Mason & Mason (No 4)
[2023] FedCFamC1F 756
•7 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Mason & Mason (No 4) [2023] FedCFamC1F 756
File number: SYC 6981 of 2021 Judgment of: CHRISTIE J Date of judgment: 7 November 2023 Catchwords: FAMILY LAW – FINAL PROPERTY ORDERS – Value of net asset pool available for adjustment – Where the husband and wife built their wealth together over a long marriage – Where the husband’s parents entered into a Deed with the husband in relation to the transfer of the family farm – Where the Deed provided transfer subject to mortgage – Where there has been no request for repayment – Where the composition of the farm property has been altered by a boundary shift – Where there is a dispute as to whether the husband’s post-separation tax liability should be included in the balance sheet in the context of assertions of excessive expenditure – Where each party received funds by way of partial property settlement – Where the husband applied funds to rent of a second set of premises, a second car after separation – Where the husband’s financial contributions exceeded the wife’s financial contributions – Where the wife’s non-financial contributions exceeded the husband’s non-financial contributions – Where the husband’s parents made gifts of cash to the parties early in the relationship– Where the husband and wife lived rent-free in the property of the husband’s parents – Where the parties performed substantial renovations to the dwelling on the property of the husband’s parents – Where the wife seeks to include her contribution in renovating a property prior to its transfer into the name of the husband – Where the wife’s parents provided rent free accommodation to the parties for a substantial period of time – Where the husband has a reduced life expectancy – Where the husband receives income from an income protection insurance policy – Where the husband has made contributions to the parties’ property portfolio and wife’s superannuation from those income protection payments – Where the wife contends that the income protection monies are a financial resource – Where the husband has remarried – Where the husband has made substantial payments to his new wife – Where the husband alleges those are payments for working on the farm, administering the household and being his carer – Where the wife seeks monies paid to the husband’s new wife be added back to the property pool – Where the wife has undertaken work for the partnership between herself and the husband– Where the wife has professional qualifications – Where the wife’s career was impacted by the duration of the marriage and the role she undertook outside the paid workforce – Where the wife will face barriers to re-entry into the professional workforce. Legislation: Family Law Act 1975 (Cth) ss 4, 75, 79, 117 Cases cited: AJO v GRO (2005) FLC 93-218; [2005] FamCA 195
Dickons & Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
Hirst v Rosen (1982) FLC 91-230
Hobson & Hobson (2020) 61 Fam LR 557; [2020] FamCAFC 251
Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78
Kennonv Kennon (1997) FLC 92-757
Kowaliw& Kowaliw (1981) FLC 91-092
NHC & RCH (2009) FLC 93-204; [2004] FamCA 633
Petterd & Petterd (1976) FLC 90-065
Rosativ Rosati (1988) 23 Fam LR 288
Tomaras and Tomaras (2021) 64 Fam LR 237; [2021] FedCFamC1A 82
Trevi & Trevi [2018] FamCAFC 173
Williams v Williams [2007] FamCA 313
Division: Division 1 First Instance Number of paragraphs: 143 Date of hearing: 18-22 September 2023 Place: Sydney Counsel for the Applicant: Mr Jones SC Solicitor for the Applicant: Barkus Doolan Winning Counsel for the Respondent: Mr Sansom SC Solicitor for the Respondent: Lander & Rogers ORDERS
SYC 6981 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS MASON
Applicant
AND: MR MASON
Respondent
ORDER MADE BY:
CHRISTIE J
DATE OF ORDER:
7 NOVEMBER 2023
THE COURT ORDERS THAT:
1.Within 42 days of the date of these orders the husband pay to the wife the sum of $2,124,646 (“the settlement sum”).
2.Within 42 days of the date of these orders each party shall do all things necessary to cause the following simultaneously:
(a)Transfer of the property situated at and known as L Street, Suburb D in the state of Queensland being the whole of the land contained in title reference … ("the Suburb D property") into the sole name of the wife at her cost, such that the husband shall sign all documents presented to him by the wife and the wife shall do all other things necessary for such transfer; and
(b)Discharge of all mortgages and encumbrances presently registered over the Suburb D property at the wife’s sole cost such that the husband shall sign all documents presented to him by the wife and the wife shall do all other things (including paying any sum) necessary to cause such discharge.
3.Pending transfer of the property provided for in Order 2 the wife shall be responsible for all mortgage payments, statutory rates and charges, other utilities, insurances, outgoings and expenses in relation to the property incurred prior to the date of transfer and shall make all such payments as and when they fall due and hereby indemnifies the other party in respect of all other liabilities incurred prior to the date of transfer.
4.In the event that the husband complies with Order 1 but the wife does not discharge the mortgage over the Suburb D property then within a further fourteen (14) days each party shall do all things necessary to cause the Suburb D Property to be sold by auction at the earliest possible date at a price to be agreed between the parties and failing such agreement to be determined by the President of the Queensland Division of the Australian Property Institute or his/her nominee and that the proceeds of sale shall be disbursed as follows:
(a)In payment of agent’s commission and advertising expenses and legal expenses of the sale;
(b)In payment of costs incurred in relation to the nomination of a real estate agent (if any), in payments of costs incurred in relation to the nomination of a solicitor (if any) and in payment of costs in relation to determination of value or selling price by the President of the Queensland Division of the Australian Property Institute or his/her nominee (if any);
(c)Discharge of all mortgages secured on title including mortgage;
(d)Payment of a sum sufficient to meet the CGT liability calculated by U Company to U Company Trust Account;
(e)Balance to the wife.
5.For the purposes of Order 4 above, the real estate agent to act in respect of the sale shall be as agreed by the parties and, failing agreement, within seven (7) days of the date of these orders, then shall be a real estate agent appointed by the President of the Real Estate Institute of Queensland or his/her nominee.
6.For the purposes of Order 4 above, the solicitor to act in respect of the sale shall be as agreed by the parties and, failing agreement, within seven (7) days of the date of these orders, then shall be a solicitor appointed by the President of the Law Society of Queensland or his/her nominee.
7.Pending the sale of the property in accordance with Order 4 above the wife shall have the right of sole occupation of the property and shall:
(a)Keep the property in good order and repair;
(b)Cooperate in all reasonable ways with requests by the real estate agents and/or prospective purchasers including but not limited to:
(i)Providing keys to obtain access; and
(ii)Doing all things necessary to facilitate access to the property at all reasonable times and facilitating access for inspection without interference;
(iii)Maintaining the property in a presentable condition so as to facilitate the sale including but not limited to presenting the property in a neat and tidy condition at all times when the property is subject to inspection; and
(iv)Doing all things necessary to facilitate a sale at the earliest possible time and shall refrain from doing or saying anything which has the effect of hindering or preventing an inspection or a sale of the property being effected.
8.Upon each party completing their tax return for the financial year in which the Suburb D property is sold the parties shall do all acts and things necessary to cause the funds retained pursuant to Order 4(d) to be applied to meet the CGT liability owing by each of them to the Australian Taxation Office in discharge of that liability, and in the event that there are surplus funds after discharge of said liability then the surplus funds are to be paid to the wife.
9.Simultaneously with the transfer referred to in Order 2 above each party shall do all acts and things and sign all documents necessary to cause the following simultaneously:
(a)Transfer of the property situated at and known as 3 G Street, J Town in the State of New South Wales being the whole of the land contained in folio identifier … ("the 3 G Street property") to the sole name of the husband at his cost, such that the wife shall sign all documents presented to her by the husband and the husband shall do all other things necessary for such transfer; and
(b)Discharge of all mortgages and encumbrances presently registered over the property at the cost of the husband such that the wife shall sign all documents presented to her by the husband and the husband shall do all other things necessary to cause such discharge (including payment of any sum); and
(c)The husband shall indemnify and keep indemnified the wife in respect of all liabilities in relation to the 3 G Street property following the transfer of the property in accordance with this Order.
10.Pending transfer of the property provided for in Order 9 the husband shall be responsible for all mortgage payments, statutory rates and charges, other utilities, insurances, outgoings and expenses in relation to the property incurred prior to the date of transfer and shall make all such payments as and when they fall due and hereby indemnifies the other party in respect of all other liabilities incurred prior to the date of transfer.
11.In the event that the husband is unable to make the payment referred to in Order 1 or discharge the mortgage referred to in Order 9(b) then seven (7) days following the non‑compliance, unless otherwise agreed, the husband and wife shall forthwith do all acts and things and sign all documents necessary to effect a sale of either or both of the 3 G Street property and if required the F Property (“the rural properties”), for the best price reasonably obtainable as agreed (and it is noted they will take the advice of the agent as to the best method of sale) and in the event of no agreement then the rural properties will be sold in the following manner:
(a)Within seven (7) days of default, the wife nominate three real estate agents she proposes be appointed in relation to the sale of the rural properties and within a further seven (7) days the Husband nominate one of the real estate agents which agent the parties shall appoint within a further seven (7) days (“the agent”) and should the husband fail to comply with this Order, the agent shall be nominated by the Wife.
(b)Within seven (7) days of default, the wife nominate three lawyers or conveyancers she proposes be appointed in relation to the sale of the rural properties and within a further seven (7) days the Husband nominate one of the lawyers which lawyer the parties shall appoint within a further seven (7) days (“the rural properties' lawyer”), and should the husband fail to comply with this Order, the wife shall nominate the rural properties' lawyer.
(c)The auctioneer shall be agreed upon between the parties and if there is no agreement then the auctioneer shall be as nominated by the agent.
(d)The rural properties shall be listed for sale by private treaty for a period of three months with such sale price as the parties agree and absent agreement as nominated by the agent.
(e)If after a period of three months the rural properties remain unsold ("date of default"), then the parties will immediately list the rural properties to be listed for auction and the first auction of the rural properties shall take place within 2 months from the date of default (“the rural properties' auction”).
(f)That the reserve price for the rural properties to be as agreed between the parties, and failing agreement, in accordance with the recommendation of the agent.
(g)The parties shall cooperate in every way with the agent until the settlement of sale of the rural properties, including, without limiting the generality of the foregoing:
(i)Making the key and any other devices required to access the rural properties available to the agent and codes required to deactivate any security alarms to facilitate his/her entering the rural properties;
(ii)Allowing inspection of the rural properties at all reasonable times requested by the agent;
(iii)Doing or saying nothing to hinder or prevent a sale being effected;
(iv)Not being present during the inspection of the rural properties and vacating the properties no less than fifteen (15) minutes prior to the inspection;
(v)Ensuring that the rural properties including any grounds, are in a neat, uncluttered and clean condition at the time of inspection by the agent and prospective purchaser including but not limited to ensuring that all areas of the property are accessible for inspection;
(h)The husband and wife to sign all documents requested by the agent and the rural properties' lawyer in relation to the listing of the rural properties, except any contract agreement for sale which has not been authorised by the rural properties' lawyer, within 7 days of receipt of the document.
(i)In the event the bidding at the rural properties auction does not reach the reserve price the husband and/or the wife may negotiate with the highest bidder or any other interested person and effect a sale of the rural properties at a price which is no more than 5% below the reserve price, or at such other price as the husband and the wife agree upon in writing;
(j)In the event the rural properties are not sold by auction or by way of private treaty within fourteen (14) days after the first rural properties' auction, then both parties shall do all acts and pay all monies necessary to schedule a second auction within a further ten (10) weeks of the first auction (“the second rural properties' auction”) upon the same terms and conditions as applied to the first rural properties' auction save that the reserve price shall be 5% less.
(k)In the event the rural properties are not sold by auction or private treaty within fourteen (14) days after the second rural properties' auction, the parties shall do all acts and things and sign all documents necessary to continue to relist the rural properties for sale by public auction at ten (10) weekly intervals, and the provisions of these orders will apply at each successive auction until the rural properties have been sold so that at each successive auction the reserve price shall be 5% less than the reserve price at the immediately preceding auction unless otherwise agreed by the parties in writing until such time as the rural properties are sold.
12.That upon settlement of the sale of the rural properties the parties do all acts and things to cause the proceeds of sale proceeds of the rural properties to be distributed in the following manner and priority:
(a)In full repayment and discharge of the 3 G Street mortgage;
(b)If the F Property is sold, in full repayment and discharge of the F Property Mortgage save for the mortgage that is secured by Mr S and Ms V ("the parents mortgage");
(c)In payment of all costs and expenses of sale including legal costs and disbursements, agent’s commissions, advertising expenses and auction expenses;
(d)In reimbursement to either of the parties for any costs expended in preparing the property for sale as recommended by the agent and agreed between the parties;
(e)In full payment of any and all rates, utilities, insurances and outgoings for the rural properties;
(f)Such part of the settlement sum as is outstanding to the wife together with interest thereon at the rate provided for by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) from date of default by the husband to the date of payment; and
(g)The remaining balance (if any) to the husband.
13.To give effect to Order 11, the husband must do all acts and things and sign all documents to irrevocably authorise the agent and the rural properties' lawyer appointed pursuant to Orders 11(a) and 11(b) herein to provide the wife with any and all information and documents relevant to the sale of the rural properties.
14.The Husband shall forthwith do all acts and things and sign all documents to irrevocably authorise the agent to communicate with the wife in relation to marketing and advertising of the sale such that each of the parties be permitted to provide comments on the advertising and marketing campaign proposed by the agent within forty-eight (48) hours of receipt of any proposed advertising and marketing and in the absence of agreement, approval or any dispute on the comments relating to the marketing campaign, the marketing and advertising shall proceed as recommend by the agent.
15.That the husband be solely entitled to all of his right, title and interest in W Pty Ltd and shall indemnify and keep indemnified the wife in respect to any liabilities arising as and from the date of these Orders:
(a)As a result of the wife being an employee, director, officer and/or shareholder; and
(b)By reason of the wife having given or executed a guarantee of or otherwise being liable for the liabilities of W Pty Ltd to any person or corporation, including but not limited to the Australian Taxation Office.
16.Within sixty (60) days of the making of these Orders the wife shall:
(a)Resign and remove herself from all positions as a trustee and appointor in respect to the Mason Family Trust;
(b)Allocate any loan accounts with the Mason Family Trust and the Mason Financial Services Trust to the husband;
(c)Sign a Deed of Relinquishment in respect to any right, title or interest she may have as a beneficiary of the Mason Family Trust and the Mason Financial Services Trust, whether that interest be actual, contingent or otherwise; and
(d)The husband shall thereafter indemnify shall keep indemnified the wife in respect of all liabilities in relation to, the Mason Family Trust, and the Mason Financial Services Trust.
17.Within sixty (60) days of the making of these Orders the husband shall allocate any loan accounts with C Pty Ltd to the wife.
18.The husband and wife do all acts and things and sign all documents necessary to effect an equal division of their joint GG Company shareholding.
19.The parties do all acts and things and sign all documents necessary to wind up the Mason partnership as at 31 December 2023 including but not limited to:
(a)Transfer all of the wife's right, title and interest in the partnership and all partnership assets, to the husband;
(b)Instructing U Company to prepare estimates of such stamp duty and/or tax as may be payable referrable to said wind up;
(c)Signing all documents prepared by U Company to cause such wind up;
(d)Payment of costs of wind up including but not limited to stamp duty and/or tax expenses as at 31 December 2023 from partnership funds; and
(e)The husband shall thereafter be solely entitled to the assets of the partnership and shall indemnify the wife in respect of all liabilities of those assets thereafter.
20.Within seven (7) days of the making of these Orders the wife do all acts and things to provide to the husband and/or his nominees full access to the complete Reckon files and account for the Mason Group and:
(a)The wife be restrained from that date from making any journal entries or other entries which have the effect on impacting on Division 7A loans and/or tax payable without the written consent of the husband; and
(b)The wife do all acts and things to transfer ownership of the Reckon files and account referred to above to the sole name of the husband and he shall thereafter be solely entitled to same and the wife shall have no access thereafter.
21.As and from the date of these Orders the wife be restrained from:
(a)Transferring funds between bank accounts held by:
(i)The Mason Partnership;
(ii)The Mason Financial Services Trust;
(iii)The Mason Family Trust;
(b)Drawing upon partnership funds;
(c)Doing any act or thing which has the effect of increasing currently existing Mason Group unpaid present entitlements, inter-entity loans and/or Division 7A loans;
unless she has the consent of the husband in writing.
22.The wife be restrained from:
(a)Discussing these proceedings and/or the husband's health with any client of W Pty Ltd, including via any form of electronic communication, correspondence, email, telephone or text message;
(b)Denigrating the husband to any client of W Pty Ltd;
(c)Causing any third party or agent to communicate about these proceedings and/or the husband's health and/or to denigrate him with or to any client of W Pty Ltd;
(d)Approaching clients of W Pty Ltd directly or via a third party with the intent to cause them to remove their business from W Pty Ltd; and
(e)Undertaking any course of action which is likely to have a negative impact on W Pty Ltd and/or the client base of that entity.
23.The husband will make available for collection by the wife’s agent the following items:
(a)The item the wife selected in 2013 at an antique shop in Country Z;
(b)All of the wife's silverware and vases that were gifts to the wife and belonged to the grandmother;
(c)Wine Decanters;
(d)The mix master;
(e)The wife's grandmother's cupboard;
(f)All of the wife's candle stick holders – wedding presents;
(g)All of decorative items purchase by the wife during the marriage and or that were gifts to her including the ceramic decoration; vases;
(h)The large wooden mirror (it sits on top of a side board);
(i)The wooden side board cupboard (sanded and restored by the wife and which was a gift to her from my mother);
(j)The large cedar sideboard gifted to the wife as a wedding present; and
(k)The kitchen table and benches bought by the wife's mother.
24.Within 28 days of the making of these Orders the wife shall make available to the husband or his nominee the following items for collection:
(a)All personal property of the husband currently in the Suburb N property including but not limited to:
(i)Husband’s medical records;
(ii)Husband’s personal financial records;
(iii)Silver item;
(iv)Silver homeware;
(v)Statue;
(vi)Sporting trophies; and
(vii)Sport painting.
25.As between the husband and wife, and subject to the above orders, the husband shall retain all interest in and entitlement to:
(a)C2 Pty Ltd;
(b)The Mason Financial Services Trust;
(c)The Mason Bros Trust;
(d)The property situate at and known as G Street, J Town New South Wales, known as "F Property";
(e)All personal property now in his possession or control, including but not limited to:
(i)Motor Vehicle 3 and Motor Vehicles 1 & 2;
(ii)The home contents of the F Property;
(f)All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his sole name; and
(g)All interests in life insurance policies and superannuation funds standing in his sole name.
26.As between the husband and wife, and subject to the above orders, the wife shall retain all interest in and entitlement to:
(a)The property situate at and known as M Street, Suburb N in the state of New South Wales;
(b)Her Motor Vehicle 4, Motor Vehicle 5 and Motor Vehicle 6;
(c)The home contents of the Suburb D property;
(d)All personal property now in her possession or control;
(e)All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in her sole name; and
(f)All interests in life insurance policies and superannuation funds standing in her sole name.
27.Save and except as otherwise provided in these Orders, the husband shall remain solely liable for all liabilities in his sole name, including but not limited to:
(a)The NAB Business Markets Loan;
(b)Loans referrable to the Motor Vehicle 3 and Motor Vehicles 1 & 2;
(c)Litigation funding loan from CC Financial Services;
(d)Litigation funding loan from NAB; and
(e)The mortgage over F Property to Mr S and Ms DD; and
(f)The husband shall indemnify and keep indemnified the wife in relation to these liabilities.
28.Save and except as otherwise provided in these Orders, the wife shall remain solely liable for all liabilities in her sole name and the wife shall indemnify and keep indemnified the husband in relation to these liabilities.
29.Pursuant to section 81 of the Family Law Act 1975 (Cth) the parties intend these orders to finally determine all financial relations and issued between them and avoid further proceedings between them.
30.That each party shall do all things necessary including providing all consents to give effect to these orders in the time periods prescribed in these orders.
31.That in the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these orders, then a Registrar of the Court shall be appointed pursuant to section 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
This is an application for adjustment of interests in property as between the parties to a marriage which has ended.
Both parties accept that it is necessary to adjust their existing interests in the assets in their individual or joint names.
The parties started to live together in 1992 and separated in mid-2021; although I accept the husband may have believed he had communicated that the marriage was at an end at an earlier date. In the circumstances of this case the precise date of separation is not material to my assessment of the relevant statutory matters.
The parties are parents to two adult children. The husband has remarried.
In broad terms the parties agree about what assets should be held by whom (subject to that party being in a position to discharge joint debts and or make any additional payments as may be required). Accordingly, in the first instance I intend to make orders which permit each party to retain those assets they seek to retain and make default orders for sale in the event that retention of those assets is not possible or practicable.
THE LAW
It is useful to approach the question of property adjustment by first making a determination as to the nature, composition and value of the assets, liabilities, superannuation and financial resources of the parties.
Having determined what net assets and superannuation entitlements are available for adjustment as between the parties s 79(4) of the Family Law Act 1975 (Cth) (“the Act”) directs the Court’s attention to assessment of the contributions of the parties both financial and non‑financial, direct and indirect.
Having made an assessment about the weight to be attached to the parties’ various contributions, it is necessary to have regard to those s 79(4) matters which are pertinent to the parties’ current and future financial circumstances, in particular the provisions of s 75(2) of the Act.
The matters which arose as issues requiring determination in this case were as follows:
(a)Should the interim distribution to the husband of $175,000 on 30 November 2022 be included as notional property in circumstances where he contends that $44,474 was applied to legal fees and the balance to farm expenses and interest?
(b)How should the Court treat monies paid by the husband to his new wife or to her benefit?
(c)Should the $129,345 the husband paid by way of legal fees other than via interim distributions be added back to the property pool?
(d)Should the wife’s personal tax liability be included as a liability?
(e)Should the husband’s personal tax be included as a liability?
(f)Should the line of credit be included as a liability in whole or part and how should the Court treat the funds which the husband applied to car payments and rent?
(g)Are the husband’s entitlements under the EE Insurance policy (previously and hereinafter referred to for consistency as “R Finance”) a financial resource?
(h)What weight should be given to the contribution of the F Property and what is the effect of the Deed entered into by the husband and his parents in late 2014 and of the mortgage registered against the property in favour of the husband’s parents?
(i)What weight should be given to the contributions of the monies received by the husband from his R Finance policy.
(j)What is the husband’s life expectancy?
(k)What is the significance of the husband’s health issues?
(l)What impact does the duration of the marriage have on the ability to re-enter the workforce?
(m)What are the financial circumstances of the cohabitation between the husband and his new wife?
(n)How should the ongoing R Finance payments be treated?
CONSIDERATION
Perhaps the most significant issue in the case at the conclusion of the evidence was what the Court’s approach should be to the parties’ financial conduct post-separation. This is perhaps unsurprising since, on both parties’ cases, the wife, in conjunction with the parties’ accountants, had effectively overseen the financial arrangements of the parties and the partnerships, trusts and corporate structures through which those arrangements operated throughout their relationship and post-separation that situation changed.
Identifying the pool of assets available for adjustment
It is necessary to understand some of the history to determine how to approach the issue. Before I turn to consider the history, I will set out the table of assets, liabilities, superannuation, financial resources and addbacks which was adopted by the parties at the conclusion of the trial (Exhibit 39) and represents the areas of agreement and the areas where the parties are asking the court to make a finding.
Balance Sheet Ownership Applicant Wife Respondent Husband ASSETS Farming Enterprise 1 Farm - F Property Land Husband 2 Farm – F Property House Husband 3 Total F Property 4 License Husband 5 Total F Property (incl License) - rounded values $9,400,000 $9,400,000
6 Farm - 3 G Street Joint Tenants $2,850,000 $2,850,000 7 Farm Machinery excl GST Joint $859,015 $859,015 8 Farm - livestock Joint $420,750 $420,750 9 Farm – livestock (recently sold) Joint Total farm assets $13,529,765 $13,529,765 Off Farm Assets 10 QLD Suburb D Tenants In Common $4,200,000 $4,200,000 11 M Street Wife $5,250,000 $5,250,000 12 Personal Cash - Ms Mason Wife $275,000 $275,000 13 Personal Cash - Mr Mason Husband $14,918 $29,021 14 Partnership Cash - Farm Joint NIL $3,363 15 Partnership Cash - Non-Farm (…52) Joint $15,498 $15,498 16 QLD Offset Ms Mason account Wife NK 17 Mason Family Trust (…19) $260 $260 18 C Pty Ltd (…32) Wife $40,389 $40,389 19 C Pty Ltd (Mason Family Trust)……19 Wife
20 W Pty Ltd Business Husband $2,204,500 $2,204,500 21 Q Company Cash (…67) Husband $42,779 $42,779 22 Ms Mason Motor Vehicle 4 Wife 23 Mr Mason Motor Vehicle 1 & 2 & Motor Vehicle 3 Husband $305,000 $305,000 24 Ms Mason Motor Vehicles (excl Motor Vehicle 4) Wife $35,000 $35,000 25 Other Assets -Animals Joint $29,000 $29,000 26 Other Assets - Mr Mason FF Husband $20,759 $20,759 27 GG Shares Joint & Mr Mason & Ms Mason Joint $1,564 $1,564 28 PAYG Tax PAID FYE23 C Pty Ltd Wife 29 Tax liability FY2023 C Pty Ltd Wife ($68,638) ($68,638) 30 Funds due to the Husband (cost order) Husband $53,000 30a FF Shares (owned by W Pty Ltd) - 50% of the value W Pty Ltd $14,977 $14,977 30b Funds due to be paid to Q Company on 19.9.23 Joint 31 Total Assets $25,963,771 $25,913,260 SUPERANNUATION 32 Ms Mason Super Wife $311,802 $311,802 33 Mr Mason Super Husband $312,003 $312,003 Total Superannuation $623,805 $623,805 LIABILITIES 34 Farm LOC Joint $2,599,929 $2,599,929 35 Suburb D Mortgage Joint $1,881,979 $1,889,338 36 Mr Mason Motor Vehicles 1 & 2 & Motor Vehicle 3 Loan Husband $203,156 $203,156 37 Partnership tax on wind up Joint NIL NIL 38 C Pty Ltd Div7 Loans Wife $1,207,640 $1,207,640 39 Funds Wife to pay Husband pursuant to cost order Contempt Wife
$53,000 40 Equipment hire purchase $3,037 $3,037 41 CGT - real estate $254,828 $254,828 41(a) Wife's credit card liability …46 41(b) Insurance due on Suburb D Total Liabilities $6,203,569 $6,157,928 42 Further liabilities 43 Farm SS Finance Loan line of credit Husband $255,000 44 Husband tax FY 2022 Husband $154,619 44a Husband Tax FY 2023 Husband NIL $170,510 44b Wife Tax FY 2023 Wife $110,034 $110,034 45 Loans from Husband’s parents Husband $47,000 46 Husband's CC Financial Services litigation loan 47 Total further liabilities $110,034 $737,163 Total liabilities $6,313,603 $6,895,091 ADDBACKS 48 Partial property settlement - Ms Mason Wife $200,000 $200,000 49 Partial property settlement - Mr Mason Husband $27,000 $27,000 50 Interim Payment - Ms Mason Wife $175,000 $175,000 51 Interim Payment - Mr Mason Husband $175,000 $44,474 52 Legal fees paid by the Husband (other than via interim distributions) Husband $129,345 53 Payments to Ms B Husband $252,500 54 Wedding costs Husband 55 Ms B's engagement ring Husband 56 57 Payments for unreasonable expenditure; Sydney rent (88,174) and Motor Vehicle 3 lease (59,522.88) Husband $120,221 58 Total $1,079,066 $446,474 FINANCIAL RESOURCES 59 Husband's income protection insurance ($389,000 x 7) $1,715,000 Total $1,715,000 60 Total Gross Assets $25,963,771 $25,913,260 61 Total Superannuation $623,805 $623,805 62 Total Liabilities $6,313,603 $6,895,091 63 Total addbacks $1,079,066 $446,474 Total Net Assets $21,353,039 $20,088,448 64 Financial resources $1,715,000.00 65 Total net assets: $23,068,039 $20,088,448
I will deal with the less controversial aspects of the above schedule first.
Where the parties have indicated their agreement that an asset or liability has no value I will not further consider it, except in the course of making orders or declarations sought by the parties which are uncontroversial.
The wife’s Motor Vehicle 4 while included in the balance sheet above was purchased with funds received from a partial property settlement which is included in the balance sheet, as so to avoid any double counting, will be deleted.
The parties included a line in the balance sheet marked QLD Offset Ms Mason account. The notes to the balance sheet indicate that the offset held the partial property settlement funds of the wife ($275,000) which are otherwise included in the balance sheet. I heard no evidence directed to their being any additional funds in that account and received no submissions and accordingly it will be deleted.
I will similarly delete reference to the husband’s litigation funding which appears as a blank item under the heading “liabilities” – since to include a figure here would compromise the operation of s 117 of the Act.
The division of some small jointly owned assets should be non-controversial. I have set out the partnership funds – they are de minimis in this asset pool and I am aware that in all likelihood they will be applied to partnership expenses while this matter is reserved. I will delete them from the final balance sheet of assets and liabilities on that basis but noting that the husband be entitled to apply them to expenses of the partnership.
I will make an order directing the parties to split their small GG Company shareholding.
I have assumed the husband will retain the item titled “Other Assets - [Animals]” as he will retain the rural properties.
The parties agreed in closing submissions that I would not include either as an asset of the husband or a liability of the wife a costs order previously made in these proceedings so as not to interfere with the operation of s 117 of the Act.
The parties had a different figure in the joint balance sheet referable to “Personal Cash – Mr Mason”. I propose to include the funds in the husband’s E Bank account: probably $14,918 (Exhibit 39 says it is $14,918.19 but the notes in Exhibit 39 say $14,913.19). I do not propose to include the monies in one of the NAB farm accounts but nor do I propose to include as a liability money which the husband has borrowed from his parents and has applied to farm expenses, some of which he says remains in the farm account (I discuss this determination in more detail below). I accept that it would not be appropriate to include as an asset of the husband money his parents have recently advanced.
The parties do not have the same figure as the balance of the Suburb D mortgage. On the basis that the figure in the wife’s column of the balance sheet would appear to be more recent than that in the husband’s evidence, I have adopted the wife’s figure.
The parties agree on the figure for the Capital Gains Tax (“CGT”) liability which would arise should the Suburb D property be sold. The parties do not in the first instance propose its sale and in those circumstances, consistent with the principles enunciated in Rosativ Rosati (1988) 23 Fam LR 288, the liability will not arise and I will not consider it as a liability in calculating the net assets available.
Both parties separately listed a modest parcel of shares owned by W Pty Ltd as an asset of that company separate from the agreed value of the company and so I have included that shareholding separately in my consideration as well.
Addbacks
Should the interim distribution to the husband of $175,000 on 30 November 2022 be included as notional property in circumstances where he contends that $44,474 was applied to legal fees and the balance to farm expenses and interest?
On 30 November 2022 orders were made in this Court as follows:
3.Within 7 days both parties shall do all acts and things necessary to cause $175,000 to be transferred to the trust account of each of their respective solicitors from NAB [Q Company] […67] then to NAB […52]. To give effect to this order, the wife will be permitted to transfer the total funds of $350,000 initially to the [Ms Mason Partnership] account […52] and then pay $175,000 to the Trust of the Wife's lawyers and $175,000 to the Trust Account of the Husband's Lawyers and shall send receipt of the transfers to the respective lawyers.
4. Within 7 days of the receipt by the Husband of the $175,000, the husband must deposit the sum of $32,500 (or whatever the interest amount is that is payable) to the NAB account […92] to meet the interest expenses associated with the NAB Farm Line of Credit account […01] for the month of December 2022.
The parties each received funds by way of partial property settlement by reason of the orders of 14 October 2021 and the further orders of 30 November 2022. The first of those amounts of $200,000 allocated to the wife and $27,000 received by the husband pursuant to the former order are not controversial and the parties have included them in their joint balance sheet. The 30 November 2022 orders provided for a payment to each of them of $175,000. The wife says those amounts should similarly be included as property of the parties. The husband says that since he has applied all but $44,474 of those funds to farming expenses the funds not applied to legal fees should not be included. I accept that in the ordinary course if a party has applied funds received pursuant to an interim order to living expenses it is open to the judge hearing the matter on a final basis to disregard those funds when making a determination as to the assets available for distribution on the basis that they have been spent in the usual course.
The situation is not as simple here. It highlights the necessity to look at the whole of the financial arrangements of both of the separated persons to chart a path which avoids double counting and ultimately produces a result which is just and equitable.
The authorities since AJOv GRO (2005) FLC 93-218 have focused on the exceptionality of including “addbacks” as property as though they were assets still in existence and available to the parties.
The observation that including addbacks as notional property is exceptional is not the same as saying that the court cannot or ought not adopt the approach. Rather, it is a caution to the judge to consider the specific facts of the case in order to reach a conclusion that justice and equity require. Sometimes it will be appropriate to include funds no longer in existence as though they were notional property in the hands of the party. In other cases it may be appropriate to make an adjustment in reliance upon the provisions of s 75(2)(o) of the Act. Here there is an inter‑relationship between the expenditure of funds and the acquisition of additional debt and so it is important to consider inclusion or exclusion or assets and liabilities in a holistic sense. It is for this reason that while I will consider the evidence about individual proposed addbacks in each case my determination will be in reference to all the issues collectively.
The wife seeks that I include as an “addback” monies:
(a)which the husband has provided to his now wife, Ms B;
(b)payments in respect of an apartment leased in Sydney; and
(c)payments of a lease in respect of a car.
In the period 1 July 2021 to 31 August 2023 the husband transferred a total of $252,500 to Ms B according to the wife’s section 50 schedule which became Exhibit 11 and $259,800 per Ms B’s affidavit and the husband’s affidavit. Those funds were transferred from his E Bank account ending …16 to an account in Ms B’s name. In her affidavit, Ms B states (and the evidence supports) that she applied the monies transferred by the husband to pay for her engagement ring, the couple’s 2023 wedding and living expenses for her and the husband.
Ms B says that her time is committed to a combination of caring for her husband and work on the farm such that she does not have outside paid employment and is therefore entirely financially dependent upon her husband.
It needs to be recognised that the funds which the husband has transferred to Ms B have been applied to his benefit as well in terms of living expenses and the costs of his wedding and the engagement ring purchased by Ms B.
It is artificial, in my view, for the husband to say that specific funds from his partial property settlement were spent on farm expenses and therefore ought not be included, in circumstances where, had he not diverted funds, for example to his spouse, those funds would have been available to meet farm expenses.
It has to be remembered that the husband has elected, for perfectly understandable reasons (such as tradition, family duty and lifestyle), to continue to run the rural properties at a loss and at a time where he says his fatigue makes it difficult to undertake work himself. He is of course entitled to do this but this decision has financial consequences not all of which need be borne by his former spouse after separation.
It is appropriate for the whole of the monies received by the husband by way of partial property settlement to be included as a notional asset of the husband or addback in the above context – since he elected to make payments to his now spouse which could have been used to meet farm expenses had he chosen.
Should the $129,345 the husband paid by way of legal fees other than via interim distributions be added back to the property pool?
The wife seeks inclusion as an addback on the husband’s side of the ledger an amount of $129,345 which is described by her as “husband’s legal fees (paid other than via interim distributions)”. I accept that the husband paid his solicitors the sum of $129,345 by way of transfers from his E Bank account ending …16 in the period 11 August 2021 to 30 November 2022. During that same period he received his R Finance insurance income into that account.
The written submissions on behalf of the wife contend that “there is no dispute that the Husband’s [R Finance] insurance benefit emanated from an asset to which the Wife made a contribution and as such the [R Finance] income benefit is a product of something paid for and maintained during marriage”.
In Trevi & Trevi [2018] FamCAFC 173 at [27] the reasons for judgment of Murphy J (with which Alstergren DCJ (as he then was) and Kent J agreed) provide as follows:
27. The Full Court held in AJO and GRO that addbacks fall into “three clear categories”: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and “waste” or wanton, negligent, or reckless dissipation of assets.
(Footnotes omitted)
In approaching the specific category of monies expended on legals fees the reasons at [31] read as follows:
31. To the considerations just discussed must be added the propositions emerging from authority that paid legal fees as a category of addback is imbued with considerations specific to that expenditure. The Full Court said in Chorn:
56.In summary, we consider that the above mentioned decisions of the Full Court establish that, while the treatment of funds used to pay legal costs remains ultimately a matter for the discretion of the trial Judge, in determining how to exercise that discretion, regard should be had to the source of the funds.
57.If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
58.If funds used to pay legal fees have been generated by a party post‑separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance), they would generally not be added back as a notional asset; nor would any borrowing undertaken by a party post-separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties. Funds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post‑separation income or acquisitions.
The funds used to pay the husband’s legal fees in this case did not exist at separation but came to him as income post-separation. The applicant wife submits that she should be seen to have made a contribution to those funds as the policy under which they were paid was acquired by the husband during the currency of their relationship. That is certainly factually accurate but ignores that the income protection policy operates to replace income, provided the terms of the policy are fulfilled, and accordingly it is difficult to treat the husband’s income from this source differently from other post-separation income. Unlike the partnership income which was undoubtedly both pre and post separation income which was derived from the joint historic and current efforts of the parties the insurance payments to the husband were personal to him and applying principles outlined in NHC & RCH (2009) FLC 93-204 may be used to fund legal fees without an automatic assumption that those fees will as a consequence be included as a notional asset or addback. The wife submitted that if the wife’s paid legal fees were to be included then those of the husband should also be included as there should be a commonality of approach. This ignores the source of the funds. In these circumstances I accept the submission on behalf of the husband that it is not necessary to include these paid legal fees as an addback.
Liabilities
Should the wife’s personal tax liability be included as a liability?
As a matter of general principle the exercise of doing justice and equity as between the parties is usually best served by having regard to all of the assets, liabilities, superannuation and financial resources of the parties as at the date of trial. But in some cases there will be a proper reason to depart from that approach.
The wife submitted that the manner in which her taxation liability had arisen was different from the manner in which the husband’s taxation liability had arisen and that difference warrants the inclusion of her debt and the exclusion of the husband’s.
The husband accepts that the tax liability of the wife is properly included as a liability and I will do so.
Should the husband’s personal tax be included as a liability?
The husband has a taxation liability for year ended 30 June 2023 in the sum of $170,510. The wife says I should disregard that income tax liability as the husband should have “save[d] funds to meet his tax liability”.
The husband also has a taxation liability for the year ended 30 June 2022 in the sum of $154,619.
The wife’s submission that the husband ought to have saved to meet his taxation liabilities would not without more justify their exclusion. The taxation liability for 2022 has crystallised and there is no dispute about the figure in the draft return for 2023. Accordingly, the husband owes the Australian Taxation Office those amounts and he will be required to pay them.
If the husband had spent the other funds available to him during this period in a manner which was reckless, negligent or wanton as those concepts were understood by Baker J in Kowaliw& Kowaliw (1981) FLC 91-092 then there may be some basis for excluding his taxation liabilities from the balance sheet on the basis of his financial conduct.
I do not think the wife’s submissions about the husband’s spending rise to reckless, negligent or wanton. Instead, I understood the submission to be critical of the husband’s failure to live within his means and a comparison of her frugality post-separation to what she submitted was his excessive expenditure. I have made some adjustments, as sought by her in an effort to address these issues and as a consequence I have determined below that some but not all post‑separation liabilities are appropriately excluded. Accordingly, having regard to totality of post-separation financial conduct referred to in these reasons I have determined that it is proper to include the husband’s taxation liabilities in the joint balance sheet.
Should the line of credit be included as a liability in whole or part?
The farm SS Finance line of credit is a liability in the name of the husband in the sum of $328,000. Of that sum the husband seeks to bring to account in the joint balance sheet a liability of $255,000. The husband submits that the court should have regard to the sum of $255,000 as a liability which is taken into consideration when determining the net assets available for adjustment as between the parties because of the manner in which those funds were applied. The husband submits that since the loan was used to fund $200,000 of the 2022 Division 7A minimum loan repayment and a further $55,000 was paid to W Pty Ltd in respect of money W Pty Ltd applied to the Division 7A loan repayment then it is appropriate that the liability be included.
The wife says the whole of the line of credit ought not be included in the balance sheet from which the court will adjust the parties’ assets and should be considered personal to the husband, to be met from the assets he receives pursuant to the court’s ultimate orders.
It is possible to exclude a liability from consideration in appropriate circumstances. No issue arises in this case to raise the spectre that any of the liabilities are unlikely to be repaid and so questions which might arise under s 75(2)(ha) of the Act are not in play here.
The orders of 14 October 2021 restrained the parties from further borrowing. The husband obtained the line of credit borrowings while that order was in place. On 21 July 2022 the husband’s lawyers wrote to the wife’s lawyers (Exhibit 25) indicating that the husband had obtained a new loan facility to meet the minimum Division 7A Loan repayments. In that correspondence the husband’s lawyers made the following representation:
We are instructed that our client agrees for the loan facility, which he intends to reduce to a zero-balance drawn upon the repayment of funds used to meet the Division 7A Loan repayments, to be excluded from the balance sheet. Our client will indemnify your client in respect to said loan.
(As per original)
The husband, in evidence, indicated this representation was conditional although nothing in the letter itself imposes conditions.
I accept that the husband did apply the funds as he contends and in the ordinary course that would be sufficient to persuade me that the liability should be included in the balance sheet. It is not so much the husband’s securing the borrowings against property contrary to the Order which persuades me that they ought be excluded but, as previously discussed, the husband’s election to utilise funds which could have been applied to the Division 7A Loan repayments to other discretionary expenses such as the money he paid to his (now wife) and the money he paid to rent an apartment in Sydney and acquire an additional car with ongoing lease payments.
In mid-2021 the husband’s now wife started to live with him at F Property. For the next twelve months she continued to maintain an apartment in Sydney and within a few months the husband commenced to pay the rent for that apartment. In Ms B’s affidavit she says that the monthly rent was about $4,000.
Both the husband and Ms B explain that the Sydney apartment was retained to facilitate the travel by Mr Mason to Sydney for medical treatment. I accept that he has traditionally travelled to Sydney and prior to separation would have had the opportunity to stay at the parties’ home in Suburb N.
My task is not to assess the reasonableness of the husband’s expenditure on rent for an apartment which the evidence says was used for a week each month (including to attend court for these proceedings) but rather to assess what his election to use his funds in this way means for my assessment of either contributions in the post separation period or matters which arise under s 75(2) of the Act.
In July 2022 the lease on Ms B’s property came to an end and the husband entered into a new lease on different premises in the same area. In the period between July 2022 and 21 August 2023 the husband paid $88,174 in respect of the apartment leases. This is a significant sum for rental accommodation which the evidence suggested was used for the purpose of attending a monthly medical appointment. The husband readily accepted in cross-examination that he could stay at a club where he is a member (albeit that that would necessitate boarding his dog with a vet). It is not clear whether that figure includes $320 per month paid for a parking space near the apartment.
The wife also raised the husband’s expenditure on lease payments for Motor Vehicle 3 in circumstances where he had recently purchased Motor Vehicle 2. The wife herself has more than one vehicle. Each party would likely say that the vehicles have different functions.
I am not prepared to approach each individual claim for an addback or request to exclude a liability in isolation for risk that it will distort the overall assessment.
I take into account the parties had access to different income during the post-separation period. The wife has had $15,000 of discretionary income paid as a distribution from the Mason Partnership. She has also had the benefit of payments made towards joint liabilities and expenses from partnership and trust income.
The husband has had access to the same $15,000 by way of discretionary income and has been paid a distribution from the Mason Partnership and also had the benefit of payment of other expenses from partnership and trust income. He has also had the payments under his R Finance policy. The receipt of those last funds have placed him in a significantly stronger financial position than the wife. But those funds are not unlimited.
The approach I have taken is as follows:
(a)I will not add back money which has been spent - that includes money which has paid rent for an apartment in Sydney, money which has been used to pay lease payments for Motor Vehicle 3 and money which has been transferred to the husband’s partner (now wife).
(b)But I will not include as a liability money the husband has borrowed from the line of credit or his parents. Those are liabilities the husband must shoulder from his share of the assets.
(c)I will include the taxation liabilities of each of the parties in my consideration of the net assets available for distribution.
(d)I will not add back the husband’s legal fees paid other than from interim distributions.
The rationale for the above approach has been canvassed in my reasons above but in summary: neither party is expected to go into suspended animation post separation but on the other hand justice and equity require some consideration of the fact that one party has had greater access to the assets and income which have been the product of the parties’ joint efforts over a long period. The wife has lived within her means and the husband has given monies which would otherwise have been available to meet expenses or pay debts to a third party. The husband’s R Finance policy is in effect income and at some point after separation he must have a legitimate expectation that he is entitled to apply that income stream to his expenses (here including legal fees). The above approach is not a mathematical exercise but an attempt based on the evidence to balance the interests of the parties so as to do justice and equity as between them.
Are the husband’s entitlements under the R Finance policy a financial resource?
A figure was included in the balance sheet under the heading “financial resources” being the capitalised value of the payments the husband expects to receive from R Finance between now and age 65. The husband was 57 years of age as at the time of hearing. The husband certainly has an expectation that if he complies with the terms of the insurance policy (and is alive) then he will continue to receive payments.
In Tomaras & Tomaras (2021) 64 Fam LR 237 (Ainslie-Wallace, Aldridge JJ, (Watts J dissenting on this point)) the appellant argued that the primary judge should have found that the husband’s entitlements under a total and permanent disability insurance policy (“TPD policy”) were property for the purposes of ss 4 and 79 of the Act. The Full Court comprehensively considered the definition of “property” and, in relation to the TPD policy, said that its capitalised value was not capable of division and could only be regarded as a financial resource or income. Contemporaneous with their consideration of the meaning of “property” they said that the insurance payments would be best categorised as income. While the facts are not identical, I think the husband’s entitlement to receive payments under the R Finance policy is best regarded as income for the purpose of section 75(2)(b) of the Act.
Final Balance Sheet
Having made the above findings the assets, liabilities, superannuation of the parties are as follows:
Balance Sheet Ownership Value ASSETS 5 Total F Property (incl License) - rounded values Husband $9,400,000 6 Farm - 3 G Street Joint Tenants $2,850,000 7 Farm Machinery excl GST Joint $859,015 8 Farm - livestock Joint $420,750 Total farm assets $13,529,765 Off Farm Assets 10 QLD Suburb D Tenants In Common $4,200,000 11 M Street Wife $5,250,000 12 Personal Cash - Ms Mason Wife $275,000 13 Personal Cash – Mr Mason (E Bank account) Husband $14,918 17 C Pty Ltd (Mason Family Trust) …19 $260 18 C Pty Ltd (…32) Wife $40,389 20 W Pty Ltd Business Husband $2,204,500 21 Q Company Cash (…67) Husband $42,779 23 Mr Mason Motor Vehicles 1 & 2 & Motor Vehicle 3 Husband $305,000 24 Ms Mason Motor Vehicles (excl Motor Vehicle 4) Wife $35,000 25 Other Assets -Animals Joint $29,000 26 Other Assets - Mr Mason Husband $20,759 27 GG Shares Joint & Mr Mason & Ms Mason Joint $1,564 30a FF Shares (owned by W Pty Ltd) - 50% of the value W Pty Ltd $14,977 Total Assets $25,963,911 SUPERANNUATION 32 Ms Mason Super Wife $311,802 33 Mr Mason Super Husband $312,003 Total Superannuation $623,805 LIABILITIES 29 Tax liability FY2023 C Pty Ltd Wife
$68,638 34 Farm Line of Credit Joint $2,599,929 35 Suburb D Mortgage Joint $1,881,979 36 Mr Mason Motor Vehicles 1 & 2 & Motor Vehicle 3 Loan Husband $203,156 38 C Pty Ltd Div7 Loans Wife $1,207,640 40 Equipment hire purchase $3,037 44 Husband tax FY 2022 Husband $154,619 44a Husband Tax FY 2023 Husband $170,510 44b Wife Tax FY 2023 Wife $110,034 Total liabilities $6,399,542 ADDBACKS 48 Partial property settlement - Ms Mason Wife $200,000 49 Partial property settlement - Mr Mason Husband $27,000 50 Interim Payment - Ms Mason Wife $175,000 51 Interim Payment - Mr Mason Husband $175,000 Total $577,000 Total Gross Assets $25,963,911 Total Superannuation $623,805 Total Liabilities $6,399,542 Total Addbacks $577,000 Total Net Assets $20,765,174
Having determined that the net pool available for adjustment is in the sum of $20,765,174 it is now appropriate to turn to the assessment of the parties’ contributions to the acquisition, conservation and improvement of those assets.
Assessment of Contributions
This was a long marriage and it is an agreed fact that each of the parties worked hard to the best of their ability either for financial reward or otherwise such that while at the beginning of the relationship the wife’s personal exertion income exceeded that of the husband and later the position was reversed. They each also made significant and diverse non-financial contributions such that their contributions both financial and non-financial are regarded by, me when viewed holistically, as having been equivalent.
The wife has skills derived from her tertiary education and work experience which she applied to the parties’ financial affairs. As a consequence, the parties had a diverse asset and income base whose taxation affairs were managed by her advantageously.
At the end of the day each of parties acknowledged the hard work of the other during the relationship and it is those efforts over a long period which are relevant to assessment of their individual contributions. It is, however, necessary to look at the contributions which were made on behalf of the parties by their respective families to reach a conclusion about contribution based entitlement overall.
During the relationship the parties bought and sold a number of pieces of real property – some of those transactions are discussed in the following paragraphs where relevant to the assessment of contributions.
The husband’s family made a gift of $250,000 in about 2000 which the parties applied to the purchase of HH Street, Town JJ (“the HH Street property”). The purchase price was approximately $360,000 and the remainder of that sum was secured by a mortgage in the approximate sum of $110,000. That property was the parties’ home between 2001 and 2005.
In about 2003 the parties purchased a property located at KK Street, Town LL (“the Town LL property”) for $550,000. The parties used their joint savings for the deposit with the remainder funded by way of mortgage. The parties sold the HH Street property in 2005 and when sold the parties applied the sale proceeds to the Town LL property.
In 2017 when the Town LL property sold the parties retained net proceeds of between $630,0000-$640,000. Between $500,000 and $550,000 of the Town LL property proceeds were applied to meet the deposit and stamp duty in respect of the acquisition of L Street Suburb D (“the Suburb D property”) in 2019.
There is no dispute that the husband’s parents formed an intention to transfer real property to each of their sons and this was known to both the husband and the wife from the time they commenced to live together. The husband’s affidavit says in 2003 the husband’s brother received a 2000 acre parcel of land from the husband’s parents subject to a mortgage in the sum of $500,000.
What weight should be given to the contribution of the F Property property?
In early 1992 the husband and wife moved into the cottage located on F Property – the parcel of land that the husband understood would ultimately be transferred to him. Work was undertaken on that cottage by the parties in the period 1992-1999 funded by the parties and the husband’s parents. The husband’s parents spent about $25,000 as did the husband and the wife. The husband’s father gave the parties $10,000 when the parties left F Property referable to their expenditure on the improvements such that their net outlay was $15,000. The husband and wife did not pay to occupy the cottage on F Property. During this period the husband was employed as a counsellor and later consultant full time although he also assisted his parents on the property when available.
The parties did not live at F Property between 1999 and 2020 and the cottage was occupied by another family.
In 2014 the husband’s father transferred F Property to the husband subject to a Deed which acknowledged a mortgage in the sum of $500,000. After the transfer the husband and wife paid the husband’s father $250,000. Notwithstanding the existence of the mortgage no repayments were made by the husband or the wife and the evidence of the husband and his parents supported the conclusion that no demand for repayment will occur.
There is an issue about the value to be attached to the contribution of the F Property by the husband’s parents. As I understand the competing contentions the wife says I should look at the value of F Property as at 1992 when the parties first lived there. That value according to the uncontested evidence of Mr RR is that the property was then valued at $820,000. As I understand the submission the wife says that 1992 marks the beginning of her having made contributions to that property (in the knowledge it was to be transferred to the husband) and accordingly it is appropriate to have regard to its value so that, as her counsel submitted, increases in value after that date may properly be apportioned equally as between the parties.
The husband for his part says that it is not material to attribute a value to the property prior to its transfer to the parties as, while he accepts that his parents intended that it be transferred to him, until such time as the transfer occurred he had no entitlement to the property (nor did the wife) and so any contributions that either of them made were not contributions to the property of the parties or either of them. To the extent that the parties made a contribution to that property at a time when they did not own it they were contributing to a property owned by a third party and they received accommodation without charge. I accept that the proper time to assess the parties’ direct contributions to their property must be at a time when it is their property. That does not mean that I ignore contributions made at this time but they cannot be regarded as contributions to the property of the parties, noting that it is not necessary for a party to establish any direct contribution to a particular piece of property in order for the Court to assess contributions.
Further, the husband does not accept the proposition that increases in value of an asset after its transfer are automatically to be considered the equal contribution of each of the parties.
I do not accept that there is a principle of law by which I must regard the increase in value of a property as being attributed equally as between the parties. Such a principle would improperly prevent any appreciation of the actual nature of the individual contribution in the circumstances of the individual case. Here, the husband received the land, licence and some livestock in 2014. In return the husband and wife paid the husband’s parents $250,000. Thereafter the husband and wife were entitled to farm the land as their own land including taking profits or making losses from the farming enterprise they conducted on that land as a partnership. Prior to 2014 any benefit the husband and wife derived from the land was a gift from the husband’s parents and any improvements they effected were improvements to land owned by their husband’s parents. I therefore consider that the value of the F Property at the time the parties first assumed occupation is not material to my assessment of the parties’ contributions.
It is also necessary to examine what has happened to the land which was gifted to the husband after its acquisition. In 2018 the husband effected a boundary shift such that 300 acres of land which had been on the title to the F Property was, from that time, part of the neighbouring property, 3 G Street. Accordingly, to the extent that the 3 G Street property is now more than 800 acres and has an agreed value of $2,850,000 in the balance sheet, 300 acres was previously part of the land gifted to the husband. I therefore consider that the value of F Property at the time the parties first assumed occupation is not material to my assessment of the parties’ contributions.
It is in this context that it is necessary to have regard to those authorities which examine not just the value of the property at the time the contribution was made, but the value to the parties of that contribution having regard to the whole of the circumstances including the use to which the land has been put subsequently.
In Williams v Williams [2007] FamCA 313 (“Williams”) the Full Court noted that it was necessary for a trial judge to not simply have reference to the value of an item (in that case an initial contribution) as at the date of the commencement of cohabitation without reference to the value to the parties at the time of the hearing as this may not adequately recognise the importance of the contribution at the time of the hearing:
26. We think that there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution towards the parties. Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing or the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in so doing it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
Those principles have application here. While the F Property was not an “initial contribution” it was a contribution by gift made during the relationship of an asset which has increased in value during the relationship. The principles set out by the Full Court acknowledge the necessity to place that contribution alongside the parties’ other various contributions.
The Full Court in Jabour & Jabour (2019) FLC 93-898 said at [43] of the approach in Williams:
43.We consider that the decisions in Baker and Bilous indicate that the Court in Williams somewhat overstated the importance of the increase in value of a piece of property at the expense of “the myriad of other contributions that each of the parties has made during the course of the relationship (Williams at [26]).
In that case the Full Court found at [136] that the evidence established:
136. Whatever was the value of the property at the commencement of the relationship its significance has been largely lost given the myriad of the contributions by each of the parties to their various business ventures, through their employment and care of the family over a long relationship, including the contributions made to the retention of the property which we have discussed above. There is no doubt that they both worked hard and over many years they both contributed to the full extent of their capacity within the roles each took within the marriage. As was said in Wallis at [20] it is important that this miscellany of other s 79(4) factors is not accorded a subsidiary role in the assessment of contributions.
Here we are not talking about a contribution made at the commencement of the relationship between these parties but more than twenty years into a relationship of about 29 years duration. That said it remains relevant to consider that the contribution, significant as it is, must not displace consideration of the multiplicity of other contributions made over the lengthy relationship. In Dickons & Dickons (2012) 50 Fam LR 244 the Full Court said of percentage attributions to specific contributions:
24. There can be little doubt that the classification of contributions by reference to terms such as “initial contributions”, “contributions during the relationship”, and “post-separation contributions”, can be helpful as a convenient means of giving coherent expression to the evidence in a s 79 case and to giving coherence to the nature, form and extent of the parties’ respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
25. Doing so is also consistent with the demands of authority that the ultimate assessment of contributions should be made without “giving overzealous attention to the ascertainment of the parties’ contributions” (Norbis v Norbis (1986) 161 CLR 513 at 524; 65 ALR 12 at 18; 10 Fam LR 819 at 825; [1986] HCA 17 ) and the well-established recognition in the authorities (acknowledged specifically by her Honour in this case) that the process required of the court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise.
26. The necessarily imprecise “wide discretion” inherent in what is required by the section is made no more precise or coherent by attributing percentage figures to arbitrary time frames or categorisations of contributions within the relationship. Indeed, we consider that doing so is contrary to the holistic analysis required by the section and, in the usual course of events, should be avoided.
As a consequence of consideration of the above principles and to strike a balance between recognition of the significant size of the gift, its present value and the timing of the gift, the contributions of each during the relationship do not have the effect of counterbalancing this contribution and accordingly the husband’s contribution-based entitlements to the property of the party outweigh those of the wife. In reaching that conclusion I have had regard to the wife’s significant non-financial contributions to the care of the parties’ sons and the unpaid work undertaken by each of the parties throughout their long relationship. I can confidently conclude that while the husband’s economic contributions were greater than those of the wife the wife’s non-economic contributions were greater than those of the husband. The wife was the parent who was most available to the children although I accept that the husband was involved when his work commitments permitted.
What weight should be given to the contribution of the monies received by the husband from his R Finance policy?
The final contribution which requires consideration are the funds the husband derived from his R Finance policy. In 2012 the husband was diagnosed with a medical condition. The policy paid a lump sum on diagnosis and monthly payments thereafter. At present the monthly payments total approximately $391,860 per annum and are subject to income tax.
There was some effort by the husband, historically, to quarantine the R Finance payments which were received by him into an E Bank account in his name but ultimately it is not in contest that the husband applied the initial lump sum to the parties’ acquisition of the second property the parties purchased in Suburb N, namely M Street, and that the husband also saved monthly payments which were also contributed to the acquisition of this property. The parties renovated this property whilst living at the apartment they had purchased next door some years before. Later the husband made multiple $25,000 payments towards the wife’s superannuation entitlements and from time to time the husband applied the R Finance monies towards farm expenses (see Exhibit 8).
The question for the Court is should the husband’s receipt of these insurance payments be treated differently from receipt of personal exertion (or investment) income by a party – that is are they personal to the husband such that it would be appropriate to acknowledge them separately from his income contributions when determining the overall contribution-based entitlements of the parties?
I am comfortably satisfied that the initial lump sum trauma payment is personal to the husband and should be considered as a contribution outside the ordinary course on his behalf, which facilitated the parties’ acquisition of the second Suburb N property. The ongoing periodic income protection payments are in the nature of income and ought be regarded as contributions by the husband but only in the same manner as I regard the income each of them earned from various sources throughout the relationship.
It follows that I accept that it is appropriate to give weight to the following financial contributions made by the husband or on his behalf which fall outside the contributions each party made otherwise:
(a)The gift of F Property.
(b)The gift of $250,000.
(c)The payments by the husband’s family towards Y’s school fees at MM School.
(d)The $500,000 trauma payment received by the husband following his diagnosis in 2012.
As against that I do consider that the fact that the parties were able to live without paying rent in a property owned by an entity whose shares belonged to the wife’s father is also a contribution which requires special attention and acknowledgment.
In about 2006 the parties started to live at a property in Town NN known as “OO Property”. The property was not in particularly good condition and the parties undertook renovations to the property prior to moving in. The renovations cost about $300,000. The parties loaned the entity which owned the property $150,000 and the entity also contributed $150,000. Between 2006 and 2018 the parties occupied the property without paying rent to the entity. Between 2018 and March 2020, when they ceased occupation of “OO Property”, the parties paid an occupation fee of $200 per week. At the time the parties left “OO Property” in early 2020 the entity repaid the $150,000 loan which had been advanced for the improvements.
It is plain that the parties derived a financial benefit from their rent-free occupation of “OO Property” which was partly offset by the provision (interest free) of $150,000 loan for 14 years and the work undertaken by the wife to improve the property owned by the entity. That said, it is still a matter which I must consider alongside the other contributions from the husband’s family because it has the effect of offsetting those contributions to some extent.
The wife contended that one of the factors which I would have regard to in determining that the parties’ contributions should overall be considered equal were the onerous circumstances in which the contributions were made. In that regard reference was made to the geographical isolation of the parties’ residence and the living conditions (especially at the commencement of the relationship).
I accept that the husband and wife lived remotely. I would not without more find that this circumstance should have the effect of bolstering the wife’s contribution based entitlements. The parties chose where they lived and indeed moved on a number of occasions during the relationship. The husband travelled long distances for work (as did the wife). It is not for the court in the assessment of the parties’ contributions to retrospectively determine whether one party’s experience of shared living conditions while making contributions was more difficult than the other particularly in a case where it is an agreed fact that each worked hard. It is to be distinguished from a case such as Kennonv Kennon (1997) FLC 92-757 where it is the very conduct of one spouse which has made the contributions of the other more difficult – here the parties chose to live where they did and each enjoyed benefits and detriments from that election which do not affect my assessment of contribution.
I have considered whether it is appropriate to treat the post-separation period differently from the period prior to separation in considering the parties’ respective contributions. I conclude that having determined not to include the borrowings of the husband (as set out above) I should not assess the parties’ post-separation contributions separately.
The wife’s senior counsel said that, taken holistically, I would find that that the parties’ contributions over this long marriage were equal. The husband’s senior counsel submitted that a contribution-based analysis would result in an assessment in the range of 60-65 per cent in the husband’s favour.
Having regard to all of the contributions of the parties, direct and indirect, financial and non-financial I am unable to find that it would be just and equitable to regard them as equal given the substantial value of the F Property and 3 G Street parcels, together with the husband’s insurance lump sum payment and the $250,000 gift from the husband’s parents which was contributed to real estate acquisitions. The history of receipt of these funds from outside the efforts of the husband and wife results in a disparity such that I assess the contribution based entitlements of the parties to be 60-40 per cent in the husband’s favour.
Future needs
I turn now to consideration of the matters which arise by application of the relevant provisions of section 79(4)(d) and (e) and of consequence section 75(2) of the Act.
What is the husband’s life expectancy?
The husband is 58 years of age. In 2012 he was diagnosed with cancer. He has received treatment since that time including surgery, chemotherapy and monthly injections. The husband’s surgeon gave evidence as follows in response to being asked what his prognosis was as to the husband’s life expectancy:
This is difficult to say and patients can survive > 20 years with this condition. Given that he was diagnosed in 2012, it is possible he may live for another 10 years.
I accept that the husband may live for a longer or shorter period than his surgeon’s best estimate but it seems likely, given this expert evidence, that the husband will predecease the wife and accordingly she is likely to require greater funds for her self support than will he.
Professor PP writing in November 2015 noted that the median survival for the husband’s condition was probably in the region of five to six years (Exhibit 15).
Those two opinions are probably the best evidence in respect of the husband’s life expectancy. The husband for his part represented to R Finance (Exhibit 20) in 2018 that he expected to live for 5-10 years.
There is no evidence about the wife’s life expectancy but there is similarly no evidence to suggest that it has been affected by ill health in the same way. The wife is two years younger than the husband.
Given these matters it can fairly be concluded that the wife will likely have a longer period of requiring funds to provide for a standard of living which is in all the circumstances is reasonable.
What is the significance of the husband’s health issues?
I have already discussed the question of life expectancy. The husband’s state of health is such that he has indicated it may impact on his income earning capacity. It is necessary to understand his sources of income to evaluate this submission.
The husband operates a financial planning business run through a company “W Pty Ltd” (“the company”). He is one of two shareholders. The other shareholder is an unrelated third party. The company has operated by distributing commissions received to the Mason Financial Services Trust and the Mason Partnership on a monthly basis. The company receives commissions in respect of the monies which are under management. The commission income is presently about $117,000 per month (Exhibit 29). The husband built the business through his contacts in the rural sector and presently has the (paid) assistance of the parties’ adult children. The husband says his inability to travel due to ill health limits his capacity to bring new clients to the business to replace clients who have ceased to instruct the business or died. However, he ultimately accepted that the commission income had increased and the business was “doing quite well”.
I find that the business has been valued and has an agreed value on the balance sheet. It would not be appropriate to in addition have regard to its income stream – that income stream having given rise to the value of the entity.
The husband says his health also impacts on his capacity to undertake physical labour on the rural properties. The parties have in the past employed paid contractors to undertake work, although I accept that the husband and wife also undertook unpaid work. The husband says he is now required to pay his wife both to care for him and in respect of work undertaken on the rural properties.
The medical evidence does not suggest that the husband requires paid care. Writing in April 2021 Dr QQ noted that then husband was “independent with his activities of daily living and continues to drive” (Exhibit 16). I accept the husband’s fatigue may impact on the amount of physical labour he can undertake on the rural properties and his doctor says that full-time work is precluded by “substantial fatigue” (Exhibit 19). The husband says he wishes to retain the property for his children. I accept that is his desire. Whether he is able to undertake work on the farm is not of great moment in circumstances where it has traditionally run at a loss and where the husband has traditionally employed people on the farm while undertaking off-farm work. The husband will have the significant income from the R Finance policy until he turns 65 as well as an income stream from the financial planning business.
Duration of marriage and ability to re-enter the workforce
The wife is 56 years old. She married just before finalising her formal tertiary qualifications and apart from work undertaken for the Mason Group the wife has not been in paid employment since 1996 (save for some bookkeeping and accounting work undertaken for private clients on a part-time basis in the period between 1996 and 2000 and then as a part-time employee until 2001).
The absence of recent experience in the paid workforce combined with the wife’s age is likely to create barriers for employment although she clearly retains a capacity to undertake paid employment. These circumstances have arisen because of the nature and duration of the parties’ relationship.
In Petterd & Petterd (1976) FLC 90-065 (“Petterd”) Wood J said of s 75(2)(k) in considering an application for spouse maintenance at 75,329:
…The matter to be examined is the extent to which the marriage has affected the earning capacity of the party whose maintenance is under consideration. So that, in the case of an applicant wife, for example, who has, prior to marriage, for many years supported herself in an adequate manner and enjoyed by her own efforts a good standard of living and a socially well-adjusted life, and has, upon marriage, surrendered of her volition this financial independence and the freedom which the interests of the marriage require her to surrender, then, if the marriage subsequently breaks down, the dependent spouse is not necessarily to be expected to go back to fending for herself.
…if by reason of the length of duration of the marriage, the way of life and habits and expectations of the dependent spouse had altered in such a way as to have affected the earning capacity of the claimant spouse, or if a previously existing desire to earn had been lost, or if the need to earn would create anxiety and stress, or require a marked alteration in accustomed life style, then the duration of the marriage could be said to have affected the earning capacity of the party whose maintenance is under consideration.
In Hirst v Rosen (1982) FLC 91-230 Nygh J said of Wood J’s comments in Petterd at 77,250:
For the wife, reliance was placed on the dictum by Wood J. in Petterd and Petterd… where his Honour states that the emphasis is upon the extent to which the marriage has affected the earning capacity of the claimant spouse. It was argued that this passage means that if as a result of the marriage, no matter what its duration, a financial loss has occurred, the claimant should recover compensation for that loss. I agree with the submissions of the learned editors of Australian Family Law and Practice ¶26-630 that this interpretation ignores the use of the word ``duration’’. It also ignores the use of the words ``to the extent to which it has affected the earning capacity of the party whose maintenance is under consideration’’. It is not the impact of the celebration of the marriage by itself, but the erosion which the duration of the marriage has upon the earning capacity which is referred to.
…
…I agree with the interpretation given by Gibson J in Beck and Beck…, to para (k). I would also agree with him that the words “earning capacity” in that paragraph refer to skills in earning money, whether by way of wages or by way of business acumen. Paragraph (k) cannot be read as if it referred to any loss of income as a result of a marriage. “Earning capacity” does not have the same meaning as income. It relates to the ability to earn income which may or may not be commensurate with the income actually received.
In Hobson & Hobson (2020) 61 Fam LR 557 the Full Court allowed an appeal in part as a result of error in the application of s 75(2)(k) and there observed:
34.Much of that outcome ensues from the parties’ disparate earning capacities. Plainly her Honour was mindful of that (at [62]) as s 75(2)(b) of the Act required. However s 75(2)(k) of the Act mandates that in considering any adjustment under s 75(2) “the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration” must also be taken into account. There can be no doubt that the wife’s case before the primary judge was expressly structured by reference to that consideration. Her written submissions to the primary judge filed on 5 July 2019 at paragraph 112 said:
The wife has worked around the children’s requirements. She sacrificed her potential to pursue a more lucrative career. The husband agreed with the proposition that the wife will never be in the same position as him from an income perspective.
(Emphasis added)
35. Indeed at trial, it was not seriously in contention that the wife had made a significant contribution to the husband’s earning capacity, by sacrificing her own career advancement, to say nothing of her participation in the labour market generally. Particularly her sacrifice had enabled the husband to achieve appointment as a self-employed professional, with the attendant opportunity — in this case realised — for an increase in income which that might bring. The simple fact is that the husband’s earning capacity had been built up during the parties’ relationship at the expense of the wife.
36. A clearer example of a need for real weight to be given to s 75(2)(k) of the Act is difficult to envisage. The fact that the wife, on a contributions basis, was nonetheless entitled to a significant sum, did not diminish that need.
Here the Court is not considering the position of a dependent spouse but rather the impact that the duration of a marriage has had on someone where someone has effectively been the primary carer for children and self-employed in a family partnership and now finds themselves post‑separation in a different position as that partnership is wound up and it is agreed that the husband will retain the farm and business and corresponding income received.
Treatment of ongoing R Finance payments
Apart from farming income which is subject to the vagaries of the season the husband will continue to earn income from the funds under administration in his business and he will be in receipt of income from the R Finance policy. The wife, on the other hand, after the partnership is wound up will be entitled to rents from the Suburb D property if she continues to operate it as a rental property but will otherwise be without income.
The husband will have a significantly greater income stream on any view. Although, as raised with the parties during submissions it is important that I not double count the financial planning income since it is reflected in the value attributed to that entity on the balance sheet.
As already discussed, the husband is entitled to receive payments under his policy of insurance until he turns 65 (subject of course to remaining compliant with the terms and conditions of the insurer). At present the policy pays him approximately $391,860 annually upon which he is obliged to pay income tax.
As discussed above, the wife sought to bring the policy to account as a financial resource of the husband in the capitalised sum of $1,715,000. I have determined not to do so. It strikes me that whether I regarded the entitlements of the husband to received payments from R Finance as a financial resource or as income may be a distinction without a difference since I accept both that I am required to have regard to these payments and that the expectation that the husband will receive these payments places him in a different situation than that of the wife.
I have also, as against that, taken into account the terms of the property order which I propose to make which will leave a greater share of the parties’ assets with the husband: s 75(2)(n) of the Act. It is also relevant, as discussed above, to consider the income earning capacity of those assets.
I have concluded on the basis of the unchallenged evidence of the husband’s new wife that she is financially dependent upon him.
Having considered each of the above matters (all save for the last which favour the wife) I am satisfied that it is necessary to make an adjustment of 5 per cent in the wife’s favour to take into account those matters. In this pool 5 per cent is $1,038,259 (rounded to the nearest dollar).
The overall adjustment will see the husband receive 55 per cent of the property and the wife 45 per cent of the property.
The husband sought injunctions designed to protect his income. The application arises from the evidence set out in paragraphs [231]–[233] of the husband’s affidavit, which I accept. I did not hear any submissions opposing this course and propose to make the orders as proper in the circumstances.
Both parties sought to retain the shares in C Pty Ltd. Those shares are in the name of the wife and she is the sole director of the company. The husband for his part indicated a desire to obtain the shares as part of the structure which has operated the Mason Group. The husband is at liberty to acquire a new company to undertake this function and I propose to leave the shares with the wife. This leaves the Division 7A liability with the wife as well. The husband established a new trust after separation, the Mason Financial Services Trust.
Given the assets and superannuation of the parties at the commencement of the relationship. The size of the superannuation entitlements and the parties’ ages no party sought that there be a separate pool for superannuation nor did any party seek a splitting order.
CONCLUSIONS
The wife wants to keep Suburb D. I accept that if she is unable to keep Suburb D then the sale of the property will incur a CGT liability. The parties agree that the liability for CGT will be in the approximate sum of $254,828. Obviously this may change if the sale price is different from the valuation evidence. The orders I will make will permit the wife to retain Suburb D if she elects and accordingly I have not included the CGT in the assessment of the parties’ financial position set out below.
As indicated above I have structured the adjustment of the parties’ assets to provide them with the opportunity to retain the assets they seek to retain.
What the husband retains:
The husband has the following property in his name or such of it as may be the wife’s name is to be transferred to the husband (with the wife’s agreement):
ASSETS Farming Enterprise Farm - F Property Land $8,323,000 Farm – F Property House $753,000 License $324,000 Total F Property (incl License) - rounded values $9,400,000 Farm – 3 G Street $2,850,000 Farm Machinery excl GST $859,015 Farm - livestock $420,750 Total farm assets $13,529,765
Off Farm Assets Personal Cash – Mr Mason (E Bank account) $14,918 Mason Family Trust (…19) $260 W Pty Ltd Business $2,204,500 Q Company Cash (…67) $42,779 Mr Mason Motor Vehicles 1 & 2 & Motor Vehicle 3 $305,000 Other Assets -Animals $29,000 Mr Mason FF $20,759 GG Shares (half) $782 FF Shares (owned by W Pty Ltd) – 50% of the value $14,977 Partial property settlement $27,000 Interim payment $175,000 Total Gross Assets $16,364,740
SUPERANNUATION Mr Mason Super $312,003 Total Superannuation $312,003
LIABILITIES Farm line of credit $2,599,929 Mr Mason Motor Vehicles 1 & 2 & Motor Vehicle 3 Loan $203,156 Equipment hire purchase $3,037 Husband tax FY 2022 $154,619 Husband Tax FY 2023 $170,510 Total liabilities $3,131,251
The husband therefore has net assets (including superannuation) of $13,545,492.
As discussed above he should also be at liberty apply the partnership funds to the expenses of the partnership prior to winding up (and they have been excluded from the above table).
What the wife retains:
The wife has the following assets in her name or it is agreed between the parties (or I have determined) they will be transferred to her:
ASSETS QLD Suburb D $4,200,000 M Street, Suburb N $5,250,000 Personal Cash - Ms Mason $275,000 Ms Mason Motor Vehicles (excl Motor Vehicle 4) $35,000 Partial property settlement $375,000 C Pty Ltd (…32) $40,389 GG Shares shares (half) $782 Total assets $10,176,171
SUPERANNUATION Ms Mason Super $311,802 Total Superannuation $311,802 LIABILITIES Tax liability FY2023 C Pty Ltd $68,638 Suburb D Mortgage $1,881,979 Wife Tax FY 2023 $110,034 C Pty Ltd Div 7 Loans $1,207,640 Total liabilities $3,268,291
The wife has net assets inclusive of superannuation in the sum of $7,219,682.
It is necessary to make adjustments from a net pool which totals $20,765,174. To effect a 55/45 division the wife would need to have assets or cash totalling $9,344,328. This requires a payment from the husband of $2,124,646.
Furniture
Both parties sought some specific items of personal property. This was not a subject which received much attention at trial. I will make orders to facilitate each party retaining items where that is agreed and the property is on both parties’ cases able to be located and in this regard I have read their respective affidavits dealing with this topic. Otherwise, the wife will retain that which is located at Suburb D and Suburb N and the husband will retain that which is located at F Property.
I certify that the preceding one hundred and forty-three (143) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 7 November 2023
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