Parsin and Parsin

FAMILY COURT OF AUSTRALIA

PARSIN & PARSIN

[2010] FamCA 529

FAMILY LAW – PROPERTY – add backs – alleged waste by the husband arising out of alleged failure to negotiate a reasonable alteration of property – contributions - s 75(2) matters

Family Law Act 1975 (Cth) s 79

Omacini (2005) FLC 93-218

APPLICANT:

Ms Parsin

RESPONDENT:

Mr Parsin

FILE NUMBER:

SYF

3495

2006

DATE DELIVERED:

30 June 2010

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Watts J

HEARING DATE:

23, 24 and 25 September 2009; 27 and 28 January 2010

REPRESENTATION

SOLICITOR FOR THE APPLICANT:

Litigant in person

COUNSEL FOR THE RESPONDENT:

Mr Givney

SOLICITOR FOR THE RESPONDENT:

Newnhams Solicitors

Orders

Pursuant to s 79 Family Law Act, an order be made in the terms of paragraphs 2 to 10 below.
The parties as soon as practicable, do all acts and things necessary to transfer the monies in the controlled monies account to the wife.
Within three (3) months the husband pay to the wife a sum of $143,396.
The husband is declared sole and beneficial owner of:-
4.1.His shareholding in Parsin Group Pty Limited.
4.2.The property at W.
4.3.St George Bank Account No. …448.
4.4.The suite at Y.
4.5.IAG Shares.
4.6.AMP Insurance Policy.
4.7.Mazda 6 motor vehicle.
4.8.Loan payable to Parsin Superannuation Fund.
4.9.Interim property distribution.
4.10.Paid legal fees.
4.11.Monies paid by P International Pty Limited to husband’s current wife in April 2008.
4.12.Monies paid by Parsin Superannuation Fund to husband for shares in F Limited in February/ March 2008.
The wife is declared sole and beneficial owner of:-
5.1.Furniture and household effects.
5.2.Honda Civic motor vehicle.
5.3.Banking accounts in her name.
5.4.Interim property distribution.
5.5.Payment of legal fees.
5.6.Loan to B Parsin.
The husband shall indemnify and keep indemnified the wife in respect of the following:-
6.1.Loan payable by husband to Parsin Group Pty Limited.
6.2.Capital gains taxation payable by the husband.
6.3.50 percent liability to St George Bank regarding loan secured by the Y Suite.
6.4.Credit card debts.
6.5.50 percent liability to St George Bank regarding loan secured by W property.
The wife shall indemnify and keep indemnified the husband in respect of:-
7.1.Credit card debts in her name.
7.2.Loan from family members.
7.3.Capital gains taxation payable by her.
Pursuant to Section 90MT(1)(a) Family Law Act, as soon as practicable:
8.1.Whenever a splittable payment is payable in respect of the superannuation interest of the husband in the Parsin Superannuation Fund:-
8.1.1.The wife is entitled to be paid an amount calculated in accordance with the Family Law (Superannuation) Regulations 2001, using a base amount to be calculated in accordance with the method set out in order 8.2 at the operative date being the date of these orders; and
8.1.2.There is a corresponding reduction in the entitlement of the husband to whom the splittable payment would have been made but for this order.
8.2.The base amount referred to in order 8.1 will be calculated by deducting the current value of the wife’s interest in the Parsin Superannuation Fund from the value of the items referred to in order 8.3.
8.3.The trustees of the Parsin Superannuation Fund shall cause the fund to transfer the wife’s interest in the fund together with the entitlement the wife receives by way of this order in respect of the husband’s interest in the fund, to a fund nominated by the wife by transferring, as soon as practicable, the following assets and liabilities:-
8.3.1.E property.
8.3.2.Rental fittings.
8.3.3.Valuation adjustment.
8.3.4.Depreciation [building].
8.3.5.Depreciation [contents].
In the event that any tax or penalty is incurred by the Parsin Superannuation Fund then the parties shall equally pay any such amounts.
Either party may apply on 7 days notice in respect of the implementation of these orders.
If either party refuses or neglects to sign (within fourteen (14) days of a written request to do so) any documents necessary to effect the terms of these Orders, the Registrar of the Sydney Registry of the Family Court of Australia is hereby appointed pursuant to the provisions of Section 106A of the Family Law Act to execute such documents on behalf of such party.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 3495 of 2006

MS PARSIN

Applicant

And

MR PARSIN

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

The litigation in this matter has been long and protracted. Despite many opportunities, the parties have been unable to reach an agreement about how their property should be distributed. Along the way, the pool of assets has significantly diminished as a result of holding charges on investment properties, forced sales and the costs of the litigation.
This matter is about what adjustment should be made between the husband and the wife to achieve a just and equitable alteration of the property which is left. A major issue at the hearing was whether or not notional amounts should be added back onto the balance sheet for various reasons. In respect of these asserted addbacks, the most significant was a sum of $530,200 which the wife claims should be added back as a result of the husband wasting assets after separation. Other addbacks related to how the husband used monies that were in the two companies that the parties controlled and in the superannuation fund as at the date of separation.
The companies in the superannuation fund were valued by a single expert and the husband sought initially to challenge the single expert’s opinion as to the value of the parties’ interest in those entities. That challenge however was not pursued in final submissions by the husband.
The parties agreed the contributions that they made were equal throughout the marriage up to the date of separation. The focus of the analysis during the hearing was what had happened since the separation, particularly in relation to the issues of use of funds and waste alleged by the wife for which she seeks the husband be held responsible. In the main, the allegation for waste made against the husband arose from an assertion by the wife that at various points in the litigation pathway, the husband failed to accept reasonable offers that she had made to settle the matter and as a consequence, monies were lost in holding charges and forced sales. The waste claim against the husband was $574,650 and the overall addbacks claimed were in the sum of $999,718.

SHORT HISTORY

The husband was born in 1953 and is now 56 years of age. The wife was born in 1954 and is now 55 years of age.
There are four children of the marriage, L Parsin born in 1978, J Parsin born in 1980, B Parsin born in 1982 and M Parsin born in 1986.
The parties married in 1974.
The parties separated on 18 December 2005.
The parties were divorced on 20 July 2007.

APPLICATIONS

The Wife

The wife in an Amended Application filed on 24 August 2009 seeks the following orders:
1.Disbursement of monies held in Controlled Monies Account:
1.1That within 30 days of the date of these orders, the parties do all acts and things and sign all documents necessary to disburse the balance of all monies held by Owen Hodge Lawyers in a controlled monies account on behalf of both parties, to the applicant wife.
2.Payment of monies by the Husband to the Wife:
2.1That within 30 days of the date of these orders, the respondent husband pay to the applicant wife the sum of $752,077.00;
2.2That the respondent husband pay interest on the a mount referred to in paragraph 2.1, on the balance outstanding at any time, at the rate prescribed in the Family Law Rules.
3.Rollover of interest in [Parsin] Superannuation Fund:
3.1That within 30 days of the date of these orders or such further time as the parties agree, the husband and wife do all things and sign all documents necessary to cause the trustee(s) for the [Parsin] Superannuation Fund to convert the value of the fund into cash and to do all things necessary to cause a split of the superannuation fund in favour of the applicant wife as to 55% and simultaneously, with that interest being created and rolled over into a fund of the applicant wife’s choosing, the wife will sign all documents and do all things necessary to resign as trustee for the [Parsin] Superannuation Fund.
4.Transfer of companies:
4.1The husband do all acts and things and sign all documents necessary to:
4.1.1Resign as director and/or officer holder of [P International] Pty Limited; and
4.1.2Transfer the whole of his right title and interest in his shareholding in [P International] Pty Limited to the wife;
4.2The wife do all acts and things and sign all documents necessary to:
4.2.1Transfer the whole of her right title and interest in her shareholding in ACN […], and [Parsin] Group Pty Limited to the husband;
4.3That simultaneously with order 3.2, the husband indemnify and keep indemnified the wife in respect of all liability arising in connection with ACN […] and [Parsin] Group Pty Limited which the wife may have whether now or in the future (save in relation to any matter arising out of any future action taken on her own part) and whether alone, jointly or severally with the husband and/or with any person and/or company including, without limiting the forgoing:
4.3.1Liability to [Parsin] Group Pty Limited or [P International] Pty Limited under any loan account;
4.3.2Liability to any creditor pursuant to any guarantee or indemnity;
4.3.3Liability arising in respect of any lease; or
4.3.4Any taxation or taxation-related liability, fine, interest or penalty and any legal costs arising in respect thereto.
5.Transfer of Frequent flyer Points:
5.1The respondent do all acts and things necessary to transfer to the applicant a total of 435,309 frequent flyer points accrued by the respondent.
6.Indemnity:
6.1That unless otherwise specified in these orders:
6.1.1Each party be solely entitled to the exclusion of the other to all other property and financial resources including money, motor vehicles, shares, bank accounts, insurances, equities, superannuation entitlements and personal effects including choses-in-action and superannuation entitlements, in the respective possession, name and/or control of such party as at the date of these orders;
6.1.2Each 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.
6.1.3That the husband indemnify and keep indemnified the wife in respect of any and all indebtedness by either of the parties (or any other party) in respect of the loans owing to ACN […] and [Parsin] Group Pty Limited;
6.1.4That except as otherwise provided herein, each party be and remain solely responsible in relation to any an all liabilities (including respective loans from friends and family and respective credit card liabilities) presently in the name of each of the parties respectively.
7.Declarations:
7.1Declarations that as and from the date of these orders the wife be solely entitled to the exclusion of the husband to the joint family loan payable by [B Parsin] in the sum of $82,868.35.
8.Miscellaneous:
8.1That the parties do all such things and execute all such documents and instruments necessary to give effect to the orders herein;
8.2That if any party refuses or neglects to sign any documents necessary to give effect to the terms of the orders herein, the Registrar of the Sydney Registry of the Family Court of Australia be hereby appointed pursuant to the provisions of Section 106A of the Family Law Act 1975 (Cth) to execute such documents on behalf of any or either party as are necessary to give effect to these orders.
8.3That each party have liberty to apply to have this matter re-listed within 48 hours for the purposes of the implementation of any of the orders.
8.4That pursuant to section 81 of the Family Law Act 1975 (Cth) the parties intend these orders shall as far as practicable finally determine the financial relationship as between the parties to the marriage and avoid further proceedings between them.
8.5That forthwith the husband use his best endeavours to deliver to the wife the share certificates for the [F Limited] shares in her name; do all acts and things and sign all documents as may be necessary to join with the wife to have new share certificates issued in the wife’s name for one hundred thousand (100,000) [F Limited] shares;
8.6That the husband pay the wife’s costs of and incidental to this application.
During final submissions I had a discussion with the wife as to the orders that she sought.
Firstly, she confirmed that consistent with the wife’s Summary of Argument provided at the commencement of the final stage of the hearing, she sought an overall adjustment of 60-62.5 percent of the assets.
That application of course is based on the wife’s submission that notional assets of an amount of almost $1,000,000, are added back into the pool of assets and credited against the husband.
The wife confirmed that in respect of a distribution of assets, she would prefer to have the assets which she received to be as liquid as possible. She wished to have the balance of the monies in the controlled monies account and the loan which is owed by B Parsin. She sought orders that she receive the furniture, household items and the Honda Civic motor vehicle together with the bank accounts in her own name. She sought in effect that an order be made against the husband for him to pay her an amount of cash. In relation to the self managed superannuation fund which partly owns, jointly with the wife’s brother-in-law, an interest in an investment property at E together with shares and monies at bank, the wife sought that any adjustment in the self managed superannuation fund left her with liquid funds in the fund rather than a co-ownership of the property at E. I will come back to that issue at the end of these reasons.

The Husband

The orders sought by the husband in final submissions are in the following terms:
1. The parties shall do all acts and things necessary to:-
1.1Transfer the monies in the controlled monies account $45,000 to the husband (PLUS $10,110).
1.2Transfer the balance of the controlled monies account to the wife (less $10,110).
1.3Transfer the loan to the parties payable by [B Parsin] to the husband.
2.The wife shall forthwith do all acts and things necessary to:-
2.1Transfer to the husband her right, title and interest in the [F Limited] Shareholding.
3.The husband shall forthwith do acts and things necessary to transfer to the wife:-
3.1His shareholding in the [P International] Pty Limited.
3.2The loan payable by [P International] Pty Limited.
4. The husband is declared sole and beneficial owner of:-
4.1His shareholding in [Parsin] Group Pty Limited.
4.2The property at [W].
4.3St George Bank Account No. […]448.
4.4Suite […], [Y].
4.5 IAG Shares.
4.6AMP Insurance Policy.
4.7Mazda 6 motor vehicle.
4.8Loan payable to [Parsin] Superannuation Fund.
4.9Interim property distribution.
4.10Paid legal fees.
4.11Monies paid by [P International] Pty Limited to husband’s current wife in April 2008.
4.12Monies paid by [Parsin] Superannuation Fund to husband for shares in [F Limited] in February/ March 2008.
5.Wife is declared sole and beneficial owner of:-
5.1Furniture and household effects.
5.2Honda Civic motor vehicle.
5.3Banking accounts in her name.
5.4Interim property distribution.
5.5Payment of legal fees.
6.The husband shall indemnify and keep indemnified the wife in respect of the following:-
6.1Loan payable by husband to [Parsin] Group Pty Limited.
6.2Capital gains taxation payable by the husband.
6.350 percent liability to St George Bank regarding loan secured by Suite […], [Y].
6.4Credit card debts.
6.550 percent liability to St George Bank regarding loan secured by [W property].
7.The wife shall indemnify and keep indemnified the husband in respect of:-
7.1Credit card debts in her name.
7.2Loan from family members.
7.3Capital gains taxation payable by her.
8.Noted the parties and [J Parsin] and [Ms C] and [B Parsin] [called collectively the trustees] are trustees of [Parsin] Superannuation Fund.
9.Noted pursuant to Section 90MT(2) the Court determines the value of the assets of the [Parsin] Superannuation Fund as determined in the report of [Mr GN] attached to his Affidavit of 14 September 2009.
10.Pursuant to Section 90MT(1) the trustees of the [Parsin] Superannuation Fund shall cause the fund to make a splittable payment to a fund nominated by the wife by the transfer of the following assets and liabilities:-
10.1[E property].
10.2Rental fittings.
10.3Valuation adjustment.
10.4Depreciation [building].
10.5Depreciation [contents].

CREDIT

The impression I gained when both parties gave evidence was that neither of them deliberately attempted to deceive the court. Each of them had very different perceptions of various negotiations and events that had taken place since the separation. It was the wife’s strong conviction that she at all times had negotiated in good faith and it was only the result of the husband’s bloody mindedness that the parties were unable to resolve their dispute. The wife also has a very firm conviction that the husband should be found by the court to either deliberately or recklessly have wasted assets.
Much of the communication between the parties is in writing, either in letters written between the parties’ lawyers or in emails that have been exchanged. There obviously can be no doubt in relation to the writings as to what was said. Both parties place very different interpretations on some of the things that were said at various times. At the end of the day there was in fact not a great deal of evidence which fell into the category of a dispute about oral conversations between the parties.
I conclude that both parties attempted as best they could, to answer questions in evidence honestly, given their own perceptions as to how particular events had occurred.
My findings in relation to allegations of waste are primarily based upon undisputed written material and my findings as to what history is more inherently likely.
Consequently, I do not make any specific findings of credit against either party and I am able to determine the issues between the parties without doing so.

CHRONOLOGY

The period of marriage

As I have already indicated, the parties agreed that their contributions to assets as at the date of separation were equal. Consequently, I provide only a brief outline of the history of the parties’ contributions prior to December 2005.
The parties married in 1974. The parties had four children between 1978 and 1986.
In 1991/ 1992 the husband commenced a business called Parsin Pty Limited, which later became known as Parsin Group Pty Limited (“Parsin Group”). This was a consultancy business. Both the husband and the wife were shareholders. The wife says she assisted with administrative tasks for a few hours each week until 1999 when the business moved to the Y office.

In 1994 the parties purchased an investment property at SR (“SR Investment Property”). The property was purchased for an amount of $165,000 in the name of Parsin Pty Limited.
In 1998 the parties purchased a commercial property in Y (“the old Y Office”) for $320,000 in the name of P International Pty Limited (“P International”). The property was purchased as a business premises for the Parsin Group. The Parsin Group moved into the premises in 1999. The wife states she attended the Y Office three days per week undertaking administrative tasks for the Parsin Group for a period of nine months. After that, she states, she worked from home for the Parsin Group eight hours per week.
In 1998 the parties also purchased a commercial property at J (“J Investment Property”). The property was purchased for $140,000 in the name of Parsin Pty Limited.
In 2003 the parties purchased a further investment property at N (“N Investment Property”) for an amount of $660,000. The purchase monies were obtained from the National Australia Bank (NAB). The husband states that the total sum borrowed amounted to $740,000.
In 2004 the parties exchanged contracts for an “off the plan” investment home unit at E, Queensland (“E Investment Property”) with the purchase price being about $1,625,000, plus stamp duty and legal costs. The wife was cross examined at length in relation to the circumstances in which the contracts were exchanged. The husband was also cross-examined about the circumstances in which the parties entered the contract to purchase the E investment property. The husband denied having a conversation with the wife in which, she alleges, she raised her concerns about the affordability/financing of this investment (in case it could not be sold prior to settlement.) Given that it was an agreement between the parties that their contributions towards the acquisition, conservation and improvement of the property was equal up to the date of separation, I wondered why there was any emphasis upon who might have been right and who might have been wrong at the time of exchange of contract of the E investment property.
Between 2003 and 2004 the wife experienced problems with glands in her neck including swelling, intense pain as well as loss of saliva, dry mouth and discomfort when eating and pain in her jaw. She was treated with antibiotics. Although the symptoms have reduced the wife states she still experiences problems with glands and jaw to date.
The wife and her business associate/friend researched, inspected and purchased seven investment properties in 2004, them being:-
30.1.… (“K property”)
30.2.… (“I1 Property”)
30.3.… (“I2 Property”)
30.4.… (“I3 Property”)
30.5.… (“I4 Property”)
30.6.… (“I5 Property”)
30.7.… (“I6 Property”)
These investment properties were sold after separation between 2007 and 2008.
In 2005 the parties purchased a property at T (“former matrimonial home”). The husband says that the parties purchased the former matrimonial home for $1,625,000 and it was partly funded by borrowing $500,000 from NAB. The wife commenced employment with the Parsin Group doing administrative work 3.5 days per week and was paid a salary of $36,000 per year.
The parties separated on 18 December 2005 after having been married for 31 years and raising four children.
As I have already said, the parties agreed that contributions up until the time of their separation were equal.

Post-separation

After separation the wife remained living in the former matrimonial home with the parties’ youngest child M, then aged 19.
The wife says during 2006 the parties attempted to sell the E Investment Property before they were required to settle with the developers. The wife asserts that due to failure by the husband to agree to her agent, the property did not sell prior to December 2006, when the parties settled the contract. This asserted failure by the husband is part of the wife’s claim that the husband wasted assets and is discussed later in these reasons.
Between January and April 2006 the husband made mortgage payments for the former matrimonial home totalling $36,239, mortgage payments for investment properties in the sum of $156,084, and levies, rates and maintenance in the sum of $31,162. The husband made payments with respect to the wife’s living expenses in the sum of $12,309; he made payments towards M’s university studies in the sum of $6,335 and assisted B with university HECS fees in the sum of $5,300.
On 14 June 2006 the wife arranged for a transfer of $43,000 from the joint loan account into an NAB account, which is in her name only. The husband withdrew the balance of $49,500 from the joint loan account a day later. On 30 June 2006 the wife re-credited the joint loan account of NAB with the sum of $34,000. From the balance of funds the wife repaid her brother $3,200 and paid $6,000 to the rental account to replenish funds the wife says were withdrawn by the husband.
On 24 July 2006 the wife filed an application at the Family Court in Sydney seeking final and interim property orders as well as spousal maintenance for the wife.
On 10 October 2006 orders were made by consent of both parties to have Mr GN, a chartered accountant, appointed as the Single Expert.
On 18 December 2006 the parties received a letter from NAB, which sets out the conditions applying to the provision of continuing finance for the E Investment Property in the sum of $1,710,000, including the requirement for a reduction of indebtedness to NAB by $700,000 by March 2007.
On 20 December 2006 settlement on the purchase of E Investment Property took place at a total cost of $1,710,000 including stamp duty and legal costs.
In December 2006 the wife received an invoice from the Australian Taxation Office advising that she had a liability of $46,893. That liability was a result of dividends paid to her and the husband by the Parsin Group which was used to purchase the former matrimonial home. In order to pay the tax debt, the wife used funds in the sum of $31,393 from the joint loan account with NAB and further borrowed $15,500 from the parties’ daughter J.
From about March 2007 the husband and the wife were in default of the loan repayments in respect of E Investment Property, N Investment Property and the former matrimonial home.
On 12 March 2007 the wife filed an Application in a case seeking the sale of the N Investment Property to reduce indebtedness to NAB in accordance
On 16 March the husband filed a Response, seeking the sale of N Investment Property.
When the matter came before Judicial Registrar Loughnan on 19 March 2007 the Judicial Registrar ordered, inter alia, that the matter be adjourned to 17 April 2007 and that the husband file a response and any documents in support.
On 17 April 2007 the wife’s application was stood over to 18 May 2007.
On 18 April 2007 an informal settlement conference took place in respect of final property proceedings. The matter did not settle.
On 19 April the wife says she received a letter of demand from NAB advising of the intention to commence legal recovery action and issue formal demands in respect of the defaults.
On 18 May the wife’s application in a case seeking the sale of the N Investment Property was stood over to 19 June 2007.
The parties attended a conciliation conference and attempted a further informal settlement conference and mediation before appearing again before a Registrar of the Family Court on 19 June 2007. The wife amended her application in a case and was now seeking the sale of a further eight investment properties in addition to the N Investment Property. The Registrar stood the amended application over to 6 August 2007.
On 3 July 2007 the bank issued a s 52(2)(b) Notice.
On 16 July 2007 the wife received two default notices from NAB in respect of the N Investment Property and the former matrimonial home and three Cancellation of Facility Notices in respect of three FlexiPlus Mortgage accounts for total amounts of $101,780.02, $1,757,163.52 and $50,456.03 (J 17). In response to a letter sent to NAB by the wife’s solicitors, NAB stated that it will not defer its legal action. The wife’s solicitors advised the husband that they are seeking to have the matter re-listed before the Family Court.
On 20 July 2007 the husband and the wife divorced.
On 31 July 2007 NAB issued a default notice on Parsin Group in respect of a FlexiPlus Mortgage Split Facility for the total amount of $102,387.07.
In July 2007 the parties agreed to list the E Investment Property and the N Investment Property for sale. The husband’s solicitors sent a letter to NAB informing the bank of the husband and wife’s agreement on the sale of the two investment properties. NAB in its response declined to defer legal action and requested a sealed copy of proposed orders of the Family Court in regards to the proposed sale of the two investment properties.
On 6 August 2007 the wife’s application in a case to sell the nine investment properties was again adjourned. On 24 August 2007, Judicial Registrar Johnston made orders providing for the sale of the E Investment Property and the N Investment Property. On 10 September 2007 consent orders were made providing, inter alia, that the husband pay additional costs in regards to the seven remaining investment properties.
On 24 August 2007 the proceedings were listed for final hearing before Johnston JR on 8 and 9 November.
On 5 September 2007 NAB issued a demand in respect of the mortgage account of the former matrimonial home totalling $112,083.12.
In October 2007 the E Investment Property was listed for auction. The husband participated in the auction. After an initial bid of $1,100,000 the husband made a bid of $1,150,000. The property was passed in and later sold for $1,200,000. The husband claims credit for having increased the sale price of the E investment property by $100,000.
The N Investment Property subsequently sold for $742,000.
After a two day hearing in November, Judicial Registrar Loughnan delivered judgment and made final property orders on 12 December 2007.
In January 2008 the husband sought to have the orders made on 12 December 2007 reviewed.
On 6 February the parties attended court and entered into negotiations.
On 21 February 2008 the parties had final property orders made by consent. These consent orders were made by Loughnan JR. On 19 March 2008 the wife then sought a review of these orders, which was to be heard by Judicial Registrar Loughnan on 29 April 2008.
In March 2008 the wife advised the husband that she has approval to refinance the matrimonial home, the K property and B’s family loan. The husband advised the wife that he is unable to meet refinancing arrangements in order to implement the Consent Orders of 21 February 2008.
On 10 April 2008 the wife says, the husband issued a notice of general meeting of members to pass a resolution to wind up the company Parsin Group and to appoint a liquidator. The husband says he convened a meeting of Directors of Parsin Group in accordance with s 558G of the Corporations Act 2001 (Cth). The husband says that the staff of Parsin Group were advised that the company had ceased trading that day.
On 17 April 2008 the husband wrote to the wife’s solicitors advising that Parsin Group was insolvent because it was unable to meet its existing debts.
On 23 April 2008 the wife filed an application in a case seeking an injuction to restrain the liquidation of Parsin Group Pty Ltd.
On 29 April 2008 orders were made by Judicial Registrar Loughnan to restrain the husband from voluntarily winding up the company ACN … (formerly Parsin Group) and P International. S Firm were appointed administers of Parsin Group.
In May 2008 Justice Le Poer Trench set aside the consent orders made on 21 February 2008. The parties agreed to interim consent orders providing for the sale of seven investment properties and two properties owned by the family companies as well as the sale of the Parsin Group.
In June 2008 the wife was served with a statement of claim issued by NAB seeking to take possession of the former matrimonial home, all the investment properties and the Y property owned by P International Pty Ltd.
In June 2008 the husband incorporated a new company Parsin Group Pty Limited, with his current partner and the husband as shareholders.
On 4 August 2008 the parties attended Court in respect of the husband’s application in a case filed on 10 July 2008 which sought to list the former matrimonial home for sale by auction immediately. The parties agreed to the orders.
In October 2008 the parties exchanged contracts with the purchaser for the sale of the former matrimonial home at T for $1,280,000. The net proceeds of the sale were placed in a controlled money account in trust for both parties.
In April 2009 the wife filed an application in a case seeking interim costs and property orders. When the application came before Judicial Registrar Johnston, orders were made by consent providing that monies from the jointly controlled monies account are paid to the wife’s solicitors ($300,000) and to the husband’s solicitors ($250,000).
All investment properties have now been sold. The only real estate which remains is the old Y office in the name of P International. The husband since separation has acquired new premises at Y (“the new Y office”) which he owns jointly with his current wife. The husband also has an interest in a property at W which he also jointly owns with his current wife.

THE APPROACH TAKEN

In this matter, my task is to:
79.1.Identify and value the property, assets, financial resources and liabilities of the parties;
79.2.Identify relevant contributions and assess them;
79.3.Consider relevant matters referred to in s 79(4)(d) to s 79(4)(g) of the Family Law Act 1975 (Cth); and
79.4.Ensure my order adjusting the property, assets and liabilities of the parties is just and equitable.

BALANCE SHEET

Mr GN was appointed by the parties as Single Expert to prepare a valuation report of the interests held by the husband and the wife in the following entities:-
80.1.Parsin Group Pty Limited (“Parsin Group”)
80.2.ACN … Pty Limited (“Parsin Group Old”)
80.3.P International Pty Limited (“P International”); and
80.4.Parsin Superannuation Fund.
Mr GN prepared reports dated 19 February 2007 (Exhibit L) and 6 November 2007 which set out the value held in Parsin Group Qld, P International and the superannuation fund on the basis of financial statements as at 30 June 2006 and 2007.
Mr GN further prepared an updated report dated 11 September 2009 (“current report”) setting out the value of the interest in all entities on the basis of financial statements as at 30 June 2009.
In his current report Mr GN concludes that, in his opinion, the value of Parsin Group as at 30 June 2009 was $426,000.
As already mentioned, initially the husband sought to challenge the valuation of the companies including loan accounts. Counsel for the husband cross examined Mr GN at some length. In the end however, counsel for the husband did not make any submission which called into question the valuations which Mr GN had reached and those values were placed on the balance sheet as undisputed amounts.
The settled balance sheet is set out below. Where values are not agreed they appear in bold as determined by me. The reasons for each determination is set out under item numbers following the table.

Assets
Item no.	Title	Description	H value	W value	Agreed/ Determined	Value
1	J	Balance of monies in controlled monies account	$74,304	$74,304	Agreed	$74,304
2	J	Loan to B Parsin	$87,891	$87,891	Agreed	$87,891
3	H	Parsin Group Pty Ltd	$426,000	$426,000	Agreed	$426,000
4	J	P International Pty Ltd	$270,000	$270,000	Agreed	$270,000
5	J	Loan payable by P International Pty Ltd	$163,934	$163,934	Agreed	$163,934
6	J	Furniture and household items	$16,000	$16,000	Agreed	$16,000
7	W	Honda Civic	$10,100	$10,100	Agreed	$10,100
8	W	Banking accounts	$4,203	$4,203	Agreed	$4,203
9	H	W property	$84,000	$84,000	Agreed	$84,000
10	H	St George Bank a/c no. …448	$47,953	$47,953	Agreed	$47,953
11	H	Suite at Y (1/2 share with husband’s current wife)	$197,500	$197,500	Agreed	$197,500
12	H	IAG shares	$2,815	$2,815	Agreed	$2,815
13	H	AMP share	$3,339	$3,339	Agreed	$3,339
14	H	Mazda 6	$9,680	$9,680	Agreed	$9,680
15	H	Loan payable to P International Pty Ltd	$12,849	$12,849	Agreed	$12,849
16	H	Loan payable by Parsin Superannuation Fund	$652	$652	Agreed	$652
17	W	Interim property distribution to wife to pay legal fees	$300,000	$300,000	Agreed	$300,000
18	W	Payment of legal fees	$57,050	$57,050	Agreed	$57,050
19	H	Interim property distribution to husband to assist in purchase of property and to pay down debts (less monies invested in property and bank accounts)	$118,063	$118,063	Agreed	$118,063
20	H	paid legal fees of husband (see Exhibit C)	$260,083	$280,518	Determined	$255,749
21	H	Wedding costs incurred by husband in regard to the marriage with his current wife paid from joint funds	$0	$13,000	Determined	$13,000
22	H	Monies paid by B Parsin pursuant to a loan to both parties	$0	$10,000	Determined	$10,000
23	H	Total amount of the monies which are the subject of a claim for waste as against the husband (see paras 11.1 to 11.10 wife's summary of argument)	$0	$530,200	Determined	$0
24	H	Monies paid by P International Pty Ltd to husband's current wife in April 2008	$0	$60,000	Determined	$0
25	H	Monies paid by Parsin Superannuation Fund to husband for shares in F Limited in February/March 2008; later valued at nil	$24,800	$24,800	Agreed	$24,800
26	H	Monies from the shareholder's loan accounts utilised by the husband for his sole expenses	$0	$45,093	Determined	$0
27	H	rental received by P International from Parsin Group since separation not accounted for by the husband	$0	$140,000	Determined	$0
Total assets						$2,189,882
Liabilities
Item no.	Title	Description	H value	W value	Agreed/ Determined	Value
28	J	Capital gains tax payable on the winding up of P International Pty Ltd	$0	$0	Agreed	$0
29	W	Credit card debts	$3,543	$3,543	Agreed	$3,543
30	W	Loan from family members	$65,129	$65,129	Agreed	$65,129
31	W	Capital gains taxation payable by wife	$7,493	$7,493	Agreed	$7,493
32	H	Lease from Centregy	$0	$0	Agreed	$0
33	H	Loan payable by husband to Parsin Group Pty Ltd	$4,794	$4,794	Agreed	$4,794
34	H	Capital gains taxation payable by husband	$42,392	$42,392	Agreed	$42,392
35	H	50% liability to St George Bank regarding loan secured by suite at Y	$144,895	$144,895	Agreed	$144,895
36	H	Income taxation owing from previous financial year	$0	$0	Agreed	$0
37	H	Loan (now repaid) for legal fees to husband’s current wife	$24,172	$0	Determined	$0
38	H	Loan (now repaid) for legal fees to husband’s current wife	Agreed	$0
39	H	Paid monies from Parsin Superannuation Fund for legal fees	$0	$0	Agreed	$0
40	H	Credit card debts	$30,000	$0	Determined	$0
41	H	One half of the costs for the sale of E Investment Property, the sale of N Investment property and the parties’ mediation	$10,110.25	$0	Determined	$10,110
Total liabilities						$278,356
Total net assets						$1,911,526
Superannuation
Item no.	Title	Description	H value	W value	Agreed/ Determined	Value
42	W	Parsin Superannuation Fund	$216,917	$216,917	Agreed	$216,917
43	W	Hesta	$5,441	$5,441	Agreed	$5,441
44	H	Parsin Superannuation Fund	$347,412	$347,412	Agreed	$347,412
Total assets						$569,770
Total net assets over all pools						$2,481,296

Items 9, 10 and 19

Counsel for the husband made clear during the final stage of the hearing that the purchase of the property at W by the husband and his new wife had been completed and that items 9, 10 and 19 on Exhibit A had now been consolidated into the equity that the husband had in the W property. For simplicity’s sake however, the original item numbers were retained (there being no difference in respect of the amounts for which the husband would be credited).

Item 20

Exhibit C is a summary of legal fees and expenses paid by the husband, not only in relation to this litigation, but also for legal work connected with the companies not being part of the dispute in these proceedings. The overall fees are $280,518. There was no dispute that the costs relating to the family law proceedings of $260,083 should be added back. There is a dispute in relation to the balance sum of $20,435 which the wife asserts should be added back and the husband says it should not be.
In his affidavit filed on 29 May 2009 (on behalf of the wife) Mr FD outlines what was provided in the subpoenaed documents he inspected in relation to the legal fees and disbursements paid by the husband since the time the husband first instructed Coddington Lamont but excluding any monies paid to Newnhams Solicitors. Mr FD states that he inspected documents produced by Mash O’Neil Tomkin Lawyers, which indicated that P International Pty Ltd and the husband paid legal fees on behalf of the husband in the sum of $20,435.57. No further details are provided by Mr FD in regards to this particular sum of monies. The remaining parts of his affidavit essentially correspond with what is provided in Exhibit C ($165,634.92 legal fees and disbursements paid to Coddington Lamont; $25,702.72 paid to Mr GN; $4,334 paid to Mediator; $1,000 - $1,500 payable to Mr BK; $500 to Dr Z; $35,303.45 paid to Musgrave Peach).
Legal fees in the sum of $20,435.57 were spent on the instruction of the husband to defend P International from moves made by the National Australia Bank to close on a loan facility. The husband asserted that he acted appropriately to protect the company’s interest at the time. The wife has not demonstrated on the balance of probabilities to my satisfaction that that was not the case and accordingly there should be no addback against the husband personally for the sum of $20,435 and the overall addback in respect of legal fees should be the lower figure of $260,083.
As is clear from Exhibit C, part of the legal costs being added back against the husband contain monies that he paid for a mediation with the wife in the sum of $4,343. This amount should not be counted back against the husband. In fact, the husband (at item 41) makes a claim, which I find is appropriate, that the wife pay one half of the costs of that mediation.
Consequently the amount for item 20 should be $255,749 ($260,083 - $4,334).

Item 21

There was a dispute relating to wedding costs incurred by the husband in regard to his marriage to his current wife. The wife asserted that those costs were paid from joint funds. The husband conceded during cross examination that the wedding costs should be added back. Counsel for the husband during submissions indicated that part of the wedding costs came from credit cards and the concession to add back wedding costs should be on the basis that the husband’s credit card debt (item 40) should also be added back in. I however have no satisfactory evidence to connect those two items. Based on the husband’s concession during cross examination, the figure of $13,000 will be added back for item 21.

Items 22 and 30

The adult child of the marriage B Parsin, owed the parties $10,000 prior to the separation. B paid $10,000 to his father after the separation. The wife asserts that $10,000 should be added back. The husband opposes that. This item is connected with item 30 which is loans from family members. It was agreed that there is owing by the wife to the three children of the marriage, J, B and M a sum of $65,129 (Item 30). In relation to item 22, counsel for the husband initially said that the husband had given evidence in chief that B had also given $10,000 to the wife. That submission however was withdrawn by counsel for the husband and a transcript of the husband’s evidence in chief was made available to counsel for the husband. There is nothing in the evidence given by B Parsin that mentioned that $10,000 has also been given by B to the wife. B was not cross examined about that happening. I am unable to accept that there is a contra amount that has been given by B to his mother. I find that at the date of separation an amount of $10,000 was owing to the parties by B and that the husband received that amount after separation and that it is appropriate to add that amount back onto the balance sheet.

Item 23

A substantial amount of time was spent during the final stages of the hearing exploring a number of claims by the wife for waste as against the husband. The total amount of these claims was in the sum of $530,200. The husband asserts that none of those monies should be added back against him. The details of the claims are set out in paragraphs 11.1 to 11.10 in the Summary of Argument document prepared by counsel who appeared for the wife on the first three days of the final stage of the hearing. The wife in final submissions relied upon the submissions contained in that document.
Those submissions were in the following terms:
11.Waste claims against the husband
11.1The wife contends that since the parties separated and the husband has remained in sole control of [Parsin] Group and [P International], the husband embarked on a course of conduct designed to reduce or minimise the effective value or worth of the matrimonial assets or as a result of his reckless, negligent or wanton behaviour he has reduced or minimised the value of the assets of the parties.
11.2The wife contends that the husband is responsible for waste caused to the net marital assets and that as a result an adjustment should be made to notionally add back the value of the reduction to the net marital asset pool as against the husband.
11.3[N Investment Property] cost and interest charges:
11.3.1The wife alleges that due to the husband’s refusal to sell the investment property located at [N] (paragraph 14.6.3 to 14.6.27 of wife’s affidavit) and the parties failure to meet interest re-payments (paragraph 14.3), costs and interest charges have been incurred, totalling $69,921.36 (paragraph 14.10.1(a)). This is referred to in the bank statements exhibited to the affidavit of the wife at J8;
11.3.2The wife contends that the additional costs and interest incurred in the sum of $69,921.36 should be added back into the asset pool as waste as against the husband.
11.4[E Investment Property] costs and interest charges.
11.4.1The parties agreed by court order to market the sale of the property at [E] and to sell the property by auction on 28 October 2007 (paragraph 14.2 of the wife’s affidavit). The cost of the advertising campaign was approximately $11,000.00;
11.4.2This was despite the wife’s attempts to reach agreement to advertise and sell the property for a similar sum of money in November 2006 (11 months earlier) (paragraph 14.2.4 of the wife’s affidavit);
11.4.3The wife alleges that due to the husband’s failure to agree to pay a reasonable sum of money to advertise the property held at [E] at a date prior to the sale of the property on 28 October 2007 (referred to in paragraph 14.2.4, 14.2.5, 14.2.8 and 14.2.9 of the wife’s affidavit), the parties incurred interest totalling $184,930.90 (paragraph 14.2.10 of the wife’s affidavit);
11.4.4The wife claims that the husband is directly responsible for this interest and this amount of $184,930.90 should be added back into the asset pool as waste as against the husband.
11.5Interest charges on [J’s] unit loan and the PG loan facility:
11.5.1[J’s] unit loan facility and the PG loan facility were loan facilities available to the parties to assist with cash shortfalls and other periodic expenses (paragraph 7.1.2(c) and (d) of the wife’s affidavit). These loan facilities had almost nil owing to the National Australia Bank at the date of separation (exhibit J13 and J14);
11.5.2Prior to and at the date of separation, the parties had been making regular payments on all the loan facilities referred to in paragraph 5.1 of the wife’s affidavit, with the exception of the loan facility secured by the [E] investment property which had not yet been purchased, from the earnings of [Parsin] Group Pty Limited (paragraph 9.3 to 9.3);
11.5.3From the date of separation to the date that [J’s] unit loan facility and the PG loan facility expired, [the husband] used both of these loan facilities to make payments on the [N Investment Property] loan facility, the [E Investment Property] loan facility and the loan facility secured by the former matrimonial home (paragraphs 14.3.2 to 14.3.9 of the wife’s affidavit). In respect of the [E Investment Property] loan facility only two payments, one for $12,343.55 and one for $2,417.65, were paid by [J’s] unit loan and the PG loan facilities (exhibit J1). All other payments were made in respect of the [N Investment Property] loan facility and the facility secured by the former matrimonial home;
11.5.4This was not approved by the wife and incurred interest that was otherwise not necessary, as these payments had been previously met by the parties from the earnings of [Parsin] Group. On this basis there was no need to use these loan facilities to make these payments and therefore incur additional interest;
11.5.5The wife alleges that the additional interest incurred in the sum of $23,832.93 (paragraph 14.10.1(b) of the wife’s affidavit) was incurred as a result of the actions of the husband was not necessary, but was done to enable the husband to use the income of [Parsin] Group for his own personal benefit, including paying $165,634.92 to his solicitors acting for him at the time in these proceedings, Messrs Coddington Lamont and his counsel, Mr R Lethbridge SC;
11.5.6The wife contends that the additional interest incurred in the sum of $23,832.93 should be added back into the asset pool as waste as against the husband.
11.6Default interest associated with the bank bill:
11.6.1In July 2005, a loan facility (referred to as a bank bill) was provided to [Parsin] Group and payments were made by both [Parsin] Group and [P International] (paragraph 7.1.2(b) and exhibit J43 of the wife’s affidavit);
11.6.2On 31 July 2007, NAB issued a cancellation notice in regard to the bank bill, which converted the facility to a default interest rate (paragraph 14.6.25 of the wife’s affidavit). This was due to prior acts by the parties and the failure to reduce debt to NAB. This was a direct result of the husband’s failure to reduce debt to NAB. This was a direct result of the husband’s failure to reduce debt by failing to sell real property as requested by the wife and as requested by NAB, even after the wife commenced interim proceedings on 12 March 2007 seeking to sell property to reduce indebtedness in accordance with NAB loan agreement of December 2006, imposed by the bank as part of the facility granted to settle on the purchase of the [E] investment property (paragraph 14.6);
11.6.3As a result of the conversion to a default interest rate, the parties have incurred additional interest than what they would otherwise have incurred had the default not incurred;
11.6.4The wife estimates that the additional interest incurred is $123,368.16 (paragraph 14.10.1(c) of the wife’s affidavit);
11.6.5The wife claims that the interest in the sum of $123,368.16 is a direct result of the husband’s actions and that the wife should receive an adjustment to the asset pool as a result of this waste with this sum being added back as against the husband.
11.7Bank charges and costs of NAB:
11.7.1The parties breached an agreement to reduce debt owing to the NAB (paragraph 14.6 of the wife’s affidavit);
11.7.2The breach of the agreement is due to the husband’s failure to agree to sell property as requested by the wife throughout 2007 (also paragraph 14.6);
11.7.3As a result of the breach, th NAB have issued default notices, commenced proceedings, incurred costs and charges (also paragraph 14.6);
11.7.4The NAB incurred costs and charges totalling $15,653.02 (as referred to in an email 5 August 2009, forwarded to the husband on 20 August 2009 and as referred to in paragraph 14.10.1(d) of the wife’s affidavit).
11.7.5The wife claims the husband is responsible for this cost and that this amount of $15,653.02 should be added back to the asset pool as waste as against the husband.
11.8Costs to arrange two public auctions:
11.8.1Due to legal enforcement proceedings brought by NAB, as refered to in 3.6.3 above, the parties were required to hold two auctions at a cost to the parties of $19,349.82 (paragraph 14.10.1(e) and exhibit J46 of the wife’s affidavit);
11.8.2The wife claims the husband is responsible for this cost and that this amount of $19,349.82 should be added back to the asset pool as waste as against the husband.
11.9Legal fees incurred by the husband:
11.9.1The wife has filed several applications and attended court on at least 5 occasions to request the sale of investment properties to reduce debt and ensure that the parties were not in default of their obligations to the NAB (paragraph 14.6 of the wife’s affidavit);
11.9.2This has been at a cost of approximately $17,000 to $19,000 to the wife (paragraph 14.10.1(f) of the wife’s affidavit);
11.9.3The wife claims the husband is responsible for this cost and that an amount of at least $17,000 should be added back to the asset pool as waste as against the husband.
11.10Administration of [Parsin] Group Pty Limited:
11.10.1On or about 28 April 2008, the company ACN […] (formerly [Parsin] Group) was placed into administration by the husband to pre-empt an application by the wife, to be heard the following day by the Family Court, to appoint an administrator and to have orders made seeking to restrain the husband from appointing a liquidator to wind up the company;
11.10.2This action by the husband was allegedly as a result of the company not being able to re-pay loan facilities cancelled by NAB in July 2007 (paragraph 14.7.9 of the wife’s affidavit);
11.10.3These loan facilities were cancelled due to the failure by the parties to reduce debt as required by NAB, and as requested throughout 2007 by the wife and which was due to the failure by the husband to agree to sell property as requested (3.5.2 above);
11.10.4The costs of the administration were $120,594 as referred to in exhibit J47 of the wife’s affidavit;
11.10.5The wife claims the husband is responsible for this cost now assessed at $76,144.00 and that this amount should be added back to the asset pool as waste as against the husband.
From 2003 to the time of separation the parties purchased 10 properties totalling $5,243,500. These properties were highly negatively geared at the time of separation. The wife had commenced employment shortly before separation. The husband’s income at best was about $140,000. Upon their sale, most other properties purchased by the parties ended up with a slight profit, apart from E Investment Property which turned out to have been purchased off the plan for a price which was not recoverable in the short term. The parties got into trouble with the monthly commitments on their large property portfolio.
After separation, the parties were doing one thing on the record, possibly to show the relevant financial institution they were doing something, and a different thing off the record. On the one hand, they were writing open correspondence to the other or filing applications regarding the sale of the properties but on the other hand, negotiating about who would keep which property.
There are strong arguments the husband can make, about actions the parties took, which led to the conclusion that loses should be shared. For example, the husband said in 2006 ‘Let’s just sell everything and get out of this’. The husband can argue that a significant number of cash flow problems would have been solved if the former matrimonial home had been sold earlier. The wife agreed in cross-examination with that proposition. The wife was living in the former matrimonial home and resisted its sale. The wife wanted the N Investment property sold. The husband did not want N property sold. His thinking at the time was that a sale at that time would have created a liability for the parties. The wife can claim that decision was wrong, but that claim relies heavily on hindsight.
Individual emails should not be considered by themselves but in conjunction with where the parties were in respect of the proceedings or negotiations.
There were a number of interim applications in 2007, but it is not clear that the husband was the recalcitrant party. In September 2007, parties were before JR Johnston and the dispute was set down in November 2007. JR Loughnan heard the matter and gave “final” judgment in December 2007. Early 2008 the husband filed an application for review. The parties negotiated for at least one day. The parties entered into fresh orders by consent. The husband could not put orders into effect by borrowing enough money. The wife filed an application for review. The wife set out in a letter dated March 2008 that the review was conditional (in effect to protect her position). But the letter essentially says that the wife wished to retain the former matrimonial home. The course of the interim litigation does not form a basis for a finding that the husband has committed waste.
In relation to the sale of E Investment Property, the wife asserts that the husband was not proactive in the sale of the E Investment property or in choosing an appropriate real estate agent. The wife’s attachments to her affidavit and the exhibits do not substantiate the wife’s claim. The developer of the E site signed many purchases “off the plan” with similar settlement times. Because many speculative investors wanted to “on sell”, a significant number of properties came on the market at once. The global financial crises had an impact on the development. In addition, the developer was still selling similar units in another stage of the project “off the plan”. The wife conceded, in oral evidence, that it was a buyer’s market. It is unreasonable to make the husband accountable for all of that.
The wife asserts that the parties had a significant window of opportunity after the bank issued its default notice (9 July 2007) until it commenced proceedings (May 2008), and that it was the husband’s fault that the bank’s regular payments were not attended to. The wife asserted that the husband should be accountable for interest payments on loans and costs associated with enforcement by the bank. The husband submits, and I accept, that the events parties faced were overwhelming. In relation to the costs associated with the administration of the Parsin Group, the husband submits that the bank was moving against them. I accept the husband’s evidence that the company could not meet day to day liabilities. I find the husband had no alternative and did what was necessary. Secondly, the husband submits that as an offset to the monies paid by way of the costs associated with the administration of the Parsin Group, substantial savings in tax were made (income tax and CGT). The husband argues, and I accept, that these savings were greater than the costs the wife seeks by way of add back to the pool, on loans and costs associated with enforcement by the bank.

A further general point that should be made, in response to the wife’s assertions against the husband for waste, is that in the period after separation the husband was the person who ran the business operations. He expended his personal energies in doing so. Mr GN has indicated that he was entitled to a level of remuneration post separation of about $140,000 per annum. The position in relation to loan accounts and the husband’s drawings was not referred to in submissions in any detail and I am unable to precisely analyse how much the husband’s wages from the company fell short of appropriate remuneration for him. The extent that it did fall short, is a partial answer to any claim by the wife that the husband misused the credit loan account that he had at the date of separation in an inappropriate way after the separation.
I am unable to find, as the wife has invited me to do, that the husband deliberately or recklessly wasted funds of the parties post separation and accordingly no amount will be added back for item 23.

Item 24

The wife pointed to the fact that the husband had paid to his current wife an amount of $60,000 from P International Pty Ltd in April 2008. Paragraph 5 of the affidavit of the husband’s current wife GH is her evidence that she lent the husband $60,000 on 6 November 2007. Supporting bank documentation is attached to her affidavit. The parties also entered into a formal loan agreement. GH said that the sum of $60,000 that was paid to her in April 2008 was a repayment of that loan without any interest (to which she was otherwise entitled under the loan agreement). GH was not challenged by the wife in relation to her evidence about those transactions. Accordingly, there is no basis for an amount of $60,000 to be added back against the husband because he had paid it to his current wife.

Item 26

The wife claims that the husband used his shareholder’s loan accounts from the date of separation until 30 June 2007 to pay both joint expenses and the husband’s sole expenses. The wife says that the overall drawings by the husband against his loan account in that period were $166,222 (paragraph 14.4.1 and 14.4.4 of the wife’s primary affidavit). The wife claims that of that amount, only $121,128.64 was used for joint expenses. The wife claims that the balance amount of $45,093.68 was used for the sole expenses of the husband (see paragraphs 14.4.6 and 14.10.1(h) of the wife’s affidavit).
Accordingly the wife claims the husband is solely responsible for an amount of $45,093.68 and that amount should be added back to the asset pool as against the husband.
The relevant period is between 1 January 2006 and 30 30 June 2007. In that year the husband received remuneration of about $90,000. According to Mr GN, he was entitled to remuneration in that year of $140,000. The difference in these two amounts covers the movement in the loan accounts that the wife is asserting should be added back. This just demonstrates the point that I had previously made relating to my lack of satisfaction about a reconciliation of what the husband should have been paid with what he actually took out of the company. The wife conceded that she had not been able to employ a forensic expert to do a full analysis of these matters, although she had had some considerable assistance from Mr PI, a forensic accountant who had provided her with advice and who had filed evidence relating to other issues in these proceedings. The wife did not point to anything in Mr PI’s evidence that would assist her in this claim.
I am unable to find it is appropriate to add back the sum of $45,093 against the husband for item 26.

Item 27

The wife asserts that the husband failed to account for rent of P International Pty Limited. Since separation, P International was paid regular rental monies from Parsin Group (that is set out in paragraph 14.5 of the wife’s affidavit). The wife estimates that the amount that one company paid the other was at least $140,000 (see paragraph 14.5.5 of the wife’s affidavit). The wife asserted that the husband had unfettered sole control of both Parsin Group and P International during the period that she is referring to in respect of this claim. She alleges that the husband had full access to these rental monies and failed to properly account for these monies to the wife.
The fundamental difficulty with this claim by the wife is that we are actually talking about the movement of monies from one entity which is the alter ego of the parties to another entity which is the alter ego of the parties. It has not been demonstrated to my satisfaction that any money was actually gained or lost and accordingly there will be no addback for item 27.

Item 37

The husband claims as one of his liabilities, a loan which has now been repaid that he took from his current wife GH to pay legal fees. The wife was legally represented for the first three days of the final six days of the hearing. It is clear that the legal representatives for the parties had a number of discussions to resolve issues arising from disputed items in the balance sheet (in these reasons I have only dealt with those items that have been unable to be resolved). I allowed evidence to be called from Mr Thompson, the solicitor representing the husband. Mr Thompson gave evidence that the wife’s former lawyer had conceded in a conversation with him that item 37 should be put on the balance sheet at a figure of $24,172 on the basis that those borrowings were part of the amount that the husband had conceded at item 20 as paid legal fees. It is clear that if a person borrows monies to pay legal fees, then those borrowings should be taken into account. I accept Mr Thompson’s evidence that the wife’s lawyer made this concession (although it was apparent that the wife was unaware that it had been made). That however is not the end of the matter. It is clear that this loan has been paid back by the husband to his wife and so as at today, legal fees have not been paid from borrowings but rather from monies that the husband had available to him through the companies. These monies might have been referrable to personal exertions since post separation or might have been referrable to loan credits that the husband had at the date of separation in the company. I am unable to say which is the case. The Full Court in Omacini (2005) FLC 93-218 has laid down the general principle that unless there is a proper explanation as to why legal fees should not be added back, then they should be. Accordingly, I am not prepared to include this liability on the list of the husband’s liabilities and item 37 will be assessed as nil.

Item 40

The husband asserted that he used his credit cards to pay business expenses. I however do not have any breakdown as to how the credit card had been used apart from an assertion that part of the wedding costs, which have been added back against the husband, were paid on the credit card, then part of legal expenses were paid on the credit card. I have insufficient evidence however to allow me to say that any of the husband’s current credit card debts should be added back onto the balance sheet as effectively a joint liability of the parties. Item 40 will be added to the balance sheet as nil.

Item 41 - Additional item on balance sheet

The husband made a claim that there was an agreement that the wife would refund half of certain costs he had paid. The costs referred to were sale costs in relation to E Investment Property in the sum of $11,532.50; sale costs in relation to N Investment Property in the sum of $4,354; and the cost of the mediation in the sum of $4,334. It is clear (from Exhibit C) that the part of expenses added back against the husband include the mediator’s fee in the sum of $4,334 (see Item 20 husband’s legal costs). The wife in response, said that those figures were accounted for in the Shareholders Loan Account as expenses that have been covered. The wife said that the expenses were covered in J8 and Annexure Y (see para 14.4. of the wife’s affidavit). Annexure Y contains details of the General Ledger of the B & J Parsin loan account but specific costs for the sale of the E Investment property or the N Investment properties cannot be identified from Annexure Y. There are no records before me of either a lump sum of $11,532.50 or of $4,354 having been withdrawn from the loan account. There is no record of any monies having been withdrawn in relation to ‘the sale of costs’ of either investment property. Annexure J8 contains bank statements, apparently in relation to the N Investment property. (see para 14.4.5 of the wife’s affidavit) There is no record in these statements of either a lump sum of $4,354 having been withdrawn or any record of monies having been withdrawn in relation to ‘the sale of costs’ of the N property. Given the husband has paid the full amount of the mediator’s fee, it is appropriate that the husband be given credit for one half of that payment as a liability on the balance sheet. Likewise, given that there is no indication that the husband used joint drawings for the payment of the costs in relation to the sale at E and in relation to the costs of the sale of N property, then one half of that amount should also be credited to the husband. The amount for this item to be credited as a liability against the husband will therefore be $10,110.25 ($11,532.50 + $4,354 + $4,334 ¸ 2).

CONTRIBUTIONS

The chronology set out earlier in the judgment relating to what has happened after the separation of the parties sets out a summary of what the parties’ contributions have been since the separation. I have dealt with the losses the parties have incurred in relation to the various investment properties that they had when dealing with the wife’s claim against the husband for waste.
Since separation the husband has incorporated another company and transferred his business operations into that company. The value of that new enterprise has been taken into account on the balance sheet and represents the major asset. The husband’s efforts have been responsible for maintaining and conserving that asset since separation.
The wife asserts, and I accept, that since separation she carried out a number of repairs to the former matrimonial home which were paid for from monies that she earned while she was employed, and from monies that she borrowed from family and friends. The borrowings of course have been included in her favour on the balance sheet. The wife did some work in organising cleaning, repairing and replacement of missing and broken items when the tenant from the SR investment property vacated in November 2006.
Since separation, the wife paid monies towards the mortgage on the T property but of course was at the same time residing in that property. Some of these payments were made from monies borrowed from her children (which as I have just said are otherwise brought to account in the wife’s favour on the balance sheet).
The wife managed and maintained accounting records of the various properties in the investment portfolio of the parties. M was still in the wife’s household after separation. He was involved in full time study and I take into account that the wife continued to carry out household duties, including cooking meals and washing clothes for him (B was also in the home for a month after separation).
The husband contends that post separation contributions should be treated as being equal. The wife contends for a 5 percent adjustment in her favour. I find there is no basis to make the adjustment sought by the wife. The contributions by the husband in maintaining the principle asset that remains, more than balances any contributions the wife has made as detailed above.

Conclusions in relation to contributions

I conclude that contributions in this matter from November 1974 to date should be assessed as being equal and that consequently contributions have been equal overall.

SECTION 75(2) MATTERS

Initially counsel for the husband argued that no adjustment should be made for the prospective needs of the parties. When pressed, his submission was that the maximum adjustment should be 2.5 percent. The wife seeks a 5 to 7.5 percent adjustment for s 75(2) factors (but in circumstances where she has asserted that a 5 percent adjustment should be made in her favour based on contributions and also in circumstances where she asserted that substantial amounts of monies should be added back against the husband for her claim in respect of waste). Neither of those suggestions were successful.
The husband is 56 years of age. The wife is now 55 years of age.
Both parties are in reasonable health, although the wife alleges that she has symptoms that affect her ability to earn income in the future. Those symptoms include:
124.1.Mid joint pain;
124.2.Pain in her jaw;
124.3.Dryness of the mouth;
124.4.Tinnitus and hearing loss in both ears (it was apparent during the hearing that at times the wife required what had just been said to be repeated to her);
124.5.The wife has said she also has difficulty with her eyes.
The wife filed an affidavit by Dr Z. The doctor had been appointed as the single expert and was not required for cross examination. The doctor had available to him reports from previous medical professionals that the wife had seen and various pages of the wife’s affidavits which detailed the symptoms that have been outlined above. The wife currently uses eye ointment at night and eye drops during the day. At the time she saw Dr Z in November 2007, she was on antidepressants (Lovan).
The doctor’s conclusion is in the following terms:
“Because of the diagnosed conditions, bilateral conductive hearing loss and tinnitus, Fuchs’s Syndrome, Sjogren’s Disease and arthritis affecting the tempero mandibular joints, I do not believe that [the wife] could work full time as a [teacher].”
The doctor then goes on to discuss the difficulties that the wife’s medical condition would pose upon the wife operating full time in a classroom environment. He concluded that the wife would have the capacity for gainful employment generally and considered that she would be capable to work full time in office environments with the proviso that she had a flexible working arrangement. He commented that because of the wife’s condition, she may need to take days off work and work shorter hours from time to time and that may be an impediment to getting and maintaining full time employment. In summary, the doctor said that the wife had the capacity for gainful employment generally and considered her fit to work in an office environment. He assessed in 2007 that the wife’s current capacity for gainful employment was about 20 hours per week spread over a full week.
It is clear that the wife has, since the assessment, during particular periods been able to manage working hours longer than that assessed by the doctor. I do however accept that the wife has underlying medical conditions which will restrict her ability to generate income. This is not a restriction to which the husband is subject. The husband also (apparently going to the issue of contributions) questioned the extent to which the wife had worked in the businesses of the company. I accept the wife will have difficulty maintaining full time employment, particularly having regard to her age and her work experience.
Getting some accurate view on the wife’s current earning capacity is a little difficult. In final submissions, counsel for the husband asserted that the wife’s income was $52,000.
Exhibit M is a collection of tax returns for the wife. The wife’s taxable income in the year ending 30 June 2007 was $15,244; in the year ending 30 June 2008 was $20,505; in the year ending 30 June 2009 was $57,218. Exhibit M also contains pay advices from the wife’s School.
Further, Annexure J6 provides NAB bank statements of the ‘[Ms Parsin]’ account. In the period from 1 April 2009 to 20 May 2009 (6 weeks) the wife received salaries in the total sum of $6,821.61 (average per week: $1,137). From the period of 21 November 2008 to 20 May 2009 the wife received salaries totalling $14,900.45 (average weekly income of approximately $573).
The wife submitted that all of her bank statements needed to be looked at and it if that was done, it would be clear that some periods are unusual and she has an opportunity to work extra hours.
The wife’s most recent financial statement filed on 31 July 2009 provides that the wife earns $757 per week (before tax - $757 x 52 = $39,364).
I was handed by counsel for the husband during final submissions a summary of the entries at Exhibit K (bank statements by the wife for the period 11 June 2009 to 6 August 2009). That indicated income from wages of a sum of $8,769 in a 13 week period (or $674.56 per week).
Whatever the true level of the wife’s earning capacity (and the above evidence indicates a range in which that might currently fall), it is clear that the wife’s earning capacity is significantly less than the husband’s which I will now discuss.

Husband’s salary – Mr GN’s view

Mr GN estimates the husband’s approximate salary in 2009 to be $160,000 per annum ($150,000 for 2008 and $140,000 for 2007) including superannuation for the roles and responsibilities performed by the husband.Although Mr GN in his oral evidence conceded that there was no readily available industry information in which to say, that is what a reasonable salary would be for someone with the husband’s roles, responsibilities and position, Mr GN explains that he assessed the husband’s salary by taking “some consideration to what the person undertaking responsibilities in the next level down within the organisation was being paid and some salary surveys at the time. Those salary surveys being accounting surveys, given that that was what the husband’s professional background and training is.”
From Mr GN’s recollection the next most senior person to the husband was paid marginally over $100,000.
Mr GN was asked by counsel for the husband about having considered the 2009 Hays Salary Survey (as listed at item 11 on appendix B, page 9 of Mr GN’s current report). Mr GN states that when assessing the husband’s salary Mr GN referred to the “professional practice heading” and within that heading he considered the “business services section”.

Husband’s salary – husband’s view

The husband in his affidavit sworn on 17 August 2009 stated that the reported salary on his 2008 Payment Summary was not a true reflection of his actual earnings during the 2007/ 2008 financial year. The husband states that, “To reduce my liability to [Parsins] pre-Administration, the balance of loans owed to the company by me were offset against unpaid salary resulting in an abnormal salary of $231,667 being reported on my payment summary and my loans were reduced to nil” [paragraph 196]. In regards to his salary for the 2008/2009 financial year the husband states that he received $116,666 from Parsin Group [paragraph 199].

Conclusion about the husband’s earning capacity

I commented during the trial that no remuneration expert had been employed to give evidence in a more usual way as to the husband’s remuneration entitlements. Mr GN’s evidence is the best evidence I have and I accept that he was sufficiently qualified to give the evidence that he did.
I accept that the appropriate level to assess the husband’s earnings, consistent with the other valuation of his business, is in the sum of $160,000.
Counsel for the husband warned me about placing too much weight on that fact because it was asserted that it would involve “double counting”. I do not see how that is so. The husband’s notional wage has been debited by Mr GN as an expense of the company. As a consequence, the net maintainable earnings of the business operations have been reduced. It is those earnings which form the basis of the valuation. Consequently the valuation has been reduced by the fact that Mr GN has attributed wages in the sum that he has to the husband. If in fact the husband’s income earning capacity is less than the amount ascribed by Mr GN the valuation of the business activities would be higher because there would be more maintainable earnings to capitalise. It would in fact be double counting if one did not assume that the husband had a wage at the level Mr GN had ascribed to him.

The other argument that counsel for the husband advanced was that two years ago the husband tried to sell the company but there had been no takers. As counsel for the husband pointed out, Mr GN has valued the business operations of the husband on the basis of the value that it has for the husband rather than on the basis of any sale to a third party. Counsel for the husband did not seek to challenge Mr GN’s methodology in final submissions and accepted for the purposes of balance sheet valuations the values ascribed to various parts of the husband’s business activities by Mr GN. I accept that Mr GN has adopted the correct methodology. The husband is 56 years of age. He is in good health and I have no evidence whatsoever that he intends to retire any time soon. I find that his business operations will continue to generate the income predicted by Mr GN into the foreseeable future.
The husband’s income of $160,000 per annum has to be compared with the wife’s level of income.
Based on contribution findings, the parties will equally share in the marital assets.
Counsel for the husband made the point during final submissions that the wife would be able to generate income from those assets and otherwise use those assets for her future.
The wife’s evidence however is that she currently does not own a home. She described herself as somewhat of a nomad with four places at which she could stay. One of those places is the old business premises at Y. The wife has done some alterations to those premises to enable her to be able to stay there on an occasional basis. The husband attempts to rely upon an advertisement placed by the wife which asserts that those premises could be leased at a figure of $35,000 (which is half the market rent). I have no evidence at all that the original Y offices could currently be rented for $70,000 and that assertion by the husband seems to be improbable when one considers the agreed value of that particular property ($70,000 would be a rental which would be inherently unlikely given the agreed value of the property).
In contrast with the wife’s accommodation situation, the husband and his new wife have purchased a new home at W. Senior counsel for the husband initially requested that I accept evidence going to the issue as to problems with that acquisition, but in the end the application to adduce that evidence was not pressed. The husband will, as a result of distribution of assets, retain his interest in the Parsin Group. What comes with that is the ability to generate an income as referred to above which Mr GN has most recently assessed at $160,000.
There is no doubt the husband and wife maintained a good standard of living throughout their marriage. There is however some restriction on the ability of the parties to maintain that standard of living now that they are apart.
I accept that the wife’s earning capacity has been affected over a period of 31 years by the fact that she devoted herself to the role of homemaker and primary caregiver to the four children of the marriage (in addition to the problems that I have discussed above in relation to her current state of health).
The wife is not cohabiting with any other person. The husband has remarried and lives with his new wife, GH, and has been doing so for in excess of four years. Ms GH has assets which have from time to time been made available to the husband and have allowed the husband, jointly with his new wife, to acquire a property in W.

Conclusion in relation to adjustments pursuant to s 79(4)(d) - (g) FLA

The major matter to take into consideration is the respective ability of the parties to regenerate capital through future earning income. There is no doubt that the wife has been left in a far weaker state in that regard as a result of the history of the marriage and her health when compared with the husband.
Taking all s 79(4)(d) - (g) matters into account, I find that it is appropriate to make a 5 percent adjustment in favour of the wife.

JUST AND EQUITABLE

The result of my conclusions in relation to contributions and s 79(4)(d) - (g) matters leads to the result that there would be an adjustment as to 55 percent of the assets to the wife and 45 percent of the assets to the husband.
In final submissions, the wife indicated that given her need to re-establish herself (and particularly reaccommodate herself), she would ask that she receive the balance of the monies in the controlled monies account, the loan that is owing from her son B Parsin, the company P International Pty Limited (which owns the old Y office) together with loans payable by that company to the parties. She also wanted the joint furniture and household items (which are all in her current possession) and the Honda Civic and banking accounts. In relation to the superannuation, she did not want transferred to her in specie the E property, but rather receive the shares. She would also seek a cash adjustment.
In relation to how assets should be divided, in specie, the husband gave evidence that he expected the wife should take the interest in the E property in the superannuation fund because the other co-owner was the wife’s brother-in-law.
I need to recognise that there is not a large amount of liquidity in the balance sheets, nor is there real estate that could easily be sold. Many of the items on the balance sheet are illusionary because they are amounts credited against one party or the other as a result of monies already expended by them and do not represent real assets today. The major actual assets that exist today are the business that is owned and operated by the husband and the company P International Pty Ltd which will be retained by the wife (which admittedly has real estate on its books). The other major real assets held by the parties are held in the superannuation fund.
The distribution of assets therefore, which requires the husband to make a payment to the wife, has to be structured in a way that the husband will be able to manage by way of financing. I have little evidence about that topic.
I infer the husband has some ability to generate cash flow through his business in a way which is superior to the wife’s ability to save from her earnings, but I need to balance the wife’s need for liquid funds against the husband’s ability to finance a payout to the wife. It may be that the wife can access some part of her superannuation fund (by for example making an application on the grounds of hardship). I have no evidence about that one way or the other, however, I think it is appropriate to attempt to place into the wife’s hands a superannuation interest so as to ameliorate the amount of cash the husband has to raise and I also am attracted to the idea that if the wife takes the interest in the E property, she may be more easily able to liquidate that property with the cooperation of her brother-in-law.
The percentage division of assets and liabilities between the parties could be affected by the following distribution with the husband making a payment to the wife in the sum of $143,396. In addition, the wife will receive the liquid funds in the controlled monies account ($74,304).

H gets 45.0%
Assets
Item No.	Description		Percentage	Value
3	Parsin Group Pty Ltd		100%	$426,000
6	Furniture and household items		100%	$16,000
9	W property		100%	$84,000
10	St George Bank a/c no. …448		100%	$47,953
11	Suite at Y (1/2 share with GH)		100%	$197,500
12	IAG shares		100%	$2,815
13	AMP share		100%	$3,339
14	Mazda 6		100%	$9,680
15	Loan payable to P International Pty Ltd		100%	$12,849
16	Loan payable by Parsin Superannuation Fund		100%	$652
19	Interim property distribution to husband to assist in purchase of property and to pay down debts (less monies invested in property and bank accounts)		100%	$118,063
20	paid legal fees of husband (see Exhibit C)		100%	$255,749
21	Wedding costs incurred by husband in regard to the marriage with his current wife paid from joint funds		100%	$13,000
22	Monies paid by B Parsin pursuant to a loan to both parties		100%	$10,000
23	Total amount of the monies which are the subject of a claim for waste as against the husband (see paras 11.1 to 11.10 wife's summary of argument)		100%	$0
24	Monies paid by P International Pty Ltd to husband's current wife in April 2008		100%	$0
25	Monies paid by Parsin Superannuation Fund to husband for shares in F Limited in February/March 2008; later valued at nil		100%	$24,800
26	Monies from the shareholder's loan accounts utilised by the husband for his sole expenses		100%	$0
27	rental received by P International from Parsin Group since separation not accounted for by the husband		100%	$0
43	Hesta		100%	$5,441
44	Parsin Superannuation Fund		67.4%	$234,329
Liabilities
Item No.	Description		Percentage	Value
28	Capital gains tax payable on the winding up of P International pty Ltd		100%	$0
32	Lease from Centregy		100%	$0
33	Loan payable by husband to Parsin Group Pty Ltd		100%	$4,794
34	Capital gains taxation payable by husband		100%	$42,392
35	50% liability to St George Bank regarding loan secured by suite at Y		100%	$144,895
36	Income taxation owing from previous financial year		100%	$0
37	Loan (now repaid) for legal fees to husband’s new wife		100%	$0
38	Loan (now repaid) for legal fees to husband’s new wife		100%	$0
39	Paid monies from Parsin Superannuation Fund for legal fees		100%	$0
40	Credit card debts		100%	$0
41	One half of the costs for the sale of E property, the sale of N property and the parties’ mediation		100%	$10,110
H pays W			$143,396
Net Assets			$1,116,583
W gets 55.0%
Item No.		Description	Percentage	Value
1		Balance of monies in controlled monies account	100%	$74,304
2		Loan to B Parsin	100%	$87,891
4		P International Pty Ltd	100%	$270,000
5		Loan payable by P International Pty Ltd	100%	$163,934
7		Honda Civic	100%	$10,100
8		Banking accounts	100%	$4,203
17		Interim property distribution to wife to pay legal fees	100%	$300,000
18		Payment of legal fees	100%	$57,050
42		Parsin Superannuation Fund	100%	$216,917
44		Parsin Superannuation Fund	32.6%	$113,083
Liabilities
Item No.		Description	Percentage	Value
29		Credit card debts	100%	$3,543
30		Loan from family members	100%	$65,129
31		Capital gains taxation payable by wife	100%	$7,493
W receives			$143,396
Net Assets			$1,364,713

The wife will receive by way of transfer into a superannuation fund nominated by her, the interest in the E property. Standing back, I consider a distribution of assets and liabilities in accordance with the above table to be just and equitable.

PROPOSED ORDERS

Counsel for the wife seemed, as a result of questions he asked in cross examination, to complain that sale of shares in F Limited to the superannuation fund may not have been in compliance with the rules relating to the sale of members’ assets to a fund (but that is a different matter and would only go to reduce the overall pool if there was a liability owing by the fund because of issues around non compliance). I have not brought into account in the balance sheet any allowance for the fact that the Parsin Superannuation Fund might be liable as a result of non compliance with the rules governing self managed superannuation funds. I find that it is appropriate that should non compliance issues be brought to the attention of the Australian Taxation Office, both parties equally share in any payments that have to be made because of that non compliance. I make that order on the basis that if any such liability exists, it hasn’t been put onto the balance sheet and I am not otherwise satisfied that if it was put on the balance sheet that the husband should be entirely responsible for it.

I certify that the preceding one hundred and sixty-two (162) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts.

Associate:

Date: 30 June 2010

[2010] FamCA 529

30 June 2010

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