SANDERS & SANDERS
[2010] FMCAfam 1289
•26 November 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SANDERS & SANDERS | [2010] FMCAfam 1289 |
| FAMILY LAW – Property – lengthy marriage – substantial financial assistance from husband’s parents throughout parties’ marriage – recoverable debts versus contributions – allegations of waste cf imprudent decisions. |
| Family Law Act 1975, ss.75(2), 79(4) Federal Magistrates Court Rules 2001, Parts 14 & 24; Rule 24.03 |
| AB v GB (No 2) (2006) 34 Fam LR 82 Bremner & Bremner (1995) FLC ¶92-560 Clives v Clives (2008) 40 Fam LR 273 In the Marriage of Chang & Su (2002) 29 Fam LR 406 C v C (2005) FLC ¶93-220 Ferraro & Ferraro (1993) FLC ¶92-335 In the Marriage of Gosper (1987) 90 FLR 1; (1987) 11 Fam LR 601; (1987) FLC ¶91-818 Gould & Gould (2007) FLC ¶93-333 In the Marriage of Kessey (1994) 18 Fam LR 149; (1994) FLC ¶92-495 Kowaliw & Kowaliw (1981) FLC ¶91-092 AJO v GRO (2005) 191 FLR 317; (2005) 33 Fam LR 134; (2005) FLC ¶93-218 In the Marriage of Pierce (1998) 24 Fam LR 377 Poulos v Svoboda (2005) 33 Fam LR 458 |
| Applicant: | MS SANDERS |
| Respondent: | MR SANDERS |
| File Number: | CAC 2469 of 2007 |
| Judgment of: | Neville FM |
| Hearing date: | 5 May 2010 |
| Date of Last Submission: | 26 May 2010 |
| Delivered at: | Canberra |
| Delivered on: | 26 November 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr T Tockar |
| Solicitors for the Applicant: | Dobinson Davey Clifford Simpson |
| Counsel for the Respondent: | Ms A Tonkin |
| Solicitors for the Respondent: | Barker & Barker |
ORDERS
Within 60 days of the date of these Orders, the Husband pay the Wife the sum of $211,333.
Save for the property known as [L], the Wife retain all the assets in her possession or control, and that she be responsible for her own liabilities.
The Wife assign and transfer to the Husband all her right, title and interest in the partnership known as [Mr & Ms Sanders].
The Husband retain all the assets in his possession or control, including the items at [L] and be responsible for his own liabilities (including any alleged loan or loans from his parents or the company).
In the event of the Husband, within 60 days of Orders being made herein, paying to the Wife the sum of $211,333, the Wife do all things necessary to transfer to the Husband all her right, title and interest in the property known as [L].
In the event of the aforesaid payment not being made by the Husband to the Wife, then the parties do all things necessary to sell [L] and from the net sale proceeds, the Wife be paid a cash sum that will result in her having 41% of the net asset pool, and the Husband to retain the balance.
From the date of these orders, the Husband is solely liable for the following outgoings on the property known as [L]:
(a)all rates, water and sewerage expenses;
(b)any land lax;
(c)the premiums for the continuation of current insurance policies; and
(d)all mortgage payments, as and when they fall due and any and or all arrears.
In the event that the Husband fails to comply with Order (1) herein, the Husband and the Wife do all acts and sign all such documents as may be required to effect a sale of the property located at [L] (“the sale”) and:
(a)The property shall be listed for private sale with a real estate agent as agreed between the parties.
(b)The listing price for the property shall be as agreed between the parties and if there is no agreement the listing price shall be recommended by the real estate agent appointed by the parties.
(c)Upon completion of the sale, the proceeds of the sale be applied in the following order:
(i)first, to pay all costs, commissions and expenses of the sale;
(ii)second, to discharge the mortgage encumbering the property;
(iii)third, an amount paid to the Wife that results in her having 41% of the net asset pool, save that the value of [L] shall be determined by the value of the net proceeds of sale and interest payable on the amount to the Wife as calculated in accordance with the Family Law Rules; and
(iv)fourth, the balance to be paid to the Husband less any arrears of mortgage as at the date of settlement.
In the event the property has not been sold within ninety (90) days of the date of these Orders then the Husband and the Wife shall make arrangements and do all such acts and sign all such documents and equally pay all moneys necessary to procure a sale by public auction on the following terms:
(a)the auctioneer shall be as agreed between the parties and failing agreement as recommended by the real estate agent;
(b)the auction shall take place within 60 days of the date this clause comes into effect.
(c)the reserve price shall, unless agreed upon by the parties, be as proposed by the auctioneer;
(d)upon completion of the sale, the proceeds of the sale be applied in the following order:
(i)first, to pay all costs, commissions and expenses of the sale;
(ii)second, to discharge the mortgage encumbering the property;
(iii)third, an amount paid to the Wife that results in her having 41% of the net asset pool, save that the value of [L] shall be determined by the value of the net proceeds of sale and interest payable on the amount to the Wife as calculated in accordance with the Family Law Rules; and
(iv)fourth, the balance to be paid to the Husband less any arrears of mortgage as at the date of settlement.
Unless otherwise provided for by these orders and save for the purpose of enforcing any monies under these orders, the Wife is entitled to be the sole legal and beneficial owner of all property in her possession and/or control including but not limited to:-
(a)the household contents and personal items in her possession;
(b)any monies standing to the credit of the Wife in her sole name in any bank or savings or other account;
(c)the jewellery in the Wife’s possession;
(d)the Wife’s superannuation entitlements; and
(e)the Wife’s motor vehicle
Free from any interest of the Husband and the Wife shall indemnify the husband in relation to any and all debts attached thereto.
Unless otherwise provided for by these orders and save for the purpose of enforcing any monies under these orders, the Husband is entitled to be the sole legal and beneficial owner of all property in his possession and/or control including but not limited to:-
(a)the household contents and personal items in his possession;
(b)any monies standing to the credit of the Husband in his sole name in any bank or savings or other account;
(c)the jewellery in the Husband’s possession;
(d)the Husband’s superannuation entitlements; and
(e)the Husband’s motor vehicle
Free from any interest of the wife and the husband shall indemnify the wife in relation to any and all debts attached thereto.
The parties shall have liberty to apply in relation to the implementation of these orders.
The parties shall do all acts and things and sign all documents necessary to give effect to these orders.
In the event that either party refuses to execute a Deed or instrument necessary to give effect to these orders, the Registrar or Deputy Registrar of the Family Court of Australia is appointed pursuant to Section 106A to execute all Deeds and documents in the name of the parties and do all acts and things necessary to give validity and operation to the Deed or instrument.
Unless an Application is made within 14 days of the date of these Orders, each party is to bear their own costs.
IT IS NOTED that publication of this judgment under the pseudonym Sanders & Sanders is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CAC 2469 of 2007
| MS SANDERS |
Applicant
And
| MR SANDERS |
Respondent
REASONS FOR JUDGMENT
As Corrected
Introduction
A very significant amount of material was produced in these property proceedings, which concern the parties’ 14 year marriage.[1] It reached its zenith (subject to what is said later in these reasons, I do not say this critically) in annexure A to the Respondent Husband’s affidavit, filed on 11th September 2008.
That annexure contains (a) 3 pie-charts, (b) 1 line graph, and (c)
1 column graph, each of which purports to depict, in different ways, the source of funds, and their application, for the period 1990 – 2008.[2]
The same annexure contains a 15-page schedule (“the Schedule”) containing approximately 309 entries, commencing on 30th December 1990 and concluding on 14th August 2008, which purports to detail various – and decidedly varied[3] – financial and other contributions to the parties by either (a) Mr Sanders’ Father, (b) Mr Sanders’ Mother, or (c) the (now non-trading) family company, known as [S] Pty Ltd, in which the Respondent has a 25% share.[4] The amount of funds reflected in this schedule totals $738,173.79. In relation to all the items in the Schedule the Respondent Husband claimed that they were either loans/debts to be repaid to his parents (or presumably the family company to which I have just referred), or alternatively, they constituted a significant financial contribution on his behalf to the relationship between the parties.[5]
In the course of the trial, except for 10 identified items in the schedule,[6] folders containing relevant receipts and other supporting documentation, together with a plastic bag of bank statements, were provided to support the amounts claimed as “loans” in the Schedule to which I have just referred. The Schedule together with these supporting documents became collectively Exhibit K.
The issues for determination presented to the Court were diffuse. Conveniently, they can be dealt with in the course of treating the usual “four-step process.”[7] For convenience and outline, and of course leaving to one side those elements of the asset pool which are agreed (noted below), a non-exhaustive list of the issues addressed at trial included the following:
The Asset Pool
·What, if any, of the items identified in the Schedule are loans, and to whom they are owed? Should any of them be included as liabilities in the asset pool in these proceedings? If so, which ones?
·What, if any, of the items identified in the Schedule are gifts, and to whom? Should any of them (and if so, which ones) be considered as a ‘contribution’ in these proceedings?
·What is the value of the partnership known as [Mr & Ms Sanders]?
·What debts (if any) are owed to or by this partnership?
·What is the value of the family company known as[S] Pty Ltd (“the Company”)?
·What debts (if any) are owed to or by the Company?
·Does the Husband have an interest in the Company? If so, what is its value? Should it be included in the asset pool?
·Should a payment to [he says] his parents, but in fact to the Company, of $220,000 made by Mr Sanders the day after the parties separated, constitute an ‘add-back’ and, therefore, should it be included in the asset pool?
Contributions
·
How should financial and other ‘assistance’ provided by
Mr Sanders to Ms Sanders, prior to their marriage, be treated?
·How should the Court treat the contested claims by both parties in relation to (a) their living situation (was part of their time living in ‘rent-free accommodation’ provided by the paternal Grandparents a “contribution”?), and (b) parenting responsibilities,[8] between the date of the marriage in 1993 until 2001, when Mr Sanders injured his arm (and thereby/thereafter has been unable to engage in paid employment)?
·From the time of Mr Sanders’ injury in 2001 until separation in 2007, what have been the respective contributions of the parties?
·What matters are relevant, in relation to contribution, post-separation?
Section 75(2) Factors
·The parties are aged respectively 42 – Ms Sanders (born [in] 1968) and 44 – Mr Sanders (born [in] 1966). Given their diverse circumstances - the wife is a [occupation and qualifications omitted]; she has no health issues to speak of; the husband has no formal qualifications, was a well paid [omitted] until he injured his arm in 2001 and now receives modest workers’ compensation payments,[9] and remains heavily dependent (financially and otherwise) on his parents – in the light of these matters, where do the factors under s.75(2) fall, and to what degree?
·Given his dependence on his parents, who are aged in their early 70s, what relevance is their age and their circumstances under s.75(2)?
These reasons proceed as follows: (a) Outline of Orders Sought; (b) Narrative/Chronology of the relationship; (c) Summary of the Evidence; (d) Findings and Determination of the Asset Pool; (e) Other Considerations: Waste, non-disclosure, add-backs, Company valuation; (f) Contributions; (g) Section 75(2) Factors; (h) Conclusion: The Just & Equitable Order.
A. Outline of Orders Sought
Simply stated, it is clear that the result of the orders sought by
Ms Sanders will result in a 50:50 split of the parties’ [net] assets.[10]
According to Ms Sanders’ Counsel, the result of the orders sought by the Husband would result in a percentage split of the parties’ assets 77:23 in favour of Mr Sanders.[11] According to Counsel for Mr Sanders, the orders sought by the husband would result in a percentage split, in his favour, 66:34.[12]
The respective percentages just detailed provide a good and simple ‘snapshot’ of the ultimate scope of the dispute, albeit that they necessarily mask the myriad issues behind them.
The detailed orders sought by each of the parties is as follows:
Applicant Wife’s Minute of Orders Sought
1. The Wife seeks that:
1.1 The wife seeks that the net asset pool be divided equally between the parties.
1.2 In order to achieve this outcome, the wife seeks that:
1.2.1 save for the property known as [L], she retain all the assets in her possession or control, and that she be responsible for her own liabilties;
1.2.2 she assign and transfer to the husband all her right, title and interest in the partnership known as [Mr & Ms Sanders];
1.2.3 the husband retain all the assets in his possession or control, including the items at [L] and be responsible for his own liabilities (including any alleged loan from his parents or the company); and
1.2.4 in the event of the husband, within 31 days of Orders being made herein, paying to the wife a cash sum that will result in the Wife having a 50% share of the net asset pool, the wife do all things necessary to transfer to the husband all her right, title and interest in the property known as [L].
In the event of the aforesaid payment not being made by the Husband to the Wife, then the parties do all things necessary to sell [L] and from the net sale proceeds, the Wife be paid a cash sum that will result in her having 50% of the net asset pool, and the Husband to retain the balance.
2. That from the date of these orders, the husband is soley liable for the following outgoings on the property known as [L]:
2.1 all rates, water and sewerage expenses;
2.2 any land lax;
2.3 the premiums for the continuation of current insurance policies; and
2.4 all mortgage payments, as and when they fall due and any and or all arrears.
3. That in the event that the husband fails to comply with Order 1.2.4 herein the husband and the wife do all acts and sign all such documents as may be required to effect a sale of the property located at [L] (“the sale”) and:
3.1 The property shall be listed for private sale with a real estate agent as agreed between the parties.
3.2 The listing price for the property shall be as agreed between the parties and if there is no agreement the listing price shall be recommended by the real estate agent appointed by the parties.
3.3 Upon completion of the sale, the proceeds of the sale be applied in the following order:
3.3.1 first, to pay all costs, commissions and expenses of the sale;
3.3.2 second, to discharge the mortgage encumbering the property;
3.3.3 an amount paid to the wife that results in her having 50% of the net asset pool as calculated by the Honourable Court save that the value of [L] shall be determined by the value of the net proceeds of sale and interest payable on the amount to the wife as calculated in accordance with the Family Law Rules; and
3.3.4 fourth, the balance to be paid to the husband less any arrears of mortgage as at the date of settlement.
4. In the event the property has not been sold within ninety (90) days of the date of these Orders then the husband and the wife shall make arrangements and do all such acts and sign all such documents and equally pay all moneys necessary to procure a sale by public auction on the following terms:
4.1 the auctioneer shall be as agreed between the parties and failing agreement as recommended by the real estate agent;
4.2 the auction shall take place within 60 days of the date this clause comes into effect.
4.3 the reserve price shall, unless agreed upon by the parties, be as proposed by the auctioneer;
4.4 upon completion of the sale, the proceeds of the sale be applied in the following order:
4.4.1 first, to pay all costs, commissions and expenses of the sale;
4.4.2 second, to discharge the mortgage encumbering the property;
4.4.3 third, to pay all costs, commissions and expenses of the sale;
4.4.4 fourth, to discharge the mortgage encumbering the property;
4.4.5 an amount paid to the wife that results in her having 50% of the net asset pool as calculated by the Honourable Court save that the value of [L] shall be determined by the value of the net proceeds of sale and interest payable on the amount to the wife as calculated in accordance with the Family Law Rules; and
4.4.6 the balance to be paid to the husband less any arrears of mortgage as at the date of settlement.
5. That unless otherwise provided for by these orders and save for the purpose of enforcing any monies under these orders, the wife is entitled to be the sole legal and beneficial owner of all property in her possession and/or control including but not limited to:-
5.1 the household contents and personal items in her possession;
5.2 any monies standing to the credit of the wife in her sole name in any bank or savings or other account;
5.3 the jewellery in the wife’s possession;
5.4 the wife’s superannuation entitlements; and
5.5 the wife’s motor vehicle
Free from any interest of the husband and the wife shall indemnify the husband in relation to any and all debts attached thereto.
6. That unless otherwise provided for by these orders and save for the purpose of enforcing any monies under these orders, the husband is entitled to be the sole legal and beneficial owner of all property in his possession and/or control including but not limited to:-
6.1 the household contents and personal items in his possession;
6.2 any monies standing to the credit of the husband in his sole name in any bank or savings or other account;
6.3 the jewellery in the husband’s possession;
6.4 the husband’s superannuation entitlements; and
6.5 the husband’s motor vehicle
Free from any interest of the wife and the husband shall indemnify the wife in relation to any and all debts attached thereto.
7. The parties shall have liberty to apply in relation to the implementation of these orders.
8. The parties shall do all acts and things and sign all documents necessary to give effect to these orders.
9. In the event that either party refuses to execute a Deed or instrument necessary to give effect to these orders, the Registrar or Deputy Registrar of the Family Court of Australia is appointed pursuant to Section 106A to execute all Deeds and documents in the name of the parties and do all acts and things necessary to give validity and operation to the Deed or instrument.
Respondent Husband’s Minute of Orders Sought
1. That the wife transfer title to “[L]” to the husband.
2. That the husband refinance the mortgage over [L].
3. A declaration that the husband has no interest in the [O] property and no liability for the mortgage over that property.
4. A declaration that the wife has no interest in the husband’s share in [S] Pty Limited nor in the property owned by [S] Limited.
5. That the husband indemnify the wife in respect of all monies owing to Mr and Ms S and [S] Pty Limited.
6. That the wife transfer to the husband any interest she has in all stock, plant, equipment and vehicles of the parties.
7. A declaration that all other property and superannuation is the property of the party possessing or holding the same.
B. Narrative/Chronology of the relationship
The following summary will suffice to provide the basic factual contours of the parties’ relationship for the purposes of the current proceedings.
The parties met in 1984. Mr Sanders described the relationship from early on as ‘loyal boyfriend/girlfriend’, from not too long after their first meeting. Mr Sanders contended that after Ms Sanders left school and moved to Canberra to pursue a career in [omitted], he regularly assisted her financially.[13]
In 1991, Mr Sanders purchased a residential property in the Canberra suburb of [M] (“the [M] property”). Ms Sanders resided in that residence. There was a dispute in relation to the purchase,[14] and to the financial and other contributions concerning this property.
The [M] property was sold in 2001 for $265,000.
The parties married [in] 1993.
In 1993, the parties moved into a property [B]. The property was purchased by the Company, [S] Pty Ltd (“the company”). Adjacent to this property was a [business omitted], also owned by the company. Issues in relation to these properties ([B] and the [business]) included whether the parties lived ‘rent free’ until 2002/03, and what contributions the parties made (and additional benefits received, such as “free [omitted]”) to these properties.
In 1998 and 1999, the two children of the relationship, [X] and [Y], were born.
Also in 1999, the parties purchased an investment unit in Property [C] for $105,000. It was sold in March 2003 for $175,000.[15]
In 2001, Mr Sanders injured his arm.[16] In 2002, there was an unsuccessful operation on Mr Sanders’ arm. Worker’s compensation payments commenced in 2001. Although Mr Sanders was challenged in cross-examination as to the extent of his incapacity, and therefore his capacity for work, there seemed to be no dispute that Mr Sanders remains unable to work in his usual occupation as a [omitted]. This has been the case since 2001.
In 2003, the parties purchase the property known as “[L].” The purchase price was $355,000.[17] The property is registered in the sole name of Ms Sanders, as is the mortgage.
Ms Sanders contended that she understood the purchase price to have been financed from the net proceeds of sale of the [M] property and Property [C], together with a mortgage, in her sole name, from the Bendigo Bank, for the amount of $177,000.
Mr Sanders said that [L] was financed from his savings of $300,000, $90,000 of which was saved prior to his marriage. He said that he used $197,000 of his savings to purchase [L].
Ms Sanders made the mortgage payments on [L] from 2003 until 2007; thereafter, save for the period January 2007 until early in 2008 when no payments were made, the mortgage payments have been paid by
Mr Sanders’ parents. Mr Sanders continues to reside at [L]. He has done so since separation in January 2007.
In 2003, the parties established the partnership known as [Mr & Ms Sanders]. Ms Sanders contended that this partnership was set up as a vehicle for managing various [omitted] enterprises.[18]
On 7th January 2007, Ms Sanders left the marital residence.
On 8th January 2007, Mr Sanders transferred $220,000 to his parents. Details of the transfer were contested; it was not contested, however, that the actual transfer was effected without the knowledge or the consent of Ms Sanders. Mr Sanders contended that he paid the money to his parents to reduce the debt he says was outstanding to them. He also contended that he did so at the suggestion/direction of his wife.[19]
On 16th February 2007, Mr Sanders said that his Father provided him (or re-paid out of the recently transferred $220,000) with $50,000. There was some confusion in Mr Sanders’ evidence as to whether these funds were used for living expenses or to purchase horses and to pay for farm expenses.[20]
In August 2007, Ms Sanders received $73,644 as a bequest from the estate of a friend, Mr C. Shortly thereafter, she applied these funds to the purchase of a property in Property [O], for $130,000. The balance of funds for the purchase price of Property [O] came via a loan from the Commonwealth Bank of $40,000, and a re-draw on the mortgage over [L], in the sum of $30,000.
Mr Sanders said that he knew nothing of the re-draw on the [L] mortgage. Ms Sanders said that she had been depositing savings and tax refunds into that mortgage account in order to build up the re-draw facility.[21]
Ms Sanders said that Property [O] remains a vacant block of land and was valued (by Mr D) at $125,000.[22]
On 27th February 2008, orders were made by consent whereby
Mr Sanders took over responsibility for the mortgage payments in relation to [L], as well as arrears in relation to it, rates, taxes and any other outgoings.
Counsel for Ms Sanders contended that, post the February 2008 orders, the [L] mortgage had fallen into arrears on three occasions,[23] which required Ms Sanders to make further repayments on it. For his part,
Mr Sanders said that, more often than not, he did not receive relevant notices of rates, letters of demand, and the like, in relation to [L] because Ms Sanders did not forward them to him.
In July 2008, Ms Sanders said that Mr Sanders received a payment of $14,940 from the Federal Government for horse assistance in relation to the equine influenza epidemic. Mr Sanders denied that the payment was made to him.[24]
From August 2008, Mr Sanders said that his parents assumed responsibility for the payment of the [L] mortgage.[25]
In September 2008, the Australian Tax Office advised Ms Sanders that she was liable for $813 for her share of interest paid by financial institutions to the partnership of [Mr & Ms Sanders] for the financial year ended 30th June 2006.[26]
On 3rd November 2008, orders were made in relation to valuations, including the appointment of a joint expert to value plant, equipment and stock of the Company.
On 9th December 2008, Ms Sanders cashed in an AMP life policy for which she received the sum of $16,442 and which, she said, was applied towards her legal fees.[27]
In early 2009, Mr Sanders said that he sold a Commodore vehicle to his Mother for $7000.[28]
In September 2009, at the end of the lease on her Holden Astra vehicle, Ms Sanders said that she learnt that she had, in fact, overpaid her lease and in consequence received a refund of $12,991.
In October 2009, Mr Sanders said that his parents bought a gooseneck horse float. And in November of that year, Mr Sanders went on a three week overseas holiday: he said it was to the US; Ms Sanders said it was to South America.[29] In my view, the destination is of no moment.
On 15th June 2009, Ms Sanders filed an Application in a Case seeking orders for the sale of [L].
This will suffice for a chronological overview.
C. Summary of Evidence
There are two parts to this section – the evidence of the parties, and of Mr S (the Respondent Husband’s Father), followed by a short list of the documentary evidence put before the Court.
Evidence of Ms Sanders: Ms Sanders agreed that she owned or had use of four cars early in her relationship with Mr Sanders but prior to their marriage. She said, however, that the first car was purchased by borrowing $2000 from her Grandmother, and that the balance, of $1500, came from Mr Sanders, which she paid back. That car, she said, was subsequently sold for $1500 when a second car was purchased.
Ms Sanders confirmed that a third car was purchased, and by
Mr Sanders for her use; she said that it cost $5500, while Mr Sanders said that it cost him $8500. She also confirmed that Mr Sanders purchased a fourth car for her use, which cost $14,950.[30]
For my part, the value/purchase price of each of the cars is of lesser moment; what is of some significance is the fact that, prior to their marriage, but as an “incident” or feature of the quite committed relationship, Mr Sanders was in a position to, and did, provide not insignificant assistance to Ms Sanders. That said, in the context of the current proceedings, in my view, the purchase of these cars should be appropriately noted but care should be taken not to put disproportionate weight on them. They are part of a much larger, more nuanced but complex picture.
Of greater moment for these proceedings was the purchase of the [M] property. Ms Sanders confirmed that she did not contribute to the purchase of that property. Nor did she contribute to outgoings such as rates, nor did she pay for carpet, blinds and curtains.[31] She confirmed that Mr Sanders did some work around the [M] property, such as building a retaining wall. She also said that she paid rent while living at the [M] property (together with others with whom she shared the residence and who also paid rent), and attended to the general upkeep of the property.
Again, there was some contest between the parties as to the degree of such contributions by Ms Sanders: Mr Sanders claiming that
Ms Sanders’ non-financial contributions were minimal and confined essentially to various matters, which might be described more as domestic assistance; Ms Sanders claimed to have done rather more (e.g. mowing lawns – which Mr Sanders said did not exist) so as to warrant a higher level of contribution than Mr Sanders would allow.
The next area of her cross-examination focussed on the [B] property, being the parties’ residence for some years after their marriage.
In this regard, the following may be noted. First, Ms Sanders agreed that the parties lived rent-free in the [B] property for approximately
10 years.
Secondly, contrary to Mr Sanders’ assertion that she also had ‘free [omitted]’ from his family’s [business] next door to the [B] property, she said that she always paid for her own [omitted]. She did this, she said, because she did not wish to be financially dependent on Mr Sanders’ parents.
Thirdly, as with a great many matters in these proceedings, Ms Sanders claimed, and Mr Sanders denied (either completely or to the degree alleged), that she contributed to the [B] property and to the relationship. For example, Ms Sanders said that she worked at the [business] for one day per week for five years (1993-1998 – until [X] was born).[32]
Ms Sanders also said that she worked as a [omitted], on a casual basis but which was usually for 5 days per week, for 3½ years (1994-1998). This was at a number of [workplaces omitted]. She also confirmed that after their second child was born (in September 1999), she returned to [occupation omitted], again on a part-time basis – 2 or 3 days per week.[33]
Fortunately, most of these matters in relation to her [occupation] were uncontested. However, it was not completely free from difficulty. For example, a question arose as to whether, after his injury, Mr Sanders became primary carer of the children at home while Ms Sanders [work omitted]. A related issue was whether (and if so to what degree)
Mr Sanders, in his post-injury circumstances, had assistance from others, and or whether, because of her [occupation omitted] commitments, Ms Sanders dropped off or picked up the children to the degree that she claimed.
Unfortunately, such was often the nature and degree of dispute between the parties. As important as it was (or appeared to be to the parties – at least at times) - quite this level of minutiae regarding who was and who was not able or available for various family duties did not assist the Court very much at all.
On a range of other matters, the following may be noted shortly and succinctly: (a) Ms Sanders said that she was the book-keeper for the partnership;[34] (b) she was aware that Mr S Senior paid $45,000 for a Hino truck in 2003/04; (c) although she was the book-keeper of the partnership, she was aware of only one tractor being purchased, for $40,000, when in fact two tractors were purchased, the second by
Mr Sanders’ parents. As well, Ms Sanders said that she understood the tractor was paid for by the partnership, whereas the fact was that $20,000 came from the partnership and the balance from the Company. (d) Ms Sanders confirmed that she paid the mortgage on [L] for 12 months after separation; she also confirmed that she drew down on the mortgage over that property to assist the funding for her purchase of Property [O]. She said that she regarded the mortgage, which was in her sole name, ‘as her own’, and therefore, she did not have to consult Mr Sanders about the draw-down. She also confirmed that she sought Mr Sanders to pay the mortgage over [L] from February 2008 because he continued to live on the property. She also confirmed that she had not advised him of any problems with the mortgage even though all documents in relation to it continued to go to her. To state the obvious, the latter position could hardly be described as helpful.[35]
Also shortly stated, Ms Sanders said that (a) she had paid legal fees out of her cashed-in insurance policy as well as out of an increased loan facility; (b) notwithstanding Mr Sanders’ contention that the breakdown of the marriage was due primarily if not solely to
Ms Sanders not ‘getting on with’ his parents, especially over money and the parties’ [alleged] dependence on them, Ms Sanders confirmed that there were some disagreements with Mr Sanders over his financial dependence on his parents.[36]
Ms Sanders confirmed that she was in arrears in relation to child support to the tune of $3710.
She denied firmly Mr Sanders’ contention that she said to him that he should pay back funds to his parents, which resulted in him paying them $220,000 the day after she left the marital residence in January 2007.[37]
Ms Sanders claimed to do some, but nonetheless limited, labour on the [L] property, both in relation to the limited number of animals kept on it, and in relation to fencing. As is seen later in these reasons, both of these, at best, modest ‘contributions’ to the property were quite disparagingly dismissed by Mr Sanders, to whose evidence I now turn.
Evidence of Mr Sanders: While Ms Sanders’ evidence may be said to have been short and quite precise, and delivered in a reasonably measured manner, that of Mr Sanders was significantly more expansive and not infrequently quite convoluted. I do not say this critically. Nor should Mr Sanders be criticised by his evident frustration, exhibited quite frequently in the witness box, at both the series and nature of questions asked of him (which he not infrequently took as a personal slight against him, as did his Father – which they were not) and his relative bemusement if not hostility at the trial process, on the one hand, and on the other, his still somewhat simmering angst (and perhaps resentment towards Ms Sanders) at the breakdown of the relationship.[38]
Mr Sanders’ patent frustrations, for the reasons just mentioned, were also, it seems to me, in part because he felt that his very modest formal education (but genuine practical and wide-ranging life experience as a [occupation omitted]) put him at a significant disadvantage on almost all levels, not least in relation to his university-educated wife. Indeed, his sense of relative helplessness and understandable frustration because of his injured arm, and the failure of his marriage, seemed to augment or confirm (at least in his eyes) his declaration in the witness box that, ‘because I can’t read and write, so what good am I. By way of further example, when asked about different matters of evidence, he simply stated that he would have only guessed at his weekly expenses, which are paid for by his parents, in any event.[39]
To speak generally, a regular feature of his evidence was his patent lack of knowledge of financial affairs which involved him and his parents, as well as Ms Sanders. This lack of knowledge related to (a) how much was [allegedly] owing to his parents at any one time, (b) the details of the financial affairs of the partnership with Ms Sanders, and (c) not without some consequence, that he was, and remains, a 25% share-holder in (and director of) the Company. He repeatedly and firmly stated that he had nothing to do with the Company.[40]
Although he also said that he was ‘not too bad with figures’,[41] which may be correct, he repeated regularly that he had no idea of the details about his ‘borrowings’ from his parents. He said that he treated the funds obtained from his parents as a bit like an overdraft but with no regular statements.[42]
I have little difficulty accepting these general statements from
Mr Sanders that he had little idea about his financial position vis-à-vis his parents. Similarly, I have no difficulty with his evidence in relation to him being quite unaware as to whether funds came to him from his Father, his Mother, or the Company. Essentially, he saw the funds as part of a global resource - being his family or any entity associated with or under their control, such as the Company. From this perceived single resource funds flowed essentially in one direction (to
Mr Sanders) and with little attention to basic detail, including the on-going debit balance.[43]
Not insignificantly, he agreed that there was no ‘running account’ but rather a ‘loose family arrangement’ as to how much money was, he said, borrowed from his parents. He acknowledged that often he did not know the source of the funds provided to him.[44] Later in his evidence he confirmed [again] that he never calculated how much was owed to his parents.[45] Indeed, contrary to his earlier evidence (previously noted) that he was ‘not too bad with numbers’, he also said that he was hopeless with numbers and that he never checked anything, and that he often guessed anything.[46]
Also of significance was his quite ready acknowledgement that, of the large number of items listed in the Schedule to which I have already referred, from his perspective, only the ‘big things’ were really loans, while the smaller items were, in his view, properly regarded as gifts to him and Ms Sanders.[47] His Father took a very different view (noted later) and said that all moneys provided to any family member was expected to be repaid.
Mr Sanders confirmed that, in relation to the ‘repayment’ of the $220,000 to his parents just after the parties separated, no demand had ever been made by his parents for this amount, or, apparently, for any other amount set out in the Schedule. He also confirmed that even upon his parents learning of his intention to repay ‘everything he had’, “they did not want it at that stage.”[48]
I accept Mr Sanders’ assertion that his parents paid for most of his day to day living expenses, and that they continue to do so.[49]
I also accept his confirmation that Ms Sanders did all their tax work, including for the partnership, and that he had nothing to do with it, in this regard, for the reasons already given.[50]
Mr Sanders said that he had forgotten to include in earlier documents filed the purchase of a second truck.
He also confirmed that he had sold to his Mother a 2004 Commodore vehicle for $7000, which had previously been purchased for $15,000. He could not recall when this occurred. Nor did he explain how or why there was such a significant difference between the two figures.
Mr Sanders said in his 2006 tax return that there were 125 head of cattle on the [L] property. For the purposes of the trial, he averred that there were now only 20 head of cattle. There was no explanation what happened to the other 105.
Mr Sanders again confirmed that he had had nothing to do with the Company for 10 years. As noted later, the financial statements of the Company were placed in evidence before the Court. Thus, for example, the financial statements for the Company for the financial year ended 30th June 2006 (Exhibit G) disclose that Mr Sanders owed the Company the sum of $22,089.68. The financial statements confirm that that debt was taken over by Mr S Senior. The same records confirm that this debt, as disclosed and taken over by Mr Sanders’ Father, was discussed with his former solicitor. To all of this Mr Sanders said that he ‘would not have a clue’ about it. When asked if he signed anything in relation to that debt, he said that he signed ‘thousands of things’ but could not recall anything in particular about this debt.[51] The deed evidencing the loan being taken over by
Mr S, and which bears the signatures of both Father and son, became Exhibit H.
Importantly, Mr Sanders confirmed that, notwithstanding the advancing years of his parents (his Father is aged 71),[52] they would continue to help him – financially and otherwise. He acknowledged that, because of his injured arm and the level of his workers compensation payments, he would be unable to repay his parents for any sums given to him.[53]
In a not dissimilar vein, Mr Sanders confirmed that he wished to retain [L], that he would have to re-finance it in order to pay any amount to resolve the property matters with Ms Sanders, but that, because of his personal plight, he could not re-finance.[54]
Again, to state a range of matters as shortly as possible, especially given the not insignificant number of matters canvassed and the often voluble, sometimes opaque – sometimes very clear – sometimes a tad confused, and also sometimes slightly agitated evidence of Mr Sanders, he said that (a) the Company owned a property at Property [P], and at [B],[55] but Mr Sanders did not know the value of it, nor if any moneys were owing in relation to it;[56] (b) without having any first hand (or in fact any) knowledge of it, acknowledged that all plant and equipment of the Company was disposed of on 1st July 2007 for $72,274;[57] (c) without too much documentary evidence to support it, he said that he paid Ms Sanders $125 per week for “rent” on the [L] property;[58] (d) prior to his accident in 2001, Ms Sanders was the primary carer of the children, but after it, he was. He did concede that after his injury,
Ms Sanders was the major income earner;[59] (e) Ms Sanders’ contributions to the [B] property were modest, and more so in relation to the [M] property, and even less so still in relation to the [L] property, particularly in relation to the horses and cattle;[60] (f) he would like to make [L] profitable, but considered it to be too small to do so;[61] (g) there was no appraisal of the value of the horses on the property in a Report prepared by [D];[62] and (h) his parents were paying his legal fees but he did not know how much was involved.[63] Unhelpfully, his legal fees were never disclosed.
Mr Sanders said that he could not recall any relevant details of the sale of the [M] property, even though he had some details of it in his affidavit filed shortly before the trial. The property was sold for $265,000, the mortgage was $65,000, thus leaving a profit on the sale of $200,000. Mr Sanders refused to concede that these figures were correct or otherwise.[64] He denied Ms Sanders’ contention that she paid rent when she lived at the [M] property prior to their marriage.
Of greater and more immediate moment are the following matters. First, as previously noted, Mr Sanders confirmed that his parents were going to have to help him out.[65] Secondly, he said that from early on in the relationship Ms Sanders knew that the source of significant funds came from Mr Sanders’ parents and that they would have to be repaid.[66] At a little length, the distinction between what was a loan and repayable, and what was a gift, from his parents was explored with
Mr Sanders. It was not always the most helpful of discussions.
For example, Mr Sanders contended that if ‘you did not ask for the money’ it should be treated as a gift, and a little later in his evidence, claimed that ‘if it’s for us’ (i.e. the parties when married) it is a loan.[67] In another part of his cross-examination, Mr Sanders claimed that the parties’ non-payment of rent when they lived at the [B] property was a loan to be re-paid, whereas in his Counsel’s Case Outline it was described as the parties living “rent-free.”[68] He said that he did not pay the rent ‘because I was slack.’
I take this to be an admission that there was never any demand made for payment of the rent, either at the time of the parties’ occupancy of the [B] property, or since, and that it had not been calculated until it appeared in the Schedule. Moreover, Mr Sanders said that Ms Sanders never knew the amount of the rent, which was set by the accountant (and not by his parents). He also confirmed that Ms Sanders was not a party to any formal agreement between Mr Sanders, or his parents.[69] To state the obvious, it strikes me as rather difficult to be held accountable for a debt about which one knows nothing and in relation to which no demand has ever been made.
One of a number of curiosities about evidence of this kind, in which Mr Sanders clearly stated that Ms Sanders did not know about any rent being due and payable (but which his Father, Mr S, contradicted), is that he nonetheless asserted in other parts of his testimony that he discussed with his then wife that all moneys from his parents were loans and were, therefore, repayable.[70] And in another place, he might be taken expressly to disavow the [loan] Schedule itself, when he stated that “I want nothing to do with it”, but then immediately, and just as clearly and emphatically, stated that “... what’s there and that’s what I owe my parents....”[71] And yet just before these exchanges, he confirmed that his Mother said that the parties had to pay rent, but nonetheless the parties (said Mr Sanders) continued to go on ‘spending money’, including on holidays and stayed at “all the flash motels”, that he was spending too much money which, he said, he should have used to repay his parents, but did not because he ‘was slack.’[72]
In relation to amounts shown in the Schedule as being paid by the Company, consistent with his evidence, Mr Sanders said that he did not know anything about the Company, but seemed to accept, with that qualification, Counsel for Ms Sanders’ proposition that, based on his calculations from the Schedule (a) the amounts “lent” to the parties by the Company totalled just on $400,000, and (b) no such figure shows up in any of the accounts or financial statements of the Company.[73]
On a number of occasions, Mr Sanders readily confirmed that he had no idea how the figures in the Schedule came into existence, how much money was “owed” to his parents, nor how much was listed as having been paid after the parties separated, and that the Schedule was compiled by his Father’s accountant, his Father and his then solicitor.
Again with a mixture of candour and regret, Mr Sanders confirmed that he did not discuss with Ms Sanders (but wished he had done so) that telephone expenses, now said to total $36,000 for the period between 1992 and 2007, and which are now listed in the Schedule and claimed as a “loan”, were to be repaid to his parents.[74] My earlier comments in relation to lack of knowledge of a debt and lack of relevant demand for repayment apply equally here.
When it was put to him that, in the light of his injury in 2001 and on-going workers compensation payments, the fact that [L] has always run at a loss, and that his own evidence is that [L] is too small to make any realistic attempt to earn a living running stock, Mr Sanders did not concede that his “fortunes” were unlikely to turn around. He simply said that he did not know, but later acknowledged that it was all “a pretty sad deal.”[75]
Evidence of Mr S:[76] The main focus of this witness’s cross-examination related to the financial support to the parties.
It might be, and was, said that Mr S’ basic position was that any money given to any member of his family was expected to be repaid.[77] He also maintained that “we” – by which I took him to be referring to himself, and or his wife, and or the Company – had lent the parties “heaps of money”, a large portion of which is set out in the Schedule. He suggested that the repayment of the funds ‘loaned’ to the parties was to enable him to retire.[78]
Mr S maintained that “we were expecting something back”, and that the preparation of the Schedule was, in effect, to facilitate the recoupment of those funds.[79]
It may be immediately observed that this evidence suggests if not confirms three things: (a) that Mr S (nor any other of the lenders – his wife or the Company) had ever made any formal demand for repayment of any moneys lent or otherwise provided to the parties, (b) that there was no expectation that all of the funds detailed in the Schedule were in fact debts and therefore payable, and (c) that the Schedule should certainly be characterised as an ex post facto ‘reconstruction’ of funds provided to the parties in various and varying guises.
Moreover, without using Mr S’ more colourful expression to describe the breakdown of the parties’ marriage,[80] it also seems unquestionably to be the case that the marital breakdown crystallised the [alleged] debts. Put another way, the history of dealings between all of the protagonists indicates strongly that, but for the marital breakdown, no demand would ever have been made for any repayment. This is not to suggest that the Respondent Husband did not have a genuine intention to repay something, at some appropriate time, to his parents. However, history, and the Respondent’s income earning (in)capacity, tells against any repayment.
Again, to highlight briefly the most relevant parts of Mr S’ evidence, I note the following.
The [B] property was sold recently for $25,000, yet the same property had been used to secure a mortgage in the sum of $200,000, which sum was said to be used for renovations to the house and shed.[81] He conceded in cross-examination, however, that not all of those funds had been used for these purposes, and that some had in fact been used to purchase a Land Rover for approximately $70,000.[82]
Mr S said that there was an agreement with the parties in relation to the rent payable on the [B] property when they lived there for a number of years following their marriage. He confirmed, readily and candidly, that such evidence was not in any affidavit.[83] This clearly contradicted his son’s evidence.
Mr S said that Ms Sanders gave an undertaking to repay the rent. This assertion also was not in any affidavit.[84] Similar difficulties were encountered in terms of evidence claiming that there was agreement for the reimbursement of telephone costs and expenses.[85]
It was put to Mr S that he and his wife were continuing to provide funds to their son, which has, and continues to do so, increased the amount said to be owing to them. He seemed, albeit somewhat reluctantly, to agree. This led to the consequential proposition that he (and his wife) were continuing to provide funds to their son whose only income was $29,000 per annum, and therefore, the prospect of repayment of any amount was negligible, if not non-existent. He would not concede that this necessarily followed. Nor did he, or would he, concede that he has never had any expectation that any of the funds provided to the parties would be, or was required to be, repaid.[86]
Mr S confirmed that the financial statements of the Company do not show any loans to either of the parties.[87] He also confirmed that the Schedule was prepared only after the current property proceedings had been commenced.[88]
Finally, Mr S agreed, after some discussion, that he (and his wife) continued to provide funds to their son, particularly in relation to the running costs of [L]. On the one hand, he hoped that [L] would be able to get their son back on his feet financially, but also (somewhat reluctantly) agreed that [L] (a) had never made any money and had been consistently run at a loss, and (b) was too small to be profitable.[89]
Mr S claimed that he never asked his son how the farm ([L]) was going. I found such an assertion remarkable. He also agreed with the suggestion from the Bench that the more realistic assessment of the prospects for [L] (and therefore financially for his son) were more in hope than anything else.[90]
Assessment of the Evidence: First, for the reasons already noted, and confirmed by the testimony of all the witnesses – in particular, that there was never any demand for any repayment, and because of its ex post facto reconstruction[91] – I cannot and do not accept the Schedule as debts for which the parties are liable. I will leave further consideration of the Schedule to the discussion of contribution.
Secondly, and unsurprisingly, there were certain, clear entrenched positions of all the witnesses in their evidence. In general terms, this led to the Court having rather less assistance than one would hope, but in the end, those entrenched positions did not, in my view, make very much difference to the end result. I say that for the following reasons.
Ms Sanders’ evidence was quite crisp and clear. I had the clear impression that, for the most part, her recollection of events was accurate and truthful. However, she did not concede, in my view to the degree that was warranted, that the souring of the relationship with
Mr Sanders was very much because of the pervasive influence of and dependence upon Mr Sanders parents. That influence and dependence gave some degree of readily apparent hostility to them and to
Mr Sanders, and in turn coloured if not skewed somewhat her legal appreciation and consideration of their financial contribution to the relationship.
I have previously remarked on Mr Sanders (the Respondent) and his voluble, sometimes passionately frustrated evidence.[92] Just as his former wife had difficulty (and perhaps understandably so) distancing the breakdown of the relationship and its emotional (and other) aftermath, so too did Mr Sanders. Unfortunately, often his evidence was confused and not infrequently contradictory. He clearly had no specific idea, and therefore no accurate recollection, about a great many matters that directly affect these proceedings. Sometimes, there was a very clear inconsistency between his affidavit evidence and his testimony in cross-examination, or simply no explanation (or any adequate one) for certain evidence.
For example, Mr Sanders said, in para.153 of his trial affidavit, that he had disposed of certain items (e.g. a ski boat and a horse). He said he did so in order to secure funds for “living expenses.” While understandable, details of these dispositions were not readily forthcoming.
Likewise, over a number of disparate documents (e.g. his two Financial Statements of September 2008 and February 2010), Mr Sanders provided rather different estimates of the value of [his] horses, equipment and tools. A different figure again was given for these items in the course of the trial. The figure initially was $15,000; it then moved to $25,000, before ultimately arriving at the agreed sum of $65,580.
In his Summary of Argument, filed 5th May 2010, Counsel for
Ms Sanders listed (at p.4) a large number of items not included in
Mr Sanders’ estimation of the assets of the partnership (including the matters just referred to in relation to horses and equipment). Counsel noted, however, that it was agreed that a sum of $65,580 should be included as the [fractional] value of the partnership. That said, Counsel also submitted that a more accurate assessment of the value of the assets of the partnership would be their written down value, rather than the figure agreed. For my part, the agreed figure must and will suffice.
Mr Sanders relied – and continues to do so – very heavily on his parents for financial assistance, and for a great many other things. Understandably, they are a very close family unit. If possible, this seems to have become heightened in the light of Mr Sanders’ injured arm; his financial (and other) dependence seems to have intensified – understandably so.
In a different, but related, way, the evidence of Mr S was significantly coloured by the breakdown of his son’s marriage with Ms Sanders. The utility of his evidence was, in my view, simply to confirm the financial (and other) dependence of the Respondent Husband upon his family (irrespective of the legal guise or persona of the ‘lending body’), and that no demand had ever been made for any of the funds set out in the Schedule. That said, subject to further discussion and consideration later in these reasons, there is no doubt that Mr S and his wife, and the Company, provided various and not insignificant financial (and other) contributions to the parties in the course of their marriage. Ultimately it becomes a question of assessing the weight to be attributed to such contribution subject, as I have said, to some other matters considered shortly, raised by Ms Sanders, such as “waste” and “non-disclosure.”
I have already remarked on Mr S’ evidence as to the prospects of the [L] property being able to support the Respondent Husband.
In their evidence, both of the Mr Sanders showed the significant fluidity that has clearly characterised their business and family operations. This is to say that more often than not, there were difficulties in identifying who the lender of any funds was, to which account funds went, and who was the intended beneficiary;[93] in the case of ‘lenders’, it could be either Mr S, Ms S, or the Company. Clearly, and without adverse criticism, agreements were rarely, if ever, reduced to writing. A hand-shake or non-verbal understanding was enough. The difficulties for the parties, and no less so for the Court, many years later, either to re-construct events and agreements and or to determine with absolute certainty such things is obvious.
In sum, subject to any particular qualification noted, in the totality of the evidence, where there is any conflict between accounts, I would prefer that of Ms Sanders to the evidence of either of the Mr Sanders. In saying this, I do not suggest at all that anyone was fabricating their evidence, still less telling any deliberate untruth. It is rather to say that the recollection and documentary evidence, in greater respects, supported that of Ms Sanders than that of the other witnesses. And to repeat, there were, as I have already noted, some deficiencies in her evidence as well, which are addressed when I deal with contributions later in these reasons.
Documentary Evidence: Among other documents tendered, the following should be noted for ease of reference:
·The Financial Statements for [S] Pty Limited for the years 2002, 2004, 2006, 2007 & 2008 (Exhibits E, F, G, I & J)
·Loan Agreement between Mr S & Mr Sanders, dated 28th June 2007, whereby the former took over a loan owed by the latter to [S] Pty Limited, in the sum of $22,089.68 (Exhibit H)
·The Schedule (together with supporting documents) (Exhibit K – originally “marked for identification 1”)
·Letter from Davis Faulkner & Co (Lawyers) dated 3rd May 2010, confirming the sale of Property [P] from [S] Pty Ltd, in the sum of $25,000 (Exhibit L)
·Report from [D] regarding the [L] Property (Exhibit M)
E. Other Considerations – Waste, non-disclosure, add-backs & Company valuation
Before finalising the asset pool in the light of the evidence, I note the following.[94]
Among his detailed submissions, Counsel for Ms Sanders raised four issues in particular, which should be canvassed now. Those issues concern “waste” in relation to the [L] property, “non-disclosure” of assets, “add-backs”, and the valuation of the Company in which
Mr Sanders has a 25% share-holding.
Waste: Stated shortly, the “waste” argument was essentially that Mr Sanders knew (as did his supporting family) that the [L] property was unprofitable, that it had consistently run at a loss, but notwithstanding this fact, significant funds continued to be expended on it.
The legal principles in relation to “waste” are well established, beginning with Baker J’s judgment in Kowaliw.[95] There his Honour set out some basal principle which focussed on either a course of conduct designed to reduce or to minimise the effective value or worth of matrimonial assets, or where one of the parties has acted “recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.”[96]
On the evidence before the Court, whatever the decisions of Mr Sanders and his family in relation to [L], I have not seen anything to suggest that anything has been done that could be said or characterised as satisfying either of the two limbs of Baker J’s stated principles. At its highest, the Sanders family (to speak widely but accurately of this extremely tightly-knit family) may be said, by some, to have made not the most prudent decisions regarding the degree and frequency of investment in the [L] property in the rather vain hope that, in some way and at some time in the future, it may become profitable for the benefit of their injured son. The judgment to continue to invest in [L] has been motivated, constantly, consistently, and clearly, to support their son, the Respondent Husband in these proceedings. Well-intentioned imprudence (at its highest) does not, in my view, constitute waste. This is especially so since the investment continues to come, not from matrimonial assets or funds, but from the Respondent’s parents. At its lowest or worse categorisation, the continuing investment of the paternal Grandparents in [L] has at least maintained the value of the property rather than warrant any categorisation of ‘waste.’ Accordingly, I do not accept the Applicant Wife’s waste argument.
Non-Disclosure
: I have previously noted some omissions in
Mr Sanders’ evidence in relation to disposition of assets (e.g. a ski boat, etc), and changes in stock (e.g. number of horses and cattle).[97] It is sufficient for current purposes to deal with disclosures in relation to the Company. The line of attack in relation to non-disclosure was as follows.
The Company name, as already noted, is [S] Pty Limited. Mr Sanders consistently and strongly asserted that he had had nothing to do with the Company for 10 years. He knew nothing of the workings of the Company, particularly its finances, save for running [omitted] and related services through it. I have also previously noted that it ceased trading a number of years ago.
The reality, however, is this. Whatever the protests about his lack of knowledge in relation to the Company (which I readily accept), the legal position is that Mr Sanders is a 25% share-holder in the Company. The Company holds property (e.g. [B], valued at approximately $340,000), as well as having a sum owing to it consequent upon Mr S taking over the stock and plant and equipment. And, as previously noted, Exhibit H confirms the signature of the Respondent (and his Father), in 2006, to a loan taken over by Mr S from the company. Whatever of his memory, from time to time, clearly Mr Sanders signed documents that involved the company.
In my view, upon strict analysis,[98] Mr Sanders should have disclosed his share-holding in the Company.[99] Inadvertence, ‘slackness’ and or lack of actual knowledge (all of which Mr Sanders claimed), either individually or collectively, do not obviate or excuse compliance with the duty to disclose all relevant assets and financial resources, properly and adequately. Moreover, Mr Sanders has been legally represented throughout the proceedings by experienced attorneys, albeit by two separate firms. In the larger scheme of things, however, and in the light of the totality of the evidence, I do not consider that Mr Sanders’ failure to make proper disclosure was intended to prejudice
Ms Sanders. It has, however, made the conduct of the proceedings for Ms Sanders and the Court that much more difficult. This should not have occurred. That said, as strict as the requirement is to make full and frank disclosure, the breaches of the duty in this case, in my view, are at the lower end of the scale. It seems to me that the most appropriate course is to take the non-disclosures into account when considering what the just and equitable order to make is.
Add-backs: A clear statement of relevant principle in relation to “add-backs” is the Full Court decision in AJO v GRO.[100] Those categories are (a) where funds have been spent on legal fees, (b) where there has been a premature distribution of matrimonial assets, and (c) where the principles set out in Kowaliw regarding “waste” have been established. The only qualification to these categories is the Full Court’s observation regarding whether the expenditure can be reasonably explained and justified, for example for self support.[101]
There are two aspects, submitted by Counsel for Ms Sanders, which need to be “added back” to the property pool. They are (a) the $220,000 that Mr Sanders “re-paid” to his parents the day after
Ms Sanders left the marital residence, and (b) the undisclosed legal fees of Mr Sanders.
I have recounted earlier in these reasons the competing versions of how and or why this sum of money was paid to Mr Sanders’ parents. In my view, on both accounts, there is no denial that the day after separation Mr Sanders transferred $220,000 to his parents from funds that, properly regarded, in my view, were then, and should be now, part of the asset pool of the parties.
It was argued that the ‘re-payment’ of $50,000 by his parents to
Mr Sanders, a week or so after the transfer of the $220,000, should be deducted from any add-back because that sum constituted ‘reasonable living expenses.’
In my view, there are a number of problems with this argument. First, Mr Sanders’ own evidence was seriously conflicted as to the purpose of the $50,000. On one occasion he maintained that he needed it for living expenses. On another, it was said to be used to purchase stock (horses) and equipment. Secondly, given that (a) he was in receipt of regular workers compensation payments, (b) he was not (at that stage) paying the mortgage on the [L] property, and (c) his parents continued to provide for him financially in any event, in such circumstances it was a very large sum of money claimed to be needed for ‘living expenses.’ For these reasons, in my view, the full amount of $220,000 should be added back to the asset pool.
The second area in issue regarding add-backs concerned legal fees.
Ms Sanders included her legal fees paid to date of $49,442.[102] There was no disclosure of any legal fees paid by or on behalf of Mr Sanders. His only admission was that his parents had paid (and by inference would continue to do so) his legal fees. The fees should have been disclosed. It might reasonably be inferred that, because two different law firms have been used, the undisclosed legal fees for Mr Sanders are significantly higher than the amount paid by Ms Sanders, which she has disclosed and are added-back to the pool.
Counsel for Ms Sanders submitted that, in the circumstances just outlined, a comparable figure thus far paid by his client should be included in the asset pool on behalf of Mr Sanders as legal fees. Given the duty of disclosure on Mr Sanders, and the wide discretion that reposes in a Court in such circumstances, I propose to accept this submission.
Company Valuation: The final matter of relevance concerned the valuation of the Company, [S] Pty Limited. Mr Sanders’ Counsel submitted that because Ms Sanders did not request a valuation of it, there was no obligation on her client to obtain one.
I have already noted that the legal reality was (and remains) that Mr Sanders had, and continues to have, a 25% share-holding in the Company.
Counsel for Mr Sanders submitted that the Company was simply the alter ego of Mr S, and that, in the light of the Respondent Husband’s evidence, the Court should find that he held and continues to hold the shares in the Company on trust for his Father.[103]
However, consistent with the earlier discussion regarding Mr Sanders’ duty to disclose his interest, in my view, I cannot and should not, avoid this share-holding. The real issue, in my view, is how best to deal with it in a manner that is just and equitable.
Counsel for Ms Sanders submitted that, in the absence of a formal valuation, the Court should have regard to the net asset value of the Company. But as Counsel for Mr Sanders rightly pointed out, the primary submissions of Ms Sanders’ Counsel did not take account of the liabilities of the Company, including the recently raised mortgage of $200,000 over the [B] property, even though (as noted earlier) those funds were used for a range of purposes, including the personal benefit of Mr S and his purchase of a vehicle.
In the absence of any reliable value of the Company, and certainly no information or valuation of its shares, in my view, the most appropriate course in dealing with Mr Sanders’ interest in the Company is to treat it as a resource – to whatever degree is appropriate, or just and equitable in the circumstances. On the figures put before the Court, the previously agreed sum of $65,580 should be taken as the value of
Mr Sanders’ 25% share-holding in the Company.
In the light of the above extended discussion, the asset pool should be taken to be as follows:[104]
Assets and liabilities of the parties
| Assets | |
| * Property known as "[L]" | $460,000 |
| * Property [O] | $135,000 |
| * Wife's CBA Accounts | $2,371 |
| * Wife's AMP Shares x 464 | $2,784 |
| * 2005 Holden Astra m/v | $8,000 |
| * Household content (in Wife's possession) | $6,000 |
| * Interest in [Mr and Mrs Sanders] Partnership including Plant, Stock & Equipment | $65,580 |
| * Household items at [L] | $5,000 |
| Husband's Bendigo Bank Account | $2,000 |
| Husband's CBA Account | $1,000 |
| Husband's Interest in [S] Pty Ltd | $65,580 |
| * Wife's [F] Superannuation | $68,199 |
| * Wife's [P] Superannuation Scheme | $7,434 |
| Paid Legal Fees ($49,442 x 2) | $98,884 |
| Husband's [A] Superannuation | $26,618 |
| Add-back of Funds withdrawn by the Husband from his Bendigo Bank account and transferred to the [S] Pty Ltd bank account | $220,000 |
| Total (Assets) | $1,174,450 |
| Liabilities | |
| * Mortgage ([L]) | $154,070 |
| * Mortgage (Property [O]) | $71,374 |
| Westpac Credit Card | $684 |
| * Arrears Child Support | $3,710 |
| Total (Liabilities) | $229,838 |
| Net Assets | $944,612 |
F. Contributions
In the light of the already extensive discussion, the matters to be considered here can and must be very brief. I will deal with contributions according to the helpful time-line used by Counsel for
Mr Sanders, thus: (a) prior to the marriage in 1993, (b) from 1993 until Mr Sanders’ injury in 2001, (c) from 2001 until separation in early 2007, and (d) post-separation. Before dealing with each of those periods, I note one matter of principle.
Whether the relationship is counted as 14 years (the actual length of the marriage), or from the time when the couple first met (in 1984, in which case the relationship was 23 years), or some point around 1990 (the first date in the Schedule, in which case the relationship was 17 years), in my view it was a relationship of substantial duration. This is, of course, because Full Court authorities such as Bremner, Pierce and Clives v Clives make plain that the assessment of contributions (a) is not a precise, meticulous mathematical exercise, and (b) disparity of [initial] contribution should not so much be considered as being eroded over the life of a long marriage but rather the issue is what weight should be attached to the contributions in all of the circumstances.[105]
Prior to 1993
: I accept, and it seemed not to be denied, that either on his own account and or with assistance from his family, Mr Sanders purchased the [M] property a couple of years before the parties married, and before they moved to [B]. There was no financial contribution by Ms Sanders to the purchase of this property.[106]
Mr Sanders was employed; Ms Sanders was studying.
In my view, at its highest, Ms Sanders’ financial contributions (e.g. rent), and non-financial contributions to the [M] property were modest. They must favour Mr Sanders, accepting too that they are now a very significant time ago, and in my view must also be seen in the light of the whole of the relationship.
From 1993 until 2001: Upon their marriage in 1993, the parties moved to live at the [B] property, which neither of them owned. It was sufficiently long ago, and the evidence basically ‘she said/he said’, that it is impossible to make any specific findings. Both parties, to some degree, acknowledged that they both benefited from this accommodation.
There are two issues, however, in relation to the parties’ occupation of the [B] property. First, Ms Sanders said that she worked regularly, one day per week, at the [business]. Like many things, Mr Sanders challenged this evidence. The same challenge was made to
Ms Sanders’ contention that she assisted in a range of work around that property. On balance, I accept the evidence of Ms Sanders. Among other things, I find it improbable, to a significant degree, that she would not have done quite a range of things, either on her own or with Mr Sanders, in relation to the [B] property during the couple’s 10 year residency of that property. Put another way, if Mr Sanders’ evidence is accepted, it could be taken to mean that Ms Sanders was, if not completely, to a significant degree, largely indolent in relation to the long period of residence at [B]. I have great difficulty accepting such a proposition. Even if not accepted in full, Ms Sanders’ evidence, as I have said, should be accepted. For the same reason, I have little reason to doubt Ms Sanders’ assertion of her regular, albeit very part-time, work at the [business] adjacent to the property.
The second issue relates to whether, and if so to what degree, the ‘rent-free’ accommodation should be treated as a contribution on behalf of Mr Sanders. His Counsel supported a submission along these lines by reference to cases such as Gosper and Kessey.[107] It is sufficient to note the following from the Full Court judgment in Kessey. In particular, I note the Full Court’s express endorsement of Fogarty J’s remarks in Gosper; then the Court comments further, as follows:[108]
There is nothing we would want to add to his Honour's comprehensive review of the authorities, nor to his conclusions that (at Fam LR 611; FLC 76-168):
The critical case is where a relative of one of the parties gifts property to both of the parties to that marriage. Dependent upon the circumstances of the case it is, in my view, open to court in such a case to look at the actuality and treat that as a ``financial contribution made directly... on behalf of'’ the spouse relative
In many such cases that gift was made only because of that relationship and in reality as a means of benefiting that relative in that marriage. It was made ``because she was a daughter of that family'’ as was said in W's case at 75,527.
It is clearly a ``financial contribution'’ and one ``made directly'’ to the acquisition, conservation and improvement of property. In such cases it is open to the court to conclude, if the facts justify it, that it was made ``on behalf of'’ one spouse.
In other cases the evidence, including evidence that the donor intended to benefit both spouses, may not justify that conclusion. If so, the application by the parties of that property to the marriage would, at least at that point, be an equal contribution by them.
It was submitted by counsel for the appellant husband that Gosper is distinguishable from the present case because Gosper was concerned with the matter of gifts and in the present case there is no evidence of a gift. In our opinion the application of the principles enunciated in Gosper should not be so limited. Rather, those principles should be regarded as being applicable in all cases where there has been an advance of money or property by a parent (or perhaps even by some other relative) of one of the parties, to one or both of the parties (or to their property), and the circumstances of the advance cannot be categorised as a loan, or as any other recognised commercial transaction.
On the basis of these authorities and in the light of the evidence, in my view, the [B] accommodation should be treated as a contribution by or on behalf of Mr Sanders.
That significant contribution should be balanced, to some degree by the fact that both parties benefited from it, and, as I have said, that
Ms Sanders also contributed to the property, albeit to a limited degree (especially after when the children were born). As well, there was little contest about Ms Sanders’ regular, part-time [occupation] during this time – details of which I have already noted. There was no suggestion that she kept her [occupation] income solely for her own benefit.
Without putting a percentage figure on it, in my view the rent-free accommodation was a not insignificant contribution on behalf of
Mr Sanders; Ms Sanders’ contribution during the same period in relation to the property must be taken to have been modest. This is also intended to take into account that she was working, part-time but nonetheless to a significant degree, as a [omitted] during this period as set out in the evidence earlier in these reasons. In my view, the financial and related contributions during this period must be taken to favour Mr Sanders.
Also on the evidence set out in detail earlier in these reasons (and therefore not repeated here), I take the view that the contribution to the welfare of the family[109] during the period from 1993 until 2001 should be taken as essentially equal.
2001 until separation: Again because of the detailed consideration of the evidence earlier in these reasons, in my view it is unnecessary to repeat it. I note the following.
It is indisputable that Mr Sanders’ injured arm has prevented him being gainfully employed since 2001. On his own evidence, since that time he has been unable to lift items above a quite modest weight. That said, he does have some use of his arm, cautiously, and with ongoing pain and discomfort. Nevertheless, given her full-time employment (the primary income from which was acknowledged by Mr Sanders), the limited capacity of Mr Sanders (financially and practically), and accepting that Mr Sanders’ parents continued to support their son to some degree (evidenced by the matters set out in the Schedule), in my view the contributions (financial and otherwise) during this time must be taken to favour Ms Sanders and to a not insignificant degree.
From Separation Until the Trial
: This period, too, has been canvassed at some length in the consideration of the evidence. It was only in February 2008 that Mr Sanders assumed responsibility for repayments over [L]. Mr Sanders has been living in the former marital residence since separation. On a few occasions since those orders Ms Sanders has paid the mortgage when it fell into arrears. Since late 2009, the children have been in a shared care/week-about arrangement.
Ms Sanders has a child support debt of a few thousand dollars.
Throughout this same period, Mr Sanders has continued to be significantly supported (financially and otherwise) by his parents, while Ms Sanders has continued in her [omitted] career and is now an [occupation omitted]. Although there was some confused evidence as to her current income in the course of her oral evidence, from her tax records there is no doubt as to the extent of her income, which may generally and quite properly be described as at the higher end of the [occupation omitted] scale. She has access to an employer-contribution superannuation scheme. Mr Sanders has no such resource of expectation.
The time between separation and the trial, relatively speaking, has been short. The parties have had to adjust to parenting and other things in their changed circumstances. I have already recounted the various matters of relevance which, in my view, indicate that it would not be just and equitable to do anything other than to assess the respective post-separation contributions as equal.
Accepting that comparative analysis is never conducted on “a level playing field” (to use the words of the Full Court in Ferraro),[110] and with the qualifications to which I have already referred in later cases such as Pierce and Clives v Clives regarding ‘weight’, especially in longer marriages (such as here), if one was to assess the contributions and reduce them to percentages, the following may be taken as a summary of that assessment.
It might conveniently be said that for the pre-marital period, and from the time of the marriage up until Mr Sanders’ injury, contributions generally should be taken as favouring Mr Sanders. In percentage terms, in my view, for this period, contributions favour him by 9%.
For the second period, from Mr Sanders’ injury in 2001 until separation in early 2007, in my view the contributions favour Ms Sanders by 6%.
On this analysis, overall contributions favour Mr Sanders by 3%.
G. Section 75(2) Factors
Summarily, the relevant considerations here, in the light of the evidence, are: both parties are in their early 40s; the care of the two children of the relationship (who are aged 12 & 11) is shared equally between the parties; save for what is said shortly, the immediate superannuation resources of both parties is relatively modest, but for reasons already observed, in the longer term, they clearly favour
Ms Sanders. Ms Sanders’ child support debt is also modest and presumably will result in some further adjustment now that a shared care arrangement is in place.
In my view, the most telling issues to address under this section of the Act, concern the income and earning capacities of the parties, and in Mr Sanders’ case, and in the light of his significant employment incapacity due to injury, the ‘financial resource’ or the capacity of his parents to continue to support him financially.[111]
Ms Sanders has a secure and well paid job as a [omitted].[112] She has “acted” as a [occupation omitted]. It is not unreasonable to anticipate, to some degree at least, that she is likely to advance in her [omitted] career. She has tertiary qualifications and access to employer-contributions to superannuation. Subject of course to the vagaries and vicissitudes of life, she should be able to accumulate a ‘healthy’ superannuation fund by the time of her retirement.
On the other hand, Mr Sanders has no qualifications to equal, or even to approximate, those of Ms Sanders. He remains on workers compensation as a result of his injury, and will remain so. There is no question that his parents have provided for their son financially and in various other ways, and continue to do so. That said, they are now in their early seventies. It may be asked, not unreasonably, how long can they be expected to provide for him given their more senior years? Such a factor, on the one hand, of them being a ‘financial resource’ (however crass or even venal the description), and on the other, having due regard to their seniority, only makes the Court’s consideration all the more difficult.[113] Although there was no medical evidence before the Court in relation to his parents, Mr S presented as extremely spry. I took his evidence as indicating both that he clearly recognised the plight of his son and its consequences for all the family, as well as a quite ready willingness to continue to work for his own, and that of his son’s, betterment. As well, there was no dispute that Mr S, in one form or another, had recently raised $200,000 (secured over the [B] property), thus suggesting that, for their part, lenders seem not to have any difficulty with his capacity to service a loan of significant proportions. Put another way, I accept the submission that Mr Sanders’ parents should be considered a ‘financial resource’, but not quite to the degree sought by Counsel for Ms Sanders.
Taking into account all of these factors, it seems to me that an adjustment in favour of Mr Sanders should be made, under s.75(2), of 6%.
H. Conclusion: Just & Equitable
In percentage terms, on the above analysis, there would be a total adjustment in favour of Mr Sanders of 9%, thus resulting in a split of the asset pool 59:41% in his favour. In my view, that adjustment is just and equitable in all the circumstances of the case. In coming to this view, I am conscious of and have had regard to the number of matters not disclosed by Mr Sanders to which I have referred in the course of these reasons.
On a percentage division of 59:41 in favour of Mr Sanders, on a net asset pool of $944,612, this would result in Mr Sanders receiving $557,321, and Ms Sanders receiving $387,290.
I should also confirm that, to the degree that one can speculate in the light of the evidence, in my view, the effect of the orders proposed will have limited impact on the parties’ earning capacity.[114] On the evidence, very little will change. Ms Sanders will continue to work as an [omitted]. Mr Sanders will continue to rely heavily on his parents.
In the light of the orders I make, the net asset holding of the parties would look as follows:
| Item | Wife | Husband |
| Property [O] | 135,000 | |
| CBA Accounts | 2,371 | |
| AMP Shares | 2,784 | |
| Holden Astra m/v | 8,000 | |
| Household Contents | 6,000 | |
| [F]Superannuation | 68,199 | |
| [P] Superannuation | 7,434 | |
| Paid Legal Fees | 49,442 | |
| Property [O] Mortgage | (71,374) | |
| Westpac Credit Card | (684) | |
| Arrears Child Support | (3,710) | |
| "[L]" | 460,000 | |
| Plant, Stock & Equipment | 65,580 | |
| Household Items at [L] | 5,000 | |
| Bendigo Bank Account | 2,000 | |
| CBA Account | 1,000 | |
| Interest in [S] Pty Ltd | 65,580 | |
| [A] Superannuation | 26,618 | |
| Add-back of Funds withdrawn by the Husband from his Bendigo Bank account and transferred to the [S] Pty Ltd Bank Account | 220,000 | |
| Paid Legal Fees | 49,442 | |
| Property [L] Mortgage | (154,070) | |
| Payment to Wife | 183,829 | (183,829) |
| Total: | 387,290 | 557,321 |
On the basis that Mr Sanders seeks to retain the [L] property, and having regard to what Ms Sanders will retain in assets, such as Property [O], as well as the other assets listed in the table above, the actual amount payable to Ms Sanders by Mr Sanders, within 60 days of the date of these orders, to give effect to this division is $183,829.
Subject to that payment, and it being made within 60 days of the date of these orders, I make orders as sought by Ms Sanders, which includes provision for the [L] property to be sold in the event the payment to Ms Sanders is not made within the prescribed time.
On the facts and circumstances of this case, I would be minded to make the usual order in relation to costs, whereby each party is to attend to their own legal fees. Unless an application is made within 14 days of the date of these orders, I propose making such an order.
I certify that the preceding one hundred and sixty-seven (167) paragraphs are a true copy of the reasons for judgment of Neville FM
Date: 26 November 2010
Corrections
Amount appearing in the table in paragraph 164 at the line “Payment to Wife” in the “Wife” column changed from 211,333 to 183,829.
Amount appearing in the table in paragraph 164 at the line “Payment to Wife” in the “Husband column” column changed from (211,333) to (183,829).
Amount appearing in the table in paragraph 164 at the line “Total” in the “Wife” column changed from 414,795 to 387,290.
Amount appearing in the table in paragraph 164 at the line “Total” in the “Husband” column changed from 529,817 to 557,321.
Amount appearing in paragraph 165 being the actual amount payable changed from 211,333 to 183,829.
[1] There was no dispute that the parties first met in 1984, married in 1993, and separated in 2007.
[2] To be scrupulous, the original affidavit of Mr Sanders to which I have referred was filed by his former solicitors, rather than by those who conducted the trial.
[3] The range of items listed in the schedule was diverse: e.g. payments for dog biscuits, dog tablets, the purchase of tractors, a ‘goose-neck horse float’, a rope, horse rug, the payment of dental bills, and a shirt for Mr Sanders, to name only a few items.
[4] In an affidavit filed on 22nd February 2010, para.158, Mr Sanders referred to his parents engaging their accountant to compile “the list of loans and principal purchases for [Ms Sanders] and me over the period from December 1990 until August 2008.”
[5] See Respondent Husband’s Written Submissions, filed 18th May 2010, paras.9-17.
[6] These were items numbered 225, 250, 253, 254, 255, 263, 268, 290, 291 & 298.
[7] See AJO v GRO (2005) 33 Fam LR 134 at p.147 [46].
[8] The parties have two young children, aged 12 and 11. Final orders have been made, by consent, in relation to the children, who live in a shared care arrangement between the parties.
Mr Sanders said that he receives approximately $26,800 per annum in workers compensation. See
Mr Sanders’ affidavit, filed 22nd February 2010, para.60.
[10] On the basis of Ms Sanders’ Counsel’s calculations of the asset pool and an equal division of assets, but taking account of the assets that Ms Sanders currently holds and will retain, Mr Sanders would be liable to pay his wife $288,852.50.
[11] See Applicant’s Case Outline, 26th February 2010, p.22. In a document entitled “Current Financial Circumstances,” dated 2nd March 2010, Counsel for Ms Sanders stated (p.6) that if orders were made as sought by Mr Sanders, it would result in a percentage split of 75.5% in the Husband’s favour, and 24.5% in his client’s favour.
[12] See Respondent Husband’s Case Outline, 1st March 2010, p.7.
[13] See his affidavit, filed 11th September 2008, paras.9, 10, 13, 14 & 15. Mr Sanders did not formally rely on his September 2008 affidavit. However, the matters to which I have referred were also set out, albeit in an abbreviated manner, in his affidavit filed on 22nd February 2010.
[14] Among other things, the Husband says that the purchase price was $195,000; the Wife says that the price was $168,000.
[15] There was little, if any, relevant cross-examination of the parties in relation to this investment property. Thus, the Court was left with little else except the competing contentions in relation to it. See Mr Sanders’ account of this investment property at paras.85-87 of his trial affidavit. Ms Sanders’ version of events in relation to it is at para.34 of her trial affidavit.
[16] Three medical reports, albeit produced in 2003 and 2004, were relied upon by Mr Sanders. See Section E of the Respondent Husband’s Case Outline, 1st March 2010. They were rarely referred to. There was no evidence produced to suggest that Mr Sanders’ injury was anything other than of a kind and severity to prevent him from being permanently unable to work, and certainly to prevent him working at his chosen labour as a [omitted].
[17] Mr Sanders contends that the purchase price was $365,000. See his affidavit, filed on 22nd February 2010, paras.89-90. Unless otherwise specified or required, this affidavit will be referred to hereafter as ‘the trial affidavit’ or very similar description.
[18] See Ms Sanders’ affidavit, filed 5th February 2010 para.37, and the trial affidavit of Mr Sanders, paras.122 ff. For the remainder of these reasons, unless otherwise required, Ms Sanders’ affidavit to which I have just referred will be referred to as her ‘trial affidavit.’
[19] See Mr Sanders’ trial affidavit, para.166. In the same place, Mr Sanders said that he had “about $220,000 in a fixed deposit with Bendigo Bank in my name.” It was the funds from this deposit, he said, that he used to [re]pay his parents. For Ms Sanders’ account of this “repayment”, see her trial affidavit, paras.53 - 56.
[20] In his trial affidavit, para.159, Mr Sanders deposed to using the funds for horses and farm expenses. In the course of his cross examination, noted later in these reasons, he said that he needed the money to live on.
[21] See, respectively, Mr Sanders’ trial affidavit, para.154, and Ms Sanders’ trial affidavit, para.52. Mr Sanders also contended that Ms Sanders had asked him to borrow $100,000 from his parents to assist her in the purchase of Property [O], and that she berated him when he refused to do so. See his trial affidavit, para.168. This account from Mr Sanders contradicted his evidence (see note 17 above) that Ms Sanders wanted him to repay his parents.
[22] Ms Sanders’ trial affidavit, para.52.
[23] See, for example, Ms Sanders’ trial affidavit, pars.42, 47 & 49.
[24] See Ms Sanders’ trial affidavit, para.68, and Mr Sanders’ trial affidavit, para.136.
[25] Mr Sanders’ trial affidavit, para.160.
[26] Ms Sanders’ trial affidavit, para.57.
[27] Ms Sanders’ trial affidavit, para.89.
[28] Mr Sanders’ trial affidavit, para.151.
[29] See Mr Sanders’ trial affidavit, para.186, and Ms Sanders’ trial affidavit, para.83.
[30] See Transcript (1st March 2010) pp.19-21.
[31] Transcript (1st March 2010) pp.22-23.
[32] See Transcript (1st March 2010) pp.25-29.
[33] Transcript (1st March 2010) pp.28-31.
[34] There was no contest about the fact of this contribution; there was a contest about its weight.
[35] See the discussion at Transcript (1st March 2010) pp.51-53 & 58-59.
[36] Transcript (1st March 2010) p.55.
[37] Transcript (1st March 2010) pp.55-56.
[38] For example, later in the course of his cross-examination he confirmed (or professed), quite simply if not somewhat plaintively, that “I [still] love the girl.” Transcript (2nd March 2010) p.155.
[39] Transcript (2nd March 2010) p.100.
[40] Among many places, see, for example, Transcript (1st March 2010) pp.76, 92, 100, 101, 106, 107, 116, 124. As to the Company, see Transcript (1st March 2010) p.77.
[41] Transcript (1st March 2010) p.95.
[42] Transcript (1st March 2010) p.75.
[43] Transcript (1st March 2010) pp.76 & 77. At Transcript (2nd March 2010) pp.125-127, Mr Sanders again confirmed that he did not know the exact source of any funds he received. He also agreed with the suggestion that even if there was no legal obligation to repay he felt a moral obligation to repay his parents.
[44] Ibid.
[45] Transcript (2nd March 2010) p.92.
[46] See, for example, Transcript (1st March 2010) p.76 and Transcript (2nd March 2010) pp.95, 98, 106, 111, 116 & 124.
[47] Transcript (1st March 2010) pp.69 & 70.
[48] Transcript (1st March 2010) pp.78-80.
[49] See, for example, Transcript (2nd March 2010) pp.100-102 & 122.
[50] Transcript (2nd March 2010) p.109.
[51] Transcript (2nd March 2010) p.132.
[52] Transcript (2nd March 2010) p.134.
[53] Transcript (2nd March 2010) p.134.
[54] Transcript (2nd March 2010) p.136. The current monthly mortgage payments are $1350. See Transcript, p.137.
[55] But see Mr Sanders’ evidence, at Transcript (2nd March 2010) p.178, where he contended these properties comprised one block, then indicated it was two blocks, one with a house on it and that he would run horses on the adjoining block.
[56] Transcript (2nd March 2010) p.139. In the course of his evidence, and therefore while still in the witness box, Mr Sanders asked a question directly of his Mother, who was seated at the back of the Court. I took this action to be a simple example of Mr Sanders trying to be helpful – but, of course, it was not. Perhaps curiously, Mrs S (the Respondent’s Mother) was not on affidavit and did not give any evidence otherwise, even though she was listed in the Schedule as the source of a number of “loans” to Mr Sanders.
[57] Transcript (2nd March 2010) p.141.
[58]
These funds came from his workers compensation payments which, in the first instance, were sent to his Father who, it would seem, either passed it through the Company’s account or into one of
Mr Sanders’ accounts. His evidence in this regard was not as clear as one would have wished. See Transcript (2nd March 2010) pp.145-146.
[59] Transcript (2nd March 2010) pp.146 & 153.
[60] Transcript (2nd March 2010) pp.154-158.
[61] Transcript (2nd March 2010) pp.159 & 177.
[62] Transcript (2nd March 2010) p.163. The earlier, detailed Appraisal & Report of [D], dated February 2010 in relation to the plant and equipment of the parties’ partnership, was filed in Court on 1st March 2010. It was procured by the solicitors for Ms Sanders, and assessed the fair market value of the plant and equipment at $66,880.
[63] Transcript (2nd March 2010) p.171.
[64] Transcript (2nd March 2010) pp.172-173.
[65] Transcript (2nd March 2010) p.179.
[66] Transcript (2nd March 2010) pp.180-181.
[67] Transcript (2nd March 2010) pp.181 & 193.
[68] Transcript (2nd March 2010) p.182. The amount claimed as a “loan” in relation to “unpaid rent” is said to total $67,000.
[69] Transcript (2nd March 2010) pp.183-184. This evidence was contradicted by his Father; it is noted later in these reasons.
[70] Transcript (2nd March 2010) p.180.
[71] Transcript (2nd March 2010) p.185.
[72] Transcript (2nd March 2010) p.183.
[73] See Transcript (2nd March 2010) pp.187-188.
[74] Transcript (2nd March 2010) pp.193-195.
[75] Transcript (2nd March 2010) pp.195-196. It is unnecessary to deal at any length with later, post-separation, acquisitions such as a horse float, paid for by Mrs S for her son, but registered in his name so that he could recoup GST. See Transcript (2nd March 2010) p.197. In the wider context of the issues to be determined, I do not think it is necessary to make any formal determination in relation to Mr Sanders’ assertion, at para.161 of his trial affidavit, that he receives approximately ‘$400 per week towards the cost of hand feeding stock.’
[76] For ease of reference, in this section of the judgment, unless otherwise required or indicated, the witness will be referred to as Mr S, the Respondent Husband’s Father.
[77] Transcript (5th May 2010) p.11.
[78] Transcript (5th May 2010) p.10.
[79] Transcript (5th May 2010) pp.13 & 28.
[80] See Transcript (5th May 2010) p.13.
[81] See Transcript (5th May 2010) pp.18 & 19.
[82] See the discussion at Transcript (5th May 2010) p.48.
[83] Transcript (5th May 2010) p.23.
[84] Transcript (5th May 2010) p.25.
[85] See Transcript (5th May 2010) pp.26-27.
[86] Transcript (5th May 2010) pp.29-30.
[87] Transcript (5th May 2010) p.33. As previously indicated, based on the detail in the Schedule, Counsel for the Applicant Wife confirmed that his calculations show that just on $400,000 was said to have been provided, via the Company, to the parties.
[88] Transcript (5th May 2010) pp.35 & 36.
[89] Transcript (5th May 2010) p.38.
[90] Generally, see the discussion at Transcript (5th May 2010) pp.39-41. Mr S also confirmed that the Schedule showed only amounts owed; it did not show any amounts (small or large) received.
[91] I should also add that, in any event, a significant number of the alleged loans/debts are statute-barred, noting that the Schedule begins in 1990, albeit that there are few entries for that year. Other loans/debts in the Schedule clearly refer to items paid to or for Mr Sanders post-separation. On my calculations, these post-separation items total $81,001.43.
[92] It was suggested in the course of the trial, and in written submissions, that Mr Sanders was “depressed.” In the course of his cross-examination in this regard, he stated vehemently that he was not depressed either now or at any time following the unsuccessful operation on his injured arm. I readily accept his explanation that he was (and presumably still is from time to time) anxious, frustrated and perhaps disconsolate at his inability to [occupation omitted] and therefore work to provide for his family. He said often that he loved [occupation omitted] and obviously misses that work In my view, it is unnecessary to take the matter further.
[93] By questioning the identity of “the intended beneficiary” I simply intend to highlight that in the Schedule quite a number of items could only have been “given” or “lent” to Mr Sanders, and it is difficult, therefore, to see how the funds so used could be said to be either a loan or to have benefited the parties or the property of the relationship (e.g. see the items in the Schedule that refer to ‘shirt’, or ‘dental bills’ etc.).
[94] It is convenient to note here that because there is such a modest sum of superannuation involved, I propose treating the asset pool as one, rather than separate pools of superannuation and other assets. In this regard, see the discussion by the Full Court in C v C (2005) FLC ¶93-220.
[95] (1981) FLC ¶91-092. See also the more recent discussion in AB v GB (No 2) (2006) 34 Fam LR 82 where, among other things, the Kowaliw decision is referred to, at [53], as not being a “fixed code.”
[96] (1981) FLC ¶91-092 at p.76,644.
[97]
Mr Sanders did not provide any valuation of two [1985 & 1986] Commodore cars. He said, at para.152 of his trial affidavit, that he bought the two “Brock Commodores” in 1985/1986. He said that they have “low mileage”, but that he does not know what they are now worth.” Ms Sanders contended, at para.14 of her trial affidavit, that in 1995 these vehicles were valued at $100,000. Nor did
Mr Sanders disclose his legal fees. I deal with ‘legal fees’ in the context of ‘add-backs’ shortly.
[98] The duty to make full and frank disclosure is set out in full in this Court’s Rules. See Federal Magistrates Court Rules2001, generally, Part 14, and in family law proceedings in particular, see Part 24, and notably r.24.03. For a very recent discussion of the duty of disclosure, admittedly in the context of the rules applicable in the Family Court, see the reasons of Cronin J in Carmel-Fevia v Fevia (2010) 43 Fam LR 405 especially at [55].
[99] Among many cases, see Gould & Gould (2007) FLC ¶93-333 and In the Marriage of Chang & Su (2002) 29 Fam LR 406. These cases suggest that there is an especially wide discretion available to the Court in circumstances where there has been non-disclosure.
[100] AJO v GRO (2005) 191 FLR 317; (2005) 33 Fam LR 134; (2005) FLC ¶93-218, especially at [30].
[101] See AJO v GRO at [39].
[102] Those fees were paid from two sources: a cashed-in AMP insurance policy, and a draw-down facility over the [L] property. Because these legal fees are specifically included by Ms Sanders, I accept the argument on her behalf to the effect that to include the proceeds of the cashed-in AMP policy as well as the legal fees would improperly include the same funds twice into the pool. The mortgage was in Ms Sanders’ name; since Mr Sanders’ injury in 2001, she had been the primary income provider for the family and, thereby, payer of the mortgage. It was not until orders were made in February 2008, well after the draw-down of funds, that Mr Sanders formally assumed responsibility for the mortgage payments. I accept Ms Sanders’ evidence that she had paid extra amounts so as to build up the draw-down facility. Moreover, the funds were used to purchase Property [O], the value of which has been included in the asset pool.
[103] See Respondent Husband’s Written Submissions, filed 18th May 2010, pp.4-5. Unfortunately, this appears to have been the first time that such a proposition about Mr Sanders’ share-holding in the Company was put before the Court. No authority was provided for the submission, and the only evidence was Mr Sanders’ own, not untroubled, testimony.
[104] It will be immediately evident that, because no evidence was provided of their value, Mr Sanders’ 1985 and 1986 Commodore cars have not been included in the following table. Note, too, that “starred items” – thus (*) – denote an agreed value between the parties.
[105]Bremner & Bremner (1995) FLC ¶92-560; In the Marriage of Pierce (1998) 24 Fam LR 377; Clives v Clives (2008) 40 Fam LR 273 especially at p.281 [43] & [44] ff (Warnick, Boland & Cronin JJ).
[106] There is no need to rehearse the previously given evidence, notably from Ms Sanders, regarding the purchase of various motor vehicles by Mr Sanders.
[107] In the Marriage of Gosper (1987) 90 FLR 1; (1987) 11 Fam LR 601; (1987) FLC ¶91-818; In the Marriage of Kessey (1994) 18 Fam LR 149; (1994) FLC ¶92-495. For a recent discussion and application of the principles from these cases, see the NSW Supreme Court decision in Poulos v Svoboda (2005) 33 Fam LR 458.
[108] Kessey 18 Fam LR 149 at pp.159-160.
[109] Cf. s.79(4)(c).
[110] Ferraro & Ferraro (1993) FLC ¶92-335 at p.79,572.
[111]
“Health” is not an issue for Ms Sanders, and save for his injured arm, nor is it an issue for
Mr Sanders.
[112] See discussion at Transcript (1st March 2010) pp.17-19 and Financial Statement of Ms Sanders filed on 5th February 2010.
[113] In this discussion of financial resource, I should be taken to be including, such as one can, the now non-operating family Company, in which Mr S has the controlling shareholding.
[114] See s.79(4)(d).
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