Mancini and Mancini
[2008] FamCA 319
•8 May 2008
FAMILY COURT OF AUSTRALIA
| MANCINI & MANCINI | [2008] FamCA 319 |
| FAMILY LAW – PROPERTY – Property adjustment – principles re resolution of conflict in expert evidence – weight given to initial contributions – capital gains tax – add-back of property received – just and equitable orders pursuant to s79. |
| Hickey & Anor and Attorney-General for the Commonwealth (2003) FLC 93-143 Housing Commission v Tatmar (1983) 3 NSW LR 378 Townsend and Townsend (1995) FLC 92-569 Rosati and Rosati (1998) FLC 92-804 Robb and Robb (1995) FLC 92-555 Preece and Preece (1981) FLC 91-048 Elsey and Elsey (1997) FLC 92-727 |
| APPLICANT: | Mrs Mancini |
| RESPONDENT: | Mr Mancini |
| FILE NUMBER: | SYF | 3646 | of | 2005 |
| DATE DELIVERED: | 8 May 2008 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | The Hon. Justice Rose |
| HEARING DATES: | 21-25 May 2007; 2 August 2007; |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | J Millar |
| SOLICITOR FOR THE APPLICANT: | Dimocks Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | M Kearney |
| SOLICITOR FOR THE RESPONDENT: | Barkus Edwards Doolan |
Orders
That the parties forthwith sign all documents and do all acts and things necessary for the purpose of the sale of their right title and interest in the property situate at and known as L in the State of New South Wales being the whole of the land comprised in Folio Identifier … (“the former matrimonial home”) by public auction unless otherwise agreed in writing to be conducted by such auctioneer as agreed upon in writing or failing agreement as nominated by the President of the Australian Property Institute at a reserve price agreed upon in writing or failing agreement as nominated by the auctioneer PROVIDED THAT in the event of there not being a bid or offer to purchase the former matrimonial home at or in excess of the reserve price then the parties shall join in the sale of it at the best price reasonably obtainable by them.
That the parties shall apply the proceeds of sale of the former matrimonial home in payment of the following:
(a) real estate agent’s commission (if any) and auction expenses;
(b) legal costs of sale;
(c) the amount equal to 91.27% of the balance in favour of the wife;
(d) the remaining balance to the husband.
That the husband do all things necessary to cause a discharge in registrable form of the mortgages (if any) granted over the former matrimonial home at the time of completion of the sale of it.
That forthwith upon the wife receiving the amount referred to in Order 2(c) she shall apply it in payment of the following loan accounts:
M & Co. $44,365.00 M & Co. $25,396.00 C Pty Ltd $105,399.00 Family Unit Trust $10,145.00 Total $185,305.00 and such further loan account liability incurred by her (if any) pursuant to the implementation of the consent orders made 21 November 2007.
That the husband pay to the wife periodic amounts referred to in the interim orders made 24 August 2005 until the date of completion of the sale of the former matrimonial home.
That upon compliance by the husband with Orders 1, 2 and 3 the wife shall do all things and execute all documents as may be necessary to:
(a)resign as a director of C Pty Ltd, W Pty Ltd and transfer to the husband her shareholding in each of those companies;
(b)resign as a director of M & Co. Pty Ltd and transfer to the husband her shareholding in that company;
(c)transfer to the husband her right title and interest in the properties known as … in the State of Queensland; … in the State of Victoria; time shares at … in the State of Queensland and …, Mexico;
(d)assign to the husband the whole of her interest in the Mancini Partnership;
That the husband shall indemnify the wife and keep her indemnified in respect of all actions, suits, claims, demands that may be made against her in relation to:
(a)any liability she has or may have arising in connection with her having been a director of C Pty Ltd, M & Co. Pty Ltd, W Pty Ltd including liability for any breach of duty, liability to any creditor of those companies and liability in relation to any loan account the wife may have with any of the companies and with the Family Unit Trust;
(b)any liability for taxation of any kind in connection with the wife having been a director of any of the companies referred to in (a) for taxation liability resulting from any income or deemed income of the wife from any of those companies;
(c)any liability the wife has or may have in connection with her having been a trustee of the Family Superannuation Fund including any liability for taxation of any kind arising from the wife having been a trustee of that Fund;
(d)any liability the wife has or may have from having been a partner of the Mancini Partnership including liability for any debt of the partnership, for taxation on any income of the wife arising from the partnership and for any rates, land tax and other outgoings in relation to the properties owned by the partnership;
(e)any liability the wife has arising from any debit loan account of any of the entities referred to in these Orders over and above the loan account liabilities which she is required to discharge pursuant to Order 4.
That within twenty-eight (28) days the husband do all things and execute all documents to cause the whole of the right title and interest in the Porsche motor vehicle registered number … and presently in the possession of the wife to be transferred to the wife free of any encumbrance.
That upon compliance by the husband in full with these Orders the husband is entitled as against the wife to the entire beneficial interest in:
(a) the runabout boat;
(b) the boat known as “[S]”;
(c)the timeshares and the properties at Queensland and Mexico;
(d)the husband’s interest in the Family Superannuation Fund;
(e)the Family Trust;
(f)the Family Unit Trust.
That as against the husband, the wife is entitled to the entire beneficial interest in:
(a)the contents of the former matrimonial home; and
(b)any other items of personalty reflected in the agreed amount of contents in the sum of $38,151.00 referred to under the heading “Revised Property of the Parties” in the Judgment given this day.
That except as otherwise provided by these Orders and upon compliance in full with these Orders each of the husband and the wife is entitled to retain to the exclusion of the other all property of any kind presently in the possession of or standing in the name of that party including any funds in any bank account in the name of that party.
That in the event that either party refuses or neglects to execute any deed or other document necessary to give effect to these Orders within seven (7) days of being first requested to do so, then the Registrar of the Court is appointed pursuant to s106A of the Family Law Act 1975 to execute such deed or other document in the name of the defaulting party and to do all such things as may be necessary to give validity and operation to that deed or document.
Liberty to apply on seven (7) days written notice being given in relation to the implementation of these Orders.
GENERAL
That all documents produced on subpoena may be returned to the person who produced the same.
That the proceedings be removed from the Active Pending Cases List.
IT IS NOTED that publication of this judgment under the pseudonym Mancini & Mancini is approved pursuant to s 121 (9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF3646 of 2005
| Mrs Mancini |
Applicant
And
| Mr Mancini |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
In these proceedings each of the parties seek orders for property settlement.
The proceedings were instituted by the wife in accordance with her application filed 3 August 2005. Subsequently the orders sought by the wife were in accordance with the “Minute of Orders” which became Exhibit 1. In substance the wife sought orders that the husband transfer to her the whole of his interest in the property at L (“the former matrimonial home”) unencumbered; that the husband pay to her $206,664.50; certain orders in relation to personalty, that the wife resign from all company offices and transfer her shareholding to him with indemnities in her favour.
The orders initially sought by the husband were in accordance with his response filed 23 August 2005.
The orders sought by the husband at the commencement of the hearing were as set forth in the document “Amended Orders Sought” being Exhibit 2. The husband sought orders that various parcels of real property including the former matrimonial home be sold by the parties after payment of secured and unsecured liabilities and the net remaining proceeds of sale be divided on the basis set forth in that Exhibit. Orders were also sought by him in relation to distribution of items of personalty.
The parties cohabitated for a period of approximately 15½ years which commenced on 1 January 1990 according to the wife or in April 1990 as contended by the husband. This issue was barely explored in the evidence and in my view its resolution was of no relevance to the ultimate determination in these proceedings.
The wife is 53 years of age having been born in August 1954. Her occupation is that of company director although she had not been engaged in those duties for a considerable period.
The husband is 50 years of age having been born in May 1957. He is a self-employed accountant carrying on his practice through the entity of M & Co. Pty Limited (“M & Co.”) Sydney.
There are no children of the marriage. Both parties have children by prior marriages.
The parties married in June 1992 and separated under the same roof on 24 June 2005.
The marriage was dissolved by decree nisi made 10 August 2006 which became absolute on 11 September 2006.
HISTORICAL BACKGROUND
The following are brief relevant historical matters.
In about 1985 the husband contends that he acquired a fifty percent interest in the accountancy practice conducted by P Company.
On 16 July 1987 the M Company was incorporated. It conducted the husband’s accountancy practice at his direction.
In October 1989 the wife acquired her former husband’s half interest in the property at S (“the [S] property”) for $140,000.00. The wife contends that the purchase price was funded by a gift from her father. The husband alleges that he lent the wife $140,000.00.
In April 1990 M & Co. purchased the property at T for $192,000.00. The source or sources of funding are unclear. The husband’s accountancy practice was conducted at this property.
In 1990 W Pty Limited was incorporated. It was and remained an investment company. The parties were the sole directors and shareholders and each of them held one ordinary share.
In 1992 the husband acquired his former wife’s interest in a unit at B pursuant to consent orders for property settlement. The agreed value of the interest held by her was $63,000.00 subject to a mortgage to the National Australia Bank.
In 1992 the husband retained the sole legal interest in a timeshare in Queensland pursuant to consent orders for property settlement with his former wife.
In 1994 W Pty Ltd purchased the property at T2 for $400,000.00. The purchase price was funded by a bank mortgage loan of $200,000.00 and the balance by an interest free loan from the husband’s aunt. The husband’s accountancy practice is conducted at this property.
In 1996 the S property was sold. The affidavit evidence of the parties is that the wife contends that the S property was sold for $620,000.00 whilst the husband claims that the sale price was $380,000.00. During the course of cross-examination the wife acknowledged that the sale price was $340,000.00. There is an absence of evidence of the net proceeds of sale. However, I infer that the property was sold unencumbered, there not being any contrary evidence and that the proceeds of sale were inferentially reduced due to selling costs although those costs are not quantified.
In 1996 W Pty Ltd purchased a property at H for $1,120,000.00. There is an absence of evidence of the funding. Subsequently, W Pty Ltd transferred its interest to the parties jointly.
In September 1998 the husband caused a refinancing of the B Unit securing a mortgage loan of $202,000.00.
In 2000 the parties purchased off the plan a home unit in Melbourne for $460,708.00.
In or about 2000 M & Co. as trustee of the Family Unit Trust purchased the property at P (“the P unit”) for $450,000.00 according to the wife or $415,000.00 as contended by the husband.
The purchase price was funded in part by the trustee of the Trust and a Westpac mortgage advance of about $370,000.00.
In 2002 the H property was sold for $2,400,00.00. There is an absence of evidence of the net proceeds of sale. The husband’s evidence which I accept is that the amount secured by the mortgage had been paid although the mortgage had not been discharged.
In 2002 the parties purchased the former matrimonial home. The purchase price was $3,200,000.00. It was funded in part by the net proceeds of sale of the H property and a bank mortgage advance of $600,000.00. The mortgage was partially satisfied by the subsequent net sale proceeds of the B unit.
In 2002 C Pty Ltd purchased a property at R for $2,500,000.00. It was fully funded by a Westpac mortgage loan. It appears that further security was provided by the parties over the former matrimonial home.
In 2002 the B Unit was sold for $292,500.00. The net proceeds of sale were $290,500.00 less selling costs.
In 2003 the parties as members of the Mancini Partnership acquired four units at … in the State of Queensland (“the [Queensland] premises”) for $1,500,000.00. The purchase price was fully financed.
In January 2004 the parties acquired an interest in a Vacation Club for US$17,192.00. There is an absence of evidence of its funding, other than the deposit of US$6,418.00 paid by the parties.
On 24 August 2005 orders by consent were made before Judicial Registrar Loughnan in the following terms:-
1.That reserving characterisation of the same, the husband is to pay specified outgoings in relation to the [L] property including mortgage instalments, statutory charges, electricity, phone calls, maintenance and insurance.
2.That the husband shall cause the company [M & Co] Pty Limited to pay specified outgoings in relation to the Porsche motor vehicle being reasonable maintenance expenses, registration and insurance.
3.The husband pay $475.00 per week, up to $60.00 per week in respect of the wife’s petrol card and medical insurance premiums for the wife together with non elective gas expenses.
4.That the wife is to deposit the $13,000.00 in the safe of the [L] property to a controlled monies account.
5.The wife return certain chattels to their original position in the property.
6.The wife provide to the husband specified items of personalty.
7.Noted that the payments required of the husband are to be met from a number of specified sources.
On 24 October 2005 orders by consent were made before Judicial Registrar Johnston in the following terms:
1.That by interim property settlement the wife retain $125,000 drawn by her from the account of [M & Co] and an account in the joint names of the parties and apply such funds to her legal costs.
2.Nomination by the wife of a bank account for the deposit of the periodic payments to her pursuant to the orders made 24 August 2005.
3.Restraining the husband from application of rental income from the [Melbourne] and [Queensland] properties save in the ordinary course of business, meeting usual costs and expenses of the partnership and [C Pty Ltd], meeting the interim financial support of the wife and properties, husband’s medical expenses, boat expense, maintenance of the parties’ timeshare interests and payment of taxation.
4.That the husband permit the wife to obtain information from the agents for the Queensland and Melbourne properties.
5.That the husband will provide to the wife not less than monthly statements received by him from the agents in respect of the Melbourne and Queensland properties and details of accounts to which income is deposited.
6.Discharging Order 3.2 of 24.8.05 and ordering in lieu thereof the husband pay to the wife $60 per week in relation to the wife’s estimated petrol usage.
7.The wife provide to the husband all cheque butts, books and other documents in relation to the company.
8.The wife be restrained from operating in any way upon the accounts of the companies and partnership.
9.The wife will cease all charges on her behalf to the Westpac Visa card account.
10.The wife is to meet all liability of her interest in respect of Westpac Equity Access Account […].
11.Subpoena to produce documents issued to the husband on 14.8.05 be withdrawn and reserved of the issue of costs to the Trial Judge.
12.Determining the interim proceedings.
13.Reserving each parties’ costs to the Trial Judge.
14.Noting that the payments to be made by the husband per Order 7.2 of 24.8.05 are made by way of distribution of income from the parties’ partnership and on the basis of equal portion between them.
15.Noted the husband’s obligation per Order 1.1 of 24.8.05 shall not include payment in respect of the Westpac Equity Access Account for which the wife is responsible.
16.That the parties each provide the other with particulars in relation to the funds withdrawn by each of them.
On 27 June 2006 consent orders were made in the following terms:
1.Adjourning the husband’s Form 2 Application filed 8 March 2006 in respect of the Third Party Notice to the final hearing.
2.Varying the orders made in relation to the interim financial support to be provided to the wife.
On 22 August 2006 orders were made by consent for the provision of further interim funds to be paid to the wife in the sum of $100,000.00.
On 16 March 2007 directions were made and leave granted to obtain new hearing dates.
On 21 November 2007 interim orders were made by consent which provided, inter alia, that each of the parties may receive $50,000.00 by way of a loan from C Pty Ltd.
RELEVANT LEGAL PRINCIPLES
It is now well established that generally speaking the approach to be taken to determination of property settlement proceedings, concluding with an order that is “just and equitable”, represents four steps.
The first of which is that the Court should determine the property and financial resources of the parties at the date of the hearing.
Secondly, determine the nature and extent of the respective contributions made by each of the parties whether financial or non financial, including contribution to the welfare of the family in the role of home-maker and parent.
Thirdly, determine and assess the relevant matters pursuant to s75(2).
Fourthly, consideration of orders, if any, that should be made that are just and equitable.[1]
[1] Hickey & Anor and Attorney-General for the Commonwealth (2003) FLC 93-143
I will now proceed to make findings in relation to the property of the parties, their respective financial and non-financial contributions and relevant matters (if any) pursuant to s 75(2) of the Act. In addition, I will make findings in respect of the issue of “waste” raised by the applicant.
PROPERTY OF THE PARTIES
The agreed “Joint Schedule of Assets & Liabilities” at the date of the hearing became Exhibit 3 and was subsequently expanded upon and annotated in the written submissions lodged by counsel. The reasons for expanding Exhibit 3 were not made clear in those written submissions. However as counsel addressed their submissions accordingly, that is the Schedule which is reproduced hereunder:
JOINT SCHEDULE OF ASSETS & LIABILITIES AS AT HEARING DATE
ASSETS Husband Wife 1 [L property] 4,850,000 3,800,000 D 2 [M & Co] Pty Ltd, including: 2,130,000 2,130,000 A a. [Family] Unit Trust b. Husband's motor vehicle 3 [C Pty Ltd] 1,378,000 1,378,000 A 4 [W] Pty Ltd a. If [T property] valued at $880,000 (husband) 734,000 D b. If [T property] valued at $1,100,000 (wife) 1,024,000 D 5 [Mancini] Partnership: 677,000 677,000 A a. [Queensland property] b. Melbourne Unit 6 Wife's 1,576 IAG shares $5.72 per share 9,015 9,015 A 7 Husband's 847 IAG shares @ $5.70 per share 4,845 4,845 A 8 Husband's [P] Group Trust 70,730 70,730 A 9 Riviera Cruiser 190,000 190,000 A 10 Wife's St George Bank account […] 49,649 49,649 A 11 Wife's Westpac account […] 60 60 A 12 Husband's St George Bank account 295 295 A 13 Husband's jewellery 5,430 5,430 A 14 Wife's jewellery (husband contends wife did not provide all jewellery for valuation) 11,395 11,395 A 15 Household contents: a. Husband to retain 2,835 2,835 A b. Wife seeks to retain 38,151 38,151 A 16 Runabout Boat 6,500 6,500 A 17 Husband's Club [Qld] time share, 2 weeks 8,500 8,500 A 18 Controlled moneys account holding cash from safe 4,132 12,132 D 19 Partial property sums received by wife: 320,000 0 D 19.1 $25,000 19.2 $100,000 19.3 $100,000 19.4 $95,000 20 Deposit paid on Mexico time share 11,232 25,000 D 21 Loan owed to husband from [W] Pty Ltd 23 23 A 22 Loan owed to wife from [W] Pty Ltd 23 23 A 23 Husband's motor vehicle - Holden cruse 15,000 17,500 D 24 Wife's motor vehicle (note 23) 100,000 100,000 A 25 Husband's superannuation 87,368 87,368 A 26 Wife's superannuation 32,438 32,438 A 27 Add back husband's legal fees 163,902 327,738 D 28 Add back wife's legal fees 0 195,548 D 29 Add-back: monies paid from [C Pty Ltd] account to [Mancini] Family Trust account 0 12,573 D 30 Monies withdrawn by husband from Cash Management account 11/05/06 0 46,524 D 31 Add-back monies paid to [LD] for Ms [C’s] children 0 5,950 D 32 TOTAL 10,900,523 10,269,222 LIABILITIES 33 Balance to be paid on Mexico time share 14,900 14,900 A 34 Westpac Equity Access account 100,000 100,000 A 35 Husband's loan owing to [his aunt] 59,000 0 D 36 Husband's loan account [M & Co] at 30 June 2006 44,366 44,366 A 37 Husband's further loans from [M & Co] since 30 June 2006 123,600 0 D 38 Wife's loan account [M & Co] 44,365 44,365 A 39 Wife's further loan account [M & Co] 25,396 25,396 A 40 Husband's loan account [C] Pty Ltd 2,732 2,732 A 41 Wife's loan account [C] Pty Ltd 105,399 105,399 A (a) Husband's loan account for legal costs [Family] Unit Trust 55,855 10,145 D (b) Husband’s loan account [Family] Unit Trust as at 30 June 2006 20,015 20,015 A 42 Wife's loan account [Family] Unit Trust as at 30 June 2006 20,015 10,145 A 43 Wife's Westpac Mastercard 0 1,127 D 44 Wife's Citibank Ready Card 0 9,044 D 45 Wife's St George Mastercard 0 6,160 D 46 Husband's loan from his mother for Holden cruse + legal fees 27,000 0 D 47 [Mancini] Partnership capital gains tax liability 73,572 0 D 48 [C] Pty Ltd capital gains tax liability 567,234 0 D
49 [Family] Unit Trust capital gains tax liability 38,522 0 D 50 [W] Pty Ltd capital gains tax liability: a. If [T property] valued at $880,000 90,877 0 D b. If [T property] valued at $1,100,000 175,702* 0 D 51 Husband's credit card debt 30,000 30,000 A 52 Total 1,442,848 403,779 NET ASSETS 32 Assets 10,900,523 10,269,222 52 LESS liabilities 1,442,848 403,779 53 Total 9,457,675 9,865,443 FINANCIAL RESOURCES 54 [M] Unit owned by [Mancini] Family Trust 0 220,000 D 55 [S] Family Trust 0 0 A 56 Total 0 220,000
* Not included in total
DISPUTED PROPERTY AND LIABILITIES
Property
In relation to my reasons for preferring the evidence of one expert over that of the other in relation to the former matrimonial home and the T property I have followed established principle that whilst reasons must of course be given so far as the preference ultimately decided upon, in the area of expert evidence, as distinct from the clash of lay witnesses, those reasons need not be extensive. As was held by Hutley JA in Housing Commission v Tatmar “the choice between conflicting experts may have to be a matter of judgment, not of detailed reasoning.” [2]
[2] (1983) 3 NSW LR 378 at 381 followed in Gamer and Gamer (1988) FLC 932 at 76,746.
In Gamer and Gamer the Full Court referring to the preference by the trial judge of one expert compared to another stated “Her Honour, having heard each expert, and the husband, preferred the evidence of the accountant for the wife. By doing so, she was adopting his judgement and his prediction about the future of the company. It must be implicit that in so doing she found his reasons more convincing that those of the accountant for the husband. The reasons are clearly set out in his report.” [Emphasis added].[3] Those observations are apposite in this case.
Item 1 – L Property
[3] Ibid at 76,747.
The former matrimonial home
There were two valuers in relation to the current market value of this property. The valuers were GB on behalf of the wife and DB on behalf of the husband.
The valuation provided by GB was $4,850,000.00. DB’s valuation was $3,800,000.00.
Exhibit 12 is the joint statement of the valuers. Exhibit 12 noted the valuers agreement in relation to location, land and improvements and description. Importantly they set out description of their difference in their respective valuations being due to the:
“Result of our respective analysis of comparable sales. The valuers disagree with regard to the appeal of the design and construction of the subject dwelling, [DB] considering it to be now somewhat dated and having less appeal, whilst [GB] considers it to comprise a good quality home with excellent broad market appeal. The valuers do agree this is a somewhat subjective area or personal judgement.”
Discrete areas of difference included the significance which GB placed particularly upon … for $3,800,000.00 (“sale one”) and … for $3,800,000.00 (“sale two”). He also drew support from other sales listed in his Report. He further contended that “the immediate vicinity of [L] has not seen a waterfront sale above this level at any recent time.”
GB was in disagreement with DB in relation to a number of matters. In his opinion the waterfront and facilities of sale one was substantially inferior to the former matrimonial home. DB disagrees.
In addition GB contended that sale two was not “a true indicator of market conditions, his information being it sold below its true market value due to duress on the part of the vendor.” Accordingly GB did not utilise those sales. DB on the other hand considered that sale two “was the subject of a marketing campaign and was sold recently and as a registered sale exposed to typical market forces” was acceptable and relevant to consider.
GB and DB were cross-examined.
During the course of his oral evidence GB stated that the reasons for him not considering sale one which took place in January 2006 was that it was not comparable or relevant market research as “the house was a totally different type of property, the waterfront was virtually in name only, it was a steep block down to a southern aspect, and with my knowledge of [the area] which I have, to moor a boat or even land a boat down there with any sort of southerly breeze is physically impossible.”
GB rejected the proposition that the design and décor of the former matrimonial home was dated. In his view that particular design and décor “is the traditional design and decor that probably 90% of waterfront buyers look for. They don’t go for the stainless steel and glass buildings because they will date”. He rejected the further proposition that in today’s market for a property such as the former matrimonial home and its particular location would be more attractive if it included open plan design living. So far as large families are concerned he was of the view that the former matrimonial home offered large areas of living space in its traditional design. He further expressed the opinion that the traditional buyer of property of the size of the former matrimonial home with its waterfront is a purchaser who would “buy regardless of their family circumstances”. He commented that this aspect of the matter represented a personal opinion of DB and implicitly himself.
GB acknowledged that a concern to a purchaser of the former matrimonial home was whether or not it had access for a boat to the water and consequently the presence of a jetty would be significant. He acknowledged that he did not refer to the jetty in the first report because he did not see the necessity for it. As the report was not prepared “for a prospective buyer. It was done for this purpose of the court.”
GB also rejected the proposition that it was a disadvantage to the marketability of the former matrimonial home that at night the lights of a nearby town in the distance could not be seen.
In relation to sale two he stated that he was aware of it because he knew all of the parties involved in that sale.
GB stated that he had had discussions with the agent who had placed an offer for the purchase rejected by one of the two vendors. GB stated that he had spoken to that particular vendor who informed him of financial difficulties that he was having at the time.
GB stated that his understanding was that the property went on the market in January 2006 and sold about nine months later in October 2006 and that two offers had been rejected in the interim.
GB stated that sale number two was advertised for sale over that nine months period by all of the usual means. Two offers were attracted. He was unfamiliar with the advertising campaign.
GB stated that in his opinion the vendor’s original market price “was probably realistic” which was above $3,800,00.00 namely $4,950,000.00. He stated that the vendors had an offer of $4,800,000.00 and then subsequently at $4,500,000.00 which they rejected as “he [the vendor, DN] was in such financial strife.” He was “desperate to get his $4,950,000.00 and he knocked it back.” He subsequently did the same to the offer of $4,500,000.00 notwithstanding that in the interim he was in financial difficulties and implicitly preferred to leave the property on the market rather than have the benefit of the money represented by the first offer and then subsequently the second offer.
GB was of the view that in relation to sale two “the end selling price wasn’t the bottom line.” That is based upon what GB stated that the agents had told him.
GB also stated that the other vendor, who was the de facto wife of DN, “bailed him out”. DN also had a hotel which he was keen to have reopened. As a result $3,800,000.00 was accepted from the purchaser “with suspicion and innuendo” as to the contribution that the purchaser made to the hotel.
In GB’s opinion the sale could not be used due to the surrounding circumstances which were unsatisfactory. Consequently in his opinion the $3,800,00.00 sale price for sale two having regard to the particular property involved was “an out of line sale.” He emphatically disagreed that the sale two property was one of the most desirable waterfront locations in the Shire. He also emphasised that a waterfront buyer “is after the waterfront, he is not after the night lights of […].”
GB also rejected the proposition that the market had declined since sale one. He relied upon discrete data that can be purchased from Australian Property Monitors for the purpose of information in relation to and assessment of real estate sales of waterfront properties in the area.
DB was cross-examined at length in relation to his report. So far as “comparable sales are concerned” he agreed with the essence of GB’s evidence that he had regard to relevant property and to the difficulties of finding a property that is truly comparable. He explained his approach further in relation to a “comparable sale” by providing a description that it “is some sale that gives me some measure of guidance in terms of arriving at a figure on the subject property.”
Whilst the cross-examination elicited the differences between DB and GB so far as particular property to which they had referred in their respective reports, the critical difference was in regard to sale two. DB did not accept discussions that GB had regarding the alleged two offers that were rejected during the period of marketing of some nine months for the purpose of implicitly coming to the view that its ultimate sale represented an “out of line sale.” In that regard DB’s evidence was that he took into account that the property had been marketed extensively and ultimately there was a registered or recorded sale. He referred to his extensive experience as a valuer during which he had heard on many occasions that a previous offer had been made which was rejected. Based on that experience he did not place any weight on offers that did not proceed even if implicitly they had really been made.
As DB pointed out an auction determines the fair market value of the property. He further explained that “if it has been marketed correctly, if it has been exposed to market forces, a buyer in the room to me constitutes willing buyer, willing seller concept.”
DB pointed out that a sale which might have proceeded prior to auction for $3,900,000.00 or $4,000,000.00 was within a reasonable range. However, “I struggle to accept that the property could have been worth $4,800,000.00 and yet there wasn’t a buyer out there in nine months that was willing to bridge the gap between $3,800,000.00 and $4,800,000.00.” He asked the rhetorical question “where were these people when it sold for $3,800,000.00? $3,800,000.00 to me, is the value of the property. That is its registered selling price.” The property had been extensively marketed and had been on the market for anyone to purchase.
A difficult issue of preference arises when considering the approach to valuation between two experienced valuers particularly when they have a different view as to the aesthetic value of the former matrimonial home compared with other relevant sales which each of them recognised “is a somewhat subjective area of personal judgement”[4]. I have concluded that I accept the evidence of DB as opposed to GB in terms of the current market value of the former matrimonial home which has the result of it being determined at $3,800,000.00. The crucial reason for my conclusion is that I preferred the objective features of DB’s evidence of assessment in relation to the sale described as sale number two, rather than the approach of GB which he considered it be “an out of line sale” due to the hearsay information which he had received in relation to two offers in the period of marketing well in excess of the ultimate sale price upon terms and conditions which were not stated other than as to price; the suggestion that the purchaser may have had some collateral agreement with the vendors in relation to investment by one of them in a hotel and the suggested financial arrangements between the two vendors themselves. I am not satisfied that weight can be attached to that type of background especially as it was not corroborated in any of its aspects by either of the vendors.
[4] Exhibit 12.
Item 4 – T2 property
As Exhibit 12 makes clear the valuers were in agreement in relation to a number of matters. They included location, land and improvements description and that a property sale at S Street, T was relevant.
Methodology represented the principal area of difference. GB’s valuation approach was “solely on a capitalisation of income” and that consequently in his opinion “there were no relevant comparable sales to be included”.
In contrast whilst DB “does not necessarily disagree with the capitalisation approach, his opinion is that there is a range of yield rates supportable and that merely minor variances in the rate applied will result in quite wide end valuation ranges.”
DB referred to a number of sales of property which he considered to be relevant and in particular the sale of number 326-328 in the same street as T2 property. Although he had noted those sales GB was of the view that rental returns were below market, there was potential to increase income with a result that a higher yield rate could be achieved than was initially shown. DB disagreed. DB was also of the view that the sales “reflect more the shop/residence value than a simple investment yield.”
GB also contended that other sales in that street as referred to in DB’s report were not relevant as they were in much superior “prime location”. DB disagreed with that description.
Both valuers however did agree that the sale at S Street was of some relevance. The valuers disagreed as to the degree of its inferiority compared to the T2 property. GB was of the view that it was only “slightly inferior”. Hence his valuation figure of $810,000.00 against the sale of $760,000.00.
DB applied “a capitalisation approach as his secondary method”.
In summary Exhibit 12 reveals that GB’s valuation was $810,000.00 whilst DB’s valuation was $1,100,000.00.
The valuers were cross-examined at length.
GB confirmed that he adopted the methodology to which I have earlier referred on the basis that there was an absence of relevant property sales.
GB conceded that there are difficulties and complexities in utilising a basis of yield and in different circumstances could have been used by him as a cross-reference. In that regard he took into account the relevant interest rate and rent.
So far as a sale of real estate nearby to the T2 property was concerned, he agreed that the total land area of numbers 326 and 328 was marginally less than the T2 property in that the former area was 304 square metres, the area of the T2 property being 306 square metres approximately. He acknowledged that the sale price of numbers 326 and 328 was $820,000.00 each.
He stated that there had been agreement between him and DB that market rental of those properties should be assessed at $300.00 a metre notwithstanding that it was only showing a low yield due to its rental at $175.00 a metre. He pointed out that yields may vary depending upon the nature of the property, long term tenancies, short term tenancies and the attractiveness of the tenant. He acknowledged that those factors represented the difficulties with the yield method. Notwithstanding that his valuation of the T2 property at $810,000.00 was in fact for a property double the size of each of numbers 326 and 328 which each sold for $820,000.00 a short time previously, one of the reasons that he relied on for his valuation was that the T2 property was in a lesser location. However he acknowledged that may not be the case for specific uses such as commercial offices.
Substantial further evidence was given by GB by way of explanation of the yield rate chosen by him at seven percent as well as comparisons of the desirability of the southern end of the street compared to the Northern end. He did not consider the T2 property was comparable with number 326 or implicitly number 328.
So far as the sale of S Street was concerned he considered that the improvements were “very comparable” to the T2 property. However he was of the view that it was situated in a fringe location from the main area of T.
Essentially, GB did not change his views of the methodology to be applied nor the manner in which it was applied.
Early in his oral evidence DB indicated that an acceptable range of valuation was $1,000,000.00 to $1,100,000.00. He reiterated that his primary method of valuation was the so called comparable sales method as against a capitalisation approach.
The factor involved was the significance of the T2 property being owner occupied which thereby made a determination of marked rent an issue. He emphasised that a particular difficulty was fixing on a specific yield rate to apply to the market rent although he and GB reached a similar conclusion regarding the level of market rent. The real issue revolved around the expression of yield.
DB was cross-examined in relation to the number of sales of property which he considered to be relevant which took place in nearby streets.
With regard to one of the principal sales of property which he considered as relevant namely, numbers 326 to 328 he emphasised that it was within approximately 60 metres of the T2 property.
He acknowledged that the S Street property was largely inferior, on the smaller side and not a specifically constructed commercial office space. In contrast the T2 property was superior. Nonetheless he considered it to be a relevant sale of property as it provided some guidance.
DB emphasised that “a very key sale” was that of numbers 326 to 328. It was sold for $1,640,000.00 at auction in two separate lots each recorded as selling at $820,000.00. He classified the properties as being “very fringe retail” with a residence attached which was not a feature of the T2 property.
He expressed the view that whilst capitalisation was relevant, given the nature of the T2 property being owner occupied it was not his primary approach. He further stated that when there was an actual sale price and conclusions can be derived from it, it is less subjective than determining a yield rate for arriving at overall value. As with GB, concessions were made by DB in relation to aspects of one or other of the properties referred to in his report. However, he did not depart from his methodology and the manner in which it was applied.
I prefer the evidence of DB to that of GB. GB recognised there are inherent difficulties in applying the capitalisation method involving striking a yield rate. Obviously, he considered that it was preferable to use that methodology as in his opinion there was an absence of relevant property sales.
However, I prefer the evidence of DB in that I accept his premise that the primary methodology to be used is that of “comparable sales” in the context explained by him. In that regard I accept his evidence that the sale of properties numbered 326 to 328 are particularly significant given the close proximity, the features of properties by comparison to the T2 property and the sale prices achieved in the market. There was no evidence to suggest, nor was it alleged, that both or either of those sales were out of line or there was some peculiar aspect of one or both sales which enabled the sale price achieved to be overlooked or discounted.
Item 15 – household contents
The written submissions make it clear that agreement has been reached. As a consequence the parties retain household contents to the following values:
Husband - $ 2,835.00
Wife - $38,151.00
Item 18 – controlled monies account holding cash from safe
The husband’s evidence-in-chief was that shortly after the parties separated the wife gained access to cash held in a safe in the former matrimonial home. The cash amount was about $13,000.00. That amount has since been held in the controlled monies account.
The husband’s evidence is that $8,000.00 of the above-mentioned amount represented cash that he was holding in safe custody for his mother which she had provided to him for that purpose in about 2005.
The husband’s mother corroborated the husband’s evidence by her affidavit sworn 4 May 2007. The husband borrowed other amounts from her to assist him in meeting a variety of liabilities.
The husband and his mother were cross-examined. The husband contended that he will definitely repay his mother the cash amount of $8,000.00 but he had not the opportunity to do so because of other commitments. The husband’s mother’s oral evidence was that she had not asked for the amount to be repaid but implicitly trusted the husband to do when she requested it.
I accept the evidence of the husband and his mother that she provided $8,000.00 in cash to him to be held in safe custody. The husband’s mother had not asked for the amount of $8,000.00 or any part thereof to be repaid to her.
I do not accept the husband’s evidence that he has not been in a position to repay the amount of $8,000.00 to his mother. Since the amount was made available to him, he has purchased another motor vehicle which involved additional financial commitment on his part. At the same time he retained a BMW motor vehicle worth approximately $100,000.00 which is unencumbered and which he hardly used as he considered it too expensive to run. He pointed out that the as BMW motor vehicle was owned by the Trust the sale of it with a consequential loan to him had tax implications. He was endeavouring to deal with his loan account in the Trust in an appropriate manner prior to the end of the financial year due to personal tax implications that it raised.
I am not satisfied that the husband has had a commitment to repay his mother the $8,000.00 that he has held on her behalf since in or about 2005, notwithstanding the potential tax implications of the sale of the BMW motor vehicle. It seems that his priorities have been to minimise motor vehicle expenses by incurring a further commitment for another motor vehicle when he could have caused the BMW motor vehicle to be sold leaving more than ample funds to repay his mother, notwithstanding the tax implications of a trust loan account entry of $8,000.00 for which he would have been in debit for any potential tax implication that may have then arisen. In those circumstances I find that the amount of $8,000.00 has been retained by the husband as his property which may be repaid at an indeterminate time in the future, especially in circumstances where payment of it has not been pressed by his mother at any time since the money was made available to the husband in about 2005.
It was agreed that the relevant amount held in the controlled monies account was now $12,132.00. For the reasons set forth in the last preceding paragraph, I find that $12,132.00 represents the amount of property to be reflected in Item 18.
Item 19 – partial property sums received by wife
As Exhibit 3 makes clear the total amount received by the wife was $320,000.00. On behalf of the husband it is submitted that the full amount should be included in the calculation of the net property of the parties. Counsel for the wife submits that as the amount was fully expended upon the purchases referred to in the written submissions with the exception of money held in a bank account, therefore the total amount received should not be added back.
The wife has paid legal fees of $196,648.00 from the total amount received. In addition it is submitted that the wife holds $49,649.00 in her bank account divorced from the total amount of $320,000.00. Bank account funds held by the wife are reflected in Item 10 of Exhibit 3.
The wife’s further evidence is that she has expended funds on third parties and weddings of two of the children.
In addition it is submitted on behalf of the wife that funds have been expended by her for medical and other health expenses whilst at the same time the husband has not placed restrictions in the manner in which he has been able to utilise funds held by M & Co Pty Limited which includes discretionary expenditure.
I have determined that I will add back the amount of $320,000.00 received by the wife less the amount expended by her for payment of legal fees of $196,648.00. The latter amount will be a separate add back amount. In those circumstances if the deduction did not take place there would be an error reflecting double counting.
I accept the written submissions on behalf of the husband that there is an absence of evidence linking the funds standing to the credit in the bank account of the wife attributable to amounts received by her on an interim or partial property settlement basis. I accept the remainder of the written submissions by counsel for the husband. Those submissions set out my reasons for disallowing further deductions from the total amount of $320,000.00 received by the wife.
Consequently, the amount to be added back pursuant to Item 19 is $123,352.00 ($320,000.00 - $196,648.00).
Deposit paid on Mexico Timeshare
It was common ground that the husband had entered into a contract for the purchase of a Mexican timeshare entitlement and a deposit of $11,232.00 (USD6,418) was paid. There was also no issue that a further amount of $14,900.00 is payable on call for the purpose of completion of the contract. That is a contingent liability of the husband and indeed reflected in “liabilities” Item 1 of Exhibit 3.
I accept the submissions made on behalf of the husband that the contingent liability of $14,900.00 can not be treated as an asset of the husband at this stage given that it currently is a liability and there is an absence of value of interest in the timeshare unit on completion.
Consequently, this item will be shown as having a value equal to the deposit namely $11,232.00.
Item 23 – husband’s motor vehicle – Holden Cruise
Exhibit 3 reflected implicitly an agreement as to current market value of $15,000.00.
In the course of submissions it was contended on behalf of the wife that the value should be shown as $17,500.00 on the basis that that was the amount that was the purchase price. The submissions for the respondent are that the previously undisputed amount of $15,000.00 should be shown as the value of the vehicle.
I accept the written submissions on behalf of the husband. It is a matter of notoriety that the purchase price of a motor vehicle does not necessarily reflect its subsequent current market value. There was an absence of evidence of that value given that the amount of $15,000.00 was not disputed until raised in submissions. Otherwise, no doubt the disputed amount would have been shown in Exhibit 3.
Accordingly, the current market value that will be shown for the husband’s motor vehicle will be $15,000.00.
Add-back husband’s legal fees
In contrast to Exhibit 3 the amount shown as contended on behalf of the wife is $327,738.00 as opposed to the amount shown in Exhibit 3 being $251,488.00.
The amount stated as showing the husband’s position on this topic in Exhibit 3 has not altered namely, $163,902.00.
There is no factual issue involved in that it is clear from the written submissions by counsel for the husband that the amount paid by him to his legal representatives who represented him at the trial was $305,238.00 and that he had previously paid a further $22,500.00 to former solicitors and counsel giving a total of $327,738.00.
It is submitted on behalf of the husband that part of the amount paid to his current legal representatives of $305,238.00 was only able to be paid as a result of loans made to him by Family Unit Trust; M and Co Pty Limited and the husband’s mother. In addition he made a payment on account of legal costs of $37,447.00 from savings. He also utilised his credit card to make a payment of $30,000.00.
I do not accept the submissions made on behalf of the husband for reducing the amount to be shown as his paid legal fees because of the loans to which I have referred as well as savings held at separation and credit card indebtedness. Any outstanding loans of the husband were created to enable him to have a notional asset of paid legal fees and will be shown as part of his liabilities as clearly the sources of payment of legal fees by way of loans which remain outstanding generally speaking must be included. That the husband had savings at separation which he utilised to meet legal costs is not a basis for reducing the amount of legal costs paid for the purpose of the calculation of the net property of the parties.
I also do not accept the submission that simply because part of the paid legal costs have been met by the husband from post-separation income generated by him would lead inevitably to the conclusion that the amount so involved should not be shown as an “add back”. No authority was relied upon for that proposition in the written submissions on behalf of the husband.
Item 28 – add-back wife’s legal fees
In view of my earlier findings and conclusion in relation to the treatment of the interim or partial property settlement funds received by the wife which were utilised in part to pay for her legal fees in the sum of $196,648.00. The amount to be included will be $196,648.00.
Item 29 – add-back monies paid from C Pty Ltd account to Family Trust account
The wife contended that the amount of $12,573.00 should be shown in relation to this item.
The husband’s submissions were that no amount should be added back.
Written submissions on behalf of the wife did not appear to deal with this item. The written submissions lodged by counsel for the husband provided a detailed analysis and submission. Suffice to say that I accept those submissions as being persuasive and for the reasons inherent in them no amount will be added back.
Item 30 – monies withdrawn by husband from cash management account 11 May 2006 - $46,524.00
It is apparent from the written submissions made by counsel for the parties that the relevant account and the balance standing to the credit of the husband in 2006 when it was closed was sourced from accumulated rent.
The husband was in the peculiar position of being able to demonstrate the use of the funds withdrawn by him on closure of the account as for example meeting expenditure which was reasonable in all the circumstances.[5]
[5] Townsend and Townsend (1995) FLC 92-569 pp. 81,654 – 81,655.
As was conceded in the submissions on behalf of the husband his evidence was that he had forgotten about the account and was unable to recollect his application of the funds received by him on the closure of the account. No further evidence was sought to be adduced by him nor were any bank or other financial records tendered to demonstrate the use of the funds in question. In those circumstances I propose to add back the sum of $46,524.00 as notional property of the husband.
Item 31 – add-back monies paid to LD for Ms C’s children - $5,950.00
Ms C has been the intimate friend of the husband subsequent to the parties’ separation if not prior to that event. Ms C has also been an employee directly or indirectly of the husband.
There is no issue that the husband paid $5,950.00 for the benefit of Ms C’s children. He agrees that that was a discretionary payment. I do not accept that it was a reasonable expense of the husband and that the amount involved should not be added back as notional property of the husband in that it represented monies accumulated from his earnings. The husband and Ms C were not living together nor did he assume any parental type care of any of her children.
Prima facie, the amount of $5,950.00 represented further property of the husband which could have been taken into account for potential inclusion in the net property of the parties. It seems clear that the expenditure by the husband of that amount for the purpose to which I have referred was an act of kindness on the husband’s part. However, that does not lead to a finding that the expenditure was reasonable given the matters referred to in the last preceding paragraph.
Accordingly, I will add back the amount of $5,950.00 as the husband’s notional property for the purpose of calculation of the net property of the parties.
Liabilities
Item 35 – husband’s loan owing to husband’s aunt - $59,000.00
The husband contends that he owes his aunt $59,000.00, albeit it that the debt was assigned to the S Family Trust as according to the husband’s evidence the aunt did not want the debt owing to her in her name. No records have been complied in relation to the Trust and its assets other than a copy of the Trust Deed and a bank account statement. The husband’s evidence was that he proposed to do so at the end of the last financial year being a practice that he has followed with other clients.
His affidavit evidence and his oral evidence were inconsistent in that it only emerged in the course of his oral evidence that strictly speaking the debt was owing to the S Family Trust at the direction of the husband’s aunt.
The husband’s evidence as to the origin of the debt was that it was part of a personal loan of $200,000.00 interest free which he received to enable him to pay the balance of the purchase price of T2 property.
The husband did not call corroborative evidence from his aunt and no evidence was given to explain his failure to do so.
With regard to the essential issue as to whether or not the husband had indeed borrowed monies from his aunt leaving a balance owing of $59,000.00 I accept the husband as a witness of truth in that regard, notwithstanding the inconsistencies to which I have referred and the absence of corroborative evidence. I accept the implicit reality of the husband’s evidence that the amount of $59,000.00 represents the balance of funds originally borrowed from his aunt and his own indebtedness for her benefit notwithstanding the assignment of it to the S Family Trust.
Consequently I accept the husband’s case that he has a liability of $59,000.00 as claimed by him.
Item 37 – husband’s further loans from M & Co since 30 June 2006 - $123,600.00
I have determined to allow this liability for the purpose of calculation of the net property of the parties for the following reasons.
The total amount of the alleged indebtedness reflects the evidence that I accept that the husband borrowed two amounts namely, $95,000.00 to enable compliance with orders 9th March 2007in relation to payment to the wife and completion of their agreement with respect to transfer the River Cruiser and secondly, $28,600.00 ultimately paid by the husband on account of legal costs.
Item 41(a) – husband’s loan accounts for legal costs Family Unit Trust
The husband contends that the relevant amount is $55,855.00 whilst the wife’s contention is that the amount is $10,145.00.
I will include this particular liability for the reasons set out in the written submissions of counsel for the husband and my acceptance of the evidence which underpins those submissions.
Item 43 – 45 – wife’s credit cards
I have determined to include these liabilities for the purpose of calculation of the net property of the parties for the following reasons.
Notwithstanding that at least some of the expenditure occurred post-separation, I accept the written submissions made by counsel for the wife that there was an absence of evidence upon which a finding could be made that the wife had been “unreasonable or extravagant in her expenditure.” Indeed no such finding has been sought.
Item 46 – husband’s loan from his mother for Holden Cruise and legal fees
The amount in contention is $27,000.00 represented by two separate payments for the above items.
It is submitted on behalf of the wife that even if the amounts involved do represent indebtedness (which is not conceded) then nevertheless the amount of $27,000.00 should not be included as a liability of the husband as his mother has not sought repayment and is unlikely to do so.
I will include the liability contended for by the husband for the following reasons.
There is no issue that amounts were advanced by the husband’s mother to him for the relevant purposes. In her affidavit sworn 4 May 2007 the husband’s mother gives evidence of having lent the husband $12,000.00 and then $15,000.00 in about April and June 2006 that they had conversations which I summarise being her requirement for repayment “when things get sorted out with [the wife]” and his agreement to do so. To that extent the conversations giving rise to that agreement, which I accept, distinguish the circumstances from those that pertained to the husband’s mother providing $8,000.00 in cash to the husband for safekeeping. So far as the latter is concerned the husband’s mother did leave in abeyance payment to her, and indeed her evidence-in-chief does not suggest any stipulation or prior agreement for repayment. In contrast, the evidence of the husband’s mother which I have accepted sets out different circumstances so far as the provision of two amounts which total $27,000.00. Indeed during the course of cross-examination she did not resile from her affidavit evidence, nor indeed was she challenged in relation to it.
Accordingly, I will include the liability of $27,000.00 as contended by the husband.
Items 47 – 50
These particular items raise issues in relation to capital gains tax liabilities.
In Rosati and Rosati general principles were stated in relation to the issue of capital gains tax.[6] The judgment considered the situation whereby an asset may be ordered to be sold or that the sale of it “is inevitable, or would probably occur in the near future, or if the asset is one which was acquired solely as an investment and with a view to its ultimate sale for profit” then the general approach is allowance should be made for any capital gains tax payable upon such a sale when determining the value of that particular asset.[7]
[6] (1998) FLC 92-804 at 85,043.
[7] Ibid.
In addition, should there be an absence of the circumstances referred to in the last paragraph, Rosati also held if “the court is satisfied that there is a significant risk that the asset will have to be sold in the short to medium term, then the court, whilst not making allowance for the capital gains tax payable on such a sale in determining the value of the asset, may take that risk into account as a relevant s75(2) factor, the weight to be attributed to that factor bearing according to the degree of the risk and the length of the period within which the sale may occur.”[8]
[8] Ibid.
In addition, Rosati is also authority for the proposition that “there may be special circumstances in a particular case which, despite the absence of any certainty or even likelihood of a sale of an asset in the foreseeable future, make it appropriate to take the incidence of capital gains tax into account in valuing that asset.” The court further held that it may be appropriate for the capital gains tax to be taken into account at its full rate or at some discounted rate having regard to the degree of risk of a sale occurring and/or the length of time which is likely to elapse before that occurs.[9]
[9] Ibid.
I accept the submissions made on behalf of the husband. I will include capital gains tax liabilities for the reasons that in applying the principle in Rosati[10] I have concluded that the relevant real estate was acquired solely as an investment with a view to ultimate sale for profit and/or that I am satisfied with a “significant risk” that one or other of the parcels of relevant real estate may have to be sold in the foreseeable future.
[10] Ibid.
Item 54 – M Unit owned by the Family Trust
A property that falls for consideration is the housing unit in M of which the previous registered proprietors were the husband’s parents. The husband’s father is deceased. The husband’s mother gave evidence in relation to this matter.
In her affidavit sworn 8 May 2006 the husband’s mother deposed to her and her husband having purchased the M Unit in October 1980 for approximately $39,000.00 funded in part by a bank mortgage loan. At the time of its purchase the husband was still a school pupil. His name was apparently included “as one of the owners of the property.”[11]
[11] Affidavit 8th May 2006 paragraph 4.
The husband’s mother further deposed that the M Unit was purchased as an investment to provide income for her husband and herself in their retirement and has been rented since its purchase. The mortgage has been discharged implicitly prior to her husband’s death.
The husband’s mother’s further evidence-in-chief is that following receiving financial planning advice the Family Trust was established and the M Unit transferred to it. Since her husband’s death the husband’s mother has received the benefit of the rental income from the M Unit presumably by way of distribution from the Trust and she has managed that unit be it at times with assistance from the husband.
The husband’s evidence-in-chief in relation to this matter is found in his financial statement sworn 4 May 2007 at Part L Item 56. He stated that the Family Trust was established for the benefit of his parents and that all capital provided to the Trust was so provided by his parents. He considered during the course of cross-examination that statement was not accurate in that he has provided funds to the Trust from time to time.
The husband and his mother were cross-examined in relation to the M Unit. The essential history particularly that provided by the husband’s mother summarised by me was not departed from.
The husband’s activities in relation to the Trust and his mother’s apparent acquiescence in the manner in which funds of the Trust have been provided and at times drawn upon by the husband do not reflect the formal commercial arrangements that one might expect in other circumstances. I have not lost sight of the fact that essentially this was a family arrangement in which the husband’s mother trusted him. There is no evidence of any substance which I can accept to support a finding that the M Unit is property which the husband may control for his benefit to the actual or possible disadvantage of his mother, other than with her consent. Indeed, it was not even put to the husband’s mother that she is likely to acquiesce in the unit being realised or otherwise the capital that it represents being utilised for the benefit of the husband in her lifetime.
Accordingly, I find that the M Unit is not a financial resource of the husband.
REVISED PROPERTY OF THE PARTIES
I find that the property of the parties consistent with my findings in relation to disputed items in the Schedule which represents an extended and annotated version of Exhibit 3 is as follows:
ASSETS 1 Former matrimonial home – L Property 3,800,000 2 M & Co Pty Ltd, including: 2,130,000 a. Family Unit Trust b. Husband's motor vehicle 3 C Pty Ltd 1,378,000 4 W Pty Ltd a. If T2 property valued at $880,000 (husband) b. If T2 property valued at $1,100,000 (wife) 1,024,000 5 Mancini Partnership: 677,000 a. Queensland property b. Melbourne Unit 6 Wife's 1,576 IAG shares $5.72 per share 9,015 7 Husband's 847 IAG shares @ $5.70 per share 4,845 8 Husband's P Group Trust 70,730 9 Riviera Cruiser 190,000 10 Wife's St George Bank account 49,649 11 Wife's Westpac account 60 12 Husband's St George Bank account 295 13 Husband's jewellery 5,430 14 Wife's jewellery (husband contends wife did not provide all jewellery for valuation) 11,395 15 Household contents: a. Husband to retain 2,835 b. Wife seeks to retain 38,151 16 Runabout Boat 6,500 17 Husband's Queensland time share, 2 weeks 8,500 18 Controlled moneys account holding cash from safe 12,132 19 Partial property sums received by wife: 123,352 19.1 $25,000 19.2 $100,000 19.3 $100,000 19.4 $95,000 20 Deposit paid on Mexico time share 11,232 21 Loan owed to husband from W Pty Ltd 23 22 Loan owed to wife from W Pty Ltd 23 23 Husband's motor vehicle - Holden cruse 15,000 24 Wife's motor vehicle (note 23) 100,000 25 Husband's superannuation 87,368 26 Wife's superannuation 32,438 27 Add back husband's legal fees 327,738 28 Add back wife's legal fees 196,648 29 Add-back: monies paid from C Pty Ltd account to Family Trust account 0 30 Monies withdrawn by husband from Cash Management account 11/05/06 46,524 31 Add-back monies paid to LD for Ms C’s children 5,950 32 Total 10,364,833 LIABILITIES 33 Balance to be paid on Mexico time share 14,900 34 Westpac Equity Access account 100,000 35 Husband's loan owing to his aunt 59,000 36 Husband's loan account M & Co at 30 June 2006 44,366 37 Husband's further loans from M & Co. since 30 June 2006 123,600 38 Wife's loan account M & Co. 44,365 39 Wife's further loan account M & Co. 25,396 40 Husband's loan account C Pty Ltd 2,732 41 Wife's loan account C Pty Ltd 105,399 (a) Husband's loan account for legal costs Family Unit Trust 55,855 (b) Husband’s loan account Family Unit Trust as at 30 June 2006 20,015 42 Wife's loan account Family Unit Trust as at 30 June 2006 10,145 43 Wife's Westpac Mastercard 1,127 44 Wife's Citibank Ready Card 9,044 45 Wife's St George Mastercard 6,160 46 Husband's loan from his mother for Holden cruse + legal fees 27,000 47 Mancini Partnership capital gains tax liability 73,572 48 C Pty Ltd capital gains tax liability 567,234 49 Family Unit Trust capital gains tax liability 38,522 50 W Pty Ltd capital gains tax liability :- a. If T2 property valued at $880,000 0 - b. If T2 property valued at $1,100,000 0 51 Husband's credit card debt 30,000 52 Total 1,358,432 NET ASSETS 32 Assets 10,364.833 52 Less liabilities 1,358,432 56 Total 9,006,401 FINANCIAL RESOURCES 54 M Unit owned by Family Trust 0 55 S Family Trust 0 56 Total 0
CONTRIBUTIONS OF THE PARTIES
the wife
I make the following findings in relation to her financial and non-financial contributions including those made in the role of homemaker.
The wife’s initial contributions included the following:
(a)The S property which had a market value of $280,000.00 and was unencumbered in accordance with the wife’s affidavit evidence to which there was no objection.[12] There is a factual issue that requires determination subject of a subsequent finding as to whether or not the husband advanced to the wife the sum of $140,000.00 to enable her to purchase the half interest in the S property which had been held by her former husband.
(b) One share in L Holdings Pty Ltd.
(c) A Mitsubishi Colt motor vehicle.
(d) Jewellery.
(e) Crystal.
(f) Furniture and furnishings in the S property.
[12] Affidavit sworn 11 May 2006 paragraph 16.1.
There was an absence of evidence of value of all or any of the property referred to in paragraphs (b) to (f).
The wife was also a member of the NRMA. That membership gave her the opportunity to acquire subsequent shares in IAG (formerly NRMA Insurance Ltd).
A factual issue arose between the parties in relation to whether or not the wife received $140,000.00 from the husband who enabled her to acquire her former husband’s half interest in the S property or, whether that amount had been advanced to her by her father as result of a loan made by her paternal grandmother.
The case for the wife comprised her evidence in chief set out in her Affidavit sworn 11 May 2006 and the Affidavit of the wife’s father sworn 22 April 2006.
The wife’s affidavit evidence is that the amount of $140,000.00 represented funds that:
“Had been gifted to me by my father, Mr [S]. I already owned the other one-half of the [S] property unencumbered.”
In the affidavit of the wife’s father, he stated that towards the end of 1989 the wife asked him whether there was a possibility that either he:
“…or your Mum could help me pay off the home loan on my house? I am having trouble making ends meet.”
The wife’s father referred to the wife then living at the S property. He was aware that the wife was in the process of negotiating a settlement with her former husband and that she was living with her then four young children. He had a desire to assist the wife. The wife told him that she needed about “about $150,000.00”.
The wife’s father further stated that he approached the paternal grandmother (his mother) who agreed to advance him $140,000.00 and for that purpose he subsequently handed him a “bank cheque or cheques totalling $140,000.00 that I then passed on to [the wife]”.
The wife was extensively cross-examined in relation to this issue. During the course of her evidence, the wife stated that she had an obligation to pay her former husband $140,000.00 although the payments were not all made to him but rather represented three different amounts, namely, $850.00 to Marsdens Solicitors, $48,827.70 to Westpac to discharge its mortgage, and the balance paid to her former husband.
The wife’s further evidence was that an earlier affidavit by her was incorrect in that the suggestion that the husband discharged the existing mortgage was wrong. The wife re-affirmed her affidavit evidence that she had borrowed $140,000.00 from her father in October 1989, although she herself did not regard it as a loan given that the funds were lent to the wife’s father by the paternal grandmother who apparently forgave the loan.
The wife’s father was also cross-examined. He was not in a position to provide funds to the wife as requested by her as his available funds were largely spent by him in discharging the mortgage on his home and other loans. Consequently, he approached the paternal grandmother for the funds requested by the wife.
The wife’s father gave further evidence that he received an envelope from the paternal grandmother who informed him that it contained bank cheques, stating that those cheques were for the wife. However, he never saw the cheques. The wife’s father stated that the paternal grandmother lived in … and that she could not have travelled to T to draw a bank cheque and it was unlikely that she had travelled to Botany. The wife’s father stated that he delivered the envelope to the wife and did not know what happened to the cheques subsequently.
The wife’s father stated that funds for the wife, to which earlier reference has been made, represented a loan to him from the paternal grandmother and regarded it as a loan to the wife. Although, the paternal grandmother made “a standard joke” that money lent to him or his brother would be taken off their inheritance, he did not mention that in his affidavit as he did not think it was applicable.
The wife’s father conceded that he had not directly referred to the loan from the paternal grandmother to the wife in his affidavit. At the time of the loan the wife was not there.
The husband’s evidence in chief is set out in his Affidavits sworn 10 May 2006 and 4 May 2007. In his Affidavit sworn 10 May 2006 the husband contends that his assets at marriage included “loan to [the wife]” of $140,000.00. The circumstances of that loan are not stated.
However, in the husband’s Affidavit sworn 4 May 2007, he states that following a search of his records and enquiries he had made, he stated that Annexure C to his affidavit represents copies of three bank cheques each dated 11 October 1989 which he obtained from Westpac drawn on funds held by him in bank accounts sourced in part from a credit facility and that each of those bank cheques was provided by him to the wife to enable her to complete settlement with the husband.
Annexure C to which I have made reference includes three bank cheques each dated 11 October 1989 as follows:
(1) Payee – Westpac Banking Corporation - $48,827.79;
(2) Payee - … - $90,322.21 (the wife’s former husband);
(3) Payee – Marsdens - $850.00.
The bank cheques referred to in the last paragraph being (1) and (2) were drawn on the bank’s “District Operations Centre Botany/Redfern NSW” and the cheque described in (3) was drawn on the bank’s “District Operations Centre [T]”. The counter signature on all three cheques appeared to be the same. Another signature on the first two cheques may be the same. The additional signature on the third cheque is different.
Both in his oral evidence in chief and during the course of cross-examination, the husband confirmed the substance of his affidavit evidence. It was agreed that the funds the husband drew on his line of credit may have been less than that which he referred to in his affidavits.
The husband’s attention was drawn to two different branches shown on the bank cheques, to which earlier reference has been made. The husband insisted that he attended the same branch at which all three bank cheques were received by him but was unable to explain why two different branches were shown, or that one signature of the two signatures on one cheque was different to those that appeared on the remaining two cheques. However, the principal elements of the husband’s evidence in chief were not departed from.
There was substance and consistency in the evidence given by each of the parties, and to some extent the evidence given by the wife’s father. There were inconsistencies in the evidence that each of the parties gave, as well as some aspects of it which were arguably unexplained.
I am satisfied on the balance of probabilities that the evidence of the husband is to be preferred to that given by the wife and the wife’s father. I am also satisfied that notwithstanding I do not accept the amount of $140,000.00 was by way of a loan from the husband to the wife, given that repayments were not discussed as conceded by the husband in his evidence, nor was such alleged loan ever reflected in subsequent financial dealings between the parties. Indeed, as one might have expected when the parties commenced to live together and married at or about the time of the advance of the amount of $140,000.00, it would not be necessarily unexpected that monies so advanced would not be treated as a loan between them even if it was a loan at the time when the monies passed between the husband and the wife. Critical to my finding of fact is the evidence of the three bank cheques totalling $140,000.00 there being any other evidence showing a different purpose for drawing of those cheques. Indeed, there was no evidence from the wife that either the amounts of either of the three cheques or the payees were incorrect having regard to the relevant circumstances that surrounded the property settlement that was negotiated between her and her former husband.
During the period of cohabitation the wife made financial contributions represented by part-time work as a bookkeeper for the M & Co company until September 2004, with more restricted duties and implicitly less hours of work from that date until June 2005. Apart from her work as a bookkeeper the wife’s work also included from time to time advertising for and interviewing staff; forwarding promotional material; office cleaning; answering the telephone; attending to filing and archiving of files; bank entries and payment of invoices; some typing; ordering and collecting stationery; banking and collecting mail; liaising with clients; other work described in paragraph 25 of her affidavit sworn 11 May 2006.
The wife received a wage whilst in the employ of the Company. Absent evidence to the contrary, I infer that money so earned by her was applied by her towards her personal needs and living expenses.
The wife also introduced clients to the husband’s practice as set forth in Annexure A to her Affidavit, although some of them may not have been clients of substance.
The wife made direct contributions to the maintenance and improvement of T property which included arranging for her brother a builder to carry out work at minimal cost; assisting him in cleaning; having her father carry out electrical work implicitly without charge; assisting in improvements to the front garden; interior furnishing and renovation; cleaning and re-painting the kitchen; maintenance of gardens.
In relation to T2 property the wife carried out cleaning in preparation of it for office work, arranged for her two sons to install fluorescent lighting free of charge; selecting and ordering window tinting and office furniture; carpeting; interior colours and partitioning in addition to instigating and ordering and attending to the installation of the new compactus system. The wife also managed the files for the husband’s accountancy practice.
The wife made a contribution in the role of homemaker carrying out a variety of domestic work including in and about the home for her and the husband. That did not include her role as a homemaker for her own children referred to in paragraph 34.4 of her affidavit in view of the Full Court’s judgment in Robb and Robb.[13]
[13] (1995) FLC 92-555.
The wife also made a contribution in terms of renovations and improvements including interior decorating in relation to investment real estate described in her affidavit evidence.[14]
[14] Affidavit 11 May 2006 paragraphs 28, 33 and 38.
The wife also extended and maintained the collection of Quadro crystal and other object d’art.
The husband
I make the following findings in relation to the husband’s financial and non-financial contributions including contribution to the family in the role of homemaker and parent.
The husband’s initial contributions included the following having regard to the findings of fact that I made in relation to his advance loan to the wife of $140,000.00:
Asset Value ($) 1 B property 2 Advance to wife 140,000 3 Office premises T property 4 Accounting practice 4.1 Goodwill 4.2 Debtors & WIP 4.3 Plant & equipment 5 1989 Ford Maverick 4WD 6 Household furniture 7 Queensland 2 week timeshare 8 Superannuation Total Liabilities 1 Mortgage T office 140,000 2 Mortgage B property 3,000 Total 143,000 Net Assets Assets Less Liabilities 143,000 Total
The B property was leased. The husband received the rent. In that regard I accept his evidence that it was in excess of the relevant mortgage payments. There was an absence of evidence of market value of the property he introduced following material in his primary affidavit not having been pressed in the face of proper objection being made.
The husband made the following further financial contributions.
The husband caused improvements and renovation work to be carried out to the T property. He and the wife undertook painting and cleaning to the rear of the premises.
In relation to T2 property the husband organised for internal improvements and together with the wife he selected carpet and office furniture. He contracted for construction of a reception desk, organised purchase of new office furniture and arranged for painting to be carried out on a commercial basis.
In addition, the husband contracted and paid for the conversion of parking spaces to that property being converted into a storage garage.
The husband has been engaged on a full-time basis in expanding his practice. It was not subject to challenge that the sum earned by him was applied towards meeting the parties’ living expenses and liabilities.
The husband either or solely with the wife and by use of commercial entities he established, purchased and sold real estate and he arranged the necessary finance for those purposes. He was active in arranging for renovations to the property.
In particular, the husband undertook substantial investigation and review of real estate investments prior to the purchase of the R property. He carried out negotiations for its purchase and finance.
He made a contribution in the role of homemaker joining in with the wife in the selection of furniture and furnishings, carrying out of extensive gardening and assistance in a range of domestic work.
The husband also made a contribution in the role of homemaker providing substantial parental and financial support for the wife’s four children who lived with them at the commencement of cohabitation. Their ages at that time were approximately 15, 14, 11 and 7 years of age respectively and they lived with the parties for many years thereafter.
ASSESSMENT OF CONTRIBUTIONS
I have assessed the contributions of the parties including financial and non-financial contributions and contributions to the welfare of the family in the role of home-maker in the proportions of 60% in favour of the husband and the remaining 40% in favour of the wife for the following reasons.
The contributions were assessed by me on a global basis, there being no contrary submission. Those contributions must be seen against a background of cohabitation of approximately 15 ½ years during which the parties did not have children from their relationship.
I find that at the commencement of cohabitation, the husband’s initial contributions well exceeded those of the wife. His contributions were principally reflected in an interest as the registered proprietor of the B property subject to a small mortgage; the registered proprietor of T property, subject to a mortgage of $140,000.00; the financial contribution of $140,000.00 that he had made to the wife to enable her to become the sole registered proprietor of the S property; his ownership of the Queensland time share; and last, but far from least, his proprietary interests as the principal of a well-established accountancy practice.
The wife’s initial contributions were significantly less than the husbands, being reflected in her interest in the S property subject to the financial contribution of $140,000.00 made by the husband to which I have referred; one share in L Holdings Pty Ltd to the value of which was not in evidence; a motor vehicle; jewellery; contents of the S property all of which were not the subject of valuation evidence.
I have taken into account that the parties realised their real estate interest in the S property and the B property respectively for the purposes of acquiring subsequent real estate, and to that extent represented significant financial contributions subsequent to commencement of cohabitation.
The husband clearly made the primary ongoing financial contribution as a result of earnings from his accountancy practice, the establishment of various commercial entities to which I have made earlier reference, and increase in real estate holdings largely brought about by his commercial enterprise activities.
The wife’s financial contributions were limited her paid part-time employment in various aspects of the accountancy practice.
The wife made the greater contribution so far as her domestic work in and about the former matrimonial home.
However, the husband made a significant contribution as homemaker to the parenting and financial support that he provided over many years to the wife’s four children of her prior relationships.
Subsequent to the parties’ separation the husband has continued to meet outgoings in relation to the former matrimonial home and ensured that they were met for the purpose of maintaining various interests in investment properties.
RELEVANT SECTION 75(2) MATTERS
I make the following findings in relation to relevant matters pursuant to the provisions of Section 75(2).
The wife and husband are 53 and 50 years respectively.
In her primary affidavit, the wife claims that by the end of 2005 she was suffering from “poor self esteem, depression and anxiety”.
The wife’s further evidence is that since the end of 2004 and during 2005 she consulted Dr GM psychiatrist who prescribed medication for her which she took on a daily basis. Her consultations with Dr GM during 2005 took place weekly. Following a consultation with him on 14 June 2005 and by arrangement with him, the wife was admitted to Hospital for convalescence and was discharged on 11 July 2005. During her period in that hospital, the wife took part in courses conducted by a psychologist to assist her in coping with distress and anxiety.
In her affidavit sworn 7 May 2007 the wife deposes to the treatment that she has continued to receive from Dr GM who she was consulting monthly. The wife states that she has continued to take medication and that she has experienced difficulty in attending to normal daily tasks due to periodically feeling lethargic and because of easily losing concentration.
In addition, the wife had been having fortnightly consultations with Ms ST, consultant psychologist (“psychologist”).
The psychologist swore two affidavits namely on the 9 May 2006 and 3 May 2007 annexing reports dated 11 April 2006 (“the first report”) and 24 April 2007 (“the second report”).
In the first report, the psychologist confirms that there were 12 weekly consultations commencing 30 August 2005 and five fortnightly consultations commencing 14 February 2006. A detailed history was given.
Following a detailed review of the wife’s “symptoms on assessment” combined with the history of alleged misconduct by the husband, the psychologist sets out her conclusions. Those conclusions principally by way of a diagnosis were that the wife suffered an episode of major depression in 2005 and that she remains “significantly depressed and in need of medication and ongoing psychiatric treatment.” The psychologist’s opinion also was that the wife suffered from symptoms of post-traumatic stress disorder which was explained in further detail.
The psychologist also expresses the opinion that the wife is not psychologically fit for work in any capacity and that that will continue for the foreseeable future. The psychologist expresses a final opinion that the wife “will continue to require psychological and psychiatric treatment for the foreseeable future.”
In the second report the psychologist confirms that there were 12 further consultations since 11 April 2006 ranging from fortnightly to monthly, the last of which took place on 17 April 2006.
The psychologist states that the treatment over that period had been predominantly focussed on assisting the wife with “her significant depression and anxiety symptoms.” The psychologist expressed the view that the wife had been struggling to cope and required psychological treatment due to the husband’s alleged adverse behaviour.
The psychologist also expressed the opinion that the wife has needed to use anti-depressant and anxiolytic medication having regard to symptoms of severe anxiety and panic attacks, cognitive difficulties as well as becoming “very socially withdrawn”.
In her view, the wife had presented with “typical symptoms of clinical depression such as low mood, loss of self-esteem, loss of motivation and enthusiasm, loss of ability to enjoy everyday activities, pessimism and a feeling of hopelessness about the future.” In addition she noted that the wife had consistent reporting of physical symptoms “such as head spins, dizziness and chest pain which are fairly typical of severe anxiety”.
The psychologist observed that the wife had had variable response to treatment but it had not been sufficiently regular to “provide her with adequate support, monitoring and guidance. Her symptoms are so severe that monthly visits are inadequate.”
The psychologist was of the view that the wife had used her best endeavours to cooperate with suggestions, treatment techniques and strategies.
The wife had repeatedly expressed feelings of desperation and her psychological state has been fragile and at risk whilst the husband remained living in the family home.
The second report provides a prognosis that the wife now suffers from chronic clinical depression, anxiety and panic attacks. That she will continue to require treatment “for her self esteem, her anxiety, her panic attacks and clinical depression for at least the next twelve to twenty-four months” with a requirement to use medication for a substantial period of that time if not longer.
The psychologist concluded that her view was that the wife was not fit for work and had not been so since her first report and that situation will continue in relation “to any type of employment in the near future.”
The psychologist was cross-examined at length. It emerged that from one view of it, her clinical notes following consultations with the wife were unusual in that following the receipt of subsequent information from the wife during other consultations the psychologist at times added to her previous notes on specific topics as explained by her during her oral evidence. I do not accept the submission that the psychologist had become an advocate in the cause of the wife given her style of review of past clinical notes or, because she did not analyse in depth aspects of the history given to her by the wife. There is no evidence of substance before me to suggest that the psychologist’s diagnosis of severe depression and anxiety as set out in her two reports should not be accepted nor, her prognosis that the wife was likely to be unfit for work “in the near future”. The question of the type of work that she might be fit to engage in, and the availability of employment in that field are of course separate issues.
Accordingly, I accept the evidence of the psychologist that the wife has been suffering from severe depression and the consequences of it.
Evidence was given in relation to psychiatric issues that may be affecting the wife by the Affidavit of Dr WD filed 4 May 2006. Annexure C to that affidavit is his report dated 18 April 2006. It provided a diagnosis that the wife was suffering from a depressive illness and that his provisional diagnosis was that of major depression. He further advised that “the differential diagnosis would include a moderate to severe adjustment disorder with depressed mood.” Dr WD expressed the opinion that it was appropriate for the wife to continue to receive support from a psychiatrist and a psychologist including taking the prescribed anti-depressants and that all of those matters should continue for “at least another 12 months although the frequency of her appointments with the mental health professionals may diminish if her mood state improves. She may need to be on anti-depressants for 12 to 18 months. They will need to be reduced gradually under medical supervision.”
Dr WD also concluded that “I do not believe that [the wife] would be able to gain or maintain employment in a competitive workforce. She presents as an emotionally labile, depressed woman and her capacity to deal with work related and other stresses will be significantly reduced while she is in her current state.” He was of the view that there was a favourable prognosis for a full recovery in that the wife should be able to return to the workforce once her illness was in remission. He further opined that it was possible that within three to six months following the completion of the litigation between her and the husband that there should have been a sufficient recovery of her mood state “to enable her to consider returning to some type of employment. Obviously her capacity to do so at that time will depend on her clinical condition.”
Dr WD was not required for cross-examination. I accept his affidavit evidence which was given in a thoroughly professional, detailed and reasoned fashion. I make findings accordingly.
The husband gave evidence that he suffered from an inability to concentrate at work, to cope with the pressures of his practice and of the litigation. Evidence was given by Dr SH a general practitioner who the husband consulted in March 2007. Dr SH provided a report dated 20 April 2007 which is Annexure B of her affidavit sworn 27 April 2007. Dr SH referred to three consultations that took place during the period 15 March 2007 to 27 April 2007. Dr SH’s diagnosis was that the husband was suffering from “severe depression and anxiety caused by the constant stress of his divorce proceedings.” Dr SH noted that the husband had received counselling, advice on psychological strategies, anti-depressant medication and referral for more intensive stress management. In that regard the husband had consulted Dr DW, psychiatrist upon a referral from Dr SH.
Dr SH expressed the opinion that the husband’s ability to function on a day to day basis, memory and ability to cope with the pressure of work and the proceedings had been affected by the husband’s mental state. Dr SH provided a “guarded” prognosis for future mental health and recommended that the husband continue to use anti-depressant medication for “at least nine months probably 12 months due to recent recommendations with ongoing focussed cychical strategies.” Due to the husband not having experienced prior episodes of depression and upon the conclusion of the divorce proceedings, the husband should make a discovery. Dr SH qualified that prognosis on the basis that it would take “some time and I don’t feel he will be capable to return to work at his previous intensity or hours.”
During the course of cross-examination Dr SH reiterated the history that she had been given by the husband. In that regard Dr SH stated that she had not been informed by the husband of his relationship with Ms C. Dr SH stated that the husband had decreased his workload although she did not know that he was attending his practice each day or the length of his attendance at that practice on a weekly basis.
Dr SH’s further oral evidence was that she expected the husband to return to an improved mental state upon the conclusion of the proceedings depending upon the result.
Having observed the husband and Dr SH giving evidence in relation to the issue of the husband’s health I accept Dr SH’s diagnosis of the husband suffering from depression and anxiety, although I do not accept her evidence that such depression has been “severe” due to the husband failing to inform Dr SH of his implicitly supportive relationship that he had with Ms C and her lack of appreciation of the extent to which the husband continued to be involved in his accountancy practice.
I find that the wife has the income referred to in her Financial Statement sworn 7 May 2007. That income amounts to $475.00 per week maintenance paid by the husband. He also meets her petrol expenses.
I find that the wife has the property described in paragraph 167.
In the past the wife has demonstrated that she has had the physical and mental capacity for a variety of office work including bookkeeping. In that regard the wife’s employment for many years was associated with the husband’s practice. She does not hold formal qualifications which would assist her in employment.
It is submitted on behalf of the husband that the extent of her diminished capacity for employment is not great given amongst other things her regular attendance at a gymnasium, playing golf and from time to time meeting with friends. The wife’s evidence is that she has been following on the program of improved physical activity and socialisation to assist her in coping with and ultimately overcoming the health issues the subject of my earlier findings. I accept the wife’s evidence and the substance of the submissions made on her behalf. Accordingly, I find that the wife is not in a position to exercise her capability for employment at the present time or in the immediate future. The potential for her re-entering the workforce in the foreseeable future is significant. However, it is unclear as to the realistic prospects of employment in office work and/or bookkeeping, let alone the range of approximate income that she may be able to earn.
The husband has the property described in paragraph 167. He also has the demonstrated financial resource of the monetary assistance from time to time of his mother and to some degree the use of the Family Trust for that purpose.
The husband is a qualified and highly experienced accountant who has established and developed an accountancy practice over many years. I find that he has the physical and mental capacity to continue to be self-employed albeit that he has been suffering from depression and anxiety obviously affecting his work and general well-being. In my previous findings so far as the husband’s health is concerned I find that he is likely to be able to demonstrate a return more active practice in the foreseeable future, although not be quite at the same intensity as in the past.
The parties have the commitments for their respective support as set forth in their Financial Statements.
The parties each have superannuation entitlements described in paragraph 167.
The parties have been able to enjoy a high standard of living.
Neither of the parties is cohabiting with another person.
The wife has continued to occupy the former matrimonial home subsequent to the separation of the parties albeit that there have been periods when the husband has resided there.
ASSESSMENT OF RELEVANT SECTION 75(2) MATTERS
I have determined that there will be an adjustment in favour of the wife of 2.5% of the parties’ net property in view of the weight I have given to relevant s75(2) matters for the following reasons.
Each of the parties has significant emotional health issues. I have made findings of fact in that regard which do not require reiteration. However, the weight that I give to those findings so far as the wife is concerned exceed the weight attributed to the husband in relation to such issues. The wife’s substantial ongoing emotional issues associated with severe depression which are likely to continue into the foreseeable future.
I have accepted evidence which reveals that the husband has been adversely affected also by emotional health issues. I have not accepted that they are to the degree as has been suggested by Dr SH for the reasons previously given by me. As a result the husband’s prognosis is substantially more encouraging than that which is attributed to the wife.
In addition, the husband is a well qualified and experienced self-employed accountant who has established, expanded and maintained a significant practice. Whilst the nature and extent of his involvement of the practice has been limited due to issues associated with the breakdown of the marriage, ongoing conflict with the wife, and no doubt litigation, he has reasonable prospects of exercising his earning capacity to a much greater degree than of late, even if it is not at the same level of intensity and commitment as of several years ago. The husband has a proven capacity to successfully engage in real estate investment and is able to manage his financial resources in a tax effective way having regard to the various commercial entities that were established under his direction.
The wife does not have any professional qualifications. Her principal area of employment experience has been that of a bookkeeper as well as carrying out a variety of office administration duties. I have accepted the evidence that the wife is currently unable to exercise her earning capacity such as it may be due to health considerations. Whilst it may be a more positive outlook, it is not likely to occur in the immediate future and the wife’s demonstrated past earning capacity is well below that of the husband.
A third party debt notice was filed by the wife claiming the amount of $6,664.50 from the husband. There have been disputed issues of interpretation of the relevant orders. At times the dispute between the parties descended to unrealistic analysis of the expense claimed by the wife, not to mention the demeaning query in relation to sunscreen. The legal costs generated by that dispute was probably significant.
I have considered the detailed submissions made by counsel. I accept the submissions made on behalf of the wife including but not limited to the interpretation of the relevant order and the relationship of it to expenses claimed by the wife. I have taken into account the amount of $6,664.50 in the adjustment which I have determined in favour of the wife.
CONCLUSION
I have found that the net property of the parties amounts to $9,006,401.00.
As is apparent from my determinations of the contributions-based entitlements of the parties and the adjustment in favour of the wife having regard to relevant s75(2) matters, the result on those bases is that the husband would receive 57.5% of the net property and the remaining 42.5% in favour of the wife.
However, I am required to consider whether orders for property settlement reflecting the percentages referred to the last paragraph are just and equitable in accordance with s79(2). Considering that matter I have had regard to the following implications which arise from those percentages, as have been required by Full Court judgments.[15]
[15] Preece and Preece (1981) FLC 91-048 at 76,404; Elsey and Elsey (1997) FLC 92-727 at 83,799
Husband to receive/retain the following:
Assets $ M & Co. Pty Ltd 2,130,000 C Pty Ltd 1,378,000 W Pty Ltd 1,024,000 Mancini Partnership 677,000 IAG shares (847) @ $5.72 per share 4,845 P Group Trust 70,730 Riviera Cruiser 190,000 St George Bank account 295 Jewellery 5,430 Household contents 2,835 Runabout boat 6,500 Queensland Timeshare 8,500 Controlled monies account from holding cash from safe 12,132 Deposit paid on Mexico Timeshare 11,232 Loan owed to husband from W Pty Ltd 23 Motor vehicle – Holden Cruise 15,000 Superannuation 87,368 Add-back husband’s legal fees 327,738 Add-back monies paid from C Pty Ltd account to Family Trust account 0 Monies withdrawn by husband from Cash Management Account on 11 May 2006 46,524 Add-back monies paid to LD for Ms C’s children 5,950 6,004,102 Liabilities Balance to be paid on Mexico Timeshare 14,900 Westpac Equity Access account 100,000 Loan owing to husband’s aunt 59,000 Loan account M & Co. at 30 June 2006 44,366 Further loans from M & Co. since 30 June 2006 123,600 Loan account C Pty Ltd 2,732 Loan account for legal costs Family Unit Trust 55,855 Loan account Family Unit Trust as at 30 June 2006 20,015 Loan from mother for Holden Cruise plus legal fees 27,000 Mancini Partnership capital gains tax liability 73,572 C Pty Ltd capital gains tax liability 567,234 Family Unit Trust capital gains tax liability 38,522 W Pty Ltd capital gains tax liability 0 Credit card debt 30,000 1,156,796 In addition his proportion of the net sale proceeds of the former matrimonial home 4,847,306
Wife to receive/retain the following:
Assets $ 1,576 IAG shares @ $5.72 per share 9,015 St George Bank account 49,649 Westpac Bank account 60.00 Jewellery 11,395 Household contents 38,151 Partial property sums received 123,352 Loan owed to wife from W Pty Ltd 23.00 Motor vehicle 100,000 Superannuation 32,438 Legal fees 196,648 560,731 Liabilities Loan account M & Co. 44,365 Further loan account M & Co. 25,396 Loan account C Pty Ltd 105,399 Unit Trust 10,145 Westpac Mastercard 1,127 Citibank Readycard 9,044 St George Mastercard 6,160 201,636 359,095 In addition her proportion of the net sale proceeds of the former matrimonial home 3,468,625
I am satisfied that implications for orders for property settlement reflecting a division in favour of the husband of 57.5% and 42.5% in favour of the wife has the practical consequences set out in the preceding paragraphs where the wife and the husband will each receive large amounts of funds which they may utilise at their discretion for the purchase of suitable accommodation, each of them without any dependants, and the other net assets set out in the totals described by me amount to a just and equitable result in accordance with s79(2).
The lump sum which the wife is to receive, namely, $3,468,625.00 can only be satisfied by the sale of the former matrimonial home. The percentage that last-mentioned amount bears to the value of the former matrimonial home which I found to be $3,800,000.00 is 91.27%. Orders for sale will reflect that percentage entitlement of the net proceeds of sale with the remaining percentage in favour of the husband, instead of a fixed amount, being in accordance with well established authority. That approach will ensure that neither party is disadvantaged by any change in the real estate market.
I accept the husband’s evidence in relation to tax implications of loan accounts. Each of the parties have a loan account in debit in one or more of the relevant entities. There was no contrary evidence by the single expert G Chartered Accountant. Amendments made to the income tax legislation over the years may result in such loan accounts being treated as deemed income, subject to the terms and conditions of those loan accounts in accordance with legislative requirements and various tax rulings. There is no evidence before me that that is the case. The result is that the loan accounts in question cannot simply be glossed over as notional liabilities. In that the wife has the following loan accounts in debit, I will make orders requiring her to discharge those loan accounts from her proportion of the net proceeds of sale of the former matrimonial home taking into account also that the husband will be required to provide indemnities in her favour, particularly if it later transpires that her liabilities were greater that the agreed amounts. It is a matter for the husband to discharge his loan account liabilities and being an experienced chartered accountant in private practice, he is well able to attend to his financial affairs without the requirement of Court orders.
Wife’s loan accounts in debit
| M & Co. | $44,365.00 |
| M & Co. | $25,396.00 |
| C Pty Ltd | $105,399.00 |
| Family Unit Trust | $10,145.00 |
| Total | $185,305.00 |
| And in addition, such further loan account liabilities that the wife incurred (if any) due to the implementation of the consent orders made on 21 November 2007. |
The wife is clearly in need of financial support continuing pursuant to certain of the interim orders until such time as she receives her proportion of the net proceeds of sale of the former matrimonial home. Accordingly, I will make orders that continue the operation of the relevant interim orders until that stage has been reached.
I certify that the preceding two hundred and seventy-seven paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rose.
Associate to the Hon. Justice Rose
Date: 8 May 2008
Key Legal Topics
Areas of Law
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Family Law
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Property Law
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Equity & Trusts
Legal Concepts
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Consent
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Remedies
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Costs
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Fiduciary Duty
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Constructive Trust
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Res Judicata
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