Polson & Polson & Anor

[2012] FamCA 802

FAMILY COURT OF AUSTRALIA

POLSON & POLSON AND ANOR [2012] FamCA 802

FAMILY LAW – PROPERTY - Settlement in relation to marriage – Identification of property to be divided between the parties – Where there is a dispute between the parties and the husband’s brother in relation to property – Where the husband is ordered to transfer his shareholding in the company to his brother in order to be liquidated – Where substantial contributions were made by the husband’s family to the parties – Where the parties’ financial affairs were enmeshed with the husband’s family – Where it is not accepted that the parents intended their sons to hold the properties in the manner asserted by their mother – Contributions – Where the husband made the greater financial contribution and the wife made the greater contribution as homemaker and parent –Where the parties and the husband’s brother undertook renovations to the properties – Just and equitable approach to valuation – Where the assessment of overall contributions favour the husband 55:45 per cent – Where the wife has parental responsibility for the two teenage children and the husband for the elder adult child – Where it is appropriate for an adjustment of 5 per cent to be made in favour of the wife pursuant to the Family Law Act 1975 (Cth), s 75(2) – Where property be divided equally between the husband and wife.

Family Law Act 1975 (Cth) – s 75(2); s 79; s 79(1); s 79(2); s 79(4), s 90AE(2), s 90AE(3); s 90AE(4)

Antmann and Antmann (1980) FLC 90-908; 6 Fam LR 560
Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693
Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414

Ferraro and Ferraro (1993) FLC 92-335; 16 Fam LR 1

Gosper and Gosper (1987) FLC 91-818; 11 Fam LR 601

Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355

Lee Steere and Lee Steere (1985) FLC 91-626 10 Fam LR 431
Lint & Lint [2011] Fam CAFC 115
Money and Money (1994) FLC 92-485; 17 Fam LR 814
Pierce v Pierce (1999) FLC 92-844; (1998) 24 Fam LR 377
Rainbird and Rainbird (1977) FLC 90-256; 3 Fam LR 11,368
Smith and Smith (1991) FLC 92-261; 15 Fam LR 206

APPLICANT: Ms Polson

1st RESPONDENT: Mr Polson

2nd RESPONDENT: Mr J Polson

FILE NUMBER: SYC 1511 of 2010

DATE DELIVERED: 20 September 2012

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Johnston J

HEARING DATE: 10 & 11 September 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Messner

SOLICITOR FOR THE APPLICANT: Moylan Family Lawyers

FOR THE 1^ST RESPONDENT: Mr Polson  in person

SOLICITOR FOR THE 2^ND RESPONDENT: Mr Quinn of John R Quinn & Co

Orders

1. That within 14 days the parties do all things and sign all documents necessary to cause the controlled monies in the trust account of John R Quinn & Co Solicitors to be paid as follows:

   (a)       $128,930 to the wife;

   (b)       $128,930 to the husband; and

   (c)The balance is to be used to pay capital gains tax on behalf of the company E Pty Limited in accordance with the Reasons for Judgment, and earlier orders, and any surplus is to be paid to the husband, the wife and Mr J Polson in equal shares.

2. That within 60 days Mr J Polson pay to the wife the sum of $360,645.

3. That within 60 days Mr J Polson pay to the husband $419,754.

4. That upon the payments in orders 2 and 3 being made the husband do all things and sign all documents necessary to transfer his interest in the property at F Street, Suburb T (“Property F”) to Mr J Polson.

5. That in the event that Mr J Polson fails to comply with either or both of orders 2 and 3 herein Mr J Polson shall be appointed trustee for sale and shall do all things and sign all documents necessary to effect the sale of Property F in the State of New South Wales and:

   (a)Mr J Polson shall appoint a real estate agent (“the agent”) within 14 days of his default of order 2 and 3 or both;

   (b)Mr J Polson shall appoint a solicitor to act in relation to the sale (“the solicitor”) within 14 days of his default of order 2 and 3 or both; and

   (c)Mr J Polson shall cooperate in every way with the agent, including:-

   (i)Making the key available to the agent;

   (ii)Allowing inspection of Property F;

   (iii)By not saying or doing anything that is likely to hinder or prevent the sale being effected;

   (iv)By ensuring that the property, including the grounds are in a neat and clean condition at the time of inspection by the agent or prospective purchasers;

   (v)By accepting the sale price nominated by the agent;

   (vi)By signing all documents requested by the agent in relation to the listing for sale of the property, except a contract or agreement of sale which has not been authorised by the solicitor acting in relation to the conveyance;

   (d)Upon the sale of Property F, Mr J Polson shall do all things and sign all documents necessary to ensure that the net proceeds of sale are distributed in the following manner and priority:-

   (i)In payment of the agent and solicitor/conveyancer expenses referrable to the sale;

   (ii)In payment of any outstanding council rates, taxes and insurances owing on Property F;

   (iii)In payment of the balance:

   A.18.032 per cent to the wife;

   B.20.988 per cent to the husband; and

   C.The balance to be paid to Mr J Polson

6. That except as otherwise provided herein, the husband, wife and Mr J Polson shall each retain, to the exclusion of the other, all of their interest in the following:-

   (a)Any real property in which they have a legal and/or equitable interest; and

   (b)Any funds standing to their credit in any Bank, Credit Union or Building Society account; and

   (c)Any shares in any public or private company; and

   (d)Any motor vehicle registered in their sole names or in their possession;

   (e)Any superannuation fund in which they have an entitlement; and

   (f)All and any annual leave or long service leave, or any other employment benefits or entitlement.

7. That except as otherwise provided herein the husband and wife remain solely liable for, and indemnify the other, in relation to all debts, charges and liabilities in his or her sole name, jointly with any other person or in the name of any company or business in which that party may have an interest, including but not limited to the following:

   (a)       Mortgages;

   (b)       Credit cards and store cards;

   (c)       Personal loans;

   (d)       Hire/purchase agreements including car leases;

   (e)       Personal and business taxation liabilities.

8. That the husband do all things necessary to resign as a director of E Pty Limited (“the company”) provided that Mr J Polson hands to the husband a copy of the minutes of a resolution of the company recording the husband’s resignation as a director together with a properly drawn and executed form of notification to the Australian Securities and Investments Commission advising of the husband’s resignation.  In the event that the husband neglects or refuses to sign his resignation as a director of the company within three (3) weeks from the date of the commencement of these orders Mr J Polson is authorised to formally notify the Australian Securities and Investments Commission of the husband’s resignation as a director of the company.

9. That the husband do all things and sign all documents, transfers or writings necessary to transfer to Mr J Polson or his nominee his interest in his shareholding in the company.

10. That upon transfer to Mr J Polson of such interest, Mr J Polson forthwith do all things necessary to cause the company to be liquidated.

11. That upon transfer to Mr J Polson of such interest, the husband shall otherwise assign to Mr J Polson any right or claim he may have at law or in equity against the company.

12. That upon Mr J Polson making payment to the wife in accordance with these orders the wife shall forthwith do all things to remove Caveat …48 from the title of Property F.

13. That the husband shall allow access to the property at W Street, Suburb T (“Property W”) on a date to be agreed for the purpose of allowing the wife to remove her personal items.

14. In default of the parties, or either of them, doing all things and executing all such documents as are necessary to give effect to these orders, a Registrar of the Family Court of Australia at Sydney be appointed pursuant to s 106A of the Family Law Act 1975 to execute all such documents in the name of the party in default and to do all such acts and things necessary to give validity and operation to the said documents.

15. That all exhibits be released.

16. That the above orders not commence operation until 10 October 2012.

17. That all parties have leave to relist these proceedings by arrangement with Associate …, for further submissions in relation to the form of the orders only, at any time not later than 9 October 2012.

18. That all parties have leave to relist these proceedings on 14 days notice in relation to the implementation of these orders.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1511 of 2010

Ms Polson

Applicant

And

Mr Polson

Respondent

And

Mr J Polson

2^nd Respondent

REASONS FOR JUDGMENT

Introduction

1. There are three parties in these proceedings.  They are the applicant Ms Polson, her former husband Mr Polson and his brother Mr J Polson.  For convenience I shall refer to them as “the wife”, “the husband” and “[Mr J Polson]”.

2. There is a long-standing dispute between the husband and Mr J Polson in relation to their property.  In order to be able to identify the pool of property available for division between the husband and the wife, it is necessary to determine the dispute between the husband and his brother. 

Applications

1. The wife sought orders to the following effect:

   ·That within seven days the parties do all things and sign all documents necessary to cause payment to the wife of $257 860 of the balance of the funds held in the trust account of John R Quinn & Co, Solicitors;

   ·That within ninety days Mr J Polson pay to the wife the sum of $332 607;

   ·That within ninety days Mr J Polson pay to the husband the sum of $533 612;

   ·That upon the above payments being made by Mr J Polson the husband do all things and sign all documents necessary to transfer to Mr J Polson his interest in the property at F Street, Suburb T (“Property F”);

   ·That in the event that Mr J Polson fails to comply with either or both of the above orders Mr J Polson sell the said property and pay the proceeds in a specified manner;

   ·That otherwise the husband, the wife and Mr J Polson retain, to the exclusion of the other, their interest in:

   (a)any real property in which they have a legal and/or equitable interest;

   (b)any funds in bank, credit union or building society accounts;

   (c)any shares;

   (d)any motor vehicle in their possession or control;

   (e)any superannuation fund

   ·That except as otherwise provided the husband and wife remain solely liable for, and indemnify the other in relation to all debts, charges and liabilities in their respective names, jointly with any other person or in the name of any other company or business in which they may have an interest;

   ·That an enforcement order be made as specified.

2. On the other hand the husband, who was self-represented, sought orders to the following effect:

   ·That from the monies in the controlled monies account ($257 860) he be paid $192 000 to repay to him the balance of the $242 000 paid by him to discharge the mortgage over the property at N Street, Suburb Z (“Property N”) (the difference being $50 000 which he received as a preliminary property settlement payment);

   ·That he have the benefit of 50 per cent of the balance of the controlled monies taking account of the payments to Mr J Polson of $50 000 and payment to the wife of $50 000;

   ·That the Property F be sold and the net proceeds be divided equally between him and Mr J Polson and that he pay Mr J Polson $182 877;

   ·That the property available to him following division between himself and his brother as described above be divided between him and the wife equally; and

   ·That the husband have the sole responsibility to pay the capital gains tax liability in respect of his interest in Property F.

3. On the other hand Mr J Polson sought orders to the following effect:

   ·That he pay to the husband the sum of $500 000 within three months;

   ·That upon payment of the above sum the husband transfer to Mr J Polson his interest in Property F;

   ·That upon compliance with the above orders Mr J Polson indemnify the husband with respect to capital gains tax arising out of the said transfer up to a sum not exceeding $60 000;

   ·Certain formal orders with respect to the company E Pty Limited including to cause the company to be liquidated;

   ·That the husband transfer his shares in the said company to Mr J Polson (prior to its liquidation);

   ·That the husband assign to Mr J Polson any right or claim he might have at law or in equity against the company;

   ·That the wife remove the caveat lodged by her against the title to Property F;

   ·That otherwise the orders sought by the wife against the property of Mr J Polson be dismissed; and

   ·That the wife pay the costs of Mr J Polson.

Background

1. The wife 44 years, and the husband 45 years, commenced cohabiting in October 1992.  They married in 1993 and finally separated on 11 November 2009.  They were divorced in July 2012.

2. They have three children namely, C who is 18 years of age, and twins V and G who are almost 15 years of age. 

3. On 27 April 1978 the parents of the husband and Mr J Polson, Mr A Polson and Ms R Polson established  a company known as E Pty Limited.  The parents were its shareholders and directors.  They established the company for the purpose of making investments.   

4. In approximately 1978, E Pty Limited purchased Property F.  They operated their business from these premises.

5. At the commencement of cohabitation the wife was employed in hospitality earning approximately $350 per week.  She had no assets of significant value.  The husband was a company director of E Pty Limited.  The husband had been working in the business since he was approximately 16 years of age.

6. At this time the husband and the wife lived in an apartment in Suburb B owned by the husband’s parents and paid no rent on the basis that they would undertake some renovations, which they did.

7. Shortly after they commenced cohabiting, the wife ceased employment as a waitress.  She subsequently undertook some modest work in the business and assisted the husband to undertake the renovation of the Suburb B apartment.

8. In December 1992 the husband’s father went into hospital for a hip replacement operation.  The husband and wife stayed at the husband’s parents’ home at W Street, Suburb T (“Property W”) for some weeks to assist the husband’s mother and sister.

9. As indicated above, in 1993, the husband and wife married.

10. In April 1993, the wife returned to work on a part time basis in positions in child care and retail and continued to assist the husband in the business.

11. In January 1994, C was born.

12. In approximately 1996, the Property F was damaged in a fire.  The business was relocated to Property W for a period.  The husband , the wife and other family members all contributed to cleaning up after the fire, the initial work taking approximately 6 weeks.

13. In approximately 1996, the husband’s paternal grandfather died and the husband’s father inherited money from the estate.  The husband and wife purchased a property at S Street, Suburb Y (“Property S”) for $300 000 in the husband’s name.  This purchase was funded by an advance of between approximately $200 000 and $230 000 from the husband’s father using money from the inheritance, approximately $80 000 from the husband and a small mortgage for the balance which was paid for by the business.  The husband and wife undertook some renovation of the property.

14. At approximately this time Mr J Polson also purchased a property at I Street, Suburb Y (“Property I”) assisted also by funds advanced by his father from the same estate.

15. In 1997 the husband’s parents decided to move to the Central Coast.  They arranged for E Pty Ltd to purchase Property N for $360 000 in July 1997.  It is not clear to me how this purchase was funded.  The husband’s mother said that her superannuation of some $94 000 was used together with a mortgage.  The husband denied that such superannuation was used.  It is not clear to me how superannuation could have been used for such a purpose.  In any event, it is clear that there was a substantial mortgage.  The husband’s parents also established a business office at Suburb J on the Central Coast.

16. The husband’s parents moved into Property N later in 1997 and rented out their previous home at Property W.  The business paid the mortgage repayments and outgoings on Property N, at least for some years.

17. In November 1997, V and G were born. 

18. In March 1998, Mr J Polson commenced cohabiting with Ms D.

19. The husband and wife said that they spent holiday time at Property N with their children and undertook some maintenance on the property during such visits.  This was denied by the husband’s mother but I prefer the evidence of the husband and wife about this matter.

20. On 8 August 2000, Property S was sold for $559 000.  The husband and wife then commenced living rent-free at the property owned by the husband’s parents at Property W.

21. The husband’s father decided that he wanted to retire from the business.  The husband’s parents also decided that they would give Property N and Property F to their sons.  They transferred their shares in E Pty Limited to the husband and Mr J Polson.  This occurred in 2002. There were five issued shares. The husband and Mr J Polson became the owners of three shares and two shares in E Pty Limited respectively.  As indicated above, this company was the registered proprietor of Property N and Property F.

22. There was an issue about what the husband’s parents intended by their gifts of these properties.  I shall refer to this again below.

23. In 2001, Mr J Polson and Ms D moved into Property F.  They commenced carrying out repairs to the property and have continued to do so up until the time of these proceedings.

24. In 2002, upon G and V commencing school, the wife commenced working on a casual basis.  

25. In October 2002, the husband paid out the mortgage over Property N in the sum of $242 241.60.  He used part of the proceeds of sale of Property S for this purpose.

26. In 2003, the wife commenced full time work in education. 

27. On 8 October 2004, the husband and Mr J Polson, as the owners of E Pty Ltd arranged for the company to transfer Property F to the husband and Mr J Polson as tenants-in-common in equal shares.  This followed advice to the effect that they could avail themselves of a stamp duty exemption in order to transfer the property out of the ownership of E Pty Limited in which ownership it had been subject to payment of land tax.  Apparently, the one-half portion in Mr J Polson’s name would not be subject to land tax because it was his residence.

28. On 21 January 2005, X was born to Mr J Polson and Ms D.  He is currently seven years of age.

29. On 23 December 2006, K was born to Mr J Polson and Ms D.  She is currently five years of age.

30. In 2007, the husband’s parents moved out of Property N and went to Town Q to live with their daughter.

31. On 11 November 2009, the husband and wife separated on a final basis.  The wife and children continued to reside at Property W for a few months. 

1. On 20 November 2009, the wife lodged a caveat against the title of Property F. 

2. On 11 February 2010, the wife and the two younger children moved out of Property W after the wife was served with an eviction notice by the husband’s mother.  The husband moved back into the property and C remained living with him.

3. On 12 March 2010, the wife filed an Initiating Application, thereby commencing these proceedings.

4. On 17 May 2010, Mr J Polson was joined as a party to the proceedings.

5. On 11 August 2010, Loughnan J made interim orders, including orders providing for the sale of Property N and appointing Mr O as single expert to value Property F.

6. On 24 October 2011, I made orders by consent including orders for the wife to have the sole parental responsibility for V and G, that they live with her and spend time with their father only in accordance with the prior written agreement between the parents.  I also made consent orders to the effect that from the proceeds of sale of Property N in the controlled monies account the following be paid:

   ·$48 283.20 capital gains tax payable by E Pty Limited;

   ·$9900 to Accounting Firm P for preparation of the company tax returns for the tax years 2005-2010;

   ·$2346.94 reimbursement to Mr J Polson for monies spent by him to prepare the property for sale; and

   ·$36 628.55 reimbursement to Mr J Polson to clear his company loan account to enable the company to be wound up.

7. On 22 November 2011, Property N was sold for $595 000.  The net proceeds of sale were placed in a solicitors trust account.

8. On 30 January 2012, I made orders by consent providing for $30 000 to be released to each of the three parties from the controlled monies account and for Mr O to prepare an updated valuation of Property F the costs of which were to be paid from the controlled monies account.

9. On 26 March 2012, I made orders by consent providing for $20 000 to be released to each of the three parties from the controlled monies account. 

10. In approximately August 2012, the husband’s parents listed Property W for sale. 

Credit

The wife

1. The wife gave her evidence in a forthright fashion and was responsive in her answers to questions. 

2. The wife demonstrated a fair knowledge of the major financial transactions during the parties’ cohabitation and marriage, bearing in mind she said that the parties’ finances were managed almost wholly by the husband.  The wife annexed to her affidavit many helpful documents which filled in many of the important financial details of the marriage.

3. I had a sense that the wife exaggerated to an extent her contributions to renovations although I accept that she undertook some of this work.  I also had a sense that the wife understated the significance of the husband’s contributions as home-maker and parent.

4. Having said this, generally I regarded the wife as a witness of the truth. 

The husband

1. The husband gave me the impression that he is a strong-willed person who expresses his opinions bluntly.  But he can also be quite personable. 

2. He gave his answers in a responsive fashion.  At times he spoke extremely quickly which reinforced the general confidence that I had, that in respect of most matters his evidence would be reliable. 

3. The husband made numerous concessions including readily conceding that the wife was a very good mother and home-maker and he did not criticise her contributions.

Mr J Polson

1. Mr J Polson gave his evidence in a forthright manner and was responsive in his answers to questions.  However, I had a sense that he had a view about the history of the relevant contributions in relation to Property F which was probably not commensurate with the true history. 

2. There appeared to me to be quite bad blood between the two brothers and I think to an extent that coloured Mr J Polson’s evidence. 

3. Where his evidence conflicts with that of the husband I prefer the husband’s evidence generally. 

The husband’s mother

1. Ms R Polson gave her evidence in a forthright manner.  I had the sense that she was very interested in assisting the Court. 

2. Except for some inconsistency in the area of her evidence referred to below, generally I regard her as a witness of the truth. 

Ms D

1. Ms D’s evidence was not challenged.

Mr O

1. Mr O was the single expert valuer.  His evidence was not challenged.

The Applicable Law

1. Sub-section 79(1) of the Family Law Act 1975 (“the Act”) provides that in property settlement proceedings, the Court may make such order as it considers appropriate.

2. Sub-section 79(2) provides that the Court shall not make an order under the above sub-section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.

3. There is a long-standing preferred approach to the determination of an application brought pursuant to the provisions of s 79. This involves four inter-related steps. Firstly, the Court should make findings about the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g), including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.

4. This approach has been confirmed in numerous cases in this Court including for example Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355; Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414 and Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693.

5. As indicated above, in this case there is a third party, namely Mr J Polson.

6. Sub-section 90AE(2) of the Act provides in effect that in s 79 proceedings the Court may make an order that:

   ·Directs a third party to do a thing in relation to the property of a party to the marriage; or

   ·Alters the rights, liabilities or property interests of a third party in relation to the marriage.

7. But s 90AE(3)(a) of the Act provides in effect that the Court may only make an order under the above provisions:

   ·If the making of the order is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and

   ·The court is satisfied that, in all the circumstances, it is just and equitable to make the order; and

   ·The court is satisfied that the order takes into account the matters in s 90AE(4) of the Act to which I shall refer below.

Property Available for Division

1. The major issue in these proceedings is how to identify the property which is available for division between the parties.  This involves consideration of the property of not only the married parties but also of Mr J Polson. 

2. As would be obvious from the above, the financial affairs of the husband and wife have been intimately enmeshed with those of the husband’s parents and those of Mr J Polson.  The lives of the husband’s parents, the husband and wife, as well as Mr J Polson and later his partner Ms D, revolved around the business.  This was the focus and the lifeblood of the extended family.

3. As also indicated above, the husband’s parents were the original shareholders and directors of the company which operated the business.  The husband became a director of the company E Pty Limited in 1986 and Mr J Polson became a director in 2004.

4. As also indicated above, by 2001 or 2002, the husband’s father wanted to retire from the business.  The husband’s parents transferred their interests in the business to their sons. In 2002, the parents also decided that they would give Property N and Property F to their sons.  Accordingly, the parents transferred their shares in the company E Pty Limited to their sons.

5. Upon this transfer, as indicated above, the husband became the owner of three of the five issued shares in the company E Pty Limited and Mr J Polson became the owner of two of the five issued shares.

6. The husband said that this imbalance in shareholding between the brothers was to reflect the fact that, for many years, he had been the general manager of the business and to reward this, he was given a higher shareholding than his brother.

7. The husband’s mother said that her own understanding of what had occurred was that the shares were gifted to the husband and his brother equally. Yet clearly this was not what occurred.  The husband’s mother described what she and her husband had done for their sons as being “a living will”.  By this I inferred that the gifts of the parents’ properties were really an advance on their sons’ inheritance but given also upon the understanding that they would keep the business operating.  The husband’s mother also acknowledged that the gift by her husband and herself of their shareholding in E Pty Limited was in recognition of the many years of work performed by their sons in the business.  Ms R Polson also acknowledged that the fact that the husband held three of the five issued shares was in recognition of the fact that he had been a director over many years.

8. This evidence appeared to me to be somewhat inconsistent with Ms R Polson’s evidence above that the shares were gifted to her sons equally.  There was no evidence from the husband’s father about this or any other relevant matter notwithstanding that he was sitting in the courtroom for at least part of the hearing.

9. There was another piece of evidence which was relevant to consideration of what was in the minds of the parents when they gifted the shares to their sons.  This was the fact that when the husband and Mr J Polson, as the owners of E Pty Limited, transferred Property F to themselves as individuals in 2004, they transferred an equal interest to each of them rather than a two-fifths interest to Mr J Polson and a three-fifths interest to the husband.  This was consistent with what the husband’s mother asserted was her intention at the time and her understanding of what her husband intended namely, that their sons would have an equal interest in the properties.

10. However, to some extent, this was also confused by the husband’s mother asserting that she and her husband intended that the husband’s brother would own Property F and the husband would own Property N because she and her husband had already given the husband Property S.  This was partly true in a very broad sense because the husband’s father had advanced a substantial part of the required funds from his inheritance and the business almost certainly had advanced most of the balance of the funds required to purchase Property S.  But the husband was working in the business at the time and his efforts, at least in part, would have been involved in producing the funds.  So I do not think it was correct to say that the parents had already given the husband a property, although they had given him a substantial part thereof.

11. Mr J Polson’ partner Ms D said in her affidavit that in or about 2001 Mr J Polson had said to her as follows:

    Mum and Dad have given me [Property F] as a gift and [the husband] gets [Property N]. Our place is more than [the husband’s] so at some stage we will need to do some adjustment between us but what a wonderful gift.

12. I must say I find it difficult to accept that the husband’s parents intended that the husband would be the owner of Suburb S and Property N and that his brother would be the owner of Property N.  This would be at odds with their legal interests in the properties.  In addition, although there was no evidence of value of the properties at the time they were gifted, Property F was unencumbered and would appear to represent considerably more value than the sum of the other two properties.  This would appear to be especially so because there was a substantial mortgage on Property N and Property F was unencumbered.  And in any event, Mr J Polson had also received a substantial benefit from his father in acquiring Property I.

13. In all these circumstances I do not accept that the parents intended their sons to hold the properties in the manner asserted by their mother.

14. An even more vexed question is what finding should the Court make about the husband’s interest in Property F?  A number of different scenarios were suggested by learned counsel for the wife.  However the preferred position submitted on the wife’s behalf was that the husband holds a legal interest of one half of the property and that this interest has a value of $1 000 000 in accordance with the valuation of the single expert Mr O.

15. On the other hand, there was a very strong submission on behalf of Mr J Polson to the effect that it would be most unfair to him and his partner Ms D if the interest of the husband in the property was valued at $1 000 000.  This was because he, Ms D and Ms D’s father had undertaken considerable extension and improvement work on the property and Ms D had funded this work without financial contribution from the husband.

16. In my view, in order to achieve fairness for all the parties concerned, which on my reading, the relevant provisions of the Act requires, how the Court should arrive at the value of the husband’s interest in Property F should be considered in the context of all relevant matters.

17. The first of such relevant matters in my view is the fact that Mr J Polson and his partner Ms D, assisted by Ms D’s father, have undertaken extensions and renovations to Property F.  Mr O, the single expert, expressed the opinion that without this work, the value of the property would have been $1 500 000 compared with its value (in his opinion) of $2 000 000, both valuations having been as at May 2012.  As I have said, Mr O’s evidence was unchallenged. 

18. Also relevant is the fact that that there are two owners of the property, not only Mr J Polson but also the husband.  So whatever value was added to the property by the work, was added to the value of the legal interests of both of the owners as was submitted by learned counsel for the wife.

19. Ms D annexed to her affidavit an itemised summary of expenses she paid for the extensions and renovations to Property F.  It is also clear that her father, a licensed builder, spent many hours in working at the site and supervising tradesmen and others who provided their services for the project.

20. Mr O arranged for a building company, to inspect the Property F and provide their opinion of the present cost of the work undertaken at the property.  Their opinion was that the work, as at May 2012, would have a cost of $365 753, based on their estimates of the present cost of the items of work as set out in Ms D’s affidavit.

21. Also relevant is the fact that the husband actually participated in a physical sense in undertaking some of the work involved.  His evidence was that he lived at the property for a few weeks and did physical work on the project during that period. 

22. Also significant in my view, is the fact that the husband spent $242 241 of the proceeds of sale of Property S to pay out the mortgage on Property N which was owned not only by the husband but also by Mr J Polson.  In my view, this is particularly relevant because, as indicated above, Mr J Polson had also owned a property at Suburb Y.  There was no evidence that the husband had ever had any benefit from that property.  Clearly the husband, by paying out the mortgage on Property N, significantly advantaged Mr J Polson because this contributed significantly to the equity of Mr J Polson in that property.

23. Mr J Polson paid council rates and outgoings in relation to Property N for a period although his parents paid these in more recent years.

24. It was submitted by the husband that a fair approach would be for the Court to find that the value of the interests of him and his brother in Property F was $1 000 000 each but that it would be fair that he, in effect, pay his brother one-half of the estimated cost of the work as valued by Mr O namely $365 753 which would be $182 876.  But this submission was also on the basis that the husband would in effect be repaid from the controlled monies account the $242 241 being the cost to the husband of paying out the mortgage on the brothers’ Property N.  The effect of this would be that Mr J Polson would allow the husband one half of the cost of the mortgage payout, namely $121 120.

25. In the case of Smith and Smith (1991) FLC 92-261; (1991) 15 Fam LR 206 the Full Court of this Court (Fogarty, Baker and Rourke JJ) said as follows at (FLC) 78,759 and (Fam LR) 213:

    The determination of values of property is a difficult and uncertain matter at the best of times … .  It becomes a difficult and at times hazardous task in s 79 proceedings but which, if performed is likely to have a significant effect for better or worse on the fortunes of the parties.

26. Their Honours went on to observe that in certain cases the preferable course can be to order the sale of the relevant property.

27. With respect to their Honours, I consider the present case to be a case where it is somewhat difficult to arrive at a valuation of the interests of the husband and Mr J Polson in Property F.  But obviously the Court has a duty to do this, because otherwise it would be impossible to identify the property available for division between the husband and the wife.  And ordering the sale of the property would not resolve this particular challenge.

28. As I have said Mr O’s evidence has not been challenged.

29. In my view, it would be unfair to arrive at a valuation which did not give some recognition in money’s worth to the expenditure and effort made in relation to Property F by Mr J Polson, Ms D and her father.  But as I have also said, this needs to be considered in the context of all the other relevant considerations.  Doing the best I can in these difficult circumstances I would regard the value of the husband’s interest in the said property as being $1 000 000 and that of his brother as being $1 000 000.  But I also accept that fairness requires that the husband pay to Mr J Polson one half of the present cost of the work undertaken to Property F as referred to by Mr O which is the sum of $182 876 as I have said.

30. In my view however, it would be unfair to require the husband to reimburse Mr J Polson for one-half of the present cost of the improvements to Property F and expect the husband to bear the entire responsibility for having paid out the mortgage on the Property N.  As indicated above, the husband owned three fifths of the shares in the company E Pty Limited and therefore owned three-fifths of Property N.  Mr J Polson owned the remaining two-fifths thereof.  In my view, fairness requires that they should bear the responsibility for the mortgage repayment in accordance with the proportion of their entitlement.  Accordingly, in my view, Mr J Polson should account to the husband for two-fifths of the mortgage repayment which is $96 896 ($242 241 x 2/5 = $96 896).

31. In order to arrive at the value of the husband’s three-fifths interest in the proceeds of sale of Property N and that of Mr J Polson therein, it is necessary to examine what has happened to the said proceeds of sale.  As indicated above, the property was sold for $595 000.  After payment of sale costs and a rental adjustment there was deposited to the controlled monies account the amount of $564 319.55 (see Exhibit 5).

32. From this account, the following amounts were paid in accordance with the Court orders referred to above:

$
1.         To Mr J Polson for costs of preparing the property for sale	2,346.94
2.         To Accounting Firm P for preparation of the company tax returns	9,900.00
3.         To Mr J Polson to pay out his E Pty Limited loan account to enable the company to be wound up	36,628.55
4.         To Mr O for costs of valuation of Property F	2,998.92
5.         To Mr J Polson for a valuation fee	5,110.35
_____________
$56,984.76

1. There is also capital gains tax liability arising from the sale of the property which the company accountants have calculated as likely to be $48 283.20.  This will be retained in the controlled monies account and will be payable at the appropriate time on behalf of the company.

2. Accordingly, in my view, the net proceeds of sale of Property N were $459 051.59 ($564 319.55 - $56 984.76 - $48 283.20 = $459 051.59).

3. From this have been paid various amounts to the parties including a payment of the children’s outstanding school fees to a total of $201 191.44.  I shall refer to these payments again below.

4. The husband owned a three-fifths interest in Property N which would be $275 431 ($459 051.59 x 3/5 = $275 430.94).  Mr J Polson owned a two-fifths interest in the property which would be $183 621 ($459 051.59 x 2/5 = $183 620.63).

5. But Mr J Polson has been paid a preliminary payment of $50 000.  This has reduced his interest in the net proceeds of sale to $133 620 ($183 621 - $50 000 = $133 621).

6. The husband and the wife have each been paid a preliminary payment of $50 000 and the outstanding school fees for the children of $51 191.44 have also been paid from the controlled monies.  This is a total of $151 191.44.  For this part of the exercise I shall deduct this from the husband’s interest which would leave his interest in the controlled monies account as being $124 240 ($275 431 - $151 191 = $124 240).

7. On this basis the property available for division between the husband and the wife is as follows:-

Assets	$
1.         Husband’s interest in Property F	1,000,000
2.         Husband’s interest in controlled monies	124,240
3.         Husband’s preliminary payment (add back)	50,000
4.         Husband’s motor vehicle	5,000
5.         Husband’s home contents	5,000
6.         Husband’s superannuation	15,727
7.         Re-imbursement to the husband from Mr J Polson for mortgage repayment on Property N	96,896
8.         Wife’s preliminary payment (add back)	50,000
9.         Wife’s motor vehicle	5,000
10.      Wife’s home contents	1,000
11.      Wife’s superannuation	19,836
_____________
$1,372,699
(Note I have not added back the school feels [$51 191] because this would not affect the result)
Liabilities	$
1.         Husband’s estimated capital gains tax on Property F	65,000
2.         Husband’s re-imbursement to Mr J Polson for one-half value of Property F extension and improvements	182,877
3.         Wife’s credit card debt	6,000
_____________
$253,877
Surplus	$1,118,822

Contributions

1. As indicated above, when the husband and the wife commenced cohabiting neither had assets of significant value.  The husband owned a motor vehicle and a one-half interest in a boat, the other interest being owned by his father.

2. The husband has made the overwhelming financial contributions.  He was the bread-winner for the family.  He has had continuity of employment in the family business from the time that he and the wife commenced cohabitation until separation. 

3. The wife has also made some financial contributions.  As indicated above, she was working as a waitress when the parties commenced cohabitation.  But she ceased this work shortly after commencing cohabitation.  The wife recommenced paid work in April 1993, shortly after marriage, working in child care and retail until a few months prior to the birth of C.  Then the wife was full-time homemaker and parent until the twins commenced primary school in approximately 2003.  At this time the wife worked in a number of retail positions. 

4. In June 2005 the wife commenced her employment in education and she continues to work there.

5. In my view the wife has made a significantly greater contribution as home-maker and parent than the husband.  Clearly, she was at home over many years when the children were young and at a time when the husband’s primary focus was managing the family business and earning income for the family.  This is not to say that the husband did not make a significant contribution as home-maker and parent because he did.  He was involved very much with the children including delivering them to school and collecting them from school when they were young and at a time when their mother had recommenced in the paid workforce.  The husband was also very much involved with the children in taking them to their sporting and extracurricular activities.  He was very involved with the children in the Nippers swimming program over the years.  But the wife also involved herself in such activities and in driving the children to sporting and other commitments. 

6. Also, in my view, the wife made greater contributions than the husband after separation because she paid most of the costs of the children including payment of some of their school fees.  She also had the major responsibility for their physical care.

7. Both the husband and wife were involved in numerous renovation projects although I am satisfied that the husband did the major part of the renovation work.

8. These renovations commenced very early in the parties’ cohabitation with them undertaking renovations to the Suburb B flat owned by the husband’s parents.  This work involved taking out floor coverings, repairing walls, painting, installation of a new kitchen and tiles, and restoring and refitting windows.  By arrangement with the husband’s parents the husband and wife paid no rent on the basis that they paid for materials and provided their labour for the renovation work.

9. In relation to Property S, the wife assisted the husband with renovations and improvements to this property including removing the old bathroom and installing a new bathroom, painting, modifying the courtyard and doing gardening. 

10. When the husband’s parents agreed to the husband and wife and children occupying Property W the wife assisted the husband in tidying the property which had fallen into a most untidy state, to make it ready for the family’s occupation.

11. After the fire at Property F in approximately 1996 the wife assisted the husband with the substantial clean up necessary to restore the property to a condition which would enable the business to resume operations from the property. 

12. The husband’s parents made significant contributions.  Initially they permitted the husband and wife to live in their apartment in Suburb B rent free on the basis indicated above. 

13. As also indicated above the husband’s father provided the husband with between $200 000 and $230 000 towards the costs of purchasing Property S.

14. The husband’s parents gave the husband three of the five issued shares in their company E Pty Limited, the effect of which was to make the husband owner with his brother of Property F as well as Property N.  At the time Property N was subject to a mortgage but Property F was unencumbered, as I have said.

15. The husband’s parents also permitted the husband and the wife and the children to live in Property W for many years as I have also said. 

16. These were most significant and generous contributions.  But the husband also made significant contributions to his parents in that he managed their business over many years and paid various costs on their behalf including mortgage repayments in respect of their home at Property N. 

17. The significance of contributions by relatives of a party to proceedings to that party or to both parties have been the subject of consideration by this Court in many cases over the years including Rainbird and Rainbird (1977) FLC 90-256; (1977) 3 Fam LR 11,368, Antmann and Antmann (1980) FLC 90-908; (1980) 6 Fam LR 560; Lee Steere (above), Gosper and Gosper (1987) FLC 91-818; (1987) 11 Fam LR 601 and more recently in Lint & Lint [2011] Fam CAFC 115.

18. A common approach has been for the Court to take the view that property gifted by a relative of one of the parties has been gifted because of the relationship between the relative and the party and has been treated as a financial contribution made directly on behalf of the “spouse relative”.  See for example Gosper at page (FLC) 76,168.

19. But the Court has also made it clear in cases such as Money and Money (1994) FLC 92-485; (1994) 17 Fam LR 814 and Pierce v Pierce (1999) FLC 92-844; (1998) 24 Fam LR 377 that the Court must weigh all of the relevant contributions over the whole period of cohabitation and as a consequence the significance of particular contributions, such as initial contributions or contributions from relatives, can be offset or diminished when account is taken of all other contributions.

20. It was submitted on behalf of the wife that the Court should assess the husband’s and wife’s contributions overall as having been equal.  On the other hand the husband submitted that the Court should find his contributions overall to have exceeded those of the wife.

21. In my view, taking account of all the contributions made by, and on behalf of, the parties over the many years since they commenced cohabitation, including the position following separation in which I would regard the wife’s contributions as having been greater than those of the husband, in my view the assessment of contributions overall must favour the husband.  This is particularly because of the very significant contributions which have been made by his parents.  But having said this, the marriage was a long marriage which produced three children and each of the parties has worked hard and consistently, within their respective capacities.  And the imbalance of contributions in favour of the wife after separation has been such as to reduce what otherwise would have been a greater disparity brought about because of the contributions by the husband’s parents.

22. In my view, the difference between the contributions has been such as to require the Court to assess the husband’s contributions as 55 per cent overall and the wife’s contributions overall as 45 per cent. 

s 75(2) matters

1. The wife is 44 years of age and she is in reasonable health.  She underwent surgery in November 2011.  Her condition is monitored regularly.  She said that she tires easily. 

2. The wife works in education.  The wife completed her School Certificate but otherwise does not have formal qualifications.  The wife is hoping to obtain a child care certificate to enable her to study for a diploma in child care. 

3. Her weekly income is $1212.  This comprises her salary of $882 plus the Family Tax Benefit and rent assistance of $330.  The wife pays a reduced rent of $430 per week under an arrangement that she has to undertake general cleaning and maintenance work at her apartment building. 

4. On the other hand the husband is 45 years of age and he is also in reasonable health.  He works full time as a fund raising telemarketer.  His income from this employment is between $600 and $700 per week. 

5. The husband has been living in his parents’ property at Property W with the parties’ eldest child C.  But it is clear that his parents wish to sell this property and have taken steps to obtain vacant possession of it.  There appears to be litigation in another court involving the husband about this matter. 

6. I have referred to the property of the parties and to their superannuation. 

7. Under current orders the wife has the care of the twins.  I am satisfied that she also has the major financial responsibility for them, that situation having continued since separation.  The current child support assessment requires the husband to pay child support at the rate of $238 per fortnight.  But this has been revised from an earlier position in which he was paying at a very low amount.

8. In my view the most significant s 75(2) matter is the fact that the wife has the responsibility for the two younger children. They are almost 15 years of age. So there is a little more than three years before they would attain adulthood. On the other hand, as indicated above, the husband has C living with him. She will be 19 in January next year.

9. So far as the parties’ respective capacities for earning income is concerned in my view they have broadly similar capacities.  At an earlier time, it would appear that the husband would have had a higher income earning capacity than the wife by reason of the profitability of the family business.  But it appears that some years ago there were significant changes within that industry particularly brought about by the emergence of the electronic media so that opportunities which previously had been available to the husband would appear no longer to be available. 

10. There was a strong submission on behalf of the wife that if the Court found the contributions by the parties overall to favour the husband then the Court would make a greater adjustment in favour of the wife than 5 per cent taking account of s 75(2) matters. I must say I am unpersuaded by this submission. But I do have the view that in order to arrive at a just and equitable order overall for the husband and the wife it is appropriate to set off 5 per cent of the available property in the wife’s favour taking account of the relevant matters.

11. Accordingly, in my view a just and equitable result between the husband and wife will be achieved by orders which provide that their available property be shared between them equally.

Conclusion

1. The wife is to have 50 per cent of the available property ($1 118 822) which is property with a value of $559 411.

2. The wife has the following property:

$
1.         Preliminary payment (add back)	50,000
2.         Motor vehicle	5,000
3.         Home contents	1,000
4.         Superannuation	19,836
_____________
$75,836

1. The wife has a credit card liability of $6000.  Accordingly, the wife has property with a net value of $69 836 ($75 836 - $6000 = $69 836).  

2. For the wife to achieve property with a value of $559 411 the wife would require additional property with a value of $489 575 ($559 411 - $69 836 = $489 575).

3. On the other hand the husband is also to have 50 per cent of the available property which is property with a value of $559 411.

4. The husband has the following property:

$
1.         Interest in Property F	1,000,000
2.         Interest in controlled monies	124,240
3.         Right to re-imbursement from Mr J Polson	96,896
4.         Preliminary payment (add back)	50,000
5.         Motor vehicle	5,000
6.         Home contents	5,000
7.         Superannuation	15,727
_____________
$1,296,863

1. But the husband also has the following liabilities:

$
1.         Estimated capital gains tax on Property F	65,000
2.         Re-imbursement to Mr J Polson	182,877
_____________
$247,877

1. Accordingly, the husband has property with a net value of $1 048 986.  If the husband was to give the wife property of his with a value of $489 575, this would leave him with property with a value of $559 411 ($1 048 986 - $489 575 = $559 411).

The Scheme of the Orders

1. There is $306 143.35 in the controlled monies account.  But $48 283.20 will be preserved in the account to pay the company’s capital gains tax liability arising from the sale of the Property N.  So the balance available for payment out to the parties is $257 860.

2. As indicated above, of this amount, $133,620 would be the property of Mr J Polson except that he would have to reimburse the husband $96 896 for the mortgage payout on Property N.

3. So what Mr J Polson would have to pay the husband for the husband to transfer his interest in Property F to Mr J Polson would be $780 399 ($1 000 000 - $182 877 [husband’s reimbursement] + $96 896 - $133 620 = $780 399).

4. The orders will provide for one half of the $257 860 in the controlled monies account to be paid forthwith to each of the husband and the wife.  This would be $128 930 each.  The balance is to be applied to pay capital gains tax.  This would leave $360 645 ($489 575 - $128 930 = $360 645) either to be paid by Mr J Polson to the wife or, if Property F has to be sold, to be paid to the wife from the proceeds of sale of Property F, in order for her to receive her entitlement to property in accordance with this judgment.

5. The orders will also provide for Mr J Polson not only to pay the above amount to the wife, but also to pay the husband the amount of $419 754 ($780 399 - $360 645 = $419 754).

6. In the event that Mr J Polson is unable to pay the husband and the wife these amounts, Property F will have to be sold and from the proceeds of sale the wife will be paid 18.032 per cent ($360 645 : $2 000 000 = 18.032 per cent) and the husband will be paid 20.988 per cent ($419 754 : $2 000 000 = 20.988 per cent) thereof.

7. In relation to the orders directed to Mr J Polson, in my view the making of such orders is reasonably necessary and appropriate to effect a division of property between the husband and the wife as required by s 90AE(3) of the Act. I am satisfied that it is just and equitable, in all the circumstances to make such orders.

8. I am also satisfied that Mr J Polson has the legal capacity to comply with the orders as referred to in s 90AE(4)(f) of the Act.

9. As indicated above, there would be a capital gains tax liability arising from the sale of Property N which will have to be paid by the company E Pty Limited of which Mr J Polson and the husband are shareholders. The orders will provide for this to be paid. This is a relevant matter pursuant to s 90AE(4) of the Act.

10. Clearly Mr J Polson wishes to be able to retain Property F as a home for himself and his family.  It is to be hoped that he will be able to find a way to do this, although having considered his financial circumstances as set out in his financial statement and his evidence, it would appear difficult to achieve.

11. In the event that this property has to be sold, that would come as a disappointment to him. Nevertheless, to do justice to each of the parties, as required by the Act, I cannot see any alternative.

I certify that the preceding one hundred and fifty-eight (158) paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Johnston delivered on 20 September 2012.

Associate:     

Date:              20 September 2012