Santini & Santini
[2023] FedCFamC2F 529
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Santini & Santini [2023] FedCFamC2F 529
File number(s): PAC 3297 of 2019 Judgment of: JUDGE NEWBRUN Date of judgment: 9 May 2023 Catchwords: FAMILY LAW – PROPERTY – Just and equitable property Orders made. Legislation: Family Law Act 1975 (Cth) ss 75(2), 79(2), 79(4), 81, 106A Cases cited: Bevan & Bevan (2013) FLC 93-545
Lotta & Lotta [2017] FamCA 50
AJO & GRO (2005) FLC 93-218
Division: Division 2 Family Law Number of paragraphs: 130 Date of hearing: 2–3 March 2023, 6 March 2023 Place: Parramatta Counsel for the Applicant: Mr MacPherson Solicitor for the Applicant: Sydney Family Law Specialists Pty Ltd Counsel for the Respondent: Ms Abdelraheem Solicitor for the Respondent: JB Solicitors ORDERS
PAC 3297 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS SANTINI
ApplicantAND: MR SANTINI
Respondent
order made by:
JUDGE NEWBRUN
DATE OF ORDER:
9 MAY 2023
THE COURT ORDERS THAT:
1.Within twelve weeks of the date of these Orders, the husband shall pay to the wife the sum of $1,746,161.
2.Failing compliance with the above Order, the husband and wife shall do all things and acts and sign all documents as is necessary to list the property known as and situate at B Street, Suburb C being that parcel contained in Certificate of Title Folio Identifier … (“the B Street, Suburb C property”) for sale by private treaty at the best possible price and at the earliest possible time and for the purpose of implementing the sale:
(a)The husband and wife shall instruct Ms D of E Conveyancing, Suburb F, or other such solicitor or conveyancer as they agree upon, to have the conduct of the sale of the B Street, Suburb C property on behalf of the husband and wife;
(b)The husband and wife shall appoint Mr G of H Real Estate to sell the B Street, Suburb C property, or such other real estate agent as the parties agree to appoint;
(c)Neither the husband nor wife may confer on any other agent, without the consent of the other party, any right to any sole or exclusive agency in respect of the B Street, Suburb C property or to any commission;
(d)The sale price at which the B Street, Suburb C property shall be listed shall be as mutually agreed between the husband and wife, and in the absence of agreement at two calendar months prior to the due date of the sale, the price as nominated as the fair market value by J Pty Ltd (“the valuer”) the costs of and incidental to such appointment of the valuer shall be borne equally by the husband and wife as and when they fall due; and
(e)The valuer will, if requested by the husband or wife, at a date three calendar months after the date upon which the B Street, Suburb C property is first listed for sale pursuant to the provisions of these Orders and thereafter at three monthly intervals until the B Street, Suburb C property is sold, nominate a sale price other than the originally nominated sale price, provided that such further nominated sale price reflects, in the valuer’s opinion, a fair market value for the B Street, Suburb C property.
3.The husband and wife shall co-operate in every way with the agent including (without limiting the generality of the foregoing):
(a)Making the key available to the agent;
(b)Allowing inspection of the B Street, Suburb C property at all reasonable times requested by the agent;
(c)Doing or saying nothing to hinder or prevent a sale being affected;
(d)Signing all documents requested by the agent in relation to the listing for sale the B Street, Suburb C property except a contract or agreement for sale which has not been authorised by the husband and wife; and
(e)Doing all acts and things and signing all documents as is necessary to jointly accept any reasonable offer made for the purchase of the B Street, Suburb C property provided that such offer reflects the fair market value for the B Street, Suburb C property in line with the valuer’s opinion (if appointed, pursuant to these Orders) and in the absence of any valuer being appointed, the opinion of the real estate agent.
4.Upon settlement of the sale of the B Street, Suburb C property, the husband shall ensure that at his expense, all personal items/property/litter and/or other items not included in the Contract of the Sale of the B Street, Suburb C property shall be removed and the husband indemnifies the wife with respect to any costs associated with removal of same.
5.Each of the husband and wife are hereby restrained by injunction from causing or allowing the B Street, Suburb C property to be withdrawn from sale (other than to affect the sale of the B Street, Suburb C property pursuant to these Orders).
6.Pending the settlement of the sale of the B Street, Suburb C property, the husband and wife are both hereby restrained by injunction from encumbering the B Street, Suburb C property in any way, accessing any redraw facilities on the B Street, Suburb C mortgage or otherwise increasing the B Street, Suburb C mortgage in any way, and the husband shall pay as and when they fall due all rates, utilities, insurances and other expenses associated with the B Street, Suburb C property and shall indemnify and keep the wife indemnified in relation to same.
7.The husband shall ensure that the Building Insurance Policy for the B Street, Suburb C property is paid in full and maintained from the date of these Orders until the date of settlement of the sale.
8.Upon completion of the sale of the B Street, Suburb C property, the proceeds of sale shall be disbursed as follows:
(a)In payment of all costs, commissions and expenses of the sale (including, but not limited to all conveyancing costs and real estate fees and commissions); then
(b)In payment to the husband of the amount of $2,413,838, but less his half share of the above costs and expenses; then
(c)In payment of to the wife of the amount of $1,746,161, but less her half share of the above costs and expenses.
9.Within 28 days, if she has not already done so, the wife is to do all acts and things and sign all documents necessary to:
(a)Transfer her shares in the company K Pty Ltd (“the company”) to the husband or his nominee; and
(b)Assign all of her interest and entitlement in the company, including any stock, to the husband; and
(c)The husband shall forthwith do all acts and things and sign all documents as is necessary to affect the transfer of shares.
10.The husband is to indemnify the wife and keep her forever indemnified in respect of any taxation liability that may arise, as well as any claim, suit, action, demand, or liability in connection with the company or any other debt or liability arising from joint loans, credit cards, or loan facilities of the parties and of the company.
11.Unless otherwise provided for in these Orders, the wife shall retain all interest in and entitlement to and the husband has no interest in/entitlement to:
(a)The L Street, Suburb F property located at L Street, Suburb F, NSW;
(b)All personal property now in the wife’s possession or control including, but not limited to, all property received by her at present and in the future from the estate of Ms M;
(c)The wife’s bank accounts;
(d)The Motor Vehicle 1;
(e)The wife’s shares; and
(f)The wife’s superannuation.
12.Unless otherwise provided for in these Orders, the husband shall retain all interest in and entitlement to and the wife has no interest in/entitlement to:
(a)The husband’s company K Pty Ltd (trading as K Pty Ltd) and all associated entities;
(b)All personal property now in the husband’s respective possession or control;
(c)The husband’s bank accounts; and
(d)The husband’s superannuation.
13.Unless otherwise specified in these Orders, the wife is solely responsible for and is to indemnify the husband and keep him forever indemnified in relation to all of the wife’s liabilities.
14.Unless otherwise specified in these Orders, the husband is solely responsible for and shall indemnify the wife and keep her forever indemnified in relation to all of the husband’s liabilities including but not limited to:
(a)Any Capital Gains Tax arising from the sale of the property known as and situate at N Street, Suburb O in the state of New South Wales;
(b)Any Capital Gains Tax arising from the sale of the property known as and situate at P(1) Street, Suburb Q in the state of New South Wales;
(c)Any Capital Gains Tax arising from the sale of any other properties owned by the Husband; and
(d)Any monies alleged to be owed to the Respondent Husband’s mother Ms R.
15.Unless otherwise specified in these Orders:
(a)The husband and wife each be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these Orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the banks’ records thereof and superannuation entitlements are deemed to be in the possession of the person who is named as the er whose age or working future provides the conditions for payment of such entitlements;
(b)The husband and wife each be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders; and
(c)The husband and wife each be liable for and indemnify the other against any liability in their respective sole names, including but not limited to credit cards and personal loans.
16.The husband and wife shall each do all such things as are necessary and sign all such documents as are necessary to give effect to these Orders.
17.The husband and wife each have liberty to apply in relation to the implementation of these Orders.
18.Pursuant to section 81 of the Act the husband and wife intend that these Orders shall finally determine their financial relationship and avoid further proceedings between them.
19.In the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these Orders then the Registrar of the Court shall be appointed pursuant to section 106A of the Act to execute such deed, document or instrument in the name of the said party and to do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Santini & Santini has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE NEWBRUN:
INTRODUCTION
These are Reasons for Judgment relating to a final property hearing held before the Court on 2, 3 and 6 March 2023.
The applicant wife and respondent husband both appeared, legally represented.
PROPOSALS
The wife sought orders as set out in her case outline filed 23 February 2023, inter alia, that:
(a)The property at B Street, Suburb C NSW (the “B Street, Suburb C property”) be sold;
(b)From the net proceeds of sale of the B Street, Suburb C property the wife receive 50%, a further payment of $267,485 (which the Court infers represents half of the wife’s contended add back of $534,970), with the balance then remaining to be paid to the husband;
(c)She transfer her shares in the company K Pty Ltd (“the company”) to the husband;
(d)She retain her interest in the property at L Street, Suburb F, NSW, and other specified personal property, as well as her shares and superannuation;
(e)The husband retain his interest in the above company, his personal property and superannuation; the husband remain responsible for any capital gains tax arising from two specified items of real estate previously held by the husband.
The husband sought orders as set out in his Minute of Order that:
(a)The husband pay to the wife a lump sum of $1,200,000;
(b)Should the husband fail to pay to the wife the said sum of $1,200,000, he do all such acts and things to effect the sale of the B Street, Suburb C property and pay to the wife $1,200,000 from the net sale proceeds, with the balance being retained by the husband;
(c)Each party retain their respective interests in personal property, shares and superannuation.
MATERIAL RELIED UPON
The wife relied upon the following documents:
(a)Case outline filed 23 February 2023;
(b)Further Amended Initiating Application filed 19 August 2022;
(c)Her affidavit filed 19 August 2022;
(d)Joint statement of agreed facts and issues;
(e)Joint balance sheet;
(f)Further Amended Financial Statement filed 19 August 2022;
(g)An asset and liability schedule (two pages), and a schedule of effect of proposed Orders (three pages).
The husband relied upon the following documents:
(a)Case outline filed 27 February 2023;
(b)Further Amended Response filed 22 August 2022;
(c)Further Amended Financial Statement filed 22 August 2022;
(d)His affidavit filed 22 August 2022;
(e)Balance sheet prepared for closing submissions.
The exhibits in evidence were as follows:
(a)Exhibit A: Joint balance sheet;
(b)Exhibit B: Amended joint balance sheet;
(c)Exhibit C: Guardianship Orders for the triplet sons of the parties;
(d)Exhibit D: Guardianship applications for the triplet sons of the parties AND report to NCAT;
(e)Exhibit E: Notice to Produce issued to the husband by the wife;
(f)Exhibit F: Agreed statement of initial contributions;
(g)Exhibit G: Trust deed and account transaction listings.
EVIDENCE
The Court has considered the documentary material relied upon by the parties discussed above, and the parties’ oral evidence. The standard of proof applied by the Court in respect to the evidence is the balance of probabilities. The Court does not propose to set out the entirety of the evidence. Relevant evidence relating to the issues to be determined will be set out below and under the headings, “Financial disclosure by husband”, “BALANCE SHEET”, “CONTRIBUTIONS”, and “SECTION 75(2)”.
The parties at the outset of the hearing agreed that the Court should disregard any hearsay evidence in the parties’ affidavits relied upon.
The wife was briefly cross-examined. She presented well. She sought to give responsive answers to questions asked of her.
The husband was cross-examined at length on a range of subjects, including financial disclosure. The husband also sought to give responsive answers to questions asked of him. He made frank admissions as to financial non-disclosure. He also made frank admissions as to his inability to provide full detail as to various aspects of his past financial history, including as to the precise manner in which he spent the net proceeds of sale of the property at P(1) Street, Suburb Q, NSW (the “P(1) Street, Suburb Q property”). The husband impressed as a somewhat unsophisticated person, and a husband and father who had historically sought to work hard to provide for and care for the family but who at times had struggled in this respect, including by reason of the acute demands of the parties’ children who have serious mental health and other disabling issues. Towards the end of his cross-examination, he broke down in the witness box when relating that his son Mr S was close to suicide and that he gets no help for him; the Court briefly adjourned having assessed that this emotional reaction was genuine. In the view of the Court, the husband sought to give honest evidence.
The parties’ children are Mr S, 18 years, and triplets, X, Y, and Z, aged 17 years, presently living with the husband.
Financial disclosure by husband
The wife’s property proceedings were commenced in 2019.
On 22 August 2022, by consent, the Court made interim Orders that within eight weeks the husband provide certain financial disclosure relating to K Pty Ltd, and his bank accounts. In oral evidence the husband stated that he was aware of these Orders and had read Order 2 relating to his obligations to provide disclosure in various respects. He agreed that he had not complied with that Order.
The husband stated that he understood his disclosure obligations in these property proceedings. He agreed that there had been correspondence between the parties’ respective solicitors regarding disclosure. He confirmed that he had not produced bank statements or other documents.
The husband stated in his oral evidence that he has not lodged his tax returns for financial years 2018 to 2020. He had stated in his trial affidavit that he had not lodged such returns from 2017 to 2020. He asserts that the current state of the B Street, Suburb C property has meant that he has been unable to find the documents required by his accountant to complete the tax returns.
The husband stated that his depression and chronic fatigue, the stress of these proceedings, the expense of his business, his strained relationship with the wife, together with his elder son’s criminal matters, had made it difficult for him to sort through his financial affairs.
The husband stated that he had read the letter dated 19 October 2022 from the wife’s solicitors to his solicitors relating to his failure to comply with the above orders made on 22 August 2022 relating to disclosure.
The husband stated that he had not attempted to thwart the wife having a better understanding of his financial position but that he just had so much on his plate and that it was not easy. It was put to the husband that he just did not comply with Court orders if it was inconvenient for him. The husband denied this suggestion, stating that he has a lot of issues, besides himself, and referred to the children. He stated that he has had a lot happening. He stated that his son Mr S, who he has to look after, is close to suicide and the husband gets no help.
The husband’s attention was drawn to a Notice to Produce dated 21 February 2023 being Exhibit E. The husband agreed that his solicitors had been served with this document by the wife’s solicitors and that he had not produced the documents set out in that Notice to Produce. (In this context, the Court observes that the Notice to Produce sought, inter alia, documentation in relation to the company K which the husband had not yet caused to be prepared, and similarly had sought taxation returns of the husband for financial years in relation to which the husband had not yet caused to be prepared.)
The husband agreed that there was no documentation to support his contention that monies were owed to his mother.
The husband initially stated that he had kept documentation at the B Street, Suburb C property relating to his investment properties. A short time later he stated that he had looked for such documentation at that property but they were not there now.
The husband repeated his statement in his trial affidavit that the B Street, Suburb C property had been the subject of hoarding by the wife. (The Court observes that the wife denied the husband’s allegations that she had unreasonably hoarded items in the family home at B Street, Suburb C. There was no cross examination of the wife in this context. The Court does not accept that the wife unreasonably hoarded items at the family home.)
The husband stated that he was not sure why a Motor Vehicle 2 was not referred to in the balance sheet. He had purchased a vehicle two years ago for $1,000. He stated he just forgot to put it in the balance sheet. (The Court observes that this motor vehicle is in fact referred to in paragraph 112 of the husband’s trial affidavit.)
The husband agreed that he had been asked for documents by the wife during these proceedings. He agreed that he had not fully complied with his disclosure obligations.
The husband was asked why he had not disclosed, inter alia, the Motor Vehicle 2 in his Further Amended Financial Statement filed 22 August 2022. The husband replied by stating that he did not know and stated that he did not understand the procedures. He stated that sometimes you forget things. He stated that he did not pick up on the fact that his Financial Statement did not include the Motor Vehicle 2.
The husband was cross-examined as to a liability to NAB of about $49,933 (the Court observes that this would appear to be the same liability as that referred to in Exhibit F with the sum there being referred to as $49,974). It was put to him that he had not produced any documentation in relation to this liability, to which the husband replied that the wife has the documents, not himself. A short time later he stated that he did try and get documentation from NAB.
The husband was cross-examined in relation to the existence of documentation relating to one of the investment properties, namely T Street, Suburb Q, NSW. The husband stated that he doesn’t have any documentation and that he was unable to find any documents.
The husband was cross-examined as to his assertion in his trial affidavit that he earned on average $80,000 per annum during the parties’ relationship. He stated that his income over the last 12 months was zero. He stated that during the 2022 tax year his income was zero. He stated that his income for the 2021 tax year was zero. He then confirmed that his Further Amended Financial Statement filed 22 August 2022 stated that his total average weekly income was estimated $500. He was then asked why he asserted that his income was zero (over the last 12 months), to which he replied that he was pulling $500 out of the business to live and that this was his income, namely $500 per week. He reiterated that he just pulls money out of the business to feed the children and confirmed that if he does so it is not income.
The husband agreed that he had not completed taxation returns from 2018 to date. He stated that 2017 was his last lodged income tax return. The last taxation return for K Pty Ltd was in 2017.
The husband confirmed that the children had been living with him since March 2022. He was asked why he had not produced documents prior to March 2022. He responded by stating that he had been suffering depression over the last few years and which was sometimes quite debilitating. He stated that sometimes he could not get out of bed.
The husband was shown some bank account documents from NAB relating to an account ending in …32. He agreed that this account had not been disclosed by him and that his statement in paragraph 119 of his trial affidavit that he had no other bank accounts was incorrect. In re-examination, in this context, the husband stated that bank account …32 was still in existence and that he had last used account over ten years ago. He stated that he had not disclosed this bank account because he had forgotten all about it. He stated he had not failed to disclose that bank account on purpose.
The husband stated that he only attended high school until Year 10 and that he was not a good reader.
The husband confirmed his evidence that he had left documentation at the B Street, Suburb C property on separation, such documentation remained at this property, the wife had (later) left this property, and the documentation was now gone.
The husband denied that he was intentionally not making financial disclosure.
The Court finds that the husband has failed to make adequate financial disclosure in these property proceedings. Inter alia, he had consented to interim Orders obliging him to provide specific financial disclosure relating to K Pty Ltd in August 2022 and he had failed to comply with this Order.
Nevertheless, the Court does not accept that the husband has hid or is hiding an asset or assets. The husband’s lifestyle is modest. He works in the business during the week and does his best to care for the parties’ four sons with serious mental health and other issues including autism.
LEGAL PRINCIPLES
In Lotta & Lotta [2017] FamCA 50 Foster J stated:
281 The approach to the determination of an application under s 79 of the Act is set out in Stanford v Stanford (2012) 247 CLR 108 and further considered by the Full Court in Bevan & Bevan [2014] FamCAFC 19, Chapman & Chapman (2014) FLC 93–592 and Scott & Danton [2014] FamCAFC 203.
282The Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order.
283Such a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist. The question is whether those rights and interests should be altered.
284There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 79(4). The Court needs to conclude that it would be unjust or unfair to leave property rights intact under s 79(2) of the Act.
285In many cases this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and, thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship.
286In particular, such a circumstance arises where both parties seek property adjustment orders but are unable to agree as to same. Here the wife seeks an order for adjustment of property and the husband contends that there should be no such adjustment.
287It is thus important to ascertain the present property and resources of the parties so as to facilitate a consideration of the s 79(2) question.
288In some circumstances it is not possible to determine whether it is just and equitable to make adjustment orders as to the parties’ present property rights without a consideration of s 79 (4) matters.
289Section 79(4) requires a consideration of the contributions made by the parties as defined in s 79(4)(a) to (c). The Court must then consider s 79(4)(d) to (g) in particular the subjective considerations as to the parties by having regard to the provisions of s 75(2) in so far as they are relevant (s 79(4)(e)).
290The Court can then consider the “justice and equity” of the actual orders to be made: Russell & Russell (1999) FLC 92–877; Teal & Teal [2010] FamCAFC 120, in the context of the Court’s obligation to make “appropriate orders” as provided for in s 79(1) of the Act.
BALANCE SHEET
The balance sheet of the parties, Exhibit B, is now set out:
BALANCE SHEET Ownership Description Wife’s value Husband’s value Assets 1 W L Street, Suburb F NSW $1,700,000 $1,700,000 2 W Partial property settlement received by the wife from the sale of the Town U property $33,533 $33,533 3 W Bank account – Bank V - …70 $31,947 $31,947 4 W Motor Vehicle 1 $15,000 $15,000 5 W Shares Company W (44 shares at $18.08) $796 $796 6 W Company AB (44 shares at $48.86) $2,150 $2,150 7 W Household contents at L Street, Suburb F $5,000 $5,000 8 W Wife’s share in the property at AC Street, Suburb AD, NSW $446,166 $446,166 9 H Partial property settlement received by the husband from the sale of the Town U property $33,533 $33,533 10 H B Street, Suburb C NSW $4,160,000 $4,160,000 11 H K Pty Ltd trading as K Pty Ltd including stock $250,000 $250,000 12 H Trailer 1 $2,000 $2,000 13 H Trailer 2 $600 $600 14 H Bank account – NAB …68 $6 $6 15 H Motor Vehicle 3 $500 $500 16 H Household contents at B Street, Suburb C $5,000 $5,000 17 W Ms M Pty Ltd ATF Ms Santini Testamentary Trust
Account …95
Account …36$0.00 $1,273,499 Total $6,685,231 $7,959,730 Addbacks 18 H Proceeds of sale from P(1) Street (including P(2)) P Street, Suburb Q, $534,970 $0.00 Total $534,970 $0.00 Liabilities 19 H CGT arising from sale of N Street, Suburb O and P Street, Suburb Q $0.00 NK H Loan from husband’s mother $0.00 NK Total $0.00 NK Superannuation Member Name of Fund Type of Interest Wife’s Value Husband’s Value 20 H Super Fund 1 Accumulation $71,405 $71,405 21 H Super Fund 2 Accumulation $119,509 $119,509 22 W Super Fund 3 Accumulation $72,586 $72,586 Total $263,500 $263,500 Financial Resources Ownership Description Wife’s Value Husband’s Value 23 W Ms M ATF Ms Santini Testamentary Trust
Account …95
Account …36$1,168,048
$105,451$0.00
Total $1,273,499 $0.00 Net Total Assets Total $ $
Item 1, the wife’s property at L Street, Suburb F, was purchased by the wife from her inheritance from her late mother who had died in 2021. Again the parties separated in November 2018. The husband made no contribution towards this inheritance. Item 1 should be removed from the above balance sheet and placed in a separate balance sheet pertaining to assets of the wife from her above inheritance.
Item 8, the wife’s interest in a property at AC Street, Suburb AD, NSW, in the sum of about $446,166, arose from the wife’s inheritance from her late mother and should be placed in the separate balance sheet.
Item 17, being cash funds held by the wife in a testamentary trust, and relating to the above inheritance, should be removed from the above balance sheet and placed in the separate balance sheet. The wife had stated in oral evidence that she was the primary beneficiary of this testamentary trust.
As to item 18, the wife’s contended add back in the sum of $534,970, and relating to the husband’s receipt of net proceeds of sale from the P Street, Suburb Q, property, the Court will now set out relevant evidence and determine this issue.
Again, the wife contended that there was unaccounted proceeds of sale from the sale by the husband of the P Street, Suburb Q, property in the sum of $534,970.
For the husband’s part, he contended, inter alia, that he had spent a considerable portion of the proceeds of sale for his and the parties’ reasonable living expenses, he had paid a considerable portion for debts of the business K Pty Ltd, he had paid monies to people who were owed money by him (such debts having arisen from the husband’s need to borrow moneys to pay for the parties’ living expenses), and he had made mortgage loan repayments for the former property at Town U. Accordingly, he submitted that the parties should share the accumulated cost of these payments.
In relation to this addback issue, the Court refers to the following legal principles.
In AJO & GRO (2005) FLC 93-218 the Full Court of the Family Court of Australia stated at 79,617–79,619:
30.To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a)Where the parties have expended money on legal fees. In DJM and JLM (1998) FLC 92-816 the Full Court said at 85,262:
“11.6For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.”
(b)Where there has been a premature distribution of matrimonial assets. In Townsend and Townsend (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at 81,654:
“In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.”
(c)In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644:
“As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)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.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec 75(2)(o) to applications for settlement of property instituted under the provisions of sec 79.”
…
39.Her Honour seems to be saying that the mere fact that a party has expended money realised from the disposition of assets that existed as at the date of separation, will result in that expenditure being added back “in the usual way” as a premature distribution of assets with nothing more. If that is what her Honour is saying, in our view, she is being unduly simplistic. In our opinion, it was a necessary requirement for her Honour to examine and make some assessment of the reasonableness or otherwise of the expenditure.
In Bevan & Bevan (2013) FLC 93-545 at 87,233 the Full Court stated:
79.We observe that “notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them”, and thus is not amenable to alteration under s 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage – and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that s 79(4) and in particular s 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.
The P Street, Suburb Q, property had been sold in September 2018 for $825,000. The net proceeds of sale in the sum of about $534,970 were transferred into the husband’s NAB bank account ending …68. The husband stated in his trial affidavit that these funds were applied over time towards “the business and on living expenses”.
The husband stated in his trial affidavit that for a few years, “I have been mainly living off the proceeds of sale of the properties I sold, as detailed further in this affidavit. However, since then, my main source of income has been the business.”
The wife refers to the husband’s affidavit filed 10 November 2021 in which the husband stated, “I am currently living off the proceeds of sale of the properties that I sold.”
In oral evidence, in reference to paragraph 66(a) of his trial affidavit, the husband stated that from the above net proceeds of sale he had paid about $25,000 to pay off loans to people that he owed money to, including to his mother. The Court finds that the husband had earlier repaid his mother previous sums of money that she had given to him for living expenses, $80,000, and which sum had been repaid from the proceeds of sale of the property at N Street, Suburb O.
The husband stated that his aunt had been owed about $20,000 and that she was alive. His friend Mr AE had been paid $5,000 and he was alive. He stated that there was no documentation relating to these previous loans.
By reference to paragraph 66(c) of his trial affidavit, the husband could not recall how much he had paid off for rent which he was behind on.
By reference to paragraph 66(d), the contended debt for the business from overseas, $80,000, the husband confirmed that he had no documentation available although he had them somewhere.
By reference to paragraph 66(e), the contended debt on the business and expenses, the husband stated he had produced no documentation but he would have some documentation.
The husband stated that in reference to his expenditure on living expenses and referred to in paragraph 66 of his trial affidavit his expenditure for food, fuel and travel expenses was quite low, not greater than $500 per week. In this context he stated that the children had not been living with him up to March 2022, except for the child Z who was with him since 2021.
The husband stated that the NAB bank statements in Annexure 12 to his trial affidavit referred to his expenditures as described by him in paragraph 66 of his trial affidavit.
The Court finds, on the balance of probabilities, that the husband reasonably spent the sums of money referred to below (see paragraph 60 (a)–(e) below), a total of $252,738, for the business (K t/as K Pty Ltd) and his living expenses from the net proceeds of sale of the P Street, Suburb Q property received by him in September 2018. The Court makes these findings by reason of the following accepted evidence:
(a)the husband’s evidence in his trial affidavit at paragraphs 48, 49, 50, 51, 52, 53, 54, 55, 56, 66, 67, 114, 115, 116, 117, 118,
(b)his oral evidence pertaining to importing a container from Country AF in relation to paragraph 66(b) of his trial affidavit,
(c)his oral evidence relating to spending not more than $500 per week on food, fuel and travel and being part of his “living expenses” referred to in paragraph 66 of his trial affidavit, and,
(d)his oral evidence that the NAB bank statements in Annexure 12 to his trial affidavit relate to his expenditures toward the business and on living expenses as described by him in paragraph 66 of his trial affidavit.
The sums of money, referred to above, are:
(a)Mortgage loan repayments for the former property at Town U owned by the parties: a total of about $32,629. In this context, the Court observes that the former property at Town U was the only property with a mortgage loan outstanding from about September 2018 until June 2021, and there are references to income received (the Court would infer rental income) and noted as credits in Annexure 12 (eg, “Town U” on 1 June 2021);
(b)Payments to the business K Pty Ltd: a total of about $65,770;
(c)Payments to overseas creditors in relation to the above business, including importing expenses for this business: a total of about $73,034. (The Court observes, inter alia, that the NAB debit entries making up this total link up with the husband’s business visits to Country AF to purchase stock for the business in October 2018, February/March 2019, and noting that the husband’s affidavit evidence was that the duration of his Country AF business visits varied but were for about two weeks at a time; there are references to, eg, “Country AF trans”, “container”);
(d)By reference in particular to Annexure 12 there are payments for reasonable living expenses, including expenses for AGL, “bill payment”, transport, pickup, tradesperson, glasses and gym: a total of about $10,305;
(e)From 4 September 2018, (being the date the husband received the net proceeds of sale of the P Street, Suburb Q property, $534,970) until about 1 June 2021 (being the end date of the bank statements in annexure 12), a period of about 142 weeks, the husband reasonably expended the sum of $71,000 (142 times $500 per week) for food, fuel and travel expenses.
Again, the wife contends that the above sum of $534,970 in effect represented a premature distribution by the husband of the proceeds of sale of the P Street, Suburb Q property asset arising out of the parties’ relationship.
The Court finds that from the proceeds of sale of the P Street, Suburb Q property, again representing property of the parties arising out of their relationship, the sum of $282,232 should be found to constitute a premature distribution by the husband of an asset arising out of the parties’ relationship and added back into the balance sheet, with the said sum being calculated as follows:
(a)$534,970 less husband’s reasonable expenditure, as above, $252,738 = $282,232.
As to items 19 and 20, certain contended liabilities of the husband, in closing submissions the husband’s counsel informed the Court that specific amounts for these contended liabilities were not known and accordingly the specific amounts for these contended liabilities should be removed from the above balance sheet and in their place the words, “not known” will be inserted.
The final balance sheets accordingly will be as follows:
FINAL BALANCE SHEET Ownership Description Wife’s value Husband’s value Assets 2 W Partial property settlement received by the wife from the sale of Town U property $33,533 $33,533 3 W Bank account - Bank V - …70 $31,947 $31,947 4 W Motor Vehicle 1 $15,000 $15,000 5 W Shares Company W (44 shares at $18.08) $796 $796 6 W Shares Company AB (44 shares at $48.86) $2,150 $2,150 7 W Household contents at L Street, Suburb F $5,000 $5,000 9 H Partial property settlement received by the husband from the sale of Town U property $33,533 $33,533 10 H B Street, Suburb C NSW $4,160,000 $4,160,000 11 H K Pty Ltd trading as K Pty Ltd including stock $250,000 $250,000 12 H Trailer 1 $2,000 $2,000 13 H Trailer 2 $600 $600 14 H Bank account – NAB …68 $6 $6 15 H Motor Vehicle 3 $500 $500 16 H Household contents at B Street, Suburb C $5,000 $5,000 Total $4,540,065 $4,540,065 Addbacks 18 H Husband’s premature distribution of part proceeds of sale P Street, Suburb Q $282,232 $282,232 Liabilities 19 H CGT arising from sale of N Street, Suburb O and P Street, Suburb Q $0.00 NK 20 H Loan from husband’s mother $0.00 NK Total $0.00 NK Superannuation Member Name of Fund Type of Interest Wife’s Value Husband’s Value 21 H Super Fund 1 Accumulation $71,405 $71,405 22 H Super Fund 2 Accumulation $119,509 $119,509 23 W Super Fund 3 Accumulation $72,586 $72,586 Total $263,500 $263,500 Net Total Assets Total $5,085,797 $5,085,797
WIFE’S ASSETS FROM HER INHERITANCE Ownership Description Wife’s value Husband’s value Assets 1 W L Street, Suburb F NSW $1,700,000 $1,700,000 2 W Wife’s share in the property at AC Street, Suburb AD, NSW $446,166 $446,166 3 W Ms M ATF Ms Santini Testamentary Trust
Account …95
Account …36$1,273,499 $1,273,499 Total $3,419,665 $3,419,665
Accordingly, the Court finds that the net assets of the parties arising out of their relationship is $4,822,297. The Court finds that their superannuation entitlements arising out of their relationship total $263,500. Thus the parties’ total net assets and superannuation entitlements total $5,085,797.
The Court finds that the wife’s assets arising from her inheritance from her late mother’s estate, to which the husband made no relevant contribution, total $3,419,665.
SECTION 79(2) OF THE ACT
The Court is satisfied that it is just and equitable in this case to alter the property interests of the parties in light of the breakdown of their relationship, the fact that they will no longer have the joint use and enjoyment of their property, and the fact that the continuance of the current legal ownership of their property would not afford them justice and equity.
CONTRIBUTIONS
The parties’ relationship spanned the period from about 2001 until about November 2018; a period of about 17 years.
It is agreed between the parties that at the commencement of cohabitation, in about 2001, the husband’s initial contributions, by reference to, in particular, four properties that he brought into the relationship, was net $559,041: see Exhibit F. This was a significant contribution by the husband made in 2001, and which enabled the parties to accumulate capital gains.
Of the above the four properties, the property at T Street, Suburb Q was sold in about 2011, the property at N Street, Suburb O was sold in 2016, and the property at P Street, Suburb Q was sold in September 2018.
The wife’s assets as at commencement of cohabitation were probably minimal and included a car and some savings.
In about 2002, the parties purchased a property at Town U financed by way of home loan. It was sold in about December 2021 and the parties agreed to each receive a partial property settlement from the sale proceeds in the sum of $33,533. The net proceeds of sale had been about $73,166.
During the parties’ relationship, the husband worked full-time in employment as a transport worker. In about 2013 until about 2014 he started buying goods wholesale and selling them online. In 2016 the husband ceased his work as a transport worker due to suffering depression and chronic fatigue and commenced a business called K Pty Ltd trading as K Pty Ltd and which was a business based in Suburb AG. To assist the husband establish this business, the wife agreed to be appointed the sole director, and she entered into a bank guarantee in respect of obligations under a lease for the business. The husband contributed his earnings from his employments and the business K Pty Ltd towards mortgage loan liabilities and/or the parties’ living expenses, noting that some of the mortgaged properties were tenanted.
The husband built a shed on the B Street, Suburb C property in about 2003.
During the parties’ relationship up until about 2004 the wife worked in employment and contributed her income towards the parties’ living expenses.
In about 2006 the wife received a $25,000 inheritance from her grandfather which she used to pay bills and other general living expenses. In about 2015 she received the sum of $80,000 from her mother which money was applied to the parties’ joint expenses. The Court takes these amounts into account.
During the parties’ relationship, from about the birth of the eldest child Mr S in 2004, the wife was the primary carer of the four children, and she was receiving the assistance of a part-time nanny four days a week until the children were five years old. During the parties’ relationship the wife was primarily responsible for the homemaking duties. These were contributions of substance by the wife. The husband assisted the wife with the care of the children during the parties’ relationship and he cared for the lawns and gardens at the B Street, Suburb C property.
In relation to the above care of the children, the court should state that the eldest child was detained for about two and a half years in a juvenile detention Centre in City AH from about late 2020 until 2022 when he came into the husband’s care.
Separation occurred in about November 2018. The husband vacated the B Street, Suburb C property in about May 2019, and the children remained at that property with the wife. The wife predominantly cared for the children until she moved out of that property in February 2022 to move into her new property at L Street, Suburb F, albeit that the child Z had been living with the husband since about August 2021. The Court takes into account this contribution by the wife over a period in excess of three years.
From about February 2022 to date the husband has predominantly cared for the children which the Court takes into account.
In 2021 the wife paid an electrician for electrical repairs at the B Street, Suburb C property in the sum of $4,929. She paid about $22,347 in plumbing repairs for that property in 2021. These amounts are taken into account.
In relation to the parties’ superannuation entitlements, there was a lack of evidence before the court as to the value of the parties’ respective superannuation entitlements as at the date of commencement of cohabitation. In any event, the wife only started working with Employer AJ in 1998 and the parties’ relationship commenced in 2001. The wife had ceased working in about 2004. The husband commenced employment after he left school aged almost 16 years. He began work as a transport worker when he was about 19 years. He commenced a business in 1997 and was self-employed to around 2003. Thereafter he was employed as a transport worker until about 2016. There was no significant and specific evidence before the Court as to the husband’s accumulation of superannuation. The Court finds that it is likely that the parties indirectly contributed to the accumulation of each other’s superannuation entitlements during their relationship and to date through their respective care of the children and arrangement of employment and work.
In 2021, the wife’s mother died and thereafter the wife received a substantial inheritance. The husband conceded that he had made no contribution towards this inheritance. With this inheritance, the wife purchased her property at L Street, Suburb F, with an agreed present value of $1,700,000. She has cash funds in two bank accounts relating to a testamentary trust totalling about $1,273,499. In oral evidence the wife stated that she transfers cash monies to herself as needed for day-to-day expenses. She has an interest in a property at AC Street, Suburb AD, NSW, in the sum of about $446,166 arising out of the inheritance.
The wife contended that a contributions finding of equality should be made between the parties.
The husband contended that a contributions finding of 60% in favour of the husband should be made.
Taking into account the above matters, and viewing the parties’ overall contributions holistically, the Court assesses the parties’ contributions to the net assets including superannuation arising out of their relationship (excluding the wife’s inheritance assets of $3,419,665 to which the husband made no relevant contribution) of $5,085,797 to be 55% in favour of the husband and 45% to the wife.
The husband’s 55% of $5,085,797 is $2,797,188.
The wife’s 45% of $5,085,797 is $2,288,608.
Accordingly, the resulting disparity is $508,580 in favour of the husband.
SECTION 75(2)
The husband is aged 55 years. The wife is aged 51 years.
The husband lives with the children at the B Street, Suburb C property. The wife lives in her recently acquired property at L Street, Suburb F. Presently the wife spends time with the children each week at B Street, Suburb C for one hour with “the support and supervision of my carer for my safety as I am fearful of the children and of (the husband).”
The husband sought an adjustment under section 75(2) by reason of his likely care of the children even after they all reach 18 years, noting the children’s disabilities and related special needs, the husband’s prospective capital gains tax liability in respect of the sale of the N Street, Suburb O property, and the wife’s much stronger financial position by reason of her inheritance related assets.
The wife sought no adjustment under section 75(2) by reason of her inheritance assets. She contended that no adjustment should be made in favour of the husband by reason of the husband’s failure to provide disclosure.
The Court will now deal with the husband’s contention that an adjustment should be made in his favour under section 75(2) by reason of his likely care of the children even after they all turned 18 years.
The husband presently has the primary care of the children. Again, the wife sees the children once a week for one hour on Fridays.
The husband states that he has real concerns about the eldest adult child’s mental state and his continued threats to self-harm. The father states that this child’s criminal charges and his health have been a great concern to him. He states that the eldest child has another two and a half years left on parole. The wife refers to this child’s convictions in about 2021 for serious criminal offences, with the child receiving a non-parole period of two years and six months, and with the child becoming first eligible for parole in 2022. The husband states that this child has regular appointments with a food therapist, psychologist and psychiatrist.
The husband states that he has to take the three youngest children (triplets) to about four to five appointments per week; these include seeing a psychologist and interacting with the AK Family Group who assist with health and medical needs.
The husband states that the NDIS provides a lot of assistance on a regular basis to the children in his care. The husband states that even with the assistance from NDIS, when the children are being taken care of, he still gets phone calls from the triplets about 10 to 20 times a day. The husband states that the children generally do not like working with the support workers or going to respite (and the children, whilst in the husband’s care, have only gone to respite three times). They tell the husband that they just want to be at home with him. The husband still has to do a lot of cleaning in the house. The triplets have severe anxiety and obsessions about electricity and power. Most days the husband needs to manage the children’s excitement, anxiety or aggression. The triplets all have food issues which requires significant management by the husband. They have sensory issues with clothes. A few nights every week one of the children might experience anxiety in the night and will come and wake up the husband. Some of the children have or have had issues dealing with depression. On a weekly basis the husband takes the children with him to work, usually on weekends. The husband teaches the children how to use tools and do other things in the business. The children have been prescribed medication by their psychiatrist, but they refuse to take it.
According to the husband an NDIS officer and the triplet’s psychologists have told him that the children will need care for the rest of their lives, however there is no significant documentary evidence from these persons confirming and/or explaining why such long term care may be required. The husband states that he has no intention of sending the children to a group home (for full-time care). He states that the children have no other family or friends to care for them but himself.
The medical reports in relation to the children, annexed to the husband’s affidavit, confirm the husband’s evidence relating to the children’s significant special needs and difficulties. The medical reports refer to the children’s various disabilities including autism and paranoid delusions. For example, the paediatric report dated 24 February 2022 in relation to the child Z refers to the child’s increasing violence when things do not go his way including smashing a car window. The children Y and Z have delusions about wifi and electricity at the property. The report dated 3 March 2022 addressed to the Department of Education in relation to the child X and authored by a psychiatrist and two senior social worker/mental health clinicians, refers to, inter alia, the triplet children being highly enmeshed with each other and that the child X tends to follow and echo the child Y’s delusional ideations.
In oral evidence, the husband stated, in relation to his care of the children, that he utilises income earned from his business to pay for the children’s food, including organic food, and that he spends a considerable sum of money each week for food. In this context he stated that he receives no financial support from the government. He stated that the children did obtain food when on respite care.
The NDIS had prepared a guardianship application for the triplets to NCAT in about August 2022. The husband disputed the contents of the guardianship application made in respect of the triplet X, in particular he disputed that the children were unsafe living with the husband and that the parties did not have the capacity to make decisions on behalf of the triplets. The husband disputed the contention in the guardianship application that he was neglectful of the triplets. He stated that the guardianship application was a false document, however he agreed that he had stated many times that he would not allow the triplets to live elsewhere. In this context he stated that the triplets want to be with him.
Guardianship orders were made in relation to the triplets by NCAT on 30 November 2022, for 12 months from 30 November 2022, and appointing the Public Guardian as their guardian. The relevant guardianship orders noted the functions of the Guardian in relation to certain matters including accommodation, healthcare, medical/dental consent, and services to be provided to each child. There is no evidence before the Court as to the precise reasons as to why NCAT made the guardianship orders that they made including any findings they may have made in relation to the guardianship applications made to NCAT.
From Exhibit D, the report to NCAT dated 17 November 2022 prepared by the manager client services of the Suburb AL Community Services Centre, there is no clear comment or suggestion that the allegations against the husband of extreme neglect of the children (made in the guardianship applications) were substantiated.
The Court is not persuaded on the balance of probabilities that the allegations of neglect of the children and other criticisms made against the husband in the guardianship applications to NCAT are made out. The Court observes that the children have remained in the father’s care since 30 November 2022 and, the Court infers, to the knowledge of the Public Guardian.
The wife states that she continues to apply for and manage the children’s NDIS funding and that the husband has not engaged in this process at all, including from when the children had been living with him.
After separation, the husband was assessed to pay child support. He did not do so and as of June 2022 he was in arrears in the sum of about $14,757. The wife did not pay child support to the husband during the period that the triplets lived with him. The wife has been recently assessed to pay child support in the amount of only $459 per year. As the husband is still in arrears of child support the wife has been applying a debt offset to her assessed payments.
The Court takes into account under section 75(2) that the parties’ children may remain in the husband’s primary care for a significant period of time. Whilst the husband receives outside assistance in relation to his care and management of the children, and may continue to receive such assistance prospectively, the Court accepts that presently the husband provides regular financial support for the children (eg food) and for which the husband does not receive full reimbursement. The Court infers that the husband’s need to often be present for the children might take him away from his business resulting in a reduction of his work income. Again, the wife’s assessed child support for the children is $459 per year.
The husband sought an adjustment in his favour under section 75(2) by reason of his alleged adverse health.
The husband has Type 2 diabetes and depression for which he takes medication. He also asserts that he suffers from chronic fatigue which impacts upon his ability to work. He goes to work usually every day of the week, often in the afternoons. And on the weekends he works Saturdays and Sundays for between five to six hours. The husband adduced no medical evidence in relation to his health and work capacity. Nevertheless, the Court accepts that the husband probably does suffer from depression and fatigue and accepts that these conditions likely did impact upon his work previously as a transport worker and probably contributed to him setting up the business K Pty Ltd. Fortunately, the husband, aged almost 56 years, continues to work in his business and retains a reasonable, albeit modest, work capacity, whilst again noting that his present care of the children may take him away from his business with a resultant reduction in work income. The court takes into account the husband’s health issues however not significantly so by reason of the absence of medical evidence.
The wife is in good general physical health. She has been diagnosed with ADHD and severe anxiety. She receives a disability support pension, since 2019. She also has an NDIS plan whereby she has weekday support from a support worker accompanied her for several hours. The wife is not employed. She probably has little work capacity.
The Court takes into account the disparity in work capacities between the parties, as discussed above.
The husband also contended that an adjustment under section 75(2) in favour of himself should be made by reason of the wife’s much stronger financial position arising out of her significant inheritance.
Pursuant to the Court’s contributions findings the husband will be entitled to $2,797,188, and the wife will be entitled to $2,288,608 with her separate assets from her inheritance being $3,419,665. These latter two sums pertaining to the wife total $5,708,273 as against the husband’s $2,797,188 a difference of about $2,911,085. The court will take into account under section 75(2) the wife’s stronger financial position.
The husband contended that the Court should take into account under section 75(2) a prospective capital gains tax liability (“CGT”) in relation to the sale by the husband of the N Street, Suburb O property which had been sold in September 2016 for $665,000. In closing submissions the husband sought an adjustment for CGT only for this property and not for the sale of the P Street, Suburb Q, property as well because the husband had personally received the net sale proceeds from the sale of the P Street, Suburb Q property.
The wife, in submissions, acknowledged that there may well be a capital gains tax liability but in view of the husband failing to provide relevant financial disclosure relating to, in particular, his income, and there being no admissible expert evidence relating to the calculation of capital gains tax, the Court should not take into account under section 75(2) any possible future capital gains tax liability.
The N Street, Suburb O property had been purchased by the husband in 1997 for $158,000. During the trial the Court had rejected a proposed tender by the husband of an unsigned draft letter by the husband’s accountant and an unsigned draft taxation return by the husband also purportedly prepared by the accountant in relation to this capital gains tax liability issue. There was no proposal by the husband to call the accountant to give evidence at the trial. The husband referred the Court to Annexure 20 to the wife’s trial affidavit which was a copy letter from the parties’ accountant dated 17 April 2019 addressed to the husband stating, inter alia, “Further to our conversation midway through 2018, you have two outstanding tax returns, 2017 and 2018 now, both with capital gains tax (CGT). This is no small amount of money as you may recall.” The husband gives an estimate of $100,000 for CGT relating to the sale of the N Street, Suburb O property in his affidavit.
In the view of the Court, the Court should and does take into account that the husband is likely to have a primary capital gains tax liability in relation to his purchase and sale of the above property, with the Court observing that on the material before the Court, the Court is unable to clearly calculate the likely primary capital gains tax liability, and that the husband has provided an estimate for CGT.
The husband sought a total adjustment of 10% in his favour pursuant to section 75(2).
Again, the wife sought no adjustment for herself under section 75(2). Again, she contended that no adjustment should be made in favour of the husband by reason of the husband’s failure to provide disclosure. As to disclosure by the husband, the Court refers to its findings previously in these Reasons, in particular that it does not accept that the husband has hid or is hiding an asset or assets; the Court will not take into account to any significant extent the husband’s failure to make adequate disclosure.
The Court, doing the best it can, and taking into account the above matters, determines that there should be an adjustment in favour of the husband of 7.5%. Thus, the adjusted contributions finding is 62.5% to the husband and 37.5% to the wife. With the net property of the parties including superannuation (but excluding the wife’s inheritance assets) being $5,085,797 such adjusted contributions finding results in:
(a)the husband’s 62.5% of $5,085,797 is $3,178,623,
(b)the wife’s 37.5% of $5,085,797 is $1,907,173,
representing a disparity between the parties of $1,271,450.
JUSTICE AND EQUITY
Pursuant to the Court’s adjusted contribution assessment, the husband should be left with $3,178,623 but less the interim property distribution of $33,533 and less the addback of $282,232 effectively retained by him, leaving $2,862,858, and the wife should be left with $1,907,173 but less her interim property distribution of $33,533, leaving $1,873,640.
Separate to the above entitlements of the parties, the wife will retain her inheritance assets totalling in value $3,419,665.
Should the husband retain:
(a)The B Street, Suburb C property: $4,160,000;
(b)K Pty Ltd: $250,000;
(c)Trailers: $2,600;
(d)Bank account: $6
(e)Motor Vehicle 3: $500;
(f)Household contents: $5,000;
(g)His superannuation entitlements: $190,914;
totalling $4,609,020,
and the wife retain:
(a)Bank account: $31,947;
(b)Her car: $15,000;
(c)Her shares: $2,946;
(d)Her household contents: $5,000;
(e)Her superannuation: $72,586;
totalling $127,479,
then the husband will need to pay the wife the sum of $1,746,161 ($1,873,640 less $127,479). The husband should be given 12 weeks to pay this sum to the wife, failing which the B Street, Suburb C property should be sold.
The Court now turns to what should occur if the B Street, Suburb C property is sold.
Should the husband retain:
(a)K Pty Ltd: $250,000;
(b)Trailers: $2,600;
(c)Bank account: $6
(d)Motor Vehicle 3: $500;
(e)Household contents: $5,000;
(f)His superannuation entitlements: $190,914;
totalling $449,020,
then the husband will need to receive cash of $2,413,838 (being $2,862,858 less $449,020). Such cash can be paid from the net sale proceeds of the B Street, Suburb C property. In these circumstances, the husband will retain cash totalling about $2,413,838 and with which he can pay the CGT liability and purchase a residence or else invest and rent accommodation. He will retain his business K Pty Ltd, and other modest assets, and retain his superannuation.
Should the wife retain:
(a)Her above assets and superannuation totalling $127,479,
then she will need to receive cash of $1,746,161 (being $1,873,640 less $127,479). Such cash can be paid to the wife from the net sale proceeds of the B Street, Suburb C property. The wife presently owns her own home at L Street, Suburb F, and she will retain her other inheritance assets (the testamentary trust cash of $1,273,499 plus her share in a property at Suburb AD valued at $446,166).
Should the B Street, Suburb C property be sold for a sum in excess of its balance sheet value, $4,160,000, then the net proceeds of sale should be divided between the parties in accordance with these Reasons.
The Court is of the view that its proposed property adjustment orders will represent a just and equitable property settlement between the parties.
The Court makes Orders accordingly.
I certify that the preceding one hundred and thirty (130) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Newbrun. Associate:
Dated: 9 May 2023
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