the event that there is no Shortfall, and the net sale price of the Statesman (as described in paragraph 2(c) above) exceeds the payout figure referred to in paragraph 2(a) above, the husband do forthwith pay to the wife an amount calculated as follows:
(x + $5,000.00) X 70%
where “x” is the amount by which the said net sale price exceeds the said payout figure.
The husband do forthwith transfer and assign to the wife all his share and interest (if any) in the following:
(a)the wife’s Mazda motor vehicle;
(b)the furniture, chattels and effects presently in the wife’s possession;
(c)all moneys standing to the credit of the wife in any account in any bank, building society or other financial institution; and
(d)the wife’s superannuation entitlements.
The wife do forthwith transfer and assign to the husband all her share and interest (if any) in the following:
(a)the drafting business conducted by the husband and/or Desmech Engineering Pty Ltd (including the goodwill, plant and equipment, trading stock, work in progress, bank accounts, debtors, intellectual property and all other assets whatsoever of the said business) (“the Business”);
(b)Desmech Engineering Pty Ltd;
(c)the furniture chattels and effects presently in the husband’s possession;
(d)all moneys standing to the credit of the husband in any account in any bank, building society or other financial institution; and
(e)the husband’s superannuation entitlements.
The wife do forthwith:
(a)transfer to the husband, or to his nominee, her shareholding (if any) in Desmech Engineering Pty Ltd;
(b)resign any office she may hold in the Business and Desmech Engineering Pty Ltd (including, but not limited to, the office of director of Desmech Engineering Pty Ltd); and
(c)transfer and assign to the husband the whole of her share and interest in any loan account or indebtedness —
(i)due or owing by her to the Business or to Desmech Engineering Pty Ltd; or
(ii)due or owing to her by the Business or by Desmech Engineering Pty Ltd.
The husband indemnify the wife and keep her indemnified from all debts, liabilities and obligations of the wife relating to or arising out of:
(a)the Business;
(b)Desmech Engineering Pty Ltd;
(c)any security, charge, promise, personal guarantee or undertaking given by the wife to any bank, building society or other financial institution or commercial entity in relation to the Business and/ or Desmech Engineering Pty Ltd;
(d)the property dealings, loans, undertakings, business or affairs of the Business and Desmech Engineering Pty Ltd, including all taxation liabilities or duties (including income tax, capital gains tax and stamp duty and all penalties and interest not yet paid) assessed or hereafter assessed against the wife in respect of income (if any) derived by the wife from, or allocated to the wife by, the Business and/ or Desmech Engineering Pty Ltd;
(e)any loan account or indebtedness due or owing by the wife to Desmech Engineering Pty Ltd;
(f)the creditors of the Business and Desmech Engineering Pty Ltd; and
(g)all charges or other encumbrances affecting the plant and equipment or other property of the Business and/ or Desmech Engineering Pty Ltd,
and from all actions, proceedings, costs, claims and expenses in respect thereof.
The wife do forthwith deliver up to the husband (and sign all such documents and do all such acts and things as shall be necessary to cause her solicitors and her agents to forthwith deliver up to the husband) all documents in her possession, custody or power (or in the possession, custody or power of the wife’s solicitors or agents) relating to:
(a)the Business; and
(b)Desmech Engineering Pty Ltd.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DANDENONG & MELBOURNE |
DGM 2143 of 2002
| JULIE EILEEN LESLIE |
Applicant
And
| PETER LESLIE |
Respondent
REASONS FOR JUDGMENT
Introduction/Background
Before the Court are the parties’ competing applications for property settlement.
The husband was born in March 1951. He is now 53. The wife was born in December 1954, and is now 49. The husband is a draftsman, and the wife a part time shop assistant.
The parties commenced cohabitation in 1982 and were married on
13 December 1986. They separated in April or May 2000.
There are three children of the marriage — William (born in October 1985), Erin (born in October 1987) and Peta (born in January 1991). William resides with the husband. Erin and Peta reside with the wife.
The husband remarried on 8 June 2004. His present wife was born in June 1977 and is now aged 27. She is a student, a national of China and currently resident in that country. She hopes to join the husband in Australia in approximately September 2004.
The wife has not repartnered.
Orders Sought
It was extremely difficult to identify the precise orders sought by each of the parties.
The wife filed an amended application on 11 June 2004. The orders sought in that application are set out in Annexure A to these Reasons.
The husband filed an amended response during the course of the trial. The orders that he sought in the response are set out in Annexure B to these Reasons.
By the conclusion of the trial, the husband’s position was — in very broad terms — that the assets presently available to the parties should be utilised to discharge or partially discharge the parties’ debts. If moneys remain after payment of the parties’ debts, then those funds should be divided equally between the parties (although the husband conceded that it might be appropriate to require him to pay “the legal costs of earlier hearings) that may (have been) awarded against him”.
Again in the broadest of terms, the wife’s case at the completion of the trial was to the effect that the asset pool should be divided on a 70/30 basis in her favour. The wife also argued that various alleged liabilities should be ignored, or treated in such a way as to avoid any diminution of what would otherwise be her 70 percent entitlement.
The Primary Issue
The primary issue in the proceedings was the identification and valuation of the assets and liabilities of the parties.
The husband contended that the parties’ liabilities exceeded their available assets to a significant extent.
The Law
The general approach that should be adopted by the court in relation to a property settlement application has been described in many cases[1]. The court must first identify the property of the parties. It must then attribute a value to each item of property — usually as at the date of the hearing. Thereafter, it must assess the extent of each party’s contributions under the various sub-headings described in section 79(4) of the Family Law Act. Finally, the court must consider the financial resources, means and needs of the parties, and the other matters set out in section 75(2) so far as they are relevant. An adjustment of the amount due to each party by way of contribution is then made by reference to the section 75(2) factors. It is not essential, however, that such an adjustment take place. Generally speaking, an adjustment is made because one party has greater needs and the other has stronger means.
[1] see, for example, Pastrikos (1980) FLC 91-987, Lee-Steere (1985) FLC 91-626, Ferraro (1993) FLC 92-335, Clauson (1995) FLC 92-595 and Whitely (1996) FLC 92-684
In relation to the contribution of the parties under section 79(4) generally, it has been held that a “global” approach will usually be more convenient than an “asset by asset” approach — although the application of an asset by asset approach does not (of itself) amount to an error of law[2].
[2] see Norbis (1986) FLC 91-712
Section 75(2) is concerned with the process of arriving at a just and equitable result. It follows that there may be circumstances in which the justice and equity of the case, and the specific provisions of section 75(2), support an adjustment in a party’s favour for matters which cannot comfortably be described as being of financial or economic significance.[3]
[3] see McMahon (1995) FLC 92-606 at 82,043
Under section 79(2), the court is required to be satisfied that the order to be made is just and equitable — and not simply that the underlying percentage division of the net value of the parties’ assets is appropriate. In other words, in the consideration of whether the overall result of property settlement proceedings is just and equitable, it is the justice and equity of the actual orders, and not of the percentage distribution, which must be considered[4].
[4] see Russell (1999) FLC 92-877
Section 79(2) and the so called "Fourth Step"
One of the most recent authorities dealing with the correct approach to be applied in property settlement cases is the Full Court decision in Hickey (2003) FamCA 395, where their Honours said:
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere (1985) FLC 91-626; Ferraro (1993) FLC 92-335; Davut & Raif (1994) FLC 92-503; Prpic (1995) FLC 92-574; Clauson (1995) FLC 92-595; Townsend (1995) FLC 92-569; Biltoft (1995) FLC 92-614; McLay (1996) FLC 92-667; JEL & DDF (2001) FLC 93-075 and Phillips (2002) FLC 93-104. (Emphasis added)
Notwithstanding the Full Court’s reference to four steps in the above passage, it is my view that the testing of any proposed orders by reference to section 79(2) is not a fourth substantive step (properly so called) in the property settlement exercise.
In Russell[5], consideration was given to precisely that question. It has been considered in other cases as well[6].
[5] (1999) FLC 92-877 (at 86,439)
[6] see JEL & DDF (2001) FLC 93-075; but see Phillips (2002) FLC 93-1041
The problem with considering the application of section 79(2) as a stand alone requirement or consideration is that it is impossible to determine what factors may direct the court in its consideration of what may or may not be a just and equitable result in proceedings. Nygh J, in early cases, referred to concepts such as “palm tree justice” or “a soup kitchen approach” in relation to subjects such as these. It is impossible to look at the question of whether an order or a result is “just and equitable” without measuring or assessing that consideration by some yardstick. The approach set out in section 79 requires that the court use the considerations in section 79(4) as the yardstick, and not other (wholly undisclosed) considerations.
I note that the Full Court in Hickey did not refer to the so called fourth step as a substantive adjusting process. It clearly indicated that the process relates to the form of the orders that are ultimately to be made (and, in that regard, I refer to the words to which I have given emphasis in the passage from Hickey quoted above).
The high point (as it were) of the Full Court's approach in this regard is to be found in Phillips (2002) FLC 93-104. In that case, the Full Court said (on page 88, 986):
In determining an application pursuant to section 79 findings will usually be made as to the entitlements of the parties expressed as a percentage of the net assets of the parties having regard to the matters of contribution and the other factors. However, when considering whether or not the overall result is just and equitable a further adjustment may be warranted depending on the circumstances of the case.
Earlier in its decision[7], the Full Court metaphorically described this process as follows:
... it is necessary to “stand back” and consider if overall the ultimate award was just and equitable to both parties...
[7] see paragraph 70 on page 88, 986
In my view, Phillips is not and cannot reasonably be interpreted as authority for the proposition that a Court exercising jurisdiction under the Family Law Act in relation to property settlement should “stand back” and make substantive alterations to the result that has been reached after the application of what has been described as the first three steps in the property settlement exercise. The Full Court in Phillips recognised that the order which it considered to be just and equitable in all the circumstances (after allowing the appeal and exercising its own discretion) was an order that itself fell within the range of reasonable and appropriate orders having regard to the specific findings made by the trial Judge. The Full Court did not suggest that any form of additional “loading” could or should be added to (in that case) the wife's overall entitlement. Clearly, the “further adjustment” to which the Full Court referred in the passage quoted above[8] could only comprise an adjustment to the form, structure or balance (for want of a better description) of the relevant orders. Alternatively, the Full Court could only have intended to mean that the “further adjustment” associated with the “fourth step” would be an adjustment from one (slightly less) just and equitable result based on the first three steps of the property settlement exercise to another (slightly more) just and equitable result based on those same three steps.
[8] see paragraph 20 above
I am strengthened in my view in this regard by the fact that the Full Court in Phillips gave no guidance (in the form of guidelines or otherwise) as to the types of factors that might be relevant in the exercise of the discretion so obviously involved in the application of this so called “fourth step”.
The Full Court’s use of the expressions “overall result” and “ultimate award” in the passages quoted above does not alter my view of nature of the so called “fourth step”. These expressions do not obviously relate to the financial result of the proceedings, and in my opinion, can only fairly be understood as referring to the actual orders that the court may be minded to make. Once again, there does not seem to be any clear suggestion that the process associated with the so called “fourth step” could possibly lead to a significant change in the overall financial consequences to the parties of the result achieved following the proper application of the first three steps.
Section 79(2) is Phrased in the Negative
Section 79(2) is phrased in the negative. It reads:
The Court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order. (Emphasis added)
The preamble to s 79(4) directs the Court to take into account the matters set out in s 79(4)(a) to (g) for the purpose of determining what order (if any) should be made under s 79 in property settlement proceedings. Section 79(1) empowers the Court to make "such order as it considers appropriate" altering relevant property interests (amongst other things).
Thus ss 79(1), (2) and (4) all refer to the making of orders and not, for example, to the division of property. In my opinion, a careful reading of ss 79(2) and (4) – without more – leads to the inevitable conclusion that s 79(2) does not contain any power to vary or recast a substantive division of property reached after the application of what have been described as the first three steps in the property settlement exercise. That proposition can be tested in the following way:
a)Section 79(2) directs the Court not to make an order (under s 79) unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
b)"The order" referred to in the last two words of s 79(2) can only mean the order that the Court is or may otherwise be minded to make under s 79.
c)But s 79(4) compels the Court to take into account the matters set out in s 79(4)(a) to (g) in the process of considering what order (if any) should be made under s 79.
d)In other words, if the Court scrutinises a proposed order that it is minded to make for the purpose of determining whether that proposed order is indeed just and equitable — as it is obliged to do pursuant to the provisions of s 79(2) — and concludes that it is not just and equitable to make that particular proposed order, then the Court has no option but to revisit s 79(4) to determine what other, alternative or additional order or orders should be made.
e)Section 79(4) must be revisited because that subsection clearly states that the considerations set out in it must be taken into account in determining what order (i.e. what order altering the interests of the parties in their property, including, if appropriate, an order for a settlement of property) should be made.
f)If the property settlement exercise was carried out correctly by the Court on the first occasion, then it is clear that the same overall division of the property of the parties must be achieved when the court revisits s.79(4). All that is left in such a circumstance is to alter the form, structure or balance of the orders required to give effect to that overall division, in order to ensure that s 79(2) is not offended.
g)The only other possibility, it seems to me, is that the Court may conclude – after due consideration of s. 79(2) – that it did not carry out the property settlement exercise correctly on the first occasion, and that that is why it now considers that the proposed order that it was minded to make is not just and equitable. Such a conclusion will necessarily lead the Court to either reassess the parties’ contributions (in all their various guises), or to attribute different weight to the various s 75(2) factors (or both). Either way, the overall process can only, ultimately, involve three substantive steps (being the first three steps referred to in Hickey).
In other words, and as I have already explained, the determination of the proportional or other distribution or division of the property between the parties must necessarily be concluded before one looks at the justice and equity of the actual orders that are utilised to effect that distribution or division.
In any event, and as I have inferred in paragraph 30(g) above, I am of the view that the consideration and application of the factors referred to in s 75(2) in the "third step" of the property settlement exercise provide the Court with ample scope to ensure that the provisions of s 79(2) are not offended. Section 75(2)(o), in particular, enables the Court to take into account a miscellany of relevant circumstances.
Short History
The wife worked at a factory on a full time basis until William was born in October 1985. She did not return to work until she commenced part time employment after the youngest child, Peta, commenced kindergarten in 1994 or 1995. The wife then obtained employment with K-mart at the service desk.
The wife has continued working with K-mart on a part time basis, and continues to work for that firm.
The husband has qualifications as a draftsman. In or about 1985, he established his own drafting business. A company known as Desmech Engineering Pty Ltd ("Desmech") was incorporated to conduct the business. The husband and the wife were the directors and shareholders of Desmech.
It would appear that Desmech was moderately successful. The husband was principally responsible for the conduct of the business, and the wife’s role in the company appears to have been a minor one.
I am satisfied that Desmech was incorporated, and that the husband’s business was conducted through it, to reduce the income tax that would have been incurred if a corporate structure had not been utilised. I accept that the wife was not directly involved in the day to day running of the business, and that she accepted a role as director for the purpose of assisting the husband to maximise the income available for the benefit of the family.
The wife resigned as a director of Desmech in September 2000 — some four or five months after the parties separated.
The Separation was a Difficult One
The separation was difficult for the wife. It appears to have been far more difficult for the husband.
In his affidavit sworn 16 February 2004 (which affidavit was prepared without the benefit of legal advice), the husband said:
·“I have been in a total state of resignation, shock, desperation and the stress on me has been unbearable.”
·“I have been out of work and destitute. This has a lot to do with my frame of mind due to the enormous losses I have had — my wife, my family and my financial future.”
·“My son and I have been scraping to have food to eat and a roof over our heads. I have had to sell all of my personal items…to be able to pay the rent. I have never been so desperate in my life and dangerously close to breakdown.”
In his affidavit sworn 9 March 2004 (also prepared without the benefit of legal advice), the husband expressed his disapproval of the wife and certain of her actions or behaviours — which, in his view, contributed to the breakdown of the marriage.
Many of the husband's comments reflect unfavourably on him, and are regrettable. The husband has not coped well with the breakdown of the marriage and, in my opinion, has failed to understand the impact upon others (including the wife and the children that live with her) of his negativism and self pity. For all that, issues of blame were not ventilated during the course of the trial, and it is to the credit of Counsel for the husband that such obviously irrelevant areas of dispute were not explored.
To the extent that the husband’s affidavit material suggests that the wife was vindictive, manipulative, dishonest, obstructive of contact between the children and their father, unduly preoccupied with her religion, intolerant, obsessional, wasteful, greedy, financially irresponsible, uncaring, controlling, secretive, inappropriately angry, lazy and indolent, I find that the wife is none of those things. The husband’s criticisms of the wife are spiteful and insulting. I commented during the course of the trial that, in my opinion, the husband would benefit from appropriate counselling or other professional intervention to assist him to come to terms with the breakdown of the marriage and its consequences.
For her part, the wife said the following in her affidavit sworn 22 April 2003:
The marriage was difficult for some time, largely on my part because of the controlling behaviour of the husband, and constant verbal abuse. The husband would continually attempt to alienate me from friends and family and would allow me no independence whatsoever, including financially. The husband also became difficult as a result of me becoming a Jehovah’s Witness, a religion that he had introduced me to previously. As a result of constant unhappiness, I asked that the husband leave the former matrimonial home…where we resided. He refused and I moved into another bedroom…After an incident…I decided to leave the home which I did with the three children in May 2000. William returned to live with the husband shortly afterwards.
The wife was not cross-examined in relation to the passage set out in the previous paragraph. Similarly, the husband was not cross-examined regarding his many criticisms of the wife. As I have indicated above, it is appropriate that no such cross-examination took place. The parties’ criticisms of each other are of no real relevance to the issues that must be determined in these proceedings. To the extent that the attitude or behaviour of one or other of the parties might be relevant, I shall make reference to it in its appropriate context.
Further History
In 1994, the parties purchased a residential property in Chewton (“the Chewton property”).
The Chewton property had been owned by the husband’s parents. It was the home in which he was brought up. After the death of his parents, the Chewton property passed to their estates, and the husband became entitled to a one quarter interest in it. His three siblings were entitled to the other three quarters.
The parties decided to acquire the Chewton property from the estates of the husband’s parents. The purchase price was agreed at $80,000.00.
Exhibit W3 reveals that the husband paid $80,000.00 for the Chewton property in June 1995. After deduction of legal and other expenses, the net proceeds of sale (to which the beneficiaries of the estates of the husband’s parents were entitled) amounted to $79,841.45.
The solicitors representing the trustees of the estates of the husband’s parents divided the net proceeds of sale amongst the husband and his three siblings in equal shares. It follows that each received $19,960.00.
The net result (from the parties’ point of view) was that they acquired the Chewton property for $60,000.00.
It would appear that the parties used the Chewton property as a holiday house after its acquisition in 1995. The husband continued to use the property after separation in 2000, but made no attempt to rent it, or to derive income from it in any other way.
In order to acquire the Chewton property (which acquisition involved a net outlay of approximately $60,000.00), the parties refinanced the mortgage that then encumbered the former matrimonial home in Werribee. The refinanced mortgage thereafter encumbered both properties.
The husband continued to reside in the former matrimonial home after separation. William lived with him. The husband also retained control of the Chewton property. It follows that the wife had to obtain alternative accommodation for herself, Erin and Peta.
Following separation, the husband’s financial affairs seem to have descended into a chaotic state. He asserted that the business (and the parties) had very significant debts, but did not seem to be able to maintain sufficient focus on his business activities to enable the debts to be properly managed. For example, the husband has not filed income tax returns since the date of separation.
I accept that the wife had no real knowledge of the indebtedness of the company (or the parties personally) at the time of separation.
The Husband is Required to Provide Evidence of his Financial Position
After the commencement of the proceedings in this Court in September 2002, the husband was given a number of opportunities to provide appropriate evidence of his financial position — and of the debts that he alleged were owed. The fact of the matter is, however, that significant confusion still surrounded this subject at the commencement of the trial, and continued to surround it throughout the trial.
On 24 October 2002, Federal Magistrate McInnis made the following orders:
1.The matter be fixed for a final defended hearing on 21 May 2003 with an estimated duration of 2 days.
2.The husband provide the solicitor for the wife on or before 30 January 2003 with the following:
(a)Full particulars of all liability associated with the business Desmech Engineering Pty Ltd as at 25 April 2000.
(b)Full particulars of all liability associated with the business Desmech Engineering Pty Ltd for the financial year ended 30 June 2001 and 30 June 2002.
(c)Details of all assets of the business for the financial years ending 30 June 2000, 30 June 2001 and 30 June 2002.
(d)Details of all taxation liability pertaining to the husband and wife associated with the business Desmech Engineering Pty Ltd for the financial year ending 30 June 2000, 30 June 2001 and 30 June 2002.
3.The husband and wife exchange market valuations of the properties at 10 Whipbird Close, Werribee and Miners Nut Road, Chewton on or before 30 January 2003 and the husband provide the wife with access to the properties for the purposes of such valuation.
4.The husband file a Form 17 Financial Statement, Form 3A Response on or before 11 November 2002.
5.The wife file any reply on or before 25 November 2002.
6.The husband and wife file any affidavit material on which they seek to rely on or before 14 March 2003.
The husband failed to comply (or properly or effectively comply) with the orders made on 24 October 2002. As a result, the wife applied for further interim and procedural orders, including orders that the former matrimonial home and the Chewton property be sold.
On 21 May 2003, Federal Magistrate Connolly made the following orders:
1.On or before 2 July 2003 the husband vacate the properties situated at and known as 10 Whipbird Close, Werribee and Miners Hut Road, Chewton and thereafter the wife have possession of these properties for the purposes of preparing them for sale.
2.On or before 17 August 2003 the said properties be offered for sale by public auction, by an agent and on terms and conditions as nominated by the wife.
3.Each party do all acts and things and sign all documents necessary to give effect to order 2 hereof, and in the event that either party fails or refuses to execute any document with 72 hours of being requested to do so then a Registrar of the Federal Magistrates Court of Australia be empowered pursuant to section 106A of the Family Law Act 1975 to execute such document in their place.
4.The proceeds of the said sales be applied as follows:
(a)to pay all costs, commissions and expenses of the said sales;
(b)to discharge any liability secured against the property;
(c)to pay to either party any outstanding orders for costs;
(d)the balance to be held in trust by the solicitor for the wife for the pending written agreement between the parties or further order of the Court.
5.Prior to the husband vacating the properties in accordance with order 1 herein the husband be solely liable for and indemnify the wife with respect to mortgage payments, rates and like outgoings with repsect to the properties and keep the properties in good order and repair.
6.On or before 18 December 2003 the husband make, file and serve an affidavit setting out his evidence in chief in these proceedings and an affidavit of documents.
7.In the event that the husband fails to comply with order 6 herein the wife be at liberty to apply to have the matter disposed of on an undefended basis.
8.The wife’s costs of this day be fixed in the sum of $2,299.00 and reserved.
9.Otherwise all extant applications be adjourned to this Court on 18 February 2004 for final hearing as a 1 day matter.
The husband appeared in person on 24 October 2002 and 21 May 2003. The latter date was intended to be the date of the trial of the proceedings.
In her affidavit sworn 7 July 2003, the wife said:
Throughout these proceedings, the husband has failed to contemplate the sale of (the former matrimonial home and the Chewton property) despite the amount of indebtedness currently existing and his self confessed inability to meet these payments and pay me for my entitlement in the properties. At the final hearing of this matter on 21 May 2003, the husband did not agree to the sale of the properties and by his behaviour indicated he would attempt to prevent the sales. The Court, at my Counsel’s suggestion, agreed to giving the husband six weeks to vacate the property. This time has expired and the husband has made no effort to relocate nor vacate in any way the property (sic). He has not started clearing out the home nor making any attempt to do so (sic). The Chewton property has been vacated and is listed with an agent for auction on 16 August 2003. The husband has indicated to the real estate agent that he will not allow the sale.
The proceedings came back before Federal Magistrate Connolly on 14 July 2003. Once again, the husband represented himself.
Federal Magistrate Connolly made the following orders:
1.By 6:00pm on 15 July 2003 and until further order the husband vacate the premises at 10 Whipbird Close, Werribee and he not enter upon the said premises at any time whatsoever.
2.Until further order the husband is restrained from selling or attempting to sell, disposing or attempting to dispose, mortgaging or attempting to mortgage, charging or attempting to charge the property at 10 Whipbird Close, Werribee in the State of Victoria.
3.The costs associated with the application made to the Court this day be reserved.
4.Otherwise the Wife’s application be dismissed.
The Chewton property was sold after 14 July 2003, and settlement of the sale took place in September 2003. The former matrimonial home was also sold after 14 July 2003, and settlement of that sale took place in December 2003.
As is apparent from the orders made on 21 May 2003, the trial was to proceed on 18 February 2004.
The trial did not proceed on 18 February 2004. On that day, Federal Magistrate Connolly adjourned the trial to 11 March 2004 and ordered the husband to file an amended financial statement (together with any further affidavits upon which he proposed to rely) by no later than 4.00 p.m. on 4 March 2004.
The husband represented himself on 18 February 2004.
Once again, the trial did not proceed on 11 March 2004. On that day Federal Magistrate Roberts made the following orders:
1.The hearing of this matter be adjourned to the 23rd June 2004 at 10.00 a.m. in Dandenong.
2.Both parties make discovery on oath within 14 days.
3.Both parties make file and serve all affidavits upon which they intend to rely, including affidavits for any professional witnesses, by the close of business on the 1st June 2004.
4.Each party have leave to file a further affidavit in reply to the other party’s affidavit within 7 days of being served with that affidavit.
5.The husband pay the wife’s costs of and incidental to the adjournment today fixed in the sum of $2,210.00.
Both parties were represented on 11 March 2004.
The trial commenced before me on 24 June 2004. Both the husband and the wife were represented. Notwithstanding the long history of procedural orders that had been made in this matter, neither Counsel was able to clearly identify the asset pool at the commencement of the trial.
Some Relevant Admissions/Concessions
In his closing address, Counsel for the husband made a number of admissions or concessions. For example:
a)“The husband has over some five years in the aftermath of a traumatic separation defiantly abandoned his fiscal responsibilities while otherwise maintaining his employment.”
b)“The husband’s evidence of his financial position is grossly inadequate”.
c)“The husband’s first affidavit and his general demeanour when giving evidence suggest that his mental health is precarious, and he admits to having been close to a complete breakdown”.
d)“(The husband’s) mental capacity is shadowed by his failure to cope with the filing of personal and company returns, and by feelings of stress and revenge evident in his court documents”.
Property and Liabilities as at Date of Trial
The first step in the property settlement exercise relates to the identification and valuation of the property of the parties at trial.
During the course of their closing addresses, Counsel for the parties endeavoured to summarise the evidence that had been presented during the proceedings, and to identify all relevant items.
I find that the property and liabilities of the parties are as follows:
Moneys held in trust (being proceeds of sale of the former matrimonial home and the Chewton property)
$ 125,500.00
Wife’s Mazda motor vehicle
$ 6,500.00
Husband’s Statesman motor
vehicle (to be sold)
$4,500.00less: GE auto finance ($9,500.00)
Sub Total:
($ 5,000.00)
Wife’s savings (balance of child support payment)
$ 5,400.00
Wife’s bank accounts
$ 112.00
Wife’s furniture, chattels and effects
$ 3,000.00
Husband’s furniture, chattels and effects
$ 300.00
Joint bank accounts (Suncorp Metway and Westpac)
Nil
Husband’s superannuation entitlements
$ 20,763.00
Wife’s superannuation entitlements
$ 9,589.00
Wife’s personal loan
($ 2,150.00)
Wife's Myer card
($ 880.00)
Husband’s Westpac Visacard
($ 3,429.00)
Husband’s American Express card
($ 5,338.00)
Husband’s outstanding professional fees
$ 3,400.00
TOTAL:
$157,767.00
It can be seen from the above that the total net value of the parties’ property is $157,767.00.
There are a number of matters relating to items included in (and excluded from) the above schedule that require explanation.
Agreed Figures
The values to be attributed to the following items were (eventually) agreed.
·Moneys held in trust.
·Wife’s Mazda.
·Amount owing to GE Auto Finance in respect of the husband’s Statesman motor vehicle.
·Moneys in wife’s bank accounts.
·Parties’ superannuation entitlements.
·Wife’s Myer Card debt.
·Husband’s Westpac Visa debt.
·Wife’s personal loan.
·Husband’s American Express debt.
·Husband’s outstanding fees.
Holden Statesman
At the commencement of the trial, Counsel for the wife argued that the Statesman should be valued at $7,000.00. Counsel for the husband argued that it should be valued at $2,500.00 — due to the fact that the car’s gear box had seized and required replacement.
I advised both counsel that admissible evidence of the value of the vehicle would be necessary before I could endeavour to ascertain its true value. Notwithstanding the fact that the trial was adjourned from 23 June 2004 to 1 July 2004, no such expert evidence was produced.
When regard is had to the husband’s conduct as a litigant[9] and his failure to make a full and frank disclosure of his financial position in an appropriate and timely fashion, I am not inclined to accept his (uncorroborated) evidence regarding the present condition of the vehicle.
[9] See paragraphs 57 to 71 above.
I advised both Counsel during the course of their closing addresses that, in my opinion, the only fair way of ascertaining the value of the Holden Statesman is to sell it. Neither Counsel mounted a strong argument in opposition to my suggestion in that regard, and I have taken the view that it is indeed appropriate that the car be sold.
After discussion with Counsel on 1 July 2004, I indicated that I would bring the vehicle into account at an approximate value of $4,500.00. Given that it is to be sold, however, I recognise that the value of the car might be higher or lower than this figure.
I am aware that the Statesman has been financed through GE Auto Finance, and that the finance company must be notified of the proposed sale. The result of the sale may well be that the amount owing in respect of the vehicle exceeds its sale price. I have factored that likelihood into the schedule appearing in paragraph 75 above.
Child Support Payment
On 16 February 2004, the wife’s solicitors were served with a Notice to Pay Money Directly to the Child Support Registrar pursuant to Section 72A of the Child Support (Registration and Collection) Act1988. The notice required the wife’s solicitors to pay the sum of $22,353.48 to the Child Support Registrar. This amount was expressed to be a debt owed by the husband in respect of child support arrears.
I was not provided with details of the manner in which the child support arrears had accrued. It is the case, however, that the husband was aware of the procedures available to him to object to any relevant assessment and to seek an appropriate review of the same.
In compliance with the Section 72A notice, the wife’s solicitors paid the arrears from the funds then held in their trust account in the joint names of the husband and the wife. The funds in the trust account comprised the net proceeds of sale of the former matrimonial home and the Chewton property.
According to the wife, she received approximately $19,200.00 from the Child Support Agency following her solicitors’ compliance with the Section 72A notice. Of the amount that she received from the Child Support Agency, approximately $4,500.00 remains, and is held by her in two bank accounts.
The wife said that she spent the sum of approximately $13,800.00 on clothing, shoes, the repayment of loans, payments in respect of her Myer card, holidays for herself and the children (or one of them) and dental and orthodontic treatment for Erin. The cost of the dental/orthodontic treatment for Erin was approximately $7,000.00.
It was suggested that it might be appropriate to treat the whole of the $22,353.48 paid by the wife’s solicitors to the Child Support Agency as a notional asset, and to add it back into the property pool for division between the parties. It was also suggested that this sum should then be deducted from the husband’s ultimate share in respect of property settlement.
In my opinion, there is no need to deal with the payment to the Child Support Agency in this way. The child support debt accrued after the date of separation and was, in effect, allowed to accrue by the husband. He allowed it to accrue because he either failed to take any steps to challenge the assessments which gave rise to the debt, or, alternatively, any challenges that he may have mounted were unsuccessful. Further, no attempt was made to stay or set aside the Section 72A notice.
Premature Distribution of Property?
In Townsend (1995) FLC 92-569, the Full Court said (at page 81,654):
…What occurred in this case…was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances, I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under Section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property…Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
In Townsend, the husband had ¾ around the time of separation ¾ sold a taxi owned during the marriage. He had then spent the proceeds.
In this case, the liability to the Child Support Agency was accrued after the date of separation. The vast majority of that debt comprised moneys owed to the wife for child support. Whilst it is true that the former matrimonial home and the Chewton property had existed prior to and at the date of separation (and could therefore be described as “matrimonial assets”), the reality is that the funds removed by or on behalf of the husband pursuant to the section 72A notice were not “spent” by the husband in any relevant sense. Had the husband paid child support on a periodic basis (as he was obliged to do) then the debt would not have existed. It is not possible to know whether the wife would have spent the moneys that she received in the same way if they had been paid to her on a periodical basis in accordance with the child support assessments. But, in my opinion, it makes little difference whether she would or would not have done so.
In Marker (1998) FamCA 42 the Full Court said:
There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge.
In Cerini (1998) FamCA 143, the Full Court said:
Whilst not seeking to place a fetter upon the exercise of discretion of a trial Judge in individual cases, it seems to us that the concept of adding moneys reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives.
The passages from Marker and Cerini referred to above were citied with approval by the Full Court in Chorn v Hopkins (2004) FamCA 633.
In my opinion, the manner in which the wife utilised the moneys that she received from the Child Support Agency earlier this year was wholly appropriate. She and the children residing with her had endured a lengthy period of receiving from the husband either little or no child support or, alternatively, significantly less child support than the amount to which they were properly entitled. It goes without saying that their standard of living (in the broadest sense) must have been adversely affected by the shortfall between the amount to which they were entitled and the amount which they actually received.
I accept the wife’s explanation of the nature of the expenditure that she incurred and the need for Erin’s dental work. In my view, the wife acted appropriately.
I have decided to include within the property pool the amount of $5,400.00 which presently remains from the moneys that the wife received. I am well aware that the moneys paid pursuant to the section 72A notice came from moneys held in trust on behalf of both parties, and I am also aware of the source of the trust moneys. There is no reason, however, why the circumstances surrounding the reduction in the moneys held in trust and the distribution of funds to the wife cannot be properly assessed under the general heading of “Contribution”. The wife has notionally provided part (and, arguably, a significant part) of her own child support payment. Conversely, if the husband had met his child support obligations as and when they fell due, then there would have been no need for the moneys held in trust to have been reduced.
The Parties’ Furniture, Chattels and Effects
Very little evidence was provided to the Court regarding the value of the furniture, chattels and effects in each party’s possession. Exhibit “W1” comprises two lists of chattels ¾ one list describing the chattels retained by the husband and the other describing the chattels retained by the wife.
The husband asserted that the value of the chattels retained by him was significantly less than the value of the chattels retained by the wife, and a perusal of the two lists reveals that that may well be the case.
The only values provided for these items are those appearing in the parties’ financial statements. As neither party was cross examined about the values as they appear in their statements of financial circumstances, I propose to accept those values and incorporate them in the property schedule.
The Wife’s Myer Card Debt and Personal Loan, and the Husband’s Westpac Visa and American Express Cards
The amounts owing in respect of these liabilities were discussed and agreed during the closing addresses on 1 July 2004.
Husband’s Outstanding Professional Fees
This figure appeared in the schedule provided to the Court by the husband’s Counsel during his closing address on 1 July 2004. It was accepted without argument.
Various Liabilities claimed by the Husband
The husband’s Counsel (Mr Herbert) described the husband’s “primary submission” in the following terms:
Having enjoyed the fruits of the taxable income, the wife should now contribute to the resulting but yet unquantified tax and superannuation liability and the accountancy costs in bringing the same to account.
Mr Herbert conceded that the husband had “defiantly abandoned his fiscal responsibilities” following separation and that the husband’s evidence of his financial position “is grossly inadequate”.
A large volume of material was tendered during the course of the trial. In my opinion, none of it served to clearly or effectively corroborate the husband’s assertion that he owes approximately $60,000.00 in respect of income tax (including penalties) and a similar amount in respect of unpaid GST (and penalties), together with various other significant amounts.
It was argued that the bundle of Desmech invoices comprising exhibit “H5” might somehow demonstrate that the husband (or, more correctly, Desmech) has the income tax and GST liabilities claimed. I do not accept that submission. The invoices, which date from August 1999 to February 2004, indicate the fees rendered by Desmech and the GST that adheres to those fees. It is the case, however, that no BAS statements were provided and that the husband has not filed income tax returns since the date of separation. Without a great deal more evidence, I am unable to identify what the husband's or Desmech’s income tax liabilities might be, or what the liability for GST might be. The presentation of the invoices alone is something akin to what has been called (in another context) “one column accounting”. I am not privy to payments that the husband may have made during the relevant tax periods since the date of separation which would serve to offset his tax liability. I am not aware of the expenses associated with the conduct of the business. And I have no details of the GST paid by the husband which might properly be utilised to offset the GST that he must pay.
Further, and given the status of the Chewton property as, in effect, an investment property, it is at least possible that the husband might be able to offset any relevant losses associated with the Chewton property against what would otherwise be his (or, directly or indirectly, Desmech’s) tax liability.
I do not accept that the husband was unable to obtain professional assistance to deal with his financial affairs, and those of Desmech. The invoices comprising exhibit “H5” reveal that the husband has received significant moneys since the date of separation. Whilst I accept that the husband met certain liabilities after the date of separation, the fact of the matter is that his financial affairs are so chaotic that it is not possible to determine what his true financial position has been over the relevant period.
I would add that the evidence reveals that the husband has travelled to China on at least two occasions since separation, and that he has been able to find sufficient funds to spend thousands of dollars on the trips and on expenditure associated with courting his present wife and her proposed relocation to Australia.
I find that the husband failed to give any priority to the elucidation and effective organisation of his finances after the date of separation. Mr Herbert’s description of the husband’s decision to “defiantly abandon his fiscal responsibilities whilst otherwise maintaining his employment” is fair and accurate.
Given that the husband was left in control of what appears to have been a successful business until shortly before the date of separation, and that the husband has continued to work since that time and deal with the income so derived as he saw fit, it would be a significant injustice to the wife if I were to bring into account unquantified and uncorroborated liabilities.
In Campbell v Kuskey (1998) FLC 92-795, the Full Court held that the parties' assets and liabilities should be identified before considering contributions and s.75(2) factors:
…it is inappropriate in most cases to use s.75(2) as a means of bringing to account in a general way a liability, or a potential liability, which has not otherwise been brought to account as a liability when determining the overall net pool of assets.[10]
[10] Campbell v Kuskey at page 84,924.
In Biltoft (1995) FLC 92-614, the Full Court said:
A general practice has developed over the years that, in relation to applications pursuant to the provisions of s. 79, the Court ascertains the value of the property of the parties to a marriage by deducting from the value of their assets the value of their total liabilities. In the case of encumbered assets, the value thereof is ascertained by deducting the amount of the secured liability from the gross value of the asset. See, Ascot Investments Pty Ltd v. Harper & Anor (1981) 148 CLR 337 where Gibbs J. (as he then was) pointed out at p 355 that the Court ''must take the property of a party to the marriage as it finds it. The Family Court cannot ignore the interests of third parties in the property, nor the existence of conditions or covenants that limit the rights of the party who owns it'' . Where the assets are not encumbered and moneys are owed by the parties or one of them to unsecured creditors, the court ascertains the value of their property by deducting from the value of their assets the value of their total liabilities, including the unsecured liabilities. See Prince and Prince; General Credits Australia Limited (Intervenor); A-G for the State of Queensland (Intervening); A-G for the Commonwealth of Australia (Intervening) (1984) FLC ¶ 91-501, where Evatt CJ. at p 79,076 said:¾
... the outcome of the wife's application will depend upon findings made by the Court as to the parties' assets and liabilities, their contributions and their respective financial resources, means and needs. It would be necessary for the Court to determine so far as is possible the value of the property held by each party. In accordance with the usual practice this would be done by deducting the value of outstanding mortgages, debts, and other liabilities (e.g. Albany and Albany (1980) FLC ¶ 90-905, p. 75,717 ). The Court may have to determine, as between the parties, the existence of a particular liability (Af Petersens and Af Petersens (1981) FLC ¶ 91-095).
The assessment of debts and liabilities is not necessarily arrived at by a strictly mathematical or accountancy approach in all cases. While some liabilities are charges upon the property which can be accurately assessed at a certain date, others are at large, or have not been precisely determined, e.g. tax liabilities (Kelly and Kelly (No. 2) (1981) FLC ¶ 91-108 p. 76,801 ). In some cases the amount of the liability can only be estimated generally (Albany (supra) , p. 75,717). The Court can make an allowance for a particular liability if appropriate to do so. In some cases there are sufficient uncertainties as to the alleged liability to lead the Court to disregard it entirely or partly (e.g. a loan from a parent of the party not likely to be enforced; Af Petersens (supra) ; Quirk (1983) unreported). In other cases, the Court may take the view that because of the circumstances surrounding the incurring of the liability it ought in justice and equity to be wholly or partly disregarded in determining the appropriate order to make under sec. 79 as between the parties to the marriage. Such a result could be reached where a spouse had incurred a liability in deliberate or reckless disregard of the other party's potential entitlement under sec. 79 (Kimber and Kimber (1981) FLC ¶ 91-085 ; Kowaliw and Kowaliw (1981) FLC ¶ 91-092 ; Antmann and Antmann (1980) FLC ¶ 90-908 ; Af Petersens (supra) ). Complex issues can arise in regard to liabilities to third parties (see, e.g. Pockran and Crewes; Pockran (1983) FLC ¶ 91-311 ).
Of course, the Court cannot ignore the fact that there is or may be a liability; the effect is simply that it does not consider that the other spouse should be called upon to in effect 'contribute' to the liability by having that spouse's fair share in the parties' property reduced by virtue of its existence. The effect may be that the party who has incurred the liability will be left to meet it out of whatever funds remain to that party after satisfying the property order made under sec. 79 (Af Petersens (supra) )."
The Court, in that case, went on to dismiss the appeal of the wife against an order staying her proceedings for property pending the outcome of proceedings on foot in the Supreme Court because, inter alia, ''[i]t would not be until those proceedings had been completed that it would be known whether there was any property in the estate in respect of which orders could be made pursuant to sec. 79'' . The clear indication of the Full Court in that statement was that the property of the parties for the purposes of an order pursuant to s. 79 means net property.
The Full Court continued (at p. 82,127):
Notwithstanding the general practice which has developed, the Court has indicated that it may properly determine not to take into account or to discount the value of an unsecured liability in certain circumstances. Such liabilities would include but are not limited to a liability which is vague or uncertain, if it is unlikely to be enforced or if it was unreasonably incurred…
There is no requirement that the rights of an unsecured creditor or a claim by a third party must be considered and dealt with prior to the Court making an order under s. 79, nor is there a rule of priority as between a creditor claimant and a spouse. Those rights, however, cannot be ignored. They must be recognised, taken into account and balanced against the rights of the spouse…
In a similar context, the question of how liabilities "unreasonably incurred" or the loss of assets by a party prior to the trial in circumstances which can be regarded as reckless or unreasonable usually leads to consideration of cases such as Kowaliw (1981) FLC 91-092 and Townsend (1994) FLC 92-569.
In Kowaliw, Baker J said (at page 76,643-4):
Marriage is for most couples an economic partnership. Married couples live together and work together with the ultimate object of purchasing a home, paying it off, acquiring other assets with the overall object of attaining a higher standard of living. The reported decisions in respect of applications for settlement of property under sec.79 of the Act are unanimous that both parties should share the economic fruits of a marriage, having regard to the provisions of sec. 79(4) and sec. 75(2), although not necessarily equally.
Is not, however, the converse equally sustainable? In other words, should not financial losses incurred by parties to a marriage or either of them, whether incurred jointly or severally, be shared by them in the same manner as the financial gains?
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 a 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.
In Browne v Green (1999) FLC 92-873, the Full Court said:
While care should probably be taken…not to elevate Baker J's statement (in Kowaliw) to "a principle", we are nonetheless satisfied that it is certainly is a well-accepted guideline within the jurisdiction which has received the endorsement of successive Full Courts.
In my opinion, the potential, possible or contingent liabilities referred to by the husband (including the possible tax liabilities) should be ignored for the following reasons:
·The chance or probability that a liability actually exists is not substantial. The husband had ample opportunity to provide relevant evidence to enable the court to evaluate all aspects of the matter. In my view, the alleged liabilities remain a mere possibility. In other words, the "liabilities" that the husband seeks to bring into account are speculative, and not substantial.[11]
·Having regard to the paucity of relevant and persuasive evidence regarding these "liabilities", and having regard to the comments that I have made elsewhere in these Reasons relating to the husband and his credibility, I cannot conclude — on the balance of probabilities — that the liabilities actually exist. I certainly cannot make a finding, on the balance of probabilities, as to what amount may be owed.[12]
·In my opinion, the husband has acted in a reckless and negligent manner in relation to the conduct of the business, and in relation to the management of his financial affairs generally, since the date of separation. To the extent that the husband has done so, it would be unfair and unjust from the wife's point of view to compel her to share in the financial consequences of such behaviour.
·The husband's decision to "defiantly abandon his fiscal responsibilities whilst otherwise maintaining his employment" (being Mr Herbert's description of the husband's attitude) is behaviour which equates to deliberate waste or dissipation of the parties' assets — at least on a theoretical or speculative basis. As I have indicated above, the true financial impact of the husband's irresponsible behaviour cannot be clearly identified.
·Overall, the alleged "liabilities" are vague and uncertain. If they do exist, then they have been incurred unreasonably and can properly be ignored. To the extent that any priority as between the wife and any potential creditors may be concerned, it is my view that such creditors (if they exist), should be left to their own devices.
[11] See DJM v JLM (1998) FLC 92-186 at 85,261.
[12] See Campbell v Kuskey (1998) FLC 92-795 at 84,917.
In all the circumstances, I find that it is appropriate to ignore such liabilities. It follows that they do not appear in the schedule appearing in para 75 above.
Contributions
As I indicated to counsel during the course of the trial, I am of the view that it is convenient to have regard to two periods when considering the issue of contribution. The first period runs from the date of commencement of cohabitation to the date of separation. The second period commences at the date of separation and concludes at the date of trial.
The First Relevant Period (Cohabitation to Separation)
It was apparent that the husband worked hard during this period ("the First Period"), and that he was the principal bread winner for the family during it. Although the wife initially worked on a full time basis, and did part time work after the birth of the children, there can be no doubt that the husband's financial contribution to the acquisition, conservation and improvement of the parties' assets was very significantly greater than that of the wife.
The husband confirmed that he reduced his hours of work approximately 12 months before the parties separated. It was his view that the long hours that he had worked up to that point in time were "not good for the family".
According to the husband, he asked the wife on many occasions to work on a full time basis. She declined to do so. This matter was not put to the wife during cross-examination, but I accept that the wife would have found it difficult to work on a full time basis — given that it was not in dispute that the wife was the principal home maker and care giver for the children throughout the period of cohabitation.
I do not accept the husband's criticisms of the wife in relation to the time she spent in pursuance of her involvement with the Jehovah's Witnesses. Once again, the wife was not cross-examined in relation to this subject in any detail, and I find that her involvement with the Jehovah's Witnesses was appropriate and not excessive in the circumstances.
There can be no doubt that the final years of cohabitation were difficult and stressful for both parties. Each of them endeavoured to deal with the stresses involved with their deteriorating relationship in different ways. The wife became more involved in activities outside the house (such as her part time work, and the Jehovah's Witnesses), while the husband resolved to reduce his working hours. In my view, neither party can be criticised for the choices that they made at that time. As I indicated earlier in these Reasons, I reject the husband's wide ranging criticisms of the wife — none of which were effectively tested in cross-examination.
In my opinion, it is clear that the husband was profoundly affected by the separation. He did not desire the separation, and has had difficulty coping with his altered position. He has struggled to deal with the loss of security and loss of confidence brought about by the marriage breakdown. Leaving aside feelings of abandonment and betrayal (and my comments in this regard are not intended to imply that the wife has behaved unreasonably or inappropriately), the husband's unanticipated and unwanted (from his point of view) "independence" seems to have created within him an emotional need which has, to some extent, been met by the presence of the party's son William in the husband's home.
The wife, like the husband, found the period leading up to the separation — and following the separation — to be stressful and depleting.
No relevant evidence was led regarding the parties' non-financial contributions to the acquisition, conservation or improvement of their property. I can only assume, therefore, that the parties' contributions in this regard were of similar weight or that, alternatively, they were insignificant.
If it were not for the Chewton property, it would be fair to conclude that the parties' contributions (in all their various guises) made during the First Period were approximately equal.
A fair assessment of the parties' contributions during this period requires, however, that the acquisition of the Chewton property be taken into account. This process is described in paragraphs 46 to 54 above.
The parties acquired the Chewton property for something in the order of 75% of its true value. It is also fair to say that the parties may not have acquired the property at all if it had not been part of the estate of the husband's late parents.
The Chewton property was used as a holiday house. The husband continued to use the property after separation in 2000, but made no attempt to derive income from it in any way.
The Chewton property was eventually sold by way of private sale. Settlement took place in September 2003. The sale price was $160,000.00.
Due to the fact that moneys were secured against both the former matrimonial home and the Chewton property, the net proceeds of sale of the Chewton property amounted to only $7,962.90. The net proceeds of sale of the former matrimonial home (which sale was completed on 3 December 2003) amounted to $139,888.17. These two amounts were placed in the trust account of the wife's solicitors. At the time of the payment of the sum of $22,353.48 to the Child Support Agency pursuant to the s.72A Notice, $147,851.00 remained in the trust account. After the payment to the Child Support Agency, the balance in the account was approximately $125,500.00. It is these moneys which remain to be dealt with in these proceedings.
Although I have referred to the Chewton property and its acquisition (and sale) in the course of my discussion relating to the First Period (which concludes at the date of separation), it is apparent that any discussion of the second period — being the period of the date of separation to the date of trial — should also make reference to it. Suffice it to say, at this point in these Reasons, that the fact that the parties were able to acquire the Chewton property for some 25% less than its market value is clearly a relevant factor. It is a factor which could support a conclusion to the effect that that the husband's contributions during the First Period outweighed those of the wife. It is impossible to be precise about the degree to which the husband's contributions outweighed those of the wife, but a fair assessment would be something in the order of 55% on the part of the husband and 45% on the part of the wife.
The Second Period (Separation to Trial)
After separation, the husband behaved in the manner described elsewhere in these Reasons. Amongst other things, he:
·so neglected the affairs of Desmech that it was de-registered in or about mid 2003 (because, according to the husband, he had not filed appropriate financial statements);
·has continued to trade in the company's name notwithstanding its de-registration;
·failed to file income tax returns (for himself or the company) after 1999;
·employed an accountant to prepare income tax returns, but lost the accountant's services when he failed to provide the accountant with relevant financial material;
·allowed his financial affairs to deteriorate to the chaotic state described by Mr Herbert;
·earned something in the order of $50,000.00 to $55,000.00 per annum in each of the years since separation;
·conceded that some $332,000.00 had "flowed though" the business since mid 2000, but seemed unable to satisfactorily account for the manner in which it was spent;
·spent close to $10,000.00 (or more) on airfares and other expenses associated with courting and assisting his present wife (whom he married on 8 June 2004);
·was able to spend money (when it suited him) for his own benefit (such as for a scuba diving course in late 2001);
·paid wholly inadequate child support (although I acknowledge that the wife has now received all child support to which she was entitled up to the date of the s.72A Notice);
·caused the amount owing in respect of the mortgage encumbering the former matrimonial and the Chewton property to increase by approximately $30,000.00 between mid 2000 and 2003;
·failed to adequately explain the precise manner in which the additional funds obtained by the husband in this way were utilised (although it is accepted that the husband did pay certain expenses, such as rates and utilities in respect of the two properties, and payments in respect of the wife's vehicle);
·failed to comply with court orders resulting in the current proceedings being delayed and the wife having to incur additional cost and experience added stress;
·has maintained an irrational and embittered attitude towards the wife;
·had the exclusive use of both the former matrimonial home and the Chewton property; and
·asserted that he had sustained a fall in his living standard (although the chaotic state of the husband's financial affairs, and his failure to make full and frank disclosure, make it impossible to conclude that such was in fact the case).
During the second period, the wife:
·continued to work on a part time basis;
·has been unable to occupy the former matrimonial home or the Chewton property, which remained under the husband's control until they were sold;
·has had the primary responsibility for the care and supervision of the children Erin and Peta;
·has received the lump sum child support arrears referred to earlier in these Reasons (and used most for the benefit of Erin and Peta, and, to a lesser extent, herself);[13]
·still retains some $5,400.00 from the lump sum payment;
·has struggled financially, and is presently sharing accommodation (with Lynda O'Neill) in Berwick; and
·has had to endure a reduced standard of living (including having to request fellow Jehovah's Witnesses to assist her with food in or about 2002) when the wife was not receiving sufficient child support.
[13] But see paragraph 142 below.
It was during the second period that the former matrimonial home and the Chewton property were sold — in the circumstances already described in these Reasons.
I am conscious of the fact that the lump sum child support which the wife eventually received was removed from funds held in trust. In other words, the wife herself contributed, to a significant extent, to a lump sum child support payment.
Doing the best that I can with the very inadequate evidence presented during the course of the proceedings (and, in particular, presented on behalf of the husband) I consider that the wife's contributions during the second period outweigh those of the husband to a significant extent. I accept that the husband made certain financial contributions towards the parties' joint debts, that he paid some child support and that he was principally responsible for the care and supervision of the child William. Overall, however, it is clear that the husband did not act with appropriate financial responsibility, and that the wife's contributions to the welfare of the family outweighed whatever off-setting contributions the husband may have made.
Conclusions Regarding Contributions
When I have regard to the parties' contributions (in all their various guises) over the whole of both the periods referred to above, I conclude that the wife's significant contributions over the whole of the period outweigh the husband's contributions (even when regard is had to the fact that the Chewton property was purchased at a significant discount).
In my view, the husband's unreasonable actions and irresponsible financial behaviour have had a significant adverse impact upon the husband's contributions (particularly since the date of separation). To put it another way, the husband's attitude and actions made the wife's contributions significantly more arduous that they ought to have been. That is a fact that I am entitled to take into account in assessing the parties' respective contributions within s.79 of the Family Law Act.[14]
[14] See Kennon (1997) 22 FamLR 1 at 24.
The facts of the present case are exceptional — as the concessions made by Mr Herbert on behalf of the husband clearly reflect. At the date of separation, the husband was left in control of virtually all of the parties' assets (and liabilities). He continued to live in the former matrimonial home, and continued to have the use of the Chewton property. He could have continued running Desmech as he had in the past, and could have obtained expert financial assistance when it became necessary for him to do so. To the extent that he had difficulties coping with the breakdown of the marriage, it was always open to him to obtain professional assistance. Whilst it is understandable that a party who does not desire a separation (and, perhaps to no lesser extent, one who does) will have difficulty re-adjusting to his or her new situation, and may be unhappy, anxious, unsettled and distracted, the reality is that most parties are able to re-focus after a reasonable period of time, and regain much if not all of the perspective that may have been lost during (for want of a better description) the grieving process. Many parties to a failed relationship do not miss a beat (as it were). Others are profoundly, and chronically, affected by the process.
I do not accept that the husband was so affected by the breakdown of the marriage that he was unable to regain focus for the whole of the period after separation and leading up to the trial. In my opinion, the husband allowed himself to be overcome with self pity and his unreasonable hostility towards the wife. In his affidavit sworn 16 February 2004, the husband purports to "apologise for his lack of cooperation". He also apologises for "not coming around sooner — but I was defeated and had given up on any justice at all". In my opinion, the husband's actions were not brought about by despair or unbearable distress. The husband seems to have been determined to destroy the wife (and himself) financially. As Mr Herbert described the position in his submission, the husband "…has over some five years in the aftermath of a dramatic separation defiantly abandoned his financial responsibilities whilst otherwise maintaining his employment".
Whether the husband's attitude as described above, and elsewhere in these Reasons was willed or unwilled, the fact of the matter is that it had the effect of making the wife's contributions significantly more arduous than they ought to have been. I have no doubt that that result, at the very least, was intended by the husband.
Overall, and doing the best that I can with the evidence available to me, I conclude that an appropriate division of the parties' property available for distribution between them as described in the schedule contained in paragraph 75 above — and on the basis of contribution alone — is something between 60% and 65% to the wife, and the balance to the husband. As it would be intellectually dishonest of me to choose either of those two figures, I conclude that the appropriate split on the basis of contribution should be 62.5% to the wife and 37.5% to the husband.
Section 75(2) Factors
So far in considering the question of property settlement, I have dealt with the identification of the parties’ property and resources, valuation issues and the question of contribution. The court has power to make an adjustment to a party's property settlement entitlement on the basis, amongst other things, of both parties’ respective means and needs. The Family Court has been critical of shorthand terms being used to describe this step in the property settlement exercise, preferring to refer to it simply as "the section 75(2) factors" (see Clauson (1995) FLC 92-595). In essence, section 75(2) is concerned with the process of arriving at a just and equitable result (see, in that regard, Waters & Jurek (1995) FLC 92-635).
I have already recorded that the husband and the wife are aged 53 and 49 respectively. The wife is in good health.
Mr Herbert submitted that the contents of the husband's first affidavit and his general demeanour when giving evidence suggest that the husband's "mental health is precarious". The husband admits to being close to a complete breakdown.
I was provided with no expert evidence regarding the husband's mental health. The fact that the husband is and has been angry, vindictive and unreasonable does not necessarily mean that his mental health is precarious. Still, there can be no doubt that the husband is sorely in need of counselling (at the very least) to enable him to gain a better understanding of the circumstances surrounding the breakdown of the marriage and the causes and effects of his post separation actions and attitude. The fact of the matter is that the husband has continued to work in his profession for almost the whole of the time since separation (whilst at the same time abandoning his responsibilities for the administrative and bookkeeping aspects of the business). He cared for William and maintained the former matrimonial home and the Chewton property until they were sold. He has met, courted and married his present wife, and has made representations to the Immigration Department to enable her to enter Australia.
For all that the husband has behaved in the manner which I have described in these Reasons, I am unable to conclude — on the basis of the evidence that was presented to me (including my observations of the husband) — that his state of physical and mental health is other than satisfactory. If he has elected not to obtain the counselling that he so clearly requires, then that is a matter for him.
I have dealt with the income, property and financial resources of the parties elsewhere in these Reasons. Each of them has the physical and mental capacity for appropriate gainful employment. The wife's evidence is that she works on a part time basis at K-Mart and that she is unable to obtain full time employment. I accept her evidence in that regard and find that she is exercising her earning capacity in an appropriate manner.
The husband is clearly capable of continuing to work as a draftsman. As indicated above, he has worked in that capacity for a very long time.
Mr Herbert submitted that the husband's mental capacity to engage in appropriate gainful employment "is shadowed by his failure to cope with the filing of personal and company returns, and by feelings of stress and revenge evident in his court documents". Mr Herbert also submitted that the husband's "physical capacity (for appropriate gainful employment) is otherwise good, and on his mental and organisational skills he has a full time working capacity with a prospective mid-range income for some seven years before retirement".
I find that the husband did not file personal and company returns because he elected not to do so — and not because any inability or incapacity on his part. The husband has had more than adequate time to confront the relevant paper work and to attend to it. I have no doubt that, after the present proceedings have been completed, and when the husband commences cohabitation with his present wife, the husband will quickly regain his "organisational skills", and ability to file relevant documents.
In any event, the husband has had access to significant funds since the date of separation, but chose not to use them to employ the services of an accountant or bookkeeper.
Even if the wife were able to obtain full time employment, it is apparent that she would not be able to earn an equivalent income to that of the husband. I find that his earning capacity is well in excess of that of the wife. He conceded that he was earning something in the order of $80,000 per annum prior to separation, and that he has been earning approximately $50-$55,000.00 per annum since separation.
The husband asserted that he will not be able to fully exercise his earning capacity unless he can trade through a corporate entity. In my opinion, there is no impediment to the husband now confronting the paper work that he has neglected for the past four or five years and, at the same time, incorporating or acquiring a company if such a vehicle is in fact required. To use a colloquialism, the husband's present predicament is a self inflicted wound.
The parties' son William lives with the husband. He is 18, and a student. It would appear that he has Asperger's Syndrome, which is a form of autism.
The wife has the care and control of the parties' two daughters. The husband incurred significant arrears of child support, which were paid to the wife in a lump sum. I have already observed that, to a significant extent, the wife contributed to her own child support in this respect. It is likely that the wife will continue to experience difficulty obtaining realistic child support from the husband.
The wife is doing her best to accommodate the children. They now live in shared, rented accommodation.
The husband also resides in rented accommodation (with William).
Both parties have financial commitments that are necessary to enable them to support themselves and the children that live with them. William is an adult, and the husband is not obliged to maintain him — although I accept that William's psychological problems might mean that he could have significant difficulties supporting himself. I have no doubt, however, that suitable financial assistance could be obtained from the Government if William is so affected by his problems that he is unable to support himself financially.
The husband has re-married, and his present wife is a Chinese national. The husband will have an obligation to maintain his wife if she is unable to support herself adequately for one of the reasons referred to in s.72 of the Family Law Act.
Mr Herbert submitted, and I accept, that the husband has assumed the responsibility for the total support of his wife, and to negotiate and fund her admission to Australia. Both parties are entitled to a standard of living which is reasonable in all the circumstances. As indicated above, both currently reside in rented housing which is suitable for their immediate needs in the foreseeable future.
The effect of the husband's actions and behaviour after separation is that the overall (combined) financial position of the parties deteriorated markedly. Mr Herbert submitted that the husband "is beset by a crisis in his tax and superannuation compliance and believes himself to be in serious debt and facing prosecution. (Further, he is also struggling to meet the immigration and establishment needs of his new wife. His standard of living is therefore one of extreme poverty)".
I have already commented upon the husband's present problems being "a self inflicted wound". As indicated above, I have no doubt that the husband will be able to re-establish a satisfactory level of income in the near future. I accept that he will have to devote many hours to dealing with the paper work that he has neglected for so long, but I do not accept that any "crisis" that he may presently face is insurmountable, or anything other than transient.
The duration of the marriage has not (in itself) affected the earning capacity of either party. The husband has continued to develop his professional skills as a draftsman, and the wife has obtained and maintained employment with K-Mart in a semi managerial role.
The wife wishes to continue her role as a parent. She asserted (and I accept) that she is only able to work part time due to her need to be available for the younger children before and after school. It is also the case that Erin's relationship with the husband is poor, and she does not appear to have contact with him. According to the husband, Peta sees the husband much less frequently than the contact orders currently in force would allow for.
Having regard to the findings that I have made in relation to the husband's attitude towards the wife, and having heard the husband give evidence (during which process his bitterness and resentment towards the wife were made abundantly clear), I have little doubt that the husband's relationship with the two girls will continue to be strained — with the resultant effect that the wife's role as a parent will continue to demand more time that would be available to her were she to obtain a full time position.
Neither party is presently cohabiting with any other person. I accept, however, that the husband is likely to be cohabiting with his new wife in the near future. The husband's wife will be without immediate prospects of new employment. It would appear that she also has very basic English language skills. She will be wholly dependant upon the husband for her support.
I have already commented upon the issue of child support. The husband only met his obligations in relation to child support as a result of the lump sum having been demanded by the child support agency (and even then, the lump sum was paid — in part, at least — from moneys to which the wife would otherwise have been entitled). Having regard to the husband's attitude (as already described in these Reasons) and to the fact that he will have to support his new wife — and possibly William as well — it is fair to anticipate that the wife is unlikely to receive any realistic child support from the husband in the near future.
The husband's future payment of child support is likely to be affected by his commitments — to support himself, his new wife and, possibly, William. Having regard to the husband's history of financial irresponsibility since the date of separation, I am not confident that the wife is likely to receive proper or adequate child support in the foreseeable future, and probably not before the youngest child attains the age of 18.
It was not suggested that there exist any other facts or circumstances which the justice of the case require be taken into account.
Conclusion as to s.75(2) Factors
Having regard to all the evidence before me, I am persuaded that it is appropriate to make an adjustment on the basis of the s.75(2) factors. This is so because the purpose of the s.75(2) factors adjustment is to assist the court with the process of arriving at a just and equitable result. To refuse to make an adjustment in the present proceedings would be, in my opinion, to run the risk of making orders which are neither just nor equitable.
In my opinion, the most significant of the s.75(2) factors are the following:
·The wife will continue to have the care of the two younger children of the marriage for the foreseeable future (although one of the girls is nearly 17).
·It is unlikely that the wife will receive significant child support for the girls in the foreseeable future.
·The husband is likely to have to support his new wife for the foreseeable future.
·The husband's earning capacity is significantly greater than that of the wife.
When I have regard to the above matters, together with all the other matters discussed under the general heading of the s.75(2) factors, I conclude that an appropriate adjustment of the wife's entitlement on the basis of contribution alone is to increase that entitlement by 5% or 10%. Once again, it would be intellectually dishonest of me to choose either of those figures in preference to the other, and I have concluded that the appropriate adjustment should be the mid range of the two — being 7.5%.
It follows that the overall distribution of the property between the parties should be on the basis of 70% to the wife and 30% to the husband.
Just and Equitable?
Although I am of the view that the testing of any proposed orders by reference to s.79(2) is not a fourth substantive step (properly so called) in the property settlement exercise, and although I have considered the justice and equity of the overall "split" under the general heading of "Conclusion as to s.75(2) Factors", I propose to (metaphorically) step back and consider whether the outcome achieved by my consideration of the parties' contributions and the s.75(2) factors has brought about a just and equitable result.
One matter that might be considered relevant in this process is the fact that I have declined to take into account certain of husband's alleged liabilities.
In every sense, the husband is the author of his own misfortune. I have dealt with this matter in detail in these Reasons — and the husband's failure to make a full and frank disclosure of his financial position cannot be ignored. Further, it seems to me that it would be illogical and inappropriate to ignore the liabilities (or potential liabilities) referred to by the husband when determining the asset pool and then, at this final stage, effectively reduce the wife's entitlements based upon some form of intuition or discomfort that I might have to the effect that the husband might otherwise be treated unfairly.
Suffice it to say that I am not prepared to adopt such an illogical approach. The husband had every opportunity to present all relevant evidence to the court regarding his financial position. At the end of the day, he conducted the proceedings as he, (and his legal advisers) saw fit.
I am very conscious that justice and equity must be done to both parties, and I am satisfied that the split that I propose (as described below) achieves that result.
Overall Conclusion
I have already recorded that the total, net value of the property presently available for distribution between the parties is $157,767.00. 70% of $157,767.00 is $110,437.00.
It is apparent from the schedule contained in paragraph 75 above that the total value of the property to be retained by the wife is $147,071.00 (comprising the moneys held in trust, the Mazda, the wife's savings and bank accounts, her superannuation, her furniture, chattels and effects, her Myer card debt and personal loans). Accordingly, if the wife's entitlement is $110,437.00, then she must pay to the husband (from the assets at her disposal) a total of $36,634.00.
The moneys presently held in trust were agreed at $125,500.00. I propose to order, therefore, that the wife pay to the husband the sum of $36,634.00 from those moneys. The balance of the moneys now held in trust, together with the other property owned by and retained by the wife and referred to in the schedule in paragraph 75 above, is to remain the wife's property.
One of the most difficult aspects of the present case is the relatively modest size of the asset pool. The Full Court has cautioned against assessing s.75(2) factors in percentage terms without considering the real impact of any proposed adjustment. In other words, the real impact in money terms is "the critical issue".[15] In the present case, the s.75(2) adjustment equates to approximately $11,832.00 (being 7.5% of $157,767.00). I am satisfied that the adjustment is proper. Indeed, I am satisfied that the adjustment is proper even when regard is had to the differential between the wife's overall entitlement and the husband's overall entitlement, which differential equates to 40% of the asset pool (or approximately $63,100.00).
[15] See Clauson (1995) FLC 92-595.
Orders
In accordance with the above Reasons, I now pronounce orders as set out at the commencement of this judgment.
I, Paul O'Halloran, certify that the preceding one hundred and ninety one (191) paragraphs are a true copy of the Reasons for Judgment of Walters FM
Associate:
Date: 20 August 2004
ANNEXURE A
Orders Sought by the Wife
The funds presently held on trust with the wife’s solicitors in the names of the husband and the wife be distributed as follows:
a) the sum of $16,183.10 to the husband; and
b) the balance to the wife.
The husband retain all of his right, title and interest in the company and business known as Desmech Engineering Pty Ltd and indemnify the wife against all liability in relation thereto.
Within 14 days of the making of these orders the husband forthwith do all acts and things and sign all documents necessary to effect a closure of the parties joint Bank of Melbourne account.
In the event the husband fails to comply with order 3 herein within 14 days, the Registrar of the Federal Magistrates Court of Australia at Dandenong is hereby appointed to execute all documents in the name of the husband and/or wife and do all acts and things necessary to give validity and operation of the said order.
Each party be solely entitled to the exclusion of the other to all property (including choses-in action) in the possession of such party as at the date of these orders.
Each party be liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
Each party foregoes any claim they may have to any superannuation benefits belonging to or owned by the other.
Such other or further orders as this honourable court deems appropriate.
ANNEXURE B
Orders Sought by the Husband
From the parties’ funds held in trust by the wife’s solicitors, the following advances be made:
a)An advance of moneys be provided to the husband or for the benefit of the husband’s accountant in order to pay him/her for the preparation of up to date taxation returns in relation to the parties and Desmech Engineering Pty Ltd, such sum to be determined by this Honourable Court.
b)An advance of $10,000.00 to the husband’s solicitors in payment of the husband’s legal costs and disbursements necessarily incurred to date in these proceedings, or alternatively to be incurred in the further legal representative of the husband in these proceedings.
c)An advance to pay all of the parties’ liabilities with respect to superannuation, workcover income tax and other taxes and other liabilities owing by the parties and Desmech Engineering Pty Ltd incurred in the course of trading by the parties and Desmech Engineering Pty Ltd up to the date of the parties’ separation, after the extent of such liabilities are ascertained by the accountant referred to in paragraph 1(a) above.
The balance of funds referred to in paragraph 1 above be otherwise divided equally between the parties.
The wife relinquish all of her right, title and interest in the company and business known as Desmech Engineering and contemporaneously the husband shall indemnify and keep the wife indemnified with respect to all present and future liabilities of the said business/ company, subject to 1(c) above.
These proceedings be otherwise stayed until further order.
The wife’s application and amended application for final orders be otherwise dismissed.
Such further and other orders as this Honourable Court deems fit and just.
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