Parmenter & Louwen
[2023] FedCFamC1F 739
•31 August 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Parmenter & Louwen [2023] FedCFamC1F 739
File number(s): CSC 452 of 2021 Judgment of: JARRETT J Date of judgment: 31 August 2023 Catchwords: FAMILY LAW – PROPERTY – Where parties operate a business through a series of trusts and corporate trustees – Where one trust has a significant value and one company has no value with significant debt
FAMILY LAW – PROPERTY – Where respondent engaged in a course of conduct post-separation to interfere with the business – Where respondent’s course of conduct was in spite of orders granting exclusive operation of the business to the applicant – Whether conduct that makes one party’s contributions significantly more onerous can be taken into account when assessing contributions where the conduct does not constitute domestic or family violence
Legislation: Family Law Act 1975 (Cth) ss 75(2)(o), 90SF(3)(r), 90SM, 90SM(4), 90SM(4)(d), 90XT(1)(b), 102NA(1)(c)(iv), 102NA(2)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021, Part 6.1
Cases cited: Baranski & Baranski [2012] FamCAFC 18
In the Marriage of Kennon (1997) 22 Fam LR 1
In the Marriage of Weir (1992) 16 Fam LR 154
Keating & Keating [2019] FamCAFC 46
Mallet v Mallet (1984) 156 CLR 605
Mayhew & Fairweather (2022) 64 Fam LR 633
Omacini & Omacini (2005) 33 Fam LR 134
Pavlic & Pavlic [2023] FedCFamC1A 54
Spagnardi & Spagnardi [2003] FamCA 905
Division: Division 1 First Instance Number of paragraphs: 164 Date of hearing: 12, 13 June, 2023 Place: Cairns Counsel for the Applicant: Mr Raeburn Solicitor for the Applicant: Preston Law Solicitor for the Respondent: Litigant in person ORDERS
CSC 452 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS PARMENTER
Applicant
AND: MR LOUWEN
Respondent
ORDER MADE BY:
JARRETT J
DATE OF ORDER:
31 AUGUST 2023
THE COURT ORDERS THAT:
1.The respondent shall sign any such documentation prepared by B Accountants necessary for him to resign from any position he may hold and transfer to the applicant any interest he may have in (including in any bank account, loan account or unpaid entitlement/loan) or shareholding he may have, in any of the following entities within 7 days of the documentation being provided:
(a)C Pty Ltd;
(b)D Pty Ltd;
(c)E Pty Ltd;
(d)The Parmenter Family Trust; and
(e)The Louwen Family Trust.
2.The respondent is hereby restrained and an injunction issue restraining the respondent from making any claim (including as a beneficiary) against any of the following entities:
(a)C Pty Ltd;
(b)D Pty Ltd;
(c)E Pty Ltd;
(d)The Parmenter Family Trust; and
(e)The Louwen Family Trust.
3.The respondent hereby forgives and assigns to the applicant any funds owed to him by any of the following entities:
(a)C Pty Ltd;
(b)B Pty Ltd;
(c)E Pty Ltd;
(d)The Parmenter Family Trust; and
(e)The Louwen Family Trust.
4.The applicant shall indemnify and shall cause the entities listed hereunder to indemnify the respondent with respect to any amounts owed by the respondent to any of the following entities:
(a)C Pty Ltd;
(b)D Pty Ltd;
(c)E Pty Ltd;
(d)The Parmenter Family Trust; and
(e)The Louwen Family Trust.
5.Within 90 days of the date of these orders, the parties are to do all acts and things necessary for the name of the Louwen Family Trust to be changed to a name that is not identifiable with the respondent.
6.In accordance with s 90XT(1)(b) of the Family Law Act 1975 (Cth):
(a)the respondent is entitled to be paid the specified percentage of the applicant’s superannuation interest in the Louwen Parmenter Superannuation Fund;
(b)the applicant’s entitlement (or the entitlement of such other person to whom a payment may be made out of the applicant’s interest) in the Louwen Parmenter Superannuation Fund is correspondingly reduced by force of this order; and
(c)the percentage specified for the purposes of this clause of the order is 100%.
7.The Trustee of the Louwen Parmenter Superannuation Fund shall do all such acts and things and sign all documents as may be necessary to:
(a)calculate, in accordance with the requirements of the Family Law Act 1975 (Cth) and the Family Law (Superannuation) Regulations 2001 (Cth) the entitlement awarded to the respondent in the clause immediately preceding this clause of the order; and
(b)pay the entitlement whenever the Trustee makes a splittable payment from the applicant’s superannuation interest in the Super Fund.
8.Paragraph 6 of these orders has effect from the operative time, the operation of which is from the beginning of the day upon which this order is made.
9.Service of this order on the Trustee of the Louwen Parmenter Superannuation Fund shall be deemed to have occurred on the date of this order by reason that the parties are the only directors of the Trustee company (Louwen Parmenter Super Pty Ltd) and the Court notes that service of this order on the Trustee will enliven the operating standards under Part 7A of the Superannuation Industry (Supervision) Regulations 1994 (Cth).
10.Forthwith after the completion of the superannuation split as provided for by paragraphs 6 to 9 of these orders, the parties shall do all acts and things necessary, including signing any documentation necessary, for the applicant to:
(a)resign as a director of Louwen Parmenter Super Pty Ltd;
(b)transfer her shareholding in Louwen Parmenter Super Pty Ltd to the respondent;
(c)terminate her membership in the Louwen Parmenter Superannuation Fund; and
(d)relinquish the rights and authorities in relation to the management and administration of the Louwen Parmenter Superannuation Fund, transferring all the said rights and authorities to the respondent, including, but not limited to, operating bank accounts of the Super Fund and removing herself as a signatory on the said accounts.
11.From the date of these orders until the transfer and/or assignment in accordance with paragraph 1 of these orders, the applicant is to have sole and exclusive control and authority in relation to the operation of the following entities and the respondent is restrained and an injunction issue restraining the respondent from interfering in any way with the operation of, or acting on behalf of, the following entities:
(a)C Pty Ltd;
(b)D Pty Ltd;
(c)E Pty Ltd;
(d)The Parmenter Family Trust; and
(e)The Louwen Family Trust.
12.The respondent retain the following items currently held at G Street, Suburb H:
(a)the following paintings:
(i)Painting 1;
(ii)Painting 2; and
(iii)Painting 3;
(b)Painting 4;
(c)to the extent it can be identified, Painting 5;
(d)the prints;
(e)to the extent it can be located, the mountain bike;
(f)the bicycle;
(g)the exercise machine;
(h)the rechargeable torch;
(i)his children’s possessions in the attic;
(j)the treadmill;
(k)the portable BBQ;
(l)the three safes in their current conditions;
(m)the drill press;
(n)the hoist;
(o)any tools kept in the workbench;
(p)the chainsaw;
(q)a decorative item;
(r)stereo equipment and speakers;
(s)equipment from the respondent’s office;
(t)the decorative bowl;
(u)the table.
13.The applicant pay the amount of $1,796,972 to the respondent within 60 days of the date of these orders.
14.Contemporaneously with order 13 above, the respondent shall transfer his interest in the property at G Street, Suburb H to the applicant.
15.Should the applicant not make the payment referred to in order 13 above, the property at G Street, Suburb H be sold and the proceeds of sale be applied as follows:
(a)in payment of any costs associated with the sale of the property, including legal costs;
(b)payment of any outstanding rates or other charges attaching to the property;
(c)an amount of r to the respondent calculated according to the following formula:
a = proceeds of sale less any amounts pursuant to order 15 (a) and 15(b) hereof;
r=[(a+ $3,280,160)x(45/100)]-$365,350;
(d)the balance to the applicant.
16.Pending the transfer in order 14 above or the sale in order 15 above, the applicant have sole and exclusive possession of the property at G Street, Suburb H.
17.Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders;
(b)money standing to the credit of the parties in any bank account are to become the property of the person so named as the owner of the bank account;
(c)each party forego any claims they may have to superannuation benefits belonging to or earned by the other;
(d)insurance policies remain the sole property of the beneficiary named therein; and
(e)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
18.Unless otherwise provided for in these orders, the transferee party, or the party receiving the benefit of any transaction pursuant to these orders, is required to prepare the necessary documentation to give effect to these orders, at their cost, and is responsible for payment of any registration or other fee in relation to the transfer of property into their name.
19.The parties do all acts and things and sign all documents required to implement these orders and if either party refuses or neglects to sign (within 7 days of a written request to do so) any documents necessary to give effect to the terms of these orders, a Registrar of the Federal Circuit and Family Court of Australia is hereby appointed pursuant to the provisions of s 106A of the Family Law Act 1975 (Cth) to execute such documents on behalf of that party.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JARRETT J:
Before me is an application for the alteration of property interests pursuant to s 90SM of the Family Law Act 1975 (Cth) between the applicant de facto wife, Ms Parmenter and the respondent de facto husband, Mr Louwen.
On 13 October, 2022 the Federal Circuit and Family Court of Australia (Division 2) made an order pursuant to s 102NA(1)(c)(iv) of the Act, the effect of which was to prevent personal cross-examination of each party by the other.
The application was initially listed for trial before me on 7 March, 2023. When it came on that day, the respondent, represented by solicitor and counsel, sought an adjournment of the proceedings so as to seek legal aid funding under the scheme established to assist litigants affected by s 102NA(2) of the Act. His solicitor and counsel were only retained for the purpose of seeking the adjournment.
Although it was not the principal reason for granting the adjournment of the trial on 7 March, 2023, the trial was adjourned to 12 June, 2023 and the respondent was told that he should engage with Legal Aid Queensland and the s 102NA cross-examination scheme as quickly as he could.
The respondent appeared without legal representation at the adjourned trial date on 12 June, 2023. He sought a further adjournment of the proceedings to enable him to obtain representation. He was unable to demonstrate that he had engaged with Legal Aid Queensland and the s 102NA cross-examination scheme in a timely manner following 7 March, 2023. I refused his application to adjourn the proceedings and the trial proceeded. Consequently, the respondent was not permitted to cross-examine the applicant although the applicant, by her counsel, was able to cross-examine the respondent.
THE RELATIONSHIP
The parties commenced their relationship in 1999 and commenced cohabitation later that year. At the commencement of the relationship, the respondent had five children from a previous relationship and the applicant had two. The parties have no children together.
Although the parties never married, their relationship was over 20 years in length. They separated on 18 February, 2020 and lived separated under one roof until July, 2021.
THE ISSUES
Neither party suggested that it would not be just and equitable to make a property adjustment order pursuant to s 90SM(4) of the Act between them. Neither suggested that it would be appropriate to leave the parties with their present legal and equitable entitlements to property and make no adjustment order. That approach is entirely appropriate. Their relationship was of 20 years duration, both parties made contributions to the acquisition, maintenance and improvement of their property and their finances remain intermingled. I am satisfied that it is just and equitable to make a property adjustment order.
Having regard to the parties’ evidence, their submissions and the matters that arise for consideration pursuant to s 90SM(4) of the Act, the more significant, but not the only issues requiring determination so as to reveal the orders for property adjustment that might be just and equitable are:
(a)has the respondent made full and frank disclosure of his financial circumstances and in particular, does the respondent have assets that he has not disclosed?
(b)if so, how is it best to take account of that non-disclosure?
(c)what value should be attributed to a company operated by the applicant named D Pty Ltd?
(d)what consideration, if any, should be given to the “negative value” of another company operated by the parties named C Pty Ltd?
(e)has the respondent’s post-separation behaviour made the applicant’s post‑separation contributions significantly more onerous and if so, what consideration, if any, should be given to that? and
(f)assuming that C Pty Ltd has a “negative value” and assuming that the respondent has not made full and frank disclosure of his financial circumstances, what adjustment is appropriate for either (or both) of those matters pursuant to s 90SF(3) in the event that they are not taken up elsewhere in the discretionary decision making exercise.
SOME CONTEXT
To provide context to what follows, it is necessary to set out and make findings about the parties’ business interests. In broad terms, the parties carry on a business that operates out of City J, Queensland. The business was started by the respondent more than 30 years ago. Currently the business (in broad terms) is operated utilising two discretionary trusts and three companies.
C Pty Ltd
The business is carried on by C Pty Ltd. The business operates out of premises at K Street, City J and utilises three vehicles – Motor Vehicle 1, Motor Vehicle 2 and Motor Vehicle 3. Generally speaking, Motor Vehicle 1 remains on-site in Region F. Motor Vehicle 2 provides transfers from City J to Motor Vehicle 1 as well as providing transport for clients. Motor Vehicle 3 operates in tandem with Motor Vehicle 1.
The respondent is currently the only director and secretary of C Pty Ltd. He is the sole shareholder. In its business, C Pty Ltd employs a small number of staff including the applicant. It utilises vehicles, equipment, other equipment necessary for running and maintain the vehicles and access permits.
Apart from some minor items of plant and equipment, all assets utilised by C Pty Ltd in its business are owned by E Pty Ltd. C Pty Ltd pays an annual hire fee for its use of the moveable assets. It leases K Street, City J from E Pty Ltd.
Save for the year ended 30 June, 2021 C Pty Ltd generated losses for each of the financial years ended 30 June, 2018 – 30 June, 2022. The evidence of an expert valuer, Mr L, is that as at 30 July, 2022 the company has no value. The business operated by the company has no value and requires an amount of $734,090 to fund its short-term liabilities. The company has no other assets of any value. No issue was taken with this valuation by either party.
Aside from the business requiring an amount of $734,090 to fund its short-term liabilities, the company also has non-business-related liabilities. It has a loan outstanding to the Louwen Family Trust ($882,766) and a CBA business loan of $187,424. According to Mr L’s evidence, the total indebtedness of C Pty Ltd is $1,804,705.
This valuation was not challenged and I accept it.
E Pty Ltd
The respondent is currently the only director and secretary of E Pty Ltd. The applicant is its sole shareholder. This company does not carry on any business on its own account. Its purpose is to hold assets subject to the terms of the Louwen Family Trust as trustee of that trust. Because it does not hold any assets beneficially, Mr L valued this company at $20 (being the valued of its paid up share capital).
This valuation was not challenged and I accept it.
Louwen Family Trust
The Louwen Family Trust was established in 1999 and is a discretionary trust. The beneficiaries of the trust are the respondent, the applicant, any children of the parties and extended family members of the parties. The applicant is the appointor of the trust.
Mr L opined that as at 30 June, 2022 (and 30 July, 2022) the Louwen Family Trust had a net value of $2,933,830. That figure was arrived at as follows:
Goodwill Nil
add net business assets $4,719,712
Capitalised value of the business $4,719,712
add surplus assets:
Loan – C Pty Ltd $915,422
Loan – Beneficiary Account – Mr Louwen $154,194
$5,789,328
less debt:
loan – Ms Parmenter $487,320
loan – CBA $2,368,178
Net value of trust $2,933,830
No issue was taken with this valuation and I accept it.
Parmenter Family Trust
The Parmenter Family Trust is a discretionary trust. The applicant is the trustee of the trust. She is also the primary (but not the only) beneficiary of the trust. This trust does not carry on a business and Mr L assessed its value based on its net assets. The applicant owns shares in D Pty Ltd as trustee for the Parmenter Family Trust and the value of the shares in D Pty Ltd represents the value of that trust.
D Pty Ltd
D Pty Ltd was incorporated in 2009. The applicant is the sole director, secretary and shareholder of the company. D Pty Ltd operates a booking business. For the purposes of the trial, D Pty Ltd and its business were valued by Mr M, chartered accountant. There is a significant dispute about the value of this company and consequently, the value of the Parmenter Family Trust.
The business develops websites which are used by businesses to advertise their services. D Pty Ltd does not operate these services itself. Users are able to browse services on D Pty Ltd’s websites, check availability and place bookings. The websites are also used to pay for bookings. The company retains 20% of the booking fee as a commission, with the balance forwarded to the relevant business.
D Pty Ltd also owns approximately 1,400 domain names, held in an account with another unrelated organisation. The domain names are used in respect of websites developed by the company or are held to be used in the development of future websites. Not all of them are active and some may never be. The domain names have a 12-month lifecycle, at the expiry of which, D Pty Ltd must pay to renew the registration (or “ownership”) of each domain name. At the time of Mr M’s report, the cost to renew all of the domain names owned by D Pty Ltd for one year was $27,748.01. The company (or more precisely the applicant) decides on which websites or domain names to list individual tour operators and the products of individual operators do not request specific domain names. The evidence is that D Pty Ltd has never sold a domain name and has not received offers to buy any of the domain names owned by it.
In addition to the domain names, D Pty Ltd owns booking software which was specifically developed for it over a number of years. The software is used to streamline bookings for C Pty Ltd, where those bookings are made via a website developed by D Pty Ltd. The software is not used by any businesses other than C Pty Ltd. The software is purpose built for the operations of C Pty Ltd and it seems uncontroversial that significant customisation would be required in order to sell or licence the software for use by, or with, other businesses.
It is not controversial that D Pty Ltd provides booking services to C Pty Ltd for the products that it offers to the public. The applicant suggested that D Pty Ltd accounted for approximately 75% to 80% of all bookings made with C Pty Ltd. The balance was made through other independent booking agencies. In his cross-examination, Mr M suggested that the range of 75% to 80% was overstated and he suggested that for most of the periods under his scrutiny, D Pty Ltd provided about 1/3 of the bookings for C Pty Ltd. In the end, however, nothing turns on this discrepancy.
Mr M valued D Pty Ltd using what he described as the dual method which required the capitalisation of future maintainable earnings and an assessment of the net tangible assets of the business. He concluded that the value of the company’s business and goodwill was nil because it had no maintainable future earnings. To this value, Mr M added the value, as assessed by him, of the company’s tangible assets. He adopted the average value (rounded) of $14,000 as the replacement cost of the domain names on the basis that this is the approximate cost for the company to “re-acquire” the domain names each year “and reflects the remaining benefit of those Domain Names to the Company”.
As to the value of the company’s software, Mr M recorded that he had been informed by the software developer engaged by the company that the estimated total cost of developing the software over its lifetime ranged between $149,904.20 and $176,957.84. Mr M adopted the mid-point as the historical cost of the software, namely $163,400. However, after rejecting the historic cost of the software as an appropriate basis upon which to value it (and a valuing the software based upon comparable market transactions), Mr M fixed upon a method of valuing the software by reference to the capitalised cost a software user would be willing to pay to use the software. After taking into account information provided to him by the parties and in particular by the applicant, Mr M concluded that the software might return a revenue stream that consisted of a user fee (or royalty payment) together with a commission on sales made using the software. He concluded that the total annual revenue that could be generated from the software through royalties and commissions to be $36,379, comprising annual user fees of $7,200 and annual commissions of $29,179. Capitalising that sum, Mr M opined that the software had a value of $79,000 to D Pty Ltd. However, given that it was only suitable for use by C Pty Ltd, Mr M concluded that on the open market it was without any value.
Thus, Mr M concluded that the Parmenter Family Trust had a value within the range of $14,000 to $93,000.
Mr M was cross-examined by the respondent at the hearing. The respondent suggested that the Parmenter Family Trust was worth considerably more than was suggested by Mr M. There seemed to be three bases for his suggestion. The first was that the value of the domain names was understated. The second was that the development cost for the software owned by the company was much higher than Mr M had calculated and that higher development cost more properly reflected the value of the software. The third related to the capacity of D Pty Ltd to complete bookings either for C Pty Ltd or third parties and receive commission for those bookings thereby increasing its revenue.
I have set out Mr M’s approach to the first issue – the value of the domain names – above. I accept Mr M’s evidence about his methodology for valuing the domain names and the value he ascribes to them. Mr M explained in his evidence why the respondent’s approach to the valuation of the domain names was inappropriate. I accept his evidence about that.
As to the second matter, the respondent put to Mr M that the software developer who developed the reservation software had spent many more hours and had been paid much more for his work than was disclosed to Mr M by the applicant. It was suggested that the costs of development could have been as high as $1.25m over a period of approximately 12 years. Mr M rejected the respondent’s approach on the basis of the information that he had received from the software developer for the purposes of his report. That information, set out and explained in his report at paragraphs 5.16 – 5.19 and 5.39 – 5.40 led to Mr M’s assessment of the development cost of the software reflected at paragraphs 5.82 and 5.83 of his report. However, the development cost of the software was expressly rejected by Mr M as an appropriate basis upon which to value the software: see 5.84 of his report. Rather, Mr M valued the software by reference to the “relief from royalty method” as explained in paragraphs 5.99 – 5.100 of his report. Thus, even if the respondent’s contentions about the development cost of the software are correct, it would have no discernible effect upon Mr M’s valuation of the software.
The third basis identified by the respondent for rejecting Mr M’s value requires a more detailed explanation.
According to Mr M, the accounting practices adopted by D Pty Ltd and C Pty Ltd saw “a lot of the larger accounting work” “done by [C Pty Ltd] on behalf of both businesses”. That was because the businesses were “run through the same entity, and at the end of the year the [D Pty Ltd] activities are extracted and then put through to [D Pty Ltd]”. Thus, the accounting figures used by Mr M had been extracted (either by him or for him) from the accounts of C Pty Ltd. Although unusual and “clunky”, it was something that Mr M had seen adopted before by small businesses and so was of little moment.
The financial statements for C Pty Ltd for the financial years ended 30 June, 2017 – 30 June, 2020 appear at Annexure 7 to Mr M’s report. The company’s “fares and sales” for each year are set out therein and those figures represent the company’s income on a yearly basis. The evidence from the respondent was that 70% - 80% of bookings for C Pty Ltd are made by D Pty Ltd. On that basis and using the 2017 year as an example, the respondent put to Mr M that commissions (at the rate of 20% of the booking cost) of $1,466,775 would have been due and payable to D Pty Ltd for those bookings. As a matter of arithmetic, Mr M agreed with those calculations.
There is no dispute that C Pty Ltd never paid commissions to D Pty Ltd for the bookings that it made on its behalf. The revenue figures used by Mr M to calculate a net maintainable earnings figure for D Pty Ltd reflected the actual income received by D Pty Ltd from its activities with clients and customers other than C Pty Ltd.
The respondent’s argument was that the amounts of commission payable (but not paid) by C Pty Ltd for each of the relevant years should be added to D Pty Ltd’s gross income. That would inevitably increase D Pty Ltd’s net profit and consequently the net maintainable earnings derived from those net profits. The likely result of that exercise would be a positive value for both the business and goodwill for D Pty Ltd, substantially increasing the value of its underlying entity.
Mr M rejected the first respondent’s proposition as “too simplistic”. He considered that it would be commercially unrealistic to expect a business like that of C Pty Ltd to enter into a commission arrangement as the respondent suggested. Rather, he thought that the business “would actually develop an in-house marketing system and that actually was exactly what [C Pty Ltd] did.”
Fearing that Mr M did not understand his proposition correctly, the first respondent clarified that he was suggesting that the capacity that D Pty Ltd had to make bookings on behalf of third parties represented by the volume of bookings that it undertook for C Pty Ltd could be converted to a revenue stream if those bookings were made with third parties rather than C Pty Ltd. The respondent suggested in his questions that other tour operators would “go on bended knee to websites and booking agents to book their product, so there is going to be no shortage – in fact, the products will pay a much higher commission than 20 per cent”.
However, Mr M still rejected the respondent’s proposition. He explained that he was asked to prepare an opinion as to the market value of the D Pty Ltd business, that is to say what a buyer would pay for the business on the open market. Mr M pointed out that although much of D Pty Ltd business was derived through bookings for C Pty Ltd, the latter company had no financial capacity to pay commissions for bookings made through D Pty Ltd. For that reason he characterised D Pty Ltd as an “internal booking agency” for C Pty Ltd. Given that company’s inability to afford to pay commissions, a purchaser of the D Pty Ltd business could have no confidence in an income stream that derived from bookings made for C Pty Ltd. Mr M thought that a prospective purchaser would completely discount any prospective income from C Pty Ltd.
I accept Mr M’s opinion. I reject the respondent’s suggestion that Mr M has not properly taken into account the commissions or prospective commissions that D Pty Ltd might earn from completing bookings for C Pty Ltd in the future. Nor do I accept the respondent’s suggestion that the booking capacity, for want of a better description, represented by the amount of bookings performed by D Pty Ltd for C Pty Ltd might be taken up by bookings made for other tour companies and operators. Indeed, apart from the evidence contained within the financial material relied upon by Mr M that indicated that some of the bookings undertaken by D Pty Ltd were for unrelated tour operators there was no other evidence that D Pty Ltd would be able to “fill the gap”, as it were, if it no longer made bookings for C Pty Ltd.
I find that the value of the domain names held by D Pty Ltd is $14,000. I find that the value of the software held by D Pty Ltd is $79,000. I make that finding on the basis that it is likely that if one of the parties retains C Pty Ltd or the business of the company is sold, a purchaser of that business would seek to continue to use the reservation and payment software developed by D Pty Ltd and it is likely that the latter will seek to impose a fee for its use. Mr M’s evidence provides a proper basis, in my view, for concluding that having regard to the likely fee (plus commissions for bookings) a value for the software is $79,000.
Accordingly, I find that the value of D Pty Ltd is $93,000.
Louwen Parmenter Super Pty Ltd
Louwen Parmenter Super Pty Ltd is a company of which both parties are directors and equal shareholders. The company is the trustee of the Louwen Parmenter Superannuation Fund, of which both parties are members. The company has no value independent of the superannuation fund.
The parties agree that the Louwen Parmenter Superannuation Fund has a value of $225,000.
THESE PROCEEDINGS
This application has spanned two years and in that time, the parties have been quite litigious. The application for final orders was filed on 1 June, 2021. Initially the applicant sought, inter alia, a final division of property of 70 percent to her and 30 percent to the respondent, along with interlocutory orders that she have interim control of the C Pty Ltd business and sole use and occupation of the parties’ former matrimonial home at Suburb H, City J. The applicant sought an urgent hearing of the matter as she alleged the respondent to have frozen her out of the C Pty Ltd business accounts.
On 4 June, 2021 the Federal Circuit Court of Australia (as it then was) made orders that the respondent restore the applicant’s access to the business banking accounts and thereafter, the parties were to jointly authorise transactions on those accounts.
On 1 July, 2021 the applicant filed an application in a case seeking to vary the orders of 4 June, 2021 to permit her to solely authorise payments for the businesses. On 6 July, 2021 the Federal Circuit Court of Australia made orders that the applicant have sole and exclusive control in relation to operation of the business and sole occupation of the Suburb H property. The orders made were roughly in line with the interlocutory orders sought by the applicant. The orders also provided for the respondent to repay any money he had withdrawn from the business bank accounts since 28 May, 2021.
On 11 October, 2021 the Federal Circuit and Family Court of Australia (Division 2) made orders that C Pty Ltd pay for speeding fines accrued by the respondent when driving Motor Vehicle 4 owned by the company. There was also an order that the vehicle be transferred into the respondent’s name “by way of partial property settlement”.
On 7 February, 2022 the applicant filed an application in a proceeding seeking a further order for Motor Vehicle 4 to be transferred into the respondent’s name (as it had not been done in accordance with the orders of 11 October, 2021) and for valuations and disclosure she asserted had not been made by the respondent. On 14 February, 2022 orders were made by consent addressing the valuations. The balance of the application concerning the motor vehicle was withdrawn on 10 May, 2022 after the vehicle was finally transferred into the respondent’s name.
On 20 June, 2022 the respondent filed an application in a proceeding seeking, inter alia, sole control of the C Pty Ltd business, a partial property settlement of $200,000, that he have sole use and occupation of the Suburb H property and for C Pty Ltd to purchase equipment. In the alternative to having sole use and occupation of the Suburb H property, the respondent sought an order permitting him to collect his personal belongings, personal papers and contents of his safe from the property.
On 21 October, 2022 the respondent amended his application in a proceeding. He no longer sought control of the business and instead sought various orders restraining the applicant from interfering with his residence at the K Street property, into which he had moved in July, 2021. In response, the applicant sought an order that the respondent vacate the K Street property, which was also used as business premises for C Pty Ltd.
On 3 November, 2022 the Federal Circuit and Family Court of Australia (Division 2) ordered the respondent to vacate the K Street property by 1 December, 2022 and granted the applicant sole use and occupation of it. The court also made orders, by consent, for the parties to borrow against the Suburb H property in the order of $300,000 and for $250,000 of that to be split equally between the parties as a partial property settlement. The parties were not able to secure finance for the $300,000. The respondent alleges that the reason for their failure to secure finance falls at the feet of the applicant.
On 22 November, 2022 the court varied the 3 November, 2022 orders and gave the respondent until 29 January, 2023 to vacate the K Street property. All outstanding applications were transferred to the Federal Circuit and Family Court of Australia (Division 1).
On 14 December, 2022 I made trial directions listing the matter for trial on 7 March, 2023. I made directions for the applicant to provide a draft balance sheet to the respondent by 28 February, 2023 the respondent to reply by 2 March, 2023 and the parties to file an agreed balance sheet by 3 March, 2023. Instead, a balance sheet completed only by the applicant was filed on 3 March, 2023.
On 25 January, 2023 the respondent filed an application in a proceeding seeking that he be permitted to remain in the K Street property until 11 March, 2023. I heard that application on 7 February, 2023 and dismissed it. I ordered he give vacant possession by 9 February, 2023.
On 28 February, 2023 the respondent filed another application in a proceeding. In it he sought an adjournment of the trial to “a date to be fixed upon written notification to the Court by the parties confirming that funding has been paid to their respective lawyers’ trust accounts”. The application also sought an ‘amendment’ of the orders of the Federal Circuit and Family Court of Australia (Division 2) of 3 November, 2022 by, inter alia, changing the amount of a part property settlement from $300,000 to $400,000.
At the commencement of the trial on 7 March, 2023 the respondent pressed his application for an adjournment. He had obtained representation for the purposes of that application. The basis for his adjournment application shifted because in the day or so prior to the trial, the respondent had received two director’s penalties notices from the Australian Taxation Office. These notices disclosed a total amount of unpaid tax liability for C Pty Ltd of $530,873.95. For reasons I gave on 7 March, 2023 I adjourned the trial to allow for updated material to be filed concerning the Australian Taxation Office debt and to permit the respondent to organise his legal representation, either through his own means or by pursuit of a lawyer appointed pursuant to the s 102NA cross-examination scheme.
THE ASSETS, LIABILITIES AND FINANCIAL RESOURCES OF THE PARTIES
The direction I made for the filing of a joint balance sheet was designed to illuminate the issues between the parties in so far as their assets, liabilities and financial resources were concerned. Unfortunately, the respondent did not respond to the balance sheet given to him by the applicant prior to the trial. My attempt to have the respondent make a proper response to that balance sheet during the trial also failed. That attempt is exhibit 1 in these proceedings.
Disclosure issues
Before proceeding to make findings about the parties’ assets, liabilities and financial resources, it is necessary to deal with the applicant’s argument that the respondent has not made proper disclosure of his financial circumstances.
Parties to property proceedings in this court have an ongoing and absolute duty to make full and frank disclosure of their financial affairs. That is apparent both from case law: e.g. In the Marriage of Weir (1992) 16 Fam LR 154, and from the rules of court: Part 6.1 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021.
The applicant complained that the respondent did not make proper disclosure of his financial circumstances and in particular that he did not disclose particulars of:
(a)an N Bank account;
(b)a PayPal account;
(c)certain jewellery;
(d)Motor Vehicle 5, equipment, game machines and vending machines located in the United States;
(e)an interest in P Company; and
(f)a recreational vehicle sold in 2019.
The applicant gave evidence of several requests for information about these items from as early as 15 July, 2021.
Whilst accepting that he had the accounts, the respondent did not demonstrate that he had made any disclosure at all in relation to the N Bank account or the PayPal account. He provided no explanation for his failure to disclose those accounts. I find that he has not provided adequate disclosure of these accounts and in the absence of evidence to the contrary, I find that the non‑disclosure was deliberate.
The jewellery is a matter of some dispute. The respondent alleges that his watches and jewellery were stored in a safe at the Suburb H property, the keys for which were also located at the Suburb H property. The interim consent orders made on 3 November, 2022 included orders for the valuation of the parties’ jewellery.
It is uncontroversial that there were several safes at the Suburb H property and that the applicant hired a locksmith to open the safes because, on her evidence, she did not have the keys to them. It is also uncontroversial that when they were opened, certain jewellery was not in them. The respondent reported the jewellery stolen.
The missing jewellery was not valued for obvious reasons. Those items which were not valued were helpfully listed in the report of Ms Q of R Appraisals.
The respondent said in evidence that he did not have the keys to the safe and that they were in the possession of the applicant. However, his evidence that he did not have the keys to the safes is unconvincing. An interim order was made by consent on 3 November, 2022 requiring him to provide a jointly appointed agent with details to the location of all keys and combinations to the combination lock for each safe to be opened. It is beyond strange that he would consent to such an order if he did not have the keys for the safes. I am also convinced that the applicant would not have gone to the trouble (and cost) to have a locksmith open the safes if she had access to the keys. I prefer the evidence of the applicant on this point. I am not persuaded the jewellery has been stolen by the applicant or any other person. I find that the respondent has retained the assets in the above list without disclosing their location or value. His non‑disclosure about those matters was deliberate.
The respondent, through his solicitors in correspondence dated 28 February, 2022 asserted that he owned no property outside of Australia. He later admitted this was false because he swears to owning Motor Vehicle 5 and valuables both stored in State S, USA. He gave an estimated value of Motor Vehicle 5 of $10,000. Again, this is in contrast to his solicitors’ correspondence of 28 February, 2022 in which the estimated value of the vehicle is alleged at $1,500. In later correspondence of 13 December, 2022 the respondent admits to owning Motor Vehicle 5, with an estimated value of $8,000, and two game machines with an estimated value of $1,000 each. The respondent did not provide any evidence to support these values despite the fact that the value of his overseas assets was clearly in contention. There is evidence from the applicant that the equipment was purchased in 2018 for almost $13,000, but no evidence from the respondent about this. I find that the respondent has not provided adequate disclosure of these interests and that his failure to do so was deliberate.
In relation to the P Company, the respondent, through his former lawyers, stated that he owned a 7/9 share in the company, but that the company site was inactive and has no value. It is confusing then that the respondent attributed a value of $750 to his interest in the company site in his affidavit. He did not attest to the source of that value. The applicant, through her solicitors, requested documentation in relation to the interest. In response, the respondent claimed that the documentation was at the Suburb H property which he was unable to enter so as to obtain the relevant documents. It is unclear why the respondent could not obtain another copy of these documents, or alternatively make arrangements via his lawyers for the documents to be retrieved from the Suburb H property. The evidence of the applicant is that C Pty Ltd paid US$5,000 for the interest in P Company. I find that the respondent has not provided adequate disclosure of this interest and that the lack of disclosure about this was deliberate.
It is uncontroversial that the respondent had a recreational vehicle. The applicant’s evidence establishes that it was purchased in 2016 for $28,764. The applicant alleges the recreational vehicle was sold in 2019 and puts in evidence some Facebook messages that appear to support this account. She does not know how much the recreational vehicle fetched. The respondent does not mention the recreational vehicle in his affidavit. The duty of disclosure extends to disposal of property in the 12 months immediately before separation (which in this case was in early 2020): FCFCR 6.06(3)(g)(i). I find that the respondent has not provided adequate disclosure of the disposal of the recreational vehicle, and that the non-disclosure was deliberate.
The principles arising from non-disclosure were canvassed by the Full Court of the Family Court of Australia in In the Marriage of Weir. To summarise those principles:
(a)in cases of deliberate non-disclosure, the court should not be unduly cautious about making findings in favour of the innocent party;
(b)where there is sufficient evidence to support a finding that a party has not made full disclosure, the Court has jurisdiction to make an order going beyond the identified property;
(c)deliberate non-disclosure is relevant to costs orders.
In Mayhew & Fairweather (2022) 64 Fam LR 633 at [14], the Full Court of the Federal Circuit and Family Court of Australia (Division 1) observed that the “usual way” to take into account defective disclosure is either by adding a sum to the pool reflective of an estimate of the value of undisclosed property, or under s 75(2)(o) of the Act (here s 90SF(3)(r)).
The applicant submitted that due to the respondent’s non-disclosure I should ascribe a value of nil to her jewellery. I do not consider that to be an appropriate course, as that property remains property of the parties or one of them and there is evidence of its value. I also consider it would be an impossible endeavour for me to attempt to ascribe values to all of the various items the respondent has not disclosed. Instead, I intend to take his non-disclosure into account pursuant to s 90SF(3)(r).
I find that at the time of the hearing before me the parties have the following assets, liabilities and financial resources:
Asset Held by Value G Street, Suburb H J $1,525,000 Motor Vehicle 4 H $42,000 Motor Vehicle 6 H $75,000 Artwork at Suburb H property (sought to be retained by the applicant) W $4,300 Balance of artwork at Suburb H property J $11,550 De facto husband’s valued personal effects H $6,200 De facto wife’s valued personal effects W $75,200 C Pty Ltd H Nil Parmenter Family Trust (incl D Pty Ltd) W $93,000 Louwen Family Trust (incl E Pty Ltd) W $2,742,310 Addbacks Withdrawal from Superannuation Account H $5,600 Subtotal $4,580,160 Louwen Parmenter Superannuation Fund J $225,000 TOTAL $4,805,160
The parties have no personal liabilities. Any liabilities are taken up in the value of the trusts referred to above.
The value of the Suburb H property was agreed between the parties.
Motor Vehicle 4 and Motor Vehicle 6 are listed in the respondent’s affidavit as “to be valued”. The applicant provided a valuation from T Valuers of $42,000 and $75,000 respectively. I accept her evidence in this respect.
The various artworks and personal effects were subject to valuation from R Appraisals and the values set out above are in accordance with that evidence. That evidence was not challenged.
Neither party suggested that it was not appropriate to treat the assets of Louwen Family Trust and Parmenter Family Trust as assets of the parties that are available for distribution in these proceedings. The trusts are plainly the alter ego of one or other or both of the parties.
There is controversy about how to treat the value of C Pty Ltd. The applicant included this business on her balance sheet but the respondent did not factor it into the calculations in his evidence. The company itself is not an asset or liability of the parties save to the extent that its shares have value. Insofar as the respondent has, as sole shareholder, a right to distribution of assets upon winding up of the company, the value of that right can firmly be said to be nil where the company’s nett value is negative.
Often, shareholders and directors of private companies such as C Pty Ltd are required to give personal guarantees to secure borrowings from bankers and the like. They often also give such guarantees to suppliers to the company’s business. On the evidence before me, however, the parties’ liability for the company’s debts is not apparent. I can make no finding that either has any potential liability contingent upon the non-payment of debts by C Pty Ltd.
Tax liability owed by C Pty Ltd
It became apparent in March, 2023 that C Pty Ltd owed significant tax liabilities to the Australian Taxation Office for both GST and PAYG withholding tax. These were in the order of $530,873.95. On the adjournment application in March, 2023 the respondent tendered two director’s penalty notices issued to him by the Australian Taxation Office (although they were not tendered in evidence on the trial). The applicant’s evidence is that she has caused the company to enter into an arrangement with the ATO to repay the unpaid amounts. Although there is no evidence about it, I assume that in the event that the amounts are repaid, the director’s penalties will be withdrawn or not pursued.
The Full Court of the Federal Circuit and Family Court of Australia (Division 1) recently considered the inclusion of corporate tax liabilities in a balance sheet in Pavlic & Pavlic [2023] FedCFamC1A 54 at [17]-[19]. In that case, the majority warned against the inclusion of corporate tax debt in a table of the parties’ assets and liabilities where neither party bore any personal liability for it. Even in cases where there could be statutory penalisation of the director of the company for failure to pay tax, the majority differentiated that from a derivative liability for the corporate tax debt.
Here, the corporate tax debt is included in the valuation of C Pty Ltd and is part of the reason that company has nil value. It is therefore not necessary to take it into further account. Because there is an arrangement with the ATO to pay the unpaid tax, I have not included the liability under the director’s penalty notices as a liability of the respondent. I have included in the orders I have determined to make, provision to take account of these penalties in the event that the company does not pay the outstanding tax and the notices are enforced. The respondent should not bear the penalties if the tax is not paid, the company, or those that control its day-to-day activities should.
Addbacks
Both parties alleged various assets should be notionally “added back” to the property pool.
In Omacini & Omacini (2005) 33 Fam LR 134, the Full Court of the Family Court of Australia set out three categories of cases where the court has determined it is appropriate to notionally “add back to the pool of assets”: where the parties have paid legal fees from funds that would have otherwise been available for distribution between them in the proceedings, where there has been a premature distribution of assets and where there has been waste.
The respondent sought reimbursement from the Louwen Family Trust for costs he incurred paying for fixtures to the K Street property. I do not have the power to make those orders because, apart from anything else, the trustee of the trust is not a party to these proceedings and it is the trustee who ought to reimburse the respondent if that is appropriate. In any event, even if I had power to do so, I would decline to make the orders. Given that the property beneficially owned by that trust will be included on the balance sheet (as discussed below), the respondent’s payment for those fixtures has simply increased the overall value of the pool. It is just another matter to take into account when assessing the parties’ respective contributions.
The respondent sought the adding back of $100,000 said to have been stored in a safe in cash at the Suburb H property, $180,000 in the applicant’s personal bank account at the date of separation and $100,000 spent by the applicant on legal fees.
In relation to the money in the safe, the applicant’s evidence was that the money was banked to reduce debt owing to the Australian Taxation Office. I find that the money was thus banked and therefore decline to add it back to the property pool.
The respondent complains that the applicant has not accounted for how she spent the $180,000 in her savings account. This misunderstands the add back process. Adding back property to the pool is the exception rather than the rule. The burden is on the respondent to prove that an asset was prematurely distributed or wasted. Here, he has not proved to the requisite standard (or at all) that the applicant did have $180,000 in her savings account at the time of separation. On the evidence I am not satisfied that she did. I therefore decline to “add back” this amount.
Similarly, the respondent has provided no evidence that legal fees were expended by the applicant from property that would otherwise have been available for distribution in these proceedings. I therefore decline to add them back to the property pool.
Conversely, the applicant provided evidence whereby she suggested that the respondent had wasted assets. She provided bank statements that demonstrated that the respondent withdrew money from the C Pty Ltd business account or the superannuation fund account on the following occasions:
(1)$1,200 on 10 July, 2020;
(1)$3,000 on 10 November, 2020;
(2)$2,900 on 11 November, 2020;
(3)$700 on 20 November, 2020;
(4)$700 on 2 December, 2020;
(5)$5,000 on 14 December, 2020;
(6)$600 on 3 February 2021;
(7)$480 on 16 April, 2021;
(8)$6,000 on 28 May, 2021;
(9)$11,000 on 31 May, 2021;
(10)$20,000 on 4 June, 2021;
(11)$500 on 24 June, 2021.
These sums total $52,080.
Interim orders were made on 4 June, 2021 requiring all business transactions to be authorised by both parties. Of serious concern is that immediately following that order, the respondent withdrew $20,000 in breach of them.
Further orders made on 6 July, 2021 required the respondent to repay any funds he had withdrawn from any C Pty Ltd bank accounts since 28 May, 2021. He made no repayments.
The respondent has not repaid any of the amounts set out above. There is no explanation in the evidence for those withdrawals made at a time when the applicant was in control of the business. I consider that having established the fact of the withdrawals, there is an evidential onus on the respondent to explain the transactions. There is no explanation.
However, most of the money was withdrawn from C Pty Ltd. Given the net asset position of that company and the fact that it always operated at a loss, I consider that ultimately the withdrawals have not depleted the property of the parties.
There is no dispute that $5,600 was taken from the superannuation fund on 13 December, 2020 and 3 February, 2021. He should be credited in these proceedings with having that sum now available to him.
In August, 2021 and in breach of the orders of 4 June, 2021 the respondent spent $1,010 on a credit account operated by C Pty Ltd. For the same reasons as above, I do not intend to notionally add back this amount.
In his financial statement filed 7 February, 2023 the respondent admitted to disposing of over $3,000 worth of furniture on Facebook marketplace. Similarly, this was property of C Pty Ltd and so the sale of this property did not diminish the property of the parties.
Interim orders were made by consent on 11 October, 2021 for C Pty Ltd to pay speeding fines incurred by the respondent in Motor Vehicle 4 then owned by the company. C Pty Ltd also paid for several invoices relating to work done on Motor Vehicle 4. The total of these sums was in the order of $13,500. These amounts were paid by C Pty Ltd, for the same reasons as outlined above I do not intend to notionally add them back to the parties’ property available for distribution in these proceedings.
The applicant alleges that the respondent withdrew $4,687 from his superannuation fund on 2 June, 2022. She did not provide evidence of this claim and I do not accept it.
The applicant also sought to add back several payments made by the respondent to his partner. I do not intend to add these amounts back. The transaction statements are such as “New Lounge” and “furniture”. To the extent these amounts have been paid for furniture then they are already contained in the property of the parties and otherwise represent a reasonable expenditure for the respondent to re-establish himself. I do not conclude on the evidence that the payments were unreasonable.
Interim orders were made by consent on 3 November, 2022 for the respondent’s bond and rent costs of $15,000 to be paid from funds jointly borrowed. The parties were unable to borrow these funds and the applicant instead provided the $15,000 to the respondent, paid by the company. I do not intend to add back this amount as claimed by the applicant but rather I intend to take it into account as a contribution by the applicant.
Finally, the applicant sought to have $6,200 spent on a locksmith to open the safes added back. As I have said, I prefer the applicant’s evidence that she did not have access to the keys and that the respondent had the keys. The necessity to spend this money arose from the respondent’s non-compliance with court orders. However, I do not intend to notionally add back this amount, but I will take it into account when assessing contributions.
Finally, there is a miscellany of other items in the balance sheet which is exhibit 1 that I have not included above. I have not included the loan wed to the applicant from the Louwen Family Trust. That amount is taken up in the valuation of the trust and given that the applicant contends that she should receive the trust and its assets, I have not included it separately. I have also not included her leave entitlements owed by C Pty Ltd for the same reason.
Exhibit 1 includes a share portfolio, but there is no evidence about that before me. I have excluded bank accounts because they have nominal values just as I have excluded items that have no value. There is no basis in the evidence to suggest that the Qantas Frequent Flyer points have any particular value and so I have excluded them. I have also excluded the respondent’s liability to the Louwen Family Trust and the wife’s credit card balances which are also nominal.
CONTRIBUTIONS
Neither party suggested that I should approach the assessment of the matters to be taken into account under s 90SM(4) separately in relation to superannuation assets and non‑superannuation assets. The case outlines for each party treated the parties’ superannuation interests and their non-superannuation property as a single group of assets. The parties commenced cohabitation in 1999.
It was not controversial that at the commencement of cohabitation, the applicant had $230,000 in savings that were applied to the K Street property. What is a little more controversial is how she applied those funds. I accept the applicant’s evidence that $100,000 of these funds were used to establish the booking office and fit out a kitchen and bathroom facility for the office and renovations to the residential part of the K Street property to make it suitable for the parties’ use.
The respondent’s initial contributions were the subject of some dispute. The parties agreed the respondent contributed the following assets at the commencement of cohabitation:
(1)the property at K Street, City J;
(2)C Pty Ltd and E Pty Ltd;
(3)vacant land at U Street, City J;
(4)several motor vehicles;
(5)two recreational vehicles; and
(6)furniture and personal effects.
The evidence does not permit me to make precise findings about the value of the respondent’s assets at the commencement of cohabitation. However, it is necessary to traverse the evidence to get an idea of the relative initial contributions of the parties.
It was agreed that the K Street property was purchased for $430,000 at around the time of cohabitation, although the applicant did not know the value of the loan secured by a mortgage on the property. The respondent asserts that this loan was $180,000, leaving an equity of $250,000. I accept his evidence about these matters.
The applicant acknowledged that the respondent had interests in the business entities at the commencement of cohabitation. The respondent estimated their combined value at $2,000,000. He provided no evidence for his assertion. The applicant acknowledged some of the property owned by the business entities at the time and provided some documentary evidence in support of estimated value.
The applicant also disputed that the business was thriving when the parties commenced cohabitation. She particularised the reasons for her belief and provided some supporting evidence, though that evidence was somewhat incomplete as might reasonably be expected following the passage of some 20 years. The respondent’s evidence that the business was thriving consisted of an almost-illegible contract for a loan agreement of $1,200,000 for purchase of a vehicle in 2001. However, the respondent’s own evidence seems to contradict his assertion. The loan agreement was secured by a charge not only over the vehicle to be purchased, but also over another vehicle, the K Street property, and the vacant land at U Street. Perhaps the extent of the charges suggests the business was not in a good financial position at the time.
In any event, none of the evidence, save for his own self-serving statements, establishes the value of the business at the commencement of the parties’ relationship. What is important is that the company and its business existed then and that company and its business remains today. Whether it was thriving or not doing so well is moot because on the evidence of each of the parties, in the first ten years of their relationship both worked hard in the business in their own ways such that it was plainly worth the effort and funded the parties’ lives and lifestyle.
The respondent estimated the land at U Street to be worth $300,000 without any evidence to support his assertion. The applicant provided an email from the respondent to Mr V of W Valuers dated 10 April, 2001 in which he had estimated the value of the land to be less than $250,000. I accept that this statement by the respondent is probably a more accurate estimate of the value of the land, it being more contemporaneous to the relevant time.
The value of the various motor vehicles was also disputed. The respondent did not provide any evidence to support his valuations. For instance, he attributed a value of $90,000 to Motor Vehicle 7 which he had allegedly bought for $110,000 three years prior. The applicant did not know the value of this vehicle as at cohabitation but provided evidence that it was sold in 2006 for $17,000. The respondent also attested to having a recreational vehicle worth $14,000, though the applicant’s evidence was that this was purchased during the relationship. Without further evidence, I do not accept the respondent’s valuations.
The respondent estimated his personal belongings and furniture at the commencement of cohabitation were worth some $200,000. He provided no evidence to support this contention and the applicant took issue with it. Without further evidence, I do not accept his valuations.
The respondent plainly made greater financial contributions to the property of the parties at the commencement of the relationship than did the applicant. Importantly, one of the major assets he introduced (the business and the structure through which it was operated) continues today and provides a large part of the parties’ wealth. Doing the best I can on the evidence before me, it appears the initial contributions made by the respondent were some three or four times greater than those made by the applicant.
It was agreed that from the commencement of the relationship until 2009, the parties both worked in the business. Initially, the applicant worked as a bookkeeper and did sales and marketing and as time went on, her role developed into an office manager and administrator, whereas the respondent handled more of the practical side of the business, working on the vehicles. The respondent acknowledged that as time passed he ceded more responsibility to the applicant in the business.
The applicant’s evidence was that following the passing of the respondent’s son in 2009, she took over primary responsibility for the operation of the business. She said that since 2009, the respondent has had very limited involvement in the business. She annexed a letter purporting to be from the respondent in which he stated she had worked from 2000-2019 whereas he had only worked from 1989-2009. I accept that the respondent’s statements in this letter are very likely an accurate depiction of the parties’ respective efforts in the business.
In addition to C Pty Ltd’s business, the applicant developed the internet-based sales system which is now owned by D Pty Ltd.
The respondent’s evidence was that he acknowledged his involvement lessened after 2009, but that he remained actively alert to and involved in the day-to-day business operations. I accept that and I consider that the respondent did continue to undertake some tasks for the business after 2009. However, I find that after 2009 the applicant was making significantly greater contributions to the business and its day-to-day operations.
It was uncontroversial that the applicant received an inheritance of $160,000 in 2012 and that this inheritance was applied to the parties’ business interests.
The respondent attested to receiving an inheritance of USD $860,620 over a period of 12 years following his father’s death in 2002. He claimed to have received this money mostly in cash and having to declare it upon re-entry to Australia. However, he provided no evidence of this inheritance. He provided a statement purportedly from the executor of his father’s estate of the amounts he received. The statement was in the form of a typed word document of amounts and what seemed to be financial institutions. No other evidence was provided to support this documentary hearsay. The executor was not called as a witness. I do not place weight on the document produced by the executor.
The applicant says that she was not aware of the inheritance the respondent claims to have received.
It is impossible for me to determine the true value of the inheritance given the state of the evidence. Although I am satisfied that there was probably an inheritance received by the respondent, I can make no finding about its value. I do not consider it a significant contribution.
The respondent did provide some evidence that the Australian Federal Government paid E Pty Ltd some $1,218,232 in 2007. This money was “[restructuring assistance]” to assist with “managing the longer term impacts of the rezoning of [Region F]”. I do not accept the respondent’s assertion that this money was provided solely for the commercial licence he held prior to commencement of cohabitation. The respondent also provided no evidence of the commercial licence he allegedly held, nor did he include it in his list of pre-relationship assets. This was compensation provided to the business, which had at that time been contributed to by both parties. Whatever impact that capital payment had on the value of E Pty Ltd (made over 15 years ago), it is reflected in the valuation of that entity carried out by Mr L.
Since separation, the applicant has continued running the business. She has done so despite numerous attempts (some successful and others not so) by the respondent to interfere in it. She documents those interferences (and others in her personal affairs) in her affidavit, including:
(a)withdrawing money from business accounts on many occasions (as discussed above) and sometimes in contravention of court orders;
(b)instructing business staff to cancel bookings for Motor Vehicle 1 in mid-2021;
(c)removing the applicant’s access to business bank accounts in May, 2021 causing the business accounts to be frozen and the business to be unable to pay staff;
(d)having a locksmith attend the Suburb H property to change the locks while the applicant was living there and gaining access to the applicant’s home office;
(e)attempting to take the applicant’s pet from the Suburb H property in mid-2021;
(f)failing to reinstate the applicant’s access to business bank accounts in accordance with court orders until July, 2021;
(g)failing to authorise business related payments to creditors and employees after the interim orders of 4 June, 2021 causing the company to breach its payment agreement with the Australian Taxation Office and several loan agreements;
(h)emailing the relevant Region F authority in mid-2021 on behalf of the business in contravention of the orders of 6 July, 2021 granting sole and exclusive control of the business to the applicant;
(i)entering the ground floor of the business in mid-2021 and giving directions to staff in relation to the operation of the business;
(j)moving furniture from the business and harassing staff in late 2021;
(k)attempting to break into the office manager’s office in late 2021;
(l)listing Motor Vehicle 1 on a rental website in mid-2021;
(m)selling furniture owned by the company on Facebook Marketplace in or around late 2021 (as discussed above);
(n)coming into the business office in late 2021 and asking questions about the numbers from the day;
(o)entering the business offices after they had closed in late 2021 and removing a letter from the applicant’s pigeonhole;
(p)unreasonably delaying signing transfer documentation for Motor Vehicle 4;
(q)accessing the back storage area of the business in late 2021 and disposing of company documents and records;
(r)contacting several people about the business vehicle which needed repairs;
(s)boarding one of the business’ vehicles in mid-2022 and removing documentation;
(t)entering the office after closing time in mid-2022 and attempting to gain access to the Operation Manager’s office, and taking equipment;
(u)urinating on 12 occasions between mid-2022 and late 2022 onto the pavement in front of the office front door;
(v)rifling through the office on several occasions in 2022;
(w)accessing the Operations Manager’s office in late 2022 and removing his keys for the business; and
(x)cutting the wires to the office CCTV after the court mention in late 2022.
The applicant provided a range of evidence to support the above events, including CCTV footage, emails from staff and her own testimony. The evidence was supplemented by:
(a)an email of Mr X, Operations Manager, dated mid-2021, setting out that the respondent came into the office on that date and gave directions to staff;
(b)an email of Mr X dated late 2021, setting out that a few days earlier the respondent came down to the office in his underwear, took tables and chairs outside the business and placed them obstructing the entrance to the office. When Mr X tried to move the furniture, the respondent yelled profanities at him;
(c)an email of “Mr Y” dated late 2021, setting out that on the previous day the respondent entered the business, tried to enter the tool room, studied the morning manifest and was generally disruptive as Mr Y attempted to work;
(d)an email of Mr X dated late 2021 setting out that the respondent came into the office on that date and requested Mr X throw away all the business paperwork because it was water-damaged. Upon Mr X refusing because he did not believe the paperwork was water-damaged, the respondent said he would throw it out himself. Mr X then witnessed the respondent throw boxes of paperwork unaffected by water damage into the wheelie bin;
(e)an email of Mr Z dated late 2021 setting out that on that date the respondent called E Pty Ltd asking if they had a specific prescription mask, and was rude to staff;
(f)an email of Mr X dated late 2021 setting out that the respondent on that date tried to enter Motor Vehicle 1 but was stopped by Mr X; and
(g)an email of Mr AA, senior consultant, dated late 2021 setting out that the respondent organised a private booking to Motor Vehicle 1 without notifying staff.
None of this documentary hearsay was the subject of objection. Despite its hearsay nature, I place weight on this evidence for four reasons. First, the statements were made close to the time of the events happening rather than being recently commissioned by the applicant. Second, there is no apparent reason for the statement makers to fabricate these statements. Third, the statements are relatively well-detailed and none of the above matters was denied by the respondent in his affidavit of evidence in chief. Finally, I consider that the calling of every statement-maker as a witness may have significantly increased the length and costs of the trial in circumstances where the statements were not denied by the respondent.
The respondent previously admitted to urinating outside the front door of the business, but only on two occasions. I find that he did urinate outside the business on 12 occasions. I otherwise find that he did all of the things in the above list.
I was invited by the applicant to make a finding that her contributions have been made more onerous by the respondent’s behaviour since separation. Such an argument is commonly called a Kennon argument, originating from the case of In the Marriage of Kennon (1997) 22 Fam LR 1, applied and explained in Spagnardi & Spagnardi [2003] FamCA 905 and Keating & Keating [2019] FamCAFC 46.
To put the case on that basis, is however, unnecessary. The decision in Kennon is an application of a broader principle, set out in Mallet v Mallet (1984) 156 CLR 605, wherein the High Court emphasised that in determining proceedings with respect to settlement of property, the court must consider the nature and quality of the contributions made by parties to a marriage. Here, the quality of the applicant’s contributions made post-separation take on a quality that must reflect the circumstances in which they were made. In Baranski & Baranski [2012] FamCAFC 18 the Full Court of the Family Court of Australia observed that:
259.In reality, the obiter dicta of the majority in Kennon (supra) did no more than confirm that, where the contributions of a party are rendered more arduous by the violent conduct of that party’s spouse, as the learned Federal Magistrate uncontroversially found them to have been in this case, that is a matter which is relevant to determining the nature and quality of the parties’ contributions.
Kennon arguments are usually associated with claims that one party has subjected the other to violence in some form or another. I was taken to no case that did not involve allegations of violent conduct towards the spouse seeking the “Kennon adjustment”. As explained in Spagnardi, a Kennon argument typically requires evidence of the incidence of violence, the effect of violence, and evidence to enable the court to quantify the effect of that violence upon the party’s capacity to contribute (although the Full Court in Keating preferred a nexus rather than quantification). It matters not whether the relevant contributions occurred before or after separation: Baranski at [255] – [259].
The vast majority of the incidents relied upon by the applicant here do not involve violence. They are, however, deliberate interferences with the operation of the business to which the applicant was solely contributing post-separation.
In Kennon the Full Court made this preliminary point (at p.19):
Although in this discussion reference is made exclusively to domestic violence, it is not intended to be confined to that issue. We do not consider that domestic violence is an exclusive category. It is the most obvious example of a wider and more general category of conduct which may be relevant within s 79.
Their Honours went on to say (at p.24):
Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party’s contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought have been, that is a fact which a trial judge is entitled to take into account in assessing the parties’ respective contributions within s 79. We prefer this approach to the concept of “negative contributions” which is sometimes referred to in this discussion.
In the above formulation, we have referred only to domestic violence, for the reasons which we indicated earlier, but its application is not limited to that.
However, the Full Court later (at p.24) cautioned that such an approach should be incremental:
However, it is important to consider the “floodgates” argument. That is, these principles, which should only apply to exceptional cases, may become common coinage in property cases and be used inappropriately as tactical weapons or for personal attacks and so return this court to fault and misconduct in property matters – a circumstance which proved so debilitating in the past. In addition, there is the risk of substantial additional time and cost.
However, in our view, s 79 should encompass the exceptional cases which we described above. It would not be appropriate to exclude them as a matter of policy because of this risk. It is a matter of commonsense for the lawyers involved and, where that may not be sufficient, it is a matter for a firm hand by the court at an early stage when a case appears to raise those issues.
There is clear evidence here that the respondent’s conduct has made the applicant’s post‑separation contributions more arduous or difficult to render. His consistent interference with the business has, on her evidence, led to a frequent turnover of staff, increased costs, and generally made the workload more significant. It is also of significance that the respondent’s conduct was frequently in contravention of court orders. The respondent’s behaviour has been described both by the Federal Circuit and Family Court of Australia (Division 2) and his own counsel in submissions as “aberrant”. I find that the respondent’s conduct post-separation made the applicant’s contributions post-separation significantly more arduous. My assessment of the nature and quality of her post-separation contributions, as part of the broader holistic assessment of contributions, takes that into account.
CONTRIBUTIONS – CONCLUSIONS
The respondent filed a case outline on 21 February, 2023 which was settled by counsel, though counsel ultimately withdrew prior to the hearing. That outline was not abandoned by the respondent at the trial before me. Counsel submitted in that document that although the “myriad of contributions” diminishes the weight of initial contributions and inheritances, I should nonetheless have regard to the fact that “much of what exists now had its genesis in activity and assets that existed at the date of cohabitation”. I accept that submission as far as it goes. But it is necessary to be careful to recognise the continual evolution of the business and its activities and the very significant contributions of the applicant both after 2009 and post‑separation.
Counsel for the respondent ultimately submitted that a contributions-based assessment of 60% to the respondent and 40% to the applicant was appropriate. The applicant argued that her contributions would “at least have the effect of equalising any adjustment to [Mr Louwen] for initial contributions”. She ultimately submitted a 50% contributions-based assessment was appropriate.
I accept the submissions made for the applicant. Whilst the respondent introduced property at the commencement of the parties’ relationship which continues to exist today and which was the source of the parties’ livelihoods throughout their relationship, the evidence shows that since 2009, the contributions to the businesses have been largely the doing of the applicant. In addition to that, the applicant’s contributions take on an enhanced quality since separation having regard to the respondent’s conduct towards her, and her efforts to keep the businesses running. Just as the present existence of the parties’ overall wealth is a function of the respondent’s introduction of major assets at the commencement of the relationship so too, it is a function of the hard work invested by the applicant almost, although not entirely without the respondent’s assistance since 2009.
I assess the parties’ contributions to the acquisition, conservation and improvement of their property as at the date of the trial as equal. The parties’ nett property is $4,805,160. On that basis, they are each entitled to $2,402,580.
ADJUSTMENT PURSUANT TO S 90SM(4)(D)-(G)
To determine the quantum of adjustment pursuant to s 90SM(4), it is first necessary to determine which party will retain the corporate entities because the retention of those entities will carry with it an income earning capacity and a means of financial support: 90SM(4)(d).
C Pty Ltd, E Pty Ltd and D Pty Ltd are closely connected. D Pty Ltd runs a business advertising tours for C Pty Ltd. C Pty Ltd uses assets owned by E Pty Ltd as trustee for Louwen Family Trust. The income in the Louwen Family Trust relies on the business of C Pty Ltd, which in turn relies on both the assets held beneficially for Louwen Family Trust and the business run by D Pty Ltd.
If any order were to be made for one party to retain the shareholding (and indirect control via the right to appoint directors) in one company and for the other party to retain the shareholding in the other two companies, the businesses would not be able to continue operating. Notwithstanding this, the respondent argued that one of the parties could retain D Pty Ltd and the other party C Pty Ltd and E Pty Ltd. He argued that they could be separated. However, I do not accept this argument. The evidence of Mr L (which was unchallenged) and Mr M demonstrated that this was not practically possible. D Pty Ltd was essentially an in-house booking agency for C Pty Ltd. Whilst it did have other strings to its bow, it was established essentially for that purpose and C Pty Ltd could not afford to pay a third party commission agent to sell its products at a commercial rate. I find that all of the entities should vest in one or other of the parties and not be divided between them.
It is appropriate to take into account the fact that C Pty Ltd is in debt. It owes money to trade creditors. It also has a significant tax liability. The company being hampered by debt will affect the ability of whichever party retains the corporate structures to earn income. Additionally, the assets owned on trust for the Louwen Family Trust are tied up in the running of the business. It is unlikely their value can be utilised apart from running the business or one similar to it. Neither party has expressed a desire to wind up the companies and liquidate the assets. In fact they have both expressed a desire to continue running the business. Liquidating the assets would also mean the cessation of the business operated by C Pty Ltd and an end to the resulting income for whichever party retains the business.
I have determined that the applicant should retain the corporate entities. I have done so noting both her more significant involvement with the business than the respondent since 2009, her sole operation of the business under the interim orders, and her sole development of D Pty Ltd which is important to the business operations.
Both parties are of similar ages and are in good health. The respondent is unemployed but his evidence is that he will seek employment. The applicant asserts he may possibly be employed in City J or elsewhere. What he might earn doing so is not answered by the evidence before me. The applicant will continue working in the current business. That has the advantage of continuing that which is already in place. There will be little change for her. The respondent on the other hand will have to re-establish himself. I take these matters into consideration.
I have earlier made findings about the respondent’s non-disclosure of financial position in a fulsome way. I consider there are likely significant assets owned by the respondent which have not been included on the balance sheet because their whereabouts are unknown to all but him. This has a countervailing effect against the adjustment which goes in his favour by reason the applicant retaining the business interests.
So too, does his use of property (specifically cash taken from the C Pty Ltd bank accounts) following separation that he has not replenished despite an order of a court to do so. I take into account the matters I discussed earlier in these reasons concerning so-called “add-backs”.
I have come to the conclusion that an overall adjustment of a further 5% in the applicant’s favour is appropriate to take account of these matters. This 5% adjustment represents about $240,000 of the parties’ net property, including superannuation.
Thus, I am satisfied that an appropriate division of the parties’ nett property is 55% to the applicant and 45% to the respondent or $2,642,838 of the nett property for the applicant and $2,162,322 for the respondent.
ORDERS
For the reasons above, I have found that the applicant should retain the following assets:
(a)the Louwen Family Trust;
(b)the Parmenter Family Trust;
(c)her personal effects; and
(d)the artworks specified in her amended initiating application.
She presently has in her possession, or control over:
Suburb H property $1,525,000.00 Artwork at Suburb H (sought by W) $4,300.00 W Personal effects $75,200.00 Parmenter Family Trust $93,000.00 Louwen Family Trust $2,742,310.00 Total $4,439,810.00
The respondent presently has in his possession the following:
Superannuation withdrawal $5,600.00 Motor Vehicle 4 $42,000.00 Motor Vehicle 6 $75,000.00 Balance of artwork $11,550.00 H Personal effects $6,200.00 Total $140,350
The applicant seeks to retain the Suburb H property and seeks 60 days in order to obtain a loan to pay out the respondent. As I have set out above, if she does so, she will have assets worth $4,439,810.00. The respondent will have the balance of $365,350 if I include the superannuation fund as part of his entitlement. To receive the balance of his entitlement, the applicant will have to pay the respondent $1,796,972. I will extend to the applicant the opportunity to obtain a loan so as to enable her to pay out the respondent. Sixty days is adequate for that purpose.
The sum to be paid to the respondent exceeds the value of the Suburb H property and the question arises as to whether, if the respondent cannot raise funds sufficient to make the required cash payment to the respondent, it is appropriate to order that the applicant transfer her interest in the property to the respondent in part satisfaction of the amount due to him. The balance ($271,972) would remain payable by the applicant to the respondent, but it is difficult to see how she might pay that without the security of the Suburb H property to raise finance for that purpose.
In the event the applicant is unable to secure finance, the Suburb H property should be sold and the parties’ residuary entitlements funded from that. The orders take into account that the nett sale price of the property is unknown, but should be divided between the parties in such a way as to give an overall distribution of property to the parties in accordance with my assessment.
At the conclusion of the trial the respondent requested that a range of personal property and other chattels be returned to him. There is no evidence before me about most of those items, but counsel for the applicant was able to indicate which of the items existed and could be made available to the respondent. I have included orders about those items but I decline to make orders about the balance.
I consider that orders in the terms set out at the commencement of these reasons are just and equitable. I observe that the respondent too, at least after separation considered such an outcome, or one close to it, just and equitable because he wrote to the applicant in these terms:
[Ms Parmenter],
You deserve to be happy.
When I’m around you, it doesn’t make you happy. I’m greatful [sic] for the things you’ve done and tried to do.
Can we work it out so you keep everything and I will leave [City J]?
I have caused you pain that you don’t need or deserve.
*There is no way I would ever touch the 97,000 USD at [BB Finance]!
*I will never ever say anything unkind about you to anyone especially the children.
*I’m at fault, so don’t ever cut them out.
*I was wrong and you were right.
I lied to you and that is unforgiveable. You won’t be getting any nasty surprises because I wasn’t cheating on you. I have to fullfill [sic] several obligations before we can finalise our partnership dissolution.
1.I have to finish the [permits].
2.I have to comply with the court ordered land scaping.
If you would allow [Mr CC] to come up with a fair settlement I will agree to it.
We have 6 children and 3 grandkids that must benefit from the last 20 years you work 2000-2019 and the first 20 years I worked 1989-2009.
I want you to keep everything I ever gave you because we liked and loved each other most of the time.
You and [Mr DD] and [Mr EE] have been handling the company so you don’t need me.
Maybe [Ms FF] will want to get involved when she comes back with me not being (unintelligible).
None of the kids need anything from us.
Don’t you agree that [Mr DD] should get a larger share than [Ms GG], [Ms FF], [Ms HH], [Mr Y] or [Mr JJ] –
The [vehicle], the 2 houses, the business, the stuff, the supply, the [permits] adds up to a huge sum of money, minus all the money we owe it’s still a huge sum of money. Think about what’s fair and let [Mr CC] find a settlement.
[Ms Parmenter] 30% ([Ms Parmenter] gets to keep everything)
[Mr Louwen] 30% immediate pay out.
(Not before) their 40th birthday
[Mr DD] + [Ms KK] 10% (15%) if he stays on until he is 40
[Mr JJ], [Ms LL], [Ms MM], 5%
[Ms HH] 5%
[Ms FF] 5%
[Mr Y] 5%
[Ms GG] 5%
I guess that you will get on with your life and it’s not what I want to know about.
In a while you will have everything the way you like it. Of course the mutts stay with you. I’m just glad it didn’t get uglier than it became. I saw to [sic] much misery and suffering that I caused you and I hate myself more than anuone [sic] else. Look at the good side of this. You get the entire wardrobes. All your clothes & shoes will finally have the space they need.
I hope this doesn’t make you angry. This was an apology that was long overdue. I will try not to make you mad, or embarrass you any further…
I make the orders set out at the commencement of these reasons.
I certify that the preceding one hundred and sixty-four (164) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jarrett. Associate:
Dated: 31 August 2023
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