Sarka & Sarka
[2024] FedCFamC1F 804
•27 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Sarka & Sarka [2024] FedCFamC1F 804
File number: SYC 7105 of 2022 Judgment of: SCHONELL J Date of judgment: 27 November 2024 Catchwords: FAMILY LAW – PROPERTY – Final orders – Where the wife and husband both contend the contribution-based entitlement was equal – Where the wife contends there should be a 5 percent adjustment under s 75(2) because of the wife’s care of the parties’ youngest child, the husband’s greater earning capacity and the wife’s contention that the two older children will pay to the husband their unpaid present entitlements – Where the husband contends there should be no adjustment under s 75(2) – Where the wife’s position regarding property alteration pursuant to s 79 shifted from seeking a cash adjustment to seeking a transfer to her of a property, a company in which the husband was a director holding on trust for her 50 percent of the parties’ units in a unit trust, as well as a cash adjustment – Orders made as to the parties’ SMSF, payment of present unpaid entitlements, and a division of assets as to 52 percent to the wife and 48 percent to the husband in the form of a cash payment.
FAMILY LAW – PRACTICE AND PROCEDURE – Application to adduce adversarial evidence – Where the wife seeks to adduce adversarial evidence as to the value of a commercial property – Where the husband objected to the adducing of adversarial evidence – Discussion of ‘special reason’ for allowing adversarial evidence – Where there is a special reason for allowing adversarial evidence in addition to the evidence of the jointly appointed single expert – Application to adduce adversarial evidence as to the value of commercial property allowed.
Legislation: Family Law Act 1975 (Cth) Part VIII of the ss 75(2), 79(4)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 7.02, 7.08
Cases cited: ASIC v Hellicar (2012) 247 CLR 345; [2012] HCA 17
Cubillo v Commonwealth (No 2) (2000) 103 FCR 1; [2000] FCA 1084
Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
Neales & Neales (2022) FLC 94-079; [2022] FedCFamC1A 41
Palumbo v Mandel (2019) FLC 93-929; [2019] FamCAFC 228
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; [2003] HCA 48
Division: Division 1 First Instance Number of paragraphs: 111 Date of hearing: 11 November 2024 – 13 November 2024 Place: Sydney Counsel for the Applicant: Ms Coulton Solicitor for the Applicant: Stacks, Collins & Thompson Counsel for the Respondent: Ms Petrie Solicitor for the Respondent: Calvin Nelson & Co ORDERS
SYC 7105 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS SARKA
Applicant
AND: MR SARKA
Respondent
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
27 NOVEMBER 2024
THE COURT ORDERS THAT:
1.Within seven (7) days of the date of these Orders, the parties shall do all acts and things and sign all documents necessary to cause F Pty Ltd as trustee for the Sarka Family Trust (“F Pty Ltd atf SFT”) to distribute to the Wife the sum of $6,621,333 from funds held on term deposit with E Financial Services in account number …11 in the name of F Pty Ltd atf SFT.
2.From the date of these Orders the Husband shall have the sole use and occupation of the property situated at and known as G Street, Suburb H in the State of New South Wales being the whole of the land in Folio Identifier … (“Suburb H property”).
3.Simultaneously with the parties compliance with Order 1 herein:
(a)The Wife shall do all such acts and things and sign all such documents as may be required and prepared by the Husband to transfer to the Husband all of her right, title and interest in the Suburb H property;
(b)The Wife shall do all such acts and things and sign all such documents as may be required to withdraw the Caveat on the Suburb H property to K Pty Ltd.
(c)The Husband shall indemnify the Wife against all payments and liabilities pursuant to the rates and outgoings of or with respect to the Suburb H property of whatever nature and kind.
(d)That the Husband and Wife do all such acts and things and sign all such documents as may be required to allow the transactions in Order 3(a) and (b) herein to take place electronically within PEXA and, for the purpose of the performance of the foregoing, that each party shall have a Solicitor or a Licenced Conveyancer act on their behalf for the purpose of the said transactions taking place on PEXA and each party shall bear their own costs associated with the transactions occurring on PEXA.
4.In relation to the proceedings in the Technology and Construction List currently before the Supreme Court of New South concerning the strata title scheme at L Street, Suburb J in the State of New South Wales (“Suburb J claim”) the Husband and/or Wife shall:
(i)Equally contribute from time to time such moneys as are required in accordance with the terms of Share Transfer Agreement dated April 2019 between M Pty Ltd , F Pty Ltd atf SFT and Mr Sarka (“Share Transfer Agreement”), until a mediated resolution or adjudicated determination (including any appellate determination) of the Suburb J claim;
(ii)Cause F Pty Ltd atf SFT to refund in the proportions of 50% to the Husband and 50% to the Wife any amount remaining in the said Term Deposit Account after payment of all amounts for which F Pty Ltd atf SFT and/or the Husband are liable to contribute from time to time pursuant to the Share Transfer Agreement upon a mediated resolution or adjudicated determination (including any appellate determination) of the Suburb J claim.
(iii)In the event that any amount for which F Pty Ltd atf SFT and/or the Husband are liable to contribute from time to time pursuant to the Share Transfer Agreement exceeds the amount in the Term Deposit Account then the parties shall personally pay any excess amount in the proportion of 50% by the Husband and 50% by the Wife.
5.The Husband do all acts and things and sign all documents necessary to cause F Pty Ltd atf SFT to make a payment from funds held on term deposit in the name of F Pty Ltd atf SFT with E Financial Services in account number …11 upon the expiration of 60 days after the making of these orders, with such funds to be distributed in the sum of $862,482 to Ms B or as otherwise directed.
6.The Husband shall do all acts and things and sign all documents necessary to cause F Pty Ltd atf SFT to within six (6) months of the date of these orders, pay:
(a)Ms C the sum of $854,449; and
(b)Ms D the sum of $827,727.
7.Within 28 days of the date of these Orders, the Wife shall do all acts and things and sign all documents, instruments and writings, including but not limited to moving and passing of all necessary resolutions, signing of trustee minutes and related documents, that may be necessary to:
(a)complete any outstanding accounts and thereafter resign as a Director of F Pty Ltd atf SFT;
(b)assign to the Husband the whole of the Wife’s right, title and interest and liability (if any) in any loan account (credit or debit) and/or unpaid distributions she may have in F Pty Ltd atf SFT;
8.Upon the Wife’s compliance with Order 7 herein, the Husband shall indemnify the Wife and keep her so indemnified in relation to all actions, suits and demands as may from the date of these orders be made against the Wife in respect of any debt or other amount of money due by her to F Pty Ltd atf SFT; to the Fund or in respect of any other matter whatsoever arising out of the management, business affairs and operation of these said entities.
9.The parties shall do all acts and things and sign all documents necessary to cause F Pty Ltd atf SFT to transfer to the Wife the whole of the aforementioned company’s right, title and interest in Motor Vehicle 1 Registration Number: … within seven (7) days of the making of these orders.
10.The Wife, in her capacity as director of F Pty Ltd atf SFT, be responsible for the preparation of the necessary documents, including the transfer of any insurance policies relating to the said motor vehicle, to give effect to this order and that the Husband, in his capacity as director/secretary of F Pty Ltd atf SFT, execute and return such documents to the solicitor for the Wife within seven (7) days of the documents being sent to the Husband or his solicitor.
11.The Wife be responsible for the payment of any necessary transfer costs, stamp duty and other expenses occasioned by the transfer to the Wife of said motor vehicle.
12.Within seven (7) days of the date of the making of these orders, the parties shall do all acts and things and sign all documents necessary to close the National Australia Bank BSB … and account Number …14 currently held in the parties’ joint names, and that any credit balance standing in any such joint bank account at the time of closure shall be retained by the Husband, and that a sealed copy of these Orders shall be sufficient authority for the Husband in that regard.
13.Both parties shall prepare personal tax returns disclosing all interest received from F Pty Ltd atf SFT and rental income from the Suburb H property during the financial year ending 30 June 2025 pursuant to Orders 2 to 4 dated 17 September 2024 and shall be personally liable for such payments individually received.
14.Should the Husband at any time so request, the Wife shall sign all documents, instruments and writings that may be necessary:
(a)pursuant to clause 21 of the Deed of Trust dated June 1985 establishing the Sarka Family Trust, and as amended from time to time, to vary, alter or add to any of the trusts contained in the said Deed, including the removal of the Wife as an eligible beneficiary and primary beneficiary, as determined by the Husband; and
(b)pursuant to clause 15 of the said Deed to effect appointment of a new or additional trustee as directed by the Husband; and
(c)such other documents as may reasonably be required, including a Deed of Renunciation in relation to the Sarka Family Trust, to give effect to these orders.
15.Pending compliance with these Orders, the Wife shall not make any claim, demand, take any action or commence any proceedings with respect to any unpaid present entitlement, unpaid distribution or loan owing to the Wife by F Pty Ltd atf SFT.
16.Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)Each party be solely entitled to the exclusion of the other to all other property resources and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the bank’s record thereof, insurance policies are deemed to be in the possession of the beneficiary thereof, superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements, and the chattels in the Suburb H property are deemed to be in the possession of the Husband.
(b)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
(c)With respect to debts and liabilities, whether past, present or future, as are in the sole name of the Wife or Husband neither the Wife nor the Husband will seek contribution from, or indemnity by the other, with respect to such debts and liabilities.
(d)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
17.The Husband and the Wife, as directors of the Fund acknowledge that they have been afforded procedural fairness and that this order binds the trustee of the Fund.
18.Pursuant to section 90XT(1)(b) of the Family Law Act 1975, the Husband and Wife shall do all acts and things and execute all deeds, documents, instruments and writings in their capacities as directors of F Pty Ltd atf Superannuation Fund 1 (“the Fund”) to make a splittable payment to an eligible superannuation fund nominated by the Wife in respect of the parties’ combined interests in the Fund and for that purpose the Wife is declared to be entitled to an amount representing 50 percent of the parties’ combined superannuation interests in the Fund and there be a corresponding reduction in the entitlement that the Husband would have had in the Fund but for these orders herein.
19.Order 18 have effect from the operative time.
20.The operative time for these Orders is a date 4 days after completion of a final distribution or winding up of the N Property Trust of which the Fund is currently a unitholder.
21.Within 42 days after completion of a final distribution or winding up of the N Property Trust, the parties, in their capacities as directors of the Fund, shall do all acts and things necessary in the following sequence:
(a)to enable the accountant for the Fund to complete and lodge all outstanding tax returns and financial statements for the Fund;
(b)to cause the payment of any outstanding taxes or other charges owing by the Fund to the Australian Taxation Office;
(c)to enable the accountant for the Fund to calculate the parties’ combined superannuation interests in the Fund taking into account the distribution, if any, from the N Property Trust, and any other assets held by the Fund;
(d)to make a splittable payment to an eligible superannuation fund nominated by the Wife of an amount representing 50 percent of the parties’ combined superannuation interests in the Fund.
22.Contemporaneously with the making of the splittable payment referred to in Order 18 herein, the parties, in their capacities as directors of the Fund, forthwith do all acts and things and execute all deeds, documents, instruments and writings, including but not limited to signing of trustee minutes, rollover requests and related documents that may be necessary:
(a)to give effect to the splittable payment referred to in Order 18 herein;
(b)to close the Wife’s member account in the Fund;
(c)for the Wife to resign as co-trustee of the Fund; and
(d)for the Wife to resign as a director of the Fund.
Section 106A
23.In the event of the Wife or Husband refusing or neglecting to sign the necessary documents to effect such sale, transfer or assignment within seven days of being requested by a party, then the Registrar of the Federal Circuit and Family Court of Australia is hereby appointed and empowered pursuant to the provisions of Section 106A of the Family Law Act 1975, to execute such documents in the name of the defaulting party and to do all acts and things necessary to give validity and operation to such document and further, that the defaulting party pay the costs on an indemnity basis in relation to the obtaining of the Registrar’s signature.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 the pseudonym Sarka & Sarka has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
These are proceedings pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”) for financial adjustment following the end of the parties’ 32-year marriage.
On 12 July 2024 at an interlocutory event, the Court noted the following matters:
A.The parties contend that this matter is ready for the allocation of hearing dates save that there need to be updated valuations in relation to a property at [Suburb H] and a commercial property and that it is the intention of the parties to update those valuations proximate to the hearing.
B.The wife contends that the contribution-based entitlements are equal and that there should be a 75(2) adjustment in her favour as to 5% contending overall that she should receive 55% of the parties’ net assets.
C.Counsel for the husband advises that the husband contends that the contribution-based entitlement favours him as to 53% and that there should be no adjustment under s 75(2).
D.Counsel for the husband contends that the imbalance as to contribution arises solely as a consequence of initial contributions by the husband.
E.I am advised that there is no Kennon argument being pursued by the wife.
F.There is an issue about the unpaid present entitlements to be paid to the children:
•the husband’s position is that that should be paid;
•the wife’s position is also that that should be paid but as I am presently advised the wife is unsure as to what the quantum is.
At the commencement of the hearing the wife, consistent with Notation B, contended that the contribution-based entitlement was equal but that there should be a 5 percent adjustment under s 75(2). The wife’s counsel identified the basis for such adjustment was because of the wife’s care of the parties’ youngest child Ms B, the husband’s greater earning capacity and the wife’s contention that the two elder children will pay to the husband the unpaid present entitlements referred to in Notation F.
In respect of the unpaid present entitlements, the wife’s counsel indicated that there was no issue that the monies should be paid to the children but contended that the husband should indemnify the wife in relation to those payments.
The husband indicated by way of departure from Notation C that the contribution finding should be equal with no adjustment under s 75(2) of the Act.
The parties agreed that they would remain members of their SMSF, and that the wife should retain her car. Despite what should have been a relatively simple exercise to prepare mutually agreed orders, it was a task beyond them.
Until the second day of the hearing, the wife had sought a cash adjustment pursuant to s 79 of the Act. She changed her position and now sought a transfer to her of a property at Suburb H (“the home”) and for a company in which the husband was a director holding on trust for her 50 percent of the units in the R Unit Trust (“Unit Trust”) as well as a cash adjustment.
In view of the above, the issues became the following:
(a)The wife’s application to adduce evidence from another expert as to the value of a commercial property at City O;
(b)The constituent parts of the pool of assets;
(c)Whether there should be a s 75(2) adjustment in favour of the wife;
(d)The form of any final order including who should retain the home, whether units in the Unit Trust should be held on trust and whether the husband should indemnify the wife in relation to the unpaid present entitlements payable to the children;
(e)whether the payment to the youngest child of her unpaid present entitlement should be made to the public trustee (as sought by the husband) or to the wife on behalf of the child (as sought by the wife).
In view of the narrowing of the issues, it is unnecessary for me to record the extensive contribution history of the parties, including the wife’s contentions as to matters of family violence, particularly given the concession as to equality and where they were not the subject of submission. In those circumstances, I propose to address only those matters of evidence referable to the identified issues.
BACKGROUND
The husband was born in 1964 and is 60 years of age.
The wife was born in 1967 and is 58 years of age.
The parties married in 1990 and separated on 17 October 2022. On that date, the wife left the former matrimonial home at G Street, Suburb H (“the home”) and has not returned.
Neither party has re-partnered.
There are three children of the marriage; the eldest two are aged 30 and 28 and have resided with the husband since separation. Both are working and self-supporting.
The youngest child, Ms B, is 28. The wife describes her as a “special needs child” (affidavit of the wife filed 20 May 2024, paragraph 4c) who requires a high level of care. There is some issue between the parties as to the extent of care that she requires.
In relation to Ms B, the wife says in her affidavit as follows:
11.[Ms B] was born with […] a genetic condition. She has had [an organ] transplant, and she was recently diagnosed with [another condition]. She cannot live independently, and I continue to provide her with 24-hour care.
…
97.[Ms B] has required a constant level of care from birth. She has had global developmental delay, was wearing glasses from the age of 4 months, and had delayed milestone. She was suffering from [a medical condition] which affected her [organs]. Ms B's bloodwork had to be sent [overseas] for assessment, which confirmed that she has a rare genetic condition "[…]. With that condition, she has [multiple issues]. She is unable to live an independent life and needs constant care and supervision. She requires ass instance with [personal care], preparation of meals, medication administration, taking [Ms B] to her appointments.
98.[Ms B] started with [a treatment] at the hospital while she was admitted for a month. [Mr Sarka] and I were trained in doing [another type of treatment] by the nurses. [Ms B] had to be [treated overnight and each afternoon]. There were scheduled times for training in the morning however [Mr Sarka] never kept wanting to change times because it didn’t suit him as he had meetings to attend to. I have explained to him that it has to be done that way as the nurses have to [attend to other patients] in the afternoon. [Mr Sarka] did not assist with her [treatment]; he only did one cycle with my supervision. For two years, I was her nurse at home. I was responsible for ordering all of her medical supplies as well.
99.The level and type of care has changed over time to meet [Ms B 's] emerging care needs, such as:
a. Constant care during her infancy;
b. [Medical condition and treatment] that followed;
c.Administration of medication and feeding post-operatively, and infection control;
d. [Ms B's] hospital and medical appointments;
e. Latterly, attending to [Ms B's] needs when she started school.
…
101.The day caring for [Ms B] starts at 6.00am to administer her medication. I supervise her through her morning ablutions and attend to any feminine hygiene needs.
102.After the evening meal I complete any housekeeping tasks such as washing and cleaning before preparing [Ms B] for bed at 9.00pm
103.During the night, I have to attend to [Ms B] up to 4-5 times each night.
104.If [Ms B] has a medical appointment, I ensure that all preparations are made such as fasting specimen samples, and reports for the doctors.
105.During the appointments I keep notes of the medical instructions for [Ms B's] care and then ensure that [Ms B] receives the prescribed care at home.
None of these matters were the subject of any challenge during cross-examination.
Ms B’s care is provided substantially by the wife with assistance through the NDIS. In relation to the husband’s post separation involvement with Ms B, the husband says:
326.I did not see [Ms B] after [Ms Sarka] took her away until about April 2023 when she started visiting her sisters and I at our home at [G Street, Suburb H]. At the present time, [Ms B] spends about 1 night per week on average at our home at [G Street Suburb H]. [Ms B’s] bedroom and other personal necessities are still in place for her whenever she wants to spend time with her sisters and I.
327.I am prepared to have [Ms B] stay over 3 to 4 nights a week (or for as long as she requests) if she so chooses and am hopeful that [Ms B] will take up the opportunity to spend more time with me and her sisters at [G Street, Suburb H] in the future, especially as she gets along well with her sisters and they have traditionally assisted her with a range of her daily activities.
There was no challenge to the husband’s evidence.
Application to Adduce Evidence from Another Expert
By Application in a Proceeding filed 10 November 2024, the wife sought the Court’s leave to adduce evidence from Mr P as another expert in relation to the value of the home and a commercial property at City O (“the commercial property”). Her counsel subsequently advised despite the form of the application that leave was only sought in relation to the commercial property.
By way of context to the application on 28 October 2024, the matter was urgently listed in circumstances where the then single expert was unavailable to do the updated report anticipated by Notation A in the orders referred to above.
The husband proposed that Mr Q be the single expert on the basis that he was available to prepare a report in time for the hearing and that the husband would meet more than 50 percent of the cost of his report. The wife opposed the appointment of Mr Q, proposing in the alternative that Mr P prepare a report.
Counsel who appeared for the wife on the relisting confirmed that there was no issue as to the expertise and/or experience of Mr Q and despite the wife contending that some suspicion should be attached to Mr Q, by virtue solely of the fact that he was nominated by the husband, conceded that there was no evidence that Mr Q had had any contact or dealings with the husband.
The Court determined that the single expert should be Mr Q. When requested, neither party sought the Court provide reasons for the appointment of Mr Q.
Clearly unhappy with the Court’s determination and despite the appointment of a single expert, the wife on 31 October 2024 instructed her solicitor to retain Mr P as her expert.
The parties’ received the report of Mr Q at about 5.00 pm on the Friday before the commencement of the hearing on the Monday. On the Sunday at about 5.00 pm (being the day prior to the commencement of the hearing) the wife filed and served an Application in a Proceeding supported by an affidavit from her solicitor seeking the Court’s leave to rely upon the report of Mr P as another expert pursuant to r 7.08 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”).
On the first morning of the hearing, the Court heard submissions from each of the parties in relation to the wife’s application to appoint Mr P as another expert. Part of the wife’s submissions in support of leave was that she had been denied (given the lateness of the single expert report) the opportunity to ask questions of the single expert. During the course of the wife’s counsel’s submissions, the Court enquired as to whether Mr P would be available for cross-examination if leave were granted. The Court was informed that he was not. One must wonder as to the utility of his retainer if he was unavailable to be cross-examined on his opinion. The Court declined to finally determine the application for leave at that time and proceeded with hearing the parties evidence.
At the commencement of the second day of the hearing, in view of the wife’s counsel submission that the wife had been denied the opportunity to ask questions of Mr Q, the Court made the following order:
1.Pursuant to Rule 1.31 I dispense with full compliance with Rule 7.25 and direct that the parties may, should they wish to do so, confer with the single expert [Mr Q] for the purposes of clarifying his report at a time prior to him giving evidence.
I can only presume as I heard nothing further and given the tenor of the cross examination, that the wife did not avail herself of this opportunity.
On the last day of the hearing and before Mr Q gave his evidence, the Court heard further submissions from the parties in relation to the appointment of Mr P and determined that the wife would be given leave to tender his report and adduce evidence from him. I indicated I would provide reasons for such determination in due course. These are those reasons.
The parties were then permitted to give each of Mr Q and Mr P copies of each other’s report.
The parties first cross-examined Mr Q. Despite leave being granted to adduce evidence from Mr P, he was not made available for cross examination.
The wife’s actions in retaining Mr P arise entirely from her dissatisfaction with the appointment of Mr Q. It was a unilateral process commenced by her before she even knew what his opinion would be. It bespeaks of a misguided distrust with the process which, as it transpired, put herself and the parties to unnecessary additional cost.
Rule 7.02 of the Rules embodies the purpose of the Rules that deals with experts, namely, that a party should only obtain expert evidence in relation to a significant issue, that it should be restricted to that necessary to resolve or determine the proceedings and that without compromising the interests of justice, expert evidence is to be given by a single expert.
As the Court identified in Persson & Marchand [2024] FedCFamC1F 758 (“Persson & Marchand”) the choice of expert is very much a lottery. The parties do not know when they select their expert what the ultimate opinion might be. Despite some appearance to the contrary, there is no magic or exalted status that accrues to the single expert by virtue of the lottery that selects them. It is for that reason that the Rules permits a party to seek leave to tender and/or adduce evidence from another expert.
Rule 7.08 imposes a restriction on a party seeking to tender a report or adduce evidence from another expert subject to the Court being satisfied pursuant to r 7.08(2) that:
(a)there is a substantial body of opinion contrary to any opinion given by the single expert witness and the contrary opinion is or may be necessary for determining the issue; or
(b) another expert witness knows of matters, not known to the single expert witness, that may be necessary for determining the issue; or
(c)there is another special reason for adducing evidence from another expert witness.
As observed in Persson & Marchand, sight must not be lost of the fact that the Court’s determination is to ensure justice is accorded to each of the parties. The Rules are not to be construed as a straitjacket restricting the interests of justice, rather, they are designed to serve the interests of justice. For that reason, r 7.08 cannot be read in isolation and must be read with r 7.02 and in particular r 7.02(c), which specifically provides:
(c)to ensure that, if practicable and without compromising the interests of justice, expert evidence is given on an issue by a single expert witness.
The wife submitted that her application meets each of the subsections. Her counsel submitted that the single expert determined that the valuation of the Commercial property should be valued on an individual basis as it did not constitute an amalgamated site, whereas Mr P, so it was submitted, valued the property at its highest and best use as a development site. Although not specifically adverted to, I presume this was a reference to a “substantial body of opinion contrary” as contemplated by r 7.08(2). It was further submitted that the single expert had proceeded on an erroneous assumption that the site was not amalgamated.
The wife also submitted that the significant disparity of opinion gave rise to a special reason within the meaning of r 7.08(2) and further that the wife had been denied procedural fairness by virtue of the lateness of the single expert report in her ability to ask questions of the single expert. The husband opposed the wife’s application.
Relevant to this application are the observations of the Full Court in Neales & Neales (2022) FLC 94-079 (“Neales”) that the various considerations in 7.08(2) may in aggregate establish a special reason. The difference in value is significant. While I accept, consistent with Neales, that a difference of opinion as to value “does not simpliciter establish a basis for an adversarial expert” (Neales at [53]) as adverted to in Persson & Marchand, the more substantial the difference, in the absence of a challenge as to expertise and/or experience, calls for a closer attention to the matters that are said to be the basis for the contrary opinion.
In this case it is said that there is a substantial body of contrary opinion, the difference of which could potentially have been resolved only by cross-examination of the experts. I am also conscious that the valuers adopted a different approach to valuation and that there was some force to the wife’s submission that the lateness of the process had inhibited her ability to ask questions of the single expert. Those matters considered in “aggregate” (Neales at [40]) are such as to satisfy the requirement of “another special reason” (r 7.08(2)(c)). I was not satisfied that having another expert was impracticable but was satisfied for the above reasons that having more than one expert would ensure that the interests of justice are not compromised (r 7.02(c)). For these reasons, the wife was granted leave to tender a report and adduce evidence from Mr P.
Credit
The wife submitted that the Court should form an adverse view as to the credit of the husband. In that respect, she relied upon the evidence that he gave in relation to when he became aware of the City O council’s planning proposal and his knowledge of his daughter’s application to the Supreme Court seeking recovery of their unpaid present entitlements. The wife’s counsel submitted that his evidence in relation to these matters was inherently implausible, unbelievable, and the Court should find him an untruthful witness.
The wife says that the husband cannot be believed when he said that the first notice, he had of the council meeting in July 2024 was when the issue was raised by the wife’s solicitor. In that respect, he agreed that Mr S had signed a form permitting the lodgement by the owner of the neighbouring property of a planning proposal. He said he had had no input into the proposal. He indicated that whilst he was in business with Mr S, he did not regularly communicate with him and said that in the last five years they have rarely seen each other.
The wife’s counsel put to the husband that contrary to his sworn evidence he had in fact gone to council staff and spoken to them about the planning proposal. The husband denied that proposition. The wife adduced not a scintilla of evidence to support the proposition that the husband had spoken to council staff.
I do not accept the wife’s contention that the husband knew about the planning proposal before being advised of it by the wife’s solicitors. His lack of knowledge is entirely consistent with his evidence that he rarely sees Mr S and also entirely consistent with the proposition that all that has occurred is that the council have passed a resolution about a proposal and nothing more. The evidence from Mr Q reveals that the planning proposal requires State government approval and there is no guarantee if or when that would occur.
The wife also contends that the husband’s credit should be called into question in circumstances where he says that he was unaware that his daughters had commenced proceedings in the Supreme Court seeking recovery of their unpaid present entitlements only to withdraw those proceedings. The wife suggests the husband’s evidence was inherently unbelievable in circumstances where they lived in his home.
Whilst it may be unusual it does not, when I consider the husband’s evidence in its entirety, cast doubt on his credibility. I am satisfied that the husband was a truthful witness. I am not satisfied that the wife has established on this issue or on any other issue that I should find the husband to be an untruthful witness.
Quite to the contrary, I found him to be a witness who answered questions directly, did not prevaricate, made appropriate concessions and was credible. His evidence stands in stark contrast to that of the wife whose usual response to a question was that she could not recall a particular event and otherwise demonstrated a pervading sense of distrust of her husband. That distrust seemed to inform decisions made in the litigation, such as her engagement of Mr P, her suspicions surrounded the loan from her cousin and the various recorded liabilities in the accounts of the R Unit Trust. In that respect, despite having the source documents such as the Financial Statements for the Unit Trust since at least July 2023, she denied any knowledge of them, took issue initially with items 47, 48 and 49 in the Balance Sheet only to resile on the last day and take issue with only item 48. Why these matters were left to the final hearing and why a single expert was not retained to address these issues earlier given her high degree of suspicion is confounding and unfathomable.
I make no adverse finding as to credit of either party.
APPROACH TO PROPERTY PROCEEDINGS
The orthodox approach to be adopted in a financial adjustment case under s 79 of the Act is to follow the well-recognised four-step process (Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143). Following such an approach, the Court identifies and values the assets and liabilities at the date of hearing for the purposes of division. Secondly, the Court assesses the contributions of the parties within the meaning of s 79(4) of the Act and determines a contribution-based entitlement. Thirdly, the Court identifies the relevant matters under s 75(2) and determines such adjustment as is necessary to the contribution-based entitlement. Finally, the Court considers the effect of the findings and must then determine whether the order as proposed is in all the circumstances just and equitable.
In conformity with the orders sought by each party and the ratio arising out of the High Court’s determination in Stanford v Stanford (2012) 247 CLR 108, I am of the view that it is just and equitable that an order be made adjusting the property interests of the parties. The parties are no longer living together and there is no longer the common use of their property. The assumptions and undertakings that governed the use of their property ended with separation and is recognised by both parties seeking an adjustive order.
BALANCE SHEET
The parties’ assets, addbacks, liabilities and superannuation entitlements were captured in a document that went through multiple drafts but finally became Exhibit 29. It recorded as follows:
Ownership Description Applicant Wife's value Respondent Husband's value ASSETS 1 Joint G Street, Suburb H NSW $6,000,000 $6,000,000 2 Joint NAB A/C No. …14 $219 $219 3 Wife Motor Vehicle 1 $22,000 $22,000 Total $6,022,219 $6,022,219 ADDBACKS 4 Husband Personal unsecured loan from Mr S $1,256,062 Not agreed Total $1,256,062 $0 Sub Total Assets + Addbacks $7,278,281 $6,022,219 LIABILITIES 5 SFT Daughters’ unpaid entitlements from SFT:
Ms C ($854,449)
Ms D ($827,727)
Ms B ($862,482)$2,544,658 $2,544,658 6 Husband & F Pty Ltd/L Contingent liability arising out of claim in the Supreme Court (allowance for estimated maximum amount of contingent liability including costs) – [refer to Court Order 2.1.1 of 30 November 2023] 0 (E) $600,000
Total $$2,544,658.00 $3,144,658 NET $4,733,623 $2,877,561 SUPERANNUATION Member Name of Fund Type of Interest Applicant Wife's value Respondent Husband's value 7 Wife Superannuation Fund 2 Accumulation
(at 30.06.2022)$2,649
$2,649
8 Wife Superannuation Fund 3 Accumulation
(at 30.06.2024)$19,473
$19,473
9 Joint Superannuation Fund 1 SMSF $0
$0 Total $22,122 $22,122 TRUST ASSETS/ Ownership Description Applicant Wife's value Respondent Husband's value 10 F Pty Ltd Sarka Family Trust (see Schedules “A” & “B”) $15,567,315 $9,916,743 Total $15,567,315 $9,916,743 TOTAL NET ASSETS (including Superannuation) $20,323,060
$12,816,426
Schedule “A”
Sarka Family Trust
Ownership Description Applicant Wife’s value Respondent Husband’s value ASSETS 33 F Pty Ltd E Financial Services $8,700,000 $8,700,000 35 F Pty Ltd Unsecured loan owed by R Pty Ltd to Sarka Family Trust (as at 30.06.2022) $1,633,202 $1,633,202 36 F Pty Ltd NAB A/C …93 held in name of F Pty Ltd atf Sarka Family Trust (as at 31.10.24) $29,533 $29,533 37 F Pty Ltd 50% share in R Unit Trust (see Schedule “B”) $5,209,930 -$440,642 38 F Pty Ltd Motor vehicles (owned by F Pty Ltd atf Sarka Family Trust)
Motor Vehicle 2 (2023 model) used by Husband:
Motor Vehicle 1 used by Wife: (E) $22,000 [Wife]
Motor Vehicle 3 used by Ms D
Motor Vehicle 4 used by Ms C$62,400 $62,400 Sub-total $15,635,065 $9,984,493 LIABILITIES 40 F Pty Ltd Accountant’s fees owed to T Accountants by F Pty Ltd atf Sarka Family Trust $67,750 $67,750 Sub-total $67,750 $67,750 Net value of Sarka Family Trust: $15,567,315 $9,916,743 Schedule “B”
R Unit Trust
Ownership Description Applicant Wife’s value Respondent Husband’s value ASSETS 42 R Pty Ltd U Street, City O $18,000,000 $8,400,000 43 R Pty Ltd NAB A/C BSB: … Acc: …38 (as at 30.08.2024) $3,118 $3,118 44 R Pty Ltd NAB A/C No. …79 (as at 30.08.2024) $84,500 $84,500 Total $18,087,618 $8,487,618 LIABILITIES 46 R Pty Ltd NAB A/C No. …35 (loan account) $5,950,000 $5,950,000 47 R Pty Ltd Unsecured loan owed to Sarka Family Trust $1,633,202 $1,633,202 48 R Pty Ltd Unsecured loan owed to V Family Trust Family Trust Not agreed $1,701,145 49 R Pty Ltd Security deposits (leases) $84,555 $84,555 Total $7,667,757 $9,368,902 Net value of R Unit Trust: $10,419,861 -$881,284
Items 4, 6 and 10 are in dispute. The issue in relation to item 10 is informed by the findings in relation to items 37, 42 and 48.
Item 4 relates to a loan advanced to the husband in May 2018 and repaid in April 2023 in the sum of $1,256,062. As best I can glean from the wife’s submissions, it is said to be, I presume, a premature distribution of property, albeit it was not entirely clear. The circumstances in which monies will be added back are the exception rather than the rule. In Trevi & Trevi (2018) FLC 93-858, the Full Court observed:
27.The Full Court held in Omacini and Omacini that addbacks fall into “three clear categories”: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and “waste” or wanton, negligent, or reckless dissipation of assets.
28.However, the Full Court also made it clear that an addback does not necessarily occur whenever “a party has expended money realised from the disposition of assets that existed as at the date of separation”, the Full Court describing such a proposition as “unduly simplistic”. An earlier Full Court made the same point, saying that adding back is “the exception rather than the rule”.
29.The fundamental precept that addbacks are exceptional, reflected in the decisions just referred to, also mirrors what has been said in earlier decisions of the Full Court that, for example, “the Family Court must take the property of a party to the marriage as it finds it” at trial. An important parallel proposition is that the parties do not “go into a state of suspended economic animation” after separation. Thus, reasonably incurred expenditure does not usually come within accepted categories of addback.
30.Two fundamental premises emerge from Omacini and the authorities preceding it. First, “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing interests in property.
(Footnotes omitted)
The husband’s affidavit recorded that he borrowed money from a Mr S with whom he had done business for many years. Attached to his affidavit were the loan agreements between him and Mr S which recorded a schedule of payments (Exhibit 22). The husband also attached to his affidavit a ledger from his accountant recording receipt of the funds (Exhibit 20) from Mr S and the disbursement of the funds. The loan agreements record the advance of funds consistent with the ledger.
The husband in his affidavit gave a fulsome explanation of the circumstances in which the loan occurred and why and when it was repaid. He also gave an explanation as to the circumstances surrounding the repayment. The husband’s evidence on this issue was credible, logical and not impeached by cross-examination. None of it had the air of contrivance and was supported by documents.
The wife’s counsel submitted that there was no loan and no obligation to pay any money to Mr S. The foundation for the wife’s challenge to the loan rested entirely upon her distrust of the husband. It was apparent from her cross-examination that she had no basis to her challenge to the loan and its repayment beyond suspicion and distrust. In that respect, during cross‑examination, I specifically asked her what made her think that the transaction that the husband gave evidence about had not occurred, to which she replied, “a feeling”. Feelings do not provide a sound foundation.
The wife’s counsel submitted that the Court should draw a “Jones v Dunkel” inference (being a reference to Jones v Dunkel (1959) 101 CLR 298) arising from the failure on the part of the husband to call Mr S to give evidence. The evidence reveals that Mr S has been a longstanding business associate of the husband. I note however that he is also the wife’s cousin. I am not satisfied that any inference arises. The husband’s evidence set out in his affidavit is credible and consistent with documents that were tendered and the objective business records of his accountant showing the receipt of the funds. I am not satisfied that an inference arises from the facts.
In Cubillo v Commonwealth (No 2) (2000) 103 FCR 1, O’Loughlin J said as follows:
353. A party who, without explanation, fails to call, as a witness, a person whom he or she might reasonably be expected to call, can attract the application of the principle enunciated by Windeyer J in Jones v Dunkel (1959) 101 CLR 298. Both the applicants and the Commonwealth seek to invoke the rule as a result of the absence of witnesses who were said to be material witnesses. While it is possible to state the rule in general terms, its application must be considered with regard to each situation in which a witness is alleged to be absent; the rule is not to be used to complete gaps in the evidence or to convert conjecture into inference. The rule is that the unexplained failure of a party to give evidence may, in appropriate circumstances, lead to an inference that the uncalled evidence would not have assisted that party’s case, so entitling a court the more readily to draw an inference against that party which might otherwise fairly be drawn from the evidence which was adduced. In essence, an inference may be drawn contrary to the interests of a party who, although having it within his or her power to provide or give evidence on some issue, declines to do so.
354. That principle has recently been succinctly stated by the High Court in RPS v R (2000) 168 ALR 729 at 737:
In a civil trial there will very often be a reasonable expectation that a party would give or call relevant evidence. It will, therefore, be open in such a case to conclude that the failure of a party (or someone in that party’s camp) to give evidence leads rationally to an inference that the evidence of that party or witness would not help the party’s case [Jones v Dunkel (1959) 101 CLR 298 at 312 per Windeyer J] and that [(1959) 101 CLR 298 at 312 per Menzies J]:
“. . . where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance that the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference.”
In ASIC v Hellicar (2012) 247 CLR 345 (“Hellicar”) the plurality firstly observed, on the issue of the failure to call a witness, that:
165.Disputed questions of fact must be decided by a court according to the evidence that the parties adduce, not according to some speculation about what other evidence might possibly have been led… And there are cases where demonstration that other evidence could have been, but was not, called may properly be taken to account in determining whether a party has proved its case to the requisite standard. But both the circumstances in which that may be done and the way in which the absence of evidence may be taken to account are confined by known and accepted principles which do not permit the course taken by the Court of Appeal of discounting the cogency of the evidence tendered by ASIC.
The plurality then referred to Jones v Dunkel, as an example of the application of such principles, quoting:
167.…“that any inference favourable to the plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the defendant and the evidence provides no sufficient explanation of his absence.”
Here there was no lacuna in the evidence that would have necessitated the husband calling Mr S or give rise to an inference. The circumstances are not such as to lead to the inference that the husband should have called Mr S as O’Loughlin J observed “the rule is not to be used… to convert conjecture into inference” (Cubillo v Commonwealth (No 2) (2000) 103 FCR 1 at [353]. Given the familial relationship one might conclude that Mr S was a witness whom the wife could have called.
There is no basis for the inclusion as sought by the wife of Item 4.
The husband sought to include as a liability at Item 6 a sum of $600,000 for a contingent liability arising out of a claim in proceedings in the Supreme Court. The wife asserted that there was no evidence as to the sum of $600,000. There is some merit to the wife’s assertion that the amount of $600,000 is imprecise and uncertain, but that does not mean that the existence of the contingent liability should be ignored in circumstances where the challenge is not to the underlying liability but the quantum.
I am satisfied that it is appropriate that the parties should share equally the liability. In circumstances where the parties concede the contribution-based entitlements are equal, then it seems that there is no principled reason as to why it is that the parties should not share a liability arising from an asset from which they ultimately benefited. I further note that on 30 November 2023, the Court made Orders by consent that included the following:
2.That in relation to the proceedings in the Technology and Construction List currently before the Supreme Court […] concerning the strata title scheme at [L Street, Suburb J] (“the [Suburb J] claim”):
2.1the Husband and Wife shall do all acts and things and sign all documents necessary to cause [F Pty Ltd] atf the [Sarka] Family Trust to:
2.1.1pay the amount of $200,000 into [E Financial Services Account …11] (“the [Suburb J] Sum”), such amount to be held in the name of [F Pty Ltd] atf the [Sarka] Family Trust, and such payment to be made from funds held in term deposit Account number […00] held with Westpac Banking Corporation in the name of [F Pty Ltd] atf the [Sarka] Family Trust upon maturity of the said term deposit [in] December 2023;
2.1.2pay, from the [Suburb J] Sum, amounts for which [F Pty Ltd] atf the [Sarka] Family Trust and/or the Husband are liable to contribute from time to time in accordance with the terms of Share Transfer Agreement dated […] April 2019 between [M Pty Ltd], [F Pty Ltd] atf the [Sarka] Family Trust and [Mr Sarka] (“the Share Transfer Agreement”), pending a final resolution of the [Suburb J] claim;
2.1.3refund in the proportions of 50% to the Husband and 50%to the Wife any amount remaining in the said [Suburb J]Sum after payment of all amounts for which [F Pty Ltd] atf the [Sarka] Family Trust and/or the Husband are liable to contribute from time to time pursuant to the Share Transfer Agreement upon a final resolution of the [Suburb J] claim.
2.2in the event that any amount for which [F Pty Ltd] atf the [Sarka] Family Trust and/or the Husband are liable to contribute from time to time pursuant to the Share Transfer Agreement exceeds the amount in the [Suburb J]Sum then the Husband and Wife shall personally pay any excess amount in the proportion of 50% by the Husband and 50% by the Wife.
There is no principled reason why the parties should be released from the agreement that they entered into in November 2023, particularly in circumstances where it was contemplated by the terms of Order 2.2 that the liability may be greater than $200,000. Accordingly, I propose to remove the sum of $600,000 from the Balance Sheet as a liability to be retained as against the husband and leave the parties jointly liable in relation to this debt in the terms of their agreement recorded in November 2023.
The parties were otherwise apart as to the value of the Sarka Family Trust and the R Unit Trust. The issue in that respect focused on the findings as to the value of the commercial property, and an unsecured loan owed to the V Family Trust.
The commercial property
Mr Q, the single expert in relation to the commercial property, said in his report at page 6 the following:
It is noted the property recently gained council endorsement for a gateway determination, however noting the proposal for an uplift in permissible building height and floor-space ratios is considered contingent on future development of the subject property in conjunction with the neighbouring property.
At page 7 of Mr Q’s report, he recorded that he had regard to a number of documents including the council minutes dated mid-2024, an extract of the City O Council minutes of the same date and an extract of the Notice of Council Meeting Public Agenda for City O Council dated mid‑2024.
At page 17, the single expert observed as follows:
The most recent planning proposal prepared by ‘[X Company]’ dated [mid] 2024, was considered by Council at its Ordinary Meeting of [City O] Council held [mid] 2024. The proposal primarily seeks to gain Council endorsement of a gateway determination to be submitted to the Department of Planning, Housing and Infrastructure allowing for the preparation of a planning agreement and draft amendment to the [City O Development Control Plan], comprising increasing the maximum Height of Buildings control on the map from 80 metres (105 metres when including all bonuses) to part 133 metres (153 metres when including all bonuses) and part 0 metres, and Increasing the Floor Space Ratio (FSR) control on the map from 6:1 (9.7:1 when including all bonuses) to 12.8:1 (15.36:1 when including all bonuses).
At this time, [City O] Council endorsed the proposal and resolved to submit the Planning Proposal to the Department of Planning, Housing and Infrastructure subject to updating of the applicant’s Flood Report to accommodate [a] Flood Study […] once adopted by Council.
It is noted this proposal is based upon the 2 adjoining properties having a combined site area of approximately 2,192 square metres, so as to maximise permissible existing controls as well as those submitted for gateway determination.
However, the subject property is being considered on an individual basis as it does not currently constitute an amalgamated site, and thus does not benefit from proposal as an individual holding which would likely be inhibited to some degree by its own site area. Additionally, though having gained Council endorsement for the gateway determination, it is still to be submitted to the Department of Planning, Housing and Infrastructure and can therefore be considered to still retain an element of risk of not proceeding or requiring amendment.
At page 34 the single expert weighed the strengths and weaknesses of the property and observed that one of the negatives was that the “gateway determination would appear contingent on the future development and/or amalgamation with the adjoining property to achieve a development approval”.
The single expert was cross-examined on his report. He confirmed in cross-examination that he had assumed that the highest and best use of the property was as commercial premises. He did not agree with the proposition advanced by counsel for the wife that the highest and best use would be as a development of the site with the adjoining owner. He did not accept counsel for the wife’s proposition that the City O Council has expressed an approval to the City O Development Control Plan. In that respect, the single expert said that all the council have done is endorse the process which has a long way to go before its ultimate approval. He said that that approval may take two to three to four years. He said that there is no gateway approval; all the council is saying is that they have endorsed the commencement of this process.
He confirmed that it was a long and involved process. Even when approved, it would depend on the feasibility in economic terms and the viability of the project. He said that in his opinion there is no appetite in City O for unit buildings. He opined that the market is oversupplied in both residential and commercial properties. He contended that at present it is not an attractive proposal. He confirmed, contrary to the proposals put to him by counsel for the wife, that it is not an amalgamated site and it has not been approved for a gateway development. In relation to Mr P’s report, he contends that it contained numerous errors.
Counsel for the wife submitted that the Court could not rely upon the single expert’s report as he had failed to take into consideration the gateway approval. I do not accept that submission. It is inconsistent with the evidence. The gateway development has not been approved; it is just the first step in a long process. Counsel for the wife also sought to rely upon the initial engagement letter sent by the single expert about the property. The single expert was cross‑examined about this letter and confirmed that it did not represent an opinion as to value but merely his initial view of the property. The wife sought to suggest that the single expert had changed his mind and that therefore the Court could not rely upon the single expert’s opinion. When properly analysed, the submission is absent foundation. The parts of the initial letter read by the wife’s counsel did not represent an opinion as to value but rather just the initial thoughts of the single expert.
Mr P did not swear an affidavit and was not available for cross-examination. His report suffers from a number of limitations which calls into question whether or not the report is even in complete form. In that respect, on page 13 of the report, Mr P records the following:
I note that the subject’s planning proposal has not been finalised and approved it has simply passed the proposed stage and approval for the gateway development determination stage. From my experience once it is at this stage
The sentence is not completed, and it is unclear what Mr P was then opining too.
At page 5 of Mr P’s report, the report states:
I assume since the council has approved an increase in the floor-space ratio and height limit there will be an amendment to the
The sentence is not completed. This appears under the heading of “Assumptions”. It calls into question the extent to which any reliance can be placed on the report given those deficiencies. In the absence of cross-examination, it remains unclear whether what the Court has is a draft or completed report.
A fulsome reading of his report reveals a discrepancy between page 13 and the conclusions at page 39. At page 13, Mr P acknowledges that the planning proposal has not been finalised and approved but has simply passed the proposal stage. At page 39, he seems to proceed upon an assumption that there has been a gateway approval for 46 storeys.
There is no evidence that there is a gateway approval. At page 39 Mr P says:
With the gateway approval and future amended DCP in line with the council approval the FSR can go as high as 15.36.
The evidence of Mr Q, which I accept, reveals that all that has happened is the first step in a long process which may take up to four years and may not even result in an amended DCP.
The matters upon which Mr P expresses his opinion as to value are entirely dependent upon events for which there is no evidence that they will ever come to pass. I place no weight on the evidence of Mr P for the above reasons.
For the above reasons, I adopt the evidence of Mr Q and find the value of the Commercial property to be $8,400,000.
Unsecured loan to V Family Trust
In respect of the unsecured loan owed to V Family Trust, the husband’s affidavit records in detail the circumstances and funding arrangements in relation to the purchase of the Commercial property. Part of that involved each of the owners contributing through trusts their share of the deposit. His evidence on this issue was not challenged.
The wife’s counsel asserted that the first time that the wife had knowledge of this liability was on the Sunday evening prior to the commencement of the hearing when the financial accounts for the R Unit Trust for the year ended 30 June 2023 were provided. It subsequently transpired that a copy of the financial statement was in fact provided to the wife’s solicitors under cover of letter dated October 2024 (Exhibit 21)
I am not satisfied that there is any merit to the wife’s contention through her counsel that she was not aware of this liability before either of these dates. The husband’s Financial Statement sworn 21 July 2023 records in the notes to the Financial Statement an unsecured loan owed to the V Family Trust on page 19. Annexed to the Financial Statement is the financial statements for the R Unit Trust dated 30 June 2022. At page 39 it records the liability to the Sarka Family Trust as well as the liability to the V Family Trust in both the year ended 30 June 2022 and in the year ended 30 June 2021.
The wife had initially disputed the liability to the parties’ family trust only to resile from that position during the hearing. I am not satisfied that there is any merit to the wife’s assertion that she had no prior notice of these liabilities. In circumstances where the wife set out no basis to call into question the accuracy of the financial statements and where she sought to adopt part of them, I am not satisfied that she has established any basis on which I should ignore the liability. The wife’s mere suspicions are not sufficient.
REVISED BALANCE SHEET
Accordingly, I find the pool of assets for division between the parties to be as follows:
Ownership Description Value ASSETS 1 Joint G Street, Suburb H NSW $6,000,000 2 Joint NAB A/C No. […]14 $219 3 Wife Motor Vehicle 1 $22,000 Total $6,022,219 LIABILITIES 5 SFT Daughters’ unpaid entitlements from SFT:
Ms C ($854,449)
Ms D ($827,727)
Ms B ($862,482)$2,544,658 Total $2,544,658 NET $3,477,561 SUPERANNUATION Member Name of Fund Type of Interest Value 7 Wife Superannuation Fund 2 Accumulation
(at 30.06.2022)$2,649
8 Wife Superannuation Fund 3 Accumulation
(at 30.06.2024)$19,473
9 Joint Superannuation Fund 1 SMSF $0 Total $22,122 TRUST ASSETS/ Ownership Description Value 10 F Pty Ltd/L Sarka Family Trust $9,916,743 Total $9,916,743 TOTAL NET ASSETS (including Superannuation) $12,816,426 S 75(2) ADJUSTMENT
I have read all of the evidence relied upon in the proceedings including the exhibits but do not propose to repeat all of it in these reasons. As the High Court reminds in Whisprun Pty Ltd v Dixon (2003) 200 ALR 447:
62. … A judge’s reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge’s failure to mention such facts and arguments would be evidence that he or she had not property considered the losing party’s case.
In view of the way the parties conducted the case they are agreed that the contribution-based entitlement is equal. The only remaining issues are whether there should be an adjustment under s 75(2) in favour of the wife and the form of the order to give effect to the ultimate findings
The husband contended there should be no adjustment under s 75(2).
The wife’s counsel departed from the matters relied upon in the Case Outline and submitted that the basis for an adjustment under s 75(2) relates to the wife’s care of the child Ms B, because of the disparity as to earning capacity between the parties and because, so she submits, the Court should conclude that the eldest two children will pay to the husband their unpaid present entitlements.
I accept that the wife has the majority care of Ms B. The history of the pattern of care during the party’s relationship is that despite the husbands’ contributions to her care, it was to the wife that fell that responsibility which continued post separation and will in all likelihood continue thereafter. The evidence reveals that the wife continues to provide substantial care to Ms B. In Palumbo v Mandel (2019) FLC 93-929, the Full Court observed:
56.There is no doubt that s 75(2)(c) directs attention to children of the marriage who have not attained the age of 18 years. However, s 75(2)(o) is expressed in the widest terms and enables the Court to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”. It is well settled that s 75(2)(o) enables the Court to take into account the financial consequences to a party arising from that party’s care or support of an adult child.
57.In Lint & Lint [2011] FamCAFC 115 the primary judge made an adjustment in favour of a party by reason of that party’s care of an adult child who had autism. The primary judge also took into account that party’s expected “financial burdens” for a child who was then 17 years old that would arise once that child commenced tertiary studies. The Full Court in that case said at [183]:
…[T]he section 75(2) adjustment determined by the trial Judge included, as we have earlier indicated, a significant adjustment for the future care of the parties’ children. Nothing to which we have been referred demonstrates that the trial Judge’s discretion miscarried, or was based upon material errors of fact. Nothing to which we have been referred demonstrates that the section 75(2) adjustment determined by the trial Judge, which favoured the wife by approximately $1.4 million, was based upon inadequate recognition of the wife’s future parenting of the children.
58.In Zaruba & Zaruba (2017) FLC 93-776, an adjustment was made in favour of a party by reason of that party’s ongoing care of her adult daughter who had a significant disability, albeit, the adult daughter was not a child of the other party. In relation to this approach, the Full Court said at [130]:
His Honour found that “[the wife’s disabled daughter] is now 18 years old and whether the wife has a legal duty to maintain her remains an open question on the evidence” (at [156]). Given the combined effect of s 66C and s 66L of the Act in light of his Honour’s findings that the adult child suffers from a “significant disability”, it may be said that the wife does indeed have “a legal duty to maintain her”. Be that as it may, past care of that child, now an adult; receipt of the carer’s pension and the evidence of the modifications to the Mindarie property to which we have referred all point to the future care of the wife’s daughter being a significant matter pursuant to s 75(2)(o) of the Act.
59.A similar approach was taken in D & D [2004] FMCAFam 154 by Bryant CFM (as she then was) who made an adjustment in favour of a party who had full time care of the parties’ 26 year old child who had a significant disability. Bryant CFM determined that caring for the adult child was “a full time and unrelenting task which [the mother] will undoubtedly carry out for the rest of her life, at least until she becomes unable by virtue of her own health to do so” [31] and which justified a sizeable adjustment in the mother’s favour.
I am satisfied that the wife will continue her significant care of Ms B and it is properly a matter to consider at this stage of the adjustment.
The wife contended that she was making a significant financial contribution to Ms B’s support by virtue of the difference between the funding Ms B received and Ms B’s asserted expenses. In that respect, I note that the wife’s Financial Statement identified that Ms B’s expenses totalled some $4,102 per week. There was some challenge about various asserted expenses incurred by Ms B. That said, the husband’s evidence reveals that Ms B receives various payments from NDIS and by way of pension and funds available to her as follows:
339.[Ms B] has not only financial resources available to her for her future care and welfare, but also the care and support of her sisters and I. [Ms B] currently has the benefit of:
a)a Disability Support Pension from Centrelink of about $1,026 per fortnight (as at [early] 2023);
b)NDIS funding which has provided her with over $409,000 in funding support to date and which is due for review/renewal in [late] 2024; and
c)trust distribution entitlements owing to her in the [Sarka] Family trust of $862,482 (as at 30 June 2022).
The NDIS funding plan has been renewed for a further 12 months (Exhibit 25).
The wife’s Financial Statement records that she contributes some $600 per week to Ms B’s medical and living expenses. By the form of the parties’ Orders, at least $860,000 will be available to Ms B to meet any shortfall in her asserted expenses.
The wife submits that there is a disparity as to earning capacity between the parties. In relation to earning capacity it is clear that the husband has many years’ experience in the building industry. That said, I note his evidence at paragraph 314 and 315 of his affidavit which was not the subject of any challenge. I am satisfied that the husband has an earning capacity, as does the wife, but that hers is inferior to the husband’s by virtue of her care of Ms B and the history of working.
I am not satisfied that there is any basis to find that the eldest two children will pay the monies they are to receive to the husband. The husband denied that he would call for it or that there was any agreement between he and the children. The wife had issued subpoenas to the two eldest children to attend to give evidence and produce documents. On the first morning of the hearing the wife indicated that she would not seek to call upon the subpoenas to give evidence. The wife had the opportunity to test the assertion she put to the husband and declined to take the opportunity to call the children to give evidence. I do not accept that there is evidence that would permit of a finding that the daughters, albeit living in the husband’s home, would pay to the husband the monies which are due to them.
Overall, I am satisfied that the wife’s care of Ms B and the disparity as to earning capacity call for an adjustment in favour of the wife. I am satisfied such adjustment is for the reasons above, measured at 2 percent.
Accordingly, I am satisfied that the parties’ assets should be divided as to 52 percent to the wife and 48 percent to the husband. In view of my findings as to the pool of assets, this represents a division of the parties’ assets in mathematical terms of $6,665,455 to the wife. The wife has property to a value of $44,122 thus she is to receive from the parties’ assets $6,621,333.
JUST AND EQUITABLE DETERMINATION
I am satisfied that that is a just and equitable determination.
The husband has consistently sought to retain the home and commercial property and make a cash payment to the wife. The wife’s Amended Initiating Application filed 20 October 2022 merely sought a cash adjustment from the husband. That application was never amended other than in the Case Outline which then sought merely by way of order a division of the parties’ assets as to 55 percent to the wife. In that form, it was barely competent. At no time in either of those documents did the wife seek the transfer to her of the home or to retain an interest in the Unit Trust. That position only eventuated on the second day of the hearing.
I do not propose to accede to either of the wife’s requests. The wife left the home at the time of separation. The husband has continued to reside in the property since then and has always sought to maintain it. His affidavit records he has maintained the property. There is no issue as to its value. No principled reason was advanced as to why the wife should be permitted to resile from her long-standing position that she sought a cash payment. I propose to make an order that the home be transferred to the husband.
I do not propose to make the order the wife seeks at paragraph 13 of her Minute of Order (Exhibit 31) as follows:
That …the Husband shall do all acts and things and sign all documents, instruments and writings, including but not limited to moving and passing of all necessary resolutions, signing of trustee minutes and related documents, that may be necessary to cause [F Pty Ltd] to hold the unit in the [R Property Trust] in trust for [F Pty Ltd] and wife in equal shares as tenants in common.
This would just be a recipe for further disputation and conflict. The wife’s affidavit at length makes apparent her distrust of the husband. The proposal in her orders stands in stark contrast to her oral and written evidence where she now seeks to place herself in the position where a company of which the husband is a director, and shareholder will hold assets on trust for her. The wife has consistently since separation refused to sign company accounts and financial statements and I have no confidence such circumstance would change. In light of s 81 of the Act I will as far as practicable end any financial relationship between these warring parties. I do not propose to make the order the wife seeks.
The wife’s counsel indicated on a number of occasions that the wife sought the husband indemnify the wife for the payments to the children. No such final order was proposed in Exhibit 31 nor is there a basis for such an order.
The husband sought that the payment to the youngest child be made to the NSW Trustee and Guardian whilst the wife sought that it be paid to her on behalf of the child. The husband’s basis for doing so was the wife’s admission that she had borrowed monies from Ms B and her counsel’s concession that the wife had breached her fiduciary duty arising under the enduring guardianship and power of attorney she holds for the child.
The husband has been aware of this issue for a long time and done nothing about it. It is unclear how an order directing a payment to the NSW Trustee and Guardian, without more, would be managed by them. The husband’s counsel indicated that the husband proposed to make an application to the Guardianship Division of the NSW Civil and Administrative Tribunal and in those circumstances, I propose to make the order for payment of the unpaid present entitlements to Ms B to take effect from 60 days after the making of my orders. That would provide the parties sufficient time should they wish to do so to address this issue.
I was advised that the parties were otherwise in agreement that the husband should retain the joint account, the wife should retain her car and orders should be made to sign various documents to amend trust deeds to remove the wife as a beneficiary and to ensure that the parties remain members of the SMSF until such time as there had been a distribution or winding up of the N Property Trust of which the Fund is a unitholder.
I will make orders to give effect to the above.
I certify that the preceding one hundred and eleven (111) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 27 November 2024
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