Oldham & Krantz (No 2)
[2024] FedCFamC1F 347
•23 May 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Oldham & Krantz (No 2) [2024] FedCFamC1F 347
File number: MLC 8578 of 2019 Judgment of: STRUM J Date of judgment: 23 May 2024 Catchwords: FAMILY LAW – PROPERTY SETTLEMENT – De facto relationship – Self represented litigants – Value of property – Expert evidence – unpaid taxation liability of parties’ company – Duty of court to protect revenue – Just and equitable to make an order – Negligible admissible evidence of parties’ respective contributions – Duty of the Court in adversarial proceedings to proceed on evidence, albeit minimal – Interest in unvalued overseas property treated as financial resource – On limited evidence, nothing to distinguish parties contributions – Contributions found to be equal – No s 90SM(4)(e) adjustments or account of s 90SF(3) factors – Order for taxation liability to be paid and for intervenors’ claims to be paid from each party’s respective shares – No funds ultimately to be received by the parties. Legislation: Family Law Act 1975 (Cth) ss 90SF(3), 90SM
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 3.07, 12.15
Cases cited: Biltoft & Biltoft (1995) FLC 92-614; [1995] FamCA 45;
C& C [1998] FamCA 143
Commissioner of Taxation v Worsnop & Anor (2009) FLC 93-392; [2009] FamCAFC 4
Deputy Commissioner of Taxation v Kliman & Kliman (2002) FLC 93-113; [2002] FamCA 629
Gollings & Scott (2007) FLC 93-319; [2007] FamCA 397
Grier & Malphas [2016] FamCAFC 84
Hickey & Hickey & Attorney - General for the Commonwealth of Australia (Intervenor) (2003) FLC 93-143; [2003] FamCA 395
Lainhart & Ellinson (2023) FLC 94-166; [2023] FedCFamC1A 200
Oldham & Krantz [2024] FedCFamC1F 293
P and P [Tax evasion] (1985) FLC 91-605; [1985] FamCA 10
Pavlic & Pavlic [2023] FedCFamC1A 54
Re F: Litigants in person guidelines (2001) FLC 93-072; [2001] FamCA 348
Sadasivam & Seshan (2019) FLC 93-899; [2019] FamCAFC 76
Stanford &Stanford (2012) 247 CLR 108; [2012] HCA 52;
Stella & Stella [2023] FedCFamC1F 1092
Zdravkovic & Zdravkovic (1982) FLC 91-220; [1982] FamCA 23
William Shakespeare, King Lear, Act 1, Sc 1, line 90
Division: Division 1 First Instance Number of paragraphs: 90 Date of hearing: 25–27 March 2024 Place: Melbourne The Applicant: Litigant in person The Respondent: Litigant in person ORDERS
MLC 8578 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR OLDHAM
Applicant
AND: MS KRANTZ
Respondent
ORDER MADE BY:
STRUM J
DATE OF ORDER:
23 MAY 2024
THE COURT ORDERS THAT:
1.The balance of the proceeds held upon trust for the applicant and the respondent by N Lawyers, together with the funds standing to their joint credit with K Bank, (totalling approximately $215,000) be applied as follows:
(a)first, in payment of the primary taxation liability of E Pty Ltd as at 30 June 2022 (in the order of approximately $170,000), together with any penalties and interest thereon; and
(b)secondly, the balance, if any, then remaining be divided equally between the applicant and the respondent, subject to orders 2 and 3.
2.From any funds receivable by the applicant pursuant to order 1(b) hereof, prior to receipt by him, there be paid:
(a)first, the sum of $130,000 to M Pty Ltd, pursuant to order 1(a) of the Orders made on 7 March 2024; and
(b)secondly, the sum of $72,278.91, together with any interest accrued thereon, to Mr O and Mr P, as liquidators of Q Pty Ltd (in liquidation), pursuant to order 1(b) of the Orders made on 7 March 2024.
3.From any funds receivable by the respondent pursuant to order 1(b) hereof, prior to receipt by her, there be paid the sum of $116,807.76 (or such lesser amount as may be agreed or taxed), but with no interest payable thereon, to N Lawyers pursuant to order 2 of the orders made on 25 March 2024.
4.The applicant retain, in particular:
(a)the proceeds of sale of motor vehicles received by him (in the agreed sum of $60,000;
(b)his shareholding in E Pty Ltd; and
(c)liability for his credit card liabilities and his personal loan from Westpac Bank.
5.The applicant, save in respect of the primary taxation liability of E Pty Ltd and any interest and penalties thereon, to the extent that same are payable from the funds referred to in order 1 hereof, as between the applicant and the respondent, the applicant otherwise be liable for and pay and indemnify and keep indemnified the respondent against any liability of E Pty Ltd and any liability of the respondent howsoever arising to or in relation to E Pty Ltd (including any loan account/s owing by her to the said company).
6.The respondent retain, in particular:
(a)her motor vehicle and watch; and
(b)liability for her credit card liabilities.
7.In respect of such of the furniture and paintings previously situated at C Street, Suburb D in the State of Victoria, which are in the respondent’s possession or control, she make same available for collection on behalf of the applicant by professional removalists nominated by and at the expense of the applicant, upon not less than three business days’ notice in writing by him to her.
8.Save as otherwise provided by these orders, each of the husband and the wife be and is hereby solely entitled, as against the other, to all property and financial resources in their respective names, possession or control or to which they otherwise are or may become entitled, and indemnify and keep indemnified the other party in relation thereto.
9.The parties do all acts and things and execute any documents reasonably necessary to give effect to these orders and should either party fail to execute any document within seven days of their being so requested, a Registrar of the Court pursuant to s 106A of the Family Law Act 1975 (Cth) be and is hereby appointed and authorised to sign such documents on behalf of such party.
10.All extant applications be otherwise dismissed and the proceeding be removed from the docket of the Honourable Justice Strum.
AND THE COURT NOTES THAT:
A.Pursuant to section 90ST of the Family Law Act 1975 (Cth), as far as practicable, it is intended that these orders will finally determine the financial relationships between the parties to the de facto relationship and avoid further proceedings between them.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Oldham & Krantz has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
STRUM J
In his tragedy, King Lear, William Shakespeare wrote: “Nothing will come of nothing” (King Lear, Act 1, Sc 1, line 90). Over the course of the trial of the parties’ competing applications for property settlement, in which they each appeared self-represented, I endeavoured to convey this message to them, albeit possibly less eloquently so. However, it fell upon deaf ears.
For the reasons that follow, in broad terms, other than some assets of modest or no value, including, in the latter case, the parties’ business, as well as some personal liabilities, the primary assets available for division between the parties are comprised of the balance of the proceeds of sale of a real property, in the order of $175,000, and a bank account with an agreed balance of $40,000, and the main liability is comprised of a taxation debt of the parties’ company, which conducts their business, in the order of $170,000. I shall order that taxation liability to be paid by the parties from those proceeds of the sale and the bank account. Hence my reference to the passage from King Lear. For reasons that will become apparent, there will be nothing left.
BACKGROUND
The applicant was born in 1963 and is 61 years of age. He is self-employed. The respondent was born in 1967 and is 58 years of age. She is similarly self-employed.
The parties were in a de facto relationship. They commenced cohabitation in or about 2011 and separated in or about May 2019.
There are no children of the relationship. The parties were previously in other relationships and the respondent has an adult child, who was about 15 years of age at the commencement of cohabitation.
The proceedings were instituted by Initiating Application filed on 1 August 2019, in which the applicant sought, by way of final relief, an unspecified “just and equitable alteration of the property interests of the parties pursuant to s 90SB [sic]” of the Family Law Act 1975 (Cth) (“Act”). On 18 September 2019, the respondent filed a Response to Initiating Application in which she too sought, by way of final relief, an alteration of interests in property.
It took nearly five years for the trial of these proceedings finally to be listed for trial and to commence, in large part due to the interlocutory skirmishes in which the parties sought to engage and to ongoing non-compliance by them with orders made for the matter to be prepared and ready for trial. Over 120 documents have been filed by the parties and there have been over 20 hearings. However, even when the trial commenced before me, on Monday, 25 March 2024, it was woefully under-prepared. Nevertheless, neither party sought an adjournment that day. They told me that they were ready and wished to proceed and, given the time over which this matter has been pending in this Court, it was not appropriate for it to be further adjourned. The Court does not provide an incubation service for cases until they are ready, at the pleasure of the parties and/or their solicitors, proverbially, to hatch.
Over the course of the proceedings, third parties have come and gone. Indeed, as late as Thursday, 21 March 2024, with only one working day before the commencement of the trial, N Lawyers, who were previously solicitors on the record for the respondent, filed a Notice of Intervention by Person Entitled to Intervene. Contrary to r 3.07(2)(b)(ii) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“Rules”), the affidavit filed therewith did not attach a schedule setting out the orders sought by that firm. However, on the first day of the trial, orders were made by consent that relevantly provided for the respondent to pay to her former lawyers, “from her final property settlement in these proceedings the sum of $116,807.76, or such lesser amount as may be agreed or taxed, with no interest payable” and no order as to costs between them. Those orders having been made, N Lawyers were removed as a party to the proceedings.
Another of the third parties to have been involved in these proceedings was the applicant’s new partner, who was the second respondent. She was previously joined to the proceedings in circumstances where the applicant, in an undisputed breach of an injunction made on 5 August 2019, had transferred to her shares held by him in E Pty Ltd, which conducts their business, trading as S Business. Over the course of her appearances at interlocutory hearings, at which she was at all times self-represented, I observed the interactions between the applicant and her at the Bar table, as well him attempting to make submissions on her behalf, both when she was and was not present in Court. I formed the impression, albeit preliminary and inconclusive, that she was but a puppet or alter ego of his. However, I do not need to make any findings in this regard. It was an agreed fact between the applicant and the respondent at trial that the shares have been re-transferred to him by his new partner. Further, she did not appear at trial, seeking to rely upon a medical certificate dated 14 March 2024, not annexed to an affidavit by the author thereof, opining that she “[s]uffers from chronic Anxiety and Depression for which she is on medication”; that, in relation to her appearance at trial, “[s]he feels that this would exacerbate her condition as she would find this very stressful”; and that the author “agree[d] that she should avoid attending, if possible, to avoid an exacerbation of her condition”. That medical certificate was marked Exhibit R2-1. Whilst I acknowledge, as a general proposition, that litigation may be stressful for the parties thereto, especially when self‑represented, on no occasion when she previously appeared did she inform me that she was stressed, nor did I observe any signs of distress on her part.
That medical certificate was forwarded under cover of a letter by her to my chambers dated 20 March 2024 in which she purported to notify the Court that she would not be attending at trial due to “ill health”, but asserting that she is owed $108,000 by E Pty Ltd in respect of the period “during which the company was under my name and that I held in trust & good faith” (sic) and that “[a]part from the $108,000 [E Pty Ltd] owes me, I have no financial interest in [the applicant's] assets”. The second respondent was called outside of Court but, unsurprisingly in the circumstances, there was no response to the call. Whilst, in her letter, she advised that she was available by telephone, if required, and she specified her telephone number therein, when my associate attempted to contact her by telephone in Court in the morning of the first day of the trial, she did not answer the call. In circumstances where no relief was sought against her by either of the applicant or the respondent; she failed to appear; she sought no relief from the Court in any response (or, indeed, application) of her own; and she failed to file any affidavit for trial, in support of her allegation that she was owed any money by E Pty Ltd, I made a further order on the first day of the trial that she too be removed as a party to the proceedings, leaving only the applicant and the respondent.
Further, on 7 March 2024, orders were made by consent that the applicant pay, from his ultimate entitlement ordered in these proceedings, in the following order and priority:
·first, to the (then) second intervenor, M Pty Ltd (being former solicitors on the record for the applicant), the sum of $130,000; and
·secondly, to the (then) third intervenor, Mr O and Mr P as liquidators of Q Pty Ltd (In Liquidation), the sum of $72,278.91, together with any amount of interest accrued thereon.
Those orders having been made that day, it was further ordered that those intervenors cease to be parties and that there be no orders as to costs as between the applicant and the second intervenor.
Another matter, long in issue in the proceeding, was the respondent’s alleged interest in one or more properties in Country H. As early as 28 January 2022, more than two years ago, when the matter first came before me in my docket, orders were made in relation to property there. On 7 February 2022, interlocutory orders were made by me, in Chambers, by consent, orders 5–6 of which provided:
5.Within 7 days of the date of this Order, the Respondent provide to the Applicant the names of three (3) valuers in [Country H] to for [sic] the purposes of providing a sworn valuation of the property in [Town T], in [Region U] ("[Town T] Property") and [V Street, Town W, Country H], (“[Town W] Property"), and the Applicant choose one of the three valuers within 7 days, and the solicitor for the Respondent thereupon provides to the valuer a joint letter of instruction with a copy of the applicable Family Law Rules in respect of joint valuations for the [Town T] Property and the [Town W] Property respectively.
6.The sworn valuation report on the [Town T] Property be filed in this Honourable Court within 7 days of the date of the valuation report by the Respondent.
Further orders were made in relation to property in Country H on 10 May 2022, which noted, at order 6(a) thereof, in relation to the Town T property, that the respondent did not concede she has any interest in that property and asserted it is owned by her sister. Nevertheless, she agreed to use her best endeavours to cause her sister to cooperate with the preparation of a valuation, “without prejudice to her right to argue at the final hearing that this property should not be included in the pool of assets available for distribution between the parties”.
Orders were also made by me in relation to property in Country H on 27 October 2022, which provided for Mr R, a Country H valuer, to be appointed as the single expert witness to value the Town T Property and the Town W Property (collectively the “Country H properties”), with a similar notation in relation to the Town T Property to that contained in the orders made on 10 May 2022.
Notwithstanding these orders, no valuation reports in relation to the Town T Property and the Town W Property appear to have been filed in these proceedings, and certainly not annexed, as required, to affidavits of valuers who may have prepared same and/or interpreters who may have translated same from Country H language into English.
Nevertheless, on Friday, 22 December 2023, being the last working day before the Court’s Christmas/NewYear break, at or about 1.40 pm, the applicant filed an Application in a Proceeding seeking, inter alia, that the respondent’s sister and her husband be joined as parties to the proceedings; declarations pursuant to s 90SL of the Act that the applicant and the respondent have an equitable interest (to an unspecified extent) in each of the Country H properties; that the said properties be sold “immediately”, with him to have the conduct of the sales; and that the proceeds of sale “the funds be repatriated to Australia and be part of the asset pool for judgement and distribution in the final trial in March 2024”. That application was made returnable on 7 March 2024 and, on that date, I dismissed it and delivered reasons for judgment for so doing. See Oldham & Krantz [2024] FedCFamC1F 293. In summary, I found that it was “too little, too late”, in circumstances where the proceedings had been pending since 2019; orders had been made since 28 January 2022, and not complied with, in relation to those overseas properties; the matter was listed for trial in less than three weeks’ time; the joinder of the proposed further respondents would inevitably necessitate an adjournment of the trial; and, in any event, there was no evidence in relation to the recognition and enforceability of any orders of this Court in Country H. Whilst this Court is mandated by s 90SM of the Act to make orders that are just and equitable, proceedings in this Court, certainly in relation to financial matters, remain adversarial in nature and the parties are, or should be, bound by their conduct thereof.
In Lainhart & Ellinson (2023) FLC 94-166, the Full Court said:
28Courts exercising jurisdiction under the Act must decide justiciable disputes, by conventional adversarial procedure, between imperfect litigants on the available evidence according to law by making prescriptive and enforceable orders within statutory power to quell the controversy. That is the unique and essential function of judicial power (Rizeq v Western Australia (2017) 262 CLR 1 at [52]; Fencott v Muller (1983) 152 CLR 570 at 608; Harrington v Lowe (1996) 190 CLR 311 at 325). The judicial function cannot be delegated to others, apart from to registrars in limited circumstances, and only then subject to the right of de novo judicial review (Harris v Caladine (1991) 172 CLR 84 at 95, 120–122, 145, 150–151, 160 and 163–164).
29Courts must take the litigants as they find them when determining causes of action under Pt VII of the Act. Courts are not, and cannot operate like, therapeutic agencies, using litigation as the vehicle to meddle by making aspirational directions about how litigants should improve their parenting capacity in the hope of enhancing their children’s familial experiences.
30As the High Court of Australia recently said in GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore [2023] HCA 32 at [19]:
The normative structure of the Australian legal system is that it is adversarial in nature. … The independence and impartiality of [the court] is protected, in part, by the confining of [the court’s] role to deciding the case on the basis of the evidence which each party elects to tender … The adversarial system … does not permit the judge to engage in “an inquisitorial role in which [the judge] seeks … to remedy the deficiencies in the case on either side”. The judge “hear[s] and determine[s] the issues raised by the parties” and does not “conduct an investigation or examination on behalf of society at large”.
(Footnotes omitted)
Insofar as the Full Court referred at [29] to the requirement that courts “must take the litigants as they find them when determining causes of action under Pt VII of the Act”, I consider the requirement to apply equally, if not more so, to proceedings under Part VIII of the Act, which involve the finances of the parties, rather than their children whose best interests are the paramount consideration.
As observed above, the case was in a deplorable state of preparation by the parties. I acknowledge that, being self-represented, this was a difficult task for them; however, that is no excuse. Legal representation is a privilege, not a right. Nevertheless, I endeavoured to provide them with the guidance set out in Re F: Litigants in person guidelines (2001) FLC 93-072.
Despite orders having been made, and varied, on a number of occasions, to ensure the matter was ready to proceed at trial, it was not. The orders sought by each of the parties in their respective minutes were, in part, unintelligible and, in part, incapable of being made. Their evidence, in their respective affidavits, was largely inadmissible or otherwise deficient. Contrary to the Rules, and in breach of orders, the respondent sought to rely upon three affidavits. There was no reply affidavit by the applicant. There was no electronic court book. The parties did not have copies of many of the documents they sought to tender, either in soft or hard copy. The applicant did not file a Case Outline. There was no joint chronology of agreed facts, nor was there a joint balance sheet. Documents were filed late.
APPLICATIONS AND EVIDENCE
The applicant relied upon:
·his further amended Initiating Application filed 5 February 2024;
·his affidavit filed 5 February 2024;
·his Financial Statement filed 5 February 2024;
·his minute of orders sought, marked Exhibit A-1; and
·his list of assets and liabilities contended by him, marked Exhibit A-2.
The respondent relied upon:
·her further amended Response to Initiating Application, filed 3 March 2024;
·her affidavit filed 21 February 2024;
·with my leave, her affidavit filed 4 March 2024;
·with my leave, her affidavit filed 18 March 2024; and
·her Financial Statement filed 3 March 2024.
As I have observed above, at the commencement of the trial, each party’s case was in a parlous state of preparation. It did not improve over the course of the hearing. In circumstances where the parties were self-represented, I was not much assisted by the cross-examination by each of them of the other. Nevertheless, notwithstanding the “known unknowns” and the evidentiary lacunae, I am seized of jurisdiction and must decide this case within those constraints.
The affidavits of the parties were drawn by each of them respectively; the vast majority of the contents thereof are inadmissible, being replete with material that is, inter alia, hearsay, unqualified expert opinion, comment, argument and conclusion. In the case of the applicant, his affidavit was witnessed by his former solicitor and discloses that it was prepared/settled by that solicitor. Nevertheless, it was clarified by the applicant that it had in fact been drawn by him. However, there is no explanation why that solicitor, when he witnessed the applicant’s signature thereon, did not notice the error, which appears on the same page as the jurat. Had the affidavit been drawn by that, or indeed any other, solicitor, in that form, I may well have made an order, of my own motion, as I am entitled to do, pursuant to r 12.15 of the Rules, inter alia, restraining such solicitor from charging for drawing that affidavit or requiring such solicitor to disgorge any funds already paid therefor. No competent lawyer should or, indeed, could draw an affidavit in that form.
Further, the parties relied upon the affidavit of the jointly appointed single expert, Mr X, of Y Valuers, who prepared a valuation report dated 7 August 2023 in relation to E Pty Ltd, trading as S Business, as at 30 June 2022.
Each of the parties also relied, albeit belatedly, upon a minute of orders sought. In the case of the applicant, he seeks, in summary:
·the payment to him of the balance of the proceeds of sale of the real property situated at C Street, Suburb D in the State of Victoria (“Suburb D property”), held upon trust for the respondent and him by N Lawyers, in the sum of $175,202 (“Suburb D sale proceeds”);
·the payment to him of the sum of $40,000, standing to the credit of the respondent and him in an K Bank offset account (“the K Bank funds”);
·the retention by the respondent of “her property in [Country H]” (as asserted by him and denied by her) subject to a number of payments (in respect of which there was no admissible evidence); and
·the delivery up by the respondent to him of various chattels.
Whilst the applicant initially sought the sale of S Business, he no longer pressed for it at the conclusion of the trial and advised the Court that he was content to retain it, together with E Pty Ltd, in which it is held.
In the case of the respondent, she seeks, in summary:
·the payment to her of the Suburb D sale proceeds, after payment of monies owing to two firms of solicitors which previously acted for her;
·the payment to her of the K Bank funds;
·the retention by the applicant of E Pty Ltd and S Business owned by it;
·the retention by her of the furniture, paintings and other effects removed from the Suburb D property; and
·the payment by the applicant to her of an outstanding costs order, together with various reserved costs.
JUSTICE AND EQUITY
Both the applicant and the respondent seek orders pursuant to s 90SM(1) of the Act. Therefore, at least implicitly, they concede that it is just and equitable to make an adjustive order under that subsection, as required by s 90SM(3). In the circumstances of this case, as set out herein, I am satisfied that it is just and equitable to make an order under s 90SM(1). However, what orders it is then just and equitable to make is another matter. It is well settled that it may be just and equitable to make an order under s 90SM(3) in respect of some property but not in respect of other property. See Stella & Stella [2023] FedCFamC1F 1092 and the cases referred to therein. I am also conscious to avoid conflation in my consideration of the matters in s 90SM(3) and s 90SM(4), although they ae not unrelated.
ASSETS, LIABILITIES AND FINANCIAL RESOURCES
The agreed assets (including add-backs) are, and the values thereof are rounded, as follows:
·The Suburb D sale proceeds, in the order of $175,200;
·The K Bank funds, in the sum of $40,000;
·The respondent’s motor vehicle, with an agreed value of $6,000;
·The respondent’s watch, with an agreed value of $10,000;
·E Pty Ltd, with a nil value, for the reasons which follow; and
·By way of add-back, the proceeds of sale received by the applicant of the sale of his motor vehicles, in the total order of $60,000–
a total of $291,200.
The respondent has a Commonwealth Bank of Australia account, the balance of which, immediately before and at trial, was de minimis ($2,368 and $985 respectively). Given the quantum thereof, the fact that the parties separated some five years ago and that the applicant did not disclose (nor did the respondent ascribe any figure to) the balance of his cash at bank, if any, in the exercise of my discretion, I decline to include the respondent’s bank account.
As to the value of E Pty Ltd, which owns and conducts S Business, the single expert valuer, in summary, opines that, as at 30 June 2022:
… the business as reported indicates an ongoing likelihood of losses and that any income method to value the business is not appropriate. It also appears that there are limited tangible assets owned by the business …
On this basis, it is our view that the market value of 100% of the equity of [E Pty Ltd] as at 30 June 2022 is Nil.
We are also of the view that:
The ongoing performance of the business will not materially change our assessment of the value.
…
(Emphasis in original)
In considering the tangible assets of the company, the single expert opines that they are very limited, comprised (as at 30 June 2022) of $59,000 in cash and $14,800 in accounts receivable. Further, there are loans owing to the company by the parties of $610,000. The single expert also reports that the company had a commercial loan of $532,000 owing to K Bank and debts owing to the Australian Taxation Office, then in the order of $153,000.
In respect of the loan owing to the company by the parties, which was recorded as an asset thereof, the single expert reported that:
A significant amount of asset value resides in the loan to the owner (reported as a $610k asset). We have assumed this loan is a recoverable loan, with monies to be paid to the company by relevant parties. We have not sighted any loan documentation or agreement to repay the loan, although we would expect this to be subject to a Div 7A ATO loan with the amounts treated as wages to owners.
If this loan is not to be repaid or subject to any Div 7A loan requirements, then the net asset [sic] of the company will be significantly more negative and may indicate the company is not a going concern.
We have assumed this loan will be repaid to the company.
(Emphasis in original)
The single expert, having appropriately adjusted the balance sheet, concludes that the “negative net asset value indicates the value of the equity in the company remains Nil” and that it does not include goodwill or any amounts for the business or brand name. Accordingly, he concludes:
On this basis, it is our view that the market value of 100% of the equity of [E Pty Ltd] as at 30 June 2022 is Nil.
(Emphasis in original)
The single expert’s report was dated 7 August 2023. On 18 September 2023, the respondent’s then solicitor wrote to the single expert by email, copied to the applicant and his new partner (who was then still a party), in the following terms:
Further to your valuation report provided with respect to the above matter, we note in your report that you mentioned a commercial loan owed by the business to [K Bank] (in the order of $532,000), and that this loan influenced your opinion of the value of the business/company.
We understand that this [K Bank] loan relates to borrowings obtained to purchase the company/business in 2019, and that this [K Bank] loan was secured by a property in [Suburb D], Victoria. This [Suburb D] property has been sold and is due to settle shortly, whereupon this [K Bank] loan is to be discharged.
Does this information change the value ascribed by you to the company/business? If so, please provide your revised value for the company/business.
On 21 September 2023, the single expert replied by email addressed to all three parties advising that:
If the loan is discharged then the value of the company increases by the amount of the loan.
Based on our negative Adjusted Net Assets of ($123k) - ($111k), the resulting Adjusted Net Asset value would be a positive of $409k - $421k.
This was confirmed by letter from the single expert dated 15 March 2024. That letter, together with the preceding emails, are also annexed to his affidavit filed on 19 March 2024.
Accordingly, at the commencement of the trial, armed with and misguidedly encouraged by that revised valuation, the respondent asserted the value of E Pty Ltd to be $409,000. However, what she ignored, and what the single expert confirmed in the course of his brief oral evidence at trial, was that if the loan owing by the applicant and the respondent was to be included as an asset of the company, it similarly needed to be included as a personal liability of theirs. Alternatively, if the parties’ liability was to be disregarded, so too should the corresponding asset of the company be disregarded, such that the market value of 100 percent of the equity of E Pty Ltd as at 30 June 2022 remains nil.
Each of the parties contended that other assets and add-backs should be included. It is settled law that add backs are exceptions, rather than the rule, and are discretionary. See the Full Court decisions in Grier & Malphas [2016] FamCAFC 84 at 34 and Gollings & Scott (2007) FLC 93-319 at 81,489-81,490 citing with approval the earlier decision of the Full Court in C& C (1998) FamCA 143 at [45].
Insofar as the applicant sought to include furniture and paintings removed by the respondent from the Suburb D property, some of which was admitted by her to be in her possession or control, there was no agreed or expert value thereof. Similarly, insofar as he sought to include various personal effects of his, there was no agreed or expert value thereof and the respondent denied that the bulk thereof was in her possession, and I consider that he has not discharged the burden of proof reposed in him.
Insofar as the applicant sought to add back funds transferred from Australia to Country H, said to total $690,000, the evidence suggests that substantial funds were transferred during the course of the parties’ relationship. The applicant asserts that such funds, or the bulk thereof, were applied to the Country H properties, whilst the respondent asserts that they were expended over the course of their frequent and extended travels in Country H and overseas generally. I consider the evidence of both parties to be entirely unsatisfactory. The applicant, who bears the burden of proof in respect of the contended add-back, was unable to point to any funds of the parties being applied to those properties.
The respondent’s evidence is that, in respect of one of the Country H properties, it was inherited by her sister and her, jointly, from their father and that their mother has continued to live there since his death and will continue to do so for the foreseeable future and/or her death. It is unclear whether their mother has a life interest in the property or that they merely agree she may live there. Whilst, in the absence of expert evidence as to Country H law, the respondent’s “interest” (if it be that) would be presumed to be of a proprietary nature, there is no admissible expert evidence of value before the Court, by reason of the poor preparation by the parties of the case. For reasons which are not apparent, in breach of her duty of full and frank disclosure, the respondent failed to disclose that real property in her Financial Statement filed on 21 February 2024. However, without in any way excusing her of that breach, on the applicant’s own case, he was aware of it and had raised it earlier in the course of these proceedings.
In respect of the other property, the applicant does not dispute that it is registered in the names of the respondent’s sister and, it appears, her husband. As referred to above, very belatedly, prior to the trial, he sought to join them, asserting that they held that property upon trust for the respondent and him. I disallowed that proposed amendment and my reasons for so doing are set out in Oldham & Krantz [2024] FedCFamC1F 293.
In circumstances where all the applicant could do was point to funds transferred to Country H, without any evidence of any application thereof to real (or any other form of) property there, and where the respondent contends they were expended over the course of their travels, I am not satisfied that any amount should (or, even, could) be added back.
That said, in the absence of any admissible evidence of value of the respondent’s interest in the property jointly owned with her sister, inherited from their father, in which their mother lives, together with the respondent’s evidence in cross-examination that she has unfettered use, when in Country H, of the other property, registered in the names of her sister and brother-in-law, I consider it appropriate, in the circumstances, to treat the Country H properties, as a financial resource of hers, of indeterminate value.
Insofar as the applicant also sought to add back, as against the respondent:
·mortgage arrears, in respect of the Suburb D property, said to total $164,000;
·funds totalling $31,162, contended by him to have been unilaterally withdrawn by her from the business bank account of E Pty Ltd; and
·further funds totalling $130,000, contended by him to be cash takings retained by the respondent while operating S Business–
these amounts were disputed and/or denied by her and, by reason of the state of the evidence, I similarly do not consider I should, or even could, add them back.
The applicant sought to rely upon an order made by a Senior Judicial Registrar on 3 December 2021 which, inter alia, gave him sole responsibility for the day-to-day operations and financial and administrative management of S Business and required the respondent to indemnify him “for any loss or liability arising in respect to non-payment or default of the mortgage accounts from 20 December 2019 to the date of these Orders, or in relation 20 liabilities accrued during this same period”. The commencement date of the period referred to was the date upon which a Judge of this Court had previously made orders which, inter alia, gave the respondent sole responsibility for the day-to-day operations and financial and administrative management of S Business. However, not only am I not satisfied as to the amounts referred to in the preceding paragraph, which were not properly particularised or proven, sought by the applicant to be added back, but, in any event, the order made by the Senior Judicial Registrar, although not expressed to be “until further order” must, of necessity, have been so. It does not appear to have been the subject of any reasons for judgement; however, the Senior Judicial Registrar did not have delegated power to make a final order to such effect. Further, I observe that the other order made that day, which gave the applicant sole responsibility for the day-to-day operations and financial and administrative management of S Business, was expressed to be “until further order”.
As Austin J said on appeal in Sadasivam & Seshan (2019) FLC 93-899:
26.The parties and the primary judge all wrongly presumed the appealed orders made on 18 March 2019 operated to temporarily suspend the injunction and airport watch list order made on 5 September 2017, whereas all interim orders made in respect of the child during the litigation (including those made in September 2017) were spent and discharged by the final parenting orders which were made with the parties' consent on 1 August 2018. Although the interim orders were expressed to operate until September 2019, they were undoubtedly still characteristically interim in nature. Interlocutory orders may be discharged at any time before the trial or settlement of an action, but are ipso facto discharged by determination of the action, since interim orders are only intended to regulate the parties' conduct in one form or another until the action between them is finally determined according to law (see Klewer v Official Trustee in Bankruptcy (No.2) [2010] NSWCA 258 at [6]; Fatimi Pty Ltd v Bryant [2002] NSWSC 750 at [226]-[232]; Marriage of Millar (1983) FLC 91-326 at 78,220 - 78,221).
27.It matters not that the parties erroneously believed the interim injunction and the interim airport watch list order made in September 2017 continued to prevail beyond the final determination of their dispute under Part VII of the Act in August 2018, since court orders are construed according to accepted guides of construction, which is an objective rather than subjective process (Repatriation Commission v Nation (1995) 57 FCR 25 at 33 - 34).
28.Any implicit contention that the interim injunction and the interim airport watch list order still continue to apply for the remaining duration of their two-year terms until September 2019, notwithstanding the final orders made in August 2018, is rejected. The two-year term selected by the parties for the interim injunction and the interim airport watch list order was an arbitrary period designed to strike a balance between the short term risk of the mother absconding overseas with the child and the unreasonable restriction of the mother's freedom of movement, but only while the litigation was on foot and well before they had any idea of when they might settle their dispute or it might be finally heard. The selection of the fixed term for those interim orders cannot be interpreted as an intention that they should or would endure beyond final orders. The proof of that is found in the distinction between the interim orders later made on 16 April 2018 and the final orders lastly made on 1 August 2018. The former expressly preserved the interim injunction and the interim airport watch list order, whereas the latter did not. By the time the parties agreed upon final parenting orders in August 2018, nearly 12 months had elapsed since the interim injunction and the interim airport watch list order were made and they agreed to omit any further restraint from the final orders. They instead agreed to equally share parental responsibility for the child, which obliged them to confer over all "major long-term issues" related to the child (s 65DAC), and the child's international travel with either one of them was such an issue.
The respondent sought to add back the sum of $41,583, asserted by her once to have been standing to the applicant’s credit by way of superannuation entitlement, but no longer so. The applicant contends that, given his age and asserted poor health at various times since separation, he no longer has any superannuation entitlements whatsoever (either the funds sought to be added back by the respondent or the balance of his superannuation entitlements asserted by her to be in the order of $26,000) or any remaining funds derived therefrom. Taking those circumstances into account, together with the discretionary nature of add-backs and the state (and/or absence) of evidence, I decline to include such an add-back. In so concluding, I take into account the parties’ ages, and the fact that it is not disputed that each of them has suffered from poor health from time to time during and after the relationship. The applicant tendered a bundle of documents, marked Exhibit A-4, said by him to evidence his expenditure on medical expenses. However, there nevertheless remains little clarity regarding the application of his superannuation entitlements, past or present, other than his vague, unparticularised assertion in relation thereto. It is not for the Court to trawl through the documents and to make out a case for him. In the circumstances, I also decline to include, as an asset, the modest superannuation entitlements of the respondent, although conceded by her to be in the order of $20,000.
Accordingly, I find the assets available for division to be those the subject of agreement between the parties, as set out above, and the total value thereof to be $291,200.
Turning to the liabilities agreed between the parties to be taken into account, possibly unusually in some instances, given the passage of time since separation, they are as follows:
·the applicant’s personal loan from Westpac Bank (quantified in his Financial Statement in the sum of $60,000, but in his list of assets and liabilities at trial at): $55,000;
·the applicant’s MasterCard debt: $15,000;
·the applicant’s Visa card debt: $50,000;
·the respondent’s Visa card debt: $13,000–
totalling $133,000.
Insofar as the applicant contends that alleged liabilities to employees of $25,000, unpaid rent of $28,000 and an alleged debt of $120,000 to the second respondent (his current partner, but said by her to be $108,000) should be taken into account, he failed to adduce any evidence thereof and, in the latter respect, she failed to adduce any evidence thereof or to appear at trial. It is well settled that the court may, in its discretion, exclude an asserted liability where it is too vague or uncertain to be taken into account: see, for example, Biltoft & Biltoft (1995) FLC 92‑614 at 82,127. In the circumstances, I decline to take those alleged liabilities into account. In any event, they would appear to be liabilities of E Pty Ltd, which was ascribed a nil value by the single expert, rather than of the parties personally.
Insofar as the applicant contends that an outstanding tax liability of E Pty Ltd should be taken into account, I consider that to fall into a different category. In his balance sheet at trial, which was marked Exhibit A-2, he asserted the quantum thereof to be “about $200,000”. In the report of the single expert, albeit as at 30 June 2022, he quantifies that debt as then being in the sum of $170,628. Although that is a debt, in the first instance, of the company, rather than of the applicant and/or the respondent, in his valuation report, the single expert opines that “the business has significant financial risk, with liabilities exceeding assets by $135k” and (as noted above) that the company, in fact, may not be a going concern.
This Court’s obligation to protect the revenue is well settled. In P and P [Tax evasion] (1985) FLC 91-605 at 79,925, Lindenmayer J said:
… I am of the opinion that this Court, the federal court exercising the judicial power of the Commonwealth, as a duty to protect the revenue of the Crown in right of the Commonwealth. That duty extends to requiring this Court to take such steps as it is able to take to ensure that the revenue laws of the Commonwealth and not before ordered or invaded by litigants are others who come before it.
See also Commissioner of Taxation v Worsnop & Anor (2009) FLC 93-392 at 83,221, where the Full Court drew a distinction between a primary taxation liability and a consequential liability for interest and penalties, giving greater weight to the former, rather than the latter.
In Deputy Commissioner of Taxation v Kliman & Kliman (2002) FLC 93-113 at 89,113-89,114, Ellis ACJ and Finn J, in the Full Court of the Family Court, referred with approval to the obiter dicta of the Full Court in Zdravkovic & Zdravkovic (1982) FLC 91-220 at 77,205-77,206, to the effect that the Court can, as part of its jurisdiction under s 79 (and, similarly, s 90SM) of the Act, order the discharge of a debt to a third party (whether or not that party has intervened).
In the circumstances, I am of the opinion that the primary debt of E Pty Ltd (together with any penalties and interest therein), albeit as at 30 June 2022, should be included as a liability of the parties and discharged from their assets, in particular, the proceeds of sale of the Suburb D property and the K Bank funds. Each of the parties has been a director of the company at various times, both prior and subsequent to separation. The parties agree that the debt has not been reduced since 30 June 2022. Therefore, in addition to the agreed debts totalling $133,000, I shall also include the liability of E Pty Ltd to the Deputy Commissioner of Taxation, in the sum of $170,628, such that the liabilities to be taken into account total $303,625.
Although not referred to by either of the parties, presumably because they appeared in person, without the benefit of legal representation or training, I respectfully consider the decision of the Full Court in Pavlic & Pavlic [2023] FedCFamC1A 54, insofar as the treatment of taxation liabilities of corporate entities controlled by the parties to a marriage is concerned, to be distinguishable in the circumstances of this case. If the taxation debt of E Pty Ltd is not paid from the Suburb D property sale proceeds and the K Bank funds, it will not be paid, to the detriment of the Commonwealth revenue.
Accordingly, I find the assets and liabilities to be as follows:
Assets
Suburb D property sale proceeds (joint)
$175,200
K Bank funds (joint)
$40,000
Motor vehicle (respondent)
$6,000
Watch (respondent)
$10,00
E Pty Ltd (applicant)
Nil
Proceeds of sale of motor vehicles (applicant)
$60,00
$291,200
Liabilities
Westpac Bank personal loan (applicant)
$55,000
MasterCard debt (applicant)
$15,000
Visa card debt (applicant)
$50,000
Visa card debt (respondent)
$13,000
Taxation liability (E Pty Ltd)
$170,628
$303,625
Total (assets – liabilities)
<$12,425>
My opening reference to the passage from Shakespeare’s King Lear that “[n]othing will come of nothing” should therefore now be clear.
Having found the values of the assets and the quantum of the liabilities to be as set out above, unlike night and day, it does not follow that I must adjust the parties’ interests in all of that property. For the reasons that follow, I do not propose to do so, and will only make orders in relation to the Suburb D sale proceeds, the K Bank funds and the taxation liability of E Pty Ltd.
Of those assets and liabilities, other than the sale proceeds of the Suburb D property and the K Bank funds, both of which are in the parties’ joint names, and the taxation liability:
·The applicant has assets totalling $60,000 and liabilities totalling $120,000. Whilst he will retain E Pty Ltd, with a nil valuation for the purposes of these proceedings, that valuation is nearly two years old. Further, in relation to that company, the single expert reports that “[i]t is acknowledged by the industry that [business] operators have typically received sales as cash that go unreported. In most cases cash is used to pay casual staff so that revenue and expenses are reported lower than actual results”. Whilst neither party admitted, or alleged against the other, tax evasion, which might require the Court to refer E Pty Ltd, the applicant and/or the respondent to the Australian Taxation Office for investigation, I nevertheless take into account, in a general sense, that the company may provide a financial resource to him.
·The respondent has assets totalling $16,000 and liabilities totalling $13,000. However, as noted above, in the circumstances in which the case was prepared for, and conducted, by the parties at trial, I consider it appropriate, to treat the Country H properties, as a financial resource of hers, of indeterminate value.
Additionally, pursuant to orders previously made and referred to above, from any property settlement received, the applicant is to pay, first, the sum of $130,000 to his former solicitors, M Pty Ltd and, secondly, the sum of $72,278.91, to the liquidators of Q Pty Ltd (in liquidation). Similarly, the respondent is to pay the sum of $116,807.76 to her former solicitors, N Lawyers.
It will therefore be obvious that, of the funds totalling in the order of $215,000, after payment of the taxation liability, the primary liability being in the order of $171,000, together with any penalties and interest thereon, there will be little (approximately $44,000 or less), or any, funds remaining for division between the parties. Further, after payment out of the sums previously ordered to be paid by each of them, from their respective shares (if any), to the various interveners, neither of the parties will retain any such funds, rendering the trial, which spanned three days of Court time, and the outcome thereof, nugatory.
CONTRIBUTIONS
Notwithstanding the paucity of the assets and the fact that, of the funds standing to the joint credit of the parties, totalling $215,202 (namely the Suburb D property sale proceeds and the K Bank funds), only $45,574, or thereabouts, will remain, after discharge of the taxation liability, I nevertheless now turn briefly to consider the parties’ contributions pursuant to s 90SM(4)(a)-(c), such as the limited evidence thereof enables me to do so.
The applicant asserts that he made the greater financial and non-financial contributions, within the ambit of s 90SM(4)(a)-(b), before, during and after the parties’ de facto relationship.
He relies upon a binding Financial Agreement dated 12 December 2011with his former partner. That agreement contains no schedule of assets and liabilities, or the values and quantum thereof respectively. It relevantly provides, inter alia, that his former partner would transfer her interest in the Suburb D property to him; he would refinance the mortgage thereover; she would pay him the sum of $250,000 (in addition to the sum of $30,000 already paid for his benefit in anticipation of execution of the Financial Agreement); she would pay to him a further sum of $480,000, payable by 24 equal monthly instalments; he would receive specified artwork; and he would retain his interest in certain companies. The difficulty with which the applicant is faced is that, for the purposes of this proceeding, there is no evidence (or, at least, admissible evidence), in relation to the value of the Suburb D property at or about the commencement of the de facto relationship, either contemporaneous or retrospective; of the quantum of the mortgage then secured thereover at that time; of the value of the artwork and corporate interest retained by him; and of the receipt, and/or the application, by him of the moneys payable by his former partner to him. What is clear is that he retained the Suburb D property, encumbered, in which the parties lived during the course of most of their relationship, and which was subsequently used as security to fund the purchase of S Business, in the order of $500,000, in early 2018. He deposes that, at or about the time of separation, the Suburb D property, secured both the home loan in respect of that property and the business loan in respect of the acquisition of S Business, and that the total secured liability was approximately $1,500,000. Exhibit A-3, tendered by him, was a statement evidencing the amount secured against the Suburb D property, as at 28 November 2014 (some three years later), in the sum of $953,189. The balance of the proceeds of sale of the Suburb D property, which are held upon trust for the parties and are included amongst the assets available for division between them, are in respect of that property, which was contributed by the applicant at the commencement of the relationship.
The respondent deposes, and the applicant admits, that at the commencement of the relationship, she owned the real property situate at Z Street, Suburb L in the State of Victoria (“Suburb L property”). The parties lived in the respondent’s Suburb L property from the commencement of their relationship until late 2013, when they commenced to reside in the applicant’s Suburb D property. The Suburb L property was thereafter developed, with two residences constructed thereon, in partnership with a property developer. The residences were sold in about 2015 and the net proceeds of sale were divided equally between the respondent and the developer, with each receiving slightly in excess of $1 million.
The respondent, in her affidavit filed 22 February 2024, alleges that she deposited approximately $660,000 of the proceeds received by her from the sale of the Suburb L property, as developed, into the applicant’s home loan account secured over the Suburb D property in early 2015. Further, in that affidavit, she deposes that, the following month, she received a payment of approximately $180,000 from her superannuation entitlements, released due to her ill-health, which she similarly deposited into that account. The applicant, in his trial affidavit filed 9 March 2024, does not deny those allegations and, at trial, did not seek to give any evidence in chief in relation thereto, nor did he cross-examine her in relation thereto.
In respect of S Business, it was purchased late in the parties’ relationship and, since separation, has been conducted by one or the other of them at various times. Each party is critical of the other’s conduct of the business. The report of the single expert addresses the overall financial performance of S Business in the period spanning the 2019–2022 financial years, which includes a period prior to separation, as well as periods thereafter when S Business was conducted by one or the other of them, in summary as follows:
Unsurprisingly, the single expert concludes that the “EBITDA is operating at a loss in every year, and we do not expect this to increase dramatically in the short term”.
Otherwise, there are extensive evidentiary lacunae in the parties’ cases, in relation to their contributions, within the rubrics of s 90SM(4)(a)–(c) of the Act, in the intervening period after the commencement and before the conclusion of their de facto relationship and, indeed, thereafter.
In summary, I find that, at the commencement of the parties’ de facto relationship, the applicant contributed, inter alia, the property to be retained or received by him pursuant to the Financial Agreement with his former partner, including the Suburb D property in which they lived for most of their de facto relationship, the modest balance of the proceeds of sale of which are now available for division between them. However, there is no evidence of the value of that property, or the balance of the mortgage secured thereby, at or about the commencement of cohabitation. The evidence is, and I find, that some 3 years thereafter, in late 2014, the balance of the mortgage was in the sum of $953,000. Further, I accept that, the following year, the respondent contributed in the order of $840,000 in reduction of the mortgage, from the proceeds of sale of the Suburb L property and the early release of her superannuation entitlements. That should have reduced the sum secured by the mortgage to approximately $113,000 in or about 2015. However, I accept, on balance, that the applicant also received monies totalling approximately $760,000 from his former partner, pursuant to the terms of their Financial Agreement. As for the other assets retained or received by him pursuant thereto, again, there is no evidence of value or any related liabilities.
I was not pointed to any evidence as to the sale price of the Suburb D property or the balance of the mortgage at the time thereof. The evidence is that the business loan, in the order of $532,000, was discharged from the proceeds of sale, leaving the remaining balance in the order of $175,000.
In the case of the respondent, I accept that she initially contributed the Suburb L property and, subsequently she contributed her share of the proceeds of sale thereof, together with superannuation monies in reduction of the home loan secured by mortgage over the Suburb D property.
Given the substantial lacunae in the evidence, whilst I find that each of the parties made not insubstantial contributions at and in the early years of their de facto relationship, from or related to property owned by them or to which they were entitled prior thereto, it is not possible to make more precise findings. Whilst there is no presumption of equality of contributions, on the evidence, such as there is, I find that there is little, if anything, to distinguish their respective contributions. This observation is similarly applicable to their other contributions during their relationship and thereafter. In the circumstances, I generally find the parties’ overall contributions, within s 90SM(4)(a)–(c) to have been equal.
SECTIONS 90SM(4)(E) AND 90SF(3)
Subsection 90SM(4)(e) of the Act requires that, in considering what, order (if any) should be made should be made under that section in property settlement proceedings, the Court must take into account the matters referred to in subsection 90SF(3), so far as they are relevant. I was not much assisted in this regard by the parties’ evidence or their submissions in relation thereto. I have had regard to the matters referred to in in subsection 90SF(3) and consider those in paragraphs (a) and (b) thereof to be relevant.
Insofar as the age and state of health of each of the parties is concerned, the applicant is 61 years of age and the respondent is 60 years of age. Other than the evidence that of each of them has suffered from poor health at times during and since their relationship, there is no expert medical evidence, for example from their treating medical practitioners, as to their current states of health, any impact thereof (including on their income earning capacity) and any needs arising therefrom.
Insofar as the income, property and financial resources of each of the parties, and the physical and mental capacity of each of them for appropriate gainful employment is concerned, I take into account the following matters.
Each of the parties is self-employed and conducting a business. In the case of the applicant, he will retain E Pty Ltd and its business, which (I was very belatedly told by him) is apparently being rebranded to trade under a new name. The premises from which it operates are being refurbished. The respondent conducts a business trading as AA Business in Suburb D. I have identified, as best I can on the evidence, the financial resources I consider each of them to have: in the case of the applicant, the benefits available to him from the business, identified by the single expert; and, in the case of the respondent, the Country H properties.
Taking these matters into account, I do not consider any further adjustment is warranted pursuant to s 90SM(4)(e) on account of the relevant matters referred to in s 90SF(3).
WHAT ORDERS (IF ANY) SHOULD BE MADE UNDER S 90SM?
As I acknowledged above, I am conscious to avoid conflation in my consideration of the matters s 90SM(3) and s 90SM(4), although they are not unrelated. The requirement of justice and equity pervades the entire exercise, namely, whether it is just and equitable to make an order and, if so, what order should be made. See: Stella & Stella [2023] FedCFamC1F 1092, citing inter alia, Hickey & Hickey& Attorney - General for the Commonwealth of Australia (Intervenor) (2003) FLC 93-143 at [39] (Full Court) and Stanford &Stanford (2012) 247 CLR 108 (High Court).
Of the assets and liabilities identified above, I have observed that, excluding the balance of the Suburb D property sale proceeds and the K Bank funds, the applicant presently has assets totalling $60,000 and liabilities totalling $120,000, and the respondent presently has assets totalling $16,000 and liabilities totalling $13,000. In other words, the value of the property to be retained by the respondent is negligible and, in respect of that of the applicant, there is a shortfall. However, in respect of their personal liabilities, they separated some five years ago and there is no evidence of when their credit card liabilities and, in the case of the applicant, his personal loan, arose and to what they relate. In the circumstances, as referred to above, I do not consider it would be just and equitable to adjust their interests in any property other than the balance of the Suburb D property sale proceeds and the K Bank funds, or to adjust those interests other than equally.
OUTCOME
In the circumstances, in summary, I shall order that the total of the balance of the Suburb D property sale proceeds and the K Bank funds, in the total order of $215,000 be applied to discharge the primary taxation liability of E Pty Ltd as at 30 June 2022, in the order of $170,000, together with any penalties and interest thereon. Any balance then remaining is to be divided equally between the parties; however, from their respective shares, the sums previously ordered are to be paid by each of them to the various interveners. Given the quantum of those amounts, it is manifest that neither party will receive anything from the balance of the Suburb D property sale proceeds and the K Bank funds.
The parties will otherwise each retain the other assets and liabilities identified above including, in the case of the applicant, E Pty Ltd and its business together with the balance the balance of the liabilities thereof and he will indemnify the respondent in relation thereto.
In circumstances where each of the parties received a partial property settlement of $40,000 in the early stages of the proceedings, the application of which is not the subject of any evidence, and I have found there to be equality of contributions, with no further adjustment on account of s 90SF(3) factors, this will not affect the outcome. It is neutral.
In respect of such of the furniture and paintings from the Suburb D property which are in the respondent’s possession or control, she conceded that they may be retained by the applicant, provided that they are collected by professional removalists, at his expenses, upon not less than three business days’ notice in writing to her. I shall order accordingly.
In the circumstances, orders will be made to reflect and give effect to these reasons for judgment.
I certify that the preceding ninety (90) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Strum. Associate:
Dated: 23 May 2024
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