Pandelis and Pandelis

[2016] FCCA 2530

FEDERAL CIRCUIT COURT OF AUSTRALIA

PANDELIS & PANDELIS [2016] FCCA 2530

Catchwords:
FAMILY LAW – Property – long marriage –assessment of contributions made by each party’s parents to assets and family– treatment of significant debt acquired post separation by each parent in order to maintain lifestyle for children – assessment of wife’s future needs.

Legislation:

Family Law Act 1975 (Cth) ss.75(2), 79

Cases cited:
Pierce & Pierce (1998) FamCA 74
Ferraro & Ferraro (1993) FLC 92-335

Applicant: MS PANDELIS

Respondent: MR PANDELIS

File Number: SYC 6905 of 2013

Judgment of: Judge Henderson

Hearing dates: 15-16 August 2016

Date of Last Submission: 16 August 2016

Delivered at: Sydney

Delivered on: 10 October 2016

REPRESENTATION

Counsel for the Applicant: Mr Schonell

Solicitors for the Applicant: Croker Edwards

Counsel for the Respondent: Mr Lloyd SC

Solicitors for the Respondent: Slater & Gordon Lawyers

ORDERS

1. By way of property alteration under s 79 of the Family Law Act 1975 the wife be entitled to the sum of $1,213,834 and the husband $624,033 of their total asset pool excluding superannuation being a split of 65% to the wife and 35% to the husband.

2. To bring into effect Order 1 the wife has 30 days to advise the husband in writing if she is able to retain the Property H property on the basis that the property at Property C is sold for no less than $1,325,000, the debts specified in order 4(a) to (f) are discharged and she pays to the husband 35% of the net proceeds of sale.

3. Upon the wife giving the husband such notice the property at Property C is to be forthwith placed on the market for sale at a reserve of no less than $1,325,000 by way of auction with the husband to have conduct of the sale.

4. Upon sale of the Property C property the proceeds to be paid as follows:

   (a)To discharge all current mortgages;

   (b)To discharge the current line of credit;

   (c)To pay Ms M $87,000;

   (d)To pay the wife’s (omitted) debt of $7,922;

   (e)To pay Capital Gains Tax on the sale on the sale of Property N of $57,906;

   (f)Payment of the costs of sale and the usual adjustments including solicitor’s fees;

   (g)Pay the husband $624,033; and

   (h)The balance is to be divided 65% to the wife and 35% to the husband.

5. The husband to pay school fees of $53,000 from his share of the sale proceeds.

6. In the event Property C sells for more than $1,325,000 the husband and wife to receive the additional sale proceeds on a 65/35 split in favour of the wife.

7. Simultaneously with the payment to the husband specified in Order 5 the husband transfer all his right title and interest in the home at Property H to the wife.

8. In the event the wife is unable to comply with order 2 then the husband is place the property at Property C on the market for sale by way of action at a reserve of no less than $1,325,000 and is to have conduct of that sale and the wife is to place the property at Property H on the market for sale by way of auction at a reserve of no less than $1,800,000 and she is to have conduct the sale of that property. This order is to be complied with by the parties within 30 days of the wife electing not to retain the Property H property.

9. The following debts be discharged from the proceeds of sale of the properties as followed:

   (a)Current mortgages;

   (b)Line of credit up;

   (c)Ms M $87,000;

   (d)Wife's (omitted)HELP debt of $7,906;

   (e)Capital Gains Tax of $57,906;

   (f)Usual conveyancing costs and costs of the sale;

   (g)The balance is to be divided 65% to the wife and 35% to the husband with the husband to pay school fees of $53,000 from his share;

   (h)If either Property C or Property H sell for more than the specified price the parties are to divide the increased sale proceeds on a 65/35 split in the wife’s favour.

10. The parties may agree to vary these orders in the event the wife is unable to buy the Property H property and the husband chooses to either:

    (a)Retain the Property C property and sell the Property H property with the wife to have carriage of the sale by way of auction;

    (b)Retain the Property H property and sell the Property C property with the husband to have carriage of the sale by way of auction; or

    (c)Retain both properties.

11. In either event the husband is to pay the wife $1,213,834 and the debts specified in Orders 4 (a) to (f), Order 5 and 65% of the sale price of Property H above $1,800,000 or of Property C above $1,325,000.

12. This order is to be complied with within 60 days of the wife electing not to retain the Property H property

Superannuation

1. Pursuant to s 90MT of the Family Law Act 1975 whenever a payment of the husband’s (omitted) Superannuation becomes payable the wife is to receive the amount of $122,922.50 and the husband’s entitlement in that fund is reduced accordingly.

2. This order is binding upon the Trustee of the husband’s (omitted) Superannuation Fund after 30 days of the issue of these orders.

3. Otherwise both parties retain all assets in their control and be liable for all debs or name.

4. The husband is to do all acts and things to cash in his Qantas Frequent Flyer points into Woolworth’s vouchers and the parties are to divide those vouchers equally.

IT IS NOTED that publication of this judgment under the pseudonym Pandelis & Pandelis is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 6905 of 2013

MS PANDELIS

Applicant

And

MR PANDELIS

Respondent

REASONS FOR JUDGMENT

1. The matter of Pandelis & Pandelis was a two day property hearing commenced to be heard on 15 August. Mr Lloyd SC acted for the respondent Husband and Mr Schonell for the respondent Wife.

2. This matter resembles a Greek tragedy. These parties are good, hard-working people who had, at the date of separation, acquired substantial assets and whose financial position was secure.

3. Separation occurred in or around October/December 2012 when the husband left the former matrimonial home and the wife and children remained in the home. In that time the parties have increased their indebtedness by in excess of $500,000, being a combination of payment of or incurring of legal fees amounting to for the wife $144,000 and for the husband some $120,000, payment of private school fees for their two children, X born (omitted) 1998 and Y born (omitted) 2002 and living expenses.

4. The matter has been marked not reached twice and this was the third occasion the matter had come before the Court. The impasse the parties had arrived at and the reasons for their incapacity to come to an agreement in relation to their property when each has made substantial contribution to their current wealth, is complicated and multiple in nature. However, four clear factors emerged at the hearing.

5. The first is the wife’s absolute implacable intent to retain the former matrimonial home for herself and her children. That overwhelming desire of hers has had an extremely negative consequence for her financial position. The wife has pursued this litigation in circumstances where she was of the view that her husband was failing to disclose the totality of his financial affairs and true wealth. Ultimately this turned out to be incorrect.

6. Secondly although the wife has lived in the home, effectively rent free she has borrowed significant sums of money, some $233,000 from her sister, to assist in paying for legal fees to pursue her application to remain in the home. Had the parties sat down shortly after their separation this desire was well achievable especially with the help of her sister. One of the bases for this opinion is that the husband reiterated in the witness box and in his material that it had always been his intention that the wife and children would remain in the home and have that home.

7. Tragically that desire of each parent may no longer be available today given the current indebtedness of the parties.

8. Most profoundly, this desire of the wife’s to remain in the former matrimonial home has had a significant and negative impact on their son, X. As at the date of the hearing, he had had, to use the layman’s terms, “suffered a meltdown” and was in a mental health facility receiving treatment consisting of drugs and counselling. This boy has been carrying a significant load due to his parents’ acrimonious separation. The parties’ affidavits are littered with their son saying, “Why are you throwing us out of our home? I don’t want to leave this home. This is my home.” That situation was not assisted by the mother having exactly the same desire as her son.

9. Fourthly the husband also pursued the litigation. He opened with a statement that the wife had failed to disclose and was not disclosing her true financial position. Nothing could be further from the truth. These parties each took a position and the consequences have been that between them they have incurred somewhere in the vicinity of $300,000 in legal fees after this hearing, which can only be paid from their matrimonial assets, maintained a fiction of their children continuing to be educated at private schools when there was insufficient income to do so and this has further eaten into the available capital.

10. I am unsure whether the parties have been ill advised and thus pursued the litigation or they have ignored sage advice to focus on resolving the dispute and not enlarge it.

Evidence

1. The material I read was voluminous.

2. For the wife:

   a)Her affidavit dated 20 May 2016;

   b)The Affidavit of the Wife’s sister dated 23 May 2016; and

   c)Her financial statement of 25 May 2016.

3. For the husband:

   a)His affidavit of 23 May 2016,

   b)The affidavit of his partner, Ms D, filed 23 May 2016;

   c)His financial statement filed 23 May 2016; and

   d)Affidavit of Mr K.

4. The husband and wife were cross-examined as was the wife’s sister Ms M.

5. The husband’s accountant, Mr K, gave evidence on the telephone.

6. The exhibits were, as always in these hard fought matters, voluminous.

7. The Husband’s exhibits were;

   a)Exhibit 1: A document from (omitted) Bank concerning a loan the wife sought. The husband tendered this document to show that the wife had not told the truth about a significant factor in this case, which is, whether moneys advanced to the parties by the wife’s parents very early in their relationship was a gift or a loan. Those documents disclosed that the wife had not told (omitted) Bank, when obtaining finance for a property, that she had an outstanding loan to her parents and, thus, she could not maintain that this was a loan today. Ultimately I did not form an adverse view of either party’s credit after evidence was given and this tender was of marginal relevance.

   b)Exhibit 2: An application for finance from (omitted) Bank, again by the parties.

   c)Exhibit 3: Letters from the (omitted) Bank to the parties re the purchase of the Property H property in 1995.

   d)Exhibit 4: Notice to produce documents. There is no doubt the wife did not produce documents that were the husband’s and of which she had possession as they were situate in the former matrimonial home for reasons that completely escape me.

   e)The wife failed to comply with the rules of this Court of disclosure, that is, to provide documents relevant to the financial proceedings that are in your possession or control. The wife had documents of the husband’s going back to even pre their marriage of land he owned at Property W. The husband was at some disadvantage in preparation of his case because many of the figures, dates, net equities he was not able to be entirely accurate whereas the wife’s figures were of a precise nature as she had the actual documents.

   f)Exhibit 5: Notice to produce sent to the wife’s lawyers. A voluminous number of documents were produced after the second day of the hearing by the wife. That is very poor behaviour indeed and she has been poorly advised by her legal team.

   g)Exhibit 6: Three letters to (omitted) Bank where the husband is seeking reduction of the mortgage payments on hardship grounds to enable him to maintain the wife and children in the former matrimonial home, which he has done since separation. The husband has been successful in obtaining two moratoriums on hardship grounds however his last such application was rejected.

   h)Exhibit 7: A letter to the husband from the (omitted) Bank confirming his deposit of $430,000-odd thousand dollars from a successful share portfolio scheme. The parties borrowed $320,000 which turned into $430,000 some few years later.

   i)This successful venture was not conceded by the wife and she sought to muddy the waters by not accepting the transactions and where monies had been deposited or used. This was disingenuous given she was in possession of the very documents that that spelt out this successful venture during the relationship carried out by the husband.

   j)Exhibit 8: Correspondence between the wife’s lawyers and the husband’s lawyers dated 7 August 2015 to 12 August 2016 regarding disclosure.

8. The Wife’s exhibits were;

   a)Exhibit 1: Correspondence between the husband and wife on 13 June 2016.

   b)Exhibit 2: Letter sent from the wife’s solicitor to the husband’s solicitors dated 12 August 2016.

   c)Exhibit 3: A letter dated 19 July 2013 from the wife’s parents to the husband’s solicitors regarding loan monies, which is clearly an issue between the parties.

9. The short and relevant chronology is as follows;

   a)The husband was born in 1966, the wife in 1967.

   b)They commenced cohabitation in (omitted) 1990.

   c)The lived in accommodation provided by the wife’s parents from (omitted) 1990 to (omitted) 1996.

10. The parties moved into a home that the wife’s parents owned in (omitted). The wife’s case is it needed some work and they spent between $4,000 and $6,000 renovating. The husband’s case is it required substantial work and the parties spent between $30,000 and $40,000 and I will deal with that issue later.

11. The husband conceded they did not pay rent for this property and only paid outgoings, that the wife’s father was wonderful in helping the parties renovate the property, that the wife’s sister was wonderful in helping the parties renovate the property, that the wife’s mother was wonderful in assisting the parties and the husband’s concession throughout this hearing was that the wife’s parents and family, including her sister, were absolutely wonderful and assisted he and the wife to acquire the assets they did, care for their children and maximise their lifestyle.

12. The wife did not make similar concessions of the husband’s contributions and minimised them. This is in stark contrast to the husband who freely made concessions against his interest, at relevant times particularly regarding how wonderful and supportive the wife’s family were and in his praise of the wife as a mother.

13. The wife ultimately agreed that the parties did undertake extensive renovations as Mr Lloyd took her through the matters the husband detailed one by one. Apart from an issue about replacing a front door, a toilet and some roofing the wife agreed with the husband’s list of renovations set out in paragraph 25 of his affidavit. The wife however made no concession of how much work her husband carried out when it was clear this was the case.

14. The husband asserted the parties replaced external doors and deadlocks and latches, the Wife disagreed, they replaced the external doors. Given the lack of specificity in the wife’s affidavit, the husband’s detailed description of the scope of works and the wife’s grudging and parsimonious acknowledgment occasionally of the husband contribution to this family venture when it comes to a contest on these issues, I prefer the evidence of the husband.

15. The wife agreed that they removed lino from the floor of the property, installed new kitchen but quickly added that it was small kitchen. It may have been however it still required new plumbing as did the whole house.

16. There were difficulties with the sewerage which had to be replaced, digging up the backyard, notoriously difficult in properties where you have limited access. They carried out restoration of floor boards which the wife did not concede, repaired damaged roof tiles and gables, demolition of an internal wall to create a larger living room, painting and rendering of internal walls, replacement of the metal roof and repair and replacement of gutters and installation of a new outside toilet. The wife said only part of the roof was replaced. I prefer the husband’s evidence on this.

17. Replacing the external toilet and door of the toilet. The wife said only the seat only was replaced. Demolishing and replacement of rotted wooden windows, landscaping the yard after the digging up for the sewerage, insulation system and recarpeting the house. I accept the totality of the work the husband said the parties carried out with the assistance of her parents and sister.

18. However the reality is whether these renovations cost $2,000 to $4,000, as the wife asserts, which I reject, or $30,000 to $40,000 which the husband asserts, which I reject, matters not for the parties made that contribution from their income. Additionally the husband’s concession at the end of the day that he, his wife and the wife’s family carried out the work is an agreed fact. There was no claim that the wife’s parents had been unjustly enriched by the husband’s labour and expenditure of funds and I failed to see why the wife made such an issue of this matter. Perhaps it is merely that whatever the husband says the wife takes issue with I do not know however the inability to concede even when a concession is in your interests maybe one of the major reasons this matter has not settled.

19. The wife could not see that if the husband said, as he did in his 2013 Affidavit material, at paragraph 26:

    “…To the best of my recollection Ms Pandelis and I spent the sum of approximately thirty to forty thousand dollars ($30,000-$40,000) on the renovations.”

20. That this was her contribution as well as his and it mattered not a jot at the end of the day as the husband conceded they lived at the property rent free. Her family’s contribution to the parties’ life has always been accepted by the husband.

21. The husband received an inheritance of some $95,000 from his father’s estate in (omitted) 1995 and he and his sister now also have some land in Greece of which the husband’s share is $125,000. The wife disagreed that $95,000 that went into the matrimonial pool and asserted it was only $84,000 because she had the very documents to show this. The wife had not provided them to the husband and asserts that the husband’s father’s funeral cost $10,000. I find that the husband is likely to have netted more than $84,000 from his father’s estate and whatever he netted he used towards the asset base that the parties now have.

22. The parties purchased a property in Property H in late 1996. The wife’s parents advanced the parties some $200,000 to assist in that purchase. That $200,000 on the evidence came to them via a round robin affair. The wife’s sister, Ms M, purchased her parent’s property at (omitted) for $200,000 and her parents gave her a break because it was, even on the wife’s and Ms M’s own evidence, purchased at under value it being worth $215,000 at the time. The $200,000 purchase money went to the husband and wife and the husband conceded this money was advanced to them by the wife’s parents. His view was it was a gift to both and the wife asserted it was a loan.

23. This money was advanced in 1995 and any claim for reimbursement by the parents as a loan is now statute barred. The wife’s parents caused a letter to be written by solicitors in 2013 that this money was a loan and they wanted repayment of the loan. That letter does not assist the wife’s’ case and is too little too late.

1. This is not a loan that can be enforced in the District Court. It does not fall within a category of loan for which I can take judicial notice. There is no written contract, there are no terms, and there is no interest specified. The very people who could give evidence about the terms and condition of the loan did not give evidence. I understand why. They are aged and English is not their first language. However, the wife’s case, that this advancement is now a loan and is repayable at law by her and the husband, is not accepted by me. I accept the wife may feel morally obligated to repay this sum.

2. Similarly, I do not accept this was a gift to each of the parties by the parents. This was a gift from the wife’s parents through her, due to their love and affection for her, and consistent with their Greek heritage, wishing to assist their child and I find this was a contribution by the wife.

3. The parties repaid some $60,000 of that advance prior to purchasing Property H. Thus the contribution made by the wife from the advancement is $140,000.

4. Secondly, it cannot be said that the husband made no contribution to that advancement. His contribution was the work he did on the (omitted) property with the husband’s parents. This was a joint endeavour the parties carried out with the wife’s parents. They lived in (omitted), they renovated to a much higher standard of property than it had been prior to the parents moving in and the wife herself said, “We wanted the house to be nicer than it was.” It would have been in very poor condition, rented out or not, and it is clear that the husband and wife, by their energy, effort and expenditure of money earned by the husband and wife during the marriage, increased the value of that property.

5. The parties clearly obtained a benefit from the occupation of the (omitted) property rent free as they were able to produce savings, however, I cannot say the husband has made no contribution to that advancement. Clearly the wife’s contribution is greater however.

6. The husband sold a property he had at Property W in 1997 and that, together with borrowings and at minimum $84,000 from his father’s estate, assisted the parties in being able to purchase their property at Property H.

7. For a year from April 1999 to November 2000 the husband finished his (qualifications omitted) and the wife worked and earned a substantial income. The husband made that concession. The wife earned a very good income during that period and it was her income that supported the family at that time. The husband completed his (qualifications omitted) while caring for the child. The wife’s final salary, when she left in (omitted) 2000, was $123,000. The wife clearly is a woman of capacity and ability.

8. The parties borrowed $320,000 and invested this money in a share portfolio in June 2001 which resulted in net money to them of some $120,000. It was a very successful venture.

9. The parties borrowed $265,000 to renovate the home at Property H in late 2001 and they lived with the wife’s parents for five months. Again, the husband conceded this was of wonderful assistance to them. The husband was made redundant in September 2002 and received $200,000. That was used to reduce the mortgage. He was quickly back in work.

10. Y is born in 2002. By 2006 the parties have paid back all their bank loans. This is a remarkable achievement and indicates the hard work, dedication and careful attitude these parents have to money. They were, effectively, debt free and there is no doubt the advancement from the wife’s parents of the $140,000 assisted them to become debt free, however, the husband’s redundancy payment of $200,000 and his quickly obtaining work thereafter and money from the sale of his land at Property W and his father’s estate also assisted in this achievement.

11. In August 2006 the parties determined that they would buy investment properties and, in the Greek tradition they decided to buy two, one for each of their children. They purchased a property in Property C and a property in Property N and increased their borrowings to $1.8 million. The husband purchased a very expensive car in December 2007 and the wife was unhappy about this and I accept this was so.

12. In August 2011 the parties refinanced their bank loan to the $2 million mark giving them a $200,000 buffer for emergencies.

13. The parties’ marriage is in significant trouble by this stage. The parties separate in 2012 with the husband leaving the matrimonial home.

14. The wife says that their relationship significantly deteriorates and the wife says she felt threatened by the husband not paying the children’s school fees, and the wife draws to the maximum the party’s then line of credit up to $38,000.

15. This causes the husband to cut off her access entirely to all their bank accounts, including credit cards. His concern was that the wife would just use up any credit or deplete the money. These actions have resulted in the significant distrust which exists between the parties today. It was at that time the wife sought the assistance of her sister who obtained a facility on her properties that the wife now has a capacity to draw down to $400,000. She has drawn down $233,000 to pay for what she regards as necessary expenses including legal fees and private school fees for her children.

16. The wife’s case, supported by the sister, is that the husband left the wife and children destitute. That is simply not correct on the facts. They were not left destitute. The wife’s case that she and the children were devastated by the marriage break down and knowledge that the husbands was in another relationship is clear and is still apparent today for the wife and I fear X.

17. The husband received a second redundancy in February/March 2013 of $108,000.

18. The husband determined to sell Property N, in November 2013 and the wife becomes very concerned as he did not tell her of his plans prior to putting the house on the market. This was poor choice by the husband.

19. The wife commences proceedings, to ensure that the sale proceeds monies are used to reduce loans, which they are. The husband’s reasons for doing so was that he was unable to afford to maintain payments now that the parties were living separated. That is no doubt correct however it is no justification for not advising the wife of this sale.

20. There were orders made in December 2013 for both Property N and Property C to be sold. Property C has not been sold and the husband now lives at that property.

21. The husband commenced a (omitted) business in April 2013.

22. The husband withdrew $200,000 from the parties’ line of credit and by March 2015 this facility was exhausted. He asserts he has used that money to pay for his living expenses, legal fees, expenses for the children including school fees, payment of the mortgage and other expenses since that time. In January 2015 the husband ceased giving the wife money but has continued to pay all mortgages and some school fees.

23. The husband set up a company called (omitted) Pty Ltd as trustee for the Pandelis Family Trust and is using that company as a vehicle to earn his income. He is an (occupation omitted), having now been made redundant on two occasions once in (omitted) 2002 when he received $200,000 and secondly in (omitted) 2013 when he received $108,000.

24. One can see, most unfortunately from a reading the chronology, how the distrust between the parents has arisen.

The joint balance sheet

1. As always in these cases they are a work in progress. However, ultimately, the position is thus:

   ·Property H: $1.8 million.

   ·Property C: $1.325 million

   ·The husband’s BMW motor vehicle: the wife said it is worth $18,000, the husband said $35,000. The insurance value is $29,400. That is the figure I will accept, $29,400. The husband says the wife can have that motor vehicle if she wishes as her car is not able to be registered.

   ·I take no account of the current bank account balance each have they have been separated for four years. Those monies are theirs.

   ·The wife’s 315 (omitted) shares worth $1,886 is a matrimonial asset.

   ·I find that the parties’ furniture at $2,500 is equal and I will take that asset out of the assets for division.

   ·Each of them have other personal items at their respective homes valued at $1,000 and I will take those assets out of the assets for division.

   ·(omitted) Pty Ltd is worth nothing. It is a vehicle that the husband uses to earn his income.

   ·The husband’s properties in Greece, $125,000 are assets in his name and not a matrimonial asset. I will take that into account in relation to the ultimate division of property.

The legal fees and add backs

1. The wife has paid $148,441.65 in legal fees. These fees have not come out of matrimonial assets but out of borrowings from her sister. Borrowings from her sister are now $233,000. The wife claims as a matrimonial debt the difference between the legal fees of $148,000 and $233,000, which is $84,000.

2. The wife says I ought to take that debt into account because they are monies she has used to pay children’s school fees and/or living expenses not otherwise paid by the husband.

3. The husband has paid $53,262 in legal fees. That has come out of, in part, the drawdown of the line of credit standing now at a debit of $200,000.

4. The husband says this line of credit is a matrimonial debt because he has used the facility to pay children’s school fees, mortgages on the matrimonial home, mortgage on the investment properties, tax liabilities and the like. The wife ought not to be saddled with the husband’s legal fees. I will reduce this debt accordingly to $147,000.

5. The wife seeks $2,000 be paid to her by the husband due to orthodontic fees she paid for Y and $10,000 for Y’s school fees.

6. The line of credit at $200,000 is secured over the parties properties.

Liabilities

1. The wife puts in as a joint liability a loan to her parents of $140,000. There is no loan to her parents and I will disregard that as a liability. It is clearly, however, a contribution of $140,000.

2. The wife has a HELP debt: $7,922.

3. The mortgages on Property H and Property C are cross-collateralised and are in 2 accounts one at $846,000 and a second mortgage of $92,000.

4. The husband has personal tax debts approaching $150,000 and a capital gains tax in relation to the sale of Property N, of $57,906, unpaid legal fees of $80,737 and accounting fees of $2,500.

5. There are outstanding school fees for the children at (omitted) School and (omitted) School of $51,567.

6. Superannuation.

7. The wife has $88,756 in superannuation and a small policy of $191.

8. The husband has two policies, one of $299,203 and one of $49,398.

9. There are many Qantas frequent flyer points in the husband’s name which the wife wants the husband to cash into Woolworths vouchers.

10. The husband concedes the wife is entitled to more than 50 per cent of the matrimonial property and says her entitlement is 55 per cent of the pool.

11. The wife seeks 65 per cent.

12. Ascertaining the asset pool has some complications.

Tax debts

1. Mr K the husband’s accountant gave evidence of his tax position via the telephone. Upon looking at the husband’s integrated account on the tax portal he has four separate tax liabilities for the husband which totals $150,000. Income tax of $59,244 for past years, company tax of $36,989.38, tax on the family trust of $15,488 and his tax for this year of $38,342. This does not include capital gains tax on the sale of Property N $57,906.39.

2. Only the capital gains tax is a matrimonial tax debt. The remainder are the husband’s debts.

3. Much was made that the husband had omitted to include some income he had earnt in December of 2015 totalling $13,000. Mr K said, “Yes, that was an error but it has been included in this tax and we’ve fixed it up.”

4. The annexure A to Mr K’s affidavit was a spreadsheet prepared by the husband to assist Mr K as an aide memoire. I am satisfied that Mr K is well across the husband’s income and tax position. Mr K realised this error together with another error where the husband had included an amount for income he did not receive at an earlier point in time and the figures were corrected accordingly by Mr K.

5. In the light of this evidence I do not find that the husband has been anything other than truthful and honest about his tax or income position post separation.

6. The parties have been living beyond their income since separation and the payment of the children’s school fees and legal fees is a significant reason for this however these are the choices that they made.

Contribution to current assets

1. The wife’s assertion she had $60,000 in assets at the commencement of the cohabitation being furniture and the like is rejected by me. Secondly that type of a contribution made so long ago is of little relevance today.

2. The wife was made bankrupt before the marriage and although much was made of that the salient issue is the impact of her bankruptcy on her claim that she was able to make a contribution to the payment of the mortgage for land at Property W that the husband purchased prior to the marriage for some $30,000. The wife’s evidence was that she was not discharged from her bankruptcy for 5 years into the marriage and I reject her assertion that she was able to pay off her creditors and make a contribution to this property in those circumstances.

3. The vacant block of land at Property W was sold some years after the marriage in 1997 to assist in purchasing Property H. The parties were married in 1990. Thus the land was owned for some seven years prior to sale and the wife was an undischarged bankrupt for about 5 of those years and not able to make a contribution to that asset.

4. The parties netted the sum of $43,733 from that sale. The wife had these dates and amounts available to her as she had the husband’s documents and yet did not provide them to him despite his request.

5. I find the husband made the overwhelming financial contribution to the net proceeds of sale of the land.

6. The contribution of this $43,733 which, together with the monies from the husband’s father’s estate and using the wife’s figure of $84,000 totals $123,733 or $124,000 rounded up went directly into the purchase of the Property H property. I find the husband made this direct financial contribution to the exclusion of the wife.

7. The $140,000 the wife’s parents advanced them certainly is of a greater monetary value however, there is clearly a similarity of contributions made by each of these parties from assets or inheritances and the like or gifts from their families to their ultimate asset base.

8. Secondly the husband made a contribution to the figure of $140,000 from the wife’s parents due to his efforts in the renovations.

9. If I accept that husband case that the whole of the $94,000 he received from his father’s estate was put into the purchase of Property H then the party’s respective sole contribution to Property H is almost equal.

10. Living in the (omitted) property for 5 years rent free and in the wife’s parents’ home for 5 months while Property H was renovated is a contribution by the wife over and above that of the husband. However, I find that in terms of assets each had at the commencement of the relationship or came to them via their parents during the relationship, there is a significant equality of contribution.

11. Generally in a marriage of 26 years as at today’s date and 22 years as at separation there is an equality of contribution as at the date of separation. However the 5 years rent free accommodation the wife’s parents provided at (omitted), the 5 months accommodation rent free whilst Property H was renovated and the assistance given to the parents by the wife’s own parents and sister in caring for their children when the husband was studying for his (qualifications omitted) favours the wife and I assess that at 5% as at the date of separation.

12. Going now to contributions post separation.

13. The husband says that the Property C property was tenanted up until March 2014 but that the rental income was insufficient to pay the outgoings. He was paying rent private and determined to move into Property C which for him was a sensible economic approach. Since he has moved into Property C he has spent regular time with his children.

14. The husband says at paragraph 41:

    “With the exception of rental income received from Property C and Property N properties, I have been solely responsible for meeting all the mortgage payments over all three of our properties since approximately August 2000 after [wife] permanently ceased employment...”

15. He further said when he was made redundant in March 2013 he struggled to continue to pay all the mortgages and thus he drew down the line of credit and Property N was sold.

16. The husband earnt a high income during the marriage. For example in 2007 he earnt $407,000 and $228,141 in 2013.The parties lived well and were well able to afford the life they had due to the husband’s demonstrated income earning capacity.

17. The wife has now returned to work in (employment omitted) part time and she has a skill in that area. However it is many years since she has worked and she does not have a demonstrated income earning capacity as does the husband. The wife had a skill base last demonstrated some 20 years ago. The wife is hoping to get back into the workforce and complete her (qualifications omitted) but X’s mental health issues, understandably, have put a spanner in the works and it will take her some time to retrain and be in a position to support herself to the level she had become accustomed to. The husband conceded she may never achieve the income she could have achieved had she continued to work and not care for the children as she did.

18. These parents carried out a traditional role in their marriage, namely, the wife remained at home to care for the children and the husband earnt income and earnt significant income. The wife makes no complaints of the husband’s income earning capacity in support of the family whilst the parties were together, neither does the husband criticise the wife’s parenting and said she was a wonderful mother.

19. While parenting was not at large in this issue, it is relevant for the following. I have formed the view, consistent with the husband’s view, that the wife was adverse to the father spending time with the children, particularly given the circumstances of separation where the father was already involved in a relationship. The wife has been deeply hurt by the separation and appeared to me to have not yet recovered from her hurt and disappointment in her husband’s behaviour. This has had an impact upon her children, particularly X.

20. The wife may not have been able to protect him from her hurt. The husband became very upset when it was asserted he and his children did not have a good relationship. The wife’s case that she alone will parent the children into the future is not supported on the evidence. There is no reason why the husband is unable to share in the day to day care of the children given their ages and thus assist the wife other than resistance from the wife.

21. I accept that the separation came as a significant shock to the wife and she says so in her affidavit at paragraph 78:

    “Our separation was a shock to both of the children, and also to me. They have both attended counselling.”

22. Y appears to be progressing well and is doing well at school. X is a gifted student and was undertaking the International Baccalaureate. There is some issue now as to whether he will be able to complete his HSC this year given his mental health breakdown.

23. The mother described him as a “contentious student who performed well academically” and that he had “a busy extracurricular schedule (hobbies omitted) and participating in team sports”. The mother’s assertion in paragraph 83 that she has “tried to ensure that the children know as little as possible about these court proceedings” is not accepted by me. The children, and particular X, have witnessed poor behaviour by each of their parents.

1. They have read emails and other messages between the parents, all read at the mother’s home. The incident which occurred in 2014 where the wife called the police because she asserted the husband assaulted her was both unnecessary and uncalled for. I accept the husband’s evidence that X witnessed this, became most upset and that Y stormed upstairs saying, “Really, mum. Honestly.”

2. The husband came to the house to pick up some items, three minor items that he required. The wife had not made them available and an argument ensued. The husband’s behaviour on that occasion was inappropriate as well. He took the wife’s keys including her car keys as they included the key to the shed, sat in his car with the keys until the police arrived and would not return them to the wife. This was a poor decision by him and resulted in the parents playing one off against the other in the presence of their older teenage children. This type of behaviour has had a poor outcome for the children.

3. Having said that, the wife’s allegation that the husband has not supported the family since separation is simply not made out on the facts. The husband’s income in 2014 was $170,000 being in part his redundancy of $108,000 and (omitted) work. In 2015 it was $81,000 as a self- employed (omitted) in business for himself.

4. His evidence was that his business is growing, his cash flow is growing and he believes in the next few years he will cement his business and be successful. However, there have been times when the business was first operating in 2014 when there was no income being generated.

5. I accept the husband’s evidence that he used the redundancy money he received in March 2013 for his support and that of the family including paying the mortgages.

6. I accept the husband’s evidence set in paragraph 85 of the numerous applications he has made for positions at senior level with a level of income he had earnt during the marriage. I accept he has been unsuccessful and that he is now devoting significant time and resources to his company and that his company is growing. On a positive note the husband gave evidence that from the well over 50 job applications he has made there has been a positive in that it has given him contacts in the area that he wants to work and he is now well on his way to establishing those contacts. The husband clearly stated who the contacts with his business are and he has been open and honest about these matters. The husband says he has two main clients now (omitted) and (omitted) and is endeavouring to secure more clients.

7. The husband sold the property at Property N because he could not meet the mortgage payments. All the proceeds of sale went into reducing the then mortgage. Property N was sold in 2013 for $951,000. There was a shortfall on this sale of $30,000 and that was met from the line of credit. There were sale costs of selling Property N of $13,853 which also came from the line of credit as is set out in paragraph 78 of the husband’s affidavit. This capital gains tax remains unpaid today. It is a matrimonial debt and stands at $57,906.30.

8. The husband has used the line of credit to maintain his cash flow, pay the children’s schooling fees and his outgoings. In March 2015 the husband had to use his credit cards which have now been maxed out to pay for school fees. He has made two successful hardship applications with (omitted) Bank for mortgage relief and has been refused a third.

9. The husband was able to make up the mortgage payments arising from the June 2015 moratorium as by then he had secured clients and thus had a cash flow.

10. This all occurred whilst the wife and children remained in the former matrimonial home and the children’s parents had each endeavoured to maintain normality for them and security in continuing to attend at their private schools.

11. The husband was paying the wife sums of money set out in paragraph 106 of his affidavit, which was no less than $5,000 a month, sometimes $8,000 a month, between 5 April 2013 until 8 January 2015. He also paid the children’s school fees and when he could, and those payments came from income or the line of credit with (omitted) Bank.

12. The husband’s payment of school fees from February 2013 to July 2015 were $53,000 for Y and for X $50,000 a total $103,000 paid by way of school fees. He was made redundant in March 2013 and his income has significantly reduced since then.

13. The husband has continued to pay private health for the children with (omitted) and paid orthodontic costs for Y’s braces. He owes the dentist $2,000 which he will pay.

14. The wife seeks an order that the Property C property be sold and she retain Property H. That sale will incur further capital gains tax which each will be liable for.

15. The husband opposed the selling of Property C in 2013 because, as he says at paragraph 180 of his affidavit, the cross-collateralisation of Property C and Property H totalled $1.148 million in December. His position was that selling Property C then would not have resolved the arrears of school fees, it would have caused a further capital gains tax and the husband opposed the order. The outstanding school fees of $25,000 in 2013 were paid by the husband from maxing out his credit cards.

16. The husband and wife have each, to the best of their ability, endeavoured to maintain the lifestyle the children enjoyed whilst they were living together. However this lifestyle was dependent upon the husband continuing to earn the significant income he earnt which he has not been able to achieve despite his best efforts since March 2013.

17. The husband is in arrears of child support as paying child support, the mortgage payment, school fees and the like were simply beyond his capacity to pay. The wife will not accept that the husband can either pay child support or school fees, but not both despite it being clear that this has been the case for some time.

18. The husband seeks Property C be retained. The husband is agreeable to a sum of money being set aside from the property settlement to pay for the children’s school fees as he agrees the children are doing well at their current schools.

19. The wife is now working for (employer omitted) as a (occupation omitted) and I accept her gross income is about $25,800 and that she needs to fit her work around the children’s needs, particularly X.

20. Looking back I find that the wife has made a superior contribution during the marriage to that of the husband by the provision rent free of the property at (omitted) for 5 years and at her parents’ home for 5 months during renovations. This contribution enabled the parties to save a substantial sum of money which assisted them to purchase their home in Property H. I assess that contribution to be 5%.

21. The $140,000 that ultimately came from the contribution by the wife’s parents has been somewhat matched by the husband’s contribution of monies from his father’s estate and the sale of the Property W property.

22. Although the wife has a view that her $140,000 is worth more than the husband’s contributions, of at minimum $124,000 or at best $134,000 I find their sole contributions are equal.

23. Post-separation the husband has drawn down the line of credit for $200,000 of which some monies went to pay legal fees but also joint debts, such as on the Property N property. The husband asserts this is a matrimonial debt.

24. I will not allow the husband’s paid legal fees of some $53,400 as a matrimonial debt. This reduces the line of credit debt as a possible matrimonial debt to $147,000.

25. I will allow the following as matrimonial debts.

26. The shortfall between the sale price and what was owed to the bank of $30,845 and the costs of sale for Property N of $13,853 which totals of $44,600 was paid from the line of credit and is a joint matrimonial debt.

27. Looking at the husband’s affidavit paragraphs 105 and 108 since he was made redundant in March 2013 and until the line of credit was exhausted in March 2015 the husband paid school fees of $29,939 for Y and $31,087 for X a total of $61,623.

28. Looking at paragraph 106 of the husband’s affidavit post the husband’s redundancy in March 2013 and until the line of credit was exhausted in March 2015 the husband paid the wife $79,000 in addition to paying all mortgages on the party’s properties.

29. The payments made to the wife and for the children’s school fees total $140,000 virtually what was left in the line of credit after the husband paid his legal fees. The husband’s redundancy of $108,000 did not even cover these costs. His real net income since March 2013 has been less than the $81,000 he earnt in the tax year ending 2015. Yet he paid all the mortgages as well as supporting himself. Clearly his expenses far outweighed his income and thus his use of the line of credit was necessary.

30. Thus I find that the line of credit less the amount paid for legal fees of $53,262 is a matrimonial debt and that debt is $146,738 or $147,000 rounded up. Having taken into account this debt as a matrimonial debt results in the husband not receiving any additional entitlement for the support of his family post separation. The reality now is that the parties have each made that contribution.

31. I note that post March 2015 he has paid in addition to those sums $13,000 in school fees for Y and $17,793 for X a total of $30,793 from his income.

32. In relation to the loan the wife has with her sister. I will allow the wife $84,941 being $85,000 rounded up and I accept that this money together with the monies taken from the line of credit at separation was used by the wife to support her and the children particularly when the husband was not making payments to her from January 2015.

SUPERANNUATION

1. I will treat this as a two pool approach matter. The parties are young, they have many years before they can access their superannuation, and the law is clear: one party shall not receive all the liquid assets and the other party superannuation.

2. In relation to the Qantas frequent flyer points, I will make an order that the husband is to use his best endeavours to cash them out to obtain Woolworths or other shopper dockets and that each of the parties will retain half of those shopper dockets. They may well be valuable to each of them.

Post-separation and into the future

1. The wife has had the benefit of residing in the former matrimonial home to the exclusion of the husband. This is supporting your family.

2. I do not see either the husband or wife have made a superior contribution to the other to their family or assets post-separation and I will make no adjustment to their current contribution based entitlement which I have assessed as 55% to the wife and 45 % to the husband.

3. X’s health is fragile at the moment and his prognosis is unknown. That is something that the husband and wife will each share the care of and I see no difference between them on this issue given X is 17. I do not see X’s needs as a factor for one parent over the other. The father is capable, willing and able to assist in his care of and recovery to health of his son and this is not a task that only the mother can do. I am satisfied X and his father have a good relationship and once these proceedings are over X and his father will spend the time together as they determine.

4. However, the wife does not have the capacity to earn the income that the husband does and that he exercised throughout the marriage or the skills or contacts he has in his area of expertise. The wife wishes to complete her (qualifications omitted) to further her career and thus has some way to go to reach even the husbands’ current income level.

5. I find that having regard to the matters under section 75(2) of the Act I ought to give the wife an adjustment of 10% due to her inferior capacity for some time to support herself to an adequate level. That would then equate to a 65/35 division of property in the wife’s favour of the liquid assets.

6. In relation to superannuation there will be an equal division of superannuation.

7. The superannuation for division is:

Superannuation
Wife's (omitted)	$88,756
Husband's (omitted)	$299,203
Husband's (omitted) Super	$49,398
Total	$437,357

1. An equal division is $218,678. This will require a splittable payment of the husband’s superannuation to the wife of $129,922.50.

2. The liquid assets for division are;

Assets
Property H	$1.8 million
Property C	$1.325 million
Husband’s BMW motor vehicle	$29,400
Wife’s 315 (omitted) shares	$1,886
Total	$3,156,266
Note: Husband’s share in Greece property	$125,000

Liabilities
1st Mortgage	$846,000
2nd Mortgage	$92,000
Husband’s line of credit	$147,000
Wife’s loan to sister	$87,000
CGT on Property N sale	$57,906
Unpaid school fees	$51,000
Wife's HELP debt	$7,922
Total	$1,288,828

1. Assets for division are $1,867,438 being total liquid assets available of $3,156,266 less the debts of $1,288,828.

2. The wife sought the husband repay her $10,000 for school fees for Y and $2,000 in orthodontist costs. I will not so order. School fees have been paid from capital and not income in the main and thus it is pointless to make this order given each has paid school fees from borrowings and I have allowed those borrowing as matrimonial debts.

3. The husband also has an orthodontists account for $2,000 for Y. Once the property matter is resolved the husband will be able to pay child support to the wife. This has not been possible due to commitments to the bank. Secondly I propose to award the wife 65% of the matrimonial property and in those circumstances I will not order the husband to repay this sum to the wife.

4. What is the result of the orders I propose to make.

5. 65% the assets for division is $1,213,834 to the wife and $653,603 to the husband. Less his car at $29,400 is a payment to him of $624,033.

6. The wife can only retain Property H if Property C is sold. The husband can only retain Property C if Property H is sold. If I could see a way clear for each to retain their properties I would however the borrowings required to discharge the exiting liabilities are beyond the parties’ capacity on their declared and accepted incomes. If the parties are able to structure my orders in such a way to enable them to keep the current homes I will provide for this to occur in my orders. I see no clear way to do this. Given the husband and wife each wish for her and the children to retain the Property H home I will give her an opportunity to do so.

7. Upon the sale of Property C for $1,325,000 the parties’ liabilities as I have found them to be will be extinguished and there may be $50,000 surplus to pay any capital gains tax and costs of sale. If Property C sells for more than $1,325,000 the parties will share any increase in a 65/35 split and similarly if it sells for less.

8. I will give the wife an opportunity to buy out her husband’s interest in their assets by paying him $624,033. Her sister may well be able to assist her in this. I will give the wife 30 days to determine if she able to raise this money on the basis Property C is sold and the parties’ debts as I have determined them to be are extinguished. There will still be from the banks point of view $53,262 or rounded down $53,000 of the $200,000 overdraft left as I have determined that this is the husbands share of the debt and not the wife’s.

9. In the event the wife is able to raise sufficient money to buy out her husband I will order that the whole of the line of credit be extinguished by the wife from the sale of Property C and that the husband be solely responsible for outstanding school fees of no more than $53,000.

10. If the parties wish to put money aside for school fees into the future that is a matter for them. I will not so order.

11. If the wife is unable to raise sufficient monies to buy out the husband’s interest and the husband is unable to raise sufficient to retain Property C, pay out the exiting debts as I have found them, pay the wife $1,214,056 from the sale of Property H then both properties are to be placed on the market for sale and the following are to be paid from the net proceeds of sale:

    a)The existing mortgages.

    b)Costs of sale.

    c)Capital gains tax if any in respect of Property C.

    d)The current line of credit to an amount of $147,000.

    e)Capital gains tax in respect of Property N.

    f)Wife’s HECS debt.

    g)Outstanding school fees of $51,567.

    h)$87,000 to wife’s sister.

    i)The balance to be divided 65/35 in the wife’s favour.

    j)The husband to discharge the remainder of the $200,000 line of credit from his share of the proceeds of sale.

12. Even after these debts are paid the husband will still have $98,000 in tax debts, $22,000 in a credit card debt and unpaid legal fees of $89,737.

13. The wife will have a loan of $146,059 to her sister.

14. Do these orders result in a just and equitable division of the parties assets? I find they do.

15. The parties will have equal amounts of superannuation in the sum of $218,678.

16. It was necessary and to do justice between the parties to embark upon an assessment of the division of their assets. The orders acknowledge each parties contribution to their assets during the marriage having regard to the matters under section 79 of the Act and the principles in Pierce & Pierce (1998) FAMCA 74 and Ferraro & Ferraro (1993) FLC 92-335 and provide for their needs into the future having regard to the factors set out in section 75(2) of the Act. The wife has many years to reach the earning capacity of the husband if she can achieve this and this is not certain. The husband is also re partnered and has land in Greece. Additionally these orders give the wife an opportunity to buy out the husband’s interest in the former matrimonial home a position each agreed with. I accept the husband did not want the Property C property sold however retaining Property C is less likely than retaining Property H.

I certify that the preceding one hundred and sixty-six (166) paragraphs are a true copy of the reasons for judgment of Judge Henderson

Date: 10 October 2016