Linder and Linder

FAMILY COURT OF AUSTRALIA

LINDER & LINDER

[2013] FamCA 988

FAMILY LAW – PROPERTY SETTLEMENT IN RELATION TO MARRIAGE – Where the parties were married for approximately 26 years – Where there are three children of the marriage – Where the parties’ s 79(4) contributions to the date of hearing were assessed in favour of the husband – Where the Court found that the husband had failed to adequately disclose evidence of his financial circumstances – Where the Court found that the husband had committed waste – Where the husband has a greater income earning capacity than the wife – Where an adjustment was made in favour of the wife under s 75(2).

Family Law Act 1975 (Cth)
Family Law Rules 2004

Browne BJ and Green NL (1999) FLC 92-873

Kowaliw and Kowaliw (1981) FLC 91-092

APPLICANT:

Ms Linder

RESPONDENT:

Mr Linder

FILE NUMBER:

SYC

3553

2011

DATE DELIVERED:

17 December 2013

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Rees J

HEARING DATE:

3 and 4 December 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Tockar

SOLICITOR FOR THE APPLICANT:

Luther Webster & Evans

COUNSEL FOR THE RESPONDENT:

Ms Coulton

SOLICITOR FOR THE RESPONDENT:

Denise King & Associates

Orders

That the husband and the wife do all acts and things necessary to pay to the wife the whole of the money in the controlled money account.
That within 30 days of these Orders, the husband shall pay to the wife the sum of $41,142.
That upon payment to the wife of the sum referred to in Order 2, the wife shall sign such documents as are tendered to her by the husband to effect the transfer to him of the jointly owned shares in IAG and Argo Investments Ltd (“the shares”).
That in the event that the sum referred to in Order 2 is not paid to the wife within the time specified, then the parties shall forthwith do all acts and things required to sell the shares and to pay from the proceeds of the sale the sum owed to the wife, together with interest at the rate prescribed by the Family Law Rules 2004 (Cth), and to pay the balance to the husband.
That the wife shall forthwith do all acts and things and sign all documents tendered to her by the husband in order to transfer to the husband all of her right, title and interest in the self-managed superannuation fund known as the “C Superannuation Fund” (“the superannuation fund”).
That the husband shall indemnify the wife from any and all liability, however arising, from her being a trustee of the superannuation fund or a member of the superannuation fund.
That the husband shall indemnify the wife in respect of any and all liability for any debt due to GE relating to the Mercedes Benz motor vehicle in the husband’s possession.
That the husband and wife shall be liable in equal shares for the liability to G Pharmacy and they shall each pay the sum of $897.50 in order to discharge that liability.
That, other than as specified in these Orders, each party shall be solely entitled to any asset in his or her possession at the date of these Orders.
That, other than as specified in these Orders, each party shall be solely liable to repay any liability owed by that party as at the date of these Orders.
That the order for spousal maintenance made on 11 March 2013 be discharged.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Linder & Linder has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 3553 of 2011

Ms Linder

Applicant

And

Mr Linder

Respondent

REASONS FOR JUDGMENT

Background

Before the Court are proceedings for property settlement arising out of the marriage of Ms Linder (“the wife”) and Mr Linder (“the husband”). The wife is currently 56 years of age and the husband is 62 years of age. The parties married and commenced co-habitation in late 1984, and there are three children of their marriage: N, now aged 25; L, now aged 24; and V, now aged 20.
The husband is a legal professional. The wife, prior to co-habitation, worked full time in the travel industry but stopped working towards the end of her pregnancy with the parties’ first child and has not been in paid employment since that time.
There is a dispute between the parties about the assets which were introduced by the wife into the marriage. It was the wife’s evidence that she had lived at home with her parents from the time she started work when she was aged 18 until her marriage to the husband some five years later. She had saved money and bought shares in that time. The quantum of the wife’s contribution at the time of the marriage will be dealt with later in these reasons.
In October of 1984, before the parties married, they purchased their first home at H Street, Suburb P (“the P property”) for $230,000. To fund the purchase, they borrowed $100,000 from the New South Wales Building Society. It is asserted by the husband that, in addition to that amount, his family gave the parties $200,000.
They married in 1984 and moved into the P property.
From the commencement of the marriage until 1990, the wife’s grandmother gave the wife $150 per week on average in cash, which she used to pay family expenses.
From the commencement of the marriage, the husband worked as an employed legal professional.
In about March 1990 the parties sold the P property for $560,000 and received net $460,000. They purchased a property at C Road, Suburb U (“the U property”), solely in the name of the wife. The purchase price of the U property was $1,025,000. To fund the purchase, they used the net proceeds of sale of the P property together with a mortgage of $275,000. In addition to those monies, the husband asserts that his family advanced a further sum of $500,000.
In about 1997 the husband became a partner in X Firm (“X”), which was a legal partnership specialising in commercial law. He remained as a partner in X until 2003 when the partnership was terminated.
In order to raise the money necessary to contribute equity to X the husband borrowed from the ANZ Bank (“ANZ”). When the X partnership was terminated, the ANZ called upon the husband to repay the loan and ultimately instituted proceedings in the Supreme Court of New South Wales, which the husband defended. The husband was unsuccessful in those proceedings and the wife asserts that his pursuit of the proceedings to its ultimate conclusion constitutes waste on the part of the husband.
At about the same time as the husband’s business partnership was terminated, the parties’ youngest child V, who was then 12 years of age, became gravely ill. V was admitted to the Sydney Children’s Hospital and diagnosed as having aplastic anaemia, a severe and rare blood disorder which is life threatening. V was in need of a bone marrow transplant to save her life and both of the parties and the children underwent testing to see if they were suitable donors. Ultimately, N became the donor and V received a bone marrow transfusion on 14 December 2005. After the transfusion, V remained gravely ill and was kept in isolation. V was required to take high doses of steroids and medication each day. She was incubated and relying upon oxygen. V developed a form of osteoporosis in her hip which was painful.
V spent 12 months in hospital from November 2005 to June 2006. She developed allergies to medication. In 2006 V was required to undergo chemotherapy. As a result of the chemotherapy she developed renal failure.
For the whole of the time that V was in hospital the wife stayed with her, sleeping overnight at the hospital every night except Saturday night when the husband stayed, so that the wife could go home and attend to the other children. Equally, for the whole of the time that V was in hospital and the wife was staying with her, it was the husband who was not only the sole source of financial support for the family but also the only parent available to care for the older children.
In 2007 V was admitted to intensive care suffering from renal failure. She was on life support and the mother again moved into the hospital and cared for V for a period of about seven months. When V was discharged from hospital the mother cared for her at home.
In 2007 V was required to have kidney dialysis at R Hospital three times per week. V could not walk any distance and the mother took V in a wheel chair three times per week for dialysis.
In April 2008 the husband and wife underwent testing to ascertain whether either of them would be a compatible kidney donor for V. The wife was found to be a compatible donor.
On 21 April 2008 the wife underwent a nine hour operation at R Hospital where one of her kidneys was removed and donated to V. Before the operation, V was kept in isolation for approximately two weeks and was required to remain in isolation for about three weeks after the kidney transplant operation because V’s immune system was supressed. The wife was unable to stay with V after the operation because she was herself in intensive care. The husband remained with V. The wife was hospitalised after the operation for about seven days.
V missed a great deal of school during the period of her illness. Effectively, she lost two years of schooling. However she completed her Higher School Certificate in 2010. In 2011 she enrolled an undergraduate degree which she will complete at the end of 2013. V has secured an unpaid internship as part of her course and has told the husband that she is hopeful of receiving an offer of employment.
Throughout the whole of V’s university studies, the wife drove V to university in the morning and picked her up in the afternoon.
The parties separated under the one roof in October 2010. However, the husband remained in the home and did not leave until June 2011.
Until about March 2010 the husband paid $9,000 per month into a St George bank account in the name of the wife from which she paid the mortgage on the U home, the car leases for both of their vehicles and the expenses of the family. Between May and September 2010, he paid a total of $19,400 into the account. After September 2010 the husband ceased making the payments of $9,000 a month and made no financial contribution to the welfare of the family, although he remained living in the home.
The wife refinanced the St George mortgage with Citibank in about September 2010 and borrowed, in addition to the amount required to discharge the St George mortgage, a further sum of $281,000 approximately.
On 15 September 2010 the sum of $220,000 was paid in full satisfaction of all liabilities of the husband to the ANZ arising out of the judgment (including costs) in the Supreme Court litigation. After the ANZ debt was paid out, an amount of approximately $59,000 was left in the account and that amount was used to meet the repayments on the Citibank mortgage.
After the parties separated the wife had no source of income.
The husband remained living in the home, separated, until June 2011.
The additional borrowings from Citibank serviced the mortgage over the U property for about eight months but would not have allowed additional monies for the wife to live on. In February 2011 the wife transferred the balance of her personal Westpac savings account into the Citibank account. In June 2011 she sold an Advanced Alliance investment for $11,802 and deposited those funds in the Citibank account.
In August 2011 the wife, with the assistance of her accountant, Ms D, negotiated with Citibank to suspend mortgage payments on the basis that the U property would be listed for sale.
During the latter half of 2011, the wife sold Westpac shares for a total of $29,469.72. Between November 2011 and July 2012, the wife borrowed $75,000 from friends and it is acknowledged that those monies are required to be repaid.
In October 2011 the wife redeemed an MLC insurance policy receiving $4,421 and applied those funds to family expenses.
In August 2011 the wife received from the local Council a refund of a bond for $7,121, deposited at the time of the renovations to the U property and used those funds for family expenses.
The wife brought an application in the Family Court of Australia seeking the sale of the U property. On 11 July 2011, orders were made for the property to be listed for sale with an agent agreed upon between the parties and at a reserve price agreed upon between them. From the sale proceeds it was ordered that all encumbrances in relation to the U property should be discharged and all current tax liabilities of the husband and the wife were to be paid to the Australian Taxation Office (“the ATO”). The balance was then to be held in a controlled money account.
The property was initially listed for sale with Mr E of Raine and Horne, an agent nominated by the husband. Mr E was unable to sell the property and, after the expiration of his agency agreement, the property was listed for sale with Mr F of LJ Hooker.
Contracts for the sale of the U property were exchanged in April 2012 and settlement took place on 24 August 2012. The amount which was required to pay out the mortgage was $1,421,030.41, of which $121,030.41 was capitalised interest as a result of the non-payment of the mortgage.
On 13 August 2012 orders were made by consent in the Family Court of Australia in relation to the distribution of the proceeds of sale of the U property. The orders provided for the following payments:
1.The amount of $30,000 to be paid to A School in satisfaction of the parties’ debt relating to the education of their daughters.
2.The payment of costs incurred in relation to the presentation of the U property for sale and for agents costs and commission.
3.The payment of $150,000 to each of the husband and the wife, the characterisation of those payments being left to the Trial Judge.
4.“In payment to the Australian Taxation Office (ATO) of the sum of $210,855 in relation to the wife’s taxation liabilities, as assessed as at 11 July 2011, and in payment to the ATO of the sum of $57,822.93 in relation to the husband’s taxation liability as assessed at 11 July 2011.”
The requirement for payment to the ATO on behalf of the wife arose because the husband had distributed to the wife substantial income in previous financial years. The husband had not caused any tax to be paid in relation to that income.
In relation to the payments to each of the parties in the sum of $150,000 it was agreed in the course of the trial that those payments should be characterised as a partial property settlement to each party and that they should not be taken further into account in the Balance Sheet. Accordingly, those monies are to be removed from the Balance Sheet and the assets which were purchased using those monies are similarly removed from the Balance Sheet.
On 3 December 2012 the wife filed an Application in a Case seeking orders for spousal maintenance. On 11 March 2013 orders were made in relation to spousal maintenance by consent and the wife was to be paid $1,000 per week by way of maintenance. The orders provided that the spousal maintenance payment be met from the controlled money account holding the proceeds of sale of the U property. Up to the conclusion of the hearing, $37,000 had been paid to the wife by way of spousal maintenance from the controlled money account.
Since the husband chose not to pay the spousal maintenance from periodic income, he must account to the controlled money fund for the amount of $37,000 paid to the wife on his behalf.
At the conclusion of the proceedings, the wife applied for the release of $100,000 to her from the controlled money account by way of partial property settlement. The husband did not agree to the unconditional release of the funds (although in his application he sought payment to the wife of more than $308,000) and, therefore, that order was not made.

THE ISSUES

At the commencement of submissions, Counsel were invited to settle the list of issues which needed to be determined. The agreed issues are:
·Credit
·The amount of the wife’s initial contribution
·The money provided from the husband’s family at the time of the purchase of P property and U property
·The weight to be given to the wife’s contribution to the welfare of the family, taking into account her having donated a kidney to the parties youngest daughter
·The husband’s allegation that the U property was either sold at an undervalue or that the wife has failed to account for the whole of the proceeds of the sale
·The wife’s assertion that the husband has committed waste in failing to accept a reasonable offer to settle his litigation in the Supreme Court of New South Wales, resulting in his paying some $114,000 together with his own legal fees of $50,000
·The value of the superannuation fund and the manner in which it should be treated
·How the husband’s outstanding taxation debt should be treated
·The husband’s financial position having regard to his lack of financial disclosure

CREDIT

At the commencement of submissions, Counsel for the wife conceded that the facts in this matter would be determined having regard to documentary evidence. He conceded that the wife’s evidence had not been helpful.
The husband’s affidavit evidence was, in large part, objected to and struck out. The husband’s oral evidence was unhelpful, being largely based on what he believed rather than any objective facts. I did not understand Counsel for the husband to contend that his evidence could be relied upon.

THE WIFE’S INITIAL CONTRIBUTION

In her affidavit sworn on 23 August 2013, the wife deposed to savings at the time of the marriage of $35,000, Advance Bank shares and an Advance imputation investment. In an earlier affidavit sworn on 8 June 2011, the wife deposed that, at the time of the marriage, she had savings of $50,000 and shares in St George of $30,000. In cross-examination the wife said that she had purchased the shares about five years prior to the marriage.
When it was pointed out to the wife that the New South Wales Building Society had not been demutualised and become the Advance Bank until June of 1985, and therefore that her evidence in relation to Advance Bank shares must have been in error, she resolutely maintained that she had bought Advance Bank shares for $900 some five years prior to the marriage. Clearly, that is impossible.
Whatever the wife’s assets may have been at the commencement of co-habitation, she clearly did not own shares in the Advance Bank. I accept that she had some savings and she may have had some investment in shares but it is not possible to quantify the amount.
This was but one of the matters which lead the wife’s Counsel to sensibly concede that decisions in these proceedings in relation to financial matters are likely to be based on documents rather than the oral evidence of the parties.

MONEY PROVIDED BY THE HUSBAND’S FATHER AT THE TIME OF THE PURCHASE OF THE P AND U PROPERTIES

It was the husband’s assertion that at the time of the purchase of the P property he had been lent the sum of $200,000 by his father, on the basis that that money would be repaid. The husband further asserted that at the time of the purchase of the U property his father had lent a further amount of $500,000, also on condition that repayment was required. The husband therefore asserted that there was a debt to his father of $700,000 which needed to be repaid.
The wife in cross-examination vehemently disputed the existence of the debt. She did not concede that any monies had been provided by the husband’s family.
Mr Linder Snr (“the husband’s father”) swore an affidavit on 2 October 2013 in which he said, “Initially we paid over the sum of $200,000 for them to purchase a property in [P] and later when they sold that property to buy a property in [U] a further $500,000 was advanced to them.”

The husband’s father caused a letter to be written to the husband and the wife on 4 November 2010 (after the parties had separated) demanding repayment of the sum of $700,000.
In his affidavit, at paragraph 9, the husband’s father says:
That letter was written on my instructions. On reflection I am now of the view that the initial $200,000 was a gift to [the husband] on the occasion of his marriage, and its timing was more specifically related to the time of the purchase. We subsequently, but before the payment of $500,000, gave an equivalent amount (approximately $200,000) to our other son … to assist in the purchase of a business.
The husband’s father in his affidavit sought repayment of the sum of $500,000.
There is no admissible evidence to establish that the sum of $500,000 was lent to the parties. No evidence has been led about any conversations which took place between the husband and his father at the time of the advance. The loan is not documented.
I am not able to find that the monies which the husband and his father assert were advanced for the purchase of the U property in the sum of $500,000 were a loan.
However, despite the wife’s denials that the money had ever been advanced, a letter was written by her then solicitors in response to the letter of 29 November 2010 from the solicitors for the husband’s father. In that letter the solicitors replied:
Alleged debt due to Mr [Linder Snr]
Our instructions are that there is no debt to your client in relation to the advances made in the sums of $200,000 and $500,000. Those amounts were given to our client and [the husband] and the gifts gratefully acknowledged at the time by them.
I do not accept the evidence of the wife that those letters were written without her instructions. That is inherently improbable.
At the time of the purchase of the P property there was a shortfall between the purchase price and the amount available to the parties by way of mortgage of approximately $130,000. There is no explanation given by the wife for the source of the balance of funds required for the purchase and, in those circumstances, it is likely that the balance of the funds came from the amount of $200,000 which she, in her solicitor’s letter, acknowledged to have been advanced.
Similarly, at the time of the purchase of the U property there is no other explanation for the shortfall between the monies available to the parties from the mortgage and the balance of the sale proceeds of the P property and the purchase price of the U property, other than that the husband’s father advanced the funds.
I am comfortably satisfied that the husband’s father gave $700,000 to the parties: $200,000 in 1984 and $500,000 in 1990.
Contributions were also made by the wife’s family on behalf of the wife. In 1990 the wife’s parents paid $50,000 for a new kitchen to be installed in the U property. From the time of the marriage, the wife’s grandmother gave the wife $150 per week for a period of about six years.

SALE OF THE U PROPERTY

The property was sold pursuant to orders of the Court. The sale was necessary because neither the husband nor the wife was paying the mortgage payments and the provision for interest which had been included in the loan facility had been exhausted.
Both of the selling agents who were engaged to sell the property swore affidavits in the wife’s case. The agencies are well known national franchises.
The husband requested a registered property valuer, Mr S, to value the U home at the time of the sale. The evidence does not establish whether Mr S valued the property before the sale or recently. The husband did not seek the leave of the Court as required by the Rules to rely on the affidavit of Mr S. Counsel for the wife objected to its receipt into evidence and it was not admitted. The husband, in his affidavit, says of the valuation prepared by Mr S:
It is a significantly higher value than what the house was sold for and I strongly believe that some arrangement was made between Mr. [F] and my Wife so that the house would be shown as sold at a lower price than it’s (sic) true value, and that my Wife has in some way profited from the sale which she has not disclosed.
Taken at its face, the husband’s assertion that the wife, the real estate agent, and presumably the purchaser, conspired to commit fraud is a serious allegation. The husband in cross-examination said that he was well aware of the obligations of a legal professional not to make an allegation of fraud or a similarly serious allegation unless there was proper evidence to support that allegation. He conceded that he had no evidence to support the allegation which was based entirely, he said, on his belief. In his oral evidence he said that he believed it was the wife who had received the undisclosed money from the sale and, in the Balance Sheet, he sought that the sum of $600,000 be added back.
Not only is there no evidence to support the husband’s very serious allegation but his willingness to make such an allegation, and to maintain the allegation in cross-examination, is one of the matters which give cause for concern in relation to his credit.
The witnesses in the wife’s case, Mr F and Mr E, the two agents who were contracted to sell the property, both swore affidavits but were not required for cross-examination.
It was the unchallenged evidence of Mr E that between 27 October 2011 and December 2011 the U property was presented for open house and other inspections. Mr E said that the wife went to significant effort to present the property well. Mr E said that, whilst there was positive feedback concerning the size of the home, the layout and the location, there was comment about less attractive features of the property. As at October 2011, Mr E had listed the property at about $4 million based upon previous comparables.
Throughout the period of the agency agreement with Mr E, only one contract was issued in relation to the property to a purchaser who expressed interest at about $3.3 million. However, the purchaser did not pursue the matter and did not make an offer. Mr E deposed to having kept the husband updated with the marketing campaign. Mr E was unable to sell the property. Mr E is a real estate agent with 15 years’ previous experience in the Eastern Suburbs market and, in his affidavit sworn on 6 August 2012, he expressed the view that prices in Suburb U had dropped between 10 per cent and 20 per cent in the last 12 to 18 months.
The matter was next listed with Mr F. In the agency agreement Mr F quoted a price of $3.7 million to $4 million of his estimate of the likely selling price achievable for the property. In his affidavit sworn on 14 June 2012, Mr F says:
It became clear soon after we commenced marketing the [U] property, on or about 8 February 2012, that the property would not fetch a price anywhere near the $3.7 to $4 million that we were quoting. On this basis, we wrote to [the wife] on 17 February 2012 requesting that she lower the price quoted in the ‘expressions of interest’ marketing campaign to ‘in excess of $3 million,’
Mr F does not appear to have sent a copy of that letter to the husband.
Mr F marketed the U property on an “Expressions of Interest” campaign for a four week period from 8 February 2012 until 3 March 2012, advertising in multiple newspapers. The property was also listed on major internet websites. After the initial four week campaign, the property was advertised for sale by private treaty from 14 March to 18 April 2012.
Mr F says:
Throughout the period of the marketing campaigns, that is between early February and April 2012, the buyer feedback indicated a huge resistance to the value of the [U] property on the basis of the … tower located next door and also given the brick face of the property.
Mr F issued two contracts throughout the entire period of the marketing campaign. There was only one offer throughout the period of the marketing campaign and that was by the ultimate purchaser of the property. The original offer by the purchaser was $2.8 million, increasing through negotiations to $2.9 million. Mr F says, “There was complete and utter lack of buyer interest, it coming down to the one potential purchaser who made the only offer for the property.”
Mr F in his affidavit says:
There is no doubt in my mind, after 26 years’ experience in the industry, that if this property were still on the market now, it would sell for even less than its achieved sale price of $2.9 million. The present market is the worst market that I have experienced in my 26 years in the industry.
Mr F went on to give a number of sales results which supported his conclusion.
Mr F in his affidavit says:
There is no doubt in my mind, based on 26 years of experience in the industry, that [the wife] was fortunate to achieve $2.9 million for the [U] property in the current market.
Whatever may be the husband’s beliefs, I accept the evidence of the wife, Mr E and Mr F that the property was sold for the best price achievable at the time.
The husband alleges that the wife sold the U property, which was registered in her name, at an under value or, in the alternative, that she and the agent and the purchaser colluded or conspired to conceal the true purchase price from the husband and that she received $600,000 more than she disclosed.
Despite the serious nature of the husband’s allegations, the two agents were not required for cross-examination and thus those allegations were not put to either of them. I also note that the husband’s allegations were not put to the wife. Those were, no doubt, forensic decisions made by his Counsel and, with respect to her, appropriately and consistently with her obligations to the Court.

WASTE

The proceedings which give rise to the assertion of waste were heard in the Supreme Court of New South Wales. In the judgment at paragraph 1 the Trial Judge says:
The proceedings before the court are brought by the Australia and New Zealand Banking Group Limited seeking to recover repayment of loans said to have been made to the defendant Mr [Linder] at relevant times, a [legal professional] in New South Wales.
The Bank claimed from the husband the sum of US$145,892.82 together with interest and costs.
The husband defended the banks claims on a number of bases.
By letter dated 31 March 2009 the plaintiff served an offer of compromise upon the husband. The offer was that the plaintiff would accept the sum of US$75,000 exclusive of costs in full and final settlement of its non-costs claim against the defendant.
In cross-examination the husband conceded that the Australian dollar equivalent was $108,000.
The husband rejected the offer of compromise.
In his judgment the Trial Judge, in relation to the offer of compromise, says at [88]:
88.The offer of compromise was accompanied by a detailed letter which went into chapter and verse of the reasons why the bank contended that each of the defendant’s allegations were and could not be substantiated. Importantly the letter further addressed the duties of the court where a solicitor of the Supreme Court is concerned: that is to suggesting that there was no reasonable basis for the defendant to swear an affidavit deposing that the allegations of fact contained in the affidavit were true. In the same letter ANZ’s solicitors referred the defendants’ solicitors to section 345(1) of the Legal Profession Act 2004 which states:
A law practice must not provide legal services on a claim or defence of a claim for damages unless a legal practitioner associate responsibly for the provision of these services concerned reasonably believes on the basis of provable facts and a reasonably arguable view of the lord (sic presumably law) that the claim or the defence (as appropriate) has appropriate prospects of success.
89.For the reasons detailed by ANZ’s solicitors in the above letter they expressed the view that they did not believe that a legal practitioner could form such a belief in relation to the proposed amended defence.
90.In all of the circumstances the principled exercise of the relevant discretion is to order that the defendant pay the plaintiff’s costs of the proceedings on the ordinary basis up to 31 March 2009 and on an indemnity basis from 1 April 2009.
At all relevant times the legal firm acting for the husband in the proceedings was Z Firm, the practice of which he was the principle.
In cross-examination before the Trial Judge, the husband conceded that he understood that he would be personally liable to pay the loan to the ANZ. He was asked, “… if the partnership for one reason or another did not repay the loan, you knew that it was you that was going to have to repay it” and he answered, “as a person of last resort, yes”.
On behalf of the husband, a number of defences were raised. It is not necessary here to examine each of the defences and it suffices to say that each defence was rejected by the Trial Judge. Specifically, however, the Trial Judge rejected the evidence of the husband that he was unaware of certain communications from the solicitors for the ANZ about the debt and the necessity for its repayments. At [55] of the judgment the Trial Judge says:
55.Whether or not [the husband] knew of these communications, or attempted communications, need not necessarily be decided. However, I accept that on the balance of probabilities would seem unlikely that there was a comedy of errors of such proportions as to permit a finding that he was in fact unaware. In any event and even if he knew of none of them, which is unlikely, he did know that he had not repaid his loans and he did nothing to contact ANZ to determine of discuss the position. It is the debtors obligation to pay a debt, not the creditors obligation to demand payment.
The Trial Judge went on to say, “The present case involves little, if anything, more than a standard commercial transaction in which a sophisticated borrower does not wish to repay his loan.”
The case which has come to define the scope of “waste” in the family law context and which is viewed as establishing legal “guidelines” for this Court is the frequently cited case of Kowaliw and Kowaliw (1981) FLC 91-092 (“Kowaliw”).
In Kowaliw, Baker J made the following comments on the topic of “waste” at 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of 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.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec. 75(2)(o) to applications for settlement of property instituted under the provisions of sec. 79.
At 76,644 of Kowaliw Baker J reiterated his earlier comments by stating:
If a party has acted in a manner to which I have referred earlier… then such conduct in my view and the economic consequences that flow therefrom are clearly matters to which the Court may have regard pursuant to the provisions of sec 75(2)(o).
I do not consider that the husband’s actions in defending the claim by ANZ for repayment of money which he had borrowed in the full knowledge that he would be required to make repayment, even as a person of last resort, comes within that category of behaviour which could be described as “a project which has failed”, to use the expression used by the Full Court in Browne BJ and Green NL (1999) FLC 92-873 (Lindenmayer, Finn and Holden JJ). There can be no suggestion that the wife was a willing participant.
Rather, I find that the husband’s conduct in pursuing the Supreme Court litigation and in refusing the offer of compromise, which had the effect of causing payment to ANZ of $114,000 in excess of the payment he would have been required to make if the matter had settled according to the offer of compromise, comes within the category of acting “recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value”.
The money used ultimately to discharge the liability to the ANZ was borrowed and secured against the U property and had the direct effect of reducing the equity in that property.
This is a matter to be taken into account when assessing the appropriate adjustment pursuant to s 75(2).

THE SUPERANNUATION FUND

In 1995 the husband and the wife had established the “C Superannuation Fund” (“the Superannuation Fund”). The husband and the wife were the trustees of the Superannuation Fund and the assets of the fund, according to the husband, were comprised of publicly listed shares and cash in a Macquarie Bank account. The most significant asset of the fund was shares in Argo Limited (“Argo”), which were held in a number of different parcels. There is a dispute between the parties as to whether all of the Argo shares were assets of the Superannuation Fund and that issue will be discussed later in these reasons.
No audited accounts have been prepared for the Superannuation Fund since the end of the financial year 30 June 2007.
The husband in his affidavit sworn on 2 October 2013 says
Since the inception of the Superannuation Fund there has not been any contribution whatsoever by any employer on behalf of my wife and at no stage did my wife ever take an interest whatsoever, in the assets or operations of the Superannuation Fund or make any contribution towards it administration and management.
Thus, it is clear that, whatever may have been done, or failed to be done, in relation to the Superannuation Fund, the husband alone is responsible.
On 13 August 2012 the Family Court made orders by consent in relation to the Superannuation Fund to the following effect.
3.That forthwith a new accountant and a new auditor be appointed for the [C] Superannuation Fund and to advise the same:
3.1The wife shall within 7 days nominate three accountants and three auditors to the husband who shall within 7 days thereafter select one each of those nominated;
3.2In the event that the husband does not make any selection in accordance with order 3.1, the wife shall be at liberty to nominate the accountant and auditor to be appointed;
And the husband and the wife shall do all things necessary to appoint and instruct the persons appointed pursuant to this order to thereafter act as accountant and auditor for the fund pending further order.
As a consequence of this order, Ms D, a chartered accountant and superannuation fund auditor, was appointed to enquire into the Superannuation Fund. For the purpose of her report filed under an affidavit sworn 16 August 2013, Ms D reviewed the audited 2007 Financial Statements of the Superannuation Fund which showed the assets of the Superannuation Fund to be $568,502 comprised of shares in listed companies and a parcel of shares in a non-listed company. Ms D said that based on the 2007 Financial Statements the wife’s entitlement to the Superannuation Fund as at 30 June 2007 was $132,972 and the husband’s entitlement was $435,530.
Ms D was not provided with, and had not been able to obtain, any documentary records to indicate whether any assets of the Superannuation Fund had been sold or whether any further assets had been acquired.
Ms D was asked to advise whether the Superannuation Fund was compliant. In her report dated 22 November 2013 Ms D says:
Based on the information we have before us, there are clearly significant concerns regarding the compliance status of the fund. The information we have reviewed, does not constitute accounting records, nor does it satisfy any tests which could be construed as ordered evidence. So the opinion expressed here is qualified.
From reading Mr T’s affidavit, although [the wife] was and still remains a trustee of the fund, all references for queries have been directed toward [the husband] and as it is apparent that [the wife] has not been consulted and the instructing party and source of all information, is [the husband].
I am aware that there have been repeated requests to [the husband] to provide information for the fund to [the wife’s] solicitors to fulfil the family law disclosure requirements. It is my understanding that these requests have been ignored.
I am of the view however, that it is not unreasonable to suggest that based on the information I have reviewed the fund has a very high risk of being in breach of the following sections of the SISA and these breaches, if proven, would be included in annual ACR’s
·Section 35A and 35B – requires the trustees to (sic) accounting records for a minimum of five years and must prepare and maintain. Clearly given that there are no audited financial statements prepared since 2007, nor any income tax returns, the trustees have not fulfilled their responsibilities with regard to this fund.
·Section 52(2)(d) – requires that the assets of an SMSF must be held separately from any assets held by the trustee personally or by a standard employer or an associate of the standard employer.
·Section 65SISA – trustees must not loan monies to a member or a relative or related parties.
oIn the 2007 (sic) there was a loan to the [C] Investment Trust, which had been in existence during the 2006 year and was being repaid.
oIn [the husband’s] affidavit – paragraph 8.5 advised “the Argo shares held since their respective purchase by the superannuation fund in four parcels”.
·From the subpoena records reviewed and from the affidavit of Mr [T] (annexure H) it appears that there are three parcels of Argo Investments Limited shares held in either the trustee’s name or jointly. A forth parcel held in the name of [Mr Linder Snr]. It is understood this is [the husband’s] father.
·There is a question as to the quantum of those shares held by [Mr Linder Snr]. Mr [T’s] affidavit indicates 731 and the subpoena records indicate a substantial additional parcel of 29,383 shares. This clearly needs clarification.
Without the provision of information from [the husband] to the contrary, we can only rely on Mr [T’s] affidavit at paragraph 13, 15, 16 and 17, which clearly indicates that [the husband] was not able to provide sufficient evidence to satisfy the audit evidence requirements to determine exactly what assets are to be recognised as being owned by the fund.
Added to the above queries, we would suggest that the trustees have not attended to their basic duties of preparing an appropriate investment strategy; keeping appropriate minutes and ensuring that the funds trust deed is kept up-to-date.
Based on all these issues it is my opinion that the fund would probably be determined by the ATO to be non-complying in many areas.

Ms D was asked to advise whether or not the Superannuation Fund could be made compliant and if so the potential costs of the exercise. In her report dated 22 November 2013 Ms D said:
A fund cannot be made compliant retrospectively. It is a year by year proposition.
In this case, it is my opinion that the financial loss of $343,240, being my estimate of the taxation impost which the ATO could impose, is too great not to attempt to rectify any and all breaches and present all available information to the ATO to reduce this impact. With this in mind is suggested the following actions be undertaken:
In practical terms the trustees must take all actions and co-operate with the accountants and auditors of the fund to facilitate and prepare all outstanding actual financial and taxation reporting lodgements requirements.
The trustees must take actions to rectify any matters which can be rectified, prior to the finalisation of the annual reporting and lodgements. This would at least provide the ATO with some evidence of intent by the trustees that they want to fulfil their obligations.
Finally the advisors should then make submissions to the ATO regarding the sanctions to be imposed. It is my suggestion that we seek to wind up the fund, given the individual members have both achieved ages which are recognised as sufficient to have achieved a “condition of release”.
Ms D estimated that the cost of the work which would need to be done would be approximately $63,000.
The husband’s accountant Mr T swore an affidavit on 2 October 2013. In his affidavit Mr T says at paragraph 13:
With regard to the [C] Superannuation Fund (the fund) we, as their newly appointed accountants and auditors of the superannuation fund, have reached an impasse in preparing audited financial statements for the fund for 2008 (the funds 2007 accounts were prepared and audited by the previous accountants) due to the lack of evidence around the ownership of certain shareholders and as to whether they were inside or outside the superannuation fund as well as some other miscellaneous queries …
Mr T went on to say:
19.A new deed was prepared to allow for the commencement of that pension so that [the husband] could then access the superannuation funds and draw down on the balance from his share of the fund’s assets (refer to member statements per financial accounts per annexure H). The old deed did not allow for the fund to make market linked pensions post 1 July 2007, the type that [the husband] would have to commence. Unfortunately I understand from [the husband] that [the wife] would not sign this new deed nor agree to it, and so it did not progress any further. To this date without a court order in accordance with the SIS Act Rules the superannuation funds cannot be accessed as the deed does not permit it.
20.As a result of the above [the husband] has been unable to access the superannuation fund and draw a pension to supplement any income he received from the business at a time when I observed things were becoming very tight and his expenses such as legal, rent, accounting and other business costs have been mounting and income earned has also been failing. He is still not able to access the superannuation fund for a pension because I believe [the wife] has not signed the new deed or any other legal document associated with the superannuation fund which would otherwise allow [the husband] to commence a pension from it. The other matter is that the fund’s most recent accounts at income tax return are now considerably out of date and so the regulator the ATO may also not permit the commencement of a pension until such time as these are up to date. [The husband] has no control over having these prepared up to date. My understanding according to the correspondence and from [the husband] is that we no longer act as accountants and auditors of the fund. Herein lies the impasse for [the husband].
As a result of the agreement reached between the parties in the course of the hearing the wife’s entire interest in the Superannuation Fund will be transferred to the husband. The husband will then indemnify the wife in respect of any financial consequences of her having been a member of the Superannuation Fund.
It would appear from the affidavit of Mr T that he does not share the concerns raised by Ms D as to the Superannuation Fund’s non-compliant status or the financial penalties which might be imposed by the ATO as a result of that non-compliance.
It was made clear by the husband’s Counsel in submissions that if the husband were to take the whole of the Superannuation Fund then he did not wish to be fettered in any way as to the appointment of accountants or his management of the Superannuation Fund. Accordingly the Court cannot assume that the accounts of the Superannuation Fund will be brought up-to-date in the manner in which Ms D has suggested or that the penalties which Ms D has referred to as potentially being imposed will occur.
Additionally, according to Mr T’s evidence it is likely that the husband will be able to have access to the Superannuation Fund in order to draw a pension to supplement his income. In those circumstances the Court must regard the Superannuation Fund as a valuable asset in the hands of the husband and cannot assume that its current state of disarray will have the consequences that Ms D predicts.
If it were the case that the Superannuation Fund will still, in the husband’s hands, be depleted in some way by the consequences of the ATO finding it to be non-compliant at some time in the future, then that is a consequence of his, and only his, failure to properly manage the Superannuation Fund and should not be visited against the wife.
In all of those circumstances the Superannuation Fund will be an asset of the husband at the value ascribed to it by Ms D.
There is a dispute between the parties as to the value of the Superannuation Fund which relates to the shares in Argo Investments Ltd. The husband contends that a parcel of 22,322 shares is owned by the Superannuation Fund. The wife contends that the shares are owned by the parties jointly.
Ms D, who was appointed by the Court to be the accountant for the Superannuation Fund, could find no evidence that the shares were held on behalf of the Superannuation Fund. They are owned jointly by the husband and the wife. Ms D said, and I accept, that, in order for the shares to be held in the Superannuation Fund, there would need to be evidence of the source of the purchase money and the records must show that the shares are held “on account of” or “on behalf of” the Superannuation Fund.
There is no evidence of the source of the funds used to purchase the shares. The shares are held by the parties without any notation that they are held other than beneficially.
I do not understand the husband’s accountant Mr T, to assert that the shares are owned by the Superannuation Fund. I accept the evidence of Ms D that the shares are the asset of the parties.
Therefore the value of the Superannuation Fund is calculated without reference to those shares.

THE HUSBAND’S FINANCIAL POSITION

The husband did not file an up-to-date Financial Statement in the proceedings. The case outline document prepared by Counsel indicated an intention to seek leave to file a Financial Statement. However, no such leave was sought and no Financial Statement was filed.
It was left to the wife to put evidence before the Court about the husband’s financial position and her ability to do that was limited to her access to documents which were either disclosed by the husband or produced on subpoena.
It was the wife’s contention that the husband had failed to disclose documents requiring her to issue subpoenae to bring the necessary and relevant evidence to Court.
What the husband did not disclose, and the wife did not discover, was evidence about the current position of the husband’s legal practice.
Thus the Court was left with no satisfactory evidence about the husband’s actual income from his legal practice or his necessary expenses. Similarly, the Court was not told by the husband what work in progress he had or the value of that work. Evidence of the husband’s debtors was obtained by the wife and tendered.
I am left in the unsatisfactory position of having to determine what the husband’s financial position is without any assistance from him.
It is not asserted on behalf of the wife that the husband has assets of substance apart from the legal practice and his interest in the Superannuation Fund.
The parties agree that the practice of Z Firm, which is the practice run by the husband as a sole trader, has no saleable value.
However, the practice provides the husband with an income. The wife tendered the tax returns for the husband, the wife and the Investment Trust for the financial years ended 30 June 2007 to 2011 inclusive. Income from the practice was distributed to the wife, the husband and the children. Neither the wife nor the children had any other source of income in the relevant period. There is no evidence of the husband’s income for the years ended 30 June 2012 and 2013.
The taxable income disclosed for the husband, the wife and the children (through the trust) is:
2007  $413,288
2008  $433,373
2009  $258,837
2010  $291,274
2011  $    2,713
The parties separated in October 2010 but it is to be remembered that the husband remained living in the U property until June 2011, almost the whole of the 2011 financial year.
The wife tendered documents to show that the bankings for the practice, variously into accounts in the name of Z Unit Trust, Z Pty Ltd for the financial years ended 30 June 2008 to 31 October 2013 were:
3 March 2008 to 30 June 2008                 $400,325
30 July 2009 to 30 June 2010
(11 months)$629,285
1 July 2010 to 30 June 2011  $733,116
1 July 2011 to 30 June 2012  $682,751
1 July 2012 to 30 June 2013  $625,602
1 July 2013 to 31 October 2013               $335,074
There is no explanation from the husband for bankings in his business in the year ended 30 June 2011 of $733,166, producing a taxable income in his hands of $2,713.
The husband has not lodged returns for the years ended 30 June 2012 and 2013.
The wife tendered documents to show the husband’s practice debtors. The debts are an asset of the husband. In the financial year ended 30 June 2012, the husband wrote off debts of $128,646. The Aged Matter Balances report for the period ended 30 June 2012 showed a final balance of $656,234. Making allowance for the doubtful debts written off, the debts represented an asset of some $527,600.
Thus in the financial year ended 30 June 2012, in addition to income of $682,751 banked in the account of the practice, the husband had debtors who owed a further amount of $527,600.
For the period 1 July 2012 to 30 September 2012, the Aged Matter Balances report discloses debts owing to the practice of $587,263. For almost the same period, the practice banked $335,074.
The up-to-date Aged Matter Balances report must have been available. If it had not already been prepared, it must at least have been available with very little effort on the part of the husband. No attempt was made by him to put that very relevant material before the Court.
No attempt was made by the husband to account for unbilled work in progress which is also an asset in his hands.
The husband has made no attempt to give any financial disclosure of the income of his practice, let alone full and frank disclosure.
Both Mr T for the husband and Ms D for the wife prepared an analysis of the husband’s outstanding tax liabilities. They are not in dispute as to the amounts.
It is clear from Mr T’s analysis that of the $380,963 owed to the ATO at the date of his report, interest totalling $95,956 accrued after separation. Further interest has accrued after the date of Mr T’s report.
Ms D in her oral evidence referred to an amount outstanding for GST in the sum of $66,000. Ms D said that she was unable to reconcile the GST debt of $66,000 with an Australian Business Number (“ABN”) referable to the husband’s business enterprise and could not identify the business to which the ABN, referable to the GST debt, was attached.
No attempt was made by the husband to remedy this difficultly. The relevant documents must be in his possession. He cannot claim, before the Court, that the debt is a joint debt arising out of the business that provided the income for the family, and at the same time be unable to identify the business whose operation gave rise to the debt.
Ms D, in her affidavit, sets out her analysis of the husband’s outstanding tax as follows:
General Interest Charges (“GIC”) payable after remittances for
the period 2003 to 30 June 2011 $181,150
GIC per the period 1 July 2011 to date $ 95,956
GST for a business which Ms [D]is unable
to identify$ 66,000
TOTAL$343,106
The husband tendered a print out from the ATO portal showing a total outstanding at 2 December 2013 of $392,030.
In his affidavit sworn on 2 October 2013 at Paragraph 22.1 the husband deposes that the tax debt “is a liability which is directly referable to income that has been expended for the benefit of the whole family during the marriage”.
That is not consistent with his assertion in the next paragraph that the tax liability arose:
…largely as a result of some prior year investments made by me on the advice of my then accountants [named] into certain retirement villages, in respect of which deductions were subsequently denied by the Commissioner.
In relation to the debt owed to the ATO, Ms D comments:
I have reviewed [the husband’s] affidavit and I am aware from Paragraph 22.3 thereto that [the husband] is in the process of negotiating the (“ATO”) in relation to his taxation liability. I can ascertain from the [T] reconciliation that there has been a total of $99,588.68 of GIC remitted by the ATO to date. On this basis I cannot regard the amount payable in the [T] reconciliation as anything other than a contingent liability, given the possibility that further remissions of GST may be obtained from the ATO.
Ms D was not challenged in relation to this evidence.
The husband asks the Court to find that his outstanding tax liabilities, which result from penalties and interest and GST unpaid, should be treated as a debt of the parties and paid from the controlled money account.
In so far as the liability arises from the period when the parties lived together, the wife’s evidence was that the husband stopped making significant contributions to the household finances, including the mortgage, in March 2010. He paid $2,000 into her account in May 2010 and $7,000 in June.
As at the end of 2010, the liability to the ATO stood at $358,976. However, that sum included the GST debt to which I have previously made reference.
Some difficulty is created by the fact that the ATO portal uses calendar years, whereas the husband’s income (insofar as it can be calculated) is calculated using the financial years in the tax returns and the business records.
In the financial year ended 30 June 2011(which included part of the period from March 2010 when the husband stopped contributing to household expenses, to the time he actually left the home in June 2011), the husband’s business banked $733,116 and his taxable income was $2,713. He has made no attempt to explain how that could be so. None of that money was available to the wife. The ATO portal records no payments in the calendar year 2011 to the Integrated Client Account and a repayment of $16,000 to the Income Tax Account. How the income of the business was disbursed is entirely unexplained. Why the income of the business could not be used to reduce or repay the husband’s tax liability is unexplained.
In the financial year ended 30 June 2012 the husband’s business banked $682,751. He has not lodged a tax return for that year. In the calendar year 2012, the ATO portal shows no payments.
In the financial year ended 30 June 2013 the husband’s business banked $625,602. He has not lodged a tax return for that year. In the calendar year 2013 the ATO portal shows payments of $58,603.67.
Since the husband stopped contributing to household expenses, he has retained for his own use the income generated from his legal practice. He has given no evidence in relation to that income which would assist the Court to understand what he earned and why he was not able to pay at least some of his tax liability. Between 1 July 2010 and 31 October 2013, the legal practice banked $2,376,543. No attempt has been made by the husband to explain what that money was used for or where it went.
The onus lies with the husband to explain why he was unable to pay his tax as it fell due in circumstances where his taxable income for the financial years 2007 to 2010 inclusive totalled $1,396,772. In those years, the husband had the benefit of the income and, insofar as the tax was not paid, had the benefit of those funds as well. If the husband had evidence which explained his failure to pay tax in the years before 2010 then he ought to have brought the evidence before the Court.
I note, in addition, that from the proceeds of the sale of the U property the husband received a partial property settlement of $150,000 and a further amount of $57,000 was paid to the ATO, being the amount of the husband’s primary tax then outstanding. No attempt was made by the husband to explain what was done with the partial property settlement.
To allow the husband to include his tax liability as a joint debt in the Balance Sheet, in circumstances where his income from 1 July 2011 has not been accounted for, would be an injustice to the wife.

THE ASSETS AND LIABILITIES OF THE PARTIES

On the second day of the hearing the parties tendered a Joint Balance Sheet which set out their various contentions as to their assets and liabilities. It was necessary to determine some of the issues that were raised in order to make findings about their respective contentions.

Ownership		Description	Wife / de facto partner’s value	Husband / de facto partner’s value
1.	H/W	Controlled Moneys Account	$ 793,299	$ 793,299 E
2.	W	Household furniture	$ 5,000	$ 87,000
3.	H	Household furniture	$ 5,000	$ $2,000
4.	W	Artwork (in Wife’s possession)	$ 7,630	$ 50,000 E
5.	H	Artwork (in Husband’s possession)	$ 50,000	$ 5,000 E
6.	W	Personal jewellery	$ 13,590	$ ($200,000)
7.	H/W	Contents of former safety deposit box	$ NK	$ 200,000
8.	W	Car VW Golf	$ 15,000	$ 23,000
9.	W/H	IAG shares (395 shares)	$ 2,382	$ 2,382
10.	H	Business – [Z] Pty Ltd	$ NIL	$ NIL
11.	H	Mercedes [motor vehicle]	$ 40,000	$ 28,200
12.	W	Bank account balance – Westpac a/c …38	$ 10,446	$ NK
13.	H/W	Argo Investments Ltd Shares (22,322 shares)	$ 160,495	$included in superannuation
14.	H	NAB Account (…58)	$ 1,500	$ 900
15.	H	NIB Shares (3,800 shares)	$ 9,500	$ 6,251
16.	H	Guiness Peat Group Pty Ltd (5,736 shares)	$ 3,011	$ 3,209
17.	H W	Wine Collection Wine Collection	$ NIL	$ NIL $ 38,400
18.	W	Bank account – controlled moneys	$ NIL	$ 52,000
19.	W	Bank account – Westpac a/c …29	$ 1,199	$ NK
20.	W W	Maple Brown Abbott Investment … Council Rebate	$ 595 $ NIL	$ NK $ 7,000

Total

$ 1,118,647

$ 2,084,940+ Wife’s numerous accounts not disclosed

ADDBACKS
21.	H	ANZ Liability & associated costs	$ 114,179	$ NIL
22.	H	American Express totalling $38,000 paid by husband	$ NIL	$ 38,000
23.	W	Partial payment to the Wife	$ 98,000 Subject to Trial Judge’s discretion	$ 150,000
24.	H	Partial payment to the Husband	$ 150,000 Subject to Trial Judge’s discretion	$ 150,000
25.	W	Sale of Westpac shares	$ NIL	$ 40,000
26.	W	Sale of former matrimonial home – alleged by Husband as under market value	$ NIL	$ 600,000
27.	W	Husband clothing purchases – alleged by Husband due to Wife withholding belongings	$ NIL	$ 6,800
28.	H	Gift of $200,000 and a loan to be repaid of $500,000 by Husband’s father totalling: $700,000	$ NIL

Total

$ Subject to Trial Judge’s discretion

$ 1,646,800

LIABILITIES
29.	W/H	GE payout – Mercedes	$ 37,626	$ 52,264
30.	W	St George Bank a/c …05 (overdrawn)	$ 10,715	$ 6,021
31.	W	Personal loans – sourced from personal friends – December 2011/March 2012/July 2012	$ 75,000	$ NIL
32.	W	Credit card – Westpac Visa	$ 1,513	$ 1,967
33.	W	David Jones store card	$ 4,192	$ 5,200
34.	H	Taxation Liability	$ NIL	$ 340,770
35.	H	St George Visa Card	$ NK	$ 37,830
36.	H/W	G Pharmacy American Express paid out by husband	$ NIL	$ 1,795 $ 38,000
37.	H	Motor vehicle repairs	$ NIL	$ 2,000
38.	H	Loan from Mr Linder Snr	$ NIL	$ 500,000

Total

$ 129,046

$ 645,077

SUPERANNUATION
Member		Name of Fund	Type of Interest	Wife / de facto partner’s value	Husband / de facto partner’s value
39.	W	C Superannuation Fund	Self-managed Fund	$ 81,403	$ 81,403
40.	H	C Superannuation Fund	As above	$ 266,770	$ 266,770

Total

$ 348,173

FINANCIAL RESOURCES
Ownership		Description	Wife / de facto partner’s value	Husband / de facto partner’s value
41.	W	C Investment Trust	$ NK	$ NK
42.	H	C Investment Trust	$ NK	$ NK

Total

$ NK

The items in the Balance Sheet which are disputed will be dealt with using the numbering used in the Balance Sheet.
2. Wife’s furniture
There is no evidence of the value of the furniture. In particular there is no evidence to support the husband’s contention of $87,000. The wife makes an admission against interest of a value of $5,000. There being no other evidence, that value will be adopted.
3. Husband’s furniture
There is no evidence of the value of the furniture. In particular there is no evidence to support the wife’s contention of $5,000. The husband makes an admission against interest of a value of $2,000. There being no other evidence, that value will be adopted.
4. Artwork in wife’s possession
There is no admissible evidence of the value of the artworks. In particular there is no evidence to support the husband’s contention of $50,000. The wife makes an admission against interest of a value of $7,630. That sum, she said, arose from a valuation prepared at her request by Lawsons. A copy of that document was made available to the husband but he did not accept its authenticity or the amount. There being no other evidence, the wife’s value will be adopted.
5. Artwork in the husband’s possession
There is no admissible evidence of the value of the artworks. In particular there is no evidence to support the wife’s contention of $50,000. The husband, in the Joint Balance Sheet, makes an admission against interest of a value of $5,000. There being no other evidence, the wife’s value will be adopted.
6. Wife’s personal jewellery
There is no admissible evidence of the value of the jewellery. In particular there is no evidence to support the husband’s contention of $200,000. The wife makes an admission against interest of a value of $13,590. That sum, she said, arose from a valuation prepared at her request by Lawsons. A copy of that document was made available to the husband but he did not accept its authenticity or the amount. There being no other evidence, the wife’s value will be adopted.
7. Contents of safety deposit box
There is no evidence to support the husband’s contention that the box contained items to the value of $200,000 at any time. The husband gave evidence that he emptied the box in March 2010, prior to separation. Why he then gave authority for his father to open the box or why he or his father continued to visit the box is unexplained. The husband said the box contained nothing but passports. There is no evidence to establish what was in the box or, if anything, its value. That item will be deleted from the Balance Sheet.
8. Wife’s car
The car was bought using the sum of $150,000 received by the wife which, for reasons I will later explain, will be regarded as a partial property settlement. The partial property settlement will be excluded from the Balance Sheet and therefore the car will also be excluded.
11. Husband’s Mercedes
There is no evidence of the value of the vehicle. In particular there is no evidence to support the wife’s contention of $40,000. For the reasons I have explained when dealing with the loan for the vehicle at item 29, I propose to disregard both the value of the vehicle and the amount of the loan. This item will be removed from the Balance Sheet.
13. Argo Investments Ltd shares (22,322)
For the reasons I have already explained, these shares will be included as an asset of the parties.
14. Husband’s NAB account
There being no evidence of amount held in the account, the husband’s admission against interest is accepted.
15. Husband’s NIB shares (3,800)
There being no evidence of amount held in the account, the husband’s admission against interest is accepted.
16. Husband’s Guiness Peat Group Pty Ltd shares (5,736)
There being no evidence of value of the shares, the husband’s admission against interest is accepted.
17. Wine collection
There is no evidence that any wine exists. This item will be removed from the Balance Sheet.
18. Wife’s interest in controlled money account
There is no evidence of any such account. If the amount is said by the husband to represent the amount of spousal maintenance paid to the wife by the husband then that amount is not an asset. In so far as the spousal maintenance was paid to the wife, not from the husband’s income but from the controlled money account which is item 1 in the Balance Sheet, those monies should be refunded to the controlled money account from any other funds the husband receives.
20. Refund from … Council
The wife gave evidence that she received the refund from the local Council and used it for living expenses. It does not exist as an asset and will be removed from the Balance Sheet.
21. Addback of $114,179 alleged to have been wasted by the husband
It is not necessary to determine whether or not it is appropriate to deal with the issues at items 21 to 28 as “addbacks”. Counsel for the wife conceded that, if the Court were persuaded that the husband had committed waste, then there would be an adjustment pursuant to s 75(2) to take the waste into account. This item will be removed from the Balance Sheet.
22. American Express paid by the husband
There is no evidence to support this contention. The item will be removed from the Balance Sheet. If it is asserted that the payment related to pre-separation expenses of the family, then evidence was required to prove the assertion.
23 and 24. Partial property settlement
Each of the parties received $150,000 by order of the Court, to be characterised by the Trial Judge. They agreed that the sums should be characterised as a partial property settlement and not included in the Balance Sheet.
25. Money received by wife from sale of Westpac shares
The husband seeks to add back $40,000. There is no evidence that shares were sold in that amount. The wife gave evidence that she sold Westpac shares between August 2011 and December 2011 for a total amount of $29,470. She provided documents relating to the sales. She gave evidence that she used the funds to pay for living expenses. This occurred at a time after the husband had stopped contributing to the wife’s expenses or to the expenses of maintaining the home. At the relevant time, the husband was making no payments for the support of the wife. I do not consider that she should be required to bring those funds to account.
26. Sale of former matrimonial at under value
For the reasons I have already expressed this item will be removed from the Balance Sheet.
27. Clothing purchased by the husband after separation
There is no evidence to support this contention and the item will be removed from the Balance Sheet.
28. Gift/Loan from husband’s father
For the reasons I have already expressed, the money given to the parties by the husband’s father will be treated as a contribution on behalf of the husband.
29. GE payout - Mercedes
This is agreed to be a joint liability. There is no agreement as to the amount owed. Either of the parties should have been able to obtain a document to establish the amount but neither did. The safest course is to disregard the loan and to remove the asset to which it relates from the Balance Sheet. Since the husband retains the asset, he will be responsible for the repayment of the debt.
30. Wife’s St George overdraft
There does not appear to be a dispute that the amount owed to the bank should be treated as a joint liability. The debt arose from car leases for both of the parties. There is no evidence of the amount of the liability and I accept the wife’s figure as an admission against interest.
31. Personal loans to the wife by friends
These funds were borrowed by the wife during a period when she was living in the U property. The husband was making no contribution to her expenses or to the expenses of maintaining the property and the husband was retaining for himself the income from the legal practice. It is not disputed that the loans must be repaid from any money the wife receives. They should be treated as a liability for the purpose of the Balance Sheet.
32. Wife’s Visa card debt
There is no evidence that this debt relates to pre-separation expenses. It will be disregarded.
33. Wife’s David Jones account
There is no evidence that this debt relates to pre-separation expenses. It will be disregarded.
34. Husband’s tax debt
For the reasons I have already stated, this debt will be disregarded for the purpose of the Balance Sheet.
35. Husband’s Visa card debt
There is no evidence that this debt relates to pre-separation expenses. It will be disregarded.
36. Joint debt to G Pharmacy
The debt relates to medication for V and will be allowed. The Court proposes to make an order requiring the parties to assume and discharge this liability in equal shares.
36. American Express paid by the husband
For the reasons expressed when dealing with Item 22, this liability will be disregarded.
37. Husband’s motor vehicle repairs
There is no evidence that this debt relates to pre-separation expenses. It will be disregarded.
38. Loan from Mr Linder Snr
For the reasons I have already expressed, this alleged loan will be treated as a contribution and removed from the Balance Sheet.
I therefore find the assets and liabilities of the parties to be as follows:

Ownership		Description	Value
1.	H/W	Controlled Moneys Account	$ 93,299
2.	W	Household furniture	$ 5,000
3.	H	Household furniture	$ 2,000
4.	W	Artwork (in Wife’s possession)	$ 7,630
5.	H	Artwork (in Husband’s possession)	$ 5,000
6.	W	Personal jewellery	$ 13,590
7.	W/H	IAG shares (395 shares)	$ 2,382
8.	H	Business – Z Pty Ltd	$ NIL
9.	W	Bank account balance – Westpac a/c …38	$ 10,446
10.	H/W	Argo Investments Ltd Shares (22,322 shares)	$ 160,495
11.	H	NAB Account (…58)	$ 900
12.	H	NIB Shares (3,800 shares)	$ 6,251
13.	H	Guiness Peat Group Pty Ltd (5,736 shares)	$ 3,209
14.	W	Bank account – Westpac a/c …29	$ 1,199
15.	W	Maple Brown Abbott Investment	$ 595

Total

$ 1,011,996

16.	W	St George Bank a/c …05 (overdrawn)	$ 10,715
17.	W	Personal loans – sourced from personal friends – December 2011/March 2012/July 2012	$ 75,000
18.	H/W	G Pharmacy	$ 1,795

Total

$ 87,510

Thus I find that the net, non-superannuation, assets of the parties are valued at $924,486.

Member		Name of Fund	Type of Interest	Value
19.	W	C Superannuation Fund	Self-managed Fund	$ 81,403
20.	H	C Superannuation Fund	As above	$ 266,770

Total

$ 348,173

The assets to be divided between the parties are the Superannuation Fund, which it is agreed will be retained by the husband and the balance of their property to the value of $924,486.
In addition to the existing assets, it is necessary to make an adjustment to the pool to reflect the fact that the husband has been paying maintenance to the wife by drawing on the controlled money account. The husband has drawn a total of $37,000 from the controlled money account. The Order for maintenance made on 11 March 2013 required the husband to pay to the wife by way of spousal maintenance the sum of $1,000 per week. That payment should have been made from the husband’s income but it was agreed to be paid from assets. Since I have found that the husband has no entitlement to the funds in the controlled money account, he must reimburse the account in the sum of $37,000.
Thus the amount notionally available to be divided between the parties is $961,486 and the Superannuation Fund of $348,173. This creates a total net asset pool, including superannuation, of $1,309,659.

SECTION 79(2)

The parties ask the Court to divide their assets. In circumstances where they are no longer able to use their assets for their joint purposes, that is appropriate. The Court therefore finds that it is just and equitable to make orders altering their interests in property.

CONTRIBUTIONS

The wife had assets in cash and investments at the date of marriage which was also the commencement of co-habitation. I am unable to ascertain what the value of those assets might have been. There is no evidence from the husband of his assets at the time of the marriage. The first property they purchased at Suburb P was purchased using a mortgage and a gift from the husband’s father. The husband does not assert that he had any savings to contribute to that home.
If there was a disparity in their initial contributions, the state of the evidence is that I cannot determine what that was. In a marriage of almost 30 years, that disparity (if there be one) has been rendered minimal by the passage of time and the very significant contributions made by both the parties after their marriage.
During the period that the parties lived together, the wife was the homemaker and primary parent. Although she attempted to give the impression that the husband made no contribution whatsoever to either the home or the parenting of the children, I do not accept that to the true. I accept that the husband contributed as homemaker and as a parent in so far as he was able to, given his long working hours and his overseas travel. In 2006, the wife gave a speech at the husband’s birthday party in which she acknowledged the husband’s contributions as a husband and as a father. Time and bitterness appear to have eroded her then positive attitude towards both.
The husband was the sole income earner and the family was supported by him from his work as a solicitor in the various practices.
There is no doubt that the wife bore the major share of the care of V during her long and extremely serious illness but there is equally no doubt that the husband bore the responsibility of continuing to support the family financially as well as being the only parent available to the two older girls. In his affidavit he deposes to working long hours when V was ill because he had only established a new legal/multi-disciplinary practice within the past month. I accept that the husband, as he asserted, was involved in the decision making with the wife and V’s doctors.
The wife’s contribution of a kidney to V is a contribution that should be recognised in a substantial and significant way. I accept that the husband would have donated a kidney if he had been compatible, but he was not. The wife’s contribution allowed V to live a life which might have been denied to her had the wife not made the contribution that she did. Her contribution to the welfare of the family requires appropriate recognition.
The husband’s father gave the parties $700,000, enabling them to buy the two properties in Suburb P and Suburb U. Against that gift must be balanced the gifts from the wife’s parents and grandmother. The gift of $500,000 was made in 1990 and the wife made significant contributions to the welfare of the family from 2005 until separation which balance, to an extent, those contributions.
The asset pool in this matter is modest. Were it not for the wife’s significantly greater contributions to the welfare of the family, I would have assessed contributions to be 65 per cent to the husband and 35 per cent to the wife. Owing to the wife’s greater contributions to the welfare of the family, however, I assess the contributions to be 60 per cent to the husband and 40 per cent to the wife. This should not be taken as an attempt to ascribe a dollar value to the wife’s contributions but rather an attempt to give proper recognition to two very significant, but very different, forms of contribution.

SECTION 75(2)

The wife is aged 56 years and the husband 62.
The wife has not worked in paid employment since the birth of the first child more than 26 years ago. There is no evidence that she is likely to obtain any employment.
As a result of the proposed superannuation orders, which are agreed, the wife will have no superannuation entitlements and no likelihood, given her age, that she will be able to accrue superannuation.
The husband has worked as a solicitor for more than 30 years. During the marriage he earned substantial income as has been set out earlier in these reasons.
He continues to earn an income from his legal practice but chooses not to inform the Court of the amount of that income. It is, however, significant that in his last filed tax return he disclosed a taxable income of $2,713, when bankings in his business in the year ended 30 June 2011 totalled $733,166. Whatever the income from the husband’s practice may be, he has the ability, on the evidence of the 2011 financial year, to turn that income to his considerable advantage.
His working life is not infinite but he will work for a number of years and, as a consequence of the way he has chosen to present his evidence, it is impossible even to guess what his income might be.
The husband has chosen not to put evidence before the Court of his current financial position. He has an income from his practice, whatever that may be, work in progress and significant debtors which, in September 2012, exceeded $587,000. Those are assets in his possession that were disclosed only as a result of cross-examination.
I also take into account here the husband’s waste of matrimonial assets in the ANZ litigation under s 75(2)(o), for the reasons set forth above.
Where the husband has not complied with his obligation to make full and frank disclosure, the Court need not shy away from a robust exercise of discretion in favour of the wife.
For all of the above reasons, I consider that there should be an adjustment in favour of the wife of a further 20 per cent for s 75(2) factors.

CONCLUSION

Thus the wife will received 60 per cent of the assets. Because, according to Mr T, the Superannuation Fund can be immediately available to the husband insofar as the husband can commence to draw a superannuation pension, I propose to add the value of the fund to the other assets in order to calculate the wife’s entitlements.
The wife will receive 60 per cent of the pool of $1,309,659 or $785,795.

She has assets in her possession valued at $38,460 and liabilities (to friends, to St George Bank and to G Pharmacy) totalling $86,612.50. Thus the wife has a net liability of $48,152.50 and she must receive $834,443.50 to satisfy her entitlement. That will be satisfied by payment to her of the money in the controlled money account of $793,299 and the payment by the husband of a further sum of $41,144.50 (rounded up to $41,142).
The payment from the husband will be secured against the jointly owned shares, which will pursuant to the proposed Orders be transferred to him upon the payment to the wife of the sum outstanding.
Having regard to all of the circumstances of this matter, and placing particular emphasis on the husband’s failure to bring evidence of his financial position, I consider that result to be just and equitable.

I certify that the preceding two hundred and twenty-four (224) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 17 December 2013.

Associate:

Date: 17 December 2013

[2013] FamCA 988

17 December 2013

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Remedies

Costs

Injunction

Fiduciary Duty

Constructive Trust

Res Judicata