PILGRIM and PILGRIM

[2011] FCWAM 35

JURISDICTION : MAGISTRATES COURT OF WESTERN AUSTRALIA - 150

TERRACE ROAD

ACT : FAMILY LAW ACT 1975

LOCATION : PERTH

CITATION : PILGRIM and PILGRIM [2011] FCWAM 35

CORAM : DUNCANSON M

HEARD : 11 & 12 APRIL 2011

DELIVERED : 23 MAY 2011

FILE NO/S : PTW 4780 of 2009

BETWEEN : Applicant AND Respondent

Catchwords:

Property settlement - Australian Taxation Office liability, equal division

Legislation:

Family Law Act 1975 (Cth) s 79
Family Law Act 1975 (Cth) s 75(2)

Category: Not Reportable

Representation:

Counsel:

Applicant : Self Represented Litigant
Respondent : Self Represented Litigant

Solicitors:

Applicant : Self Represented Litigant

Respondent : Self Represented Litigant

Case(s) referred to in judgment(s):

Biltoft and Biltoft (1995) FLC 92-614

Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143

Khademollah and Khademollah (2000) FLC 93-050
Kowali and Kowali (1981) FLC 91-092

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED

1The parties separated in June 2007, after 20 years of marriage. They have been unable to reach agreement in relation to the division of their property.

BRIEF BACKGROUND

2 [David] is aged 45 years. He is a self-employed wholesaler. [Barbara] is aged

44 years. She is an assistant.

3 The parties married in December 1987 and separated in June 2007.

4The parties attended mediation and reached an informal agreement as to the division of their property. They intended to sever their financial ties in relation to their business with effect from 5 November 2007. The family home was sold in March

2009. The parties’ financial transactions during the intervening period came under some scrutiny at the trial particularly in relation to funds received by both parties.

5At the commencement of the trial both parties confirmed their agreement that there should be an equal division of net assets. It was also agreed that the joint self managed superannuation fund would be dissolved. Upon the sale of the assets of the fund, the net gain or loss would be shared equally between them. The parties confirmed that I should make orders by consent in terms of paragraphs 3 and 4 of the Final Orders Sought in the applicant father’s Form 1A Response filed 3 November

2009.

6What was in dispute was how the pool of assets and liabilities was to be constituted. There was disagreement as to values of certain assets and also whether sums of money received by each party should be added back into the pool.

7It was agreed that David would retain the business of [OEO], the value of which was also agreed. What had to be determined was how the net sale proceeds of the former matrimonial home should be divided to achieve the equal division overall. Those proceeds are currently held in an interest bearing account in the joint names of the parties.

8 On Barbara’s calculations the entire sale proceeds would be paid to her. On

David’s calculations he would be entitled to receive part of those funds.

9 The matter was complicated by David’s liability to the Australian Taxation

Office (“ATO”).

THE PARTIES AND THEIR EVIDENCE

10 Both parties were self represented. Neither presented their case adequately.

Documents which would have been of assistance at the hearing were not available. Much of the cross examination was unhelpful and at times the parties concentrated on matters which were not relevant to the issues which I had to determine.

11 The fact that the parties agreed to sever their financial ties but then maintained a financial connection for about 18 months thereafter has made the task of ascertaining the true position extremely difficult, particularly in the absence of relevant and important documents.

12 Although I consider both parties endeavoured to be truthful witnesses, it was clear that both had very different recollections of events and both were prepared to embellish their accounts of events to suit their case.

13 Barbara concentrated on insignificant detail, at times losing sight of “the bigger picture”. David was often unable or unwilling to follow her line of questioning and to respond adequately.

14 Neither party provided the Court with adequate information regarding the taxation liabilities. This was very unsatisfactory given the significance of that issue.

15 In view of the deficiencies in the evidence and the way in which the case was presented, I have, of necessity, had to take a fairly robust view when determining the issues.

THE LAW

16 The approach to be taken in relation to an application for property settlement pursuant to s 79 of the Family Law Act 1975 (Cth) is a four step process. (Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 Those steps are:

•To make findings as to the identity and value of the assets and liabilities of the parties;

•To identify and assess the contributions made by the parties within s 79(4)(a), (b) and (c);

•To identify and assess the s 75(2) factors, together with any matters relevant pursuant to section 79(4)(d)-(g); and

• Consider whether the proposed orders are just and equitable.

17 Although the parties agree that there will be an equal division of their net assets I

must, nevertheless, ultimately consider whether such a division is just and equitable.

SHORT RELEVANT HISTORY

18 In 1990 the parties established the business known as OEO. They were both directors and shareholders of [Company 1], the trustee for the Family Trust which

traded as OEO. The parties were also directors and shareholders of [Company 2], which, Barbara deposes, was a company established to create an Employee Shared Benefits Plan accepting pre distribution profit from the Family Trust.

19 In about 1995 and for some years thereafter the parties invested in what was thought to be a tax effective investment scheme run by Budplan. The ATO subsequently disallowed tax deductions for Budplan investors. Each party incurred significant personal debt following the issue of amended Notices of Assessment.

20 In 1997 the parties purchased the [former matrimonial home] in their joint names with a mortgage from Bankwest.

21 The parties were also directors of [Company 3], the trustee for the

Superannuation Fund. The fund has a liability to the ATO which is understood to be

$56,393.

22 The parties separated in June 2007.

23 The parties reached agreement as to the division of their assets. The terms of that written agreement dated 5 November 2007 are as follows:

“Resolution of general financial term on separation of [David] and
[Barbara Pilgrim]

Held at Ord Group Level 2, 47 Colin Street WEST PERTH WA 6005

Friday 26 October 2007

Present: [David Pilgrim] [Barbara Pilgrim]

[Craig Vivian (Craig)]

The below terms may be varied once the Australian Taxation Office has responded to the settlement request and a final position is known.

1.0 Terms agreed by both parties

1.1 Financial assets are to be split on a 50/50 basis;

1.2 [David] to retain the business “[OEO]” and assets and liabilities there on, the business is operated via the Family Trust;

1.3 [Barbara] to resign as a director and be removed as an appointor of the trust once the business value has been agreed;

1.4 [Barbara] to be employed fulltime under a normal employment contract and be entitled to normal employment conditions as outlined under the act. i.e. 20 paid annual leave days per year;

1.5 No value to be attributed to [David’s] or [Barbara’s] existing leave entitlements, all these are to be waived;

1.6 [Barbara] to receive a net weekly wage of $561 per week, plus retain current fully maintain vehicle, until the family home is sold, any excess paid over this figure will be offset against the agreed capital sum [David] is to pay [Barbara];

1.7 [OEO] to pay [Barbara] $700 per week to cover rent on living expenses, being repayment of agreed capital sum, subject to clause 1.6;

1.8 [David] and [Barbara] to jointly continue to meet mortgage payments on house;

1.9 Once family home is sold and housing loan paid out, [Barbara] is to be employed on a gross salary package of $50,000, this is to comprise a

$35,000 base salary plus a fully maintained vehicle not to exceed an annual cost of $15,000 inclusive of any Fringe Benefits Tax payable by [OEO]; [David] is also to pay [Barbara] $700 per week as reduction of the capital sum owing to transfer [Barbara’s] 50% interest in the business.

1.10 Interest is to be charged on the capital sum, the interest rate is to be on commercial terms, and is calculated on the reducing balance until the loan is paid out;

1.11 [David] and [Barbara] were both happy to based value on the cash profit figure and not adjust for commercial salaries, depreciation etc, based on a current cash profit of $30,000, [David] felt the business would be worth $90,000 on the 3 times multiple, but would value it at $100,000, hence [Barbara’s] interest would be $50,000. [Barbara] felt the business profit could improve by another $15,000, this would value the business at

$135,000. An agreement was reached to value the business at

$160,000.00, [Barbara] to receive $80,000.00.

1.12 Both parties agree, if the payments can be structured in a tax effective manner, then will support this, also long as the after tax effect does not change;

2.0 Terms still to be agreed

2.1 A current offer to settle has been tabled with the Australian Taxation Office in relation to the outstanding tax debt, at the time of the meeting no response had been received from the Tax Office, the proposal was to offer

$50,000 as a final settlement on the debt owing.

The above is a true reflection of the points discussed and is to be used as the basis for the financial separation agreement.

Signed

[David Pilgrim] [Barbara Pilgrim]

5.11.07”

24 With effect from 5 November 2007 the parties took steps to implement their agreement.

25 On 25 February 2008 Barbara renounced her interest in the Family Trust.

26 Barbara continued to work in the business, she says until about November 2008 although David says it was until February 2009.

27 As at 18 March 2009 David’s debt to the ATO was $127,650.65. Barbara’s debt to the ATO was $141,377.60.

28 On 20 March 2009 settlement of sale of the former matrimonial home took place. From the sale proceeds of $650,817.70 the following loans were paid out:

Equity Access Account xxx xxxxxxx $97,276.22

Equity Release Account xxx xxxxxxx $149,754.30

Gold Home Loan xxx xxxxxxx $288,731.64

Business Cheque Account xxx xxxxxxx $113,543.09

Complete Account xxx xxxxxxx $602.00

29 The balance of the sale proceeds amounting to $115,022.00 was paid into Bankwest account number xxx xxxxxxx pending determination of the parties’ claims. The amount of the funds are agreed for the purposes of these proceedings in the sum of $116,983.

30 The ATO has waived Barbara’s debt. David’s debt which, as at 17 August 2010 was $136,109, remains outstanding.

31 A divorce order took effect on 10 April 2010.

ASSETS AND LIABILITIES

32 The parties were able to agree the value of some of the assets and liabilities but others remain in contention. Barbara provided a schedule of assets and liabilities. There are two areas of dispute with respect to the pool of assets and liabilities, namely:

• the value to be attributed to certain assets and liabilities;

•whether sums of money which are no longer available should be added back into the pool as notional assets or “addbacks”.

• Artwork.

33 Barbara said this item is in David’s possession and she attributed a value of

$1,750 to it. David agreed with the value but said that he did not have this item in his possession. He said Barbara must therefore have it. I am unable to ascertain whether

or not either party has this item in his or her possession and accordingly I intend to exclude this item from the pool.

• Barbara’s Furniture and Contents

34 Barbara values her furniture and contents at $4,000. David said the value is

$20,000. Barbara said that at separation she took an outdoor table, a torn leather lounge, a bedroom suite, an old television cabinet and, on resale, she would be lucky to achieve $4,000 for these items.

35 From cross examination it appeared that the outdoor table was in fact a reasonably expensive item when first bought and the lounge was a leather chesterfield. Barbara acknowledged that she also had a number of other items including a 50’s style cocktail cabinet, Noritake tea set, Royal Albert set, study desk and chair. She said that she would not get much for these items if sold. I intend to accept the Barbara’s value of $4,000 for the furniture and contents. She has the items in her possession and is therefore likely to be aware of their condition and second hand value. Although David asserts a higher value he has not provided any evidence in support of that value.

36 The onus is on the party seeking that an adjustment be made for the value of chattels in the overall property settlement to provide evidence of the value. Khademollah and Khademollah (2000) FLC 93-050

• David’s furniture now sold.

37 Barbara attributes $3,000 to furniture sold by David.

38 David said that at separation the parties divided their furniture between them.

He has sold certain items but they were included in his share. His furniture and effects are reasonably valued at $4,000 and included in the pool as such. The parties divided the furniture between them. Each party has furniture and contents valued at about

$4,000. I intend to exclude this item from the pool.

• Barbara’s Jewellery

39 Barbara attributes a value of $780 to her jewellery. It appears this value relates to a ring containing a diamond solitaire with five diamonds on either side. David stated that the value is $12,000.

40 Barbara acknowledged that the ring cost about $4,000 when purchased [overseas] in 1997. However, she says she had it valued at Cash Converters. She produced a business card from Cash Converters, Osborne Park on the back of which was written the value of the ring at $780. Barbara conceded that the ring had been insured for $12,000. David pointed out $12,000 was the value she attributed to the ring in her Form 13 financial statement. She explained that she had inserted the insurance value in the form but that is not the resale value.

41 I have some doubt as to whether the value of the ring is only $780. There is no indication from the Cash Converters business card that the item referred to is in fact the ring in question. Barbara acknowledged it was bought overseas for $4,000 and is insured for $12,000. I consider the value asserted by David to be too high but similarly the value from Cash Converters to be low and unreliable. Neither party has

produced a reliable valuation of this item. I intend to include it in the pool at $4,000. This is the figure Barbara says the parties paid for the item and that is the only reliable evidence regarding its value.

• Barbara’s Artwork Prints

42 Barbara attributes a value of $200 to these prints. David said the value is

$1,000. Again I have no independent valuation of these items. Barbara said they are in the theme of Greek mythology. Some of them might have cost as much as $100 new, others can be purchased at the shop called “Thingz” for $25. There are eight of them. She estimates that they are worth $200. I intend to accept her value. She is more likely to be aware of their condition as they are in her possession. David has not provided any valuation to support his asserted value.

• Wife’s Advance

43 Pursuant to the informal agreement Barbara was to receive $80,000 as her half share of the value of OEO. She acknowledged she had received this sum. David’s case appeared to be that she had in fact received more than $80,000. The sums she received were as follows:

• $60,000 by way of weekly payments of $700;

• $16,000 from sale of shares;

• $9,000 being withdrawals made by her from Bankwest account number xxxxxx;

• $10,000 being the cost of her course at [Coventry] Business School.

44 Barbara commenced the course in February 2007. Payments of $1,000 per month for the course were to be debited from the OEO account until December 2007.

45 I intend to disregard the payments totalling $10,000 for Barbara’s course. This was an agreement reached prior to separation and all but one payment had been made prior to the date of the agreement in November 2007. The amount therefore received by Barbara from the other sources is $85,000.

• Husband’s Advance

46 Barbara said that David had received an advance of $20,000 from the sale of shares. It was established that from the sale of shares each party each received approximately $16,000. Barbara was unable to identify the difference of $4,000. I therefore intend to include David’s advance in respect of shares at $16,000 having taken the same amount into account for Barbara.

• Business Overdraft

47 At settlement of the sale of the home the business overdraft account number xxx xxxxxxx was paid out in the sum of $113,543. Barbara said that the overdraft should be “capped” at $57,715 being the balance at 2 November 2007. At settlement of the sale of the home she signed the Request to Release Security. She said that after she had done so David amended it to include an instruction to Bankwest to pay out the business overdraft. She therefore sought to have the difference, which she calculated to be approximately $57,000 added back into the pool. Her case is that David made a number of payments for his own personal use or benefit from the business overdraft.

As a consequence the net sale proceeds of the home available for division between the parties were less than they would otherwise have been.

48 David denied amending the document after Barbara had signed it. He said that the bank required payment of the overdraft at settlement.

49 He pointed out that the date of the agreement between the parties was dated

5 November 2007. A number of payments were made on that date, including a substantial payment to creditors.

50 The bank statement in fact shows that the overdraft went from $57,150 to

$70,015 on 5 November 2011.

51 It was necessary to examine as carefully as possible what the proposed addback of $57,000 was comprised of.

52 Barbara deposed the parties had agreed that each would pay $250 per week towards the home mortgage repayments of $500 per week. She paid her share to the joint account from which the mortgage was then paid. David’s share was paid from the business account instead of from his personal account and was added to the overdraft. Barbara calculated David’s share of the home mortgage payments to be

$16,000.

53 David’s accounts with Foxtel, Synergy, Telstra, Alinta Gas and entertainment expenses were also paid from the business and thus increased the overdraft. Barbara worked in the business until about November 2008. She acknowledged that she authorised these payments. She pointed out however that she did not gain any benefit from these amounts and yet she paid for them, indirectly, when the overdraft was paid out from the sale proceeds of the home which were joint funds. Barbara initially estimated that the amount of these expenses was as much as $24,000 per year for two years. She then conceded that the amount would be about $500 per month over 16 months, that is $8,000.

54 It had been agreed that OEO would pay Barbara $700 per week being payment of the agreed capital sum of $80,000. This was paid to her monthly in the sum of

$2,800 per month and added to her salary. For 16 months $2,800 was paid to her totalling $44,800. These payments were included in the overdraft.

55 It appears to me that Barbara’s case in this respect has merit. The payments in question, namely mortgage repayments totalling $16,000, utilities totalling $8,000 and Barbara’s payout figure of $44,800, having been paid from the business, have increased the overdraft. These figures total $68,800. The responsibility for payment of this amount was David’s and these payments should not have been derived from joint funds.

56 David contended that OEO continued to meet joint liabilities of the parties for which he has not been given credit. The parties had a Bankwest loan for the purposes of buying and selling shares. The interest payments on that loan were met by the business and he quantified these in the sum of $11,000 during the period in which the

parties had separated but prior to the sale of the home. Barbara benefitted from these payments.

57 He referred to another account being the second loan over the home. The business met the interest repayments on that loan for a period of time which he quantified in the sum of $12,000. These two amounts total $23,000.

58 Under cross examination David then acknowledged that not all of these interest payments had been met by the business. Taking into account payments which were made to the business account he modified the figure which had benefitted Barbara down to $15,000.

59 David said that he paid the tax liability of the business, half of which he considered should be attributed to Barbara and therefore taken into account. He was referring to a debt of $44,888 owed by Company 1 as trustee for the Family Trust. I disagree with this proposition. It was agreed that David would retain OEO and its assets and liabilities and the tax liability of the business was a component of the business.

60 David said he paid $7,500 for painting the former matrimonial home and getting it ready for sale. This benefitted Barbara and should be taken into account.

61 David did not deny that sums applied to his personal use had been withdrawn from the overdraft account. Accounts for which he solely received the benefit were paid through the business. The amounts which Barbara was paid, namely $700 a week as her repayment of capital was also paid from business overdraft.

62 It was clear from the evidence that there had been considerable intermingling of David’s personal and business expenses during the period from 5 November 2007 until the sale of the home on 20 March 2009. Bank statements were produced for various periods which provided only a “snapshot” of the position at any one time. All of the necessary documents were not available and I was not provided with documents which would enable me to calculate with any certainty the amount David received for his sole benefit which directly increased the overdraft.

63 It appears that David’s case for reducing the amount by $15,000 being interest on the parties’ personal accounts and $7,500 for painting and work done on the house are legitimate deductions from the amount sought to be added back by Barbara.

64 These items total $22,500 and should be deducted from the figure of $68,800.

65 The difference is $46,300. That is the figure which I intend to include in the asset pool as funds received by David, included in the overdraft, which was ultimately paid out upon settlement of the sale of the home.

• Business Debtors and Creditors

66 David said that OEO is owed about $40,000 by its trade debtors and this should be added into the pool as an asset. Associated with that are the liabilities of the business of about $180,000, and that should be included as a liability. I intend to

disregard both of these amounts. On the joint instruction of the parties the business has been valued by Graham O’Hehir of Goodwin Mitchell O’Hehir and Associates. His valuation report is dated 1 April 2011.

67 The total market value of OEO as a going concern is $143,388.

68 The parties agreed this valuation. Amounts owed by trade debtors and owing to trade creditors are components of the business and are reflected in the valuation.

• OEO

69 Mr O’Hehir gave evidence and in answer to questions from David explained certain issues arising from his report.

70 The valuation report refers to David’s wages of $1,000 per week and associated superannuation of 9% being added back in 2008 and 2009.

71 It was put to Mr O’Hehir by Barbara that if David’s wages were in fact $65,000 as shown in his 2009 income tax return this might have an impact on the valuation. Mr O’Hehir said that with other relevant adjustments, if the wages figure was $65,000, the valuation could be $151,000.

72 Barbara, in submissions, asked me to take into account the higher valuation. I do not intend to do so. The parties agreed the valuation at the commencement of the trial. While it appears David’s taxable income was $65,583 for 2009 there is some uncertainty as to the precise impact this would have on the valuation. Although it may increase the valuation, I do not know what the other relevant adjustments are. In view of the uncertainty about this, I intend to include the agreed value of $143,388 in the pool.

Tax Liabilities

73 Both parties had outstanding debts to the ATO. As at March 2009, that of

Barbara was $141,377 and that of David was $127,650.

74 These liabilities arose from the parties’ investments with Budplan. Following a ruling by the ATO these schemes were disallowed and the liabilities arose. After a period of time and much correspondence, on about 23 March 2010, the ATO granted Barbara a full release of her income tax debt on the ground of financial hardship. Barbara’s correspondence with the ATO was not available at the trial and therefore it is not known upon what basis the debt was waived and whether the possible outcome of the Family Law proceedings was taken into account.

75 Barbara pointed out this is a benefit the parties have received as her debt is no longer a liability of the marriage. She was not however prepared to concede that David’s debt to the ATO which remains outstanding is a liability of the marriage.

76 David’s tax debt is currently $136,109. Barbara is of the view that the liability should be attributed to David alone and should not be included in the pool. Her case is

that it is open to David to do what she did and to try and persuade the ATO that he should be granted a release of the debt. David’s evidence was that he is in communication with the ATO. The Commissioner of Taxation is awaiting the outcome of these property proceedings to consider the matter further. It appeared from David’s evidence that he intended to approach the ATO upon the conclusion of these proceedings and negotiate the outstanding debt. I cannot predict the outcome of the negotiations.

77 In Biltoft and Biltoft (1995) FLC 92-614 , the Full Court of the Family Court of Australia considered the issue of responsibility for matrimonial debt and said that there are circumstances where it is open to the Court to discount or disregard an unsecured liability, including, for example a liability which is vague or uncertain, unlikely to be enforced, or unreasonably incurred.

78 There is no certainty that David will be granted a release of some or all of his debt. I have to assume, absent evidence to the contrary, that the debt must be paid. It is a debt arising from the marriage.

79 In Kowali and Kowali (1981) FLC 91-092 , Baker J said, a p 76,644:

As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liabilities, should be shared by them (although not necessarily equally) except in the following circumstances:-

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

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

80 Clearly the taxation debt was not incurred by design or because David acted recklessly, negligently or wantonly, with the matrimonial assets.

81 On balance, I will include the debt as a liability. I consider that the parties should have finality in their financial arrangements.

82 David agreed to “cap” his tax liability in the sum of $123,308 being the amount of the debt as at 10 January 2008. That is the amount I will include in the pool.

83 David did not press the inclusion of his current tax liability of $12,955 and that item, rightly, will be excluded from the pool as it is a post separation debt.

84 I find the pool of assets and liabilities to be as follows:

ASSETS	HUSBAND	WIFE
Trust Funds	58,491	58,491
OEO]	143,388
Artwork 1 Artwork 2 Artwork 3	24,200 500	200
Sporting Memorabilia	1,000
Bottles of Penfold Grange (7)	1,400
Furniture and contents	4,000	4,000
Rolex Watch Jewellery	4,000	4,000
Macquarie Shares	1,900
Wife’s Advance (including shares)	85,000
Husband’s Advance (shares)	16,000
Funds received by Husband (business overdraft)	46,300
ASSETS TOTAL	299,279	153,591
Superannuation Fund	11,750	11,750
Superannuation	9,360	6,000
TOTAL ASSETS (Including superannuation)	320,389	171,341

LIABILITIES	HUSBAND	WIFE
Income Tax Liability	123,308	Nil
Tax liability of C & C Superannuation Fund (to be divided equally)	NK	NK
TOTAL LIABILITIES	123,308	Nil
TOTAL NET ASSETS	197,081	171,341

CONTRIBUTIONS

85 There was no dispute between the parties in relation to contributions. This was a lengthy marriage. Neither party suggested that his or her contributions were greater than the other during the relationship. Their disagreement arose from post separation financial transactions which have been dealt with when determining the asset pool.

SECTION 75(2) AND OTHER FACTORS

86 I am required to take into account factors set out in s 79(4) (e) to (g) of the Act.

These incorporate the matters referred to in s 75(2) to the extent that they are relevant.

Once again there was no dispute between the parties in relation to these factors and neither suggested there should be any adjustment in favour of the other. I observe that the parties’ incomes are not dissimilar. Both are of similar ages and both are in reasonable health.

87 Both have minimal superannuation benefits which have been accumulated post separation. It is agreed that their self managed superannuation fund will be realised and the proceeds applied to its tax liabilities. Any gain or loss will be shared equally between them.

EFFECT OF EQUAL DIVISION OF THE POOL

88 The net pool of assets taking into account David’s tax liability is $368,422. On an equal division each party would receive $184,211.

89 It is necessary to calculate the parties’ assets and liabilities excluding the funds held in trust. Their respective shares can then be adjusted by dividing those funds appropriately to achieve an equal division overall.

90 Barbara retains assets and superannuation totalling $112,850. She is therefore to receive from the funds held in trust the amount of $71,361. David retains assets and superannuation totalling $138,590 and will receive the corresponding balance of

$45,621. In percentage terms the trust funds would be divided 61% to Barbara and
39% to David.

JUST AND EQUITABLE

91 Barbara sought payment of the entire funds in trust. This would have been the outcome or close to it if David’s tax liability had been excluded from the pool. I have found that the tax liability should properly be included in the pool.

92 The parties are both in a fairly modest financial position. David will continue to operate OEO. Barbara has set up her own business. The parties have similar incomes. Both are left in a fairly modest position. In all the circumstances, as they were presented to me, I am satisfied that the outcome is just and equitable.

ORDERS

93 Subject to hearing from the parties the orders I intend to make are as follows:

1. Within 14 days of orders the husband and the wife do all things and sign all documents necessary to close the parties’ joint Bankwest account number xxx xxxxxxx and to distribute the proceeds as follows:

(a) 61% to the wife; and

(b) 39% to the husband.

2. All of the wife’s right, title and interest, if any, in the business trading as [OEO] vest in the husband absolutely.

3. Save for otherwise provided for in these orders, each party be solely liable for debts assessed against each party individually including but not limited to past taxation debts owing to the Australian Taxation Office and to any debts assessed in future.

4. Unless otherwise specified in these orders, each party be solely entitled (to the exclusion of the other party) to all property, both real and personal, and to chattels of whatsoever nature and kind in the possession of such party as at the date of these orders, and for this purpose:

(a) motor vehicles are deemed to be in the possession of the party whose name appears on the vehicle registration documents;

(b) bank accounts are deemed to be in the possession of the person whose name appears on the bank’s records thereof;

(c) insurance policies are deemed to be in the possession of the beneficiary thereof:

(d) superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment; and

each party be solely liable for and indemnify the other against any liability covering any item of property to which that party is entitled to pursuant to these orders.

BY CONSENT

5. Within 30 days of the date of the orders the parties do all things and sign all necessary documents to dissolve the parties’ joint Superannuation Fund (“the Fund”) and to sell by private treaty or public auction the assets of the Fund with such proceeds to be distributed as follows:

(a) firstly, in payment of the costs of sale including auction costs and commissions, if any;

(b) secondly, in payment of any outstanding Australian Taxation

Office liability previously assessed against the Fund;

(c) thirdly, in payment of any Australian Taxation Office liability assessed against the Fund as a result of the fund’s dissolution; and

(d) fourthly, in payment of the balance proceeds equally to the parties.

6. In the event that there are insufficient funds to comply with orders

5(a)(b) and (c) above, the parties share equally in payment of the Fund’s outstanding liabilities provided that neither party has paid their share of any outstanding debt and in any other case the party who has not paid their share of the debt shall be wholly responsible for their share of the debt and any accumulated penalties until the debt is paid.

IT IS FURTHER ORDERED THAT:

7. The husband and the wife do all necessary acts and things and sign all necessary deeds and documents to give effect to these orders.

8. The husband and the wife shall have liberty to apply with respect to the implementation of any of these orders.

I certify that the preceding [93] paragraphs are a true copy of the reasons for judgment delivered by this Honourable Court

Secretary