Rigge and Rigge

FAMILY COURT OF AUSTRALIA

RIGGE & RIGGE

[2020] FamCA 106

FAMILY LAW – PROPERTY – where the husband seeks a property division in his favour – where the wife seeks an equal adjustment – where the nett pool of available assets is largely agreed – where there is little available cash in the pool, with a significant part of the pool’s value constituted by real estate in various entities, particular in a Trust – issues of add backs and waste – whether inheritances from the husband’s parents’ estates should be treated as a financial contribution by the husband – where an adjustment for inheritances received by the husband is compelled – where the Court finds a property adjustment order in favour of the husband is just and equitable.

Family Law Act 1975 (Cth), ss. 75, 79

Hickey & Hickey (2003) FLC 93-143
Stanford & Stanford (2012) 247 CLR 108
Kennon & Kennon (1997) FLC 92-757
Gosper & Gosper (1987) FLC 91-818
Jones & Dunkel (1959) 101 CLR 298

Williams

APPLICANT:

Mr Rigge

RESPONDENT:

Ms Rigge

FILE NUMBER:

BRC

10441

2014

DATE DELIVERED:

5 March 2020

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

Baumann J

HEARING DATE:

11, 12, 13 & 14 February 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr T Kirk QC

SOLICITOR FOR THE APPLICANT:

MBA Lawyers

COUNSEL FOR THE RESPONDENT:

Mr J Bunning

SOLICITOR FOR THE RESPONDENT:

Damien Greer Lawyers

Orders

That these proceedings be adjourned to 9.30am on 22 April 2020 in the Family Court of Australia at Brisbane, for the purposes of considering any further submissions or directions as to the form of order consistent with the Reasons for Judgment delivered 5 March 2020.
That the parties, if not agreed as to the form of orders consistent with the Reasons for Judgment delivered 5 March 2020 by 15 April 2020, shall exchange and provide to the Associate to Justice Baumann (…) a copy of the orders they contend for that is consistent with the Reasons for Judgment delivered 5 March 2020.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 10441 of 2014

Mr Rigge

Applicant

And

Ms Rigge

Respondent

REASONS FOR JUDGMENT

Introduction

This property dispute arises from a relationship that commenced subsequently with cohabitation in 1996; bore one child (now an adult), but was compromised by a number of commercial and other factors including the husband’s bankruptcy; a significant inheritance; use of funds between a number of related entities and not the least, a now toxic relationship between these mature aged litigants.
The reasons which follow seek to explain determinations made by the Court on a range of issues, which shape the ultimate conclusions reached as to what orders might ultimately achieve justice and equity.

Competing proposals

The Applicant husband seeks a property adjustment so that he receives 85% of the nett property pool in his favour, whilst the Respondent wife says justice and equity is achieved by adjustments that create an equal division.
The form of order sought by the husband is set out in written submissions relied upon and delivered with oral submissions by his Counsel Mr Kirk SC on 14 February 2019. Mr Bunning of Counsel for the wife relied upon his Summary of Argument filed 7 February 2019, supplemented by oral submissions delivered on 14 February 2019, at the conclusion of the evidence heard by the Court in the trial that had commenced on 11 February 2019.
The Court expresses its regret to the parties for the delay in delivering these Reasons.
As the submissions identify, although by final submissions the nett pool of available assets was largely agreed, some sums, it is argued, should be “added back” by way of notional property or on account of alleged “waste”. I deal with these arguments in these Reasons below.

Statutory principles to be applied

Shortly stated, but more concisely and elaborately described in the Full Court decision in Hickey & Hickey (2003) FLC 93-143, in a property settlement case, the Court must adopt a well-known four-step process, essentially:
a)to identify the pool of assets and liabilities generally, and usually at the time of hearing;
b)to assess the relative contributions of both the financial, non-financial, direct and indirect nature as specified by s.79(4);
c)to consider the factors as are relevant contained in s.75(2) of the Act; and
d)finally, consider the ultimate analysis to determine whether the order the Court proposes to make is just and equitable to both parties.
Arising from s 79(2) and the decision in Stanford & Stanford (2012) 247 CLR 108, I am satisfied, and the parties both submit, that it is just and equitable for the Court to make an order in this case.

Contextual history

Although certain transactions are considered discretely, as the evidence and submissions demand, the following history is largely uncontroversial and sets the scene for the, at times, complicated and ultimately acrimonious relationship which the parties share.
Before doing so, and although Counsel for the husband (submissions at paragraph 1.4(a) asserts the wife’s credibility is an issue) urged a general credit finding be made, I record that I found the parties generally believable in their recant of the history, save that at times their focus through the prism of their own perceptions of the past, caused some embellishment of their own financial position and contributions as well as a tendency to minimise the contributions of the other party. Significant documents and financial records were offered as evidence, said at times to corroborate versions of history asserted – or at times said to clarify a factual situation where the recollection of the parties was said to be less certain or as Mr Kirk SC contended, were “untruthful”. Some critical documents were only “discovered” by the wife a week out from the trial and much of the first day of the hearing was devoted to objections to evidence and, in part, the admissibility of evidence, which continued into 12 February 2019, when oral Reasons were delivered for permitting some documents to be relied upon.
Statements of fact hereafter should be construed as findings of fact.
I also record that the wife’s trial Affidavit contained a number of allegations about conduct of the husband during the relationship said to be relevant within the Kennon & Kennon (1997) FLC 92-757 principles. For reasons delivered orally at the time, a number of paragraphs were struck out as inadmissible, and as a result cross-examination of those allegations did not take place.
The husband is now 65 years old (born in 1954) and the wife is now 61 years old (born in 1958). Although the wife asserts some casual intimacy in 1987 occurred, I am satisfied that cohabitation commenced in KK Region by 1996, although a more casual sexual relationship probably began in 1993/1994. For the purposes of these Reasons, the “date of cohabitation” is to be construed as occurring in early 1996.
I find at the date of cohabitation that:
a)the husband was a business man who had separated from his first wife, Ms B, during 1994. That earlier marriage produced two children; Mr W (born in 1987) and Ms X (born in 1991);
b)the husband’s business activities in Sydney, operated though the Rigge Group, had faced financial difficulties and the husband had protected himself from bankruptcy by entering into at Part X Agreement in 1992. He was therefore entitled to continue to act as a Director of entities C Pty Ltd (incorporated in 1991); D Pty Ltd in which C Pty Ltd held a 33 1/3 interest, which went into administration in 1998; E Pty Ltd (incorporated in 1992) of which the husband’s mother Ms VV Rigge was also a Director until October 2009; F Pty Ltd (incorporated in 1995);
c)the wife was the primary carer of Mr Y (born 1994). The mother says the biological father of Mr Y is “unknown” although she says he was conceived during a time she was having sexual relations with the husband and at different times also with her ex-husband. Although, sadly, during some testing cross-examination some hurtful comments about Mr Y’s paternity were made, the evidence reveals that although the husband does not admit paternity of Mr Y, Mr Y was a member of the household and was treated by the husband as his son;
d)when discussing contributions later in these Reasons, I make findings about the initial contributions of the parties at the date of cohabitation.
In 1996 the K Trust was established. The operation of this Trust is a matter of some significance in this matter which I deal with later in these Reasons.
In 1996, the parties’ daughter Ms Z was born and during 1996 C Pty Ltd purchased vacant land at H Street upon which a family home was constructed - enabling the parties to move from rented accommodation well before their marriage in 1997.
During 1996 G Pty Ltd, of which the husband was a Director, was incorporated and took over a development that ultimately comprised a large number attached houses – a development that was not completed until late 2000. The husband says, and I accept, that the development site known as the “Suburb L Project”, was originally acquired by a joint venture entity called M Pty Ltd shortly after incorporation in or around March 1994. When the other two partners in the joint venture withdrew in 1996, G Pty Ltd took over the project which was funded by a cash injection from C Pty Ltd and external funding (including from the husband’s parents). The husband says the development was profitable and helped fund other projects.
In 1998 G Pty Ltd purchased land at Suburb N (the “O Development”) and constructed an apartment block of 42 apartments. The husband says, and I accept, the venture was profitable and some of the profits were used to purchase in September 2002 the house and land at Suburb P, New South Wales still owned by G Pty Ltd.
In 1999 G Pty Ltd purchased land at Suburb Q (“the Suburb Q development”) and constructed 26 detached homes on the site. The husband says that the venture was profitable.
Tensions arose in the relationship in early 2000, and the parties separated but reconciled quickly. A further period of separation for 12 months did occur in 2002, the husband asserting that the wife accessed funds of $100,000 from G Pty Ltd which she spent, I infer, partly on rental accommodation. The wife, in her Affidavit in reply filed 1 February 2019, did not challenge the husband’s evidence, save to say that she deposed to using $45,000 of the funds accessed, to purchase titles and other items for the property at R Street purchased in August 2000. I accept this evidence.
In 1999, G Pty Ltd purchased an aircraft for $1,236,000, used by a charter company. The aircraft was sold by the entity then controlled by the wife in 2012 for $203,000. The husband claims the sale, without his consent, was “sold at a significant undervalue”. The wife says it was sold for a fair market price, considering its then condition. This issue founds the contention by the husband (see submissions at paragraph 2.5) that “whilst the evidence available is again insufficient for there to be a specific add back for this sale, the circumstances are such to cause the husband severe angst”. I make no finding of a sale at “undervalue” but agree with Mr Kirk QC that the sale transaction, occurring before the parties had formally separated finally, is “part of the background to this strange case”.
Between its acquisition in 2001 and its sale by auction in 2003 as a site with approval for 200 residential lots, T Pty Ltd (as Trustee for the V Unit Trust) was the vehicle used to purchase the land at Suburb U as a joint venture comprising E Pty Ltd (65%) and an entity controlled by Mr BB (35%). The husband says the sale resulted in a profit of approximately $2,600,000 with E Pty Ltd receiving a 65% share. The funds, I accept, found their way into the web of entities, particularly CC Pty Ltd as Trustee for the FF Unit Trust, which purchased a property at AB Area for $2,750,000 in 2004 (“the CC Development”). The husband says, and I accept, that the K Trust has a 60% interest in the FF Unit Trust, with the remaining 40% controlled by Mr BB through one of his corporate entities. Development applications to the HH City Council have been rejected and the rural land (comprising 784 hectares) remains undeveloped.
In around 2001, G Pty Ltd purchased 100 acres of vacant land at Suburb JJ at a cost of approximately $420,000 and that interest is included in the pool of assets.
In July 2003, C Pty Ltd purchased a property at LL Street, Suburb J and by Order of a Judge of the Federal Circuit Court of Australia made on 5 April 2016, the said property was eventually sold for $1,130,000 in December 2016.
In 2004 MM Pty Ltd was established in the Country NN but was based in Country OO, with the husband’s intention that it would buy and sell aircraft. In 2005 an entity associated with the husband’s family QQ Pty Ltd loaned to an Australian corporation MM Pty Ltd $1,350,282 for MM Pty Ltd to purchase an aircraft. The husband (at paragraph 76 of his trial Affidavit) says “I promised my parents that I would repay this loan. I personally guaranteed the performance of MM Pty Ltd.” The loan and how it was dealt with was a matter of significant controversy in this case, as I analyse later.
What does not seem to be in dispute is that the husband resigned as a Director of the Country NN company in December 2008 when Mr PP took over control of this entity. By 2010 the husband concedes (see husband’s Affidavit at paragraph 69) there was approximately AUD$300,000 held in a EF Bank account in Country OO and the funds were utilised to:
a)make a loan for $120,000 to RR Pty Ltd;
b)$60,000 was transferred to an entity in CD State USA in 2013 and applied towards the purchase of properties in FG City, USA in the husband’s name and/or control
c)$60,000 was applied by the husband towards the costs of travel between Australia, Asia and USA (for the purpose of establishing a new business); and
d)$60,000 was applied to the husband’s general living expenses since 2011. As I discuss later, the wife contends for some “add backs” relating to these transactions.
In August 2008, the property at TT Street, Suburb SS was purchased unencumbered for $897,500 and by order of the Federal Circuit Court of Australia (earlier noted) the property was sold in June 2016 for approximately $1,000,000. The nett proceeds of sale were deposited into the Trust Account of the solicitors for the wife. The parties agreed, at the date of hearing, a small balance remained, as the Trust funds had been the primary source of partial property settlement distributions ordered by a Court on 5 April 2016, 9 June 2016 and 21 June 2018. It is agreed that, in totality, the husband has received $550,000 and the wife has received $500,000 under these Orders. It was conceded that as these partial property distributions were used for a mixture of legal expenses and living expenses, the amounts should properly be “added back” to the pool of assets but that no “add back” was necessary for legal costs expended, as to do so would to some extent amount to “double dipping”
The husband at paragraphs 110 to 113 of his trial Affidavit confirms that he voluntarily entered bankruptcy on 29 May 2009 and was to be discharged (after the usual effluxion period of three years) on 29 May 2012. He was, however, not discharged until 24 August 2012. The husband says simply that “during my bankruptcy I did not act as a director of any company”. Whilst I examine the husband’s Statement of Affairs filed in his bankruptcy in respect of other issues, I do find that the husband’s decision to present his own Petition would have been a strategy carefully considered by him before doing so. I infer he knew, of course, that the status of bankruptcy does restrict his personal capacity to borrow and act as a Director and as a Trustee. He was a very experienced business man and had, earlier in his career, taken the option available of entering into a Part X arrangement, so as to avoid bankruptcy.
In the two years leading up to and during the period of the husband’s bankruptcy, the following agreed events took place of relevance, namely:
a)on 30 October 2007, the wife claims she was appointed as:
i)the sole Director of C Pty Ltd;
ii)the sole Director of MM Pty Ltd;
iii)the sole Director of E Pty Ltd; and
iv)the sole Director of G Pty Ltd.
b)on 12 November 2007, the wife claims she was appointed as:
i)the sole Director of FF Pty Ltd; and
ii)a joint Director of CC Pty Ltd.
c)on 1 May 2009 the wife claims she was appointed as the:
i)joint Director of UU Pty Ltd;
ii)sole Director of F Pty Ltd;
d)on 4 July 2009 a meeting was held of the QQ Pty Ltd referred to below;
e)on 7 July 2009 the husband’s mother Ms VV signs her last Will and Testament;
f)on … July 2009 the husband’s mother passed away;
g)on 23 July 2009 the husband’s father Mr YY Rigge signs his last Will and Testament;
h)in January 2010 the husband’s father passes away as did the husband’s brother Mr WW, who in his Will named the husband as a beneficiary. The husband says he received approximately $412,500 in 2013 as a beneficiary under his brother’s Will, which funds were utilised towards living expenses and towards business ventures;
i)After first consulting a solicitor, Mr XX on 15 December 2010, the wife further consulted Mr XX on 26 July 2011 and informed him (according to the diary note of the solicitor) that the parties had separated in August 2010. Under cross-examination during the trial, and before the solicitors file was tendered, the wife asserted that:
i)she only saw Mr XX in relation to protective measures in relation to the husband’s bankruptcy not family law matters;
ii)the parties were living together and the marriage was “not on the rocks”.
j)Mr XX referred the wife to another lawyer (Mr ZZ) who on 25 August 2011, and I infer on the wife’s instructions (as sole Director of E Pty Ltd as Trustee for the K Trust), prepared a Deed of Variation of the K Trust, the effect of which was:
i)to include a new power to the Trustee to appoint additional beneficiaries; and then
ii)the wife appointed herself as a named beneficiary of the Trust.
There is no evidence that, nor does the wife say, she informed the husband about her actions.
k)Distributions from the Estate of Ms VV began to be paid to the K Trust as a beneficiary on 13 March 2012;
l)Distributions from the Estate of Mr YY began to be paid to the K Trust as a beneficiary on 8 June 2012. At paragraph 92 of the husband’s Affidavit he sets out payments made (totalling $1,398,923.78) to the K Trust to 13 August 2018;
m)On 8 August 2012 the wife effects a sale of the R Street for $860,500 netting limited nett proceeds; and
n)In October 2013 the parties separated. This date of separation is deposed to at paragraph 4 of the wife’s trial Affidavit, and not disputed by the husband (see paragraph 4(d)) and was adopted in the Application for Divorce filed in 2015.

As earlier noted, the husband accessed some of the funds held by the Country NN company in the LM Bank account to purchase properties in FG City, shortly after he was released from bankruptcy.
In 2013 the husband received approximately $412,500 as a beneficiary under the Will of his deceased brother Mr WW.
On 18 February 2016, the husband commenced proceedings in the Federal Circuit Court of Australia, subsequently transferred to this Court. During the course of the proceedings a number of Orders were made, including for the parties to receive partial property settlement and the appointment of a Court Expert. The proceeds of sale of the properties at TT Street, Suburb SS and LL Street, Suburb J created the funds necessary to meet interim payments to the parties.
I now deal with a number of discrete issues which were the focus of submissions and which critically shape the ultimate decision of the Court.

Forensic accountant reports

The history of the business activities undertaken during the relationship made the retention of, and evidence from, independent forensic accountants critical. In the end analysis, the pool of assets represents an agreed position (based on the reports) and the results of a conference of experts held on 7 February 2019, shortly before the trial.
The joint Statement of Experts (Exhibit 2) included some areas of continuing disagreement, however by negotiation most of the matters were resolved between the parties, so as to enable an agreed pool of assets (at least in respect of most of the corporate entities, loan accounts and the like) to be created.
Although the experts (Mr JK for the husband and Mr NP for the wife) used as a starting position the report and underlying methodologists set out in an earlier report by Mr QR dated 21 March 2017, neither Mr QR, Mr JK or Mr NP were required for cross-examination.
I refer at times to aspects of the forensic accountants’ reports later in these Reasons.

The husband’s bankruptcy

During the period of the husband’s bankruptcy he carefully says that he did not operate as a Director but merely gave advice to the wife who, as the history of appointment as a Director of various entities reflects, generally held legal control of a number of entities during that period.
The wife asserts that any of her actions during this period were shaped by the husband having full knowledge of what she was doing and that he had, she claims, “controlled” her from the start of their relationship.
There is no doubt that the husband’s entrepreneurial flair, business contracts and reputation as a business man were skills he brought to the relationship and which enabled a number of profitable ventures to be undertaken. The wife, although she developed some business skills during the relationship, did not have the same level of involvement in the ventures.
The husband does not really explain why he chose voluntarily to file for bankruptcy when, at the time, he should reasonably have been aware the effect of bankruptcy was to allow his wife to control most of the assets they had and, through the K Trust control the distributions to beneficiaries under the Trust Deed.
An examination of the husband’s (apparently self-prepared) Statement of Affairs signed 19 May 2009 shows the husband asserted that the main cause of his insolvency was “adverse legal action” (Item 18). However, in these proceedings little detail is given about the legal action, other than what is disclosed at Item 40 “unsecured creditors”. The disclosure is vague, but relevantly the husband claimed the following significant “unsecured creditors”, being:
a)$784,000 owed to his parents Mr YY Rigge & Ms VV Rigge under a “loan & guarantee” incurred in 1995;
b)$5,600,000 owed to Mr ST for a “performance bond” in 2005;
c)$2,000,000 owed to Mr UV (which he said he disputed).
There is no evidence before the Court that I was directed to that revealed either Mr ST or Mr UV filed a Proof of Debt in respect of the alleged obligations the husband personally owed them.
On 26 June 2009, Mr YY signed a Proof of Debt claiming he and his wife Ms VV were owed $784,000 by the husband incurred in 1995.
The timing of the bankruptcy, and proof of debt, perhaps coincidentally, all took place less than one month before the husband’s parents signed their last Wills.
I am left with significant disquiet about whether I have been told the full story behind the need for the husband to voluntarily enter bankruptcy; the totality of the discussions between the husband and wife around this time and what the real agenda was for the ongoing (and somewhat complex) operation of a number of business entities.
The wife says she saw Mr XX because the husband’s Trustee in Bankruptcy was “sniffing around” and she wanted to try and protect the marital assets from creditors of the husband. As is clear from Mr XX’s file (Exhibit 21), the discussions with Mr XX involved mostly a discussion about her family law rights (based in part on the misrepresentation that the wife and husband were separated at the time) and this lack of candour by the wife merely adds to the uncertainties about her intentions.
What is clear, in my view on all the evidence, and I find, is that when the husband’s parents signed their Wills in July 2009 they had some idea of the strategy and bankruptcy. I deal with the topic of their Wills next.

The Wills and bequests of the husband’s parents

It is common ground that the parents of the husband were comfortable financially. They had, during their lifetime, provided financial support and loans to the husband to enable him to pursue his various entrepreneurial activities.
I am satisfied that the husband’s parents, either personally or via their corporate vehicle “QQ Pty Ltd” (which was also the Trustee of the Rigge Family Trust), provided unsecured loans to the husband in 1995 as they claim in the Proof of Debt signed by the husband’s father Mr YY and dated 26 June 2009. Although the effect of bankruptcy was to extinguish that date, when I come to consider the husband’s initial contributions at cohabitation, the existence of this debt of $784,000 will need to be taken into consideration.
I am satisfied that at 26 June 2009, the husband’s parents knew their son was bankrupt. In this context, the last Wills of the husband’s parents are to be understood so far as any interest for the benefit of the husband.
The Wills of Ms VV and Mr YY are in similar terms and save for Ms VV providing for her shareholding in “WX Pty Ltd ACN … to the Trustee for the K Trust in its discretion”, and a different alternate Executor and Trustee, the Wills are in the same terms. The Wills both provide, inter alia, that:
“SUBJECT to the payment of my debts, funeral and testamentary expenses and all probate and other duties payable in respect of my estate or in consequence of my death I GIVE:
…
Four fifths of everything (else) I own equally to my children Mr WW Mr YY, Mr YZ, Ms BC and Ms BD. As to the remaining one fifth of everything else I own I give this to the Trustee of K Trust.”
A clear intention is revealed by the Testators, that the benefit due to the husband was not to vest personally but would vest in the K Trust.
Ms VV signed her Will on 7 July 2009 and died on … July 2009. Mr YY signed his Will in 2009 (five days after his wife passed away) and died in early 2020.
At the time the Wills were executed, E Pty Ltd was the Trustee of the K Trust, and the wife had been the sole director of E Pty Ltd since 30 October 2007. This meant the wife controlled, in effect, the Trust although the Trustee owed a fiduciary duty to administer the Trust in accordance with the terms of the Trust and for the benefit of the named beneficiaries.
I am satisfied that at the time the Wills were made, the husband was the sole named beneficiary of the K Trust (other than remoter beneficiaries related to the husband), and I infer that his parents knew that to be the case from their close business dealings with their son.
Also of relevance at this time, was a meeting of “QQ Pty Ltd” on 4 July 2009. This meeting was held before the Wills were executed and the apparent intention of the meeting was to:
a)elect Mr YZ, Ms BF and Ms Rigge as directors (noting that the husband says he was present at the meeting but he was not able to be a director because of his bankruptcy that occurred on 29 May 2009);
b)confirm “related parties loans as repayable to the company by call or resolve of the directors from” Mr WW and Mr YZ, and relevantly the recording of Mr Rigge’s loan as follows:
“a) Mr Rigge, aircraft loan $1,300,000. This loan is off set by capital funding provided to BG Pty Ltd”
BG Pty Ltd was another corporate entity of the husband’s father or parents. Although the loan amount (recorded in handwritten form rather than typed) is less than the loan amount of $1,350,282 loan to MM Pty Ltd by QQ Pty Ltd in 2004, I accept that it is this loan that is referred to in the Minutes of Meeting. Properly so, the unsecured loan of $784,000 is not mentioned either because it was a personal loan by the husband’s parents or they were aware that the loan was extinguished upon the husband’s bankruptcy.
The proximity of these transactions around the time of the poor health at least of Ms VV, satisfy me that some thought had been given to the effect of the transactions and, at least, the effect of funds being received by the husband during his bankruptcy.
Although I deal further with this issue below, the first distribution under the Wills of the husband’s parents (apart from $80,000 on 18 June 2012 and $120,000 on 21 August 2012), all took place after the husband was discharged from bankruptcy on 24 August 2012 and are set out accurately at paragraph 92 of the husband’ Affidavit totalling $1,398,923.78.
Although the husband, at paragraphs 100 to 105 disputes the wife’s evidence (at paragraph 139 to 144) about the care she provided Ms VV when she came to KK Region in 2009 only weeks before her death from terminal cancer, the inheritance received from the Estate of Ms VV was a modest $42,183. The inheritance received from the Estate of Mr YY exceeded $1,356,000. The wife did not assert similar care of Mr YY, however at paragraph 41 of the wife’s Summary of Argument she submits those factors “lead to a conclusion that the inheritance was intended for the benefit and use of each of the parties, not just the husband. Such inheritance moneys should it is submitted be seen as such as an equal contribution by the parties.”
I disagree with this submission for the following reasons:
a)Although the wife was the Principal of the Trust (since 1999) and, upon the death of Ms VV in 2009, the sole director of the corporate Trustee, the wife was not a named beneficiary until she unilaterally, and without notice to the husband, varied the terms of the Trust on 25 August 2011;
b)The Wills, simple in their terms, sought to divide the residuary of the Estate between the five children – with four children to have a share vested personally and the fifth child (the husband) having his interest vested in the K Trust;
c)Although the wife submits (at paragraph 41(d)) that when the husband signed a Statement of Affairs in May 2009 he did not reveal an “interest in any Trust, nor any interest in any inheritance estate”, he had no need to do so. He was a discretionary beneficiary in the K Trust and his parents had not died at that time.
I was properly referred to leading authorities such as Gosper & Gosper (1987) FLC 91-818 when considering when an inheritance should be treated as a financial contribution by only one party – inferred generally to be the party who is the child of the deceased. In Gosper (supra), a parcel of land was a gift to the parties jointly, yet Fogarty J regarded that the gift from the wife’s parents should be treated as a contribution made directly on behalf of the wife and in so doing, observed “it is open to the Court to look at the actuality” of the benefit received.
In the circumstances of this case, I am satisfied that when the Court comes to consider the relative contributions of the parties, the inheritances from the Estates of Mr YY and Ms VV should be treated as a financial contribution by the husband, now forming some part of the agreed value of the K Trust.
It follows that the wife, having accessed funds totalling $501,525.62 mostly (but not entirely post separation in October 2013), that her use of those funds need to be considered under s 75(2)(o) and within the parameters of what achieves just and equity.

Pool issues

Although as previously noted, by the conclusion of the hearing, most items in the pool were agreed and their value to the pool compromised, some issues remained to be determined. I deal with those issues now.

Add back of $849,333 held by estate trustees

Forensic Accountant Mr JK was engaged by the husband to prepare an “updated” valuation of various entities, building on a single expert report by Mr QR dated 21 March 2017. Mr NP was similarly retained by the wife to undertake a review.
In short, the report of Mr JK dated 11 January 2019 reviewed the conclusions and opinions of Mr NP set out in her report dated 21 November 2018. The two experts were directed to confer and a “joint statement” of experts (Exhibit 2) dated 7 February 2019 was tendered and lead to a number of agreements as to the constitution of the pool.
One issue that arose, which the two experts agreed the Court should decide, is the inclusion or otherwise of a loan owed by an entity to QQ Pty Ltd. The existence or otherwise of the loan and whether an entitlement due to the husband from the Rigge Family Trust (calculated at $849,333) should also be added back became contentious issues.
It must be said at the beginning of this analysis, that the issues are mired in confusion. My impression is that, upon the wife becoming aware (she says for the first time) of the withholding of some benefit to the husband after reading the report of Mr JK in January 2019, she not surprisingly demanded some explanation. However, upon further analysis, some of the book entries of MM Pty Ltd (which the wife had controlled for some years) touching on these “loans” added to the confusion.
Doing the best I can on a range of documents tendered before the Court, with little assistance from any reliable evidence on this issue from the husband, as well as no evidence from his family members involved with the Rigge Family Trust, I make these findings:
a)I accept that around 1995, the husband’s parents provided him with loans. The “debt” is claimed by his parents in the Proof of Debt earlier referred to in these Reasons. That personal debt was extinguished by the husband’s bankruptcy. It was therefore irrecoverable, as a matter of law, after 29 May2009. There is no reliable evidence those “loans” from 1995 were represented in the books of the Rigge Family Trust and/or QQ Pty Ltd;
b)A loan was made to MM Pty Ltd by QQ Pty Ltd in 2005 said by the husband to be for $1,350,282 to purchase an aircraft. The husband said he promised his parents he would repay the loan, and although he says he “personally guaranteed the performance” of MM Pty Ltd, no written guarantee has been produced to the Court;
c)However, on the weekend before the hearing, whilst the wife was looking through some boxes in her garage, she uncovered a copy of an Aircraft Purchase Deed (“…”) dated 20 May 2005, suggesting QQ Pty Ltd was the seller of an aircraft to MM Pty Ltd for the sum of $1,301,889 (plus GST). MM Pty Ltd was to make a payment at settlement in the sum of $430,000 - leaving a balance of $871,889 (described as “the loan”);
d)The Deed provided at clause 4.1 for the loan to be on the following terms:
“a)the term shall be for a period of 5 years from 26 May 2005;
b)the interest rate shall be 8% annum simple;
c)interest only payments shall be required monthly with the principal amount repayable on the last day of the loan term;
d)interest shall not be payable on any GST component.”
The loan Deed does not contain any written personal guarantee by the husband.
e)There is no evidence to suggest that the loan (or for that matter any interest) was ever paid on the “loan” of $871,889;
f)The minutes of meeting referred to above at paragraph 57, refers to the loan being offset by some capital funding. However the notation is confusing as to its intent. At best the intent might have been for Mr YY to indicate some historical loans owed by members of the family to QQ Pty Ltd – but this is really speculation. The husband’s email to his brother Mr YZ on 28 January 2014 (Exhibit 12) might be read to suggest Mr YY was the only person able to inform anyone as to his “objectives” with various loans. Certainly the wife acknowledges that even though she was the sole director of MM Pty Ltd since 30 October 2007, in respect of various loan accounts that appeared in the financial statements, she had:
“no personal knowledge as to their origin or status.”
Attempts to get clarity from the company accountant at the time (Mr BH) proved futile;
g)However, the wife did it seems take some actions to “clean up the company accounts” of at least MM Pty Ltd as the financial statements reveal:
i)At 30 June 2012, the Balance Sheet showed various loans to related entities totalling $1,362,859 and an unsecured loan owed to QQ Pty Ltd of $1,350,282;
ii)At 30 June 2013, the Balance Sheet showed various loans (mostly to G Pty Ltd) receivable of $1,313,257 but the loan owed to QQ Pty Ltd no longer appears – replaced (without explanation) by a loan owed to the wife for $3,086,021;
iii)At 30 June 2014, the same entries for receivable loans, and the debt to the wife for $3,086,021 remained;
iv)At 30 June 2015 the Profit and Loss Statement reveals that $3,264,752 were “commerce debt written off”. These financial statements appear to have been prepared by a different firm of accountants (e.g. now BM Accountants not as previously CF Pty Ltd) which might account for the lack of “reconciliation” in the 2014 and 2015 statements at page 509; and
v)Nonetheless, for the financial statements ended 30 June 2016, 30 June 2017 and the draft statements for 30 June 2018, there is no mention of a loan owed to either QQ Pty Ltd or the wife.
h)I am not able to conclusively accept the submission of Counsel for the husband (at paragraph 2.2(a)) that these changes represent unacceptable “financial gymnastics” by the wife. However, at the time of the hearing I am not satisfied that MM Pty Ltd owed any funds to QQ Pty Ltd;
i)Furthermore, the most recent financial statements by QQ Pty Ltd (produced under subpoena) demonstrate the company is almost wound up and shows no loan owing by MM Pty Ltd;
j)It seems clear that paragraph 60 of the report of Mr JK was the catalyst for the wife’s concerns, when it said:
“the husband has instructed me that a distribution in the amount of $849,333 was withheld by the Trustees of his father’s Estate on the basis of an unpaid loan by MM Pty Ltd to QQ Pty Ltd which was a company owned and controlled by his parents”
The joint experts report speculated that if the QQ Pty Ltd loan is still outstanding “then the Unpaid Present Entitlement owing from the Rigge Family Trust should also be included”, I infer in the pool of assets. As neither Mr JK nor Mr NP have details in regard to the Rigge Family Trust, they were unable to say whether “this entity would be able to pay”;
k)In cross-examination, when the husband was properly asked about these transactions his somewhat vague responses included that:
i)QQ Pty Ltd as Trustee for the Rigge Family Trust withheld the funds. The person who told him was his sister Ms BD in early 2014 and he told the wife orally at that time. By letter dated 4 July 2017 (Exhibit 14) he formally informed the wife what he knew. He disputes therefore that the wife did not know about the issue until as late as Mr JK’s report;
ii)The minute of 4 July 2009 was the basis for the adjustments and his nett debt at the time was $1,300,000 as shown;
iii)He was unable to explain how the amount “withheld” was calculated. In this regard Mr Bunning (Counsel for the wife) submitted that the husband could have called one of his siblings with knowledge of the transactions and how the sum “withheld” was calculated. By failing to do so, it is submitted an adverse finding under the principles of Jones & Dunkel (1959) 101 CLR 298 should be made. It is unclear what the effect of any adverse finding (that his sibling could not give evidence that would assist him) would be in this case;
iv)No capital funding was provided to his father’s company BG Pty Ltd as the minute suggests; and
v)The husband failed to make full disclosure of the “withheld” funds at paragraph 54 his Affidavit filed 18 February 2016, for which he apologised.

The conclusion I have reached on this confusing array of documents; lack of evidence and lack of disclosure, is that it is more likely than not that his siblings did regard it as fair between themselves to use the discretions under the Rigge Family Trust Deed to make differential payments to the beneficiaries – and to some extent the husband bore the burden of some of his parents support in the past. Considering the loans of 1995 were “written off” by the bankruptcy and the debt owed, at one time, by the company MM Pty Ltd was not paid, adjustments were likely to be made for fairness.
In circumstances where there is no evidence to support a finding that:
a)the husband could sue or seek to recover any sum as a discretionary beneficiary of the Rigge Family Trust;
b)the target of any claim has the capacity to pay;
c)the siblings of the husband (or any of them) have expressed to pay some further sums to the husband when these proceedings are complete; and
d)where, even if the husband was to receive some funds, they would clearly come from the Rigge Family Trust to which the wife had made no contribution,
the lack of clarity means that there is no rational way in which this issue could found any finding under s 75(2) or as part of the pool. Considering how much effort was devoted to this topic, I accept the findings I make may not satisfy either party.

Add back – loan to RR Pty Ltd

The husband, at paragraph 69 of his trial Affidavit, asserts that in 2010 there was approximately AUD$300,000 in a Country OO account for the Country NN company. I am not satisfied the wife (who claims she became the sole director of MM Pty Ltd on 30 October 2007) had any knowledge of the account.
The most likely explanation is that the Country NN entity was a different entity to the Australian registered company for which financial statements have been produced to the Court. I make this observation because the husband says (at paragraph 68) that Mr PP (a friend of the husband), took over MM Pty Ltd (not MM Pty Ltd I infer) in December 2008. As a result, the husband may not have had an interest in the Country NN company sufficient to warrant disclosure to his Trustee in Bankruptcy.
Even though Mr PP was said to be in control, it seems like the husband dictated how the sum of AUD$300,000 was to be disbursed. So far as the funds used to buy real estate in FG City are concerned, those properties are now part of the pool.
As I understood the wife’s case, she contends for the sum of $240,000 to be “added back” – being a distribution of funds used solely by the husband for his benefit. As both Counsel alluded to, the notional “adding back” of funds is the “exception to the rule”. In deciding not to “add back” any of these funds, I make the following findings:
a)Although the husband seemed to access the funds, his legal entitlement to do so is uncertain. I am not satisfied they would have properly constituted part of the pool even if not disbursed;
b)The husband was still using funds to travel overseas to “do deals” and live. He was bankrupt for part of that time and the wife controlled most of the corporate entities; and
c)On the evidence, I cannot be satisfied if the debt/loan to RR Pty Ltd is recoverable and if so, by which entity. I agree with the submission of Counsel for the husband, that merely because the husband retained some of the funds to invest in FG City, does not mean I can find he had a legal interest in the balance of the funds.
I accept the husband used at least $120,000 for living expenses and travel expenses. This sum is much less than the funds the wife was able to access through her control of the K Trust. I will further consider this evidence in the context of s 75(2)(o) later in these Reasons.
For completeness, I disregard any bank accounts the parties held at the time of the hearing. Since they separated over five years ago, to include them would not properly take account of the spending habits of the parties and their use, as they were entitled to do, of post separation income.
I am not satisfied that the wife’s interest in the enterprise known as “GH Place Suburb J” is capable of any sensible quantification. I accept the wife used some distributions from the K Trust to begin this enterprise, but I find the evidence of Mr BM reliable about the current status of his business relationship with the wife.
On the basis of the findings made, and the concessions advanced by Counsel in final addresses, I find the pool to be as set out at Appendix One. In so doing, I note that there appears to be little available cash in the pool, with a significant part of the pool’s value constituted by real estate in various entities – particularly the K Trust.

Contributions

With respect to the direct and indirect financial contributions made by the parties during the course of the relationship between 1996 (when cohabitation commenced) and separation in October 2013, and thereafter to the trial hearing before me, I make the following findings:
a)I rely upon findings already made in these Reasons, shaped to a large degree by the contextual history;
b)At cohabitation, the husband had various financial interests and at paragraph 21 of his trial Affidavit, he deposes to those interests, primarily in the entity C Pty Ltd. After objections were allowed to evidence given by the husband to his estimates of “value”, I do accept C Pty Ltd held shares in related entities, plant and equipment and business goodwill. A number of inter-company related loans existed. Whilst I am prepared to accept C Pty Ltd had a one third share of D Pty Ltd that was undertaking a 42 lot townhouse development at Suburb BK at the time, any reliance by the Court on the company’s financial statements at 30 June 1994 is asserted to be questionable by the husband, as he says the statements were inaccurate. The wife relies upon the statements in contending that Annexure “[W]23” (the statements) reveal a very modest nett asset position for C Pty Ltd;
c)Although the husband concedes he entered into a Part X arrangement in 1992 (from which of course I can infer a negative personal asset position), Counsel for the husband (at paragraph 3.1) properly concedes that the husband’s “corporate interests cannot be determined with accuracy”. I accept that submission;
d)Whilst the husband asserts that he had a clear recollection of holding savings of $130,000 which he used towards the construction of a home at Suburb J nowhere in his statements as to his initial contributions, does the husband acknowledge the debt to his parents created around 1995, for $784,000, which his parents claimed as still owning in May 2009, when they filed their Proof of Debt;
e)As a result, I am not satisfied the husband brought into the relationship nett assets at all. The debt to his parents was not the subject of any payments (for interest or the like) in the period from cohabitation to his bankruptcy to 2009, and whilst that could amount to a benefit he received, the lack of detail as to how the loan/s of $784,000 received by the husband in 1995 were used, makes it hard to understand the transaction. I accept that the wife came into the relationship with no significant assets;
f)As a result of these findings, I do not regard the parties’ “initial” contributions as a significant factor – although I do accept a number of legal entities and trusts did exist which the husband essentially controlled – some of which (for example D Pty Ltd) went into administration within two years of cohabitation;
g)It is not possible to accurately trace all the funds passing between the various entities. The husband, in my assessment, as an entrepreneurial business man in KK Region, can be seem to be at times “robbing Peter to pay Paul”. On his evidence (if accepted) the number of significantly profitable ventures he was engaged in should have resulted in a much longer pool of assets that are now found to exist. I find really that was the nature of his operations, and his decision to seek protection from creditors by entering into bankruptcy in 2009 probably means he was always on the edge of financial difficulties;
h)My assessment is that during the relationship (both to the time of his bankruptcy in 2009 and after), this couple lived a relatively comfortable lifestyle and most likely beyond their means. Money was “swirling” around between entities and various property transactions;
i)Although, unquestionably, the husband had significant experience and commercial contracts in the property development industry (both in Sydney and KK Region) that the wife did not possess initially, the husband’s decision to support his new wife to take various directorships and legal interests meant she, on my assessment, did get engaged in many of the business activities and was not merely a “paper” director signing forms when told to do so. This decision by the husband began as early as when he allowed the one share in C Pty Ltd that had been vested in his first wife Ms B, to be transferred to the wife in these proceedings “as part of the matrimonial settlement with Ms B”. The history shows the husband’s strategy in supporting the wife to take up directorships etc;
j)The wife says, on one hand, that she made a valuable contribution to the business dealings as a result of her directorships etc but, on the other hand, asserts that during the husband’s bankruptcy and before, the husband basically told her what to do – and certainly knew what was happening. I find the husband, alert to the limitations on him acting as a company director whilst bankrupt, was cautious in his testimony about the role he played. The fact that the wife asserts that towards the end of the husband’s bankruptcy the Trustee was “sniffing” around, which I characterise as the Trustee having concerns about the husband’s automatic discharge from bankruptcy, has some foundation. There was a delay in his discharge;
k)Even noting the complicated business relationships that existed, I find one of the issues most challenging to understand is why the husband, post his discharge of bankruptcy on 24 August 2012, allowed the wife to continue to unilaterally control the K Trust – particularly in circumstances where he must have known (and I find he did know) that the combination of the terms of his parent’s Wills and the Estate administration meant that funds were being paid to the K Trust. Paragraph 97 of the husband’s trial Affidavit sets out a table of distributions he said the wife caused to make. I accept the accuracy of that distribution statement, however I find it an unexplained fact in this case that:
i)after his discharge from bankruptcy in August 2012; and
ii)even after the relationship came to an end in October 2013 (over 12 months later),
the husband took no formal or effective steps to seek to restrain the wife from exercising her powers under the BR Trust Deed (amended in August 2011) and to effectively prevent, if he could, the distribution in the financial years:
iii)2012/2013 - $37,700
iv)2013/2014 - $92,300
v)2014/2015 - $148,700
vi)2015/2016 - $154,355,
before commencing these proceedings in the Federal Circuit Court of Australia on 18 February 2016;
l)In these circumstances, as set out above, between cohabitation and the hearing – save for the benefits arising from the inheritance which found its way into, at least, the K Trust initially, I find the parties’ direct and non-direct financial contributions to be equal;
m)Before turning to the inheritance issues, I find that the non-financial contributions during the course of the relationship as a homemaker; to the maintenance of residences; to the preservation of the property interests, should also be regarded as equal – noting that the paternity of Y (aged 26 years now) is disputed. Certainly Ms Z, the parties’ child now aged 23 years, lived with the wife during the period of separation in 2002, but at the time of final separation in October 2013 she was 17 years of age and, of course, now is an adult. Although I accept the wife most likely performed more of the domestic chores (cooking, washing of clothes etc.), they were both busy people who seem to have eaten out regularly (for business, pleasure, or both), and I see no basis to find other than an equal non-financial contribution. I also take into account that the parties had the use of significant partial property orders that enabled them to support themselves and pay their legal fees. The distributions so made are properly, by agreement, included in the pool;
n)However, having determined that the receipt of funds into the K Trust should be treated as a contribution made on behalf of the husband, this significant benefit – agreed to be $1,398,923.78 – compels weight to be applied. The introduction of these funds, received in the way they were, enabled the benefit to be protected from the husband’s bankruptcy. They form part of the pool now – although the reduction of that sum through the actions of the wife on utilizing or distributing $501,525 will be considered under s 75(2)(o). This inheritance, as authority demands, is to be taken into consideration amongst all the other respective contributions made during the course of this 17 year relationship. Having been “intermingled” with other income, capital and entities, neither party contended that the balance of the inheritances be somehow isolated in the pool as a separate pool, for example. I would not do so in any event.
At paragraph 3.4 of the written submissions, Counsel for the husband contends that as the “inheritances and loan write-off have a value of in excess of $3.1 million” which represents 67% of the divisible pool, the husband’s entitlement, “based on contributions, can be no less than 80%”. I do not accept Counsel’s submission based on the findings I have made. Mr Bunning for the wife submits that contribution based entitlements should be equal, which takes no account of the findings I have made on the inherited funds.
An adjustment for the inheritances received of $1,398,923 is compelled. In my view, the assertion that the husband is entitled to some “credit” for loans “written off” fails because of his lack of evidence as to the actual existence of the liability.
It is not appropriate to merely look mathematically at the value of the inheritance compared to the pool as now exists. All contributions during this long relationship need to be weighed into account.
In my assessment, a proper articulation to the parties for their contributions is 62.5% to the husband and 37.5% to the wife – a differential of 25% on the pool of $4,469,170, or a sum of $1,117,291.

Section 75(2) factors

At paragraphs 4.1 to 4.2 of the written submissions of the husband’s Counsel Mr Kirk SC, he points to the relevant s 75(2) factors as:
a)financial care provided by the husband to Mr Y;
b)waste by the wife through the use of the funds from the inheritance; and
c)disparity in wealth,
before contending no other factors in s 75(2) could require an adjustment to the contribution based entitlements. Counsel submits for an adjustment for the factors referred to of no less than 5% in favour of the husband.
In contesting that there should be any adjustment for s 75(2) factors, Counsel for the wife Mr Bunning says that:
a)if there was to be any adjustment for the care of Mr Y (his paternity being disputed sadly for him) then it is “offset” by the care the mother provided to the husband’s children Ms X and Mr W; and
b)no adjustment for the use of funds by the wife from the K Trust should be made as the inheritance should be treated as a joint contribution.
I make the following findings:
a)The husband is slightly older than the wife (65 years compared to 61 years), but now that the husband’s previous diagnosis of cancer appears to be in remission, I find both parties are in reasonable health for their age;
b)Whilst I accept that a greater share of the pool of assets, as will inevitably flow from the contribution based entitlements, gives the husband more “capital” to generate income – the earning capacities of the parties is more associated with the level of risk each is prepared to take in future business dealings. I say this, as the wife and the husband have no formal qualifications to secure employment – and neither seeks to do so. They are business people who wish to manage their affairs as a self-employed operator;
c)In this respect, I am not satisfied the wife’s business at “GH Place” is necessarily profitable or capable of being profitable. She had used some of her capital (whether from the partial property distributions by Court Order or from the K Trust), to create her business interests and pay her son Mr Y income (and also her brother). The wife described herself as a “CEO” and clearly is confident that she has the skills and business contacts to forge her own career. Her foray into retail through “CM Pty Ltd” was not successful, but that does not appear to have dented her confidence;
d)The husband’s income is difficult to ascertain, but has relied principally on making profits from property development and through a mixture of highly confusing inter-company loans and the like, living off funds to acquire property and, I infer, use cash flow to live. However his business history reveals a personal bankruptcy less than 10 years ago. His future business dealings might, on this recent history, despite his confidence to “do a deal”, not prove to be entirely positive;
e)In the circumstances I do not find the parties’ current income or earning capacity as significantly different, although on balance with more capital in the husband’s favour, his potential is marginally better;
f)It is not appropriate, by some form of social engineering, to seek to adjust between the parties simply because of the finding I make as to the inheritances, which results in a greater share of the property pool falling to the husband – but as the earlier findings make clear, I do not ignore that fact;
g)I would make no adjustment for the “Robb factor” so far as Mr Y is concerned. Whilst it is true that the husband treated him, during the marriage, as his son and joint income was used to meet the child’s support (including education), I, in the exercise of my discretion, find the factor as of limited application in this case. I do not regard, for completeness, the fact that Ms X and Mr W had contact with their father on weekends and holidays which necessarily meant at times support from the wife as “offsetting” the claimed adjustment for Mr Y, who lived in the household full time from the age of two years. Any child support paid by the husband to the mother of his other infant children, was of course paid for from joint funds; and
h)I would find a marginal adjustment to the husband might be made, for the use by the wife of the over $500,000 from the K Trust – however in circumstances where the wife was in control of the Trust and the husband did nothing to impede her use of the funds, I do not regard this as a significant factor, on balance.
Assessing all these various factors, one against the other, I would make no adjustment to the contribution based entitlements of the parties.

What orders achieve just and equity?

The husband, in the written submissions of his Counsel, sets out the orders he seeks. They are attached as Appendix Two.
The wife’s minute of orders is set out in her “summary of argument” and are attached as Appendix Three.
Leaving aside, for the moment, that in final submissions Counsel for the husband sought an adjustment of legal and equitable interests in the proportions of 85% to the husband and 15% to the wife, whilst the wife sought an adjustment of interests to achieve an equal division, the challenges for the Court in determining the order which achieves justice and equity, is made more difficult because:
a)the wife’s orders, apart from agreeing that the husband retain the Suburb P property and Suburb JJ property (vested in G Pty Ltd), seeks to retain control of all the entities which she has been a director for some time – including the K Trust. Her proposal at order 4 is imprecise and incapable of enforcement – even if the figures for adjustment found under these orders to be proper are substituted for “a 50/50% division”;
b)certainly the husband’s draft orders are more precise and clear. In particular, whilst the husband also seeks to retain the Suburb P and Suburb JJ properties and have them transferred from G Pty Ltd to the husband (I presume personally as the proposed order seeks), the husband’s orders seek to:
i)cause the 60 units held by E Pty Ltd as Trustee for the K Trust in the FF Unit Trust to be transferred to the Applicant. This order (as well as order 5) is related to the interest in a property at DD Street, Suburb EE (known as “CC”). It is clear both parties wish to retain this interest;
ii)the effect of this transfer is designed to remove from the K Trust this interest. The interest in the CC Pty Ltd property constitutes a significant proportion of the K Trust corpus;
iii)little evidence was offered by the forensic experts, and none of the evidence was in any event tested, as to the effect of various transactions envisaged by the husband’s orders from a taxation perspective. The husband’s orders (at 10 and 12A) purport to deal with taxation and Division 7A factors, however I am concerned that although some attempt to cover the situation that could arise is made in the orders, the effect of the orders needs to be clearly considered so that the orders made can be assessed as just and equitable.

It also seems to me, if the adjustments of property interests in the proportions of 62.5% to the husband and 37.5% to the wife is to be achieved, this would mean the wife (under her proposed order 4) would have to pay a significant sum of money to the husband to retain the interest in the CC Pty Ltd land as she seeks. There is no evidence that was offered at the hearing which gives the Court any satisfaction that the wife has the capacity to do so. As a result, the obligations imposed by s 81 of the Act to achieve finality is, on the current evidence, unlikely to be met.
The wife relied on the Affidavit of Mr BB (filed 21 November 2018) and his statement at paragraph 21 that:
“I have no interest in having a commercial relationship with Mr Rigge.”
as a basis for supporting the wife’s proposed orders to retain control of the units in the FF Unit Trust. Whilst I accept that the business relationship between Mr BB and the husband may not be good, Mr BB as an experienced property investor should have been aware of the issues that could arise when he held a substantial (yet minority) interest in the Unit Trust. Mr BB acknowledged the actions of the husband acquiring the interest in the property (see paragraphs 6 to 10). Mr Kirk SC, in his submissions at paragraph 5.3 says:
“The Wife has had solitary control of the corporate/trust entities since 2009-2010 and she ought retain them and provide the Husband with the indemnity he seeks.
As to the transfers of property sought by the Husband, he seeks to receive the 60% interest held in the DD Street property, which he acquired so many years ago effectively with Mr BB. The Wife’s connection to this property is accidental and it would be some comfort to the Husband if he was given the opportunity to finish what he started. That Mr BB would prefer not to have to deal with the Husband, is irrelevant – there are processes available to both to sort this out.”
I agree with this submission, even if the wife were able to demonstrate that she could fund a payment to the husband to enable her (through the entities) to retain the interest in the CC land.
I also have to regrettably acknowledge that since the hearing, 12 months have elapsed and I think it is only fair, now that the findings above have been made, for the parties to have a short opportunity to negotiate (and seek, if required, accounting and taxation advice) on how orders which may achieve a 62.5%/37.5% division of the pool can be seen as just and equitable.
I regard this as a better course to follow than, with the uncertainties evident in the parties’ proposed orders, to make final orders now which might not take into account the concerns I have raised.
I also note that the submissions the Court received in the final address (both orally and by reference to written submissions), did not comprehensively deal with the form of orders. Understandably, the submissions were more directed to the controversial facts which have been dealt with now in these Reasons.
As a result, I propose to give the parties a period for reflection and discussion and will list the matter before me to determine any further submissions to be made on the form of the orders, if agreement as to the form of orders consistent with these Reasons cannot be reached.

I certify that the preceding one-hundred (100) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Baumann delivered on 5 March 2020.

Associate:

Date: 5 March 2020

APPENDIX ONE

ASSETS
Realty	Ownership	Value
a) Proceeds from sale of TT Street, Suburb SS in Damien Greer Lawyers Trust Account	W	$54,311
b) FG City properties	H	$275,000
Corporate/trust interests
a) E Pty Ltd as trustee for The K Trust (the QQ Pty Ltd loan is excluded)	W	$1,489,326
b) Loan C Pty Ltd	H	($19,221)
c) Loan C Pty Ltd	W	($29,000)
d) E Pty Ltd as trustee for The K Trust loan	W	$706,175
e) Loan G Pty Ltd	W	($2,543)
f) MM Limited Loan	W	($178,731)
g) Loan to FF Unit Trust Loan	H & W	$904,570
Other assets
a) GH Place Suburb J	W	Nil
b) BN Bank Account ($USD10,568)	H	$14,703
c) Motor Vehicles 1 and 2	W	$7,500
d) Motor Vehicle 3	H	$6,000
e) Aircraft 4	H	$22,500
f) Aircraft 5	H	$15,000
TOTAL ASSETS	$3,265,590
Superannuation interests
a) BJ Bank Superannuation	H	$148,478
b) BJ Bank Superannuation	W	$5,102
TOTAL SUPERANNUATION	$153,580
TOTAL POOL	$3,419,170
Notional adjustments
a) 5 April 2016 partial property settlement to husband	H	$550,000
b) 9 June 2016 partial property settlement to wife	W	$500,000
$4,469,170

APPENDIX TWO

That within two (2) days from the date of this order the Applicant and Respondent do all acts, things and sign all documents necessary to cause the monies held in the trust account of Damien Greer Lawyers on behalf of the parties and C Pty Ltd, to be paid to the Applicant, being the following sums:
a)$54,311 plus interest (if any), from the proceeds of sale of the property at TT Street, Suburb SS; and
b)$412,907.35 plus interest (if any), for C Pty Ltd, from the proceeds of sale of the property at LL Street, Suburb J.
That within seven (7) days the Respondent do all acts, things and sign all documents necessary to transfer the following properties from G Pty Ltd to the Applicant:
a)The property situate at and know as Suburb P, more particularly described as Lot … and contained in Folio …; and
b)The property situate at and known as GG Street, Suburb JJ, more particularly described as:
i)Lot …, contained in Title Reference number …; and
ii)Lot …, contained in Title Reference number ….
That within seven (7) days the Respondent do all acts, things and sign all documents necessary to transfer the 60 units, held by E Pty Ltd as trustee for The K Trust, in the FF Unit Trust, to the Applicant.
That within seven (7) days the Respondent do all acts, things and sign all documents necessary to transfer the shareholding of EE Pty Ltd in CC Pty Ltd to the Applicant.
That within seven (7) days the Respondent do all acts, things and sign all documents necessary to appoint the Applicant as director of CC Pty Ltd, and immediately thereafter to resign as a director of CC Pty Ltd.
That the Applicant retain the properties at:
a)BL Street, FG City, CD State USA …
b)BQ Street, FG City, CD State USA …
c)BZ Street, FG City, CD State USA …
d)BR Street, FG City, CD State USA ….
e)BT Street, FG City, CD State USA …
f)BV Street, FG City, CD State USA ….
That the Applicant retain all of his right, title and interest in the following:
a)Motor Vehicle 3;
b)Aircraft 4;
c)Aircraft 5;
d)All bank accounts in his name;
e)BJ Bank Superannuation held in his name.
That the Respondent retain all right title and interest in the following:
a)G Pty Ltd;
b)C Pty Ltd;
c)E Pty Ltd;
d)The K Trust;
e)CM Pty Ltd;
f)F Pty Ltd;
g)MM Limited;
h)UU Pty Ltd;
i)FF Pty Ltd;
j)The V Unit Trust; and
k)BW Superannuation Fund.
That each of the parties be entitled to their respective account balances in the BW Superannuation Fund (“the Fund”) and in relation to the Fund:
a)Within thirty (30) days of the date of the making of these Orders each the Applicant and Respondent do all acts and things and sign all documents and vote in favour of all resolutions to transfer, or to procure the transfer by the Fund of, the Applicant’s superannuation entitlement (including income as at 30 June 2018 on an after tax basis) to a retail fund or to another self-managed fund as notified by the Applicant in writing;
b)Within sixty (60) days of the transfer referred to in Order 9(a) the Respondent do all acts and things and vote in favour of all resolutions to pay to the Applicant's new superannuation fund the additional sum being the balance of the Applicant’s entitlement in the funds as at the date of the roll out, together with interest thereon (on an after tax basis) as has accrued between 1 July 2018 and the date of these Orders; and
c)Within two (2) days thereafter the Respondent shall prepare and submit to the Applicant all necessary documents for signing, so that the Applicant ceases to be a member of the Fund.
That the Respondent indemnify and keep indemnified the Applicant against all or any manner of actions, suits, causes of action, arbitrations, debts, dues, costs, interest and demands both at law and in equity which the Respondent and any of the entities referred to in Order 6 hereof now has or may have at any time or times after the date of these Orders against the Applicant or which may arise in respect of any act or thing done or omitted to be done by the Applicant up to and including the date of making of these Orders whether by reason of the Applicant having been an employee and/or director and/or officer of any of the entities referred to in Order 8 hereof and/or by reason of his shareholding within any of the entities referred to in Order 8 hereof, and/or any debit balance in any loan account in his name and/or the receipt by him of any moneys at any time from the entities referred to in Order 6 hereof or otherwise and/or in respect of any tax liability pursuant to Division 7A of the Income Tax Assessment Act or otherwise that arises by reason of the carrying out of the orders contained herein.
That the Respondent indemnify the Applicant in respect of all liability which the Applicant may have now or in the future and whether alone, jointly and/or severally with the Respondent and/or any other person and/or company to any creditor of any of the entities referred to in Order 8 hereof pursuant to any guarantee and/or indemnity and/or in any other manner however arising in respect of any liability of any of the entities referred to in Order 8 hereof.
That the Respondent release to the Applicant all rights of indemnity and/or contribution which the Respondent now has or may have against the Applicant pursuant to any joint and/or several guarantee and/or surety given by the Applicant and/or any other entity whether alone, jointly and/or severally in respect of any obligation of any of the entities referred to in Order 8 hereof.

12A.Notwithstanding the indemnities and releases otherwise referred to in these orders, there was an issue referred to in the joint statement of experts (Exhibit 2) in respect of a contingent liability for GST for C Pty Ltd (“C Pty Ltd”) which could be in the vicinity of $102,727 and it is agreed that should a tax liability arise in respect thereof, the Husband shall indemnify C Pty Ltd, limited to the percentage thereof assessed by the Trial Judge for the purpose of division of the net asset pool of property, provided however, that upon receipt of any such assessment, C Pty Ltd shall immediately provide a copy thereof to the Husband and shall lodge an objection thereto, providing the Husband shall agree in writing to share with the Wife or C Pty Ltd the costs of objection in the same percentage that the Husband and Wife share the division of the net asset pool as assessed by the Trial Judge.

Unless otherwise specified herein and save for the purpose of enforcing the payment of any money due under this or subsequent Orders:
a)The parties be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of this Order;
b)Insurance policies remain the sole property of the owner named thereon;
c)Each party forgoes any claims they may have to any superannuation benefits belonging to or earned by the other;
d)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is hereby entitled pursuant to this Order;
e)Each party is solely responsible for, and indemnified the other against, any liability to a third party existing at the date of this Order which was incurred in their name whether before or after the date of this Order;
That within thirty (30) days the Respondent pay such cash settlement sum to the Applicant, so as to effect an overall division of the property pool such that the Applicant receive 75% of the total net value of the property pool.
Where any asset is to be transferred to a party pursuant to this Order the transferee is responsible for the preparation of all documents necessary to affect the transfer and the payment of any costs, and statutory costs, including stamp duty, associated with transfer.
In default of the Applicant or Respondent doing all acts, things and executing all such documents as are necessary to give effect to these Orders within fourteen (14) days of an obligation to do so is required under these Orders, and on the Registrar being satisfied of such failure or neglect or default by the party by way of an affidavit of evidence only, a Registrar of the Family Court of Australia at Brisbane is appointed pursuant to section 106A of the Family Law Act to execute all such documents in the name of the party in default and to do all such acts and things necessary to give validity and operation to the said Orders and the party in default pay to the other party to this Application that party's costs and disbursements on an indemnity basis.
Such further or other Order as deemed appropriate by this Honourable Court.
That the Respondent pay the Applicant's costs of and incidental to this application.

APPENDIX THREE

That:

Within 60 days, the Wife do all things and sign all documents necessary to cause G Pty Ltd to transfer to the Husband its interest in the properties located at Suburb P (Lot …) and GG Street, Suburb JJ (Lots 1 & 2…).
The Husband be responsible for and meet payment when due any company or individual taxation liability, Division 7A liability, interest or fines payable in consequence of the transfers pursuant to Order 1 and the Husband shall indemnify and keep indemnified the Wife from all such liability howsoever arising in relation to same.
Unless otherwise specified in these Orders and except for the purposes of enforcing payment of any money due under these or any subsequent Orders each party shall be solely entitled to the exclusion of the other to:
a)all property in the possession of such party as at this date including any jewellery, furniture, furnishings, shares and motor vehicles.
b)Interest in any company, partnership, trust or any entity whatsoever.
c)Moneys standing to the credit of the parties in any bank accounts to be the property of the party in whose name such bank account is held.
d)Each party hereby foregoes any claims they may have to any superannuation benefit to or owned by the other. The party in whose name any such policy of superannuation or insurance stand shall be deemed to be the owner and the beneficiary of such policy to the exclusion of the other.
e)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to this Order.
Within 28 days of the transfers pursuant to Order 1 being completed, the Husband pay to the Wife or the Wife pay to the Husband such sum as to result in a 50/50% division of the matrimonial asset pool, with the quantum of such payment to be determined by the findings of the Court as to the value of the matrimonial asset pool.
The Husband pay the Wife’s costs of and incidental to these proceedings.

[2020] FamCA 106

5 March 2020

Key Legal Topics

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Family Law

Civil Procedure

Legal Concepts

Appeal

Costs

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