Liveson and Zhou (No. 2)

[2019] FamCA 1054

FAMILY COURT OF AUSTRALIA

LIVESON & ZHOU (NO. 2) [2019] FamCA 1054

FAMILY LAW – PROPERTY – Where the parties engaged in an informal property settlement around the time of separation but it was not formalised by a Court – Where both parties did not have significant assets at the start of the relationship – Where since the end of the relationship, the wife has significantly improved her financial position – Where the interests and contributions of the parties were reflected in the informal agreement reached after separation and this largely reflects a just and equitable split of the property of the parties or either of them  – Where the monies the husband received from a superannuation fund are to be treated as a partial member withdrawal and the parties are to otherwise retain their interests in the superannuation funds, businesses, trusts and other property which they have an interest and are to transfer any interest they have in any of the other party’s properties to them.

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

APPLICANT: Mr Liveson

RESPONDENT: Ms Zhou

FILE NUMBER: LEC 610 of 2011

DATE DELIVERED: 27 November 2019

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 29 & 30 April 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Mort
(on 29 April 2019)

SOLICITOR FOR THE APPLICANT: Armour Legal
(on 29 April 2019)

THE APPLICANT: Self-represented
(on 30 April 2019)

COUNSEL FOR THE RESPONDENT: Mr Alexander

SOLICITOR FOR THE RESPONDENT: Somerville Laundry Lomax

Orders

1. That the Applicant husband and the Respondent wife in their capacities as trustees of the Zhou Superannuation Fund forthwith do all things necessary to have the sum of money previously unilaterally withdrawn from the said superannuation fund’s bank accounts by the Applicant husband in the approximate sum of $137,000 treated as a lump sum withdrawal of part of the Applicant husband’s member benefits in the said fund with the balance of his member interest to be calculated having regard to that lump sum withdrawal.

1. That, subject to paragraph (1) of these Orders, pursuant to s 90MT(1)(b) of the Family Law Act 1975 (Cth), whenever a splittable payment becomes payable in respect of the interest held by the Applicant husband in the Zhou Superannuation Fund, the Respondent wife shall be entitled to be paid 100% of that splittable payment and that there be a corresponding reduction to the entitlement the Applicant husband would have received in the Zhou Superannuation fund but for this Order.

1. That paragraph (2) of these Orders binds the trustee/s of the Zhou Superannuation Fund and that Order takes effect from the operative time being the fourth business day after the date of service of a sealed copy of these Orders upon the trustee/s of the said fund.

1. That the Applicant husband shall forthwith take all steps necessary, including by executing any documents necessary and delivering them to the Respondent wife’s solicitors, to transfer the registration of the title to the following listed properties to the Respondent wife as trustee for the Zhou Superannuation Fund:

(i)The real property known as and situate at F Street, G Town in the State of Victoria being the whole of the property described in Land Description Lot … on Plan of Subdivision …; and

(ii)The real property known as and situate at H Street, J Town in the State of Victoria, being the whole of the property described in Land Description Lot … on Plan of Subdivision …; and

(iii)The real property known as and situate at K Street, J Town in the State of Victoria being the whole of the property described in Plan of Consolidation …; and

(iv)The real property known as and situate at L Street, Suburb C in the State of New South Wales being the whole of the property described in Certificate of Title Folio Identifier ….

1. That upon compliance with paragraphs (1) and (4) hereof, the Applicant husband shall forthwith take all steps necessary, including by executing any documents necessary and delivering them to the Respondent wife’s solicitors, to resign as a member and trustee of the Zhou Superannuation Fund.

1. That upon compliance with paragraphs (1), (4) and (5) of these Orders by the Applicant husband, the Respondent wife shall take all steps necessary to transfer, unencumbered, all of her right, title and interest in the real property known as and situate at M Street, G Town in the State of Victoria being the whole of the property described in Land Description Crown Allotment … Section … Parish of G Town to the Applicant Husband and he shall thereafter retain all of that said real property as his property solely.

1. That the Respondent wife shall also retain as her sole property all of her right, title and interest in the real properties situated at P Street, O Town in the State of New South Wales, Q Street, R Town in the State of New South Wales and S Street, Suburb T in the State of Victoria.

2. That the Respondent wife shall forthwith in her capacity as director of U Pty Ltd take all steps necessary to transfer all of that company’s right, title and interest in motor vehicle 1 registration number … to the Applicant husband and he shall thereafter retain that said motor vehicle as his property solely.

1. That the Applicant husband shall forthwith take all steps necessary, including by signing any documents necessary, to authorise the ANZ Bank to deal with all and any funds held in Term Deposit account number …81, in the approximate sum of $243,000 in accordance with the sole direction of the Respondent wife.

1. That the Applicant husband shall forthwith take all steps necessary, including by signing any documents necessary, to authorise the ANZ Bank to deal with all and any funds held in joint account number …59 in accordance with the sole direction of the Respondent wife and such funds shall be hers solely.

1. That the Applicant husband shall forthwith resign as a director of U Pty Ltd.

1. That the Applicant husband shall also retain as his sole property all of his right, title and interest in shares in Section Z Pty Ltd Pty Ltd and the V Group Trust, including in any loan account balances owed to him by either of those entities.

1. That the Respondent wife shall also retain as her sole property all of her right, title and interest in shares in U Pty Ltd, Zhou Investments Pty Ltd, Zhou Investments No. 2 Pty Ltd, the Zhou Family Trust, the Zhou Family Trust No. 2, the Zhou Family Trust No. 3 and all of her superannuation interest in the Zhou Superannuation Fund including in any loan account balances owed to her by any of those entities.

1. That the Applicant husband shall retain as his solely, all his member interest in the W Superannuation Fund and the funds previously withdrawn by him, in the approximate sum of $137,000, from his member interest in the Zhou Superannuation Fund.

1. That the Respondent wife hereby indemnifies the Applicant husband and shall keep him indemnified against any and all liability owed by him to her or by him to any of the corporate and trust entities listed in paragraph (13) of these orders or owed by her or him, either jointly or severally, to the Australian Taxation Office, any other financial institution or any other third party, now or in the future, arising out of the activities of or their involvement in, any of the corporate and trust entities listed in paragraph (13) of these orders, including any personal credit card liabilities in her name.

1. That the Applicant husband hereby indemnifies the Respondent wife and shall keep her indemnified against any and all liability owed by her to him or by her to Section Z Pty Ltd Pty Ltd or the V Group Trust or owed by him to the Australian Taxation Office, any other financial institution or any other third party, now or in the future, arising out of the activities of or his involvement in Section Z Pty Ltd Pty Ltd and the V Group Trust, including any personal credit card liabilities in his name.

1. That each party shall do all acts and things reasonably required by the other party, including the signing or execution of all necessary documents, to give effect to the provisions of these orders within seven (7) days of being requested to do so.

1. That if either party refuses or neglects to sign or execute and return a document that he or she has been reasonably required to sign or execute and return in compliance with paragraph (17) of these orders, then a Registrar of this Court’s Brisbane Registry shall be appointed under s 106A of the Family Law Act 1975 (Cth) to sign or execute such document on behalf of that defaulting party upon lodgement of such document and the filing of an affidavit by a solicitor representing the requesting party in which that solicitor deposes to the said refusal or neglect.

1. That if either party is required to invoke paragraph (18) of these orders to have a Registrar of the Court sign or execute any document that the other party has unreasonably refused or neglected to sign, the defaulting party shall pay the applying party’s costs of and incidental to the application to the Registrar on a party and party basis as agreed or as assessed in accordance with the Family Law Rules 2004 (Cth).

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: LEC 610 of 2011

Mr Liveson

Applicant

And

Ms Zhou

Respondent

REASONS FOR JUDGMENT

1. This is the determination of just and equitable property adjustment orders between a former husband and wife. They married in … 1999, separated in or about October 2007, informally divided their assets at that time, and then divorced in 2012 but did not finalise their property affairs with orders of the Court reflecting their informal division.

1. Then in 2013, the husband applied to the Federal Circuit Court for property adjustment orders and the matter progressed through that Court until it was transferred to this Court in May 2014. For reasons not fully understood by me, the matter did not make it into a Judge’s docket before it came before me on an interim application in September 2018. Gravely concerned about the length of time the matter had been before the Courts, I listed it for trial before me in April this year. Even then, when the matter was called on for trial, a lawyer appeared for the husband and asked for the trial to be adjourned for several more months. I refused that adjournment for reasons I gave at the time, and that lawyer withdrew, leaving the husband without legal representation.

1. The trial commenced the next morning, after I gave the husband some time to prepare. The only witnesses who were required for cross-examination were the husband and the wife. Neither party cross-examined the single expert accountant who had provided valuation evidence in respect of numerous corporate and trust entities of the parties, as well as two self-managed superannuation funds they operated. The trial itself finished in one day.

1. My judgment has been reserved for almost seven months now. I regret that I have not been able to deliver it sooner than this. I attribute this to the responsibility I have had in the meantime to write other reserved judgments and to continue to hear and determine a constant stream of difficult and complex parenting disputes, as well as other property adjustment disputes. I hope that delivery of this judgment permits the parties to finalise their affairs and move on with their separate lives.

A brief history

1. The former couple met when they were studying at a university in Melbourne in 1998. At that time, the husband was 51 years old and not previously married. He is an Australian of European descent. The wife was 34 years old and had been previously married. She is Chinese and was only in Australia on a student visa. She had an eight year old daughter who was living in China.

1. The husband has a number of university degrees and whilst studying he was earning some income providing consulting services. There is no dispute that he had very little in the way of assets and was not earning much income.

1. The wife had studied healthcare in China and had qualified in that country, though her qualifications were not recognised in Australia and she was not able to work here in healthcare when the former couple first met. However, she was working as a healthcare assistant at that time, supporting herself and also sending some money back to China for the support of her daughter. There is no dispute that she also had very little in the way of assets when they commenced their relationship.

1. The former couple commenced living together in Melbourne after they commenced a relationship. They married in … 1999. The wife nevertheless had to return to China and wait there until her spouse residency visa was processed and granted by the Australian Government. In early 2000, her visa was approved and she returned to Australia to live with the husband.

1. The former couple continued to live in Melbourne and the wife continued working as a healthcare assistant whilst studying for exams that she would have to pass in order to achieve registration as a healthcare practitioner in this country. The husband continued to do his consulting work during these years.

1. The wife’s evidence, which I accept, was that she was also undertook most of the domestic work in the households the couple occupied throughout their relationship without much assistance in this respect from the husband. It was not challenged by the husband.

1. In 2003, the wife finally passed her exams and obtained registration as a healthcare professional. She immediately began working as a healthcare professional and began saving to buy a business of her own. The husband and the wife then looked around for a business to purchase for the wife to work in. A small business was purchased in a Victorian country town a few hours’ drive from Melbourne. It was purchased for the sum of $125,000 with a deposit of $25,000 being paid using savings and earnings of the wife and a balance that was borrowed by her from a specialist financier to the healthcare professions. The business was owned and operated through a company, U Pty Ltd. U Pty Ltd was incorporated on 31 July 2003 and the wife was the sole shareholder and sole director of that company. U Pty Ltd paid off the finance within two years.

1. The husband was employed in an administration capacity in the business by U Pty Ltd whilst still doing his consulting work when he could.

1. In March 2004, the former couple set up their own self-managed superannuation fund of which they were both members and trustees. U Pty Ltd began contributing superannuation into that fund for each of them to take advantage of the generous tax concessions offered for superannuation contributions, with more being contributed into the husband’s member account than the wife’s as he was older and subject to higher maximum superannuation contribution limits.

1. In 2005, the former couple purchased their own home in the same town where they were living and working. It was purchased in the wife’s sole name for $190,000 with a deposit of about $75,000 being sourced from savings from the business income and the balance being borrowed from a bank which took a mortgage over the property. That mortgage debt was paid out by the wife borrowing retained earnings from U Pty Ltd a little while later. At the trial, the husband said the mortgage may not yet actually be formally discharged on the title of that property. That will have to be done.

1. The self-managed superannuation fund known as the Zhou Superannuation Fund (“ZSF”) then purchased the freehold title of the building the business operated out of and began earning income from rent paid to it by U Pty Ltd as well as growing rapidly from the contributions that were being made to the members’ accounts.

1. The husband was keen to expand and buy more businesses. In late 2005, the husband decided to use ZSF funds to purchase the freehold on a property in a smaller, nearby town out of which another dental premises had been operating. That was done, though the wife was not at all interested in operating another business there. Consequently, the husband incorporated his own company, V Group Pty Ltd (“V Group”), of which he was the sole shareholder and director, and he established a discretionary trust, the V Group Trust (“VGT”), that he solely controlled, through which he acquired equipment and began to operate the premises. The husband then managed that and engaged staff on contract to work there, as well as persuading the wife to work there from time to time.

1. The husband caused ZSF to purchase another real property in that smaller town soon thereafter. Somehow, the details of which were not completely clear to me, that property was registered in the sole name of the husband and, apparently, not as trustee. Nevertheless, there has never been any dispute that it is an asset of ZSF and is included on its balance sheet.

1. Again, for reasons not completely clear to me, the husband established a second self-managed superannuation fund in September 2006. He called it the W Superannuation Fund (“WSF”) and he was its only member. He put his company, V Group, in as the trustee of WSF. He began having VGT make contributions to it on his behalf.

1. The former couple’s relationship began to break down around this time. In affidavit evidence, the husband said:

During early 2007 [the wife] became increasingly abusive, demanding, unreasonable and unpredictable.

He even said:

I started deliberately spending time away from [her] in circumstances that she could not intrude upon.

1. In or around the middle of 2007, a sponsored, skilled migrant worker arrived at the U Pty Ltd business. That came as a complete surprise to the wife. The husband had hired him to join the business. The wife said that it then became apparent to her that the husband was trying to gain control of the two businesses and to move her out. Around this same time, another new discretionary family trust was established. This one was the Zhou Family Trust (“ZFT”). It had a corporate trustee, Zhou Pty Ltd (“ZPL”). The wife was its only shareholder. Though the husband was later a director of ZPL, it is not clear whether he was when the company was incorporated. The wife was the sole “appointor” of ZFT and could change the trustee at her discretion.

1. At that time, the ZSF was valued at $473,165 with the husband’s member interest valued at $311,392 and the wife’s member interest at $161,773. The fund had in excess of $300,000 in cash in its bank account. Also at that time, the husband was experiencing some ill health. He asserts that he retired in July 2007. He turned 60 years of age in that month and could access his superannuation interests. In late August 2007, the husband drew $300,000 from the ZSF bank account and put that into another account in the joint names of the husband and the wife.

1. The husband began encouraging the wife to look elsewhere for another business and to move away from the town they then lived in. He told her of a business he had found advertised for sale in the Y Town region of northern New South Wales (“NSW”). They both travelled up to take a look at it. The wife decided that she would buy it and it was bought for $90,000. She said in evidence, and I accept, that she was still hoping that the marriage was not going to end and that the husband would move with her to NSW.

1. However, it soon became clear that the husband did not want the marriage to continue. The wife had been in NSW at the newly acquired business for a few days and when she returned home to Victoria, the husband told her he had invited a pregnant female friend and her sister to move into the Victorian home. The wife told him that was not appropriate, to which he responded with words that indicated his intent to end their relationship. He told the wife she had now gone to NSW, and that she could have the $300,000 to pay for the NSW business and run that as her business. He told her that it was not her house anymore. He told her that he would continue to run the Victorian business from then on and would continue to support her if it was necessary.

1. The wife then accepted the marriage was over and went back to NSW. She drew the $300,000 from the joint account and put it into her own account.

2. The wife estimates that the home in Victoria was worth about $200,000 and that the Victorian business was worth $200,000 at that time. However, the single expert accountant valued the Victorian business as at 31 October 2007 at $168,000 using the earnings method. The expert accepted that included goodwill of $120,000 and other tangible assets of around $50,000 (a motor car and some other plant and equipment). That same expert valued the VGT controlled and retained by the husband at $2,000 as at 31 October 2007, and another company, Z Pty Ltd, solely owned and controlled by the husband, at $34,000 as at 31 October 2007. The husband owed that company about $16,000 and the wife owed U Pty Ltd about $55,000.

1. When the wife went to NSW, she retained the $300,000 cash from which she paid $90,000 for the NSW business. A little later, she bought an apartment for $170,000 in which she lived. She had a new motor car that they had purchased in Melbourne before she went up to NSW that she said was worth $70,000 and she had her member entitlement in the ZSF that was valued at $161,773. She also owed U Pty Ltd the sum of $55,000 (the balance of the money that she had borrowed from the company to pay out the housing mortgage). It seems agreed that there was also about $93,000 in cash at bank that was in the U Pty Ltd accounts that the wife retained and used as start-up capital in her new business. Accordingly, she had $634,773 in assets and superannuation and she owed her own company $55,000. She had not transferred the Victorian home to the husband yet, though she said in evidence that she was always ready to do that when he asked.

1. In contrast, the husband retained the home estimated at $200,000 that had not been transferred to him yet and continued to live in it rent free. He still had around $11,000 in superannuation in ZSF. He took and retained the Victorian business, including the car and plant and equipment, valued at $168,000. He retained interests in VGT and Z Pty Ltd worth $36,000, though that amount included a debt he owed to the entities of $16,000. He also had a superannuation interest in WSF and as I discuss in more detail further on in these reasons, I am satisfied that his interest in that fund was worth about $60,000. Accordingly, he retained $459,000 in assets and superannuation (net of his $16,000 debt).

1. The husband said in his 2013 affidavit that the business, the premises and the home in Victoria “had a combined valued at that time of about $750,000”. Though the evidence that I had available to me at the trial does not support that assertion, his 2013 opinion illuminates the context in which the 2007 informal division was undertaken.

1. The couple never lived together again after that time. As I am satisfied that the wife earned more income than did the husband during the years that they were together, including principally generating the business fee income that enabled around $300,000 to be contributed to the husband’s superannuation interest whilst only $150,000 was contributed to her own superannuation interest, and as her non-financial contributions were also greater than the husband’s during the nine years of their marriage relationship, that division of the property and superannuation interests that they had in October 2007 was probably reasonably close to being a just and equitable one at the time. The division was roughly a 58/42 division in favour of the wife. By their actions, the parties apparently agreed it was appropriate. At least the husband thought it was, that is, until 2013. But, as I have already observed, they did not formalise that property division through a consent order made in a Court having jurisdiction under the Family Law Act 1975 (Cth) (“the Act”), leaving it open for the husband to bring the application that he did in 2013.

1. The husband then ran the Victorian business using V Group as trustee for the VGT. No amount ever got paid to U Pty Ltd either by way of income or consideration for the acquisition of the business or its tangible assets. The wife began to run the NSW business using ZPL as trustee for the ZFT. Despite their separation, the wife would occasionally return to Victoria and undertake a couple of days work in the Victorian business at the request of the husband. I am satisfied that she was trying to get the husband to agree to sell the Victorian business at this time. In fact, she gave evidence that she offered him a position as a co-director of ZPL in order to try to persuade him to sell the Victorian business. He became a director but still would not sell the Victorian business.

1. Though they still had contact with each other in connection with the businesses over the next year or so, their relationship did not improve. The husband made an application in the local Victorian Magistrates Court for a family violence protection order against the wife, though it does not appear that he went through with that or successfully obtained an order. He also had solicitors write to the wife in March 2008 confirming that separation had occurred in September 2007 when the wife moved from Victoria to NSW and opened her own business. That letter threatened the wife with injunctions and various criminal proceedings and warned her of “heavy criminal sanction” and demanded various written undertakings from her.

1. Nevertheless, the former couple remained in contact. The husband was marginally involved in helping the wife purchase another business in D Town in June 2009, to the west of Y Town, though the wife contributed all of the $125,000 for the purchase from her own funds. After the business was established there, the husband lent that business a mobile EFTPOS machine and for some weeks the patient fee payments being made through that machine were actually being deposited into a bank account of V Group in Victoria before the wife realised that and took steps to remedy the situation. Just in excess of $20,000 went into accounts solely controlled by the husband in that way. He never returned that money to the wife, despite her requests.

1. Over the 2008 and 2009 financial years, the wife continued, despite the separation, to make contributions to the ZSF for herself and for the husband at the maximum amount permissible pursuant to tax and superannuation law. For the husband, that was $100,000 each year. She clearly did this to reduce taxable income and without any real concern that the money was actually going to the husband’s benefit, though she had separated from him. But that soon stopped. In March 2011, the commercial property in which the business near Y Town was operating was purchased by the ZSF using the cash that the wife had contributed into that fund for herself and the husband over the previous years. It remains as one of four pieces of real property still owned by the ZSF.

1. Although the husband said he had retired in July 2007, he clearly went back to work after the separation. I am satisfied that from the Victorian business he was paid wages or a salary in 2008, 2009, and 2010 of $23,400, $41,600 and $41,600, respectively. In 2011, the husband was again paid $41,600 by the business and there was a profit of $38,647 that was distributed to him through the VGT. In 2012, he was again paid $41,600 by the business, and a profit of $138,009 was distributed to him through the VGT. In addition, another $50,000 was contributed to superannuation for him. I am satisfied that would have been paid into the WSF for him. In 2013, he was paid $83,200 by the business and a profit of $21,071 was distributed to him, whilst another $25,000 in superannuation was contributed for him. In 2014, he was not paid a wage but a profit of $56,653 was distributed to him through VGT and $35,000 in superannuation was contributed for him. In 2015, the last year for which there are financial statements for the Victorian business and the VGT, no wages or salary was paid to the husband, but there was a $117,609 profit distributed to him and another $35,000 in superannuation contributed on his behalf.

1. The single expert accountant valued the business as at 30 June 2015 at $184,000 using the earnings method. She attributed $51,600 of that to the value of the net tangible business assets and $132,000 to goodwill.

1. There was no valuation of the husband’s superannuation member interest in the WSF as at 30 June 2015 and little evidence given about it at all by the husband. However, the evidence establishes that at least $145,000 was contributed to his superannuation account from 2012 to 2015. He clearly has also had the benefit of that.

1. The evidence establishes that the wife was running her two northern NSW businesses through ZPL as trustee for the ZFT. As a co-director of ZPL, when the 2010 tax returns were prepared for ZPL and ZFT in late 2010, the husband refused to sign off on them because he did not agree with the distributions of the profit that had been determined. The company had to pay a default tax amount of 46% of the profit that year. As a consequence, the wife, acting on advice from her NSW accountants, determined to exercise the power to dismiss the trustee of the ZFT and replaced it with a different one. She did that and replaced it with another corporate trustee of which she was the sole shareholder and director. The husband has been complaining about this ever since, asserting that the actions of the wife have potentially exposed them both as directors of ZPL at that time in 2010 to significant penal consequences with the Australian Taxation Office (“the ATO”) in respect to potential additional tax, interest and penalties.

1. I saw no evidence from which I could be satisfied that the ATO has taken such action or intends to. I saw no evidence that caused me to conclude that it would if notified or to conclude that the ATO should be notified. No evidence or submission made by the husband persuaded me to refer the matter to the ATO. As I said to the husband during the hearing, his concerns can be assuaged by ordering the wife to indemnify him against any liability arising out of any such future action by the ATO. The wife offered no opposition to such a course.

1. There was also evidence that money that had been determined to be distributed by ZFT to U Pty Ltd (a corporate beneficiary of the ZFT) was still frozen in a bank account of ZPL because of the husband’s refusal to agree to sign off on that 2010 tax return. Fortunately, it is in a term deposit and has been earning interest all these years. At the time of the trial earlier this year, the balance was $242,770. The husband refused to co-operate in the way needed for that money to be released at the wife’s direction but could give no good reason why that should not happen. Counsel for the wife asked for an order that the husband authorise that to happen. I am satisfied such an order should be made.

1. Over the years since the former couple separated and the wife has been living in northern NSW, on advice from her accountants, the wife has established the Zhou Family Trust No 2 (“ZFT2”) and the Zhou Family Trust No 3 (“ZFT3”) as well as two other companies, Zhou Investments Pty Ltd (“ZI”) and Zhou Investments No 2 (“ZI2”). The wife has been successful in the operation of the businesses in northern NSW and has accumulated many valuable assets in her various entities.

1. The single expert accountant was tasked with providing valuation opinion in respect of all of the wife’s entities and the husband’s entities as at 30 June 2015. She provided her opinion on the basis that the wife would be keeping the two businesses but also on the basis that she would be selling both businesses. In the first of those scenarios the values ascribed by the expert were as follows:

ZFT	$1,312,000
ZFT2	$3,465,000
ZFT3	$25,000
ZI2	$35,000
Total	$4,837,000

1. Included in this total is the value of the business near Y Town that the wife bought for $90,000. She has, through her efforts alone, grown the value of that business to $1,152,500 on an earnings basis. Also included in this total is the value of the business at D Town that the wife bought for $125,000. She has, again through her efforts alone, grown the value of that business to $670,000 on an earnings basis. If she was to sell the two businesses the expert has estimated that realisation costs, including Capital Gains Tax, would total $295,000.

1. The value of the ZFT also included a debt of $29,300 recorded as owed by the husband’s VGT. This arises out of the circumstances relating to the EFTPOS machine the husband left with the D Town business when it was purchased. I will not be ordering the husband to repay that to the ZFT so I will not include that. Accordingly, the total of the value should be reduced by that amount. That gives $4,807,700.

1. The single expert valued U Pty Ltd at the 30 June 2015 at $438,000. That includes $257,041 owed to it by the ZFT (much of which is that money in the term deposit that I have already mentioned). It also includes $23,000 owed to it by the wife, so that amount can be netted off for the purposes of determining the net value of the wife’s interests in property. It also includes an amount of $141,305 that the single expert accountant has included as a debt owed to U Pty Ltd by the husband’s VGT in respect of its takeover of the Victorian business and its plant and equipment. I will not consider that amount in determining the value of the wife’s interest in U Pty Ltd. Accordingly, the wife’s net interest in U Pty Ltd will be considered as $273,356 as at 30 June 2015.

1. The single expert accountant valued the husband’s interest in the VGT as at 30 June 2015 as nil. However, that was calculated by including the value of $190,796 being the value of the business on an earnings basis (including its net tangible assets and goodwill), $99,633 that was held in the bank, $20 in cash and $4,790 provision for GST. It also included a notional debt of $141,305 to U Pty Ltd owed to it for the acquisition of the business and its net tangible assets, such as the motor vehicle the husband retained. I will not be ordering that amount to be repaid to U Pty Ltd so will not include it as a debt. Adjusting the expert’s valuation in this way, I am satisfied that the husband’s interest in the VGT as at 30 June 2015 was worth $170,625 and included a business worth $190,796. The expert also valued his interest in Z Pty Ltd at $170,000 as at that date.

1. A valuation of the ZSF and the parties’ member interests in that fund as at 30 June 2015 was also provided by the single expert accountant. Based on real property valuations of $205,000, $10,000 and $25,000 for the three Victorian properties and $330,000 for the property near Y Town on which one of the wife’s businesses continues to operate, and cash assets held in the bank of just in excess of $130,000, the fund was valued at $701,000 with the wife’s member interest being valued at $472,508 and the husband’s member interest being valued at $228,310.

1. As I have already said, there is no evidence of the value of the husband’s interest in the WSF that he established as at that date, though he said in his Financial Statement of April 2019 that it was worth nothing. That would mean he had withdrawn all of the benefits in that fund. In his 2013 Financial Statement, the husband estimated his member interest in WSF at $110,000. As a $50,000 contribution was made in 2012 from V Group, on the evidence the first contribution since the separation, I consider it safe to assume that he had about $60,000 in superannuation in WSF as at the time of separation.

1. The evidence also established that the husband had unilaterally withdrawn the cash assets of the ZSF sometime in the few years leading up to the trial, totalling $137,000. He did that without the wife’s knowledge or consent prior to doing it and has refused to put that money back in the bank despite requests and despite being informed that his actions potentially make the fund a non-complying self-managed superannuation fund. Given that he is over 70 years of age and no longer working, I do not understand that he would not be entitled to take his member benefit at his discretion, in any event. Nevertheless, those circumstances and the fact that now the only real assets of the ZSF are real properties is a matter that will have to be taken into account when determining the outcome of this case. If his superannuation interest was $228,000 and he withdrew $137,000 then he still had $91,000 worth of superannuation in the ZSF. No more recent valuation was adduced into evidence, but the husband did say that he did not wish to retain any of the real properties in Victoria that are assets of the ZSF as in specie superannuation.

1. The husband still lives in the home that the parties bought when they first moved to country Victoria from Melbourne. It remains registered in the wife’s sole name, though she remains prepared to transfer title to him. It was valued by a single expert real property valuer in April 2017 at $205,000.

1. The wife has also acquired interests in three other real properties. She bought a property at O Town in September 2015. She bought land and built a residence in November 2016 and she bought a half interest in a property in Suburb T, Victoria in June 2017, along with another person. Those interests have been valued at $835,000, $730,000 and $432,500, respectively. She has debts secured by mortgages over her interests of $700,000 and $455,000, netting the value of her interests out to $842,500.

1. In 2015, the wife was diagnosed with cancer for which she had surgical treatment and chemotherapy. The illness did interfere with her capacity to work for some time and she has had some residual difficulties with the physical work required of her as a health care professional. She is concerned that her cancer may reoccur and said in her affidavit evidence that she wants to sell the businesses because of the stress they cause her. The fact that the ZSF owns the premises out of which her Y Town business operates and the unwillingness of the husband to co-operate with her to date has, she said, made it problematic for her to sell. She said that she intends to sell the businesses and the property and retire as soon as these proceedings are completed.

1. The husband did not say much about his circumstances since 30 June 2015. He said nothing much of relevance to this in his affidavits filed in the proceedings since that date as, respectfully, his evidence became somewhat obsessively focused on the allegations of “wrongdoing” by the wife and her advisers in respect of the financial affairs of ZPL and ZFT. At the trial, the husband asserted, mostly from the bar table, that he was now impecunious. Though I formed the impression that he is probably not running the Victorian business anymore and not otherwise in employment or working, it was not entirely clear to me what he had done with what was a valuable business. There was no evidence as to whether he sold it or simply closed it down.

1. The husband is now 72 years of age. There is no dispute that he will keep the home in which he has been living now for around 15 years and that it is valued at $205,000 and is unencumbered by debt. Apart from having a member interest in the ZSF worth around $91,000, he may not have much left other than the motor car he has retained for many years now and his personal possessions. He has had access to $137,000 of his superannuation from the ZSF in recent years as well as around $200,000 in superannuation from the WSF. In addition, he had the business worth nearly $200,000 and his other company, Z Pty Ltd, which was worth $170,000 a few years ago.

1. The wife is 55 years of age. Her health has not been good and causes her ongoing concern. She wants to sell her businesses and retire. Fortunately for her, she has accumulated a good amount of assets in recent years.

The decision in this case

1. The question to be decided in this case is whether there is a need to make property adjustment orders in order to do justice and equity between the parties.

1. Considering the history that I have outlined and the current position in respect of their interests in property and superannuation, particularly the fact that the property in the Victorian country town that the husband has lived in for many years is still registered in the sole name of the wife, and the fact that the parties are both still members and trustees of the same self-managed superannuation fund, I am quite satisfied that property adjustment orders are required to do justice and equity between the parties.

1. One order that I do consider just and equitable is an order that requires the wife to cause the mortgage that could still be registered on the title to the property in Victoria in which the husband lives to be discharged and removed from the title and to transfer all of her right, title and interest in that property to the husband.

1. I also consider that an order should be made that requires the wife to cause the registration of the motor car that is in the husband’s possession that might still be in the name of U Pty Ltd to be transferred to the husband.

1. Another order that should be made is one that requires the husband to authorise the ANZ Bank to release the term deposit that has been locked up all these years to be released at the direction of the wife.

Does justice and equity require any other orders to be made?

1. As I said earlier in these reasons, the informal property division that was effected in late 2007 at the principal behest of the husband reflected a just and equitable property adjustment of their interests in property and superannuation at that time having regard to the matters that are to be considered pursuant to s 79(4) of the Act. Consideration must now be given to what has transpired since that time and whether or not the contributions each of the parties made that are to be considered pursuant to ss 79(4)(a) to (c) as well as the other matters that are to be considered pursuant to ss 79(4)(d) to (f) require any other form of property adjustment.

1. The parties separated in 2007. They also effectively separated their property interests. Apart from the superannuation the wife still contributed for the husband over a couple of years after their separation, what each has had in the years since and owns now is the product of their own endeavours and contributions. I am not minded to conclude that the husband has made any meaningful or measurable contribution towards the acquisition and accumulation of the interests in property that the wife now has that was not already justly and equitably dealt with in 2007.

1. For the wife, it could reasonably be argued that in respect of the husband’s superannuation interest in the ZSF of $228,000, (of which he has already withdrawn $137,000), the wife was the one who made all of the contributions without any offsetting contributions by him. She solely generated the fees from which those contributions to the superannuation fund were made in years after the separation and without any assistance from the husband. However, the wife clearly received tax benefits for her business from those substantial contributions made to the husband’s superannuation that he received no benefit from, whilst the husband has had the benefit of $137,000 of his member interest.

1. I am satisfied in this case that there is no requirement, in order to achieve just and equitable property adjustment orders to require the wife to pay the husband any other amount of money or to transfer any other interest in property to him. What I do consider is proper to achieve that just and equitable property adjustment between them is that the parties treat the withdrawal of the $137,000 by the husband as a partial withdrawal of his member benefits and for the remaining balance of his member interest in the fund, whatever that might be actually calculated at, be made subject to a 100% superannuation splitting order in favour of the wife. I consider it appropriate that the husband also cause the titles in the three Victorian real properties that are assets of ZSF and the NSW real property that is an asset of ZSF to be transferred to the wife as trustee for the ZSF and for him to take all steps necessary to resign as a member and a trustee of the fund. The wife will then have sole control of the ZSF and all of its assets and all of the member entitlements in the fund will be hers solely. She will have the ability to sell any or all of those properties in her capacity as trustee. She will, if she has to, be able to choose to roll her member entitlements out into another approved superannuation fund and close down the ZSF. All of those decisions will be hers to make solely as she may be guided by her own advisers. She will not have to seek and obtain the agreement and consent of the husband.

1. I will make the orders set out at the commencement of these written reasons satisfied that they are just and equitable in all the circumstances.

I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 27 November 2019.

Associate: 

Date:  27 November 2019