Pavlic & Pavlic (No 2)

[2022] FedCFamC2F 1453

Federal Circuit and Family Court of Australia

(DIVISION 2)

Pavlic & Pavlic (No 2) [2022] FedCFamC2F 1453

File number(s):

MLC 6470 of 2020

Judgment of:

DEPUTY CHIEF JUDGE MCCLELLAND

Date of judgment:

28 October 2022

Catchwords:

FAMILY LAW – PROPERTY – Application for an adjustment under s 79 of the Family Law Act 1975 (Cth) – Where the parties own multiple properties and a family business – Where the parties agree that contributions during the relationship and post-separation are equal – Husband’s earning capacity considerably greater than that of the wife – adjustment of 7 per cent made in favour of the wife – Wife afforded opportunity to purchase the husband’s interest in the former matrimonial home.

Legislation:

Corporations Act 2001 (Cth) ss 181, 182

Evidence Act 1995 (Cth) ss 76, 79, 140(2)

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

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Pt 12.3

Cases cited:

Babett & Falconer (2015) FLC 98-067; [2015] FamCAFC 124

C & C (2005) FLC 93-220; [2005] FamCA 429

Dickons & Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154

DJM v JLM (1998) FLC 92-816; [1998] FamCA 97

Dovgan & Dovgan [2021] FamCA 306

Hickey and Hickey and Attorney-General (Cth) (2003) FLC 93-143; [2003] FamCA 395

Jabour & Jabour (2019) 59 Fam LR 475; [2019] FamCAFC 78

Kildea v Kildea (2007) 38 Fam LR 347; [2007] FamCA 1524

Kowaliw & Kowaliw (1981) FLC 91-092; [1981] FamCA 70

Manolis v Manolis (No 2) [2011] FamCAFC 105

AJO & GRO (2005) FLC 93-218; [2005] FamCA 195

Perrin & Perrin (No 2) [2018] FamCAFC 122

Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52

Townsend & Townsend (1995) FLC 92-569; [1994] FamCA 144

Trevi and Trevi (2018) FLC 93-858; [2018] FamCAFC 173

Division:

Division 2 Family Law

Number of paragraphs:

170

Date of hearing:

26–28 April 2022

Place:

Melbourne

Counsel for the Applicant:

Mr McIvor

Solicitor for the Applicant:

Coote Family Lawyers

The Respondent:

Litigant in person

ORDERS

MLC 6470 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

MR PAVLIC

Applicant

AND:

MS PAVLIC

Respondent

order made by:	DEPUTY CHIEF JUDGE MCCLELLAND
DATE OF ORDER:	28 OCTOBER 2022

THE COURT ORDERS THAT:

B Pty Ltd

1.The parties forthwith do all acts and things and sign all documents necessary to list the business operated by B Pty Ltd ("B Pty Ltd") for sale with a selling agent, with all plant and equipment and motor vehicles owned by the business to be included in the sale, namely:

(a)The Motor Vehicle 1;

(b)The Motor Vehicle 2 ;

(c)The Motor Vehicle 3; and

(d)The Truck;

2.The selling agent is to be as agreed by the parties or, in the absence of agreement:

(a)Within 14 days, the Husband is to nominate three (3) selling agents; and

(b)Within 7 days of receipt of those agents’ details, the Wife is to select one agent from that list to sell the business.

3.The parties follow the reasonable recommendations of the selling agent in relation to listing B Pty Ltd for sale including, but not limited to, resigning as officeholders, transferring shareholdings and transferring the registration of any assets that are to be sold with or from B Pty Ltd.

4.The parties instruct the selling agent to list B Pty Ltd at an agreed price or, failing agreement, the parties are to follow the reasonable recommendations of the selling agent.

5.Upon sale of the business and the motor vehicles, the net sale proceeds be applied as follows:

(a)Firstly, to any sales and commission costs;

(b)Secondly, to discharge any hire-purchase liabilities and any other business liabilities, save for the B Pty Ltd tax debt; and

(c)Finally, the balance then remaining to be divided between the parties as 57% to the Wife and 43% to the Husband.

C Street, Suburb D property

6.Within 30 days of the date of these Orders, the Wife provide evidence to the Husband of her capacity to make a payment to the Husband in the sum of $287,632;

7.Within 60 days of the date of these Orders, the Wife make the payment in the sum of $287,632 to the Husband ("the Wife’s payment");

8.Contemporaneously with the Wife’s payment, the parties do all acts and things and sign any documents necessary to transfer the Husband's right, title and interest in the real property situated at C Street, Suburb D, Victoria (more particularly described as the whole of the land in Certificate of Title Volume …, Folio …) ("the C Street, Suburb D property") to the Wife at her sole expense;

9.In the event that the Wife is unable to provide evidence of her capacity to make the payment in accordance with Order (6) herein, the Husband be provided with an option to retain the C Street, Suburb D property and he is to confirm his option to retain the real property in writing within 14 days;

10.In the event that the Husband chooses to retain the C Street, Suburb D property, he is to pay the Wife the sum of $1,332,286 (“the Husband’s payment”) within 60 days of exercising his option to retain the real property;

11.Contemporaneously with the Husband's payment, the parties do all acts and things and sign any documents necessary to transfer the Wife's right, title and interest in the C Street, Suburb D property to the Husband at his sole expense;

12.In the event that the Husband is unable to make the payment at Order (10) herein, the C Street, Suburb D property be listed for default sale with a selling agent as agreed between the parties as follows:

(a)Within 14 days, the Husband is to nominate three (3) selling agents; and

(b)Within 7 days of receipt of those agents’ details, the Wife is to select one agent from that list to sell the property.

13.The parties are to co-operate in every way with the selling agent in relation to the marketing of the C Street, Suburb D property for sale including, but not limited to, making the key readily available, allowing inspection of the property at all times reasonably requested by the agent and ensuring that the property is in good order at the time of inspection by any prospective buyer.

14.Upon agreement being reached for the sale of the property, the parties shall execute the contract of sale and all other documents necessary to complete the sale, including all transfer documentation forthwith upon its submission to them by the agent or their solicitor.

15.The default sale proceeds of the C Street, Suburb D property are to be applied as follows:

(a)Firstly, to pay the sales and commissions costs;

(b)Secondly, to pay any outstanding utilities and rates notices; and

(c)Finally, the balance remaining to be divided between the parties as 57 per cent to the Wife and 43 per cent to the Husband.

E Street, Suburb F & G Street, Town H properties

16.Within 60 days, the parties do all acts and things and sign any documents necessary to transfer their right, title and interest in the real properties situated at:

(a)E Street, Suburb F, Victoria (more particularly described as the whole of the land in Certificate of Title Volume …, Folio …) to the Husband at his sole expense; and

(b)G Street, Town H, Victoria (more particularly described as the whole of the land in Certificate of Title Volume …, Folio …) to the Wife at her sole expense.

Collection of belongings

17.Within 14 days, the Husband, at his sole expense, collect the following chattels from the C Street, Suburb D property:

(a)The J painting.

18.Except as otherwise provided in these Orders, the Husband indemnify the wife and keep her indemnified against all liability of or in relation to B Pty Ltd, including any debt personally guaranteed by the Wife and including any tax liability (including capital gains), penalties, fines and interest assessed or hereafter assessed against the Wife with respect to income derived, distributed or otherwise received by her from B Pty Ltd or any amount owed by the Wife to B Pty Ltd and from all actions, proceedings, costs, claims and demands in respect thereof.

Declaration & Indemnity

19.Save for the purposes of enforcing monies due under these or any subsequent Orders, the Husband otherwise retain, to the exclusion of the Wife, all of his right, title and interest in the following:

(a)Any bank accounts in his sole name;

(b)His superannuation entitlements;

(c)His interest in the horses;

(d)The balance of the sale proceeds in the sum of $44,500 currently held in the Coote Family Lawyers trust account;

(e)ANZ One account – $1600; 

(f)The E Street, Suburb F property; and

(g)The furniture, chattels and personal effects in his possession.

20.The Husband shall otherwise assume sole responsibility for any loan or liability whatsoever, past, present or otherwise in his name and any liability encumbering any item of property to which the Husband is entitled pursuant to these Orders (“the Husband's debts”) and the Husband shall indemnify the Wife for all time and keep her indemnified in respect of all liability arising from the Husband's debts, including but not limited to:

(a)His Company K debt;

(b)Westpac Altitude Platinum credit card ending in #...;

(c)Any tax debt, including capital gains tax, in the Husband's name; and

(d)The director's loan from L Pty Ltd.

21.Save for the purposes of enforcing monies due under these or any subsequent Orders, the Wife otherwise retain, to the exclusion of the Husband, all of her right, title and interest in the following:

(a)Any bank accounts in her sole name;

(b)Her Company M shares;

(c)Her superannuation entitlements;

(d)The G Street, Town H property; and

(e)The furniture, chattels and personal effects in her possession.

22.The Wife shall otherwise assume sole responsibility for any loan or liability whatsoever, past, present or otherwise in her name and any liability encumbering any item of property to which the Wife is entitled pursuant to these Orders (“the Wife's debts”) and the Wife shall indemnify the Husband for all time and keep him indemnified in respect of all liability arising from the Wife's debts, including but not limited to any tax debt, including capital gains tax in the Wife's name.

Partnership

23.Within thirty (30) days of the date of these Orders, the parties shall do all acts and things and sign all documents necessary to finalise any outstanding financial accounts of the family partnership Mr Pavlic and Ms Pavlic, and the Husband indemnify the Wife in relation to any and all liabilities associated with the partnership including, but not limited to, tax liabilities.

Other property

24.Unless otherwise specified in these Orders and save for the purposes of enforcing monies due under these or any subsequent Orders:

(a)Each party be solely entitled, to the exclusion of the other, to all 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 joint bank account shall be divided between the parties as 57 per cent to the Wife and 43 per cent to the Husband;

(c)Insurance policies remain the sole property of the policy holder;

(d)Each party be solely liable for and indemnify the other against any other liability encumbering any item of property to which that party is entitled pursuant to these Orders; and

(e)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

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 Pavlic & Pavlic (No 2) has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

DEPUTY CHIEF JUDGE MCCLELLAND:

INTRODUCTION

1. This matter concerns an application for property adjustment orders brought by Mr Pavlic (“the husband”) after the breakdown of the parties’ 24 year relationship and a marriage spanning just over 19 years. The husband and Ms Pavlic (“the wife”) have two adult children together, who continue to reside in the former matrimonial home with the wife.

2. At the commencement of the parties’ relationship, the wife was working as a transport worker and the husband was working in the building industry. After commencing living together, the parties jointly established and ran a successful company, B Pty Ltd (“B Pty Ltd”) that primarily undertakes commercial construction. The business provided a comfortable standard of living for the parties and their children. It also enabled them to expand their property portfolio and for the husband to invest in the purchase and training of horses.

3. The work undertaken by that business has declined since the parties separated. The wife contends the decline is due to the husband shifting business to his brother’s building company of which the husband is a director. I have not found that to be the case. In any event, neither party wishes to retain B Pty Ltd and it has not been valued by a qualified valuer. It must therefore be sold. To his credit, in the event that the sale price is insufficient to meet the liabilities of the business, the husband undertakes to indemnify the wife in respect to those liabilities.

4. For the purposes of s 79(4) of the Family Law Act 1975 (Cth) (“the Act”), the parties agree their contributions have been equal. The husband acknowledges he has a superior earning capacity than the wife but it is only such that she should receive a 2 per cent adjustment in her favour, pursuant to s 75(2). I have found the disparity in earning capacity, together with the fact that the husband has access to a financial resource in the form of an ability to obtain directors loans in his capacity of director of his brother’s business, to be such that the wife should obtain an adjustment, pursuant to s 75(2), of 7 per cent.

5. The wife wishes to have the opportunity to retain the former matrimonial home and the husband agrees to orders that will permit that to occur in the event that she is able to raise sufficient funds to acquire his adjusted interest in that property. The orders reflect that position.

6. The orders also provide for each party to retain an interest in separate investment properties.

7. The orders otherwise provide for the parties’ assets, superannuation and liabilities to fall where they lay in each parties’ hands.

   Documents relied upon

8. The applicant husband relied upon the following documents:

   ·Amended Initiating Application for Final Orders filed 5 April 2022;

   ·Affidavit of the husband filed 5 April 2022;

   ·Further Updated Financial Statement filed 5 April 2022;

   ·Affidavit of Mr N filed 6 December 2021;

   ·Affidavit of Mr O filed 6 December 2021;

   ·Affidavit of Mr P filed 6 December 2021;

   ·Affidavit of Ms Q filed 6 December 2021;

   ·Affidavit of Mr R filed 23 November 2020;

   ·Amended minute of order (marked Exhibit “1”);

   ·Amended property pool (marked Exhibit “2”); and

   ·Coote Family Lawyers tender bundle (marked Exhibit “3”).

9. The respondent wife relies upon the following documents:

   ·Amended Response filed 9 August 2021;

   ·Affidavit of the wife filed 25 April 2022;

   ·Financial Statement filed 3 August 2021;

   ·Orders made on 5 August 2020 (marked Exhibit “4”);

   ·L Pty Ltd NAB account ending in #... (marked Exhibit “5”);

   ·Bundle of documents relating to the wife’s taxation liabilities (marked Exhibit “6”);

   ·Covering email from Company S to B Pty Ltd dated 12 October 2018 (marked Exhibit “7”); and

   ·Unsworn Financial Statement of the wife provided 27 April 2022 (marked Exhibit “8”).

   Background

10. The applicant is 47 years of age and operates a business that provides trades services in the building industry. The respondent is now 48 years old and is currently employed as a transport worker with a major transport company.

11. The parties commenced their relationship in 1994 and were married in 1999. The parties separated in November 2018, at which time the husband vacated the former matrimonial home located at C Street, Suburb D, in the state of Victoria. The husband then moved into a rental property at T Street, Suburb D whilst the wife continued to live in the former matrimonial home.

12. The parties have two children: Mr U, born in 2001, who is now 21 years of age and Ms V, born in 2003, who is now 19 years of age. Both adult children reside with the wife in the former matrimonial home and also regularly visit the husband. 

13. At the time the parties met, the husband was employed as a tradesman while the wife was employed as a transport worker with a major transport company. It is not disputed that the parties did not, at that time, have significant assets or superannuation.

14. The parties lived in various rental properties prior to moving into the former matrimonial home in 2005.

15. The wife took approximately 12 months of maternity leave after Mr U’s birth. The wife then returned to work in her previous employment and continued to work until she gave birth to Ms V in 2003.

16. It is not disputed that after this time, the wife assumed the role of primary carer of the children and was the homemaker while the husband was the primary breadwinner. The parties agree, appropriately, in my view, that they both made contributions to the best of their ability in their respective spheres and that their contributions, during the course of their relationship, should be regarded as being equal. 

17. In 2003, the parties purchased residential land at W Street, Suburb X (“the W Street, Suburb X property”) for the sum of $92,000.

18. In 2004, the husband registered the company, B Pty Ltd, through which he conducted a trades business.  Since its inception, the husband has been the sole director. The husband holds one founder share and the wife holds the remaining one ordinary share. 

19. In 2005, the parties purchased the former matrimonial home for the sum of $320,000. 

20. In 2005, the parties purchased a 50 per cent interest in a property at G Street, Town H (“the G Street, Town H property”) for the sum of $110,000. The remaining 50 per cent interest was purchased by the wife’s sister and the wife’s brother-in-law. The property is held on the basis that the owners are tenants in common, with the parties to these proceedings holding one of two equal shares. 

21. In 2008, the parties purchased a property at C Street, Suburb D, (“the C Street, Suburb D property) for the sum of $511,000, which was subsequently renovated into two townhouses. The parties were registered as joint proprietors of the townhouses, which were leased out to tenants after the renovations had been undertaken. 

22. In 2010, the parties purchased a property at E Street, Suburb F, (“the E Street, Suburb F property”) for approximately $520,000. B Pty Ltd operates from that property and the parties are joint proprietors. 

1. On 6 December 2012, the parties purchased a unit at Y Street, Suburb Z (“the Suburb Z property”) which was registered in the wife’s sole name. After the purchase, that property was also tenanted, with the rental income being paid into the parties’ joint account ending in #... during the course of the parties’ relationship. That continued to be the case until approximately 15 July 2020, at which time rental income was deposited into the wife’s personal account.

2. In May 2018, the parties purchased a property at AB Street, Suburb AC (“the AB Street, Suburb AC property”) for the sum of $950,000. The property was purchased as an investment property, with both of the parties being registered as joint proprietors. During the course of the parties’ relationship, the rental income received for the property was also deposited into the parties’ joint ANZ account ending in #..... 

3. The wife was not challenged on her evidence that all of the parties’ properties were encumbered by various cross-collateral mortgages with ANZ bank and the Bank AD such that, at the time of separation, the parties had approximately $3,173,676 owing in respect to their respective mortgages.

4. On 5 August 2020, orders were made for the parties to sell the W Street, Suburb X property.

5. On 23 November 2020, consent orders were made to sell the C Street, Suburb D property, the Suburb Z property and the AB Street, Suburb AC property.

6. It was not disputed that by 11 June 2021, all four properties had been sold and the proceeds of sale were applied as follows:

   (a)To sales and commission costs;

   (b)To discharge the ANZ and Bank AD mortgages;

   (c)On 12 July 2021, the sum of $45,194.32 to the wife’s ANZ account ending in #... by way of an interim partial property settlement payment;

   (d)On 12 July 2021, the sum of $45,194.31 to the husband’s ANZ account ending in #.... by way of an interim partial property settlement payment; and

   (e)The remaining balance of $44,500 deposited in the trust account of Coote Family Lawyers, who are the lawyers representing the husband in these proceedings.

7. As noted, the parties agree that they had relatively little by way of assets at the commencement of their relationship.

8. The parties also agree that their contributions during the course of their marriage and subsequent to their separation should be regarded as equal.

9. I will deal with the parties’ evidence in respect to the current circumstances in considering the matters set out in s 75(2) of the Act.

   Legal principles

10. In respect to the parties’ dispute regarding the division of their property in these proceedings, s 79 of the Act sets out the following:

    (1)In property settlement proceedings, the court may make such order as it considers appropriate:

    (a)in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or

    …

    including:

    (c)an order for a settlement of property in substitution for any interest in the property; and

    (d)an order requiring:

    (i)        either or both of the parties to the marriage; or

    …

    to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.

    …

    (2) The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.

11. In exercising that discretion, the Court is required to take into account the matters set out in s 79(4) of the Act, as follows:

    (4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:

    (a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and

    (b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and

    (c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and

    (d)the effect of any proposed order upon the earning capacity of either party to the marriage; and

    (e)the matters referred to in subsection 75(2) so far as they are relevant; and

    (f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and

    (g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.

12. The High Court at [35] in Stanford v Stanford (2012) 247 CLR 108 (“Stanford”) confirmed that before an order is made adjusting the parties’ property, the Court is required to make a determination that it is just and equitable to do so. That determination is to be made, however, not as a discrete or preliminary issue but in light of the requirement for the Court to consider the matters set out in s 79(4) of the Act.

13. In the leading case of Hickey and Hickey and Attorney-General (Cth) (2003) FLC 93-143, the Full Court held at [39] that, in considering the matters set out in s 79(4) of the Act, the preferred approach was to adhere to the following four steps:

    (1)Identify and determine the value of the parties’ asset pool as at the date of the hearing (this necessarily involves identifying both the assets and liabilities);

    (2)Identify and assess each of the parties’ financial and other contributions up until the date of the hearing (this can include the financial contributions made before, during and after the marriage);

    (3)Assess how future and other events may have a financial impact on either of the parties, such as their age, state of health, income and property or financial resources (known as the s 75(2) factors); and

    (4)Step back and examine this formula-based reasoning against the history of the marriage, intangible considerations and other contingencies so as to consider whether the outcome represents a just and equitable result.

14. That approach had been endorsed many times.[1] However, as the High Court noted at [35] in Stanford, s 79(2) of the Act provides that the Court shall not make an order altering the interests of the parties to the matrimonial property “unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Accordingly, since Stanford, it has generally been the practice of the Court to determine, as an initial issue, whether it is just and equitable to make an adjustment of marital property.

    [1] See, for example: Manolis v Manolis (No 2) [2011] FamCAFC 105 at [63] (per Coleman, May and Ainslie-Wallace JJ); Kildea v Kildea (2007) 38 Fam LR 347 at [104] (per Finn, May and Boland JJ); C & C (2005) FLC 93-220 at [22] (per Bryant CJ, Finn and Coleman JJ) and [142] (per O’Ryan J).

15. The Full Court at [57]–[58] in Perrin & Perrin (No 2) [2018] FamCAFC 122 cited, with approval, the decision in Babett & Falconer (2015) FLC 98-067 at [44]:

    Within the family law context, those comments [in respect to the adequacy of reasons] should be seen as reinforced by the fact that the nature of the s 79 inquiry is, in essence, a broad discretionary assessment, which is neither an accounting nor mathematical exercise and which, effectively as a corollary, requires a "broad-brush approach".

    (Citations omitted)

    Is it just and equitable to make a property adjustment?

16. The parties’ final separation was in November 2018. The separation brought an end to their common use of property and that separation was voluntary. Both parties seek that the Court makes property settlement orders pursuant to s 79 of the Act. Consistent with Stanford at [22], the just and equitable requirement in s 79(2) of the Act is readily satisfied.

    The balance sheet

17. In identifying the parties’ assets and liabilities, the Court was assisted by a balance sheet prepared by the husband and dated 27 April 2022 (marked Exhibit “2”). Working through that document, the parties were able to reach agreement in respect to the following assets:

Asset	Ownership	Value
C Street, Suburb D property	Jointly owned	$2 million
E Street, Suburb F property	Jointly owned	$850,000
G Street, Town H property	50 per cent owned by the parties	$315,000
Mr Pavlic & Mr Pavlic Partnership	Jointly owned	Nil
Funds in Coote Family Lawyers trust account	Jointly owned	$44,500[2]
ANZ One offset account	Jointly owned	$1,600[3]
ANZ account #...	Husband	$191
Westpac cash investment account #...	Husband	Nil
Westpac equities account #...	Husband	$17,729[4]
ANZ account #...	Wife	$121[5]
Company M shares	Wife	$5,000[6]

[2] Transcript 28 April 2022, p.164 lines 6–15.

[3] Transcript 28 April 2022, p.167 lines 26–28.

[4] Transcript 28 April 2022, p.168 lines 22–24.

[5] Transcript 28 April 2022, p.169 lines 6–9.

[6] Transcript 28 April 2022, p.135 lines 42–44.

1. The wife did not agree to the value of the item included in Exhibit 2 identified as “ANZ account #... - $10,688”. At the hearing, the wife contended that the balance in that account is an amount of $1,284.91.[7] In the absence of evidence presented by the husband as to the existence of funds in the sum of $10,688 in that account, I will accept the evidence of the wife that the existing amount is $1,284.91, being an admission against interest in circumstances where that amount will be deducted from the final allocation of property to her as being property already in her possession.

   [7] Transcript 28 April 2022, p.168 lines 26–30.

2. At paragraph 49 of her affidavit, the wife sets out what she contends is additional property owned by the parties which I have not dealt with immediately above. It is convenient to consider each item separately to explain how I have treated them on the parties’ joint balance sheet.

3. At item 6 of paragraph 49 of her affidavit, the wife asserts that the husband has an unknown interest in a company owned by his brother, Mr R, known as L Pty Ltd (“L Pty Ltd”). The husband and the husband’s brother gave evidence in these proceedings that the husband became a director of that company to assist his brother, in circumstances where the husband has a builder’s licence: a necessary precondition for L Pty Ltd to submit tenders in respect to certain building work. Both men attested that the husband does not have an interest in L Pty Ltd. They both gave evidence in a clear, direct and responsive manner and the veracity of the evidence they gave was not diminished in cross-examination. I accept the evidence that the husband does not have an interest in L Pty Ltd. Moreover, that company is not a party to the proceedings, with the wife releasing L Pty Ltd from the proceedings by consent orders entered into on 1 October 2021. Further, there is no valuation of that company available. Accordingly, I do not include that company on the balance sheet. 

4. Similarly at item 7, the wife contends an unknown amount in respect to AE Pty Ltd (“AE Pty Ltd”). The husband’s brother gave evidence that L Pty Ltd is the sole shareholder of AE Pty Ltd and that the husband does not have an interest in that company. For reasons which I explained previously, I accept the veracity of that evidence and do not include AE Pty Ltd on the balance sheet. 

5. At item 8, the wife asserted that the husband has an unknown interest in the AF Unit Trust. In response to questions from the wife in cross-examination, the husband attested that the unit trust was established by both himself and the wife but that the trust has never operated.[8] The wife did not press the husband on those answers that he gave, nor did she present any evidence to counter or challenge the accuracy of the evidence provided by the husband. In circumstances where I accept the husband as a truthful witness, I accept that there are no assets in that unit trust and I do not include that item on the balance sheet. 

   [8] Transcript 27 April 2022, p.51 line 39 to p.52 line 11.

6. At item 9, the wife contends that the husband holds the amount of $11,348 in an ANZ account ending in #.... As I have noted, however, the wife agreed that the balance in that account as at the date of the hearing was $191.[9] I have earlier included that item as an agreed item on the balance sheet. 

   [9] Transcript 28 April 2022, p.168 lines 12–15.

7. At item 10, the wife contends that the husband also holds an amount of $11,348 in a Westpac Equities account ending in #.... It is to the credit of the husband that, despite the wife’s assertion of that amount, the husband acknowledges in his balance sheet that the amount in that account is currently $17,729. As previously noted, the wife agreed to the accuracy of that assertion by the husband and it is that higher amount which I have included in the balance sheet. 

8. At items 12, 13, 14, 16, 17, 19, 20 and 21, the wife contends that the husband, herself, B Pty Ltd or the parties jointly, hold various unknown amounts in the 8 bank accounts there identified. The wife has not, however, provided any evidence that sustains a finding that her assertions in that respect are accurate. In the absence of such evidence, I do not include those items in the balance sheet.

9. At item 18, the wife refers to an unknown amount in a jointly owned ANZ offset account. As previously noted, the wife agreed that, as at the date of hearing, there was an amount of $1,600 in that account.[10] I have already included that amount on the balance sheet.

   [10] Transcript 28 April 2022, p.167 lines 26–28.

10. At item 23, the wife contends that the husband has an unspecified shareholding in a company called Company AG. In giving oral evidence in response to the affidavit of the wife, the husband acknowledged that he has an interest in that company but the value of that interest is included in the Westpac Equities account, which currently has a balance of $17,729 and has already been included in the balance sheet. The husband was not challenged on that evidence.  Accordingly, I do not include, as a separate amount in the balance sheet, an item in respect to what the wife contends is an unknown value of shares that the husband has in Company AG.

11. At item 24, the wife further contends that the husband has shareholdings to an unknown value in a company titled Company AH. In giving oral evidence in response to that assertion, the husband acknowledged once investing the amount of $3,000 in that company, however he is of the understanding that the company is not currently listed and has received no correspondence from the company for a long time. He therefore assumes that he has lost the amount which he invested in that company.[11] Again, the husband was not challenged on that evidence, which I accept as being accurate. Accordingly, I do not include that item on the balance sheet.

    [11] Transcript 27 April 2022, p.41 lines 1–4.

12. The wife asserts at item 25 that the husband has a shareholding to an unknown value in a company titled Company AJ, previously known as Company AK. In giving oral evidence in response to that contention, the husband acknowledged that he previously had a shareholding in that company, however he stated that he and the wife signed the relevant paperwork to sell the shares, which were subsequently sold.[12] Again, the husband was not challenged on that evidence, which I accept as accurate. I do not, therefore, include that item on the balance sheet.

    [12] Transcript 27 April 2022, p.41 lines 6–13.

13. At items 29 through to 43, the wife lists various collectible items, noting beside those items her estimated value or an unknown value. In the context of property proceedings where the rules of evidence apply, the wife’s opinion as to the value of those items is inadmissible.[13]  Accordingly, I have not included those items on the balance sheet. 

    [13] Evidence Act 1995 (Cth) s 76.

14. At paragraph 21 of his affidavit filed on 5 April 2022, the husband stated that he wished to retain the artwork, game machine and pool table currently located at the former matrimonial home. During the course of the proceedings, however, both parties agreed that in the absence of those items being valued and to avoid a situation where it was necessary for those items to be sold, it was appropriate for the parties to retain those items that were in their possession, save for a game machine and the pool table located at the former matrimonial home. It was agreed that those two items are to be given to the parties’ son, who had just turned 21 during the course of the hearing. It was also agreed that the husband would retain the J painting, but it was unclear as to where that painting was located.

15. Accordingly, I do not include items 29 through to 43 of paragraph 49 on the balance sheet, nor do I make any orders in respect of the sale of those items.

16. At items 44 and 45, the wife contends that she has household furniture and effects located at the former matrimonial home to the value of $20,000 and that the husband has similar household furniture and effects located at T Street, Suburb D to the value of $30,000. This is consistent with paragraph 15 of the husband’s affidavit, where he acknowledges ownership of household effects to the value of $30,000. Accordingly, I will include on the balance sheet items 44 and 45 of paragraph 49 of the wife’s affidavit.

17. At items 46 through to 62, the wife contends that the husband owns various horses and includes against the name of each relevant horse an amount which she understands to be its value. At items 63 through to 76, the wife lists a number of other horses in respect to which she contends the husband has a part interest. No value has been identified in respect to any of those named horses which the wife contends are still in the possession of the husband and which, she contends, remain undisclosed.

18. The husband denies that he has failed to disclose the identity of horses in respect to which he owns or has an interest. 

19. For reasons previously set out, I found the husband to be a truthful witness and, regrettably, I found the wife to be a poor witness, as evidenced by her inability to acknowledge that the husband had in fact provided disclosure of relevant documents concerning the financial affairs of B Pty Ltd. The wife maintained her position in that respect despite clear evidence that those documents have been provided to her previous solicitors and, as evidenced by Exhibit 5, were in the wife’s possession prior to the commencement of the hearing. In other words, the only way the document that is Exhibit 5 could have come into the wife’s possession was by it being provided to her through her previous solicitors. The wife’s attempt to obfuscate  by denying possession of documents disclosed by the husband and inferring they had not been provided to her by her previous solicitors was inconsistent with her possession of those documents. Accordingly, wherever the evidence is inconsistent, I prefer the evidence of the husband to that provided by the wife.

1. I am satisfied that the husband has disclosed those horses in respect of which he has an interest and that his interest in those horses has been valued. In that respect, pursuant to orders made on 22 September 2021, the parties jointly appointed Company AL to prepare a valuation report in respect to the husband’s interest in several horses. The valuation report indicated that the husband’s total interest in the horses was valued at $83,975. The wife, at paragraph 49 of her affidavit and during the hearing, accepted that as being the agreed value of the horses or, at least, her understanding of the value of those horses which she accepts having been disclosed by the husband.[14]

   [14] Transcript 27 April 2022, p.86 line 30.

2. For the purpose of undertaking the exercise of identifying the parties’ property, I accept that the husband has an interest in a number of horses to the value of $83,975. However, for the following reasons, I do not propose to include the horses on the balance sheet.

3. The husband attests that his debt to Company K, a company that undertakes the maintenance of the horses including feeding, travel, veterinary expenses, training and stables, totals $321,273. That sum, the husband contends, is the amount outstanding as at 31 January 2022. The husband further contends that he has a separate debt to Mr AM, who now maintains his horses, in the sum of $16,120 as at 28 February 2022. The husband contends that, on the basis that the liabilities in respect to the horses exceed the value of those horses, an appropriate concession is that there is no inclusion on the balance sheet in respect to the value of the horses. This is an appropriate concession to the wife and, on that basis, I do not include either the value of the horses nor the liabilities owing by the husband in respect to those horses on the balance sheet. This has the effect that the husband is solely responsible for meeting those liabilities from his own funds and resources. 

4. The parties are in dispute as to the value of B Pty Ltd which the wife contends, at item 5 of paragraph 49 of her affidavit, should be included on the balance sheet as having a value of $595,000. In that respect, she refers to a valuation provided by Company AN on 25 October 2021. The wife acknowledged, however, that the valuation prepared by Company AN was an “indicative” valuation only and that it was not an “expert report” for the purpose of these proceedings.[15] In those circumstances, the indicative valuation is not admissible as an expert report pursuant to s 79 of the Evidence Act 1995 (Cth) (“Evidence Act”).

   [15] Transcript 28 April 2022, p.159 lines 30–40.

5. The husband contends that the business has little or no value. In that respect, the husband refers to item 12 of his tender bundle (marked Exhibit “3”), which contain the June 2021 financial statements for B Pty Ltd. Those financial statements indicate that the equity in the company is calculated at approximately $305,000 but that comprises, in large part, shareholder loans owed by the parties of $268,000.[16]

   [16] Transcript 28 April 2022, p134 lines 39–46.

6. In the absence of a valuation undertaken by an appropriately qualified expert that is admissible in these proceedings and in circumstances where neither party wishes to retain B Pty Ltd, the husband contends that the company should be sold. The husband proposes that, in the event of the company being sold for a surplus, the surplus less associated costs of the sale is distributed to the parties according to the percentage adjustment determined in these proceedings. In the event that there is no such surplus, the husband proposes that he will meet any outstanding liabilities of the company, including taxation debts.

7. In circumstances where the Court is without an expert evaluation of B Pty Ltd, I do not include it in the balance sheet and respectfully agree with the proposal of the husband that the only practical alternative is for the company to be sold. The proposed method of sale coupled with the husband’s assumption of any outstanding liabilities remaining after the sale, if the sale raises insufficient funds to cover those liabilities, is to the wife’s advantage and I propose making orders in those terms.  

   Addbacks

8. At items 77 through to 82 of paragraph 49 of her affidavit, the wife contends that the following amounts should be added back to the matrimonial property pool:

   77.      Husband’s gambling – $960,000

   78.      Unexplained expenditure – not known

   79.      Unreasonable living expenses – not known

   80.      Legal costs (Coote family lawyers) – not known

   81.      Country AO holiday – estimated at $100,000

   82.      Distribution of B Pty Ltd dividends – not known

9. In circumstances where no amount has been quantified, I do not consider items 78, 79 or 82.

10. In AJO and GRO (2005) FLC 93-218 (“AJO & GRO”) at [30], the Full Court identified three categories where it may be appropriate to notionally add back an item of expenditure, as follows:

    (1)Where the parties have expended money on legal fees: see DJM v JLM (1998) FLC 92-816 at 85,262;

    (2)Where there has been a premature distribution of matrimonial assets: see Townsend & Townsend (1995) FLC 92-569 at 81,654; and

    (3)In the circumstances outlined by Baker J in Kowaliw & Kowaliw (1981) FLC 91-092 at 76,644, including:

    (a)Where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets; or

    (b)Where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.

11. The authorities confirm that the exercise of discretion by a trial judge to include add backs on the balance sheet of property to be adjusted in Part VIII proceedings is the exception, rather than the rule: Trevi and Trevi (2018) FLC 93-858 (“Trevi”) at [28]. The wife has not satisfied me that it is appropriate to include those items, to which I have referred, as being items that should be added back on the balance sheet.

12. Firstly, the wife has not attempted to quantify items 78, 79 or 82 and, in those circumstances, it is not possible to include any amount in the balance sheet, even if I had been satisfied that the items fall within one of the categories identified in AJO & GRO above.

13. Secondly, no evidence has been presented to satisfy the Court that the husband had incurred gambling debts of $960,000. As earlier mentioned, I found the husband to be an honest witness and, while he acknowledged engaging in gambling, I am satisfied that his gambling losses were nowhere near that which has been asserted by the wife. 

14. Further, in exercising my discretion not to include any amount in the balance sheet in respect to gambling, I am satisfied, on the basis of the husband’s evidence, that during the course of the parties’ relationship, both parties enjoyed regularly attending horse meetings and events, including the prestige that occurred from time to time when one of the husband’s horses was successful. I accept that gambling is commonly associated with horses. I am further satisfied that the wife was aware of the husband’s gambling activities and that he has kept his gambling activities within reasonable bounds. This is in the context of the assets that the parties have jointly built during the course of their relationship and the fact that the husband has continued to support the family by way of attending to the mortgage on the former matrimonial home, meeting car expenses and supporting the children in the period both during and subsequent to the breakdown of the parties’ relationship. Accordingly, I do not include the amount which the husband has spent on gambling on the balance sheet. 

15. Contrary to the wife’s assertion, in respect to item 79 of paragraph 49 of her affidavit, the husband has provided proper disclosure of his expenditure that is primarily for the purpose of meeting his own expenses and the expenses of the family, to which I have earlier referred. I will subsequently refer to the wife’s assertion regarding expenditure on a Country AO holiday.

16. In respect to item 81 of paragraph 49 of the wife’s affidavit, the husband acknowledged embarking upon an overseas holiday with his mother and the parties’ children. He further acknowledged that some of the funds he applied towards the cost of that holiday were from a cash payment that he received in respect to building work. In that respect, at paragraph 32 of his affidavit, the husband attests that of the $120,000 received as a cash payment, $40,000 was applied towards costs associated with horse breeding, an unspecified amount was applied towards a holiday for himself, the wife and the children in early 2019, an additional $40,000 was divided between himself and the wife equally upon separation and a further amount was spent on living expenses including purchasing new furniture for the residence into which he moved after separation. The father also acknowledges utilising a portion of that $120,000 as spending money on a Country AO holiday with the children and his mother in order to attend his cousin’s wedding. In circumstances where I accept the husband to be a witness of truth, I accept that he did not spend the amount of $100,000 on that holiday as alleged by the wife. Indeed, at paragraph 58 of her affidavit, the wife contends that the documentary evidence establishes that the husband spent a lesser total of $86,950 on the travel for himself his children and his mother.

17. Moreover, as noted in Trevi at [29], parties do not, after the cessation of their relationship, “go into a state of suspended economic animation” and reasonably incurred expenditure does not usually come within accepted categories of add backs. In circumstances where I have accepted the veracity of the husband’s evidence, the wife has failed to satisfy me that the husband has engaged in other than reasonably incurred expenditure in taking his children and his mother overseas for the purpose of attending his cousin’s wedding.

18. At item 80 of paragraph 49 in her affidavit, the wife contends that the amount that the husband has spent on legal fees for the purpose of these proceedings should be included as an add back on the balance sheet. It is the case that any amounts spent by a party from joint funds on legal fees which would otherwise be available, at trial, for distribution between the parties is usually added back into the property pool. This is followed by an adjustment whereby the amount that a party spent on legal fees is deducted from the property allocated to that party. In effect, the expenditure is treated as a premature distribution of property that otherwise would have been available for distribution between the parties (Trevi in particular at [41] and [42]).

19. In this matter, I would have included the amount specified in the husband’s costs notice, as having been paid by him towards legal fees, as an add back on the balance sheet, but for the fact that the wife has not disclosed the amount she has spent on legal fees. 

20. In that context, I accept that the wife was self-represented at the hearing. However, that was a relatively recent occurrence, with the wife filing a Notice of Address for Service on 19 April 2022, and it is quite clear that the wife has otherwise been represented since the commencement of these proceedings. Those legal fees have not been disclosed by the wife in accordance with her obligations under Part 12.3 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”). In those circumstances, it would be unfair to include, as an item on the balance sheet, an amount for an add back attributable to legal fees spent by the husband where there is no corresponding information available in respect to legal fees that have been paid by the wife.

21. At item 82 of paragraph 49 of her affidavit, the wife seeks an add back in respect to “distribution B Pty Ltd dividends”, for which she contends an unknown value. It appears this item is a reference to the evidence of wife set out at paragraph 57 of her affidavit where she notes that, for the financial year ending 30 June 2020, B Pty Ltd distributed dividends in the sum of $234,000. The wife contends that she has not had the benefit of any of those funds. Comparatively, the father contends that the funds were applied to the benefit of both himself and the wife, as well as the children.[17] In circumstances where the wife has not defined the amount that she contends should be included as an add back in this respect, I will not include that item on the balance sheet. I will nonetheless consider that issue in terms of the s 75(2) considerations.

    [17] Transcript 27 April 2022, p.42 line 43 to p.43 line 33.

    Superannuation

22. The parties are in agreement in respect of superannuation, which is as follows:

    ·The wife’s superannuation entitlement with Super Fund AP – $242,251;

    ·The husband’s superannuation entitlement with Super Fund AP – $213,708.

    Liabilities

23. At items 82 and 83 of paragraph 49 in her affidavit, the wife contends that the husband has liabilities in respect to his ownership of horses totalling $321,273 and $16,120 respectively.  This, it is to be noted, is in excess of the value of the horses, which is in the sum of approximately $84,000. The husband does not dispute that his liabilities in respect to that activity exceed the value of the horses. On that basis, he proposes to personally assume responsibility for those liabilities. That is to the advantage of the wife.  In those circumstances, I do not include those liabilities on the balance sheet.

24. The husband also acknowledged a liability in respect to a platinum credit card with Westpac totalling $20,037. The wife agreed with that evidence.[18] Accordingly, that amount will be included on the balance sheet.

    [18] Transcript 28 April 2022, p.169 lines 19–22.

25. The husband contends that the taxation debt payable by B Pty Ltd is $185,255. This contention is supported by item 10 of his tender bundle. The wife indicated she was not in a position to neither confirm nor dispute that assertion. In circumstances where I find the husband to be a witness of truth, I accept his existence of that tax debt. It was a debt incurred in the course of the business’ trading activities and should be included on the balance sheet.

26. Understandably, the wife indicated that she is not in a position to confirm or dispute the husband’s personal taxation liability, which he contends is $103,288.36 at paragraph 14 of his affidavit. In circumstances where I accept the husband to be a witness of truth and he was not challenged on his contention, I will include that amount as his personal taxation debt on the balance sheet.

27. The wife agrees that the parties have a partnership tax debt of $11,502. I will include that on the balance sheet.

28. At item 85 of paragraph 49 of her affidavit, the wife contends that she has a taxation debt of $113,209.

29. The evidence relied upon by the wife to establish that figure is set out in Exhibit 6. That documentation, however, does not establish the accuracy of the wife’s contention. The first page of Exhibit 6 is a document provided to the wife by her accountant indicating that her estimated taxation liability for the year ending 30 June 2021 is $20,632.50. Page 59 of that exhibit sets out the wife’s “income tax return tax estimate” for the financial year ending June 2020 and specifies the amount of $7,181.50. Pages 61 to 62 of that exhibit contain the wife’s “Notice of Assessment – year ended 30 June 2019” and specifies tax payable in the amount of $30,308.90. 

30. Based on Exhibit 6, I therefore conclude that the wife’s outstanding taxation liability is $58,122.90. In circumstances where the husband is prepared to accept that the amount of $60,000 as the wife’s taxation liability is a concession in favour of the wife, I will include that amount in the balance sheet.

    Conclusion as to Balance sheet

31. Accordingly, leaving aside B Pty Ltd, I assess the parties’ assets and liabilities including superannuation to be as follows:

Ownership	Value
Assets
C Street, Suburb D property	Jointly owned	$2 million
E Street, Suburb F property	Jointly owned	$850,000
G Street, Town H property	50% owned by the parties	$315,000
Funds in Coote Family Lawyers trust account	Jointly owned	$44,500
ANZ One offset account	Jointly owned	$1,600
ANZ account #...	Husband	$191
Westpac equities account #...	Husband	$17,729
ANZ account #....	Wife	$121
Company M shares	Wife	$5,000
ANZ account #...	Wife	$1,284.91
Household furniture and effects	Husband	$30,000
Household furniture and effects	Wife	$20,000
TOTAL ASSETS (excluding B Pty Ltd and superannuation)		$3,285,425.91
Superannuation
Super Fund AP entitlement	Husband	$213,708
Super Fund AP entitlement	Wife	$242,251
TOTAL ASSETS (excluding B Pty Ltd and including superannuation)		$3,741,384.91
Liabilities
B Pty Ltd tax liability	Jointly owned	$185,255
Partnership tax debt	Jointly owned	$11,502
Westpac Platinum credit card	Husband	$20,037
Personal taxation liability	Husband	$103,288
Personal taxation liability	Wife	$60,000
TOTAL LIABILITIES		$380,082
NET ASSETS (including superannuation, excluding B Pty Ltd)		$3,361,302.91

Contributions

1. The Court is required to make an assessment of the nature and quality of the totality of the parties’ contributions throughout the entirety of their relationship, together with their contributions in the period subsequent to their separation.[19]

   [19] Dickons & Dickons (2012) 50 Fam LR 244 at [14] (Bryant CJ, Faulks DCJ, Murphy J); Jabour & Jabour (2019) 59 Fam LR 475 at [61] (Alstergren CJ, Ryan and Aldridge JJ).

   Initial contributions

2. As noted, both parties agree that neither party had any assets of substance at the commencement of their relationship.

   Contributions during the course of the parties’ relationship

3. In circumstances where both parties agree that their contributions during the course of their marriage were equal,[20] I will not set out the details of each party’s evidence. The husband’s evidence in respect to the contributions he made during the course of the parties’ relationship is set out at paragraphs 26–33 of his affidavit. The substance of that evidence is that the husband used his best endeavours to provide for the family as the primary breadwinner although he assisted the wife, when he could, in respect to homemaking and parenting responsibilities. The parties also undertook significant renovations to properties during the course of their marriage which contributed to an increase in value of those properties.

   [20] See, for instance, the wife’s affidavit filed 25 April 2022, paragraph 46.

4. The wife details both her financial contributions and non-financial contributions during the course of the parties’ marriage in her affidavit at paragraphs 35–38. Based on the unchallenged evidence of the wife, I am also satisfied that the mother did her best in respect to fulfilling the responsibility she had as primary homemaker and parent, in addition to time she spent assisting the husband with the operation of B Pty Ltd, in respect to which she drew a salary that was applied for the day-to-day living expenses of the family. 

5. I am also satisfied that the wife contributed lump sum severance payments that she received from her employers, during the course of the parties’ marriage, for the purposes of the family.

6. The wife was not challenged on her evidence that, for a period of approximately two years after the parties were married, they lived at the home of the wife’s grandmother and paid nominal rent, which enabled the parties to save money and subsequently invest in what became a successful business.

7. The wife was also not challenged on her evidence that she was assisted in undertaking parenting responsibilities by her mother, which enabled her to both undertake paid employment and engage in the parties’ business.

1. In summary, both parties have agreed that their contributions during the period of their relationship were equal, with the husband being the primary breadwinner but also assisting with homemaking and parenting and the wife being primarily responsible for homemaking and parenting as well as assisting in the business. Based on the broad summary of the parties’ respective contributions, I accept that is the case. 

   Post separation contributions

2. To their credit, appropriately, in my view, the parties agreed that the respective post separation contributions were also equal.[21] This was in the context where, rather than engaging in the business activities of B Pty Ltd, the wife has obtained employment in the transport industry and has continued to be the primary carer of the parties’ children, who are now adults.

   [21] Transcript 28 April 2022, p.157 line 22 to p.158 line 46.

3. Comparatively, the husband has continued to operate the business of B Pty Ltd.

4. The wife agrees that the husband continued to meet mortgage commitments and school fees in the period subsequent to the parties’ separation from the activities of B Pty Ltd. The wife further acknowledges that the father has been “quite generous” with the children.[22]

   [22] Transcript 28 April 2022, p.158 lines 18–21.

5. In that respect, I accept the husband’s evidence that he has assisted with the financial needs of the children, including paying for their petrol and servicing of the motor vehicles as well as their mobile phones.

   Assessment of s 79(4)

6. In circumstances where the parties acknowledge that they had relatively few assets at the commencement of their relationship and that their financial and non-financial contributions, during the relationship and in the post separation period, have been equal, I do not propose to make any adjustment pursuant to s 79(4) of the Act.

   Relevant s 75(2) factors

   Subsection (2)(a) – the age and state of health of each of the parties

7. As at the date of the trial, the parties were both 47 years of age. The husband attested to being in good health and the wife attested to being in reasonably good health, save to the extent that she has some challenges with an injured knee for which she had surgery and requires ongoing rehabilitation physiotherapy. Further surgery is also possible.

   Subsection (2)(b) – the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment

8. The wife was not challenged on her evidence that, as at 29 January 2018, 10 months prior to separation, the parties’ joint offset account ending in #... contained funds in the sum of $345,425.68. Until 5 August 2020, deposits in the form of the parties’ wages and income from B Pty Ltd continued to be deposited in that account. However, the account was also accessed by both parties to meet their day-to-day living expenses, including for the children’s food, fuel, clothing, utilities, school fees and their extra-curricular activities including sports activities.

9. Pursuant to orders made on 5 August 2020, the wife received an amount of $5,000 from that joint offset account. The wife also continued to receive fortnightly payments from the husband in the sum of $1,200 per fortnight, however those payments ceased in March 2021.

10. Additionally, in the period from September 2020 until approximately March 2021 the wife, through an arrangement made with a real estate agent, arranged for rental income in respect to the Suburb Z property in the sum of $1,700 per month to be paid into her personal savings account. Those funds were supplemented by Centrelink Jobseeker payments that were also received by the wife.[23]

    [23] Wife’s affidavit filed 25 April 2022, paragraph 30.

11. In February 2021, the wife secured full-time employment as a customer service officer for a company, earning approximately $700 per week. However, that employment subsequently ceased, with the wife being made redundant on 28 May 2021. It has not been contended that the wife received any severance payment arising from the termination. 

12. For a period of approximately one month between October and November 2021, the wife worked for another employer, earning the weekly equivalent for a salary of $65,000 per annum.

13. On 24 February 2022, the wife commenced full-time work as a transport worker for a major transport company, earning approximately $45,000 gross per annum. She continues in that employment.

14. In summary, the wife was not challenged on her evidence that she has worked sporadically since separation and earned the income to which I have referred above. As noted, the wife currently works for a major transport company earning approximately $45,000 gross per annum. 

15. The wife contends that, had she continued working at that major employer rather than accepting involuntary redundancy in 2004 in order to assist the family business, to care for the children and undertake responsibilities as a homemaker, she would now be in a senior managerial position earning in excess of $150,000 per year. The wife further contends that she would have also had the benefit of lifelong transportation entitlement. As this matter concerns Part VIII of the Act, the rules of evidence apply and the wife’s lay opinion of her likely career progression is inadmissible to establish the lost earning potential to which she refers (s 76 of the Evidence Act). Nonetheless, relying upon common sense and life experience, I accept that had the wife continued to work for that employer, it is likely that she would have had some career progression which would have resulted in her currently receiving a greater salary, coupled with a greater associated superannuation entitlement.

16. Comparatively, the wife contends that the husband’s trades and management skills are such that if he were to seek employment in the building and construction industry he would receive an income of between $180,000 and $200,000 per annum.[24] Again, the wife’s opinion in that respect is inadmissible. 

    [24] Wife’s affidavit filed 25 April 2022, paragraph 45.

17. The husband has continued to engage in the business of B Pty Ltd. In the husband’s further updated financial statement filed 5 April 2022, he attests that his average weekly income is $400 per week. That assertion is based on his income tax return for the financial year ended 2021. I am satisfied, however, that the husband has applied additional amounts received by way of the business activities of B Pty Ltd towards meeting his day-to-day expenses and also those of the family. In that respect, I accept that B Pty Ltd has, in the past, been a successful business, with the amount of $386,000 being available for distribution to the parties in June 2019 and the amount of $234,000 being available for distribution for the financial year ending June 2020 although, as previously noted, the wife contends that she has not received the benefit of those dividends. 

18. The husband’s evidence that the business activities of B Pty Ltd have been adversely impacted by the COVID-19 pandemic is plausible. However, the husband has demonstrated considerable business acumen to build up and operate a successful business that has been able to pay dividends in the amounts to which I have referred in addition to a regular salary for the husband. 

19. The income of the wife received during the course of the parties’ relationship from B Pty Ltd was related to her relationship with the husband and there is no evidence that she has particular administrative skills that would enable her to find employment that generates an income over and above that she is receiving as a transport worker. 

20. Accordingly, I am satisfied that the husband’s future income and earning capacity is likely to be significantly greater than the wife’s, such that it justifies an adjustment in her favour pursuant to s 75(2). To his credit, this point is conceded to a degree by the husband, who contends that an adjustment of 2 per cent in favour the wife is appropriate. With respect, I am of the view that such an adjustment would be too conservative, having regard to the facts that I have outlined.

    Subsection (2)(c) – whether either party has the care or control of a child of the marriage who has not attained the age of 18 years

21. The parties’ children are both over the age of 18 years. 

    Subsections (2)(d) and (e) – commitments of each of the parties that are necessary to enable the party to support himself or herself, and a child or another person that the party has a duty to maintain; and the responsibilities of either party to support any other person

22. The parties’ children are now over the age of 18. While both children live with the wife and she attests to providing support for them, it cannot, however, be said that the wife has a duty to maintain the children in terms of this consideration.

    Subsection (2)(f) – the eligibility of either party for a pension, allowance or benefit under any law of the Commonwealth, of a State or Territory or of another country; or any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia; and the rate of any such pension, allowance or benefit being paid to either party

23. It is not contended that either party is currently in receipt of any social security entitlement. As previously noted, their superannuation entitlements are roughly comparable.

    Subsection (2)(g) – where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable

24. The wife is in receipt of a relatively modest income and is likely to remain on a modest level of income for the duration of her employment. She has continued to live in the former matrimonial home, but also has an interest in the G Street, Town H property, which the parties jointly own with the wife’s sister and brother-in-law. 

25. Nonetheless, I am satisfied that the wife’s standard of living will be relatively modest. 

26. Comparatively, the husband appears to have sufficient resources available to him to maintain his interest in horses, including an interest in horses to the value of approximately $83,000. He continues to incur the training and maintenance costs of those horses. 

27. While it is the case that the husband has applied income earned through B Pty Ltd towards meeting his day-to-day expenses and also attended to meeting certain expenses of the wife, he has also had the enjoyment of a greater amount of funds from B Pty Ltd comparative to the wife.  In that context, the wife was not challenged on her evidence that she has not received the totality of her share of dividends available for distribution by B Pty Ltd, although the evidence is not such that I am able to determine the amount which has or has not been paid to her or on her behalf in respect to B Pty Ltd dividends for the financial years ending 2019 and 2020. In that respect the husband attests to applying the dividends and income he has earned through B Pty Ltd for purposes that include meeting the expenses of himself, the parties’ mortgage commitments and expenses for the children.

28. While I have not regarded the husband’s expenditure as being wasteful, the evidence satisfies me that, in the period subsequent to separation, the husband has enjoyed a higher standard of living than that of the wife and that it is likely he will have the capacity to continue to do so in the future. 

29. This is an additional factor that justifies an adjustment in favour of the wife.

    Subsection (2)(h) – the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income

30. It has not been contended that this consideration is relevant.

    Subsection (2)(ha) – the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant

31. The parties each have a number of substantial liabilities, including taxation liabilities. I note that the husband has committed to indemnify the wife in respect to any potential taxation liability remaining in the event of insufficient funds being recovered from the sale of B Pty Ltd.  At this stage, however, whether that indemnity will be called upon is speculative. I have not therefore regarded this consideration as being relevant.

    Subsection (2)(j) – the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party

32. I am satisfied that, by retiring from her employment as a transport worker and focusing her attention on the family business as well as taking on primary responsibility in respect to caring for the children and home maintenance, the wife contributed to the success of B Pty Ltd. To his credit the husband acknowledges, at paragraph 28 of his affidavit, that the profits of B Pty Ltd “were achievable as a result of [the wife’s] capacity to care for the children.”

33. I have already taken into consideration the fact that the wife has, to some extent, sacrificed her career opportunities in order to contribute to the family business, and I have also taken into consideration the wife’s contribution as a homemaker who primarily cared for the children, as a consideration in respect to s 79(4).

34. Nonetheless, even avoiding double counting in respect to those matters, I am satisfied that in enabling the husband to focus upon developing B Pty Ltd and its associated industry contacts, the wife has contributed to the husband’s earning capacity which will be of benefit to him in the future and she is entitled to some recognition for that in the form of an adjustment pursuant these considerations.

    Subsection (2)(k) – the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration

35. In addressing paragraph 2(b), I have explained why I am satisfied that the wife’s earning capacity has been affected by the fact that she gave up her previous employment to focus upon the family business, parenting and family responsibilities. It is not appropriate that I double count that consideration, save to the extent that it is relevant that the wife remained out of her previous employment as a transport worker for 14 years during the parties’ marriage.

    Subsection (2)(l) – the need to protect a party who wishes to continue that party’s role as a parent

36. It is not contended that this consideration is relevant.

    Subsection (2)(m) – if either party is cohabiting with another person—the financial circumstances relating to the cohabitation

37. It is not contended that either party is cohabitating with another person.

    Subsection (2)(n) – the terms of any order made or proposed to be made under section 79 in relation to the property of the parties; or vested bankruptcy property in relation to a bankrupt party

38. It was not contended that this consideration is relevant.

    Subsection (2)(naa) – the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to a party to the marriage; or a person who is a party to a de facto relationship with a party to the marriage; or the property of or vested bankruptcy property in relation to a person covered by the categories aforementioned

39. It was not contended that this consideration is relevant.

    Subsection (2)(na) – any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage

40. The wife accepts that, to his credit, the father has in the past supported, and continues to support, the parties’ children. They are now adults and, accordingly, this consideration is not relevant.

    Subsection (2)(o) – any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account

41. At paragraph 5 of her affidavit, the mother contends that the husband acted irresponsibly at the time he moved from the former matrimonial home in November 2018 and into rental accommodation. The wife contends that, rather than acting in that manner and pre-paying rent, the husband should have moved into the vacant AB Street, Suburb AC property.

42. I do not, however, determine that the father’s conduct in moving into rental accommodation constituted waste as contemplated in authorities such as AJO & GRO at [30] and I have therefore not taken into consideration that conduct by the husband.

43. The wife’s primary contentions in respect to the husband’s conduct as justifying an adjustment in her favour are her allegations that the husband has acted inappropriately in his business activities by diverting clients from B Pty Ltd to L Pty Ltd.

44. As previously noted, the husband is currently a co-director of L Pty Ltd along with his brother.  That company provides trades and building work in the Melbourne region. The shareholders of L Pty Ltd are the husband’s brother and entities controlled by the brother. The husband acknowledges that he was originally a shareholder of L Pty Ltd but has not held an interest in the company since 15 April 2019, at which time he transferred his six ordinary shares to his brother “for a nominal sum”.[25] In cross-examining the husband, the wife did not challenge the husband in respect to the propriety of that transaction, nor has she made an application for the transaction to be set aside.

    [25] Husband’s affidavit filed 5 April 2022, paragraph 22.

45. Accordingly, I have not taken into consideration the fact that the husband previously had, but no longer has, shares in L Pty Ltd. 

46. Further, as previously noted, there is a dispute between the parties regarding the nature of the husband’s broader interest in the activities of L Pty Ltd. For reasons which I have explained, I am satisfied that L Pty Ltd has, at all times, been a company managed by the husband’s brother and that the husband’s involvement is limited to assisting with the obtaining of building permits, in circumstances where he is a registered builder and his brother needs to rely upon the husband’s building licence to obtain the building permits. I further accept the husband’s evidence that he does not receive any remuneration as a co-director. I accept the husband’s evidence that any funds he has received from the company have either been in reimbursement for materials supplied or otherwise by way of a loan.

47. In that respect, at paragraph 24 of his affidavit, the husband contends that his director’s loan with L Pty Ltd has been applied to the following:

    (a)       On 30 January 2020, to repay a B Pty Ltd tax debt in the sum of $62,039;

    (b)On 27 February 2020, to repay a motor vehicle loan for the Motor Vehicle 4 in the sum of $27,761; … and

    (c)       The sum of $24,844 to fund my daily living expenses up until 30 June 2021 …

48. The husband contends that it was necessary for him to obtain a director’s loan from L Pty Ltd in respect to his daily living expenses as result of the fact that B Pty Ltd’s business was impacted by the COVID-19 pandemic. This is in circumstances where the husband contends that the social distancing measures implemented by the Victorian government substantially reduced the demand for trades work in the city during the period of those public health measures. 

49. Nevertheless, the fact that the husband has been able to obtain a director’s loan from L Pty Ltd is a financial resource available to him. This is therefore an additional consideration in assessing an appropriate adjustment in favour of the wife pursuant to s 75(2) considerations.

50. On the other hand, I am satisfied that the husband has, as he contends, applied the income he received from B Pty Ltd to meet his personal and company expenses including rent, insurance, motor vehicle expenses, wages and subcontractor fees. At paragraph 23 of his affidavit, he attests that any personal expenses paid by B Pty Ltd are paid from the husband’s shareholder account, with payments declared as a dividend. In circumstances where B Pty Ltd is to be sold, this financial resource will no longer be available to the husband and that is a factor to be taken into consideration in moderating any adjustment in favour of the wife.

1. The wife challenges the husband’s evidence in respect to his post-separation business activities, contending that the husband has a more substantial business arrangement with his brother than is acknowledged to be the case by the husband. The wife further contends that the husband has effectively shifted business opportunities from B Pty Ltd to L Pty Ltd. The wife’s contentions in that respect amount to allegations that the husband has acted in breach of ss 181 and 182 of the Corporations Act 2001 (Cth), which relate to the failure on the part of the director to discharge his powers and duties in good faith, in the best interests of the company and for a proper purpose, and by improperly using his position to gain an advantage or cause the company detriment. The wife’s evidence in that respect is largely circumstantial, being that, at the same time that the business activities of B Pty Ltd have been in decline, the business activities of L Pty Ltd, she contends, have been improving.

2. She also contends that the records of L Pty Ltd establish that the company has been undertaking work for clients of B Pty Ltd. This was denied by the husband.[26] In circumstances where I found the husband to be a credible witness, I accept that evidence.

   [26] Transcript 27 April 2022, p.42 lines 11–31.

3. In summary, at best, the wife’s evidence establishes a suspicion that the husband has been complicit with his brother in respect to the respective business activities of B Pty Ltd on the one hand and L Pty Ltd on the other. As such, the evidence does not reach the standard of proof required by s 140(2) of the Evidence Act that the husband has engaged in any impropriety as a director of B Pty Ltd. Accordingly, I have not made any adjustment pursuant to s 75(2)(o) in respect to that issue.

   Subsections (2)(p) and (q) – the terms of any financial agreement and any Part VIIIAB financial agreement that is binding on the parties to the marriage

4. This consideration is not relevant.

   Evaluation of s 75(2) factors

5. Having regard to those relevant s 75(2) considerations to which I have referred including, most relevantly, the disparity between the parties’ future earning capacity and the husband’s access to a financial resource in the form of his capacity to obtain a director’s loan from his brother’s business, I am satisfied that an adjustment of 7 per cent in favour the wife is appropriate pursuant to the considerations set out in s 75(2).

   treatment of Superannuation

6. It is convenient, initially, to set out why I have decided to include superannuation in the one property pool, together with the parties’ other assets.

7. As previously noted, the parties’ superannuation entitlements are roughly comparable. The wife contends that the fact that the husband has a marginally smaller superannuation entitlement is as a result of him accessing an amount of $20,000 from his superannuation account (item 27 of paragraph 49 of the wife’s affidavit). Insufficient evidence has been presented in these proceedings to enable me to make any assessment as to the circumstances in which that occurred. In any event, no evidence has been presented that justifies the Court determining that the husband accessing his superannuation amounted to waste in the context of AJO & GRO.

8. At the same time, however, the parties have not provided evidence that enables me to make any determination of the matters which the Full Court has indicated the Court is required to consider in determining whether there should be a differential approach to the parties’ superannuation, as compared to the treatment of their property generally. This includes the relationship between use of fund membership at cohabitation; actual contributions made by the party at the commencement of cohabitation, at separation and at the date of hearing, and any factors peculiar to the fund (see for example C & C (2005) FLC 93-220 at 79,644).

9. Accordingly, in circumstances where the parties’ superannuation interests are approximately equivalent, I propose to include the parties’ respective superannuation entitlements as property in their possession, constituting part of the combined property pool.

   Overall evaluation

10. As earlier explained, I have calculated the parties’ net property, including superannuation and excluding B Pty Ltd, to be $3,361,302.91. For convenience, I will round that figure up to $3,361,303.

11. Leaving aside a potential surplus arising from the sale of B Pty Ltd, the husband is entitled to receive property to the value of $1,445,360.29 and the wife is entitled to $1,915,942.71. For convenience, I will round the husband’s figure to $1,445,360 and the wife’s figure to $1,915,943.

12. Leaving aside the parties’ interests in joint property, the husband has in his possession:

    ·Superannuation – $213,708

    ·Westpac equities account ending in #...07 – $17,729

    ·Household furniture and effects – $30,000

    ·ANZ Account #...25 – $191

    Total:   $261,628

13. In addition, the husband has expressed a desire to retain the E Street, Suburb F property and has proposed that the wife retain the parties’ interest in the G Street, Town H property. This has merit in circumstances where the remainder of the interest in the G Street, Town H property is held by the wife’s sister and brother-in-law. As noted, the parties agree on the value of the E Street, Suburb F property as being $850,000.

14. During the course of these proceedings, the wife indicated a very strong desire to retain the former matrimonial home, which has been described as the C Street, Suburb D property. A significant issue in these proceedings is whether she has the capacity to raise sufficient funds to make the requisite payment to the husband, even allowing for the adjustment that I propose making in her favour, being 57 per cent of the parties’ total property.

15. Accordingly, in addition to the assets that I have noted to be in the possession of the husband, supplemented by the E Street, Suburb F property, I propose to allocate to the husband that remaining property which is jointly owned by the parties, other than the C Street, Suburb D property.  This will have the effect of reducing the amount that the wife will have to borrow in order to acquire the C Street, Suburb D property.

16. For the purpose of assessing the adjustment which will be required to enable the wife to acquire the C Street, Suburb D property, I will include that joint property (other than the C Street, Suburb D property, on the husband’s side of the ledger. Therefore, in addition to property in his possession outline above at [158], the husband’s side of the ledger will be as follows:

    ·Property in his possession $261,628

    ·E Street, Suburb F property – $850,000

    ·Funds in Coote Family Lawyers trust account – $44,500

    ·ANZ one offset account – $1,600

    Total:   $1,157,728

17. Therefore, in order to make the necessary cash adjustment to the husband to acquire the C Street, Suburb D property, the wife will be required to make a payment to the husband calculated by subtracting, from the sum of $1,445,360, the sum of $1,157,728. This gives a balance of $287,632.

18. Affording the wife the opportunity to achieve that outcome is consistent with a just and equitable adjustment of parties’ property. It has regard to the fact of the wife has continued to live in the former matrimonial home in the period post-separation. It has also been, and continues to be, the home of the parties’ children.

19. For reasons which I have set out, the wife’s earning capacity is such that I anticipate she will receive a modest income but potentially one that will sustain the indebtedness necessary to raise sufficient funds to acquire the husband’s interest in the C Street, Suburb D property.

20. At the same time, she will retain an interest in the G Street, Town H property and enjoy access to that property with her sister and brother-in-law. Her equity in that property may assist her to obtain a loan to make the necessary adjustment to the husband to acquire his interest in the C Street, Suburb D property.

21. Comparatively, the husband has, for the reasons I have set out, a greater earning capacity than the wife including, if he so chooses, the opportunity to re-establish a business in the building industry in circumstances where he holds a builder’s licence. The lump sum that he will receive from the wife, in the event that she acquires the C Street, Suburb D property, may assist him in that respect. He will also retain, unencumbered, the E Street, Suburb F property and has access to a financial resource in the form of his ability to obtain a director’s loan from his brother’s company.

22. Accordingly, I propose to make orders substantially in the terms of those which have been proposed by the husband, subject to adjusting the relevant amounts. As noted, those orders will provide for the sale of B Pty Ltd.

23. As a default position, I will also make orders as proposed by the husband, enabling him to acquire the C Street, Suburb D property in the event that the wife is unable to raise sufficient funds. The wife, as noted, is entitled to $1,915,943. She currently has superannuation and other assets, including the allocation of the parties’ interest in the G Street, Town H property exclusively to her, totalling $583,656.91. This means that, in the event that it is the husband who is to acquire the C Street, Suburb D property, he will need to pay the wife the sum of $1,332,286.09, rounded to $1,332,286.

    Costs

24. In the event that either party wishes to make an application for costs, they have the right to do so in accordance with the Rules.

I certify that the preceding one hundred and seventy (170) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Deputy Chief Justice McClelland.

Associate:

Dated:       28 October 2022