Myrtle & Myrtle
[2012] FamCA 460
•19 June 2012
FAMILY COURT OF AUSTRALIA
| MYRTLE & MYRTLE | [2012] FamCA 460 |
| FAMILY LAW - PROPERTY – Where there was a 24 year cohabitation and two now adult children – Where the Wife has not been employed since the birth of the parties’ first child – Where the Wife has made a significant parenting and homemaking contribution – Where the Wife’s contribution was significant in the context of the Husband’s absence for work purposes – Where both parties have failed to make full and true disclosure – Where there has been concealment of assets – Where there are significant “pool” and “add-back” issues – Where there were substantial gifts from the Husband’s family – Issue of expenditure of available capital – Treatment of substantial gambling losses by the Wife FAMILY LAW - PROCEDURE – Anton Piller Order – Where the Husband sought and obtained an Anton Piller Order in order to recover two paintings allegedly being secreted by the Wife in the former matrimonial home – Duty of candour in relation to an ex parte application for the Anton Piller Order – Where the Wife applies for the Anton Piller Order to be discharged in defence to an application by the Husband that the Wife bear the Husband’s costs of the Anton Piller proceedings and to seek her costs |
| Family Law Act 1975 (Cth) |
| Best & Best (1993) FLC 92-418 C & C [2006] FamCA 528 Chorn & Hopkins (2004) FLC 93-204 Crampton & Crampton (2006) FLC 93-269 Farnell & Farnell (1996) FLC 92-681 Gosper & Gosper (1987) FLC 91-818 In the Marriage of De Angelis [1999] FamCA 1609 Kessey & Kessey (1994) FLC 92-495 Kouper & Kouper (No. 3) [2009] FamCA 1080 Kowaliw & Kowaliw (1981) FLC 91-092 Microsoft Corporation v The Good View Electronics Pty Ltd & Anor (1999) 46 IPR 159 Omacini & Omacini (2005) FLC 93-218 Prince & Prince (1984) FLC 91-501 Stowe (1981) FLC 91-027 Tael & Bonnard Equipment Pty Ltd& Leo (2008) FLC 93-379 Thomas A Eddison Ltd v Bulloch (1912) 15 CLR 679 Townsend & Townsend (1995) FLC 92-569 |
| APPLICANT: | Ms Myrtle |
| RESPONDENT: | Mr Myrtle |
| FILE NUMBER: | BRC | 11689 | of | 2009 |
| DATE DELIVERED: | 19 June 2012 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Kent J |
| HEARING DATE: | 30, 31 August 2011; 5 September 2011; 6 December 2011 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Hamwood |
| SOLICITOR FOR THE APPLICANT: | Biggs Fitzgerald Pike |
| COUNSEL FOR THE RESPONDENT: | Mr Baston |
| SOLICITOR FOR THE RESPONDENT: | Hopgood Ganim Lawyers |
Orders
Property Orders
There be an overall division of 50% / 50% between the parties of the net property pool, with the following Orders to give effect to such division.
The Husband and the Wife shall each receive an initial distribution of $120,000.00 from the net proceeds of the sale of the first property to sell, or as the case requires from also the next succeeding settlement, in priority to the retention of capital gains tax, such that if the making of such distribution means that the capital gains tax in respect of the sale of the subject property or part of it cannot be retained, such amount of capital gains tax will be retained from the next or subsequent sales as required.
Pending the settlement of the sale of each of the real properties as provided for, the Husband shall be responsible for ensuring that all payments of mortgage, rates, land tax and other outgoings with respect to such property are met.
Pending the settlement of the sale of the last of the properties to be sold, the Husband shall continue to be responsible for ensuring the payment of the mortgage instalments, rates and other outgoings with respect to the former matrimonial home at … F Street, Suburb W, in the State of Queensland.
The following be sold under Orders 6 and 7:
(a) … E Street, Town P in the State of New South Wales (“Town P”);
(b) … G Street, Town A in the State of New South Wales (“Town A”);
(c) … O Street, Suburb H in the State of Queensland (“O Street”);
(d) … M Street, Suburb H in the State of Queensland (“M Street”);
(e) … K Street, Town J in the State of Queensland (“Town J”);
(f) … I Street, Suburb L in the State of Queensland (“Suburb L”);
(g) … Q Street, Suburb T in the State of New South Wales (“Suburb T”).
The Husband and the Wife forthwith sell the Town P, Town A, Town J and Suburb T properties as follows:
(a) Within seven (7) days the Husband and Wife list those properties for sale by private treaty with such agent as agreed between the parties and if not agreed, the agent is to be nominated by the Chief Executive Officer (or his or her nominee) for the time being of the Real Estate Institutes of New South Wales and Queensland as appropriate for the location of each property;
(b) The list price for the sale of:
(i)Town P be no less than $1,000,000.00;
(ii)Town A be no less than $650,000.00;
(iii)Town J be no less than $446,250.00;
(iv)Suburb T be no less than $800,000.00;
or as otherwise agreed between the parties and, failing agreement within seven (7) days, at a price to be determined by a valuer nominated by the Chief Executive Officer (or his or her nominee) for the time being of the Real Estate Institutes of New South Wales and Queensland, as appropriate to the location of each of the properties;
(c) If a contract for the sale of Town P and/or Town A and/or Town J and/or Suburb T is not entered into at the nominated price (or such other agreed price) within 14 weeks, such properties not under contract be auctioned as soon as practicable thereafter, the reserve price and auctioneer to be determined by agreement between the parties and, if not agreed, the auctioneer be nominated by the Chief Executive Officer (or his or her nominee) for the time being of the Real Estate Institutes of New South Wales or Queensland as applicable to the location of each property to be sold, and the reserve price be determined by the nominated valuer;
(d) If such property or properties referred to in Order 6(b) above is or are not disposed of by auction, the property or properties will be relisted for sale by private treaty for a further period of twenty-eight (28) days at the reserve price with a further auction, without reserve, to be held immediately at the expiration of the twenty-eight (28) day period, the auction to be conducted by the auctioneer referred to in Order 6(c) subject to agreement between the parties to the contrary;
(e) Either party may bid to purchase any of the properties for sale when they are listed for sale or auctioned;
(f) Either party may buy out the other party’s share at a price agreed between them at any time prior to sale;
(g) Pending the sale of the properties:
(i)The joint tenancies in respect of the Town P, Town A, Town J and Suburb T properties are severed;
(ii)The Husband must meet payments due under:
A.St George loan account number …00 in respect of Town P and secured by a registered bill of mortgage over Town P;
B.SGE Credit Union …74 mortgage loan L7.1 in respect of Town A and secured by a registered bill of mortgage over Town A;
C.Adelaide Bank customer number …85 in respect of Town J and secured by registered bill of mortgage over Town J;
D.AMP Credit Union number …70 in respect of Suburb T and secured by registered bill of mortgage over Suburb T;
E.Any requirement to pay land tax, rates and other outgoings with respect to the properties;
(iii)The parties co-operate with the aforesaid agent(s), auctioneer(s) and/or valuer(s);
(iv)The parties supply the keys to all properties to the aforesaid agent(s);
(v)The parties permit “for sale” signs to be placed on all properties as directed by the aforesaid agent(s);
(vi)The parties ensure all properties, including the grounds, are in a neat and clean condition at the time of inspection by the agents and prospective purchasers;
(vii)The Husband be at liberty to make any and all repairs, maintenance or improvements to the properties necessary to enable the said properties to be presented for sale, with the costs of any and all repairs, maintenance and improvements to be reimbursed to the Husband from the proceeds of sale of the relevant properties upon production by the Husband to the Wife of receipts or tax invoices for such repair, maintenance or improvement costs;
(viii)The parties do and say nothing to hinder or prevent a sale being effected;
(ix)The parties sign all documents and do all acts necessary to give effect to these Orders except signing a contract or agreement for sale which has not been authorised by the parties’ solicitor referred to in Order 6(g)(x) hereof;
(x)The parties engage, for the purpose of the sale of the aforementioned properties, such solicitor as agreed between them and, if not agreed, a solicitor nominated by the Chief Executive Officer of the New South Wales Law Society or the Queensland Law Society (or his or her nominee) as applicable to the location of each of the properties to be sold; and
(xi)The parties make all properties available for inspection at all reasonable times;
(h) The parties have liberty to apply to the Court with respect to the reserve price and the terms, conditions and costs of sale;
(i) Subject to Order 2, upon sale of the properties, the gross proceeds of sale be applied in the following order and manner:
(i)The amount necessary to satisfy the indebtedness of the Husband and the Wife to:
A.St George loan account number …00 in respect of Town P and secured by a registered bill of mortgage over Town P;
B.SGE Credit Union …74 mortgage loan L7.1 in respect of Town A and secured by a registered bill of mortgage over Town A;
C.Adelaide Bank customer number …85 in respect of Town J and secured by registered bill of mortgage over Town J;
D.AMP Credit Union number …70 in respect of Suburb T and secured by registered bill of mortgage over SuburbT;
(ii)In satisfaction of the real estate agent’s commission, advertising costs and auctioneer’s costs (if any) associated with the sale;
(iii)The parties’ taxation liability arising from any capital gains on the sale of the property (“the capital gains tax liability”) and for this purpose, the parties:
A.Will obtain an accountant’s assessment of the likely liability;
B.Pending the issue of Notices of Assessment by the Australian Taxation Office, will set aside sufficient funds from the proceeds of sale to meet each party’s share of the capital gains tax liability, such funds to be invested by the Husband’s solicitors, Hopgood Ganim Lawyers, in a controlled trust account investment at the highest interest rate offered by their trust account bankers;
C.Will cause the funds to be released in payment to the Australian Taxation Office of the assessed capital gains tax liability; and
D.Will indemnify and keep indemnified the other in respect of such share of the capital gains tax liability (including shortfall) in the proportions of 50% to the Wife and 50% to the Husband and each will share in any excess amount after payment of the liability in such said proportions;
(iv)Any arrears of rates, land tax or other statutory charges over the properties;
(v)The legal costs of sale of the properties;
(vi)The amounts paid by the Husband in respect of any necessary repairs, maintenance or improvements to the properties upon production by the Husband to the Wife of receipts or tax invoices for such amounts;
(vii)Subject to agreement otherwise between the parties, the balance will be retained in trust pending settlement of the sale of the last of the parties’ properties to be sold pursuant to these Orders and thereafter the net balance is to be distributed to the parties so as to effect an overall division of the net property of the parties as to 50% to the Wife and 50% to the Husband.
The Husband forthwith sell the properties situated at O Street, M Street and Suburb L as follows:
(a) Within seven (7) days the Husband and Wife list those properties for sale by private treaty with such agent as agreed between the parties and if not agreed, the agent is to be nominated by the Chief Executive Officer (or his or her nominee) for the time being of the Real Estate Institute of Queensland;
(b) The list price for the sale of:
(i)O Street be no less than $260,000.00;
(ii)M Street be no less than $260,000.00;
(iii)Suburb L be no less than $400,000.00;
or as otherwise agreed between the parties and, failing agreement within seven (7) days, at a price to be determined by a valuer nominated by the Chief Executive Officer (or his or her nominee) for the time being of the Real Estate Institute of Queensland;
(c) If a contract for the sale of O Street and/or M Street and/or Suburb L is not entered into at the nominated price (or such other agreed price) within 14 weeks, such properties not under contract be auctioned as soon as practicable thereafter, the reserve price and auctioneer to be determined by agreement between the parties and, if not agreed, the auctioneer be nominated by the Chief Executive Officer (or his or her nominee) for the time being of the Real Estate Institute of Queensland, with the reserve price to be determined by the nominated valuer;
(d) If such property or properties referred to in Order 7(b) above is or are not disposed of by auction, the property or properties will be relisted for sale by private treaty for a further period of twenty-eight (28) days at the reserve price with a further auction, without reserve, to be held immediately at the expiration of the twenty-eight (28) day period, the auction to be conducted by the auctioneer referred to in Order 7(c) subject to agreement between the parties to the contrary;
(e) Either party may bid to purchase any of the properties for sale when they are listed for sale or auctioned;
(f) Either party may buy out the other party’s share at a price agreed between them at any time prior to sale;
(g) Pending the sale of the properties:
(i)The Husband must meet the payment of rates, land tax and other outgoings with respect to the properties;
(ii)The Husband must meet payments due to SGE Credit Union in respect of loans numbered …65 L7; …65 L7.1; …65 L7.6; and …65 L7.7;
(iii)The parties co-operate with the aforesaid agent(s), auctioneer(s) and/or valuer(s);
(iv)The parties supply the keys to all properties to the aforesaid agent(s);
(v)The parties permit “for sale” signs to be placed on all properties as directed by the aforesaid agent(s);
(vi)The parties ensure all properties, including the grounds, are in a neat and clean condition at the time of inspection by the agents and prospective purchasers;
(vii)The Husband be at liberty to make any and all repairs, maintenance or improvements to the properties necessary to enable the said properties to be presented for sale, with the costs of any and all repairs, maintenance and improvements to be reimbursed to the Husband from the proceeds of sale of the relevant properties upon production by the Husband to the Wife of receipts or tax invoices for such repair, maintenance or improvement costs;
(viii)The parties do and say nothing to hinder or prevent a sale being effected;
(ix)The parties sign all documents and do all acts necessary to give effect to these Orders except signing a contract or agreement for sale which has not been authorised by the parties’ solicitor referred to in Order 7(g)(x) hereof;
(x)The parties engage, for the purpose of the sale of the aforementioned properties, such solicitor as agreed between them and, if not agreed, a solicitor nominated by the Chief Executive Officer of the Queensland Law Society (or his or her nominee); and
(xi)The parties make all properties available for inspection at all reasonable times;
(h) The parties have liberty to apply to the Court with respect to the reserve price and the terms, conditions and costs of sale;
(i) Subject to Order 4, upon sale of the properties, the gross proceeds of sale be applied in the following order and manner:
(i)The amount necessary to satisfy the indebtedness of the Husband and the Wife to SGE Credit Union in respect of loans numbered …65 L7; …65 L7.1; …65 L7.6; and …65 L7.7; or such of the loans as SGE Credit Union require to be satisfied to release the title to the relevant property at settlement;
(ii)In satisfaction of the real estate agent’s commission, advertising costs and auctioneer’s costs (if any) associated with the sale;
(iii)The parties’ taxation liability arising from any capital gains on the sale of the property (“the capital gains tax liability”) and for this purpose, the parties:
A.Will obtain an accountant’s assessment of the likely liability;
B.Pending the issue of Notices of Assessment by the Australian Taxation Office, will set aside sufficient funds from the proceeds of sale to meet each party’s share of the capital gains tax liability, such funds to be invested by the Husband’s solicitors, Hopgood Ganim Lawyers, in a controlled trust account investment at the highest interest rate offered by their trust account bankers;
C.Will cause the funds to be released in payment to the Australian Taxation Office of the assessed capital gains tax liability; and
D.Will indemnify and keep indemnified the other in respect of such share of the capital gains tax liability (including shortfall) in the proportions of 50% to the Wife and 50% to the Husband and each will share in any excess amount after payment of the liability in such said proportions;
(iv)Any arrears of rates, land tax or other statutory charges over the properties;
(v)The legal costs of sale of the properties;
(vi)The amounts paid by the Husband in respect of any necessary repairs, maintenance or improvements to the properties upon production by the Husband to the Wife of receipts or tax invoices for such amounts;
(vii)Subject to agreement otherwise between the parties, the balance will be retained in trust pending settlement of the sale of the last of the parties’ properties to be sold pursuant to these Orders and thereafter the net balance is to be distributed to the parties so as to effect an overall division of the net property of the parties as to 50% to the Wife and 50% to the Husband.
Each party is to bear half of the cost of outstanding New South Wales land tax which is in the total amount of $40,301.00.
Upon settlement of the last sale of the real properties referred to in Order 5:
(a) The Husband shall transfer to the Wife all of his right, title and interest in and to the former matrimonial home situate at … F Street, Suburb W, in the State of Queensland;
(b) The Wife shall refinance into her sole name the joint SGE Credit Union loan …74-L7 secured by registered bill of mortgage over the former matrimonial home so as to cause the Husband to be released from all personal covenants, guarantees and liability in respect of same;
(c) The Wife shall deliver to the Husband the … Volvo … in the possession of the Wife;
(d) There shall be an adjustment in favour of the Husband from the Wife’s share of sale proceeds otherwise provided for in these Orders in the amount of $16,500.40;
(e) Any arrears in rates, charges or land tax paid at settlement from the proceeds of sale of each property shall be added back to the balance for distribution and paid from the Husband’s share on distribution of each property;
(f) Any surplus in rates and charges allowed to the Husband and Wife included in the net proceeds of sale of each property shall (excluding land tax) be paid to the Husband from the balance available for final distribution prior to the said final distribution;
(g) Any rebate of land tax available form any relevant state authority shall be the sole entitlement of the Husband to the exclusion of the Wife and paid to the Husband form the said authority;
(h) Where any balance payout of any mortgage secured by any of the properties is in arrears at the date of settlement of the same of same, then such arrears shall be added to the final balance for distribution and paid from the Husband’s share on the final distribution; and
(i) From each party’s share, as the case requires, adjustment to achieve the parties having paid equally the costs of any single expert.
Pending the transfer to the Wife of the former matrimonial home, the Husband shall continue to cause to be paid:
(a) In respect of the former matrimonial home, any periodic mortgage instalments, rates and other outgoings with respect to the former matrimonial home; and
(b) With respect to the … Volvo …, any lease liability.
Within thirty (30) days of the date hereof, the Wife make available for collection by the Husband or his nominee from the former matrimonial home the following items that the Husband shall retain as his property:
(a) Bijar rug;
(b) Z artwork;
(c) Bedside tables;
(d) Y artwork;
(e) Stamp and coin collection;
(f) Black sofa; and
(g) Huon pine cupboard.
The Wife retain as her absolute property the title and possession of and the Husband transfer and assign to the Wife and/or relinquish any right, title, interest and/or claim that he may have to or in the following property and financial resources:
(a) The furniture, chattels and items of household adornment in the possession of the Wife not referred to in Order 11 above;
(b) The Wife’s bank accounts (including AMP Credit Union Rediaccess account …03S1) and all monies standing with a credit balance in those accounts;
(c) The Wife’s superannuation member entitlements;
(d) The Wife’s personal possessions, effects and jewellery;
(e) The Wife’s interest in the estate of her late father;
(f) The sum of $15,000.00 received by the Wife pursuant to paragraph 1 of the Orders of Federal Magistrate Purdon-Sully dated 15 April 2010 (such sum to be characterised as partial property settlement); and
(g) The share of proceeds of … R Street, Suburb S received by the Wife in the sum of $44,176.32.
The Husband retain as his absolute property the title and possession of and the Wife transfer and assign to the Husband and/or relinquish any right, title, interest and/or claim that she may have to or in the following property and financial resources:
(a) The furniture, chattels and items of household adornment in the possession of the Husband and stored at the Husband’s parents’ home;
(b) Pursuant to Order 11, the items mentioned in Order 11;
(c) The following bank accounts of the Husband and the balance standing to credit in those accounts:
(i)SGE Credit Union account number …S1; and
(ii)NAB Classic Banking account number …38;
(d) The Husband’s superannuation member entitlements;
(e) The Husband’s personal possessions, effects and jewellery; and
(f) The Husband’s one (1) ordinary share in X Pty Ltd.
Except for the properties and financial resources expressly dealt with otherwise in these Orders, the Husband and Wife each retain as his or her (as the case may be) own property absolutely all assets and financial resources (other than those dealt with herein) of whatsoever description and wheresoever situate both real and person of which that party is the legal owner or which is in their possession or control.
Except as otherwise expressly provided for in these Orders, the Wife forthwith be responsible for the Wife’s personal liabilities, including:
(a) The Wife’s taxation liability;
(b) The Wife’s liability to V Legal Financing funding; and
(c) Any other liability of the Wife in her name.
Except as otherwise expressly provided for in these Orders, the Husband forthwith be responsible for the Husband’s personal liabilities, including:
(a) The Husband’s Westpac Altitude Gold Credit Card account number …01;
(b) The Husband’s taxation liability; and
(c) Any other liability of the Husband in his name.
The Wife and the Husband deliver to the company accountants as requested from time to time the following information and documentation in relation to any real property(ies) of the parties so as to enable the parties to complete the taxation returns in respect of the Income Tax Assessment Act 1936 (Cth) and Income Tax Assessment Act 1997 (Cth) and for which the parties will be responsible and to assist the parties in arriving at the calculation of the tax payable in respect of the capital gains:
(a) Documentation detailing the consideration for which the parties acquired the property or the market value at the date(s) of the acquisition if acquired other than for valuable consideration;
(b) The date(s) of such acquisition;
(c) The legal costs, duty, disbursements and other related costs incurred about the time of acquisition as incidental costs to the acquisition and the dates upon which those amounts were actually paid, together with all supporting documents;
(d) Complete details with supporting documentations detailing all monies spent on the capital improvement on the property and particularly the dates upon which those monies were expended and the nature of the capital improvements so as to enable the improvements to be identified as having altered the state of the property as at the date of final sale or disposal by the parties;
(e) The amount of the Husband and the Wife’s costs of litigation in these proceedings in relation to the relevant property and when those costs were paid;
(f) The amount of incidental expenses incurred by the Husband and the Wife and the dates of such costs together with supporting documents;
(g) All such further information and documentation which the company accountants may call upon the Husband or Wife to reasonably produce from time to time in their possession, control or knowledge in order to calculate the cost base and value of the relevant property for the purpose of determining the liability to the Australian Taxation Office.
The Husband forthwith retain as his absolute property the title and possession of and the Wife forthwith transfer and assign to the Husband and/or relinquish any right, title, interest and/or claim that she may have to or in:
(a) The Husband’s share in X Pty Ltd;
(b) The Husband’s interests as director and secretary of X Pty Ltd; and
(c) Any loan account in the Husband’s name (whether solely or jointly with others), standing with a credit balance in the books of account of X Pty Ltd.
Within seven (7) days, the Wife do the following:
(a) Transfer and assign to the Husband all of her right, title and interest to and in the one (1) ordinary share held by the Wife in X Pty Ltd and the Wife do all acts and sign all documents necessary to comply with the requirements of the constitution of X Pty Ltd to effect the transfer and to cause X Pty Ltd to register the transfer of the shares under the constitution of X Pty Ltd;
(b) Relinquish any and all right, claim and interest to and in the assets (including X Pty Ltd’s AMP Credit Union account number …83) and the income of X Pty Ltd;
(c) Transfer, novate and assign to the Husband all loan accounts in the Wife’s name (whether solely or jointly with others) standing with a credit balance in the books of account of X Pty Ltd and, if required to give effect to same, complete and execute a deed of assignment of the loan account(s);
(d) Resign as director of X Pty Ltd;
(e) If necessary, resign as an employee of X Pty Ltd;
(f) Authorise the financiers and bankers of X Pty Ltd to cancel all of her signatory arrangements, if any, in respect of the financial accommodations and accounts of X Pty Ltd;
(g) Remove herself from having any access (including any internet or telephone banking access) to the financial accommodations and/or accounts of X Pty Ltd; and
(i)For that purpose, this Order shall be taken to be an authority to any bank, financial institution or credit provider to cancel the Wife’s access to any such accounts; and
(h) Return to the Husband or the company accountants any:
(i)Data files (paper or electronic);
(ii)Computer discs or other computerised records;
(iii)Data lists;
(iv)Books of account and financial records;
(v)Client lists;
(vi)Constitutions;
(vii)Company registers; and/or
(viii)Other documents of any other kind (if any);
held by the Wife relating to or belonging to X Pty Ltd, if any, in her possession, power or control.
The Husband and the Wife shall sign all documents and do all acts necessary, if required, to notify the Australian Securities and Investments Commission of the change of officeholder and shareholder in X Pty Ltd and the Husband will cause all documents to be prepared necessary to ensure the parties’ compliance with the requirements of the Australian Securities and Investments Commission.
The Husband and the Wife shall do all acts and sign all documents as advised by the company accountants to ensure the compliance of X Pty Ltd with the requirements of the Australian Taxation Office, the Australian Securities and Investments Commission, the Corporations Act 2001 (Cth), the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997 (Cth) in respect of X Pty Ltd.
Within seven (7) days, the Husband do the following:
(a) Become responsible for all and any loan accounts in the name of the Wife (whether solely or jointly with others) standing with a debit balance in the books of account of X Pty Ltd and indemnify and keep indemnified the Wife from all liability howsoever arising therein; and
(b) Except where otherwise provided for, use his best endeavours to procure the release of the Wife from all personal guarantees, indemnities, personal covenants, liabilities and obligations of the Wife, howsoever arising, in respect of X Pty Ltd so as to cause the Wife to be released, discharged and forever held harmless from all liability therein, howsoever arising, except where the Wife has been fraudulent, negligent or both, and in the meantime will indemnify and keep indemnified the Wife from all liability therein, howsoever arising.
Costs
There be no Order as to costs in respect of any interim applications or in respect of any costs reserved as a result of such applications.
There be no Order as to costs with respect to the Husband’s application for an Anton Piller Order.
Adult Child Maintenance
Pursuant to s 66L of the Family Law Act 1975 (Cth), the Husband pay or cause to be paid, by way of adult child maintenance, the following amounts to:
(a) Mr MM Myrtle (“MM”), born … 1992, the sum of $200.00 per week net of tax, to an account nominated by MM;
(b) The Wife the sum of $200.00 per week net of tax, to an account nominated by the Wife.
The payment pursuant to Order 25(a) herein will be adjusted pro rata, dollar for dollar, with any income MM receives from government benefits (for example, Youth Allowance) and/or any casual or part-time employment, and MM is required to provide to the Husband a copy of MM’s pay slip or benefit statement within seven (7) days of the pay slip or benefit statement being receive by MM or otherwise made available to MM.
The payment pursuant to Order 25(b) herein will be adjusted pro rata, dollar for dollar with income received by MM received in excess of $200.00 per week from government benefits (for example, Youth Allowance) and/or casual or part-time employment, and MM is required to provide to the Husband a copy of MM’s pay slip or benefit statement within seven (7) days of the pay slip or benefit statement being received by MM or otherwise made available to MM.
The payments in Order 25 will cease upon:
(a) MM commencing full-time employment; or
(b) In respect of any period exceeding six (6) months when MM is not habitually residing in the Wife’s residence; or
(c) The discontinuance of MM’s enrolment at TAFE or university; or
(d) MM failing to pass two or more subjects in one semester forming part of his tertiary study course requirement; or
(e) MM being absent from tertiary study for a period of longer than four months; or
(f) The day on which MM marries or commences residing in a de facto relationship; or
(g) 1 February 2015;
whichever is the earlier.
Pursuant to s 66L of the Family Law Act 1975 (Cth), the Husband pay or cause to be paid, by way of adult child maintenance, the following amounts to:
(a) Ms CC Myrtle (“CC”), born … 1983, the sum of $200.00 per week net of tax, to an account nominated by CC;
(b) The Wife the sum of $200.00 per week net of tax, to an account nominated by the Wife.
The payment pursuant to Order 29(a) herein will be adjusted pro rata, dollar for dollar, with any income CC receives from government benefits (for example, Youth Allowance) and/or any casual or part-time employment, and CC is required to provide to the Husband a copy of CC’s pay slip or benefit statement within seven (7) days of the pay slip or benefit statement being receive by CC or otherwise made available to CC.
The payment pursuant to Order 29(b) herein will be adjusted pro rata, dollar for dollar with income received by CC received in excess of $200.00 per week from government benefits (for example, Youth Allowance) and/or casual or part-time employment, and CC is required to provide to the Husband a copy of CC’s pay slip or benefit statement within seven (7) days of the pay slip or benefit statement being received by CC or otherwise made available to CC.
The payments in Order 29 will cease upon:
(a) CC commencing full-time employment; or
(b) In respect of any period exceeding six (6) months when CC is not habitually residing in the Wife’s residence; or
(c) The discontinuance of CC’s enrolment at TAFE or university; or
(d) CC failing to pass two or more subjects in one semester forming part of her tertiary study course requirement; or
(e) CC being absent from tertiary study for a period of longer than four months; or
(f) The day on which CC marries or commences residing in a de facto relationship; or
(g) 1 February 2016;
whichever is the earlier.
For the purposes of the payments at Orders 25 and 29, the Husband may record the payments made as distributions from the Myrtle Family Trust to the Wife, subject to the Husband indemnifying the Wife with respect to any taxation liability associated with those distributions.
Liberty to Apply
Each of the Husband and the Wife shall have liberty to apply as to the interpretation or implementation of these Orders upon the giving of seven (7) days’ notice to the other.
Other
All other outstanding applications be dismissed and removed from the pending cases list.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Myrtle & Myrtle has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: BRC 11689 of 2009
| Ms Myrtle |
Applicant
And
| Mr Myrtle |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms Myrtle (“the Wife”), born in 1961, commenced cohabitation with Mr Myrtle (“the Husband”), born in 1962, in 1985. They married in 1990 and finally separated on 3 August 2009. Thus the period of cohabitation was approximately 24 years.
The Husband was approximately 23 years of age when cohabitation commenced, and is now 50 years of age. The Wife was approximately 24 years of age at commencement of cohabitation, and is now 51 years of age.
There are two children of the marriage, namely Mr MM Myrtle (“MM), born in 1992, who is thus now aged 20 years, and Ms CC Myrtle (“CC”), born in 1993, who is thus now aged 18 years.
At the commencement of cohabitation, the Wife worked in the finance industry, and continued to so do until shortly before the birth of MM in 1992. The Wife has not been engaged in paid external employment since that time.
At the commencement of the relationship, the Husband worked in the Communications industry, and has continued to so do. On 3 August 2005, the company, X Pty Ltd, was registered and that company acts as trustee for the Myrtle Family Trust. The company employs the Husband as a consultant and enters consultancy agreements with third parties and provides the Husband’s services under those agreements.
Both parties are directors and hold equal shareholdings in X Pty Ltd, and the parties are general beneficiaries of the Myrtle Family Trust. The parties’ children are primary beneficiaries of the Myrtle Family Trust, while the Husband is the guardian and appointor of that trust.
Aside from the Husband’s work in the Communications industry, the parties purchased and operated a retail business called “[FL]” from about 1998 until about early 2000. That business was never successful and incurred losses.
At the beginning of 2000, the family, who had been living in Sydney, moved to Queensland because the Husband obtained a contract with company AA. When they moved to Queensland, MM was approximately 8 years of age and CC was approximately 7 years of age.
The family returned to Sydney in 2002, again because of the Husband’s work. They again returned to Brisbane, Queensland, in 2007, because of the Husband’s employment being based here.
In about July 2008, the Husband secured a new contract for consulting in Perth and was pursuing that employment at the time of the parties’ final separation on 3 August 2009.
Throughout the marriage, the parties were engaged in the buying and selling of real estate, both in New South Wales and in Queensland, and have accumulated a negatively geared investment portfolio of real estate that comprises the substance of the property pool of assets.
Upon separation, the Wife and the children continued to reside in the former matrimonial home at F Street, Suburb W. Following separation, the Husband resided initially in Melbourne, where he worked for a few months, until he took up a consultancy contract in Town BB, Western Australia, where he commenced work in November 2009. The Husband has resided in rented accommodation in Perth and Town BB since, whilst the Wife and children have continued to reside in the former matrimonial home.
The Husband’s income from his consultancy work via X Pty Ltd and the Myrtle Family Trust has maintained the property portfolio of the parties both prior to and since separation as the rental income from the various properties is not sufficient to meet the expenses, including interest on borrowings, incurred in relation to those properties as well as the former matrimonial home.
On 7 July 2010, the Wife commenced study for a degree at university on a full-time basis. However, as at the final trial of the proceedings, the Wife had discontinued those studies, at least temporarily.
History of Proceedings
On 22 December 2009, the Wife filed an Initiating Application in the Federal Magistrates Court seeking final property Orders as well as interim financial Orders. The Wife’s application for interim Orders included an application for periodic spousal maintenance in the sum of $535.00 per week; injunctions restraining both parties from dealing with their real properties and their associated rental income and loans without the consent of the other; an Order for sale of the property owned by the parties at Town P and, relevantly, the following specific Order with respect to the sale proceeds of RR Street, Town J, that had been received by the Husband:
That in respect of the real property owned by the husband and wife jointly and severally, where prior to separation the husband was meeting the necessary loan and other expenses not covered by the income generated from renting the properties, the husband should pay such expenses from the sum of $119,000 received by the husband from the proceeds of the sale of [RR Street, Town J] until such funds and any interest accrued thereon are exhausted and thereafter from his own income until property settlement or further Order, subject to the judge determining any issue arising from this Order at trial.
On the return date of the proceedings initiated by the Wife on 15 April 2010, Federal Magistrate Purdon-Sully made Orders by consent. Those consent Orders included an Order for the Husband to pay the Wife a lump sum of $15,000.00, with the nature and characterisation of such payment to be determined at settlement or trial. Otherwise, the consent Orders provided for valuations of real property and chattels, including furniture, artwork and other items to be obtained; for the parties to attend a mediation; for the parties to provide disclosure; and for the Husband to provide notice to the Wife of any intention to sell any real property which was in the Husband’s name. The application was otherwise adjourned to 6 September 2010.
On 6 September 2010, Federal Magistrate Purdon-Sully set the matter down for final hearing for two days commencing 2 February 2011 and otherwise made directions and Orders with respect to the trial of the proceedings. By that stage, the parties had attended mediation on 16 July 2010, which was not successful in resolving the matter. I ought record that in relation to the consent Order for mediation earlier referred to, I was personally identified in the Order as one of two possible mediators in my then capacity as a private practitioner prior to my appointment. In the result, I did not undertake the mediation, and it was confirmed at an early stage of the trial before me that neither party took any issue about my hearing and determining the matter by reason of my having been previously identified as a potential mediator prior to my appointment.
The Wife’s Application in a Case was heard by Federal Magistrate Purdon-Sully on 5 November 2010. The Federal Magistrate’s Orders in relation to that application are dated 22 November 2010 and the Federal Magistrate’s reasons for judgment in respect of those Orders are dated 23 December 2010. Both the Orders and the reasons for judgment were read before me.
As identified in the Federal Magistrate’s reasons, the issues agitated on 5 November 2010 were, for the Wife, whether she ought receive a lump sum of $29,000.00 by way of interim property settlement, or in the alternative, whether properties should be sold, with the proceeds being distributed to the parties; whether the Wife should receive the sum of $550.00 per week by way of interim spousal maintenance; and the appointment of a Court expert to value two pieces of artwork. On behalf of the Husband, disclosure of specific documents were sought, including documents concerning the two pieces of artwork; documents relating to the Wife’s interest in her father’s estate; documents relating to a loan which the Wife then alleged to be owed to her sister; and other documents therein referred to.
Whilst the Federal Magistrate’s reasons for judgment speak for themselves, it is obvious that the Federal Magistrate was focussed upon a trial of the substantive proceedings occurring on 2 February 2011, and in respect of the interim financial relief sought by the Wife, had at the forefront of her thinking the imminency of the trial of the proceedings.[1]
[1] See, for example, paragraphs 24, 40, 42, 45, 47, 57 and 59 of the reasons for judgment of Federal Magistrate Purdon-Sully dated 23 December 2010.
It may also be observed that the Federal Magistrate was disinclined to make findings, on an interim hearing, given the imminence of the trial.[2]
[2] See, for example, paragraphs 42, 48. 50, 51, 57, 63 and 63 of the reasons for judgment of Federal Magistrate Purdon-Sully dated 23 December 2010.
As the Orders made by the Federal Magistrate on 22 November 2010 reflect, the Wife’s Application in a Case was dismissed, and the Federal Magistrate made Orders for disclosure in respect of the Wife’s inheritance and Orders for expert valuation of the two pieces of artwork in contention.
On 20 January 2011, the Husband, having received the valuation of the single expert, Ms B, of the two artworks in contention, sought and obtained, on an ex parte basis, an Anton Piller Order. The Order of 20 January 2011 and the Federal Magistrates reasons for judgment, are read before me, as well as the transcript of submissions made to obtain the Order being in evidence. That Order, and the costs relating to it, are an issue to be determined, and will be dealt with separately below.
On 2 February 2011, Federal Magistrate Purdon-Sully made an Order adjourning the final hearing and re-listing it for trial for 4 days, commencing on 1 August 2011, in the Federal Magistrates Court. There was an issue as to the filing by the Husband of his affidavit of evidence-in-chief for the trial and affidavits of other witnesses outside of the timetable directed in the trial directions earlier referred to of 6 September 2010. It also appears that the matter, having been initially set down for two days, evolved into one that would obviously not be completed in such a timeframe.
Whilst the Order made by the Federal Magistrate on 2 February 2011 reflects, as noted, the proposed trial proceeding in the Federal Magistrates Court in August 2011, I was informed by both parties that in fact on 2 February 2011, the Federal Magistrate transferred the proceedings to this Court. This seems curious, because in reasons for judgment delivered on 2 February 2011, the Federal Magistrate concludes:
I am adjourning the trial to 1 August for four days. I did consider transferring this matter, obviously to the Family Court, given the fact that it is preferable that any matter that takes longer than three days in this Court should be referred to the Family Court. However, I am conscious of the fact that the matter has been in my docket for some time. I am also conscious of the fact that the Wife has filed some evidence in relation to the stress to her associated with these proceedings. I am sure it is not any less stressful for the Husband, and it is unlikely, in my view, if I did transfer the matter, the (sic) trial dates would be obtained in the Family Court before 1 August.
Whilst nothing in the result turns upon this, I simply observe that events have conspired to delay finalisation of this matter. I record to the parties and their respective legal representatives my apology for contributing to that delay in not delivering these reasons and Orders in as timely a manner as I would have hoped.
On 12 April 2011, the Wife filed an Application in a Case in this Court seeking, inter alia, Orders for interim spousal maintenance. That application was heard by the Principal Registrar on 19 May 2011. In the meantime, on 21 April 2011, Registrar Coutts had made Orders in relation to the hearing of that application, as well as consent Orders allowing for, inter alia, the appointment of a single expert for the purpose of examining the Husband’s iPhone and the digital file from the Husband’s laptop computer containing the metadata in relation to photographs the Husband alleged he had taken of the artwork in dispute.
The Order of the Principal Registrar of 27 May 2011, together with the Principal Registrar’s reasons for judgment, are read before me. The Principal Registrar reserved the Husband’s costs of the application to trial, in circumstances where the Principal Registrar dismissed the Wife’s application for interim spousal maintenance.
On 2 June 2011, Registrar Coutts made further directions in the matter, and the trial was set down for hearing commencing 30 August 2011.
Trial Stage
The initial stage of the trial and evidence at trial proceeded on 30 and 31 August 2011. At the outset of the trial, for reasons then given, I granted leave for the Wife to rely upon the expert evidence of Mr N in respect of an issue of valuation concerning two items of artwork referred to in these proceedings as the “[Mr C] painting” and the “[Mr D] painting”, which are discussed further below.
In the result, a number of witnesses who provided affidavit evidence were not required for cross-examination. For example, the Husband did not require either Dr SS or Dr DD for cross-examination, and neither party in the end result required the parties’ accountant, one Mr GG, to give oral evidence.
On 5 September 2011, the oral evidence of each of the single expert, Ms B, and Mr N, was received on the question of the value of the disputed items of artwork.
For the purpose of submissions received on 5 September 2011, each party provided the Court with a balance sheet.
For the purpose of the record, the Husband’s balance sheet is marked “I1” for identification, and the Wife’s balance sheet is marked, “I2”.
Whilst specific issues as to the identification and value of assets and liabilities of the parties contended for by them respectively will be discussed specifically below, I record from the submissions of each Counsel some aspects relating to each of the respective balance sheets presented at that time.
In respect of the Husband’s balance sheet (I1), it is to be noted that, in respect of any differences in values ascribed to any items of real property, the trial proceeded on the basis that it was unnecessary for the Court to resolve any differences on value on the basis that those items of property with respect to any difference were to be sold. In respect of items of property sought to be retained by both parties respectively, it was ultimately agreed by both parties that there ought be Orders for sale, with each party being at liberty to bid at any auction of those properties.
As at 5 September 2011, the property at R Street, Suburb J, had been sold, but settlement of the sale was yet to be effected. That occurred subsequently and the net figure became known, so the value ascribed to that property and the mortgage amount in each of I1 and I2 respectively, for that item of property, was superseded by subsequent figures referred to below.
Item 3.2a in the Husband’s Balance Sheet nominated a value for certain chattels, namely silk rugs and sideboards. Mr Baston acknowledged in his submissions that objection had been taken to the asserted value and that such objection should be upheld as to value.
An issue which arose during the trial, discussed further below, was the Husband’s wrongful claim, for taxation purposes, that the former matrimonial home was a rental property and other claims relating to the proportions of ownership of investment properties. This was addressed by the parties having their accountants submit amended returns correcting the position. Mr Baston of Counsel for the Husband confirmed that items 5.1a to 5.3, inclusive, in the Husband’s Balance Sheet reflected the amended assessments of taxation as had been calculated by the parties’ accountant, Mr GG. I note in passing that Mr GG provided a further affidavit to the Court confirming the filing of the amended returns of the parties to correct the previous wrongful claim referred to.
Item 5.9 in the Husband’s Balance Sheet was the amount for capital gains tax in respect of the real properties to be sold, as calculated by the parties’ accountant. This calculation includes the two items of property that both parties wished to retain.
Mr Baston of Counsel for the Husband confirmed in his submissions directed to the Husband’s Balance Sheet, that whilst an inheritance of the Wife was included as an “add-back”, that contention was not pursued. It was relied upon solely as indicating funds available to the Wife, rather than being an item that should be added back or notionally included in the pool of assets available for division.
In respect of the Wife’s Balance Sheet (I2), Mr Hamwood of Counsel for the Wife, in oral submissions, amended the figure contended for with respect to the Toyota in the Husband’s possession from the figure of $1,100.00 in the schedule to the evidence of the sale value of $200.00. Mr Hamwood, on behalf of the Wife, did not contend otherwise than was contended by Mr Baston for the Husband in respect of the amended assessments for taxation, as contained in the Husband’s Balance Sheet as earlier referred to.
With respect to the Wife’s Balance Sheet, Mr Hamwood acknowledged that the Wife’s debt to V Legal Financing, her litigation lender, for legal fees, ought not be included in the pool but its existence is of obvious relevance, as are debts of the Husband to his brother not specifically included in the divisible pool.
As at 5 September 2011, both parties informed the Court to the effect that, “…in principle…” agreement had been reached concerning the issue of adult child maintenance, and both Counsel expressed confidence that the parties would be able to provide the Court with Minutes of Orders reflecting that agreement. Likewise, confidence was expressed as to the parties’ ability to formulate agreed Minutes of Orders governing the sale of real property as agreed. In the event, the parties were unable to agree on the terms of these Orders to give effect to their agreement.
At the conclusion of the hearing on 5 September 2011, I gave leave to Mr Baston of Counsel for the Husband to provide further written submissions the next day. Such submissions were filed on 6 September 2011. That led to the filing of further written submissions on behalf of the Wife on 21 September 2011, together with annexures.
On 22 September 2011, an e-mail was received by the Court from the solicitors for the Husband, correcting an error in the Husband’s submissions filed on 6 September 2011. That e-mail is marked, for the record, as “I3”.
On 25 October 2011, correspondence was received from the solicitors for the Husband which, inter alia, confirmed that the parties had been unable to agree on the terms of the Orders for adult maintenance or for the sale of property. That letter is marked for the record as “I4”.
Given the inability of the parties to reach agreement on the proposed terms of Orders, the matter was relisted for further submissions on 15 November 2011. In advance of that, I caused correspondence to be forwarded from the Court to each party identifying areas, apart from the form of disputed Orders referred to, where the Court would be assisted by further submissions. That letter is marked “I5”.
The response of the Husband’s solicitors to that letter is marked “I6”. The response of the Wife’s solicitors to that letter is marked “I7”. In the result, the relisting of the matter was delayed until 6 December 2011. Marked “I8” is further correspondence with attachments from the solicitors for the Wife of 5 December, and marked “I9” are the proposed Orders handed up on behalf of the Wife on 6 December 2011. The proposed Orders handed up on behalf of the Husband on 6 December 2011 are marked “I10”.
Credit Issues
It is necessary to the disposition of this case, given the nature and substance of disputed issues between the parties, that findings as to the credit of each of the Husband and the Wife be made.
Regrettably, each of the Husband and the Wife have demonstrated fundamental failures of honesty and personal integrity, leading to the conclusion that neither is a credible witness, and the Court must adopt a cautious approach to the uncorroborated evidence of either of them on disputed issues of fact.
The Wife
Set out below in some detail in these reasons is discussion of the evidence surrounding the existence of two paintings, and my findings in relation to that evidence, an issue which has occupied a significant part of the dispute between the parties. It will be seen from the findings made in relation to that issue that the Wife’s credibility is fundamentally flawed.
Another important example of the Wife’s lack of credibility concerns her inheritance from her late father.
On 7 June 2010, the Wife received $45,828.45 as a beneficiary of her late father’s estate. That was not disclosed by the Wife at that time, nor had she, at any earlier time, disclosed any expectancy she had to benefit from the estate in circumstances where the Wife’s father passed away in September 2009 and the Wife initiated proceedings in the Federal Magistrates Court on 22 December 2009.
Notwithstanding that the parties proceeded to a mediation on 16 July 2010, pursuant to earlier Orders made by Federal Magistrate Purdon-Sully on 15 April 2010, the Wife continued to conceal her receipt of the funds referred to.
On 16 September 2010, and again on 1 October 2010, the Husband’s solicitors addressed correspondence to the Wife’s solicitors seeking any relevant disclosure about the Wife’s inheritance. Still the Wife failed to disclose.
As earlier noted, on 4 October 2010, the Wife filed an Application in a Case seeking interim financial Orders. Yet again, on 29 October 2010, the Husband, via his solicitors, sought from the Wife, via her solicitors, details as to any inheritance.
Notably, the Wife’s affidavit filed on 4 October 2010, accompanying her Application in a Case, solemnly sworn by her to be the truth, purports to detail the funds available to the Wife since separation and contains detailed particulars of expenditure, yet there is no mention whatsoever of the inheritance or its disbursement.
In an affidavit filed on 4 November 2010, the Wife swore to the following:
…in June 2010 I received payment from my late father’s estate of approximately $45,000. I had disposed of these funds at least a month prior to bringing my application in case (sic) filed 4 October 2010. I paid my sister the bulk of these funds as repayment for monies paid on behalf of the husband and I for works on the property at [Suburb T], and the property at [F Street]. Other expenses were incurred in relation to the family to which I will depose in my trial affidavit in due course.
I did not disclose the existence of these funds because I considered that the funds belonged to me and made it possible for me to discharge certain obligations which I considered needed to be discharged without interference from the Husband. …
As earlier noted, the Orders made by Federal Magistrate Purdon-Sully on 22 November 2010 obliged the Wife to make disclosure of all documents relating to the Wife’s inheritance and all documents relating to the purported loan from, and payments made to, the Wife’s sister.
Faced with that Order and the obvious pursuit of the issue by the Husband via his lawyers, the Wife finally admitted to the falsity of her earlier evidence in paragraph 56 of her affidavit filed 23 December 2010.
The admission by a witness of earlier swearing false evidence to a Court has obvious consequences for the Court’s regard to the evidence generally of such a witness. I find the Wife’s apology to be hollow and late and borne out of being caught out in a lie rather than being motivated by any genuine remorse.
The Husband
During the course of the Husband’s cross-examination, the Husband sought and was granted a certificate pursuant to s 128 of the Evidence Act 1995 (Cth) because of evidence concerning the Husband’s false claims to the Australian Taxation Office. Those claims included that the former matrimonial home at F Street, Suburb W, occupied by the family, was a rental/investment property, and claims as to proportional ownership of other properties as between the Husband and the Wife so as to falsely maximise the taxation position.
Cross-examination of the Husband established that the relevant declarations the Husband caused to be made to the Australian Taxation Office were knowingly false.
Counsel for the Husband submitted that the Husband had been, “…candid…” during his cross-examination on this issue. I find otherwise. Confronted with what was contained in the relevant taxation returns claiming the former matrimonial home as a rental property, the Husband had little option but to acknowledge the falsity of the claim. Otherwise, the Husband obfuscated as to his instructions to the accountant, Mr GG. He attempted to attribute responsibility to Mr GG for the incorrect ownership apportionments as between the Husband and the Wife as contained in the returns, in an obvious attempt to maximise taxation deductions. Mr GG’s evidence makes it plain that the instructions were supplied by the Husband and Mr GG was unaware the family resided at F Street.[3]
[3] See affidavit of Mr GG filed 31 August 2011.
Further, when cross-examined about the content of Mr GG’s evidence, which plainly identifies the Husband, as opposed to the Wife, as the provider of instructions, the Husband repeatedly referred to the Wife having full knowledge of the claims and made several references to her involvement in the preparation of “spreadsheets” supplied to the accountant.
Mr Hamwood challenged the Husband to the effect that such assertions were not contained in his affidavit evidence, to which the Husband responded to the effect that he had not included that detail because he did not think it relevant.
What Mr Hamwood might have put to the Husband are the specific contents of the Husband’s affidavit, which are irreconcilable with this evidence. In a context where it then suited his purpose to minimise the Wife’s role, the Husband deposed to the following at paragraphs 103 and page 52 respectively, of his affidavit filed 27 January 2011:
103. … On many occasions over the years, I asked [the Wife] to prepare the spreadsheets for the properties and help with the administration work to give to the accountants as I was so busy working full-time. On all these occasions [the Wife] refused to assist.
…
In terms of managing the properties and doing the paperwork, I had made repeated attempts to get [the Wife] to ease my burden, but she refused to do this, so I attended to the management of the properties and associated paperwork.
It was the Wife’s refusal to sign the 2009 taxation returns, which initially likewise contained the false claims, that identified this issue as an issue in these proceedings. The Husband’s evidence as a whole on this issue was far from candid. It was misleading. I find the Husband’s credit to be damaged not only by the feature that he was quite prepared to perpetrate a fraud on the Australian Taxation Office, but also by the fact that, rather than taking responsibility for that, sought to attribute blame to the accountant and the Wife.
Taken in cross-examination to his Financial Statements filed 19 April 2010; 27 January 2011; and 22 June 2011 respectively, the Husband confirmed in answers to the effect that he was careful to be accurate in the information he provided in his sworn Financial Statements and had taken care to be truthful. However, cross-examination of the Husband by Mr Hamwood demonstrated that the Husband had understated his income in the first two of his Financial Statements to the tune of $1,500.00 per week, or $78,000.00 per annum. This was suggested by the Husband as the product of, “…oversight…” or that he had, “…overlooked…” the allowance of $300.00 per day he was receiving as part of his income. That suggestion was taken up in submissions on his behalf. I reject it. The Husband confirmed in cross-examination that he was in the habit of checking, on a fortnightly basis, the payments he was receiving, including the daily allowance. He sometimes worked more than five days a week, and thus the total of the daily payments as well as the total for the daily allowances could differ in different fortnightly periods. The Husband was thus well aware of his full income on a daily and weekly basis, and I find he knowingly understated his income in the relevant Financial Statements.
Cross-examination also confirmed that not only did the Husband understate his income by reference to the daily allowance, but the Husband did not include the income he received from the firm, U Company, nor did he include agistment income from the Town P property.
In oral submissions made on 5 September 2011, Mr Baston contended that the Court ought not find that the understatement by the Husband of his income of $300.00 per day (or $78,000.00 per annum) was deliberate concealment, but was rather an “oversight”. In support of this submission, Mr Baston suggested that the error was disclosed by the Husband himself, given the content of the affidavit of his solicitor, Mr Geoffrey Wilson, filed 17 May 2011 where, at paragraph 6, Mr Wilson deposes:
My client instructed me that [X] Pty Ltd is earning less income under the current contract it (sic) was previously earning in Perth where it received $1,050 per day plus a rent abatement of $300.00 per week and a hire car of $33.00 per day.
Leaving aside that the amount identified in Mr Wilson’s affidavit is not a “higher amount” than the actual figures received (as Mr Baston contended), and leaving aside that the Husband, in cross-examination, confirmed that the figures in Mr Wilson’s affidavit were inaccurate (he never received rent abatement or the hire car amount), reference to the reasons for judgment of Federal Magistrate Purdon-Sully, delivered on 22 November 2010, reveals that well before Mr Wilson’s affidavit arrived, the Wife had raised as an issue what the Husband swore in his Financial Statement as compared with the relevant service contract. Paragraphs 49 to 51 of those reasons are as follows:
49. Mr Woodgate submits that the husband has the capacity to pay, and in that regard, he referred me to the husband’s income, property, and financial resources as follows.
50. He submits that the husband has a greater income than that disclosed by him in his financial statement. However, because the husband’s consultancy agreement entitles him to certain daily expenses over and above his daily consultancy fee, that does not entitle me to extrapolate from that, based on the evidence before me, an additional income of $78,000 for the reasons submitted by Mr Wilson.
51. Further, Mr Wilson contends that it would be dangerous to draw the inferences that Mr Woodgate urges upon me, based on bank balances, in light of the fluidity of the husband’s operating accounts and the level of his commitments on behalf of the parties. I accept that submission. This will be a matter for tested evidence at trial.
Whilst the Federal Magistrate did not specify, “…the reasons submitted by Mr Wilson,” the plain meaning of this extract is that Mr Woodgate, on behalf of the Wife, was then actively agitating that the Husband’s sworn Financial Statement understated his income by reference to the service contract. The Husband, via Mr Wilson, actively dissuaded the Court from treating his daily allowance income (the $78,000.00 reference) as part of the Husband’s income.
Thus, not only is it not the case that the Husband himself first disclosed the, “…error…”, as Mr Baston contended, the Husband, at that hearing via his solicitor, actively dissuaded the Court from concluding that the allowances were part of his income, as was in fact the case.
This issue, having been squarely raised by Mr Woodgate on behalf of the Wife on 22 November 2010, the affidavit of Mr Wilson, filed 17 May 2011, obviously prepared on the Husband’s instructions, rather than assisting the Husband’s credit on this issue, further damages it.
There was no correction of this obvious misstatement for the purpose of the hearing before Principal Registrar Filippello, and it is clear from the reasons delivered by the Principal Registrar, likewise read before me, that the Principal Registrar had regard to the earlier reasons of Federal Magistrate Purdon-Sully to which I have referred.
I find that the Husband deliberately understated his income by a massive amount when faced with claims by the Wife for interim financial relief, and thereby corrupted the integrity of the process before Federal Magistrate Purdon-Sully. That in turn appears to have been an influencing factor in the further determination by the Principal Registrar, given the latter’s references to, and apparent reliance in part upon, the reasons of Federal Magistrate Purdon-Sully referred to.
As cross-examination of the Husband by Mr Hamwood demonstrated, whilst the Husband had claimed in each of his Financial Statements filed on 19 April 2010 and 27 January 2011 respectively, that his expenses exceeded his income, inclusion of the understated amount of income would have, in each case, demonstrated a significant excess of income over claimed expenses. By way of example, in his first Financial Statement, the Husband swore to a shortfall between income and expenses of $266.00 per week. If the $1,500.00 per week daily allowance is included, the Husband would have demonstrated a weekly surplus of $1,234.00. The claimed shortfall in the 27 January 2011 Financial Statement is $215.00 per week, so that the addition of $1,500.00 per week would demonstrate a weekly excess of $1,285.00. These figures are without including also the income from U Company or the agistment.
Specific reference is made below to the Husband’s receipt of the net proceeds of sale of the RR Street property. As there referred to, in each of his affidavits filed 19 April 2010; 2 November 2010; 5 November 2010; and 27 January 2011, the Husband maintained, in resistance to the Wife’s attempts to receive whole or part of the funds, or alternatively to receive an accounting for the funds, that the funds were needed to be retained by the Husband to meet joint expenses. At no point did the Husband suggest that the funds would be used or had been used to pay his own legal fees. As to that, the Husband’s case throughout the proceedings, including in paragraphs 50 and 51 of his trial affidavit, was that he had paid his legal costs from his own income. In fact, the Husband did not pay all of the identified and anticipated expenses repeatedly referred to from the RR Street proceeds, and he in fact applied $57,620.16 of the proceeds, about half of them, to payment of his legal fees. It was not until the parties exchanged costs letters in advance of the trial that he made disclosure of the payment of his legal fees. When called to give evidence, he did not correct this issue prior to his cross-examination by Mr Hamwood.
At paragraphs 55 and 56 of the reasons for judgment delivered by Federal Magistrate Purdon-Sully in support of the Orders made on 22 November 2010, the Federal Magistrate made specific reference to there being no capital sum available to meet payments sought by the Wife and referred to there being tax payable (a reference to capital gains tax) with respect to the sale of the RR Street property.
Thus, the Husband managed to convince the Court that he should retain the RR Street proceeds in total on the basis of the need for them to be used for joint purposes, with the result that the Wife had to resort to a commercial funder for litigation funding at 16.5% interest, whilst the Husband in fact used a substantial part of the capital sum to pay his own legal fees, without disclosing that until trial.
The Husband failed to disclose until he was under cross-examination that of the $100,000.00 fund retained by the Wife at separation from the term deposit, the Husband had been paid, at his request, $35,000.00. There is no accounting for that sum in the Husband’s affidavit material.
It follows from the above findings that I find that neither the Wife nor the Husband were credible witnesses upon whose evidence the Court can have confidence in relying, particularly in respect of disputed issues and where their evidence is uncorroborated.
Approach to Property Settlement
It is now well-settled that the preferred approach to the determination of an application brought pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) involves four inter-related steps.[4]
[4] See, for example, Hickey & Hickey (2003) FLC 93-143.
First, I should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Second, I should identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c), and determine the contribution-based entitlements of the parties which can be expressed as a percentage of the net value of the property of the parties. Third, I should identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g) (“the other factors”), including, because of s 79(4)(e), the matters referred to in s 75(2), so far as they are relevant, and determine the adjustment, if any, that should be made to the contribution-based entitlements of the parties established at step two. Fourth, I should consider the effect of those findings and determinations and resolve what Order is just and equitable in all the circumstances of the case.
In many cases, it is legitimate for the Court to adopt a global approach to the overall entitlement of parties to property, which involves the division of the parties’ assets on an overall proportion on a global view of the total assets. Alternatively, it may in the circumstances of a particular case be legitimate to adopt an asset-by-asset approach involving a determination of the parties’ interests in individual items of property.[5] There may also be circumstances dictating a “two pools” approach where non-superannuation assets and superannuation assets receive separate treatment.[6]
[5] Norbis & Norbis (1986) FLC 91-712.
[6] Coghlan & Coghan (2005) 93-220.
In this case, each party proposed that a global approach be taken, including both non-superannuation and superannuation assets in a single pool, and I am satisfied that a just and equitable outcome is achieved by adopting a global approach to a single pool including superannuation. Neither party contended for any splitting Order with respect to their respective superannuation entitlements.
In circumstances where I am to consider both Orders for property settlement and the Wife’s additional application for spousal maintenance pending her receipt of final settlement, I ought determine the property Orders before considering maintenance as the relevant financial positions of the parties need to be reassessed in light of the property Orders before maintenance is considered.[7]
[7] Albany & Albany (1980) FLC 90-905; Pastrikos & Pastrikos (1980) FLC 90-897; Anast & Anastropoulos (1982) FLC 91-201; Clauson & CLauson (1995) FLC 92-595; and Bevan & Bevan (1995) FLC 92-600.
Step 1 - Issues as to Items and Value of Assets and Liabilities
Whilst I will deal in topic form with each area of dispute, the overarching requirement is to do justice and equity to both parties holistically, so that the disputed areas are dealt with in topic form for convenience rather than reflecting an entirely disjunctive approach given the significant overlap between many of them.
Existence of two paintings
A significant issue which has permeated these proceedings and the trial is the existence and value of two paintings by a style of artists. Because the evidence on this issue is extensive, so, too, must be discussion of it.
The Husband’s case, as set out in paragraphs 13 and 14 of the Husband’s affidavit sworn 13 January 2011,[8] is that he purchased a painting by the artist, the late Mr C, from a private gallery in or about the year 2000 for approximately $5,000.00. The Husband deposes to its dimensions being approximately 2m x 0.5m. The Husband deposes to purchasing a painting by Mr D, “…in or around 1984…” for $3,000.00. He gives the dimensions of that painting at 2m x 1.4m.
[8] Attached to the affidavit of Ms Shauna Foley, filed 20 January 2011.
For convenience, these paintings will be referred to respectively as “the Mr C painting” and “the Mr D painting”.
The Husband’s case is that these paintings hung in the respective dwellings occupied by the parties from time to time over the period since the respective purchases; that in respect of the Mr C painting, there existed photographic evidence of the artist painting the work; that the files and records of the parties included invoices or receipts for the purchases, and relevantly in respect of the Mr C painting, documents authenticating its provenance as a painting by Mr C.
The Husband’s case is that both paintings were hanging in the former matrimonial home upon the parties’ separation and that the Wife has actively concealed both paintings from the disclosure and valuation processes in these proceedings.
The Wife’s case is that the paintings do not exist. Whilst Mr Hamwood of Counsel for the Wife submitted that the Wife’s denial of any knowledge of the paintings may not necessarily be the same thing as a denial of the existence of the paintings, the Wife’s position, in light of all of the evidence, can only be sensibly understood as a denial of the existence of the paintings. Likewise, Mr Hamwood’s submission to the effect that if the Court found that the paintings did exist, it was possible for the Court to infer that the Husband retained them, is not a proposition which is sensibly open on the evidence. There was no assertion by the Wife herself of such a possibility in any of her evidence, and that submission, let alone the inference, is not open on the evidence.
The evidence on this issue discussed below compels a positive finding as to the existence of the paintings.
Part of the Husband’s case is that prior to the parties’ separation on 3 April 2009, he took photographs of each of the paintings as he was investigating the possibility of leasing the paintings. Exhibits 3 and 4 in the proceedings are copies of the photographs which the Husband transferred from his iPhone to his laptop computer. The Husband’s contention that he investigated the possibility of leasing the artworks is corroborated by Exhibit 10 in the proceedings, being an e-mail from Mr EE of Company HH.
I find that the Husband took the photographs, as he said he did, sometime prior to the parties’ separation as reflected in Exhibits 3 and 4.
The Husband relied upon the expert evidence of Mr LL, who provided an affidavit filed on 31 March 2011, as expert evidence that photographs taken by the Husband, including those reflected in Exhibits 3 and 4, were completely authentic and had not been modified, tampered with, or altered in any way. The expertise of Mr LL was not challenged by the Wife and he was not required for cross-examination. I accept his evidence.
I note in passing that, during cross-examination of the Husband, Mr Hamwood of Counsel for the Wife challenged the Husband to the effect that in respect of the subject photographs, the Husband had not provided the “metadata”, being the data stored in digital photographs, including the date taken and like data, to verify the authenticity of such photographs. However, I find that such challenge only served to highlight the significance of the Wife’s failure to take up the invitation to have an expert inspect the Husband’s iPhone and laptop computer if she wished to challenge the veracity of the digital photographs, an invitation made to the Wife and her legal representatives long before the trial and facilitated by the Order of 21 April 2011 to which I earlier referred. By swearing to the taking of the photographs as he did and supplementing the evidence by the unchallenged expert evidence of Mr LL, the Husband plainly met any evidentiary burden upon him to prove, on the balance of probabilities, that the photographs were taken by him when he says they were, and that they are authentic photographs. In those circumstances, it was for the Wife, if she chose to so do, to challenge the authenticity of the photographs by further investigation, whether via the metadata or otherwise.
Ms JJ Myrtle, the Husband’s mother, provided an affidavit filed 28 January 2011 and was cross-examined at trial. She freely acknowledged, both in her affidavit and in her oral evidence before me, that the subject artwork was, “…not [her] cup of tea.” To my mind, that acknowledgment added credence to the oral evidence she gave, describing the subject paintings. I accept her descriptions of the paintings and that her recollection of them is based upon her observations of those paintings on visits to the parties’ former matrimonial home in 2007 and 2008 and that she was able to match her recollection of the paintings she observed on those visits with the copied photographs (Exhibits 3 and 4) which were sent to her for the purpose of preparation of her affidavit. That is, I accept that she gave a description from her own recollection of the paintings rather than from seeing the copied photographs. Her oral evidence was to the effect that, because of the dimensions of the subject paintings, one could not help but notice them when present in the relevant rooms where the paintings hung in the former matrimonial home.
The paintings are of a distinctive nature and, as the Husband’s mother put it, she could, “…pick them really easy…” in terms of identifying the paintings she observed on her visits.
I accept the Husband’s mother’s evidence. That acceptance extends to her deposition in paragraph 18 of her affidavit, unchallenged in cross-examination, as to her conversation with the Wife on the first occasion that the Husband’s mother saw the paintings. The Husband’s mother deposes:
…I said to [the Wife] words to the effect that they were not my cup of tea. I recall that [the Wife] said to me words to the effect that they were “worth a lot of money”. [the Wife] said to me words to the effect that she liked the paintings.
It follows from my acceptance of the Husband’s mother’s evidence that not only was the Wife aware of the existence of the subject paintings, but that she liked them and apparently considered them to be worth a lot of money.
Mr KK, the Husband’s step-brother, provided an affidavit on this issue which was filed on 28 January 2011, and Mr KK was cross-examined in the trial. Similar to the Husband’s mother, Mr KK was forthright as to his views on the subject artwork. He records in his affidavit telling the Husband words to the effect that he, “…absolutely hated the artwork…” and in his oral evidence, confirmed this with words to the effect of, “I hate [this style of] painting.” That likewise added credence to the descriptions of the artwork which Mr KK was able to give, which descriptions plainly matched the Mr D painting and the Mr C painting respectively. Mr KK was able to give detailed particulars of the location of the paintings in the former matrimonial home, noting in particular that one of them was hung behind a large television set which he had gifted previously to the parties. In referring to the Mr D painting, Mr KK made critical comment of the, “[…]” as he described it, appearing on that painting, and referred to the initials that could be made out on the Mr C painting.
The Wife has also notionally contributed to the sale proceeds of RR Street received by the Husband, and the $35,000.00 in capital he has had the use of from the term deposit over the period post-separation whilst she has had to resort to a commercial provider to fund her litigation expenses. Even though I have made specific findings as to the inclusion of any debts of the Wife to her sisters as a “pool” item, it is to be noted that the Wife was not challenged about her needs as claimed in the post-separation period, or the need to resort to borrowing or receiving advances from family members to fund those needs. That is properly recognised as a contribution factor on her account to the extent that her needs would otherwise have to be met out of available assets.
Mr Baston, on behalf of the Husband, relying mainly upon the feature of the initial $30,000.00 received by the Husband from his family and, more particularly, the $330,000.00 received later; taken with the lack of evidence asserting that this money was wasted or lost on extravagances, submitted that there ought be an adjustment in favour of the Husband of not less than 15%. By referring to “adjustment”, Mr Baston was referring, in a short hand way, to an alteration from an equal assessment, given the length of the parties’ marriage. That is, I do not take it that Mr Baston was urging any presumption of equality as a starting point, but rather, recognising the length of the marriage and that an equal division might otherwise be appropriate, the particular contributions referred to ought result in a 65% / 35% division of the parties’ property in the Husband’s favour, taking all relevant elements into account.
In agitating for the 15% adjustment, Mr Baston highlighted in respect of the injection of a total of $360,000.00 that this amount approximated 26% of the pool (the pool for which the Husband contended). However, an adjustment of 15% produces a disparity between the parties of 30%. A 30% disparity on the current pool would effectively return to the Husband in full, or perhaps more than in full depending upon the final outcome, that monetary injection.
Mr Hamwood of Counsel for the Wife submitted to the effect that it was by no means clear to what extent, if at all, the contribution of funds derived from Uncle VV’s estate had an effect on the current value of the pool. Mr Hamwood referred to evidence as to losses of $270,000.00 to $300,000.00 from the retail business and referred to the possibility that the gift was entirely, “…swallowed up…” in the retail business debt. I have already dealt with that argument.
Mr Hamwood also referred to some of the real estate investments as not being particularly favourable, and submitted that offsetting this contribution was the Wife’s contribution as a homemaker and parent both up and until separation, and also in the period since separation. Mr Hamwood submitted that the Wife’s role as homemaker and parent very significantly offsets the contributions of the Husband, with particular emphasis upon the introduction of the subject capital. On that basis, Mr Hamwood submitted that there ought be a 10% adjustment in favour of the Husband such that contributions should be assessed overall at 55% / 45% in favour of the Husband.
In my judgment, a disparity of 30% between the parties on the divisible pool as contended for on behalf of the Husband for contribution-based entitlement, places too much emphasis upon the capital introduced by the Husband via his family, given the many and varied other “myriad” of contributions by both parties over a significant period of time, having regard also to the overall length of the marriage and the Wife’s role as a homemaker and parent.
In my view, the 20% disparity contended for on behalf of the Wife, rather than a 30% disparity, is appropriate having regard to the overall contributions of each party, both financial and non-financial, having regard to the net value of the pool.
I therefore assess the parties’ contribution-based entitlements at 60%/40% in favour of the Husband.
Step 3 - ss 79(4)(d),(e), (f) and (g) – Including s 75(2) Factors
The Husband will retain what is, on any view, a high earning capacity. Mr Hamwood of Counsel referred to Best & Best (1993) FLC 92-418 in highlighting the significance of the Husband retaining that capacity. It is a capacity which affords the Husband to be self-employed with the attendant advantages of that, and which will enable him to continue to make investments. He is 51 years of age and given the sedentary nature of his employment, ought be able to exercise that capacity for a significant future period.
Whilst Mr Hamwood contended that the Husband’s capacity ought be regarded as the capacity to earn approximately $280,000.00 per annum in his business (and by reference to the relevant contract in Perth, the Husband has at times earned at this or greater levels), I accept the submissions on behalf of the Husband that his capacity ought be identified by reference to his historical earnings, which reflect a capacity in the order of $230,000.00 per annum.
Whilst it was submitted on behalf of the Husband that a gross of approximately $230,000.00 ought be reduced by the incidence of income tax without any deductions, it is clear on the Husband’s history that he has actively pursued tax effective investments and is likely to do so in the future.
Against that, the Husband’s agreed liability for adult child maintenance will be, as submitted on his behalf, $41,600.00 per annum, and although this can be structured in a tax effective way via the Myrtle Family Trust, will nevertheless be of significance in terms of a responsibility the Husband will continue to have.
The Husband will continue, until sales of property as proposed eventuate, to have the responsibility of maintaining expenses in relation to the various properties until final settlement can be achieved.
Nevertheless, even if the Wife achieves her retraining and can earn an income in the order of $50,000.00 per annum, there is nevertheless a significant disparity of income earning capacity between the parties.
Whilst I accept that the Wife’s medical conditions, in terms of her psychological issues, as well as her physical limitation in the form of plantar fasciitis, as referred to by Dr DD, have placed some limitations upon the Wife’s capacity for employment, I do not accept that either historically or in the future the Wife will be precluded from earning a reasonable income in the order of that she has ambitions to earn.
CC was completing her grade 12 education last year, and it was anticipated that both children would be in tertiary education for several years from now. In the way of things, it is not necessarily certain that the Wife will retain responsibility for both children or either of them for many years to come, given that MM and CC may decide upon paths that do not see them continuing to reside with the Wife or her maintaining the responsibilities she has maintained for them thus far.
Obviously, the Wife will receive property as a result of these proceedings.
Plainly enough, the Wife’s commitments as a homemaker and parent over the duration of the marriage has contributed to the income-earning capacity of the Husband and has the corollary that the duration of the marriage has had an effect upon the earning capacity of the Wife.
It was contended on behalf of the Husband that an adjustment of no more than 10% should be made in favour of the Wife with respect to s 75(2) factors, albeit in the context that the Husband’s starting point was a 65% / 35% apportionment on contributions.
For the Wife, it was contended that a 15% adjustment ought be made. I consider that a 15% adjustment on the subject pool, giving rise to a 30% disparity, would be disproportionate, and I consider that the 10% adjustment (or 20% disparity) contended for on behalf of the Husband gives proper and proportionate weight to the relevant factors to be considered.
In reaching that conclusion, I have taken into account the s 75(2)(o) factors earlier identified in the course of these reasons.
I therefore consider that an overall 50% / 50% division of the divisible pool I have identified ought be the outcome.
Step 4 - Just and Equitable Orders
The structure of the parties’ asset holding comprising multiple negatively geared investment properties which need to be sold to achieve a financial resolution for both of them; in circumstances where prevailing market conditions are not particularly favourable; and in circumstances where allowance must be made for potential substantial capital gains tax; it follows that there may be some time to come before final resolution is achieved.
The nature of the parties’ financial structure means that the Wife will only realistically be able to obtain or retain the former matrimonial home property once final financial settlement is achieved. In the meantime, it is unrealistic to conclude that the Wife would have the capacity to refinance the current mortgage debt on the former matrimonial home into her name, with a transfer to be effected in the immediate future, as was contended for by the Husband.
In the circumstances of this case, it is just and equitable that until there can be a final financial settlement, the Husband ought be responsible for continuing to manage income from the investment properties, together with his own income, in meeting the outgoings with respect to all properties, including the former matrimonial home.
An issue debated at the time of final submissions was said to be, “…control…” of the sales of property as well as the receipt of investment income in the meantime pending final settlement. In circumstances where the Husband will bear continuing responsibility to ensure the payment of relevant outgoings, I conclude that it is reasonable that the Husband retain control of the management of investment income, given also that obviously he will need to resort to his own income to some extent in meeting shortfalls between investment income and outgoings on the relevant properties, pending final settlement. Of course, as sales progress, any gap between income and expenditure will reduce, and how quickly that occurs depends upon which of the properties is first to sell.
The potential capital gains tax liabilities are significant, but also of significance is the Wife’s debt to V Legal Financing. I consider that it is just and equitable that from the first or early sales of property, each party receive as part of their final distribution, an initial payment of $120,000.00 so that in the Wife’s case, she will be able to use funds to discharge debt which is attracting high interest.
As has already been noted, I intend to give effect to the concession made by both parties respectively, to the extent that they each initially sought to receive particular property (other than the former matrimonial home), that it was appropriate that there be Orders for sale with the capacity for each party to seek to “purchase” such property as they see fit.
In relation to the former matrimonial home, the trial was conducted throughout on the basis that the Wife wished to retain this property. Belatedly, the Wife sought different Orders which would see her having the option at the time of the last settlement of the sale of other property of either retaining the home or choosing to sell it and seeking to have the costs of disposition taken into account.
In circumstances where the trial was conducted on the basis referred to, and because there ought be no or no substantial capital gains tax upon the former matrimonial home as the parties’ principal place of residence, I consider it just and equitable that the Wife retain this property, and if she chooses at a later time to dispose of it, she may do so.
Moreover, in circumstances where the Husband will remain responsible for the payment of mortgage debt and other outgoings on the former matrimonial home until final settlement is achieved, by that stage the Wife will be able to make a more informed decision and have an obviously known capacity as to any decision to retain or subsequently sell the former matrimonial home, which will be transferred to her at the time of the last sale.
I do not propose to set out, in detail, each and every of the differences between the proposed Orders of the parties. In circumstances where there was a dispute about even into which solicitor’s trust account funds should be deposited, it would be unproductive and unnecessarily indulgent to engage in detailed exposition of the resolution of each and every matter of fine detail in dispute between the parties.
I have considered each of the parties’ proposed Orders, together with the submissions made on their respective behalves by Counsel in the oral submissions that were made on 5 September and 6 December 2011, along with the documents tendered or forwarded in the meantime prior to that date in formulating the Orders overall.
That includes the Orders with respect to adult child maintenance, the substance of which was not ultimately a matter of agitation at trial. That is, as was conveyed by the parties’ respective Counsel, they had agreed the substance of the adult child maintenance, and all that remained was the mechanics. I consider that there is nothing unreasonable in the Orders sought by the Husband in terms of giving effect to the agreement that was conveyed to the Court. I do not consider there to be unreasonable difficulty about any necessary calculations to be performed at the end of a financial year to ascertain the Wife’s taxation position in view of the receipt of adult child maintenance in the manner proposed by the Husband.
To some extent, each of the proposed Orders sought by each party respectively were agreed to be modified in the course of oral submissions on 6 December 2011, and I have sought to incorporate also any agreed amendments.
In respect of the items in the divisible pool not being sold, on the basis that the Wife receives a transfer of the Husband’s interest in the former matrimonial home subject to the mortgage, the Wife will receive, or be taken to have already had the benefit of, the following:
a)Equity in F Street, Suburb W $147,000.00
b)Share of proceeds of R Street, Suburb S $44,176.32
c)Furniture $26,741.00
d)Mr D painting $10,000.00
e)Mr C painting $15,000.00
f)Jewellery $3,665.00
g)Legal fees $27,083.00
h)Superannuation $8,322.00
That amounts to a total of $282,183.60.
The Wife will also bear the following liabilities:
a)Her outstanding taxation liability ($19,505.73)
b)Half share of outstanding New South Wales land tax ($20,150.00)
Therefore, the Wife’s net position would be $242,331.59.
In respect of the Husband, he will receive or retain or be taken to already have had the benefit of the following:
a)Share of proceeds of R Street, Suburb S $44,176.32
b)SGE Credit Union account $1,168.00
c)NAB Classic Banking account $15,835.00
d)Chattels $6,216.00
e)Furniture items stored at Husband’s parents’ home $5,000.00
f)X Pty Ltd $10,105.00
g)Proportion of RR Street proceeds $83,000.00
h)Funds received from term deposit $35,000.00
i)Superannuation $72,152.70
That amounts to a total of $275,973.02.
The Husband will also bear the following liabilities:
a)His outstanding tax liability ($26,671.83)
b)Half share of New South Wales land tax ($20,150.00)
That amounts to a total net position of $225,831.19.
Thus, to achieve an overall 50% / 50% division of the above, it will be necessary that there be an adjustment of $16,500.40 in favour of the Husband out of the sale proceeds of the properties to be sold.
Spousal Maintenance
The Wife seeks an Order that, pending her receipt of final financial settlement, she be paid spousal maintenance of $550.00 per week.
There was no challenge in the cross-examination of the Wife to her claimed expenses.
Section 72 of the Act provides that:
A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so if, and only if, that other party is unable to support herself or himself adequately…
Section 72(1) sets out the three circumstances which may cause the need for maintenance to arise and, relevantly here, provides in sub-paragraph (b):
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; …
having regard to any relevant matter referred to in subsection 75(2).
In Bevan & Bevan (1995) FLC 92-600 (“Bevan”), the Full Court of this Court set out the process for assessing a spousal maintenance claim as:
Taken together then, we would state the law as being that an award of spousal maintenance requires:
1. A threshold finding under s 72 [now s 72(1)];
2. Consideration of s 74 and s 75(2);
3. No fettering principle that pre-separation standard of living must automatically be awarded where the respondent’s means permit;
4. Discretion exercised in accordance with the provisions of s 74, with ‘reasonableness in the circumstances’ as the guiding principle.
The first question is whether the Wife is unable to support herself adequately.
In Nutting & Nutting (1978) FLC 90-410, Lindenmayer J interpreted “adequately” within the meaning of s 72 of the Act as importing:
A standard of living which is reasonable in the circumstances, including the circumstance that the parties are no longer husband and wife and that the assets and resources which were formerly available to them both in common have now been divided between them.
In Saxena & Saxena (2006) FLC 93-268, Coleman J set out the four steps that the Court should follow as:
1. To what extent was the Wife unable to support herself?
2. What were the Wife’s reasonable needs?
3. What capacity did the Husband have to meet an order, if one were made?
4. If steps 1 to 3 favoured the Wife, what order would be reasonable having regard to s 75(2) of the Act?
As noted above, the Wife has now received her share of the proceeds of the Suburb S property. Whilst it was submitted that those proceeds would need to be paid to the Wife’s debt to V Legal Financing in the amount of $120,000.00 and monies borrowed from her sisters, whilst the V Legal Financing amount exceeds the amount received by the Wife from the Suburb S property, there is no evidence before me of a pressing requirement for the Wife to pay the whole of those proceeds towards that debt. I recognise that at an interest rate of 16.5%, the Wife is keen to remove that debt as soon as possible.
Whilst I accept that the Wife has had medical issues, in circumstances where, as at the trial, she had discontinued her full-time study, I am not satisfied that the Wife would not be able to meet her reasonable needs between now and receiving financial settlement as proposed in the Orders. That is, with the Wife to receive some priority when property is sold.
I note that in paragraph 17 of her affidavit filed 12 April 2011, the Wife acknowledges a capacity to undertake, “…jobs of a reception nature…” and although she there identifies the need to attend to the children as a limiting factor, it is the fact that both children are now adults and there ought be no limitation by reference to any of their needs upon the Wife now being able to undertake full-time employment.
I propose to order that the Husband continue to cause the mortgage and other outgoings on the former matrimonial home to be paid until there is a final financial settlement. Continuation of payment by the Husband of the mortgage debt on the former matrimonial home, together with other outgoings, which may be for some time to come until settlement of all sales is completed, is obviously of significance in terms of support of the Wife pending the final financial settlement in the matter.
I therefore consider that the Wife does not meet the threshold issue.
Even if I am wrong about that, I am not satisfied that, beyond maintaining the position with respect to the former matrimonial home and taking into account the adult child maintenance the Husband is to pay as well as meeting any shortfall between rentals and other income of the properties and their expenses, in the interim period prior to final settlement the Husband demonstrates a capacity to otherwise contribute to the Wife’s maintenance.
I therefore decline to make any Order with respect to interim spousal maintenance.
Costs
Anton Piller Proceedings
Each party seeks an Order for costs in respect of the Anton Piller application heard and determined by Federal Magistrate Purdon-Sully on 20 January 2011.
Whilst Mr Hamwood of Counsel for the Wife contended that I ought treat this trial as the first return date of the ex parte Order made on 20 January 2011, I decline to so do. The Federal Magistrate did not make a return Order as is sometimes made with ex parte applications. Rather, the Federal Magistrate gave the Wife liberty to relist the matter to dissolve or vary the Orders on the giving of 24 hours’ notice.[22] The Wife had that option. The Order was exercised months before trial. In any event, Mr Hamwood confirmed that the reason for seeking dissolution of the Anton Piller Order was referable to the costs issue, and that is the real issue between the parties.
[22] See paragraph 6 of Orders made 20 January 2011 by Federal Magistrate Purdon-Sully.
The contention on behalf of the Husband is, obviously, that if the Wife had properly disclosed the existence of the Mr D painting and the Mr C painting, there would have been no need to bring the application for an Anton Piller Order, given that the evidence confirms that other items that were the subject of the Anton Piller Order, such as furniture and jewellery would not, without the issue concerning the paintings, have motivated such an application.
The duties of litigants and their legal representatives to act with candour on an ex parte application are well-established. All the facts relevant to the relief sought, whether or not that supports the grant of the relief, must be laid before the Court.[23]
[23] See Thomas A Eddison Ltd v Bulloch (1912) 15 CLR 679, 681-3; R v KensingtonIncome Tax Commissioner (1917) 1 KB 504 (CA); Mobasser v Mankervis (1983) FLC 91-335.
Aside from this duty, the failure to disclose a material fact in an ex parte application for an injunction, subsequently exposed on the next return date, commonly leads to the discharge of the injunction whether or not, if the disclosure had been made, the injunction would still have been granted.[24]
[24] See Stowe (1981) FLC 91-027, 76,2601; Bentley v Nelson [1963] WAR 89; Dean (1977) FLC 90-213, 76,095; Lee (1977) FLC 90-314, 76,678; Oates (1980) FLC 90-853, 75,397.
The valuation report of Ms B, dated 6 January 2011 and annexed to her affidavit filed 27 January 2011, does not contain any positive assertion to the effect that Ms B might assign a higher value than the $182,000.00 she gave to the Mr C painting if she were given the opportunity to inspect the original work. As already noted, Ms B confirmed in oral evidence that she proceeded on the assumption that the work was in excellent condition and that its provenance as a Mr C painting was not in doubt. It follows that if there were any doubt about this at the time of receiving Ms B’s report, that could have been readily clarified by a question to Ms B as the expert.
No evidence directly from Ms B to this effect was put before the Federal Magistrate for the purpose of the application. For obvious reasons, given the approach taken by Ms B, that evidence would not have been forthcoming.
Notwithstanding that feature, the Husband deposed to this at paragraph 32 of his affidavit sworn on 13 January 2011 and attached to the affidavit of his solicitor, Ms Shauna Foley, filed by leave on 20 January 2011:
Without being able to access the artwork, the valuer is limited to placing a value on the paintings “sight unseen” by working off the photographs and the artist (sic) reputation. I verily believe that if the artwork is valued “in person” then the artwork and particularly the [Mr C] may have an increased valuation (above $182,000), as [Mr C] is now deceased, his paintings are in high demand, and the valuer, in attributing a “sight unseen” value, is unable to determine the precise characteristics of the painting which will be marked on the back of the canvas.
Better attention to detail in terms of carefully considering the report of Ms B ought properly to have avoided Mr Baston making submissions consistent with his client’s affidavit, but inconsistent with the actual evidence, when Mr Baston appeared on the application. The transcript of the proceedings is attached to the affidavit of the Wife filed on 24 August 2011. Mr Baston did not correct what the Federal Magistrate said at page 6, lines 5-10 of the transcript and indeed, from line 40, Mr Baston apparently referred to the paintings, “…potentially…” having a value, “…over $300,000 and more depending upon…”
In particular, at page 7 of the transcript commencing at about line 5, Mr Baston submitted as follows:
MR BASTON: Just two paintings. It all depends upon their condition. They are valued now conservatively, based on sight unseen. This is [a style of] art. The nature of the production originally of the artwork brings with it all sorts of problems about its preservation and the like, and that’s why it has been conservatively valued. The prejudice to my client is it may well ultimately – the Anton Piller order goes to two things to assist in establishing that the artworks exist and are in the former matrimonial home and [to] gain a proper value to it. …
The Federal Magistrate was thus misled to come to the conclusion that the Mr C valuation was conservative and that there was significant potential for it to be valued at a value significantly higher than that ascribed by Ms B in her report if the work could be inspected. Thus the Federal Magistrate was led to believe that the damage to the Husband, potential or actual, was serious.
That the Federal Magistrate operated on this basis is plain from her reasons for judgment. For example, at paragraph 21 of her reasons, the Federal Magistrate specifically referred to the Husband’s concern about undervalue and notably, at paragraph 32(b), the Federal Magistrate, in referring to what she identified as three essential pre-conditions to the granting of such an Order, referred in (ii) to, “…the damage, potential or actual, must be very serious for the applicant.” At paragraph 33(e), the Federal Magistrate specifically refers to the potential that the valuation was an, “…undervalue…”
I have earlier referred to the authorities reflecting that the failure to disclose a material fact in an ex parte application for an injunction, subsequently exposed on the next return date, commonly leads to the discharge of the injunction, whether or not, if the disclosure had been made, the injunction would still have been granted.
It matters not whether the Federal Magistrate would still have made the Anton Piller Order if given the correct facts, and if not misled to the misunderstanding of the evidence of value.
On an urgently listed ex parte application where there was substantial material and the applicant was represented by solicitors and Counsel, the Federal Magistrate sensibly took the approach of relying upon the submissions made to her rather than undertaking the analysis which would have revealed to the Federal Magistrate that there was in fact no reliable evidence that a different or higher value would be obtained if the original artwork was inspected.
The application for the Anton Piller Order was supported by, inter alia, the affidavit of the Husband’s solicitor, Ms Shauna Foley, filed 20 January 2011, containing undertakings and the Order was made upon such undertakings.
Relevantly, paragraph 4 of the affidavit of Ms Foley sets out the undertakings offered.
Ms Foley was cross-examined before me. Having regard to her evidence under cross-examination, I am comfortably satisfied that there was a failure to provide the Wife with any reasonable opportunity to obtain legal advice before complying with the Order. Paragraph 4(a), containing the relevant undertaking, can only be sensibly understood as meaning that the Wife was to be given the explanation that she had the right, “…to obtain legal advice before complying with the Order…” meaning that there would be an opportunity for that to occur. On the oral evidence of Ms Foley, when at the doorway of the Wife’s residence, the Wife informed those seeking to enter that she was proposing to telephone her solicitor. When the Wife then attempted to close the door, forcible entry was immediately effected.
I find that there was a significant failure of candour on the part of the Husband in the affidavit he swore in support of the application as referred to, and likewise, there was a significant failure in the duty owed by those representing him when the application was heard.
I further find that there was a significant failure in the manner in which the Order was executed.
It is noted that the Federal Magistrate raised at the hearing the prospect of an independent person supervising the execution of the Order. Counsel for the Husband, by reference to unspecified authorities, suggested that such an approach ought not be taken in this case, mainly having regard to costs. I do not know to what authority or authorities Counsel was there referring as they were not there identified. That approach is inconsistent with the approach set out by Branson J in Microsoft Corporation v The Good View Electronics Pty Ltd & Anor (1999) 46 IPR 159 at [30] as follows:
The service of the order by the supervising solicitor, a neutral appointee of the Court, should assist in ameliorating the shock likely to be experienced by the occupier of premises when the order is served. Further, the supervising solicitor will then be in a position:
(a)to give immediate and independent advice to the occupier as to the significance of the order;
(b)to ensure that the occupier has an appropriate opportunity to obtain his or her own legal advice should he or she so desire;
(c)to mediate any dispute as to whether any particular member of the applicant’s search team is an unsuitable member of the team on the basis, for example, that he or she might derive commercial advantage from an inspection of the premises;
(d)to ensure the proper protection of privileged documents (if any);
(e)to attempt to achieve agreement on a suitable search procedure;
(f)to assess whether items or documents come within the terms of the court order and, in the case of doubtful material, to ensure its safekeeping pending an order of the court;
(g)to ensure that an appropriate list is prepared of all items or documents to be removed from the premises; and
(h)generally to assist in the smooth execution of the order.
The importance of safeguards in the granting of Anton Piller Orders, including by the involvement of an independent solicitor or other person, is well-established on the authorities.[25] These authorities were cited with approval by Thackray J, sitting as the Full Court of this Court in Tael & Bonnard Equipment Pty Ltd& Leo (2008) FLC 93-379.
[25] PMSI Group v Wilson [2003] NSWSC 263, [8] (Campbell J); Television Broadcasts Ltd v Nguyen (1988) 21 FCR 34, 38; Long v Specifier Publications Pty Ltd (1998) 44 NSWLR 545, 547.
Reference to such authority by Counsel for the Husband might have led to a different approach, and avoided the unfortunate events that unfolded in the way in which this particular Order was executed.
In the circumstances, I conclude that it would not be “just” within the meaning of s 117(2) of the Act, to make an Order in favour of the Husband for costs of the Anton Piller application.
Nor, in circumstances where it is clear that no such application would have ever been made if the Wife had properly disclosed the paintings, would it be “just” within the meaning of s 117(2) of the Act for the Wife to have an Order for costs in her favour.
I therefore order that there be no Order for costs with respect to the Anton Piller application.
Interim Proceedings - Costs
The Husband’s failure to meet his absolute duty of disclosure in respect of his income and his receipt of the $35,000.00 earlier referred to; as well as his application of a substantial part of the RR Street proceeds to his own legal costs contrary to his various depositions, permeated and frustrated each of the interim proceedings.
For her part, the Wife’s failure to disclose her inheritance, followed by her false evidence as to the use of the funds; followed by her belated rectification; taken also with her failure throughout the proceedings to make full and proper disclosure with respect to the subject artwork, likewise permeated and frustrated the interim stages of these proceedings.
In the circumstances, I find that it would not be “just” within the meaning of s 117(2) of the Act for either party to receive a costs Order in their favour with respect to any of the interim proceedings in this matter.
I therefore order that there be no Order as to costs of either party with respect to interim applications.
I make Orders as set out at the commencement of these reasons.
I certify that the preceding three hundred and sixty-one (361) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 19 June 2012.
Associate:
Date: 19 June 2012
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