Pieters and Pieters

[2017] FamCA 991

FAMILY COURT OF AUSTRALIA

PIETERS & PIETERS [2017] FamCA 991

FAMILY LAW – PROPERTY – where there is a modest amount of property yet significant contribution by the wife as a result of her relationship with a benefactor – where asset by asset approach is fairest – where husband desires to keep home but evidence does not support his capacity to do so.  Husband should still have opportunity to try – where parties conducted business through a trust which held significant tax losses and each party seeks them – where the home valuation of a single expert is disputed.

Family Law Act 1975 (Cth)

Chorn & Hopkins (2004) FLC 93-204
Gosper and Gosper (1987) FLC 91-818
Pollard & Young [2010] FamCAFC 228
Robb and Robb (1995) FLC 92-555
Zalewski and Zalewski (2005) FLC 93-241

APPLICANT: Ms Pieters

RESPONDENT: Mr Pieters

FILE NUMBER: MLC 5067 of 2013

DATE DELIVERED: 5 December 2017

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 22 November 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Atkinson

SOLICITOR FOR THE APPLICANT: Vadarlis & Associates

COUNSEL FOR THE RESPONDENT: Ms McDiarmid

SOLICITOR FOR THE RESPONDENT: GJ Legal Solicitors

Orders

1. By 4 pm on 19 January 2018, the husband pay to the wife $400,000 and provide her with written evidence of a release from any liability to F Bank in respect of the mortgage encumbering the real property at B Street, C Town.

2. Contemporaneously with the payment and the receipt of the release in paragraph 1, the wife transfer to the husband, at his expense, her interest in the C Town property and the wife thereafter relinquish any interest in any chattels and personal property otherwise contained or retained there.

3. If the husband defaults either in the payment in paragraph 1or the provision of the release referred to, he and wife forthwith thereafter place the C Town real property on the market for sale on terms and conditions to be agreed.

4. If agreement is not reached as to the terms of conditions of the sale of the C Town real property within one month of the default, each party has leave to make an urgent application for that issue to be determined by the Court.

5. Upon the settlement of the sale of the C Town real property, the proceeds be applied as follows:

   (a)First, to pay the costs, commissions and advertising expenses of the sale of the C Town real property;

   (b)       Secondly, to discharge the mortgage to F Bank encumbering it;

   (c)Thirdly, to add the balance to the sum referred to in paragraph 182 of the reasons for judgment delivered this day and that such sum then be divided according to the formula set out in paragraph 208 of those reasons. 

6. That pursuant to s 78 of the Family Law Act 1975, the wife is declared the legal and equitable owner of the properties in Country J referred to in paragraph 182 of the said reasons for judgment and the business known and described in those reasons as “D Pty Ltd”.

7. From this day onwards, the wife indemnify the husband, and pay, all liabilities specifically arising from D Pty Ltd.

8. That save as to issues of costs between the parties, the application of the wife filed 23 June 2017and the response of the husband filed 14 July 2017 are dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Pieters & Pieters has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 5067  of 2013

Ms Pieters

Applicant

And

Mr Pieters

Respondent

REASONS FOR JUDGMENT

1. These reasons explain orders made under s 79 of the Family Law Act 1975 (Cth) (“the Act”) between Mr Pieters (“the husband”) and Ms Pieters (“the wife”).

2. Section 79 of the Act gives power to the court to alter the interests of the parties to the marriage in the property of either of them, regardless of when that property was acquired or by whom, provided it is satisfied that it is just and equitable to do so. I am satisfied that the orders made this day are just and equitable.

Background

1. The parties married in 1994 and from their relationship, there are two adult children neither of whose financial circumstances affects this determination.

2. The wife is 48 years of age and conducts a business in Melbourne.  The husband is 66 years of age and described himself as retired although he seems to have undertaken a rebuilding project.  Both parties earn little or no income and there are few signs of future change.

3. The husband still lives on the 85 acre former home of the parties’ and has been there since they separated in August 2010.

4. It is most unfortunate that this case has taken a number of years to reach the final stage of a hearing in circumstances where the issues are relatively simple and the assets modest.  The degree of investigation, accusation and equivocation that can be seen along the litigation pathway, was hardly warranted.  That pathway has seen each party spend well over $200,000 in legal fees.  Their total property is not much over $800,000.

5. The parties did not resolve their dispute leaving the court to decide it.  The remarkable thing about that is that each initially sought an equal division of assets but they could not agree on what there was to divide and particularly, whether their former home should be sold.

6. To be absolutely clear about their respective positions, it is important to look both at what orders they sought and how they presented their respective cases.

The wife’s orders

1. The wife sought that the C Town property be sold and the net proceeds be divided equally. She then sought an order that she “retain” her interest in three properties in Country J in Asia. It is not clear whether or not that was intended to be a declaration under s 78 of the Act because otherwise, there was no suggestion of an alteration of property interests. The husband has no interest in those properties and made no claim for them.

2. The wife sought that the husband transfer his shareholding to her in E Pty Ltd (the company) and that she retain all interests in the company and the Pieters Trust (No 2).

3. If the transfer of those assets occurred, she would then seek an order in the following terms:

   The husband pay to the wife such sum as to achieve an equal adjustment between the parties as to the value of all non-superannuation assets.

4. There is also a dispute in relation to superannuation.  I shall deal with that separately because what the wife seeks (and the husband seems to agree) is that an adjustment should be made in the wife’s favour by a cash sum because he did not comply with a previous court order for payment which arose after the wife transferred her superannuation interests to him.  For the reasons that follow, I decline to make any such order.

5. Ancillary orders were also sought but they are irrelevant to the immediate problem.

The husband’s proposed orders

1. The husband sought orders that the wife transfer C Town to him and that he provide a release of her liability under a mortgage to F Bank.  Consistent with what the wife sought about a cash adjustment payment, he proposed an order that he pay her $164,873.

2. Consequent upon such an order being made, various indemnities for liabilities would follow arising from the husband’s occupation of C Town.

3. In respect of the company, the husband sought that the wife resign as a director and secretary and transfer to him all of her shareholdings as well as relinquish any beneficial entitlements in loan accounts (or otherwise) she may have in the Pieters Trust (No 2).  For the reasons that follow, I consider it inappropriate for the court to be involved in that issue.

4. Later, I shall deal with a business called “D Pty Ltd”.  The husband sought that consistent with the transfer of the company to him, he transfer to the wife any interest in D Pty Ltd and then a series of orders to give effect to those transfers.

5. Consistent with the position of the wife in relation to sorting out the superannuation, the husband sought an order that he pay $30,500.28 to satisfy an order made on 3 September 2015 with which he had not fully complied.

The positions of the parties

1. The orders set out above look very simple and one might wonder why there was a dispute.  This case was bitterly contested and as can be seen, seven years has passed since separation occurred.  There have been accusations of lack of disclosure of documents, improper removal of money and a lack of candour in respect of giving evidence.  All of those have to be traversed. 

The summaries of argument

1. Each party filed a summary of argument which is the document relied upon to indicate what documents a judge should read.  But it also gives advance warning to both the other party and the trial judge how that party presents the case for determination.

2. The wife filed her summary of argument on 17 September 2017. In a vague way, the wife said the contributions of the party were an issue as was the husband’s failure to make full and frank disclosure. Those issues are dealt with but the wife’s case was that there should be an equal adjustment of all non-superannuation assets. It was said by her counsel that her approach was a “concession” notwithstanding her “overwhelming” contributions particularly as the result of her friendship with a Mr G. If both parties had accepted that concession, contributions would be largely irrelevant as would any adjustment under s 79(4)(e) of the Act.

3. The husband filed his summary of argument on 7 September 2017. This was drawn by his counsel. It too canvassed contributions in many forms and then addressed issues under s 75(2) of the Act.

4. At [31], the summary of argument of the husband said that if the court excluded the value of what is described below as the “H Town project”, a payment to the wife as proposed by the husband, “will effect an equal distribution” of the assets “identified” in the table provided by the husband’s counsel.

5. The case seemed to be vaguely conducted along the lines that the court had to determine the assets for division and then divide them equally.  However, in final address, counsel for the husband announced that if there had been any “concession” as to an equal outcome, it could only be on the basis that the court accepted the husband’s “pool” of assets.  Some variation on that position occurred during the hearing because it was accepted that some assets and their values were no longer pursued such as bank accounts.

6. Although there was an expression of surprise if not complaint by counsel for the wife about what seemed to be a departure from the way the case was conducted, my view is that it was always understood that the husband wanted his “pool” to be the basis of the equal division. 

7. Counsel for the husband conceded, as did counsel for the wife, the court was at large to assess the matters appropriately on the evidence so that the outcome was ultimately just and equitable to both parties. 

The issues

1. Notwithstanding the apparent confusion, the identified issues are:

   ·    Should C Town be transferred to the husband or sold and if it is to be transferred, what is its value?

   ·    How to treat items in the “pool” that were not valued?

   ·    How to treat the parties’ respective present bank accounts having regard to the seven year separation?

   ·    Does the wife own 100 per cent of a Country J property or is her interest only one-third and what is its relevance anyway? and

   ·    What to do with the superannuation fund payment dispute.

2. In addition to those issues, because of the position adopted by the husband, the final issue is what is the appropriate alteration of interests such as to affect a just and equitable outcome.  In other words, it is not appropriate to presume agreement that the assets should be divided equally.

The evidence about the relationship

1. Prior to the parties meeting, the wife was the owner of a residential unit in Country J.  She purchased it in 1990 with accumulated savings and money borrowed from the Country J Government Housing Bank.  She and her sister shared the outgoings and mortgage repayments.  That unit has an agreed value of $6436.  Modest though that sum may be, it was included in the list of assets (as it should have been) but there is no evidence that would enable me to make a finding that it was treated by the parties as jointly owned property or that it cost them money.

2. In 1991, the wife met Mr G and became his personal secretary travelling with him around Country J and then overseas.  Mr G did not speak the Country J language.  Mr G becomes an important figure in these proceedings because he provided to the wife and, occasionally the husband, a huge amount of money.  The issue is how to assess the impact of those monies and in particular, whether they are a contribution by the wife alone.  Mr G is now dead.

3. Mr G also incorporated a company called K Pty Ltd which the court was told has now been deregistered but it remains a part-owner of one of the Country J properties which the husband says belongs to the wife.  Absent evidence and some unequivocal statement of law about what happens in Country J succession law and corporate law, I propose to treat the asset according to the face of the title and therefore ignore those non-party interests. 

4. The wife also gave evidence that the apartment she acquired when she was 21 years old belonged to her sister because that was the arrangement she made “a long time ago”.  I do not have to make any finding about that because the wife included it in her list of assets.  Having regard to its minimal value, far too much emphasis was placed on pursuing that issue.

Mr G

1. It was the wife who introduced Mr G to the husband.  Indeed, Mr G invited the husband to go with he and the wife on a business trip including into Country L where the husband wanted to promote his own business activities.  Over a period of approximately two months, at the expense of Mr G, the parties travelled to parts of Asia.  It was during that trip that the wife fell pregnant with the parties’ first child.

2. Mr G took a liking to the husband as he did for the wife because he lent them both money but the conflict in the evidence lies in whether his generosity can be seen to have its genesis in the relationship with the wife.  That generosity extended to the forgiving of a loan to both parties.

3. The wife said that between April 1996 and July 2012, Mr G gave to her $3,562,776.96.  She listed the payments and was not challenged about them.  Consistent with his generosity but perhaps more with a focus on the wife’s family, Mr G also provided money to her sisters and paid for the education of the wife’s nieces.  In her assertion in evidence, the wife said that Mr G “gifted to me” the relevant money.  The husband does not accept that to be the case referring to monies as having been given to the parties jointly.

When the relationship began

1. When the parties first met, the husband was involved in a wholesale business and his assets included some stock, a car, household possessions and furniture and cash in the bank.  He thought that the money was about $150,000 but there is no evidence of that and I would not be prepared to accept such an assertion without corroboration because he admitted in evidence that he was not good with dates and indeed, I would not accept that he was good with figures.  On the other hand, the wife had at least savings of $120,000 and Country J property.

The husband’s inheritance

1. In August 2003, well into the relationship, the husband received $350,000 from his father’s estate some of which he gave away to the three children of his first marriage.  Again, his memory was not good but he thought that the money left over was used for “family expenses and business expenses”.  There is no doubt that he received the inheritance because the documents from the probate file were produced but what happened to that money remains a mystery.

M Street

1. By the time of the marriage, the wife had the savings in the Country J bank which she estimated to be about $120,000.  In 1996, the parties purchased the M Street property for $420,000.  The parties dispute the purchase price but importantly, the source of the money is the relevant issue.  The wife said that she transferred $120,285 from her Country J bank account to her Melbourne Westpac account and that was used as the deposit.  She said that as the husband had no money, they borrowed the balance.  The husband was equivocal about whether the wife’s savings went into the property.  His equivocation does not overcome the fact that there is no dispute about the money coming into Australia and it seems to have been around the time of the purchase.

2. Having acquired M Street, the house was renovated.  The wife said that Mr G sent her $100,000.  The husband’s response was that he had no recollection of that payment.  He conceded that the house was renovated.  Absent some indication to indicate that he had money, I accept the wife’s explanation.  That $100,000, was a significant financial impetus towards the parties’ wealth.

3. The husband said that in his recollection, their borrowings were through a firm of solicitors.  Importantly, he said that the house was initially purchased in the name of the wife.  That seems consistent with her making the major deposit using her savings as no other explanation was given. 

4. The husband said that in 1997, funds were borrowed in joint names from N Finance but he described those monies as being used not just for the renovations but also to inject capital into the business.

5. There appears to be no dispute that funds were borrowed but I find the substantial portion of the money to acquire the M Street house came from the wife and there is no reason for me to doubt that Mr G made the payment in October 1997.  The husband said that the borrowings in 1997 from N Finance were used for renovations and that is the same time that Mr G’s money arrived.  Having regard to the view of the husband that some of the borrowed funds went into the business, I accept the wife’s version that Mr G’s money was used substantially for renovations. 

Vacant land

1. In the middle of 1998, the parties purchased a vacant block of land.  The wife said that this purchase arose out of a discussion with Mr G and the idea was that they would build a home for all including Mr G to live.  She said that Mr G provided “approximately $550,000”.  In reality, he provided $549,994 on 29 June 1998 according to the records of the wife.

2. From the husband’s perspective, there was no dispute that the money was provided by Mr G but he said that the money was given to both of them.  However, he conceded that the property was purchased in the wife’s name and I find that to be an indication that the money was intended for the wife.  No other explanation was given for that acquisition that way. 

3. A house was not built on the property but according to the wife, it was sold in 1999 (the following year after the purchase) to enable the parties to purchase a property at O Town. 

4. The husband’s version was very different.  He said that in 2001, the parties borrowed $350,000 on a solicitor’s mortgage.  However, his evidence was that he thought the purpose was to buy a property in Suburb P.  He thought that the mortgagee money was provided by the firm of solicitors whom he named but no inquiry seems to have been undertaken to ensure that his evidence was accurate.  I find the wife a more careful and reliable historian.

5. In the circumstances, with the registration of the land in the wife’s name, and the acknowledgement of the money having been provided by Mr G, I am satisfied that Mr G was evincing an intention to make a gift to the wife.

Whose contribution?

1. At [23] of the husband’s summary of argument, the following was said:

   The husband acknowledged the generosity of [Mr G] towards the wife and at times towards the husband and wife in the form of loans and gifts.  That dichotomy gives rise to the question of whether the money paid to the parties’ benefit by [Mr G] was for one or the other.

2. The issue of how to treat such contributions was considered in Gosper and Gosper (1987) FLC 91-818. It is sufficient for me to set out the relevant paragraphs of the judgment of Fogarty J. His Honour said:

   [67]Where there has been a gift or advance by a relative to one or both of the parties to the marriage the first step is to determine the ownership of that benefaction (see Rainbird; Read). Confusion often arises at this point because, particularly with gifts of money or in kind, the evidence about it is confused and imprecise and the actual intention of the donor (the critical issue) may have been ill-defined. However, where the evidence enables the Court to determine that it is a gift to one or other or both of the parties, that is an important finding. Normally where title to a property is transferred to one or both of the parties that would be the strongest indicator of the intention of the donor. (References omitted).

   …

   [74]The critical case is where a relative of one of the parties gifts property to both of the parties to that marriage. Dependent upon the circumstances of the case it is, in my view, open to Court in such a case to look at the actuality and treat that as a ``financial contribution made directly... on behalf of'' the spouse relative.

   [75]In many such cases that gift was made only because of that relationship and in reality as a means of benefiting that relative in that marriage. It was made ``because she was a daughter of that family'' as was said in W.'s case at p. 75,527.

   [76]It is clearly a ``financial contribution'' and one ``made directly'' to the acquisition, conservation and improvement of property. In such cases it is open to the Court to conclude, if the facts justify it, that it was made ``on behalf of'' one spouse.

   [77]In other cases the evidence, including evidence that the donor intended to benefit both spouses, may not justify that conclusion. If so, the application by the parties of that property to the marriage would, at least at that point, be an equal contribution by them.

3. Counsel for the husband sought to distinguish Gosper on the basis that it related to members of a family.  In my view, the principles apply to all benefactor situations and there is no justification for being concerned that family members take any different approach to outsiders.  It was not argued that there was some form of rebuttable presumption of advancement.  To this point, I find that the payments made by Mr G, albeit that he knew that the money was to be directed towards the acquisition of property to be used by both parties, were intended to be under the control of, and belonging to, the wife as can be seen in the acquisition and registration of the title.  I find that those payments are a direct financial contribution solely by the wife.

1998 onwards

1. In the middle of 1998 also, Mr G provided the wife with nearly $150,000 for the purposes of buying a car.  She bought a German motor car.  The German motor car (now much less valuable), remains in the control of the husband.  Albeit that car is ignored by me in the list of assets, a gift to the wife was intended.  It is an example where both parties benefited as a result of the wife’s benefactor.  The money was provided for a motor car and the wife did not drive but the gift was still in the gift to her.

O Town

In 1999, the parties decided to buy a property and paid $160,000 for O Town.  Mr G came good with $850,000 of the $860,000 purchase price.  There is little dispute about this transaction from the perspective of the husband.  He said that he and the wife were “surprised” when approximately $800,000 was received as a gift from Mr G.  Again, the property was in the wife’s name.  For the same reasons as above, I am satisfied that this was a contribution made by the wife arising out of her connection with Mr G. It was not put to the wife that the logic behind acquiring the property in her name alone was for asset protection purposes or some form of tax benefit.  On that issue, the parties remained silent.  Absent some indication as to why the property was so acquired, I find that it was connected with the relationship principally between the wife and Mr G.

1. The parties borrowed money against the O Town property in 2004 some of which was used to renovate the M Street property.  Other properties were purchased along the way including a warehouse in 2003 in Suburb Q for which the parties paid $1.4 million.

Major borrowings

1. According to the husband, most of the funds for properties were borrowed.  The wife had an entirely different perspective.  She said she had $850,000 in her overseas R Bank and she transferred that to meet up with what she described as a $450,000 mortgage from S Finance.  The husband acknowledged that the mortgagee was S Finance but he did not seem at all clear about the balance other than to acknowledge that the wife claimed that she had contributed $850,000 to this particular property.

2. The wife’s evidence was that in March 2003, she obtained $850,000 from Mr G.  She made that assertion in paragraph [31] of her affidavit and pointed to the date as 19 March 2003.  Although the wife said that the purchase occurred in August 2003, it was the husband who said that she was wrong because the property was bought in March 2003.  Again, on the basis of the timing, and having regard to the lack of challenge to the wife’s statement about the amounts of money received, I find that this was money provided indirectly by Mr G. 

3. The wife was cross-examined about her interests in R Bank.  There seemed little dispute that she had an account but the husband’s complaint was about adequate disclosure.  However, the focus of much of the cross-examination was on the more recent period of the years subsequent to separation.  I find some of the money for major acquisitions to which I have just referred came from the wife’s R Bank and it was there that Mr G had again been generous by his deposits.  There is no other explanation because there is no evidence that the wife (or the husband) had any of the resources to generate such capital.  There is no suggestion that the business conducted in Australia was earning those sorts of amounts.  In addition, it could not be said that the husband was the recipient of these amounts because the money was paid into the wife’s account.

Suburb T

1. In 1996, a new property in Suburb T was acquired and it was where the parties moved to live.  The husband’s youngest child from his first marriage Ms U, then aged 15 years lived with the parties along with their two children.  All children attended private school and the fees were paid by the husband and the wife.  That contribution towards the husband’s child must be seen as a contribution by the wife.  That role by the wife was continued until around the time of separation when she moved to Country J.  The husband filed an affidavit by his son Mr V, an assistant professor, who said that in 1993 when, at the age of 14, he met the wife and grew to love her as part of a bigger family.  He described the husband and wife as “very happy running their business together”.  He said they worked very well together and often discussed new business ideas.  He spent most weekends with the husband and wife and described her as having a strong work ethic and a shrewd business sense.  Significantly therefore, from the objective point of view through the eyes of a 14 year old leading into adulthood, this was a happy family the members of which were all working diligently.  He was taken into the family as an integral part albeit on a part-time basis. 

2. When I deal with the post-separation period, the wife having left Australia, the husband continued the parenting role.  I intend to balance out the evidence of the husband’s assertions about the role he fulfilled taking into account the description given by his son.  Insofar as it was suggested to the wife that after separation, she did not fulfil a significant parenting role, the son’s evidence was that the separation came as a big shock because it occurred so abruptly and the wife had been making frequent trips to Country J.  When the wife was cross-examined about that period of time, she said she was backwards and forwards between Country J and Australia.  That is consistent with the son’s evidence who said that she was making frequent trips and that the children “missed her but knew she would always come back”.

3. The husband’s son’s affidavit was very balanced and he clearly holds affection for the wife.  His evidence also indicates that in terms of the contributions of the parties, the wife had as much a role as did the husband in the care of the family save for the period immediately after separation when clearly, the husband had to fulfil that position.  I do not consider that role was significant in the context of the total relationship wherein each party fulfilled parenting responsibilities.

W Town

1. In late 2006, the parties made a lifestyle change and decided to move to W Town.  They purchased a light industrial property at X Street for $525,000.  With the assistance of their accountant, that purchase was made by a newly-created self-managed superannuation fund.  The trustee of the fund was Y Pty Ltd.  The wife acknowledged that she and the husband were the only members of the fund and its directors.

2. The parties agreed that the purchase price was $525,000.  The source of those monies is in dispute.  The husband said that the purchase price came from the sale of other properties and that there were no borrowings.  The wife’s evidence was that Mr G again provided these funds.

3. The purchase seems to have occurred in December 2006 and in January 2007, the wife received $800,000 in two payments from Mr G.

4. Whatever occurred in relation to properties that were sold, the husband gave no explanation as to why the wife’s assertion of $800,000 was not correct.  Significant renovations were done to the property to set it up for the purposes of the company which was acting as the trustee of the Pieters Trust No 2. 

5. Apart from the issue of where the money came from, there is evidence that the parties intended this to be a retirement investment in setting up a self-managed superannuation fund.  However, what occurred in 2015 has created much confusion leaving the evidentiary position very uncertain.  As already mentioned, orders were made that both parties concede have not been fulfilled and there is a dispute about what orders should be made.

The self-managed superannuation fund

1. After the parties separated and proceedings were issued, the application of the husband came before Bennett J on 20 May 2015.  The dispute before her Honour was about disclosure of documents by the wife.  However, a specific order was made that the husband provides the wife “member’s statements” of the self-managed superannuation fund.  Reference was made by her Honour to the parties undertaking a “pre-trial mediation”.

2. On 3 June 2015, Bennett J made an order, recorded as being by the parties’ consent:

   [3]The funds ($459,271) being the funds held in trust in the [Y] Superannuation Fund be paid to the husband and thereafter applied as follows:

   (a)the sum of $285,000 to the husband, such monies to be characterised as partial property settlement;

   (b)the sum of $174,274 to the wife, such monies to be characterised as partial property settlement.

3. A further order was then made that the property owned by the self-managed superannuation fund at X Street be sold and the proceeds applied to, inter alia, various costs including income tax.  The order then provided the proceeds were to be applied:

   [4](e)To the Husband an amount of $320,000, and it is noted that of that sum an amount of $105,000 be paid as partial property settlement and the balance be dealt with as per paragraph [6] below; and

   (f)the balance be held in an interest bearing (controlled monies) trust account in the name of [Y] Pty Ltd Superannuation Fund and not be released without the written consent of the parties or order of the court.

4. Paragraph [5] of those orders then read:

   That upon the sale of the said property the Husband pay to the Wife an amount of $215,729 by way of partial property settlement.

5. Attached to the order, Bennett J noted that the parties were in negotiation to sell  X Street, W Town and “believe an offer of $680,000 has been made which the parties wish to accept”.

6. The recording of these various facts by way of orders creates confusion because what might be construed as a superannuation splitting order was certainly done on accounting advice but her Honour was not exercising that power.  It is conceivable that the parties were selling X Street but the asset was actually owned by the trustee of the superannuation fund in which, each party had a member account interest.

7. On 3 September 2015 (although the order reads 3 June 2015) Bennett J made another order with the parties’ consent. It began by vacating paragraphs 4 and 5 of the 3 June 2015 orders. Unfortunately, the signed order in June 2015 has two paragraphs 4 but presupposing the order was an exercise of the s 79A(1A) power, the parties began again. This time, the orders provided for a superannuation splitting order under which 100 per cent of the wife’s interest was awarded to the husband.

8. What was obviously intended was that within 14 days, the husband, as the recipient of the wife’s 100 per cent interest in her self-managed superannuation fund member account, would pay her $340,000.  I have presumed that the husband had completed the relevant triggering of events to enable him to retire and draw down on his member account.

9. The September 2015 orders went on to provide that by 3 June 2016, the husband pay to the wife a “further amount” which when added to the “amounts previously paid to the wife” (and at that stage there was only one), should be equivalent to 50 per cent of the self-managed superannuation fund “as at the date of the orders”.  That is, by 3 June 2016, the wife was to receive 50 per cent of the value of the fund as at 3 September 2015.

10. The court noted that the parties accepted X Street at 3 September 2015 was valued at $680,000 although the words in the notation indicate that the parties believed an offer of $680,000 had been made which they wished to accept.  The calculations remain very confusing because there was no reference anywhere to what was in the member accounts and the parties do not seem to have done the mathematics.

11. To add to the present woes, the order also provided that the superannuation fund had debts which had to be dealt with in the parties’ calculations.  Unfortunately, the typed order said that there were debts “payable to the following” but the sentence stopped there.  It seems however that the parties had signed a minute which included a list but that was never incorporated into the typed and sealed order.

12. What was to be taken into account was that the wife had already been paid by the husband $174,271 from the June 2015 orders which were then discharged.  However, it now seems common ground that whatever was intended, the parties knew what each had already received. 

13. The first focus is about the reference to the “offer” of $680,000.  It now transpires that on the day of, or the day after, the order was made, the husband signed a contract for the sale of X Street for $745,000.  He conceded that he knew of the sale prior to the orders being made but the contract was not signed until (he thought) the following day.

14. The husband’s evidence about this issue is not only confusing, it is unsatisfactory.  He filed a specific affidavit setting out what he said happened.  He maintained that he worked on the X Street property including acquiring $8000 worth of bricks and that he was negotiating a partnership arrangement which he thought was to come to fruition with a Mr Z.  Mr Z changed his mind and decided he wanted all of the property.

15. The husband filed an affidavit by Mr Z who was not required for cross-examination.  Mr Z is said to have purchased the X Street property on 3 September 2015 which was the actual day that Bennett J made the orders not the day after.  There is no dispute that the purchase price was $745,000.  However, his evidence was that in late August/early September, he got cold feet about the project with the husband with whom he was discussing partnership and decided he preferred to own the property 100 per cent.  Without stipulating a date, he then said that he made an offer to buy the whole property for $745,000 but with a delayed final payment of $145,000 for six months. 

16. I find that if the contract was signed on 3 September 2015, the offer must have been made either on that day, and contracts immediately then signed, or it was beforehand.  That evidence does not sit comfortably with the notation to the order that an offer of $680,000 “has been made which the parties wish to accept”.

17. It is common ground that the husband did not tell the wife about this arrangement because he said there was an agreement with her to the effect that because of all of the work that he had done, any increase in the value was to be kept by him.  This affidavit, by the husband was not the subject of an answering affidavit by the wife nor was the husband’s evidence about this agreement with the wife the subject of cross-examination.  However, the evidence is implausible when I consider the timing of it all and the preciseness with which the calculations were done and incorporated into the orders on 3 September 2015 which was the same day as the contract was signed.  To the extent that the notation indicated what the wife understood, I find the husband was blasé about it and I do not accept that he thought the wife would not be troubled about him keeping any extra profit or net gain.  I find he withheld information from her.

18. In his affidavit, the husband said that he had done a lot of work on the property and paid wages of others who worked there as well.  The wife did not pursue that issue as much as she did the fact that he sold the property for $745,000.  I find the husband deceived the wife because the notation on the order indicates she was oblivious of what he was doing. 

19. In addition, the court was not told the correct facts even if the husband was of the view that some agreement had been brokered with the wife. 

20. The order of Bennett J did not name the creditors of the self-managed superannuation fund and that led to a dispute about what the wife was owed by the husband.  At the hearing in 2015, the accounting on the balance sheet and member accounts of the superannuation fund was incomplete when the negotiations were being undertaken for the wife to transfer 100 per cent of her member account.

21. In my view, the matter is so confusing that it is difficult to be precise about what exactly happened and more importantly, difficult to do what both parties now want the court to do.  That is, to provide a figure that the husband has to pay to satisfy what was clearly intended as a partial distribution of property. 

22. Correspondence was tended to show that the wife queried the husband’s claim for unpaid expenses.  However, in the affidavit of the husband where he set out all of what he said should be factored into these calculations, new creditors appeared.  These had not been considered when the superannuation splitting order was agreed.  Some of these expenses, such as tax and surveying expenses may well have arisen as a result of timing issues but that just adds to the confusion about what the husband owes the wife.  It beggars belief with all of the advice that the parties had that this modest problem could be made so difficult.

1. In my view, the self-managed superannuation fund should have been treated as having an asset of $745,000 as at the day that Bennett J made the orders.  That amount should have been added to other assets of the fund offset against which, should be various liabilities.  I am not in a position to know with any precision whether the claims by the husband for work he did, and for wages he paid, should be treated in some way as a liability of that fund but I suspect they should be.

2. The evidence of what to do about this debacle was less than satisfactory. The husband’s position (with an affidavit specifically devoted to it) said that:

   [23]The value of the SMSF at that time was therefore $1,153,580 less $71,867.19=$1,081,712.81. Fifty percent of that is $540,856.40. The wife has already received a total of $514,271 and the balance due to her is therefore $26,584.40.

3. The wife’s evidence was not much better. She said (as per the original):

   [84](after the incorrect and misleading orders) the husband became solely entitled to the super fund assets/this property, which he promptly sold. I have received most of my superfund entitlement as we had agreed but the Husband still owes me $50,000, which was to be paid after he sold the property, which he is refusing to pay.

4. These pieces of mathematical gymnastics, apart from being conclusion rather than facts, were wrong.

5. Surprisingly, although the husband tendered the superannuation tax return to 30 June 2015, neither party seems to have looked at it or if they had, it would seem they wanted to ignore their own figures.

6. The husband claimed that in respect of the piece of real property owned by the fund, he had done a lot of work and that needed to be recognised. However, this tax return was done well after all of those matters were undertaken so to the extent that the husband’s expenditure on bricks and wages had been incurred, they should have been legitimately included in the tax year expenses. If they were not, I see no reason why the court should factor them into the calculations now.

7. The husband set out expenses such as agent’s commission and solicitor’s conveyancing costs but those were either taken from the purchaser’s payment or must have been included in the calculations of his own solicitor who had been holding the net cash. However, by the time the end of the 2015 tax year came around, the husband had already drawn down an “income stream” of $459,271 presumably on the basis that he had retired. The tax return recorded that but the parties made no mention of it. When I asked the husband about it, he could not explain what had happened. He assured me that he did not have an “income stream” in any form of pension or annuity. The wife did not take up the point either.

8. The balance sheet of the fund at the time the orders were made by Bennett J was $568,257 but that was because the “income stream” that did not exist.  It had already been excluded as being in the hands of the husband. To rectify the incorrect orders and reflect what the parties truly intended, that amount has to be added back into the balance sheet of the fund. If so, the correct balance of the fund’s assets (as distinct from its equity) was $1,027,528 but that was on the basis of the real property being worth $680,000 not what it was sold for which was $745,000. That needs to be rectified because the sale did not occur until after the end of the tax year but the book value of the property could not be said to reflect the reality of the value as can be seen from the September 2015 sale.

9. The husband then claimed that all sorts of expenses should be taken into account to reflect what he said he still owed the wife. As examples, he said:

   ·an allowance had to be made for “sundry levy” but that precise sum was allowed for in the tax return as “supervisory levy”. Thus, that expense had been factored in by the return;

   ·an “ATO” debt was for $32,032.54 but there was no evidence of that. The return shows that the anticipated tax for the fund was $259.00. I do not know where the liability arises;

   ·an allowance should be made for “other liabilities” of $31,114 but that sum had been included in the fund’s balance sheet anyway. No indication was given as to what that represented and it could have been the very expenses claimed by the husband.

10. Both parties signed that tax return so there is no reason for the court to presume that anything other than what the parties told the Australian Taxation Office was correct.

11. The correct position should be drawn from the return subject to the adjustment for the sale of the property and the “income stream” that did not exist.

12. Thus, the assets of the funds so adjusted totalled $1,027,593 and offset against that are the liabilities claimed by the parties of $31,144 and the tax that was said to be due on the fund of $259.

13. The net equity in the fund as at 30 June 2015 was therefore $996,190.

14. The parties had agreed before Bennett J that the equity was to be divided equally which means each should have had a member account of $498,095. It is common ground that the wife was paid $514,271. Thus, rather than being owed $50,000 or $26,584.40, the wife had been overpaid.

15. All of this is confusing and largely arises out of the parties’ own calculations compounded by the confusing orders. I decline therefore to do anything further about the superannuation issue.

E Pty Ltd (Pieters Trust No 2)

1. The trust that the parties set up was designed to run their business in its various forms.  D Pty Ltd was a part of that and after separation, the wife took over that aspect of the business.  D Pty Ltd was part of the trust assets but for reasons that remain obscure, the wife, upon moving to Melbourne, obtained registration as a sole trader and has continued the business as such.  That left the trust dormant because the husband was not continuing any business activities of any substance.

The tax losses

1. A contentious issue is the tax losses accrued in the balance sheet of the trust. Neither party included these as an asset, nor could they, because it is hard to see how they fit within the definition of property in the Act. Each party however decided to pursue the control of the trust so that they could have the benefits of those tax losses. In other words, each party seeks the trust for the purposes of having the opportunity to avoid or reduce tax in the future. How that would benefit either is impossible to tell.

2. An examination of the financial circumstances of the wife shows that she earns no income and no suggestion has been made that her financial future will suddenly blossom.  The husband has the H Town project on the go but that apparently is some form of museum and there is no evidence about how that could ever raise substantial income offset against which, he could use those losses.  The husband has some plans to make some money out of the C Town property but that evidence was vague and he shows no indication of earning a substantial income in the future to the extent that the losses might assist him. 

3. For my part, the more significant issue is whether the court should be involved in such an exercise.  In reality, what the court is being asked to do is to transfer the shareholding and directorship of the trustee company and to require one of the parties to be removed from the trust as a beneficiary.  Whilst that looks relevantly simple, an examination of the circumstances under which the tax losses arose tends to suggest that the artificiality of what the parties were doing leads to a conclusion that the court should not be involved.

4. Exhibit [5] in the proceedings are the financials of the company for 2015.  Assets declared included cash, stock and debtors, the shop bond, plant and equipment but also “farm equipment”.  In addition, the balance sheet showed $40,000 of goodwill.  That goodwill must now surely be irrelevant having regard to the absence of any business.  In any event, the total assets were $237,260.  Offset against that however are creditors, some of which are now paid, of $92,031.

5. In reality therefore, the parties’ position as at 30 June 2015 was that the company had net “assets” of $145,230.  But the trust also had two other significant liabilities.

6. The first liability shown in the balance sheet was the F Bank loan.  The accountant at least acknowledged that this was a private loan now represented by the mortgage on C Town which currently stands at $661,000.  In 2015, it was $682,867.  No explanation was given as to why the parties’ private home loan was connected to the business although I might infer that the parties put their home on the line as security for the purposes of the business but for what?

7. The second aspect of the balance sheet is that the trust had lent the husband and wife $453,447.  That loan, on the net assets of $145,230, could never be satisfied.

8. To balance the ledgers of the trust, the shortfalls were offset against “accumulated losses” of $94,085.

9. The question must be asked as to how those losses arose.  Neither party gave an answer because they relied on their accountants who did not give evidence.  However, if the court looks at the 2014 loss (and the same exercise can be replicated in 2015), the major items that gave rise to those losses were apparently business expenses such as storage, rent and wages. 

10. Presuming these expenses were all legitimate for the purposes of making a profit, the business was making a gross profit in 2014 of $127,568 but to gain that, the expenses were $237,000.  The only “loan” in those expenses apart from a credit card that could attract interest was the parties’ home loan of $682,000.  This business was not making any money in 2014.  One must ask therefore how the parties managed to live unless of course the “wages” deducted was, in reality, the drawings of the owners.

11. In 2015, a smaller but similar pattern emerged.  In my view, the “losses” are book losses arising from the constant annual lack of profit which was then accumulating and balanced against the two loans that I have earlier mentioned.

12. The losses are entirely artificial and enabled the parties to see them as important because they used their home mortgage to balance the books of the trust.  In my view, the court should not be involved in permitting a contrived situation like that to fall into either the alteration of interests in property or more importantly, to guide the discretion to be exercised in the alteration of interests.

13. No current details of the Pieters No 2 Trust were provided.  The wife’s “list of assets” described the value of the trustee company as “not known”.  The husband’s position on the same issue was “Nil but company retains tax losses”.

14. In my view, this all smacks of creative accounting.  It was said that this trust had money in a bank account and that the trustee company had shares but those have to be examined in the light of the net equity from the balance sheet.  The evidence did enable a finding to be made about the legal and equitable interests of the parties.

15. I am not comfortable with the accounting because the details are now over two years old.  I therefore decline to involve the court in what I consider to be a farce and the parties can sought that out themselves.

Ms AA

1. Ms AA is an administrative assistant who worked for both parties during the relationship and more recently has assisted the wife.  Her evidence was not the subject of cross-examination and much of what she said was based on her opinion about the appropriateness of the parties’ expenditure during the relationship.  Ms AA observed that in 2010, the husband and wife were separated and the husband was spending money in a “reckless, wasteful and non-productive” way.  She then later assisted the wife who took over D Pty Ltd.  Despite the wife’s “substantial financial contributions” to D Pty Ltd, which Ms AA opined came from the wife’s interim property settlement, she said the wife devoted long hours in the business which was “insolvent” and had been so for many years.  So too, she said it remains unprofitable.

2. The evidence of Ms AA is relevant to corroborate the wife’s evidence that her money went into D Pty Ltd from the property settlement which the husband wants ignored but also it corroborates her long hours for little gain.  In terms of a contribution towards D Pty Ltd as an asset, that evidence is significant because it has all been subsequent to separation.  But a second issue arises as well.  Insofar as I have already mentioned the tax losses, the wife could not on that evidence expect the court to accept that she will have substantial income in the future against which tax losses can be applied.

3. Whilst the genesis of D Pty Ltd was the husband’s original business and the parties’ subsequent joint efforts, seven years have now passed by and for the unchallenged efforts of the wife, the agreed $60,000 value must be seen as relatively modest if not negligible in the scheme of things.  I propose to accept the evidence of Ms AA but also to place in the list of assets of the parties D Pty Ltd noting the substantial contribution made by the wife subsequent to separation.

Disclosure

1. A significant amount of time was spent by counsel for the husband cross-examining the wife about the production of documents.  She was consistently asked whether she had produced documents relating to bank accounts and in particular, overseas accounts relating to the largesse of Mr G.  The wife seemed perplexed as to why these questions were being asked and maintained that she had provided documents.  Counsel then called for those documents and the following morning, counsel for the wife, although not answering the call, produced an “aide memoir” setting out the dates of correspondence.  He complained bitterly that this approach to the litigation had been going on for years and that there was an unrealistic pursuit of irrelevancies.  I agree.

2. The focus of discovery in this case relating to the interests of the wife could only have been on two things.  The first related to overseas accounts which might have substantial sums of money as a consequence of the largesse of Mr G.  The husband knew about Mr G and having regard to the nature of his acquaintanceship, it is hard to understand why Mr G was not personally pursued to provide confirmation about all of these generous gifts.  Mr G is now dead but that does not mean that inquiries could not have been made if the husband did not accept what the wife was saying about the nature of the accounts that she held. 

3. Having responded to the call, albeit not by the production of documents, counsel for the husband did not take the matter any further.  I find the pursuit of documents perplexing having regard to the size of the assets that the parties had but more particularly, on any view, the largesse came from Mr G and as I have found, there was a contribution made by or on behalf of the wife.

4. The second issue relates to the question of the wife’s ownership of real property in Country J.  Leaving aside the fact that it is not disputed that the value of property in Country J is much lower than any equivalent property in Australia, this pursuit was also perplexing.  The husband knew of the wife’s siblings, and importantly of their occupation of various properties.  The retail business in Country J which attracted the husband’s interest was a lease arrangement.  That occurred after separation and on any view, it was modest.

5. An affidavit purporting to give evidence about the relevant assets was obtained by the husband from an American lawyer whose expertise was questionable and who was ultimately not relied upon. Valuation exercises were undertaken, no doubt, at huge expense.  In circumstances where these assets were either owned by the wife prior to meeting the husband or had little relevance to the parties’ money during the relationship, it is hard to understand why the pursuit was so rigorous.

6. I am not in any way diminishing the obligation of parties to make full and frank disclosure of their financial position but the cost must not exceed the ultimate benefit.  That certainly was the appearance here.

7. To the extent that the husband’s case was that the wife was deceitful or uncooperative, I do not so find at all.

8. On the other hand, the husband did not set out in his financial statement that he had disposed of $50,000 worth of life insurance policies.  These were with AMP.  That too was the subject of cross-examination but this time by counsel for the wife.  It transpires that these details were provided in discovery in 2015 so from that perspective, the husband could not be accused of a lack of candour.  However, when he was questioned as to what happened to that money, he was unable to say.  I found that response unhelpful.

Mr G loans

1. I have dealt with the various sums of money provided as gifts to the wife. At [77], the husband asserted that a loan of $850,000 which was forgiven almost immediately was the wife’s own money and she was using Mr G to hide the fact that she had money overseas. No objection was taken to this assertion but its proof might be considered difficult as the onus lay with him.

2. In her affidavit in reply, the wife (at [63]) said the husband was relentless in accusing her of hiding money. There is some support for that reply.

3. Whilst the obligation on all litigants in this court is to make full and frank disclosure, here, the wife gave plausible explanations as to why account documents could not be produced and to assist, she signed necessary authorities even though she knew that the husband would have difficulty getting access to information. In June 2015, details of accounts were provided but the husband has never accepted that the wife has been frank. However, the onus lies on him to show that the wife has been less than frank. There is no evidence to support that. As an example of the scatter gun approach, the husband said at [97]:

   (the wife) held and may continue to hold accounts in various [Country J] banks, and other foreign investments. During our marriage I saw bank statements relating to some of those accounts.

4. The wife subjected herself to cross-examination and was challenged as to documents which she said she had produced but nothing about what the husband had apparently “seen” was put to her. Years have now gone by and the accusations have continued. I do not find there is any evidence to justify the husband’s assertions. Even if there was, the evidence strongly supports the conclusion that such significant sums came from Mr G.

5. In circumstances where the wife was accused of lack of candour, the husband’s approach in relation to the sale of the superannuation fund asset was perplexing. 

The husband’s indebtedness

1. The husband owes substantial monies to others.  He has acquaintances who have lent him $50,000 and he currently has outstanding legal fees.  All of that seems to have been directed towards large legal fees in a case where the assets were very modest.  I express my concern on behalf of the court as to how these huge expenses are justifiable.

The valuation of C Town

1. The major asset of C Town was valued by a single expert property valuer at $1.375 m. There was apparently mutterings amongst the parties that the wife had a “shadow” expert and was going to challenge the single expert but no such application was made. It seems that the single expert was asked to comment upon some suggested comparable sales but he declined to alter his opinion. For that reason, the witness was required to attend by telephone for cross-examination.  It is asserted by the wife that the valuation is too low.

2. Mr BB is a sworn valuer and neither party challenged his expertise or qualifications.

3. Mr BB valued C Town as at 13 June 2017. He set out that his definition of a market value was the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. I accept that is the standard test.

1. Mr BB sensibly qualified his June report by saying that it was current at the valuation date but he did not accept responsibility for it after 3 months had expired. That time limit had therefore expired on 13 September 2017.

2. In respect of “comparable sales” which he used to test market interest, Mr BB said that he relied on databases and could not therefore guarantee property values that he had not inspected.

3. When considering comparable sales, there are subjective difficulties about quality and size. The relevant property has two dwellings whereas others have one. The closeness to town in one case is seen as a bonus but not in others. The town of Federal which is about 20 kilometres away was seen as not comparable property because it is a different type of lifestyle, size and demand. Mr BB described rural residential property in Federal as being held in high regard. Other property at CC Town which sold for $1.57 million was seen by Mr BB to be in a “different area” with “quite a travel distance” difference. But, the land component and topography were thought to be superior without issues of flooding.

4. Counsel for the wife took the valuer through a number of properties some of which he was unaware and others he dismissed as not being comparable. For example, Mr BB excluded a vacant land sale not just because it had no improvements but also because it had elevated status and apparent ocean views.

5. Undoubtedly, whilst this is all a subjective assessment, Mr BB opined that it was a “volatile” and “improving” market and the area had seen an 18 per cent increase in the last 12 months but had “firmed”. He readily acknowledged that there was room for a 10 per cent variation (5 per cent each way) and that it was not an exact science.

6. Mr BB had valued this property three times and on the first two occasions, he had assessed it at $1.25m but on the third, he assessed it at $1.375 m.

7. In many cases, the amount makes little difference to the outcome but here, the opposite is true. A higher value than $1.375 would most likely mean that the husband could not buy out the wife and in any event, his proposed financial backer had written that he would participate at $1.375. It is also important to recognise that notwithstanding what the parties had, they now have very little. Their business interests are negligible and they have spent the money that had accrued through their superannuation investments. The C Town property is the only asset of value and each is dependent upon it for their future livelihood. In the case of the husband, albeit going into debt, his view is that he can make money from it. In respect of the wife, she is currently living in modest conditions above her shop. Each has spent an enormous amount for little return.

8. It is important to keep that context because Mr BB’s evidence was that this was an estimated value. His own increases over the years reflect what he said about market volatility but also that there is no immediately similar property. It is not known how attractive this property would be to a purchaser if “proper marketing” was undertaken. It has two residences and a pool. Much was made of the repairs needed but Mr BB dismissed those as not affecting the value in a major way.

9. I have no evidence that there is a demand for this area and property and if there was, it would have been seen in comparable sales. The fact that the husband’s generous business partner seems willing to assist him financially does not help because that relationship is founded on friendship rather than some form of commerciality. I could not see the partner as being an arm’s length willing buyer who was acting knowledgeably.

10. Mr BB offered to have another look and reassess but I consider that would just cost the parties more and achieve little. I find that it is likely that the value of C Town has increased only because of the views taken by Mr BB. If it increased to the maximum value for error of 5 per cent, that would mean an increase of $68,750. By the time selling costs, advertising expenses and preparation costs were taken into account, the potential gain would seem to be marginal.

11. Thus, notwithstanding my reservation about whether there is potential for this property to be sold for some small amount higher than the sworn valuation, I consider on the balance of probabilities that gain is not worth the pursuit even allowing for my assessment that the parties’ respective contributions are not equal. I find that I can determine a just and equitable outcome based on the value of $1.375 m and that I should accept that as the value for the purposes of assessing the interests of the parties.

Can the husband buy out the wife?

1. On the issue of the husband’s capacity to buy out the wife, the husband’s written evidence was missing.  It became the subject of cross-examination of the husband by counsel for the wife.  Having done the mathematics, it was clear that the husband could not afford to keep C Town.  He was asked how he expected the court to give him the opportunity to retain the property and he produced a handwritten document from his business partner in C Town who had offered to fund him.  This document had been in the husband’s hands only that morning but had not been produced by the husband’s lawyers.  I found the whole approach of both parties troubling.

2. With much confidence, the husband said that his business partner would assist him.  I reject his optimism because there is no evidence in any form that could be tested.  The husband had known about this dilemma for weeks because the trial had unfortunately not commenced in September and the case has been going for years.  No evidence was produced that would confirm the partner was prepared to take on what I consider to be a precarious proposition.  Importantly, on a piece of scrawled paper which the husband produced in the witness box, his partner wrote that it was “subject to getting appropriate mortgage”.  Whilst the husband dismissed that problem saying that the man was wealthy and preferred to borrow money rather than use his own, I would not be prepared to accept that without the formal evidence.

3. The logic of this approach by the husband is that the C Town property is worth $1.375 million.  He said the partner would buy 50 per cent which is $688,000 and give that money to the husband.  The husband would then pay out the mortgage of $661,000 but that would not cover his own personal indebtedness.  With that mathematical approach, the husband would have $27,000 (or thereabouts) before he paid the wife, his lawyers, his two friends and any other liabilities that he might have.

4. Against the equity, the husband said that he and the partner would borrow between $900,000 and $1 million but the obligation would be for the husband to meet the mortgage payments.  Much therefore depends upon what the husband has to pay the wife.

5. The husband has credit card debts of nearly $50,000, legal fees of $108,000 and $50,000 to friends who have provided him money.  If he had done his calculations on the basis of a payment as set out in his counsel’s outline of $164,873 for the wife, his calculations might be feasible.  But if the husband is to take on the sole responsibility for the payment of the mortgage anticipated at between $900,000 and $1 million, he has no income that would enable that sum to be serviced and if he defaulted, as he has with the existing mortgage because of impecuniosity, whilst the mortgage might be satisfied, the business partner could clearly not.  Absent some evidence from the business partner that he was aware of that risk and the amount of money involved, I would not be prepared to accept that what is being proposed by the husband is feasible.  Having said that, I shall give him the opportunity to keep the home but the turn-around time must be short because of how long this case has been extant.

H Town

1. The husband created a new entity and engaged in commencing a new business interest with the partner who has already been mentioned. The interim orders made in June and September 2017 seem to arise out of, or be underpinned by the money the husband  received but what he did with his share of the money was confusing.

2. At [198]-[201] of his affidavit, the husband said that he began a project with a partner and his contribution was funded by the money released “pursuant to the Interim Orders”. After the wife was paid from the superannuation fund, he retained the balance and based on what he said, he kept the sum of about $544,000. As also earlier described, this seemed to end up in cash but was described as an income stream by his accountant.

3. At [199] of his affidavit, he talked about the purchase of the H Town project site describing his share as being valued at $100,000. I have no understanding then of what happened to the balance of his money.

4. An examination of his financial statement shows that with no superannuation, I do not know about the disposal of precise amounts or indeed what is left. On the assumption that his financial statement was not challenged, that money has been used. As the wife did not pursue the issue, I have not troubled further. But, as the H Town money seems to have come from an interim distribution to which both parties had access, it too should be ignored.

D Pty Ltd

1. The wife’s part property settlement has also not been adequately explained but she pointed to money being spent on D Pty Ltd and her expenditure there is partly corroborated by Ms AA.

2. An enormous amount affidavit material is before the court. None of the husband’s material on that issue was the subject of objection.

3. The business was part of the parties’ corporate structure and trust and the wholesale and warehousing part operated out of the W Town area while the retail part was from a shop in suburban Melbourne.

4. The parties’ warehouse burned down and much of the damage was covered by insurance. The husband set out all of the negotiations he had undertaken to get a better outcome that that which the assessors had offered. This was not of much assistance in the end because it is difficult to assess what happened to all of the stock.  I am unsure of its relevance.

5. It was agreed that D Pty Ltd was worth $60,000 but it was the wife’s evidence that she had put money into D Pty Ltd from her partial property settlement in 2015. The retail business is run from a shop and she lives in tight conditions above it so that she does not have to pay rent. The business seems to cover its expenses but the objective evidence of Ms AA would suggest that, but for the long working hours of the wife, it would be completely parlous.

6. D Pty Ltd began as part of the husband’s small business many years ago but both parties worked hard to make something of it. They have lost all of that.

7. There was considerable emotional energy spent on describing an unedifying dispute between the parties about getting a valuation of D Pty Ltd. Having regard to the ultimate result, that was not a profitable exercise.  I again question the relevance of this approach.

8. Much of what the husband said (and to which objection was not formally taken) about D Pty Ltd related to his estimates of quantum, quality and value.  The husband said the wife had received a “significant benefit” subsequent to separation but as he had had years to sort out what that meant, his observation was meaningless in the light of the evidence of Ms AA.  There is no evidence of a “significant benefit”.

9. For example, he said (at [156]):

   With hindsight overall the business was not worth the effort and drew funds from us. We would have been better to sell the business prior to our move to [W Town] as we had an interested party and the business had reached a high point in popularity and it suffered from the move interstate.

10. In December 2014, the wife abandoned the corporate structure and began trading as a sole trader.  Her explanation was that she opened another account so that the husband could not draw from the funds. Her evidence of what the husband was doing was also corroborated by Ms AA. The wife then said (at [131]) that D Pty Ltd was a “matrimonial asset” but that since separation, she had injected substantial capital into it to keep it going. That too is consistent with the evidence of Ms AA but I do not know what was meant by “substantial capital”.  No balance sheets, profit and loss statements, BAS statements or personal tax returns were tendered.

11. The husband had an opportunity to comment on the wife’s evidence and said (at [179] et seq) that the wife had informed him (indirectly) that she had “injected” a total of $111,000 into the capital of the business since separation. Based on the potential earnings of the business, if true, that money must largely have come from either outside of the business or more particularly, from the wife’s use of her 2015 partial property settlement. It was unusual for the husband to raise such a subject and I do not know whether he was denying what was said by the wife. Insofar as the wife was referring to money from her interim property settlement, that could only have come in 2015. Thus, the money put into conserve and maintain D Pty Ltd over the years since separation must have largely come from the wife even if there was stock provided by the warehouse in W Town.

12. From paragraphs [181] to [192], the husband’s evidence wandered through issues of what was happening in the court and what was happening between the lawyers all of which was irrelevant because the parties agreed on $60,000. However, at [193], the husband said that he disputed the wife’s valuation of $40,000 because the stock he had sent “in 2015-2016” was well in excess of $100,000. He said he did not understand why the issue was difficult but “it is not resolved”. He accused the wife of frustrating a “proper” valuation because she wanted to keep the business and as such, he said he would “accept” $80,000 for the purposes of the proceedings.

13. This sort of evidence is unhelpful, irrelevant and distracting. The parties have spent an enormous amount of money on legal fees and the case had been set down for trial. The compromise may have been a pragmatic solution but the husband’s knowledge of what was happening in the business must be seen as limited.

14. It is important to note that one of the first steps in this property case is to determine the respective interests of the parties in the various pieces of property. I have accepted that D Pty Ltd is worth $60,000 because they say so but it is relevant to the assessment of the parties’ respective contributions that whilst both built up the business, presumably from a modest base, its value does not justify the enormous amount of cost that has been expended in circumstances where the husband has not denied that the wife has made such a significant contribution both in terms of time and money to something so modest in value.

Chattels

1. In his proposed orders, the husband sought some chattels. He said they remained in Melbourne in the possession of the wife who had refused to hand them over despite them being of sentimental interest. The wife’s affidavit sworn in August 2017 said (at [159]) that she agreed with some of what the husband wanted and she would organise for those not in dispute “in the next few days”. Nothing further was said.

2. However, when the husband’s counsel filed an outline of case document on 7 September, the items appeared as part of a proposed order.

3. Nothing further was said during the hearing. I have presumed that the issue is resolved. If it is not, there is no evidence about ownership other than the inferential assertion that these belonged somehow to the husband. For example, items were said to have belonged to his father and mother and another item was purchased when he was 18 years of age.

4. I do not intend to spend any further time on the issue.

Other unusual matters

1. In another unusual reference to financial matters, the husband said that in 1999, $110,000 was lent to people named DD. He said he was “unsure” whether this was repaid. He said the wife told him the debtors were “refusing” to pay and that she had asked his commercial lawyer to try and recover the amount but had not been told of any outstanding amount.

2. I found this evidence quite remarkable for a case that had been extant for so long with many disputes over discovery and hearings before Bennett J in 2015. One must ask why this issue remained outstanding such that it appears in his trial affidavit in 2017.

3. In her trial affidavit in August 2017, the wife answered the question by saying that it had been the subject of discussion and the solicitor mentioned was engaged. She said that most of the money was recovered and banked in the wife’s banking account which she nominated. Albeit this issue was not canvassed in the trial, nothing was said to avoid the matter having to be read.

Children

1. The assessment of the parties’ contributions requires the court to consider their respective non-financial contributions particularly those of a non-financial nature as homemaker and parent. Those were significant contributions but over a long relationship, it is inappropriate to focus on just one small part of the parties’ time together.

2. The husband described his efforts in caring for the children and it was the subject of cross-examination of the wife by his counsel. But in an holistic assessment, albeit not raised by, or argued by, the wife, the husband’s other children were at times also members of the parties’ household. These were not children of the marriage for the purposes of s 79(4)(c) and as such, the wife’s role in that household must be considered as a contribution to the children who were not his. It is not a significant matter here because the wife did not lead evidence about it but having regard to the fact that the husband spent considerable effort on what happened around separation and how the parenting role fell to him, not to mention counsel for the husband reiterating the point in cross-examination, this aspect of the parties’ contributions cannot be entirely ignored (Robb and Robb (1995) FLC 92-555).

3. It was not suggested that the wife did not do her share of parenting apart from after separation. The husband’s evidence did not assist me to assess whether that contribution in the years subsequent to separation has some significant weight bearing in mind the total length of the relationship and the respective roles both parties fulfilled in respect of parenting. Contributions cannot be seen in a vacuum; they must be seen in the context of the way the parties conducted their lives. Also offset against any role the husband fulfilled after separation was the fact that he had the sole use of the home even if he did pay the mortgage. The wife did not have that benefit.

What do the parties have?

1. I find the interests of the parties in property which I can identify and for which there is a discernible value are as follows (and dollar amounts are rounded off):

   C Town  1,375,000

   F Bank Mortgage                 (662,000)     713,000

   D Pty Ltd   60,000

   The Country J properties   81,000

   Wife’s jewellery   9,000

   Wife’s insurance   22,000

   Wife’s savings in Country J      38,895

   H Town interest  100,000

   1,023,895

Is it just and equitable to make an order?

1. Both parties sought that orders be made and as C Town is in joint names, it is necessary to make orders.

The assessment of contributions asset by asset or global?

1. Having regard to the time that has elapsed since separation and the use to which the parties have put their partial property settlement money, a global approach is not a fair way to achieve a just and equitable outcome. As Finn J observed in Zalewski and Zalewski (2005) FLC 93-241 at 79,978:

   It is my impression that there are currently coming before the Court a significant number of cases in which the period between the parties’ separation and the hearing of their property settlement proceedings is substantial.  The delay seems often to arise, at least in part, because the parties have initially reached some form of informal (or even formal) settlement from which one party later resiles (often for good reason).  In these long separation periods, the parties will usually have built up substantial new assets or incurred substantial liabilities.  In an endeavour to satisfy the parties that any orders which are eventually made by the Court in these somewhat complicated cases are just and equitable, it can, in my view, be very useful for Judges to assess contributions to property on an asset by asset basis.

1. A similar view was expressed by the Full Court (Boland, Thackray and O’Ryan JJ) in Pollard & Young [2010] FamCAFC 228 where their Honours said:

   (W)here there was a marriage of long duration and a lengthy period of separation before the hearing of applications for property settlement, during which time significant assets were accumulated by one or both parties, it should indicate that in such circumstances it may be more useful to undertake an assessment of contributions on an asset by asset, or, category of asset by category of asset basis: see Norbis v Norbis (1986) 161 CLR 513.

2. To take an approach here which adds in assets that the wife had but not those of the husband, where both used their partial property money, could lead to potential double-dipping.

3. That caution applies particularly here where, for example, the husband’s $50,000 insurance policies proceeds have been acknowledged as having been received but there is no evidence to indicate where they have gone. If they could be seen as having been used for living expenses, what happened to all of the “income stream” monies from the former self-managed superannuation fund? To the extent that renovations on property or indeed maintenance of property have been carried out, what was spent and from what source? It is not appropriate that I guess.

4. But, if the husband’s insurance monies have disappeared and not been explained, it cannot be fair to include the wife’s policy in the divisible list of assets even on an asset by asset basis. I consider the correct approach is to take that $22,000 into account under s 75(2)(o) of the Act.

5. The wife’s jewellery was a contentious topic with histrionics even in the courtroom about the wife taking it to be valued at the husband’s expense. Even after that was done, the husband maintained that there was much that was missing and all had not been valued. Even if he was correct, the issue of significance is how the wife acquired it in the first place.

6. All of these various matters indicate that it would not be a just and equitable outcome to take a global approach when the contributions here are so markedly different. The disparity however does not mean that the assets should be excluded from division as s 79 of the Act refers to the power of the court to alter the interests as I have described at the commencement of these reasons.

7. I consider the only fair way to assess the contributions of the parties is to do so on an asset by asset basis.

The assessment

1. C Town is in joint names. The findings above show that its genesis from a financial contribution point of view largely came from the joint efforts of the parties but the very large contribution through the wife from Mr G. I take into account that the husband has maintained C Town for years, provided the children with a place to live and mostly paid the mortgage payments. Against that, he had the use and benefit of it to the exclusion of the wife. The exclusion of the wife was her own desired outcome but because of the amount of time that she has been away from the property and required to wait to obtain her property entitlements and the benefits of her superannuation money, the husband has had a far greater benefit than she has had. The non-financial contribution of the husband in maintaining the property cannot be ignored but the evidence of the valuer would suggest that he has not maintained it to any great financial expense. There are roof leaks, neglected gardens and kitchen items not working all of which highlights that the husband focused the use of his superannuation money on the projects which interested him rather than getting C Town repaired. I therefore assess the contribution of the wife to C Town as being greater than the husband in a very significant way because of Mr G’s money.

2. D Pty Ltd and the wife’s savings are another example of the need for caution to avoid double dipping. The wife took property from the trust business in the form of stock and used it to sell and make money albeit that the profits were nominal. As Ms AA said, the long hours kept the business open. In addition, the wife’s evidence is that she used her property settlement money but if so, little can be seen to show for it. I am unable to ascertain exactly what money has gone into the business but the unchallenged evidence of the wife is that she has some modest savings now of just over $38,000 in a Country J bank. On the balance of probabilities, that money can have had nothing to do with the husband. She otherwise has nothing to show for the significant sums of money received from the partial property settlement in 2015. I propose to ignore those savings to avoid double dipping.

3. D Pty Ltd however is slightly different. It began as part of the trust business operation which in turn had its genesis in the business that the husband was conducting before meeting the wife. However, that was a long time ago. In my view, D Pty Ltd should be treated as having been an equal contribution because, whilst the wife has made the significant (but pointless) contribution since separation, some credit must be given to the husband for its genesis.

4. The Country J properties have been largely if not entirely the result of the efforts of the wife through her association with Mr G. I find there is limited evidence about how they were acquired and no evidence of financial support for them by the parties.

5. Financial and non-financial contributions have to be assessed for the purposes of s 79(4) but here, that exercise is best undertaken by the assessment of the C Town property and I record that I have done that above. I would give the husband no credit for any contribution in respect of the Country J properties.

6. I have also mentioned the wife’s jewellery. Its genesis was the largesse of Mr G. Because the evidence requires me to consider non-financial contributions as well as financial contributions, I would again find that there has been an overwhelming contribution by the wife in respect of these assets because they have come as gifts from Mr G.

7. I propose to ignore the wife’s insurance relying upon s 75(2)(o) because the husband has obtained, retained and/or dissipated far more than the wife in respect of such policies. He acknowledged having received the money but did not share it with the wife. He cannot have it both ways. This should be treated as an asset of the wife to which no contribution has been made by the husband.

8. The H Town interest of the husband is very vague and I have no sense of what will come of it but on any view, it has been largely if not entirely financed from the husband’s drawn down superannuation funds. I cannot see how I can do more than indicate that I would be double dipping to include it as a divisible asset in circumstances where both parties urged the court to ignore the fact that they had agreed to orders for partial distributions of property. In my view this is a case where such orders were questionable and had I been required to determine the issue at the time, I would have questioned whether they were just and equitable. One such issue in a question of that nature is whether the money can later be clawed back or adjusted. In this case, it is an example where that is doubtful having regard to the use to which the parties put the money. I propose to ignore the asset for division but take into account that the husband has it as a benefit.

Legal expenses

1. I have also considered the difficulty here of how to treat the parties’ huge expenditure on legal fees. They exchanged letters so each knows the amounts involved. But each has again used some of the partial distributions for that purpose. Whilst adding them back (Chorn & Hopkins (2004) FLC 93-204) might be necessary if the ultimate division of assets was not to be on an equality basis (as here), neither party asked me to do so. Each relied upon the list of assets and liabilities in their summaries. Having regard to the way they have conducted the proceedings, I find it is just and equitable to ignore those costs.

2. In terms of an overall assessment, the summation of those matters leads to a finding that the wife’s contributions outweigh those of the husband notwithstanding the duration of the marriage.

Should there be an adjustment for s 75 factors?

1. Section 79(4)(e) requires the court to take into account a series of factors. I do so here.

2. Both parties say they have limited financial resources and income. The property is what they have created and is modest and now has to be shared. Each needs a home. Each has health problems. Whilst the husband is retired, he has “projects” on the go and I see no reason to presume that he has no prospect of earning an income. He said that he could do so from the use of C Town but I consider that venture modest and it is more likely that he will end up with little capital because of what he has spent for little result. I do not find the wife is any better situation.

3. The wife has the benefit of the Country J properties but they are of nominal value and she shares them with her family. They are not a significant resource and I accept her evidence that she intends to live in Australia from now on. If she sold those properties in which she has an interest, it would do nothing to ameliorate her financial position here.

4. Neither party has anyone else to support.

5. Each has creditors but they could be paid from what the parties have and will receive. I consider there is no concern here for creditors and draw some comfort from the husband’s own evidence that his business partner has great faith in his ability to pay his debts.

6. Except for taking matters into account under s 75(2)(o), I do not see any basis to distinguish between the parties other than that because of the contributions findings, the wife will have more capital than will the husband. That has to be cautiously considered because although she will have more from C Town, the Country J assets and her jewellery and savings, the husband has H Town. An adjustment for capital is hardly warranted here.

Outcome

1. As a general assessment therefore, I will give the wife 60 per cent of C Town, 50 per cent of D Pty Ltd, all of her Country J assets, and 90 per cent of her jewellery. Arising from that, I give the husband 40 per cent of C Town, 50 per cent of D Pty Ltd and 10 per cent of the wife’s jewellery.  As indicated, I propose to ignore the wife’s insurance and other assets.

2. As the husband wishes to keep C Town, he should have the opportunity to do so providing he pays to the wife a rounded off figure of $400,000 which is calculated from the percentages above.

3. Justice and equity is determined not by the percentages but rather by the underlying value of the assets each receives. If the division is limited only to what is divided, the division comes out at about 60 per cent in favour of the wife. If all of the assets as set out earlier including the husband’s present interest in H Town are considered, the division still comes out somewhere near 60 per cent in favour of the wife. That represents what the parties currently have even if the genesis of the H Town project came from a partial distribution of property.

4. Taking into account all of those matters, I am satisfied that a payment to the wife by the husband of $400,000 is a just and equitable outcome. He should have the opportunity to buy the property and failing that payment by 19 January 2018, or such other date as the parties agree, the property should be sold.

5. If C Town is sold, the cash after the discharge of the mortgage and sale associated costs should be added to the other assets referred to in paragraph 181 above and then divided in the proportions set out in paragraph 207.

I certify that the preceding Two Hundred and Eleven (211) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 5 December 2017.

Associate: 

Date:  5 December 2017