Markham and Markham and Ors

[2010] FamCA 460

FAMILY COURT OF AUSTRALIA

MARKHAM & MARKHAM AND ORS [2010] FamCA 460

FAMILY LAW - PROPERTY - Property proceedings between husband and wife - Transactions to defeat claims - Gifts - Addbacks - Wife made various dispositions of money to her three children from a previous marriage who are also parties to these proceedings - Whether these payments should be added back to the property pool, whether they are gifts and whether some of those can be set aside pursuant to s 106B of the Family Law Act - Four step process - Contributions - Wife’s contributions are superior to the husband’s

Family Law Act 1975 (Cth)

Atco Controls Pty Ltd (in liq) v Newtronics Pty Ltd (recs and mgrs appt) [2009] VSCA 238
Balfour v Balfour [1919] 2 KB 571
Biltoft v Biltoft (1995) 19 Fam LR 82
Calverley v Green (1984) 155 CLR 242
Cohen v Cohen (1929) 42 CLR 91
Cumpton v Cumpton (2007) 38 Fam LR 377
Halabi v Artillaga (1994) FLC 92-470
Henderson v Miles [2005] NSWSC 710
Jones v Dunkel (1959) 101 CLR 298
Magill v Magill (2006) 231 ALR 277
Marriage of Coghlan (2005) 33 Fam LR 414
Marriage of Hickey (2003) 30 Fam LR 355
Milankov & Milankov (2002) FLC 93-095
Omacini v Omacini (2005) 33 Fam LR 134
Pflugradt & Pflugradt (1981) FLC 91-052
VC & GC & Ors [2010] FamCAFC 62

APPLICANT: Mr Markham

1st RESPONDENT: Ms Markham

2nd RESPONDENT: Mr Wight

3rd RESPONDENT: Ms Jones

4th RESPONDENT: Ms Elder

FILE NUMBER: NCC 2156 of 2007

DATE DELIVERED: 9 June 2010

PLACE DELIVERED: Newcastle

PLACE HEARD: Newcastle

JUDGMENT OF: Justice Austin

HEARING DATE: 18, 19 and 20 May 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Gould

SOLICITOR FOR THE APPLICANT: Ms Monnox, Kim Monnox & Associates

COUNSEL FOR THE 1ST RESPONDENT: Mr Bates

SOLICITOR FOR THE 1ST RESPONDENT: Mr McDonald, Gianacas Argiris McDonald

COUNSEL FOR THE 2ND RESPONDENT: Not Applicable

SOLICITOR FOR THE 2ND RESPONDENT: Not Applicable

COUNSEL FOR THE 3RD RESPONDENT: Mr Maiden SC

SOLICITOR FOR THE 3RD RESPONDENT: Mr Hill, Hills Solicitors

COUNSEL FOR THE 4TH RESPONDENT: Mr Maiden SC

SOLICITOR FOR THE 4TH RESPONDENT: Mr Hill, Hills Solicitors

Orders

1. The wife shall pay to the husband the sum of $39,001 within 28 days.

2. Subject to compliance with Order 1 hereof, and in consideration of that payment, the wife, second respondent, third respondent, and fourth respondent are each declared the legal and beneficial owners (as between the parties) of the real property and improvements comprising Folio Identifier …, being the property more commonly known as B property, NSW (“the property”), and the husband shall do all such things and sign all such documents as may be necessary to transfer all his right, title, and interest in the property to the wife, second respondent, third respondent, and fourth respondent contemporaneously with his receipt of payment pursuant to Order 1 hereof.

3. Subject to compliance with Order 2 hereof, and in consideration of that transfer, the wife, second respondent, third respondent, and fourth respondent shall each jointly and severally indemnify and keep indemnified the husband against all rates, taxes, statutory charges, mortgage repayments, and other outgoings and liabilities affecting or relating to the property.

4. Pending payment to the husband pursuant to Orders 1 or 7(c) hereof, the parties are restrained from selling or transferring their respective interests in the property, and from mortgaging or otherwise encumbering their interests in the property in a manner that would encumber the property with more than $50,000 in combined debt.

5. In default of compliance with Order 1 hereof, the parties shall do all such acts and things and sign all such documents as may be necessary to list the property for sale by public auction.

6. For the purposes of implementation of Order 5 hereof:

   a)The solicitors acting for the wife shall be the solicitors acting on the sale of the realty for the parties.

   b)The property shall be listed by the parties for auction sale within 4 weeks of the due date for compliance with Order 1.

   c)The auctioneer, in the event of disagreement between the parties, shall be the auctioneer chosen by ballot from the respective choices of the parties.

   d)The reserve price shall be as agreed between the parties, and in the event of disagreement between the parties, the reserve price nominated by the auctioneer.

   e)In the event that the property is not sold by auction, or private negotiation within a further 7 days, then the property shall be submitted to successive auctions within further 6 weeks periods until sold, otherwise on the same terms and conditions as applied to the first auction.

   f)The wife may occupy the property pending its sale pursuant to these orders, provided that she meets all expenses incurred in respect of the property as and when those expenses fall due (including loan repayments, Council rates, water rates, and insurances), maintains the property in a reasonable state of repair, and facilitates inspection of the property by prospective purchasers.

7. Upon completion of the sale of the realty pursuant to Orders 5 and 6 hereof the solicitors acting for the parties on the sale shall disburse the proceeds of sale as follows:

   a)Firstly, to pay all costs, commissions, and expenses of the sale and to pay any Council and water rates outstanding in respect of the property.

   b)Secondly, to discharge any mortgage or other encumbrance over the property.

   c)Thirdly, to pay to the solicitors acting for the husband, the sum of $39,001, together with interest calculated at the rate prescribed by Rule 17.03 of the Family Law Rules upon that sum for the period between the due date for compliance with Order 1 hereof and the date of payment to the husband under this Order.

   d)Fourthly, to pay the balance then remaining in equal shares to the wife, second respondent, third respondent, and fourth respondent.

8. 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 worker.

   (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 real property pursuant to these orders.

9. Any and all outstanding applications are dismissed.

10. 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 s106A of the Family Law Act.

11. Costs of the parties are reserved for 28 days.

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

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: NCC 2156 of 2007

MR MARKHAM

Applicant

And

MS MARKHAM

1^st Respondent

And

MR WIGHT

2^nd Respondent

And

MS JONES

3^rd Respondent

And

MS ELDER

4^th Respondent

REASONS FOR JUDGMENT

Introduction

1. These proceedings entail a dispute between estranged spouses about the adjustment of their property interests. The dispute involves the adult children of the respondent wife and so they have been joined as respondents to the litigation.

2. The respondent wife simply seeks the division of property between the spouses as it currently exists.

3. The applicant husband, however, agitates numerous issues that bear upon the assets and liabilities which notionally or actually constitute the matrimonial pool of property available for distribution between the spouses.

4. The parties have prepared revised balance sheets in the course of the proceedings, the final version of which was tendered in evidence. The exhibit, elaborated by submissions of the parties, summarises the nature of the controversial issues about the matrimonial pool of property.

5. Subject to resolution of those preliminary issues, the spouses are also at odds about the manner of a just and equitable division between them of the matrimonial property.

Evidence Read by the Parties

1. In support of his Amended Application filed on 16 July 2008 the husband read in evidence his affidavit filed on 12 April 2010 and his financial statement filed on 12 April 2010.

2. In support of her Amended Response filed on 25 August 2008 the wife read in evidence her affidavit filed on 6 April 2010 and her amended financial statement filed on 6 April 2010.

3. In support of his Response filed on 2 September 2008 the second respondent read in evidence his affidavit filed on 6 April 2010 and his financial statements filed on 8 September 2008 and 17 May 2010.

4. In support of her Response filed on 15 October 2008 the third respondent read in evidence her affidavit filed on 27 April 2010 and her financial statement filed on 15 October 2008.

5. In support of her Response filed on 29 May 2009 the fourth respondent read in evidence her affidavit filed on 6 May 2010 and her financial statement filed on 29 April 2009.

Background Facts

1. The husband and the wife are both now 60 years of age.[1] Although the husband was aged 59 years at the time of trial, he attained 60 years on 24 May 2010.

   [1] Husband’s affidavit, pars 1-2

2. The parties married in 1998, at which time their cohabitation commenced.[2]

   [2] Husband’s affidavit, par 3; Wife’s affidavit, pars 5, 9

3. The second, third, and fourth respondents are the children of the wife from a former marriage.[3] The husband also had other children from a previous marriage.[4] There were no children born to the marriage of the husband and wife.[5]

   [3] Wife’s affidavit, par 19

   [4] Husband’s affidavit, par 6; Wife’s affidavit, par 20

   [5] Husband’s affidavit, par 5

4. The wife’s children were all adults at the time of the marriage between the wife and husband. From time to time the second and fourth respondents lived with the husband and wife in the former matrimonial home, but the third respondent did not.[6] Two of the husband’s children visited and stayed in the former matrimonial home from time to time.[7]

   [6] Wife’s affidavit, pars 40-47

   [7] Wife’s affidavit, par 48; Husband’s affidavit, pars 124, 127, 128

5. At the time of marriage, the husband moved into the home occupied by the wife. That property was owned by the wife, second respondent, third respondent, and fourth respondent as joint tenants, it having been acquired by them some years before the commencement of cohabitation.[8] That home was situated at B, NSW, and remained the matrimonial home for the duration of the cohabitation between the husband and wife.

   [8] Husband’s affidavit, par 12; Wife’s affidavit, par 24

6. Prior to cohabitation, the wife was also the sole proprietor of another real property situated at C, NSW.[9] The wife contracted to sell that property only a few days after her marriage to the husband.[10] The contract for sale provided for a delayed settlement and the contract was completed a few months later in March 1999. From the proceeds realised by the wife on the sale of that property she made gifts totalling $59,670 to her three children and banked the remainder into her account with the the Community Credit Union account.[11]

   [9] Wife’s affidavit, par 27

   [10] Husband’s affidavit, par 13

   [11] Husband’s affidavit, pars 12-19; Wife’s affidavit, pars 62-63

7. But for one joint account, into which the husband and wife only ever deposited matching modest sums at an early stage of their marriage, the husband and wife always maintained separate finances. There was no intermingling of their income.[12]

   [12] Husband’s affidavit, pars 116-118; Wife’s affidavit, pars 51-56

8. During the cohabitation the husband worked as a publisher, either in paid employment or in a self-employed capacity, except for a period of about six months in 2005 following the sale of his own business.[13] The sale of that business realised a cash payment, which was retained by the husband in his own account and thereafter used incrementally.[14] The husband said in his affidavit that the proceeds of sale were $50,000,[15] but in cross examination said that the net amount was really about $46,500.

   [13] Husband’s affidavit, pars 23-28; Wife’s affidavit, pars 18, 145

   [14] Husband’s affidavit, pars 26-27; Wife’s affidavit, pars 134-135

   [15] Husband’s affidavit, par 27

9. At the time of cohabitation, the wife was in paid employment in the sales industry. She retained that form of employment until early 2000, when the wife and second respondent formed a new sales business,[16] which business was known as S Business.

   [16] Husband’s affidavit, par 35; Wife’s affidavit, par 17; Wife’s affidavit, par 89

10. Contemporaneously with the formation of that new business in early 2000, the wife, second respondent, and husband purchased commercial real property situated at S, NSW, from which premises the sales business would be conducted. The wife, second respondent, and husband purchased the property as tenants in common in equal shares. The purchase price and incidental acquisition costs were funded by a loan secured by mortgage over that property and the B property.[17] Some years later, in mid 2003, the wife received the sum of $101,634.74 as an inheritance from the estate of her deceased father, which funds were used to substantially diminish the debt mortgaged over the S property.[18]

    [17] Husband’s affidavit, par 57; Wife’s affidavit, pars 75-83

    [18] Husband’s affidavit, par 61; Wife’s affidavit, pars 69-74, 102, 106

11. Although the sales business involved both the wife and second respondent, the business was initially conducted by the wife as a sole proprietor.[19] The wife held the necessary licence, and that form of business vehicle was used on advice from the wife’s accountant. On 1 July 2002 the wife transferred the business to a private corporation formed jointly by her and the second respondent. They were the directors and shareholders, with the wife holding a 51% interest in the corporation and the second respondent a 49% interest.[20] The wife and second respondent continued to conduct the business through that corporate vehicle until the corporation ceased operating the business in about May 2004. The wife has not been in paid employment since then.[21]

    [19] Wife’s affidavit, par 89

    [20] Wife’s affidavit, par 100

    [21] Husband’s affidavit, par 36

12. The corporation conceived by the wife and second respondent was S Pty Ltd. That corporation was also used as the trustee of a private superannuation fund named the S Superannuation Fund, of which fund the wife and second respondent were beneficiaries. The superannuation fund was implemented at about the same time that the corporation was registered.[22]

    [22] Husband’s affidavit, par 70; Wife’s affidavit, par 101

13. The most significant asset of the corporation was the services list which was operated within the sales business. The list was sold by the corporation in May 2004 and realised net proceeds of sale of $482,522.68.[23] According to accountancy advice received, the proceeds of sale were paid by the corporation into the superannuation account held by the wife with the S Superannuation Fund, in the form of an eligible termination payment.[24] From that account, two payments totalling $266,012.13 were paid by the wife to the second respondent, or at his direction, some months later. [25]

    [23] Husband’s affidavit, pars 65, 68; Wife’s affidavit, pars 108-109

    [24] Wife’s affidavit, par 110

    [25] Husband’s affidavit, pars 75, 87

14. Following sale of the services list and cessation of the sales business, the property at S was leased by the corporation to a tenant,[26] until the sale of that property occurred in July 2005.[27] The net proceeds realised on the sale of that property, amounting to $379,972.05, were paid into the S Superannuation Fund.[28] The bulk of those monies were attributed to the wife’s superannuation account, but some were also allocated to the second respondent’s superannuation account.[29] The Husband received no direct financial benefit from the sale despite having held a one-third legal interest in the property.[30]

    [26] Husband’s affidavit, par 90

    [27] Husband’s affidavit, par 92; Wife’s affidavit, pars 112-115

    [28] Husband’s affidavit, pars 93-95; Wife’s affidavit, par 115

    [29] Husband’s affidavit, Annexures T, U

    [30] Wife’s affidavit, pars 117-118

15. The following month, the wife withdrew a total of $150,000 from her superannuation interest and paid the sum of $50,000 to each of the second, third, and fourth respondents.[31]

    [31] Husband’s affidavit, pars 104-107; Wife’s affidavit, pars 119-120

16. The husband and wife separated for the first and final time in November 2006[32] and they were divorced on 10 July 2009.[33]

    [32] Husband’s affidavit, par 3; Wife’s affidavit, pars 7-8

    [33] Husband’s affidavit, par 4

Credit of the Parties

1. The background facts set out above are really uncontroversial. There was nonetheless considerable disparity between the evidence of the husband and wife about numerous aspects of their marital life. The evidence of both the husband and wife must be treated with some caution because the credit of each of them was found wanting in several respects during their oral evidence.

2. The husband alleged in his affidavit that he was ignorant of many of the circumstances surrounding the transactions outlined above. For example, he maintained that he was entirely ignorant of the contents and meaning of the documents that he signed at a solicitors’ office pertaining to the sale of the property at S, even though he was a joint proprietor of the property.[34] Such evidence is quite incompatible with his obvious sophistication and intelligence. I do not accept that evidence as being truthful and accurate.

   [34] Husband’s affidavit, pars 101-102

3. The husband also had a lapse of memory on a remarkable number of occasions when pressed in cross examination by the wife’s counsel about various aspects of the transactions and his knowledge of the details. I have considerable doubt about the husband’s asserted loss of memory in light of the detailed recollection he professed to have about other aspects of his evidence.

4. The wife also gave evidence in cross examination which impaired her veracity to some degree. For example, she gave evidence in her affidavit that she has undertaken gratuitous sewing work, implying that she received no income from that work.[35] The implication was inconsistent with her oral evidence in cross examination. She has in fact received income of $9,861 over the period of five years that she has been sewing. A schedule of income compiled from her “work dockets” was tendered in evidence.[36] The wife admitted that the husband had in fact designed and prepared advertising slips and “work dockets”, which were effectively customer order forms, for her use in the sewing enterprise. Even though the wife contended that the modest income she received from sewing was used to cover the cost of materials and the payment of a sewing tutor for sewing students, the failure to disclose those aspects of the sewing enterprise raise concerns about the reliability of the wife’s evidence.

   [35] Wife’s affidavit, pars 137-141

   [36] Exhibit H7

5. The husband also sought to impugn the credibility of the wife in other respects, which were less persuasive but still curious. The wife’s denial of some portion of a conversation that she had quoted in her own earlier affidavit[37] is not necessarily mendacious. It is equally plausible that she was confused or suffered a lapse of memory. Similarly, although the wife falsely asserted in her recent affidavit that the husband paid none of the outgoings in relation to the former matrimonial home[38], she had admitted in an earlier affidavit that the husband had contributed to such outgoings to some extent.[39] The earlier admission renders the later denial capable of construction as a mistake rather than a lie.

   [37] Wife’s affidavit, par 59

   [38] Wife’s affidavit, pars 57-58

   [39] Exhibit H1, par 2

1. Ultimately the husband’s counsel submitted, correctly in my view, that the Court should not form a blanket conclusion about the credibility of the husband and the wife, but should assess the veracity of their evidence on individual controversial issues.

2. Leaving the husband and wife to one side, the second, third, and fourth respondents were each impressive witnesses. They each made reasonable concessions, but they were also resolute when they disagreed with propositions put to them in cross examination. There was no suggestion or inference that their evidence was collusive, either with one another or with the wife. I have little hesitation in accepting their evidence as reliable.

Preliminary Issues for Determination

1. The husband initially sought to agitate an allegation that the second, third, and fourth respondents each held their individual 25% legal proprietary interests in the real property situated at B, NSW on trust for the wife, such that the wife enjoyed a 100% equitable interest in that property. That allegation depended upon the husband’s ability to sustain his asserted equitable claims in the nature of constructive trust and unjust enrichment, which in turn depended upon the Court being seized of accrued jurisdiction to entertain those claims.

2. Following some preliminary argument between the husband on the one hand, and the third and fourth respondents on the other, concerning the locus standi of the husband to press such equitable claims, the parties reached an agreed position. The husband abandoned his applications for Orders 13 and 14, as set out in his Amended Application filed on 16 July 2008, and the costs of the third and fourth respondents referrable to their defence of those two orders sought by the husband were reserved against the husband until the conclusion of the proceedings.

3. In light of that agreement, only the wife’s 25% legal and equitable interest in the B property was to be included as a matrimonial asset (as item 1) in the joint balance sheet tendered by the parties[40].

   [40] Exhibit H2

4. Consequently, the balance sheet throws up the following residual issues for preliminary determination:

   1.Whether the husband remains indebted to the wife for loans made by her to him, with a debit balance of $28,000 (items 8 and 22), or any other amount.

   2.In respect of a superannuation interest formerly held by the wife in the S Superannuation Fund, valued at $193,041 as at 30 June 2006 (items 11 and 25):

   a)Whether the amount properly referrable to the wife’s former superannuation interest in that particular fund should be added back to the pool – it being common ground that it has been entirely expended by the wife.

   b)If so, whether the value of $193,041 involves double-counting, because it incorporates either monies used by the wife to pay her legal fees (item 9) or monies used to buy a sewing machine (part of item 3), which fees and machine are otherwise taken into account on the balance sheet as assets.

3.In respect of a former superannuation interest held by the wife in Zurich Superannuation, valued at $11,800 (items 12 and 26), whether that interest should be added back to the pool – it being common ground that it has been entirely expended by the wife.

4.In respect of various dispositions of money made by the wife to her adult children, as set out below, whether any of those amounts of money should be brought back to account in the matrimonial pool either by reason of notional add-back or application of ss 106B and 90AE of the Family Law Act:

a)Payments to the second, third, and fourth respondents between October 1998 and March 1999, totalling $59,670, from the proceeds of sale of the real property situated at C, NSW (items 18-21).

b)Payments to the second respondent between July and September 2004, totalling $266,012.13, from the wife’s superannuation interest held with the S Superannuation Fund (items 13 and 14), being part of the proceeds of sale of the services list from the sales business.

c)Payments to the second, third, and fourth respondents in August 2005, totalling $150,000, from the wife’s superannuation interest held with the S Superannuation Fund (items 15-17), being part of the proceeds of sale of the S property.

5.Whether the husband is indebted to his mother in the sum of $50,000 (item 23), or some other amount, and even if so, whether that liability should be excised from the balance sheet on principles established by Biltoft v Biltoft (1995) 19 Fam LR 82 at 94.

6.Whether the wife’s alleged debt to the National Australia Bank, incurred on her credit card, should be included in or excised from the balance sheet (item 24).

Issue 1 – The husband’s debt to the wife

1. It is common ground that the husband formed his own publishing business in early 2004. It is also common ground that the wife loaned amounts of money to the husband for him to commence and conduct that business. There is no dispute that a commercial relationship between them of creditor and debtor was intended, despite their matrimony, because the husband and wife each understood the husband’s need to repay the advances. Each admits that to be so. The controversy surrounds how much was loaned and how much has been repaid. There is discrepancy in the affidavit and oral evidence about those issues, in which event it is safest to rely upon admissions made by the parties.

2. The husband admitted in cross examination that the wife had loaned him two lump sums of $10,000 in January and May 2004, totalling $20,000. He identified a bank statement entry and a bank deposit slip in his handwriting in making those admissions.

3. The husband also admitted that he received two further loan advances, totalling $8,500, from the wife in July 2004, which corroborated part of the wife’s affidavit evidence.[41]

   [41] Wife’s affidavit, pars 130(i), 130(ii)

4. The husband also conceded that the wife had advanced to him three further payments of $1,200 for his use to pay wages to his employee, and a further amount of $1,200 for his use in payment of a rental bond on the leased premises from which the business was conducted.

5. There were other payments made by the wife for the husband in the nature of legal fees on the lease, fit-out costs, and advertising signage for the building, but they were not all quantified. The husband identified a cheque book containing cheque stubs bearing his handwriting, which evidenced payments received by him from the wife’s cheque account.[42] Allowing for those cheque payments which have already been mentioned, to avoid double-counting, the further cheque payments amount to some $7,600.[43]

   [42] Exhibit W1

   [43] Exhibit W1, cheque stubs 982, 985, 986, 987, 988, 989, 990, 991, 992

6. Other alleged payments made by the wife to or for the husband in respect of his business were not the subject of the husband’s admission.

7. Taking account of only the husband’s admissions, the wife advanced a total of not less than $40,900 to the husband over a period of about six months.

8. The husband also conceded that the lump sum repayments made by him to the wife were confined to two payments of $10,000 and $8,500, totalling $18,500.

9. Setting off the admitted lump sum repayments against the admitted lump sum advances results in a debit balance of $22,400. The wife’s allegation that the husband remained indebted to her for $28,000, as claimed in her affidavit[44] and the balance sheet,[45] is unsustainable on the admissible evidence.

   [44] Wife’s affidavit, par 134

   [45] Exhibit H2, items 8, 22

10. The husband contended that the entirety of the debit balance was later repaid by him in the form of his contribution to household finances over the remaining two years of their cohabitation. I do not accept that contention. His contribution to household finances was merely a continuation of the ad hoc system for the payment of living expenses that was employed during their relationship. His contributions in that form are taken into account at the second stage of the property adjustment process.

11. The husband also contended that he had a conversation with the wife to the effect that if he bought a flat screen television for the matrimonial home, the television would be accepted in full satisfaction of the debit balance due on the loans owed to the wife, and so he bought a television for the home. Even though it is agreed that the husband bought a television, I do not accept the husband’s evidence about the alleged agreement. The wife denied any such conversation or agreement, and I am not prepared to accept the husband’s uncorroborated evidence over the uncorroborated evidence of the wife about the existence and content of an alleged conversation that occurred long ago. Such an alleged agreement about acceptance of the television in satisfaction of the debt tends to be inconsistent with the husband’s allegation that his payment of household expenses was accepted in satisfaction of the debt. Moreover, the television purchased by the husband, as described by the wife, could not rationally have a value anywhere near comparable to the debit balance on the loans due to the wife.

12. On the balance of probabilities I conclude that the husband remains indebted to the wife for the sum of $22,400. That asset/liability will be factored into the property adjustment orders but, because it is a commercial liability between the spouses, it will not figure in the balance sheet so as to avoid distortion of the matrimonial property. It is an asset solely of the wife and a liability solely of the husband.

Issue 2(a) – Add-back of the wife’s former superannuation interest with the S Superannuation Fund

1. As at 30 June 2006, which was several months before the matrimonial separation, the wife held a superannuation interest with the S Superannuation Fund valued at $193,041.[46]

   [46] Husband’s affidavit, par 139

2. Although there is no corroborative document in evidence, the wife asserts that the superannuation interest had been depleted to little more than about $160,000 by the time of matrimonial separation in November 2006. Having regard to the rate of its expenditure over time, that evidence does not seem incongruous.

3. By 30 June 2007, which was several months after the matrimonial separation, the superannuation interest was valued at only $140,315.[47] That is the figure adopted by the wife in her financial statement filed in these proceedings on 15 August 2007.[48]

   [47] Husband’s affidavit, par 140

   [48] Exhibit W2, par 45

4. By the time that the wife filed another financial statement in these proceedings on 20 June 2008, she valued the superannuation interest at only $87,537.81.[49]

   [49] Exhibit W3, par 45

5. Since then the superannuation interest has been entirely exhausted by the wife.

6. The wife contended that, after 30 June 2006, her superannuation interest was expended on legal fees in these proceedings, overseas travel, and ordinary living expenses.

7. The husband has not been benefitted in any way by the funds expended from that superannuation interest. The husband therefore proposes that the superannuation interest be notionally added back to the matrimonial pool as an asset and be regarded as a share of the wife’s entitlement to matrimonial property because of its unilateral exhaustion by the wife.

8. The mere fact that a party has expended money realised from assets that existed at the time of separation, without more, does not justify notional add-back of the expended funds as a premature distribution or waste of assets. The Court needs to make some assessment of the reasonableness of the expenditure (see Omacini v Omacini (2005) 33 Fam LR 134 at 146), before deciding whether to notionally add-back the expenditure under one of the recognised categories of add-back (see Omacini at 144-145). The failure of the party responsible for the dissipation or expenditure to afford a satisfactory explanation for the dissipation or expenditure is a matter of significance in the determination of the reasonableness of it (see Omacini at 146).

9. The wife denied that her expenditure of those superannuation funds could be characterised as wasteful or a premature distribution of a matrimonial asset. She did not regard the expenditure as reckless or wanton. She was not then in paid employment, had reached retirement age, and was entitled by the terms of the superannuation trust deed to access the funds.

10. Excluding the amount paid in respect of legal fees, the wife expended some $104,000 on living expenses and travel in the period of more than 3 years since separation, which equates to net annual expenditure of no more than about $35,000. That could hardly be regarded as extravagant. The wife may have expended the funds at a faster rate than she had earlier hoped or anticipated, but that of itself is no good reason to transform the character of the expenditure from reasonable to unreasonable. The superannuation funds were the wife’s principal form of income over that period of time. She was not granted a disability pension until February 2009.[50]

    [50] Wife’s affidavit, par 146

11. By comparison, the husband has been in paid employment earning $44,000 gross per annum.[51] He has apparently spent the entirety of those wages on his living expenses. His financial statement discloses no accrued savings of any note, apart from the diminishing balance of funds in the savings accounts always maintained by the husband, into which he banked the proceeds of the sale of his publication business in May 2005.[52] His evidence is that he has had to borrow monies from his mother to meet all of his expenses because his income has been insufficient. He has been spending more than he earns.

    [51] Husband’s affidavit, par 148

    [52] Husband’s financial statement, par 37

12. On the evidence, there is general equivalence between the expenditure of the husband and the wife since the time of separation. The wife’s explanation for her expenditure is reasonable when compared to the position of the husband.

13. In the circumstances, but for the paid legal expenses addressed below, there is no proper basis upon which to conclude that the wife’s superannuation funds should be added back to the matrimonial pool of assets and resources.

Issue 2(b) – Double-counting in the wife’s former superannuation interest with the S Superannuation Fund

1. The wife contended in evidence that she has paid her legal fees to date, quantified at $55,907, from her superannuation interest. The husband did not seek to contradict her about that. The payment of those legal expenses from a matrimonial asset was a premature distribution of that asset and so the legal expenses will be notionally added back to the matrimonial pool and allocated to the wife’s share of the pool.

2. The wife admitted that the sewing machine which she now owns was purchased in early 2005 by S Pty Ltd. The purchase price was not funded from the superannuation interest held by her as at 30 June 2006. The current agreed value of the machine is already taken into account in the agreed balance sheet.

Issue 3 – Add-back of the wife’s former superannuation interest with Zurich Superannuation

1. At the time of matrimonial separation, the wife concedes that she had another superannuation interest with Zurich Superannuation, which was then valued at $11,800. Those funds have also been entirely spent, in the same manner as the superannuation interest held by her with the S Superannuation Fund. Those funds were transferred into the wife’s interest held with the S Superannuation Fund. The wife said in evidence that she believed that transfer occurred in 2009, but by reference to one of her financial statements, the transfer must have occurred by June 2008.[53]

   [53] Exhibit W3, par 45

2. Those extra monies should be regarded in the same way as the funds exhausted from the S Superannuation Fund. They do not materially detract from the characterisation of the wife’s reasonable expenditure of those funds. Averaged across a period of more than 3 years, the extra monies are inconsequential. These funds are similarly not added back to the matrimonial pool of assets and resources.

Issue 4(a) – Payments to the second, third, and fourth respondents in 1998/1999

1. By March 1999, the wife had realised net proceeds of $153,919.82 from the sale of her solely owned real property at C.[54]

   [54] Husband’s affidavit, par 13

2. From that sum, she gave $59,670 to her three children in closely equivalent shares, and retained the balance of $94,249.83 herself.[55]

   [55] Husband’s affidavit, pars 13-18; Wife’s affidavit, par 66-68

3. The husband concedes that at about the time of their marriage in October 1998 the wife told him of her ownership of that property, its impending sale, and her intention to make gifts to her children from the proceeds of that sale.[56]

   [56] Husband’s affidavit, par 19

4. The husband contends that the gifts of cash to the children, totalling $59,670, should be notionally added back to the matrimonial pool of assets on the basis of principles discussed in Omacini. The husband does not attempt to set aside any of those dispositions by reliance upon s 106B of the Act. Only the later dispositions in 2004 and 2005 are the subject of challenge pursuant to s 106B of the Act.[57]

   [57] Amended Application filed 16 July 2008, Orders 1, 5, 7, 9, 11

5. Apart from making a generalised complaint about the wife having divested herself of large sums of money over the course of the marriage, the husband did not articulate with any precision the basis upon which the gifts by the wife to the second, third, and fourth respondents between October 1998 and March 1999 from the proceeds of sale of the C property should be added back to the matrimonial pool.

6. The property was owned solely by the wife from a time well before she even met the husband.[58] At or about the time of marriage she told the husband of her intentions with respect to the sale and gifts to her children, and the contract to sell the property was struck within days of their marriage and cohabitation. There was nothing untoward about the wife selling her own property and favouring her children with gifts as she did. The fact that the wife announced her decision about the sale and gifts to the husband without discussing it with him and seeking his consent, as he alleges,[59] is of no moment. The property was not a matrimonial asset, and so consequently there was no waste or premature distribution of a matrimonial asset.

   [58] Wife’s affidavit, pars 4, 27

   [59] Husband’s affidavit, par 19

7. History shows the husband to have been perfectly content with the wife’s decision. As a demonstration of gratitude for the gift received by her, the fourth respondent and her spouse paid for the wife and husband to have trips to and accommodation at Diamond Head, Nowra, and Armidale in ensuing years. I accept the fourth respondent’s evidence that the husband was aware of the reason for his receipt of that benefit from her. The husband made no complaint of the wife’s gifts to her children until after these proceedings were commenced by him.

8. The gifts made by the wife to the second, third, and fourth respondents between October 1998 and March 1999 will not be added back to the matrimonial pool. The corollary of that finding is that the wife cannot then assert that the C property was an asset introduced by her to the relationship for the purpose of assessing contributions. She can only rely upon the net proceeds that she retained from that sale as an asset introduced to the relationship by her.

Issue 4(b) – Payments to the second respondent in mid 2004

1. The circumstances in which the wife and second respondent came to have an equivalent shareholding in S Pty Ltd has already been explained. So has the manner in which the second respondent came to receive a total sum of $266,012.13 from the sale by that corporation of its main asset.

2. The wife alleged that it was permissible for her to withdraw such funds from her superannuation interest in the S Superannuation Fund because the trust deed controlling the fund permitted her access to the superannuation interest at age 55 years. However, the wife did not attain 55 years of age until September 2004. The two payments made to the second respondent, comprising the total sum, straddled that date. No issue was taken by any party about the probity of the first payment to the second respondent on the basis that it was disbursed by the wife from her superannuation interest before she attained the age of 55 years. In fact, the wife gave uncontradicted evidence that the superannuation fund had later been audited unremarkably.

1. The husband complains that the two dispositions by the wife to the second respondent from her superannuation interest were unjustified. He contends for the dispositions to either be:

   a)Notionally added back to the matrimonial pool and allocated to the wife as part of her share of the pool, pursuant to principles discussed in Omacini, or

   b)Set aside pursuant to s 106B of the Act, with ancillary orders made for those amounts to be repatriated to the pool of matrimonial property by the second respondent, either in reliance upon s 90AE of the Act or otherwise.

2. The two arguments are conceptually different, and it is feasible for different outcomes to result from application of those principles.

3. A claim for add-back succeeds or fails on the application of Omacini principles. Either the matrimonial pool is notionally, but not actually (see Milankov & Milankov (2002) FLC 93-095 at 88,864), enlarged by the add-back or it is not. The division of property pursuant to s 79 of the Act then proceeds on the basis of the finding about the extent of the matrimonial pool and the allocation to the responsible party of the benefit received from any sums added-back.

4. When confronted with a claim to set a disposition aside under s 106B of the Act, the Court must firstly consider whether the disposition falls within the embrace of the provision, and only if so, then move on to consider whether the available discretion should be exercised to set the disposition aside, which is achieved by the making of ancillary orders to actually bring the disposed property back within the matrimonial pool. Even if a disposition is liable to be set aside, sometimes it will be unnecessary to exercise the discretion to do so because there is sufficient remaining property within the matrimonial pool to satisfy the proportional share of the party making the claim under s 106B. As has recently been observed by the Full Court (see VC & GC & Ors [2010] FamCAFC 62 at [154-159]):

   154. …Once it was established that the likely effect of the instruments was to defeat the orders sought by the wife we consider her Honour should have postponed her determination of whether or not to set aside the transactions until she had completed her consideration of the substantive dispute [under s 79].  This is because, as was explained in Halabi [see Halabi v Artillaga (1994) FLC 92-470], the legislation makes clear that a transaction may be set aside if it has the likely effect of defeating an anticipated order, regardless of the intention of the parties to the transaction. The fact her Honour had recorded that it was “arguable” that the transactions were invalid for other reasons does not provide a sufficient justification for dismissing the wife’s application at this point.

   155. At this preliminary stage of the proceedings her Honour had not identified and valued the assets and liabilities, nor could she assess the husband’s capacity to meet the orders sought by the wife. Her Honour’s assessment of the husband’s credit was limited to the issues on which he had been cross-examined up to that point in the proceedings, but her Honour had not had the benefit of hearing all the evidence. These matters throw into sharp focus the difficulties caused in endeavouring to deal with the s 106B applications in a discrete manner at the outset of the proceedings.

   156. The only utility of a hearing such as occurred here, is to ascertain if certain matters could be or are established or not; such as whether there was an intention to defeat an anticipated order.

   157. It may be also possible to establish whether, irrespective of intention, the instrument which the applicant seeks to set aside, would be likely to defeat an anticipated order, by entry into an instrument.

   158. If neither basis can be established, then the third parties might be released from the litigation.

   159. But, if either basis enabling the instrument to be set aside is established, it will rarely, at best, be open to conclude, on a discrete hearing, that the court would not, in the exercise of its discretion, set aside the instrument.  This is because of the prospect that all factors bearing upon the discretion may not be identified until the completion of the final hearing.

5. Before considering the husband’s arguments, it is necessary to establish the factual matrix to which the legal principles will be applied.

6. The second respondent was the subject of two separate dispositions. The first, in the sum of $246,012.13, was made on 7 July 2004.[60] The second, in the sum of $20,000, was made on 22 September 2004.[61]

   [60] Husband’s affidavit, par 75

   [61] Husband’s affidavit, par 87

7. The curiously exact amount of the first disposition is explained by the fact that it was the precise amount of the debit balance on a loan secured by mortgage over real property owned by the second respondent. That was conceded by both the wife and second respondent in cross examination. The amount bore no direct correlation to the second respondent’s 49% interest in S Pty Ltd and its assets. The value of the disposition equates to nearly 51% of the net proceeds generated by the sale by the corporation of its services list. The wife and second respondent conceded that the amount paid was not intended to be an exact calculation of the second respondent’s 49% interest in the corporation, and each was content that the figure was near enough. It was paid to the second respondent because that was the amount he needed to retire the debt over his rural property.

8. The second disposition of $20,000 was entirely gratuitous. It had nothing at all to do with satisfying any interest enjoyed by the second respondent in the corporation or the sales business it conducted.

9. The husband alleges in his affidavit that he was ignorant of the sale of the services list until after it occurred,[62] and that he was deprived of information about the manner in which the proceeds of sale were disbursed until many months after these proceedings were commenced.[63] He also denies that he was told of the wife’s intention to make a payment of $246,012.13 to the second respondent from the sale proceeds,[64] and says that he was ignorant of the payment of that sum to the second respondent until after separation.[65]

   [62] Husband’s affidavit, par 66

   [63] Husband’s affidavit, par 67

   [64] Husband’s affidavit, par 76

   [65] Husband’s affidavit, par 77

10. In cross examination the husband agreed that he was aware that the second respondent had a partial interest in the sales business, but was uncertain as to whether he was then aware of the extent of the second respondent’s percentage interest in it. He was unable to remember when he learned of the apportionment of the wife’s and second respondent’s shareholdings in the corporation that conducted the business. He said that he knew that the business was initially conducted by the wife as a sole proprietor and then transferred to the corporation.

11. The husband also agreed that he was aware of the prospective sale of the services list and that there was strong buyer interest in it. He had only meant in his affidavit that no-one actually told him of formal completion of the sale. When he was asked about his involvement in discussions concerning the payment of the services list sale proceeds into the wife’s superannuation fund, the husband said he could not recall. He did not deny his involvement in such conversations. He did concede though that the wife had told him that she had received advice about the transaction. The tenor of his oral evidence was different from the strident allegations and denials in his affidavit.

12. The husband took the wife to task about her decision to transfer the sales business, of which she was the sole proprietor, to a corporation and then give the second respondent a 49% shareholding in that corporation without receiving any financial consideration for the transfer. She agreed with the proposition that it was her choice to do so and that she was under no form of compulsion. It is true that the wife was not then compelled to act as she did, but that analysis is an artificial appraisal of the circumstances surrounding the transaction.

13. The sales business, from its inception, was the joint enterprise of the wife and second respondent. They built it together from the start. The business could easily have been configured from the beginning as a partnership or a corporation with equal shareholdings, and the husband could have had no complaint. The commencement of the business as a sole proprietorship on professional advice does not deprive the arrangement of proper recognition as a joint enterprise in a practical sense. The delay of about two years in formally recognising the second respondent’s equity in the business, through the formation of the corporation with equivalent shareholdings, does not carry with it a genuine foundation for the husband’s complaint of unfairness. Quite the contrary. As the wife said in cross examination, she did not even think to consult with the husband about the restructure of the business between the sole proprietorship and the corporation because she regarded the business to have been owned and conducted equally by herself and the second respondent from the start. The mutual intention of the wife and second respondent, and by extension, the corporation that they jointly controlled, was that 49% of the services list proceeds of sale should properly be paid to the second respondent.

14. The husband asserted in his affidavit that the wife spoke with him specifically about removing his name from the sales business and substituting the names of her children in the business.[66] I accept the wife’s denial of that conversation about the change in business structure for a number of reasons. Firstly, the husband’s estimation of the time of its occurrence is incorrect. He said it occurred in “about 2003”, when it is known that the change in business structure occurred on 1 July 2002,[67] following registration of the corporation on 28 June 2002.[68] Secondly, the conversation alleged by the husband is factually erroneous – the husband’s name was never associated with the business and so there was no need for him to sign any document to remove his name from the business, and apart from the second respondent, the other children’s names were never added to the business.

    [66] Husband’s affidavit, par 125

    [67] Wife’s affidavit, par 100

    [68] Husband’s affidavit, Annexure G

15. The wife denied failing to consult with the husband about the disbursement of the services list proceeds. Although she could not remember the details of the conversations, she maintained that she had told the husband of the sale and the sale price. She concedes that she did not recall telling the husband the precise amount then paid out to the second respondent. She believed that the husband was aware that the second respondent held an effective half interest in the sales business and the assets of it. Her position was that, if the husband knew the sale price of the services list and he also knew the second respondent had an effective half interest in it, the sum paid to the second respondent was quite obvious.

16. The oral evidence of the second respondent was quite emphatic. He said that the husband was party to several conversations with himself and the wife in which there was discussion about payment to the second respondent from the S Superannuation Fund. He remembered that one of those conversations took place at the farm, when there was discussion to the effect that the monies he received from the superannuation fund would be used to pay out the mortgage over his property.

17. In light of the perceptible change in the nature of the husband’s evidence, and the fact that he ultimately conceded that he could not remember whether he had taken part in conversations about the transactions, on the balance of probabilities, I prefer the evidence of the wife and second respondent about what the husband knew of the sale of the services list and the disbursement of the proceeds of sale.

18. The husband’s argument for notional add-back of the two payments made by the wife to the second respondent proceeds from a premise that the subject monies were monies of the matrimonial relationship, and that they were either prematurely distributed or wasted by the wife through her payment of them to the second respondent (see Omacini at 144-145).

19. In my view, the husband is unable to properly sustain any argument that 49% of the net proceeds of sale of the services list paid by S Pty Ltd into the superannuation interest held by the wife in the S Superannuation Fund were matrimonial monies. The wife certainly exercised dominion over the totality of the services list sale proceeds when they were paid into her superannuation account by the corporation, but the second respondent had a beneficial interest in a 49% share of those funds. The subsequent payment out to the second respondent of monies equating to 49% of the services list proceeds of sale could draw no reasonable criticism, because neither the wife nor the husband enjoyed any beneficial ownership in those funds.

20. However, the second respondent was paid out an amount in two tranches that exceeded his 49% beneficial interest. He was actually paid $266,012.13, when a 49% interest amounted to only $236,436.11. The difference of $29,576.02 was money to which the wife was both legally and beneficially entitled, and those monies were therefore a matrimonial asset.

21. There could be little doubt that those monies which comprised a matrimonial asset were prematurely distributed in the Townsend sense, or squandered in the Kowaliw sense, when they were given to the second respondent without the permission or acquiescence of the husband (see Omacini at 144-145). On the basis of the facts found proven on the balance of probabilities, the husband knew only that the second respondent would be paid out from the wife’s superannuation account an amount commensurate with his 49% interest in the corporation which controlled the services list. Accordingly, the sum of $29,576.02 should be notionally added back to the matrimonial pool of assets in reliance upon Omacini principles.

22. Section 106B of the Act relevantly provides as follows:

    (1)In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.

    (2) The court may order that any money or real or personal property dealt with by any instrument or disposition referred to in subsection (1), (1A) or (1B) may be taken in execution or charged with the payment of such sums for costs or maintenance as the court directs, or that the proceeds of a sale must be paid into court to abide its order.

    (3) The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.

    (4AA) An application may be made to the court for an order under this section by:

    (a)a party to the proceedings; or

    (b)a creditor of a party to the proceedings if the creditor may not be able to recover his or her debt if the instrument or disposition were made; or

    (c)any other person whose interests would be affected by the making of the instrument or disposition.

    (4A)In addition to the powers the court has under this section, the court may also do any or all of the things listed in subsection 80(1) or 90SS(1).

23. There are several important features of s 106B which are relevant for present purposes. Firstly, the provision relates to “dispositions”, which are individual transactions. Secondly, the subject disposition is liable to be set aside regardless of whether it was intended to defeat an anticipated order of the Court. The mere disadvantageous effect of the subject disposition may suffice. Thirdly, only dispositions which defeat anticipated “orders”, not anticipated “claims”, are liable to be set aside. As was explained by Nicholson CJ in Halabi v Artillaga (1994) FLC 92-470 at 80,884:

    The authorities establish that the intention in question must be one to defeat an anticipated order and not a claim in the proceedings, and that the test as to whether the instrument is likely to have this effect is an objective and not a subjective one (see Whitaker and Whitaker (1980) FLC 90-813 per Nygh J, Pflugradt and Pflugradt (1981) FLC 91-052 per Elliot J, Holley and Holley (1982) FLC 91-257, ANZ Banking Group Ltd v. Harper (supra), Hadjuk and Hadjuk (1993) FLC ¶92-383).

    The section therefore lays down two sets of circumstances which will cause it to operate, namely that an instrument has been made with the intention of defeating an anticipated order in the proceeding, or secondly, regardless of the intention with which it has been made it is likely to have the effect of defeating such an order.

24. Once s 106B is engaged, the Court must then consider whether discretion will be exercised so as to grant relief. The exercise of discretion should not be confused with the initial issue of whether the subject transaction falls within the ambit of the section. The proper approach is described again by Nicholson CJ as follows (see Halabi v Artillaga at 80,885):

    …first determine whether the requirements of ss (1) have been satisfied, and if so, to treat the disposition as not having been made for the purpose of arriving at an appropriate order pursuant to s 79, and then having done so, to determine whether, having regard to the rights of the bona fide purchaser or person interested under ss (3), a discretion should be exercised to set the instrument or disposition aside. The exercise of such a discretion may well depend upon whether if this is not done there are sufficient funds available to the party who has made the disposition to satisfy the order without setting the instrument or disposition aside.

25. Although Nicholson CJ was there discussing the operation of s 85, the preceding legislative formulation of s 106B, the process remains the same under s 106B of the Act (see Cumpton v Cumpton (2007) 38 Fam LR 377 at 398). The principles established in Halabi v Artillaga have the endorsement of the Full Court (see VC & GC at [153-154]).

26. It has already been noted that there were two separate dispositions to the second respondent which fall to be considered under s 106B.

27. The first disposition of $246,012.13 on 7 July 2004 was not intended to defeat an anticipated property adjustment order of the Court. That money was paid to the second respondent in intended satisfaction of his proportional beneficial interest in the services list proceeds of sale. The fact that the money paid out slightly exceeded his 49% share does not denude the disposition of that intention or motivation. The payment to the second respondent, which in fact represented about 51% of the services list proceeds of sale, was simply the amount needed by the second respondent to discharge his mortgage. In the minds of the wife and second respondent, near enough was good enough.

28. Consideration must then pass to the second limb of s 106B to determine whether the disposition had the effect of defeating an anticipated property adjustment order, regardless of intention.

29. No order could properly have been made by the Court between the husband and wife, pursuant to s 79 of the Act, in respect of those monies representing 49% of the services list proceeds of sale. That is because they were not matrimonial monies. Neither the wife nor husband had a beneficial interest in them.

30. Although matrimonial monies amounting to $29,576.02 did constitute part of the disposition by the wife to the second respondent, I am not satisfied on an objective basis that the large disposition involving a comparatively small proportion of matrimonial monies had the likely effect of defeating a just and equitable property adjustment order between the husband and the wife. For that reason I am not satisfied that the disposition falls within the ambit of s 106B of the Act.

1. Even if I concluded otherwise, similar reasoning would probably lead me to a decision not to exercise discretion to set the entire disposition aside. It should be noted that the statutory provision only permits the setting aside of a disposition in totality, not in part.

2. The second disposition of $20,000 on 22 September 2004 entirely involved money in which the wife had both legal and beneficial interest. Even if that disposition falls within the ambit of s 106B of the Act, and discretion would be exercised to set that disposition aside, the effect would be to bring back into account in the matrimonial pool of property only that $20,000. That is less than the sum of $29,576.02 that should be notionally added back on Omacini principles. Unless the notional add-back of the larger amount does not properly permit the distribution to the husband of his proper share of the remaining matrimonial pool of assets, it is superfluous considering the prospective setting aside of the disposition of the lesser amount.

Issue 4(c) – Payments to the second, third, and fourth respondents in mid 2005

1. The husband and the wife each held a one-third legal and beneficial interest in the real property at S. When that property was sold, considerably more than two-thirds of the net proceeds of sale were paid into the wife’s superannuation account held by her in the S Superannuation Fund. From the net proceeds of sale of $379,972.05,[69] the sums of $19,520 and $340,932 (totalling $360,452) were paid into the wife’s superannuation account.[70] The first amount was half of the deposit paid on exchange of contracts, with the other half being paid to the superannuation account of the second respondent, and the second amount was the balance of the sale price paid on completion of the contract.

   [69] Husband’s affidavit, pars 94, 103

   [70] Husband’s affidavit, pars 95-96, Annexures T, U

2. Two-thirds of the net sale proceeds amounts to $253,314.66. Those funds were properly due to the husband and the wife and constituted a matrimonial asset. It was from those funds that the wife disbursed the gifts of $50,000 to each of the second, third, and fourth respondents.

3. There is again some controversy about the extent of the husband’s knowledge of the circumstances surrounding the sale of that property, the payment of the net sale proceeds into the superannuation fund, and the payment of the gifts to the wife’s three children out of that fund.

4. In his affidavit, the husband alleges that he was aware that the S property was purchased by him with the wife and second respondent using borrowed funds, but that he was unaware of the amount borrowed until told by the wife.[71] In cross examination the husband conceded that he was well aware that he was buying real property as a co-owner and was entering into a mortgage to do so.

   [71] Husband’s affidavit, par 57

5. In his affidavit, the husband professes almost complete ignorance of the later transaction when the property was sold in July 2005. He alleges that he signed documents at a solicitors’ office without reading or knowing the contents of the documents signed.[72] The husband alleges having no recollection of any conversation about the manner of disbursement of the sale proceeds,[73] even though he concedes that he may have signed a direction to pay.[74] There were subtle differences in the husband’s evidence during cross examination. He said that he remembered attending upon a person named “Melissa” at Tranters Lawyers with the wife and second respondent to sign documents related to the sale. Although he could not recall the conversation at the lawyer’s office, the husband said that he anticipated that the proceeds of sale would be paid into the S Superannuation Fund, and that he did not complain about that proposal. He did not deny that the details of the transaction were explained at that time, but rather he could just not remember. He said that he had not discussed with the wife the manner of disbursement of the sale proceeds at any point thereafter before their separation nearly 18 months later – notwithstanding his knowledge that he had had a one-third interest on the property which yielded net proceeds of sale of $379,972.05. In fact, no complaint was raised by him about the gifts until these proceedings were commenced.

   [72] Husband’s affidavit, pars 101-102

   [73] Husband’s affidavit, par 108

   [74] Husband’s affidavit, par 102

6. In his affidavit, the husband positively denies being informed before November 2007 that the wife had gifted $50,000 to each of the children,[75] although he knew in about August or September 2005 that the wife had given cash gifts of some amount to each of the children.[76] Again, when he was pressed in cross examination, his evidence was different. He was unsure of the amounts given to the wife’s children, and he was unsure of the source of the gifts. He did not object to the gifts and did not regard it as any of his business. He was aware that the third respondent had purchased a grand piano with the cash gift from the wife. The husband also admitted that the third respondent had made a “thank you” speech on a family trip away in appreciation for the cash received from the wife.

   [75] Husband’s affidavit, pars 109-113

   [76] Husband’s affidavit, par 109

7. The husband’s evidence was unsatisfactory. I do not accept that a man of his obvious guile was so ignorant of the purchase and sale transactions in relation to the S property. It is quite unbelievable that, in the knowledge that he was a one-third owner of a real property which generated net sale proceeds of nearly $380,000, he had no idea what happened to his share of the cash, and moreover did not even care enough to ask.

8. Perhaps unsurprisingly, the admitted facts that the husband did not ask or complain about the disbursement of the sale proceeds is entirely consistent with the evidence given by the wife and other respondents that the husband well knew that the sale proceeds were paid into the wife’s superannuation fund and that gifts were paid out from that fund to the wife’s children.

9. The wife alleged that the husband deliberately received no financial return from the sale of the S property because he had made no financial contribution to it, and that the husband was in agreement with that arrangement for that reason.[77] The wife explained that the property was bought with borrowed funds. She denied that the husband was needed as a joint mortgagor in order to have the loan approved, and was corroborated about that by the second respondent.[78] The wife had her own funds available for use if need be.[79] She said that the B property was used as collateral security and that her daughters were also guarantors for the loan.[80] The husband was introduced as a co-owner and co-borrower because she anticipated that the husband would conduct his own publication business from the same premises, although that did not eventuate. Renovations to the property were funded by the wife and second respondent.[81] The loan repayments were met by the wife and second respondent from the sales business they conducted jointly.[82] The loan was discharged by the wife’s use of her inheritance from the estate of her deceased father,[83] and by a further payment from her own resources.[84]

   [77] Wife’s affidavit, par 118

   [78] Second Respondent’s affidavit, par 28 (first sentence only)

   [79] Wife’s affidavit, par 84

   [80] Wife’s affidavit, pars 77-80

   [81] Wife’s affidavit, pars 85, 87, 88, 92 (part), 107

   [82] Wife’s affidavit, par 91, 107

   [83] Wife’s affidavit, pars 102, 106

   [84] Wife’s affidavit, Annexure M

10. The second respondent said in cross examination that he remembered being present at the lawyer's office with the wife and husband at the time of sale of the S property. The solicitor took the trouble to explain the contract in detail before it was signed by each of them. He says that there was specific discussion at that meeting, in the husband’s presence, that the proceeds of sale would be paid into the superannuation fund. I accept that evidence of the second respondent, given that the husband conceded that he had no recollection, and that the husband anticipated that the superannuation fund would be the destination of the sale proceeds.

11. The fourth respondent said that the wife and husband attended an afternoon tea at her home during which the wife announced, in the husband’s presence, that gifts of $50,000 would be paid to each of the three children. The gifts were not conferred on that occasion. Only the announcement was made, and the gifts were later conferred. Her evidence is directly inconsistent with that of the husband. My acceptance of her evidence means that the husband was aware of the intended gifts before they occurred, and he was also aware of the amount of the gifts.

12. I find, on the balance of probabilities, that the husband agreed or acquiesced to the payment of the proceeds of sale from the S property into the superannuation fund, knew that the wife intended gifting the sum of $50,000 to each of her three children from those proceeds of sale, and did not raise objection about it at any time before the commencement of these proceedings.

13. The gifts totalling $150,000 were undoubtedly paid from a fund which was a matrimonial asset, but given the husband’s consent or acquiescence to the payment of those monies to the second, third, and fourth respondents, the monies were not squandered. With the husband’s concurrence, the gifts were not a premature distribution of a matrimonial asset, nor were the monies wasted. There is no proper basis for the gifts to be notionally added back to the matrimonial pool.

14. Having failed to sustain an argument for the add-back, the husband alternatively relies upon s 106B of the Act to set aside the dispositions of $50,000 to each of the wife’s three children.

15. There is no need to examine the evidence about the wife’s motivation for the gifts, even though that was a hotly contested issue during the hearing. I accept the submission of the husband that the consent or acquiescence of the husband to the gifts deprives the dispositions of any intended effect to defeat anticipated property adjustment orders of the Court, but that the husband’s consent or acquiescence has no influence upon the objective effect of the dispositions.

16. Axiomatically, I reject the submission of the wife that the husband’s consent or acquiescence to the gifts even deprives the dispositions of the objective effect of likely defeating anticipated property adjustment orders of the Court. The wife argued that, assuming the husband to be a reasonable man who did not act to prevent the dispositions, then it could not be objectively reasoned that the dispositions had the effect of defeating anticipated property adjustment orders of the Court. If that was objectively foreseen as the probable effect then the husband would have acted to prevent them. Conversely, the husband submitted that remonstration with the wife was pointless. If he remonstrated, and failed to prevent the dispositions by the wife, then his failure did not influence the objective effect of the dispositions. If that were so, then not remonstrating at all made no difference to the outcome. It follows that acquiescence holds no consequence for the actual effect of the dispositions.

17. I find on the evidence that the objective effect of the dispositions was the likely defeat of anticipated property adjustment orders of the Court.

18. I find as a fact on the balance of probabilities that a reasonable person in the position of the wife would have anticipated the prospect of property adjustment orders between she and the husband by August 2005. By April 2005 she had decided not to give the husband any more money for his business.[85] Some little time after May 2005 she was aware that the husband had failed to repay monies owed to her despite his receipt of sale proceeds for his business, and she was disaffected by that.[86] The parties separated by November 2006 and the likelihood is that their relationship had fallen into disrepair from some time beforehand. The husband said that their relationship was very poor in August 2005,[87] which I accept as probable, even though I am not satisfied that the disharmony extended back as far as July 2004,[88] because over the first half of 2004 the wife was still contentedly advancing large amounts of money to the husband for use in his business.[89]

    [85] Wife’s affidavit, par 132

    [86] Wife’s affidavit, pars 134-135

    [87] Husband’s affidavit, par 131

    [88] Husband’s affidavit, pars 129-130

    [89] See paragraphs 39-42 of these reasons

19. As was said in Pflugradt & Pflugradt (1981) FLC 91-052 at 76,429-76,430, and later adopted as correct in Halabi v Artillaga:

    …It is not a question of whether [the disponor] expected or foresaw a subsequent property application by [the spouse] and anticipated an order being made, but whether considering all of the circumstances at the time of the disposition such an application by [the spouse] at some time, with a consequent order, was objectively to be foreseen or to be expected by [the disponor] as being likely or reasonably probable.

20. The dispositions in August 2005 are liable to be set aside. However, having regard to the size of the matrimonial pool and the need for the husband to discharge his outstanding debt to the wife, there is apparently no need to exercise discretion so as to compel the second, third and fourth respondents to each repay the sum of $50,000 so as to permit inclusion of those monies within the matrimonial pool. In the event that the wife does not meet her obligations to pay monies to the husband under the property adjustment orders, then ancillary procedural orders permit sale of the B property, jointly owned by the wife and other respondents, to meet the husband’s entitlement.

Issue 5 – The husband’s debt to his mother

1. At the time of marriage the husband owed a debt of $25,000 to his mother.[90] There is really no dispute about that,[91] even though the wife unsuccessfully attempted to demonstrate during the husband’s cross examination that the correct amount was $20,000. The husband purported to still owe that debt at the time of separation,[92] and contends that it is still due and owing.[93]

   [90] Husband’s affidavit, par 11

   [91] Wife’s affidavit, par 14

   [92] Husband’s affidavit, par 138

   [93] Husband’s affidavit, par 146

2. In February 2010 the husband alleges borrowing a further $25,000 from his mother, for which he allegedly remains liable.[94]

   [94] Husband’s affidavit, pars 146-147

3. In cross examination the husband conceded that he had not entered into any formal written contract in respect of either loan. The first loan advance was made to the husband in 1995 and the debt has never been repaid, even partially. There is no express written or oral arrangement in place for either loan to be repaid. No call has ever been made for repayment on either loan, and the husband admits that he does not know whether his mother continues to expect repayment from him. The husband conceded in cross examination the evidence of the wife that he had also received another payment of $10,000 from his mother, which was mutually regarded as a gift and not a loan.[95] The husband offered no explanation as to why he treated that advance any differently from the other two advances of $25,000.

   [95] Wife’s affidavit, par 133

4. In light of that evidence, the wife contends for a finding that such loan advances are no longer due and owing by the husband to his mother and should be ignored. In the face of that contest, the husband failed to call his mother as a witness on the issue, and no explanation was offered for that failure. The mere fact that the husband’s mother is elderly is not of itself any rational explanation. She is apparently of sound mind.[96] Accordingly, I draw the conclusion that the evidence which could have been given by the husband’s mother would not have been of any assistance to the husband’s case (see Jones v Dunkel (1959) 101 CLR 298). The husband said in evidence that he dealt with his brother in respect of the second loan advance. The brother holds a power of attorney for the husband’s mother.[97] A similar conclusion is therefore drawn in respect of the potential evidence of the husband’s brother, in the absence of a rational explanation for the failure to adduce it.

   [96] Husband’s affidavit, pars 151-152

   [97] Husband’s affidavit, par 153

5. Even if it could be properly construed that the husband and his mother intended to create a legally enforceable commercial contract between themselves as debtor and creditor in respect of those two transactions, notwithstanding their familial relationship (see Balfour v Balfour [1919] 2 KB 571; Cohen v Cohen (1929) 42 CLR 91 at 96; Henderson v Miles [2005] NSWSC 710 at [24]; Magill v Magill (2006) 231 ALR 277 at 326; Atco Controls Pty Ltd (in liq.) v Newtronics Pty Ltd (recs and mgrs appt) [2009] VSCA 238 at [60]), I am not satisfied on the available evidence that repayment of either amount is ever likely to be called upon by the husband’s mother, or her attorney, as creditor. In those circumstances, the Court has a discretion to ignore the loans as liabilities in the matrimonial pool (see Biltoft v Biltoft (1995) 19 Fam LR 82 at 94), and I do so.

Issue 6 – The wife’s credit card debt

1. The wife conceded in cross examination that the credit card debt for which she is liable to the National Australia Bank was incurred by her since the time of separation. It was not disclosed as a liability in her financial statements filed on 15 August 2007[98] and 20 June 2008.[99] On that basis alone the husband contended that the debt should be excised from the pool of property, for otherwise it reduces the value of the pool, and thereby diminishes the share of the husband in it.

   [98] Exhibit W2

   [99] Exhibit W3

2. Although the wife derived the exclusive benefit of the post-separation expenditure incurred on her own credit card, that is not determinative of the issue. Ordinarily, the assets and liabilities of the parties are valued at the date of trial (see Omacini at 142). There is no evidence to suggest that the wife’s expenditure on the credit card was anything other than reasonable. All other existing assets of the parties are valued as at the date of trial. There is no good reason to differentiate the wife’s credit card debt. It will be included in the matrimonial pool at its current value. Had the husband’s most recent debt to his mother been regarded as a genuinely commercial liability, it too would have been included in the balance sheet as the husband had sought, notwithstanding that it was a post-separation liability of the husband.

Matrimonial Pool of Property

1. The Court is generally exhorted to treat the parties’ superannuation entitlements separately from assets, but that need not necessarily be the case (see Marriage of Coghlan (2005) 33 Fam LR 414 at 428-429). Neither the husband nor the wife directly addressed the issue in submissions, but inferentially, they both treated superannuation as another matrimonial asset. It is appropriate in the circumstances of this case to treat the superannuation entitlements of the husband as property because the remaining superannuation entitlements are only a modest amount, they represent only a small proportion of the pool, and the husband (if he has not already done so by attaining 60 years of age in May 2010) will shortly attain an age when he is able to retire and crystallise his beneficial interest in the entitlements.

2. Rounding the values to the nearest dollar, I therefore find the matrimonial pool of property to be constituted as follows:

Assets	Party	Value	Total
B property (25%)	Wife	105,000
Subaru car	Wife	4,000
Chattels & sewing machine	Wife	19,770
Chattels	Husband	1,190
Paintings	Husband	nil
Suzuki car	Husband	2,000
Building Society accounts	Husband	18,692
Sub-total	150,652
Add-backs
Paid legal fees	Wife	55,908
Paid legal fees	Husband	15,989
Overpayment to second respondent of services list sale proceeds in mid 2004	Wife	29,576
Sub-total	101,473
Section 106B dispositions
Gifts by wife to second, third, fourth respondents in August 2005	Wife	150,000
Sub-total	150,000
Financial resources
Media Superannuation	Husband	49,218
Sub-total	49,218
Total credit	451,343
Liabilities
NAB credit card debt	Wife	5,873
Total debit	5,873
Net total	445,470

1. The husband is indebted to the wife from his share of the matrimonial pool for $22,400, which liability is not included in the pool for reasons already explained.

Assessment of Contributions

1. Following compilation of the matrimonial pool as the first step in the property adjustment process (see Marriage of Hickey (2003) 30 Fam LR 355 at 370), the second step is to assess the parties contributions pursuant to ss 79(4)(a)-(c) of the Act.

2. There was considerable disparity between the assets introduced by the parties at the commencement of their cohabitation. The wife’s contribution was far superior.

3. The wife brought to the relationship:

   a)        A one-quarter share in the B property.[100]

   b)The net proceeds of sale of the C property, which amounted to $94,249.83,[101] following the making of some gifts to her children.

   c)Other savings amounting to approximately $43,000.[102]

   d)Superannuation of $15,000.[103]

   e)A relatively new car, subject to an encumbrance.[104]

   f)Personal chattels.[105]

   [100] Wife’s affidavit, par 10(i)

   [101] Wife’s affidavit, pars 10(ii), 62-66

   [102] Wife’s affidavit, pars 10(iii), 10(v), 10(vii)

   [103] Wife’s affidavit, par 10(viii)

   [104] Wife’s affidavit, pars 10(iv), 11

   [105] Wife’s affidavit, par 10(vi)

4. By comparison, the husband brought to the relationship savings of about $27,000, some personal chattels, and an unquantified but modest superannuation interest with Print Super.[106]

   [106] Husband’s affidavit, par 11; Exhibit H5; Wife’s affidavit, pars 12, 15

5. Although the husband and wife both say that the husband then also had a debt to his mother in the sum of $25,000, it would be inequitable to reduce the husband’s initial capital contribution by that sum when I have already found that the debt should not now be taken into account as a liability.

6. For the duration of the relationship the parties cohabited in the B property, which was renovated at the cost of the wife at various times. The husband agreed in cross examination that the wife would have incurred costs of some $45,000 in the renovation of a bathroom, en suite, pool area, and carport. Although the husband made no financial contribution to improvement of the property, he certainly assisted with some of the labour.[107]

   [107] Exhibit H6; Husband’s affidavit, pars 52-54

7. The wife used her wages and other emoluments to meet living and capital expenses.[108] The husband did likewise.[109] I accept the husband’s oral evidence that he paid at least ten utility accounts relating to the B property, which amounted to not less than $3,500. Ultimately, the wife was bound to agree. Nevertheless, the parties kept their finances separate and the husband agreed that there was no regular budget or bill payment routine employed by them during the marriage.

   [108] Wife’s affidavit, pars 17, 31-32

   [109] Husband’s affidavit, pars 23-32

8. The wife, husband, and second respondent jointly purchased the commercial property at S in early 2000. The husband concedes making no direct financial contribution to its acquisition. He did however commit himself as a joint debtor under the loan secured by mortgage to fund the purchase. That ought be recognised as a contribution in itself (see Calverley v Green (1984) 155 CLR 242 at 267-268).

9. Renovations were performed upon the S property to ensure its suitability as an office from which the wife and second respondent could conduct their new sales business. The cost of those renovations was met by the wife and second respondent. As a consequence of sustained objection made by the husband,[110] there is no evidence as to the quantum of the wife’s financial contribution to the renovations, but the sources of the contribution must have been her wages or the savings that she brought into the relationship, for which she will already be accorded credit. The husband’s financial contribution was limited to some tools and the purchase of some hardware items, which the husband described as “bits and pieces” which were “not greatly significant”. The source of that contribution must also have been wages or savings. I accept the wife’s oral evidence in cross examination that the second respondent contributed cash reserves of about $10,000 to the renovations.

   [110] Objections to wife’s affidavit, pars 86, 92 (part)

10. The husband contributed his labour in the performance of the renovations upon the S property.[111] There are photographs in evidence of him helping with that work.[112] The wife and second respondent also laboured on the renovations.

    [111] Wife’s affidavit, par 93; Husband’s affidavit, par 58

    [112] Exhibit H4

11. The mortgage repayments and outgoings upon the property were met entirely by the wife and second respondent.[113]

    [113] Wife’s affidavit, par 91

12. The wife received an inheritance of $101,634.74,[114] which was used to substantially diminish the debt secured by mortgage over the commercial property at S for the benefit of herself, the husband, and the second respondent.[115] The husband also agreed that the sum of $8,938.89, which was used to entirely discharge the loan and mortgage in August 2003,[116] was provided by the wife. The disbursement of the sale proceeds of that property in August 2005 has already been addressed earlier in these reasons.

    [114] Wife’s affidavit, pars 74, 102

    [115] Wife’s affidavit, par 106

    [116] Wife’s affidavit, Annexure M; Husband’s affidavit, par 91

13. The husband had no part to play in the sales business conceived and conducted jointly by the wife and second respondent. The husband did produce some artwork used in that business,[117] but I accept that he was paid for that work, both with a cash payment of $2,600,[118] and the purchase for him of a computer that he still retains.

    [117] Exhibit H3

    [118] Wife’s affidavit, par 94

14. The sale of the business’s service list, which for all intents and purposes was the kernel of the business, for $482,522 was a remarkable result. To have built the business up to that level within only four years of operation speaks volumes about the business acumen of the wife and second respondent. All the while the business generated wages and directors fees for them both,[119] which wages and fees of the wife were used within the marriage. Although a little more than half of those sale proceeds were directed to the second respondent for his benefit, the remainder were retained by the wife and used within the marriage. At the time of separation, the wife retained only $193,041 in her superannuation account, representing the balance of those sale proceeds. Some $23,000 (being $482,522 - $266,012 - $193,041 = $23,469) of the sale proceeds must therefore have been spent within the marriage.

    [119] Husband’s affidavit, par 132 (amended as agreed)

15. As already found, the wife made loan advances to the husband to help him form and conduct his own business in early 2004. It would be double-counting for those advances to be characterised as second-stage contributions by the wife when it has already been found that the husband remains indebted to the wife for $22,400 on those loan advances pursuant to a commercial agreement. I therefore ignore them at this point in the process.

16. The husband sold his business in May 2005.[120] The net proceeds of sale of about $46,500 that he admits receiving were banked into his individual account held with the building society. Contrary to the husband’s assertion in his affidavit that he contributed the whole of those sale proceeds to the household finances,[121] he admitted that some of the sale proceeds had been used paying out trade creditors, and that he in fact still retained about $20,000 in his building society account by the time of separation.[122] Depending upon how much was used to pay trade creditors, which was not quantified, no more than about $26,500 could have been expended within the marriage. It could have been considerably less.

    [120] Husband’s affidavit, par 27

    [121] Husband’s affidavit, par 33

    [122] Husband’s affidavit, Annexure Z

17. I accept the evidence of the husband that he made non-financial contributions of note in and around the garden and yard of the former matrimonial home,[123] and also to household duties.[124]

    [123] Husband’s affidavit, pars 55, 136-137

    [124] Husband’s affidavit, pars 134-135

18. The wife submitted for an outcome that entitled the husband to a maximum of 30% of the matrimonial pool, based on assessment of contributions. On the other hand, acknowledging the inferiority of his contributions, the husband submitted for his entitlement to 40% of the pool.

19. The wife’s part interest in the B property is the largest asset in the pool. It was introduced by the wife to the relationship. Although it was renovated over time, the husband’s contributions to the renovations were non-financial in nature and not substantial. There is no evidence that his labour resulted in any inflation in the value of the property. Although there is a case for that asset to be considered and assessed separately from the remainder of the pool, that was not the approach adopted or advocated by either party, and so it would arguably be procedurally unfair to take that course in reaching a determination. On a global basis, I accept the mutual position of the parties that the wife’s contributions to a single pool were superior to those of the husband. The task becomes one of assessing the extent of the superiority.

20. The superiority of the wife’s contributions is manifest in numerous ways – her contribution of the part interest in the B property that still remains, her introduction to the relationship of other significant savings which were spent during the relationship, her immersion in the marital assets of her inheritance, the capital contribution of a portion of the proceeds of sale of the services list from the business that she established with the second respondent, and her orchestration of the spouses’ part interest in the S property in relation to which a substantial proportion of the sale proceeds may be repatriated to the pool by application of s 106B of the Act.

21. The weight attributable to those contributions is diminished to some extent by reason of the wife’s expenditure and dissipation of some of the capital contributions, but not such that the wife’s contributions do not continue to enjoy clear superiority over those of the husband.

22. The correct apportionment of the matrimonial pool by reference to contributions recognised by ss 79(4)(a)-(c) of the Act is two-thirds to the wife and one-third to the husband.

Adjustment of entitlements

1. The third step in the property adjustment process is to consider whether any adjustment to the proportional entitlement is warranted by reason of the factors under ss 79(4)(d)-(g) of the Act.

2. Although those factors are numerous, I will deal with only those that have been the subject of submissions by either party. I assume that the parties do not rely upon those factors that they chose not to address.

3. The wife is now 60 years of age. She has not been in paid employment since the sale of the services list by S Pty Ltd in May 2004 and the cessation of the sales business at that time. I find that it is unlikely that she will return to paid employment.

4. The wife’s sole form of income is now a Centrelink disability pension.[125] Her entitlement to a disability pension arises from her diagnosis with lupus in November 2008.[126] I find that the pension will remain the wife’s only form of income.

   [125] Wife’s financial statement, par 12

   [126] Wife’s affidavit, par 146

5. The husband made a sustained effort in cross examination of the wife to demonstrate that she operates a sewing business for profit, or at least has the potential to do so, and that sewing is not merely a hobby as she alleged.[127] Although the wife’s affidavit evidence unsatisfactorily failed to explain some aspects of her operation of the sewing machine, which caused me some concern about her reliability as a witness, I am not satisfied by the evidence adduced in cross examination that the wife operates a sewing business for profit. Nor am I satisfied that she has any real potential to do so. The income that the wife has generated over the last five years from operation of the sewing machine is very modest.[128] I accept the wife’s evidence that such income has been expended, in the main, on the overhead cost of materials and sewing tuition. The photographs of the sewing machine and some products, tendered by the husband,[129] demonstrate the professionalism and craftsmanship of the wife’s work, but do not otherwise influence those findings of fact.

   [127] Wife’s affidavit, par 138

   [128] Exhibit H7

   [129] Exhibit H8

6. The husband is also now 60 years of age. He remains in good physical and mental health, which by his own admission permits him to continue working in his current employment as a publisher.[130] It is likely that he will continue working for a few years yet. The husband gave no indication of his intention to retire any time soon. His youngest child is now aged 20 years,[131] and no person is dependent upon him for support.[132] He will be able to spend his wages purely for his own benefit.

   [130] Husband’s affidavit, par 148

   [131] Husband’s affidavit, par 6

   [132] Husband’s affidavit, par 150

7. Although the husband has superannuation entitlements, and the wife now does not, the quantum of the husband’s superannuation interest is not such that that interest will financially support him in his retirement. It is not a significant factor in the adjustment process.

8. The wife sought to establish through cross examination of the husband that the husband had a financial resource available to him in the form of an expected inheritance from his elderly mother. The husband adduced some evidence about the circumstances of his mother.[133] The husband confirmed in cross examination that he had no knowledge at all about the contents of his mother’s will, and at least inferred that he had no idea about the extent of any future inheritance from her. There was no evidence to contradict the husband and I accept his evidence.

   [133] Husband’s affidavit, pars 151-153

9. Conversely, the husband submitted that the wife had a financial resource in the form of the residual 75% proprietorship in the B property, presently held by the wife’s three children. The submission arises from the fact that the wife conferred those quarter shares in the property upon her three children, free of consideration, and that the children gave evidence from which it could be inferred that they would not act to force the wife from the home and would transfer their shares back to the wife, free of consideration, should she ask for that. However, the evidence is not quite so compelling.

10. I find as a fact that the second, third, and fourth respondents would not force a sale of the property, thereby requiring the wife to vacate the property. Accordingly, the wife will always have a home available for her use. However, I am not satisfied that the evidence supports a finding that the second, third, and fourth respondents would each voluntarily return their quarter shares in the property to the wife simply upon her request.

11. On the strength of those factors, the wife submits for an adjustment in her favour of 3-5%, whereas the husband submits that no adjustment either way is justified.

12. The husband will continue to earn a reasonable income for some little while, but he will not have his own property within which to live. He will not have the residential security that the wife will enjoy into the future, even though she will only have a lesser income in the form of a pension. They are the most compelling factors, and they are of equal weight. I therefore accept the husband’s submission that there should be no adjustment either way.

Just and Equitable Orders

1. The outcome of the first three steps in the adjustment process is an entitlement of the wife to two-thirds of the matrimonial pool and the husband to one-third.

2. The pool has an overall value of $445,470. The one-third interest enjoyed by the husband in that pool equates to $148,490.

3. Presently, the husband is in possession, or has had the benefit, of the following assets and resources:

Assets	Value	Total
Chattels	1,190
Paintings	nil
Suzuki car	2,000
Building Society accounts	18,692
Paid legal fees	15,989
Sub-total	37,871
Financial resources
Media Superannuation	49,218
Sub-total	49,218
Net total	87,089

1. If the husband retains those assets and resources then he needs to receive further cash of $61,401 (being $148,490 - $87,089) to fulfil his entitlement.

2. However, the husband remains indebted to the wife for $22,400. Setting off that sum against the monies otherwise payable to the husband from the pool means that the husband must receive a further cash payment of $39,001 (being $61,401 - $22,400).

3. A just and equitable outcome would be for the wife to pay to the husband the sum of $39,001, and for the parties to otherwise retain the benefit and liability of assets, resources, and debts in their possession.

4. In the event that the wife fails to pay that sum of cash to the husband then it is equitable for the B property to be sold in order for the husband to be paid out his entitlement from the sale proceeds. Although that order would affect the second, third, and fourth respondents, they would be affected in any event if discretion was otherwise exercised to compel each of them to individually pay cash of $50,000 into the pool to satisfy the finding that the gifts of those sums to them in August 2005 should be set aside under s 106B of the Act. They are not therefore disadvantaged.

5. For those reasons, the orders identified at the beginning of this judgment are just and equitable.

I certify that the preceding one hundred and eighty (180) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin.

Associate: 

Date:  9 June 2010