LETTS & SHORES

[2019] FCCA 1571

FEDERAL CIRCUIT COURT OF AUSTRALIA

LETTS & SHORES [2019] FCCA 1571

Catchwords:
FAMILY LAW – Property dispute after marriage of over 20 years – proceeding distorted By wife’s ongoing bitterness at circumstances at separation – parties’ contributions equal – future needs favouring wife as to percent – matter complicated by uncertainty of realisable sale proceeds of major property owned by the parties – competing expert reports – orders for sale of property and quantification of applicable capital gains tax.

Legislation:

Family Law Act 1975 (Cth), s.75(2)

Cases cited:

Stanford v Stanford [2012] HCA 52

Applicant: MS LETTS

Respondent: MR SHORES

File Number: MLC 7719 of 2016

Judgment of: Judge Burchardt

Hearing dates: 1 and 2 April 2019

Date of Last Submission: 2 April 2019

Delivered at: Melbourne

Delivered on: 28 June 2019

REPRESENTATION

The Applicant: In Person

Counsel for the Respondent: Ms Swann

Solicitors for the Respondent: Aughtersons

ORDERS

1. The matrimonial home situated at and known as Street B, Suburb C be sold, and that there be a property adjustment of some 57 per cent in favour of the wife and 43 per cent to the husband.

2. The ride –on mower referred to in the reasons for judgment be sold.

3. Each party to retain their superannuation.

4. The matter be relisted after Orders 1 and 2 have been complied with.

5. Liberty to apply.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 7719 of 2016

MS LETTS

Applicant

And

MR SHORES

Respondent

REASONS FOR JUDGMENT

Background

1. This is a property dispute arising out of a very unhappy termination of a long marriage.  Although the parties are divorced, it will be convenient to refer to them as wife and husband. The applicant wife seeks, in essence, that she retain the former matrimonial home, which is composed of two separate lots and has, despite a dispute as to its amount, a very considerable value as a developable block of land.  She seeks that the respondent husband retain two other properties owned by the parties.  The husband seeks that the matrimonial home, both blocks, be sold, and that there be a division of the parties’ property in equal shares, save the superannuation, where he seeks that each party retain their own.

2. For the reasons that follow, I am going to order that the matrimonial home be sold, and that there be a property adjustment of some 60 per cent in favour of the wife and 40 per cent to the husband, with each party to retain their superannuation.

Agreed or uncontested facts

1. Despite the very understandable and evident emotions of the parties, in truth, there is surprisingly little factual dispute as to many matters in this case.  The wife was born on … 1970, and the husband was born on … 1966.  They met when the wife was 15 and the husband 18, respectively.  They commenced their relationship in … 1986 and married on … 1989. Their five children [V], born … 2000; [W], born … 2001 [X], born … 2004  [Y], born … 2007 and [Z], born … 2010 followed.  Tragically, and it is clear and understandable that this still hurts, the wife lost two children to miscarriages as well.

2. Neither party had any assets or resources of any meaningful moment at the commencement of the relationship.  At the start of the relationship, the husband worked for the then Employer, and the wife studied to become a health care worker.  She worked as a health care worker from 2000 to 2011 either full-time or part-time, depending upon the arrival and needs of the children as they came.  The husband re-trained as a health care worker and has been employed for some 15 years in health care at the same establishment.

3. The parties separated in January 2011, although there was a brief attempt at reconciliation later in the year.

4. The parties bought their first premises in Suburb N in 1987.  The husband’s then employment with the Employer was of some assistance in this purchase.  The property was sold in 1993, and in … 1993, a property at Street D1 was bought as an investment.  That property was subdivided in 2008 and a further loan taken out to enable this to occur.  In … 2011, the new subdivided property, Street D2 (“D2”), was rented to one Ms F. She will figure significantly in the history.

5. Turning back to the matrimonial property, in … 1993, the wife’s uncle Mr O bought a property at Street B, Suburb C.  The husband and wife house-sat this house for two years.  In … 1994, the husband and wife together bought land at the rear of Street B, Suburb C for $55,000, and that was ultimately consolidated into Street B, Suburb C, where Mr O’s property was.  That was then subdivided in 1996.  In 2002, the husband and wife paid the uncle Mr O $117,301 to purchase out his interest in the property, and he was removed from title on … 2002.

6. In … 2006, the husband and wife bought a property at Street E, Suburb G for $120,000, and in … 2009, they bought a caravan for $36,000.  On … 2011, the Suburb G property was sold for $155,000, and Street D2 was built in part with the proceeds thereof.  As earlier indicated, Ms F, together, as it transpired, with the husband, moved to that property once it was completed.

7. The rent from the original property at Street D1, which was unencumbered by the time of separation, was applied to the mortgage over Street D2 until 2015, when the wife stopped the half payment attributable to her and diverted it to herself.  Since then, the husband and Ms F have continued to live in Street D2 and have paid the mortgage and/or related bills.

8. This proceeding commenced by way of the wife’s property application on 16 August 2016.  In the fullness of time, parenting issues were also agitated, and final parenting orders were made on 27 November 2017.  Pursuant to those orders, the children were to live predominantly with the wife.  Following separation in 2011, initially, all five children had lived with the wife, but by the time of the final parenting orders, [V] was living with the husband, and the orders provided for her to spend time with the wife in accordance with her wishes;  [W] and [X] were to live with the wife and spend time with the husband as agreed and in accordance with their wishes;  and [Y] and [Z] were to live with the wife, spending from Friday till Saturday with the father each alternate weekends and certain other times provided in the orders.  By the time of trial, [V] had moved into independent accommodation;  [W] had gone to live with his father in September 2017, and [X] had gone to live with her father in August 2018.  The spend time regime in respect of [Y] and [Z] remains as it was originally ordered.

Evidence

The affidavits of the parties

1. The parties have not been shy to file extensive material.  Much of the affidavit material is, in my view, prolix and/or repetitive.  While I have of course read all of it I certainly do not propose to traverse each affidavit. I would, however, mention the following points which may be taken from their affidavits which are of some note.

2. In her first affidavit filed on 16 August 2016 contemporaneously with the originating application, from which much of the agreed facts stated above are taken, the wife observed at paragraph 7:

   “I am in general good health but I have had ongoing counselling since Mr Shores left.  I have a mental health plan in place and the stress and the emotional toll on me has been extreme.  I have also looked after the five children on my own since he left.  He has offered no support.  He has made no attempt to settle the property of the relationship of our marriage.  He has come and gone as he pleases with no communication with me.  I have had to seek an intervention order to stop this.”

3. This paragraph is noteworthy because it describes much of the mother’s affidavit material and her submissions and evidence before the Court.  She remains extremely hurt by the husband’s abandonment of her, as she sees it, for Ms F and is still bitterly disturbed by this.  I note that in her first affidavit, the wife estimated her superannuation as $234,468 and the husband’s at $400,000.

4. In his first affidavit in response filed on 15 September 2016, the husband noted his superannuation was $377,085.  He conceded that the wife had faced difficulties after the marriage and conceded that she had been the principal carer for the children during the relationship.  He said that he had been excluded by the wife from offering more assistance with the children and more time with them even though he had sought it.  He noted that he had resisted an Intervention Order application made by the wife.  I note that at paragraph 10, he valued the caravan at $26,000.  He also denied entering into an affair with Ms F before separation.  It should also be noted that the tone of his affidavit is generally relatively conciliatory compared to the highly accusatory material filed by the wife.

5. The wife’s affidavit filed on 1 May 2017, which essentially responded to parenting issues, is replete with highly emotional criticism of the husband’s extramarital affair.  At paragraph 8, the wife deposed that the husband left the family home to move with Ms F into a rental property at Street J, Suburb K in … 2011 and deposed to the move into Street D2 thereafter. She deposed to having an emotional breakdown as a result.  At paragraphs 10 and 11, the wife goes into considerable detail as to what she says proved that the extramarital relationship pre-dated separation.  As earlier indicated, the terms of this affidavit can fairly be described as highly emotional.  I note that there is no land tax paid upon the matrimonial home, even though there are two blocks, because they are treated as one property.

6. I note that an affidavit was filed by Ms L, a neighbour and close friend of the wife, on 24 January 2019, but Ms L was not called to give evidence nor, as I understand it, required for cross-examination.  It does not take the matter further.

7. I note that in her affidavit filed on 25 January 2019, the wife referred to Ms F as the husband’s “extramarital mistress”.  She deposed to the absence of discussion about the children’s schooling (a matter to which I will return when I deal with the evidence given at Court).  And she deposed that on 15 June 2015, she separated the rental from Street D1, as earlier indicated.  There are several further references to Ms F as the husband’s mistress, and at paragraph 30, the wife deposes to the loss of rental for the husband’s and Ms F’s accommodation between 2011 and 2015.

8. The wife deposed at page 28 of 295 to the abstraction of over $6,500 from the children’s bank accounts and the transfer of $5,700 of those funds to Ms F.  The wife complained again of the failure of the husband to resolve the matter by agreement.  She annexed at annexure 20 (pages 198 - 202 of the affidavit) correspondence from the Australian Taxation Office about the possible capital gains tax implications of the sale of the matrimonial home or, for that matter, of Street D, lots 1 and 2, but as will be seen, that advice has been overtaken by the evidence given at Court.  I note that annexure 22 (pages 206 - 208 of 295) shows that as at 22 August 2017, the wife had a share portfolio of in excess of $265,000, with a potential capital gain of $154,000 were they all to be sold.

9. I also note, and this is of some significance given the way the case was run, that annexure 24 discloses a letter from the wife’s then lawyers, Barbayannis Lawyers, to the solicitors for the husband dated 3 May 2018 which included very substantial disclosure on the part of the wife.

10. Annexure 27 (pages 251 - 264 of 295) shows the sale of all of the shares in the children’s names on 3 October 2018.

11. The husband’s trial affidavit sworn 30 January 2019 shows that he has been in employment in health care for almost 15 years, with a salary of approximately $1,250 per week.  He deposed that [W] and [X] live with him.  Ms F earns $700 per week, which apparently is contributed to the expenses of the household.  He asserted that the mother had a new partner and disclosed that he had consented to an Intervention Order without admissions on 7 March 2017.  He deposed that the wife had shares worth $313,306 as at May 2018, and the children’s shares worth $60,705.  He put a value on the chattels in the former home of $25,000 and the mortgage on Street D2 at $127,412.  He disclosed unpaid primary and secondary school fees in the sum of $73,697.

12. I note that in paragraph 71, the husband deposed, relevantly:

    “My attempt to leave the children at their pre-separation schools, being the School M and School O, has come at a very substantial cost, which I have been trying to carry.”

13. The husband also deposed that his superannuation had increased significantly and was now $483,744, whereas that of the wife was $287,149.

14. A final affidavit filed by the wife on 26 March 2019 does not take the matter further.

15. It should be noted that I have not traversed the affidavits from the expert witnesses.  These are the wife’s valuer, Ms P, the husband’s valuer, Mr Q, and the husband’s accountant, Mr R. These will be addressed when I come to deal with their evidence more generally.

The exhibits

1. Exhibit ‘R9’, which I admitted over objection, is an affidavit of Mr H, who is a certified practising valuer.  He valued the chattels in the former matrimonial home at $8,075.  The affidavit was filed late, albeit in large part because of the wife’s obstructive conduct, but given that she only received a copy effectively a day or two before trial, I indicated I would admit the materials, but I have regard to the wife’s incapacity to file contradicting material.  I noted that in his report at page 2, Mr H observed:

   “In every family law valuation, there are items that, whilst obtained during the relationship with joint funds, have no disposal market and No Commercial Value.”

2. While Mr H limited his observations to certain categories of material, my extensive experience in this area suggests that unless an item has particular value as a collectable, the values are likely to be nil.  The most expensive matter in the schedule prepared by Mr H was the ride-on mower, at a value of $1,000.  I am going to order that that be sold and the proceeds put into the pool.  Otherwise, the next-most expensive item is a TV screen, which realistically is of no extra value to the wife at all.  She and the children doubtless watch it.

3. The only other matter to be noted in the affidavit material at this stage is exhibit ‘R1’, which shows very considerable withdrawals of $1,000 in cash by the wife at times close to one another.  I will return to this when I deal with the evidence given directly.

The trial

1. What follows is taken from my notes. Self-evidently it is not a transcript, but records matters I found significant.

2. The husbanded handed up a schedule allegedly describing the pool, which I marked as ‘MFI1’ for identification.  Objection was also taken to parts of the wife’s substantial affidavit filed 25 January 2019.  I upheld the objection, but as things seem to have transpired, in my view, nothing turns on it.  Objection was also taken, and subsequently pressed, to annexure 19 to that affidavit, being advice from the Accountants.  Once again, because of the way in which I propose to deal with this matter, that objection is of no moment.  Despite counsel’s submissions, I would say that the provision of advice of this character would still be such as to come within the business record exemption, in any event.

The opening and evidence of the wife

1. The wife, who was self-represented, made an opening.  She referred to her self-representation and the nine years of dispute.  She referred to her five children and said that the husband’s material was inaccurate.  She said she had fully disclosed and that the husband’s subpoenas showed this.  She complained of late disclosure on the part of the husband.  She referred to the husband’s six weeks’ accrued annual leave.  She sought to include in the pool the $5,700 paid to Ms F and said school fees should be paid by the husband.  She complained that Ms F, the husband’s de facto partner, was not properly taken into account in the party’s financial position.  She referred to an alleged absence of disclosure by the husband as to legal fees and valuations.  She said that the chattels in her possession were of trivial value.  She had had the children for eight years after separation, and she should retain both lots, comprising the former matrimonial home, in their entirety.  Her uncle Mr O bought the land in 1993.  Street B, Suburb C can only be realised if it is sold.  Street D has only increased by some $200,000 in the same period.  The husband had made no contribution since separation in 2011.  There were substantial differences in valuation.  She sought the sale of all properties in the event that any were to be sold because of their outstanding liabilities.  She is still liable in respect of the mortgage of Street D.  She said no property should be sold.  The four children had been impacted.  The value of Street B, Suburb C Road would depend upon its realisation, which might take up to 12 months.

2. The mother was called and adopted her affidavits and Financial Statement as true and correct.  Under cross-examination by counsel for the husband, the wife said that she was a health care worker from 1991 to 2011 apart from her time off on maternity leave.  She had studied between 1988 and 1991.  She did a degree which qualified her in her employment, which was a personal preference.  She conceded she was better qualified as a health care worker than the husband.  She had additionally undertaken casual work during the relationship.  She had worked at the Region S Hospital after 2000 and also hospitals in the home.  She had done work in the evening after her ordinary work from 7 till 9 pm and done casual night shifts.  In 2010 to 2011, she had worked in hospitals.

3. The wife was still registered as a health care worker but would have to do a refresher program to get back into the workforce.  She would have to undertake a six to eight-week course.  She had not looked at other work.  She said she could probably find work at ….  Only [Y], who is six, and [Z], who is three, are still with her.  She denied having a fractious relationship with [X].  She conceded that [X] went to live with her father in 2018, but she still sees her.  She has not seen [X] much since 2018.  [W] left the home in September 2017 and has not spent much time with her.  [Y] and [Z] are at private school at the School M, for which there are fees.  She is aware that school fees are in issue in the proceeding.  All of the children went to the School M.  The husband was happy to pay secondary school fees, but she could not afford them.  The husband has paid school fees from 2011 to 2016.  The School M is, in fact, 8.3 kilometres from her home, and the local primary is only 1.3 kilometres and would be more convenient.

4. When it was put to her that the husband had left in January 2011 and allowed his income to be continued to be paid into a joint account for the next four years, the wife, albeit obviously reluctant to agree, eventually conceded that this was so.  She said that in October 2010, he had opened another account.  After separation, he had salary packaged the school fees.  He did not set Ms F’s income as $700 per week.

5. The wife denied having a new partner.  She has been friends with this person (who was in Court with her, as I understand it, on both days of the hearing) for just over a year.  He does not provide financial support and is retired.  She has been on holidays with him, but there are no bedrooms at his home for the children.  There is no intention to live together after this case is over.

6. The husband pays child support of $460 per month.  The wife also receives share dividends of some $60 per week.  Her share portfolio is worth $300,000.

1. When asked about the rent for Street D1, the wife said that the rent had not gone up in the last three years.  In 2015, she had told the agent to split the rent fifty-fifty.  Before that, the rent paid the mortgage on D2.  After 2015, the wife’s half share did not go to the mortgage.  Street D1 is unencumbered, and D2 is where the husband lives.  The Street B, Suburb C property is unencumbered.

2. The wife was cross-examined about the maintenance of the matrimonial home.  It was put that there was much stress upon her looking after such a large property on her own.  I did not particularly catch the terms of the answer, but I understood the wife to say that while it had been difficult, she had managed to cope.  When it was put to her that [W] had left her, the wife said that she could not predict the future, there needed to be room for the animals and she wanted to keep the family home of 24 years.  Her priority is the children, all four of the children.  The real issue is the liability that would go with selling Street B, Suburb C.  She did not want to keep it because it was valuable land.  I should interpolate and say that the wife tended to answer questions put to her with what can only be described as speeches.  They were lengthy and, in my view, at times, irrelevant answers.  She was very loathe, and obviously so, to make concessions.

3. The wife was cross-examined about expenditure of some $15,000 in 2012.  She was further cross-examined about withdrawals in excess of $70,000 in March 2014.  The wife said that she could not recall.  It was a long time ago.  She conceded withdrawing $47,000 from the bank account in March 2015.  She appeared to accept that this had gone into the NAB day-to-day account.  The wife said she lives within budget.  She shops at Salvos.  When asked about significant cash withdrawals in late 2012, she said, in my view unpersuasively, that there were a lot of expenses at that time.  When asked about withdrawals of cash of $5,000 in 2015 in one week, the wife said she spent this on living expenses.  Her car needed work.  When cross-examined about further cash withdrawals (in considerable thousands of dollars), the wife was not able to provide any understandable answer.  She said that this was a very traumatic time, and she could not remember.  I should make it clear that I do not regard that as a believable answer.  The wife’s demeanour was redolent of somebody who just did not wish to tell the full story on this aspect of the matter.

4. Despite the conscientious endeavours by counsel to cross-examine on the bank records effectively, the wife simply obfuscated.

5. The wife was adamant that she had declared all her bank accounts all the way through the case.  She referred to transferring $20 to the children’s bank accounts every fortnight all their lives.  She had opened two new school banking accounts in 2018 after the husband withdrew the funds from the other two children.  [V] has an account in her own name, but the money withdrawn was not given to [V] and [W].

6. When it was put to her that between March 2011 to 2018, the wife had sold $100,000 of shares, she denied this.  She said that this included the children’s shares.  The statements are all in her trial affidavit.  The wife’s answers, I regret to say, were unbelievable, and she was unprepared to acknowledge the obvious withdrawals shown in the bank documentation.  The wife denied that she had received $8,000 withdrawn on 8 March 2011.

7. When asked about $70,000 of shares sold in November to December 2016, the wife responded that she had told Ms Swan at mediation what she did with it.  She has spent over $80,000 on solicitors and over $10,000 in sworn valuations.

8. The wife had sold the children’s shares and put the money aside for [V]’s teeth.  The father had taken the children’s bank accounts and not declared what he did with the money.  In May to June, she had withdrawn $13,000 from ATMs and was supporting [V] and engaging a babysitter also.  She had to sell her shares to live.  She had sold all the children’s shares in December 2018.  She will be paying capital gains tax on those.  It finally emerged that of the $49,000 in shares sold, $35,000 was in a safe in the neighbour Ms L’s property.  She had sold these shares to show their real worth, as the husband was making wrong assertions.

9. Once again, I should interpolate that the wife continued to make unresponsive speeches.  She was, in my view, somewhat careless with the truth and determined not to make any concessions.  She was sarcastic and rude to counsel.

10. Re-examination did not take the matter further.

The evidence of Ms P and Mr Q

1. At this point and by agreement, the evidence of Ms P and Mr Q was taken together.  This is a process sometimes described as “hot tubbing”.

2. Ms P, who is a certified sworn property valuer, had filed an affidavit sworn 18 July 2017, in which she valued lots 1 and 2 Street B, Suburb C, and Street D1 & 2.  The valuations of Street D1 & 2 were, respectively, $510,000 for Street D1 and $650,000 for D2.  Both these are agreed valuations.  On 25 January 2019, Ms P filed a further affidavit.  In that affidavit, she appended a further report about lots 1 and 2 Street B, Suburb C as at 8 January 2018.  Ms A valued lot 1 at $855,000, lot 2 at $1,625,000 and the properties, if combined, at $2,200,000.

3. Mr Q, who is also a certified practising sworn valuer and licensed real estate agent, filed an affidavit on 31 January 2019.  He valued lot 1 (the residential dwelling) at $1,025,000 and lot 2 at $2,040,000.

4. It should be noted that the valuers had conferred twice and been unable to bridge the differences between them.

5. Counsel for the husband cross-examined essentially Ms P, whose report she was seeking to undermine, but since it became apparent to me fairly quickly that this process was likely to be extremely time-consuming and not necessarily entirely productive, I largely took over the questioning myself.  The gravamen of Ms P’s evidence, which is consistent with her expert report, is that a more cautious approach to the valuation of lot 2 is warranted.  The planning position is uncertain (she included in her report a certain amount of hearsay as to what the relevant planning offices had told her), and she took a conservative estimate as to the density of dwellings that might be allowed in the event that subdivision proceed.  She noted, as, indeed did Mr Q, that no relevant detailed planning approval has been obtained. Her approach, therefore, was based very much upon the qualifying issues that might be thought to be brought to bear.

6. Mr Q was, in every way, more bullish.  His valuation was based upon land value from comparable sales in the surrounding area.

7. I think one can properly describe Ms P’s approach as being more an intuitive assessment in which other sales were not irrelevant but one in which she had concentrated exclusively, so to speak, on lot 2 itself.

8. I should make it clear that I was impressed with the evidence of both Ms P and Mr Q.  Neither of them was really prepared to make any concession.  This was not out of obduracy but obviously out of a sincere belief in the force of their position.  They are plainly both honest witnesses.  They were plainly both very highly qualified in the field.  They just took different positions on the matter.  One is always left with the lingering suspicion that, subconsciously, each of these expert witnesses were, to some extent, influenced by the party for whom they appeared.  Both were clearly aware of the significance of the estimates that they put on the potential outcome of the proceeding and its possible implications for those that had retained them.  I should emphasise that this is not a criticism but simply, to an extent, a surmise.

9. Putting the matter shortly, I am quite unable to accept that either Ms P is right and Mr Q wrong or vice versa.  My mind has not reached the state of satisfaction that it is more probable than otherwise that either of them is to be preferred.

10. The obvious remedy is to sell the properties, crystallise the capital gains and proceed on that footing.  There are other reasons that support this approach, to which I shall come, but bearing in mind that both Ms P and Mr Q agree that there is a considerable measure of uncertainty due to the fact that planning approval has not been sought or obtained, and the result and dimensions of any outcome known with any precision whatever, it is simply, in my view, impossible to arrive at a definite issue on the evidence as it stands.

The evidence of the husband

1. The husband adopted his affidavits and Financial Statement as true and correct.

2. In evidence-in-chief, he had been asked whether there had been any discussion about school fees.  He said there had been no discussion because the communication between the parties was very poor.  He had left the children in the home and felt a measure of guilt and had felt it would be unjust to remove the children from their schools.

3. The father was asked about the money he had taken from the children’s bank accounts.  He said he had transferred this to [V] because she wanted to buy a car.  She had said she had had the funds in a bank account.  He bought the car for her 17^th birthday.  The purchase funds were lent by Ms F.  [V] was unable to repay her because her mother had frozen her money.  He had no communications with the mother.  The car cost $9,500, and the children’s funds were used for the car.  [V] will pay the other children back.

4. I interpolate and say that given the strident criticism advanced by counsel for the husband complaining about the mother’s abstraction to herself of the children’s funds, the insouciant abstraction by the husband of all the other children apart from [V]’s funds and their application directly to repay a loan to Ms F is a very good example of the pot calling the kettle black.

5. It should also be noted that despite the fact that the funds were advanced to her over two years ago, it does not appear that [V] has paid any of her siblings back even $1.

6. The father was asked about the reference to [V]’s dental treatment costing $25,000 to $30,000, as disclosed in annexure 15 of the wife’s affidavit.  He had not seen this until discovery.  [V] has told him that she does not want this process, which would involve breaking her jaw to re-align her teeth.  She is happy with her teeth, and this is not a priority for her.

7. Under cross-examination by the wife, the father confirmed that [V] came to live with him in … 2017 and stayed until … 2018.  At the time of the purchase of the car, [V] was living with the wife.  He had had orthodontic care himself and would discuss this with [V] if she wanted it.

8. The husband was cross-examined about his income as disclosed by his tax returns.  His salary sacrificing has now ceased, and last year, his income was $65,000.  He had had no communication with the wife about work.  He was cross-examined about the attempted reconciliation.  He said he had felt guilty when he left.  He had no access to the children.  Ms F had suggested he try again, and he did so for 12 weeks, but this did not work, and he moved back to Ms F.  The wife said there was no reconciliation.

9. The husband confirmed that the previous Thursday, for the first time since orders were made, he had had [Z] and [Y] for their big sister’s birthday.  He said that there was lawyers’ correspondence about him having more time, and he wanted it in writing.

10. The husband was asked about his legal fees, and he said he owed about $30,000 two years ago.  When cross-examined about removal of chattels from the home, he said he had removed his golf clubs and one other item.  He had not taken any furniture, but one of the children had given him a small wedge for splitting wood.

11. I would interpolate that the husband had a tendency to be overly concerned with minutiae and was in the habit of long, circumlocutory answers to questions which were really self-serving speeches.

12. The husband was cross-examined about his annual leave.  He has not taken any for five years and proposes to do so once this case is over.  He can cash out up to two weeks maximum of his annual leave, but his long service leave is only payable should he resign.

13. The husband said he had helped the wife with lawn-mowing and looking after the children in the matrimonial home, but the wife had rejected his offers of more.  Much of the cross-examination was concerned with irrelevant minutiae.  By way of illustration only, the husband was taxed with his estimate of the purchase price of Street D1 at paragraph 45 of his trial affidavit.  He said the $98,000 referred to was from his memory when, in fact, it turned out to be $103,000.

14. The husband was cross-examined about the purchase from uncle Mr O of lot 2.  He conceded that Mr O had contributed to the development of the property and agreed that he and the wife had a very good relationship with him.

15. The husband was cross-examined about [W]’s change of school to School N.  He said [W] was finding it difficult not seeing him and fell into a hole at school.  There was a bit of trouble, and he was asked to leave.  When pressed, he conceded that [W] was expelled from School O for stealing laptops.

16. The husband conceded his child support is garnisheed.  He said he had assisted with [X] and [W] living with him for the last two or three years, although it is clear this has only happened since they have moved in with him.  He said Ms F had contributed to school shoes and care for the children when the children were with him.  As I have said, the husband had a tendency to concentrate on minutiae.

17. The husband was cross-examined about paragraph 75 of his trial affidavit, in which inter alia he asserted that the wife could have avoided her resignation in 2011 by allowing him to have more time with the children.  He said the wife would not have him in the house and felt she had no alternative to resign and did so. It was difficult to have discussions.  When it was put to him that the resignation was in late 2012, the husband said this was a difficult time for the wife.  He had offered to help with the children.  I should interpolate again and say that the husband’s answers were given with an unctuous and self-serving demeanour, and his answers were frequently non-responsive to the questions put.

18. The husband says he finishes work at 3 pm every day and that this could assist the wife to work day or afternoon shifts.  [W] has come on leaps and bounds.  [X] has struggled a bit more but is still very happy in the home.  She will not move anywhere else.  [W] has a part-time job and works as a labourer at his workplace and has done so for some years.  He worked 24 hours per fortnight, and he keeps his income.  He has bought a car for $600, which the father now uses, as his is not working.  [X] was 15 last week and was presently in Tasmania with the two other siblings.  [X] had not said she wished to live in two houses.

19. The husband confirmed that he wishes to retain both the Street D properties, and he has no plans to sell them in the foreseeable future.

20. The husband was cross-examined about sales of minor tranches of shares, which, in my view, are neither here nor there.  He said his current legal fees outstanding are probably about $100,000.

21. In re-examination, the husband confirmed that Ms F is self-employed, and the $700 per week she earns is contributed to the household.

The evidence of Mr R

1. Mr R is a chartered accountant who adopted his affidavit as true and correct. That affidavit appends Mr R’s opinions about capital gains tax.

2. Under cross-examination by the wife, Mr R confirmed that the husband is a tax client of his business.  He has been so for the last two and a half to three years, and Mr R had prepared his tax return in 2016 to 2017.  The information in the returns was provided by the husband.

3. Mr R explained the absentee rule. If a person has two properties and has to move out of one of them, the ATO will permit a claim against the first property as a primary residence. Since the 2011 separation, the husband moved out.  He can still choose which property to allocate as his primary residence for capital gains tax purposes.  The absentee rule does not apply to state revenue, only to the ATO.  There would be no land tax if somebody was living there.  It was put to him that the husband’s postal address was in Street D, but Mr R said this did not matter.  The husband does not pay land tax on lot 1.  Lot 2 is vacant land and would always attract land tax.  The husband does not pay land tax on D1.  Mr Shores should apply for an exemption from the land tax if he was paying any.

4. It should be noted that it eventually emerged that the State Revenue Office treats lots 1 and 2 as being one lot for land tax purposes, and none is, in fact, being paid.

5. Mr R confirmed that any capital gains tax payable would include a three per cent levy.

6. I would interpolate and say that Mr R, while perhaps tending to somewhat expansive answers, struck me as being an excellent professional witness who well knew what he was talking about.  Although it may not ultimately matter, I would accept the force of his evidence.

Submissions

Counsel for the husband

1. Counsel submitted that this was not a difficult case.  The pool is substantial, and there is little debt, so there is enough for both parties.  It was a 22-year marriage where they had nothing at the start, and both did their best.  They had been separated for eight years.  The husband has re-partnered, and the wife refers to her still as his extramarital mistress.  Clearly, this relationship affects the mother.  She had five young children with her at separation, and the husband wanted to help but was obstructed by the wife.  The 11F report spoke for itself, showing the children’s desire for more time with their father, and it required an interim hearing for any overnight time to occur.  Time with the two younger children may increase to mid-week.  The wife seeks a 15 per cent loading in her favour, but the husband says that in practice, this will be about 30 per cent.  Counsel submitted that the husband is a health care worker who earns $65,000 to $70,000. The wife is not employed but is better qualified.  She is still registered and will work in due course.  While she still has the care of two children, they are not toddlers.

2. Counsel submitted that in relation to the competing valuers, Mr Q had formed his opinions based on land value with appropriate discounts.  It was submitted that Ms P’s approach was more arbitrary and involved speculation.  It was submitted that in any event, the properties have to be sold because the wife cannot keep Street B, Suburb C.

3. Counsel submitted that the wife had $45,000 in savings in 2015.  This was transferred to the NAB and taken out in cash.  The wife had sold her own shares and those of the children.  She had sold $106,519 shares in her own name and $49,515 of those of the children.  These were paid into the wife’s CBA and mostly drained out in cash.  A total of some $18,654 had been paid on legal expenses, but the other moneys were unaccounted for.  The wife does not spend that money on living expenses, as she uses her credit cards and lives frugally.  The funds were also not spent on school fees.  Money was placed into the neighbour’s safe.  It was submitted the wife was not a witness of credit regarding expenditure of funds.  Counsel submitted that the wife had not disclosed, and subpoenas had been necessary.  There was no evidence that any moneys had been spent on [V]’s dental treatment.

4. Counsel submitted the wife had been unco-operative about access for valuing the chattels, which were valued at $8,075.

5. In respect of school fees, the husband wanted to keep the children in their schools.  The younger girls are still at the School M.  They were enrolled by agreement.  There has been no discussion about changing schools, and the fees are a joint debt which should be paid at settlement.  Land tax arrears should be paid at settlement, likewise.  It arose because the husband moved out.  Counsel made submissions about the approach to capital gains tax, but since I propose to sell the properties and crystallise that issue, these submissions are not of any moment.

1. The husband opposed a superannuation split.  The parties have been separated since 2011, and in these eight years, there has been a $240,000 increase in his superannuation which should be excluded from the pool.  His long service leave is not accessible.

2. Counsel submitted that the contributions were equal during the relationship.  The husband’s post-separation were greater, as he has paid the mortgage since 2015.  He has paid the whole of the mortgage since (although this is not, in fact, correct because half the rent from Street D1 still goes to him).  The mortgage on D2 is a joint debt and should have been paid from rent from Street D1.  The husband had placed his salary into a joint account accessible to the wife from 2011 to 2015 and had paid in excess of child support.  Nonetheless, he was not seeking an adjustment based on contribution.

3. In respect of future needs, the parties had comparable earning capacity, and the husband would assist the wife with the children if he was allowed to do so.  50 per cent would give each party about $2 million, and Street B, Suburb C was expensive to maintain.  The wife’s desire to retain it was impracticable.  She would have to pay the husband over $1 million.  50 per cent to each party was well in the range.

Submissions of the wife

1. The wife commenced her address, strikingly, by referring to the phrase ‘extramarital mistress’ used to describe Ms F.  She asserted that this was semantically the right descriptor.  She went on to say that if the father had agreed to take the children at the start, she could have worked.  She said she had proposed full weekends for the husband, but he was unable to do this because of his work.  She has no income at the moment.  She would need qualifications to work, which she cannot do, and her options are significantly reduced.  The wife thought that both experts were good witnesses, but there were many assumptions about the market.  Chattels are still in issue.  She noted that the valuer had included the rabbits’ cages, and some of the matters described were belongings of the children.

2. Insofar as school fees were concerned, it was a difficult time.  The loss of income from D1 and not having a partner meant that the wife could not pay fees.  It requires joint signatures to remove the children from school.  The father never asked her to contribute.  He had not ever disclosed any assessment for land tax.  She was not looking to move.  Where she is close to the Region S Hospital.  It is her responsibility to take the children to school.  If Street B was sold, there would be capital gains tax on both lots.

3. Insofar as superannuation was concerned, the husband had received what he earned.  She had had no opportunity to be employed.  She had long service leave and resigned and was paid out.  There were equal contributions during the relationship.  From 2011 to 2015, she contributed to the mortgage through the payments of rental.  Before that, it was supposed to be rental, but it wasn’t and should have been.  The husband chose to leave, and communications were not there.  The husband had opened his NAB account prior to separation.  Child support is collected independently, and he had not paid in excess of it.  There was no evidence she could return to work, for she is a single person who had not re-partnered and the children with her are younger.  [W] earns an income and has two cars.  [X] is 15 and has two part-time jobs.  Her two children are in primary school.  She wants to retain Street B, Suburb C and had maintained it for eight years.  She had also looked after the children.  And there was a family connection with the property.  If sold, they would have to move, and she questioned whether it would be possible to buy in the Suburb P school area.

4. It should be noted that the wife’s submissions were accusatory of the husband to the last, and she made no submissions as to whether the proposal she was putting was just and equitable.

Findings about the credit of the parties and as to the relevant facts

1. I have already commented at some length about the aspects of the wife’s evidence that were unsatisfactory.  She is plainly deeply emotionally scarred by the husband’s infidelity and the style in which she perceives the marriage to have come to an end.  Her bitterness and anger against him remains completely palpable.  This has infected her view of the world and caused her to engage in a certain amount of hyperbole.

2. The husband was, likewise a far from a perfect witness.  His answers were often self-serving and circumlocutory.  He, of course, did not present as nearly as angry as the wife, but there is an underlying element of hostility clearly discernible in his manner.

3. As I have already indicated at the start of this judgment, many of the matters are not in dispute.  They met when very young and commenced a relationship when they were barely adult (particularly on the wife’s part) and were together for well in excess of 20 years.  They had five children and had the terrible misfortune to lose two other births.  They had nothing of any moment when they started, and they have now found themselves, in comparative terms, the owners of very significant assets.

4. I will deal with findings about some of the discrete matters raised, such as school fees, in due course, but at this point, it is appropriate to turn to the decision of the High Court in Stanford & Stanford.

Stanford & Stanford

1. The Court’s first task is to ascertain the legal and equitable interests of the parties and determine whether a property distribution is appropriate.  In this instance, as in so many, the basis upon which the parties conducted their financial affairs during the marriage has radically altered, and each party seeks a property adjustment.  It is clearly appropriate that there be one.

The pool

·

Lot 1 Street B, Suburb C.  The husband’s valuation:  $1,025,000. 

The wife’s valuation:  $855,000.

·

Lot 2 Street B, Suburb C.  The husband’s valuation:  $2,047,000. 

The wife’s valuation:  $1,625,000 (wife’s valuation of the properties together: $2,200,000).

·Street D2:  $600,000.

·Street D1:  $490,000.

·

Wife’s share portfolio: $305,367 (per Financial Statement

25 January 2019).

·Caravan:  $25,000 (taken as concession from husband’s Financial Statement 30 January 2019 – wife’s estimate $30,000 in Financial Statement 19 September 2016).

Liabilities

·Mortgage Street D2: $127,412.

·Husband’s land tax:  $4,569.

Superannuation

·Wife’s superannuation:  $293,730.

·Husband’s superannuation:  $483,744.

The shares sold by the wife

1. Although I have not traversed the matter in any detail, I accept that the wife sold $106,519 worth of shares overall from 2011 to 2018, and I note that she sold $49,015 of the children’s shares on 3 October 2018.  As she said in her affidavit, she did this to put the money where it could be used by the children.

2. I have no doubt that this was done because of anger at the husband abstracting the children’s bank accounts and giving the money via [V] to his partner.

3. Taken over the in excess of seven and a half years with which we are concerned, the sale of shares gives rise to an approximate annual selling of shares of $15,000 per year.  While some of the wife’s withdrawal patterns are distinctly bizarre, given her frugal lifestyle and the fact that many of her expenses were recorded through her credit card (and I do not accept for a moment her assertion that she is unable to recall what occurred), it is not possible to be satisfied that this money has simply been wasted, as the husband’s case infers.  Bearing in mind that the wife has not worked, has been in receipt of child support in relatively modest amounts (albeit as assessed) and bearing in mind the costs of maintaining the Street B, Suburb C property, this gradual dissipation is not surprising.

4. What is obvious, however, is that the selling of the children’s shares and the generation of almost $50,000 as a result was in clear breach of her duties of trust to the children.  $35,000 of it at least remains in the neighbour’s safe, a strangeness that speaks for itself.  I accept that some of the moneys generated may have been applied to legal fees.  Plainly, the mother has treated the children’s funds as her own.  The $35,000 will be added back into the pool.

5. Likewise, the husband has no idea of any notion of proper conduct as a trustee.  The in excess of $6,000 he abstracted will, likewise, be added back into the pool.

The parties’ cars

1. The husband says his car is unusable and needs repairs.  The wife says her car is merely a means of getting from A to B.  If she sells the one she has, she will have to buy another.  The amounts involved are small in the scheme of this pool, and I will not include those.

2. Likewise, the chattels are of no meaningful resale value apart from the ride-on mower, which will be sold as the Street B, Suburb C property is being sold, in any event.  The other items are of so little moment it is really only instructive of the husband’s meanness of spirit that he has sought so hard to include any figure, let alone so large a one as he abandoned at trial.

School fees

1. In truth, it was the husband’s decision to keep the children in their private schools.  Had he asked the wife, she would have said she could not afford to do it.  It is, of course, to his credit that he sought to avoid disruption to the children’s lives, but in the end, the picture that emerges from the evidence as a whole could not be clearer.  The school fees were his decision, and he should pay for it.  I make this finding notwithstanding that I accept that any endeavour to communicate with the wife would have been difficult post-separation and probably unpleasant, but the fact is he made no endeavour to do so at all through his solicitors (and she was legally represented for considerable periods of time), and as I say, it was his unilateral decision, and it should come home to him.

2. It will be seen that the scope of the pool remains ill-defined.  The two most valuable assets will need to be realised before any division can be made.  I will direct the sale of the two properties, and I will direct the parties to confer with a view to ascertaining the capital gains tax.  It seems far more probable than otherwise that it will be very much to the husband’s benefit, and not just that of the wife, that he should elect to take advantage of the choice that enables him to nominate the former matrimonial home as his home up until the point of sale.  Should he fail to do so without convincing reasons, therefore, I would be making a further adjustment against him in due course so that the wife receives the benefit of her share of the Street B, Suburb C properties free of capital gains tax.

Contributions

1. As Counsel for the husband correctly put it, this is not a difficult case.  The parties had nothing when they started, and it is through diligence and thrift, more probably accentuated in the wife than in the husband but not by any degree to justify any adjustment, they are now, in the scheme of things, wealthy people.  True it is that a not-insignificant part of this comes through the windfall of lot 2 at Street B, Suburb C, but the fact is they obtained all of this together and, realistically, almost all of it prior to separation.  Subject to the particular liabilities that have emerged since, if ever there was a case where the parties’ contributions should be assessed as equal, this is it.  Each did their best throughout.

The future needs – s.75(2) factors

1. It is not the case that the wife can immediately return to work.  Whoever’s fault it may be (and this is a no-fault jurisdiction), the fact is that she is deeply scarred by her experiences as she sees them.  She is not now registered to work as a health care worker and would need to re-train.  Some of the areas of the work most likely to be profitable to her are not going to be open to her because of the shifts and the like.  Furthermore, the interpersonal dynamic between her and the husband is so poor that, realistically, the notion that the husband will be able to pick the children up from school and look after them until the wife comes home from afternoon or late shift is simply not a practicable outcome.  She will not be able to return to work full-time for some time to come.  I fully accept, however, that she is better qualified than the husband, and in the long term, and [Y] is, after all, going to be into secondary school in just a few years, her ultimate job prospects are probably better than those of the husband.

2. The wife does not have the benefit of a partner, as does the husband, in a conjoined financial unit, but she is plainly in some sort of relationship with the gentleman who came to Court with her for two days.  It is, of course, speculative as to how that may develop, and I note that is not her current intention to re-partner and accept that that is so.  Nonetheless, as a woman of independence and personality, it is very possible that she may at some time advance to a point where she can contemplate a further relationship more actively.

3. The father does have the care of two of the children, but they are substantially older.  I accept that such income as they make remains to be spent according to their own desires and that they do not contribute financially to the household.  As adolescents, they must consume food and the like and would, doubtless, be an expense.

4. Conversely, the two younger children will be in the effective full-time care of the mother for the foreseeable future.  The father has not sought at any stage orders to increase the amount of time he has with the children, and it is likely, therefore, that they will act as an ongoing impediment to the wife’s future employment in a significant fashion.

5. In my view, the wife’s mental health is plainly still not as good as it could be.  So much is apparent from the concentrated bitterness of her comments about the husband’s abandonment of her and his immediate re-establishment of the relationship with his new partner.  The husband’s health is completely unexceptionable.

6. Balancing all these matters together, in my view, there should be an adjustment to the wife of some seven per cent.

Superannuation

1. The parties’ superannuation was almost equal when they separated.  The wife, as I find, continued to work until 2012, when things just became too much for her, and she resigned.  True it is that she has not been able to earn and to garner more superannuation since.

2. Nonetheless, such increases as have occurred in the husband’s superannuation cannot have been caused by his own contributions.  Nine per cent of something of the order of $70,000 per year would not begin to account for the enormous increase in the husband’s superannuation of more recent times.  Plainly, his superannuation investments have simply been far more successful than those of the wife.  In circumstances where the wife has made no contribution towards the husband’s affairs whatever since 2011, save the contribution of half the rent of Street D1 to the mortgage on D2, offset, of course, by the husband’s subsequent full payment of the mortgage and rates and so on, it is plainly inappropriate that there be any equalisation of superannuation.

Just and equitable

1. In my view, an overall settlement of 57 per cent to the wife and 43 per cent to the husband is, indeed, just and equitable.  This takes into consideration the non-splitting of the parties’ superannuation and the apportionment of some of the debt of the relationship entirely to the husband.  In respect of school fees, this is not an insignificant amount.  Looked at fairly and as a whole, in my view, this outcome, which does the best one can to bring justice and equity to parties whose circumstances are somewhat convoluted, is appropriate.

2. It will be noted that I am not going to order the sale of the Street D properties simply, as it were, to even things up as between the parties to cause equal inconvenience to both.  It is unfortunate that the Street B, Suburb C property will have to be sold, but there is no way in which the wife could ever pay the husband any significant amount to buy his interest out, and the amount involved would, on any view, be significant.  There will plainly need to be ongoing thought given to how these orders should ultimately be enforced, and there will be liberty to apply to the parties in that regard.

I certify that the preceding one hundred and twenty paragraphs are a true copy of the reasons for judgment of Judge Burchardt

Date:  28 June 2019