Roberts and Roberts
[2012] FamCA 317
•2 May 2012
FAMILY COURT OF AUSTRALIA
| ROBERTS & ROBERTS | [2012] FamCA 317 |
| FAMILY LAW – PROPERTY SETTLEMENT – Contribution of the parties – Where parties initial contributions have similar monetary value – When nature of initial contributions compared husband’s initial contribution has greater significance - Formulation of asset pool – Add-back of notional assets - Consideration of factors under s 79 and s 75(2) of the Family Law Act 1975 (Cth) – Contributions favour husband 60% compared to wife’s 40% - Where the Husband has paid considerable spousal maintenance to the wife – Health and future earning capacity of the parties – Standard of living considerations - Section 75(2) adjustment of 13% in the wife’s favour – Illiquid nature of the husband’s assets makes it appropriate that he has four months within which to pay adjusting amount to the wife. |
| Family Law Act 1975 (Cth), ss 75(2) and 79(2)(4) Evidence Act 1995 (Cth) s140 |
| Bell and Bell [2000] FamCA 1301 Cerini [1998] FamCA 143 Farmer & Bramley (2000) FLC 93-060 In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626 In the Marriage of Ferraro (1993) FLC 92-335 In the Marriage of Clauson (1995) FLC 92-595 Kowaliw (1981) FLC 91-092 Marker [1998] FamCA 42 Norbis v Norbis (1986) 161 CLR 513 Pierce & Pierce (1999) FLC 92-844 Russell v Russell (1999) FLC 92-877 Tomasetti & Tomasetti (2000) FLC 93-023 Townsend (1995) FLC 92-569 Waters & Jurak (1995) FLC 92-635 |
| APPLICANT: | Ms Roberts |
| RESPONDENT: | Mr Roberts |
| FILE NUMBER: | SYC | 4085 | of | 2009 |
| DATE DELIVERED: | 2 May 2012 |
| DATE ORDERS MADE: | 4 May 2012 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Ryan J |
| HEARING DATE: | 31 January 2012, 1-3 February 2012 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Mater |
| SOLICITOR FOR THE APPLICANT: | Charles Cooper Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Schonell SC |
| SOLICITOR FOR THE RESPONDENT: | Karras Partners |
Orders made 4 may 2012
No later than 2 weeks from the date of these orders the husband shall do all things and sign all documents required to effect a transfer to the wife of the whole of his right, title and interest in the property known as … H Street, Gold Coast Suburb T, in the State of Queensland, being the whole of the property contained in Certificate of Title Folio Identifier … (“the Suburb T apartment”).
No later than 16 weeks from the date of these orders the husband shall pay to the wife the amount of $752,658.13.
Upon the husband complying with Orders 1 and 2, the wife shall indemnify the husband in respect of the mortgage registered upon the title of the Suburb T apartment in favour of Westpac Banking Corporation (“Westpac”) as dealing number … and simultaneously discharge or refinance into her sole name the Premier Finance Australia loan.
No later than 16 weeks from the date of these orders the wife shall do all things and sign all documents required to effect a transfer to the husband of the whole of her right, title and interest in the property known as … D Street, Suburb G, in the State of New South Wales, being the whole of the property contained in Certificate of Title Folio Identifier … (“Suburb G”).
Simultaneously with the wife’s compliance with Order 4, the husband shall refinance into his sole name or discharge all mortgages secured against Suburb G, including in favour of Firstfolio Mortgages Australia Pty Ltd being dealing number … .
That within 16 weeks from the date of these orders the wife shall do all things and sign all documents required to effect a transfer to the husband of the whole of her right, title and interest in the property known as … S Street, Suburb B, being the whole of the properties contained in Certificates of Title Folio Identifiers … and … (“S Street”).
Simultaneously upon compliance by the wife with Order 6, the husband shall refinance into his sole name or discharge the mortgage registered in favour of St George Bank Ltd being dealing number … .
The husband and wife shall within 7 days do all acts and things necessary and sign all documents required to sell the property known as … C Street, Suburb B (“C Street”) being the whole of the property contained in Certificate of Title Folio Identifier … for the best price reasonably attainable and, without limiting the generality of the foregoing:
(a)list C Street for sale with J Real Estate Agents (or with such other agent as the parties may agree) for sale by private treaty for a period of 60 days after such listing;
(b)instruct K Law Firm (or other firm of solicitors as the parties may agree), to act in relation to the sale of the property;
(c)set a sale price of no more than $620,000.00 (or such other price as the parties may otherwise agree);
(d)co-operate with the agent in the presentation and promotion of the property for sale in relation to which the husband shall pay such marketing costs as are required to be paid in advance; and
(e)maintain the property in a presentable state of repair.
In the event that C Street is not sold within 67 days, the parties shall instruct the said agent (or such other agent as the parties may agree) to list the property for sale by public auction at the earliest possible date thereafter and shall sign all documents necessary and do all acts and things required to sell the property by such public auction and shall, without limiting the generality of the foregoing:
(a)execute all documents requested by the auctioneer for the sale of the property;
(b)nominate to the auctioneer a reserve price for the sale, such reserve price to be agreed upon by the parties and failing agreement to be the mean value of two estimates of value by estate agents being one agent nominated by the wife and another nominated by the husband, such estimates to be not more than 14 days apart;
(c)instruct K Law Firm (or any other firm of solicitors that the parties may agree), to act in relation to the sale;
(d)attend at the auction sale and negotiate with the highest bidder in the event that the reserve price is not reached and to accept a price not less than 10% lower than the reserve price;
(e)execute all contracts and documents necessary to complete the sale; and
(f)co-operate in every way with the auctioneer in relation to the auction.
In the event that C Street is not sold either:
(a)pursuant to private treaty in accordance with Order 8; or
(b)pursuant to auction sale in accordance with Order 9; or
(c)within 7 days of the date of the auction by negotiation with the highest bidder, or otherwise;
then the husband and the wife shall do all acts and things necessary and execute all documents required to cause to hold a second auction of the property within 3 months after the date of the first auction in relation to which the provisions contained in Order 9 shall apply.
Upon settlement of the sale of C Street, the parties shall do all acts and things necessary to distribute the proceeds of sale in the following manner and priority:
(a)in discharge of the mortgage to National Australia Bank Limited, registered as dealing number … ;
(b)in payment of contract adjustments incurred in the sale, if any;
(c)in payment of agent’s commission and any auction fees on sale;
(d)in payment of legal costs and disbursements incurred in the sale;
(e)reimbursement to the husband of funds paid pursuant to Order 8(d);
(f)in payment of 47% of the balance to the husband; and
(g)in payment of the remaining proceeds of sale, to the wife.
If she has not already done so, simultaneously upon distribution of the sale proceeds of C Street the wife shall refinance into her sole name or discharge Westpac dealing number … .
That within 7 days of these orders, the husband and wife shall appoint a real estate agent in Queensland to sell … F Street, Gold Coast Suburb R in the State of Queensland being the whole of the property contained in Lot … on RP… Parish … County … Title Reference … (“Suburb R”).
That in the event the husband and wife are unable to agree on a real estate agent to conduct the sale of Suburb R, the wife shall within 10 days of the date of these orders submit to the husband the names of three accredited real estate agents in the Suburb R local area, for the husband to choose, within 7 business days thereafter one agent who is to be the agent appointed to conduct the sale.
That Suburb R shall be listed for sale by private treaty for a period of 90 days at a price to be agreed on in writing between the parties, and failing such agreement at $575,000.00 and, without limiting the generality of the foregoing:
(a)instruct solicitors nominated by the husband to act in relation to the sale of the property;
(b)co-operate with the agent in the presentation and promotion of the property for sale in relation to which the husband shall pay such marketing costs as are required to be paid in advance; and
(c)maintain the property in a presentable state of repair.
In the event that Suburb R fails to sell within a period of 90 days, then the parties shall do all things required to cause the property to be sold by public auction at the earliest possible date thereafter and shall sign all documents necessary and do all acts and things required to sell Suburb R by such public auction and shall, without limiting the generality of the foregoing:
(a)execute all documents requested by the auctioneer for the sale of Suburb R;
(b)nominate to the auctioneer a reserve price for the sale of Suburb R, such reserve price to be agreed upon by the husband and the wife and failing such agreement to be the mean value of two estimates of value by estate agents being one agent nominated by the wife and another agent nominated by the husband, such estimates to be not more than 14 days apart;
(c)instruct solicitors nominated by the husband to act in relation to the sale of the property;
(d)attend at the auction sale and negotiate with the highest bidder in the event that the reserve price is not reached and to accept a price not less than 10% lower than the reserve price;
(e)execute all contracts and documents necessary to complete the sale; and
(f)co-operate in every way with the auctioneer in relation to the auction of Suburb R.
In the event that Suburb R is not sold either:
(a)pursuant to private treaty listing in accordance with Order 15; or
(b)pursuant to auction sale in accordance with Order 16; or
(c)within 7 days of the date of the auction by negotiation with the highest bidder, or otherwise;
then the husband and the wife shall do all acts and things necessary and execute all documents required to cause to be held a further auction of Suburb R within 3 months after the date of the first auction in relation to which the provisions contained in Order 9 shall apply.
Upon settlement of the sale of Suburb R, the parties shall do all acts and things necessary to distribute the proceeds of sale of Suburb R in the following manner and priority:
(a)in discharge of the mortgage to Westpac Banking Corporation registered as dealing number … ;
(b)in payment of contract adjustments incurred in the sale, if any;
(c)in payment of agent’s commission and any auction fees on sale;
(d)in payment of legal costs and disbursements incurred in the sale;
(e)reimburse the husband for any payments made pursuant to Order 15(b);
(f)in payment of 47% of the balance to the husband; and
(g)in payment of the remaining proceeds of sale, to the wife.
That pending the sale of C Street and Suburb R, and compliance by the husband with Order 2, the husband shall pay as and when they fall due in relation to Suburb G, Suburb T, S Street, C Street and Suburb R the following:
(a)excluding the loan to Premier Finance, mortgage instalments (interest only if the mortgagee agrees);
(b)council rates;
(c)water rates;
(d)body corporate levies and fees (if any); and
(e)land tax.
Upon compliance by the husband with Order 2 insofar as Order 19 relates to Suburb T it is discharged, and thereafter the wife shall pay all outgoings in relation to Suburb T, including the Westpac mortgage (interest only if the mortgagee agrees) referred to in Order 3.
In the event that the husband fails to comply with Order 19, any arrears shall be paid at settlement of the sale of each property from the husband’s share of the net sale proceeds.
Pending the sale of C Street and Suburb R, the husband and the wife are restrained from charging, mortgaging or otherwise encumbering either of those properties to a greater extent than as at the date of hearing without first obtaining the written consent of the other party.
Upon payment by the husband of the amount due to the wife pursuant to Order 2, and in the event that settlement of the sale of C Street has not been completed, Order 1 of the orders dated 17 August 2011 is varied so that the amount of interim spousal maintenance payable by the husband to the wife is reduced to $250.00 per week.
Upon settlement of the sale of C Street and compliance by the husband with Order 2 all orders for the payment of spousal maintenance (excluding Orders 2 and 3 dated 17 August 2011) are discharged.
In the event that at settlement of either C Street and/or Suburb R there are arrears of spousal maintenance or interest pursuant to Order 26 payable by the husband, any arrears shall be paid at settlement of the sale of each property from the husband’s share of the net sale proceeds.
In the event that the husband fails to make the payment due to the wife pursuant to Order 2 within the appointed time, interest, calculated in accordance with the Family Law Rules 2004, is payable on the balance outstanding from the due date.
If either party refuses or neglects to sign any document necessary to implement these orders, that a Registrar sign the necessary document on behalf of the defaulting party pursuant to section 106A of the Family Law Act 1975 (Cth).
Unless otherwise specified in these orders each party is solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the bank’s records thereof, superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age and working future provides the conditions for payment out of such payment.
Subject to any application for costs, all outstanding applications are dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Roberts & Roberts has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 4085 of 2009
| Ms Roberts |
Applicant
And
| Mr Roberts |
Respondent
REASONS FOR JUDGMENT
These are proceedings for property settlement pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”).
Ms Roberts (“the wife”) commenced these proceedings with her application filed on 10 July 2009. Depending upon the sale price of a property called C Street, the net asset pool is in the vicinity of $2 million. The wife claims 65 per cent, which comprises 45 – 50 per cent contributions and a 15 - 20 per cent adjustment pursuant to s 75(2). Mr Roberts (“the husband”) claims 60 per cent. This comprises 70 per cent contributions and, depending on the ultimate formulation of the property pool, a 10 per cent s 75(2) adjustment in the wife’s favour. Although in her Amended Application filed on 17 January 2012, the wife sought that the apartment in which she resides (“Suburb T”) be sold; during the hearing she indicated that she wished to retain it about which there is no issue. It is also agreed that she will retain other assets in her possession and receive a cash adjustment. There is no issue that the husband will retain his professional practice and the commercial premises from which it operates, the home in which he resides and assets in his possession. Neither party seeks to retain C Street or another investment property known as Suburb R, both of which will be sold.
When the hearing commenced there were significant issues in relation to the property pool, contributions and post separation property disposition. Many of the pool issues were resolved. Excluding pool issues, closing addresses focused on credit and allied issues, the quantum and significance of initial contributions, the wife’s role in a professional practice established by the husband, whether various transactions (plus gambling losses) should be notionally included in the property pool, post separation contributions and the wife’s capacity for paid work.
It will be apparent that there is a significant divergence in the outcome which each party claims is just and equitable.
Background Facts
Throughout these reasons statements of fact are findings of fact determined upon the balance of probabilities (s 140 Evidence Act 1995 (Cth)).
The husband was born in 1950 and is 62 years old.
The wife was born in China in 1955. Many years before the parties met, along with her parents and siblings, she migrated to Australia.
In 1987 the husband received professional registration and, as a sole trader, established a professional practice trading as “[Mr Roberts] & Associates”.
The wife purchased A Street, Suburb E (“Suburb E”) in July 1989. To fund this purchase she used $40,000.00 savings, borrowed $30,000.00 from the State Bank and $40,000.00 from her brother. Within 12 months she paid out the State Bank and, according to her, as at January 1991, “… there was no mortgage over the property”. It was only as a result of investigations undertaken by the husband that the wife revealed that this was incorrect. At the time of purchase, the wife executed a mortgage in favour of her brother which, although unregistered, was discharged in December 1994 when she made her final payment. It is only because of the nature and gravity of the wife’s challenge to the husband’s credit that this omission becomes noteworthy. In this regard, there were many errors and omissions by both parties. When made by the other party these were said to impugn that party’s credit. Curiously, their own mistakes were said to be inconsequential and to not reflect on their integrity. In a similar vein, the wife was aggressively cross-examined about the accuracy of her Financial Statement yet when the husband gave evidence the erroneous information contained in his Financial Statement caused her misstatements to pale into insignificance.
In late 1995 the husband and his then partner, Ms L, jointly purchased D Street, Suburb G (“Suburb G”) for $491,000.00. The majority of the purchase price was financed by a mortgage advanced by FAI Finance.
Prior to the commencement of cohabitation the husband purchased W Street, Suburb B (“W Street”). This too was subject to an FAI Finance mortgage.
The parties met in 1996 and not long afterwards, the wife became a client of the husband.
By early 1997 the husband and Ms L were separated. They entered into a Deed of Agreement the effect of which was that by May 1998 the husband paid Ms L $18,000.00 and she transferred to him her interest in Suburb G. Simultaneously, without payment, the wife became a joint owner.
The parties disagree about whether they commenced cohabitation in February or May 1997. The wife is confident she moved into Suburb G during February 1997 whereas the husband is less certain. Given the number of years during which the parties cohabited nothing turns upon whether they started to live together in February or May 1997.
There is no dispute that, from February 1997, the wife started part-time work in the husband’s practice for which she was paid.
The parties became engaged in May 1997.
In June 1997 the husband incorporated his professional practice. The practice, of which the husband is sole director and shareholder, is known as “[Mr Roberts] & Partners Pty Ltd”.
On 1 July 1997 the wife’s position as a clerk in the husband’s practice became full-time. She continued to work in the practice until the parties separated. This enabled the parties to income-split in the most tax effective manner.
In April 1998 the wife borrowed $275,000.00 from FAI Home Loans. With these funds, she purchased W Street from the husband for $240,000.00. W Street had been valued a few months earlier at $205,000.00 which means that (with entirely borrowed money) she paid more for W Street than it was worth. The FAI advance was secured over W Street and Suburb E. Apart from the acquisition costs for W Street, the remaining $25,000.00 paid out a loan secured against Suburb G previously advanced to the husband. From the W Street sale proceeds, the husband paid FAI approximately $180,000.00 to discharge its mortgage. Although it is the husband’s evidence that the balance was used to discharge the wife’s State Bank mortgage, it had already been discharged. Thus, the use to which the husband put the balance of the W Street sale proceeds is unclear. However, given the vigour with which the wife challenged transactions (but not this one) which even hinted at funds he utilised other than for the parties’ joint benefit, I infer that the balance was applied to joint matrimonial purposes.
In January 2000 the parties married.
On 1 July 2000 the husband and wife entered into a partnership named “[Ms & Mr Roberts]”, the purpose of which was to invest in commercial real estate. As will be seen, the investments were generally acquired with borrowed funds. Three of the four properties acquired by the partnership are worth less than their acquisition costs and, when holding costs are taken into account this venture has been financially unsuccessful.
On 19 July 2000 the parties borrowed $416,000.00 in the wife’s name from the Adelaide Bank to refinance the debt secured over W Street and Suburb E. After the refinance about $150,000.00 remained. This was applied towards the purchase of commercial premises, S Street, Suburb B (“S Street”). Settlement of the purchase of S Street took place on 15 December 2000. It was acquired for $760,000.00, plus fitout and GST. Including an occupation fee (for the practice), it cost the parties approximately $860,000.00 to acquire and occupy S Street. In order to complete the purchase, the parties borrowed an additional $570,000.00 from the St George Bank which was secured over the property. The balance came from joint savings. The practice operates from S Street for which it pays rent.
In February 2002 the parties purchased F Street, Gold Coast Suburb R, Queensland (“Suburb R”) for $165,000.00. This was vacant land upon which, at purchase, they contracted a builder to construct a four bedroom residence. The residence was built for $200,000.00. Although it is not entirely clear, it would appear that the property was acquired with funds advanced by ING. Suburb R has been tenanted and, as has already been mentioned, will now be sold.
The wife sold W Street for $380,000.00 in May 2003. From the net sale proceeds of $115,487.25, $45,000.00 was loaned to the practice, $44,495.00 was paid (eventually) to the Australian Taxation Office with the balance applied to joint expenses.
Four months later the wife sold Suburb E for $385,000.00. From the net proceeds of $229,956.00, $100,000.00 was advanced to the practice with the balance paid onto the Suburb G mortgage.
In May 2004 the husband received an inheritance from his late mother’s estate of about $34,000.00.
In May 2004, the wife loaned the practice $20,000.00.
The parties purchased, in their joints names, C Street, Suburb B (“C Street”) in July 2004 for $735,000.00 plus GST (total $808,500.00). The acquisition costs were fully borrowed, with a $515,000.00 National Australia Bank mortgage and most of the balance advanced by an ING line of credit which was secured over Suburb G.
In February 2006 in their joint names the parties purchased an apartment being H Street, Gold Coast Suburb T, Queensland (“Suburb T”) for $1,000,000.00. The purchase price comprised $25,000.00 from joint savings, $807,000.00 Westpac mortgage secured against the apartment and a Westpac refinance of Suburb R. In relation to the refinance, the parties borrowed $542,800.00 which discharged the existing mortgage and provided the shortfall used for the purchase of the Suburb T apartment. Until the wife moved into the Suburb T apartment it was tenanted and the income applied to the mortgage.
In late 2007 or early 2008, the husband was diagnosed with prostate cancer in relation to which he underwent surgery in April 2008. He had trauma insurance which paid him $189,000.00. This comprised $143,000.00 illness coverage and $46,000.00 loss of income. The husband paid $21,320.00 tax which resulted in a net payment to him of $167,680.00. These funds were used to reduce debt and towards a kitchen renovation at Suburb G. At separation, without the husband’s consent, the wife withdrew the remaining $36,000.00 of his insurance payment.
In June 2008 the husband and Mr M incorporated N Pty Ltd. They were equal shareholders and co-directors. This company was intended to supplement the practice’s client services by the provision of a co-located advisory service. The venture was not successful and the husband subsequently acquired Mr M’s share for $1.00. This work is now undertaken by another person with moderate success.
In February/March 2009 the parties’ tax refunds were received, in the wife’s case approximately $11,000.00, and in the husband’s case approximately $26,000.00. The wife applied both tax refund cheques to credit card and other joint expenses. It is the husband’s contention that the monies used by the wife from his taxation refund should be notionally included as her asset. As was mentioned earlier, both parties contended for the notional inclusion in the property pool of amounts utilised by the other. Before the facts are canvassed, it is appropriate to set out the principles by which notional assets may be included in the property pool.
In Kowaliw (1981) FLC 91-092, Baker J, as a statement of general principle, said that financial loss incurred in the course of a marriage, whether or not a joint liability, should be shared except in the following circumstances:
i) where one of the parties embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
ii) 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.
If the losses were suffered in the course of the pursuit of the objectives of the marriage, for example gaining income or property, then such losses should be shared, although not necessarily equally.
The issue of whether lost funds should be notionally added back into the asset pool, constitute a s 75(2) factor or should be dealt with another way is quite complex but ultimately discretionary. In Townsend (1995) FLC 92-569 the Full Court determined that wasted property should be notionally added back. Simply put, after separation the husband sold a taxi, which had been the parties’ most valuable asset. The husband had the benefit of the sale proceeds, none of which remained. His sale of the taxi was found to be a premature distribution of property which it was said would be unjust to merely treat as a s 75(2) matter. The Full Court determined that the sale proceeds should be brought into the property pool on a notional basis and a distribution made accordingly.
In Bell and Bell [2000] FamCA 1301, the Full Court made it clear that notional adjustments are not limited to wasted assets but may also include identified items of property that have been disposed of bona fide. In addition, that “(i)t may also be appropriate, depending on the circumstances, to notionally include in the pool of assets items of property in respect of which no or no reasonable explanation has been given for the assertion that they no longer exist or never existed”. It is also well established that the Court generally does not notionally add back monies which existed at separation but have been spent on reasonably incurred living expenses. The point being that parties are entitled to continue to provide for their own support: Marker [1998] FamCA 42. In Cerini [1998] FamCA 143, the Full Court determined that where the monies have been shown to have been disposed of reasonably, the notional add back approach should be the exception and not the rule.
I accept the wife’s evidence about how she applied the taxation refunds. It would be contrary to the principles discussed above to notionally include these amounts in the property pool.
The parties separated on 9 March 2009. Although separated they continued to reside at Suburb G. In addition, the wife continued to work in the practice albeit, in anticipation of her departure, she started to hand over her work. During this period the wife impermissibly removed a vast quantity of practice records including records required for its day to day operations. The records were subsequently returned.
On either 6 or 8 April 2009, the husband terminated the wife’s employment. Curiously, she lodged a claim with the Fair Work Ombudsman in which she claimed approximately $68,000.00 unpaid entitlements and, in effect, compensation for wrongful dismissal. During this hearing she appropriately entered into an anti-suit injunction which ended this action. It is her baseless contention that her non-prosecution of her Fair Work claim constitutes a contribution by her. The wife failed to appreciate that if she had been successful the value of the practice would have fallen by the amount of her award which, in turn, would have been property included in the property pool. A successful claim would have resulted in the value of the property pool being depleted by the amount paid for legal services. For two weeks following her termination, the husband erroneously paid her wages. Her termination meant this payment should have been treated as spousal support. In any event, from separation until August 2009 the husband voluntarily paid the wife $1,335.00 per week.
Following termination of the wife’s employment, she has not had paid work.
As was mentioned earlier, the wife withdrew $36,000.00 (the balance of the husband’s insurance payout) from the parties’ joint account at separation. She used these monies for living expenses, car payments and legal fees. At about the same time, the husband withdrew $6,500.00 which he used for living expenses. The husband argues that funds removed by the wife (but not him) should be notionally included in the property pool as her asset. It is the wife’s contention that neither amount should be notionally added back. However, if funds withdrawn by one party are added back, justice and equity requires that both amounts are treated the same way. As paid legal costs are included in the property pool, a component of the larger sum removed by the wife is already included as her asset. As will be discussed further later, post-separation the husband has had control of the majority of the parties’ property. This has resulted in him having a significantly greater income than the wife, which has made it possible for him to predominately live on income whereas the wife needed to use capital and income. I am not persuaded that funds used for the parties’ living expenses should be included in the property pool.
Excluding the $36,000.00 discussed above, rounded out, in her St George account the wife had at separation $13,300.00 which she also used for living expenses. In the immediate post separation period the wife’s bank accounts do not record withdrawals used for day to day living expenses. This prompted questions about whether she had undisclosed income or cash, which she used between separation and when she deposited $35,000.00 (of the $36,000.00) into a new CBA account. Although the wife speculated that she may have had cash in a home safe, she was at a loss to explain what she lived on in that period. As the period was brief and for that brief period her expenses were probably modest as well as it being a tumultuous time, her inability to explain what she lived on is not troubling and does not persuade me that she had undisclosed income or assets of significance.
In June 2009 the wife moved out of Suburb G following which she stayed with a friend.
On 10 July 2009 the wife commenced these proceedings.
In July 2009 the wife attended the practice where she impermissibly shredded documents.
Relevantly, on 12 August 2009 interim orders were made as follows:
2.Until 6 pm on 6 October 2009 the Husband cause to be paid to the Wife by way of urgent spousal maintenance the sum of $3,000 per week.
3.The Wife vacate the property at [Suburb G] within 14 days after receipt from the Husband of the sum of $10,000. It is noted that the intention of that payment is to assist the Wife with relocation expenses.
4.Thereafter the Wife remain away from that property and the Husband have exclusive occupation of it pending further order.
5.By consent the Wife be restrained from attending at the business premises of Mr Roberts and Associates.
6.Until 6 pm on the adjourned date both parties are restrained from disposing of any substantial item of matrimonial property.
7.By consent the Wife return to the Husband by 4 pm 14 August 2009 his silver Cartier watch and his father’s war service records.
8.By consent as soon as practicable the Wife deliver up to the Husband a kitchen sink and any other appliance or building materials the parties agree are to be delivered to the Husband.
9.The wife provide to the husband within ten days an inventory of all jewellery items, ornaments and collectibles in her custody or control, including jewellery items belonging to the husband and that she be forthwith restrained from disposing of any such items pending further order.
It is argued by the husband that the Court would notionally include as the wife’s asset, the $10,000.00 relocation expenses paid pursuant to Order 3 above. By now, it should be apparent that this hearing was at times bedevilled by legal argument with the flimsiest foundation. There is no proper basis for inclusion of her resettlement expenses in the property pool.
The wife removed furniture and other items from Suburb G in mid August 2009. She moved to Queensland where she resided in rented accommodation for which she paid $480.00 per week until, in March 2011, she moved into Suburb T.
Further interim orders were made on 6 October 2009 which are set out below:
1.That until further order pursuant to section 74 of the Family Law Act the Respondent Husband pay to the Applicant Wife by way of spouse maintenance the sum of $1,380.00 per week increasing to $1,680.00 per week forthwith upon the wife advising the husband through his solicitors that she is able to drive a motor vehicle following her operation.
2.That until further order, orders are made in terms of paragraphs 3 and 4 of the Interim Orders sought by the wife in her Initiating Application filed 10 July 2009 as set out hereunder:
“3.The spouse maintenance referred to in Order 1 shall be paid into the Commonwealth Bank account standing in the name of [the wife] being account number [deleted] or as otherwise directed in writing by the Applicant Wife.
4.The payment of maintenance referred to in Order 1 herein is to be made on every Monday of each week or as otherwise ordered by the Court.”
3.That by consent orders be made in terms of paragraphs 10, 11 and 12 of that application as set out hereunder:
“10.That the Husband and the Wife forthwith do all things and sign all documents necessary to cause the property situate at and known as [C Street] (the Property) to be sold by private treaty at the earliest possible date at a price to be agreed between the parties and failing such Agreement at a price to be determined by the President of the Real Estate Institute of NSW (or any successor of it) or his/her nominee and to disburse the proceeds of sale in the following manner and priority:
10.1payment of Agents Commission and advertising expenses and legal expenses of the sale;
10.2payment of costs incurred, if any, in relation to the determination of value or selling price by the President of the Real Estate Institute of NSW or his/her nominee;
10.3the balance of proceeds of sale remaining are to be deposited into a controlled money account in the name of Konstan Lawyers as Trustee for [the wife] and [the husband] pending further order of the Court.
11.That in the event the Property is not sold by private treaty within a period of twelve (12) weeks from the date of these Orders, then the parties forthwith do all acts and things necessary including executing all documents necessary to cause the property to be sold by Public Auction at the earliest possible date at a reserve price to be agreed upon between the parties and failing such Agreement at a reserved price to be determined by the President of the Real Estate Institute of NSW (or any successor of it) or his/her nominee and to disburse the proceeds of the said sale in accordance with Order 9.
12.The parties forthwith do all acts and things and sign all documents necessary to cause a real Estate Agent to be appointed as the selling Agent for the Property. In the event an Agent cannot be appointed by Agreement the Agent is to be determined by the President of the Real Estate Institute of NSW (or any successor of it) or his/her nominee, provided that the Agent is not an acquaintance of either the Husband or the Wife.”
4.That the solicitor having the carriage of that sale be a solicitor agreed between the parties within seven (7) days or the nominee of the President of the NSW Law Society.
5.That forthwith upon the delivery to her accommodation, at the cost of the husband, of the parties’ Maytag refrigerator, a Sony sound system and Loewe TV all in working order, the wife cause the Liebherr refrigerator in her possession to be delivered at the husband’s direction and at the cost of the wife.
6.That not later than 30 October 2009 or such other date as is agreed between the parties, the wife facilitate the collection by the husband of the […] Porsche […] motor vehicle in her possession.
7.That hereafter the husband meet the hire purchase payments in respect of that vehicle and indemnify the wife in relation to those payments.
8.By consent the husband pay to the wife any surplus recovered on the sale of the Porsche motor vehicle driven by the wife and that payment is to be made within seven (7) days of that sale.
9.That the husband be appointed trustee for sale of the wife’s motor vehicle and that the parties sign all documents and do all things necessary to give effect to this order.
10.Leave to the parties to apply in relation to these orders on giving seven (7) days’ notice to the Court and to the other party.
C Street has not sold and has been vacant since February 2009.
In February 2010 the wife refinanced her Porsche on the basis of monthly payments in the amount of $1,252.00 and a $60,000.00 residual. Although the parties agreed that the wife’s (but not the husband’s) Porsche would be sold, it was discovered that this would be financially disadvantageous. Thus, the wife kept her car and the husband retains his.
In July 2010 the husband added his former wife, Ms O and their adult daughter, to his American Express credit card account. Post-separation, from his income, the husband has paid $124,388.00 for the benefit of his first wife and their adult children. Although a component of this amount relates to reimbursement for holiday expenses which the husband took with his former wife, this does not alter the nature of the expenditure. It was contended by the wife, which contention appeared to be abandoned during closing addresses, that this sum should be notionally included as the husband’s asset. Nonetheless it is appropriate to record that the use by the husband of post-separation income for the benefit of others does not necessarily justify a finding that the amount expended should be notionally added back. It is, however, illustrative of his superior income and greater capacity for discretionary expenditure compared to the wife’s and, as will be discussed, lends support to her claim for a significant s 75(2) adjustment.
In early 2011 the wife terminated the letting arrangement for the Subur T apartment (which had been vacant for some time) and moved in. At about the same time, she borrowed money from friends and withdrew $59,000.00 from her superannuation. From this she paid $40,000.00 in legal costs and the balance was used for living expenses.
Based on the spurious claim that he could not afford it, the husband ceased paying spousal maintenance. This resulted in a further interim application in relation to which orders were made on 17 August 2011 as follows:
1.Pending further order, as and from 28 February 2011, Order 1 made in these proceedings on 6 October 2009 is varied so that the amount of interim spousal maintenance payable by the respondent to the applicant is reduced to $853.00 per week.
2.It is declared that the arrears outstanding in relation to Order 1 made in these proceedings on 6 October 2009 (and as varied by Order 1 of these orders) are $20,472.00.
3.Pending further order, the respondent shall pay the arrears declared above to the applicant at the rate of $400.00 per week. Payments pursuant to this order shall be made weekly and as directed in writing by the applicant.
4.Pending further order, the applicant and respondent shall jointly apply to a lending authority nominated by the respondent to advance $165,000.00 for the applicant’s use. In this regard, $150,000.00 is to be released to the applicant and the balance remaining to be applied to interest due in relation to the advance.
5.The parties shall secure the advance referred to in Order 4 above upon a property owned by them at [C Street].
In accordance with Orders 4 and 5 dated 17 August 2011, the husband applied to NAB for a personal loan. He was unsuccessful and thus, the parties applied to Premier Finance Australia. This loan application was approved and, when capitalised interest and brokerage were included, to achieve a $147,996.00 advance the parties borrowed $183,000.00. From this advance, the wife received $147,996.00 which she used for legal expenses and which is included in the property pool. It is argued by the husband that the $33,000.00 interest component should be included in the property pool as the wife’s asset. In circumstances where the husband has directed significant post separation income towards debt reduction, had control of the majority of the parties property and been able to enjoy not inconsiderable discretionary expenditure compared to the wife’s more limited financial circumstances; the interest component, which did no more than put the parties on a roughly equal footing qua legal expenses, will be included as a joint liability.
General principles for the adjustment of matrimonial property
The approach to the determination of an application under s 79 of the Act is well established (In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Clauson (1995) FLC 92-595). The process ordinarily involves a four step procedure. Firstly, identifying the property, liabilities and financial resources of the parties at the time of the hearing. Secondly, evaluating the contributions made by the parties as defined in s 79(4)(a), (b) and (c) and the effect of any proposed order upon the earning capacity of either party. I must then evaluate the matters contained in s 75(2) insofar as they are relevant, including any other order made under the Act affecting a party or child and any child support under the Child Support (Assessment) Act 1989 (Cth) (“CSAA”) that a party to the marriage is to provide, or might be liable to provide in the future, for a child of the marriage.
Lastly, in determining what orders should be made the Court must be satisfied in all the circumstances that it is just and equitable (s 79(2)). It is the justice and equity of the actual orders that the Court must consider: Russell v Russell (1999) FLC 92-877.
Assets, liabilities and financial resources at the date of hearing
The parties reached agreement as to the value of most assets and liabilities.
The value and identity of the parties’ property, liabilities and financial resources at the date of hearing are as set out in the table below.
Owner Description Agreed Value $ ASSETS J Suburb G home Agreed 880,000 J Suburb R house Agreed 575,000 J Suburb T apartment Agreed 850,000 J S Street office Agreed 770,000 H NAB account #32 Agreed 46 H NAB account #74 Agreed 10 W CBA account Agreed Nil H IAG shares - 254 Agreed 754 W IAG shares - 184 Agreed 546 W BBL shares – 2000 Agreed 530 H CBA shares – 82 Agreed 4,106 H OZ Minerals Limited – 833 Agreed 8,783 H Porsche Agreed 145,000 W Porsche Agreed 70,000 H Mr Roberts and Partners P/L Agreed 435,304 H Roberts Partnership Agreed Nil J Contents in Suburb G home Agreed 63,740 W Contents in the wife’s possession Agreed 42,981 H Paid legal costs Agreed 100,000 W Paid legal costs Agreed 215,000 W Spousal Maintenance Arrears Agreed 15,537 H Value of company assets surplus to valuation Agreed 153,813 J Debt of company to partnership Agreed 112,354 Total $4,443,504 LIABILITIES J SuburbG ING mortgage Agreed 100,000 J Suburb G ING mortgage Agreed 349,483 J Suburb G ING mortgage Agreed 388,634 J Premier Finance loan Not agreed 183,000 J Suburb R WBC mortgage Agreed 544,947 J Suburb T WBC mortgage Agreed 813,696 J S Street SGB mortgage Agreed 211,411 J C Street NAB mortgage Agreed 240,180 H WBC Mastercard Agreed 8,720 H AMEX Agreed 16,690 W NAB Mastercard Agreed 829 W AMEX Agreed 1,916 W WBC Porsche Lease Agreed 55,000 H WBC Porsche Lease Agreed 114,710 H Loan account Agreed 7,033 H Spousal Maintenance Arrears to Wife Agreed 15,537 Total $3,051,786 NET Total $1,391,718 SUPERANNUATION Fund Type of Interest Agreed Value H Colonial First Accum/growth Agreed 120,056 W Colonial First Accum/growth Agreed 42,120 Total $162,176 TOTAL NET ASSETS (excluding C Street property) $1,553,894
The parties were unable to agree about the value of C Street which has been for sale at $690,000.00 for about two years with little buyer interest. It is agreed that its value will be determined through a sale in relation to which the net sale proceeds will be divided in accordance with the overall percentage adjustment. C Street is also security for the Premier Finance advance obtained to fund the wife’s legal costs. Although this is a joint liability it will be her responsibility to repay the loan and thus it will not form part of the calculation of the net sale proceeds. C Street is said to be worth somewhere between $620,000.00 and $690,000.00. It is encumbered by a mortgage advanced by NAB, to whom, as is set out in the table of liabilities above, $240,180.00 is outstanding. Pending the sale of C Street the husband will be required to continue to service the NAB mortgage, which will be discharged upon the sale of the property. If both C Street and its mortgage are excluded from the net property pool, the parties’ liabilities are $2,811,606.00 and their net property is thus $1,794,074.00. Adopting a similar approach and also excluding Suburb R reduces the parties’ assets (including superannuation) to $4,030,680.00, liabilities to $2,266,659.00 and their net property to $1,764,021.00.
There are $1,250.00 rental arrears in relation to the practice’s occupation of S Street which the wife says should be included as an asset. For this approach to be just and equitable there would need to be a matched liability recorded against either the practice or the husband, which neither party suggests is appropriate. In these circumstances and because the amount is so small, the better course is that the liability is neither included as an asset or a liability.
The husband’s paid legal costs reflect a withdrawal he made from his pre-separation superannuation asset. The wife’s paid legal costs reflect money the parties borrowed from Premier Finance and otherwise her utilisation of property which existed at separation.
Section 79(4) – Evaluation of contributions and other factors
The submissions were made of the basis that contributions should be assessed globally and I propose to adopt that approach (see Norbis v Norbis (1986) 161 CLR 513).
Section 79(4) requires that the Court looks at the entirety of the contributions, both financial and non-financial, to the welfare of the family, as well as to the acquisition, conservation and improvement of assets. Contributions are not required to be tied to the acquisition, conservation or improvement of a particular asset and are to be taken into account generally as contributions in a total sense: Farmer & Bramley (2000) FLC 93-060. In Ferraro, the Full Court highlighted the difficulty involved in evaluating and balancing fundamentally different contributions. It also reinforced that the Court’s task includes evaluating the significance of the various contributions, the weighing of which is ultimately a matter for the Court.
The evaluation of financial contributions is more complex than the mere calculation of the funds introduced by each party. This point is reinforced by the often quoted comments in Pierce & Pierce (1999) FLC 92-844 where, in relation to initial contributions, the Full Court said at par 28:
In our opinion it is not so much a matter of 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 the use made by the parties of that contribution.
After the parties met but before they started to live together, the wife loaned the husband $10,000.00 which he repaid, with interest, by August 1996. This was a mutually convenient arrangement conducted on commercial terms. This transaction has no significance.
Turning then to the assets and liabilities the parties contributed at the commencement of cohabitation (February 1997). In relation to the husband, he introduced the following:
· Suburb G which was worth $510,000.00 and subject to a mortgage of $410,000.00, thus with an equity of $100,000.00;
· W Street which was worth about $205,000.00 and subject to a mortgage of $180,000.00, thus with an equity of $25,000.00;
· Suburb G contents – about $3,500.00;
· Honda motor vehicle – the value of which is not in evidence. Although it was contended by the husband that its insured value of $43,700.00 reflected its market value this assertion cannot be safely accepted; and
· Mr Roberts & Associates Pty Ltd – $153,750.00 – (as at 30 June 1997 - $280,500.00).
As at February 1997, he had the following liabilities:
· CBA Visa card …09 – $12,600.00;
· CBA Visa card …43 – $1,983.90;
· Lease attached to Honda motor vehicle;
· Harvey Norman – $236.87;
· Citibank – $16,341.00;
· NAB card – $10,301.00;
· Mastercard …09 – $6,691.00; and
· NAB overdraft account …54 – $14,237.00.
Although the value attributed to the practice as at 1 February 1997 ($153,750.00) is not in dispute in relation to that matter the valuer accountant (Mr P) said:
I have been unable to undertake a valuation of the business as at 1 February 1997 as there are no records available at that date. I have however undertaken a valuation as at 30 June 1996 on the assumption that the value of the business would lie somewhere between this and the value determined at 30 June 1997 and assumed an average of the two values represents a reasonable estimate of value at 1 February 1997 which amount equals $153,750. (report dated 18 January 2012, par 12)
Mr P noted the significant increase in income between the year ended 1996 ($448,555.00) and the year ended 1997 ($561,427.00) with a corresponding increase in expenses of only $20,000.00. Because he did not have a set of accounts as at 1 February 1997, he was unable to determine the point at which trade increased. As he explained:
… had it occurred before February then any potential purchaser would obviously have given more credence to the current years (1997) trading results. Conversely had it occurred after February then more weight would be provided from the prior year’s results which are similar to each other. (report dated 18 January 2012, par 171)
Hence his caution about the value of the practice as at 1 February 1997. Because of that uncertainty, the cyclical nature of the practice and there is no evidence of the period which resulted in the increased income, it is safer to determine the value of the practice as at 30 June 1997, for which records are available and the valuer’s opinion is not qualified in the manner discussed. In this regard, there is no dispute that as at 30 June 1997 the practice was worth $280,500.00. I infer that the husband’s other assets had the same value at this date as they did in February 1997.
Because of the overlap between the husband’s and the practice’s financial circumstances, it is fortunate that his liabilities as at 30 June 1997 can also be established. As at that date he had the following liabilities:
· Credit card and other liabilities identified at annexure 24 to the wife’s affidavit in the amount of $71,800.00;
· Visa card …09 – $13,500.94;
· CBA card …09 – $1,983.00,
· Car lease – not known;
· Harvey Norman – $236.87;
· Citibank – $16,341.15;
· NAB – $10,301.00;
· Mastercard – $6,691.00;
· NAB overdraft – $14,237.00;
· Company Q in the amount of approximately $8,321.00;
· Colonial State Bank – $75,397.00;
· National Mutual in an amount no greater than $4,489.34.
Although some of these amounts are calculated as at February/March 1997 the husband conceded that a number should be taken into account as at 30 June 1997. It follows that, calculated as at 30 June 1997, the husband introduced net assets worth about $185,000.00. It is noteworthy that his practice was growing in value and it undoubtedly provided the springboard for the parties’ ability to earn income and assume significant liabilities in their pursuit of wealth.
According to the wife, the husband also owed his trust account $50,000.00. Attached to her affidavit is a letter addressed “To Whom it May Concern” which the husband wrote on 4 December 1997. In the letter, he identified his assets and liabilities and commented that the wife was to be treated as “urgent second priority to the secured creditors” and as having an interest in his estate. It would appear that the letter was written at an emotional time with the wife, in effect, demanding security for $55,000.00 she loaned the husband during 1997. Essentially she was concerned to ensure that the husband’s former wife and children could not avoid repayment. In that letter, the husband identified as a liability “trust account – $50,000.00”. Long after the wife commenced these proceedings she alleged that this item reflected the husband’s habit of using trust money to meet gambling and other expenses. Given the gravity of this allegation, directions were made that she provides particulars. This she failed to do. Over the husband’s not unreasonable objection, at the commencement of hearing, the wife was granted leave to adduce evidence in chief on the point in relation to which she was directed to provide a proof of evidence. What unfolded were an ever expanding suite of allegations and no adequate attempt by her to provide a complete statement of evidence about the matter. For example, no mention was made of trust account defalcations in her affidavit filed 9 July 2009. Until she gave oral evidence no reference was made of conversations between her and the husband and her and Mr X, who was a senior professional in the practice, about trust account cheques drawn in favour of the husband.
In an attempt to deny that this evidence was, in effect, being made up on the run, the wife said she had provided written instructions to her solicitors about these matters which she anticipated would be included in her lengthy affidavit. In response to a call made by counsel for the husband for production of these instructions, counsel for the wife informed the Court that no such document was held by the wife’s solicitors. Curiously these exchanges prompted a submission by counsel for the husband that the wife had waived her client legal privilege in relation to her solicitors file to which access was sought but refused. With respect to the argument it is tolerably clear that the wife’s response, given during cross-examination, was given under compulsion of law and not in a manner inconsistent with her maintaining her privilege. No less relevantly, however, access to the solicitors file did not go to a fact in issue. According to counsel for the husband the fact in issue was the wife’s credit, that is whether she had provided written instructions. Unless counsel sought to impugn the wife’s solicitors credit, which he said he did not, the issue of whether the wife provided written instructions had been resolved in a manner inconsistent with the wife’s evidence being accepted. In short, granting access to the wife’s solicitor’s file could only have been relevant if the fact in issue was whether the response given by the wife’s solicitor was impugned and the solicitor’s credit somehow made relevant.
In any event, the husband denied withdrawing funds from his trust account other than when entitled and in accordance with clients’ instructions. He denied ever being indebted to the trust account, although he agreed with the wife’s evidence that early in their relationship he was indebted to the company. He said that the letter simply misstates the facts. After the trust account defalcation allegation was raised, the husband instructed Ms Y, who is the practice’s bookkeeper, to undertake a comprehensive search for old trust account bank statements and records. Having done so, she was unable to locate records prior to September 2003. The purpose of the search was to locate evidence that would exonerate the husband. His willingness to authorise such a comprehensive search is consistent with his denial that he misused client money.
In relation to the trust account allegation, the evidentiary onus fell to the wife. Because source documents were unavailable resolution of this issue primarily revolved around which parties’ evidence was most reliable. In relation to the wife, as will shortly be discussed, she claimed that at the commencement of cohabitation she had substantial cash at home, which claim when explored did not withstand scrutiny. In addition, she erroneously claimed that Suburb E was unencumbered earlier than was the case and initially failed to disclose the mortgage to her brother. The wife relied on a letter under the husband’s hand dated 1 June 2003 submitted by him to the ATO in an appeal that the ATO remit $26,724.14 interest on outstanding BAS. The particulars contained in the letter relate to completion of the wife’s sale of W Street. Simply put, the ATO was misled and not informed that W Street had settled and that the husband (via the wife) had sufficient funds to pay the debt. This material was introduced to impugn the husband’s credit as a witness, which in a sense, backfired. In her attack on the husband’s credit, the wife failed to disclose that she faxed the letter to the ATO in relation to which I infer that she well knew that the contents were incorrect. The point being that the wife was complicit in the misrepresentation to the ATO.
In relation to the reliability of the husband’s evidence, three matters stand out. Firstly, his Financial Statement contains significant errors, particularly in relation to the amounts paid on various mortgage liabilities. In short, he presented the amounts he pays monthly as being paid weekly. The husband obtained assistance from his practice manager to complete his Financial Statement and his evidence that these were simply mistakes she made and he adopted is accepted. They were, however, mistakes of some moment and indicate a cavalier approach by him to this important disclosure document.
At paragraph 132 of his affidavit, the husband listed items the wife removed at separation, which he says she has refused to return. Relevantly, this included a gold and stainless steel Cartier watch which he wore to the hearing and upon which the wife was vigorously cross-examined about its retention. Lest there be any confusion, notwithstanding his evidence and that he wore the watch, it was put to the wife that she had it. Again, his evidence demonstrated a cavalier attention to detail and was unreliable. Not only is this relevant to the reliability of his evidence generally, it particularly casts a shadow over the reliability of his evidence about items of personalty and a painting which he says he cannot locate at Suburb G and which he says the wife probably has in her possession. Just as the wife denied that she still had the watch she denied that she has these other items. On the issue of items removed and retained by the wife, as the watch evidence demonstrates, her evidence is more reliable. As a consequence orders will not be made in relation to these items.
Returning then to the reliability of the husband’s evidence, the most concerning matter relates to his 2000 Group Certificate of which there are two. The first, signed by him on 2 August 2000, discloses a gross salary in the amount of $126,894.00 and tax instalments in the amount of $52,151.68. The second, also signed by him, is dated 4 August 2000. It discloses a gross salary of $49,129.00 and tax instalments in the amount of $14,520.50. Even armed with a s 128 Evidence Act (Cth) 1995 certificate, the husband was unable to explain the reason for the differences. There is no doubt that the two certificates cannot be reconciled. In the absence of a satisfactory explanation from him about the differences, I infer that one certificate was intended to mislead someone.
The net effect of these matters is that there are deficiencies in aspects of both parties’ evidence. A point of difference, however, is that on oath the husband’s misstatements are accepted as mistakes borne out of sloppiness whereas the wife’s misstatements were deliberate. The effect of this is that I am not satisfied the husband defaulted on his trust account in the manner alleged by the wife (or at all) and that in relation to the practice, his evidence is more reliable about its day to day operations and the parties’ hours of work, than is the wife’s.
Returning then to the parties’ initial contributions. Calculated at February 1997, which I infer was unaltered as at 30 June 1997, the wife introduced the following assets:
· Suburb E which was unencumbered but the value of which is unknown. It will be recalled that Suburb E was acquired for $110,000.00 in 1989 and sold in 2003 for $385,000.00;
· Colonial State Bank account …81 – $33,134.00;
· Colonial State Bank account …0-81 – $1,347.00;
· Commonwealth account …70 – $4,119.00;
· Furniture at Suburb E;
· Toyota motor vehicle which was insured for $6,000.00 but the value of which cannot be determined;
· Cash in safe.
The wife did not have any liabilities.
It is the wife’s assertion that she had $50,000.00 cash in a safe at Suburb E. There is no dispute that she had cash in her safe, the contentious issue is the quantum. According to her, this money was accumulated from savings from employment. In cross-examination, she conceded that when she acquired Suburb E in 1989 her savings were effectively exhausted. In answer to questions about why she deposited monies with banks but kept cash in a safe, she explained that this was the way her family operated and she had always kept cash at home. It was in December 1994 that the wife made the final mortgage payment to her brother. Thus, she had in five years repaid him $40,000.00. When her other mortgage is taken into account this means that during a period when she had full-time employment in a modest clerical position, took in a boarder and did piecework garment work, in five years she repaid $70,000.00. The wife conceded that she repaid her brother as quickly as she could. It follows that she did not, during that period, build up significant cash assets which she kept at home. This means that the wife’s cash was built up from income she earned during 1995 and 1996. In this regard she stopped work as a clerk and hospitality worker by mid June 1996. Thereafter until February 1997, other than for a few hours work here and there in the husband’s practice for which she was paid $3,000.00, she was unemployed.
According to her, for the financial year ending June 2006 she had a taxable income in the amount of $26,000.00. I infer that this includes income she received from a boarder and garment work. Put simply, the wife did not establish that she had the capacity by February 1997 to build cash of anything like $50,000.00 which she kept at home, and I am satisfied she did not.
As has already been mentioned, from savings and I infer income she earned from the practice, in 1997 the wife advanced the husband $55,000.00. So that it is clear, the husband’s liabilities as at 30 June 1997 are calculated without this advance being taken into account. In other words, in the calculation of initial contributions whatever component of her savings which the wife used as part of the $55,000.00 is reflected as her asset. These funds were used in the practice and towards the husband’s debts. There is no doubt that at that time, the husband carried significant liabilities and, that without the ingestion of this capital by the wife he would have struggled to service the Suburb G loans and continue to develop the practice. However, the evidence does not establish that but for the ingestion of this capital that the husband would have lost the practice and/or Suburb G.
The effect of this is that the wife introduced identified assets worth about $45,000.00, plus cash savings, furniture and Suburb E. In closing addresses it was submitted on her behalf that the parties’ initial contributions were “much the same”. In money terms this is correct. Comparatively, however, although the introduction of the wife’s key capital assets (Suburb E) and savings are significant, these did not have the same capacity to produce income that the practice generated and are thus not as significant as the husband’s introduction of the practice.
The next transactions of significance are the wife’s purchase and refinance of W Street. This was a capital raising exercise which also saw the parties restructure assets and liabilities, the effect of which was that the husband transferred W Street to the wife and he was relieved of significant liabilities, responsibility for which then fell solely to the wife. Given the value of W Street and the amount borrowed from FAI, it is clear that neither W Street nor Suburb E was alone sufficient security for the amount borrowed. Permission by the wife for Suburb E to be used as collateral security for the $275,000.00 FAI mortgage, while an integral part to these transactions, is of marginally greater significance than the husband’s contribution of W Street. However, lest it be overlooked, the wife’s acceptance of sole liability for the FAI advance is a noteworthy contribution. In a similar vein, in relation to subsequent property acquisitions there is no doubt that her willingness to accept liability for significant borrowings and to income-split was an important component of the parties’ ability to pursue their shared vision for wealth creation through real estate. Although this has come to nought, their respective involvement in the partnership venture, in particular, requires acknowledgment.
Putting aside the husband’s inheritance and trauma insurance payment, from when the parties commenced cohabitation, their income came from the practice and rent and all income received was used for matrimonial purposes, as indeed were the husband’s inheritance and trauma insurance payment. Although, as will be discussed later, the wife is unhappy about the husband’s expenditure on gambling, this was not so extraordinary that a distinction should be drawn, for example, between that and the parties expenditure on what she described as their “very lavish lifestyle”.
The nature of the practice is not in issue and was accurately described by Mr P as follows:
The initial clients of the [professional] practice were individuals, predominantly employed […] where the husband had previously worked as a senior [professional]. […].
When the husband employed the wife she had no bookkeeping or management experience, which he taught her. For most of the period of cohabitation the wife was the office manager and responsible for hiring non-professional staff, debt collection and day-to-day non-professional management. In this regard, staff numbers fluctuated with the business cycle as did the time and effort spent by the parties in the practice. There is no doubt that it was the husband who was ultimately responsible for the practice, service delivery and growing its client base. In this regard, it was his idea to expand client services to include an associated financial business.
Because the wife is not professionally qualified in this field she could not be a director or shareholder in the practice. However, as an employee, the parties took the opportunity to income-split what would otherwise have been primarily the husband’s income. In those years she earned more than the husband or more than was attributable to her work in the practice, this reflected tax effective income-splitting and the allocation of income in relation to the parties’ various commercial ventures. It does not mean that in relation to her work in the practice this was the equivalent to or even more valuable than work performed by the husband. In this regard his professional qualifications, management of professional staff and professional work performed by the practice as well as his overall responsibility made his work worth much more in monetary terms than the work performed by the wife.
It was a significant component of the wife’s case that when the parties commenced cohabitation the practice was in financial difficulty and that the husband spent large amounts of time (and money) at a club. Her point being that rather than devoting adequate time to the practice, the husband socialised and gambled. It was her intervention which resulted in him, she says, re-engaging with the practice. The husband agrees that he regularly socialised at the club and gambled. There is no issue that the wife often accompanied him and, albeit to a materially lesser degree, she also gambled. Ultimately, after detailed examination of the husband’s financial records, the wife established no more than the husband conceded, namely, regular but not excessive expenditure gambling. She also established that the husband regularly attended the club, more extensively out of peak season and only modestly during peak periods of business activity. So that it is clear, both parties adjusted their work hours by reference to business activity. Thus, during peak periods both worked 50 hours plus per week. In non-peak periods, on average, the wife worked 10-15 hours per week, which was considerably less than the hours worked by the husband. In short, the wife did not establish that the husband neglected the practice and/or that it was her encouragement and involvement in the practice that saw it flourish.
It will be recalled that, in late 2007, the husband was diagnosed with prostate cancer. He was hospitalised in April 2008 and, having undergone surgery, he underwent radiation treatment. Between April 2008 and mid 2008, he was too ill to regularly attend the office. In order to care for him, the wife also reduced her hours. Nonetheless, she assumed responsibility for the approaching peak season, namely ensuring that there were sufficient staff and that the office was able to operate from 8.00 am to 8.00 pm six days a week. Throughout this period, she attended to urgent business matters, including payment of company accounts, payroll and staffing issues. Having returned to work fulltime by July 2008, the husband required a further course of radiation therapy. This involved daily attendance on medical practitioners for seven weeks during which he was basically unable to work. Again, during this period, the wife’s role in the home, particularly caring for him, increased, as did her responsibilities with the practice.
The husband received a trauma insurance payment, net of tax, in the amount of $167,680.00 of which approximately 25 per cent constituted loss of income. Put differently, approximately 75 per cent related to illness coverage. I infer that the insurance premiums were paid from income which would otherwise have been available to the parties and thus, to which the wife contributed indirectly during the years of cohabitation. Nonetheless the trauma insurance payment comprises a contribution predominantly by the husband which resulted from the trauma he suffered. In relation to the husband’s illness, his financial contribution of his insurance payment ultimately is assessed as having considerably greater significance than the wife’s indirect contribution and her consequential increased contributions.
Putting to one side the husband’s introduction of the practice, during the period the parties cohabited the husband made a significantly greater contribution to the income produced by the practice and its value than did the wife. The nature of this contribution becomes even more significant when it is appreciated that the practice paid significant rent to the partnership for S Street and supplemented the shortfall between rental income received from the partnership properties and expenses. Since separation the husband has worked full-time in the practice and been responsible for its management and ongoing development. His post separation contributions to the practice have been significant.
The husband’s inheritance is a contribution made solely by him.
When the parties separated their rental income and mortgage commitments (principal and interest) were as follows:
· $872,594.00 in three equity lines of credit secured by ING Bank over Suburb G. The monthly mortgage payment was $4,547.83 which, thereafter, the husband paid with income generated from the practice;
· $326,790.00 secured by St George Bank in respect of S Street which required a monthly payment of $5,700.00. Thereafter, exclusive of GST, the practice paid $13,300.00 per month rent which supported the various mortgages;
· $542,790.00 to Westpac Bank secured against Suburb R in relation to which the monthly mortgage payment was $2,817.00. Rental income for Suburb R was $2,167.00. The shortfall was met from income generated by the practice;
· $806,990.00 to Westpac Bank secured against Suburb T which required a monthly mortgage payment in the amount of $4,188.00. Until late 2010 Suburb T was rented for $3,380.00 per month, with the shortfall met from income generated by the practice;
· $395,607.00 to the National Australia Bank secured against C Street in relation to which a monthly mortgage payment in the amount of $7,934.80 was paid. When the parties separated C Street was leased for $6,600.00 per month with the shortfall met by income generated from the practice. C Street became vacant in May 2009 and has, since then, been vacant and supported by income generated from the practice.
In total, at separation, the parties owed $2,944,771.00 in relation to the various mortgages secured against their properties in relation to which the monthly mortgage payments amounted to $25,187.63. Once C Street became vacant, notwithstanding the high practice rental, and taking into consideration changes in interest rates, the monthly mortgage payments exceeded rental revenue by approximately $6,300.00 per month. When Suburb T became vacant this gap widened to around $9,700.00 per month.
Since separation, through income generated by the practice and rental income discussed above, the mortgage liabilities have been reduced from $2,944,771.00 to $2,648,048.00. It is the husband’s contention that this approximate $300,000.00 post-separation reduction is a contribution made by him. He also claims a significant post-separation contribution by virtue of superannuation payments which, rounded out, have grown from $108,000.00 at separation to $120,000.00 at hearing. During the intervening period he withdrew $100,000.00 from superannuation which he used to pay legal costs and is included in the property pool as his asset. The effect of this is from superannuation, post separation the husband has contributed an additional $112,000.00 to the property pool.
Counsel for the wife appropriately accepted the submission made by counsel for the husband that the combined effect of post separation reduction in mortgage liabilities and superannuation/legal costs constitutes a $412,000.00, and thus significant, addition to the property pool. However, it is not accepted that this is a contribution made solely by the husband. While it is true that he continued to operate the practice and generate the income which constitutes a significant component of the funds used to pay down the mortgages and increase superannuation, the wife’s pre-separation contributions to these assets cannot be ignored. By the time she departed the practice, there is no doubt that she had contributed to it financially and as an employee and, thus its capacity to generate income during and after separation. There is also no doubt that she contributed in a significant way to the acquisition of parcels of real estate which thereafter generated income. In these circumstances, there is a moderate distinction (because he had continued to operate the practice in the husband’s favour) between the husband’s and wife’s contributions to mortgage reduction and superannuation growth post separation.
Albeit from practice income, post separation the husband has paid considerable spousal maintenance to the wife.
On balance, I am satisfied that overall the husband’s financial contributions significantly exceed those made by the wife.
The wife was far more involved running the parties home and as a homemaker than he was. As was mentioned earlier, she also assumed significant responsibility for his care while he was ill. The husband’s contributions as a homemaker, including to the maintenance of Suburb G are set out at paragraph 97 of his affidavit. When these matters are balanced against each other, I am satisfied that throughout cohabitation the wife was overwhelmingly responsible for homemaking and her contribution in this regard, significantly exceeds the husbands.
Neither party gave evidence of other contributions made on their behalf.
As has already been alluded to, although the parties made approximately similar initial contributions, particular weight is attached to the husband’s introduction of the practice to which thereafter, although both parties have contributed to its growth, he made the greater contribution. During cohabitation, income generated from the practice enabled the parties to live an extravagant lifestyle, embark on a property investment venture and to service significant debts. Although the acquisition of investment property has ultimately been financially disadvantageous, the parties’ ability to pursue this joint venture and maintain these properties has been underpinned by the income produced from the practice. In a similar vein the husband’s trauma insurance payment attracts weight in his favour. When these and the other findings I have made about the parties respective contributions, during cohabitation and since separation, are taken into account, the effect overall is that the husband has made a materially greater contribution than the wife.
The orders will not affect either party’s earning capacity.
The overall effect of my findings expressed as a percentage of the net value of the parties’ property as at the date of hearing, is that the husband’s contributions favour him 60 per cent compared to the wife’s 40 per cent.
Section 75(2) factors
The wife sought a 15 - 20 per cent adjustment pursuant to s 75(2) in her favour. She sought the higher figure if her add-back arguments failed (which they have) and thus the asset pool was smaller than asserted by her. The adjustments sought by the wife relied upon the husband’s greater earning capacity and that the parties should each enjoy a standard of living which is reasonable. It was the husband’s contention that there should be an adjustment in her favour no greater than 10 per cent.
At 56 years of age the wife has not had paid employment since April 2009. Other than by the husband, she has not been employed since about June 1996. The wife does not have formal qualifications and following separation, she has not looked for work. In that period, she has devoted herself to these proceedings in relation to which she has diligently worked through financial records, prepared schedules in relation to her various contentions about the use of marital funds and apparently cross-checked virtually every representation made by the husband. It is contended by the husband that this demonstrates some clerical and financial acumen which could be attractive in the employment marketplace.
The wife has also felt anxious and depressed. The parties appointed Dr Z, who is a psychiatrist, to express an opinion about “the state of the wife’s mental health and specifically whether or not such mental health would have any impairment upon her earning capacity”. In his unchallenged evidence found in a report which is dated 20 December 2011, Dr Z said of the wife, that as at December 2011 she presented with “… symptoms and signs consistent with the presence of depression and heightened anxiety of inappropriate degree indicating psychopathology” (report, p 10). This constitutes an adjustment disorder “with anxiety and depression associated with co-morbid alcohol excess”. It is his opinion that the wife’s mental health compromises her capacity for employment in relation to which he doubted her present capacity to function in the workforce. Because she is phobic about taking medication, alternative treatments, such as psychological intervention, would be required. Dr Z explained that psychological intervention in the absence of medication is likely to have a lower success rate and require more prolonged treatment. With treatment, while her prognosis is likely to improve and employment the ultimate goal he said that this “is something that cannot be assured”. Even if the wife achieved improved mental health, Dr Z said “… the propensity for relapse regardless of circumstances which would compromise employment would be a matter for consideration – past history makes relapse a likely probability”. He highlighted that the wife’s history of alcohol excess and post-separation inactivity are poor prognostic factors.
Dr U, who is an orthopaedic surgeon, was appointed to assess “the state of the wife’s rotator cuff injury and repair, and specifically whether or not such condition would have any impact upon her earning capacity”. This related to surgery in late 2009 to repair and reconstruct the wife’s right rotator cuff mechanism. The surgery was largely uneventful and her recovery satisfactory. Unfortunately, the wife suffered a further injury in early 2010 to the right long finger. Dr U said the wife continues “to suffer from a range of digit motion [to the right long finger] that is clearly a cause for impairment of her right hand function”.
In relation to her capacity for paid employment, it is Dr U’s unchallenged opinion that:
18.2[The wife] should not perform any working activity that requires there to be any elevated use of the right upper extremity above shoulder height. Furthermore, [the wife] should avoid lifting objects above shoulder height that weigh more than 3 kg and the lady should generally avoid lifting objects that weigh more than 10 kg. [The wife] should also avoid pushing or pulling wheeled objects weighing more than 15-20 kg.
18.3[The wife] has also suffered an injury to her right hand and the lady has suffered from an impairment of the dexterity of her right hand that can be associated with the injury that has been suffered to the right long finger. It can be recommended that [the wife] does avoid undertaking any work activity that requires there to be repetitive and fine dextrous use of the right long finger.
18.4I have formed the opinion that [the wife’s] earning capacity has been compromised by the injuries that have been suffered to the right shoulder girdle and to the right long finger. The injury that has been suffered to the right shoulder girdle region is the more significant cause for any loss of earning capacity. … (p 11)
Dr U said that the wife has achieved maximum medical improvement, in relation to which further medical treatment will not reduce her degree of physical impairment.
The evidence given by both Dr U and Dr Z is accepted. When the wife’s work history in clerical work and garment work is considered in the context of the medical evidence in relation to her physical incapacity, it is apparent that it is highly unlikely that she could return to these areas of endeavour. When her mental health issues are taken into account it is highly unlikely that in the future she will have paid work. This is a finding to which significant weight is attached.
It will be recalled, that in 2007 the husband was diagnosed with prostate cancer following which he underwent surgery and radiation treatment. A benign mass was identified on his left kidney in early 2011 which has not required treatment. The husband has high cholesterol for which he takes medication and is a Type 2 diabetic. He occasionally uses an asthma puffer and in 2006 a malignant melanoma was removed from his scalp. These health complications are a source of worry for the husband and, at 62, he is concerned about his capacity to continue to work and/or run the practice. In addition, in December 2011 he fell disembarking from an aircraft and fractured his left elbow. He recently underwent surgery for ligament reconstruction and other damage caused in the fall. When the husband gave evidence his left arm was in a sling. However, apart from needing to take time from the practice for surgery, the husband’s health complications have not required him to reduce his hours of work or delegate responsibility for the practice to others. It appears that his diabetes and cholesterol are managed appropriately and, for so long as his cancer is in remission these complications do not impact upon his ability to continue to work in at least the short-medium term.
The combination, however, of age and the constellation of the husband’s health complications make it unlikely that he will be able to work at his current capacity for more than the medium term. He is, however, in the fortunate position that he could continue as a principal of the practice whilst delegating to others, client services and the like.
I have already made findings about the parties’ assets and liabilities. As a consequence of contribution and other s 79(4) findings, excluding C Street and Suburb R, rounded out the wife will have assets worth about $706,000.00 and the husband will have assets worth about $1,058,000.00. When the two excluded properties are taken into account the wife is likely to receive something in the vicinity of an additional $164,000.00 - $191,000.00 and the husband $245,000.00 - $287,000.00. Otherwise, the wife’s financial circumstances are set out in her Financial Statement filed 18 January 2012. Although she is entitled to receive rental income and is liable in relation to the parties’ mortgages, the vast majority of the income from the investment/commercial properties is received by the husband, he pays all mortgages and spousal maintenance. In reality, the wife’s income constitutes spousal maintenance and $230.00 per week from Suburb R from which she spends approximately $742.00 per week on average weekly expenses, plus amounts for health and car insurance in relation to her Porsche lease.
From the practice the husband earns an average $6,565.00 per week, together with $900.00 motor vehicle allowance and $889.00 superannuation. When rental income is taken into account, his total average weekly income is in the vicinity of $11,566.00. Calculated weekly, he pays personal income tax of approximately $2,600.00, life insurance of $574.00 and $54.00 car insurance. The difficulties with the husband’s Financial Statement, namely including as weekly amounts personal expenditure paid monthly, particularly the ING loans have already been discussed and essentially it is a document about which caution is appropriate. On the information contained in the husband’s Financial Statement, it would not have been possible for him to make the capital mortgage payments discussed earlier and spend money on his former wife and children. Doing the best that I can with his evidence, the husband is likely to continue to earn on an ongoing basis comparable income from the practice as well as income from the financial business. In this regard he told Mr I that the financial arm of the business was already producing income and that he hoped this would develop into income in the amount of approximately $300,000.00 per annum, a portion of which would be available to him. So that it is clear, while the amount of income which will ultimately be generated is far from clear, the husband’s success in the practice to date suggests there is reason for optimism that this too may be a reasonably fruitful financial venture. Even without this income the husband should receive sufficient income to meet his necessary expenses, service his ongoing liabilities and maintain a reasonably good standard of living. These findings weigh significantly in favour of an adjustment in the wife’s favour.
Each party lives alone and neither has financial responsibilities to any other person.
Neither party is eligible for a pension or allowance of the type referred to in s 75(2)(f). Their superannuation interests have already been taken into account.
Post separation, both parties have maintained an appropriate standard of living, albeit the wife has relied upon spouse maintenance, rental income from Suburb R, loans from friends and savings. To the extent that the wife argued in favour of an adjustment which would enable her to enjoy indefinitely the lavish lifestyle enjoyed by the parties during cohabitation, her claim is rejected. In this regard, both parties appeared to accept that their lifestyle was expensive, which it undoubtedly was. This lifestyle coincided with investment in properties that produced rental income and probably the vain hope that these properties would increase in value. There seems no reason to doubt that their lavish lifestyle was a contributing factor to their significant level of debt. Simply put, the wife has not established that it would be just and equitable to make a further adjustment to enable her to resume her “very lavish” lifestyle. It is, however, appropriate that she has a reasonable standard of living.
The only other factor which requires consideration but little weight is that pending implementation of the property orders, which includes the sale of C Street and Suburb R, the husband will be required to continue to meet mortgage payments and other statutory expenses on all properties. From the practice and rental income this he can afford to do.
Having regard to all of the s 75(2) factors, it is appropriate that there is an adjustment in the wife’s favour of 13 per cent, which means that she will receive 53 per cent of the net property compared to the husband’s 47 percent. This 13 per cent adjustment reflects the cumulative outcome of the findings made pursuant to s 75(2): Tomasetti & Tomasetti (2000) FLC 93-023. To test the measure of that assessment, it should be viewed in monetary terms: Waters & Jurak (1995) FLC 92-635. Because the value of C Street cannot be determined and selling price of Suburb R is similarly uncertain, it is not possible to state with precision the monetary effect of this adjustment. As a general guide, however, the wife will receive from the net (non C Street and Suburb R) property an additional $229,322.73 plus an additional 13 per cent of the net (sale price less mortgage and reasonable selling costs) C Street sale proceeds. After selling costs and the mortgage little, if anything, is likely to be available from Suburb R. Overall, this adjustment is an appropriate recognition of her age, health issues, the husband’s superior income earning capacity, lifestyle and the probability that she will not return to the paid workforce.
Section 79(2)
Because the Court must consider the actual orders, not just the percentage distribution, under s 79(2) justice and equity in cases like this requires that the Court stands back and looks carefully at the outcome of the s 79(4) and s 75(2) process. It is at this stage that the Court considers the actual structure of the orders. I will not repeat the findings made thus far. It is sufficient to refer to those which relate to the parties’ roughly equal initial contributions, the weighting in favour of the husband’s introduction of the practice, the duration of the period which has elapsed since the parties commenced cohabitation and during which they worked hard in the various ways already considered, the husband’s lump sum payments introduced during cohabitation, the management post separation by him of the parties’ assets which has resulted in significant debt reduction, the parties ages and health issues, the husband’s capacity to work in and/or manage the practice for some years to come and the probability that the wife will not have future paid employment. With these particular factors in mind, I am comfortably satisfied that an outcome which distributes the available assets 53 per cent to the wife and the balance to the husband is just and equitable.
Because the value of C Street is not known, the parties’ entitlements will be calculated excluding it and its NAB mortgage. As has already been mentioned, Suburb R will also be sold. Although its value is agreed its selling price cannot be known and it is thus appropriate to calculate the parties’ entitlements with that property and its mortgage also being disregarded. When C Street and Suburb R are sold, the respective net sale proceeds shall be distributed 53 per cent to the wife and 47 per cent to the husband.
Excluding C Street, Suburb R and their mortgages, the parties have net property worth $1,764,021.00. From this the wife will receive the following:
Assets
· Suburb T apartment $850,000.00
· CBA Account Nil
· IAG shares $546.00
· BBL shares $530.00
· Porsche $70,000.00
· Contents $42,981.00
· Paid legal costs $215,000.00
· Spousal maintenance arrears $15,537.00
Total $1,194,594.00
Liabilities
· Suburb T Westpac mortgage $813,696.00
· Premier Finance $183,000.00
· NAB Mastercard $829.00
· AMEX $1,916.00
· Westpac Porsche Lease $55,000.00
Total $1,054,441.00
Superannuation
· Colonial First$42,120.00
TOTAL NET PROPERTY $182,273.00
The wife is entitled to receive $934,931.13 which means that the husband must pay her an adjusting amount of $752,658.13.
Calculated on the same basis the husband will receive:
· Suburb G $880,000.00
· S Street $770,000.00
· NAB Account …32 $46.00
· NAB Account …74 $10.00
· IAG shares $754.00
· CBA shares $4,106.00
· OZ Minerals Limited shares $8,783.00
· Porsche $145,000.00
· Mr Roberts & Partners P/L $435,304.00
· Roberts Partnership Nil
· Contents – Suburb G $63,740.00
· Paid legal costs $100,000.00
· Company assets surplus to valuation $153,813.00
· Company debt to partnership $112,354.00
Total $2,673,910.00
Liabilities
· Suburb G ING mortgage $100,000.00
· Suburb G ING mortgage $349,483.00
· Suburb G ING mortgage $388,634.00
· S Street SGB mortgage $211,411.00
· Mastercard $8,720.00
· AMEX $16,690.00
· Porsche Lease $114,710.00
· Loan account $7,033.00
· Maintenance arrears $15,537.00
Total $1,212,218.00
Superannuation
· Colonial First $120,056.00
TOTAL NET PROPERTY $1,581,748.00
LESS payment to wife $752,658.13
TOTAL $829,089.87
Of course, the husband will receive 47 per cent of the net sale proceeds of C Street and Suburb R.
In relation to payment of the adjusting amount, the husband’s significant indebtedness and the illiquid nature of his assets makes it appropriate that he has four months within which to make the payment. If payment is not made within that time interest calculated in accordance with the Family Law Rules 2004 payable on the amount outstanding is appropriate. Four months will accordingly become the general timeframe for transfer of interests.
It is the husband’s desire to retain Suburb G and S Street, both of which are encumbered. Consistent with ending the parties’ financial relationship, he will be required to refinance the mortgages secured upon those properties retained by him. Similar issues arise in relation to the wife’s retention of Suburb T. In this regard it will not be until she receives her share of the C Street sale proceeds that she will be able to discharge the mortgage secured against that property. Thus, it is at that point that the wife will be required to have discharged or refinanced the mortgage. Excluding the Premier Finance loan, so that it is clear, each party will be required to either discharge or refinance into their sole name all mortgages secured against any property retained by him or her; thus freeing the other party from any subsequent liability arising therefrom. The wife is required to discharge or refinance the Premier Finance loan.
It is appropriate that until Suburb R is sold, the parties continue to receive an equal share of its rental income.
Pending receipt by the wife of her entitlements pursuant to these orders she sought spousal maintenance in the amount of $3,000.00 and, pending the sale of various properties that the husband continue to pay necessary outgoings for each property. Submissions did not address the wife’s need for spousal maintenance in that amount nor the husband’s capacity to pay spousal maintenance and property outgoings. As it will take some months to give effect to the transfers of property and for the wife to receive payment from the husband, there is no doubt that she continues to require financial support and that the mortgage and other necessary outgoings must be met during the interregnum. Interim spousal maintenance orders were made in August 2011, in relation to which the parties’ circumstances have not materially changed and I am satisfied, that the appropriate and just course is for these to continue until the wife receives the adjusting payment from the husband. At that point the husband’s expenses will increase significantly (I infer that he will borrow the entire amount) and the wife will have a substantial sum which she can use to discharge the Premier Finance loan, reduce the mortgage on Suburb T and use towards living expenses. If, however, in order to meet her necessary expenses the wife uses a significant component of the adjusting amount, even when she receives the C Street and Suburb R payments, she will be unable to discharge her liabilities. Thus, it is not until she receives her share of C Street and the adjusting amount, that she will be unable to establish that she cannot meet her reasonable needs and/or that the husband should no longer contribute towards her support (s 72). In those circumstances, from payment of the adjusting amount until settlement of the sale of C Street, the husband’s spousal maintenance liability will be reduced to $250.00 per week. This strikes a proper balance between the extent to which the wife will deplete capital and the husband’s financial circumstances after he pays her the adjusting amount.
Of course, the husband will continue to receive the income from the properties and assets he will retain (plus half of Suburb R and the entirety of C Street in the unlikely event it is tenanted) as well as continue to pay mortgage instalments, insurances and statutory outgoings for the real estate owned by the parties. So that it is clear, this includes Suburb T until he makes the adjusting payment to the wife and C Street until it is sold. In relation to mortgage instalments, subject to the lenders agreement this need only cover interest.
Before entering the proposed orders, which are set out below, these reasons will be published to the parties to ensure that my calculations and findings are accurately reflected therein. It is appropriate to observe that in relation to the orders for the sale of property the parties’ proposals differ yet the evidence provides little foundation for determination of the differences. The parties’ chronic inability to negotiate in relation to the sale and letting of C Street makes it plain that orders which require consensus will almost certainly incur additional legal costs and involve delay. As a general observation those proposed by the husband would appear to limit the prospect of further disputation.
It is also apparent that C Street has been listed at too high a price and that in order to meet the market a lower price is required. While this tends to support the husband’s contention that that property should be listed at $620,000.00 there is insufficient evidence to determine that this is what it is worth. The mechanical orders for sale will thus require further submissions. Because the husband will continue to pay outgoings pending the sale of the two properties referred to and the wife’s insistence that C Street be listed at $690,000.00 was clearly a mistake, should he seek it, the husband will manage disposition of those properties.
Proposed orders
1.No later than 16 weeks from the date of these orders the husband shall do all things and sign all documents required to effect a transfer to the wife of the whole of his right, title and interest in the property known as … H Street, Gold Coast Suburb T, in the State of Queensland, being the whole of the property contained in Certificate of Title Folio Identifier … (“the Suburb T apartment”).
2.No later than 16 weeks from the date of these orders and simultaneously upon the husband’s compliance with Order 1 he shall pay to the wife the amount of $752,658.13.
3.Upon the husband complying with Orders 1 and 2, the wife shall indemnify the husband in respect of the mortgage registered upon the title of the Suburb T apartment in favour of Westpac Banking Corporation (“Westpac”) as dealing number … and simultaneously discharge or refinance into her sole name the Premier Finance Australia loan.
4.No later than 16 weeks from the date of these orders the wife shall do all things and sign all documents required to effect a transfer to the husband of the whole of her right, title and interest in the property known as … D Street, Suburb G, in the State of New South Wales, being the whole of the property contained in Certificate of Title Folio Identifier … (“Suburb G”).
5.Simultaneously with the wife’s compliance with Order 4, the husband shall refinance into his sole name or discharge all mortgages secured against Suburb G, including in favour of Firstfolio Mortgages Australia Pty Ltd being dealing number … .
6.That within 16 weeks from the date of these orders the wife shall do all things and sign all documents required to effect a transfer to the husband of the whole of her right, title and interest in the property known as … S Street, Suburb B, being the whole of the properties contained in Certificates of Title Folio Identifiers … and … (“S Street”).
7.Simultaneously upon compliance by the wife with Order 6, the husband shall refinance into his sole name or discharge the mortgage registered in favour of St George Bank Ltd being dealing number … .
8.The husband and wife shall within 7 days do all acts and things necessary and sign all documents required to sell the property known as … C Street, Suburb B (“C Street”) being the whole of the property contained in Certificate of Title Folio Identifier … for the best price reasonably attainable and, without limiting the generality of the foregoing:
(a)list C Street for sale with J Real Estate Agents (or with such other agent as the parties may agree) for sale by private treaty for a period of 60 days after such listing;
(b)instruct K Law Firm (or other firm of solicitors as the parties may agree), to act in relation to the sale of the property;
(c)set a sale price of $XXXX (or such other price as the parties may otherwise agree);
(d)co-operate with the agent in the presentation and promotion of the property for sale in relation to which the husband shall pay such marketing costs as are required to be paid in advance; and
(e)maintain the property in a presentable state of repair.
9.In the event that C Street is not sold within 67 days, the parties shall instruct the said agent (or such other agent as the parties may agree) to list the property for sale by public auction at the earliest possible date thereafter and shall sign all documents necessary and do all acts and things required to sell the property by such public auction and shall, without limiting the generality of the foregoing:
(a)execute all documents requested by the auctioneer for the sale of the property;
(b)nominate to the auctioneer a reserve price for the sale, such reserve price to be agreed upon by the parties and failing agreement to be the mean value of two estimates of value by estate agents being one agent nominated by the wife and another nominated by the husband, such estimates to be not more than 14 days apart;
(c)instruct K Law Firm (or any other firm of solicitors that the parties may agree), to act in relation to the sale;
(d)attend at the auction sale and negotiate with the highest bidder in the event that the reserve price is not reached and to accept a price not less than 10% lower than the reserve price;
(e)execute all contracts and documents necessary to complete the sale; and
(f)co-operate in every way with the auctioneer in relation to the auction.
10.In the event that C Street is not sold either:
(a)pursuant to private treaty in accordance with Order 8; or
(b)pursuant to auction sale in accordance with Order 9; or
(c)within 7 days of the date of the auction by negotiation with the highest bidder, or otherwise;
then the husband and the wife shall do all acts and things necessary and execute all documents required to cause to hold a second auction of the property within 3 months after the date of the first auction in relation to which the provisions contained in Order 9 shall apply.
11.Upon settlement of the sale of C Street, the parties shall do all acts and things necessary to distribute the proceeds of sale in the following manner and priority:
(a)in discharge of the mortgage to National Australia Bank Limited, registered as dealing number … ;
(b)in payment of contract adjustments incurred in the sale, if any;
(c)in payment of agent’s commission and any auction fees on sale;
(d)in payment of legal costs and disbursements incurred in the sale;
(e)reimbursement to the husband of funds paid pursuant to Order 8(d);
(f)in payment of 47% of the balance to the husband; and
(g)in payment of the remaining proceeds of sale, to the wife.
12.If she has not already done so, simultaneously upon distribution of the sale proceeds of C Street the wife shall refinance into her sole name or discharge Westpac dealing number … .
13.That within 7 days of these orders, the husband and wife shall appoint a real estate agent in Queensland to sell … F Street, Gold Coast Suburb R in the State of Queensland being the whole of the property contained in Lot … on RP… Parish … County … Title Reference … (“Suburb R”).
14.That in the event the husband and wife are unable to agree on a real estate agent to conduct the sale of Suburb R, the wife shall within 10 days of the date of these orders submit to the husband the names of three accredited real estate agents in the Suburb R local area, for the husband to choose, within 7 business days thereafter one agent who is to be the agent appointed to conduct the sale.
15.That Suburb R shall be listed for sale by private treaty for a period of 90 days at a price to be agreed on in writing between the parties, and failing such agreement at $XXXX and, without limiting the generality of the foregoing:
(a)instruct K Law Firm (or other firm of solicitors as the parties may agree), to act in relation to the sale of the property;
(b)co-operate with the agent in the presentation and promotion of the property for sale in relation to which the husband shall pay such marketing costs as are required to be paid in advance; and
(c)maintain the property in a presentable state of repair.
16.In the event that Suburb R fails to sell within a period of 90 days, then the parties shall do all things required to cause the property to be sold by public auction at the earliest possible date thereafter and shall sign all documents necessary and do all acts and things required to sell Suburb R by such public auction and shall, without limiting the generality of the foregoing:
(a)execute all documents requested by the auctioneer for the sale of Suburb R;
(b)nominate to the auctioneer a reserve price for the sale of Suburb R, such reserve price to be agreed upon by the husband and the wife and failing such agreement to be the mean value of two estimates of value by estate agents being one agent nominated by the wife and another agent nominated by the husband, such estimates to be not more than 14 days apart;
(c)instruct K Law Firm (or any other firm of solicitors that the parties may agree), to act in relation to the sale;
(d)attend at the auction sale and negotiate with the highest bidder in the event that the reserve price is not reached and to accept a price not less than 10% lower than the reserve price;
(e)execute all contracts and documents necessary to complete the sale; and
(f)co-operate in every way with the auctioneer in relation to the auction of Suburb R.
17.In the event that Suburb R is not sold either:
(a)pursuant to private treaty listing in accordance with Order 15; or
(b)pursuant to auction sale in accordance with Order 16; or
(c)within 7 days of the date of the auction by negotiation with the highest bidder, or otherwise;
then the husband and the wife shall do all acts and things necessary and execute all documents required to cause to be held a further auction of Suburb R within 3 months after the date of the first auction in relation to which the provisions contained in Order 9 shall apply.
18.Upon settlement of the sale of Suburb R, the parties shall do all acts and things necessary to distribute the proceeds of sale of Suburb R in the following manner and priority:
(a)in discharge of the mortgage to Westpac Banking Corporation registered as dealing number … ;
(b)in payment of contract adjustments incurred in the sale, if any;
(c)in payment of agent’s commission and any auction fees on sale;
(d)in payment of legal costs and disbursements incurred in the sale;
(e)reimburse the husband for any payments made pursuant to Order 15(b);
(f)in payment of 47% of the balance to the husband; and
(g)in payment of the remaining proceeds of sale, to the wife.
19.That pending the sale of C Street and Suburb R, and compliance by the husband with Order 2, the husband shall pay as and when they fall due in relation to Suburb G, Suburb T, S Street, C Street and Suburb R the following:
(a)excluding the loan to Premier Finance, mortgage instalments (interest only if the mortgagee agrees);
(b)council rates;
(c)water rates;
(d)body corporate levies and fees (if any); and
(e)land tax.
20.Upon compliance by the husband with Order 2 the wife shall pay all outgoings in relation to Suburb T, including the Westpac mortgage (interest only if the mortgagee agrees) referred to in Order 3.
21.In the event that the husband fails to comply with Order 19, any arrears shall be paid at settlement of the sale of each property from the husband’s share of the net sale proceeds.
22.Pending the sale of C Street and Suburb R, the husband and the wife are restrained from charging, mortgaging or otherwise encumbering either of those properties to a greater extent than as at the date of hearing without first obtaining the written consent of the other party.
23.Upon payment by the husband of the amount due to the wife pursuant to Order 2, and in the event that settlement of the sale of C Street has not been completed, Order 1 of the orders dated 17 August 2011 is varied so that the amount of interim spousal maintenance payable by the husband to the wife is reduced to $250.00 per week.
24.Upon settlement of the sale of C Street and compliance by the husband with Order 2 all orders for the payment of spousal maintenance (excluding Orders 2 and 3 dated 17 August 2011) are discharged.
25.In the event that at settlement of either C Street and/or Suburb R there are arrears of spousal maintenance or interest pursuant to Order 26 payable by the husband, any arrears shall be paid at settlement of the sale of each property from the husband’s share of the net sale proceeds.
26.In the event that the husband fails to make the payment due to the wife pursuant to Order 2 within the appointed time, interest, calculated in accordance with the Family Law Rules 2004, is payable on the balance outstanding from the due date.
27.If either party refuses or neglects to sign any document necessary to implement these orders, that a Registrar sign the necessary document on behalf of the defaulting party pursuant to section 106A of the Family Law Act 1975 (Cth).
28.Unless otherwise specified in these orders each party is solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the bank’s records thereof, superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age and working future provides the conditions for payment out of such payment.
29.Subject to any application for costs, all outstanding applications are dismissed.
I certify that the preceding one hundred and thirty six (136) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan delivered on 2 May 2012
Associate:
Date: 4 May 2012
Key Legal Topics
Areas of Law
-
Family Law
Legal Concepts
-
Appeal
-
Costs
-
Jurisdiction
-
Procedural Fairness
0
3
2