Midden and Galloway and Ors
[2015] FCCA 11
•25 February 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MIDDEN & GALLOWAY & ORS | [2015] FCCA 11 |
| Catchwords: FAMILY LAW – De facto property – asset by asset or global approach – credit – make-up of the property pool – contributions – s.90SF factors. |
| Legislation: Family Law Act 1975 |
| Bevan & Bevan [2013] FamCAFC 116 Elias & Elias (1977) FLC 90-267 Figgins & Figgins (2002) FLC 93-122 Kessey & Kessey (1994) FLC 92-495 Hickey & Hickey & Attorney-General for the Commonwealth of Australia [2003] FamCA 395 Jones v Dunkel (1959) 101 CLR 298 Jordan & Jordan [1996] FamCA 15 Pierce & Pierce (1999) FLC 92-844 Kyriakos & Kyriakos & Anor [2013] FCCA 1249 Stanford & Stanford [2012] HCA 52 W & W [2000] FamCA 1302 Weir & Weir (1993) FLC 92 -338 |
| Applicant: | MR MIDDEN |
| First Respondent: | MS GALLOWAY |
| Second Respondent: | MR Y |
| Third Respondent: | MR P |
| File Number: | DNC 199 of 2012 |
| Judgment of: | Judge McGuire |
| Hearing dates: | 20 – 23 October 2014 |
| Date of Last Submission: | 23 October 2014 |
| Delivered at: | Melbourne |
| Delivered on: | 25 February 2015 |
REPRESENTATION
| Counsel for the Applicant: | Ms Truman |
| Solicitors for the Applicant: | DS Family Law |
| Counsel for the First Respondent: | Mr Gordon |
| Solicitors for the First Respondent: | Butlers - WA |
| Counsel for the Second Respondent: | Mr Baldry |
| Solicitors for the Second Respondent: | Butlers and Pipers |
| Counsel for Third Respondent: | In person |
ORDERS
That it is declared that Mr Y (subject to orders made in this Court on 20 October 2014) and Mr P hold the proceeds of sale of properties situate at [A] (“the [Mr Y] & [Mr P] [A] properties”) on trust for the Applicant and first Respondent pursuant to resulting trusts.
Within one hundred and twenty (120) days of the date of these orders the applicant shall:
(a)Pay to the first respondent a lump sum of $414, 236.00 but such amount to be adjusted only to take into account any costs and disbursements of sale including capital gains tax struck from any sale and settlement of sale of the properties at Property [M] and Property B, both in South Australia or either of them within 120 days of the date of these orders providing that should such sale(s) not be settled within 120 days of the date of these orders then the full amount of $414, 236.00 becomes immediately due and owing.
(b)Transfer all his right, title and interest in the following to the first respondent absolutely:
(i)Any interest in the [T] Trust (“[H] Pty Ltd” as corporate trustee) and the [B] Family Trust and the assets held within those trusts but subject to these orders;
(ii)All personalty and chattels in the possession of or under the control of the first respondent as at the date of these orders;
(iii)The balances of any bank accounts or like investments in the name of or to the benefit of the first respondent as at the date of these orders;
(iv)Any superannuation policy or entitlement of the first respondent;
(v)The proceeds of sale of the [A] unit held by the third Respondent, Mr P, in an agreed sum of $99, 737; and
(vi)[W] Pty Ltd.
(c)Be solely responsible for and indemnify the first respondent in respect of the following:
(i)Any and all liabilities attaching to any of the assets to be retained by the applicant pursuant to these orders but subject to these orders;
(ii)Any and all liabilities incurred by the applicant since separation in either joint names or in his name alone; and
(iii)The Viridian line of credit with Commonwealth Bank of Australia and to take all reasonable and bona fide action to obtain a release for the first respondent in respect of her liability under the Viridian line of credit.
That contemporaneously with the payment referred to in order 2(a) hereof the first respondent shall:
(a)Transfer and/or vest all her right, title and interest and do all things necessary and sign all documents so as to so transfer her right, title and interest (whether under any trust or otherwise) in the following to the applicant absolutely:
(i)[E];
(ii)[C] business;
(iii)The property situate at Property [P] in the Northern Territory;
(iv)The property situate at Property [M] in South Australia;
(v)The property situate at Property B in South Australia;
(vi)The property situate at Property [S], Darwin in the Northern Territory;
(vii)All personalty and chattels in the possession of and under the control of the applicant as at the date of these orders;
(viii)The balances of any bank accounts or like investments in the name of or to the benefit of the applicant as at the date of these orders;
(ix)The Volkswagen motor vehicle registered number [omitted];
(x)The Isuzu utility motor vehicle registered number [omitted]; and
(xi)All benefits and entitlements of the [Mr Midden] Super fund.
(b)Be solely responsible for and indemnify the applicant in respect of the following:
(i)Any and all liabilities attaching to any of the assets, including assets held within trusts, to be retained by the first respondent pursuant to these orders but subject to these orders;
(ii)Any and all liabilities incurred by the first respondent since separation in either joint names or in her name alone; and
(iii)Any and all liabilities of the [T] unit Trust and/or the [B] Family Trust.
That within twenty-eight (28) days of the date of these orders the third Respondent, Mr P, pay to the first Respondent a lump sum of $99, 737.00 (being the agreed proceeds of sale of the “[Mr P] [A] unit”) and for these purposes the first respondent cause a copy of these orders to be served on Mr P at his notice of address for service or personally served as soon as practicable.
That within twenty-one (21) days of the date of these orders the first respondent provide to the applicant’s solicitors withdrawals of caveats together with bank cheques in the amounts required to lodge such withdrawals in respect of any caveat(s) remaining lodged by her or on her behalf against titles to the properties situate at Property [M] and Property B, both in South Australia.
That each of the applicant, first respondent, second respondent and third respondent be otherwise entitled to those items of property currently in the possession or control of each of them and to the exclusion of any other party.
That there be liberty to applicant and/or the first respondent to apply for machinery/consequential orders should the applicant be unable to fund the cash payment to the first respondent required by order 2(a) hereof.
That there be liberty to the parties or either of them to apply in respect of any reserved or outstanding costs issues such to be by way of application-in- a case supported by affidavit.
IT IS NOTED that publication of this judgment under the pseudonym Midden & Galloway & Ors is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT DARWIN |
DNC 199 of 2012
| MR MIDDEN |
Applicant
And
| MS GALLOWAY |
First Respondent
| MR Y |
Second Respondent
MR P
Third Respondent
REASONS FOR JUDGMENT
Background
These are property settlement proceedings pursuant to section 90SM of the Family Law Act 1975 (“the Act”). The primary parties, the applicant and first respondent, were in a de-facto relationship between 1995 and their separation in January 2012.
The applicant, Mr Midden, is 58 years old by the time of this judgment. The respondent, Ms Galloway, is now 67 years of age.
The applicant is a self-employed [omitted] living and working in Darwin.
The respondent is the director of a company, [W], which, insofar as I can fathom, is involved in [omitted]. The respondent’s trial affidavit, however, at paragraph 225 refers to a company known as “[U] Pty Ltd” Nevertheless, cross-examination of the first respondent centred on [W] and did not mention [U]. I expect that the company structure is under the one umbrella and perhaps indicative of the respondent’s historical dealings with companies and trusts and her understanding generally of complex financial structures.
At or around the date of commencement of cohabitation the applicant was involved in litigation in Western Australia in respect of the winding up of a farming partnership. There seem to have been a number of interconnected suits and the applicant was cross-examined at length as to what he recouped from this doomed farming venture, together with his legal costs of the litigation and how they were met.
In March 1997 the parties purchased a property at [L] in Western Australia for approximately $600,000. The evidence suggests that the settlement was not finalised until sometime in 1999.
For about 20 months from September 1999, the parties lived predominantly overseas. During that time the first respondent operated a [omitted] business. She apparently did so with some financial success, although the extent of her income remains in dispute. The applicant travelled with her, as did the first respondent’s youngest son for periods. During this time the applicant was not generally or consistently employed otherwise than in assisting the first respondent with her business and as homemaker.
In January 2000 the applicant and the first respondent (or perhaps primarily the first respondent) negotiated the purchase of a property in [A]. The antecedents to this purchase and its relevance in the current proceedings are complex and best put in the words of the first respondent’s trial affidavit at paragraphs 77 and following, thus:
In early 2000, [Mr Midden] and my 3 sons decided that [A] would be a great spot to have a permanent base in Europe, as they all loved snow skiing. With that in mind, [Mr Midden] and I investigated the possibility of buying a property in [A].
We spent some time looking at properties, but at the time, all that was available in the area that we had chosen, [omitted], was a four-bedroom, four-bathroom apartment for sale for the equivalent of AD$228,000.
[A] law stated at the time that a foreigner may only own one property. The apartment that [Mr Midden] and I were considering was on two titles. It therefore constituted 2 properties.
[Mr Midden] and I were also interested in acquiring a chateau as our one property, so we made the decision to put the apartment into two of my son’s (sic) names.
[Mr Midden] and I purchased the property in 2000. My second son, Mr Y, went on to the title of one of the properties and a family friend, Mr P went on to the title of the second property to act as trustee for my third son, Mr N, who had not reached the age of 18 years at the time of the purchase.
The upkeep of the properties cost approximately $4000 per year in body corporate fees.
I am estranged from my son, Mr Y, and I have not spoken to him for several years. Mr P has recently reiterated that it is his belief that his role was of trustee for Mr N.
[Mr Midden] is in regular contact with my son, Mr Y.
I am told that the [A] properties were the subject of orders within general property alteration orders between the applicant and the first respondent in previous first instance proceedings in this court. A subsequent appeal was successful in respect of orders made by the trial judge dealing inter alia with those [A] properties. The matter generally has now been remitted for hearing before me. Importantly, subsequent to the previous trial, the [A] properties have been sold and the previous difficulties of an Australian court attempting to negotiate [A] property law no longer exist. It is now the proceeds of sale which is in dispute and in the hands of various of the parties.
Mr Y and Mr P were joined as parties to these proceedings. Mr Y was initially represented by counsel at the commencement of the trial before me. However, prior to the taking of any evidence, leave was given for counsel to withdraw and Mr Y took no further part in the proceedings. It was the first respondent’s position at all times, and remains so, that neither she nor the applicant held or hold any legal or beneficial interest in the [A] properties or the proceeds of sale thereof. To the contrary, it is and has always been the applicant’s position that he and the first respondent hold a beneficial or equitable interest in those properties by reason of resulting trusts. The commencement of evidence before me was delayed whilst counsel for the applicant and counsel for the second respondent, Mr Y, entered into some negotiations. This resulted in a collateral agreement between those two parties only that Mr Y would pay to Mr Midden a sum of $49,180. I was requested to and made orders by consent between those two parties on the first day of the trial as follows:
On the basis of the first respondent advising the Court that she claims no legal or equitable entitlement to the proceeds of the sale of the properties situated at [A] (“the [A] properties”), the applicant and second respondent seek the Court to make the following orders by consent between the applicant and second respondent:
(1) That the second respondent pay to the applicant the sum of forty nine thousand, one hundred and eighty dollars ($49,180) within 14 days to be paid into the trust account of the applicant’s solicitor.
(2) That the payment to the applicant in accordance with order 1 is deemed to be a payment in full and final satisfaction of any and all claims by the applicant against the second respondent in relation to the proceeds of the sale of the properties situated at [A] (“the [A] properties”).
(3) The second respondent is hereby excused from further attendance and participation in these proceedings.
(4) In respect of the applicant’s claim against the second respondent, both the applicant and the second respondent bear their own costs.
AND THE COURT ORDERS:
(5) Counsel for the second respondent have leave to withdraw.
THESE ORDERS ARE MADE ON THE BASIS THAT THE FIRST RESPONDENT DOES NOT OBJECT IN ANY EVENT AND DOES NOT ARGUE THAT THE OWNERSHIP BY [Mr Y and Mr P] REPRESENTED A RESULTING TRUST, BUT SHOULD THE COURT FIND A RESULTING TRUST EXISTS OR EXISTED, THEN COUNSEL FOR THE FIRST RESPONDENT RESERVES THE RIGHT TO ARGUE $49,180 BE INCLUDED IN THE POOL AS BETWEEN THE APPLICANT AND FIRST RESPONDENT.
The matter was further complicated by the non-appearance by or anyone on behalf of the third respondent, Mr P, at the Court. No material was filed by Mr P. The court file showed, however, an affidavit purported to be filed by Mr N who is the youngest son of the first respondent. The cover page to that affidavit did not disclose who caused the affidavit to be filed and no one claimed its “ownership” before the Court. Mr Gordon, counsel for the first respondent, confirmed that he did not represent Mr N (who by this time is an adult) and arguably the beneficiary of the “[Mr P] [A] property” held on trust. It seems that Mr N took it upon himself to file an affidavit but at no stage has he ever sought to be joined as a party to the proceedings in his own right. Having said that, it seemed that there is some cordial relationship between the first respondent and her son, Mr N. They were observed sitting together in the back of the Court. It eventuated that the first respondent did not rely on Mr N’s affidavit. Mr N himself did not seek leave to be joined as a party and was observed to leave the Court early on the first day of the trial. Mr P played no part in the proceedings. The affidavit of Mr N was not read in evidence.
Counsel for the second respondent, Mr Y, was able to assist the Court to a degree in that he had apparently spoken with Mr P shortly before the start of the trial. It was confirmed that the [A] properties had been sold and that part payment of sale proceeds had been received by Mr P with the remainder forthcoming. I then made an order, without opposition, to the effect that the third respondent, Mr P, be restrained from dealing with or disbursing the proceeds of sale of the [A] unit.
In September 2003 the applicant, Mr Midden, purchased a property at Property B, South Australia, as tenants in common in equal shares with Mr T. The applicant had previously purchased a separate South Australian property in 1990 at [M] with Ms T as tenants in common as to a 50 per cent interest. Ms T is the wife of Mr T.
In January 2004 a trust was created known as the [T] Trust. The Trust Deed clearly shows it as a unit trust. The status and/or validity of that trust is an issue now before me in that it may have operated effectively as a discretionary trust.
In 2004 the parties sold the [L] property and purchased a [omitted] business at [J] in Western Australia known as “[J].” The source of funds for the purchase of that property is in dispute. The [omitted] business was not successful and had been disposed of by July 2005.
In October 2006 the applicant purchased a business in Darwin, “[C] business”, for $30,000.
By July 2008 both parties were ensconced in Darwin and living in a home owned by the applicant at [S], Darwin and which had been purchased by him well prior to the commencement of cohabitation.
In 2008 the applicant and first respondent purchased a home unit at [T] apartments in [omitted]. The purchase was made through the [T] Trust. The purchase price was $295,000. That property was sold in 2009 for $345,000. The parties then purchased a residence at [P], for $620,000. A Viridian line of credit was obtained to assist with these purchases. The [T] Trust was again used as an instrument for the purchase.
In November 2009 the first respondent established and registered a company called [H] Pty Ltd (“[H]). In December 2009 [H] was appointed as corporate trustee for the [T] Trust and replacing the applicant.
The parties separated in January 2012.
In April 2012, the first respondent provided a letter to the applicant signed by her as “Trustee for the [B] Family Trust” claiming a “special resolution” of unit holders and directing him as “director of the corporate trustee of [T] Trust” to:
(1) sell Property [P];
(2) close the trust bank accounts and mortgages;
(3) sell [C] business;
(4) extricate [E] business from the trust;
(5)put all proceeds of sale into the trust account of the first respondent’s solicitors.
The [B] Family Trust seems of some longstanding and perhaps pre-dates the relationship between Mr Midden and Ms Galloway. The latter has previously been known by the name “[Y]”.
Proceedings were commenced in this court by the applicant on 21 May 2012. On 29 May 2012 injunctive orders were made by consent restraining the parties or either of them from dealing with the property of either of them, or the trusts, or associated companies, together with an order for disclosure/discovery to be made by the first respondent.
On 27 June 2012 a successful application was brought to have
Ms Galloway vacate the [S] property by 11 July 2012. That order was made on conditions as to financial assistance for Ms Galloway to relocate herself.
Orders sought by the applicant
Counsel for the applicant leaves open for the Court to adopt either a global or an asset-by-asset approach to the alteration of the property pool but urges the latter approach.
Counsel properly observes that, whatever the approach, the result on the applicant’s case is almost the same in respect of a cash adjustment to be paid by the applicant to the first respondent which on a strict asset-by-asset approach would be, on counsel’s submissions, an amount of $385, 237.
Effectively, on the global approach, the applicant argues that the first respondent should receive 30 per cent of the pool of tangible assets but leaving out of that pool the applicant’s interests in the two properties in South Australia which have in his hands a total equity of $373,000. The applicant argues, on either approach, that there was no contribution whatsoever by the first respondent in these two properties.
The applicant says that the first respondent’s cash entitlement should include any moneys owing to the parties from the third respondent,
Mr P, in respect of the [A] property held by him and on account of a resulting trust in their favour.
The applicant argues that the first respondent should have no entitlement to the applicant’s superannuation fund by reason of it being accrued entirely by contributions prior to cohabitation and post-separation.
The applicant also seeks a declaration from the Court that the [T] Trust is invalid. That argument is based on the use of the trust by the parties during the relationship as a discretionary trust rather than a unit trust.
Orders Sought by the First Respondent
The first respondent seeks an order for a 50 per cent distribution of the parties’ property inclusive of superannuation. Inherent in that settlement is that she receive the property at [P], Darwin unencumbered. That property has an agreed value of $690,000.
The first respondent does not argue that she or the applicant have any entitlement from the [A] properties. However, it was made clear by her counsel that should the Court consider the beneficial interest of both or either of those properties to rest with the primary parties pursuant to a resulting trust then she would claim a 50 per cent interest.
The first respondent argues that there should be an “add-back” to the property pool for the applicant’s paid legal costs of “about $220,000” which the first respondent says have been paid out of the parties’ Viridian Line of Credit since separation together with other unspecified or un-particularised expenditure allegedly made by the applicant from the viridian line of credit post separation.
The Issues
Following the taking of evidence and considering the parties’ affidavits, I can identify the following major issues between them:
a)whether the Court should adopt an asset-by-asset approach or a global approach in alteration of their property interests?;
b)the make-up of the property pool including:
i)should the interests of the applicant in two South Australian properties be included in the pool (noting that the applicant argues that the Court should not include those interests whether or not it prefers the global or asset-by-asset approach)?
ii)should the applicant’s superannuation entitlements be included in the property pool?
iii)Should the proceeds of sale of the [A] properties or either of them be included in the property pool?
iv)Should the applicant’s paid legal costs be “added back” to the pool and/or the first respondent’s paid legal costs be added back?
v)Should the applicant’s business “[E]” be included in the pool at value of $170,000 or is it without tangible value?
vi)Should the [T] Trust be declared invalid?
vii)What were the initial contributions of the applicant and the first respondent and how should those contributions now be treated?
viii)What were the contributions by the applicant and the respondent during the relationship and what weight should be accorded them?
ix)Issues of credit including allegations of non-disclosure against both primary parties and also that the first respondent has wilfully destroyed documentary evidence relevant to the forensic exercise in determining the parties’ entitlements; and
x)Whether any of the factors under s.90SF of the Act are relevant?
The Evidence
The applicant relied on his two affidavits sworn 20 June 2013 and 12 September 2014 together with a financial statement sworn 12 September 2014. He adduced evidence from Ms T. She gave evidence by telephone. Her affidavit sworn 18 June 2013 was read into evidence.
Ms T confirmed that caveats remain placed against the titles to the two South Australian properties owned by the applicant with her and her husband. There was no further cross-examination.
The first respondent relied on her affidavit sworn 23 June 2014. She adduced no evidence from witnesses.
Both the parties tendered a number of documents in evidence.
As previously mentioned, an affidavit filed by Mr N was not read into evidence. Similarly, an affidavit of Mr Y was not read into evidence given that leave for Mr Y and his counsel not to participate in the proceedings was granted at the start of the trial.
Relevant Law
Alteration of property interests between de facto couples is provided for in Part VIIIAB of the Act. There is no dispute in this matter that the parties were in a de facto relationship for approximately 17 years.
Section 90SM authorises a discretion in the Court to make such order as it considers appropriate in altering the property interests of parties.
“Property” is defined in section 4(1) as “…property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.”
Section 90SM(3) of the Act has assumed some significance following the recent decision of the High Court in Stanford & Stanford[1] where the High Court emphasised that the Court should not make orders altering interests in property of the parties unless it is satisfied that it is just and equitable to do so in all the prevailing circumstances. Nevertheless, the High Court also recognised that the issue of whether it be just and equitable to alter such interests is not one that would commonly trouble Courts. In the matter now before me the parties were in a relationship for some 17 years. They jointly purchased and held title to various properties. They each claim and acknowledge contributions both directly and indirectly. Their relationship has now come to an end. I am satisfied that it is proper, therefore, to alter their property interests.
[1] [2012] HCA 52
It was until recently generally accepted that a trial judge would follow a set multi-step process in altering property interests. First, the Court was to determine the nature of the property pool and attribute valuations. For these purposes, superannuation was to be treated as property. The date of the trial would normally be the relevant date for ascertaining the pool and attributing value.
Secondly, the court would consider the contributions of the parties to the property pool, including direct and indirect financial contributions and non-financial contributions often in the form of homemaker or parent.
Thirdly, and after considering entitlements based on contributions, the Court would determine whether any further adjustments to either party’s entitlement was proper, given the considerations under section 90SF of the Act (or section 75(2) in the case of married persons).
Fourthly, and as a final step, the trial judge would “stand back” and consider whether the proposed distribution is just and equitable pursuant to section 90SM(3).
The High Court in Stanford (supra) and soon thereafter the Full Court in Bevan & Bevan[2] observed that the “four-step” approach should not be rigidly followed but that the notion of “justice and equity” should permeate the entire process or that the earlier consideration of justice and equity not be conflated with simply a formulaic consideration of contributions.
[2] [2013] FamCAFC 116
Significantly, the Court in Bevan (supra) addressed the common practice of trial courts making “notional add-backs” to a property pool where an asset might have been dissipated by one of the parties following separation or, relevant here, where a party has paid legal costs between separation and the date of the trial thereby arguably diminishing the value of the pool. Given that the High Court in Stanford and the Full Court in Bevan agree that the initial task for the trial judge is to determine the legal and equitable interests of the parties in property as at the date of the trial, it is generally accepted that that section s.90SF(r) might be the preferred mechanism for dealing with such matters (s.75(2)(o) when dealing with married persons).
On considering the recent jurisprudence, I take the view that it is still appropriate to address the four steps articulated by a previous Full Court in Hickey & Hickey & Attorney-General for the Commonwealth of Australia[3] but after first determining whether it is just and equitable to alter the parties’ property interests independently of a simple assessment of contributions.
[3] [2003] FamCA 395
Issues of Credit
Issues and allegations in respect of the credit of the primary parties feature prominently in this matter, with each party challenging the honesty and memory recall of the other. Similarly each was frequently challenged as to the non-disclosure of documents which might ordinarily corroborate their oral and affidavit evidence and would usually have been expected to be in the possession or control of that party. Certainly, as the evidence was taken it became clear that the forensic exercise for the Court and for one or both of the primary parties was made significantly more difficult by either the non-disclosure or late disclosure of documents.
I had the benefit of seeing and hearing each of the primary parties give their evidence and be cross-examined.
I generally consider the applicant, Mr Midden, to be a truthful witness. He was challenged in great length and detail in respect of litigation in the Supreme Court in the mid-1990s. Whilst he clearly suffered some memory difficulties in respect of detail, I did not consider his evidence to be dishonest, unresponsive or evasive. He often gave his evidence in a laconic fashion but was prepared to make concessions and often against interest. A particular instance was his ready admission as to removing a sum of approximately $30,000 and into his mother’s bank account. Generally, he withstood vigorous cross-examination and in my view was honest and responsive although not always a good historian.
I did not find the first respondent, Ms Galloway, generally to be a good or credible witness. She was often argumentative, unresponsive and evasive in her answers in cross-examination. Her evidence at times was contradictory and I gained the impression that she was at times keen to a fault to shore up her own case. She impressed me as an able and intelligent person well versed in financial matters, but prone to be argumentative or selective in her evidence and disclosures in cross-examination. Unlike the applicant, the first respondent, was steadfast in her refusal to make concessions in favour of the applicant or against interest. Any such concession that was forthcoming was only at the last moment and only when “cornered” by intrusive cross-examination.
I generally found the first respondent to be an unimpressive and unsatisfactory witness and not always a witness of the truth in its fullest sense.
Issues of disclosure feature prominently here. The first respondent is accused of destroying and doctoring documents relevant to these proceedings and which by implication do not assist her case. The applicant’s affidavit sets out the efforts made by his legal representatives and the plethora of interlocutory procedure and orders undertaken to obtain disclosure from the applicant. That evidence was not substantially challenged. Ms Galloway has historically engaged in a complex web of family trusts and companies and such disclosure is relevant. I am satisfied on the balance of probabilities that the first respondent has avoided making disclosure where such disclosure might harm her case or assist the applicant’s case and such that has been made has occurred only at the last moment including during her cross-examination before me in what was, of course, the second trial of these issues, and certainly not in a voluntary fashion. A partly burned and retrieved document was tendered in evidence before me. Frankly, the first respondent’s claim that she habitually burned aged or irrelevant documents was unconvincing and I prefer, on the balance of probabilities that she has entered into a deliberate course of burning or disposing of relevant documents for the direct purpose of destroying evidence that is not supportive of her case in this court. Similarly, I find that the first respondent’s affidavit material is selective, misleading and often not representative of her true position. For example, it was only in Ms Galloway’s cross-examination before me at the end of this trial that she disclosed the full extent and nature of her interest in [W] Pty Ltd and the income, both actual and potential, of that company and business. Similarly, her affidavit evidence in respect of her alleged contributions of shares from an uncle was far removed from the picture that eventuated from her cross-examination.
I am satisfied generally that the first respondent has avoided her obligations as to disclosure and specifically and deliberately avoided compliance with informal requests, Court orders and notices to produce.
Consequently, whereas I observed the applicant to be a laconic but honest witness, I find that the first respondent to be selective, evasive, unresponsive, avoidant, to the stage at times of dishonesty. Those findings are compounded or aggravated by what I observed to be an intelligent and financially astute woman.
It follows that where there is conflict in the evidence of the parties as to historical fact, I generally prefer the evidence of the applicant. Being satisfied that there has been deliberate non-disclosure by the first respondent and that she has destroyed relevant documents, the principles in Weir & Weir[4] are relevant and I am comfortable that I should not be unduly cautious in making findings of fact in favour of the applicant if necessary and where documentary evidence has not been disclosed or has been destroyed
[4] (1993) FLC 92 -338
THE PROPERTY POOL
Much of the pool of property and values have been agreed. The following are the remaining issues:
The [A] properties
The circumstances and background of this purchase are set out above. The first respondent’s position is curious in the extreme. At no point in her affidavits or in her oral evidence can I identify her as asserting that the titles were “gifted” to either Mr Y or Mr P (on trust for Mr N). Indeed, and to the contrary, Ms Galloway uses language consistent with her own beneficial interest remaining in the property. She paid for the outgoings and maintenance. She paid the arrears to retrieve the property from a forced sale. Significantly, she sets out her motive in putting the titles into names other than her own being the prospect of she and Mr Midden purchasing another property in [A]. Yet the first respondent steadfastly argues that she and Mr Midden hold no legal or equitable interest in those properties or now in the proceeds of their sale. She maintained that position even given the financial agreement reached between Mr Y and Mr Midden on the first day of this trial whereupon Mr Y paid to Mr Midden a sum of $49,180 in consideration of Mr Midden not pursuing a claim in this court against the title registered in Mr Y’s name or the proceeds of sale thereof.
The principles in respect of presumptions of advancement or resulting trusts are well settled and as I noted in Kyriakos & Kyriakos & Anor[5]:
It is usual that when a donor purchases a property in the name of another, or transfers property to another, equity will apply a presumption of a resulting trust with the recipient holding on trust for the donor. However, where the donor and the recipient stand in particular relationships, then the presumption is one of advancement rather than of a resulting trust. Transfers from husbands to their wives and from parents to their children raise presumptions of advancement. A presumption of a resulting trust assumes that the recipient was not meant to receive the property beneficially. On the other hand, the presumption of advancement presumes an outright gift was intended. Each presumption can be rebutted. Presumption of a resulting trust is rebutted by evidence of an intention to make a gift. Presumption of advancement obligates the donor to show that they formed no intention to make a gift to the recipient thereby rebutting the presumption and enlivening a resulting trust. It seems, therefore, that the intention of the donor is crucial to both the presumption and its rebuttal. It is the intention of the donor at the date of transfer or advancement which is relevant: Calverly v Green (1984) 155 CLR 242 at 246-251. Traditionally, therefore, a feoffment to a stranger raised a presumption of a resulting trust whereas a feoffment to a child raised the presumption of advancement on the basis of natural love and affection supplying the consideration.
[5] [2013] FCCA 1249 at [53]
The applicant here firmly argues that the titles were advanced on resulting trusts. He says that there was no gift. He says that the evidence of the first respondent herself clearly evidences a resulting trust and rebuts the presumption of advancement. I find merit in this argument and note again that the first respondent could simply have asserted a gift but has not done so. She did not elaborate on her relationship with Mr N in either affidavit or oral evidence. She did not cause either Mr P or Mr N to give evidence to corroborate her implied (but not expressed) position of a gift or advancement. Such evidence may, of course, not have assisted Ms Galloway’s passive position in respect of these properties and it is therefore open for me to make negative inferences accordingly pursuant to the principle in Jones v Dunkel[6]. On consideration I do draw the inference that the evidence of Mr N and Mr P would not have assisted the first respondent on this point and given the totality of other relevant evidence. Her own evidence is consistent with and, in my view, rebuts the presumption of advancement to Mr Y or Mr P, as trustee for Mr N. Ms Galloway funded the purchase. She funded the maintenance and the costs prior to sale. The motive for placing the titles in the names of Mr Y and Mr P was to allow the purchase of other [A] real estate and to circumvent [A] property ownership laws.
[6] (1959) 101 CLR 298
Given my findings of credit in respect of the first respondent, it is tempting to speculate as to her motive in not seeking to include a valuable asset in the pool of property. Obviously, if I were to find that the advancements to [Mr P] and [Mr Y] constituted gifts then neither title, nor the proceeds of sale thereof, enter the property pool. As I have said, this is a curious position to be taken by the first respondent given that her own evidence is blatantly inconsistent with gift but consistent with resulting trust. Speculation might lead me to consider my observations as to the nature of the relationship between Mr N and his mother, the first respondent. They were seated together during the short time that Mr N was in Court. Of course, if the [A] properties (or the proceeds of sale in their hands) are to be excluded from the pool then legal entitlement stays with Mr N and with Mr Y. It would be then open for them to make any commercial arrangements that they see fit. Nevertheless, it is not the task for this Court to speculate. That particular issue was not explored to any extent in cross-examination and, as I have said, Mr N’s affidavit was not read into evidence and he was not presented for cross-examination. Certainly I have no evidence of any intended collateral agreements and counsel for Mr Midden did not engage in such speculation.
Rather than speculation, I am left with the evidence given and adduced, together with the applicable legal principles. I am satisfied, therefore, and on the balance of probabilities, as to the following:
a)That the [A] properties were purchased by the primary parties with funds provided by the first respondent and the titles placed into the names of Mr Y and Mr P (on trust for Mr N);
b)That the presumption of advancement is rebutted on the evidence and that there is a resulting trust in favour of the first respondent and the applicant.
In making these findings, I note that Mr P was on notice as to these proceedings and joined as a party, but elected, for reasons best known to him, not to participate. I am satisfied, therefore, that the proceeds of sale of the title held by Mr P should be included in the property pool. I note that an injunctive order has been made in respect of him disbursing those proceeds. The uncontroversial figure given is of there being one cleared cheque for $23,890 and an uncleared cheque for 52,500 Euros which amounts un-controversially at the time of trial to a total of $99,737. That figure will be included in the property pool for distribution between the parties. I do so on the basis generally that the purchase was made during the period of cohabitation and subject to the usual considerations of contributions and other factors.
The position in respect of the second title originally held and disposed of by Mr Y is of a different complexity. Mr Y is the son of
Ms Galloway. They are estranged. Whilst I am satisfied that the presumption of advancement is rebutted as in the “[Mr P] property”, there has been a collateral commercial agreement between Mr Y and Mr Midden. This resulted in Mr Midden receiving cash of $49,180. This transaction was transparent, made at Court, and with the full knowledge of the first respondent, Ms Galloway. Mr Midden now elects not to pursue any interest in the “[Mr Y] property”, whereas he continues to pursue an interest in the “[Mr P] property”. Ms Galloway has always maintained, and still does, that she has no interest in the “[Mr Y] property”. Whilst the Court is not bound by the positions of the parties, justice and equity must prevail within the wide discretion that the Court has in determining and altering property interests. It seems to me that the status of the respective “[Mr Y]” and “[Mr P]” properties has changed. The commercial arrangement between
Mr Midden and Mr Y took place before any findings of this Court as to the status of Mr Y’s title or the proceeds of its sale. Neither of the primary parties (although each for different reasons) now asks me to include the ‘[Mr Y] property proceeds of sale” into the pool. As I have said above, I can only speculate as to the motives of Ms Galloway in not pursuing the proceeds of sale of the [Mr Y] title and, in particular, when she is estranged and in private financial dispute with Mr Y. Nevertheless I am satisfied that the property was held by Mr Y on a resulting trust for Mr Midden and Ms Galloway. Mr Midden has now negotiated its “transfer” to Mr Y at value of $49, 180. Ms Galloway’s concessions do not go so far as to exclude this amount from the pool given my findings as to a resulting trust. Consequently, and whilst sympathetic to the argument put on behalf of Mr Midden in excluding the sum of $49, 180 from the pool, I feel bound to include it given its chronology and the fact that it is clearly an asset at value in
Mr Midden’s hands. I am content to include the interest of the primary parties at $49, 180 rather than at full value given the transparent circumstances of the transaction which occurred at Court with the full knowledge of and lack of opposition from Ms Galloway together with the lack of any other proper valuation evidence before me.
ii) Add-back paid legal costs
The applicant’s counsel in her final address concedes that he has paid $193,000 thus far in legal costs. The first respondent says that he has done so through his use of the parties’ Viridian line of credit since separation. Ms Galloway also alleges that the applicant has paid some personal taxation liabilities from the Viridian account and asks generally (in final submissions) for a sum of $220,000 to be “added back” to the pool of property.
The Court is not assisted in this dispute by a lack of any forensic accounting evidence, particularly of Mr Midden’s income into and expenditure out of the Viridian account. The first respondent alleges that Mr Midden has used the Viridian line of credit for various personal expenditure but does not dispute that it has also been the repository for his income from his [E] business, from the [C] business, and for rental from the [P] property and for outgoings. In final submissions, the following conversation took place between counsel for Ms Galloway and myself:
Mr Gordon: Well, your Honour, the difficulty is that Mr Midden takes it from the Viridian line of credit. We don’t know – included in the Viridian line of credit is not only the [E] but its rent from [P], it’s his management fee as the trustee, and it’s the [C] businesses. So, in terms of the demarcation as to what has been earned, that process has not been done by Mr Midden, so when he says – what he says is …
HH: What do you want me to do with his legal costs?
Mr Gordon: Pardon?
HH: With his legal costs that have been paid, how do you want me to treat them?
Mr Gordon: Your Honour, I would submit that they should be treated as an add-back.
HH: What, in total?
Mr Gordon: Well, your Honour, in relation to it, the – if Mr Midden hasn’t done the exercise then, in terms of it, it would be my submission that they have to go in completely. Your Honour might have a different view but that’s the submission. In terms of this, your Honour, but for the [E] business …
HH: Can you just bear with me a minute? I just want to …
Mr Gordon: Sorry, your Honour.
HH: - - - before we leave this legal costs. So they all will be added back because they all came out of the Viridian account, and there is no breakdown of what was his income and what was the income from mutually owned assets. Is that a fair summary of what you’re saying?
Mr Gordon: Yes, your Honour, and there’s a third aspect to it, and that is in Mr Midden’s own evidence. He says that as a result – I think it was of – his knees, he wasn’t able to do much work and therefore, he has had to rely more on the Viridian line of credit.
HH: So diminished it or .. out, whatever you want to call it.
Mr Gordon: Yes, your Honour
Mr Midden deals with this issue in his trial affidavit at paragraphs 19-25 as follows:
(19)Despite the fact I’ve been working as an [omitted] contractor using my old ABN, I have still deposited all money I earned from [E] into the Viridian Line of Credit to reduce the amount owing and the interest payable. I continue to use the account in the same way I did during the relationship, that is: (a) all money I earn as an [omitted] is deposited into the Viridian Line of Credit; (b) all money I earn making [omitted] for [C] business is deposited into the Viridian Line of Credit; (c) all rental income from the rental of the [P] property is deposited into the Viridian Line of Credit; (d) I then draw from the Viridian Line of Credit any money I use for my living expenses. ;
(20) [Ms Galloway] does not contribute to the interest payable on Viridian Line of Credit and does not utilise the money in that account. This was also the case prior to our separation. Apart from rent received from [P], all moneys paid into this account came from my moneys earned by my personal labour.
(21) In January 2012 when [Ms Galloway] and I formally separated, the Viridian Line of Credit was owing approximately $230,000 …
(22) At the first trial of this matter in June 2013, the Viridian Line of Credit was owing approximately $235,000 …
(23) Up until the end of 2013, I was able to fund my legal proceedings without having to draw down the amount owing on the Viridian Line of Credit account. This was because my outgoings (including legal expenses) were somewhat similar to the moneys I was depositing into the account.
(24) It has only been since my legal expenses increased to fund the appeal and since there was a reduction in my income through [E] that I haven’t been able to deposit as much into the Viridian Line of Credit as I have been withdrawing. The reduction in income from [E] has been caused by health issues. I outline these health issues below.
(25) Over the last 12 months (June 2013-June 2014) the amount owing on the Viridian Line of Credit has reduced down as low as 206,000 but is now owing over $292,000. My income is no longer able to fully pay my legal expenses and the interest and principal on the Viridian Line of Credit.
I conclude from the above that the applicant says that he was initially funding his legal costs from his earnings but that those earnings first travelled through the Viridian line of credit. He now says that since the end of 2013 his income has not been sufficient to pay his legal costs and that he has used the redraw facility or capital of the Viridian Line of Credit to do so. Significantly, neither party provides any forensic accounting evidence as to the precise details, breakdown, or percentages. However there is another factor to take into consideration being that, whilst the balance of the viridian account might have “blown out” by near $70, 000 since these parties separated, the unchallenged evidence of Mr Midden is that the mortgage on the [S] property has reduced by a similar amount. Therefore, without the benefit of any better forensic accounting evidence, I cannot be satisfied on the balance of probabilities that Mr Midden has taken any net advantage from the viridian account post separation as alleged by
Ms Galloway.
The first respondent has also paid considerable legal costs. Again this information was only extracted with considerable difficulty in cross-examination. Given that Ms Galloway argues strenuously for an add-back of legal costs paid by Mr Midden, it is disingenuous of her not to have disclosed legal costs that she herself has paid. In his final submissions, a concession was forthcoming from her counsel. It seems that she may have paid almost $200,000 herself and from various sources post-separation. I comment only that the first respondent’s evidence again was evasive and unsatisfactory so in respect of this issue. She somewhat reluctantly told the Court that “third parties” had contributed to her legal costs but provided no evidence of any enforceable obligation. The Court is now aware that she has earned some income and obtained a personal loan from Westpac Bank following separation.
In summary, the evidence in respect of paid legal costs and their sources is much more complex than the simple argument put by the first respondent that there should be an add-back for the applicant’s paid legal costs. I am satisfied on the balance of probabilities that the applicant has utilised the Viridian Line of Credit for his living expenses and payment of his legal costs but that his income from the [E] and [C] businesses have both been deposited into that account together with income from the [P] property.
I have no evidence to make mathematical calculations. The applicant, however, (and consistent with his willingness to make concessions) says at paragraph 25 of his trial affidavit that the Viridian Line of Credit has “blown out” by some $60,000 since June 2013. It would not be unreasonable for me to use this as a guideline in respect of his use of the Viridian Line of Credit for personal expenditure over and above his income. I accept, however, that this is effectively “set off” by the applicant reducing the [S] mortgage.
Whilst we now know that the first respondent has herself paid considerable legal costs, they have been through her post-separation enterprise and personal borrowings. Taking all these matters into account I am not able to reasonably make any adjustments in respect of either party’s entitlement on to the property pool on the basis of these matters.
(iii) South Australian Properties
The applicant has a fifty per cent interest as tenant-in-common in two South Australian properties with each of Ms T and Mr T. The applicant’s counsel argues that these properties should be excluded from the pool whether I adopt an asset-by-asset approach or the global approach on the basis of no direct contributions by Ms Galloway. The first respondent argues for their inclusion in the pool.
I prefer that these properties be included in the pool. Superior Courts have historically and as recently as the High Court in Stanford (Supra) seen a starting point in the intellectual task for trial Courts being to identify the legal and equitable interests of each party in property as at the date of the hearing. It then falls to consider matters such as contributions in respect of entitlement or interest. It would therefore be presumptuous of me to simply move from this well-worn pathway and exclude properties and particularly so when one of them was purchased during the course of the relationship. I propose therefore to include both properties in the pool at value and also to include the mortgage liabilities in respect of each.
[E] – Valuation
The first respondent urges me to include the applicant’s [omitted] business, [E], in the pool at a value of $170,000. The applicant says that the business has no goodwill other than himself and has no market value.
In her affidavit at paragraph 119 the first respondent says that she has always maintained that [E] has a value of between $115,000 and $188,000. Mr Midden was cross-examined as to a value of $170,000 and on the basis that he completed an application for a mortgage loan in about 2009 and attributed that value to his business.
The Court is not assisted by any formal valuation in respect of the business. It does not appear to be in dispute, however, that Mr Midden operates his business solely. He employs contractors casually if a job requires assistance. There is no evidence of any ongoing contracts with tenure. There is no inventory or valuation in respect of plant and equipment.
The first respondent here is clearly trying to invoke what might be termed the “Elias principle”[7]. This is where Courts are confronted with a prior representation made by a party who, in subsequent Family Law proceedings, retreats from that representation, seeking to obtain an advantage in each forum. Goldstein J in Elias held that a party should not be permitted to deny such prior representations.
[7] Elias & Elias (1977) FLC 90-267
Later cases[8] however, do not go so far as Goldstein J in elevating such matters to the status of “principle.” Rather, the later view is that the Courts should take a pragmatic approach and, whilst considering prior representations and previous inconsistent statements, should consider the reality of current circumstances.
[8] Jordan & Jordan [1996] Fam CA 15
I am satisfied on the balance of probabilities that the applicant runs a small business. I am satisfied that it has historically brought him a comfortable income (with some taxation advantages implemented by the first respondent) and I accept his explanation that he, “talked up” the value in his representations to the bank when applying for a loan. The business is operated by the applicant as a sole practitioner. There is no evidence of transferable contracts of any value. I am satisfied that value of personal goodwill in such circumstances would not be transferable and attaches only to the particular skill, experience and work practices of the applicant himself.[9] I do not attribute any value to [E] in this property pool.
[9] W & W [2000] FamCA 1302 [68 – 69]
[W] business
There is now evidence that the first respondent has substantial interest herself in a company, [W], which operates a business. Similarly, I am unable to attribute any value to that enterprise although I expect that proper and prudent disclosure by Ms Galloway might have given the applicant cause to investigate the asset position of that company.
Given otherwise the concessions and agreement as to the property pool, I can crystallise that pool as follows:
| Assets | |
| Property [S], Darwin | $750,000 |
| Property [P], Darwin | $690,000 |
| [C] business | $57,000 |
| Applicant’s furniture | $3000 |
| First respondent’s furniture | $8000 |
| Isuzu motor vehicle (applicant) | $12,800 |
| VW van (applicant) | $11,500 |
| First respondent’s shareholdings | $980 |
| Applicant – cash at bank | $273 |
| First respondent – cash at bank | $7000 |
| Parties’ interest in [A] property ([Mr P]) | $99,737 |
| Proceeds – [A] property ([Mr Y]) | $49, 180 |
| Applicant’s 50 per cent share (Property [M], South Australia) | $213,500 |
| Applicant’s 50 per cent share (Property B, South Australia) | $159,250 |
| [E] business | no value attributed |
| [W] business | no value attributed |
TOTAL: | $2, 062, 220 |
Liabilities | |
[S] mortgage | $60,000 |
| [P] mortgage (Viridian Line of Credit) | $295,077 |
| First respondent ANZ credit card(at separation) | $18,200 |
50 per cent of mortgage ([M]) | $3696 |
| 50 per cent of mortgage (Property B) | $85,716 |
TOTAL: | $462, 689 |
NET ASSETS: | $1, 599, 531 |
Superannuation entitlements | |
| Applicant Mr Midden self-managed superannuation fund | $141,990 |
First Respondent | unknown |
TOTAL: | $141, 990 |
Asset-by-asset or global approach
The applicant’s counsel urges me to take an asset-by-asset approach but properly leaves open the option of the global approach. The first respondent’s counsel says that the global approach to consideration of the parties’ contributions and hence alteration of their interests is appropriate.
The rationale of the applicant’s argument seems to be that particular contributions are readily apparent and attributable to particular assets.
This, however, was a relationship of some seventeen years duration. Contrary to some suggestion of a strict demarcation of personal bank accounts, Mr Midden volunteered during cross-examination that “We both combined funds throughout the relationship”. There has been a joint bank account.
These parties argue various direct financial contributions to various assets. They argue indirect financial contributions. They argue contributions by way of their labours to the maintenance or improvement of particular assets. They argue non-financial contributions and notably the appellant himself arguing a “home maker and support role” when the first respondent was engaged in her farfait activities overseas. Consequently, to my mind a strict asset-by-asset consideration of these parties’ contributions runs the danger of ignoring or undervaluing the various non-direct financial contributions. It was a relationship where each of them at times was the primary breadwinner. This was a relationship that involved the care and support of the first respondent’s dependent child. In all of the circumstances, I prefer to proceed by way of the global approach.
Contributions
There is significant dispute between parties as to the facts of various contributions claimed. There is dispute as to the quantum of various contributions. There is dispute as to the fact, extent or weight to be afforded various non-financial contributions. My findings of credit above are relevant here where there is a distinct lack of forensic assistance for the court. Documents that should conceivably be available to resolve such historical disputes have not been disclosed. Other documents have apparently been destroyed. Some other documents came to light only late in cross-examination.
Ms Galloway says at paragraph 16 and 17 of her trial affidavit:
[16] At the time that I met [Mr Midden], I was a [occupation omitted], as well as manufacturing [omitted]. My earnings were approximately $97,000 per annum.
[17] I had a 1984 Porsche 944 and cash with together totalled approximately $40,000. I had no debt at the commencement of our relationship.
This evidence was not vigorously challenged. I accept Ms Galloway’s evidence accordingly.
Mr Midden’s position at the time of cohabitation is more problematic. He says in his affidavit of 20 June 2013 at paragraph 11:
When we commenced our relationship I already owned the following properties:
(a)[S], (“the [S] property”): this property was purchased in December 1983 for approximately $83,000. This property remains in my sole name.
(b)A property in [M] in South Australia (“the [M] property”): this property was purchased in or about 1992 for $135,000. I own 50 per cent of this property, with the other half being owned by ex-partner, Ms T.
(c)A partnership in a farm at [O] in Western Australia. My business partner was Mr M.
(d)My business, [E], which I started in 1983.
(e)A Brand new Land Rover worth $57,000 that I had purchased through the farm in or about June 1995.
(f)Superannuation earned while working [omitted] from 1988 to 1983.
At paragraph 13 of that affidavit Mr Midden deposes:
Around the time I commenced my relationship with [Ms Galloway] my farming partnership collapsed and I was engaged in litigation with my business partner to end the business partnership and to distribute the wealth that the business had created. I only got back $55,000 from all of my investments into the business partnership and received $240,000 from the income that the business had generated.
Ms Galloway produced documents showing the Land Rover to be encumbered. I accept this evidence. She also raised the issue of the cost of Mr Midden’s litigation in questioning his evidence as to his net interest in the [O] farming enterprise. Undoubtedly there were legal costs incurred. And, indeed, there are documents confirming one firm of solicitors pursuing Mr Midden for $160,000. Nevertheless, there is precious little, if any, other corroborative evidence as to either party’s version of Mr Midden’s financial position at that time. Certainly, Ms Galloway’s own financial circumstances, on her own evidence, were not such so as to make a large capital input into any litigation costs. I can only assume that both parties contributed during the course of their relationship to those costs. Any claims by Mr Midden as to his receipts from that litigation and contributed to the purchase of the [L] property should be considered accordingly.
Mr Midden’s evidence is that he contributed the benefits of the farming enterprise and after the litigation in a total of $295,000 towards the purchase of the [L] property. I accept the submission of his counsel that the challenge to Mr Midden in cross-examination was mainly on the timing of this contribution rather than the fact of it. That challenge was ultimately without merit when it was established that the purchase settled in 1999 and I am satisfied that the settlement date of the [L] property is contemporaneous with the receipt of funds by Mr Midden. Consequently, I am satisfied that Mr Midden did receive funds from the farming enterprise and did contribute them to the purchase of the [L] property. I accept submissions of Ms Galloway’s counsel, however, that it is unlikely that the funds were in the gross sum of $295,000 given taxation implications and, importantly, that a cost was incurred and met jointly by the parties during the relationship in respect of that litigation. Again, some supporting documentation might have made the forensic exercise simpler or even unnecessary and saved a deal of court time.
At the commencement of the relationship Mr Midden held an interest in two pieces of real property, being [S], Darwin and [M], [M] in South Australia. The latter was a one-half interest and subject to a mortgage. The property was purchased in 1992 for $135,000. Mr Midden’s interest now has an equitable value of approximately $210,000. It is an investment property. The evidence is that the rental has attended to the outgoings. I am satisfied that this has been a passive investment during these parties’ relationship with no active further contributions being necessary.
In 2003 the [M] property was used as security for the purchase of a further property in South Australia at [B]. Mr Midden, again, holds a half-interest together with the husband of his partner in the [M] venture. The equity in [M] secured this purchase. Again, there is no evidence of any active or direct contribution by either of these parties since that purchase. The evidence has Mr Midden’s equity in this property being $73,534.
The [S] property was purchased in 1983 for $83,000. It now has an agreed value of $750,000 and equity of $690,000. Mr Midden’s unchallenged evidence is that the mortgage has been as low as $12,500. This property has benefited the parties as both a residence and as security for their various subsequent investments. Mr Midden acknowledges some financial contributions by Ms Galloway towards the construction of a fence.
Ms Galloway’s material suggests a direct financial contribution by her to the purchase of the [J] venture in a quantum of about $435,000. This venture failed with substantial capital losses which each party is now able to carry forward as taxation credits. Ms Galloway in her trial affidavit at paragraphs 99 and 103 deposes:
[99] On or about May 2006 I was given approximately $344,000 worth of shares from my children’s grandfather, Mr B. I then obtained a margin loan of $189,000 from the NAB [sic] was put in place for 12 months against the equity and significant worth of the shares. This alleviated [Mr Midden] and my financial troubles somewhat, although it left me indebted to the NAB for $189,000. Annexed hereto and marked “CG4” is a true copy of documents relating to the margin loan statement.
[103] In June 2007, with my shares having increased in value and with the World Banks heading for a crash, I cashed out the shares, netting $435,000. I used this to repay the margin loan and to the keep the [J] afloat until the sale money went through. Annexed hereto and marked “CG7” is a true copy of the bank statements showing deposits.
The above is an example of the selective, misleading or incomplete evidence provided by Ms Galloway in these proceedings. Cross-examination disclosed that she had not, in fact, been gifted the shares by the late Mr Y. She had been provided with the “use” of shares only for her to achieve the dividends. The evidence, as it now sits, suggests impropriety on her part in selling those shares and the moneys were eventually repaid to Mr Y. In his final submissions, counsel for
Ms Galloway could (properly, in my view) put his submissions no higher than the $435,000 benefitting the parties no more than in the sense of a “bridging loan”. Certainly, it was not pressed that there was a direct contribution of $435,000 by Ms Galloway as might be suggested in her affidavit material.
Similarly, Ms Galloway, in her material, claims a further $250,000 contribution put towards the [J] venture. At paragraph 102 of her affidavit, she says:
In March 2007, [N] commenced repaying loan funds totally $250,000 that they had owed me since 2000. I had loaned this company the money to pay out [omitted] which allowed [N] to continue to trade. This repayment of the loan enabled [Mr Midden] and I to keep the company in good shape. Annexed hereto and marked ‘CG6” is a true copy of the bank statements showing the deposits made by [N] and a copy of the facsimile organising the transfer of the moneys to [omitted].”
Again, Ms Galloway’s evidence in respect of these transactions was convoluted, inconsistent and, in my view, evasive. If she is claiming a direct contribution of $250,000 then I am not persuaded. I am satisfied that Ms Galloway moved moneys between accounts, including those held both in her and company names.
In any event, her evidence as to her initial financial position convinces me that any “loan” of $250,000 advanced by her must have come from moneys or income received by her during the course of this relationship with Mr Midden. I deal with these contributions separately and should be careful not to “double-count”.
For two years, between 1999 and 2001, Ms Galloway worked as a [omitted] and I am satisfied that she received substantial remuneration. These materials provided by Ms Galloway are not such as to assist me with any precise quantum although her evidence as to an income of $600, 000 in a six month period was not successfully challenged. It is also clear that Ms Galloway’s income was able to fund the [A] purchases as well as the other financial contributions she sets out in her affidavit.[10]
[10] See Ms Galloway affidavit sworn 22 September 2014 at [153] and [156]
She was during this time the primary, if not the sole, financial provider for the family unit, including Mr Midden. The parties lived predominantly overseas. Mr Midden concedes her substantial income but perhaps not to the quantum suggested by Ms Galloway.
He says, however, that he played a supportive role as carer of the then dependent Mr N, as home maker and as her personal business assistant. I generally accept his evidence in this regard. In this sense, and whilst giving weight to Ms Galloway’s significant direct financial contribution from her income, I am not charged with making simple mathematical calculations. Marriage-type relationships have special traits. In Figgins & Figgins[11] the Full Court made the pertinent observation:
...marriage is and should be regarded as a genuine partnership to which each party brings different gifts...
[11] (2002) FLC 93-122 at [134]
In this matter, Mr Midden travelled significantly with Ms Galloway allowing her to earn, and assisting her in, her highly remunerative employment. He forfeited his own income from his own trade during those times. In addition he made direct and indirect non-financial contributions as set out above. The weight to be given to
Ms Galloway’s undoubtedly high income during this period should be mitigated accordingly.
These parties entered into a number of financial ventures during their relationship. They purchased the property at [L]. This included a contribution from Mr Midden from the proceeds of his failed farming venture after the litigation. They purchased the [J] business. They purchased a property at [P], Darwin. They purchased the “[T] Apartment”. Mr Midden commenced “[E]”. The business “[C]” was purchased. They purchased the [A] properties. Many of these purchases were conducted through an umbrella of trusts and companies. Undoubtedly, Ms Galloway has substantial experience, skills and aptitude in financial matters and both parties seem to have benefited by reduction of taxation liabilities accordingly. This is a contribution by Ms Galloway which should be given consideration.
Both parties have also made non-financial contributions by their labours to maintaining and improving various of these assets. I am satisfied that each has provided actual and emotional support to the other in their personal ventures.
There are therefore a number of contributions by each party to which weight should be given. Mr Midden owned the [M] and [S] properties prior to cohabitation. He retains those properties. The [B] property was purchased as a logical investment extension of the [M] properties. Together these three properties have an equity of some $974, 000 in an asset pool with a net value of $1,599,000. Again, it is not for the court to make simple mathematical calculations but it is proper to consider the effect of such initial contributions in the pool as it currently stands.
There are also particular contributions of Ms Galloway which should be accorded weight. Her high income for a period of two years allowed the purchase of the [A] properties and assisted generally with other purchases as well as supporting the family unit. This is a significant contribution but subject to the comments I have made above. She had the use of $435,000 from the proceeds of sale of
Mr Y’s shares and regardless of my comments as to the propriety of her behaviour in selling them and the capital eventually being repaid to Mr Y. She has contributed generally from her income towards Mr Midden’s litigation costs and to other assets as set out in her affidavit material. Her financial aptitude has given taxation advantages.
Ultimately it is for the Court to consider each contribution and the circumstances of the contribution and to attribute weight. Notably the Full Court in Kessey & Kessey[12] stated:
In many – indeed probably in most – property settlement cases the Court has to evaluate and assess contributions to property in the absence of precise valuations of the contributions in question. Indeed, where the contributions to property are indirect or non-financial, precise valuation is impossible, and even where the contributions are direct or financial so that a valuation might be provided, other factors (not capable of precise mathematical statement) may well have eroded the initial value of such contributions.
In a case such as the present it is not necessary to arrive at precise mathematical valuations of the party’s contribution – all that is necessary is the evaluate the weight that should be given to each party’s contribution relative to the contributions of the other party.
[12] (1994) FLC 92-495 at page 81,151
A later Full Court in Pierce & Pierce[13] commented in respect of “erosion” of initial contributions:
In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to initial contributions. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contributions, in the case of the husband, regard must be had to the use made by the parties of that contribution...
[13] (1999) FLC 92-844 at para 28
Whilst there were various important contributions made by both parties, Mr Midden’s ownership of the [M] and [S] properties should be afforded considerable weight. [M] directly allowed the purchase of [B]. The South Australian properties have not required direct contributions during the relationship. Those properties still exist in the pool of assets. Each has been used to secure and support other assets. These properties continue to represent a significant value in the current pool. However, this was a 17 year relationship with a number of significant contributions not least being Ms Galloway’s substantial income over some 20 months but which allowed other purchases. All of these matters are to be considered within the context of all contributions during a 17 year relationship.
In the circumstances of the nature and value of the property pool being considerably influenced by the three pieces of real estate in
Mr Midden’s name and taking into account the other various contributions, I am satisfied that an adjustment of 17.5 per cent in favour of Mr Midden on account of contributions is appropriate.
Section 90SF factors
A further example of Ms Galloway’s misleading evidence is a suggestion in her affidavit that she might be reliant on an aged pension for her support. Her financial statement sworn in July 2014 does however show her income from [W] as $750 per week and supplemented by a government pension of $499 giving her a net income of $1, 200 per week. From my observations Ms Galloway retains astute financial skills and is clearly active in the business market. I am satisfied that her business (or those of the company) is deriving income currently and that it was only in cross-examination that we learned the real state of its current and potential income. Her evidence, reluctant as it was, in cross-examination suggests a recent payment to her business of $27,500 over a two month period. Other evidence suggested receipts in excess of $100,000 over the last year. As mentioned at the beginning of these reasons, Ms Galloway’s lack of disclosure and candid evidence does little to assist the court in its forensic exercise but allows me to take a less cautious approach in making my findings.
I am satisfied that each of these parties has specific qualifications, skills and experience and that both are active in their particular fields of expertise. I am not satisfied, in all of the circumstances that the age difference between these parties is of any significance given that
Ms Galloway continues to be active in her field. Similarly, I am not satisfied of any diminished capacity in Mr Midden to continue his trade given the lack of any proper medical evidence.
Consequently, I am not persuaded that there should be any adjustment in favour of either party pursuant to section 90SF(3) of the Act.
I did not understand the first respondent to be seeking a specific order in respect of the [P] property until the final submissions of her counsel. Certainly, her case outline sought only a 50/50 division of all property. To the contrary, it is my understanding that the applicant at all times preferred to retain the [P] property and make a cash adjustment on the first respondent. These options were not explored in cross-examination during the course of the trial. I note that the applicant has effectively had control of the [P] property since separation in that its rentals have been placed in the Viridian Line of Credit and that he has had exclusive operation of that facility. In all of those circumstances I think it proper that the applicant, Mr Midden, have the option as to whether or not he retains the [P] property or to transfer it at value to Ms Galloway. If he chooses and she accepts the latter option then Ms Galloway may need to assume a responsibility for the Viridian Line of Credit. Ms Galloway’s entitlement to a property settlement will be crystallised by these reasons and it is then up to the parties how that settlement is put into effect. However, I am satisfied that Mr Midden should be able to retain the [P] property unless there is agreement otherwise between the parties.
Superannuation
Amendments to the Act made some years ago see superannuation being “treated as property” for the purposes of the section 90SM exercise. It is, of course, not an asset. It is open for me to consider superannuation entitlements separately from tangible assets and in this matter I consider it proper to do so.
The applicant, Mr Midden, has a self-managed superannuation fund with an entitlement standing at $141,990. I accept his evidence that contributions to that fund were made only before cohabitation and post-separation. There were no contributions made during the course of the relationship. That evidence was not seriously challenged in cross-examination of Mr Midden. Any argument that Mr Midden’s post-separation contributions might have come from the Viridian line of credit are subsumed in my reasons above.
The first respondent does claim some contribution by way of using her financial expertise to set up the self-managed fund and generally to assist the applicant to be more tax-effective in his businesses. The unchallenged evidence of the applicant, however, is that the first respondent’s skills did not extend this far and that he was required to enlist other professional assistance in respect of his superannuation fund.
The first respondent herself has made no disclosure as to any superannuation entitlements although her own evidence suggests that she may have, or should have, entitlements from her various employments and employment through company structures even if by way of compulsory contributions in this country.
I cannot be satisfied that the first respondent has made any contributions or contributions of any weight towards the applicant’s superannuation entitlement.
I am satisfied that it is not appropriate to make any adjustment in favour of the first respondent from the applicant’s superannuation entitlements.
Other Adjustments Sought by the Applicant
In his orders sought the applicant includes the following to be considered as deductions to any lump sum payment he make to the first respondent:
a)Any costs ordered by this honourable court in relation to the costs reserved on 27 June 2012 regarding the interim hearing;
b)$4000 for bond money and rent paid in accordance with orders 5(a) and (b) of the orders dated 27 June 2012.
c)$644 for removal costs paid in accordance with order 5(c) of the orders dated 27 June 2012.
d)Any costs ordered by this honourable court in relation to the costs reserved on 28 August 2012 regarding the application in a case filed 23 August 2012;
e)one half of the following amounts paid in accordance with order 6 of the orders dated 28 August 2012;
i)$660 for the [P] property valuation;
ii)$825 for the [B] property valuation;
iii)$825 for the [M] property valuation;
iv)$3600 for the [C] business valuation;
v)$992 for the [A] valuations.
f)Any costs ordered against the first respondent for the final hearing before Judge Harland;
g)any costs assessed to be paid pursuant to the orders of May J made 11 February 2014;
h)any costs assessed to be paid pursuant to orders made 12 June 2014 by the Northern Territory Supreme Court;
i)any costs orders by this court in relation to costs reserved on 15 May 2014 by Judge Bowman;
j)any costs order ordered by this court in relation to the costs reserved on 18 August 2014 by Judge Bauman;
k)in the event that the court declares that Property [M], South Australia and Property B, form part of the property pool, less 25 per cent of the Capital Gains Tax payable by the applicant for the sale of the said properties and any associated costs incurred to facilitate the sale of the said properties; and
l)any costs generally ordered by the court.
On 27 June 2012 Federal Magistrate Turner (as she then was) made the following orders:
5. That the applicant is to pay the following amounts with such payment to be taken into account in the property division:
a) the bond of the property that the Respondent rents upon her vacation from [P] property…
b) the first 6 weeks rent for the rented property; and
c) removalist costs for the Respondent’s personal belongings including the contents of her office and other business related items.
I see no reason, given the wording of her Honour’s orders, that the sums provided by the applicant in a total of $4, 644 pursuant to (a) and (b) above should not be deducted from the first respondent’s award.
Similarly order 5 of her Honour’s orders of 28 August 2012 provided for Mr Midden to meet the valuation costs at first instance but to be reimbursed for one half by the first respondent in the settlement. I am told that valuation costs amounts to $6,902 leaving the first respondent’s share at $3,451.
It should be remembered that this is a second trial of these issues given the matter was remitted after a successful appeal to the Full Court. Obviously I did not have conduct of the first trial and have deliberately refrained from considering their Honours’ reasons on appeal. I note from the above that a number of costs applications were reserved by my colleagues and I have received no submissions in support or opposition of the same. It seems, therefore, that I can only relist the matter for submissions and argument in respect of those various issues of which I have no discrete knowledge. Consequently, I intend to hand down my orders and reasons leaving liberty for the parties to apply in respect of any outstanding costs issues. It is important, however, that they be disposed of as they will inevitably impact on the cash adjustment between the parties. I note too that there remains an application by the applicant of the property trial at first instance before Judge Harland. Whilst experience suggests that such a costs application might better be brought before her Honour, if the parties and their legal representatives consider that I can deal with such an issue by reason of convenience then I am content to do so.
Caveats
The evidence leaves me unsure as to whether or not there is an extant order that the first respondent remove caveats placed by her against the South Australian properties and [S]. I see no reason though why I should not now make an order obligating her to do so and I will make those orders that she removes such caveats within 28 days of these orders becoming final and at her expense.
[T] Trust
The applicant continues to urge me to make a declaration that the [T] Trust is invalid. This argument is inherently connected to the first respondent’s conduct throughout these proceedings and alluded to above.
The validity of the [T] Trust has little prima facie impact on my considerations above. The first respondent’s counsel conceded in final submissions that the assets of the trust including the applicant’s businesses should properly be brought into the pool of property and distributed as between the applicant and the first respondent. I take that concession to be that this court can look behind the “veil” of the trust or its corporate umbrella as to the reality of the parties’ ownership and control of assets.
Nevertheless the evidence of the first respondent in cross-examination still raises concerns as to the status of the trust and the finalisation of proceedings between these parties.
On 1 March 2013 and whilst section 90SM proceedings were current before this court, Ms Galloway brought proceedings in the Supreme Court of the Northern Territory alleging various breaches by the applicant in respect of his obligations as trustee of the [T] Trust. Her statement of claim alleges the applicant to have improperly dealt with and benefitted from the trust during his period as trustee. I must say that such allegations do not sit well with the evidence before me as to the use of the trust by the parties generally and the control of it by each of them. The significance here, however, is that Ms Galloway intimated before me in cross-examination that she retains a right to again bring or continue these proceedings in the Supreme Court. It is for these reasons that the applicant seeks an anti-suit injunction.
I understand that the Master of the Supreme Court has ordered a stay of the proceedings before him pending the outcome of these property proceedings.
The applicant says that collateral proceedings in the Supreme Court are an abuse of process. Whilst I might have a preliminary view in this regard, that question might ultimately be one for the Supreme Court given the lack of testing of any allegations before me.
The evidence suggests that the [T] Trust was established to deal with the doomed [J] business in Western Australia in about 2004. It is clear that the applicant, presumably on the advice and financial expertise of the first respondent given her expertise and experience in such matters, has placed his assets into that trust including his businesses. The [P] property is also within the trust.
Importantly, the trust itself purports to be a unit trust and the first respondent has, since separation, attempted to act on it being such a unit trust in order to regain control and to dispose of the assets in the trust. She was heavily criticised in the applicant’s material and in cross-examination in respect of her credit and bona fides in attempting to do so.
The evidence, however, from both parties suggests that the trust did not operate in accordance with the requirements of a unit trust. Rather, the unit holders became superfluous and income was distributed as if for a discretionary trust including to the applicant whom I understand not to have been a unit holder. Indeed, I accept the applicant’s evidence that he then understood the structure to be a discretionary trust insofar as he had any understanding at all of family trusts.
It seems from earlier affidavits which I was required to consider, given them being cross-examined on, that the existence of the original trust deed and/or purported copies of that document have been much in dispute between these parties. What does seem clear is that an alternative corporate trustee, [H] Pty Ltd, was appointed in December 2009. I am satisfied as to the first respondent’s role in this occurrence.
I am satisfied only that the first respondent’s credit in respect of dealing with this trust is potentially compromised and I am satisfied that the trust operated as a discretionary trust rather than within its terms as a unit trust. The first respondent admits her role in creating the various trusts, including the [T] Trust, where at paragraph 175 of her trial affidavit she says:
During the relationship I was instrumental in developing all of the business infrastructure plans and business structures, including the identification of the most appropriate structures and registration of the same.
I did the negotiations with banks, accountants and prepared our tax returns. I have been instrumental in melding the various businesses of the relationship into the Trust, the movement of trustees, the compliance work with respect to the Trust Deeds, arranging the distribution of profits and ensuring that [Mr Midden] had a sufficient wage that would be – that would not be questioned by the ATO.
At paragraph 145 of that affidavit she deposes:
[T] Trust is a Unit Trust that was created in 2004 and was to be used as an entity to purchase the land component of the [J] acquisition. The land was never purchased and the trust was in abeyance until 2006. I was initially the trustee of the trust. I am the sole unit holder, which is the holder of all of the units of the trust. I resigned as trustee at the end of 2006 in favour of [Mr Midden]. I still hold all units as trustee for the [B] Family Trust. The [B] Family Trust is a beneficiary of the [T] Trust.
As of 2006 the business known as [C] was part of the [T] Trust and in 2007, [E] became part of the trust assets. The tax benefit in this structure brought the tax rate from 30 per cent to just under eight per cent. I initiated the move to put both of the businesses into this trust and did much of the paperwork whilst liaising with [name omitted] and others.
I am satisfied that the first respondent has at all times had actual control of the trust and that the applicant is generally naïve or uncaring of such matters. I am satisfied, however, that he received the remuneration from his labours in his business through the trust as if it was a discretionary trust. It would be otherwise a nonsense for the applicant to place his assets into a trust structure which would then accrue his income but with no entitlement back to him.
I was not given the benefit of any authority or even detailed submissions as to the process for me declaring the trust invalid. There was little cross-examination, and significantly the applicant was not cross-examined at all in the trial before me as to any alleged breach of his fiduciary duties.
Whilst I can be reasonably satisfied as to the misuse of a unit trust in the sense of it operating as for a discretionary trust, and that it was the first respondent who had the knowledge, background and initiative for these matters, I am not comfortable in these proceedings in making any declarations in respect of the trust. I note the first respondent’s position in “in keeping her powder dry” in respect of the Supreme Court proceedings and can only comment that she might re-consider her position given my findings in this matter.
I prefer the alternative course proposed by the applicant’s counsel in her closing being that the first respondent in her role as sole shareholder and director of [H] Pty Ltd transfer all the assets of the [T] Trust to Mr Midden.
The Viridian Line of Credit attaches the [P] property as security. I see no reason why that line of credit should not continue with its security of [P] with [P] and the other assets being taken out of the trust into the personal hands of Mr Midden with the proviso as above in respect of Mr Midden’s options and of course with the consent of the mortgagee.
Capital Gains Tax consideration
The unchallenged evidence of the applicant at paragraph 59 and 60 of his trial affidavit is as follows:
59. I would, however, like to sell the Adelaide properties. My investment partners Ms T and Mr T, no longer want to be in business with me due to the annoyance that [Ms Galloway] has caused to them. Mr T and Ms T have informed me of their desire to sell the properties as soon as the caveats are lifted.
60. I wish to pay [Ms Galloway] her entitlement from the proceeds from the sale of the Adelaide properties. This may take some time to do as following the first trial I spent several months and considerable expense attempting to get the caveats removed pursuant to the orders of Judge Harland in October 2013 that were made after [Ms Galloway] did not comply with the first order. Unfortunately, due to the issues with dealing with the Australian – South Australian Titles Office, even after several months of trying, the caveats were not removed prior to the appeal in April 2014.
I am not provided with any evidence as to the Capital Gains Tax liabilities to be struck upon the sale of the two properties. The applicant seeks an order that the respondent meet 25 per cent of any Capital Gains Tax payable upon the sale of the properties. I do not consider the sale of the properties to be an unreasonable proposal given that I have included the properties in the pool against opposition by the applicant. There would need to be an accounting of the reasonable costs of and disbursements of the sale of those properties. Capital Gains Tax is just another cost of sale and the net proceeds should take into account that tax. Consequently, in summary, the applicant has three options in respect of settling upon the respondent: (i) he may make a cash adjustment; (ii) he may transfer the equity in the [P] property to the applicant; (iii) he may dispose of the South Australian properties thereby providing a net amount from their sales into the pool and settle upon the applicant accordingly. I am mindful that the first two options can have immediate effect and are, therefore, preferable. Nevertheless, given my inclusion of the properties in the pool against opposition from Mr Midden’s counsel, and in a situation where neither party expressly wants to retain those properties, I see no reason why the applicant should not be able to dispose of the South Australian investment properties so as to settle upon the first respondent. Orders can be drafted so as to ensure a prudent sale and liberty to the parties to apply to ensure that the sale takes place. However, I must also take into account that the first respondent is entitled to the fruits of her litigation within a reasonable time period. Mr Midden’s evidence is that his co-owners join him in wanting to sell the two properties. Yet there is no evidence before me of the properties yet being placed on the market. The caveats placed against title by the Respondent would not have prevented this step being taken before now. Ms T provided an affidavit, gave evidence and was cross-examined all without the issue being raised.
I am mindful that the interests of third parties are involved in any orders requiring the sale of the properties and that they have not effectively been heard on the point. Issues of sale price, mode of sale, marketing and the like all have the potential to raise their head. I am mindful that the applicant and the respondent have agreed the value of the properties, supported by valuation, for the purposes of these proceedings.
Taking all of the matters into account I conclude that the applicant should be given some grace to dispose of the properties in order to settle on the respondent. I will allow a settlement period of 120 days which would not be ordinarily unreasonable where a party is obliged to raise cash of more than $400, 000. However, the first respondent should not be prejudiced by the vagaries of a sale process involving third parties. The agreed valuations will therefore remain relevant for my calculations adjusted only for the reasonable costs and disbursements of the sale including Capital Gains Tax. The Courts try to provide certainty in Orders and finality pursuant to section 81 of the Act. Any undue delay in settlement will prejudice the respondent. Consequently the applicant has the reasonable period of 120 days to settle upon the respondent in accordance with the calculations above with the only adjustment being in respect of costs of sale. His obligation remains to settle accordingly regardless of whether or not he chooses to sell the South Australian properties or regardless of the ultimate sale price – be it lesser or greater than the agreed valuation.
I intend to hand down these reasons and orders but reserve a right in the applicant and first respondent to make submissions in respect of the contingent matters referred to in paragraph 127 above unless of course they are able to reach an agreed settlement.
I have found the tangible property pool to have net value of $1,599,531. The applicant is entitled to 67.5% percent or value of $1, 079, 683. He will retain the following:
Asset
Property [S] $750, 000
Property [P] $690, 000
[C] business $57, 000
Applicant’s furniture $3000
Isuzu motor vehicle $12, 800
VW Van $11,500
Applicant-cash at bank $273
Proceeds - [Mr Y]- [A] property $49, 180
Interest in Property [M] $213, 500
Interest in Property [B] $159, 250
TOTAL: $1, 946, 503
Liabilities
Property S Mortgage $60, 000
Property P Mortgage $295, 077
(viridian line of credit)
Mortgage-Property M $3, 696
Mortgage – Property [B] $85, 716
Sub total: $444, 489
NET ASSETS RETAINED: $ 1, 502, 014
Consequently, the applicant is required to make a cash settlement on the first respondent of $422, 331 but less the amounts of $4, 644 and $3, 451 to be set off and as mentioned above leaving the cash adjustment at $414, 236.
The first respondent retains:
Asset
Furniture $8,000
Shareholdings $980
Cash at bank $7,000
Proceeds – [Mr P] [A] unit $99, 737
TOTAL: $115, 717
Liability
ANZ credit card $18, 200
NET ASSETS RETAINED: $97, 517
The first respondent has an entitlement to 32.5% of the asset pool. The pool is valued at $1,599,531. Her entitlement has value of $519, 847 thereby requiring a cash adjustment to her of $422,331 less the amounts of $4, 644 and $3, 451 leaving a net cash adjustment at $414, 236.
I certify that the preceding one hundred and fifty seven (157) paragraphs are a true copy of the reasons for judgment of Judge McGuire
Date: 25 February 2015
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
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Property Law
Legal Concepts
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Costs
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Fiduciary Duty
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Remedies
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