SCOTT and GOLLINGS

[2006] FCWA 143

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: SCOTT and GOLLINGS [2006] FCWA 143

CORAM: MARTIN J

HEARD: 22 FEBRUARY 2006

DELIVERED : 1 MARCH 2006

FILE NO/S: 143 of 2004

BETWEEN: MS SCOTT

Applicant

AND

MR GOLLINGS

Respondent

Catchwords:

ORDERS - Form - Definition

Legislation:

Family Law Act 1975 (Cth)

Category: Reportable

Representation:

Counsel:

Applicant	:	Mr K Wilson SC
Respondent	:	Self Represented Litigant

Solicitors:

Applicant	:	Kim Wilson & Co.
Respondent	:	Self Represented Litigant

Case(s) referred to in decision(s):

Nil

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT – PARTIES' NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED

IT IS NOTED that publication of this judgment by this Court under the pseudonym Scott and Gollings has been approved by the Family Court of Western Australia pursuant to s 121(9)(g) of the Family Law Act1975 (Cth).

MARTIN J:

1On 20 January 2006, I gave judgment in relation to this case which concerns property settlement, spousal maintenance, child support and adult child maintenance. The proceedings were adjourned for argument in relation to the proposed orders, first to 2 February 2006, and then to 22 February 2006.

2On 1 March 2006, I made final orders and now publish some brief further reasons for decision.

3On 1 February 2006, the husband filed, by facsimile, an application seeking

“1. Leave to reopen the case in respect of:

1.1 the husband’s superannuation;

1.02 the husband’s taxation liability.”

4In relation to the value of the husband’s superannuation, in my judgment, at para 136, I referred to the superannuation as follows:-

“As to superannuation and financial resources, the wife has a [U Super Fund] policy which it was agreed was worth $16,490. She also has a [W Super Fund] with a value of $2,490. The husband has superannuation in the [Gollings Super Fund] which he included at $38,492 as an “agreed” figure, but the wife included as an agreed figure at $54,241, she says based on the 2003 unaudited financial statements referred to in the husband’s trial affidavit. Since the only evidence before me was the member statement to June 2004, at $54,241, I intend to include it as this figure. The Fund apparently holds shares, including 160,452 [Z Ltd] shares and a bank account. It was established by deed dated 9 September 1996, and the husband is the sole member of the Fund, the parties being co-trustees. The husband contributes $833 per month to his Fund from the income allocated to him from his firm.”

5The husband’s submission was that the figure of $54,241 relied on by counsel for the wife was a figure that had been provided by him at a much earlier time, when the [Z Ltd] shares had a higher value, and in that regard, counsel for the wife had misled the court.

6Counsel for the wife denied that he had misled the court in any way, but appeared to accept that the value of the superannuation in reality was $38,492.

7Since it was not really disputed, I am prepared to permit reopening by the husband on this point. I accept that this is the appropriate value and that if it is factored into the chart at the conclusion of my judgment the position would be:-

Husband	Wife
Bank Accounts
[A Bank account]	909
[B Bank account]	(E) 10,500
Real Estate
[Former matrimonial home]	760,000
Proceeds of sale [D property]	145,925
Funds spent by husband on [F property]	72,281
Shares
64,548 Z Ltd shares at 23.50c per share	15,168
Interest in partnership	348,000
Motor vehicles
VW Beetle	18,000
1994 BMW	28,000
Other Assets
Boat	95,000
Monde
Household effects	17,885	30,635
Jewellery	3,645
[YYY Charters] (business)	NK
Total:	733,668	812,280
Liabilities
Mortgage on former matrimonial home	274,361
[C Bank loan]	22,000
[Business loan]	195,000
[D Bank loan[	51,000
Income tax	161,481
Loan from parents	(E) 10,000
[Capital Gains Tax on sale of D property]	35,000
Sub total:	452,481	296,361
Net total:	281,187	515,919

Superannuation
[U Super Fund]	16,490
[W Super Fund]	2,490
[Gollings Super Fund]	38,492
Total:	319,679	534,899
-274,361	+274,361
45,318	809,260

8However, as I made clear at the hearing, despite the reduction in this figure, since the gravamen of my decision is that the wife is to receive the former matrimonial home, in effect, unencumbered, and the amount involved is reasonably modest and part of the husband’s superannuation which is not to be received for some time. I am not satisfied it is just and equitable as a result to change the amount payable by the husband to the wife.

9In relation to the husband’s taxation position, this was referred to at para 143 as follows:

“As to other liabilities, it was agreed that the husband’s income tax should be included, at a figure provided on 28 February 2005, of $161,481. The husband sought to include a quarterly statement of tax at $88,034, which was an updated figure provided by him on 28 February 2005. The wife does not accept this item, as for her it was submitted that this payment should have been funded out of future earnings of the husband over the next few months. I do not accept the sum should be regarded as a joint liability in the absence of agreement, being tax on post separation earnings.”

10The husband’s submission was that, at the time of separation, his tax liability was in excess of $280,000. At the time of trial, total tax assessed and unpaid to the end of December 2004, was $249,514. I had therefore sought to exclude his tax for the period October 2004 to December 2004.

11In addition, a further assessment of tax for the period January 2005 to March 2005, being $88,034, was due on 28 April 2005, and the trial only ended shortly prior to the expiration of that period, on 21 March 2005. The husband submitted that this assessment was not included in any calculations, even though the bulk of it relates to the period prior to trial.

12Included in the husband’s partnership interest, in para 156 of my judgment, is a large portion of “current account”, being simply undistributed profits. The husband’s submission is that to include the undistributed profits as a matrimonial asset, but to exclude the tax payable on the same as a liability cannot be correct.

13The husband also objected to me including, as matrimonial property, monies spent well after separation by him from monies earned after separation on the home in which he resides with his present partner. He submitted that to treat those earnings in a gross form without any account of the tax liability cannot be correct.

14The husband also submitted that the proposal that tax assessed to 30 December 2004, could and should be funded from income post March 2005, cannot be correct. By that time, there was already another almost full quarterly period of tax to be paid as well, being assessed on a pay as you go basis. Future income is required to pay future tax and yet the husband was still required to pay arrears as well.

15The wife’s position in relation to this issue was, not surprisingly, that the conclusion in my judgment was correct. While some post separation earnings have been brought to account, for example, in the outgoings on improvements to the F property, the husband has retained his income for his own requirements, and so should be responsible for the tax on this.

16I am not satisfied on this issue that the husband should be permitted to reopen after the judgment, when he could readily have done so in the, unfortunately, many months since trial. I was aware from press reports that the husband’s position has changed significantly since trial, yet neither party sought to reopen in this regard. Admittedly, to have done so would have meant a reconsideration of the whole of the husband’s financial position. The issue of taxation cannot be considered in isolation. Having regard to these issues, I am not prepared to vary my decision as to the liability for taxation.

17Another significant issue for determination was the distribution of the proceeds of sale of the property which had been owned by the parties in D, which had been sold during the course of the proceedings, and the net proceeds of $145,925 held in trust pursuant to an order of 9 February 2005.

18The husband sought that the proceeds of sale be used to reduce his tax liability. He informed the court, inappropriately by a facsimile letter, that on 16 February 2006, he was served with a summons claiming the sum of $185,776. That did not include tax due for the quarter October 2005 to December 2005 (presumably – as the letter says 2004). He did not credit a receipt payment of $57,000, which included $21,000 paid to the Australian Taxation Office pursuant to my order of 2 February 2006.

19The husband’s position was that the D property would have appreciated by approximately $100,000 since it was sold, but the husband had continued to incur penalty interest on this portion of his unpaid tax at the rate of approximately $1,450 per month. “An order for the sale of the property was specifically obtained for the purpose of paying my unpaid tax and yet that has been thwarted at a considerable cost”. The husband informed the Court that he had no defence to the action, and that judgment would be entered against him on Thursday, 2 March 2006. Hence the requirement for an urgent determination after the hearing on 22 February 2006.

20The submission on behalf of the wife in this regard is that the clear intention of my judgment is for the wife to receive an unencumbered home. For the wife, it was sought that the husband pay to the wife the sum of $130,000 forthwith, to be paid off the mortgage, being the balance of the monies held in trust after an undisputed amount had been paid to the Australian Taxation Office, to provide her with additional security. The position of the husband in relation to problems in his tax affairs was not properly in evidence before the Court, which was undoubtedly the case.

21I accept the husband has little in current assets and that it could be (although there was no evidence on this point) that he would have difficulty borrowing funds to pay the tax. I found it extraordinary that he did not apply months ago to release these funds. Despite his threats of bankruptcy and the fact that the wife will still have some uncertainty over her position, I am not prepared to accede to the wife’s application in this regards because it was always intended the funds be used to pay the tax, and because I do accept that, overall, the husband’s position, despite the ongoing dispute, has been consistent and his obligations to the family have largely been met, despite his complaints, and that this is likely to continue.

22As to the issue of the orders sought by the wife in relation to tax effective payments of funds to the wife and children, payments for the children being expressed net of tax, and the preamble sought by the wife in relation to the wife’s earnings, these partly appeared in the husband’s Minute as well and otherwise were not really disputed by the husband. The orders proposed by the wife reflect that has really been happening for some time, so in these respects I have made orders as proposed by the wife.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Family Court of Western Australia.

KV

Associate

10 MARCH 2023