Martello & Martello
[2021] FamCA 149
•25 March 2021
FAMILY COURT OF AUSTRALIA
Martello & Martello [2021] FamCA 149
File number(s): BRC 526 of 2016 Judgment of: BAUMANN J Date of judgment: 25 March 2021 Catchwords: FAMILY LAW – PROPERTY – Argument as to how to value the husband’s 25% interest in a unit trust and if a discount of a minority interest should be applied and if so the discount rate – Assessment of contributions – Where the Court assesses contribution based entitlements as 75% to the husband and 25% to the wife – Adjustment for s 75(2) factor of 8.5% to the wife – Parties to formulate minute of orders that achieve justice and equity consistent with the Court’s Judgment.
FAMILY LAW – SPOUSE MAINTENANCE – Where the wife contends for an award of spouse maintenance for three years – Where the Court finds the wife is able to adequately support herself into the future – application dismissed.
Legislation: Family Law Act 1975 (Cth) ss 72, 75, 79 Cases cited: Atkins & Hunt and Ors (2017) FLC 93-774
C & C (2005) FLC 93-220
Chorn & Hopkins (2004) FLC 93-204
Gosper & Gosper (1987) FLC 91-818
Hickey & Hickey (2003) FLC 93-143
Hull & Hull (1983) FLC 91-360
Kessey & Kessey (1994) FLC 92-495
Mallett v Mallett (1984) 156 CLR 605
Ramsay & Ramsay (1997) FLC 92-742
White & Tulloch v White (1995) FLC 92-640
Number of paragraphs: 112 Date of last submission/s: 8 August 2019 Date of hearing: 6, 7, 8 March 2019; 15 April 2019; 25 July 2019 Place: Brisbane Counsel for the Applicant: Mr T North SC Counsel for the Respondent: Mr T Kirk QC ORDERS
BRC 526 of 2016 IN THE MATTER OF MARTELLO & MARTELLO
BETWEEN: MR MARTELLO
Applicant
AND: MS MARTELLO
Respondent
ORDER MADE BY:
BAUMANN J
DATE OF ORDER:
25 MARCH 2021
THE COURT ORDERS:
1.That these proceedings be adjourned for pronouncement of orders and further submissions at 9.30am on 12 May 2021 in the Family Court of Australia at Brisbane.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Martello & Martello has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
INTRODUCTION
This property case examines how to effect a just and equitable division of a pool of $8 million that remains after the parties – the Applicant husband Mr Martello and the Respondent wife Ms Martello – separated nearly six years ago after a marriage of nearly 12 years to separation.
Whilst their most important creation is their three children now aged 16, 15 and 12 – their wealth undeniably swelled through significant financial gifts and support from the husband’s parents.
Apart from the controversy about how the pool of assets ought be assessed, the weight to be applied to the myriad of contributions from at least the date of marriage to the trial and what achievable orders can be made that permits justice and equity for both parties to occur, provided the dilemma not resolvable by either negotiation or mediation.
BRIEF CONTEXTUAL CHRONOLOGY
Statements of fact hereafter should be construed as findings of fact.
The husband was born in 1974 and is now 46 years of age; the wife was born in 1979 and is now 41 years of age.
The husband, a tradesman, began work for his parents in 1991 and before the parties’ marriage in October 2003, he had purchased and sold some homes in Suburb DD for a modest profit.
I accept that after the parties were engaged in August 2002, the wife suffered two miscarriages which was traumatic and although qualified as a professional, after the marriage in 2003, the wife primarily cared for the parties’ three children:
(a)X born in 2004 (now 16 years);
(b)Y born in 2005 (now 15 years); and
(c)Z born in 2009 (now 12 years).
There is no dispute between the parties as to the property transactions entered into during the course of the relationship, and more precisely set out at paragraphs 244 to 307 of the husband’s affidavit filed 15 October 2018. Importantly, the home at G Street, Suburb H was purchased in May 2006 for $870,000, and remains the only personally owned real estate interest of the parties.
As these Reasons reveal, the commitment by the husband, since the age of 17 years, to the family business started by his parents Mr and Ms J has been the source of much of the parties’ income and wealth. The family business, at its peak, employed 300 people and over 1000 sub-contractors in a building company. The business was acquired by a publicly listed entity in 2010 – after which the husband was retained as CEO, for approximately two years.
Through the continued growth of the family business, sizeable assets, particularly real property, were acquired and various restructuring endeavours enabled the owners and instigators of the business, the husband’s parents, to make significant transfers of interests to their children – particularly in what is now known as the E Trust which was established on 8 March 2012, and its predecessors in business.
In particular the husband, through entities controlled by him, has a total of 25% of the units in the E Trust through two major transactions (and some restructuring), being:
(a)on or about 30 June 2008, 12% (12,000 shares) in K Pty Ltd were gifted to him by his parents and having a value at the time of approximately $12,363,000; and
(b)A transfer of 13% (13,000 of the units) in E Trust for $10,400,000 on 18 June 2012 which was fully financed by his parents, the sellers of such stock, on an interest free loan being repaid currently at a rate of $5,000 a month.
Appendix One to these Reasons is a diagram which displays the interests (including those of the husband), in E Trust.
Shortly after the husband’s term as CEO came to an end, the family moved to Region L and purchased a home in Suburb M in March 2013 for $3.18 million. The parties separated in June 2015, and the Suburb M home was sold for $3.74 million in May 2016 – netting approximately $1,372,000 which was the source for a number of partial distributions to the parties during the course of this litigation which were commenced by the husband in January 2016.
Parenting Orders on a final basis by consent made on 2 November 2017 provide for the three children to live primarily with the mother but they were ordered to spend substantial and significant time with the father five nights a fortnight and during school holidays.
The trial in this matter commenced in March 2019 and was completed in three tranches by 25 July 2019. Submissions in writing and in reply were delivered by Mr North of Senior Counsel for the husband and by 8 August 2019 and by Mr Kirk of Queen’s Counsel for the wife by 8 August 2019.
The Court regrets its delay in delivering its Reasons for Judgment.
COMPETING FINAL ORDERS
Although a more thorough examination of the orders each party contends achieves justice and equity may need to be undertaken at some point, a sense of the wide and polarised positions taken by the parties can be seen from the orders they propose, namely:
(c)the Applicant husband’s final orders at Appendix Two; and
(d)the Respondent wife’s final orders at Appendix Three.
Although there are multiple disputes about how the pool of assets and liabilities available for alteration should be calculated, by far the major dispute relates to the valuation of the entities controlled by the husband and in particular the value to him of the 25% share of the units in the E Trust acquired or vested as earlier set out.
At its highest, the wife contends for a figure of $7,757,400 whilst, at its lowest, the husband contends for a figure of $846,361. It becomes readily apparent why these parties, despite competent firms of solicitors and highly experienced Senior Counsel, were not able to resolve the division of property interests by negotiation.
The parties both assert, and I agree, that it is just and equitable within the meaning of s 79(2) of the Family Law Act 1975 (Cth) (“the Act”) to make orders altering the current interests of the parties and further, the comprehensive written submissions of both Counsel identify the legislative pathway identified in decisions such as Hickey & Hickey (2003) FLC 93-143, simply stated:
(a)to identify the pool of assets and liabilities generally, and usually at the time of hearing;
(b)to assess the relative contributions of both the financial, non-financial, direct and indirect nature as specified by s.79(4);
(c)to consider the factors as are relevant contained in s.75(2) of the Act; and
(d)finally, consider the ultimate analysis to determine whether the order the Court proposes to make is just and equitable to both parties.
Before reaching a conclusion as to the pool of assets and liabilities, I deal with the major issue – the husband’s interest in the Martello Family Group.
CORE ISSUE – VALUATION OF THE HUSBAND’S INTEREST IN THE MARTELLO FAMILY GROUP
Introduction
In this case and amidst a number of evidentiary rulings during the final hearing, the Court has evidence of the value of the husband’s interest in the Martello Group, more specifically identified below. A single expert Ms F and the husband’s adversarial expert Mr N provided numerous reports and were directed to confer as to their differing opinions. Both were the subject of cross-examination.
Additionally, with a view to the better understanding of the effect to the husband of an acceptance by him of any offer from his parents of gross $10 million for his 25% interest, the Court received evidence from Accountant Ms O who was also the subject of cross-examination.
In final submissions, the various scenarios presented to the Court for assessment were:
(a)Ms F:
(i)Scenario A where no discount applies - $7,757,400;
(ii)Scenario B where a 10% discount applies - $6,081,900.
(b)Mr N:
(i)Scenario A where a 15% discount applies - $5,095,575;
(ii)Scenario B where a 20% discount applies $4,426,775.
Where:
Scenario A occurs when the interest in the Martello Group is retained by the husband; and
Scenario B occurs when the interest in the Martello Group is sold to the husband’s parents which includes realisation costs and taxation.
In the joint statement of experts (Exhibit 1) dated 26 February 2019, the two experts, in forming their respective opinions:
(a)agreed that the value of each Martello Group entity is appropriately determined on the basis of its nett asset backing (“agreed valuation methodology”) with the 25% interest being worth $16,550,250 (gross);
(b)agreed they have limited information about the husband and his parents’ day-to-day decision-making or the husband’s relationship with his parents, such that they proceeded on a “neutral” basis that the relationships are “normal”;
(c)Ms F remained of the view that as set out in F1, F2, F3 and F4 of her reports (identified at 1.5 of Exhibit 1), her opinion that no discount is required in the event that the husband retains his interest and a transaction discount of 10% is appropriate in the event that the interest is sold to the parents because:
(i)a discount contains two components: a minority discount (which deals with issues of control) and a liquidity discount (which deals with how quickly the equity can be converted into cash). If retained, a liquidity discount does not apply;
(ii)any impediment associated with the use of the assets as security does not affect or impair the underlying asset value, whilst she accepted it may be a relevant consideration in the case;
(iii)a unit holder may request the Trustee to repurchase units and the Trustee may in its discretion elect to repurchase (clause 13 of the Deed) and the “repurchase price” for each unit ascertained pursuant to clause 13.2.1 of the Trustee Deed is the same methodology adopted for Scenario A;
(iv)no regard was given by Mr N to a unit holder’s right “to the return of capital on winding up, being $16,505,000 subscribed by C Pty Ltd”;
(v)the discount adopted by Mr N “appears to have limited regard to the familial relationship of the husband to the other unitholders” when considered by reference to the 25% discount applied;
(vi)in adopting a discount of 20% (being within the range of 15% to 25%), if the husband sells his interests to his parents it is unreasonable for Mr N “to opine that the parents would suffer minority or control constraints any greater than those suffered by another unitholder”. Furthermore, as the parents are the Guardians of the Trust and Directors of the Trust, a discount premised on a sale to an unrelated third party, is not appropriate.
(d)Mr N remained of the view that, as set out in N2 of his report (identified at 1.5 of Exhibit 1), a 15% discount under Scenario A and a 20% discount under Scenario B was appropriate because:
(i)no “realisation” discount was included in Scenario A;
(ii)as Scenario A assumes the interest continues to be held by the husband, the clauses relating to repurchase are not relevant;
(iii)he believes it is a relevant consideration as to the ability to access economic benefits associated with owning the assets and he is not aware of a banking institution that would accept a 25% shareholding in an entity which holds property as security;
(iv)it is not relevant to speculate and assume that capital of $16,505,000 is available to unitholders as changes in the assets, which if sold prior to winding up, may have capital distributed at the Trustees’ discretion to other than special unitholders;
(v)for Scenario B, he applied a combined “minority discount and transaction discount” and made no “split” between the two; and
(vi)even though they are Guardians of the Trust, any acquired 25% interest would still have minority or control constraints.
(e)The two experts disagreed about the relevance of the “opinion piece” being the paper written by Dr P. To the extent Ms F adopts some of the opinions of Dr P, she has indicated so. Mr N gives reasons why he would distinguish between a “trading business” and the current subject entity which holds property and assessment of a minority interest in an entity and a situation involving an, for example, oppressed minority shareholder. Mr N also says the opinions expressed by Mr P are within the context of USA divorce processes and he is not able to say of its relevance in Australia.
Suffice it to say that Dr P was not the subject of cross-examination on the issues in this case, and whilst Ms F was open and transparent about her reference to the principles enunciated by Dr P, it is her opinion as formed that is relevant to the Court.
No analytical benefit arises from incorporating significant proportions of the various reports of these two experts in these Reasons. Their reports speak for themselves. Based on the evidence of these two experts (acknowledging that before I leave this topic I will engage in the submission by Mr North SC for the husband about the alternate valuation of Ms O), I make these findings:
(a)The valuation of the E Trust (before distribution to the parents) is critically based on valuations of real property interests independently valued. Whilst I accept the “financials” were as at 31 March 2018, and this is now three years ago, neither party has sought to reopen to attempt to offer other valuation evidence of the properties (which were nearly 18 months old at the time of the final submissions in August 2019);
(b)As the E Trust is a real estate holding entity and not a trading entity, I agree with both experts that their agreed valuation methodology of nett asset backing is appropriate – at least as a starting point;
(c)It is agreed that after allowance for the distribution to the parents on 18 July 2017 of $4,371,774 the nett asset backing for the units in the E Trust is $66,201,000 and therefore 25% of the units has a gross value of $16,550,250. These units are held by C Pty Ltd, a company controlled by the husband and incorporated in May 2009;
(d)10% of the shares in C Pty Ltd ultimately are controlled by the husband through the Mr Martello Family Trust (of which confusingly C Pty Ltd is Trustee), being a discretionary trust established in July 2007. The remaining 90% of the shares in C Pty Ltd are held by Martello Pty Ltd as Trustee for the Martello Family Trust, a discretionary trust established in May 2009.
Should Scenario A or B apply?
I have reached a conclusion on all the evidence that on the balance of probabilities the husband’s interest should be assessed (subject to what follows when discussing the evidence of Ms O) on Scenario B, for the following reasons:
(a)The husband’s parents have already made an offer to purchase the husband’s interests at a price of $10,000,000 (which on the basis of the expert valuations is a significant discount to the assessed gross valuation of $16,550,250 (approximately 40%). The evidence is the husband, at one time, regarded his combined interests as having a value of $12,590,000, when he made an offer to his parents to buy his units in July 2017;
(b)The absence of any evidence from other family (siblings) who have an interest in the E Trust, makes it difficult to make any assessment of the strength of relationships, however the evidence of the husband’s mother Ms J reveals that:
(i)from 1977 to 2010, when the business was sold, Ms J and her husband Mr J built from scratch a large national construction business that employed many people and was successful in securing a number of government contracts. In 2005 Mr and Ms J established Q Pty Ltd which at its peak, had over 300 employees plus at least 1000 sub-contractors Australia wide;
(ii)all four children, the husband and his siblings Mr R, Mr S and Ms T, work in different roles in the Martello Group and overall “we work as a family for the betterment of us all and everyone multi-tasks”;
(iii)as a recognition for the “hard work they had put in over the years” and a desire to reward them, in 2008 shares in the family business K Pty Ltd were “gifted” to the children, including the husband;
(iv)in 2012, the Group underwent a restructure as a result of the sale of Q Pty Ltd and as a form of succession planning (and on advice) “it make economic sense to sell our shares to the family equally”. As part of the process loans were advanced to each of the children for the value of the share transferred to each of them;
(v)it is accepted that the value of the shares transferred in 2012 (12,000) in Martello Group Pty Ltd was $10,400,000. The full vendor loan to the husband does not attract interest however the husband must make repayments. The evidence of Ms O is that the loan balance was approximately $7,487,534 at the time of her assessment in October 2018;
(vi)at paragraph 51, Ms J (after discussing the counter offer of $10 million made to the husband) says:
Our preference is for Mr Martello to retain his interest in the Group. There are no advantages for us in buying Mr Martello’s interests and we do not want to do so, but we will have to if Mr Martello has no alternative than to sell in order to resolve his financial proceedings with Ms Martello.
(vii)Although Mr and Ms J have never asked any of their children to enter into loan documentation with them (see paragraph 62), a loan agreement was entered into in 2018 for loans to the husband at that time, at this request;
(viii)Ms J gave evidence that it was the husband who found the land in Suburb U in May 2015 upon which the house built is the husband’s residence where, his mother says, he can stay “indefinitely”.
In my assessment, all of the evidence persuades me that Mr and Ms J are not likely to put their son’s future financial security – with also possible adverse effects on their other children who hold the remaining 75% of the units in E Trust – at risk. In circumstances where the husband says he will have to sell his interest if the wife is to obtain more than $750,000, I am prepared to proceed, at this stage of the analysis, on Scenario B. In this event, both Ms F and Mr N opine that a discount should be applied. I agree.
WHAT SHOULD BE THE RATE OF DISCOUNT APPLIED?
For Scenario B, Ms F opines a discount rate of 10% should be applied; Mr N opines a discount rate of 20% should be applied. Mr Kirk QC submits the evidence of the single expert should be preferred. Mr North SC contends the Court “could not but have reservations about the utility and appropriateness of the valuation methodology adopted by each valuer” and goes further to submit (at 2.2(h)) that “the only price the Court could be confident can be achieved, is that achievable under a sale to the Husband’s parents”. As Ms O opines, the nett benefit of such an offer to the husband is $846,361.
Both valuers, to some extent in respect of Scenario B, rely on the same criteria in assessing the appropriate discount rate, but for the reasons which follow (summarised essentially in the joint statement of experts – Exhibit 1) come to a different conclusion. The evidence of Ms F in respect of Scenario A, as there was no sale envisaged with the husband retaining the units, opined no discount was necessary. In essence, Mr N formed the view that some factors required broad consideration in Scenarios A and B, but that for the reasons he gave in his report at 2.2 to 2.6 he indicated a discount range:
(a)for Scenario A of between 10% to 20% (and adopted 15%); and
(b)for Scenario B of between 15% to 25% (and adopted 20%).
I note that neither valuer, in their assessment, made any allowance for income tax that may be payable on the realisation of the interests held by the husband’s entities. Ms F in her evidence said there are a range of options to minimise tax including some $16 million in tax losses that might be available.
I note the following factors were taken into account by both valuers in determining the discount rate for Scenario B, namely:
(a)both valuers say they took into account a combined minority discount and transaction/realisation component. I see no error by Mr N in not “splitting” the two;
(b)whilst Ms F regards it as relevant that the provisions of clause 13 of the Trust Deed (which provides a method for calculating unit values without allowance for any minority or other form of discount), Mr N did not. Mr N says the minority or control constraints (set out at clause 12) would still apply if units were sold to the parents, which is correct. However any purchaser of the units, as Ms F opines, would be aware of clause 13. In my view, Mr N did not give sufficient weight to this factor;
(c)both valuers acknowledged that the “familial relationships” could have an impact. I agree. I think that Ms F’s premises (when adopting a discount of 10%) overstates the “commercial” nature of the parents’ attitude to any transaction involving the husband. They have three other children who they have shown they wish to treat equally. Their counter-offer evidences a more hard edged approach at that time. I take the view from the evidence of Ms J, as the matriarch of the family, that she will exercise a “whole of family” focus on any transaction involving the units in the E Trust. There is no evidence of the attitude of the other children who hold units, and I note under clause 12.15 the unanimous consent of all unitholders and the parents (as appointed Guardians under the Trust Deed) is required to enable the process for transfer of units under clause 12 to be altered. In the absence of a variation the valuation to be obtained by the process must by “fair value”;
(d)whilst I accept logically that the market for the units, beyond the family, is limited it is not possible on the evidence offered to determine if an “arms length” purchaser aware of the nature, from and characteristics of the units (and the terms of the Deed) would be attracted to sharing in a substantial property portfolio currently generating around $400,000 per annum return; and
(e)clause 12.16 of the Deed imposes a sanction on a unitholder for pledging units as security without the consent of the Trustee. There is no evidence about whether consent would be likely. Mr N acknowledged, at least, he is not an expert in financing but speculatively opined that it would be difficult to find a lender prepared to accept the units as security. Again no reliable evidence either way exists.
I have reached a conclusion that in respect of Scenario B, the 10% discount factor opined by Ms F is too low and the 20% discount factor opined by Mr N is too high.
I propose to adopt, for this analysis, a discount factor of 15%.
Accordingly, by including in the balance sheet a combined interest of the units controlled by the husband of $5,274,750 I have considered the principles identified in Counsels’ respective submissions as guiding my discretion, including:
(a)there is no fixed rule as to the proper method of valuation of shares in Family Court proceedings (see Atkins & Hunt and Ors (2017) FLC 93-774 at [46]);
(b)the question of valuation is essentially a matter for the trial Judge (Hull & Hull (1983) FLC 91-360 at 78,410); and
(c)Warnick J in Ramsay & Ramsay (1997) FLC 92-742 at 83,997 held that “the purpose of the valuation is to ascertain the value of the shares to the shareholding party…not their commercial value or their value to a hypothetical purchaser”.
I see no need to distinguish these principles because this case deals with units in a unit trust rather than shares in a corporation.
I have considered the submissions of Counsel for the husband Mr North SC at paragraph 2.2(u):
Given that the object and purpose of the valuation in these proceedings is to ascertain the value of these units to the Husband, the terms of the Trust Deed and the rights and benefits conferred under that Deed together with the Unit Certificate for the special units owned by the Husband might well lead your Honour to conclude that it would only be by accident that a value based upon his proportionate share of the market value of the net assets held within the Trust, whether that share be discounted further or not, was reflective of the value to the Husband of his ownership of the units. Reference shall be made hereafter to the terms of the Deed and the Certificate for the special units. Notwithstanding the approach taken by each valuer, your Honour might well wonder why no-one has valued or attempted to put a figure on the present value of his likely future benefit flowing from continuing to hold these units.
which, combined with other submissions, led to what Mr Kirk QC describes (at paragraph 2.2) as the “contrived” position adopted for the proposed sale to the husband’s parents based on their offer of $10 million. This, on the evidence of Ms O, amounts to a benefit to the husband of $846,361.
I agree with Mr Kirk SC’s submission that the offer to purchase “is opportunistic and bears no relationship to the value of the interest to the husband”. I form this view relying on:
(a)the discussion about the valuation that has taken place based on the experts – including the expert offered by the husband, Mr N;
(b)the acquisition or cost base of the husband’s interest as set out in the contributions section of this Judgment;
(c)the income derived from his current interest; and
(d)the fact that his parents, without any other loan obligation or demand, accept that the husband can pay off the interest free and unsecured debt of around $7,487,534 at a rate of $60,000 per annum.
This arrangements seems more to relate to “succession planning” as Ms J referred to than anything approximating a commercial arrangement.
I do accept however the submission of Mr North SC that some of the discussion undertaken in reaching the conclusion I have not only “impacts” on the choice of method of valuation “but also the fashioning of appropriate orders”. It is those orders, where the focus is on justice and equity being achieved, that I will conclude on in this Judgment and which in many respects may create the greatest challenge in this case.
ADD BACKS AND LEGAL FEES AND TIDEWAY DEBT
It is clear that when the parties’ joint property at W Street, Suburb M was sold in May 2016 (after separation), the nett balance after discharge of mortgage and other expenses was $1,372,660.44. These funds were deposited to the then solicitors for the husband. The funds were invested but became the source of withdrawals by the parties, either via Orders of the Court or by consent.
I accept that between 31 August 2015 and 5 November 2018 (when each party received 50% of the remaining funds in Trust to close the account), that the wife received (rounding down):
(a) Payments by way of partial property settlement $639,881 (b) Payments to be categorised $285,000 $924,881
I accept that between 23 January 2017 and 5 November 2018, that the husband received (rounding down):
(a) Payments by way of partial property settlement $464,881 (b) Payment to be categorised $195,000 $659,881
The husband says that of the payment received on 5 November 2018, $35,000 was applied to meet his legal costs (paragraph 23).
Updated costs notices were tendered by the parties on 25 July 2019 and reveal (excluding various expert fees) that:
(a)the husband has paid or incurred costs (see Exhibit 19) as follows:
(i) SS Lawyers $223,132.71 (ii) BB Lawyers $502,737.34 (iii) Further disbursements $122,197.74 $848,067.79 (b)The wife had paid or incurred costs (see Exhibit 20) as follows:
(i) Family law fees to AA Lawyers $376,070.22 (ii) Disbursements $170,546.34 (iii) Outstanding fees approximately $95,926.60 $642,543.16
Based on this evidence, and if I accept, as I do that the funds withdrawn from the sale proceeds of the Suburb M property ultimately were used for legal expenses to some extent, then at least, in my view, there can be no valid argument that the sums paid for legal expenses (to the extent of the level of withdrawal) should be “added back” (see Chorn & Hopkins (2004) FLC 93-204).
On the basis of the evidence of costs incurred, then:
(a)the husband used post separation income and/or loans (including drawdown on the E Trust) for a mixture of:
(i)legal expenses ($848,067 - $659,881) = $188,186; and
(ii)his living expenses plus expenses he claims he has paid for the children of $333,286.16 (paragraph 49).
(b)The wife had a “surplus” of funds from her partial property distributions (now so categorised) of $282,338, being $924,881 - $642,543.
I think it is helpful to consider this evidence as it supports, in my view, my exercise of discretion to “add back” the disbursements or legal expenses likely to have been met from the Suburb M funds that are set out in the balance sheet.
The question that then arises is how should the Court treat other alleged adjustments contended for by the parties, namely:
(a)the balance of the wife’s receipts from the Suburb M fund totalling $282,338 (of which sum $285,000 was “not categorised”); and
(b)the debt the husband says he has incurred with the E Trust which increased from $180,000 to a figure of $528,369.
WIFE’S “SURPLUS” OF $282,338
The evidence reveals that, although I accept that the husband did expend considerable expenses on the children’s schooling as he deposes to, his available income was significantly greater than that of the wife. The wife says, and I accept, her household benefited from income received from her de facto partner – however I take into account the lifestyle the children (and herself) had enjoyed to the time of separation in June 2015. In my assessment, the wife’s evidence that any funds not used on legal expenses found their way into the expenses of her household should be accepted.
The wife’s Financial Statement sworn 12 October 2018 estimated weekly living expenses for her and the children totalling $2,370 per week approximately and although some items seemed high (e.g. entertainment and hobbies $350 per week; food for the children $475 per week) the “surplus” of $282,338 over a period of say four years amounts to $1,350 per week approximately. I have decided not to “add back” the sum of $282,338 accordingly – categorising it as reasonable living expenses expended.
HUSBAND’S DEBT TO TIDEWAY
The husband, in cross-examination, said that the funds from the E Trust were used for legal expenses, school fees and loan repayments to his parents. This evidence is consistent with paragraph 13 of his affidavit filed 8 February 2019, which I accept. Additionally, as earlier noted, the husband’s legal expenses did not include expert fees tabulated paragraph 25 of his February 2019 affidavit totalling $195,623.98.
The husband seeks, from the wife’s share of any property settlement, that in accordance with the express intention of Order 10(d) made by consent on 22 February 2016, the wife pay her share. In my view, the wife should meet that obligation. It is not a balance sheet entry. However, again it is clear that the expenses incurred by the husband greatly exceeded the partial property withdrawals from the Suburb M sale proceeds.
As will be the subject of further comment later in these Reasons, the husband has been able to access, in a relatively short period of time, funds by way of loan from the E Trust and indirectly through C Pty Ltd. He requested his parents to enter into a “loan agreement” – curiously when no such agreement was required for the current unsecured liability exceeding $7 million – for recent loans by them.
It is at least a reasonable inference, which I draw, that the husband was persuaded to seek a “loan agreement” for the debt now of $528,369 so as to be in a position to make the submissions his Counsel does about how the loan should be treated.
I do not propose to bring this post separation debt, used I accept towards legal expenses, living expenses and/or school fees into the balance sheet but will not ignore this liability when I consider a range of issues under s 75(2)(o) later.
Similarly, I see little utility in engaging with the argument advanced by the wife in her Senior Counsel’s submissions at 1.2.9 to 12.10 relating to a contention that the husband has failed to explain $837,330 of his expenditure. On balance, the husband does offer an explanation for how he has used funds (as particularised at paragraph 16 of the husband’s submissions in reply), which I accept.
Counsel Mr Kirk QC at paragraph 1.2.19 estimates that in addition to the distribution from the Suburb M nett proceeds (already discussed), the husband has since approximately 30 June 2015 (when separation occurred) had access to loans and drawings (mainly on the C Pty Ltd from E Trust). That increase in loan on the financial statements moved from $655,718 at 30 June 2015 to $1,079,932 at 31 March 2018.
I do not accept the husband’s use of these funds is unexplained, although I accept the wife (by comparison with the funds she says she had available to her) feels the husband should in some way “account” for his lifestyle decisions and expenditure.
However that is not the test. In my view, as Senior Counsel for the husband submits, the husband and wife separated in 2015 and the husband is entitled to “go about his separate life”. Separation does not require all possible personal decisions to go into “suspended animation”. I do not ignore the benefits, although conceded by Mr Kirk QC imprecise in their calculation, the husband has received. Again, the apparent ready access to funds within the family structure demonstrates the husband can access monies by family arrangement.
The better approach is to take this issue into account under s 75(2)(o).
OTHER SMALLER BALANCE SHEET ISSUES
For completeness, I find that:
(a)No injustice to either party flows from ignoring (whatever date is adopted) funds that may have remained in their respective solicitors Trust Account, because of the manner in which the Court treats the use of post separation withdrawals, income and legal costs;
(b)with the period of four years having elapsed between separation and final submissions in August 2019, it would be somewhat artificial to include any current bank account balances or credit card liabilities in the balance sheet. The parties sensibly agreed to exclude the “children’s accounts” and I exclude the others. In any event, incorporating into a balance sheet bank accounts as low as $5.00 or credit card liabilities as high as $9,370 are frankly “di minimis”;
(c)whether the wife’s additional guns, used for her hobby as a shooter, are hers (as she disputes) or not pales into insignificance in a pool of the size involved. In any event, there is no reliable evidence of value. They, if they are actually still owned by the wife, are excluded.
Otherwise, I include, at the agreed valuations, assets identified on both balance sheets and where the value has been agreed. It is appropriate to include the parties’ separation entitlement in the one pool rather than a separate pool (see C & C (2005) FLC 93-220).
On the basis of these findings, and as invited by a long list of authority to do so, I find the pool of assets and liabilities to be as set out in Appendix Four, amounting to $8,305,694.
CONTRIBUTIONS
The final written submissions of Senior Counsel for the parties reflect a very different approach to the evidence – which evidence is not significantly in dispute. Simply stated, although the parents became engaged in August 2002, a disagreement as to when “cohabitation’ commenced exists. There cannot be a dispute as to the date of marriage in 2003. Nor is there a dispute that at marriage – the husband being 29 years old and the wife being 24 years of age – the husband had property assets that he introduced superior to those of the wife. Little turns on whether “cohabitation” occurred in April 2002 (as the wife contends) or October 2003 (as the husband contends). This is particularly so where all the assets the husband controlled at the time of the marriage have been sold and the proceeds introduced into the relationship.
This was a marriage of nearly 12 years ceasing with the separation in June 2015, but more importantly blessed with three children, now aged 16, 15 and 12 years. The husband worked throughout the relationship for the “family business” Martello Family Group working hard often in senior positions, and the wife has been devoted to the role of primary homemaker, parent and supporter of the husband to at least separation. At least to the time of separation, undertaking the roles they chose in their personal relationship to perform, contributions may have been assessed as equal save for the need to consider the husband’s initial contributions and the extraordinary and substantial gift of shares in June 2008 and other transactions that resulted in the holdings identified in the Martello Family Group which have, in Appendix Three, been valued for reasons given at $5,274,750. Of course, as authority compels, the ultimate assessment of contributions (both financial, non-financial, direct and indirect) is a holistic exercise and in this case, and although some modest weight should be applied to the husband’s initial contributions set out below, the myriad of other contributions by both parties during the marriage must be considered, particularly the very substantial benefits that arises from the husband’s parents’ generosity to their son.
Rather than delving into detail, Mr Kirk SC for the wife submits that:
3.1As has already been conceded, the Husband brought more in assets to the relationship in April 2002 than the Wife did… in a relative sense, bearing in mind what the Husband asserts was subsequently brought in by him ($17M in income, $9M in capital), the property at the start is insignificant in a relative sense.
and further at 3.4 of the submissions:
3.4Whilst there has been a substantial direct financial contribution by the Husband and his parents over the past 17 years, it must be recognised that the gift of shares was in recognition of the Husband’s contributions to the family business over the years, contributions he was only able to make as the Wife took responsibility for the home and children.
I accept that the wife’s contribution as homemaker and parent should not be underestimated (Mallett v Mallett (1984) 156 CLR 605)
The submissions of the husband’s Counsel Mr North SC at 3.1 to 3.4 set out the asserted contributions by the husband, with which I broadly agree is consistent with the evidence and which I summarise as follows:
Initial contributions by the husband
The husband had the following:
(a)the property located at 3 CC Street, Suburb DD, purchased by the husband in 1998 for approximately $60,000 for the purpose of development which was developed. The property was sold on 7 July 2016 for $625,000, with net proceeds of $610,000 contributed to an existing Commonwealth Bank loan;
(b)the property located at 1 EE Street, Suburb DD, purchased by the husband in or about March 2001 for $95,000 for the purpose of development. With the benefit of approximately $550,000 interest free borrowings from the Martello Family Group, the developed property was sold in or about June 2005 for $774,000, with the husband receiving net sale proceeds of approximately $120,000; and
(c)the property located at FF Street Town GG was purchased by the husband in or about September 2003 for approximately $67,000. This property was transferred by the husband to the Martello Family Group in or about December 2007 for $80,000, with the proceeds applied to an existing Commonwealth Bank loan.
(d)Commonwealth Bank savings in the accounts ending …21, …20 and …12 of approximately $90,000 (noting the husband had sold HH Street, Suburb DD of a nett return of $133,000 in June 2003); household contends and furniture; a Super Fund 1 member entitlement of $29,694.45; and
(e)accruing long service leave with K Pty Ltd which was accessed in October 2007 for approximately $18,000.
Initial contributions by the wife
The wife owned a Motor Vehicle 1, estimated by her to be worth approximately $3,000. This motor vehicle was sold in or about late 2002 or early 2003 for approximately $1,500.
The Wife held a nominal superannuation entitlement with Super Fund 2.
The wife contends that she had a HELP liability of $15,536. As at 30 June 2007, her HECS liability was $18,062. This liability on behalf of the wife was paid after marriage.
Financial contributions during the relationship
The husband has been employed throughout the relationship and, in addition to his salary, has received income from other sources including profits from the sale of properties, rental income and dividends and distributions of funds from the Martello Group.
The wife (a professional) was not in paid employment during the relationship, save for some casual work undertaken by the wife in the final weeks of the marriage.
The parties’ income was applied for the benefit of the family unit.
Financial contributions from the husband’s parents and the Martello Family Group
(a)The husband received by way of gifts from his parents between January 2007 and August 2012 the aggregate sum of $210,000.
(b)12,000 shares in K Pty Ltd by way of gift on or about 30 June 2008, said to be valued at the time at approximately $12,363,240.
(c)The husband was also able to acquire 13,000 shares in the Martello Family Group Pty Ltd for $10,400,000 by way of an interest free loan of funds from his parents in 2012. The current debit balance of the loan is $7,487,536 as at 30 June 2018.
The husband has received several interest free loans from the Martello Family Group, including:
(a)$550,000 in order to develop the property at 1 EE Street, Suburb DD between the period 2001 to 2005. These moneys were repaid by the husband upon the sale of the property;
(b)$180,000 in order to purchase the property located at 2 EE Street, Suburb DD in 2003. Again, this loan was repaid by the husband upon the sale of the property in 2010; and
(c)Funds in order to purchase the property 5 CC Street, Suburb DD in 2013 for $240,000.
The husband’s parents provided other support to the parties, including contributing to the wedding; holidays; a designer watch for the husband and at times between 2005 and 2012, rent free accommodation for the family unit.
I accept the submission of Mr North SC that:
Without the funds advanced to the Husband from his parents and the Martello Family Group, both by way of gift and by way of interest free loan, the parties would not be in the position they are in today. These contributions on behalf of the Husband are clearly unmatched by the Wife.
Non-financial contributions to the acquisition, conservation and improvement of property
Throughout the relationship, the husband (a tradesman) managed the acquisition of real estate investments; personally undertook building works, maintenance etc to their property and investments:
Contributions to the welfare of the family
The wife undertook the role of primary parent and homemaker during the relationship, with the husband, when time permitted, considering his business activities, also contributing to the family unit in this way.
POST SEPARATION
Although it is not appropriate to divide an assessment of contributions into sections of the relationship, inevitably when separation of parties occurs, many things change.
As is conceded by the wife, the overwhelming superior financial/income position of the husband allowed him to contribute more to the children’s expenses, particularly private school fees, health insurance and when the children were spending substantial and significant time with him or for special occasions, clothing, recreational activities, holidays and gifts. The husband continued to work hard, but was, like his parents towards him, generous towards his children. He paid, in addition, child support as agreed (from separation until approximately April 2017) and then as assessed.
The husband estimates he continued to meet various expenses on the wife’s behalf totalling in excess of $126,000, including motor vehicle expenses, private health insurance and various property expenses.
Whilst the wife and the family have had the benefit of residing in the Suburb H property (effectively rent free) and this should be seen as a further non-financial contribution by the husband, the wife has continued to be the primary carer of the children since separation both before the final parenting orders and since.
I do not ignore the fact that the wife began to cohabit with her new partner Mr JJ and that, as de facto parties, they have provided mutual financial support to each other.
For completeness, I also record again the benefits each party obtained (but not equally) from the proceeds of the sale of the Suburb M home. As earlier found, the use of surplus funds by the wife (after allowance for legal expenses) was a significant support to her, which to some degree is a further contribution by the husband post separation when the funds were not split equally.
On these findings, the jump from words to figures, and explaining that leap provides a challenge where:
(a)the husband submits that the appropriate weighting for all the contributions should result in a 75% to 25% adjustment to property interests (and after allowance for s 75(2) factors); whilst
(b)the wife submits that depending on the size of the pool that her “contribution weighting ought be not less than 30%” but if the pool was “shrunk to $3,081,354… the wife’s contribution weighting ought be around 40%”.
CONCLUDED FINDING ON CONTRIBUTIONS
Counsel for the wife contends that although the direct quantification of the husband’s family support as set out above, gifts and substantial income derived by the husband from at least marriage to the time of trial is many millions – there is not as much to show for it compared to the pool asserted by the husband. Of course, the Court has found the pool to be larger than that contended by the husband.
I agree one might have expected a greater pool – however where there is no evidence to, on balance, support a finding of waste or expenditure of such extravagance; no evidence to support a conclusion of hidden or non-disclosure of assets – then frankly it is what it is. Courts never should underestimate how parties enjoying a very comfortable lifestyle; supporting three children’s desire for private education and activities that simply cost money, can chew through income, savings and capital. Furthermore the “available” pool of divisible property has been reduced by the nett proceeds of the Suburb M home being directed to payment of legal expenses and experts fees.
On the basis of the findings made, I assess contribution based entitlements as 75% to the husband and 25% to the wife. The differential of 50% (of approximately $4.15 million) is significant but justified in my view considering the particularity significant gifts from the husband’s family and the flow on effect in terms of income controlled by the husband derived for the family.
Before leaving the topic of contributions, although Mr Kirk QC did not submit, nor could he on the evidence, that the substantial gifts to the husband (and other benefits) for his family should be regarded as a joint contribution (see cases like Kessey & Kessey (1994) FLC 92-495; Gosper & Gosper (1987) FLC 91-818), he did submit that the wife, by her role in the family unit, supported the husband to pursue his career and the opportunities access to such family wealth afforded him. That is true, however she got to share in much of those benefits during the marriage and the divisible pool is still larger than would have been the case had the husband’s parents’ generosity to their son not have been so directed.
SECTION 75(2) FACTORS
The husband at paragraphs 4.1 to 4.7 of his written submissions and the wife at paragraphs 4.1 to 4.8 of her written submissions deal with any adjustment to the contribution based assessment. Of course all such contentions by the parties were made without knowing what the Court’s determination is of the pool and contribution based entitlements.
The parties’ contribution based entitlement of 75% to the husband computes mathematically to $6,229,270 compared to the wife’s 25% entitlement of $2,076,424.
After consideration of the following factors, I have come to the conclusion that a further adjustment to the wife of 8.5% of the pool (equivalent to the husband paying the wife the sum of $705,984) is appropriate for the following reasons:
(a)The parties are of a similar age and have no major health issues to contend with, save for some possible future gynaecological challenges, somewhat vague on the evidence;
(b)Although the wife, as a professional, is able to obtain gainful employment, her “income, property and financial resources” are far less than those of the husband. The husband, at the very least in his Financial Statement, conceded an income of $5,913 a week ($307,500 per annum). I find that his capacity, even with the debts he will carry, to access future income and/or capital disbursements from the E Trust is potentially much larger. Because of the interest he holds, the security of income from that source is high – noting that the E Trust is essentially a property holding company.
Furthermore, with his experience in property development (which history shows he has been successful in pursuing from a young age), any access to funds he has can support further opportunities in property development. To the extent that his parents have essentially permitted him to remain in a home with a value of nearly $3 million, at a modest rent, and with the anticipation of indefinite tenure, it is clear he has “financial resources” available to him which the wife no longer has access to. This factor weighs heavily towards an adjustment to the wife.
(c)The parents share the care of the three children, although not equally. I accept the husband will continue to pay reasonable child support and otherwise support the children’s private education as he has consistently since separation. The youngest child Z has at the most 5/6 years left of education. Any impediment on the wife in maintaining future employment is minor considering the age of the children and her profession. Little impediment affects the husband who has even greater flexibility in his workplace. This factor slightly favours the wife;
(d)Section 75(2)(g) requires the Court to consider “the standard of living that in all the circumstances is reasonable” and in this respect whilst I accept during the marriage the parties and their children did not miss out on much, the effect of the orders will enable both parties to maintain a reasonable standard of living, although the wife will need to be more careful with her funds and may not be able to afford the level of luxury the husband may from time to time wish to enjoy;
(e)I accept that the wife’s supportive role towards the husband during the relationship, both in the home caring for the children and more generally, did indirectly contribute to the husband’s earning capacity. Although the wife began the marriage as a qualified professional and continues to do so, she had (I accept by agreement between the parents) many years where she did not work and had no financial need to do so. She has returned to work (contract engagement at the time of the trial) and at her age now of 41 years, has a long working career available to her, if that is her wish;
(f)The wife has lived with Mr JJ in a genuine domestic relationship since September 2016. I accept the husband’s criticism that the wife has not made full disclosure about the financial circumstances arising from the cohabitation, but on the evidence it is more likely than not Mr JJ pays more than $300 per week to meet part of the wife’s expenses. They, as a couple, have had the use of the Suburb H property rent free. Sensibly, the wife has taken steps to protect her property settlement from future attack should the wife and Mr JJ separate (see Exhibit 21);
(g)Although the Court is required to consider the terms of any proposed order under s 79, this is not an invitation to engage in a form of “social engineering”. The husband will, under the orders, be and will likely always be, in a much stronger financial position compared to the wife;
(h)Both Counsel make submissions about what has seemed to become the “catch all” provision of s 75(2)(o). The husband, particularly in circumstances where the Court has decided not to include the E Pty Ltd debt in the balance sheet, says that account must be taken of the level of debt the husband will carry. I agree. Certainly the remaining debt of over $7 million on the units has been taken into account in Scenario B, as have some realisation costs if, to find the wife’s entitlement, he has to transfer some of his units. The obligation to pay off a debt of this size at a rate of $5,000 a month does strongly suggest repayment (which at this rate would take over 100 years) is not expected unless the units are sold.
The wife points to what she described as the “expectation of future generosity from the Husband’s parents”, that the husband is likely to receive. It is not clear at all on the evidence what retained wealth the husband’s parents control considering their earlier “succession planning”, that allows them to continue their extraordinary generosity to their children, including the husband. Ms J gave evidence, for example, that she and her husband rely on the repayments of the loans given to the children in 2012 when the family restructuring took place, to live on.
In these circumstances, and on the evidence, it would not be proper to take into consideration a future “inheritance” as might arise if evidence is properly advanced (see White & Tulloch v White (1995) FLC 92-640)
WHAT ORDERS ACHIEVE JUSTICE AND EQUITY?
Based on findings made, if the wife was to receive entitlements amounting to 33.5% of the pool, this amounts to $2,782,407 that could be made up as follows:
Suburb H property $1,100,000 Motor Vehicle 5 $48,000 Furniture $4,765 Guns $1,500 Jewellery $12,000 Loan to partner $14,490 Superannuation $9,004 Add back $642,543 $1,832,302 Payment required by the husband $950,105 $2,782,407
The husband’s entitlement of 66.5% amounting to $5,523,287 would comprise:
Motor Vehicle 2 $36,000 Motor Vehicle 3 $86,000 Furniture $30,520 Watch and wedding ring $2,000 Interest in Martello Family Group $5,274,750 Superannuation $384,241 Add back $659,881 $6,473,392 Less payment to the wife $950,105 $5,523,287
I regard orders that require alteration of interests which achieve this result, will be just and equitable noting the difference of 33% amounts to $2.74 million.
As the orders sought reveal, and the submissions illuminated, the husband says he could not meet any requirement of the wife above $750,000 and would need to be able to use the Suburb H property as security for such a loan.
In my assessment it is just and equitable that the wife retain the Suburb H home, essentially for the reasons submitted at paragraph 5.4 of the wife’s written submissions.
I am of the view that the sum of $950,000 (rounded down) can be arranged by the husband – either, as more recently, with the concurrence of other unitholders in the E Trust or by trying a little harder than his evidence suggested to me. The payment will be reduced by 50% of the expert fees paid by the husband which he estimates to be a total of $195,623.98 –with the wife’s share being $97,812.
I would, subject to further submissions, consider making a superannuation splitting order in favour of the wife. The husband has plenty of capacity to build any superannuation from “scratch” if that is how he sees his future financial security improved. He may well regard his current assets as more than enough financial security.
The wife, with an interrupted workforce participation, has less than $10,000 of superannuation. A sizeable splitting order would have the dual benefit of both:
(a)relieving the husband of incurring less debt to pay the wife her entitlement; and
(b)providing the wife with some more substantial superannuation upon which she could build through future employment.
I do not propose to pronounce orders today, but will give the parties a reasonable opportunity to negotiate both a splitting order and timetable for payment of any balance.
If, on final submissions, the husband says he cannot pay any money to the wife, then the Court will have to consider how the husband’s main asset – his interest in the E Trust – can be sold to secure the wife’s entitlement.
SPOUSE MAINTENANCE
The issue of spouse maintenance should be considered in the context of the earlier findings, and in particular, the result of the s 79 applications.
The wife bears the onus, in that context, of establishing she is unable to support herself adequately (s 72 of the Act).
This is often described as the “threshold issue” which, if overcome, then requires the Court to assess her needs and the husband’s capacity to pay.
In my assessment, post the s 79 orders being put in place, the wife will have an unencumbered home; a partner who partially supports her; employment with, I find, little impediment in increasing her hours and a sizeable cash sum.
The wife contended for an award of spouse maintenance for three years.
In my view, the wife is able to adequately support herself into the future and, as a result, I am compelled to dismiss her application for spouse maintenance.
I certify that the preceding one hundred and twelve (112) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann.
Associate:
Dated: 25 March 2021
APPENDIX ONE
[Omitted]
APPENDIX TWO
1. That there be an alteration of property interests between the Applicant and the Respondent pursuant to section 79 of the Family Law Act 1975 to effect a division of 75%/25% in favour of the Applicant.
That in order to effect paragraph 1 above the following shall apply.
2. The Applicant shall forthwith retain and/or receive as his absolutely property and/or financial resource all of his right, title and interest to and in, and the Respondent shall relinquish and/or transfer to the Applicant all of her right, title and interest, if any, to and in the following:
(a)G Street, Suburb H in the State of Queensland;
(b)C Pty Ltd (ABN …);
(c)D Pty Ltd;
(d)Mr Martello Family Trust;
(e)Martello Pty Ltd;
(f)Martello Family Trust;
(g)The credit balances of the Applicant’s bank accounts, including but not limited to:
(1)Commonwealth Bank Account Number ending …73;
(2)Commonwealth Bank Account Number ending …12;
(3)Commonwealth Bank Account Number ending …20;
(4)Commonwealth Bank Account Number ending …10;
(5)Commonwealth Bank Account Number ending …29;
(6)Commonwealth Bank Account Number ending …25;
(7)Commonwealth Bank Account Number ending …33; and
(8)Commonwealth Bank Account Number ending …21.
(h)Motor Vehicle 2, subject to any encumbrance;
(i)The benefit of the proceeds of sale of the Motor Vehicle 4;
(j)All artwork, furniture, household effects, chattels, jewellery and personal effects and belongings in the Applicant’s possession, including his watch;
(k)Any and all superannuation held in the Applicant’s name, including his entitlements with Super Fund 1, member number …;
(l)Any life insurance or assurance held in the Applicant’s name; and
(m)The Motor Vehicle 3 acquired by the Applicant post separation subject to any encumbrance.
3. The Applicant be solely responsible for and meet payment of all liabilities in his name and/or in the name of C Pty Ltd, The Mr Martello Family Trust and Martello Family Trust and he shall indemnify and keep indemnified the Respondent from all liability howsoever arising thereunder, including but not limited to:
(a)All monies owed pursuant to:
(1)Loan owed by C Pty Ltd to E Trust;
(2)Loan owed by C Pty Ltd to Mr and Ms J;
(3)TT Bank Credit Card Account Number ending …07;
(4)UU Bank Credit Card Account Number ending …85
(5)Commonwealth Bank Platinum Awards Credit Card Account Number ending …22; and
(6)Loan owing to E Trust.
4. The Respondent shall forthwith retain and/or receive as her absolute property and/or financial resource all of her right, title and interest to and in, and the Applicant shall relinquish and/or transfer to the Respondent all of his right, title and interest, if any, to and in the following:
(a)The benefit of the funds the Respondent has already received from the Applicant in the sum of:
(1)One Hundred Thousand Dollars ($100,000) pursuant to Orders made on 22 February 2016, received by the Respondent on 31 August 2015;
(2)The sum of One Hundred Thousand Dollars ($100,000) pursuant to Orders made on 22 February 2016;
(3)The sum of One Hundred Thousand Dollars ($100,000) pursuant to the exchange of correspondence between the respective solicitors dated 7 September 2016;
(4)The sum of Fifty Thousand Dollars ($50,000) pursuant to the exchange of correspondence between the respective solicitors dated 22 December 2016;
(5)The sum of Two Hundred and Fifty Thousand Dollars ($250,000) pursuant to the Orders made on 24 July 2017;
(6)The sum of One Thousand and Sixty Dollars ($160,000) pursuant to the exchange of correspondence between the respective solicitors dated 20 April 2018 and 11 May 2018;
(7)The sum of One Hundred and Sixty Four Thousand Eight Hundred and Eighty One Dollars and Sixty Five Cents ($164,881,65) pursuant to the exchange of correspondence between the respective solicitors dated 4 October 2018, 29 October 2018 and 30 October 2018.
(b)Motor Vehicle 5, free from any encumbrance;
(c)The credit balances of the wife’s bank accounts, including but not limited to;
(1)Commonwealth Bank Account Number ending …74;
(2)Commonwealth Bank Account Number ending …70; and
(3)Commonwealth Bank Account Number ending …97.
(d)The artwork, furniture, contents and household effects in the Respondent’s possession;
(e)The wife’s jewellery and personal belongings;
(f)An and all superannuation held in the Respondent’s name;
(g)Any life insurance or assurance held in the Respondent’s name; and
(h)All monies paid by the Respondent to the third party Mr JJ and/or V Company since separation.
5. The Respondent be solely responsible for and meet payment of all liabilities in her sole name and she shall indemnify and keep indemnified the Applicant from all liability howsoever arising thereunder.
6. That the Respondent be Solet responsible for the costs of the single expert, Ms F’s report dated 16 July 2019.
7. That such costs incurred by the Applicant in relation to Ms F preparing her report dated 16 July 2019 be deducted from any cash adjustment in the Respondent’s favour.
8. That there be a cash adjustment as between the Applicant and the Respondent in such sum as the Court determines but so that the overall division of the net assets is in the proportion of 75% to the Applicant and 25% to the Respondent.
9. That in relation to the Order of the Honourable Justice Forrest dated 18 August 2017 the Applicant (whether in his personal capacity, via an agent and/or in his capacity as a director and/or shareholder and/or in his capacity as a trustee and/or appointer) be released from any injunction and further that he be permitted to sell and/or dispose of and/or otherwise deal with in any manner his interest(s) in the following entities:
(a)Martello Pty Ltd;
(b)Martello Family Trust;
(c)B Pty Ltd;
(d)C Pty Ltd;
(e)D Pty Ltd;
(f)Mr Martello Family Trust;
(g)Martello Family Group
(h)RR Pty Ltd;
(i)RR Trust;
(j)E Pty Ltd; and
(k)E Trust.
10. That except for the property dealt with pursuant to the terms of these Orders, each party retain as his or her own property absolutely all assets and financial resource of whatsoever description and wheresoever situate of which that party is the legal owner of and/or which is/are in the possession of and/or control of that party as a the date of the parties consenting to these Orders.
11. That the Applicant be responsible for and meet payment when due of the Applicant’s credit card debts and any other liability in his name not otherwise dealt with in these orders and indemnify and keep indemnified the Respondent from all liability howsoever arising in relation to same.
12. That each party do and procure the doing of all things and sign and procure the signing of all documents, whether in their personal capacity or in their capacity as director, shareholder or other officeholder of any relevant entity, necessary to give full force and effect to these orders and, in the event of a default continuing for in excess of 7 days, a Registrar of this Court is appointed to sign such documents and do such acts and are necessary in lieu of the defaulting party, whether in their personal capacity or in their capacity as director, shareholder or other officeholder of any relevant entity.
13. That the Respondent pay the Applicant’s costs of and incidental to these proceedings.
14. That the Application of the Respondent for spousal maintenance be dismissed.
APPENDIX THREE
1. That there be an accounting of the property, liabilities and financial resources of the husband and the wife and an Order issue to facilitate a property adjustment between the parties pursuant to which, the wife receive 45% of the net value of the non-superannuation property and the superannuation property of the parties (less the net value of such property that she is to retain pursuant to this Order) and the husband receive 55% (less the net value of such property that he is to retain pursuant to this Order), with the property pool to include:
1.1G Street, Suburb H, Queensland;
1.2the husband’s interest in C Pty Ltd; D Pty Ltd; the Mr Martello Family Trust; Martello Pty Ltd; the Martello Family Trust; RR Pty Ltd; Martello Family Group Pty Ltd; the RR Trust; E Pty Ltd; the E Trust; and any other company or trust in which he holds an interest (hereafter collectively “the Martello Group”);
1.3the balance of any bank account standing in the husband and/or the wife’s name;
1.4any monies held in AA Lawyers Trust Account in the wife’s name;
1.5any monies held in BB Lawyers Trust Account for or on behalf of the husband, C Pty Ltd or Martello Pty Ltd as trustee for the Martello Family Trust, or D Pty Ltd as trustee for the Mr Martello Family Trust;
1.6the husband’s Motor Vehicle 2;
1.7the benefit of the proceeds of sale of the Motor Vehicle 4;
1.8the husband's Motor Vehicle 3;
1.9the wife’s Motor Vehicle 5;
1.10the husband’s tools, plant and equipment;
1.11the jewellery of the husband and/or the wife;
1.12the furniture and effects of the husband and/or the wife;
1.13Loan owed by Mr JJ trading as V Company ABN … to the wife for purchase of motor vehicle for that business;
1.14the husband and the wife’s members balances in any policy of superannuation;
1.15any amount determined by the Court to be a partial property settlement.
2. That for the purpose of the matrimonial adjustment particularised in paragraph 1 above, that:
2.1the husband transfer to the wife and otherwise abandon any right, interest or title in or to the following (with the wife thereafter retain as her own property absolutely):
2.1.1the property at G Street, Suburb H, Queensland;
2.1.2the Motor Vehicle 5, free of any encumberance;
2.1.3the furniture and effects currently in her possession;
2.1.4her jewellery;
2.1.5any and all superannuation held in her name;
2.1.6the balance of any bank account standing in her sole name;
2.1.7any amount determined to have been paid by the wife as a partial property settlement;
2.1.8any monies held in AA Lawyers Trust Account in the wife’s name;
2.1.9the loan owed by Mr JJ trading as V Company ABN … to the wife for purchase of motor vehicle for that business; and
2.2the husband pay to the wife a cash adjustment sum such that the wife receives/retains property (in cash and kind) equal to 45% of the value of the net property pool, less the value of the items retained pursuant to paragraph 2.l above;
with any transfer and payment pursuant to Order 2.1 to be made within 90 days (“the settlement date”) and any payment to be made (Trial Judge to insert - in that regard the wife would seek it be 90 days but recognises that depending on the husband’s borrowing capacity and/or ability/intention to sell his interest in the Martello Group at its true value, it may be that the payment may have to be by way of annual instalments over a period of years).
2.3That the husband pay the wife periodic spousal maintenance of $1,222 per week, with such payment to be made:
2.3.1weekly by the husband, to a bank account to be nominated by the wife; and
2.3.2for 156 weeks (3 years).
2.4the husband shall retain to the exclusion of the wife, the parties’ (or either of their) beneficial interest in and to:
2.4.1the companies and trusts referred to at paragraph 1;
2.4.2any and all superannuation held in his name;
2.4.3the balance of any bank account standing in his sole name;
2.4.4the Motor Vehicle 2;
2.4.5the benefit of the proceeds of sale of the Motor Vehicle 4;
2.4.6the Motor Vehicle 3;
2.4.7his tools, plant and equipment;
2.4.8his jewellery;
2.4.9his furniture and effects; and
2.4.10any amount determined to have been paid by the husband as a partial property settlement.
3. That in relation to the Orders of the Honourable Justice Forrest dated 18 August 2017, the husband (in his personal capacity or otherwise) shall be released from any injunction to the extent that it is necessary for him to sell and/or dispose of and/or encumber his interest in the entities referred to in paragraph l.2 in order to comply with Order 2.2 and 2.3, but not otherwise, unless and until the husband has paid to the wife all money and interest owed to her pursuant to paragraphs 2.2 and 2.3.
4. That the shares in C Pty Ltd held by the husband personally and by Martello Pty Ltd as trustee of the Martello Family Trust be charged as security for payment of the amount ordered in 2.2 and 2.3 hereof, until release or satisfaction as the case may be.
5. That in the event that the said sum referred to in paragraphs 2.2 and 2.3 hereof is not paid in accordance therewith then, in addition to any other remedy the wife may have in respect thereof:
5.1the sum owing from time to time shall from the date when payment was to be made attract interest calculated at the rate prescribed by the Family Law Regulations from time to time and if no rate is prescribed then at the rate of 10% per annum calculated on monthly rests on a compound basis;
5.2the husband personally and in his capacity as director of Martello Pty Ltd as trustee for the Martello Family Trust shall forthwith upon a request in writing by the wife to do so, transfer to the wife or her nominee of the shares in C Pty Ltd held by him or the Martello Family Trust;
5.3the wife shall, in the event that the application for registration of the transfer or transfers referred to in 5.2 hereof is refused: have liberty to apply to the Court for such further orders in respect thereof as she may be advised;
5.4that in addition to the remedy available to the wife pursuant to 5.2 and 5.3 the wife shall also have the following rights, namely:
5.4.1the husband shall forthwith upon a request in writing by the wife to do so give notice in writing to the Board of Directors of E Pty Ltd as trustee for the E Trust that he intends to sell the shares in C Pty Ltd owned by the husband personally and by Martello Pty Ltd as trustee for the Martello Family Trust and shall (in consultation with the wife) take all steps necessary to effect the sale of such shares at the best price achievable;
5.4.2should the husband either personally or in his capacity as director of Martello Pty Ltd as trustee for the Martello Family Trust fail or refuse to execute any document necessary to give effect to 5.4.1 hereof then pursuant to s 106A of the Family Law Act the Registrar of this Court is hereby appointed to execute all such documents in the name of the husband either personally or in his capacity as director of Martello Pty Ltd as trustee for the Martello Family Trust and shall do all acts and things necessary to give validity and operation thereto;
5.4.3upon sale of the said shares pursuant to the terms hereof the sale proceeds shall be paid to the trust account of the wife's solicitors and shall be applied in satisfaction or partial satisfaction (as the case may be) of the sum referred to in 2.2 and 2.3 hereof, the interest due under 5.1 hereof and the balance (if any) shall be paid to the husband.
6. Pending payment to the wife of the sum referred to in 2.2 and 2.3 hereof and interest due under 5.1 hereof the husband by himself, his agents or assigns is restrained by injunction as follows:
6.1to pay the wife all sums received by him in excess of $100,000 from any source whatsoever including (without limiting the generality thereof) the following sources.
6.1.1payments, salary or other form of remuneration from the Martello Group or their subsidiaries or associates;
6.1.2loan funds from any source including drawings from loan accounts from any entity in the Martello Group, or his parents or any other family members;
6.1.3advances or gifts of any form whatsoever from any source whatsoever, including gifts of real estate;
6.1.4bequests from any estate including but not limited to the estate of his parents and/or siblings;
6.1.5payments of any sums from superannuation or pension funds of which he is a member from time to time.
For the purposes hereof payments made by others on his behalf in respect of the acquisition of property, contribution to superannuation or pension funds, living and other expenses of whatsoever kind shall be deemed to be sums received by the husband.
6.2to forthwith upon receipt provide to the wife copies of financial accounts including consolidated accounts of all companies in which he holds shares and all trusts of which he is a beneficiary or unitholder (whether personally or through his shareholding in C Pty Ltd) including entities within the Martello Group and if such accounts are not provided to him to take such steps he shall be entitled to take at law to obtain same and forthwith provide copies thereof to the wife;
6.3to provide to the wife within 14 days of her request ( or such longer period as the Court may allow) answers to questions relating to his interests (whether personally or through this shareholding in C Pty Ltd or interest in the Martello Family Trust or Mr Martello Family Trust) in entities within the Martello Group and their operation providing however that the wife shall keep such information confidential and shall not be entitled to provide such infonnation to any person or entity other than her legal advisers and any accountant engaged in relation to these proceedings;
6.4to provide to the wife a Financial Statement by 31 July each year for the 12 month period ending 30 June in the form currently used in this Court and a list of all of the sums received by him as referred to in 6.1 hereof.
7. The husband is restrained and injunction is issued restraining the husband from any of the following acts until the full payment of the amount ordered in paragraph 2 hereof:
7.1exercising his power of appointment pursuant to the Trust Deed of the Martello Family Trust (as amended from time to time) or Mr Martello Family Trust to:
7.1.1appoint a new appoint or grant some other person or entity who has a power of appointment in relation to the Martello Family Trust or Mr Martello Family Trust; or
7.1.2remove Martello Pty Ltd as the trustee of the Martello Family Trust;
7.1.3remove D Pty Ltd as trustee of the Mr Martello Family Trust;
7.2appointing any other person as a director of Martello Pty Ltd, D Pty Ltd or C Pty Ltd;
7.3resigning as director of Martello Pty Ltd, D Pty Ltd or C Pty Ltd;
7.4issuing any further shares, including new classes of shares, in Martello Pty Ltd, D Pty Ltd or C Pty Ltd;
7.5transferring or assigning his shares in Martello Pty Ltd, D Pty Ltd or C Pty Ltd;
7.6renouncing his interest in any trust;
7.7dealing with the assets or liabilities of the Martello Family Trust, Mr Martello Family Trust or C Pty Ltd
8. That on or by the settlement date, the husband procure the wife’s release from any liability (including any personal guarantee) owing or encumbering any interest referred to in paragraph 1 above, via refinancing or procuring the discharge or payment of such liability, at his sole expense.
9. That the husband shall:
9.1be solely responsible for any claim, demand, liability or outgoing associated with the companies and trusts referred to at paragraph 1.2 above, including any loan account that the wife may owe to the companies and/or the trusts, and the husband shall procure the release of and indemnify the wife against any liability in respect thereof and will pay those debts when either party is called upon to do so by any person legally entitled to make such demand; and
9.2be solely responsible for and indemnify the wife with respect to any amount owed by the wife to the Commissioner of Taxation (or the Deputy Commissioner) which arose (or arises in the future) as a result of the operation of the companies or the trusts (or any of them), including, but not limited to, any amount owing as a result of distributions, default distributions or deemed dividends.
10. That the husband be solely responsible for and procure the wife's release from any claim, demand or liability, howsoever arising, in respect of any property interests of which he is to retain pursuant to this Order, and will pay those debts when either party is called upon to do so by any person legally entitled to make such demand.
OTHER ORDERS
11. That the husband meet payment of the wife’s cost of and incidental to this Response.
12. That:
12.1Each party shall do all acts and things reasonably required by the other including the signing or execution of all necessary documents to give effect to the provisions of this Order within 14 days of being requested to do so;
12.2In the event that a party refuses or neglects to sign or execute and return a document within 14 days of presentation to them or a solicitor representing them then pursuant to Section 106A of the Family Law Act 1975 a Registrar of this Court (or any other Court of competent jurisdiction) is appointed and empowered and directed hereby to sign or execute the same in the name of that party upon presentation of such document and an affidavit of a solicitor on behalf of the requesting party as to the said neglect or refusal;
12.3The requesting party referred to in paragraph 12.2 be at liberty to seek costs against the defaulting party of and incidental to such request and production of documents to the Registrar.
13. That either party have liberty to apply as to the implementation or enforcement of this Order upon· the giving of seven (7) days written notice to the other.
14. That the husband pay the wife’s costs of and incidental to these proceedings.
15. Such further or other orders as this Honourable Court deems appropriate.
APPENDIX FOUR
Ownership
Interest
Value
Joint
G Street, Suburb H
$1,100,000
Husband
Motor Vehicle 2
$36,000
Husband
Motor Vehicle 3
$86,000
Wife
Motor Vehicle 5
$48,000
Wife
Furniture and contents
$4,765
Husband
Furniture and contents
$30,520
Wife
Shot gun and gun
$1,500
Wife
Jewellery
$12,000
Husband
Watch and wedding ring
$2,000
Wife
Loan owed by Mr JJ
$14,490
Husband
Interest in Martello Family Group
$5,274,750
SUPERANNUATION
Husband
Super Fund 1
$384,241
Wife
Combined superannuation
$9,004
NOATIONAL ADD BACKS
Wife
Drawdown on Suburb M sale proceeds used for legal expenses
$642,543
Husband
Drawdown on Suburb M sale proceeds used for legal expenses
$659,881
$8,305,694
Key Legal Topics
Areas of Law
-
Family Law
-
Equity & Trusts
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1
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