Lowe and Lowe
[2016] FCCA 842
•20 May 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LOWE & LOWE | [2016] FCCA 842 |
| Catchwords: FAMILY LAW – Application for property settlement and spouse maintenance – where the main asset is a business which is co-owned with a third party – assessment of contribution and future needs – just and equitable order – whether need for spouse maintenance established. |
| Legislation: Family Law Act 1975 (Cth), ss.75,79 |
| Cases cited: Bevan & Bevan [2013] FamCAFC 116 Hickey & Hickey & Attorney General for the Commonwealth of Australia [2003] FamCA395 Ramsay (1997) FLC 92-742 Stanford & Stanford [2012] HCA 52 Vass & Vass [2015] FamCAFC 51 |
| Applicant: | MS LOWE |
| Respondent: | MR LOWE |
| File Number: | WOC 341 of 2014 |
| Judgment of: | Judge Altobelli |
| Hearing dates: | 8-10 February 2016 |
| Date of Last Submission: | 18 February 2016 |
| Delivered at: | Sydney |
| Delivered on: | 20 May 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Macpherson |
| Solicitors for the Applicant: | Sydney Family Law Specialists Pty Ltd |
| Counsel for the Respondent: | Mr Givney |
| Solicitors for the Respondent: | Tilley Family Law & Mediation |
ORDERS:
THE COURT NOTES:
(a)The following definitions for the purposes of these Orders:
(i)“Act” means the Family Law Act 1975 (Cth);
(ii)“Wife” means Ms Lowe, born (omitted) 1979;
(iii) “Husband” means Mr Lowe, born (omitted) 1985;
(iv)“Property H property” means the property situate at and known as 4 Property H, Property H in the State of New South Wales.
(v)“Property B property” means the property situate at and known as Property B.
(vi)“(business omitted)” means (business omitted) and bearing ACN (omitted);
(vii)“Lowe Family Trust” means the Lowe Family Trust;
(viii)“(business omitted)” means (business omitted) and bearing ACN (omitted);
(ix)“(business omitted)” means (business omitted) and bearing ACN (omitted);
(x)“Wife’s superannuation” means the Wife’s interest in (omitted) Super and/or any other superannuation fund;
(xi)“Husband’s superannuation” means the Husband’s interest in (omitted) Super and/or any other superannuation fund
(xii)“Wife’s bank accounts” means all bank accounts in the Wife’s name;
(xiii)“Husband’s bank accounts” means all bank accounts in the Husband’s name;
(xiv)“Wife’s personal belongings” means all personal belongings in the possession of the Wife;
(xv)“Husband’s personal belongings” means all personal belongings in the possession of the Husband;
(xvi)“Wife’s liabilities” means all liabilities in the Wife’s name, including but not limited to credit card liabilities; and
(xvii)“Husband’s liabilities” means all liabilities in the Husband’s name, including but not limited to his credit card liabilities.
THE COURT ORDERS:
The parties shall forthwith do all acts and things necessary to sell the Property B property and in respect of such sale the following shall apply:
(a)The property shall be sold at the best price reasonably obtainable.
(b)The property shall be placed in the hands of a licensed auctioneer to sell the property by way of public auction within eight weeks of the date of these Orders.
(c)In the event that the parties dispute the name of the real estate agent and/or auctioneer to have carriage of the sale and/or auction then the parties or either of them shall request the President for the time being of the Australian Real Estate Institute [New South Wales Division] to appoint a real estate agent and/or auctioneer to conduct the sale of the property.
(d)The Wife’s solicitor shall have the carriage of the sale.
(e)In the event the parties cannot agree as to whether an offer to purchase should be accepted and/or the reserve price at auction then the parties or either of them shall appoint the President for the time being of the Australian Institute of Valuers or his or her nominee to assess whether any offer made represents the best price reasonably obtainable and/or determine the reserve price at auction and the parties shall be bound by such assessment determinations and shall equally bear the cost.
(f)In the event that the President for the time being of the Australian Institute of Valuers and/or his nominee assesses that the offer made to purchase the property is equal to or greater than the best price reasonably obtainable as determined in accordance with the previous paragraph then the parties shall do all acts and things necessary to sell the property to the purchaser and otherwise give effect to this Order.
(g)At first instance the Husband shall pay advertising costs and costs of auction and any other costs of the agent required prior to sale [preliminary costs] and the Husband shall be reimbursed as to the costs from the sale proceeds.
(h)The parties shall both do all things necessary to facilitate the sale.
(i)Upon sale the proceeds shall be paid as follows:
(i)In payment of agent’s commission and legal fees occasioned by the sale.
(ii)In discharge of the mortgage to (omitted) Bank.
(iii)In payment to the Husband of the preliminary costs.
(iv)In payment to the Wife of the then proceeds of sale [the net proceeds].
The Husband shall pay the mortgage instalments as they fall due until the sale of the Property B property or until the expiration of four (4) months from the date of these Orders whichever date is sooner.
In the event that the Husband pays mortgage instalments after the expiration of four months in accordance with Order 2 then the Wife’s entitlement shall be reduced by such sum paid by the Husband by way of mortgage instalments or towards the mortgage paid after four months from the date of these Orders.
Noted upon the sale of the Property B property the pool will be crystallised in that the Court finds that the asset pool shall be calculated as follows:
(a)The Property B property net proceeds
(b)Property H $630,000.00
(c)Husband's (omitted) Account $200.00
(d)Husband household contents $5,000.00
(e)Husband personal loan to Mr P $110,000.00
(f)Lowe Family Trust $1,690,000.00
(g)Loan owed by Lowe Family
Trust to husband $447,000.00
(h)Wife (omitted) Bank account $375.00.00
Wife’s Toyota Prado motor vehicle $13,000.00
(i)Household contents $5,000.00
(j)Liabilities NIL
(k)Superannuation
(i) Wife $21,384.00
(ii) Husband $103,397.00
The parties shall divide the pool of assets as to 60 percent to the Wife and 40 percent to the Husband.
The Wife shall then receive:
(a)Property H.
(b)Net proceeds of sale of Property B property.
(c)Wife (omitted) Bank account.
(d)Toyota Prado motor vehicle.
(e)Household contents.
(f)Wife’s superannuation
The Husband’s liability will then be then be the difference between 60 per cent of the total net assets as found by the Court and the total assets retained by the Wife [the Husband’s liability].
The Husband shall pay to the Wife the Husband’s liability as follows:
(a)Within 60 days pay to the Wife the sum of $110,000.00 [less fees paid by the Husband to Ms. Delbridge-Bailey on behalf of the Wife].
(b)Within 120 days to the Wife the sum of $200,000.00.
(c)Pay the balance by way of instalments with the first instalment of $50,000.00 being payable 12 months following the making of these Orders and the balance payable within 18 months following the making of these orders.
In the event the Husband defaults in compliance with Order 8 the whole sum becomes due and payable and the Wife is at liberty to enforce these Orders.
In addition, and without detracting from any other order, in the event the Husband fails to make any payments pursuant to these orders on the due date, interest shall accrue at the rate as determined by the rules and regulations under the Act.
Within six (6) weeks of the making of these Orders the Husband shall do all things and acts and sign all documents necessary to transfer to the Wife, free from any encumbrance, mortgage or guarantee, the whole of his right, title and interest in the Property H property.
Pending compliance by the Husband with Order 11 and otherwise for a period of four months from the date of these orders in the case of the Property B property, the Husband shall pay the following expenses as and when they fall due:
(a)The council and water rates for the Property H and Property B property;
(b)The mortgage repayment for the Property B property; and
(c)The house and contents insurance for the Property H.
For the purpose of payment of the expenses referred to in Order 12 the Wife shall forward all invoices to the Husband within seven (7) days of receipt of same and the Husband will pay such invoices directly as and when they fall due.
Within 7 days of receipt by the Wife of the total amount payable to her in accordance with these orders:
(a)The Wife shall resign all directorships and/or positions and/or offices in (business omitted).
(b)The Husband shall prepare and execute in favour of himself a transfer of the whole of the Wife’s right, title and interest in her shares in (business omitted) and the Husband and Wife shall do all other acts and things necessary to give effect to this Order.
That the Husband shall forthwith indemnify and keep indemnified the Wife against any liability of any nature which the Wife has at any time arising in any way in respect of (business omitted), (business omitted) and (business omitted), whether from her position in the said companies, her receipt of any money from the companies, or any liability of the companies or otherwise.
Within fourteen (14) days of the making of these Orders the Husband do all acts and sign all documents necessary to discharge, release, terminate or transfer to the Husband’s sole name any and all personal guarantees given by the Wife in respect of any liabilities of or credit advanced to (business omitted), (business omitted) and (business omitted) or otherwise in relation to the said companies and its business.
Unless otherwise specified in these Orders, as against the Husband, the Wife be solely entitled to retain and the Husband has no interest in:
(a)The Property H property;
(b)The Wife’s motor vehicle;
(c)The Wife’s superannuation;
(d)The Wife’s bank accounts; and
(e)The Wife’s personal belongings.
Subject to these Orders, as against the Wife, the Husband be solely entitled to retain and the Wife has no interest in:
(a)(business omitted);
(b)(business omitted);
(c)(business omitted);
(d)The Lowe Family Trust;
(e)The Husband’s superannuation;
(f)The Husband’s bank accounts; and
(g)The Husband’s personal belongings.
Unless otherwise specified in these Orders, the Wife be solely responsible for and indemnifies the Husband in relation to the Wife’s liabilities.
Unless otherwise specified in these Orders, the Husband be solely responsible for and indemnifies the Wife in relation to the Husband’s liabilities.
Unless otherwise specified in these Orders:
(a)The Husband and Wife each be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these Orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the banks’ records thereof and superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment of such entitlements;
(b)The Husband and Wife each be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders; and
(c)The Husband and Wife each be liable for and indemnify the other against any liability in their respective sole names, including but not limited to credit cards and personal loans.
The Husband and Wife shall each do all such things as are necessary and sign all such documents as are necessary to give effect to these Orders.
Pursuant to section 81 of the Act the Husband and Wife intend that these Orders shall finally determine their financial relationship and avoid further proceedings between them.
In the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these Orders then the Registrar of the Court shall be appointed pursuant to section 106A of the Family Law Act to execute such deed, document or instrument in the name of the said party and to do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of Affidavit.
Spouse Maintenance
That the Wife’s application for spouse maintenance is dismissed.
That both parties have liberty to relist the matter on 7 days’ notice in relation to the implementation of these Orders.
IT IS NOTED that publication of this judgment under the pseudonym Lowe & Lowe is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT WOLLONGONG |
WOC 341 of 2014
| MS LOWE |
Applicant
And
| MR LOWE |
Respondent
REASONS FOR JUDGMENT
Introduction
The following reasons explain the Orders made in this property dispute between the parties to this case.
Background
Unless indicated to the contrary, the Court makes the following findings. The Wife is 36 years old, the Husband is 30 years old. They commenced cohabitation in either 2006 or 2007. As it turns out, the outcome of this case is not affected by when, precisely, the parties commenced cohabitation. They married on (omitted) 2007 and separated on 12 December 2013.
The Wife has a child from a previous relationship, X, who is 14 years old. Whilst X has spent substantial time with his biological father, the evidence in this case suggests that both the Husband and the Wife in these proceedings regarded him as one of the children. The parties have two other children, Y, who is 9, and Z, who is 6. The evidence before the Court suggests that these children lived primarily with the Wife up until the beginning of this year, whilst spending substantial and significant time with their father, the Husband. However, from the beginning of 2016 the parties agreed to implement an equal time care arrangement.
When the Husband and the Wife commenced cohabitation, on either account of the evidence, they had minimal assets and liabilities. The Wife was working as a (occupation omitted) and the Husband was working initially as a (occupation omitted) in his father’s business but then as a (occupation omitted) for a company known as (employer omitted).
In 2006, probably in the second half of that year, the Husband established a business known as (business omitted) using funds that were provided by his father. This was the initial working capital of the business. The Wife’s account about the source of the initial working capital differs from the Husband’s account and, as it turns out, the Court accepts the Husband’s account as being more likely to be true. Again, nothing turns on this.
Certainly no later than early 2007, the parties commenced cohabitation. In 2007 the business grew. The business involved (omitted) and (omitted) work. By 30 June 2007 the gross turnover of the business was about $200,000. The Wife was working as a (occupation omitted) whilst caring for her son, X, and the parties’ first child, Y.
By 2008 the business had further expanded, probably assisted by further working capital provided by the Husband’s grandmother. During 2008 the Wife became more involved in the business, whilst working part-time as a (occupation omitted) and attending to the care of the children.
In 2009 the business continued to expand. The company name was changed to (business omitted). The Wife was appointed as company secretary. The Husband and the Wife purchased land at Property H and subsequently constructed a home on the land using bank finance. There was some assistance from the Wife’s mother who provided $7,000 towards the deposit on the land. The parties received the benefit of a first home buyer’s grant.
In 2010 the business appears to have continued on its growth trajectory. Indeed, by 30 June 2011, the company’s turnover had reached in excess of $1.2 million. The Husband had arranged for the company to become accredited as a service provider as regards the installation of high and low voltage overhead and underground mains.
In 2012 the Husband commenced working with Mr P, who later became, in effect, his business partner. The Husband and Mr P established a separate entity known as (business omitted), with each of them being directors and shareholders. The Husband sold a 50 per cent interest in (business omitted) to Mr P for $500,000. To effect this sale, 100 ordinary shares were issued in (business omitted), 50 shares were sold to Mr P’s family trust for $500,000, and the Husband sold the other 50 shares to his family trust, for $500,000. The Lowe Family Trust had, by then, been established.
There is a dispute between the parties as to the nature and extent of the Wife’s involvement in these business negotiations. Ultimately, nothing turns on this.
As a result of the agreement between the Husband and Mr P, in substance, $500,000 was to be paid to the Husband, structured as described above. The sum of $250,000 was in fact paid, and a loan agreement was entered into in relation to the remaining $250,000.
The payments received by the Husband enabled the Husband and the Wife to discharge the mortgage over the Property H property. Later in 2012 they purchased 40 acres of land at Property B. The deposit was paid by drawing on the existing mortgage facility over Property H, and the balance secured by way of mortgage.
The Property B property was then and continues to be, vacant land. The Property H property was then the former matrimonial home and continues to be the home of the Wife and the children.
In December 2013 the Husband and the Wife separated. The Husband moved into rental accommodation. The Wife continued to receive a salary from the company of $1,000 a week until 30 December 2013. Once this ceased, she applied for Child Support, as well as sought and obtained Centrelink benefits.
The Wife commenced the present proceedings on 14 April 2014. The Husband filed his Response on 7 July 2014. There were issues between the parties about Child Support, issues which were dealt with through the Child Support Agency.
On 7 July 2014 Orders were made by consent, that the Husband pay the Wife $40,000. The Husband made subsequent payments to the Wife by way of support. On 4 August 2015, further Consent Orders were entered into as a result of which the Wife received $15,000 and the Wife’s solicitors $33,500. Both of the lump sum payments made by the Husband to the Wife, pursuant to Consent Orders, were made on the basis that such payments were to be characterised at the Final Hearing. This is one of the issues the Court must decide.
The Orders Sought
The final Orders sought by the Wife are contained in a document entitled “Final Orders Proposed by the Applicant Wife” provided to the Court during the hearing. This Order is reproduced in the first schedule to these reasons. In effect, the Orders provide for the Wife to receive both the properties at Property H and Property B, together with a further payment of $461,000. In return for this, the Wife would give up any interest she has in the various corporate entities now reflected in the business structure. The Orders the Wife proposes reflects the reality that the largest single asset is what the Court will describe as “the business” which, even she concedes, the Husband would retain. Thus, the payment of the $461,000 sought by the Wife would be effected by way of instalments over a finite period. In very general terms, it was submitted on behalf of the Wife that if Orders were made as sought by her, she would receive, in effect, a 60/40 property settlement in her favour. This reflects an assessment equality of contribution as at the date of trial, together with an adjustment under s.75(2) of the Family Law Act 1975 (‘the Act’) of 10 per cent in her favour.
The Orders sought by the Husband are contained in a document entitled “Husband’s Proposed Minute of Order” made available to the Court on 18 February 2016. It is incorporated in the second schedule to these Reasons. Under the Husband’s proposal, the property at Property B would be sold and all of the net sale proceeds after payment of debts, primarily the (omitted) Bank mortgage, would be paid to the Wife. He proposed that he continue to pay the mortgage instalments until the Property B property was sold, or for 4 months from the date of the Orders, whichever is sooner. The Wife would also receive the Property H property. There would then be an adjustment, having regard to the pool of assets as found by the Court, as well as the crystallised value of the Property B property, such that the Wife receive, in effect, 37.5 per cent of the property pool and the Husband receive 62.5 per cent of the said pool. Even the Husband recognised that, having regard to the disproportionate value of the business (as generally described) which he would retain, it would be necessary for him to pay the balance to the Wife by way of instalments.
On the Husband’s case, he made a greater contribution both during the marriage, and in the post-separation period, and thus contribution should be assessed in his favour in the range of 60 per cent. He contends, however, that there should be a further adjustment in his favour of 7.5 per cent which recognises the inherent difficulty of a case like this where the greatest value is tied up in a business of which the Husband is an equal partner and the value of which is dependent on future maintainable earnings.
The Issues
Having regard to the above and to the evidence generally, the Court needs to determine how contributions should be assessed in this matter, whether there should be a s.75(2) adjustment and if so in what amount and in favour of which spouse. There is an issue about how the Orders should be framed such that the outcome is a just and equitable one. The Wife has also claimed spouse maintenance, limited to the period until she is paid her entitlement pursuant to these Orders. As will be seen below, there are a number of relatively minor issues about the constitution of the asset pool.
The Evidence
In the Wife’s case she relied on her Affidavit filed 22 January 2016. She was extensively cross-examined.
In the Husband’s case he relied on his Affidavit sworn 20 January 2016, as well as the Affidavit of Mr P sworn 22 January 2016. Both were extensively cross-examined.
Both parties filed Financial Statements.
As it turns out, the parties were able to, sensibly, reach agreement about valuation matters and hence the quite extensive evidence from valuers was not needed by the Court. It is nonetheless evidence before the Court and some minor reference will be made to it.
The Applicable Law
This is an application under s.79 of the Act which relevantly provides:
Alteration of property interests
(1) In property settlement proceedings, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage--altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
(2) The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Section 79(4) incorporates the provisions contained in s.75(2) of the Act, which states:
(2) The matters to be so taken into account are:
(a) the age and state of health of each of the parties; and
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l) the need to protect a party who wishes to continue that party's role as a parent; and
(m) if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n) the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(naa) the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i) a party to the marriage; or
(ii) a person who is a party to a de facto relationship with a party to the marriage; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p) the terms of any financial agreement that is binding on the parties to the marriage; and
(q) the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
In Bevan & Bevan [2013] FamCAFC 116, the Full Court of the Family Court of Australia considered the High Court’s decision in Stanford & Stanford [2012] HCA 52 which provided guidance on how s.79 was to be interpreted and implemented. Bevan endorsed the continuing application of the four-step approach articulated by the Full Court in Hickey & Hickey & Attorney General for the Commonwealth of Australia [2003] FamCA395, but on the basis that it is a shorthand distillation of the words of s.79, as opposed to being a statutory edict. The four steps articulated in Hickey at paragraph 39 are:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
The decisions in Stanford and Bevan also emphasise the importance of making findings that any order is just and equitable for the purposes of s.79(2), independent of the s.79(4) process. In most cases, such as the present one, it makes no difference to the outcome of the alteration of property interests exercise. Even if the just and equitable consideration were treated as a threshold issue in this case the parties have, by their actions (separation, and re-ordering of their financial lives since then), and claims (divergent claims about their property under s79 of the Act), indicated that they themselves consider it just and equitable that some order be made under s79 adjusting their property interests as presently held. It is clearly just and equitable in this case to make an order.
Both decisions also emphasise the importance of identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. This is not inconsistent with step one in Hickey.
A problem that commonly arises and indeed does arise in this case, relates to property that once existed but no longer does. This disposed of property may still be significant, however. As the Full Court said in Bevan, such disposals must be dealt with carefully. In practical terms this means carefully assessing the evidence about the disposal, attempting to quantify it if this is at all possible and then assessing its weight whilst neither placing too much, or too little, weight on it. It would seem that notionally adding back such property may still be appropriate in some cases. In Vass & Vass [2015] FamCAFC 51, the Full Court said at [138]:
There is no error committed per se in adjusting the parties’ actual property interests by a calculation involving notionally adding back into the pool sums which have been dissipated by the parties. We reject any suggestion that the decision of Bevan & Bevan [2013] FamCAFC 116; (2013) FLC 93-545 – or, more particularly, the decision of the High Court in Stanford & Stanford [2012] HCA 52; (2012) 247 CLR 108 – is authority for any necessary contrary solution.
Balance Sheet Issues
By the last day of the hearing the court was provided with an agreed list of assets and liabilities, which became exhibit X. That document is reproduced below:
| ASSETS | |||||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | ||||
| 1 | Joint | Property H | 630,000.00 | 630,000.00 | |||
| 2 | Joint | Property B | 850,000.00 | 850,000.00 | |||
| 3 | Husband | (omitted) Bank account | 200.00 | $200.00 | |||
| 4 | Husband | Household contents | 5,000.00 | 5,000.00 | |||
| 5 | Husband | Personal loan to Mr P | 110,000.00 | 110,000.00 | |||
| 6 | Husband | Lowe Family Trust | 1,690,000.00 | 1,690,000.00 | |||
| 7 | Husband | Loan owed by Lowe Family Trust | 447,000.00 | 447,000.00 | |||
| 8 | Wife | (omitted) Bank account | 375.00 | 375.00 | |||
| 9 | Wife | Toyota Prado motor vehicle | 13,000.00 | 13,000.00 | |||
| 10 | Wife | Household contents | 5,000.00 | 5,000.00 | |||
| 11 | |||||||
| Total | $3,750,575.00 | $3,750,575.00 | |||||
| ADDBACKS | |||||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | ||||
| 12 | Wife | Funds advanced by Husband | N/A | 90,000.00 | |||
| 13 | Husband | Funds withdrawn by Husband 18/12/2015 | 100,000.00 | N/A | |||
| Total | $100,000.00 | $90,000.00 | |||||
| LIABILITIES | |||||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | ||||
| 14 | Husband | Mortgage | 680,000.00 | 680,000.00 | |||
| 15 | Husband | Loan (omitted) Pty Ltd | NIL | 119,212.00 | |||
| 16 | Husband | Visa card | NIL | 4,968.00 | |||
| 17 | Husband | Capital gains tax * | NIL | 123,000.00 | |||
| 18 | Husband | Estimated tax on dividend | N/A | 50,000.00 E | |||
| 19 | Wife | Personal loans | 8,000.00 | NIL | |||
| 20 | Wife | Various bills | 1,000.00 | NIL | |||
| Total | $689,000 | $977,180.00 | |||||
| SUPERANNUATION | ||||||||
| Member | Name of Fund | Type of Interest | Wife/de facto partner’s value | Husband/de facto partner’s value | ||||
| 21 | Wife | (omitted) Super | Accumulation | $21,384.00 | $21,384.00 | |||
| 22 | Husband | (omitted) Superannuation Plan 1 | Accumulation | 103,397.00 | 103,397.00 | |||
| Total | $124,781.00 | $124,781.00 | ||||||
| FINANCIAL RESOURCES | |||||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | ||||
| 23 | |||||||
| 24 | |||||||
| Total | |||||||
* Subject to husband failing to pay $250,000.00 to superannuation fund.
The first item in contention is the characterisation of item 12 – the funds advanced by the Husband to the Wife as a result of Consent Orders made during the course of the proceedings. The Husband submitted that these funds should be treated as funds advanced by way of interim property settlement. The Wife submitted that they should be characterised as spousal maintenance, and thus not added back. The Court finds that item 12 should not be added back and should be treated as maintenance. The Court finds that in the period after separation through to the date of the trial, the Wife’s financial needs were far greater than the Husband’s and exceeded the amount of support that he actually provided to her, including as a result of child support paid. Even taking account of a finding that the Court will make that the Wife’s earning capacity during this period was, in fact, greater than that which she asserts, on the evidence before the Court it could not be said that even if her earning capacity had been fully realised it would have been sufficient to meet her needs, and indeed that of the family generally. What is abundantly clear from the evidence of the Husband’s financial circumstances in the post-separation period is that he had access to substantial income and financial resources. He was able to access some moneys as and when he needed the same. He was able to actively prefer the financial interests of his business partner, Mr P, over that of his wife and, indeed, his children. The fluidity of the financial circumstances of the various corporate entities involved in the business included ebbs and flows, and the Court makes allowance for this. In short, had the financial circumstances of both the Husband and the Wife been forensically scrutinised at the time these funds were advanced by him to her, such scrutiny would have revealed that the payments should have been characterised as maintenance, and not an interim property settlement. Item 12, therefore, should not be added back.
There is a dispute about item 13. On behalf of the Wife it is submitted that the evidence establishes that the Husband withdrew $100,000 from the redraw facility secured over the Property H property on 18 December 2013, but has not adduced evidence as to repayment. The evidence before the Court in fact supports this submission. The onus of proof was on the Husband to establish either the purpose of such withdrawal, or that it was repaid. On the face of it, the transaction does appear to be a premature distribution of matrimonial funds and thus should be added back. Item 13, therefore, should read $100,000.
There is a dispute about item 15 which is a loan that the Husband contends for that he obtained from (business omitted) in the sum of $119,212. He gives evidence about this at paragraph 46 of his Affidavit sworn 20 January 2016. He deposes to having drawn the funds against his director’s loan account to meet various expenditure and living expenses. The expenses include legal and accounting fees, child support, the $50,000 payment made to the Wife and her solicitor, and rental payments. The mere fact that the Husband had access to business funds which he could use for such personal purposes merely confirms the Court’s earlier observations about the flexibility of the Husband’s financial circumstances. In effect, and consistent with other evidence that will be discussed below, he was able to access some funds through the business for personal purposes when he needed it. If the liability is left on the balance sheet, it will mean that the Wife will be meeting a share of the Husband’s legal and accounting fees, the Wife will be subsidising the child support payment to her children, the Wife will be subsidising the Husband’s rent and indeed the Wife will be meeting a part of the payment that the Court has already characterised as maintenance. That cannot possibly be just and equitable in the circumstances and accordingly item 15 will read “nil”, though the court must still take into account the liability created in general terms.
Counsel for the Wife submitted that there was no basis for the inclusion of the Husband’s Visa card liability at item 16 of the balance sheet. Counsel for the Husband agreed that there was no evidence in this regard. Item 16 should read “nil”.
Item 17 represents Capital Gains Tax that the Husband contends he will be liable for as a result of the sale of the share in the business to Mr P. On behalf of the Wife, it is submitted that there is no evidence to establish the quantum of this liability. The Court does not accept this. However, the evidence before the Court raises the possibility that there will be no Capital Gains Tax liability at all, if the Husband is able to structure his affairs in the manner recommended by his accountant. It turns out that this would involve the husband paying $250,000 into a superannuation fund. On behalf of the Husband, it is contended that there is some evidence about the quantification of this liability in the joint statement of the expert accountant (which was in evidence Exhibit A2) but that, in any event, it was the Husband’s contention that he could not fund the payment into superannuation advised to him by his accountant, thus to avoid the Capital Gains Tax liability. The Court finds the Husband has not discharged the onus of proof on him to establish the liability for any Capital Gains Tax liability. Accordingly, item 17 should read “nil”.
The Capital Gains Liability was a matter well known to the Husband. Indeed, he obtained advice from his accountant about it (letter dated 23 November 2015, annexure “X” to the Husband’s Affidavit). His accountant recommended strategies to deal with this liability. The Husband’s failure to clarify the evidence about a significant liability, in these circumstances, is somewhat baffling. To the extent that the Husband asserts that he is financially unable to act on his accountant’s advice and thus make a payment into his superannuation fund, the Court does not accept this. Again, the evidence about the Husband’s financial circumstances in the post-separation period more than amply demonstrate that the Husband had access to funds when he needed it and that, indeed, he actively preferred financially supporting his business partner, Mr P, to his own detriment in a financial sense. Exhibit A2, being the joint statement of experts prepared by Ms S and Mr B, indicates that the consolidated turnover of the business in 2015 was in excess of $25 million per annum. The Husband was one of two principals in this business. There were times when the business had in excess of a million dollars in its bank account. The Husband was able to pay his own rent, child support and maintenance obligations from the company. It is very difficult, in those circumstances, to accept a submission made on behalf of the Husband that he could not act on advice from his accountant to, in effect, create an asset that offsets a potential liability, in the circumstances of this case.
The Wife submits that there is no evidence to establish the estimated tax on the dividend, referred to at item 18 of the balance sheet. This submission is consistent with the evidence, or lack thereof. Counsel for the Wife submitted that whilst the Court can find that a transaction might precipitate a taxation liability, it cannot speculate as to the financial implications of this. Again, the onus of proof was on the husband which he has, curiously, failed to discharge. Item 18 should read “nil”.
In relation to items 19 and 20, various liabilities of the Wife, whether or not this was put in contention by the Husband (and the Court is not clear about this) these are not liabilities that the Court will allow on the balance sheet. Both items 19 and 20 should read “nil”.
Given the characterisation of lump sum payments received by the Wife in the post-separation period, as maintenance, it is unclear how either item should come onto the balance sheet. In any event, the cross-examination of the Wife about the personal loans that she obtained from relatives was far from clear and leads the Court to doubt the veracity, or the purpose, of these loans.
Having regard to the Court’s findings, therefore, the balance sheet between the parties will be as follows:
| ASSETS | ||||||
| Ownership | Description | Court’s value | ||||
| 1 | Joint | Property H | 630,000.00 | |||
| 2 | Joint | Property B | 850,000.00 | |||
| 3 | Husband | (omitted) Bank account | 200.00 | |||
| 4 | Husband | Household contents | 5,000.00 | |||
| 5 | Husband | Personal loan to Mr P | 110,000.00 | |||
| 6 | Husband | Lowe Family Trust | 1,690,000.00 | |||
| 7 | Husband | Loan owed by Lowe Family Trust | 447,000.00 | |||
| 8 | Wife | (omitted) Bank account | 375.00 | |||
| 9 | Wife | Toyota Prado motor vehicle | 13,000.00 | |||
| 10 | Wife | Household contents | 5,000.00 | |||
| 11 | ||||||
| Total | $3,750,575.00 | |||||
| ADDBACKS | ||||||
| Ownership | Description | Court’s value | ||||
| 12 | Wife | Funds advanced by Husband | NIL | |||
| 13 | Husband | Funds withdrawn by Husband 18/12/2015 | 100,000.00 | |||
| Total | $100,000.00 | |||||
| LIABILITIES | ||||||
| Ownership | Description | Court’s value | ||||
| 14 | Husband | Mortgage | 680,000.00 | |||
| 15 | Husband | Loan (omitted) Pty Ltd | NIL | |||
| 16 | Husband | Visa card | NIL | |||
| 17 | Husband | Capital gains tax | NIL | |||
| 18 | Husband | Estimated tax on dividend | NIL | |||
| 19 | Wife | Personal loans | NIL | |||
| 20 | Wife | Various bills | NIL | |||
| Total | ($680,000.00) | |||||
| SUPERANNUATION | |||||||
| Member | Name of Fund | Type of Interest | Court’s value | ||||
| 21 | Wife | (omitted) Super | Accumulation | $21,384.00 | |||
| 22 | Husband | (omitted) Superannuation Plan 1 | Accumulation | 103,397.00 | |||
| Total | $124,781.00 | ||||||
Summary of Balance Sheet
Total non-superannuation assets
$3,850,575.00
Less liabilities
-$680,000
Balance
$3,170,575
Total superannuation assets
$124,781.00
TOTAL NETT ASSETS
$3,295,356
Assessment of Contribution
Counsel for the Wife submitted that contribution should be assessed equally, as at the date of the trial. He submitted that the evidence indicated that most of the assets were created during the course of the relationship, and in this regard nothing turns on the date of cohabitation. The Court agrees. Implicit in the submissions made on behalf of the Wife is the contention that each made different types of contribution during the course of the relationship which, ultimately, should be assessed and evaluated in the same way. There is also substance to this submission. The Husband was, unquestionably, more involved and thus made a greater contribution to the business which grew spectacularly during the period of the cohabitation and indeed even post-separation. The Wife’s role in the business was less direct and less significant in a qualitative sense. Her contribution outside of the business and significantly as homemaker and parent, was substantial and greater than that of the Husband’s. Counsel for the Wife further submitted that, in any event, in the post-separation period the Wife bore most of the ongoing care arrangements in relation to the children. Even though the children spent substantial and significant time with their father, ultimately she bore the greater responsibility in circumstances where she had access to far less resources than he did.
Counsel for the Husband’s submissions that the Court should find he made the greater contribution involved a number of aspects. He contends that the period of cohabitation was relatively short and the parties had been separated for two years. In the post-separation period the Wife occupied the former matrimonial home, with the children and the Husband paid the mortgage in respect of the Property B acreage. He contends that the evidence establishes that the Husband was the driving force behind the establishment of the business and the Wife’s direct contributions to the business are minimal.
The Court has a number of concerns about the submissions made on behalf of the Husband in this regard. If the Husband is contending for a greater assessment of contribution in his favour for the post-separation period because he paid the mortgage on the home and the land, the Court does not accept that any such contribution would be greater than the contribution the Wife made in the similar period, particularly as a parent. To the extent that the Husband’s case was based on some special, or superior, contribution made to the establishment and development of the business, the Court does not accept this. The Court does not accept that this case is one where his contribution to the business should be treated either qualitatively or quantitatively in a different fashion to that made by the Wife, in other ways. Different types of contributions are often assessed to have the same value, and this is one of those cases. The problem with focusing on one party’s alleged contributions to the establishment and growth of any asset, let alone a business, is that it potentially ignores other factors that may have contributed to business growth, such as opportunity or good luck, the business skills of a partner, or simply being in the right place at the right time. Exhibits A1, A2 and R1, are the valuations and the joint statement. Without in any way detracting from the efforts that the Husband and indeed the Wife, made to the establishment and very rapid growth of the business in question, there is a sense in which they were in the right place at the right time. Is this a skill which should somehow be recognised under the Act and accorded a superior status to other less tangible contributions made by the Wife? Or is it just luck? A policy which favours treating different types of contribution in the same way is, in the opinion of this Court, soundly based.
The Court accepts submissions made on behalf of the Wife. A contribution in this marriage should be assessed as at the date of the trial as being equal.
An Adjustment under Section 75(2)?
The Wife’s case is that there should be an adjustment of 10 per cent in her favour. Her argument is that, in effect, even after a division of assets, the financial resources available to the Husband via the business, and his physical and mental capacity for gainful employment, will be far greater than hers. She acknowledges that the children will spend equal time with their father, but, as he has a flexibility of employment that she does not, he will still be advantaged over her in this regard. The Wife contends that her responsibilities towards the 2 children of the marriage, as well as X, will impact on her employment prospects. The Wife contends that she is not cohabiting with another person, whereas the Husband is and there has been a failure to adequately disclose the financial circumstances of that partner. She accepts that the Husband has been assessed to pay Child Support.
Insofar as the Wife submits that the Husband’s earning capacity is greater than hers and that he will have access to financial resource that she will not have, even on a 50/50 split, the Court agrees. Even if the Wife realises her ambition of becoming a (occupation omitted), or even if the Wife is placed in a situation where she needs to resume her employment as a (occupation omitted), or obtain work in some administrative capacity, she will never achieve the level of income that the Husband has in fact achieved through the business. Moreover, and without wishing to labour the point, the evidence amply demonstrates to the Court that the business and the way in which it is structured, provides not just an income, but a financial resource to the Husband that the Wife simply does not have, nor will ever have, in all likelihood.
There is substance in these submissions. Whilst the Court clearly reserves its position insofar as the wife’s claim for future spouse maintenance is concerned (and excludes it, for present purposes), prima facie the evidence does support an adjustment in her favour and 10 per cent is, in this Court’s view, within a reasonable range of adjustments. This, of course, is subject to a very careful consideration of the Husband’s contention about s.75(2) adjustments.
The Husband contended for a s.75(2) adjustment in his favour. The submissions made on his behalf need to be set out and carefully considered. Counsel contends that the 75(2) adjustment in his favour occurs because, in effect, the Wife will receive the tangible real estate assets and the Husband will retain the business undertaking. He contends that no adjustment should be made in favour of the Wife because of the Husband’s earning capacity as this has been included in the calculation of the value of the business undertaking. Moreover, the inherently different nature of the assets that each of the Husband and the Wife receive warrants the adjustment in his favour. In any event, the Husband should receive an adjustment in his favour because of the financial support and provision of accommodation that he provided for the Wife’s child, X. A consequence of this is, for example, that the Husband will not have the capacity to borrow because he has no real estate to offer as security. Moreover, the business has borrowings that are already secured against business assets. Thus, any payment that he is obliged to make to the Wife will have to come from income derived from the business.
Counsel for the Husband referred to, and relied on, a decision of Ramsay (1997) FLC 92-742. This is a decision of a single trial Judge, Warnick J. In that case His Honour was focused on valuation issues pertaining to a minority shareholding in a family company. One of the questions His Honour had to consider was whether there should be a discounting of the value of the shares having regard to the realistic value of those shares to the shareholder in circumstances where it was possible that the same value might not be achieved on a sale in the open market. There was much evidence before His Honour about the basis on which the value of the Husband’s shares in that case ought to be calculated. Of course, an obvious difference between this case and Ramsay’s case, is that the value on the balance sheet, specifically in item 6, is the Husband’s interest in the Lowe Family Trust and not a shareholding in the various business entities. Moreover and unlike Ramsay, the values are agreed values and reflect appropriate discounts.
In any event, Counsel for the Husband drew attention to the manner in which Warnick J in Ramsay dealt with s.75(2) factors. Indeed, His Honour makes a number of important observations, pertinent to this case. He observes that the Husband’s earning capacity was greater than that of the Wife, much as this Court has observed in the present case. Warnick J further observed that historically, the Husband’s earning capacity has been inextricably linked with his position in the Ramsay group. Thus, it was more difficult to assess his earning capacity outside that group but:
…the probabilities are that he will remain in his present position and thus it becomes a somewhat academic exercise to think of any other. His earning capacity is far better than that of the wife, at its best. Her capacity is also far less certain.
That is precisely the situation in the present case. To suggest that in the present case, either expressly or by implication, the disparity in the earning capacity is less than that which it starkly is, merely because the Husband’s earning capacity is inextricably linked to the business, is fallacious in circumstances where there is no evidence to suggest that anything will change so far as his earning capacity is concerned. Just because the valuation was based on future maintainable earnings, and thus linked to the Husband’s exertions, is irrelevant in circumstances where there is no evidence to suggest that anything will change. It is interesting to note that His Honour imposed a significant s.75(2) adjustment in Ramsay’s case.
Counsel then referred the Court to the following paragraph from His Honour’s judgment:
Even in the adoption of that course, it is appropriate, in my view, to recognise the lack of realisable value in the husband’s shareholding, but the discount need not be nearly as great as called for if an order for immediate payment of a lump sum, producing the dilemma for the husband previously described was made. Upon this consideration it would be appropriate, in my view, to reduce the share of the wife to 35% [from a contribution based entitlement of 45%].
The Court believes, however, that the paragraph in question needs to be seen in context of the earlier paragraphs. Under the heading of, significantly, The Husband’s Ability to Pay, Warnick J said:
It is at this point that I consider it essential to recognise that the value to the husband of his shareholding is not realisable, in the value found or at any particular value. The question arises how ought this recognition be made. One possibility is to discount the percentage for the wife, arrived at on other considerations.
But what is the purpose of such a discount? To arrive at a figure at which the shareholding is saleable? On the evidence here that would be an extremely low figure, if not zero.
Is it to arrive at a figure which it is believed might be raised by the husband, or at which a member of the husband's family might help him out, perhaps by buying his shareholding? Again it is difficult to introduce logic to that exercise.
To follow that course also immediately demolishes the very foundation for the assessment of nett assets, prior to final discount, because it may well force a sale, at a figure well below the $1.345 million used in calculating the nett assets.
Having regard to that real possibility and the fact that the value to the husband is calculated by capitalisation of a maintainable income stream, there is much to recommend the payment of the property settlement over time.
Even in the adoption of that course, it is appropriate in my view to recognise the lack of realisable value in the husband's shareholding, but the discount need not be nearly as great as that called for if an order for immediate payment of a lump sum, producing the dilemma for the husband previously described, was made.
Upon this consideration, it would be appropriate in my view to reduce the share of the wife to 35 per cent.
It is important to see the paragraph that Counsel referred the Court to, in context. His Honour was not dealing with the s.75(2) adjustment. What His Honour was doing was reducing the Wife’s overall entitlement, from 45 per cent to 35 per cent, to reflect the reality of the lack of realisable value in the Husband’s shareholding. In reality, His Honour was undertaking a just and equitable adjustment, not a s.75(2) adjustment.
Even if Counsel for the Husband has misconstrued this, or perhaps even inelegantly expressed the submission, the fact remains that the Court must consider whether there should be a further adjustment downwards, after assessing contribution and future needs, to reflect what Counsel contends to be the lack of realisable value in the Husband’s shareholding. The Court certainly prefers to consider this as part of the overall just and equitable approach to the implementation of ss.79 and 75, rather than somehow artificially treat it as a s.75(2) adjustment in the Husband’s favour. Moreover, when one has regard to Warnick J’s decision in Ramsay, His Honour seems to have been looking at the adjustment in the context of payments by instalment.
Bearing in mind that the Husband’s submissions, referred to above, will be treated as part of the Court’s just and equitable analysis of the evidence, the Court finds that a s.75(2) adjustment of 10 per cent in the Wife’s favour is appropriate and amply supported by the evidence.
Just and Equitable
The Court must consider, therefore, whether orders to implement a 60/40 settlement in favour of the Wife, would be just and equitable under s.79(2) of the Act. The Husband contends that it would not be just and equitable, because he is left with primarily business assets that are non-realisable, whereas the Wife is left with tangible assets, primarily real estate.
If the Wife receives 60 per cent of the net asset pool, her entitlement would be $1,977,213 and the Husband’s entitlement would be $1,318,143. If the Wife retained both the Property H and Property B properties unencumbered, together with the other relatively minor assets in her name (items 8-10 and 21 of the balance sheet) totalling an amount of $1,519,759, this would mean the Husband would need to pay her $457,454.
It is important to note that both the Husband and the Wife contemplate the making of a payment to her by way of instalments. There is neither a question about the Court’s power to do so, nor is there any issue about the appropriateness of the principle of instalment payments on the facts of this case. Clearly, however, there is an issue about the timing of such payments with the Husband contemplating a payment schedule which is much more generous than the abbreviated one proposed by the Wife. The express recognition by the Husband, however, of an obligation to make payments of a property settlement by way of instalments is somewhat inconsistent with his contention that the 60/40 outcome needs to be moderated in his favour because of the way in which the assets are structured. One may well ask; if the parties have themselves recognised the justice and equity of implementing a property settlement by way of instalments, how and why, would the justice and equity of that be somehow enhanced in the Husband’s favour because the 60/40 outcome is moderated in his favour? The logic of this escapes the Court.
Whilst it is not necessarily always inconsistent for a proposal to pay by instalment to be granted and a just and equitable adjustment moderating the Husband’s obligation, on the facts of this case, such further adjustment is plainly not, in this Court’s view, just and equitable. The Husband’s obligation to pay the Wife is $457,454 (subject to the realised value of the Property B property). The Court is satisfied from the evidence of both the Husband, and Mr P, that if pressed the latter has the capacity to repay the personal loan to the Husband of $110,000 noted at item 5 of the balance sheet. Moreover, the Court is satisfied from the evidence of both gentlemen, as well as all of the evidence of the business financial circumstances before the Court, that the business could repay the amount it owes to the Lowe Family Trust so that the Husband may gain access to the funds referred to in item 7 of the balance sheet. The Court accepts that a reasonable timeframe for this to take place might be as much as one year. Given the fluidity of both the Husband and Mr P’s financial transaction with the various business entities, it would certainly not stretch the imagination to see this happening in that timeframe. In the absence of any evidence about metaphorical “clouds on the horizon” for the business and given the consensus about the business valuation and the most recent turnover of the business, the Court is satisfied that the justice and equity to the Husband is achieved by an instalment plan without the need to make any further adjustment to the 60/40 split.
The Court does not, however, see any reason, legally or emotionally, why the Wife should receive the benefit of the Property B property in circumstances where she would contend for the Husband to continue to pay the mortgage and outgoings on that property, as well as discharge the mortgage in the 12 month timeframe she suggests. It is far more practicable and certainly less onerous and sensible if the Husband’s proposal in relation to the Property B property is adopted, that is, it is listed for sale with all of the net sale proceeds going to the Wife after discharge of expenses, the mortgage, etc but on the basis that he pays the mortgage for four months from the date of Order. The Court observes there is nothing to prevent the Wife buying the Property B property should she want to. There is nothing on the evidence before the Court which would warrant some special treatment in relation to Property B, such that the obligation be imposed on the Husband to convey an unencumbered title to her.
As a matter of principle, the remaining substantive differences between the Orders sought are not significant. Given the amount of money the Husband has to pay, a timeframe of 18 months is not inappropriate.
The Court is satisfied that these Orders are as just and equitable as the circumstances of this case permit.
The Wife’s Spouse Maintenance Application
The Wife sought an Order for Spousal Maintenance in the sum of $1,634 per week, payable monthly in advance, such payment to continue until the last lump sum instalment is paid to her. The Husband asked the Court to dismiss the Wife’s spousal maintenance Application.
The weakest part of the Wife’s case was her spousal maintenance Application. Her Application is dismissed. There is no objective evidence before the Court which explains why she cannot work. She is in good health. She is only 36 years old. She has worked as a (occupation omitted), undertaken office administration in the family business and agreed in evidence that she could work as a (occupation omitted). The Court rejects the implied contention in her evidence that, living in Property H, her employment opportunities are limited. The children are now in an equal time arrangement with their father. In any event, the age of the children is not such that would prevent her from working. She will receive the benefit of a 60/40 property settlement with the payment of lump sums over the next 12 months. She will have no financial commitments, other than her living expenses and will receive the benefit of child support.
The evidence the Wife gave about her financial circumstances was, in any event, unsatisfactory. Her expenses, in particular, do not survive any level of critical scrutiny, superficial or otherwise. Her claim for personal expenses of $1,604 at item 60, Part N of her Financial Statement is, with great respect, fanciful. There is hardly a line item that the Court would find to be reasonable, in the circumstances. The Court recognises that it must disregard the fact that the Wife is in receipt of Centrelink benefits, but the real problem for the wife in her spousal maintenance case is that the Court does not accept she is in need of maintenance. But even if that were the case, given the Husband’s onerous commitments to make payments by way of instalments, the Court is not inclined to the view that his financial circumstances establish a capacity to pay in that regard. This was not, in any event, a long marriage. It is not a case where the parties have had a standard of living during cohabitation that needs, somehow, to be perpetuated afterwards, or even for a short period. Moreover, the Court notes that the Husband has proposed that he continue to service the mortgage and pay the outgoings on the Property B property for a period of four months. This is, in the Court’s view, a more than adequate provision for the Wife by way of a spouse maintenance substitute.
I certify that the preceding sixty-seven (67) paragraphs are a true copy of the reasons for judgment of Judge Altobelli
Date: 20 May 2016
Schedule 1
Final Orders Proposed by the Applicant Wife
THE COURT NOTES:
A.The following definitions for the purposes of these Orders:
(a) “Act” means the Family Law Act1975 (Cth);
(b) “Wife” means Ms Lowe, born (omitted) 1979;
(c) “Husband” means Mr Lowe, born (omitted) 1985;
(d) “Property H property” means the property situate at and known as Property H in the State of New South Wales.
(e) “Property B property” means the property situate at and known as Property B.
(f) “(business omitted)” means (business omitted) and bearing ACN (omitted);
(g) “Lowe Family Trust” means the Lowe Family Trust;
(h) “(business omitted)” means (business omitted) and bearing ACN (omitted);
(i) “(business omitted)” means (business omitted) and bearing ACN (omitted);
(j) “Wife’s superannuation” means the Wife’s interest in (omitted) Super and/or any other superannuation fund;
(k) “Husband’s superannuation” means the Husband’s interest in (omitted) Super and/or any other superannuation fund
(l) “Wife’s bank accounts” means all bank accounts in the Wife’s name;
(m) “Husband’s bank accounts” means all bank accounts in the Husband’s name;
(n) “Wife’s personal belongings” means all personal belongings in the possession of the Wife;
(o) “Husband’s personal belongings” means all personal belongings in the possession of the Husband;
(p) “Wife’s liabilities” means all liabilities in the Wife’s name, including but not limited to credit card liabilities; and
(q) “Husband’s liabilities” means all liabilities in the Husband’s name, including but not limited to his credit card liabilities.
THE COURT ORDERS:
Financial Matters
That within six (6) weeks of the making of these Orders the Husband shall do all things and acts and sign all documents necessary to transfer to the Wife, free from any encumbrance, mortgage or guarantee, the whole of his right, title and interest in the Property H property.
That within twelve (12) weeks of the making of these Orders the Husband shall do all things and acts and sign all documents necessary to transfer to the Wife, free from any encumbrance, mortgage or guarantee, the whole of his right, title and interest in the Property B property.
That as and by way of property settlement the Husband shall pay the Wife an amount of $461,054.60 (“the settlement sum”), payable in instalments as follows:
a. The amount of $110,000 within 7 days of the making of these Orders;
b. A further amount of $200,000 within 35 days of the making of these Orders;
c. a further amount of $151,054.60 within 70 days of the making of these Orders.
That pending compliance by the Husband with Orders 1, 2 and 3 the Husband shall pay the following expenses as and when they fall due:
4.1 The council and water rates for the Property H and Property B property;
4.2 The mortgage repayment for the Property B property; and
4.3 The house and contents insurance for the Property H.
That for the purpose of payment of the expenses referred to in Order 4 the Wife shall forward all invoices to the Husband within seven (7) days of receipt of same and the Husband will pay such invoices directly as and when they fall due.
That within 14 days of receipt of the settlement sum by the Wife in compliance with Order 3:
a.The Wife shall resign all directorships and/or positions and/or offices in (business omitted).
b.The Husband shall prepare and execute in favour of himself a transfer of the whole of the Wife’s right, title and interest in her shares in (business omitted) and the Husband and Wife shall do all other acts and things necessary to give effect to this Order.
That the Husband shall forthwith indemnify and keep indemnified the Wife against any liability of any nature which the Wife has at any time arising in any way in respect of (business omitted), (business omitted) and (business omitted), whether from her position in the said companies, her receipt of any money from the companies, or any liability of the companies or otherwise.
That within fourteen (14) days of the making of these Orders the Husband do all acts and sign all documents necessary to discharge, release, terminate or transfer to the Husband’s sole name any and all personal guarantees given by the Wife in respect of any liabilities of or credit advanced to (business omitted), (business omitted) and (business omitted) or otherwise in relation to the said companies and its business.
That unless otherwise specified in these Orders, as against the Husband, the Wife be solely entitled to retain and the Husband has no interest in:
9.1 The Property H property;
9.2 The Property B property;
9.3 The Wife’s motor vehicle;
9.4 The Wife’s superannuation;
9.5 The Wife’s bank accounts; and
9.6 The Wife’s personal belongings.
That unless otherwise specified in these Orders, as against the Wife, the Husband be solely entitled to retain and the Wife has no interest in:
10.1 (business omitted);
10.2 (business omitted);
10.3 (business omitted);
10.4 The Lowe Family Trust;
10.5 The Husband’s superannuation;
10.6 The Husband’s bank accounts; and
10.7 The Husband’s personal belongings.
That unless otherwise specified in these Orders, the Wife be solely responsible for and indemnifies the Husband in relation to the Wife’s liabilities.
That unless otherwise specified in these Orders, the Husband be solely responsible for and indemnifies the Wife in relation to the Husband’s liabilities.
That unless otherwise specified in these Orders:
13.1The Husband and Wife each be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these Orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the banks’ records thereof and superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment of such entitlements;
13.2The Husband and Wife each be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders; and
13.3The Husband and Wife each be liable for and indemnify the other against any liability in their respective sole names, including but not limited to credit cards and personal loans.
That the Husband and Wife shall each do all such things as are necessary and sign all such documents as are necessary to give effect to these Orders.
That the Husband and Wife each have liberty to apply in relation to the implementation of these Orders.
That pursuant to section 81 of the Act the Husband and Wife intend that these Orders shall finally determine their financial relationship and avoid further proceedings between them.
In the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these Orders then the Registrar of the Court shall be appointed pursuant to section 106A of the Family Law Act to execute such deed, document or instrument in the name of the said party and to do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of Affidavit.
Spouse Maintenance
That the Husband shall pay, as and by way of spousal maintenance to the Wife, the sum of $1,634 per week, with such payments to be paid monthly in advance:
18.1On the first business day of each calendar month, with the first payment (and arrears) to be paid no later than 7 days after the making of these Orders and such payment to take effect from 8 February 2016 and cease on 2 May 2016; and
18.2To the credit of the Wife's nominated account.
That both parties have liberty to relist the matter on 7 days notice in relation to the implementation of these Orders.
Schedule 2
Respondent Husband’s Proposed Minute of Order
The parties shall forthwith do all acts and things necessary to sell the property situate at and known as Property B [the Property B property] and in respect of such sale the following shall apply:-
1.1.The property shall be sold at the best price reasonably obtainable.
1.2.The property shall be placed in the hands of a licensed auctioneer to sell the property by way of public auction within six weeks of the date of these Orders.
1.3.In the event that the parties dispute the name of the real estate agent and/or auctioneer to have carriage of the sale and/or auction then the parties or either of them shall request the President for the time being of the Australian Real Estate Institute [New South Wales Division] to appoint a real estate agent and/or auctioneer to conduct the sale of the property.
1.4.The Wife’s solicitor shall have the carriage of the sale.
1.5.In the event the parties cannot agree as to whether an offer to purchase should be accepted and/or the reserve price at auction then the parties or either of them shall appoint the President for the time being of the Australian Institute of Valuers or his or her nominee to assess whether any offer made represents the best price reasonably obtainable and/or determine the reserve price at auction and the parties shall be bound by such assessment determinations and shall equally bear the cost.
1.6.In the event that the President for the time being of the Australian Institute of Valuers and/or his nominee assesses that the offer made to purchase the property is equal to or greater than the best price reasonably obtainable as determined in accordance with the previous paragraph then the parties shall do all acts and things necessary to sell the property to the purchaser and otherwise give effect to this Order.
1.7.At first instance the Husband shall pay advertising costs and costs of auction and any other costs of the agent required prior to sale [preliminary costs] and the Husband shall be reimbursed as to one half of the costs from the sale proceeds.
1.8.The parties shall both do all things necessary to facilitate the sale.
1.9.Upon sale the proceeds shall be paid as follows:-
1.9.1.In payment of agent’s commission and legal fees occasioned by the sale.
1.9.2.In discharge of the mortgage to (omitted) Bank.
1.9.3.In payment to the Husband of one half of the preliminary costs.
1.9.4.In payment to the Wife of the then proceeds of sale [the net proceeds].
The Husband shall pay the mortgage instalments as they fall due until the sale of the Property B property or until the expiration of four (4) months from the date of these Orders whichever date is sooner.
In the event that the Husband pays mortgage instalments after the expiration of six months in accordance with Order 2 then the Wife’s entitlement shall be reduced by such sum paid by the Husband by way of mortgage instalments or towards the mortgage paid after six months from the date of these Orders.
Noted upon the sale of the Property B property the pool will be crystallised in that the Court finds that the asset pool shall be calculated as follows:-
The Property B property Net proceeds Property H Husband's (omitted) Account $200.00 Husband household contents 5,000.00 Husband personal loan to Mr P 110,000.00 Lowe Family Trust 1,690,000.00 Loan owed by Lowe Family Trust to husband 447,000.00 Wife (omitted) Bank Account 375.00 Toyota Prado motor vehicle [Wife] 13,000.00 Household contents 5,000.00 Funds advanced by husband to wife 90,000.00 Liabilities Mortgage $680,000.00 Loan (omitted) Pty Ltd 119,212.00 Visa card 4,968.00 Capital gains tax 123,000.00 Estimated tax on dividend 50,000.00 Personal loans 8,000.00 Various bills 1,000.00
The parties shall divide the pool of assets in such manner as provided by these Orders as to 37.5 percent to the Wife and 62.5 percent to the Husband.
The Wife shall then receive:-
6.1.Property H.
6.2.Net proceeds of sale of Property B property.
6.3.Wife (omitted) Bank account.
6.4.Toyota Prado motor vehicle.
6.5.Household contents.
6.6.Funds advanced by Husband to Wife.
6.7.Less $9,000.00 for personal liabilities.
The Husband’s liability will then be such sum as between the percentage division as determined by the Court and the asset retained by the Wife.
The Husband shall within 28 days pay to the Wife the sum of $ ,000.00 payable as follows:-
8.1.Within 21 days paid to the Wife the sum of $100,000.00 [less fees paid by the Husband to Ms. Delbridge-Bailey in the sum of $8,843.45].
8.2.Within six months of the date of these Orders pay to the Wife the sum of $100,000.00.
8.3.Pay the balance by way of annual instalments of $50,000.00 the first instalment being payable 18 months following the making of these Orders, or one half of any dividend paid to the Husband whichever figure is the greater and the Husband shall pay one half of the dividend to the Wife within seven days of receipt.
In the event the Husband defaults in compliance with Order 4 and the whole sum becomes due and payable then the Wife is at liberty to enforce the Order.
In the event the Husband fails to make payments within 28 days of the due date then the whole sum shall become due and payable and shall attract interest at the rate as determined by the rules.
Key Legal Topics
Areas of Law
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Family Law
Legal Concepts
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Jurisdiction
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Remedies
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Costs
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Statutory Construction
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