Marcel and Garrigan

FAMILY COURT OF AUSTRALIA

MARCEL & GARRIGAN

[2011] FamCA 959

FAMILY LAW – PROPERTY SETTLEMENT – ten year de facto relationship – determining the asset pool – where applicant received a large inheritance in tranches at times proximate to the break down of the parties’ relationship – no direct or indirect contribution to the assets which comprise the value of the inheritance – accepted applicant’s submission that assets traceable to his inheritance be retained by him and quarantined from the pool of property containing all other assets – value of inheritance depreciated – only assets which exist from the influx of inheritance funds taken into account
FAMILY LAW – PROPERTY SETTLEMENT – superannuation - where parties’ superannuation entitlements are not vested and represent a modest proportion of the combined pool of property - where both parties treated their superannuation entitlements as another asset and intended retention of their own superannuation – superannuation entitlements of parties treated as property – parties to retain their own respective superannuation
FAMILY LAW – PROPERTY SETTLEMENT – de facto partners – contributions – considerable disparity in the value of the assets introduced by the parties to the relationship at commencement – where assets contributed by the applicant significantly more valuable than those contributed by the respondent – both parties were in paid employment for most of the relationship – where respondent was principally responsible for performance of household duties and care of children and was assisted by the applicant – where both parties had two children from other relationships – the respondent’s children lived permanently with the parties and the applicant’s children stayed in the parties’ household for periods of time – child support was received for respondent’s children – child support was paid by applicant for his children – finding that applicant’s entitlement to main asset pool as 67.5 per cent and respondent’s corresponding entitlement as 32.5 per cent
FAMILY LAW – PROPERTY SETTLEMENT – de facto relationship – adjustment – just and equitable orders – 13 years difference in parties ages – applicant suffers from back pain – respondent in good health - following separation both parties have re-partnered and married those partners – both parties’ new partners are in paid employment – no evidence of dependence by adult children upon the parties - where the applicant was a director in the respondent’s business and corporation – where the applicant resigned from directorship post-separation and respondent had unfettered control of the business – orders made for respondent to indemnify applicant against any liability from his involvement with the respondent’s corporation or business

Family Law Act 1975 (Cth) ss 90SM, 90SF

Coghlan & Coghlan (2005) FLC 93-220
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143
Marriage of Bonnici (1991) 15 Fam LR 138
Marriage of Burke (1992) 16 Fam LR 324
Marriage of Figgins (2002) 29 Fam LR 544
Marriage of Wall (2002) 29 Fam LR 1
Norbis v Norbis (1986) 161 CLR 513
Robb v Robb (1995) FLC 92-555

APPLICANT:

Mr Marcel

RESPONDENT:

Ms Garrigan

FILE NUMBER:

SYC

2708

2010

DATE DELIVERED:

15 December 2011

PLACE DELIVERED:

Newcastle

PLACE HEARD:

Newcastle

JUDGMENT OF:

Austin J

HEARING DATE:

7, 8, 9 and 10 November 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Connor

SOLICITOR FOR THE APPLICANT:

Argyle Lawyers Pty Ltd

COUNSEL FOR THE RESPONDENT:

Mr Hamilton

SOLICITOR FOR THE RESPONDENT:

CMI Law Firm

Orders

The applicant shall pay to the respondent the sum of $810,654 within 42 days of the date of these orders.
Upon payment pursuant to Order 1 hereof, the respondent shall, within a further 14 days thereafter:
(a)Pay to B Pty Ltd the sum of $23,115; and
(b)Do all such things necessary to cause B Pty Ltd to pay to the applicant the sum of $23,115.
The respondent is declared the sole legal and beneficial owner (as between the parties) of the shares held by the parties in B Pty Ltd and the applicant shall, within 14 days of these orders, do all such things and sign all such documents as may be necessary to transfer to the respondent all his right, title, and interest in such shares.
In consideration of compliance with Orders 1-3 inclusive hereof:
(a)Subject to Order 4(c), the respondent shall indemnify, and keep indemnified, the applicant in respect of any debt or liability of B Pty Ltd to any creditor, other than:
(i)Marcel Holdings Pty Ltd; and
(ii)C Pty Ltd
(b)The respondent shall indemnify, and keep indemnified, the applicant in respect of any personal guarantee given by the applicant on or before 30 June 2010 in respect of the performance of any contract by B Pty Ltd, other than a contract relating to:
(i)Marcel Holdings Pty Ltd; and
(ii)C Pty Ltd
(c)The respondent shall indemnify, and keep indemnified, the applicant in respect of any past, present, or future liability incurred by B Pty Ltd with the Australian Taxation Office, relating to any period after 30 June 2010.
The applicant is declared the sole legal and beneficial owner (as between the parties) of his shareholdings in Marcel Holdings Pty Ltd and C Pty Ltd.
The applicant shall indemnify, and keep indemnified, the respondent in respect of any debt or liability of Marcel Holdings Pty Ltd and C Pty Ltd to any creditor other than B Pty Ltd.
Pending payment pursuant to Order 1 hereof, the applicant is restrained from:
(a)Transferring, encumbering, or otherwise dealing with the parcel of real property and improvements comprising Folio Identifier …, being the real property known as D Street, E Town, NSW; and
(b)Reducing the value of his share portfolio to a combined net value of less than $250,000.
Subject to compliance with Orders 1 and 3 hereof, the applicant is declared the sole legal and beneficial owner (as between the parties) of:
(a)The parcel of real property and improvements comprising Folio Identifier …, being the real property known as D Street, E Town, NSW;
(b)The shares registered in his name; and
(c)The parcel of real property at F Town.
Unless otherwise provided:
(a)Each party shall be the sole legal and beneficial owner (as between the parties) of all other assets in their respective possession as at the date of these orders, and for that purpose bank accounts are deemed to be in the possession of the person named as the account holder, investment accounts are deemed in the possession of the named investor, and superannuation entitlements are deemed in the possession of the superannuant; and
(b)Each party shall be solely liable for and shall indemnify the other against any and all debts attaching or relating to the property in their respective possession, and any debts in their respective sole names, including any individual liability for capital gains tax arising out of the sale by the parties of property pursuant to these orders.
In the event of either party refusing or neglecting to sign within 7 days of a written request to do so any document necessary to implement the terms of these orders the Registrar of the Family Court of Australia at Newcastle is empowered to execute such documents on behalf of the parties pursuant to s.106A of the Family Law Act1975 (Cth).
Costs are reserved for 28 days
Any and all outstanding applications are dismissed.

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

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: SYC 2708 of 2010

Mr Marcel

Applicant

And

Ms Garrigan

Respondent

REASONS FOR JUDGMENT

Introduction

The applicant and respondent were formerly partners in a de facto relationship which ended in about July 2009.
These proceedings concern their respective claims for relief under Part VIIIAB of the Family Law Act 1975 (Cth) (‘the Act’) in the form of property adjustment orders. There was no contest about the existence of the Court’s jurisdiction to entertain and determine the dispute.
The parties adopted surprisingly divergent views about the just and equitable distribution of their property interests, which made for keenly contested proceedings.

Proposals and primary evidence of the parties

The applicant pressed for the orders set out in his Further Amended Initiating Application filed on 12 July 2011, in support of which he read:
a)His affidavit filed on 7 November 2011;
b)His affidavit filed on 22 July 2011;
c)His financial statement filed on 22 July 2011;
d)The affidavit of Ms G filed on 22 July 2011; and
e)The affidavit of Ms H filed on 22 July 2011.
The respondent pressed for the orders set out in a minute of orders dated 8 November 2011, which was tendered.[1] In support of her proposal the respondent relied upon:
a)Her affidavit filed on 7 November 2011;
b)Her affidavit filed on 24 June 2011;
c)Her financial statement filed on 24 June 2011;
d)The affidavit of Mr I filed on 24 June 2011;
e)The affidavit of Ms J filed on 24 June 2011;
f)The affidavit of Ms K filed on 24 June 2011; and
g)The affidavit of Mr L filed on 22 August 2011.
[1] Exhibit R4.
Significant proportions of the affidavit evidence filed by the parties did not survive objection.
Both parties relied upon the evidence of the following single expert witnesses, without requiring either single expert for cross-examination:
a)The affidavit of Ms M filed on 13 July 2011; and
b)The affidavit of Mr N filed on 4 August 2011.

Short background

The parties met and formed a relationship in 1999, but there was some disagreement about when the relationship attained a quality capable of characterisation as a “de facto relationship” within the meaning of the Act (s 4AA). The applicant believed that transformation occurred in September 1999,[2] but the respondent considered it occurred in November 2000.[3]
[2] Further Amended Initiating Application, Part C.
[3] Respondent’s affidavit 24 June 2011, par 3.
It is common ground the parties began cohabitation in November 2000, but it is also common ground the parties regarded themselves as a committed couple and began intermingling their financial affairs from 1999.
The parties eventually agreed it was unnecessary for the Court to make any finding of fact about precisely when the de facto relationship commenced, because even if the latter date, it was conceded that the contributions they each made prior to commencement of the de facto relationship were relevant to and influenced the ultimate property adjustment orders.
The parties separated in August 2007 but reconciled several months later. There was again a factual dispute about when the reconciliation occurred, but the dispute became largely irrelevant. In final submissions the applicant’s counsel described the separation as “irrelevant”, with which statement the respondent’s counsel did not disagree. Although the parties resumed their cohabitation in February 2008, their relationship actually resumed some months earlier. The respondent asserted the reconciliation of their de facto relationship occurred in about October 2007[4] and the applicant admitted that occurred in December 2007, despite contradictory evidence in his affidavit.[5] In any event, between August and December 2007 the parties continued to intermingle their financial affairs.
[4] Respondent’s affidavit 24 June 2011, pars 4, 109, 114.
[5] Applicant’s affidavit 22 July 2011, pars 2, 54, 56.
The de facto relationship finally ended in either June[6] or July 2009.[7] The difference is immaterial.
[6] Applicant’s affidavit 22 July 2011, pars 2, 64, 73.
[7] Respondent’s affidavit 24 June 2011, pars 4, 143-144.
The relationship had an overall duration of nearly 10 years and ended after 1 March 2009. Jurisdiction is therefore invoked.
There were no children of the de facto relationship.
The applicant’s two children from a prior relationship spent time in the parties’ household reasonably frequently, but lived with their mother.[8]
[8] Respondent’s affidavit 24 June 2011, pars 10-11; Applicant’s affidavit 22 July 2011, par 21.
The respondent’s two children from a prior relationship lived with the parties for the duration of their relationship.[9]
[9] Respondent’s affidavit 24 June 2011, par 5.
The combined property of the parties was significantly more valuable at the conclusion of the relationship than it was at the commencement.
The parties have interests in various corporations, which are relevant to the outcome of these proceedings. Those entities are:
a)Marcel Holdings Pty Ltd (“Marcel”), of which the applicant is the sole director and shareholder;[10]
b)C Pty Ltd (“C Pty Ltd”), of which the applicant is the sole director, and in which the applicant and Marcel retain equal shareholdings;[11]
c)B Pty Ltd (“B Pty Ltd”), of which the respondent is now the sole director, and in which the parties retain equal shareholdings.[12]
[10] Applicant’s affidavit 22 July 2011, par 4(e).
[11] Applicant’s affidavit 22 July 2011, par 4(d).
[12] Applicant’s affidavit 22 July 2011, pars 45, 76.
The applicant’s interests in Marcel and C Pty Ltd existed at the commencement of the parties’ relationship, but B Pty Ltd was incorporated by the parties during their relationship.

Determining property adjustment orders

Once jurisdiction is established, in determining the property adjustment orders that should be made between de facto partners the Court follows the same recognised four-step process that applies in respect of spouses (see Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at [39]), albeit pursuant to different statutory provisions.
Firstly, the Court should identify and value the parties’ pool of property, comprised of assets, liabilities and financial resources at the date of the hearing.
Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss 90SM(4)(a)-(c) of the Act, and determine the contribution-based entitlements of each party as a percentage of the pool of assets.
Thirdly, the Court should identify and assess the relevant matters referred to in ss 90SM(4)(d), (e), (f) and (g), and s 90SF(3), and determine the adjustment, if any, that should be made to the contribution based entitlements of the parties.
Finally, the Court should consider the effect of those findings and resolve what order is just and equitable in all the circumstances of the case.

The pool of property

The parties adopted philosophically different approaches to the proceedings.
The respondent contended the existent property should be conglomerated and the parties’ contributions, as recognised by s 90SM(4) of the Act, assessed globally, as is usually the case (see Norbis v Norbis (1986) 161 CLR 513). Curiously, that contention was different from the final submission foreshadowed in the respondent’s Case Outline document, in which it was stated:
It is submitted that the Court would adopt a global assessment of contribution in respect of all assets except the husband’s inheritance but include the inheritance for the purposes of Section 75(2) (sic).
The applicant contended the Court should assess the parties’ contributions to two distinct pools of property – one pool containing the assets traceable to the proceeds of a large inheritance received by the applicant in tranches at times proximate to the break down of the parties’ relationship, and the other pool containing all other assets.
As was recognised in Norbis at 523, 532-533, 541, it is permissible to approach the property adjustment process on an asset-by-asset basis if the circumstances warrant. Having considered the evidence, I am persuaded by the applicant that the “two pools approach” is preferable in the circumstances of this case. Such an approach is consistent with authority (see Marriage of Bonnici (1991) 15 Fam LR 138 at 143; Marriage of Burke (1992) 16 Fam LR 324 at 328-329; Marriage of Wall (2002) 29 Fam LR 1 at 9; Marriage of Figgins (2002) 29 Fam LR 544 at 557-558).
The applicant received his inheritance in the form of cash and assets, to the value of $2,972,894, in the period between late 2008 and late 2009.[13] The parties’ relationship finally ended during that period in July 2009. The cash component of the inheritance was partly expended by the applicant at his unilateral discretion for his personal or vicarious enjoyment,[14] and the component comprising a share portfolio has since devalued and has also been used to acquire other assets and pay legal costs.[15] It was not contended by the respondent that she made any direct or indirect contribution to the assets which now comprise the value of the inheritance.
[13] Applicant’s affidavit 22 July 2011, par 59; Respondent’s affidavit 24 June 2011, par 155.
[14] Applicant’s affidavit 22 July 2011, pars 60-66; Respondent’s aff 24 June 2011, par 155.
[15] Applicant’s affidavit 7 November 2011, pars 6-7, 9.
I accept the applicant’s submission that assets which are traceable to his inheritance should be retained by him and quarantined from the pool of property containing all other assets. However, since the value of the inheritance has depreciated for the reasons identified, only the assets which now exist from the influx of inheritance funds are taken into account.
Save for one exception, the effect of adopting that course is twofold. First, the inheritance received by the applicant will not be considered as a financial contribution in his favour at the second stage of the property adjustment process, and secondly, the assets which are traceable to the inheritance will remain in the ownership of the applicant, subject to their use to achieve any necessary adjustment in the respondent’s favour at the third stage of the property adjustment process.
The exception is that some of the inheritance was used as a direct financial contribution towards an asset that does fall within the main pool of property and which is amenable to distribution between the parties. The applicant used some cash from the inheritance to discharge the mortgage over the parcel of real property at D Street, E Town,[16] thereby enlarging the net value of the main pool of property. The applicant’s evidence is inconsistent as to whether the quantum of the payment was $250,000, $255,000, or $270,000. Nevertheless, the applicant must be accorded credit for that contribution at the second stage of the property adjustment process.
[16] Applicant’s affidavit 22 July 2011, pars 26(b), 61(a), 65, Exhibit S par 2.1.
There is a further issue to consider in respect of the parties’ property, as each of them has accumulated superannuation entitlements. The Court is generally exhorted to treat the parties’ superannuation entitlements separately from assets, but that need not necessarily be the case (see Coghlan & Coghlan (2005) FLC 93-220 at [54-60]). Neither party directly addressed the issue in submissions, but inferentially, they both treated superannuation as another asset. It is appropriate in the circumstances of this case to treat the superannuation entitlements of the parties as property, even though not vested, because the superannuation entitlements represent only a modest proportion of the combined pools of property, the amounts of their respective entitlements are not unduly disparate, and each party intends retention of their own superannuation.
The task of settling a balance sheet has proven remarkably difficult. Although the parties prepared a balance sheet on 22 March 2011,[17] which was intended to be relied upon at trial,[18] neither party adhered to it. The trial was delayed from July until November 2011 and during the course of the year the parties each altered their financial position, necessitating their filing of update affidavits on the first day of trial. It is consequently necessary to re-construct current balance sheets by reference to the conclusions discussed above.
[17] Notation 7 made on 24 March 2011.
[18] Notation B made on 12 May 2011.

The “inheritance” pool of property comprises the following assets and add-backs, consistently with the submissions of the applicant:

No.	Assets	Party	Value	Total
1	Current share portfolio	App	939,410[19]
2	F Town real estate	App	218,000[20]
3	F Town legal expenses[21]	App	8,133[22]
4	Legal fees paid in proceedings[23]	App	202,527[24]
Net value	1,368,070	1,368,070

[19] Applicant’s affidavit 7 November 2011, par 8.

[20] Applicant’s affidavit 7 November 2011, pars 6, 8.

[21] Addback admitted in submissions by Applicant.

[22] Applicant’s affidavit 22 July 2011, par 80.

[23] Addback admitted in submissions by Applicant.

[24] Figure admitted by applicant in submissions.

The “main” pool of property comprises:

No.	Assets	Party	Value	Total
5	E Town real estate	App	775,000[25]
6	Shares in Marcel	App	520,802[26]
7	Shares in C Pty Ltd	App	432,211[27]
8	Applicant’s loan to C Pty Ltd	App	853,974[28]
9	Shares in B Pty Ltd	Joint	nil[29]
10	Applicant’s loan to B Pty Ltd	App	23,115[30]
11	Respondent’s loan to B Pty Ltd	Res	20,838[31]
12	Car	Res	20,750[32]
13	Personal chattels	Res	7,000[33]
14	Personal chattels	App	8,000[34]
15	Boat	App	20,000[35]
16	Banking accounts	App	15,828[36]
17	Banking accounts	Res	2,900[37]
Sub-total	2,700,418	2,700,418
Liabilities
18	Debt to Marcel	App	12,281[38]
Sub-total	12,281	2,688,137
Superannuation
19	BT Lifetime Super	App	64,807[39]
20	AXA Superguard	App	54,308[40]
21	Super Funds	Res	74,392[41]
Sub-total	193,507	2,881,644
Net value	2,881,644

[25] Agreed value.

[26] Affidavit of Ms M.

[27] Affidavit of Ms M.

[28] Submission of Applicant, accepted by Respondent.

[29] Affidavit of Ms M.

[30] Affidavit of Ms M.

[31] Affidavit of Ms M.

[32] Respondent’s financial statement, par 40.

[33] Respondent’s financial statement, par 42.

[34] Applicant’s affidavit 7 November 2011, par 8.

[35] Applicant’s affidavit 7 November 2011, par 8.

[36] Applicant’s affidavit 7 November 2011, par 8.

[37] Agreed value.

[38] Affidavit of Ms M, Appendix 8.

[39] Agreed value.

[40] Agreed value.

[41] Agreed value.

Although the parties’ shareholdings in Marcel, C Pty Ltd, and B Pty Ltd (balance sheet items 6, 7, and 9) were valued by the single expert as at 30 June 2010, the parties adopted those values as the current values for the purpose of compilation of the balance sheet.
The overall net value of the property is therefore $4,249,714, which is close but not identical to the applicant’s calculation of $4,234,994 and the respondent’s calculation of $4,453,320.

Contributions

There was considerable disparity in the value of the assets introduced by the parties to the relationship at its commencement.
The applicant contributed the following assets:[42]
a)A boat, with a value at that time of close to $25,000;
b)A parcel of residential real property at E Town. The market value of the property at that time is not established, but it had been purchased shortly beforehand for $258,000 and was sold only a few years later for $430,000. It was encumbered by a mortgage in the sum of approximately $100,000;
c)Accrued superannuation entitlements, then worth approximately $29,895;
d)Shareholding in C Pty Ltd, then valued at $361,457;[43]
e)Shareholding in Marcel, then valued at $233,265;[44]
f)Some furniture and chattels, the value of which is unknown; and
g)Shares then valued at about $3,211.
[42] Applicant’s affidavit 22 July 2011, pars 4-5; Respondent’s affidavit 24 June 2011, par 23.
[43] Affidavit of Ms M.
[44] Affidavit of Ms M.
By comparison, the respondent contributed:[45]
a)The business known as “O Pty Ltd” of which she was the sole proprietor.[46] Proprietorship of the business was acquired by Marcel from the respondent on 1 July 2000 for the sum of $68,633, which was the agreed value of the stock transferred by the respondent to Marcel;[47]
b)A parcel of residential real property at P Town. The parties agreed at trial the property was sold in November 2000 for $240,000 and at that time it was encumbered by a mortgaged loan of between $100,000 and $110,000;
c)A car, then worth close to $35,000;
d)Accrued superannuation entitlements, then worth approximately $27,000; and
e)Some furniture and chattels, then worth about $7,000.
[45] Respondent’s affidavit 24 June 2011, par 22; Applicant’s affidavit 22 July 2011, pars 6-7.
[46] Respondent’s affidavit 24 June 2011, par 39.
[47] Applicant’s affidavit 22 July 2011, pars 13, 15.
The assets contributed by the applicant were significantly more valuable than those contributed by the respondent, although an exact mathematical comparison is impossible on the evidence.
In 2001 the respondent received a significant tax refund of $12,342, which she applied to household expenditure.[48]
[48] Respondent’s affidavit 24 June 2011, par 32.
Throughout the relationship the parties both worked very hard for the benefit of each other and their children. They each devoted their available time to the advancement of the family unit, even though each assumed different roles for that purpose.
The applicant largely devoted himself to the business interests of principally C Pty Ltd, but also Marcel. C Pty Ltd owned an Q Pty Ltd agency, which was operated by the applicant. Throughout the parties’ relationship until 2006, when C Pty Ltd sold the Q Pty Ltd agency, the applicant worked up to 70 hours per week.[49] He was on call 24 hours a day, 7 days a week.[50]
[49] Applicant’s affidavit 22 July 2011, pars 25, 48, 49.
[50] Respondent’s affidavit 24 June 2011, par 6.
After C Pty Ltd sold the Q Pty Ltd agency it acquired machinery and moved into the business of construction, which was conducted by the applicant.[51] That business began to wind down in May 2010,[52] well after the parties’ final separation.
[51] Applicant’s affidavit 22 July 2011, pars 50, 51, 56; Respondent’s aff 22 June 2011, par 99.
[52] Applicant’s affidavit 22 July 2011, par 79.
In early 2004 C Pty Ltd acquired real property at R Town,[53] and from that point on the applicant spent considerable time and effort outside his usual work hours improving the property.[54] Although there is no evidence of a correlative improvement in the value of the property, it is likely the applicant’s efforts did increase the value of the property to some degree. However, any such increased value would be reflected in the shareholding enjoyed by the applicant and Marcel in C Pty Ltd, which value is already manifest in the pool of property.
[53] Applicant’s affidavit 22 July 2011, pars 36-38.
[54] Applicant’s affidavit 22 July 2011, pars 39, 50, 53, 56-58, 63, 78.
The respondent largely devoted herself to the conduct of the “O Pty Ltd” business as an employee of Marcel,[55] until Marcel sold that business in November 2002.[56] For the next few years the respondent worked in various forms of employment and was only unemployed for about two or three months.[57] The parties formed B Pty Ltd in September 2005 and after that point in time the respondent devoted herself to the conduct of its business as a paid employee.[58] That situation continued after separation up until the present time.
[55] Applicant’s affidavit, pars 13, 17.
[56] Applicant’s affidavit, par 30; Respondent’s affidavit 24 June 2011, par 61.
[57] Applicant’s affidavit 22 July 2011, par 34.
[58] Applicant’s affidavit 22 July 2011, pars 44-45; Respondent’s affidavit 24 June 2011, par 91.
The income derived by the parties from their endeavours were contributed to the household, ploughed back into their corporations, or invested.[59] The respondent confirmed in cross-examination that throughout the relationship her annual wage approximated $40,000. The applicant asserted his annual income fluctuated between $44,000 and $60,000, at least up until 2006.[60]
[59] Respondent’s affidavit 24 June 2011, pars 42-43, 45, 48, 60, 94, 105, 130.
[60] Applicant’s affidavit 22 July 2011, par 25.
During the years of their relationship the parties bought and sold several assets, either in their own right or through their corporate entities. However, other than for capital sums and inheritances they each received through their families, the sources of the funds for such transactions were their own income, capital gains realised through assets sales, or funds borrowed against the security of their assets.
I accept that the applicant assisted with the performance of domestic duties and the care of the respondent’s children,[61] but given his admissions about the enormity of his time commitment to the conduct of the Q Pty Ltd agency on behalf of C Pty Ltd and his devotion to improvement of the R Town property for C Pty Ltd, I conclude the respondent was principally responsible for the performance of household duties and the care and supervision of her children, as she asserted.[62] I also accept the respondent helped care and perform domestic duties for the applicant’s children when they stayed in the parties’ household.[63]
[61] Applicant’s affidavit 22 July 2011, pars 71-72.
[62] Respondent’s affidavit 24 June 2011, par 152.
[63] Respondent’s affidavit 24 June 2011, pars 12-13, 29-31, 48-49, 84-86.
The applicant’s financial contributions also assisted in the support of the respondent’s two children, who formed part of the household. That may be regarded more properly as a third-stage consideration (see Robb v Robb (1995) FLC 92-555 at 81,542, 81,546, 81,547), but the contribution by the applicant has not been overlooked in the overall property adjustment process. The respondent did however receive child support payments for her children from their biological father. Although the child support payments were paltry for a period of about a year between 2001 and 2002, the payments were otherwise significant and ameliorated the financial burden of the respondent’s children upon the parties.[64]
[64] Respondent’s affidavit 24 June 2011, par 8, Annexure A; Exhibit A6.
Throughout the period of the relationship the applicant also paid child support to his former partner in respect of his two children. The applicant said in cross-examination that for the entirety of his relationship with the respondent, 27 per cent of his income was paid in child support. Clearly, there was a corresponding reduction in the income he then applied for the benefit of the household he shared with the respondent and her children.
Apart from the fruits of their personal endeavour, both parties contributed capital sums to the relationship.
The respondent received total cash of $165,000 from her parents during the relationship, all of which was utilised within the parties’ relationship. The applicant concedes the respondent is entitled to credit for that contribution.
In 2004 the respondent was gifted $5,000, which she used to conduct a business that generated income for the parties.[65]
[65] Respondent’s affidavit 24 June 2011, par 76; Affidavit of Mr I, par 24.
Between late 2005 and mid 2006 the respondent received a payment of $100,000, which she spent within the household and also to enable the business of B Pty Ltd to prosper.[66]
[66] Respondent’s affidavit 24 June 2011, par 97; Affidavit of Mr I, par 25.
In late 2007 the respondent received an inheritance of $60,000, which was again expended for the benefit of the parties and their business interests.[67]
[67] Respondent’s affidavit 24 June 2011, par 122; Affidavit of Mr I, par 25.
The respondent has also borrowed extra money from her parents to pay her rent and legal expenses,[68] but that financial provision is not asserted to be an indirect contribution by the respondent or a liability of the parties. It is therefore ignored.
[68] Respondent’s affidavit 24 June 2011, par 154; Affidavit of Mr I, par 42-43.
The respondent’s mother also provided financial accommodation to the applicant in 2002 at a time of urgent need for him. She loaned $40,000 to him, which was promptly repaid.[69]
[69] Affidavit of Ms J, pars 5-6.
In late 2009, shortly following separation, the applicant used part of his inheritance to discharge the mortgage over the property at E Town in which the respondent and her children were then living. As earlier noted, there is a discrepancy in the applicant’s evidence about the amount of cash he contributed to discharge the mortgage, in which case it is appropriate to assume the lesser amount of $255,000 as the correct figure as an admission against his interest.[70] Self-evidently, that was a significant direct financial contribution.
[70] Applicant’s affidavit 22 July 2011, pars 61(a), 65, Exhibit S par 2.1.
Following separation the applicant remained living on the R Town property owned by C Pty Ltd, for which he apparently paid no rent to C Pty Ltd, and the respondent and her children remained living in the E Town property, of which the applicant is the sole legal proprietor and to whom the respondent paid no rent. The rent-free accommodation they each enjoyed in those properties was relatively equivalent in value over the period elapsed since separation.[71]
[71] Affidavit of Mr N; Respondent’s affidavit 24 June 2011, par 182.
The final submissions made by the parties about their contribution based entitlements were difficult, if not impossible, to reconcile because of their divergent approaches to whether there should be one or two pools of property.
The applicant proposed that he retain all of the “inheritance” pool assets, and further, that he was entitled to 90 per cent of the “main” pool assets, leaving the respondent with only 10 per cent of the “main” pool assets. The applicant’s counsel recognised that such an outcome for the respondent “looked miserable and grudging”. The concession was properly made, but not only does such an outcome look miserable and grudging, it actually would be.
An entitlement to 10 per cent of the “main” pool would leave the respondent with assets worth only $288,164. By comparison, it would leave the applicant with net assets worth $3,961,550.
The respondent’s counsel did not submit for her entitlement to a percentage of the overall property. Rather, he submitted for her entitlement to a specific monetary sum. It serves no useful purpose to compute that sum as a percentage of the overall property, because it has already been determined that the respondent only has an entitlement to a proportion of the “main” pool of property, and in making submissions about her entitlement to a share of all property the respondent’s counsel would have adverted to and made allowance for the applicant’s contribution of his large inheritance. Similarly, it serves no useful purpose to compute the sum as a percentage of only the “main” pool because, in the absence of the applicant’s inheritance, the respondent would logically have argued for a greater share of the “main” pool.
Weighing the respective contributions of the parties I am satisfied that the applicant’s entitlement to the “main” pool of assets is 67.5 per cent, and the respondent’s corresponding entitlement is 32.5 per cent.
The respondent’s 32.5 per cent share of the “main” pool computes to a net value of $936,534.
The applicant’s 67.5 per cent share of the “main” pool, together with his retention of the “inheritance” pool, computes to a net value of $3,313,180.

Adjustment

The respondent contended there should be an adjustment in her favour of assets worth $250,000. Again, she did not attempt to quantify the adjustment in percentage terms.
The only features of the case submitted by the respondent’s counsel to warrant an adjustment in her favour were, firstly, the disparity in the parties’ financial circumstances following evaluation of their contribution based entitlements, and secondly, the adverse effect of the duration of the relationship upon the respondent’s economic position.
I am persuaded by the submissions made by the applicant’s counsel that no third stage adjustment in favour of either party is justified, even though the applicant will be left with assets and resources of significantly greater value.
There is 13 years difference in the parties’ ages. The applicant is aged 54 years and the respondent is aged 41 years.[72]
[72] Respondent’s affidavit 24 June 2011, par 2.
The applicant suffers from back pain. Although there is no medical evidence of it, the respondent conceded in cross-examination that it was a problem from which the applicant had suffered for years. The applicant has laboured in manual tasks for many years and his wind-back of C Pty Ltd’s business from about mid 2010 is an indication that his income-earning capacity is waning. It is likely as time passes the applicant will rely progressively more upon his investments, both as to capital and interest, for his income.
By comparison, the respondent is in good health. She has extensive experience is several fields of work, but particularly retail sales. She currently runs B Pty Ltd’s business in that industry, but shortly expects to wind-up the business. She does, however, have other immediate employment options. The respondent married recently[73] and her husband is self-employed. It is expected the respondent will be employed in that business once B Pty Ltd ceases to trade. Although the respondent may initially undertake only administrative tasks in the business, it is anticipated she will move into sales, in which she has past employment experience. It is contemplated she could earn annual income of up to $50,000 in such employment. The respondent has a long period ahead of her within which to earn income to support herself.
[73] Respondent’s affidavit 7 November 2011, par 2.
One of the respondent’s daughters is already an adult and her other daughter will soon attain her majority.[74] Both of the applicant’s children are now adults.[75] There is no evidence of dependence by the adult children upon the parties.
[74] Respondent’s affidavit 24 June 2011, par 5.
[75] Respondent’s affidavit 24 June 2011, par 10.
The applicant also recently married.[76] His spouse is employed as a part-time professional earning reasonable income,[77] from which I impute she could be self-supporting. The applicant’s wife acknowledged she has been offered more work, but voluntarily declined it.
[76] Applicant’s affidavit 22 July 2011, par 77.
[77] Affidavit of Ms H, par 9.
A central theme of the litigation, at least from the applicant’s perspective, was an alleged failure on the part of the respondent to give proper disclosure about the affairs of B Pty Ltd since the time of the parties’ separation. Although the applicant’s Case Outline document relied upon that allegation as a factor for consideration at the third stage of the property adjustment process, no final submission to that effect was made at the conclusion of the trial. I suspect that manifests a concession by the applicant that he had been unable to make good on his allegation during the evidence, which is the conclusion I draw from the evidence. Ultimately the applicant was impelled to concede in cross-examination that he had unlimited access to B Pty Ltd’s accountant, he had made use of that access, and he had procured relevant financial information from the accountant. Full and frank disclosure, albeit progressively, by the respondent was also inferentially available from other documentary evidence.[78]
[78] Respondent’s affidavit 24 June 2011, Annexure K; Exhibits A1, A3, A4 and R1.

Just and equitable orders

The respondent is therefore entitled to receive assets with a net value of $936,534.
The parties agree the respondent should retain the assets and resources presently in her possession (balance sheet items 9, 11, 12, 13, 17, and 21). The combined net value of those assets and resources is $125,880. The respondent is therefore entitled to a cash adjustment from the applicant of $810,654 (= 936,534 – 125,880).

The applicant has the capacity to make such a payment to the respondent in a variety of methods. He could sell some of his share portfolio (balance sheet item 1), call upon C Pty Ltd to repay the loan due by it to him (balance sheet item 8), sell real estate holdings (balance sheet items 2 and 5), or raise a loan against the security of the assets he retains. It may be that sale of some assets associated with Marcel and C Pty Ltd could attract capital gains tax.[79] That may also be the case in the event of sale of the applicant’s shares in public corporations. However, apart from a passing comment made by the single expert flagging the potentiality for capital gains tax, no other evidence was adduced about either the likelihood of such tax being incurred or the quantum thereof.
[79] Affidavit of Ms M, Annexure B, pars (e), (f).
In making a submission that the respondent was entitled to 10 per cent of the “main” pool of assets, equating to $288,164 in value, the applicant must have known that it was necessary to make a financial adjustment in the respondent’s favour. The applicant knew the respondent held assets and resources worth only $125,880, so he must have contemplated making a financial adjustment of at least $160,000, knowing also that the respondent was claiming a cash adjustment of up to $950,000.[80] Logically, the applicant must have contemplated raising monies in one of the ways discussed to meet such a cash adjustment, including the prospect of thereby incurring capital gains tax.
[80] Exhibit R4, Order 3.
The orders allow the applicant 42 days within which to marshal his affairs to make the payment due to the respondent. That was the time frame reasonably proposed by the respondent.[81]
[81] Exhibit R4, Order 3.
There is, of course, an imperative to finally sever the parties’ financial affairs to the extent possible. In order for the respondent to retain exclusive ownership and responsibility for B Pty Ltd free of the applicant’s involvement, as the applicant proposes, the applicant needs to recover from B Pty Ltd the sum of $23,115 in satisfaction of a debt due to him by the corporation (balance sheet item 10). That debt is the liability of B Pty Ltd, not the respondent, so the order proposed by the applicant requiring the respondent to pay that sum to him is inapposite.[82]
[82] Further Amended Initiating Application, Order 2(b).
However, if the respondent liquidates B Pty Ltd, as she proposes,[83] it may be that the debts owed by B Pty Ltd to the applicant, Marcel, and C Pty Ltd will not be fully repaid. The values of B Pty Ltd, Marcel, and C Pty Ltd are interlinked by reason of the loan accounts between them,[84] and the adjustment of property interests between the parties assumes the applicant will be repaid the sum owed to him by B Pty Ltd. Therefore, from the monies paid to the respondent by the applicant, the respondent will be ordered to pay the sum of $23,115 to B Pty Ltd, and to then cause B Pty Ltd to pay that same sum to the respondent. The applicant’s chose in action against B Pty Ltd will then be satisfied and extinguished.
[83] Exhibit R4, Order 1.
[84] Affidavit of Ms M.
The applicant also proposed orders compelling the respondent to personally pay the debts owed by B Pty Ltd to Marcel and C Pty Ltd.[85] The respondent conceded in final submissions that such orders could not be made. None of those corporations are currently parties to these proceedings. Although it is feasible that, as the sole director, the respondent could be compelled to cause B Pty Ltd to meet its debts to Marcel and C Pty Ltd, there is no guarantee that Marcel and/or C Pty Ltd would accept such payments in full satisfaction of their claims against B Pty Ltd. Since they are not parties to the proceedings they cannot be bound to any declarations as to the nature, quantum, or extinguishment of their choses in action against B Pty Ltd. The legal relationships between those corporations are beyond the reach of remedies in these proceedings.
[85] Further Amended Initiating Application, Orders 2(c) and 2(d).
The evidence demonstrates that B Pty Ltd is trading poorly, and that costs have exceeded income since about November 2010.[86] The lease over the premises from which B Pty Ltd trades expires on 31 March 2012,[87] but the respondent said in cross-examination the property is due to be auctioned this month and a prospective purchaser may desire vacant possession of the property, releasing B Pty Ltd from the balance of the lease term. The parties both personally guaranteed B Pty Ltd’s performance of that lease, which causes them to be jointly and severally liable for the payment of rent if B Pty Ltd fails to meet its obligations under the lease.[88] The rent payments are currently in arrears.[89]
[86] Respondent’s affidavit 24 June 2011, par 164.
[87] Respondent’s affidavit 24 June 2011, par 176.
[88] Respondent’s affidavit 7 November 2011, pars 4-5.
[89] Respondent’s affidavit 7 November 2011, par 26.
Whilst he was a director of B Pty Ltd, the applicant gave guarantees on behalf of B Pty Ltd to suppliers so as to ensure the business was properly stocked, just as the respondent did. The respondent attempted to ascertain the extent of the parties’ potential liability under any such guarantees, but was unable to do so with any degree of certainty. Although the applicant objected to the respondent’s attempt to adduce evidence of those contingent liabilities in her update affidavit, she was nevertheless cross-examined about it. She estimated the liability to be limited to about $79,000 at worst, but because the liability is contingent, the parties may actually incur no liability at all for B Pty Ltd.
B Pty Ltd also owes accumulated employee emoluments to the respondent and another employee.[90] There is no suggestion that any derivative liability attaches to the applicant, as a former director of B Pty Ltd, for those liabilities.
[90] Respondent’s affidavit 24 June 2011, par 177.
The valuation of B Pty Ltd was undertaken by the single expert on the basis of its financial statements for the year ended 30 June 2010. Although prepared in draft format, the financial statements for the most recent financial year ended on 30 June 2011 were not furnished to the single expert, and the applicant understandably took issue with the respondent’s attempts to supplement the single expert’s valuation opinions with her own opinions.
The respondent has effectively had unfettered control of B Pty Ltd since the parties’ final separation in July 2009. The applicant resigned his directorship on 30 June 2010, despite erroneously asserting that occurred 30 June 2011 in his affidavit.[91] I accept the efficacy of the applicant’s proposal that the respondent take sole and exclusive responsibility for B Pty Ltd and indemnify him against any liability arising from his involvement with the corporation.[92] That is a just outcome because the respondent admits B Pty Ltd was trading satisfactorily until well after the applicant resiled from involvement in the corporation. If the respondent wishes to wind-up B Pty Ltd before its lease expires in March 2012, as she proposes, she will be free to make that choice when vested with sole control of the corporation in full knowledge of the consequences.
[91] Applicant’s affidavit 22 July 2011, par 76.
[92] Further Amended Initiating Application, Order 2(f).
The applicant proposed an order relating to some specific items of personal property, the effect of which would be to leave him with sole ownership of them.[93] No such order is made because no evidence was adduced about any of those items of property and no submissions were made about them.
[93] Further Amended Initiating Application, Order 1(b), Schedule 1.
I am satisfied the orders set out at the commencement of these reasons represent a just and equitable division of property between the parties.

I certify that the preceding ninety-three (93) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin delivered on 15 December 2011.

Associate:

Date: 15 December 2011

[2011] FamCA 959

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