Popplestone & Dickens

[2007] FamCA 107

FAMILY COURT OF AUSTRALIA

POPPLESTONE & DICKENS [2007] FamCA 107

FAMILY LAW - PROPERTY SETTLEMENT

Family Law Act 1975 (Cth) s75(2)

Black & Kellner (1992) FLC 92-287, Weir & Weir (1993) FLC 92-338, Farnell & Farnell (1996) FLC 92-681, Aleksovski & Aleksovski (1996) FLC 92-705

APPLICANT: MR POPPLESTONE

RESPONDENT: MS DICKENS

FILE NUMBER: ADF 961 of 2003

DATE DELIVERED: 26 February 2007

PLACE DELIVERED: Adelaide

JUDGMENT OF: Judicial Registrar Forbes

HEARING DATE: 31 October 2006, 1-3 & 17 November 2006, 30 & 31 January 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: In person

COUNSEL FOR THE RESPONDENT: In person

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Court delivered this day will for all publication and reporting purposes be referred to as POPPLESTONE & DICKENS

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADF 961  of 2003

MR POPPLESTONE

Applicant

And

MS DICKENS

Respondent

REASONS FOR JUDGMENT

1. The issue for determination is settlement of property.  It commenced by an application filed by the husband on 16^th April 2003.   The husband then filed an amended application on 6^th September 2005.  It was this application upon which the husband relied when the trial first commenced on 31^st October 2006.  On the fifth day of hearing, the husband sought to rely upon a further amended application.  This application had been filed on 10^th November 2006.  It seems not to raise any new matters, not already the subject of the first amended application.  In the first amended application the husband seeks the following orders:

   (a)that the wife deliver up to the husband a … Mercedes Benz motor vehicle, registered number …, as well as the registration plates “…” and “all spare parts for the said Mercedes Benz motor vehicle in her possession or control”;

   (b)that the wife do transfer to the husband all her estate and interest in the said Mercedes Benz motor vehicle registered number … as well as the Mercedes Benz 300SEL motor vehicle , registered number …;

   (c)that the wife pay to the husband such further sum as shall be ordered by the Court.  The husband on the first day of trial indicated that this was a sum of $417,588 and provided particulars as to how it was made up;

   (d)that the husband do transfer to the wife his one ordinary fully paid share in M Pty Ltd;

   (e)a splitting order as to the wife’s superannuation interest in certain superannuation plans; namely:

   N Superannuation Fund
   LS Superannuation Fund

   (f)that the wife do pay to the husband such sum by way of spousal maintenance “in such sum and in such manner” as may be ordered.  The husband did not particularise this claim;

   (g)costs.

1. The wife filed a Response seeking orders as follows:

   “1.     That the husband’s application be dismissed.

   2.That in full and final settlement of all claims between the parties for settlement of property past, present or in the future;

   (a)That each party retain those assets and/or financial resources in their name, possession or control.

   (b)i)   That each party be responsible for their own debts.

   ii)That the husband pay the [P] Credit Union (joint) debt.

   (c)   For such further or other order as is appropriate.

   3.     For costs.”

Introduction

1. As can be seen from the way in which the husband formulates his application, this is a matter which mostly concerns certain specific items of personal property, namely two motor vehicles, an interest in superannuation and a claim as to a sum of money.  The monetary claim has much to do with the husband’s perception of property and moneys due to him.  It is not matched by property to hand.  Much trial time was spent looking for property which the husband believed the wife or her family had received.  That issue which had to be considered arose in the context of an automotive repair business that the parties conducted.  They were each very selective in the material they chose to put before the court as to the company and its operations.  Save as to allegations which each made against the other, they were otherwise very selective in what they chose to say about the operations of the company.  The record keeping in most instances failed to throw any light on the matters under consideration.

Evidence

1. The husband filed an affidavit of evidence-in-chief on 27^th October 2005.  This affidavit was prepared at a time when the husband had legal representation.  The husband filed a further affidavit of evidence-in-chief on 11^th August 2006.  This affidavit was filed at the time that the husband was representing himself.

1. The wife adopted a similar course of action.  The affidavit of evidence-in-chief which she filed on 28^th October 2005 was filed at a time that she had legal representation. She filed a further affidavit of evidence-in-chief on 17^th August 2006.  This was at a time when she was no longer legally represented.  The wife points to conflicting allegations as they appear in the two affidavits which the husband has filed.  An immediate example of a contradiction in the husband’s evidence appears in relation to the question of when the parties first commenced to cohabit.  In the husband’s first affidavit of evidence-in-chief, hereafter referred to as the ‘first affidavit’, he alleges that he and the wife first commenced to cohabit in May 1994.  In the second affidavit of evidence-in-chief  (hereinafter referred to as the ‘second affidavit’) he says that the parties commenced to cohabit in May 1995.  In the second affidavit the husband explains some of the circumstances leading up to the date when he and the wife commenced to cohabit and it seems reasonably clear that it is the latter date, namely … May 1995, which is the more accurate version as to his evidence.  Also, it accords with what the wife is saying as to the matter.

General Background

1. At that time the husband was 58 years of age and the wife 49 years of age.  The husband was married to his then wife, G.  He had three children of that marriage, W, K and D.  He and his wife and his three children were partners in a business, M Pty Ltd.  The husband and his then wife were also joint proprietors of a property at L.  In May 1995 the L property was sold.  The Commonwealth Bank held two mortgages, one of which related to the business.  That mortgage on which was owing $32,901 was paid out.  The proceeds of sale after payment of the mortgage and selling costs were placed in a cash management at call account.  The husband says in his first affidavit:

   “12.The financial settlement between my former wife and I resolved on the basis that the wife retained the net proceeds of sale of the home owned by us at [L] which was in the sum of $83,234.00 subject to payment to the Commonwealth Bank of a business debt of $32,690.00.”

2. I do not think this evidence can be correct.  It can be seen from the consent order of 5^th September 1995 that the husband and the wife resolved their differences upon the basis that of the moneys held in the Commonwealth Bank Account in the joint names of the parties (this being the account into which the net proceeds of sale of the home were placed) be paid out as to $63,000 to the wife and the balance to the husband.  The balance in the account as at 5^th September 1995 is not to hand.  The best evidence is the balance as at 1^st August 1995 which was then the sum of $79,585.  Using that balance, the husband would have received $16,585.

1. The husband was also in difficulty with his children. On the 24^th May 1995 they applied in the District Court for a dissolution of the partnership.  Accounts as to the business of the partnership were compiled as at 23rd May 1995.  The notation to the consent minute of order for property settlement of 5^th September 1995 records

   “AND UPON FURTHER NOTING that since the 25^th May 1995 the husband to the specific exclusion of the wife and the parties said three adult children has had control over the business trading as [M Pty Ltd]”.

What had happened was that the husband and wife herein had established the company M Pty Ltd.  As I understand the evidence, it was this company that conducted the business as and from May 1995.

1. As it is, the husband and his wife, G, and the three children resolved their differences upon the basis that the husband paid out the interest of the children and of his wife G in their partnership under the terms of a Deed of Dissolution of Partnership made in September 1995.  The husband paid $5,000 to each of the three children together with a contribution of $500 towards legal costs, a total of $15,500.  The husband also paid certain creditors in the total sum of $18,679.  A total of $34,179.

1. It will be recalled that the husband had certain moneys payable to him.  The husband says (and it is contrary to what his affidavit evidence says aforementioned) that it was an amount of $16,585 which moneys were available under the order as and from 5^th September 1995.  The settlement as to the payment out of his creditors and the business and his children was set for 7^th September 1995.  In those circumstances it seems that the moneys from the sale of L would have been available to contribute to the costs of paying out the creditors and his children.  Having said that it seems that the parties agree that the wife herein contributed the sum of $34,179 to effect the settlement.  The wife explains that her moneys were required because whilst the husband had obtained an entitlement to part of the proceeds of the L home, in fact he had solicitor’s costs of some $13,000 at a time when she believed the husband received the sum of about $15,000 net from L rather than the sum of $16,585 which was the husband’s figure.  The husband failed to produce evidence to negate the wife’s assertion.

1. The settlement that the husband arrived at in the partnership dispute with his children was based upon a valuation obtained on 6^th December 1994.  That valuation is to hand.  The valuation was undertaken upon the basis of maintainable earnings and was in the sum of $27,500, a fifth share represented the sum of $5,500.  The valuation included plant and equipment, goodwill and stock and trade.  The valuer noted the tangible asset backing of the business as comprising:

   “ASSETS
   Stock on hand, at cost  21,245  
   Plant & Equipment, written down value                2,424
   Cash at Bank  1,622
   Trade Debtors  2,983
     28,274
   LIABILITIES
   Account Payable  26,103
   Notes Payable (Insurance)  7,668
     33,771
   NET LIABILITIES  $5,497  ”

2. This valuation is helpful.  It was the basis upon which the husband resolved his differences with his adult children in the partnership dispute in the District Court, and importantly for the purposes of this determination, it provides evidence of the value of the husband’s interest in the business.  The issue is still controversial as will be seen.

1. The valuer made the comment that he had based his valuation upon “the financial information up to 30.6.1994” and that he was aware of items purchased post June 1994.  The valuer indicated that these items had not added to the value of the business, they being of a leasehold interest in nature and there was no equity in them.  Specifically the valuer notes that his valuation does not include:  “2.  Mercedes Motor Vehicle (and associated loan)”.

1. Property at cohabitation (6^th May 1995)

   The husband says he held the following property:
   Superannuation N  
   Mercedes …
   Boat and Trailer
   Mercedes 220A
   Household furniture  
   Office furniture and equipment
   Workshop tools, equipment, spare parts
   New spare parts

   Superannuation

   The husband says it had a value at cohabitation of $27,000 and the wife indicated that she would agree to that figure.  The husband joined the N Scheme on 1^st June 1980.  The husband received the proceeds of the superannuation on 30^th May 2001.  The sum was $44,542.

Mercedes 190SL   Value agreed        $25,000

At first the wife said that this motor vehicle was property of the partnership.  She pointed to the annexure ‘D’ to her affidavit of evidence of 28^th October 2005.  In her affidavit she says:

“12. b) iv)Annexed hereto and marked “D” is a copy of the Deed of Dissolution for the partnership”.

Paragraph E of the annexure says:

“E.the red Mercedes 190 registration number … (including plates and all ancillary equipment) is an asset of the business.”

The wife then said that the … Mercedes was jointly owned by the husband and his son W.  The husband meanwhile maintained that he was the owner of the vehicle.  The valuation of A seems not to include the motor vehicle as an item of property of the partnership if the 190SL is the Mercedes to which he refers.

The husband then also referred to a Deed of Dissolution of Partnership.  This Deed of Dissolution of Partnership dated in September 1995 is to hand and it records under the heading “Other Conditions”

“16.4The said [W[ shall execute a motor registration transfer of ownership in relation to the Mercedes Benz 1958 Tourer registration number […] in favour of the Continuing Partner’s nominee and further delivering to the Continuing Partner the hardtop to the same in the same state of repair as the date upon which it was taken into possession by the said [W].”

This document does not include in its preamble the “E” provision mentioned above.  The documents are different.  Upon further investigation, it can be seen that the document to which the wife referred and relied upon has the endorsement “Draft for discussion purposes only 7/6/1995”.  In these circumstances I will rely upon the document which the husband has presented.  That document suggests to me that the vehicle was agreed by all parties to be not the property of the partnership although the partnership agreed that it would be a condition of the winding up of the partnership that the son W would transfer his interest in the vehicle to the husband.

It can also be seen that the motor vehicle does not appear in the financial statements of the business prepared as at 23^rd May 1995.

Boat and Trailer              Value not known
The husband says the item was sold in 2001 for $8,500.  The wife says it was sold for $9,000.  The wife points out and produces the certificate of registration showing that the boat was held in the joint names of the husband and his son, W.  The Deed of Dissolution of Partnership, paragraphs 16.5 and 16.6, provide for the transfer to the husband and/or the company by the child, W, of the boat, boat trailer and trailer.  She further produces documentation showing the transfer of registration in to the joint names of the husband and herself as of 23^rd December 1995.  The documentation she produces also indicates that the item was sold at the sum of $9,000 as she alleges.

Mercedes 220A                Value of $3,000 is agreed
The Deed of Dissolution at paragraph 16.3 is, I believe, referring to this motor vehicle when it provides that the daughter, K, is to transfer her interest in the motor vehicle to the husband or the company.  As with the 190SL, it seems not to have been regarded as partnership property.

Household furniture  
The wife says the items were worth $500.  The husband says $3,500.  There is a valuation of all household furniture at L at a sum of $3,300.  The husband took only a few of these items when he moved to the wife’s home in May 1995.  In the circumstances, I am more inclined to accept the wife’s evidence.  There is no suggestion that the husband had possession of the entire contents of the L property or anything like it.

Office furniture and equipment, Workshop tools, equipment, spare parts, New spare parts
These were contentious items.  The husband alleges values as follows:
Office furniture and equipment  $32,000
Workshop Tools, equipment, spare parts $27,500
New Spare Parts  $33,000
The wife refers to the valuation of Mr A which includes these items.  It will be remembered that A valued the business at $27,500 and the husband had acquired a 2/5ths share (having bought out his first wife G) at the time of winding up.  The husband’s share in the business was agreed at $11,000.   Alternatively, the net asset backing of the business as mentioned above, shows that all stock and plant and equipment had book values of $23,669.  I think the husband has attributed values to these items of property in the business without bringing to account that they were the subject of a partnership business in which he originally held only a fifth share and then acquired his then wife’s 1/5^th share as well.  Alternatively, if the husband is to include these items of property then he should also include the liabilities of the partnership.  These liabilities totalled $33,771.  The partnership had a deficiency of funds of $5,497.  The husband’s position at best, I believe, is an interest in the partnership of $11,000.  His worst case position is an overall indebtedness in respect of the partnership of 2/5ths of $5,497:  that is $2,198 as a net liability.

1. Liabilities - Husband

   300SEL Mercedes
   This was a leased vehicle.  The parties agree it had a value of $42,000.  This is also the amount which was owing on the lease.  It had been purchased in 1992 and was subject to a four year lease.  The wife says that the lease payments were $1,637 per month and from May 1995 until the lease expired in February 1996, the husband made one payment and the company, M Pty Ltd, paid the other eight.  The residual of $36,477 on the lease was paid on 3^rd February 1996.  The parties did that by borrowing $20,000 from P Credit Union, they had $6,000 cash in joint savings and the wife borrowed the balance.

   Hoist
   This was a leased item.  The husband says it had a value of $8,500 which the wife agrees but she points out that $8,000 was owing by way of lease.

Jeep
The husband says it had a net value of $500.  The wife agrees but says that again, it was a leased vehicle.  The exhibit W7, a letter of 31^st July 1995 from CBFC, acknowledges receipt of an amount of $3,297 to repay moneys owing, the lessee being the company.

Fax machine
The parties agree a value of $3,500.  Again, the wife says it was a leased item.

Trade Creditors
The husband says that the business had owing as creditors $20,000.  The wife says it was $40,000.  If I attribute to the husband his interest in the business at net $2,198 as a liability, then that would acknowledge the trade creditors which are brought to account in the valuation.

1. Property at cohabitation

   The wife says she held the following property:
   Superannuation  $8,500
   1972 Mercedes  agreed           $7,000
   1978 Mercedes 240 diesel           agreed           $6,500

   H property held jointly with

   son GM – purchased 1991           agreed      $110,000

   Office Furniture/Computers, IS-Assist
   Net value - Wife’s estimate   $10,000

   AB – vacant land – Wife’s estimate $2,000
   Tree Plantation Tasmania – Wife’s estimate             Nil
   Trailer – Wife’s estimate  $1,000
   Furniture – Wife’s estimate  $10,000
   Savings – Wife’s estimate  $2,000

   The wife in her first affidavit of evidence-in-chief said that she had only the one motor vehicle, a 1972 Mercedes Benz.  For the purposes of the evidence, she has agreed to the husband’s allegation that she also held a 1978 Mercedes Benz.  The values of these vehicles is not a contentious issue.

2. Liabilities – wife

   Husband says not known
   Wife says nil
   The parties agree that shortly after cohabitation in September 1995, the wife took a mortgage in the sum of $36,000 which sum was contributed by her to the business so that the husband could pay out the interest of the husband’s wife and children and pay creditors.  The funds required totalled $37,572.62.

Contribution from earnings:

1. The husband alleges that his income as per his income tax assessments were as follows:

   1996  $21,540

   1997  $23,197

   1998  $18,444

   1999  $15,920

   2000  $19,268

   2001  $9,628

2. The wife’s taxable income as per her income tax assessments were as follows:

   1997  $6,772

   1998  $11,418

   2002  $10,639

   2003  $29,319

   2005  $42,507

1. The husband underwent surgery in December 1996.  He was unable to do heavy mechanical work thereafter.  A mechanic was taken on as well as the wife’s son, GM, as an apprentice.  In 1996 the wife’s employment at the Australian Industrial Relations Commission ceased and she received a payout of $5,000.  The parties married in October 1996.

M Pty Ltd

1. The husband and wife were the Directors of the company.  As mentioned earlier, the husband has concerns as to his shareholding.  He had believed that he held nine out of ten shares in the company and had seen a document of Australian Securities and Investment Commission to that effect.  The wife confirms this but advises it was a document made in error and in fact she held the nine shares and the husband one share in the company.  I do not know that much turns on this although the husband points to it as being a feature of what was his belief that the wife was dissipating moneys and company resources.  He goes so far as to say

   “It is now my perception that [the wife]  from the outset intended to relieve me of all of my assets.  She has proved to be a very deceitful and manipulative person and a compulsive liar.  She has methodically stripped me and the business of all of its and my assets, selling most of hers so as I would have no claim on hers.”

1. The husband attaches the bank statement for the company for the period 1^st July 2000 to 30^th June 2001.  The husband says that a reconciliation between the schedule he has prepared and the bank statements shows that only the amount paid by cheque has been money deposited in the company account and that a total of $49,851.67 being an amount by cash sales was not deposited.  The husband says he believes this money was paid to the wife’s Trust Account.  The husband annexes correspondence between the accountant that he engaged to investigate the financial affairs of the company and the accountants for the company.  The husband annexes a letter of 3^rd May 2004 requesting information as to certain trading figures, being a perceived discrepancy between sales as invoiced and sales recorded and a facsimile reply of 31^st May 2004.  The advice included reference to the company accountants being in possession of the general ledgers and journals of the company for the period 1999 – 2003.  As will be seen, the husband sought an audit of the company records with the view to obtaining an explanation for the discrepancies which he perceived to exist in the company accounts.

1. The husband also attaches a summary of a schedule allegedly prepared by the wife as to the company and its trading returns for the period 1994 to 2003.  Again, this is a document which fails to disclose exactly what it is that supports the husband’s contention that the wife dissipated money from the business.  It must be said that the husband and wife each acknowledge that the business accepted cash payments.  The husband and wife each say that this was a feature of the company and its operations throughout the time of its trading.  It seems also that the husband has gone to some length to ascertain the level of cash income and what has become of it.

1. The wife for her part denies having obtained personal benefit from the cash moneys which were received from the business and then otherwise expended in respect of the home, the family and the business.  She produces a schedule of the purposes for which the cash moneys were used.  This is the exhibit H11.  The husband points to those items on the schedule which he says shows that The wife’s son was to receive certain moneys.  Again the schedule shows cash moneys paid as per invoices.  The invoices are numbered.  It does not purport to be a document recording cash where no invoice was rendered although the husband says there was other cash income.  He says he was aware of the practice of clients not being invoiced and paying by way of cash.  The husband gave this evidence under the utility of a certificate issued under Section 128 of the Commonwealth Evidence Act.  The wife denies this allegation.  She says no cash moneys were received which were not the subject of an invoice.

1. The schedule, the subject of exhibit H11, requires some explanation.  For example, there are items as to payments to the wife’s son as mentioned.  There are also items referrable to Directors’ salaries.  The wife says that these are items of expenditure which are referrable to the expenses of the business and as such a deductible item for income tax purposes.  It is not known whether the items did in fact feature in the expenses of the business for income tax purposes.  I pre-suppose that they did.  The husband makes the assertion that the wife had the benefit of cash moneys but the evidence that he produces does not support his proposition, or if it does support it, he fails to explain it in circumstances which makes it apparent how much money is involved and what became of it. 

1. Then there is the question of accountability.  If this is the schedule which was produced to the accountants, then it discloses payments made on identified invoice numbers.  In that event, I am not sure why from an accounting point of view, the appropriate information could not be ascertained for the purposes of preparing accounts.  This is a different situation to the circumstance which the husband says also occurred, namely cash payments were received where no invoice was rendered.  In that situation, unless the parties had their own methods of keeping an account of those transactions, clearly it would be very difficult to prepare accounts.  The husband readily acknowledges his involvement in a business conducting its affairs by accepting cash when no account was invoiced.  As mentioned, the wife denies this practice.  The question could be asked why, if the husband had these concerns, did he not raise them with the wife at an earlier date.  Obviously the arrangement conducted by he and the wife as the husband would have it was undertaken at a time when they chose to conduct their affairs in this manner.

1. The allegation is easily made.  It is not so easily disproved.  The husband does not point to a level of expenditure in the business or the home which might lend weight to his argument.  Nor does he refer to the purchase of property and point to a lack of funds to underpin its purchase.

1. The husband has sought answers to questions about what became of the business income and as mentioned, he sought clarification from the company accountants.  He concedes that when he failed to obtain satisfaction from their answers, he then made application to the court for an audit to be undertaken in respect of the business and its accounts.  He accepts at paragraph 43 of his affidavit of evidence-in-chief of 27^th October 2005:

   “However, that was unable to proceed on the basis that the wife claimed that she was no longer in possession of the books of accounts including receipts and invoices relating to the business”.

1. The husband then goes on to refer to examples of cash withdrawals made by the wife on the parties’ joint account.  For example, he says at paragraph 44

   “The transaction on 15^th August 2001 involved a cash withdrawal of $2,000.00 from the joint account of the wife and I, which sum was deposited into the account of her son [GM]”.

   The husband then provides an annexure, it is the annexure ‘A’ to his first affidavit.  The annexure itself is difficult to understand.  At first I understood it to be a record of the P Credit Union but the wife said that that was not so.  The annexure is a schedule compiled by the husband of certain transactions he says he has taken from various accounts conducted by the parties and the company.  The annexure, that is the schedule, is nothing more than a table which the husband has compiled of transactions, some of which he says, the wife’s son has had the financial benefit.  The husband fails to provide evidence to support the matters that are contained in the table.  The annexure does not support the husband’s allegation that moneys were paid to the wife’s son on 15^th August 2001.  In the generality of the matter the wife denied providing moneys to her son beyond payments to him or on account of him by way of wages or by way of reimbursement of moneys otherwise due to him. 

1. The husband also then refers to nine separate transactions which he says information for which can be found in the schedules, the exhibit H11, of payments made to the wife’s son for expenditure in addition to his wages ordinarily paid.  When regard is had to this schedule, it can be seen that it fails to support the husband’s assertion.  For example, the husband asserts that there were payments on 10^th December 1999 as follows:

   SA Water  $98.10
            Visa  $130.95
            Cash payment   $232.65        $461.70

The schedule itself records the expense at the sum of $370.60, not a figure of $461.70.  The schedule then refers to a further payment to the wife’s son on 13^th December of $382.50 but that is not a payment to which the husband makes reference.  Nor does the husband make reference to an item appearing 21^st January 2000 ‘Cash loan [the wife’s son] $1,500’.  There are other instances of the schedule recording payments to the wife’s son.  These items are not explained by the husband.

1. The wife explains the item 21^st January 2000 ‘Cash loan [the wife’s son] $1,500’ by pointing to the initials ‘J.D’ which also appear for the item.  She says these are the initials to her name and that the $1,500 represented a cash injection of funds by her and her son from their own resources:  a joint account which they held.  She then refers to loan repayments recorded as paid by the company to the wife’s son as follows:

   9/2/2000  $1,000
     17/2/2000  $200
     21/2/2000  $300
     $1,500

   It seems that the husband is relying upon these payments as evidence of the wife’s son receiving at the behest of the wife moneys and cash, being company moneys, to which he had no entitlement.  The way in which the wife explains the matter suggests that her son was simply being repaid moneys which were due to him.  What the wife says is an explanation which seems plausible enough.  I do not know that she ever explained why it was just her son who received reimbursement and not herself as well.  The reality is I think that only an audit of the company accounts would provide certainty as to these matters.  The husband acknowledges that he sought an audit as to the books of account. 

1. By a Form 2 Application filed 3^rd March 2005 the husband sought an order:

   “3.That [Mr C] be appointed for the purpose of undertaking an investigation as to the accounts of the company [M Pty Ltd] with the costs of [Mr C] to be shared equally between the parties.

   4.That the wife do forthwith make further and better discovery as follows:-

   (a)that the wife discover all original cheque butt, bank statements and invoices of [M Pty Ltd] for each of the financial years ending 30^th June 1998 to 30^th June 2002 inclusive;

   (b)that the wife do deliver up to the husband’s solicitors the original documents as follows:-

   (i)all original chequebooks;

   (ii)all original bank statements;

   (iii)all original invoices;

   (iv)all original cash running sheets of [M Pty Ltd].”

2. On that application her Honour Justice Dawe on 18^th March 2005 ordered:-

   “1.I order that both parties cooperate and do all things to assist [Mr C] in carrying out an investigation of the accounts of the company for the period commencing 1 July 1997 and onwards.

   2.That the cost of this investigation, fixed in the sum of $1,000.00 initially be paid by the husband with the question of overall contribution of costs being determined at the trial.”

   The Draft Order sheet for 26^th April 2005 records:
   “Upon noting that [Mr C] is not in a position to complete his report”.

   As mentioned, the husband says that the information sufficient to prepare the accounts, is not to hand.

1. In February 2001 the husband was admitted to hospital.  The husband fails to say the nature of his illness but he does concede that because of it, the wife made application on his behalf for disability benefit.  He says that she signed the application on 16^th April 2001.  The husband furnishes documents that relate to his admission to the Royal Adelaide Hospital in February 2001 and his subsequent discharge in April 2001.  The documents produced by the husband, being the annexure to his affidavit, comprise a summary of treatment undertaken including a management plan.  He was apparently investigated by a number of departments.  The report indicates that he was seen by Cardiology, Rheumatology, Infectious Diseases, Psychiatry, Neurology, Diabetes Educator and Podiatry.  The comment is then made

   “No obvious cause found”.

   There is the further comment
            “Became manic (?onset preceding admission, ?exacerbated by steroid use”’.
            Under the heading ‘Management Plan’ is the comment

   “Continue on antipsychotics until few months after normalisation of mental state. Psychiatric follow up suggested.  Has been referred to ACIS.”

1. The wife says that the husband was in fact detained under the Mental Health Act initially for 24 hours and then re-evaluated for three days and then again re-evaluated and then held for 3 weeks.  She says that he was kept in the general ward and assigned a dedicated 24 hour a day armed guard for the period of his being held in hospital.  I understand her to be saying that this was to do with the husband’s mania.  She says that medication was prescribed but the husband ceased to take it soon after discharge from hospital.

Other contributions

1. In 1997 the Mercedes 220A was sold to the wife’s sister-in-law for the sum of $7,500.  The husband says the wife took the proceeds.  If so, it was moneys spent by the wife on the expenses of the parties.

1. In March 1998 the wife says she sold the Jeep to her son, GM, for the sum of $3,000.  The husband says the wife sold the motor vehicle for just $1.00.  The husband fails to produce evidence to support his allegations.  I accept the wife’s evidence.

1. The wife alleges and the husband concedes that on 9^th November 1998 she further contributed the sum of $3,360 being the proceeds of an accident claim.

1. In June 2001 the husband cashed in his superannuation.  An amount of $44,540 was received.  The money was placed in the joint account of the parties with the P Credit Union.  The parties each say that with that money a Bankcard indebtedness of $16,350 was paid as well as a line of credit indebtedness of $14,016.  The husband says that the $14,016 line of credit payment paid off the balance owing on the 300SEL.  The wife said somewhat belatedly, I thought, that the line of credit was a facility for accounts other than the borrowing for the vehicle.  She raised this matter only during the husband’s cross-examination of her, the husband having already given evidence.  The husband did seek to introduce further evidence by way of reply in relation to other accounts but his application was refused.  I am sure it could have been the subject of further evidence but as I was saying, it was something which arose quite late in the evidence, it had not been the subject of affidavit evidence and I thought it was inappropriate to extend the enquiry beyond what the parties had chosen to already put by way of evidence before the court.  The husband says that $10,000 was paid to Olympic Industries for a garage that was erected on the premises owned by the wife’s former husband.  The husband says that unbeknown to him the wife relocated the business to those same premises and that it was at these premises that the wife’s son was living. 

1. These are the matters that the husband says in his second affidavit of evidence-in-chief.  In his first affidavit of his evidence-in-chief he says that “The balance of $10,000 remained and was used to pay for the workshop at [E]”.  These are the premises at which the husband says the garage was built.  Then in the first affidavit the husband goes on to say:

   “32.In August 2001, the wife advised me of her plans to move the company’s business from [F] to her son’s property at [E].  I was against the move, as I did not believe there would be a demand for a Mercedes Benz mechanic in the [E] area.”

1. This evidence is to be contrasted with the husband’s evidence in his second affidavit where he says:

   “[The wife] unbeknown to me had relocated the business to her late ex-husband’s home at [E], where her son [GM] was Caretaker”.

The parties do seem to be in agreement that the relocation of the business was undertaken in August/September 2001.

1. In September 2001 the wife and her son, GM, jointly received the proceeds of an inheritance in the sum of $56,859.  This money came from the estate of the wife’s late mother who had died in April 2000.  The wife says that the money was spent as follows:

   $16,500 paid into the line of credit and overdraft to reduce the indebtedness of the business;

   $10,000 was used to erect a workshop for the company at E;

   she says $30,000 was invested in the joint bank account with the P Credit Union on behalf of herself and her son.  She says this money was used to purchase shares on the stock market.  She says the balance of just a few hundred dollars was spent on general expenses.

43.The other feature to this evidence is the question of who owns the premises at E.  The husband and wife each refer to the premises as being the wife’s former husband’s premises or alternatively, the son, GM’s premises.  The husband says specifically that this property is registered in the name of the wife’s husband, one Mr JM.  He also says her former husband’s affairs are controlled by Public Trustee who has a caveat registered on the title.  The husband says that the son, GM, occupies the said property.  The husband says it was on these premises that the garage was erected.  The husband says that the wife and the son GM are named beneficiaries in the will of the former husband although the husband fails to otherwise say what would make that evidence of relevance.  The wife failed to comment on these matters for the purposes of the trial, and only disclosed that the wife’s son received the property by way of inheritance on the death of his father, when an interlocutory application came before me in January 2007.  The wife’s former husband had died in May 2006 and her son was the beneficiary of his estate, at least so far as the E property was concerned.

1. Then there is also the question of whether it was the husband’s superannuation which paid for the garage or the wife’s joint inheritance moneys.  The superannuation and inheritance were received within 3 months of each other.  The husband was ill and off work in the period February to April 2001 and he then went onto a Disability Support pension in April 2001.

1. The wife says that during the period of the husband’s hospitalisation she attended to the payment of business expenses and the parties’ personal expenses.  It can then be seen that the husband’s superannuation, as well as the wife’s inheritance moneys, in part contributed to the payment of the liabilities of the parties and of the company.  The husband interprets these events following his illness as the point at which the wife was diverting cash from the business to the benefit, if not herself then to her son, reaping the benefits of his superannuation as well as her inheritance, moving the business without consultation and locating it at premises at which either she or her son or her family would derive a benefit.  

1. Once these allegations have been made the subject of enquiry, we find that we are less than satisfied with the allegation.  As can be seen, with some of these allegations, the husband is contradictory in his assertions.  That is so as it relates to the moving of the workshop and his knowledge of it.  Nor is it apparent on the evidence that the wife was dealing in cash which was not the subject of accounting.  The allegation as to her son benefiting beyond the terms of his employment is not borne out on the evidence.  It can be seen that the business lost the services of the husband from February 2001.   The wife points to the business rental commitment of $24,000 per annum.  She says the business could not afford to pay rental at that level.  She seems to make the assertion of the high rental cost operating from 1995 when the business was starting out in the period following the dissolution.

1. In 2001 and with the husband’s ill health, rental costs were no doubt a consideration in the decision to relocate the business premises.  The husband now complains also that the new site for the business was a poor choice and a downturn in earnings was to be expected.  At the time, however, he was a willing participant in the arrangement.  He would have been compelled to accept the financial inevitability of it.  The marital relationship then was not under threat.  I believe much of the husband’s complaints about the move arise from the ill will which comes from the separation.

1. The husband then specifically in his first affidavit, paragraph 29, also makes the following allegations:

   “29.   During 2001, the wife:-

   a)sold my fishing boat in June 2001 for $8,250.00;

   b)    sold to her son [GM] my four wheel drive Jeep for $1.00 whereas it was valued at $3,500.00;

   c)    sold the company’s car trailer which had been used for towing broken down vehicles for $2,500.00;

   d)    held a garage sale and disposed of office furniture and effects and received the sum of $1,500.00;

   e)    sold a four post H7 hoist for $3,500.00;

   f)     sold a two wheel trailer for $350.00;

   g)    held a garage sale and sold other items of furniture and effects for $500.00.”

2. The wife answers these allegations not in the context of a need to generate moneys because of a downturn in the business.  To the allegation that they were transactions from which the wife obtained financial gain to the exclusion of the husband, she says:

   a)the boat was held in joint names.  She says it was sold because it was not being used.  She cannot recall what became of the proceeds;

   b)not true:  vehicle sold for $3,000 to the wife’s son and in 1997 or 1998, not 2001 as the husband alleges.  Repayment was made by instalments which she received;

   c)this item had been disposed of before the company took over the business;

   d)the garage sale was not successful.  She was non specific as to the amount received and denied it was $1,500.  She says it was undertaken so as to avoid additional debt;

   e)the cheque was received by the husband and paid into one of the accounts;

   f)agreed:  with perhaps a sale price something less;

   g)there was only the one garage sale, being the matters picked up in d).

3. It will be remembered that this was at a time when the husband was now in receipt of a Disability Support Pension in respect of health issues.  The husband provides some evidence but for the most part he fails to adequately explain the issue as to his ill health suffered in January 2001 and the consequences it represented as to the business.  On this matter it must be said that the loss of the husband’s services in the business must have represented a significant blow to its capacity to earn income.  It had the services of the wife’s son but he had barely completed his apprenticeship and then he left the company in February 2001.  The evidence indicates that the husband was the ‘key worker’, to use the colloquial expression, and his absence must have been sorely felt.

1. The husband concedes that the wife had on 20^th February 2001 advised Centrelink that he was no longer employed by M Pty Ltd ‘due to illness and shortage of work’.  Even the husband says that there was a continuing downturn in the business after his hospitalisation.  He says that became even more noticeable upon the move to E:  this happened in August/September 2001.  The husband says that the wife’s son obtained work elsewhere in July 2002.  The wife says that that was something that happened in 2001.  She produced a number of documents, company records.  These documents indicate that the wife’s son left the employ of the company sometime in the period January or February 2001.   In the letter to Centrelink the wife says that her son left the company on 19^th January 2001.  In the wages paid to employees it seems he worked a further two weeks.  At all events, according to the documents, he ceased to be fully employed by the company after 7^th February 2001 or thereabouts.

1. The wife’s son then did contract mechanic work for the business on a needs basis.  According to the wife, the husband did only minor repairs on customers’ vehicles and when he did, he did it for cash.  Otherwise the husband would arrange to take bookings and arrange for the vehicle to be put on the hoist and then the wife’s son, having completed his day job because he was separately employed full-time, would then carry out the repairs to the vehicle.  The husband would prepare the invoice and return the vehicle to the owner.  Income generated in this manner was the subject of a schedule which the husband prepared.  However, he sought to introduce it into evidence only during the cross-examination of the wife.  It was a controversial matter, that is to say, the level at which the wife’s son’s efforts contributed to the income of the business.

1. If we are satisfied then, and the evidence certainly points to the company losing the services of both the husband and the wife’s son in January/February 2001, it is difficult to understand the evidence of the company as to its sales:

   Income/Sales year    2000              $213,378     (per W24)

   2001              $170,813     (agreed per W42)

   2002                $76,750     (agreed per W42)

   2003                $20,286     (agreed per W42)

   I would have thought there would have been a greater drop of income in the 2001 year.  It may be the wife’s son’s efforts did lead to a significant contribution of income to the business.  It may also be that the income comes from work already undertaken before 2001.

1. The financial statements of the company for the years 1995 to 1999 are not to hand.  If they were, it might be possible to discern the year in which moneys were contributed by the parties to the company.  As at 30^th June 2000 the accounts show that the company was owing to the parties $41,793.45.  As mentioned, it is not possible to look at each of the years to see how that sum was accumulated.

1. Another matter which points to the business being in difficulty as and from early 2001 is the wife’s evidence that upon it moving its premises in August of that year, the wife then ceased to be employed by it full time and was required to obtain part time work elsewhere.  Then there was the indebtedness in respect of the 300SEL.  In February 1996 the parties took on borrowings of $30,477 which had to be repaid.  It was all but repaid at the time of separation.  It is presently subject to a liability of $17,203 being the balance remaining of moneys taken by the wife on 28^th December 2002 – viz the $19,990.  A Bill of Sale registered over the motor vehicle secures the payment.

1. The wife says that she and the husband each saved towards holidays which they took together.  There was a trip to New Zealand which was undertaken prior to the marriage.  There were also trips interstate and an overseas trip to Germany and England.

1. The husband says that with the wife he undertook improvements to the property at H.  This was a property held by the wife jointly with her son.  The husband says that the improvements consisted of the building and construction of a carport, the widening of a driveway, installation of a dishwasher and the installation of wardrobes in the main bedroom and hallway.  The wife does not accept these allegations pointing to input from others.  In the end the husband agreed that he did not supply the materials and that his contribution in respect of the carport was that he helped in its erection.  With the widening of the driveway, the parties seem to agree that the husband laid some bricks but the wife seemed emphatic that she did the greater part of the work.  As it is, it seems that the husband was working 5½ days a week in the business and it seems clear that it was the business that took up much of his energies.  He says otherwise that he contributed by way of providing assistance with household chores and with cooking and cleaning.   The wife says that the husband on occasions helped with housework such as vacuuming and hanging out washing and that he did all the cooking but that after the few months, she did all of the ironing.  She says that she and the husband shared the living costs but she paid the utilities.  She explains this by pointing out that she and her son were the proprietors of the property and in these circumstances, perhaps not unnaturally, the husband refused to contribute.

1. The parties separated on 27^th December 2002.

1. Property held at separation

   190SL (held by wife)
   300SEL (held by wife)
   Tools of trade (husband)
   Personal effects (husband)
   Mercedes 240 diesel (held by husband)
   P Credit Union $5,193 (joint)
   H Unit (held jointly by wife and her son)
   Superannuation (wife)
   Vacant land AB (wife)
   Debentures forest Tasmania (wife)
   Furniture (wife)
   Spare parts and tools (wife)
   IS-Assist business (wife)
   D Family Trust (wife)
   Cash from company (wife)
   Cash from company (husband)
   M Pty Ltd (husband and wife)

   Liabilities at separation
   There is a difficulty as to the wife’s liabilities at separation.  In her Form 13 filed in March 2003, she says her liabilities consisted of the P Credit Union $10,003 and Diners Club of $500.  The wife in her affidavit evidence fails to make mention of her liabilities at separation save as to the position with M Autos Pty Ltd:  refer sub-paragraph ix) in paragraph 23 b).  In oral evidence the wife alleged credit card liabilities with Westpac, Citibank and Adelaide Bank as well as the P and Diners Club already mentioned.  There is no evidence of how much was owing on any of the accounts save as to what is in the financial statement.
   Moneys owing
   P Credit Union (300SEL)  $12.17  agreed
   Mortgage H
   Creditors of M Pty Ltd  $2,535.89
   Credit card –Adelaide Bank (wife)                 not known

   P (wife) as per

   Financial Statement 25.3.03       $10,003
     Diners Club  $500
   Myers account (wife)
   Telstra company debt mobile phone                      $150

Separation and post separation contributions and events

1. On 27^th December 2002, the day of separation, the wife says that she changed the locked on the doors and placed the husband’s belongings outside for him to collect.  She says that later that day the husband attended at the premises and dug up and took from the backyard cash.  The wife says that police were called and were in attendance and she says she gave to the husband $100 cash and then says ‘not realising he had approximately $7,000 cash on him’.  The wife says

   “iii)    Between 27/12/02 and 30/12/02 my former husband took company cash (he had some of it buried in the back yard) and withdrew cash from Company bank account - approximately $7,000.00 in total.”

   In trial evidence the wife said that the husband received $7,373 made up of:

   Share of joint savings  $2,600

   Company cash tin  $2,673

   Cash hidden in garden  $2,000

   Cash paid to husband at separation             $100

   $7,373

   The husband in his affidavit evidence fails to make mention of cash being buried in tins in the backyard but he does accept receiving $7,165 in cash and savings made up of:

   Share of joint savings  $2,600

   Cash tin company contents  $2,465

   Cash hidden in garden  $2,000

   Cash received from wife on day of

   Separation$100

   $7,165

2. On the day of separation, the wife withdrew $2,630 from the joint account with P Credit Union, leaving the husband with the balance of $2,600.  Effectively they equally divided the funds in the joint account.

1. The wife continued to retain the 190SL.

1. On 5^th May 2003 the husband without notice to the wife seized the 300SEL.  This vehicle was the security by way of a Bill of Sale for the P loan, the wife having drawn $19,900 against it the day after separation.  The wife met the instalments on the loan, $315 per month, until May 2003.  Thereafter the husband paid the instalments.

1. The wife in paragraph ix) of paragraph 23 of her affidavit of evidence-in-chief says that she personally paid the debts of M Pty Ltd as follows:

   “1/3/2003 – Visa A/c  $1,919.45
   1/6/2003 – [V] Imports Dec. A/c            $1,071.61
   1/11/2003 – [E] Car Parts Nov A/c          $100.00
   1/16/2003 – Diners Club Dec A/c           $611.63
   2/3/2003 – Telstra: Fax Dec A/c                  $5.00
   08/02/2003 – Telstra: […] Fin.                 $227.20
   26/2/03 – MTS 2002 ITR  $750.00
   26/2/03 – MTS 2003 ITR (Final)             $750.00
   26/2/03 – MTS: Wind Up Co. Fee           $400.00
   27/12/2002 – Withdrew Cash              -$2,830.00
   28/12/2002 – Withdrew Cash                  -$300.00
   28/2/2003 – BAS Refund  -$169.00
   Total Directors Loan from [the wife]     $2,535.89”

2. I understand the wife to be saying that she was able to pay these moneys from the $19,900 drawn by her on the P loan.  As to the balance of the moneys, she says she “dwindled it away”, to use her expression.  She made trips to the country and interstate and bought clothes.

1. In April 2003 the wife says that she sold the home at H.  It sold for the sum of $167,000.  The agent’s commission and disbursements and broker’s fees were paid in the sum of $7,120.55 leaving $159,879.45.  The wife says that this sum was halved and from her half share of $79,939.73, the mortgage was paid out in the sum of $25,435.77 and with other incidental costs of discharge of the mortgage she then received the balance of $54,368.67.  The wife says that her son, of his half share paid out a Toyota Finances indebtedness of $35,035.48 leaving him with a balance of $44,904.24.   The wife says the mortgage liability of $25,435 was the borrowing undertaken for company purposes which I understand to be a reference to the moneys the wife contributed when the company first stated to trade.

1. The wife says of the balance of $54,368 received by her, she paid:

   i)      solicitors costs of $26,000

   ii)approximately $3,000 paid in company debts in terms of paragraph 64 hereof   

   iii)$5,000 for an interstate Rotary function and the costs of travelling to Melbourne each 6 to 8 weeks

   iv)the balance of $20,000 to buy clothes, dinners and socialising.

1. The husband sold the Mercedes 240D in July 2005 for the sum of $4,500.  He says he used the proceeds to pay his legal costs.  For her part the wife concedes the husband received the sum of $3,200 from the sale of Mercedes 240D.

1. I interpose here to say that on the 30^th January 2004 an order was made in the following terms:

   “That the husband and the wife are restrained and injunction is hereby granted restraining them from:

(a)disposing of, encumbering or in any way dealing with any property in which they may have an interest or entitlement whether real or personal and without limiting the generality thereof any interest they may have in a business or company, any funds to their credit in accounts of any description with a financial institution including any entitlements they may have to superannuation and insurance policies and any shareholdings that they own or in which they have an interest save and except in the ordinary course of business;

(b)disposing of or in any dealing with the furniture and contents in their possession.”

1. The wife points to the sale by the husband of the Mercedes 240D as being in contravention of the order of 30^th January 2004.

1. The wife has retained her superannuation.  She has an interest in six separate schemes:

   AV (formerly N)
   AG
   Macquarie ADF Super Rollover Fund
   PSS Public Service Superannuation
   L Capital Secure
   ARF

   The wife says that on 11^th May 2003 she transferred her ARF interest to AG.

1. The wife was the owner of a vacant block of land at AB, S.A. when the parties first commenced to cohabit.  She had owned it for a number of years.  The particulars as to the costs of rates, taxes and levies are not to hand.  The wife argues that it should not be included as property, the subject of orders as to settlement of property.  The husband argues that the land should be included.

1. The question of whether or not it should be included is a matter which I believe should be considered in the context of the question of whether there has been a wasting or dissipation of property by either party and the corollary, namely the totality of the property which is available for consideration.  Is this then a matter to which the principles in Black & Kellner (1992) FLC 92-287 and Weir & Weir (1993) FLC 92-338 would apply; decisions of the Full Court which acknowledge a need for each party to the proceedings to make full disclosure as to their property and the approach to be adopted if it is found that a party has failed to make full disclosure.

1. In Weir & Weir (supra) at page 79,594 the Full Court said:

   “We appreciate that this is something of a broad brush approach, but, as we have said, where there is clear evidence of non-disclosure as there was here, the Court should not be unduly cautious about making findings in favour of the other party.  It has been said by one commentator (O’Ryan and Broadfoot, 5^th National Family Law Conference Handbook, p249) the failure to disclose undermines the whole process of adjudication of proceedings for a settlement of property in that the court is unable to identify the property of the parties, to properly assess contribution, or to properly assess s75(2) factors.”

1. The husband makes the assertion that the wife has had the benefit of cash income of the business as well as the proceeds of sale of items of personal property.  As to the first allegation:

   i)The wife denies to receiving cash in circumstances where no account was invoiced.  The husband maintained that she did but was short on evidence to support his allegation.

   ii)The wife admits to the company receiving cash on invoices rendered.  On this practice the husband fails to show that moneys have been received by the wife which have not otherwise been accounted for in the books of account.  This is the exercise which would have required an audit or at least evidence of the accountant.  That would be evidence not just that there was a discrepancy between accounts and receipts but that it was the wife and her son who benefited.

2. As it is, on the question of cash, the evidence points to the husband.  He admits to having cash buried in the garden.  The obvious question is why would he choose to secure his worth in this manner if not to hide it.  The husband says that the cash represented the totality of saving a weekly sum of $50 per week taken as pocket money from the commencement of the business with the wife.  The husband fails to explain in what circumstances he was persuaded to hide this weekly sum.  There was no apparent reason why he should do so.  The wife was well aware of the weekly payment.  I believe the source of this cash is more likely to have come from cash earnings received by the husband from the business.  The husband readily admitted to having received cash from the business.  That evidence was the subject of the certificate given under Section 128 of the Evidence Act.

Costs paid

1. The husband says he has paid $40,174 in legal costs.  He has further moneys owing.  The question is whether the moneys which the husband has otherwise spent on costs should be included in the pool of property.  The wife has also spent $26,000 on solicitors costs.  Should this money also be added back into  the property pool.

1. In the case of the husband, he has undertaken borrowings so as to pay at least part of his costs.  The moneys remain owing.  In these circumstances, I believe it would be inappropriate to consider the costs as an item of property capable of being included in the property pool (see Farnell & Farnell (1996) FLC 92-681). The only exception to that finding would be the $4,500 payment of costs made by the husband from the proceeds of sale of the Mercedes 240D. The husband concedes the moneys should be brought to account.

1. The position for the wife is that she used $26,000 of the proceeds of sale of H towards her costs.  This was an inheritance and moneys received post separation.  In these circumstances, I do not think I should include those costs.  Then there is the situation in this matter where the property pool is minimal.  The implications of notionally inflating the pool may have a dramatic consequence in the adjustment because of the size of the property which is available in real terms.

1. At trial the wife identified a number of credit card liabilities and other accounts.  They were

   P Credit Union (wife)  $6,177     agreed
                Credit cards (wife)

   ANZ  $1,684   agreed
                     Westpac  $4,522   agreed
                     Coles  $1,596   agreed
                     Adelaide Bank             $2,003   agreed
                     Citibank  $14,909   agreed
                     Diners Club  $300   agreed

   Amex  $3,792   agreed
     $28,806
                Overdue accounts  $1,370

   The liabilities at separation as referred to in paragraph 59 totalled $10,503.

   The wife herself accepted responsibility for what she said was the unsatisfactory growth in her liabilities post separation.

Conclusion as to contribution

1. Upon cohabitation or shortly thereafter the husband had property to the value of $62,302.  This comprised:

   Superannuation                   $27,000     agreed
                     Mercedes …  $25,000     agreed as to value

   Boat & trailer  $9,000     sold 6 yrs later at this sum
                     Mercedes 220A  $3,000     agreed
                     Furniture  $500

   $64,500

   Liabilities  $2,198
                     Net property  $62,302

   As mentioned, he may have had a small residual value in the leased motor vehicles, plant and equipment, about $1,000 on the evidence.

1. The wife had property:

   Superannuation  $8,500
                     1972 Mercedes  $7,000     agreed
                     1978 Mercedes  $6,500     agreed

   H joint $159,000

   sale price in 2002 – half:     $79,500

   Office furniture/computers

   IS-Assist  $10,000
                     AB  $2,000
                     Trailer  $1,000
                     Household furniture             $10,000
                     Savings  $2,000
     $126,500
                     Liabilities  nil

1. The wife contributed the sum of $37,572 to the business.  The moneys were paid so as to reduce creditors or to make up the funds necessary for the husband to buy out the interests of his three adult children, a total of $15,500 and his wife a further $5,500, all up $21,000 and reduce the creditors.  I assess this as a contribution to the property of the parties.  She did it by mortgage, drawing against the equity in her interest in the property at H.

1. At cohabitation, the husband had property to the value of $62,302.  The wife had property to the value of $126,500.  The parties not long after cohabitation acquired the property of the business, it became property of the company M Pty Ltd.  The wife contributed from borrowings $37,572.  These funds added to the wealth of the company.  It is not clear whether they were used to reduce creditors or to pay out the former partners:  whichever it was, the parties enhanced their wealth; the wife had the liability.  Later events were to show the parties using further capital contributions to reduce that indebtedness.

1. During the period of cohabitation and marriage, some 7½ years, each of the parties made significant contribution by way of their respective efforts in the business and generally in respect of the home.

1. In the history of the matter, the wife made an initial contribution of funds, the borrowing against her property.  These same borrowings (that is the $25,435.77) were paid out when the property was sold post separation and effectively she has had the benefit of the net proceeds.  The original borrowing was reduced by some $12,000, no doubt with funds attributable to income generated by the business, but otherwise it was a significant contribution in the totality of things and needs to be brought to account.

1. The AB land and the 190SL motor vehicle each constituted items of property which the wife and husband held respectively at 6^th May 1995.  They remain.  Clearly different considerations apply as to contributions as it may relate to the individual items but on the question of whether to bring them in or leave them out (I would not want to bring one in and leave the other out), I would include them both.

1. The husband applied his superannuation received 30^th May 2001 towards the property of the marriage or its debts.  As to the property, the only item under consideration is the cost of purchase of a garage.  The husband failed to produce evidence in support of his contention that it was his money that was used to buy the shed.  I am not sure that the question of costs of construction was dealt with.  The husband not unnaturally makes the allegation that it was his money. 

1. Generally, the husband was not an impressive witness.  He was prone to making bold assertions and seemed unconcerned when a particular matter was shown to contradict his position.  An example of this was in respect of his admission that he dealt in cash moneys:  being moneys undeclared and unaccounted for.  That admission did not lead him to provide evidence of the real income position of the company nor what should be considered.  The actual accounts may have been helpful.  Sometimes a party can choose wittingly or unwittingly to misinform on one subject, yet be reliable as to another and it must be said that for the purposes of concessions sought and made for the exercise with the whiteboard, see W30, the husband was accommodating, but otherwise and in particular on any matter consistent with the wife having channelled company moneys for her or her son’s use, he was resolute, inflexible and uncompromising, the evidence notwithstanding. 

1. The wife also, in some instances, gave concern as to her creditworthiness.  Knowing as she would have done the husband’s allegations and having the history of record keeping for the company, she failed to:-

   i)formulate an affidavit of evidence-in-chief which made any effort to deal with the issue, namely the first affidavit;

   ii)failed to produce or acknowledge the relevance and significance in the proceedings of company financial statements until very late in the piece;

   iii)changed her position on matters e.g. from an initial acceptance that the husband’s superannuation paid out the loan on the 300SEL to a position that (without producing them) there were numerous other loan accounts which could have been the object of those moneys;

   iv)failed to deal with item 12 on the annexure A:  the alleged $2,000 withdrawal on the joint account on 15^th August 2001;

   v)failed to make mention in her second affidavit of evidence sworn 15^th August 2006 that her former husband had died in May 2006 and only made mention of the matter in January 2007 in an affidavit filed in connection with an interlocutory hearing brought by the husband;

   vi)in the particularity of the issue, failed to deal with the husband’s concession as to cash dealings beyond the exhibit H11.  I was not satisfied that she was not aware of the practice.  The husband had not made the allegation with any degree of detail, so it was something which was dealt with as a general topic rather than specific information.  The wife made a denial as to the practice and chose to answer the husband’s assertions rather than produce any evidence herself or otherwise explain the absence of the primary documentation.

2. Further there were instances where the wife failed to provide a suitable explanation or produce the evidence in circumstances where she otherwise impressed with her understanding as to the issues and of the need to produce documents to support her evidence.

1. The wife says the cost of the workshop came from her inheritance received just 3 or 4 months after the husband received his superannuation.  She cannot point to evidence which supports her contention.  Given the lack of evidence and the position I take as to the evidence of the parties on this subject, it is simply not possible to make a finding as to the source of the funds used to build the workshop.  At best it could be said that the absence of evidence may be consistent with the desire of the parties at that time to pool their resources.  I have mentioned the wife’s trading in stocks and shares with part of the inheritance.  She admits to continuing to do that in circumstances where I thought it necessary to give her a certificate under Section 128 of the Commonwealth Evidence Act.  As mentioned in paragraph 69 an order had been made on 30^th January 2004 which restrained each of the parties from dealing with their property.  The wife conceded that she had permitted her son to take an interest to the value of $9,000 or $10,000 in shares and stocks which she held with him, the order notwithstanding.  She did not produce the documentation of the share trading although she was requested to do so. 

1. In relation to the balance owing on the P loan, $17,203, at first I thought that I should exclude it or the better part of it because the wife had had the benefit of the moneys.  On the other hand, I believe that the husband should get the benefit of the contribution of that sum, if it were included; to the extent that he also has a legal obligation to repay the loan.  It is also a post separation contribution by him, as to payments he has made since taking possession of the vehicle.

1. The wife has a number of superannuation policies, as follows:

   A (N a/c no …)  $12,090.00     value

   payments outstanding  $3,592.51
            AG Superannuation  $6,336
            Macquarie ADF Super Rollover fund $4,406.00
            Commonwealth PSS   $12,644.00
            L  $9,588.00

The entitlements are not property in possession.  The wife is 58 years of age.  Given her age, the superannuation would be payable to her should she cease full time employment.  In these circumstances, I am satisfied that I should include the superannuation with the other property of the parties.

What property should be included in the pool

1. I am satisfied I should include the following property in the pool of property, the subject of the determination:

   Land AB (wife)   value agreed              $20,000           
   Mercedes …  value agreed              $34,000           

   Mercedes 300SEL   value agreed              $14,000
    P Credit Union (joint) secured by
    way of Bill of Sale over 300SEL value

   agreed (husband paying)  $17,203              -$3,203
   Mercedes 240D proceeds of sale (husband) value agreed          $4,500

   Tools, spare parts from business (husband) value agreed           $2,500

   (per valuation of Mr G 24.4.06)                 
   Tools (wife)  $2,825
   Telstra shares (wife)  value agreed                $8,148           
   Forest shares (wife)  value agreed                $6,000           
   Household contents (wife)  value agreed                $8,000           
   Superannuation (wife)  value agreed              $46,876           
   Savings & cash husband  $7,373
   Savings & cash wife  $2,600
     $139,619

Final thoughts as to contribution

1. On cohabitation, the wife had the greater financial resources:  something of the order of $126,500 as against the husband’s property of $62,302.  Because the period of cohabitation and marriage is not of significant length, this initial contribution by each of them comes into sharp focus.  There is then the borrowing of funds by the wife.  She used that money to acquire property or to reduce debt.

1. Further injections of funds came from the husband’s superannuation $44,540:  the proceeds of sale of the Mercedes 220A $7,500; the proceeds of sale of the Jeep $3,000; the proceeds of sale of fishing boat $8,250; the proceeds of sale of the hoist $3,500:  total of $66,790.

1. For the wife she contributed:

   Initial injection  $37,572
   Compensation  $3,360

   Inheritance

   Line of credit  $16,500
   Proceeds of H  $2,550        $59,982

   There is a difficulty as to whether the wife spent $10,000 for her inheritance on the workshop, or the money was spent from the husband’s superannuation proceeds.  The evidence does not permit an answer to the question.

1. The pool of property is $139,619 net.  The pool is not of sufficient size to make relevant the husband’s monetary claim of $417,588.  I understand the husband to be abandoning that claim, not because he accepted that it was without merit but because each of the items of property of which it comprises (being Appendix B and D to his second affidavit) have been brought to account.  He also sought to include the superannuation, legal costs and credit card costs.  These are already matters referred to in compiling the property pool.  He also seeks legal costs of $7,530 being the order of 18^th March 2005 which reserved on his costs of a Form 2 Application to the trial:  that being a Form 2 Application brought by the husband for orders as to “an investigation of the accounts of the company for the period commencing 1^st July 1997 and onwards”.  That application, the husband’s claim for costs, will need to be considered once orders have been made as to settlement of property.  The husband did not press the application for delivery up of the registration plates “…”.  He accepted that they did not come into his possession from the winding up of the partnership.

1. The total property pool is now $156,822 with liabilities of $17,203 making a net pool of $139,619.

1. The current property pool includes all known property held by the parties.  As mentioned there are certain items which were already held by the parties.  Essentially these pre-existing items represent the ‘gold bar’ so called in the comments of Justice Kay in Aleksovski & Aleksovski (1996) FLC 92-705, a dissenting judgment but relevant to the weight which should be given to an item of property which is free of subsequent contribution as against the weighting of contributions to other property:-

   “A party may enter a marriage with a gold bar which sits in a bank vault for the entirety of the marriage. For 20 years the parties each strive for their mutual support and at the end of the 20 year marriage, they have the gold bar. In another scenario they enter the marriage with nothing, they strive for 20 years and on the last day the wife inherits a gold bar. In my view it matters little when the gold bar entered the relationship. What is important is to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship. Just as early capital contribution is diminished by subsequent events during the marriage, late capital contribution which leads to an accelerated improvement in the value of the assets of the parties may also be given something less than directly proportional weight because of those other elements.”

1. The husband’s property brought in – ie. the superannuation, boat and trailer and Mercedes 220A - all found their way into the demands of the marriage.  Similarly the wife’s motor vehicles, H proceeds, her injection of funds, some $37,572 from borrowings, at some level at least were absorbed into the costs of cohabitation and the business.  I would not include the inheritance proceeds except to the limited extent, just $2,500 or thereabouts which paid company debts.

1. In the weighting up of all these different contributions which each of the parties has brought to the marriage, there is also the important factor that property was sold so as to enable the parties to continue the lifestyle beyond April 2001.  On the evidence to hand the husband’s ill health signalled the falling off of income, although not initially at the level which might have been expected and the wife was required to obtain outside work.  It was because of the ill health that the husband was unable to contribute his earnings as had hitherto been the case.

1. Another significant matter is the shortcomings in the evidence presented by each of the parties.  In my opinion, neither party was truthful in their evidence about the cash transactions.  The husband was the more forthcoming on the subject but generally it was a subject where there were many more questions than answers.  In short, neither party was prepared to reveal the true nature of the cash dealings.

1. I would apportion contribution overall at 40% as to the husband and 60% to the wife.  A difference of 20%:  the wife receiving an additional $27,924.  The husband’s contribution based property entitlement would be $55,847:  the wife’s $83,771.

Section 75(2)  

1. (a)     age and state of health

   The husband is presently 69 years of age.  His doctor, a Dr M, on 9^th September 2005 reports that the husband suffers from depression, diabetes, hypertension.  He has had surgery for the repair of an aneurysm and a fractured patella.  He has early sensory changes in the ball of his right foot.  As will be seen the husband has an ongoing capacity to earn a casual wage as a detailer of motor vehicles.

The wife is 58 years of age.  She says she is asthmatic and has a knee injury the results, she says, of an assault by the husband using a motor vehicle to strike and injure her.  Physiotherapy is continuing to be received.  She says she has other complications which have arisen in respect of the other knee for which physiotherapy is also being received.  The wife also complains of issues arising because of high blood pressure and excess weight.  These medical conditions seem not to have reduced the capacity of the wife to earn an income as a Case Manager with the Australian Taxation Office.

1. (b)     income, property and financial resources of each of the parties

   Wife

   Property
            Contribution based property settlement  $83,771

   Other property not otherwise brought to account

   Entitlement to balance of inheritance from the wife’s son            $9,000
            Liabilities
              PowerState  $6,177
              Credit cards  $28,806

   Financial Resources

   Nil
            Earning capacity
            The wife is employed as a Case Officer with the Australian Taxation Office.
            Income  
            Salary  $912   per week
            Private broking Telstra  $2   per week

   $914   per week

   Fixed commitments

   Tax  $208   per week
            PSS Public Service Superannuation    $8   per week
            Rent  $160   per week
            Rates and Taxes AB  $10   per week
            Motor vehicle insurance  $25   per week
            Contents insurance  $5   per week
            Motor vehicle registration (…)            $16   per week    
            Visa card  $320   per week

   Other expenditure  $398   per week  $1,150   per week

1. Husband

   Property
            Contribution based property settlement  $55,847

   Other property not otherwise brought to account

   Household contents  $400
            Liabilities
            Commonwealth Visa card           $15,808
            Income
            Aged Pension  $246.50   per week
            UK Pension  $75.25   per week
            Casual earnings  

   The husband says he earns $17 per week but his schedule, W18, seems to suggest that he has the capacity to earn as much as $57 per week.  That was his income as averaged over a 13 week period from 1^st July 2005 to 23^rd September 2005.   I would assess the husband as having a total income of $378.75 per week.
   Fixed commitments

   Rent  $35   per week

   Insurance  $2   per week

   Motor vehicle registration  $12   per week

   Loan repayments – P

   Credit Union  $75   per week

   Visa repayment  $62.50   per week

   Income Tax  $3.91   per week

   Other non fixed expenditure                $75   per week                  $265.41   per week

1. The husband is renting premises at LB.  He has only himself to provide for.  He has health issues and age notwithstanding, it seems he has a capacity to continue to do some cleaning and detailing work on motor vehicles.

1. The wife has full time employment.  She also rents premises.  She has only herself to provide her.  The wife is renting premises from her son.  The wife did not provide evidence that she is actually paying the rental cost.  I would have thought she would do so, given her evidence about the failure to recoup inheritance moneys from her son and her failure to produce documents as to that matter.

1. The husband and wife each have moneys owing in legal costs to their respective solicitors as well as other moneys owing which have been paid on account of legal costs; viz the husband’s indebtedness to Ms BA for $16,000 for costs paid by her on his behalf.  I have not included these sums.  I believe that to do so would be to make relevant moneys that each of the parties has chosen to spend in legal costs in a matter where there is a very small property pool.  The husband also claims accountant’s costs of $3,030 but I note that these are the subject of his further application.  I would otherwise exclude these for the same reason I have excluded the legal costs.

1. It can be seen that the wife has the greater income.  Her credit card costs can be repaid if she chooses to both sell assets and recoup moneys owed to her by her son.

1. The wife is in the stronger position as to Section 75(2) factors.  She has a number of years of working life available to her and has a capacity to readily provide for herself.  She has some issues as to her health although these seem not to have unduly affected her capacity to earn an income.

1. The property pool is $139,619.  10% of that sum is $13,961.

1. I am satisfied that an adjustment should be made in favour of the husband because of the matters aforementioned.  I would allow 5% or $6,981.  That would give to the husband an apportionment overall of 42.5% and the wife 57.5%.

1. The husband has property of:

   300SEL  $14,000
        240D proceeds  $4,500
        Tools, spares  $2,500
        Savings and cash  $7,373        $28,373

   Less P Loan
        Bill of Sale  $17,203             $11,170

1. The wife has property of:

   AB land  $20,000
        Tools  $2,825
        Telstra shares  $8,148
        Forest shares  $6,000
        Household contents                   $8,000
        Superannuation  $46,876
        Motor vehicle  $34,000
        Savings  $2,600  $128,449

2. 42.5% of the net property is $59,338. 

   57.5% of the net property is $80,280.  The wife should resettle upon husband $48,168, being the $59,338 less the property already retained, $11,170.

1. Is the settlement just and equitable?  The fact that the wife must transfer property or pay moneys worth in property of $48,168 brings to the fore the property which can achieve this result.  It can be done, of course, by the transfer of the motor vehicle with a value of $34,000, and the question then arises as to how the balance of funds is to be found.  The Telstra shares and forest shares, a total of $14,148, would be sufficient to pay the balance.  I will hear from the wife on this question. 

1. The only question which would otherwise remain is in respect of any perceived prejudice to the wife’s position arising from superannuation not constituting for her, property in possession.  She is 55 years of age and the entitlement would be payable to her if she has ceased full time employment.  That is not something which she presently contemplates.  The fact that the superannuation would be payable to her upon cessation of work, is a matter which I believe offsets any concern which may arise from the settlement being achieved in the manner under consideration.  Ultimately such is the quantity of property, the choices of how the settlement is to be achieved becomes somewhat limited.  As mentioned, it might be that the wife would wish to be heard on this question.

1. Failing any satisfactory alternative proposal from her, I will make the settlement orders which provide that the wife is to pay the husband the sum of $48,168 or alternatively, transfer to the husband her interest in the motor vehicle, the shares and the forestry covenants.  Otherwise, the property held by the husband shall be and remain his property and an order to similar effect should be made in respect of the wife’s property which she holds.  It follows that I am not persuaded that the settlement requires reconsideration because of the adjustments under consideration; that is to say, the settlement continues to satisfy the criterion that it is a just and equitable settlement in all the circumstances of the matter.

1. I refer to the matters in paragraphs 24 and 75 and generally as to the practice of cash dealings in the business.  During the trial I did say to the parties that consideration would need to be given to the referral of my comments on these matters to the Commonwealth Attorney-General’s Department.  On that subject I should say that the husband readily admits for the purposes of these proceedings that he has dealt with cash in circumstances where the cash transactions were not recorded in the books of the company and not otherwise counted for income tax purposes.  There is no evidence of a fraud upon the taxation laws other than the husband’s evidence.  The wife denies any knowledge of these matters and it can be seen in the reasons, the view I took as to her evidence.  Nevertheless in another context, it will be seen that short of the husband’s evidence, there is no evidence which readily supports the allegations.  The cash hidden in the backyard is one thing; evidence of actual fraud upon the revenue laws of the Commonwealth, is another.  Unless the wife wishes to pursue the matter, I would be inclined to take no action in respect of it.  I will hear from the parties on that matter.

I certify that the preceding one hundred and twenty two (122) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Forbes.

Associate: 

Date: 26.2.07