REIMES & REIMES
[2019] FCCA 3264
•20 November 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| REIMES & REIMES | [2019] FCCA 3264 |
| Catchwords: FAMILY LAW – Property – value of contaminated land – extent of liabilities – initial contributions – wastage – judgments against the husband – reduction of value of matrimonial assets – s.75(2) factors. |
| Legislation: Family Law Act 1975 (Cth), ss.75, 79 |
| Cases cited: Aleksovski & Aleksovski (1996) FLC ¶92-705 |
| Applicant: | MR REIMES |
| Respondent: | MS REIMES |
| File Number: | MLC 6229 of 2017 |
| Judgment of: | Judge Baker |
| Hearing dates: | 15-17 July 2019, 30 August 2019 |
| Date of Last Submission: | 30 August 2019 |
| Delivered at: | Hobart |
| Delivered on: | 20 November 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms Ryan of Counsel |
| Solicitors for the Applicant: | Wallace Wilkinson & Webster |
| Counsel for the Respondent: | Mr Trezise of Counsel |
| Solicitors for the Respondent: | Dobson Mitchell Allport |
ORDERS
Within forty-five (45) days from the date of this order the wife pay to the husband the sum of $156,645.
In the event the wife is not able to obtain finance to pay the husband the sum referred to in paragraph 1of this order:
(a)The properties known as and situate at PP(1) Road, Town K in Tasmania, more particularly described in Certificate of Title Volume … Folio … (“PP(1) Road, Town K”) and PP(2) Road, Town K, Town K in Tasmania more particularly described in Certificate of Title Volume … (“PP(2) Road, Town K”) (“the Properties”) be sold, subject to the following conditions:
(i)The listing price of the Properties shall be as agreed between the husband and the wife and failing agreement as determined by a valuer nominated by the President of the Real Estate Institute of Tasmania;
(ii)The Properties shall be listed for sale by private treaty with an agent to be agreed and failing agreement as determined by an agent nominated by the President of the Real Estate Institute of Tasmania at the joint cost of the parties; and
(iii)The husband and the wife shall both forthwith do all acts and things and sign all necessary documents to effect the sale of the Properties.
(b)Pending the sale of the Properties:
(i)The wife shall be solely responsible for payment of all rates, insurance, water accounts and the principal and interest repayments of the National Australia Bank mortgage (“the Mortgage”) encumbering the Properties as and when those payments fall due; and
(ii)The wife be restrained from drawing down upon, extending or otherwise increasing the balance owing on the Mortgage.
(c)The proceeds of sale of the Properties be distributed as follows:
(i)To discharge the Mortgage and any other encumbrances affecting the Properties;
(ii)To pay all real estate agent’s costs, commissions and expenses arising from the sale of the Properties;
(iii)To pay the solicitors’ costs in effecting the sale of the Properties;
(iv)The balance to be divided between the husband and wife so as to ensure that the husband receives a sum equal to 25% on the non-superannuation assets and the wife receives the balance.
Contemporaneously with the payment to the husband by the wife pursuant to paragraphs 1 or 2, the husband shall pay to the wife one half of the cost of the valuation fees for the joint valuations of the properties at RR Street, Town SS in Victoria, PP(1) Road, Town K in Tasmania, and PP(2) Road, Town K in Tasmania.
Unless otherwise specified in this order:
(a)Each party will be solely entitled to the exclusion of the other to all property in the possession of that party as at this date;
(b)Each party will be solely liable for and indemnify the other party against any liability encumbering any form of property to which that part is entitled pursuant to this order; and
(c)Each party will remain solely liable for their respective debts.
Each party shall do all such acts and execute all such documents as they shall be required to give effect to the terms of this order.
IT IS NOTED that publication of this judgment under the pseudonym Reimes & Reimes is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT HOBART |
MLC 6229 of 2017
| MR REIMES |
Applicant
And
| MS REIMES |
Respondent
REASONS FOR JUDGMENT
Introduction
Mr Reimes (“the husband”), who is 74 years old and a pensioner, has sought a property adjustment after a marriage of around 20 years. Ms Reimes (“the wife”) is 62 years old and earns an income from her employment as a health care worker, from her business and from renting a property on Airbnb.
The husband sought a division of the property on the basis of a 55/45 per cent division in his favour. The wife sought an order that his application be dismissed and the husband pay her costs.
This application was filed in the Melbourne Registry of the Federal Circuit Court in June 2017. It was transferred to the Hobart Registry on 24 April 2018.
Background
The parties began cohabitation in … 1994, and married on … 1995. They separated on 10 November 2013, according to the wife, or on 8 January 2014, according to the husband. They divorced on 27 May 2016.
There are two children of the marriage, Mr TT, aged 23 years and Ms UU aged 18 years. Both parties have two adult children from previous relationships.
In around 1983, the VV Trust (“the Trust”) was established by the husband. At the commencement of the relationship the Trust owned a factory, an office and a property in Western Australia. These properties were sold after the parties moved to Tasmania in 1996, and the proceeds were used by the Trust to pay for the development costs of a project called H Pty Ltd, and for living costs for the family. The Trust was used by the husband to purchase properties, including a farm on Town N in 1996, WW Street, Suburb P in 1997, land at WW Street, Suburb P in 1998, and PP(1) Road, Town K in 2002.
Throughout the marriage, the husband had numerous companies and trusts established by him. These included the Trust (WW), C Pty Ltd, D Pty Ltd, the Reimes Trust, B Pty Ltd, A Pty Ltd, and H Pty Ltd.
At the commencement of the relationship in 1994, the husband was the Managing Director of Q Pty Ltd. He resigned from this position in 1996, and continued working on the H Pty Ltd project.
The husband mortgaged the properties owned by the Trust to fund operations for his H Pty Ltd project. In 1999, the Deutsche Bank did not underwrite this project, which meant that the husband sold assets to repay the Bank.
On … 1999, the husband was ordered by the District Court of Western Australia to pay the plaintiff, Mr R, the sum of $67,113.37.
In 2001, the husband was declared bankrupt. The Town N, XX Street, Suburb P, and WW Street, Suburb P properties were sold.
In the same year, the wife purchased two properties in Suburb P and the titles were registered in her sole name. The wife’s mother ($5,000) and the husband’s mother ($8,000) made financial contributions towards the purchases. The wife obtained a mortgage loan. She rented one property to her mother and the family lived in the other property.
In 2002, the Trust bought a property at PP(1) Road, Town K for cash of around $260,000 plus stamp duty of $10,000. The sum of $200,000 came from the sale of a Trust asset, which the husband had obtained through an IT investment, and the husband’s parents contributed $70,000 to the Trust as an advance on the husband’s inheritance. At this time, the husband’s brother was trustee of the Trust. The family moved to live in this property. The wife rented the other Suburb P property and the rental income was used to pay the mortgage and living expenses.
In 2002, A Pty Ltd (“A Pty Ltd”) was established by the husband to commence a joint venture project called S Pty Ltd Joint Venture. The husband was paid a monthly consulting fee until 2006.
In 2003, the Trust purchased a boat called T for $50,000.
In 2006, W Pty Ltd was established by the husband. A Pty Ltd was paid a monthly consulting fee during the pre-listing period. W Pty Ltd was listed on the ASX in December 2007.
In 2007, the husband was discharged from bankruptcy. The Trust borrowed around $350,000 from a business associate of the husband to discharge the bankruptcy. The property at PP(1) Road, Town K was used as security.
In 2008, the wife lent $60,000 to the Trust to enable it to purchase W Pty Ltd options. It is not clear from the evidence about how many shares or options the Trust owned. Their value must have been substantial, as W Pty Ltd shares were used to buy the boat, U, in 2010, and in 2011, shares and options in W Pty Ltd were used as security to borrow $1.8 million in total to purchase a catamaran, the ZZ.
In around 2009, the wife purchased PP(1) Road, Town K from the Trust. The mortgage secured on the property was discharged. The wife paid around $440,000. She obtained a mortgage loan from National Australia Bank (“NAB”). The title was transferred into her sole name.
In 2010, the wife purchased PP(2) Road, Town K, which adjoined PP(1) Road, Town K. She sold the two Suburb P properties (bought in 2001) for a total of around $660,000. She extended the loan from NAB to cover the shortfall. The property at PP(2) Road, Town K was rented out. The husband negotiated a line of credit of $900,000 from NAB, which was secured as part of the mortgage. He was guarantor for the line of credit. This was used for living expenses and house renovations.
In the same year, A Pty Ltd purchased RR Street, Town SS for $600,000 with vendor finance. E Pty Ltd provided an interest only loan of around $420,000. The Trust purchased a boat, U, for around $700,000 by trading in a boat, AAA, for $150,000 and using W Pty Ltd shares for the balance. The husband also bought a Motor Vehicle QQ car on hire purchase.
In late 2010, the husband bought a house in Suburb V for $1.6 million in the parties’ joint names. He used $400,000 of a $600,000 inheritance to obtain a mortgage of $1.2 million from NAB. He used the remaining inheritance to make interest payments on the mortgage. The property was sold in 2013 for a loss of $600,000.
In 2011, the Trust bought a catamaran, ZZ, for $1.7 million. The husband arranged for the Trust to borrow funds from BBB Family Trust and used shares and options in W Pty Ltd as security. The catamaran was refitted to make it suitable for chartering.[1] The wife and children spent several weeks holidaying on it in Country CCC.
[1] Exhibit H2.
In 2012, the husband resigned as managing director of W Pty Ltd, and later resigned as a director. He deposed that pressure was placed on the Board members to resign to be replaced by representatives of clients of DDD Pty Ltd (the clients were shareholders of W Pty Ltd introduced by DDD Pty Ltd). He also gave oral evidence that it was untenable for him to be a director when legal action was commenced against him by W Pty Ltd.
In 2012, U was sold for just over half the purchase price. The husband caused the Trust to pay the sale proceeds of $382,400 into the NAB mortgage secured on PP(1) & PP(2) Road, Town K. At separation in November 2013, the mortgage balance was around $279,000.
In June 2013, the husband cashed in his EEE superannuation of $110,407.
In 2014, the Federal Court of Australia (“the Federal Court”) gave judgment against the husband and C Pty Ltd, the trustee of the Trust. Orders were made against him and the trustee for compensation in favour of W Pty Ltd, of $548,581, interest of $241,262.10, and costs. On 25 May 2015, the Full Court of the Federal Court of Australia dismissed the appeal of the decision, with costs.
In 2015, assets of the Trust were sold to pay the Federal Court compensation order. The catamaran, ZZ, was sold for US $508,000.
Circumstances of the Parties
The husband is retired and receives the aged pension of $465 per week. He pays $64 per month child support to the wife.
The wife works as a health care worker for AA Pty Ltd. She also contracts work through her business, Z Pty Ltd. She earns additional income from renting PP(1) Road, Town K on Airbnb. Her average weekly income is $2,480.
The children lived with the wife post-separation. Ms UU currently lives with her.
Proposals of the parties
The husband proposed that the wife pay to him an amount equivalent to 55 per cent of the net matrimonial assets and superannuation. In the event she does not pay this sum within 45 days, he proposed that the properties at PP(1) Road, Town K and PP(2) Road, Town K (“PP(1) & PP(2) Road, Town K properties”) be sold.
The wife sought that there be no division of the property and the husband’s application be dismissed. Counsel for the wife submitted that this was an unusual case where no division of property in favour of the husband is justified, due to the “serious mistreatment of assets” by the husband.
Documents relied upon
The husband relied on:
a)His affidavit filed 31 October 2018;
b)His financial statement of filed 31 October 2018; and
c)Affidavit of Mr BB filed 12 July 2019.
The wife relied upon:
a)Her affidavits filed 15 November 2018 and 4 July 2019;
b)Her amended financial statement filed 4 July 2019;
c)Affidavit of Mr CC filed 14 November 2018;
d)Affidavit of Mr TT filed 30 October 2018;
e)Affidavit of Mr DD filed 6 November 2018; and
f)Affidavit of Mr EE filed 30 October 2018.
Issues
The wife raised as the main issue the responsibility of the economic consequences of the husband’s financial conduct during the marriage, and whether he should be solely responsible for losses in the value of the property interests of the parties.
Credit of the parties
The Husband
The wife’s counsel submitted that a finding should be made that the husband was not a credible witness. In his closing submissions it was submitted that:
The husband was dishonest, prevaricated and steadfastly sought to attribute blame to others for his shortcomings, his failings and for the financial destruction which, by his conduct, he visited upon this family. His evidence about his alleged liabilities was unsupported and almost risible. He dissembled and nit-picked on frequent occasions, hiding behind his corporate structures and the trust entity when it suited his purposes to do so and claiming personal credit in other areas when that suited his purposes.
The husband was an unimpressive witness. One example was his evidence about income received by working for his brother, which was unconvincing. He gave evidence that cash deposits in his Commonwealth Bank of Australia account denoted as from M are from his brother Mr M, to help him with living costs and “minor reimbursement when I go and care take on the farm.” He agreed that he works for him “in kind.” He works on his brother’s boat, FFF. He incurs costs and his brother reimburses him. He said that his brother reimburses “me generally by putting funds into my account.” When counsel for the wife took him through his accounts and expenditure for the boat was shown to him, he could not point to where he has been repaid. His answer to this was that “sometimes he gives me cash.” Only one payment of $160 was evident. He added, “also he is funding my legal costs.”
I consider that his evidence about the W Pty Ltd claim in his affidavit was misleading. He was not forthcoming about the orders that the Federal Court made. I discuss this further on in these Reasons.
It was submitted by counsel for the wife that the husband was incapable of accepting that he was at fault by causing what was almost his financial ruin. It was submitted that the issue of the technology designed by the husband for his business and Mr DD’s evidence that it did not work as it was promised to work, was an example of the husband being “the author of his own misfortune”, and unaccepting that he was at fault. I do not accept this submission and agree with the submission of counsel for the husband that there was insufficient evidence to find that the husband was responsible for the failure of the technology.
Counsel for the wife relied on the decision of Weir v Weir[2] and related non-disclosure cases. An example given of the husband’s lack of disclosure was his failure to provide an updated financial statement in accordance with the trial directions. Instead, he gave oral evidence to update his previous financial statement. However, he was not challenged during cross-examination to any extent to persuade me that he has undisclosed property.
[2] (1993) FLC ¶92-338.
I do not consider that this is a matter to which decisions such as Weir v Weir,[3] Chang & Su,[4] Black & Kellner,[5] and Oriolo & Oriolo[6] apply. In Weir v Weir[7] the Full Court said:
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour’s findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.[8]
[3] Ibid.
[4] (2002) FLC ¶93-117
[5] (1992) FLC ¶92-287, [69].
[6] (1985) FLC ¶91-653.
[7] Ibid.
[8] Ibid 79,593.
During the marriage, the husband had many business ventures. He established companies and trusts. Apart from him failing to disclose an ABN for a business called GGG, which he established in … 2018 to sell mechanical products, there is no evidence that persuades me that there has been deliberate non-disclosure by him. His evidence was that the GGG business was not operating because the Chinese manufacturers failed in soldering the units, and the units could not be sold and therefore have to be disposed. He had forgotten about the ABN “…because nothing ever happened”. I accept the husband’s evidence about this.
The Wife
I consider that the wife exaggerated to give the impression that her financial circumstances during the marriage were difficult. Whilst the family had to move home after the husband’s bankruptcy, throughout most of the marriage the family lived a comfortable lifestyle. The wife minimised the husband’s contributions and found it difficult to give him any credit or make concessions. She was negative about him throughout her affidavit and throughout her cross-examination. She deposed that he was reluctant to give her money for anything. She admitted that he supported the children, but “reluctantly”. She said: “Although Mr Reimes was involved in high net-worth transactions and had access to large amounts of money, he applied very little of this for the benefit of the family.”
When I asked the wife whether she was earning an income when the children were young, she answered that it was not a huge income. She agreed that the husband must have been supporting her and said, “I think probably what I was trying to indicate it was done reluctantly.” She said, “I knew he had paid some bills. I didn’t know what income he had.” When it was put to her, she agreed that he paid the mortgage for a period when the rent did not cover it, he paid school fees and purchased clothes for the children. She agreed he paid fees for Mr TT to attend speech pathology. She did not dispute that he employed someone to work on renovations to PP Road, Town K over a two year period at a cost of $1,200 per week. Although she deposed that she was essentially responsible for financially supporting the family throughout the last years of the marriage, the husband’s evidence was that after 2009 he was paying the wife $7,000 per month to run the house. I accept the husband’s evidence about this support.
Overall, I consider that neither party was an impressive witness. This is not a matter where I prefer one party’s evidence to the other party’s evidence, wherever it conflicts. I shall consider and make findings in relation to disputed matters when necessary.
In respect of the date of separation, I prefer the wife’s evidence. She gave some context to the date. At the time the husband left the home, she was in Melbourne with her daughter, who was having her first baby. The husband gave no details to support his date, apart from saying during cross-examination that he went to Western Australia in … 2013 to look for work, came back for Christmas and then left.
Relevant Law
Section 79 of the Act provides that the Court may make orders in property settlement proceedings to alter the interests of the parties to the marriage in the property.
Section 79(2) of the Act requires that any such order must be “just and equitable.”
Section 79(4) provides the matters which are to be taken into account when considering what order should be made. This sub-section provides as follows:
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
The Court must satisfy the requirement of s.79(2) before it examines what order should be made pursuant to s.79(4).[9]
[9] Stanford & Stanford (2012) 247 CLR 108.
Consequently, in order to determine whether it is just and equitable to make an order, the existing legal and equitable interests of the parties in the property must be identified. Having determined that it is just and equitable to make an order, consideration will then be made about what order should be made assessing the factors in s.79(4).
The Parties’ Interests in Property
During closing submissions, counsel for the wife tendered a list of assets, agreed and not agreed. At a directions hearing on 30 August 2019, another list was tendered jointly, which included a list of liabilities, agreed and not agreed. The wife agreed to the value of the husband’s gun collection at $6,800. She agreed that the yacht “UU” should not be included. She accepted that the husband’s shipping containers have been sold and submitted that the sale proceeds of $5,000 should be taken into account under s.75(2)(o) of the Act.
Agreed
Asset Title Agreed Value
PP(1) Road, Town K (Wife) $570,000
PP(2) Road, Town K (Wife) $580,000
Motor Vehicle FF (Wife) $18,950
W Pty Ltd Shares (Wife) $200
Horse Float (Wife) $3,000
Motor Vehicle GG (Husband) $31,430
Shipping container (Wife) $2,000
Wife NAB Cash (Wife) $30,000
Gun collection (Husband) $6,800
Not Agreed
Asset Title Husband Value Wife Value
RR Street, Town SS (Husband) Negative value $1.35 million subject to
remediation
Wife’s Chattels (Wife) $15,000 excluding $15,000 including antique
antique furniture/ furniture/ collectibles
collectibles
… Writing (Wife) $3,000 Included in Wife’s
Desk chattels
Piano(Wife) $8,000 Included in Wife’s
chattels
Lladro Porcelain (Wife) $1,500 Included in Wife’s
chattels
Jewellery (Wife) $20,000 $5,000
Motor Vehicle HH (Husband) Negligible, $3,000 if registered
unregistered
Horses - $6,500 Horses belong to
Ms UU/neighbour,
should be excluded
I shall now turn to consider the disputed property values.
Property
RR Street, Town SS
The property at RR Street, Town SS was purchased by A Pty Ltd in 2010 for around $600,000 with vendor finance of a $420,000 interest free loan. This loan is still outstanding and there are council rates outstanding. The husband asserted that it is contaminated land and worth nothing because of the cost of its clean-up.
The wife asserted that the property is a financial resource worth $1.35 million, subject to remediation. Counsel for the wife asserted that the husband can use this property to set-off against his debts. No authorities were given in support of this submission.
A valuation of the property was undertaken. The valuation was not challenged. The valuer did not give evidence and was not cross-examined by counsel for either party.
The valuer was instructed to complete two valuations in the following scenarios:[10]
[10] Exhibit H6, v.
1. Market value, As Is, Encumbered by a contaminated Material.
2. Market Value Unencumbered – free of known contaminates, on the assumption that certificate of compliance could be provided by the EPA.
The valuation outcome for scenario 1 was: “$0 (Zero Dollars) and an associated liability of -$6,560,000”. The valuation outcome for scenario 2 was: “$1,350,000”.[11]
[11] Exhibit H6, viii.
In the valuation dated 20 September 2018, the property was described as comprising 2.246 ha located in an Industrial 1 zoned precinct of Town SS. The property has a modest single story brick veneer dwelling, a metal clad garage and second machinery shed.
Under the heading “Environmental Report”, the valuer indicates that the site was leased by F Pty Ltd from A Pty Ltd to undertake a process to recover aluminium from salt/dross generated by the aluminium industry. J Pty Ltd vacated the site, but continued to utilise the land immediately adjacent to the north and east. In doing so, it has abandoned a large volume of industrial waste on site, including sludge with solar evaporation ponds and a large volume of solid material in individual 1 “tone” (sic) portable bags. It was noted that many of the bags have deteriorated and contents of spilled. The valuer referred to the report completed by JJ Environmental and wrote:
The outcome of the report confirmed;
There is four large solar evaporation ponds, located across the majority of the property. The property is further encumbered by a large amount of contaminated material known as NMP (non-metallic product) (aluminium Oxide or AL80) referred to as Aluminium Slag or Black Dorf. The material is a residual product created in the process of Aluminium Smelting, originating at the nearby HHH refinery. The material was brought to a nearby site… where it was baked to extract the remaining aluminium left within the by-product, and the remaining sludge was transported and stored at the subject property.
The valuer relied on the JJ Environmental Report, dated 3 April 2014, annexed to the valuation, as a critical document, and wrote:
The report indicates an estimate of 5,718m3 of sludge contained in the settling ponds and 5,384.5m3 of sludge contained in transport bags, many of which are split over time, with contents cascading onto the ground. Additionally there is approximately 110 large tyres on the site and approximately 2,443,000L of wastewater held in the settlement ponds.
The valuer was provided with two separate quotations in respect of the removal and clean-up, the cost of which does not include gaining a certificate of compliance and remediation from the EPA.
The husband lives in the house on the RR Street, Town SS property. He gave evidence that W Pty Ltd “illegally dumped” aluminium oxide on the property. He disputed that the waste belongs to A Pty Ltd. He gave evidence that he cannot afford to take legal action against W Pty Ltd about who owns the waste and who should be responsible for removing it. It is his position that W Pty Ltd is responsible for removing the waste. He has been told by his lawyers that he would need $300,000 to take legal action against W Pty Ltd.
Mr DD gave evidence on behalf of the wife. He was the CEO of W Pty Ltd in around 2012. He joined the board of W Pty Ltd in around late 2011, or early 2012, when the husband was the CEO at the time. When Mr DD became the CEO, the husband remained on the Board as the Technical Director for several months, until he resigned reluctantly, according to Mr DD.
Mr DD gave evidence that the W Pty Ltd Board took the view that A Pty Ltd was the legal owner of the unprocessed waste. It had been paid to receive and treat all the waste, in accordance with an agreement between W Pty Ltd and A Pty Ltd, for A Pty Ltd to treat waste from HHH and JJJ.
Mr DD said that W Pty Ltd had licence agreements with A Pty Ltd for the use of equipment used to deliver the contract with HHH and JJJ. He gave evidence that the technology used by A Pty Ltd did not work, although during cross-examination, he agreed that W Pty Ltd entered into negotiations with A Pty Ltd to purchase its technology. He said that W Pty Ltd was at risk of accumulating thousands of tonnes of unprocessed and unusable waste, which A Pty Ltd was unable to process. Mr DD said that the Board of W Pty Ltd formed the view that A Pty Ltd was the legal owner of waste because it was paid to receive and treat waste, and the waste was therefore transferred to RR Street, Town SS.
The evidence indicates that the dispute between A Pty Ltd and W Pty Ltd would need to be resolved before any rehabilitation of the land could take place. There is no evidence to persuade the Court that the husband has a financial capacity to take such action. Even if legal action were taken, there is no expert evidence before the Court about the likelihood of success, or otherwise, of such an action.
In ‘The Law Affecting Valuation of Land in Australia’, it is noted:
It is a long-standing doctrine that land must be valued in its condition at the relevant date. This doctrine was restated by Handley JA in Yates Property Corporation Pty Ltd v Darling Harbour Corporation (1991) 73 LGRA 47, in the context of the assessment of special value following the compulsory acquisition of the land…[12]
[12] Alan A Hyam, ‘The Law Affecting Valuation of Land in Australia’ (Federation Press, 5th ed., 2014) 154.
I accept that the property has a market value, as is, encumbered by a contaminated product - “$0 (Zero Dollars) and an associated liability of -$6,560,000”[13]
[13] Exhibit H6, viii.
Other disputed Items
The parties did not obtain valuations of their chattels and jewellery.
The husband sought an order that each party retain his or her own chattels, furniture and jewellery. When agreement of values of all items was not reached at the commencement of the trial, his counsel submitted that an auction of the chattels would be appropriate to establish their value, apart for the horses used by Ms UU, for which the Court could “average the value of each party’s estimate”.[14] No authorities were given in support of the approach to be taken. Counsel for the wife submitted that the values given in the financial statements, as admissions against interest, should be used. I consider that it is an appropriate approach in the circumstances to consider the evidence of the parties and any admissions against interest made.[15]
[14] Exhibit W10.
[15] Dogan & Dogan [2006] FamCA 760 (unreported).
The wife asserted in her financial statement filed 4 July 2019, that her household contents are worth $10,000 and her jewellery is worth $1,000. She asserted in her trial affidavit that her furniture and contents are worth $15,000. She agreed in the above table that her furniture, including antique furniture, is worth $15,000. She was not cross-examined about the other items specified by the husband, and she therefore did not make any admissions against interest. It was always open to the husband to have the items valued. They were not. I consider that the value of $15,000 should be included.
The wife asserted in her financial statement that her jewellery is worth $1,000. In the above list (at paragraph 53), she agreed that it is worth $5,000. During cross-examination, she admitted that her diamond ring was purchased for $6,400. It is not known whether it has retained its value. The wife admitted that she has other jewellery, but did not attribute any value to it. Again, it was open to the husband to obtain a valuation. I therefore intend to include her jewellery at $5,000.
In respect of the horses, the wife gave evidence that they are Ms UU’s horses. I accept her evidence about this. I will not include any sum for the horses.
The husband asserted the value of his unregistered Motor Vehicle HH in his financial statement at $3,000. I will include it in the list at this value.
Liabilities
The parties tendered a list of liabilities agreed and not agreed as follows:[16]
[16] Exhibit J1.
Liabilities Value Agreed Not Agreed
NAB home loan (Wife) $474,770 H concedes
$404,770
Visa credit card (Wife) $4,863 X
MasterCard credit card (Husband) $4,248 X
Mr L[17] (Husband) $70,000 X
Mr M[18] (Husband) $50,000 X
Mr KK (Husband) $18,000 X
ANZ credit card (Husband) $32,000 Unknown Unknown
[17] For living expenses and legal fees.
[18] For living expenses and legal fees.
Total Liabilities $653,881
Whether or not an unsecured liability is taken into account is at the discretion of the trial judge. An unsecured liability may be disregarded or discounted for example, where the liability has been unreasonably incurred, or if it was incurred by deliberate or reckless disregard for the other party’s potential property entitlement, or where the liability is too vague or uncertain to be taken into account, or where it has no connection with the marriage.[19]
[19] See Kowaliw & Kowaliw (1981) FLC ¶91-092; Biltoft & Biltoft (1995) FLC ¶92-614; NHC & RCH (2004) FLC ¶93-204.
In Biltoft & Biltoft,[20] the Full Court of the Family Court of Australia (the Full Court) said:
… The assessment of debts and liabilities is not necessarily arrived at by a strictly mathematical or accountancy approach in all cases. While some liabilities are charges upon the property which can be accurately assessed at a certain date, others are at large, or have not been precisely determined, e.g. tax liabilities (Kelly and Kelly (No. 2) (1981) FLC ¶ 91-108 p. 76,801 ). In some cases the amount of the liability can only be estimated generally (Albany (supra) , p. 75,717). The Court can make an allowance for a particular liability if appropriate to do so. In some cases there are sufficient uncertainties as to the alleged liability to lead the Court to disregard it entirely or partly (e.g. a loan from a parent of the party not likely to be enforced; Af Petersens (supra) ; Quirk (1983) unreported). In other cases, the Court may take the view that because of the circumstances surrounding the incurring of the liability it ought in justice and equity to be wholly or partly disregarded in determining the appropriate order to make under sec. 79 as between the parties to the marriage. Such a result could be reached where a spouse had incurred a liability in deliberate or reckless disregard of the other party's potential entitlement under sec. 79 (Kimber and Kimber (1981) FLC ¶ 91-085 ; Kowaliw and Kowaliw (1981) FLC ¶ 91-092 ; Antmann and Antmann (1980) FLC ¶ 90-908 ; Af Petersens (supra) ). Complex issues can arise in regard to liabilities to third parties (see, e.g. Pockran and Crewes; Pockran (1983) FLC ¶ 91-311 ).
Of course, the Court cannot ignore the fact that there is or may be a liability; the effect is simply that it does not consider that the other spouse should be called upon to in effect 'contribute' to the liability by having that spouse's fair share in the parties' property reduced by virtue of its existence. The effect may be that the party who has incurred the liability will be left to meet it out of whatever funds remain to that party after satisfying the property order made under sec. 79 (Af Petersens (supra) ).[21]
[20] Biltoft & Biltoft (1995) FLC ¶92-614.
[21] Ibid 82,125.
In Antmann & Antmann,[22] the Full Court of the Family Court held that the action of the husband unilaterally closing the doors of the family business in a fit of pique should result in him being solely responsible for any losses accumulated as a result of deterioration in value of the stock and increase in the debts.
[22] (1980) FLC ¶90-908.
In circumstances such as those and in the circumstances referred to in Biltoft & Biltoft,[23] a court may find it just to order one party responsible for a debt. However, if a liability incurred after separation has not been incurred unreasonably or is connected with one of the parties’ assets or with the parties’ marriage, it will not usually be ignored by a court.[24]
[23] (1995) FLC ¶92-614.
[24] Anthony Dickey, Family Law (5th ed, 2007) 530.
I turn to consider the evidence about the unsecured liabilities.
Husband’s alleged liabilities
The husband gave oral evidence to update his financial statement. He gave evidence that Mr BB has forgiven a loan to him of $440,000. Mr BB gave affidavit evidence and was cross-examined. He was a credible witness. I accept his evidence that he does not require the husband to repay any funds.
The husband gave evidence that a loan to him from LL Pty Ltd and MM Accountants for $30,000 has been written off. His debt of $65,000 to Allion Legal has been written off.
The husband said that he still owes Mr KK the sum of $18,000, his brothers, Mr M $50,000 and Mr L $70,000. The husband gave evidence that the debt to Mr KK is for legal costs relating to the W Pty Ltd claim; the debt to Mr M is for the legal costs relating to these proceedings; and the debt to Mr L is for legal costs and living expenses, incurred during the W Pty Ltd proceedings. No affidavits were filed by any of these persons. There was no evidence presented of the terms of the loans or terms of repayment. As there was no evidence of these substantial liabilities, I am not persuaded that they exist, or if they do exist, that they will be enforced. I will not include these debts in the list of liabilities.
The husband has an Australia and New Zealand Banking Group (“ANZ”) credit card debt of $31,853. The card had a balance of $10,697 at separation. In June 2015, the husband stopped using the card and making repayments on it. On 12 November 2015, a demand was made by ANZ through lawyers for payment of $31,853.53. The debt is frozen and interest is not accruing. The husband could not recall when ANZ last made a demand. He said that he was “looking to pay it back…when he can afford to…hopefully when I can get some money from the settlement.”
The letter from ANZ’s lawyers[25] indicated that if payment was not made by 19 November 2015, further instructions will be sought from ANZ for recovery of the debt, which may include “the issuance of legal proceedings.” There was no other evidence about recovery of the debt. Since there has been no enforcement action since late 2015, I do not intend to include the liability in the list of liabilities.
[25] Exhibit H4, 189.
Wife’s alleged liability to Mr EE
The wife asserted that she has a debt to Mr EE, who was in a relationship with her between 2014 and 2016. The debt was included in her financial statement filed 15 November 2018 in the sum of $61,000. It was also included in her case outline filed 11 July 2019 in the sum of $61,000. Also included was an additional sum of $35,000, which was an estimate for work which Mr EE was contracted to do, but had not yet completed. The wife relied on Mr EE’s affidavit filed 30 October 2018 and an invoice setting out the $61,000 debt as the “total for labour from September 2014 to October 2018”. He also gave oral evidence.
Mr EE paid for the wife to go on overseas holidays to the UK and Country KKK. His evidence was that he does not expect reimbursement for these trips. The alleged debt concerns only the work done by him at PP(1) Road, Town K since 2014. During cross-examination, he said that the work has been ongoing since November 2014. Since 29 October 2018, when his affidavit was signed, he has done further maintenance and repairs, including putting a roof on a building that was destroyed by a fallen tree.
Counsel for the husband put to Mr EE that he did not expect to be paid for the work done at PP(1) Road, Town K during the period he was in a relationship with the wife. In response, he said that he would probably refuse payment even if it was offered. He then said that the account has built up, but he is in no hurry for a payment. He explained in his affidavit that he is not expecting immediate settlement of the account because he is trying to minimise the financial pressure on the family.
He gave further evidence that he may seek repayment of the debt if it “dilutes (sic) any share given to the other chap”. He conceded that he has not insisted on being repaid before, partly because he was motivated to reduce the amount that the husband could obtain through a property settlement.
When it was put to the wife that Mr EE expects to be paid for the work, she said that it was hard to say but that she has told him that she expects to pay him. She said that she has offered to pay him for the work, but each time she has paid the man that works alongside him, Mr EE has said, “pay me when you can afford it”. The wife gave further evidence that she is not paying him and is accumulating the debt “…because I feel uncomfortable not to pay him at all, because I pay the other man, and he is saying, ‘Wait till you can afford it.’” She said that she is insisting on paying the debt, but he would probably not insist on payment, if she felt she could not afford to pay him.
Counsel for the husband suggested to the wife that in 2014 she had the capacity to pay him by drawing down on her mortgage. She responded, “I would’ve done too, but he just wouldn’t let me. He… didn’t want to be paid until he thought I was more comfortable…If I still have a home to live him, I will pay him after this court case.”
The wife lent $80,000 to Mr EE during their relationship in 2016, and he repaid that loan when they separated. When he was asked why he repaid the entire loan and did not deduct any monies owed to him by the wife, he said, “I thought it was more important for her to restore her mortgage to the level it was, rather than have increasing debt.”
On 30 August 2019, the parties tendered a joint list of liabilities.[26] The debt to Mr EE had not been included. I was told by counsel for the wife that if PP Road, Town K were to be sold, Mr EE may seek to recover the debt. Otherwise, he would not insist that the debt be paid. Counsel for the husband submitted that the debt was unlikely to be enforced. Mr EE’s evidence was that he only characterised the invoices as a debt to reduce the husband’s payment at trial. The submission that Mr EE is unlikely to enforce the payment of the wife’s debt to him was further supported by his action of borrowing $80,000 from the wife and later repaying that loan in full, without deducting any monies owed to him from that sum.
[26] Exhibit J1.
I consider that the above evidence indicates that it is unlikely that Mr EE will enforce payment from the wife for any sums for work undertaken by him. If he had intended to receive payment, I consider it likely that that this would have been deducted from the $80,000 repayment. I am not persuaded that the debt will be enforced even if one of the properties is sold. I do not intend to include this sum in the list of liabilities.
Add-Backs
The Full Court in AJO & GRO,[27] identified three categories of cases where the Court has determined that it is appropriate to notionally add back into the property pool assets that no longer exist. They are:
[27] (2005) FLC ¶93-218.
(i)Where parties have expended money on legal fees (DGM & JLM [1998] FLC 92-816 ;
(ii)Where there has been a premature distribution of matrimonial assets (Townsend & Townsend [1985] FLC 92-569);
(iii)Where one of the parties has embarked on a course of conduct designed to reduce or minimise the effective value or worth of the matrimonial assets or where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value (the circumstances outlined by Baker J in Kowaliw & Kowaliw [1981] FLC 90-097 at 76,644).
The principle that monies reasonably disposed of by the parties in the conduct of their lives post-separation should not usually be added back was established in decisions such as NHC & RCH,[28] C & C,[29] and Gollings & Scott.[30]
[28] (2004) FLC ¶93-204.
[29] [1998] FamCA 143.
[30] (2007) FLC ¶93-319.
Since the decision of Stanford & Stanford,[31] courts have been more cautious about adding back property which no longer exists.
[31] (2012) 247 CLR 108.
In Bevan & Bevan,[32] the Full Court discussed the practice of courts making “notional add-backs” to property to account for the unilateral disposal of assets. Bryant CJ and Thackeray J stated:
We observe that “notional property” which is sometimes added back to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them” and thus is not amenable to alteration under s.79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage-and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that s.79(4) and in particular s.75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.[33]
[32] (2013) FLC ¶93-545.
[33] Ibid [79].
Justice Finn stated that the practice in respect of the treatment of property which no longer exists, but which one party has had the use of (the so called “add-backs”), and perhaps also the unsecured liabilities, should more strictly be considered in making findings under s.79(4)(e) (i.e s.75(2)).[34]
[34] Ibid [160].
In the recent decision of Falcken & Weule,[35] the Full Court observed:
That may be a basis for adding back or, perhaps preferably, dealing with a premature distribution of property under s 75(2)(o) of the Act, but it is not obligatory. It is to be recalled that addbacks are the exception, not the rule, and that parties are entitled to provide for their own support pending the resolution of their financial arrangements (NHC & RCH at [24]). If such spending was extravagant or reckless it may more readily be taken into account but the approach to such expenditure remains discretionary (Trevi & Trevi (2018) FLC 93-858 at [27]–[30]).[36]
[35] [2019] FamCAFC 140.
[36] Ibid [69].
NAB Mortgage
The amount outstanding is currently $474,770. The husband submitted that the wife increased the mortgage for the following:
a)$20,000 gift to her son Mr CC;
b)$10,000 gift to the parties’ son Mr TT; and
c)Recent withdrawal of $40,000 (net $10,000) because $30,000 is in the wife’s savings account.
It was submitted by the husband that only $404,770 should be included in the liabilities. The wife has increased the mortgage since separation by around $160,000. With the exception of the above amounts, her expenditure was not challenged by the husband.
There was no evidence that these were joint gifts. I consider that this increase in the mortgage was an “extravagance or reckless”[37] and should be taken into account under s.75(2)(o) of the Act.
[37] Falcken & Weule [2019] FamCAFC 140.
The wife withdrew another $40,000 in October 2018. She deposed that she had three valuations to pay, ongoing legal fees and repairs to her home for storm damage. The sum of $30,000 is still in her account. She said that she used $10,000 for legal fees. It was ordered on 8 August 2018 that she pay for the valuations, and the husband reimburse her for one half of the cost from settlement moneys ordered in his favour. Therefore, he will be required to pay the wife one half of the valuations on settlement.
In NHC & RCH,[38] the Full Court of the Family Court held that the treatment of legal fees is a matter of discretion for the trial judge, although regard should be had to the source of the funds.
[38] (2004) FLC ¶93-204, [56].
The Full Court said:
If funds used to pay legal fees have been generated by a party post-separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance), they would generally not be added back as a notional asset; nor would any borrowing undertaken by a party post separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties.[39]
[39] Ibid [58].
I will reduce the sum of $10,000 for the wife’s legal costs from the mortgage total. As the $30,000 that is still in her account is in the asset list, the mortgage total will be included at $464,770.
Husband’s sale of Trust Assets
After separation, and prior to receiving the pension in March 2015 (backdated to 20 October 2014), the husband sold Trust assets including a tractor for $14,000, a truck for $4,000, and two shipping containers for $5,000. It was not contended by the wife’s counsel that the husband’s expenditure should be added back, but should be taken into account pursuant to s.75(2)(o).
The husband deposed that he used the proceeds of sale for living expenses and he confirmed this during cross-examination. There was no evidence to persuade me that he used the funds other than to provide for his support when he was not earning any substantial income. I consider that it was reasonable for him to use the proceeds of sale to support himself. I will not take this expenditure into account under s.75(2)(o).
Conclusions about property
I find the parties have the following property:
Assets
Asset Value
PP(1) Road, Town K (Wife) $570,000
PP(2) Road, Town K (Wife) $580,000
Motor Vehicle FF (Wife) $18,950
W Pty Ltd Shares (Wife) $200
Horse Float (Wife) $3,000
Motor Vehicle GG (Husband) $31,430
Shipping container (Wife) $2,000
Wife NAB Cash (Wife) $30,000
RR Street, Town SS (Husband) Nil
Gun Collection (Husband) $6,800
Wife’s Chattels (Wife) $15,000
Jewellery (Wife) $5,000
Motor Vehicle HH (Husband) $3,000
Total $1,265,380
Liabilities
Liabilities
NAB home loan (Wife) $464,770
Visa credit card (Wife) $4,863
MasterCard credit card (Wife) $4,248
Total $473,881
Total Net property $791,499
Superannuation
The wife has a small superannuation entitlement of around $200. The husband does not have any superannuation. The parties did not include superannuation in their joint list.[40]
[40] Exhibit J1.
The wife included the husband’s superannuation of $110,400 in her case outline, and also included her superannuation of $212. Neither superannuation entitlement was referred to in either party’s written outline of closing submissions. Counsel for the wife did not make any submission about how the husband’s superannuation should be treated in his closing address.
In late 2012, the husband’s income as Managing Director from W Pty Ltd ceased. He received an income of around $15,000-$20,000 per month until March 2013. He gave evidence about cashing in his EEE superannuation in June 2013 for $110,407. He deposed in his trial affidavit he cashed in his superannuation and used lease payments from RR Street, Town SS in order to fund his claim against W Pty Ltd. This claim was in relation to alleged breach of leases, breaches of EPA approvals and breaches of council approval in respect of the alleged illegal dumping of slag and waste. He sought legal advice from King & Wood Mallesons in early 2014. He deposed:
All of this [superannuation] money was consumed by legal fees and living expenses…as deposed above, my superannuation was spent on legal fees and living costs…I have no superannuation. I drew out nearly $100,000 in early 2013 in order to pay legal fees and living expenses from that point until receiving the age pension in 2015.[41]
[41] Affidavit of Mr Reimes filed 31 October 2018, [35], [52], [102].
When he was asked about the expenditure of his superannuation during cross-examination, the husband said most of it was used to pay Allion Legal for a dispute about the loan from the BBB Family Trust on the ZZ catamaran, and for legal fees when W Pty Ltd was trying to obtain ownership of the A Pty Ltd technology. He said that little was used for the W Pty Ltd claim against him. He also said that at this stage he was using funds to support the family. The evidence was that Mr BB paid $440,000 in legal costs on the husband’s behalf for this claim and the barrister, who argued the appeal, worked on a pro bono basis. I accept that it is likely that little of the husband’s superannuation was used for the legal costs in respect of the W Pty Ltd claim against him.
The husband had little income from March 2013 until he obtained the pension in March 2015 (backdated to 20 October 2014). He cashed in the superannuation in June 2013. I consider that it was not unreasonable for him to obtain legal advice about the alleged illegal dumping by W Pty Ltd, or about the ownership of the A Pty Ltd technology. The husband was attempting to protect his and the Trust’s interests in property. In respect of the dispute about the loan from the BBB Trust, there was scant evidence about this. It is unclear when the dispute occurred. The loan agreement was dated 21 April 2011 and evidenced that W Pty Ltd Shares and options were used as security for the loan used to purchase the catamaran.[42] The loan advance was due to be repaid within 9 months of its advance. In answer to questions by counsel for the wife, the husband said funds were used in trying to resolve the loan on the catamaran. He said that “the lender should have sold the W Pty Ltd shares and repaid himself, but he didn’t want to.” He was not asked any further questions about this dispute and it was not put to him that he should not have expended the funds in the way he did.
[42] Exhibit H4, Item 40.
I am not persuaded by the evidence that the husband’s expenditure of these funds was reckless, negligent or wanton.
Is it just and equitable to make a property order?
On the above existing interests in property, the husband’s position is that he should receive net property to a value of 55 per cent. This means that he would receive property to a value of $435,324, which would mean an adjustment of the wife’s interests in property of $394,094. The wife’s position is that she should retain her property to a value of $750,269 and the husband should retain his property to a value of $41,230, with no adjustment in existing interests.
The husband’s counsel submitted that:
The husband has made significant contributions to the family’s lifestyle. There have been business events which have impacted significantly on the family’s wealth. However, the husband asserts these events should not result in his bearing the entire loss, particularly given, these very businesses provided a significant portion of the parties’ income during the marriage. The husband’s case is it is just and equitable for the Court to exercise discretion make a property adjustment in his favour.[43]
[43] Case Outline of Applicant Husband filed 12 July 2019, 11.
The wife’s counsel submitted that:
This issue lies at the very heart of the case. The wife and the children, Mr TT and Ms UU, have only just managed to “survive” the husband, financially and emotionally. Others have not been so fortunate. It would be against both propriety and equity for the Husband to receive yet further financial reward for his conduct in the particular facts and circumstances which this case presents.[44]
[44] Wife’s Outline of Case filed 11 July 2019, 5–6.
In support of this submission, counsel for the wife cited Stanford & Stanford[45] and Hall & Hall.[46] I accept that this is an unusual matter, having regard to the issue of the economic consequences of judgments made against the husband. The parties separated voluntarily. Having regard to the existing property interests of the parties and their circumstances, I am of the view that it is just and equitable to consider an order for an adjustment of the property between them.
[45] (2012) 247 CLR 108.
[46] (2016) FLC ¶93-709.
The issue of what order it is appropriate for the Court to make is determined by considering s.79(4).
Asset by Asset or Global Approach?
The usual approach in property proceedings is for a court to consider the property of the parties as an overall pool. However, it is open to a court to undertake the asset-by-asset approach. In Norbis & Norbis,[47] the High Court of Australia held that both the global and asset-by-asset approaches are legitimate.[48]
[47] (1986) 161 CLR 513.
[48] Ibid 523–524, 533, 540–541.
In Polonius and York,[49] which was cited by counsel for the husband, the Full Court agreed with observations made by Finn J in Z & Z[50] at 79,978 as follows:
It is my impression that there are currently coming before the court a significant number of cases in which the period between the parties’ separation and the hearing of their property settlement proceedings is substantial… In these long separation periods, the parties will usually have built up substantial new assets or incurred substantial liabilities. In an endeavour to satisfy the parties that any orders which are eventually made by the court in these somewhat complicated cases are just and equitable, it can in my view, be very useful for judges to assess contributions to property on an asset by asset basis.[51]
[49] [2010] FamCAFC 228.
[50] (2005) FLC ¶93-241.
[51] [2010] FamCAFC 228, [92].
The Full Court agreed with these observations and said:
In a case such as this, where there was a marriage of long duration and lengthy period of separation before the hearing of application for property settlement, during which time significant assets were accumulated by one or both parties, it should indicate that in such circumstances it may be more useful to undertake an assessment of contributions an asset by asset, or, category of asset by category of asset base; see Norbis v Norbis (1986) 161 CLR 513. However, in this case, that was not the approach the Federal Magistrate adopted when assessing the contributions made subsequent to mid-1997.[52]
[52] Polonius & York [2010] FamCAFC 228, [93].
There has been a long period of six years between separation and the date of this trial.
Since separation, neither party has acquired any assets of substance, although they have both incurred liabilities.[53] They did not obtain valuations of the real estate at the separation date. Both parties adopted a global approach for the proceedings. I consider that a global approach is appropriate in these circumstances.
[53] Z & Z (2005) FLC ¶93-241, 79,978.
Wastage
The wife asserted that the husband was reckless, wanton and/or negligent, and referred me to the case of Kowaliw & Kowaliw (“Kowaliw”).[54] Her evidence was that he entered into high-risk investments and business endeavours. She gave evidence that she did not have access to anything held by the Trust, could not decide what was bought or sold, and was rarely given the opportunity to comment about his investments. She did “assume that he was acting in a legal and honest manner and I trusted he knew what he was doing.”
[54] (1981) FLC ¶91-092.
Pursuant to s.79(4)(e) a court may take into account any destruction or unreasonable diminution or dissipation of assets caused by a party. The circumstances in which a court may take this into account were outlined by Baker J in Kowaliw[55] to which I have already referred.
[55] Ibid.
These principles in Kowaliw[56] are guidelines for use in the exercise of the discretionary jurisdiction conferred by s.79, and have been accepted since the time that they were enunciated.[57] There should be good reasons for departing from the principle that where there are economic losses incurred in the marriage, those losses should be shared, absent any negligence, recklessness or deliberate dissipation of assets by one party.[58] If there has been destruction or diminution or dissipation of assets, the question of whether it is unreasonable depends on the circumstances of the case.[59]
[56] Ibid.
[57] Browne & Green (1999) FLC ¶92-873, 86,361
[58] Ibid.
[59] Anthony Dickey, Family Law (5th ed, 2007) 595.
To support a finding that conduct is sufficiently reckless, negligent or wanton to have reduced or minimised the value of the assets, there should be cogent evidence.[60]
[60] D v D [2005] FamCA 356.
The following are relevant matters to consider under the allegation by the wife of the husband wasting property of the parties.
a)District Court of Western Australia Judgment Debt
On 5 February 1999, judgment was given in favour of the plaintiff, Mr R, against the husband in the sum of $67,113.37.[61] The District Court of Western Australia ordered that the husband pay interest from the date of demand by the plaintiff for both payment of $45,000 and the return of his goods. The husband was wholly unsuccessful in defending the action. He agreed that Mr R sued him for recovery of a Motor Vehicle GG and an amount owed to him for plant and equipment. He repaid a large amount of the debt when he was discharged from bankruptcy in 2007.
[61] Exhibit W7.
b)Bankruptcy in 2001
In his affidavit, the husband deposed that “in 2001, a legal action instigated by a party in WA caused me to go bankrupt.” During cross-examination, he explained that the main factor that caused the bankruptcy was when the Deutsche Bank reneged on lending him funds for the H Pty Ltd project, which started in 1993. He said that the Bank was going to fund a $70 million public offering for a factory plant. He had mortgaged “pretty much everything to fund the project.” He said that he was left with no assets and debt outstanding of around $300,000.
c)ZZ catamaran
In 2011, the Trust bought a catamaran, the ZZ, for $1.7 million. The trustee of the Trust obtained a loan for $1.8 million from BBB Family Trust Pty Ltd as trustee of the BBB Family Trust. Share and options owned by the Trust were provided as security for the loan. The catamaran was refitted to make it suitable for chartering.[62] The wife and children spent several weeks holidaying on it in Country CCC. The wife said, “I had no control of what Mr Reimes spent or when. I always went along and made the best of it and tried to encourage the kids to have fun.”
[62] Exhibit H2.
After W Pty Ltd succeeded in its claim against the husband and the Trust, the catamaran was sold for US$508,000 to satisfy the debt. The husband gave evidence that the balance of the judgment debt has been written off the books of W Pty Ltd.
d) Federal Court of Australia Judgment Debt
The wife deposed that W Pty Ltd took legal action against the husband in 2014 in relation to the boat T. She said that he “was found guilty of misappropriation and had to pay back approximately $500,000 and the W Pty Ltd legal costs… Mr Reimes appealed the decision and wasted another $50,000 in doing so.”[63]
[63] Affidavit of Ms Reimes filed 15 November 2018, [94].
Judgment was given against the husband and C Pty Ltd, the trustee of the Trust, in favour of W Pty Ltd on 18 September 2014 in the Federal Court. The appeal of the decision was dismissed by the Full Court of the Federal Court on 25 May 2015.
The orders made by the Federal Court provide:[64]
[64] Exhibit W7.
1.The respondents pay the applicant compensation pursuant to s 1317H of the Corporations Act 2001 (Cth) in the sum of $548,581 on the T claim.
2.The respondents pay the applicant interest on the sum of $548,581 pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth), in the amount of $241,262.10.
3.The proceeding be otherwise dismissed.
4.The respondents pay 95% of the applicant’s costs of the proceeding.
5.Paragraph 2 of the Orders of Justice Gordon made 27 November 2013 be varied as follows:
This order has effect up to and including 4:00pm on Friday 17 October 2014 or further order of the Court.
6.Liberty to apply.
Section 1317H of the Corporations Act 2001 (Cth) (“Corporations Act”) provides:
(1) A Court may order a person to compensate a corporation, registered scheme or notified foreign passport fund for damage suffered by the corporation, scheme or fund if:
(a) the person has contravened a corporation/scheme civil penalty provision in relation to the corporation, scheme or fund; and
(b) the damage resulted from the contravention.
The order must specify the amount of the compensation.
The orders in respect of the appeal provide:
1. The appeal be dismissed with costs.
2.The notice of contention be dismissed.
3.Each party pay their own costs of the notice of contention.
Counsel for the husband submitted that the action by W Pty Ltd was a civil suit in respect to the exercise of his fiduciary duties as a director of W Pty Ltd and, as a consequence, there was a judgment debt against him. However, it was conceded that there was a finding that the husband as a director misappropriated company funds. The husband said, “due to the legal action initiated by the new directors of W Pty Ltd and my subsequent losses, both initially and on appeal, any assets I or companies associated with me had (sic) were lost.”
In his trial affidavit, the husband did not mention that the claim by W Pty Ltd was about the contravention by him of provisions of the Corporation Act 2001 (Cth) and the involvement of C Pty Ltd in respect of the T. The husband’s evidence about the claim was given in the context of the action he wanted to take against W Pty Ltd for its alleged illegal dumping of slag and waste on the RR Street, Town SS property. He referred to the Federal Court placing a freezing order on him personally and all entities associated with him. He deposed, “it is my understanding that the Freezing Order was based on the idea that I had sold assets to W Pty Ltd without due process of disclosing that I was the owner, which I refute.”
In the husband’s case outline, there were two references to the W Pty Ltd claim: “Early Dec 2013 – Federal Court of Australia made an order freezing the husband’s assets and this (sic) of his companies and The Trust;” and “6 December 2013 – Federal Court Order for compensation and interest against the husband in favour of G Pty Ltd.”
During cross-examination, the husband agreed that the action brought against him and the trustee of the Trust by W Pty Ltd was about the purchase of T with company funds. He said that he had sold T to his friend, Mr KK in 2008/9 for $150,000. The deal made with Mr KK was that he would find another boat suitable for the husband and he would buy it for that value on behalf of the Trust. A boat called AAA was purchased, which was subsequently traded in on U. The husband was trying to find a vessel for the workers working for W Pty Ltd to live on. He found it difficult to find anything suitable, so he asked Mr KK whether he would sell T to W Pty Ltd and then modify it. Mr KK agreed, so long as he could get some work refitting the boat. The husband said that because he and Mr KK did not have a formal documented agreement, “they thought it was some sort of skulduggery on my part… to get them to pay to refit my boat…” He agreed that an order was made against him for payment of about $600,000, and the catamaran, ZZ, was seized and sold.
Mr DD gave evidence that T was purchased by W Pty Ltd. W Pty Ltd paid hundreds of thousands of dollars, in addition to the purchase price, to a company owned by the husband for improvements and repairs to the boat. He deposed that the boat was never used for the purpose for which the Board had approved the purchase, and no significant repairs or improvements have been made to it. W Pty Ltd took legal action against the husband and ultimately succeeded. Mr DD was not challenged about the above evidence.
e)Motor Vehicle QQ
The husband purchased a Motor Vehicle QQ for $240,000. At the time A Pty Ltd owned a Motor Vehicle HH motor vehicle worth $10,000, a Motor Vehicle FF utility, which was given to the wife, and a truck which was on the farm for carrying hay. W Pty Ltd owned a Motor Vehicle GG, which was used by the husband as a director of W Pty Ltd. He said he purchased the Motor Vehicle QQ because “the general view amongst my peers was that I had… done sufficient work to deserve a… decent car.” The car was repossessed because he could not make the lease payments after he left W Pty Ltd. The balance owing on the loan to Motor Vehicle QQ Finance was $90,000. He gave evidence that Motor Vehicle QQ Finance have forgiven the debt.
f)MMM Street, Suburb V
In 2010, the husband purchased a property at MMM Street, Suburb V for $1.6 million in the joint names of the parties. The husband borrowed $1.2 million from NAB and used $400,000 of his $600,000 inheritance for a deposit towards the purchase. He used the remaining inheritance monies to make interest payments.[65] I accept the husband’s evidence that the wife was aware of the purchase of the property because her son recommended the purchase; she inspected the property before its purchase; she liked it and was interested in living there; and she was aware of its potential for subdivision. The wife’s son lived in the property with his family and paid rent until it was sold. The property was sold in 2013 for a loss of $600,000. He said that this was his loss, due to the deposit and interest payments he made using his inheritance from his parent’s estate. He said “after my removal from the W Pty Ltd Board, the property had to be sold as I could not afford the $7,000 per month interest.”[66]
[65] Affidavit of Mr Reimes filed 31 October 2018, [40], [75].
[66] Ibid [75].
The wife has had a benefit of the loss made on the property in 2013. The email from Mr MM dated 6 March 2018[67] indicates that the wife has been able to offset a loss of $268,948 against a distribution to her of $220,000 of an anticipated capital gain in YY Trust. This left her with a loss of $48,948 to carry forward to offset in future years.
[67] Exhibit M4.
Conclusion about Wastage
I am not persuaded that the purchase of the catamaran ZZ, the Motor Vehicle QQ or MMM Street, Suburb V amounted to “reckless, negligent or wanton” conduct. The purchases occurred when the husband was earning a high income and the family was living a comfortable lifestyle. The wife was willing to share in this lifestyle.
The judgment debt of $67,113.37 resulted from finding that the husband retained property owned by Mr R and owed him funds, the effect of which reduced the value of matrimonial assets. The husband was unsuccessful in the action taken against him. There was no evidence that the wife had anything to do with this judgment debt. In these circumstances, I do not consider it reasonable the wife should share in the loss occasioned by the judgment. I consider that this conduct of the husband can be categorised as “reckless, negligent or wanton.” This debt was largely repaid in 2007.
There is insufficient evidence presented to persuade me that the failure of the funding of the H Pty Ltd project and the resultant bankruptcy was due to reckless, negligent or wanton conduct by the husband.
In respect of the orders made by the Federal Court, the husband as a director of W Pty Ltd contravened a civil provision of the Corporations Act, and was required to pay compensation to W Pty Ltd on the T boat claim. In respect of this debt, counsel for the husband submitted that the wife had benefitted from the income of the business and should therefore share in the loss caused as a result of the judgment. The decision of Browne and Greene[68] was relied on by counsel for the husband. I consider that the facts of that matter are distinguishable from this matter. In Browne and Green,[69] a business project of the husband failed. The Full Court found that there was nothing to suggest that the wife was other than a willing participant in the venture of which the husband was the initiator and controller, and would have sought to share in the fruits of success, if the project had succeeded. The Full Court held that there was no good reason why the parties should not share the economic losses. There was no evidence that there was any negligence, recklessness or deliberate dissipation of assets by one party. In this matter there was not a failure of a project or venture. The husband was unsuccessful in an action against him for retention of goods and owing funds, and unsuccessful in an action for which he had contravened the Corporations Act. In my view, these are these are very different circumstances.
[68] (1999) FLC ¶92-873.
[69] Ibid.
I consider that the terms of the orders made following the judgment and their effect are such that as a matter of justice and equity the wife should not have to bear responsibility for it. She did not contravene a provision of the Corporations Act. I consider that the finding by the Federal Court of the husband’s contravention and requirement to pay compensation falls within the category of “reckless, negligent or wanton” conduct for which he should bear sole responsibility.
Although it was submitted by counsel for the husband that the circumstances leading to this judgment and the Mr R judgment were not proven in these proceedings, and all that has been proven is the judgment debts, a concession was made that the wife did not make any contribution to the judgment debt regarding the T boat claim.
Counsel for the wife submitted that to the extent that the husband made any contributions to the current asset pool of the wife, they were negative, as his conduct was reckless and/or negligent and/or wanton in the Kowaliw sense.[70]
[70] See Kowaliw & Kowaliw (1981) FLC ¶91-092.
In Watson & Ling,[71] Murphy J stated:
This Court has long eschewed the notion of “negative contributions” (see, for example, Antmann & Antmann (1980) FLC 90-908). [72]
[71] (2013) FLC ¶93-527.
[72] Ibid [30].
In the recent Full Court decision of Worth & Worth & Anor,[73] Strickland, Kent and Hogan JJ stated:
Next, the husband contended that his Honour erred in his assessment of the wife’s contributions by failing to take into account the wife’s actions in terminating the marriage, leaving with the children and removing money from a joint account without any notice to the husband, and falsely claiming domestic violence (Ground 5.2).
... It is not open to a court to take into account conduct such as is alleged when assessing contributions. That conduct is in the nature of negative contributions and it has long been held that with few exceptions, that concept is not relevant to, and is not a factor to be taken into account in the assessment of contributions under the Act (Antmann and Antmann (1980) FLC 90-908; Bircher & Bircher (2016) FLC 93-721). Thus, again, his Honour did not err in this regard.[74]
[73] [2019] FamCAFC 40.
[74] Ibid [91]–[92].
In the earlier Full Court decision of Bircher & Bircher,[75] Strickland, Murphy and Hogan JJ stated:
In any event, her Honour determined to “offset” or discount the “five per cent” because of the wife’s “failure to take care of belongings”; in other words, a finding of a negative contribution by the wife. However, this court has long held that there is no room for such a consideration in s 79(4)(a) or (b) of the Act (Antmann and Antmann (1980) FLC 90-908, at 75,744), and thus her Honour has plainly erred in this regard.
It may of course be a relevant fact under s 75(2)(o) of the Act that a party has committed “waste” of the assets of the parties (Antmann; Kowaliw and Kowaliw (1981) FLC 91-092), but her Honour specifically found that the wife’s conduct was not in that category (at [60]), and moreover she applied the discount when considering contributions rather than the s 75(2) factors.[76]
[75] (2016) FLC ¶93–721.
[76] Ibid [86]–[87].
I consider that it is appropriate for the husband’s losses to be considered under s.75(2)(o). A direct dollar adjustment equivalent to the amount of the alleged dissipation of the pool is the exception rather than the rule.[77] Although neither party quantified the losses, the husband said the loss to the Trust on the sale of the ZZ catamaran was $1.5 million. I do not consider that it would be just and equitable in the circumstances of these parties to make a direct dollar adjustment, which would effectively result in the husband receiving no property adjustment.
[77] Ibid.
Contributions
The parties were married for around 18 years. They have been separated for six years.
At the commencement of cohabitation in 1994, the husband made initial contributions of property totalling $1,830,000. He was earning an income of $200,000 per annum as managing director of Q Pty Ltd. The wife did not dispute this.
The wife contributed minimal property. She was employed as a consultant full-time and was earning around $1,000 per day.
The way initial contributions of assets to a marriage are to be treated was considered by the Full Court in Pierce & Pierce.[78]
In our opinion, it is not so much an erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to use made by the parties of that contribution. In the present case that use was a substantial contribution of the purchase of the matrimonial home.[79]
[78] (1999) FLC ¶92-844.
[79] Ibid [28].
In the recent decision of Jabour & Jabour,[80] the Full Court stated:
…the import of Pierce is that the weight to be attached to an initial contribution must be assessed against the rubric of all the contributions, both financial and non-financial, made by the parties over the course of their relationship.[81]
[80] [2019] FamCAFC 78.
[81] Ibid [55].
Their Honours also quoted Dickons & Dickons,[82] noting that the Full Court in that decision:
…expressly rejected the notion that there must be a relationship between contributions and what they produced in terms of property saying:
14.As is plain from earlier decisions of this Court, regard must be had to the use made of contributions of various types so as to compare the contributions made by each of the parties during the course of, and over the length of, their relationship (see, for example, In the Marriage of Pierce (1998) FLC 92-844) But that is an entirely different proposition to, as it were, causally linking contributions with their asserted financial “product” or “value”. The former recognises that the nature, form and extent of contributions made by each of the parties might differ; the latter suggests that the absence of a causal link counts as no contribution at all.[83]
[82] [2012] FamCAFC 154.
[83] Jabour & Jabour [2019] FamCAFC 78, [61].
The weight to be attributed to initial contributions and other contributions is not required to be a mathematical or a counting exercise.[84]
[84] Clives & Clives (2008) FLC ¶93-385.
The husband was the major income earner throughout the marriage. He supported the family throughout the marriage, and after his bankruptcy. He earned income from his business endeavours and investments. He purchased and sold assets through the Trust. He earned income through consultancy work. He also traded in shares. He earned a high income, which the wife acknowledged. She deposed that between 2009 and 2011, he was earning around $500,000 per annum. He gave evidence that he received an annual bonus from W Pty Ltd. In 2011, he received a bonus of $107,000.
The wife reluctantly acknowledged that he supported the family throughout the relationship. He gave evidence and I accept his evidence that he was paying the wife $7,000 per month after about 2009 for her to run the house. There is evidence that he paid various bills such as Telstra, Aurora, Foxtel, gym and sporting expenses for Mr TT, Ms UU’s private school fees for high school and Mr TT’s private school fees for year 11 and part of year 12. He paid dental and orthodontic fees for the wife and the children. He purchased jewellery for the wife. He paid for the family to have overseas trips, flying business class. The family ate out at restaurants. They lived a comfortable lifestyle.
The husband made financial and non-financial contributions towards the improvement of the various properties of the parties, including NN Street, Suburb P, OO Street, Suburb P, and PP(1) & PP(2) Road, Town K. Whilst the real property at PP Road, Town K is registered in the wife’s sole name, he has made financial and non-financial contributions to it. His evidence was that he contributed in excess of $250,000 towards the improvements.
In 2001 the husband became bankrupt. The Suburb P, Town N and XX Street, Suburb P properties were sold. The Mr R judgment debt was outstanding at the time of his bankruptcy. The husband gave evidence that the amount of outstanding debt was around $300,000. He said that in around 2006, a “deal was put forward that if I pay this amount of money it would be annulled.”
The husband made financial contributions after he became bankrupt. He continued to earn income during the period of the bankruptcy. In 2002, the Trust and his parents contributed a total of $260,000 cash to purchase PP(1) Road, Town K. In 2007 the property was used as security for a loan of around $350,000 to discharge the husband from bankruptcy.
From 2007, the Trust accumulated shares and options in W Pty Ltd through the husband.
The husband contributed an inheritance of $600,000 in 2011 towards the purchase of MMM Street, Suburb V and for interest payments. This was lost on the sale of the property in 2013.
In 2012, the Trust sold a boat and used the proceeds to pay about $382,000 towards the reduction of the NAB mortgage secured on the PP Road, Town K properties.
In that same year, the husband’s salary as managing director of W Pty Ltd ceased. A Pty Ltd continued to receive income from W Pty Ltd of approximately $15,000-$20,000 per month until March 2013. He has earned income from his brother and from consulting and prospecting. He has been in receipt of the aged pension since late 2014.
Post separation, the husband made contributions during 2014 by paying Mr TT’s board, and paying his gym fees. The husband’s contributions for Ms UU since 2014 have been minimal.
The wife was the main homemaker and parent throughout the marriage. Her contributions in this respect were far greater than those of the husband. She also worked and earned income throughout the marriage for the benefit of the family.
At the time of the husband’s bankruptcy, the wife purchased two properties in Suburb P with contributions from both parties’ mothers. The wife’s mother paid rent on one property, and the family lived in the other. The properties were rented out when the Trust purchased PP(1) Road, Town K in 2002. The wife increased the mortgage to lend the Trust $60,000 in 2008. In 2009, she increased the mortgage by around $350,000 to pay the Trust for the transfer of the title of PP(1) Road, Town K.
In 2010, the wife sold the Suburb P properties and purchased PP(2) Road, Town K. She gave evidence that she made financial and non-financial contributions to the PP Road, Town K properties, such as cleaning up the garden and paying tradesman and contractors to do repairs and improve the property. She said that the husband also paid contractors and undertook physical labour at these properties such as removing bitumen from the driveway and converting it to an area for lawn.
At separation, the amount outstanding in respect of the NAB mortgage was $278,614. The wife has increased the NAB mortgage by withdrawing $160,000 from the line of credit. Her expenditure of the funds was not challenged, apart from the gifts made to her son Mr CC and to Mr TT amounting $30,000, and payment of legal costs, as already discussed.
Post separation, the wife was primarily responsible for supporting Mr TT and Ms UU. Mr TT attained 18 years of age in … 2018. Ms UU attained 18 years in … 2019 and is in Year 12 this year. The wife started an Airbnb business post separation. She has continued to pay the mortgage repayments on the PP Road, Town K properties. She has physically maintained the properties. She has had the benefit of living there since separation, whilst the husband has lived in the RR Street, Town SS property. I consider that her contributions, financial and non-financial and to the welfare of the family, post separation, have been greater than the husband.
The timing of contributions is relevant in this matter, having regard to initial contributions made and contributions made in the post separation period. The timing of contributions was considered by the Full Court in Aleksovski & Aleksovski.[85] Baker and Rowlands JJ stated:
It is therefore necessary that trial Judges weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment.
It really comes down to questions of weight. Whilst weight would and must be given to a contribution which a party makes shortly before the separation, less weight may be given to a contribution made by one of the parties to a marriage early in the cohabitation period of a long marriage, particularly in circumstances where the contribution has gone into the parties' assets or been used up in the payment of family expenses.[86]
[85] (1996) FLC ¶92-705.
[86] Aleksovski v Aleksovski (1996) FLC ¶92-705 as quoted in CCH, Australian Family law & Practice Premium Commentary, ‘Timing of Contributions’ [37-025].
Conclusion
The husband’s initial financial contributions and financial contributions during the marriage were greater than those of the wife. Both parties made non-financial contributions towards the maintenance and improvement of the property. The wife made greater homemaking and parenting contributions during the marriage. Her financial contributions, her parenting and homemaking contributions post separation over six years were far greater than those of the husband.
Having regard to the myriad of all these factors, I consider that on a contribution based entitlement, the husband and should receive property to a value of 55 percent and the wife property to a value of 45 per cent.
Section 79(4)(e) factors
The husband is 73 years of age. He deposed that he is not in good health. He receives an aged pension of $465 per week, or $24,180 per annum. He earns some income by working on his brother’s farm, or works “in kind” for other assistance from his brother. He has a capacity to earn income through consulting work.
Both parties have weekly expenses as set out in their financial statements. Neither party was challenged about their expenses.
The husband has no superannuation. The wife has a minimal amount of superannuation.
The husband lives in a caravan on his brother’s farm, when he is working for him. At other times, he lives in a house on the RR Street, Town SS property.
The effect of the findings as to contributions is that the husband will receive property to a value of $435,324 and the wife will receive property to a value of $356,175. There is a large disparity of property to be received between the parties.
In 2015, the assets of the Trust were sold to pay the Federal Court compensation order. H Pty Ltd, C Pty Ltd and A Pty Ltd were deregistered. B Pty Ltd had previously been liquidated and no longer existed. The husband’s evidence was that the ZZ boat was sold for “$500,000 with a total loss to the Trust of $1.5 million.” This loss was substantial and had the effect of reducing the value of the matrimonial assets. A loss was also made in respect of the Mr R judgment debt.
The wife has multiple sclerosis. This does not currently affect her ability to work, as she is currently able to manage her condition. The condition is incurable and has the potential to impact on her ability to work.
Ms UU lives with the wife. She is 18 years old and is in her last year at school in Grade 12. She has a hip condition and has had operations recently. The wife has had out of pocket medical expenses to pay. The husband pays minimal child support of $32 per fortnight to the wife.
The wife lives at PP(1) Road, Town K, which is a major source of income. Three rooms are rented on Airbnb. The wife’s evidence was that this is going very well. She has earned income as high as $5,000 per month. She also earns rental income from PP(2) Road, Town K, which is currently $520 per week. The mortgage to NAB is secured over both properties. From the income earned, the wife deducts interest paid on the mortgage in respect of both properties. She also deducts repairs, council rates and other sundry expenses in respect of the properties. Her average taxable income is around $40,000 per annum.[87] If the wife needs to sell one of the properties as a result of the order I make, her income will reduce accordingly.
[87] Exhibit W6.
I take into account that the wife increased the NAB mortgage by $30,000 with gifts to her sons.
Although there is a large disparity of income between the parties, which, together with some of the other factors, favours the husband, an adjustment of 30 per cent should be made in the wife’s favour. This equates to $237,445 in monetary terms, which having regard to the other factors, in particular s.75(2)(o), I consider will result in a just and equitable order.
This means that the husband will receive property to a value of $197,875 and the wife will receive property to a value of $593,624.
The wife will receive the following property:
PP(1) Road, Town K $570,000
PP(2) Road, Town K $580,000
Motor Vehicle FF $18,950
W Pty Ltd Shares $200
Horse Float $3,000
Shipping container $2,000
Wife NAB Cash $30,000
Wife’s Chattels $15,000
Jewellery $5,000
Total Assets $1,224,150
NAB home loan $464,770
Visa credit card $4,863
Mastercard credit card $4,248
Total Liabilities $473,881
Net Total $750,269
Less cash payment to husband $156,645
Total $593,624
The husband will receive the following:
RR Street, Town SS Nil
Motor Vehicle GG $31,430
Gun Collection $6,800
Motor Vehicle HH $3,000
Cash from wife $156,645
Total $197,875
The wife may need time to obtain finance. I will give her time to do so. She may need to sell one of the PP Road, Town K properties if she cannot obtain finance. If she has to do this, she will still have an income form the other property and from her employment.
Overall, I consider that this result is just and equitable and appropriate between the parties in the unusual circumstances of this matter.
I certify that the preceding two hundred and two (202) paragraphs are a true copy of the reasons for judgment of Judge Baker
Date: 20 November 2019
Key Legal Topics
Areas of Law
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Family Law
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Commercial Law
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Insolvency
Legal Concepts
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Appeal
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Damages
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Fiduciary Duty
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Jurisdiction
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