PITT & PITT
[2011] FamCA 172
•15 March 2011
FAMILY COURT OF AUSTRALIA
| PITT & PITT | [2011] FamCA 172 |
| FAMILY LAW - PROPERTY SETTLEMENT – the judicial approach to considering and determining expert evidence – whether weight should be attached to a “non-binding indicative offer” by a market competitor – application of general principles in property settlement cases |
| Family Law Act 1975 (Cth): ss 75(2) and 79 |
| Barker and Barker (2007) 36 FamLR 650; |
| APPLICANT: | Ms Pitt |
| RESPONDENT: | Mr Pitt |
| FILE NUMBER: | SYC | 2905 | of | 2007 |
| DATE DELIVERED: | 15 March 2011 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Rose J |
| HEARING DATES: | 31 August 2009 and 8 December 2010. |
| WRITTEN SUBMISSIONS: | 15 & 22 March 2010; 20 December 2010 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | R Lethbridge SC and D Dura |
| SOLICITOR FOR THE APPLICANT: | Slade Manwaring |
| COUNSEL FOR THE RESPONDENT: | C Simpson SC and P Livingstone |
| SOLICITOR FOR THE RESPONDENT: | Armstrong Legal |
INDEX
| Description | Page | |||
| Orders | 4 | |||
| Reasons for Judgment | 8 | |||
| ● | Introduction | 8 | ||
| ● | Historical background | 9 | ||
| ● | Applications by the wife to re-open | 16 | ||
| ● | First application of wife to re-open filed 3 June 2010 | 16 | ||
| ● | Second application of wife to re-open filed 17 September 2010 | 19 | ||
| ● | The “non-binding indicative offer” | 21 | ||
| Relevant legal principles | 26 | |||
| Property of the parties | 26 | |||
| Exhibit 62 – disputed matters | 30 | |||
| ● | Item 3 – shareholding in R Pty Ltd | 30 | ||
| ● | Requirement to give reasons for preference of expert evidence | 30 | ||
| ● | Expert evidence | 32 | ||
| ● | Valuation of the interest held by the parties in R Pty Ltd and F Pty Ltd | 32 | ||
| ● | The value of the parties’ interest in R Pty Ltd | 33 | ||
| ● | Future maintainable earnings | 34 | ||
| ● | Prepayment of expenses | 35 | ||
| ● | “Weighting”; EBIT multiple; and the G Ltd’s “non-binding indicative offer” | 35 | ||
| ● | Expert evidence – Messrs Ex1 and Ex2 | 39 | ||
| ● | Tax issues | 40 | ||
| ● | Messrs T1 and T2 | 40 | ||
| ● | Mr J – lease and financial transactions | 41 | ||
| ● | Item 5 – property in Tasmania | 48 | ||
| ● | Item 11 – loan to Mr J | 49 | ||
| ● | Item 13 – loan to Mr V | 50 | ||
| ● | Item 14 – wife’s paid legal costs and experts’ fees to conclusion of submissions | 50 | ||
| ● | Item 15 – husband’s paid legal costs to conclusion of submissions | 51 | ||
| ● | Item 16 – other add-backs for wife | 51 | ||
| ● | Items 19 and 20 | 52 | ||
| ● | Item 21 – Mr K’s bail surety monies | 52 | ||
| Revised property of the parties | 52 | |||
| Contributions of the parties | 54 | |||
| ● | The wife | 54 | ||
| ● | The husband | 54 | ||
| Post-separation contributions | 55 | |||
| Assessment of post-separation contributions | 57 | |||
| Relevant matters pursuant to s 75(2) | 58 | |||
| Assessment of relevant s 75(2) matters | 59 | |||
| Conclusion | 59 | |||
Orders
That upon the husband complying with Order 4 the wife shall:
(a)transfer her one (1) ordinary share in R Pty Ltd (ACN …) to the husband and contemporaneously with the said transfer the wife resign from all positions of office within R Pty Ltd;
(b)transfer her one (1) ordinary share in F Pty Ltd (ACN … to the husband and contemporaneously with the said transfer the wife resign from all positions of office within F Pty Ltd.
That contemporaneously with the transfers the subject of Order 1 above the wife do all acts and things and execute all documents necessary to transfer to the husband all her right, title and interest in the property at S.
That both parties do all acts and things necessary to adjust the loan balance of the husband and wife by re-allocating the loan to Mr J the subject of the Joint Statement of Ms D and Ms N dated 4 September 2009 to the husband and upon such allocation the wife shall assign to the husband all rights in respect of the land at …, Tasmania (“the Tasmanian land”) and all causes of action which she may have either jointly with the husband or severally against Mr J in respect of his participation with the parties in respect of or his purchase and sale of the Tasmanian land or any part thereof.
That on or before 5.00pm 16 May 2011 or such other period as the parties may agree upon in writing the husband shall pay to the wife the sum of $5,212,413.00.
That contemporaneously with the payment the subject of Order 4 the parties shall discharge any loan account liability either may have to R Pty Ltd at that date.
That as and from such transfer the wife indemnify the husband in respect of one-half of any liability R Pty Ltd may incur as a consequence of its treatment in its accounts and tax returns of the expenses incurred in the retail project F Pty Ltd such liability to be reduced by any offset available in respect of such liability from available capital gains.
That in the alternative, in the event of an order for the sale of R Pty Ltd or the business and undertaking (“the undertaking”) conducted by it or the husband not making the payment the subject of Order 4 that both parties do all acts and things necessary to engage on behalf of R Pty Ltd a lead adviser in the mergers and acquisitions or like division of one or other of:
(a) Accounting firm 1;
(b) Accounting firm 2;
(c) Accounting firm 3;
(d) Accounting firm 4; or
(e) other firm as may be agreed
to conduct the sale by it of the undertaking and in the absence of agreement within 14 days then such of Orders 7(a) to 7(d) as nominated by the single expert, Ms D.
That the lead adviser appointed pursuant to Order 7 hereof shall be at liberty to sign all necessary documents and agreements to give effect to the engagement of the firm appointed pursuant to Order 7 hereof.
That Ms B of Law firm 1 or such other solicitor as the parties may agree within 14 days shall be appointed to act as solicitor in relation to the preparation of an information memorandum, confidentiality agreement and any contract or agreement for sale necessary to give effect to any sale or to otherwise effect it.
That for the purposes of any sale of the undertaking it may be offered for sale separately from or together with the property at S.
That for the purposes of Order 10 above both parties do all acts and things necessary to cause the property at S to be offered for sale at a price and in a manner as may be agreed and in the absence of agreement liberty is reserved to apply further in relation to such sale.
That an information memorandum shall be prepared by the solicitor appointed pursuant to Order 9 above to be provided to prospective purchasers identified by the lead adviser and in that respect the parties are at liberty to advance the names of parties that might be so considered.
That the information memorandum shall contain only sufficient information to enable the recipient to commence negotiations and shall include:
(a)no commercially sensitive information or information otherwise the subject of a confidentiality agreement with or for the benefit of a third party;
(b)an executive summary or similar summary;
(c)information regarding the time payable for the submission of indicative offers and selection of a short list of prospective purchasers if considered necessary;
(d)otherwise such information as the lead adviser shall recommend provided however that the factual accuracy of information included pursuant to such recommendation shall remain the responsibility of R Pty Ltd.
That in the course of negotiation with any prospective purchaser the lead adviser shall require as a condition precedent to the disclosure of information to such purchaser or the conduct by such a purchaser of any due diligence investigation the execution of a confidentiality agreement such agreement be prepared by the solicitor appointed pursuant to Order 9 hereof and be in a form considered by that solicitor as sufficient for its purpose subject to it including a prohibition not to copy or distribute information or extracts.
That such sale shall be conducted by private treaty negotiation with all interested parties for the purpose of securing the best price available for such undertaking allowing all such interested parties including the husband or the wife should either wish to seek to acquire the undertaking, an opportunity to meet competing offers.
That each of the husband and the wife shall do all acts and things to cause all information and documentation that either the lead adviser or the solicitor appointed pursuant to Order 9 above may require in relation to any aspect of the sale.
That pending the sale the subject of Order 7 hereof the husband shall continue to conduct the business of R Pty Ltd and be paid a remuneration for the continued performance of his duties in the amount determined by Mr H the single expert appointed by the parties to determine the reasonable remuneration payable to each of the parties in respect of the services provided by them to R Pty Ltd.
That upon such sale neither the husband nor the wife shall be required to enter into any restraint of trade or other agreement restricting their respective abilities to seek such employment as they may then wish to engage in.
That in the event of a sale of the undertaking both parties will do all acts and things so as to retain from such proceeds and deposit to an interest bearing account in the name of R Pty Ltd the sum of $767,818 and thereafter cause that to be applied in satisfaction of the liability of R Pty Ltd in respect of the leases known as “the V leases” until such liability is discharged whereupon any balance shall be distributed by R Pty Ltd to the parties after deduction of any tax or other liabilities of the company in the proportions 45% to the husband and 55% to the wife.
That upon completion of the sale and subject to the retention of the sum the subject of Order 19 above both parties shall discharge any loan account liability either may have to R PtyLtd at that date and contemporaneously do all acts and things necessary to cause the net proceeds of such sale after deduction of expenses and other liabilities of R Pty Ltd to be distributed by R Pty Ltd to the parties in such proportions so as to result in the husband receiving 45% and the wife receiving 55%
That on or before 5.00pm 29 March 2011 the wife deliver to the solicitors for the husband copies of all family photographs, video and DVDs (“the photographs”) in her possession as at the date of the making of these Orders whereupon the husband shall be at liberty for a period of 28 days to make copies of the photographs at his expense and then return the photographs to the solicitors for the wife within 28 days of the delivery by the wife of the photographs.
Declare that each of the parties is the beneficial owner of all items of personal property in his or her possession respectively subject to the Orders made this day.
That the proceedings are listed at 9.30am 7 April 2011 for the purpose of making superannuation splitting orders.
IT IS NOTED that publication of this Judgment under the pseudonym Pitt & Pitt is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC2905 of 2007
| Ms Pitt |
Applicant
and
| Mr Pitt |
Respondent
REASONS FOR JUDGMENT
Introduction
In these proceedings each of the parties seeks orders for property settlement.
The applicant, Ms Pitt (who for convenience I shall refer to as “the wife”) sought orders including the realisation of property of the Pitt Superannuation Fund (“the superannuation fund”) and the payment of her interest into a complying fund nominated by her. Ancillary orders were also sought.
The wife’s application was subsequently amended unopposed by the minute of orders sought marked Exhibit 60.
The respondent, Mr Pitt (who for convenience I shall refer to as “the husband”) sought orders in accordance with his Response filed 15 June 2007. The response was amended unopposed by the minute of orders sought marked Exhibit 61.
Copies of Exhibits 60 and 61 are attached for ease of reference.
On 31 August 2009 an order was made by consent that R Pty Ltd be joined as a party to the proceedings.
It is common ground between the parties that R Pty Ltd is and at all material times has been the alter ego of the parties. That concession was made by senior counsel for the parties on the first day of the hearing. It was agreed in the circumstances that there was no need for R Pty Ltd to be separately represented.
The parties cohabited for a period of approximately 25 years which commenced on 12 June 1981 and continued until they finally separated on 28 March 2007. They have lived separate and apart continuously from that time. The parties previously separated from about June 2005 until April 2006.
The parties married in 1982. The evidence is that the marriage was dissolved by divorce order made 9 February 2009.
The wife is 55 years of age. Her occupation is given as company director. That reflects the office held with R Pty Ltd, although she has not been an active director for a considerable period of time.
The husband is 59 years of age. His occupation is given as company director. The husband fulfils the role of managing director of R Pty Ltd.
There are three children of the marriage who are now adults, namely:
(a)C who is 27 years of age having been born in 1983. He is employed as a pilot and lives in the United States of America.
(b)The parties’daughter who is 23 years of age having been born in 1987. She is a student who for part of the time lives with the husband.
(c)M who is 21 years of age having been born in 1989. He is a student living in the United States of America.
The wife lives in R.
The husband lives in G. He lives in a de facto marriage relationship with Ms P.
The principal factual issues for determination relate to the valuation of R Pty Ltd with related discrete issues in respect of which competing expert evidence was given.
There were, of course, other relevant factual issues that required findings.
It was agreed on behalf of the parties that their respective contributions made throughout the period of cohabitation should be assessed as being equal.
However, the assessment of contributions made by the parties post separation is a live issue.
Historical background
The following are further brief relevant matters.
In March 1980 R Pty Ltd was incorporated. The current directors and shareholders are the parties who hold one ordinary share each.
In May 1983 the wife became a director and shareholder in R Pty Ltd. The husband’s brother, Mr O resigned and transferred his shareholding to the wife.
In 1994 the parties jointly purchased the property at H (“the former matrimonial home”) for $1,200,000.00. Subsequently, renovations were undertaken costing approximately $200,000.00. The evidence does not reveal the sources and amounts of funding in relation to both commitments.
In 1994 the parties jointly purchased the commercial property at S. There appears to be an absence of evidence of the purchase price and funding. R Pty Ltd has carried out its operations and business activities from the property at S.
In June 2005 F Pty Ltd was incorporated. The parties are the shareholders and directors. They hold one ordinary share each.
The proposed business undertaking of F Pty Ltd, namely the establishment of specialty whole food stores, did not proceed in that the business undertaken has been carried out by R Pty Ltd.
Nonetheless, F Pty Ltd leased premises in V and T in Melbourne and K in Sydney and then sub-let those premises to R Pty Ltd.
F Pty Ltd had acquired plant and equipment for the store at E. However, the plant and equipment was sold by F Pty Ltd on 21 July 2008.
F Pty Ltd is currently a dormant company.
On 23 May 2007 the following orders and notations were made by Loughnan JR:
“1.Orders are made in terms of paragraphs 1, 3(a), (b), (c), (d), (e), (f), (j), (l), (p), (q), 8, 9 and 16 of the document titled ‘Minutes of Orders Sought by Applicant Wife on an Interim Basis’ as amended, marked Exhibit 1 as set out hereunder:
‘Exclusive Occupancy
1.That, pending further Order, the Wife do have the exclusive use and occupancy of the Real Property jointly owned by the Husband and the Wife and known as [the property at H] in the State of New South Wales.
3.That until further Order, each of the parties be restrained from doing causing or permitting any act or thing to be done or giving any direction in relation to any of the companies listed in Schedule 1 hereto which might have the effect of:
(a)Altering any of the rights of any of the existing shareholders;
(b)Issuing any further shares in the companies or reducing the capital of the companies;
(c)Registering any shares already issued but not as yet registered in the companies;
(d)Altering the rights attaching to any shares already issued in the companies;
(e)Appointing any further Directors of the company or to appoint any additional Secretary or alternate Secretary of the companies;
(f)Dismissing any or all of the Directors presently appointed to the companies;
(j)Assigning, transferring or disposing of or in any way dealing with any asset of the companies;
(l)Guaranteeing any loan or contractual liability of any other person or other corporations or entities;
(p)Affixing the common seal of the companies to any contract, agreement, instrument or other document other than in the ordinary course of business;
(q)Incurring any legal fees in the name of any of the companies other than in the ordinary course of business.
8.That, pending further Order, each of the parties be restrained from doing any act or thing as a director or shareholder of any company which acts as a trustee of any trust which might have the effect or:
(a)Removing the trustee
(b)Appointing a new trustee
(c)Altering in any way the provision of the trust deed or settlement
(d)Mortgaging or charging or encumbering any asset of the trust other than in the ordinary course of business
(e)Assigning, transferring or disposing of any asset of the trust, other than in the ordinary business of the trust
(f)Transferring or assigning the power of appointment of the trustee or the role of guardian to any person or corporation
(g)Causing the Trust to advance or loan any moneys to any person or corporation
9.That, pending further Order, the Husband do pay all rates, taxes, mortgage instalments and household insurance costs in respect of the [property at H].
16.As and from the date of making these Orders and until completion of the sale pursuant to Order 15 herein, the Husband shall make and be responsible for the payment of as and when they fall due:
(a)All other outgoings including telephone, gas, electricity accounts, council and water rates, insurance and maintenance in relation to the [property at S].’
2.By consent within 28 days from the date of these orders, the husband pay to the solicitor for the wife the sum of $100,000 to be applied only to the costs and disbursements of the wife incurred during the course of these family law proceedings.
3.By consent the wife is restrained from causing those funds or any part of those funds to be applied to the purposes of [L Company] AND in relation to that payment orders are made in terms of paragraphs 13 and 14 of Exhibit 1 as set out hereunder:
‘13.That the characterisation of the payment of the Preliminary Sum, for the purposes of these proceedings, be reserved to the Trial Judge.
14.That for the purposes of compliance with Order 12, and subject to the Husband making a declaration to this Court in accordance with a Form 13 Financial Statement as provided under the Family Law Rules, the Husband and the Wife as directors be at liberty to declare and cause a dividend to be paid to the Wife in the aforesaid amount from R Pty Ltd.’
4.The proceedings are adjourned to the Call-over of the Judicial Registrar's Duty List at 9:30 am on 25 June 2007 AND the Court requested that case outline documents be provided to Judicial Registrar Loughnan’s chambers at last two working days prior to that date.
IT IS NOTED
5.The agreement of the parties that the wife will continue to receive her normal director fee of $125,000 per annum.
6.The caveat in relation to the husband’s consent to the injunctions made in terms of Exhibit 1 contained in paragraph 9 of his Response to the Initiating Application.”
On 20 June 2007, pursuant to a court order, the wife was paid $100,000.00 with the sum to be accounted for by the trial Judge at the final hearing.
On 25 June 2007 directions were made for the wife to be provided with bank statements in relation to the companies with the husband to make available for inspection all documents pertaining to the company as reasonably requested by the wife, as well as providing copies of all monthly management and financial reports.
On 27 June 2007 interim orders were made by Loughnan JR for the husband to pay the wife spousal maintenance of $262.00 per week additional to the payments the subject of Orders made 23 May 2007. Further, an order was made by consent restraining the wife from signing cheques on any company account without the consent of the husband unless 21 days notice being provided by the wife.
On 14 September 2007 the sum of $150,000.00 was paid to the wife, at her request, and debited to the wife’s loan account with R Pty Ltd.
On 30 January 2008 consent orders were made as follows:
“(a)The husband cause to be paid to the wife the proceeds of sale of the property at W then held in trust by the conveyancers acting on that transaction.
(b)The wife be paid the net proceeds of sale of the property at E and that the total amount received by the wife in (a) and (b) herein being $250,000.00 be taken into account by the trial Judge.”
On 4 March 2008 consent orders were made requiring the parties to do all things necessary for the sale of F Pty Ltd with such sale to include all plant, stock and equipment.
In about March 2008 the husband moved from F to leased premises in G.
On 19 March 2008 the wife received the sum of $149,024.00 from the company account being the net proceeds of sale of the property at E (having been sold for $153,044.00) with the amount to be taken into consideration by the trial Judge.
On 15 April 2008 orders were made restraining the husband from increasing his salary pending the sale of F Pty Ltd.
On 12 May 2008 judgment was delivered in the Federal Court of Australia in favour of R Pty Ltd in relation to proceedings brought by G Ltd against it.
On 10 July 2008 the wife ceased to reside full-time at the former matrimonial home and moved to rented accommodation.
On 21 July 2008 the lease and fit out of F Pty Ltd at T in Melbourne sold for $1,065,000.00 and the monies retained in a controlled monies account.
On 10 October 2008 the wife was paid by R Pty Ltd the sum of $200,000.00 being part of the proceeds of sale by R Pty Ltd with the transaction and amount to be taken into account by the trial Judge.
On 21 October 2008 consent orders were entered into by the parties for the sale of the former matrimonial home and the sale proceeds after payment of commission and expenses associated with the sale to be held in a controlled monies account pending agreement or order of the Court for distribution of said monies.
On 21 December 2008 the property at W was sold for $100,976.00.
On 16 January 2009 the wife was paid the sum of $200,000.00 from her R Pty Ltd loan account.
On 22 February 2009 the wife received the sum of $100,976.00 being the proceeds of sale of the property at W with the amount to be taken into consideration by the trial Judge.
On 26 March 2009 the wife moved from rental accommodation to a rented townhouse.
On 24 April 2009 the property situated at the former matrimonial home was sold for $2,475,000.00.
On 8 May 2009 the wife had a conversation with Mr U of G Ltd regarding the possible sale of R Pty Ltd.
On 21 May 2009 the wife entered into a deed with G Ltd and provided company records and information to G Ltd.
On 28 May 2009 orders were made by consent that the wife be paid the sum of $400,000.00 being the proceeds of sale of the former matrimonial home property on account of her legal fees with such amount to be taken into consideration by the trial Judge.
On 2 June 2009 G Ltd communicated with the wife an undated and “non-binding indicative offer” in respect of R Pty Ltd.
On 11 June 2009 an order was made for the sum of $400,000.00 to be paid to the husband on account of legal fees with such amount to be taken into consideration by the trial Judge.
On 24 June 2009 the sum of $1,370.00 was paid to the wife on account of the costs associated with the purchase of a property at V.
On 6 July 2009 the sum of $1,627,072.00 was paid to the wife for the purchase of the property at V with the source of those monies being the proceeds of sale from the property at H.
On 8 July 2009 the husband was advised of the indicative offer made by G Ltd.
On 7 August 2009 an order was made restraining the wife from making any further disclosures to G Ltd.
On 20 August 2009 G Ltd withdrew its indicative offer in relation to the purchase of R Pty Ltd.
On 25 August 2009 an order was made for the sum of $190,000.00 to be released to each of the parties the amount to be obtained from bank bills provided by R Pty Ltd with the transaction and amount to be taken into consideration by the trial Judge.
On 31 August, 1, 2, 3 and 7 September, 3 and 4 December 2009, and 4 February 2010 evidence was given. Successive sitting days could not be fixed due to certain expert reports not being completed preparatory to their oral evidence being given.
On 23 and 24 March 2010 submissions were made by senior counsel.
On 20 August 2010 the first application by the wife to re-open her case was heard.
On 23 September 2010 the second application of the wife to re-open her case was heard.
On 8 December 2010 submissions were made in relation to costs sought to be added-back to the calculations of the net property of the parties.
Applications by the wife to re-open
The wife made two applications to re-open her case are as follows:
(a) Application in a Case filed 3 June 2010.
(b) Application in a Case filed 17 September 2010.
First application of wife to re-open filed 3 June 2010
By her Application in a Case filed 3 June 2010, the wife sought leave to re-open her case.
On 11 June 2010 orders were made by consent providing for directions for the filing and service of affidavits and written submissions on behalf of each of the parties.
The wife relied upon her Affidavit sworn 2 June 2010.
The husband relied upon his Response filed 9 July 2010 and his Affidavit sworn and filed on the same day.
On 20 August 2010 the hearing of the wife’s application proceeded on the Papers. Leave was not sought to cross-examine either of the parties. Oral submissions were made by senior counsel supplementing their written submissions.
The affidavit of the wife relied upon email passing between her and Mr W in Canada in relation to what the wife described as “enquiries concerning an order for [food] machines”.
Upon my perusal of the copy email from Mr W to each of the parties annexed to the wife’s affidavit, I find that whilst such email certainly makes enquiries, it is an unsubstantiated representation by the wife to describe such enquiries as “concerning an order for [food] machines”.
The first email sent by Mr W dated 4 May 2010 seeks, in effect, a quotation for machines to be provided to unnamed “associates” who were interested in manufacturing food in the United States of America.
The husband’s email in response dated 5 May 2010 sets out the company’s position of no longer supplying food machines to another manufacturer for the reasons given in that email.
The chain of email was subsequently re-invigorated due to a telephone conversation that the wife had with Mr W summarised by her as being for the purpose of seeking confirmation of information in her email to Mr W dated 14 May 2010.
Mr W replied by his email dated 18 May 2010. The substance of that email makes it clear that his client has, under consideration only, a project for the purchase of food machines leading to eventual annual sales. That is obvious from the second sentence of his email in which he states “the total project is still under investigation by my client and your information and information from others is critical to making a viable business plan and final decisions to go forward”.
I do not accept the wife’s interpretation of the email as representing “the order which [Mr W] is ultimately seeking”. As a result, I do not accept the wife’s calculation of “the value”, given that an order was not placed or about to be placed.
The solicitors for the parties exchanged correspondence dated 21 and 28 May 2010 in relation to the possible sale of food machines. The husband opposed a change of what he regarded as the policy of R Pty Ltd to the effect that food machines would not be sold to actual or potential competitors.
In his affidavit, the husband referred to and traversed the relevant email passing between Mr W and each of the parties. The husband stated “my advice to [Mr W] of 5 May was in accordance with the decision which I took in 2000 that [R Pty Ltd] would not sell machinery to other manufacturers other than to [Q company]”. The husband referred to other evidence given by him in relation to that matter and the implementation of that policy.
Significantly, the husband also gave evidence in his affidavit of discussions that had taken place between himself and the wife in about 2000 in which she allegedly agreed with the policy to which I have referred and the reasons for it. No contrary evidence was given by the wife or from any other source.
The husband also stated in his affidavit that he made further enquiries regarding Mr W’s client and ultimately received appropriate information. The husband proceeded to give further evidence in his affidavit of the potential disadvantages of machinery being supplied for the use of that particular client.
On the evidence before me, the wife failed to enquire of Mr W as to the names and business activity of the associates or companies who he represented. This was a curious omission on the wife’s part given her evidence of familiarity with the operations of R Pty Ltd and the need to be wary of assisting competitors in the market for obvious reasons.
The husband for his part made such an enquiry and set out in his affidavit the response and potential adverse financial implications for R Pty Ltd in the event that Mr W’s request was acceded to.
The issue of prospective machinery sales was a significant issue during the trial for the purpose of determining the value of R Pty Ltd’s business undertaking, although for that purpose there were other additional issues.
Leave was granted to the wife to re-open her case given the importance of the issues raised, their relevance and possible probative evidence upon which she relied, notwithstanding that those matters must be balanced against the public interest in the conclusion of litigation. A separate matter of course is the weight to be given to the evidence adduced by each of the parties.
I have made a finding as to the nature of the enquiry made by Mr W which is different to the categorisation or description of it set out in the wife’s affidavit.
Therefore, I accept the submission made by senior counsel for the husband that:
“...the evidence sought to be tendered is as such of an enquiry to assist a third party (to) formulate a business plan to assess the viability of that third party undertaking the manufacture in the USA of private label [food]”.
I accept the evidence of the husband to the extent that it conflicts with that of the wife. I am persuaded that the husband’s evidence is more complete and accurate than that given by the wife. The husband’s evidence provided details of the policy agreement reached between the parties in about 2000 with regard to future machine sales (not denied by the wife); as well as his analysis of the potential financial consequences to R Pty Ltd should further information be provided to Mr W on behalf of a company which could prove to be a disadvantage to R Pty Ltd; and the wife’s misleading description of the enquiry made by Mr W, to which earlier reference has been made.
Indeed, as senior counsel for the wife quite properly stated in his written submissions:
“1.3It is conceded that the position is, at the moment, in its early stages only.”
I do not accept his following submission that “it is likely, as the wife opines, to lead to the sale of 17 regular machines and as many as 33 further machines to produce [food]”. The evidence does not persuade me on the balance of probabilities that “it is likely” that such sales will occur. In any event, I have accepted the husband’s evidence as to the reasons for not pursuing the matter further in the interests of R Pty Ltd.
Consequently, I accept the submissions made by senior counsel for the husband that the findings of fact made by me do not enable a ready evaluation of Mr W’s enquiry leading to an order for machinery, nor the potential financial implications resulting from an unspecified possible order being given at an indeterminate time and the impact of such a possible order in terms of future competition. Therefore, I have concluded that the evidence relied upon by the wife is not relevant to the valuation evidence given by the single joint expert, Ms D, whose evidence I have preferred to that given by Ms N as subsequently appears.
Second application of wife to re-open filed 17 September 2010
By her Application in a Case filed 17 September 2010, the wife made her second application for leave to re-open her case. That application was filed following enquiries made by my Associate of the wife’s solicitor, Mr Eggleston due to information that she had received that such an application may be made.
On 15 September 2010 I made directions in Chambers for the filing and service of the wife’s application, the husband’s response, the affidavits sought to be relied upon by the parties and written outline of submissions, as well as fixing the hearing of the wife’s application to take place on 23 September 2010, that being a date convenient to the Court and senior counsel.
The wife relied upon her Affidavit sworn and filed 17 September 2010.
The husband opposed the wife’s application. Pursuant to the husband’s Response filed 22 September 2010, he sought an order that the wife’s application be dismissed with costs.
The husband relied on his Affidavit and the Affidavit of Mr A each sworn and filed 22 September 2010.
The hearing of the wife’s application proceeded on the Papers. Leave was not sought to cross-examine either of the parties or Mr A. Written and oral submissions were made by senior counsel.
Leave was granted to the wife to re-open her case on the basis of the application of the relevant principles, as referred to in paragraph 85 hereof, to the evidence which she adduced in support of this particular application.
In her evidence, the wife relied upon a further email from Mr W which made an additional enquiry in relation to potential machinery supplies.
In addition, the wife relies upon promotional material of R Pty Ltd for the period 2005 to 2009 as well as email passing between the husband and two of his employees.
The wife contends that she was unaware of the promotional material until on or about 16 September 2010, although accepted that she has been able to access company documents and email since September 2008 subject to the volume of material being available.
The wife interpreted the promotional material and other matters referred to in her affidavit as supporting the proposition that R Pty Ltd was promoting and/or marketing the sale of food machinery to interested companies.
The husband’s affidavit evidence states that inter alia that he had not seen the email passing between the wife and Mr W to which she had referred prior to 17 September 2010, as they had not been copied to him by the wife and he had not received any direct communication from Mr W subsequent to his email to the husband dated 2 June 2010. There is no evidence which contradicts the husband’s assertions. Therefore, I accept his evidence and the implication of it is a certain irony given the wife’s past protestations that the husband had not made a full and frank financial disclosure to her of relevant company documents including email.
During the course of his affidavit evidence, the husband repeated the policy considerations and agreement between the parties regarding the future supply of food machinery to other third party manufacturers, the subject of his earlier evidence. Again, there was no evidence given by the wife or from any source which challenged such assertions.
The husband further provided evidence of the purpose of the presentations and promotional material to which the wife had referred in her affidavit and contends that none of them “were prepared for or provided to companies which were themselves engaged in the manufacture of [food] or had expressed any interest in so engaging either for themselves or any third party”. The husband further emphasised that he had not had any discussions with such companies to whom presentations were made regarding the sale or possible sale of machinery. Indeed, the husband pointed out that the wife’s:
“...access to [R Pty Ltd’s] computer system would have disclosed such information if there had ever been any offer to sell or solicitation of offers regarding the sale of machinery subsequent to 2000 other than with the [Q company] Group”.
I accept the evidence of the husband to the extent that it may conflict with that of the wife, or her interpretation of email and in particular promotional material for the reasons set forth in his affidavit. The husband’s affidavit impressed me as being consistent and accurate throughout, as is his explanation for an interpretation of all relevant material. I also accept the evidence of Mr A and make findings accordingly.
I also accept the written submissions made by senior counsel for the husband including but not limited to the contention that R Pty Ltd has not been engaged in seeking to sell the relevant machinery to any other person or company than the Q company Group. I have particularly noted that R Pty Ltd has not sold any of the specific machinery since the last sale was effected in 2006 on a pre-dated order and that the agreed policy between the parties reached in about 2000 not to sell machinery other than to the Q company Group has been consistently implemented.
I have concluded that the evidence relied upon by the wife does not lead to any relevant finding of fact to which probative weight could be attached for the purpose of the principal issue the subject of the expert evidence, namely the valuation that should be adopted of R Pty Ltd.
I am satisfied that the evidence given in the trial demonstrates that it was resolved as between the parties approximately 11 years ago not to sell machines other than to the Q company Group and there is an absence of evidence that there was a change of policy in that regard either prior to the parties’ separation approximately seven years later or since. Indeed, so far as the former period is concerned, the wife does not give evidence that such was the case nor do any of the witnesses.
In addition, there is absence of reliable evidence before me that subsequent to separation there have been sales of machinery or that there have been orders for machinery other than in accordance with the policy to which I have referred.
I accept the submission that on the evidence before me the wife has had liberal access to email traffic within R Pty Ltd systems involving the husband, Messrs X and Y and other employees. In that regard, I accept the evidence of Mr A and others. I do not accept the submission that notwithstanding the volume of email and other material to which the wife has had access since the end of August 2008, that the husband had the responsibility to categorise all of such material to assist the wife. No doubt, there would have been a significant drain upon his resources and that of R Pty Ltd for that purpose. No such order was sought on the hearing of one or more of the many interlocutory applications which I determined.
For those reasons I have determined that the evidence relied upon by the wife does not assist in the ultimate determination of one of the primary issues, namely the value of R Pty Ltd.
The “non-binding indicative offer”
A matter of controversy in these proceedings is the “non-binding indicative offer” made by G Limited for the purchase of all of the business undertaking and assets of R Pty Ltd together with a first option on the property situated at S.
The non-binding indicative offer, which is annexure “B” to the Affidavit of the wife sworn and filed 8 July 2009, is undated. However, the affidavit evidence of the wife is that she received that document on 2 June 2009. That particular evidence was not challenged. As annexure “B” referred to above makes clear, proceeding “with a formal offer” would be subject to the following:
(a)G company undertaking a detailed due diligence of the business and the property; and
(b)approval from the Board of G company.
For reasons that were not made clear in the wife’s evidence, G Ltd referred to itself as “[G company]”, probably due to “[G company]” being the relevant subsidiary.
The non-binding indicative offer provides an estimated price for the business undertaking of R Pty Ltd “excluding the property” (that is the property at S) as being in the range of $11.8 million to $18.9 million.
Annexure “C” to the affidavit of the wife, to which I have referred, sets out the due diligence plan. It is clear from that document that such a plan is extensive covering all aspects of the business undertaking with appropriate documentation, inspection of equipment and access to key management. On the face of it, that would give G Ltd a thorough understanding of the operations process and accounting of R Pty Ltd and its business.
The substance of the wife’s affidavit evidence is that she unilaterally decided to speak to the manager of G Ltd to enquire if it “would be interested in purchasing [R Pty Ltd]”.
On 21 May 2009 the wife and Mr U executed a “Deed of Confidentiality” purporting to be in their capacities as a director of R Pty Ltd and manager of G Ltd respectively.
To provide a full understanding of the implications of the Deed of Confidentially the following are its recitals and terms:
“Recitals
[G Ltd] has expressed interest in purchasing [R Pty Ltd]. [R Pty Ltd] has agreed to provide [G Ltd] with documents and information to enable [G Ltd] to consider an offer.
Terms
(1)[G Ltd] agrees that it will treat all documents and information provided to it in the strictest confidence and shall not disclose any information or documentation or the fact of its discussions with [R Pty Ltd] to any third party whatsoever.
(2)[G Ltd] agrees to return all documents and photocopies thereof at the request of [Ms Pitt] of [R Pty Ltd].”
It was not disputed that there had not been a decision made by the husband and wife as directors of R Pty Ltd, let alone a directors meeting held by them to support the accuracy of that part of the recital which stated “[R Pty Ltd] has agreed to provide [G Ltd] with documents and information to enable [G Ltd] to consider an offer”. The Memorandum and Articles of Association of R Pty Ltd is not in evidence to substantiate the wife’s power as a director to unilaterally provide such documents and information to a market competitor or potential competitor.
The wife further deposed that on 5 June 2009 she received from G Ltd a list of requirements for the purpose of completing due diligence.
As the wife’s affidavit makes clear, she sought to proceed with the opportunity for G Ltd to carry out its due diligence in accordance with its requirements.
The husband’s affidavit evidence is that set forth in his Affidavit sworn 21 August 2009 and filed 24 August 2009. In that affidavit, the husband states that the wife had not disclosed to him that she had entered into discussions with a representative of G Ltd, or had proposed to do so, or that she had entered into a deed of confidentiality, or had furnished copies of R Pty Ltd documentation to that representative.
In addition, the husband stated that by letter dated 16 April 2007, a firm of lawyers wrote to the wife on behalf of R Pty Ltd requesting her “not to sign any documents, agreement or contract on behalf of the companies without the full knowledge and written consent of [Mr Pitt] who is the managing director of the companies”.[1] The husband further stated that no reply was received to that letter.
[1] Affidavit of husband sworn 21 August 2009, annexure “T”.
Further, the husband deposed that the wife had not disclosed to the Court that she had entered into discussions with representatives of G Ltd or provided information concerning R Pty Ltd and its operations to G Ltd, nor had the wife sought an appropriate order enabling her to do so.
The husband in his affidavit sets out the commercial concerns and implications of the wife’s actions, to which I have referred, so far as they had the potential to impact upon the company’s operations especially in the context that in the husband’s view G Ltd by its subsidiary “[G company]” is a competitor of R Pty Ltd and that in recent times R Pty Ltd and G Ltd were opposed in litigation in the Federal Court of Australia which was resolved in favour of R Pty Ltd.
During the course of the wife’s oral evidence, she stated that she had received legal advice in relation to the deed of confidentiality prior to it being completed by her and a representative of G Ltd.
The wife’s further evidence is that she had a meeting with three representatives of G Ltd. During the course of that meeting the wife was asked questions in relation to R Pty Ltd, they having been previously furnished with company documents by her. The wife’s further evidence is that she responded to those questions from her knowledge as a director of R Pty Ltd and provided answers to the extent that she considered she was able and free to do so.
The wife’s evidence is that she was aware that G Ltd was a competitor of R Pty Ltd at the time of that meeting.
In Ms N’s Report dated 31 August 2009 at paragraph 11.5.3, being annexure “A” to her Affidavit sworn and filed 15 September 2009, when dealing with the EBIT multiple, she refers to the non-binding indicative offer and places weight upon its terms stating in paragraph 11.5.3(e) as follows:
“Notwithstanding the recent withdrawal of offer from [G company], this offer provides the view of an informed and independent third party, which enjoys substantial knowledge of the particular sector of the market in which [R Pty Ltd] operates, of the fair market value to pay for [R Pty Ltd].”
A copy of the document to which Ms N refers is annexure “GG” to the report dated 31 August 2009.
Both Ms N and Ms D gave oral evidence in relation to the relevance and weight which each attaches to the non-binding indicative offer.
Ms N stated that she considered, implicitly, that the non-binding indicative offer was relevant and was a factor to be relied upon in her opinion so far as the EBIT multiple is concerned because it is a listed company which is comparable to R Pty Ltd manufacturing a product similar to that produced by R Pty Ltd.
Ms D, on the other hand, summarised her position in opposition to that espoused by Ms N as follows:
“This offer cannot be considered to be by a normal purchaser, because it is the only competitor and the price that they might be prepared to pay might carry a premium because they are taking out a competitor. So in terms of true relevance, in terms of a valuation principle, I would be concerned as to the validity of that.”
In addition, Ms D emphasised her position further by stating:
“I would be concerned of the relevance, in terms of valuation, of a non-binding indicative offer, since withdrawn, from a competitor.”
Consequently, for the above reasons and other reasons expressed by her, Ms D did not attribute any significance to the terms of the indicative non-binding offer.
A Deed of Confidentiality dated 21 May 2009[2] whilst having been entered by the wife as a “Director, [R Pty Ltd]” and thereby purporting to give legitimacy to R Pty Ltd being a party to that deed, was entered into by the wife unilaterally without any prior notice having been given to the husband as the other director. I also find that the wife acted in the same manner when she provided financial documentation and information peculiar to R Pty Ltd in the course of her discussion and any communications with Mr U, a manager with G Ltd.
[2] Deed of Confidentiality being annexure “A” to Affidavit of wife filed 8 July 2009.
I do not accept the evidence of the wife that her actions were for the purpose of establishing the market in relation to the value of R Pty Ltd for its benefit. Should that have been the wife’s motive, then there was no need to provide company information and have private discussions with a manager of G Ltd. The issue could have been raised in an interlocutory application so that the wife’s proposed actions would have been open for information purposes and an order sought, if necessary, permitting her to follow the course that she considered was in the interests of the parties and R Pty Ltd. However, the wife did not do so. Instead, the wife acted under a cloak of secrecy. The inescapable inference is that the wife, perhaps blinded by the pressures of litigation between her and the husband, and seeking to bolster her case in relation to the evidence of value of R Pty Ltd, simply embarked upon her own personal mission.
I accept the wife’s evidence that she had sought legal advice. Privilege was not waived by her. Consequently, I am not in a position to make a finding as to whether she was poorly advised, or had received objective and considered advice from a lawyer with appropriate qualifications, experience and ability and followed such advice, or perhaps disregarded it.
The wife’s actions were hardly in keeping with her fiduciary responsibilities as a company director, notwithstanding that the parties are the sole directors and shareholders of R Pty Ltd. R Pty Ltd at all material times has been a substantial, commercial entity with international operations and as such the wife and the husband needed to channel their efforts to ensure its continued commercial success, despite the difficulties in doing so which have arisen as a result of the litigation between the parties in this Court.
I accept the submissions made by senior counsel for the husband that the “non-binding indicative offer” does not attract any weight in terms of evidence of value and represents nothing more than an early stage to a possible offer. It is well established that offers do not represent evidence of value.[3]
[3] Barker and Barker (2007) 36 FamLR 650 at paragraph 78 (and the Judgments referred to therein)
Relevant legal principles
It is well established that generally speaking the approach to be taken to determination of property settlement proceedings, concluding with an order that is “just and equitable” represents four steps.
The first of which is that the Court should determine the property and financial resources of the parties at the date of the hearing.
Secondly, determine the nature and extent of the respective contributions made by each of the parties whether financial or non financial, including contribution to the welfare of family in the role of home-maker and parent.
Thirdly, determine and assess the relevant matters pursuant to s 75(2).
Fourthly, consideration of orders, if any, that should be made that are just and equitable.[4]
[4] Hickey & Anor and Attorney-General for the Commonwealth (2003) FLC 93-143
I will now proceed to make findings in relation to the property of the parties, their respective financial and non-financial contributions and relevant matters (if any) pursuant to s 75(2) of the Act. In addition, I will make findings in respect of the issue of “waste” raised by the applicant.
Property of the parties
The agreed “joint table of assets and liabilities” (as at 23 March 2010) was received by me as Exhibit 62. That document was amended from time to time by senior counsel for the parties and ultimately the final document was forwarded to my Associate by email dated 15 April 2010 and 22 October 2010, copies of which are also included in the exhibit.
The following is a copy of Exhibit 62 being the agreed schedule or balance sheet of the property of the parties noting matters in dispute.
JOINT TABLE OF ASSETS AND LIABILITIES (AS AT 24/3/2010)
Assets
| Item | Ownership | Wife | Husband | |
| 1. | [The property at V] | Wife | $1,725,7351 | $1,725,735 |
| 2. | Factory situated at [S] | Joint | $5,500,000 | $5,500,000 |
| 3. | Shareholding in [R Pty Ltd] | Joint | $15,313,1822 | $9,393,182 (see note 14) |
| 4. | Shareholding in [F Pty Ltd] | Joint | Nil | Nil |
| 5. | [The land at M] | Husband/Husband’s brother | $90,000 | 170,000 (see note 15) |
| 6. | Westpac Savings Account – 531926 | Wife | E$1200 | E$1200 |
| 7. | Commonwealth Bank of Australia Savings Account – 531926 | Wife | E$1000 | E$1000 |
| 8. | Wife’s 50% interest in [P company] | Wife | $2,500 | $2,500 |
| 9. | US Treasury Savings Bond | Wife | $100 | $100 |
| 10. | Ohio Energy Shares | Wife | $50 | $50 |
| 11. | Loan to [Mr J] (Husband’s brother)3 | Joint | $170,000 | $Nil (see note 15) |
| 12. | Further unpaid loans from [R Pty Ltd/Husband to Mr J/W Pty Ltd and S Pty Ltd] | Husband | $387,475 | Nil |
| 13. | Loan to [Mr V] | Husband/Joint4 | Nil | $16,5585 |
| 14. | Wife’s paid legal costs and experts costs to conclusion of submissions | Wife | $1,461,1936 | Nil7 |
| 15. | Husband’s paid legal costs to conclusion of submissions | Husband | $1,278,7478 | Nil |
| 16. | Other Add Backs for Wife9 | Wife | $198,613 | $198,61310 |
| Total | $26,129,795 | $17,008,938 |
1. This figure comprises: $1,646,000.00 purchase price of [the property at V]; $76,020 stamp duty, $2,670.50 for building and Feng Shui Reports (as per Wife’s Affidavit at para 3 filed 21 August 2009).
2. Wife’s figure (via evidence of [Ms N]) is $16,090,00 as per third and fourth joint statements dated 1 and 2 December 2009 on the basis that [Ex 1’s] figures are accepted (see joint statement between marketing experts dated 1 December 2009). Also note that the [the V leases] exposure has been included here, which has been assessed by way of joint statement at $776,818.00 and deducted from these figures.
3. As second joint statement from experts dated 1 December 2009.
4. The wife’s position is that the funds are owed solely to the Husband. The Husband’s position is that these funds are owed jointly to the parties.
5. As per Q38 Husband F13 filed 25 August 2009.
6. In accordance with the attached schedule. Wife agrees that, on 5 March 2010, her legal representatives consented to draft Orders for the release of a further $70,000 to her on account of costs and disbursements. The draft Orders are currently in Chambers with Docket Registrar Chayna, and the said sum, which has been included in the Wife’s column herein, will soon be paid to the Wife.
7. The husband’s case is that paid legals should be addressed via the loan accounts. The total paid to [Ms N] as an expert and accountant advising the wife generally is $450,364.00.
8. In accordance with costs letter from Husband’s solicitors dated 23 March 2010.
9. This figure comprises $77,130 (Security expenses); $28,596.00 (upgrades to security on [the property at H]); $34,080 (Computers); $27,887.00 (Rent [townhouse] for the period 10 July 2008 to 8 April 2009); $5920.00 (living expenses for [townhouse]); $25,000 (furniture/White goods). (see para 85 and 3 of Wife’s Affidavits filed 27 March and 21 August 2009.
10. This amount could also be dealt with via the loan accounts.
11. Figures not included as double counting with funds largely added back above. These figures do not take into account the rent due to the parties from the [property at S] ($440,000 per annum) which is credited at the end of the financial year. There will also be significant tax to pay by each party once a dividend is declared on 30 June 2010. The Husband also intends to pay his anticipated legal/expert costs from the loan account which may be up to $126,233.97 (see costs letter from Husband’s solicitors dated 23 May 2010.
12. As at 15 March 2010.
13. As at 15 March 2010
Superannuation
| Item | Ownership | Wife | Husband | |
| 17. | Wife’s Superannuation | Wife | $562,166 | $562,166 |
| 18. | Husband’s Superannuation | Husband | $557,286 | $557,286 |
| Total | $1,119,452 | $1,119,452 |
Liabilities
| Item | Ownership | Wife | Husband | |
| 19. | Debt owed to [R Pty Ltd] by Wife | Wife | Nil11 | $1,099,08812 (see note 16) |
| 20. | Debt owed to [R Pty Ltd] by Husband | Husband | Nil | $497,38813 (see note 16) |
| Total | Nil | $1,596,476 | ||
| Net total | $27,249,247 | $ 16,531,914 |
Add backs
| Item | Ownership | Wife | Husband | |
| 21. | [Mr K] Bail Surety monies | Wife | Nil | $50,000 (note 17) |
| Total | Nil | $50,000 | ||
| Net total | $27,249,247 | $ 16,581,914 |
Notes
14. Husband’s figure per submissions para 93 is $10,170,000 as determined by [Ms D] on the basis that [Ex 2’s] report is being accepted less the [the V leases] liability. This is the same approach as adopted by the wife in Note 2.
15. Husband’s submissions dated 15 March 2010 paras 95-108 deal with the amount and manner of the treatment of the Tasmanian land. There is only one claim other than the claim for $387,475 first raised in the wife’s submission dated 21.3.2010 Para 6.23 (dealt with in oral submissions).
16. These represent borrowings in the husband’s post separation. In the husband’s case his loan account is lower in part because his wage was paid into his loan account. As borrowing post separation these are not appropriate to be treated as add-backs consistent with authority such as Omacini (2005) 33 Fam LR 134 and Chorn v Hopkins (2004) FLC 93-204.
17. Husband’s submission dated 15 May 2010 paras 138 and 142.
Exhibit 62- disputed matters
I make the following findings in relation to the disputed matters arising out of Exhibit 62.
Item 3 – shareholding in R Pty Ltd
The value of the shareholding in R Pty Ltd was the subject of lengthy detailed evidence given by expert witnesses in relation to not only the value as a whole, but also discrete subject matters.
My approach to making the necessary findings and reasons for preferring one expert to another are set out in the following paragraphs.
Requirement to give reasons for preference of expert evidence
Given the myriad of matters arising from the voluminous material relevant to the operation of R Pty Ltd, and to a lesser extent F Pty Ltd, not to mention the interpretation and the significance attached to some of it by one expert as opposed to another, it is important to record the responsibility that I have to exercise for the purpose of providing a judgment at first instance.
In that regard, I follow the approach stated as appropriate by the High Court in Whisprun Pty Limited (formerly North West Exports Pty Limited) v Dixon in the joint judgment of Gleeson CJ McHugh and Gummow JJ as follows:
“A judge’s reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge’s failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party’s case.”[5]
[5] Whisprun Pty Limited (formerly North West Exports Pty Limited) v Dixon (2003) 200 ALR 447 at 464; see also Customs and Excise Commissioners v A (2003) 2 ALL ER 736 at 753 per Shiemann LJ; Digi-Tech (Australia) Limited v Brand & Ors (2004) NSW 62 IPR 184 at 228 per Sheller, Ipp and McColl JJ “prolixity is an enemy of comprehensibility and indeed, cogency”
When considering the evidence given by the expert witnesses, and the findings and conclusions that result, I will follow the principles and guidelines provided in a series of appellate judgments, to which I will make reference in subsequent paragraphs.
I am satisfied that the primary contributions of the parties during their cohabitation, the subject of previous findings, lead to the conclusion that the parties made their various contributions to the best of their ability and that their contributions taken as a whole will be assessed as being equal.
Post-separation contributions
The evidence of the wife in her Affidavit sworn 27 March 2009 is that subsequent to the separation of the parties she made indirect financial contributions. Those indirect financial contributions included the wife’s discussion with an interested purchaser which she claimed had an effect upon another interested purchaser who boosted an offer previously made by him. In addition, the wife contended that financial benefits passed to R Pty Ltd due to:
(a)the opening of the premises at T;
(b)reduction of bank bills;
(c)correction of errors in many invoices;
(d)the accounting of money sourced from her investigation of leases entered into by the husband’s brother Mr J;
(e)maintenance of the former matrimonial home and being the principal contact for the selling agent.
There was little, if any, challenge in cross-examination of the wife in relation to her affidavit evidence with respect to the post-separation contributions.
Senior counsel provided detailed, analytical submissions which have been of much assistance in relation to the issues for determination.
With regard to the question of post-separation contributions of the parties, the written submission of senior counsel for the wife is that contributions of the parties should be assessed as being equal.[27]
[27] Written submissions dated 22 March 2010, paragraph 7.4
The written submissions by senior counsel on behalf of the husband addressed this particular matter. The submission made is that on the basis that if the evidence of the husband is accepted then the assessment of his contributions by contrast with those made by the wife supports an adjustment of 5% in his favour.
It is the husband’s case that the nature and extent of his financial contributions for the benefit of the three children, and in particular the conduct of the affairs of R Pty Ltd, should be assessed in total as contributions to a greater degree than those which may have been made by the wife.
The evidence of the husband as set forth in his Affidavit sworn 21 August 2009 is that during the period April 2007 to July 2009 he provided the following financial assistance to:
(a)C of about $7,000.00;
(b)The parties’ daughter of about $31,000.00; and
(c)M of about $25,000.00.
The monies provided to C, the parties’ daughter and M were for the purpose of assisting them to meet a variety of expenditure including education, living expenses and travel.
The husband also contends that subsequent to the separation of the parties he has continued to be employed as the Managing Director of R Pty Ltd on a full-time basis: including responsibility for sales; general management; engineering; financial management and marketing. Further, the husband stated that “since separation the profit of the company has increased”.
The husband also gave evidence that he provided instructions for R Pty Ltd to fully contest the proceedings in the Federal Court of Australia by G Ltd which ultimately resulted in the proceedings instituted by G Ltd being dismissed with costs. The husband claims that the wife had opposed R Pty Ltd defending such proceedings.
The oral evidence-in-chief by the husband is that the parties’ daughter lived with him for the period from separation of the parties until March 2008. Thereafter, she attended, and was in residence at university. Otherwise, she was at home most weekends and during university holiday periods. That pattern continued until June 2009. Following June 2009, she lived with the husband. The period was not stated by the husband in his evidence. At the time of giving his evidence, she was overseas but the husband anticipated that she would return to Sydney in November 2009.
In addition, the husband’s oral evidence in chief is that M lived with the husband from the time of the separation of the parties until December 2008. Following that date, M has been a student in the United States of America returning to Sydney for “about 20% of the time”.
I accept the evidence given by each of the parties in relation to their post-separation contributions which were provided in a detailed manner and not the subject of challenge or perhaps only minimal challenge.
Assessment of post-separation contributions
I have concluded that the post-separation contributions of the husband to the net property of the parties exceed those of the wife for the following reasons.
Whilst the wife made relevant contributions, I have determined that they are exceeded by a combination of the husband’s contributions. I have accepted that the evidence of various witnesses in the husband’s case to the effect that the wife’s contributions in the business activities of R Pty Ltd were to a lesser degree that alleged by her. Those witnesses, although employees of R Pty Ltd, whilst giving their evidence impressed me as being unbiased and truthful.
The husband’s contributions not only included financial support provided to the three children but, in particular, the parental support of the parties’ daughter in circumstances where:
· serious allegations were made by her in relation to Mr K;
· those allegations were rejected by the wife;
· apprehended violence proceedings were brought against the wife and Mr K;
· the wife gave evidence against the parties’ daughter.
In addition, the husband has continued to apply himself in the role of Managing Director of R Pty Ltd with positive financial results for the company, being remunerated at the same level as the wife, notwithstanding the far greater role that the husband performed in the conduct of the business affairs of R Pty Ltd.
Those contributions made by the husband were not counter-balanced to any extent by homemaker and/or parental contributions made by the wife in contrast to the substantial contributions that the wife made in that regard during the period of cohabitation.
For the reasons previously set forth, I have concluded that an adjustment of 2.5% of the net property of the parties is an appropriate recognition of the husband’s post-separation contributions compared to those of the wife.
The consequence is that the husband’s contributions both prior and subsequent to separation are assessed at 52.5%, to those of the wife at 47.5%.
Senior counsel did not make specific submissions in relation to the contributions made by each of the parties to their respective superannuation entitlements. It is implicit that contributions were made by each of the parties, both direct and indirect, as the source of contributions to the relevant superannuation fund stems from funds generated by R Pty Ltd. The development of the business undertakings of R Pty Ltd has in turn been a product of the direct and indirect financial and non-financial contributions of the parties.
Relevant matters pursuant to s 75(2)
I make the following findings in relation to relevant matters arising for consideration pursuant to the provisions of s 75(2). Senior counsel did not make extensive submissions.
The wife and the husband are 55 and 59 years of age respectively.
Each of the parties is in good health and no submissions to the contrary were made.
The parties have the property described in paragraph 340.
The wife has substantial income as set forth in her financial statement sourced from R Pty Ltd and the property at S.
The wife is well educated at a tertiary level and holds both a Bachelor degree and a Masters degree in addition to having received a Diploma.
An issue arose as to whether or not the wife’s capacity to earn income can be realistically exercised. The wife is 55 years of age and in good health. There is an absence of evidence which would support a finding that the wife is now able to gain employment reflecting her tertiary qualifications. Whilst the wife undoubtedly did perform work in relation to the business activities of R Pty Ltd and is a highly intelligent and well educated person, I am not satisfied that she has good prospects of employment. That matter cannot be taken any further.
The husband has a proven capacity in his current occupation as Managing Director of R Pty Ltd. The business activities under his control illustrates the depth of his knowledge and experience in the food industry. The husband has the capacity to continue to earn income in that position. The evidence does not enable me to make findings as to the husband’s prospects of potential employment with another entity or person in the food industry.
Each of the parties has superannuation entitlements described in paragraph 340.
The husband cohabits with Ms P. There is scant evidence of Ms P’s financial circumstances or the measure of financial responsibility assumed by her arising out of the cohabitation.
Neither of the parties has the care of a child under the age of 18 years.
No further matters of relevance was raised by senior counsel in their submissions.
Assessment of relevant s 75(2) matters
I have determined that there will be an adjustment of 7.5% of the net property of the parties in favour of the wife for the following reasons.
The husband’s capacity to earn income and the opportunity to exercise it are vastly superior to that of the wife. He has the depth of knowledge and experience gained in the control of a wide range of business activities and aspects of them underpinning R Pty Ltd. R Pty Ltd is a market leader in its area of the food industry. The husband has a present capacity as Managing Director of R Pty Ltd which no doubt has enhanced his profile in the market place.
In contrast, whilst the wife has a working knowledge of the business activities of R Pty Ltd gained over many years, the level and intensity of her experience and expertise is significantly less than that of the husband. The wife’s tertiary education qualifications do not currently provide her with reasonable opportunities for employment. Indeed, no submission to the contrary was made.
The range of employment opportunities for the wife and the ability to generate income is not necessarily enhanced by her undoubted intellectual qualities and education.
Conclusion
My assessment of the contribution-based entitlements of the parties and the adjustment in favour of the wife having regard to relevant s 75(2) matters results in the orders that I will make whereby the net property of the parties will be apportioned between them on the basis of 55% in favour of the wife and 45% in favour of the husband.
I have concluded that such orders will be just and equitable for the following reasons.
Each of the parties made substantial contributions in their respective spheres throughout the lengthy period of cohabitation. I have independently assessed those contributions as being equal.
The post-separation contributions were assessed in favour of the husband by an additional 2.5%. The most substantial adjustment represents the weight given to relevant s 75(2) matters in favour of the wife reflected in 7.5%.
I will make orders for property settlement which provides an opportunity for the husband to make a payment to the wife reflecting the balance of 55% of the net property of the parties after taking into account property retained by her. Whilst the husband will then carry a significant liability for that purpose, on the other hand, he will be placed in sole control and ownership of R Pty Ltd.
R Pty Ltd has been a substantial enterprise operating both in Australia and internationally for many years. It represents the product of the contributions made by each of the parties both direct and indirect during their lengthy cohabitation maintained further by the husband subsequent to separation. The husband will have the potential advantage of ongoing significant income and access to funds which can be managed in the most tax effective way. The wife will not have that opportunity.
The wife will receive 55% of the net property of the parties, excluding superannuation as follows:
55% of net property $15,641,462 $8,602,804 Less: The property at V $1,725,735 Westpac savings account 1,200 CBA savings account 1,000 50% interest in P company 2,500 US Treasury bonds 100 Ohio shares 50 Paid legal costs 1,461,193 Other add-backs 198,613 3,390,391 Balance payable $5,212,413
The husband will have a substantial liability to meet which obviously will affect his investment opportunities.
The wife will have a substantial sum plus other property which will offset to a large degree, if not completely, the lack of realistic opportunity to earn income from employment. Clearly, the wife will be able to earn income from investments.
The parties have significant superannuation entitlements. The orders proposed by each of the parties need refinement so that appropriate superannuation splitting orders can be made which will reflect the same apportionment of the net property of the parties to which I have earlier referred, namely 55% in favour of the wife and 45% in favour of the husband.
I will make an order for the proceedings to be listed before me following my return from leave, the earliest time and date for that purpose will be 9.30am on 7 April 2011.
Many of the orders that I will make are machinery orders and therefore susceptible to variation on the merits. To that extent, I have adopted orders sought by the husband. I am not persuaded that other orders sought by him which contemplate further litigation arising out of the wife’s dealings with G company, the subject of findings in this Judgment, are proper or just and equitable to make. There is an absence of submissions of substance in respect of that subject matter.
I certify that the preceding four hundred and three paragraphs (403) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rose delivered 15 March 2011.
Associate:
Date: 15 March 2011
Written submissions by senior counsel for the husband dated 15 March 2010, paragraph 5.
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